STAFF NEWS & ANALYSIS
DB Briefs: The EU's Implacable Rigor / Brazil Towns Issue Own Money / Facebook Wants to Capture Yet More Data
By Staff News & Analysis - September 23, 2011

The EU's Implacable Rigor … EU Rehn: Will Not Allow Greek Default, Euro-Zone Exit … The European Union will support Greece, but the debt-stricken country needs to do more to implement the promises it has made, the EU commissioner for economic and monetary affairs said Thursday. "An uncontrolled default or exit of Greece from the eurozone would cause enormous economic and social damage, not only to Greece but to the European Union as a whole, and have serious spillovers to the world economy," Olli Rehn said according to the text of his speech at the Peterson Institute in Washington. "We will not let this happen." – Wall Street Journal

Brazil Towns Issue Own Money … In Pockets of Booming Brazil, a Mint Idea Gains Currency … Towns Issue Their Own Money, Which Brings Local Discounts … After school and on weekends, Carlos Leandro Peixoto de Abril sells ice cream made by his grandmother from a stoop alongside the family's cinder-block home. Instead of Brazilian reals, though, the 11-year-old prefers payment in capivaris—a local currency emblazoned with the face of a giant rodent. – Wall Street Journal

Facebook Wants to Capture Yet More Data … Facebook users are cranky, but developers like what they see … Facebook's 750 million members are livid about the flurry of changes the site rolled out this week. But another key communityFacebook's network of third-party developersis taking a wait-and-see approach. Several thousand Facebook developers gathered in San Francisco on Thursday for f8, Facebook's annual strategy conference. The event traditionally brings with it a batch of new site features, and Facebook quickly unveiled two biggies: a radically redesigned News Feed and a personal "timeline" to replace users' profile pages. – CNN Money

The EU's Implacable Rigor

EU Rehn: Will Not Allow Greek Default, Euro-Zone Exit … The European Union will support Greece, but the debt-stricken country needs to do more to implement the promises it has made, the EU commissioner for economic and monetary affairs said Thursday. "An uncontrolled default or exit of Greece from the euro zone would cause enormous economic and social damage, not only to Greece but to the European Union as a whole, and have serious spillovers to the world economy," Olli Rehn said according to the text of his speech at the Peterson Institute in Washington. "We will not let this happen." – Wall Street Journal

Dominant Social Theme: The implacable rigor of the EU's Eurocrats will beat back the market and re-establish the primacy of government commands. Anyway, the EU is not at fault. The Greeks are lazy and profligate.

Free-Market Analysis: The hubris of the EU's top Eurocrats has been fully on display this past week. Some have insisted that the Eurozone will move ahead with the idea of EU Treasury bonds even though a decision by the German constitutional court has made that prospect increasingly difficult. And then there is the Greek government, which is slavishly agreeing to whatever the EU says in order to gain access to more loans.

The billions of euros of loans, however, are not doing Greece much good. Greece is still only able to keep up on interest payments, not pay down any of its bank-borrowed funds. And the people of Greece, who understand this very well, have gone on a kind of silent strike. While it is not being reported, Greek tax collectors are refusing to collect ever-increasing tax bills. Greek post office workers are not cooperating, either. More general strikes are planned.

Greek sentiment is strongly against the EU bailout. If a vote were taken today it is likely that most Greeks would opt to leave the EU, even with all the dislocation, financial and otherwise, that might cause. But the Greeks will not be given an opportunity to vote. That is not the EU way, or not for the time being anyhow.

The EU's Eurocrats are still presenting themselves with the kind of "implacable rigor" that is well known to tin pot despots everywhere. Olli Rehn's comments are a good example of this. He is perfectly convinced of the necessity of the EU's demands. "A condition for the new program is that Greece implements all the corrective measures required, without any wavering," Rehn said. "In the past couple of weeks Greece has gone a long way toward meeting these demands, but we are not quite there yet."

Rehn, the article (above) tells us, acknowledges that the EU's crisis management has left something to be desired, but that has not changed the outlook of the EU's leaders. They are convinced of the rightness of their cause and the necessity for the Greeks to do as instructed. They will be convinced of this until the very moment that Greece finally blows up – and then, of course, these EU leaders will find someone or something else to blame. It can't be THEIR fault.


