It's Official: Fannie And Freddie Now Exist Merely To Lose Money, Bail Out Homeowners, And Prop Up House Prices: crazynutjob: I do have one problem with this policy (imagine that): these are still off-balance-sheet entities for the US. That means, among other things, that they are not included in the budget. Now that they are guaranteed to lose money (default rates on their portfolios have doubled over the last year and capital injections have been required), it seems prudent to somehow account for that. There are no caps on their losses, and their methods of foreclosure prevention are not…
Selected by quotingthecrisis
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Quoting the Crisis
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It's Official: Fannie And Freddie Now Exist Merely To Lose Money, Bail Out Homeowners, And Prop Up House Prices
9 Feb 2010 | 11:28 am -
continuum: Here’s a fascinating profile on radical Santa Fe...
9 Feb 2010 | 9:23 amcontinuum: Here’s a fascinating profile on radical Santa Fe Institute economist Samuel Bowles, an empiricist who says his research doesn’t support the Chicago School efficient marketplace hypothesis. Instead, Bowles argues that the wealth inequality created by strict market economics creates inefficiencies because society has to devote so much effort to stopping the poor from expropriating the rich. He calls this “guard labor” and says that one in four Americans is employed to in the sector — labor that could otherwise be used to increase the nation’s wealth and progress. -
"I think it’s time to take Wall Street literally: they’ve made it abundantly clear they have an..."
9 Feb 2010 | 5:59 am“I think it’s time to take Wall Street literally: they’ve made it abundantly clear they have an insatiable appetite for killing things: the housing market, the financial system, the economy, reform legislation, the next generation’s future. Wall Street is so steeped in destruction that the symbols of death are everywhere.” - Pam Martens (via azspot) -
"I think that a mature approach by both the movie industry and the internet industry sitting down,..."
8 Feb 2010 | 7:56 am“I think that a mature approach by both the movie industry and the internet industry sitting down, having a conversation, and coming up with a code of practice is the absolute preferable outcome. The problem is at the moment in Australia there is no agreement, there is no discussion, there is no dialogue and people resorted to court. […] In Australia, unfortunately, because of a refusal to hold a dialogue — and I’ve been trying for two years to encourage the sectors to have a dialogue — they’ve got themselves into a court battle of which there was a decisive outcome in favour of… -
"What do you mean “failure”? Your perspective is from the bottom looking up. But the financial model..."
7 Feb 2010 | 11:52 pm“What do you mean “failure”? Your perspective is from the bottom looking up. But the financial model has been a great success from the vantage point of the top of the economic pyramid looking down? The economy has polarized to the point where the wealthiest 10 percent now own 85 percent of the nation’s wealth. Never before have the bottom 90 percent been so highly indebted, so dependent on the wealthy. From their point of view, their power has exceeded that of any time in which economic statistics have been kept. You have to realize that what they’re trying to do is to roll back the…
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naked capitalism
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Links 2/9/10
8 Feb 2010 | 11:51 pm‘Boredom can kill you’ ANI Genes reveal ‘biological ageing’ BBC Re-Engineering the Human Immune System h+ (hat tip reader David C) Sahara Desert Greening Due to Climate Change? National Geographic (hat tip reader Diane R) Spray-on liquid glass is about to revolutionize almost everything PhysOrg (hat tip reader Nick) Sarah Palin caught cheating, proving to the world once again she’s a colossal IDIOT! Zeitgeist Watch (hat tip reader John L) Unaccountable America Archein Traders make $8bn bet against euro Financial Times The Option of Last Resort: A Two-Currency EMU RGE… -
Head of BIS Calls for Bigger Liquidity Buffers
8 Feb 2010 | 10:43 pmRegulators have been making a concerted push for banks to hold more equity as a protection against loss and overly-optimistic valuation of trading assets. But the head of the Bank of International Settlements, Jamie Caruna, argued at a secret (not) central bankers’ conference in Sydney that banks also need to carry more in the way of liquid assets (note that this recommendation apparently came in the form of a paper, but we can find no such document at this hour at the BIS website). Caruna recommended that banks hold enough to allow them to survive a month without access to funding. -
