A Couple of Things

by CC January 3, 2012 12:37 pm • Commentary

Citi is hosting its 22nd Global Entertainment, Media and Telecom conference this week in San Francisco. Here’s a schedule of the presentations. These companies could see some volatility during these talks:

2012 EMT Agenda 12 27 11


On an unrelated topic, Ryan Avent has a long take on the EuroCrisis in the Economist that’s worth a read, his final take here:

What we have to conclude, then, is that Europe may have put in place a mechanism through which the crisis could be resolved, but it hasn’t yet revealed what that mechanism would be, and until the mechanism is clear we should expect pressure on governments that look insolvent to increase. Unsurprisingly, the drop in long-term yields that followed the rollout of the ECB’s new programmes is slowly fading. Furthermore, nothing that the ECB has done has created a new route to resolution of the crisis. The basic options—growth, austerity, inflation, and default—are unchanged. It won’t be long before push comes to shove and the main European players are forced to provide more guidance as to which path (or which combination of paths) they’re going to choose.

Another way to think about the dynamic is to flip it around and focus on the claimant (say, Germany) rather than the indebted party. Germany accumulated lots of claims on a pool of payouts which turned out to be much smaller than previously imagined. Germany must now decide how it wants to take its loss. It could simply take a straight haircut on the debt it holds, but that might blow up its banking system. It could accept a real decline in the value of its euros as inflation within Germany rises uncomfortably high, while the ECB adopts a level of euro-zone NGDP growth and euro-zone inflation appropriate for the euro zone as a whole. Or it could take its payment in kind, in the form of consumption of lots of Italian goods and services (including tourism to Italy). (Alternatively, it could buy lots of goods and services from some other economy, which increases its consumption of Italian goods and services in turn.) If Germany’s consumers decide that they don’t find such goods and services attractive at current prices, then they must recognise that they will need to choose one of the other options, or face the risk that markets will rip the euro zone apart while Italian wages slowly decline. One would think that inflation is obviously the most attractive option, but neither the Germans or the leadership at the ECB seem to agree.

Is the euro-zone crisis over? No. To keep tabs on it from now on, watch euro-zone nominal output. If it grows at a depressed pace or declines, ask who is taking big real losses. Governments are trying to force losses onto households in order to avoid a financial blow-up. But such losses are almost certainly not sustainable. The only magic wand available is a printing press. Europe will use it in a way that is obvious to all, or something will break. The ECB has brandished the wand and in doing so has temporarily calmed markets. If it is bluffing—if it won’t actually wave it and aggressively—then the meltdown we all fear will occur.

And on a final note, this story is hilarious:

Pepsi Co., facing a lawsuit from a man who claims to have found a mouse in his Mountain Dew can, has an especially creative, if disgusting, defense: their soda would have dissolved a dead mouse before the man could have found it. An Illinois man sued Pepsi in 2009 after he claims he “spat out  the soda to reveal a dead mouse,” the Madison County Record reports. He claims he sent the mouse to Pepsi, which then “destroyed” the remains after he allowed them to test it, according to his complaint. Most shudder-worthy, however, is that Pepsi’s lawyers also found experts to testify, based on the state of the remains sent to them that, “the mouse would have dissolved in the soda had it been in the can from the time of its bottling until the day the plaintiff drank it,” according to the Record. (It would have become a “jelly-like substance,” according to Pepsi, adds LegalNewsline.) This seems like a winning-the-battle-while-surrendering-the-war kind of strategy that hinges on winning the argument that “our product is essentially a can of battery acid.” The lawyers still appear to be lawyering behind the scenes but we cannot wait for this to come to trial