Brazil Towns Issue Own Money

In Pockets of Booming Brazil, a Mint Idea Gains Currency … Towns Issue Their Own Money, Which Brings Local Discounts … After school and on weekends, Carlos Leandro Peixoto de Abril sells ice cream made by his grandmother from a stoop alongside the family's cinder-block home. Instead of Brazilian reals, though, the 11-year-old prefers payment in capivaris—a local currency emblazoned with the face of a giant rodent. – Wall Street Journal

Dominant Social Theme: So much monetary innovation in a time of desperation.

Free-Market Analysis: The bills being printed in local towns in Brazil are pegged to the national currency, so this idea is not as radical as it sounds. We learn from the Journal that the real reason to print local bills is because they tend to be spent locally and are more liquid than larger bills or credit cards. In other words, local bills encourage local liquidity.

Big deal? No, actually, it's not. It's just another quirky Wall Street Journal article that gives editors the opportunity to report on an interesting financial issue without having to get involved in really weighty issues. And there are certainly plenty of those.

In America, for instance, there is a significant movement toward state and local banks that will print money NOT linked to the dollar. And there is plenty of discontent over the role that central banks have played in the current financial crisis. What a relief, then, to focus on a whimsical story that seems to have more import than it really does.

We are still waiting for the definitive Wall Street Journal story on how central banking caused the current economic crisis along with an expose on who really controls central banking around the world. In the meantime, we can read about Brazillian currency called the capivarinamed after the capybara, a pig-sized rodent common in a local river, according to the Journal. Hey, thanks.


Facebook Wants to Capture Yet More Data

Facebook users are cranky, but developers like what they see … Facebook's 750 million members are livid about the flurry of changes the site rolled out this week. But another key communityFacebook's network of third-party developers is taking a wait-and-see approach. Several thousand Facebook developers gathered in San Francisco on Thursday for f8, Facebook's annual strategy conference. The event traditionally brings with it a batch of new site features, and Facebook quickly unveiled two biggies: a radically redesigned News Feed and a personal "timeline" to replace users' profile pages. – CNN Money

Dominant Social Theme: Everything Facebook does, it does for you.

Free-Market Analysis: We have never seen what the fuss was about when it came to so-called social media. The attention paid to these applications seems out of proportion to their actual impact. And as we pointed out a while back in an article on the subject, we don't believe social media is the publishing wave of the future.

Writing is a diffcult art form and when done well can affect plenty of people. The idea that people will be content with publishing various kinds of books to be shared only with their intimate circle of friends seems to us a non-starter. People will continue to write serious books and seek serious distribution.

In fact, most everything about social networks like Facebook seem to us unserious. Sure, Facebook has an extraordinary volume of users but popularity comes and goes, especially when it comes to social networks. MySpace is worth virtually nothing now, though Rupert Murdoch purchased it a few years back for something like US$400 million.

In fact, Kevin Rose, who founded Digg, is quoted in the article (excerpted above) as saying that any site that has attracted a large and passionate audience will find resistance to introducing new solutions. Of course, Rose should know. Digg was a very successful start-up once but it is now nothing like it once was. Why? Because Digg gained a reputation for manipulating the news it sought to present, burying some items and featuring others. The site was eventually seen as having a leftist bent, from what we can tell. Today, it seems a shadow of its former self.

We wonder when the same sort of thing will happen to Facebook. There are so many reports swirling around about how its initial funding came from American Intel agencies and how the site has been set up to capture personal data for purposes of tracking people and researching their backgrounds. Part of the negative reaction to features that are intended to capture more data may have to do with the concern people have about sharing their intimate details with an electronic facility that has little in the way of privacy features and retains your personal data forever.

This doesn't seem to dissuade Facebook honchos, however. The new applications that Facebook is featuring are the most invasive yet. They are designed to help users place every aspect of their personal lives online for purposes of "sharing" with "friends." But who else are you sharing this data with? Not everyone on Facebook, from what we can tell, is your friend, or means you well.

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