Guest Post: “More Empires Have Fallen Because Of Reckless Finances Than Invasion”
8 Feb 2010 | 9:12 pmWhile Eric Margolis’ entire comment in the Toronto Sun is a must-read, the following two quotes really hit the nail on the head: More empires have fallen because of reckless finances than invasion… If Obama really were serious about restoring America’s economic health, he would demand military spending be slashed, quickly end the Iraq and Afghan wars and break up the nation’s giant Frankenbanks. Margolis is right. As I have repeatedly shown, war is bad for the economy. According to a Nobel prize-winning economist, the head of JP Morgan and others, the Iraq war and the war on… -
Questions about the coming wave of second mortgage writedowns
8 Feb 2010 | 11:26 amBy Edward Harrison of Credit Writedowns In the lead-up to the credit crisis, I really didn’t write a considerable amount about second mortgages despite my focus on credit writedowns. At that time, I was more focused on writedowns from securitized mortgage paper (and later construction loans and commercial real estate because of the stress these loan types put on regional financials). However, second liens are a very big deal and I believe they will loom that much larger in 2010 because of the rise in strategic defaults in prime and Alt-A categories. When the crisis first developed, in… -
Links 2/8/10
8 Feb 2010 | 3:14 amGalapagos sea lions head for warm Peru waters BBC (hat tip reader Steven L) Pratap Chatterjee, Destabilizing Pakistan TomDispatch Secret summit of top bankers News.com.au Europe needs to show it has a crisis endgame Wolfgang Munchau Financial Times Employers set to keep squeezing pay Independent Irked, Wall St. Hedges Its Bet on Democrats New York Times. Some one needs to break these guys. The SWIFT Battle Heats Up FireDogLake (hat tip reader Michael T) Let’s Atomize Wall Street Martin Hutchinson, Prudent Bear Super-wealthy investors move billions out of Greece Guardian Flatlhead Matt…
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The Big Picture
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The Superbowl Team of Online Finance
9 Feb 2010 | 11:00 amGlad to see I made “New Rules of Investing” squad: Superbowl team: online finance’s best: click for full blog list > -
Bulls & Bears Make Money; Corporations Get Free Speech?
9 Feb 2010 | 9:40 amGood Morning: I will briefly dispense with yesterday’s muted market activity before tackling a recent Supreme Court decision that could vastly extend corporate influence in political campaigns. I think we can use the very logic offered in the majority opinion to hoist those five Justices by the own petard. Compared to the harrowing decline and sizzling rally after the unemployment figures were released on Friday, Monday’s market action was almost boring. With no economic data scheduled for release, and with stock markets overseas mixed (Asia down; Europe up), U.S. stock index… -
Blogonomics: Morningstar Acquires Footnoted
9 Feb 2010 | 8:32 am> Congrats to my friend Michelle Leder, who just sold her site Footnoted.org to Morningstar. I don’t have the details on the transaction, but my guess is they bought the site for $XX dollars, and they retained Michelle for a salaried post for YY years. This will give Michelle a sales team and an infrastructure, and allows Morningstar to leverage her name and expertise. Its probably a good transaction — win-win all around. Here’s Michelle’s comments: “One final note about today’s news: While I negotiated mightily for the keys to the Gulfstream, the corporate… -
Cashin’s Comments from NYSE
9 Feb 2010 | 8:08 amArt Cashin, head of floor operations at UBS, has the buzz from the NYSE. Airtime: Tues. Feb. 9 2010 | 8:50 AM ET -
5 Most Expensive Pieces of Art
9 Feb 2010 | 7:30 amAlberto Giacometti: L’Homme qui marche I $104.3 million (sculpture) Pablo Picasso’s Parisian boy smoking a pipe (painting) 1994 for $104.1 million PicassoDora Maar au chat $95.2 million in 2006 auction Gustav Klimt Portrait of Adele Bloch-Bauer II $87.9 million Francis Bacon’s Triptych $86.3 million in 2008. Hat tip CNN/Money.com
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NYT: Paul Krugman
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Anatomy of a Euromess
9 Feb 2010 | 8:52 amThe troubles of the eurozone have turned out to be even worse than the skeptics imagined. -
Euro perspective
8 Feb 2010 | 4:41 pmIt's easy to lose perspective on the size of the Greek problem. -
Know Your Deficits
7 Feb 2010 | 3:09 pmUntil the crisis hit, Spain to all appearances was highly responsible on the fiscal front -- more so than Germany. -
