Handy Dandy Guide to Europe's Economies

(Found on Barry Ritholz's website. Go here for other neat charts)

Microsoft Inks Its Biggest Cloud Deal Yet: 7.5M Students And Teachers In India | TechCrunch

In America we are often too parochial to recognize the impact of an American company's success in foreign lands. This is a very big deal for Microsoft. Seven and a half million users...wow! Hope it's profitable.


The cloud reigns!

 "Microsoft has announced that it has signed its largest-ever cloud services deal, an agreement with the All India Council for Technical Education to deploy Microsoft’s Live@edu service to some 10,000 technical colleges in the country, covering 7.5 million users."

"To give an idea of the relative size of the AICTE deal compared to others Microsoft has signed, one of its more recent deals was with the Kentucky Department of Education covering 700,000 users. In all, there are around 22 million people using Microsoft’s Live@edu service, meaning that this newest deal in India represents about one-third of all of Microsoft’s cloud/education business."

Caine's Arcade

Enjoy a bit of childhood happiness!

Caine's Arcade from Nirvan Mullick on Vimeo.
A 9 year old boy - who built an elaborate cardboard arcade inside his dad's used auto part store - is about to have the best day of his life.

Help Caine's Scholarship Fund:
http://cainesarcade.com

Caine's Arcade Online:
http://facebook.com/cainesarcade
http://twitter.com/cainesarcade

Credits:
Directed by Nirvan
http://twitter.com/nirvan

Gas Glut Rejiggers Industry - WSJ.com

A cost curve such as shown below will disrupt the energy business as the WSJ story describes. Coal is being displaced by natural gas as a primary fuel for baseload electricity generation. With so much natural gas supply coming on line, electricity costs are coming down and greenhouse gas emissions should also be coming down because natural gas burns cleaner (less CO2) than coal. The laws of economics work!

Even here in Vermont where our natural gas comes form Canada via Vermont Gas, Tom Evslin and partners have created a new company to take advantage of these low prices. NG Advantage hopes to compress the gas at a central location and truck it to large fuel users in northern NH, VT and NY not reached by pipelines at a price lower than their present fuel.

True North Reports — Vermont's Cloud Tax Controversy

http://truenorthreports.com/clouds-continue-to-gather-over-tax


Rob Roper, in an interview with Mike Wasser, [a state tax attorney with State Tax Services, LLC, and who served in the Vermont Tax department at the time the legislation in question regarding the cloud tax was implemented] provides an excellent overview of the issue that flared up in Vermont recently.


I think the issue should be addressed head on by the Legislature. The technical bulletin issued by the Vermont Tax Department in 2010 should be rescinded. and no further back taxes should be levied. Any already paid should be refunded.


The issue is enormously important because so much functionality will be living in the cloud that jurisdictional issues become very complex. The whole issue should be given serious thought about whether a tax should be levied and who should be responsible for collecting it.

"...I want to clarify that when this bulletin first came out, I don’t believe it was done with any malicious intent by the tax department. It’s a complicated issue as we’ve discussed… and they just got it wrong…. It’s really in how you address a mistake like that that makes a difference. What concerns me is in larger part, to my knowledge, nobody that’s looking at how to resolve this issue has even bothered to consult the former tax commissioners who actually administered this policy. Why aren’t they asking commissioner Pelham and commissioner Westman what the department’s official policy was on cloud services?...”"

Obama v. SCOTUS - The Washington Post

Pure Bullshit. If you believe TeamObama's pronouncement, you are not paying attention to American politics.

“I’m confident that the Supreme Court will not take what would be an unprecedented, extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress.”"

Such an absurd statement from POTUS. He's allegedly a Constitutional scholar? The healthcare act was passed on a Sunday in Congress with only a few votes in the House favoring it. No Republicans voted for it.

Obama Predicts Health Law Will Survive Supreme Court Case - WSJ.com

POTUS vs SCOTUS. Lobbying the Supreme Court for a favorable decision on ObamaCare.

"President Barack Obama predicted Monday that the Supreme Court would uphold his signature health-care law and said that overturning it would be a prime example of judicial overreach.
President Obama said at a Rose Garden press conference he is "confident" the Supreme Court will uphold his health-care reform law. (Photo: AP)
It was a rare instance of a president laying out his own arguments about a Supreme Court case before the justices are set to reach their decision.
In his first public comments about the case since the justices took it up last week, Mr. Obama appeared to be framing the political argument he would make should he have to face voters this fall after a loss at the high court..."

The VPR Table: The VPR Table: Church of the North Woods

The photo in this story at VPR is one I took a few years ago at the Works and Days Farm, owned by my son and his family, in Shoreham, VT. I always liked the picture and I appreciate VPR providing the proper credit, although the caption is more appropriately "Collecting Maple Sap."  Wouldn't want to mislead folks into thinking the syrup comes directly from the tree. So much work involved in getting the sap to syrup!

