Balance Sheet of the Federal Reserve Bank and the M1 Multiplier Ratio

March 23, 2011

Balance Sheet of the Federal Reserve Bank and the M1 Multiplier Ratio


America’s Freedom Packages – The Daily Show with Jon Stewart – 03/21/11 – Video Clip | Comedy Central

March 22, 2011

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ECB Rate Increase May Hurt Spanish Homeowners Most: Chart of Day

March 10, 2011

This is quite telling of at least one underrated risk of continued economic growth and the eventual raising of global interest rates.  It would be interesting to see the same data for the US.  If US numbers are as high as the PIGS, we are very likely to be back in a recession in the next 1-2 years, and odds are it will be just as bad as the last one, with one exception in that the suspension of mark to market accounting and stiffer capital requirements might work into fooling people that the banking system might still be solvent.  Its really frightening to consider that the end-game of a massive credit crisis is an even larger one.  When I see charts like this it is hard to imagine how we move forward, without worry, until all bad debts are written down.  Does not bode well for asset prices.

ECB Rate Increase May Hurt Spanish Homeowners Most: Chart of Day
2011-03-08 23:01:00.0 GMT

Variable Mortgage Rates in Europe

By Sharon Smyth and Charles Penty
March 9 (Bloomberg) — Homeowners in Spain, where 97 percent of about 616 billion euros ($857 billion) of mortgages have variable interest rates, may be the most vulnerable in Europe to higher borrowing costs, hurting the economic recovery.
The CHART OF THE DAY shows that Spain has the highest ratio of outstanding floating-rate mortgage loans in the region, ahead of Portugal, Ireland and the U.K., according to data compiled by the European Mortgage Federation. Europe’s average is less than 50 percent, based on the figures.
Policy makers, led by European Central Bank President Jean- Claude Trichet, have voiced concern inflation may become entrenched after keeping interest rates at record lows to fight the financial crisis. Trichet said March 3 that the ECB’s key rate could rise from 1 percent as early as next month.
“Higher interest rates enter the bloodstream of the Spanish economy almost immediately like an intravenous injection,” Cesar Molinas, an independent consultant and former head of European fixed-income strategy at Merrill Lynch & Co., said in a phone interview, “Higher interest rates immediately subtract from disposable income so they will have a direct impact on consumption.”
Spain, which has the highest unemployment rate in the euro region, emerged from an almost two-year recession in 2010. While exports underpinned the recovery, austerity measures and rising unemployment undermined consumption at home. Spending was flat in the fourth quarter.

For Related News and Information:
Home-ownership rates: ALLX HOWN <GO>
Spanish economy stories: TNI SPAIN ECO <GO> Global economy top stories: TOP ECO <GO> U.S homebuilder top stories: TNI USTOP HOM <GO> Charts, graphs home page: GRAPH <GO>

–With assistance from Ainhoa Goyeneche in Madrid. Editors:
Christiane Lenzner, Frank Connelly

To contact the reporters on this story:
Sharon Smyth in Madrid at +34-91-700-9601 or;

To contact the editor responsible for this story:
Andrew Blackman at +49-30-70010-6223 or

ECB Rate Increase May Hurt Spanish Homeowners Most: Chart of Day
Bloomberg, Sharon Smyth and Charles Penty
March 8, 2011

The Origins of the Shia-Sunni Split by Mike Shuster

March 9, 2011

With all of the mounting tension in the Middle East, tremendous talk of Shia uprisings, and Sunni leadership, I thought it was important to get caught up on the origins and meaning of the Sunni-Shia differences and rift.  The article below is from NPR in 2007.  Reading it now feels like it could have been written today.

The Origins of the Shia-Sunni Split by Mike Shuster, NPR 2007

February 12, 2007It’s not known precisely how many of the world’s 1.3 billion Muslims are Shia. The Shia are a minority, comprising between 10 percent and 15 percent of the Muslim population — certainly fewer than 200 million, all told.

The Shia are concentrated in Iran, southern Iraq and southern Lebanon. But there are significant Shiite communities in Saudi Arabia and Syria, Afghanistan, Pakistan and India as well.

Although the origins of the Sunni-Shia split were violent, over the centuries Shia and Sunnis lived peacefully together for long periods of time.

But that appears to be giving way to a new period of spreading conflict in the Middle East between Shia and Sunni.

“There is definitely an emerging struggle between Sunni and Shia to define not only the pattern of local politics, but also the relationship between the Islamic world and the West,” says Daniel Brumberg of Georgetown University, author of Reinventing Khomeini: The Struggle for Reform in Iran.

That struggle is most violent and dangerous now in Iraq, but it is a struggle that could spread to many Arab nations in the Middle East and to Iran, which is Persian.

One other factor about the Shia bears mentioning. “Shiites constitute 80 percent of the native population of the oil-rich Persian Gulf region,” notes Yitzhak Nakash, author of The Shi’is of Iraq.