Alesina On Stimulus
6 Feb 2010 | 9:55 amWhy I'm not convinced. -
People Should Travel In Trains As God Intended
6 Feb 2010 | 8:33 amAmtrak does its part. NJ Transit ... we'll see.
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Calculated Risk
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CBRE: Retail Cap Rates Increase Sharply in Q4
9 Feb 2010 | 11:31 amFrom CB Richard Ellis: U.S. Retail Cap Rates Ending at 9.01%, cap rates were up again. The 35 basis point gain is slightly lower than the last few quarters (43 and 46 b.p.). Rates are now the highest recorded since the Q1 2003 start date of our series. emphasis added Click on graph for larger image in new window.This graph from CBRE shows the retail cap rate since 2003. Note that 2009 is an average annual rate, and the cap rate in Q4 was at 9.01% - the highest since the series started.Also on retail, Reis recently reported that the strip malls vacancy rate hit 10.6% in Q4, the highest on… -
Report: Euro Zone Agrees to Help Greece
9 Feb 2010 | 9:10 amUPDATE: Reuters Headline Changed to: Report of EU Help for Greece Is Now Described as 'Unfounded'That didn't take long ...From Reuters: Euro Zone Agreed in Principle to Aid Greece: Report "The decision on help for Greece has been taken in principle within the euro zone," [a senior German coalition source] said.From Bloomberg: U.S. Stocks Gain on Prospects for Bailout of Greece by EU “You have to do the necessary measures in order for us to support you,” [Olli Rehn, who takes over as EU economic affairs commissioner tomorrow] said of Greece in an interview in Strasbourg, France today. -
BLS: Few Job Openings in December
9 Feb 2010 | 7:04 amFrom the BLS: Job Openings and Labor Turnover Summary There were 2.5 million job openings on the last business day of December 2009, the U.S. Bureau of Labor Statistics reported today. The job openings rate was little changed over the month at 1.9 percent. The job openings rate has held relatively steady since March 2009. The hires rate (3.1 percent) and the separations rate (3.2 percent) were essentially unchanged in December. Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. Remember the CES (Current Employment… -
NFIB: Small Business Owners Report "shortage of customers"
9 Feb 2010 | 5:52 amFrom Reuters: Dark clouds hang over U.S. small businesses: survey The outlook of small business owners remained bleak at the start of the new year, according to a survey released on Tuesday by the National Federation of Independent Business. ... But the group also said that seven of the index's 10 components rose, indicating conditions could soon improve. Better outlooks on jobs, inventories and capital spending have helped push the index up 1.3 points since December, the group said And a few excerpts from the report: The National Federation of Independent Business Index of Small Business… -
D.C. Closed Again on Tuesday and Euro Perspective
8 Feb 2010 | 8:23 pmFrom the WaPo: Federal government will be closed on Tuesday. More snow ...This could mean that some of the economic releases might be delayed this week.And from Paul Krugman: Euro perspective. Professor Krugman provides a pie chart putting the GDP of the PIGS (Portugal, Ireland, Greece and Spain) into perspective.Greece, which is making most of the headlines, is a tiny economy. So are Portugal and Ireland. The only sizable player among the countries in the news right now is Spain. ... the group of stressed economies account for about 20 percent of the eurozone’s GDP. So muddle through might…
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Vox (EU)
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Effects of unemployment insurance savings accounts: New insights from Chile
8 Feb 2010 | 4:00 pmGonzalo Reyes, Jan van Ours, Milan Vodopivec, 9 February 2010How can policymakers provide unemployment insurance while minimising adverse incentives? This column presents new evidence from Chile suggesting unemployment insurance savings accounts can increase job-finding rates. This provides a strong endorsement of the savings account component to reform traditional unemployment insurance programmes.Full Article: Effects of unemployment insurance savings accounts: New insights from Chile -
The Eurozone debt crisis: Facts and myths
8 Feb 2010 | 4:00 pmCharles Wyplosz, 9 February 2010The latest turn in the global financial crisis has ensnared the debt of some European nations. The fact that these nations are members of a monetary union has generated much confused comment. Here one the world’s leading experts on Eurozone monetary and financial matters sets the record straight, debunking 10 myths and setting forth 10 frequently overlooked facts. Full Article: The Eurozone debt crisis: Facts and myths -
How disciplining China could save the WTO
8 Feb 2010 | 4:00 pmSusan Ariel Aaronson, 9 February 2010Is the WTO doomed? This column argues that the WTO’s credibility is waning and that to get it back it needs to reign in China’s erratic governance. China’s failure to enforce trade laws threatens the concept of mutual benefit that underpins the WTO. China is broken, and a broken China could break the WTO.Full Article: How disciplining China could save the WTO -
Anatomy of distress: New insight on the probability of bank turmoil