11% Fewer Americans in the Stock Market Since 2007

I found this while meandering around the web. The Great Recession sure took a bite out of American stock ownership in the U.S. No surprise, as people lost their jobs and the housing crisis ensnared so many. Equity investing was predictably lost in the personal economic downturn that affected so many people.

Spain Now at the Top of the European Crisis Heap

[Hat tip to John Mauldin for sharing this letter in his newsletter from a banker/financier friend after a conference of high level folks in Paris.]

All signs point to continuing crisis in the Eurozone with Spain currently at the top of the heap of pain with massive unemployment and a huge housing bubble, worse than ours. John Mauldin examines it in detail in this week's newsletter.

The United States should be learning a lesson form all this, but TeamObama and the Democrats are placing re-election politics far ahead of fiscal responsibility.  Only the Ryan budget makes any sense to begin to fix the mess and keep America from descending into the 'more debt than we can afford' syndrome that plagues Southern Europe.

The United States must reform its entitlements and tax code to encourage fiscal responsibility and continue to grow the economy. No Democrat-sponsored budget plan does that. This is the drum that the Republicans should beat all the way to November.

Back from ParisDavid Kotok

We are back from Paris. The head is filled with new info. For the publicly available portion of the conference, see the GIC website, www.interdependence.org. The remaining comments will be my personal “takeaways” from both public and private conversations. By Chatham House Rule and Jackson Hole Rule, these words are attributable only to me. All errors are mine.

1. In my view, the situation in Portugal is unraveling. This may be the second shoe to drop in the European sovereign debt saga. Now that Greece has paved the way, the speed of unwind with Portugal may be much faster. I do not believe the markets are prepared for that. Runs are affecting Portuguese banks. Euro deposits are shifting to other, safer countries and the banks that are in those countries. Germany (German banks) is the largest recipient. Remember, deposits in European banks are guaranteed by the national central banks and the national governments, not the ECB. There is no FDIC to insure deposits in the Eurozone.

2. The issue is that Greece was supposed to be “ring-fenced.” Notice how European leaders have stopped using that word. Their new word is firewall. If a second country (Portugal) restructures, the sovereign debt issues become systemic rather than idiosyncratic. That becomes the second game-changer. Systemic risk needs big firewalls. We learned that the hard way with Lehman and AIG, which were systemic, vs. Countrywide and Bear Stearns, which were “ring-fenced” – or thought to be ring-fenced at the time.

3. A game-changer was the use (not threat) of the collective action clause by Greece. CAC altered the positions of the private sector. It rewrote a contract after the fact. That is why Portugal’s credit spreads are wide: the private-sector holders of Portuguese debt know that a CAC can be used on them, too. The same is true for all European sovereign debt. A re-pricing of this CAC risk is underway.

4. Private holders of Greek debt had several years to get out before the eventual failure. Those that did not get out were crushed in the settlement. Greece is now a ward of governmental and global institutions like the ECB, IMF, and others. It is unlikely to have market access for years. This is another game-changer. In the old crisis days, the strategy was to regain market access quickly and restore private-sector involvement. In the new Eurozone-CAC crisis days, the concept is to crush the private-sector holders, and that means no market access for a long time. Instead, we will have ongoing and increasing sunk costs by governmental institutions. Caveat: government does not know how to cut losses and run. Government only knows how to run up small losses until they are huge. Witness Fannie Mae in the US. Witness the sequence that allowed Greece to fester for years. Government does not know how to take the “first loss,” which is usually the smallest lost. Government does know how to run up moral hazard.

5. The term moral hazard means the action is done today and the price is determined later, after the chickens come home to roost and crap all over the coop. That is the nature of government everywhere. By the time the chickens return, the political leaders have changed. Those who took the moral hazard risk are gone. Those who inherited their mess are blamed during the cleanup. That is where we are today in Europe. Hence, the political risk is rising daily. Elections could change these governments, and the new governments may repudiate the actions of the old ones. We expect more strikes and unrest. That is how elections can be influenced.

6. European debt-crisis issues are lessons for the US. They belong in the political debate. Both political parties are responsible for our growing debt issues. Bush ran up huge deficits. Obama continued them. Each party blames the other. Neither takes on the responsibility of their actions. We shall see how this evolves between now and November.

I am more pessimistic about peripheral Europe than I have been. All that my co-author Vincenzo Sciarretta and I wrote in our book several years ago is now being reversed by policies. In the beginning, the Eurozone benefited immensely from economic integration and interest-rate convergence. Now it faces disintegration and divergence. Reverse the chapters in the book and play the film backwards.

Can Europe find a stabilizing level and resume growth? Time will tell. Meanwhile, political leaders and central bankers are going to be tested again.

This ain’t over. Yogi is correct.