News Links: Down with the Eurozone, It’s not about Berlusconi

For the last decade, the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) were the eurozone’s consumers of first and last resort, spending more than their income and running ever-larger current-account deficits. Meanwhile, the eurozone core (Germany, the Netherlands, Austria, and France) comprised the producers of first and last resort, spending below their incomes and running ever-larger current-account surpluses. The resulting build-up of private and public debt in over-spending countries became unmanageable when housing bubbles burst (Ireland and Spain) and current-account deficits, fiscal gaps, or both became unsustainable throughout the eurozone’s periphery. Moreover, the peripheral countries’ large current-account deficits, fueled as they were by excessive consumption, were accompanied by economic stagnation and loss of competitiveness. So, now what?

Italian bonds do not have to be restored to risk-free status-they only need their yields dragged low enough for Italy to remain solvent. Whether outside investors have the appetite to absorb all that paper at sufficiently low yields is unknown. In the meantime politicians repeatedly undermine the market confidence necessary for that to happen.

The pro-equality Occupy movement is rapidly gathering pace in Germany, with fresh protests starting in the capital Berlin and the country’s financial heartland of Frankfurt.

We’ve featured some articles by our favorite curmudgeon, political scientist Tom Ferguson, on the role of money in elections. More recently, he has been writing about the remarkably brazen system by which committee leadership positions are for sale in the House and Senate. This Real News Network segment reviews how this ugly system works, and discusses its implications. Ferguson also discusses how the system could be reformed.

Mexican investigators presented radar and video images supporting their findings that fog in the mountains around the capital caused the helicopter crash that killed the country’s second-highest official. The reports eased concerns Interior Minister Francisco Blake Mora may have fallen victim to assassination as President Felipe Calderon eulogized his top Cabinet member.

What’s driving this dramatic spike? I don’t think anyone really knows. The least likely explanation is that scientists have suddenly become less scrupulous and honest. Instead, I think the trend is almost certainly being driven by a number of unrelated factors, including a newfound willingness by journals to issue retractions, increased scrutiny from the blogosphere and the ever escalating complexity of scientific research, which makes innocent mistakes more likely. (According to one analysis, 73.5 percent of retractions were due to error, not fraud.)

After Tetlock tallied up the data, the predictive failures of the pundits became obvious. Although they were paid for their keen insights into world affairs, they often performed worse than random chance. Most of Tetlock’s questions had three possible answers; the pundits, on average, selected the right answer less than 33 percent of the time. In other words, a dart-throwing chimp would have beaten the vast majority of professionals. These results are summarized in his excellent Expert Political Judgment.

There are a few sad lessons here. For one thing, it appears that NFL teams don’t closely follow the behavioral economics literature, even when it directly involves the sport. But the lack of change in fourth down decision-making is also a depressing reminder that human biases are exceedingly hard to fix. When the game is on the line we default to our lazy hunches and instincts, even when the rational choice couldn’t be more clear.

Con 75 años, Silvio Berlusconi se despidió este sábado del poder tras haber gobernado 17 años una Italia dividida entre quienes lo respaldaban y los que deploraban su vida de "comediante", sus chistes vulgares y sus escándalos judiciales.

For all the differences among them, the juggernauts of social media rely on a common business model: create free services, then sell ads against users’ information. In a dramatic departure, a new social network plans to give its users a 50 percent commission-or even let them sell their own ads and keep all the revenue. Chime.in is built around users’ interests-think photography, politics, or travel-as opposed to friends, professional contacts, or news. The site’s founders hope that by creating pages around those interests, the users will attract people with similar affinities, an attractive combination for targeted advertising.

Goldman Sachs always seems to have something interesting to say about monetary policy. The following is proprietary information, so I can only quote portions

the Great Depression was produced by banks.   He wrote "Banks and bankers are by nature blind. They have not seen what was coming…"  Even when faced with their own destruction they get it wrong: "In the United States," he wrote "some of them employ so-called ‘economists’ who tell us even today that our troubles are due to the fact that prices have not fallen enough…" [Shades of Inside Job.]

From low capital gains taxes to stock buy-backs, here are the ways the elites ensure the markets benefit them

Penn State University had its Aa1 revenue-bond rating placed on review for possible downgrade by Moody’s Investors Service amid the investigation into a child sex-abuse scandal.

Political progress in Italy and Greece pushed stock markets higher but economists warned of stormy weeks ahead as attention turned to Spain amid fears it could be the next economy to come under the spotlight.