7 Feb 2010 | 4:00 pmMartin Cihák, Tigran Poghosyan, 8 February 2010How safe are the banks? This column provides new evidence on what determines the likelihood of an EU bank experiencing distress, suggesting that bank risks have converged across EU members, and that a more tightly integrated financial regulation should reflect this. The results also call for a greater role for market discipline. Full Article: Anatomy of distress: New insight on the probability of bank turmoil -
Tax banks to discourage systemic-risk creation, not to fund bailouts
6 Feb 2010 | 4:00 pmEnrico Perotti, 7 February 2010Obama’s plans for bank taxation took markets, policymakers, and academics by surprise, leaving all parties now debating its merits. This column suggests an alternative. By raising a Pigouvian tax based on banks’ individual contribution to systemic-risk creation, the policy would target the externality caused by funding fragility while raising the cost of opportunistic risk creation in good times.Full Article: Tax banks to discourage systemic-risk creation, not to fund bailouts
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The Baseline Scenario
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Elizabeth Warren Calls Out Wall Street
8 Feb 2010 | 7:39 pmAlthough the Consumer Financial Protection Agency made it through the House more or less intact, the banking lobby is taking another, better shot at killing it in the Senate, and is planning to use the magic words: “big government” and “bureaucracy.” Elizabeth Warren wrote an op-ed for Tuesday’s Wall Street Journal that lays out the confrontation. For most of the past two decades, many Americans trusted the banking industry–not necessarily to be moral exemplars, but they trusted that the banks were basically doing what was right for customers and for the… -
Whose Fault?
8 Feb 2010 | 7:14 amTo believe politicians in Washington and pundits in the media, the national debt has become the most important political issue of the day. (Whether it should be–as opposed to, say, jobs–is another question.) The Republican argument is, basically: “Big deficits! Democratic president! His fault!” The Obama administration argument, by contrast, is “No way! George W. Bush’s fault!” I generally side with Obama on this one, mainly because of the two Bush tax cuts and the unfunded Medicare prescription drug benefit. Keith Hennessey, Bush’s last… -
Fed Chair as Confidence Man
8 Feb 2010 | 4:00 amI’m not the one saying it–that would be Robert Samuelson, columnist for Newsweek and the Washington Post. The sole point of Samuelson’s recent opinion piece is that Ben Bernanke’s job is to increase confidence. Like much but not all error, there is a grain of truth to this point. Thanks to John Maynard Keynes (whom Samuelson cites), George Akerlof, Robert Shiller, and any number of economics experiments, we know that confidence has an effect on behavior and hence on the economy. Too much overconfidence can fuel a bubble and too much pessimism can exacerbate a slowdown. -
Euro Falling, US Recovery Under Threat
7 Feb 2010 | 5:46 pmIntensified fears over government debt in the eurozone are pushing the euro weaker against the dollar. The G7 achieved nothing over the weekend, the IMF is stuck on the sidelines, and the Europeans are sitting on their hands at least until a summit on Thursday. There is a lot of trading time between now and then – and most of it is likely to be spent weakening the euro further. The UK also faces serious pressure, and there is no telling where this goes next around the world – or how it gets there. There may be direct effects on the US, as our banking system remains… -
Europe Risks Another Global Depression
7 Feb 2010 | 4:46 amThe entirely pointless G7 meeting this weekend only served to underline the fact that Europe is again entering a serious economic crisis. At the end of the meeting yesterday, Treasury Secretary Tim Geithner told reporters, “I just want to underscore they made it clear to us, they the European authorities, that they will manage this [the Greek debt crisis] with great care.” But the Europeans are not being careful – and it’s not just about Greece any more. Worries about government debt and associated public sector liabilities (e.g., because banking systems are in deep trouble) have…
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NYT > Business
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Square Feet: Learning to Live Without Walls
9 Feb 2010 | 12:25 pmGrey dispensed with almost all private offices and hired a workplace psychologist to help employees adjust. -
Opel’s Strategy Has Fewer Jobs and Less Capacity
9 Feb 2010 | 12:20 pmOpel, G.M.’s European unit, says it plan to become profitable by 2012 by cutting its work force by 8,300 while introducing many new models. -
Square Feet: New Jersey, Home of the Servers
9 Feb 2010 | 12:18 pmCommercial real estate is experiencing a boom in data center construction, especially in New Jersey, thanks to its proximity to New York’s financial companies. -
Stocks Rally on Hopes of Greek Bailout
9 Feb 2010 | 12:05 pmStocks climbed on hopes that European officials would move to rescue Greece from its debt troubles. -
China Overtakes Germany as Top Exporter
9 Feb 2010 | 11:58 amChinese exports amounted to $1.2 trillion in 2009, while German exports totaled $1.1 trillion, or 797 billion, the German Federal Statistical Office said.