Shia predominate where there is oil in Iran, in Iraq and in the oil-rich areas of eastern Saudi Arabia as well.

The Partisans of Ali

The original split between Sunnis and Shia occurred soon after the death of the Prophet Muhammad, in the year 632.

“There was a dispute in the community of Muslims in present-day Saudi Arabia over the question of succession,” says Augustus Norton, author of Hezbollah: A Short History. “That is to say, who is the rightful successor to the Prophet?”

Most of the Prophet Muhammad’s followers wanted the community of Muslims to determine who would succeed him. A smaller group thought that someone from his family should take up his mantle. They favored Ali, who was married to Muhammad’s daughter, Fatimah.

“Shia believed that leadership should stay within the family of the Prophet,” notes Gregory Gause, professor of Middle East politics at the University of Vermont. “And thus they were the partisans of Ali, his cousin and son-in-law. Sunnis believed that leadership should fall to the person who was deemed by the elite of the community to be best able to lead the community. And it was fundamentally that political division that began the Sunni-Shia split.”

The Sunnis prevailed and chose a successor to be the first caliph.

Eventually, Ali was chosen as the fourth caliph, but not before violent conflict broke out. Two of the earliest caliphs were murdered. War erupted when Ali became caliph, and he too was killed in fighting in the year 661 near the town of Kufa, now in present-day Iraq.

The violence and war split the small community of Muslims into two branches that would never reunite.

The war continued with Ali’s son, Hussein, leading the Shia. “Hussein rejected the rule of the caliph at the time,” says Vali Nasr, author of The Shia Revival. “He stood up to the caliph’s very large army on the battlefield. He and 72 members of his family and companions fought against a very large Arab army of the caliph. They were all massacred.”

Hussein was decapitated and his head was carried in tribute to the Sunni caliph in Damascus. His body was left on the battlefield at Karbala. Later it was buried there.

It is the symbolism of Hussein’s death that holds so much spiritual power for Shia.

“An innocent spiritual figure is in many ways martyred by a far more powerful, unjust force,” Nasr says. “He becomes the crystallizing force around which a faith takes form and takes inspiration.”

The Twelfth Imam

The Shia called their leaders imam, Ali being the first, Hussein the third. They commemorate Hussein’s death every year in a public ritual of self-flagellation and mourning known as Ashura.

The significance of the imams is one of the fundamental differences that separate the two branches of Islam. The imams have taken on a spiritual significance that no clerics in Sunni Islam enjoy.

“Some of the Sunnis believe that some of the Shia are actually attributing almost divine qualities to the imams, and this is a great sin,” Gause says, “because it is associating human beings with the divinity. And if there is one thing that’s central to Islamic teaching, it is the oneness of God.”

This difference is especially powerful when it comes to the story of the Twelfth Imam, known as the Hidden Imam.

“In the 10th century,” says Vali Nasr, “the 12th Shiite Imam went into occultation. Shiites believe God took him into hiding, and he will come back at the end of time. He is known as the Mahdi or the messiah. So in many ways the Shiites, much like Jews or Christians, are looking for the coming of the Messiah.”

Those who believe in the Hidden Imam are known as Twelver Shia. They comprise the majority of Shia in the world today.

“Twelver Shiism is itself a kind of messianic faith,” Brumberg says. It is based “on a creed that the full word and meaning of the Koran and the Prophet Muhammad’s message will only be made manifest, or real and just, upon the return of the Twelfth Imam, this messianic figure.”

Political Power Fuels Religious Split

Over the next centuries, Islam clashed with the European Crusaders, with the Mongol conquerors from Central Asia, and was spread further by the Ottoman Turks.

By the year 1500, Persia was a seat of Sunni Islamic learning, but all that was about to change with the arrival of Azeri conquerors. They established the Safavid dynasty in Persia — modern-day Iran — and made it Shiite.

“That dynasty actually came out of what’s now eastern Turkey,” says Gregory Gause. “They were a Turkic dynasty, one of the leftovers of the Mongol invasions that had disrupted the Middle East for a couple of centuries. The Safavid dynasty made it its political project to convert Iran into a Shia country.”

Shiism gradually became the glue that held Persia together and distinguished it from the Ottoman Empire to its west, which was Sunni, and the Mughal Muslims to the east in India, also Sunni.

This was the geography of Shiite Islam, and it would prevail into the 20th century.

There were periods of conflict and periods of peace. But the split remained and would, in the second half of the 20th century, turn out to be one of the most important factors in the upheavals that have ravaged the Middle East.

“Why has there been such a long and protracted disagreement and tension between these two sects?” asks Ray Takeyh, author of Hidden Iran: Paradox and Power in the Islamic Republic. “It has to do with political power.”

In the 20th century, that meant a complex political dynamic involving Sunni and Shia, Arabs and Persians, colonizers and colonized, oil, and the involvement of the superpowers.

The Origins of the Shia-Sunni Split
NPR, Mike Shuster
February 12, 2007