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Reuters: Business and Finance News
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U.S. job openings rise, hirings steady in December
9 Feb 2010 | 12:03 pmWASHINGTON (Reuters) - U.S. job openings rose in December and the number of unemployed workers fell, according to a government report on Tuesday that supported views the labor market was on the brink of recovery. -
Toyota to recall more 2010 Camrys in U.S.
9 Feb 2010 | 12:00 pmDETROIT (Reuters) - Toyota Motor Corp will recall 7,314 model-year 2010 Camry sedans in the United States due to the risk that a potential defect in steering may make it harder for drivers to stop the vehicle. -
MetLife may pay AIG in stock, cash for unit: source
9 Feb 2010 | 11:49 amNEW YORK (Reuters) - MetLife Inc plans to pay American International Group Inc in stock and cash for American Life Insurance Co (Alico), as the two sides negotiate what could be a roughly $15 billion deal, a source familiar with the matter said on Tuesday. -
Wall Street jumps on reports of help for Greece
9 Feb 2010 | 11:44 amNEW YORK (Reuters) - Stocks advanced on Tuesday, with the Dow on track for its largest daily percentage gain since November, boosted by reports about an aid plan for heavily indebted Greece. -
Obama courts Republican support on jobs, deficit
9 Feb 2010 | 11:44 amWASHINGTON (Reuters) - President Barack Obama sought common ground with Republicans on Tuesday on his top policy priorities of job creation and deficit reduction, winning hints of support in both areas but a rebuke on healthcare reform.
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TIME.com Top Business Stories
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America's Business Law Protects International Crime
9 Feb 2010 | 11:15 amLax state laws of incorporation allow shell companies to operate freely in the U.S., helping the Russian mafia, drug cartels, and still, even some terrorists. -
EMI's Downfall: Will the Hits Keep Coming?
9 Feb 2010 | 11:15 amEMI, the world's fourth-largest record company, is on the verge of financial ruin after announcing losses of $2.5 billion last year. Can the venerable music-maker survive? -
Thain, Merrill Lynch Execs Find Top Jobs on Wall Street
9 Feb 2010 | 11:15 amJohn Thain is the latest ex-Merrill Lynch executive to land a high-profile, high-paying job. Across the financial landscape, former Merrill execs are sitting pretty -- an ironic twist for a firm that almost went belly up -
Retail Experts Foresee More Shoppers Seeking More Sales
9 Feb 2010 | 11:15 amWith the stock market up from its lows and federal stimulus programs proceeding apace, some retail experts foresee rising sales, though mostly for discounters -
Banking: Should Wall Street Cease Proprietary Trading?
9 Feb 2010 | 11:15 amPresident Obama and adviser Paul Volcker are calling for banks to stop engaging in proprietary trading. Is this smart? Is it even possible?
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IMF Survey Magazine
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India Rebounds, Needs to Return to Reform Agenda
8 Feb 2010 | 4:21 amIndia’s economy is rebounding strongly, ahead of most countries in the world, with growth approaching pre-crisis levels, but policy trade-offs are also coming to a head and the IMF sees conditions as ripe for a return to fiscal consolidation. -
IMF Approves $1.27 Billion Loan for Jamaica
4 Feb 2010 | 2:34 pmThe IMF approves a $1.27 billion loan to support Jamaica's plan to recover from the effects of mounting government debt, weak economic growth, and the global economic crisis. The Caribbean country’s plan includes a focus on social spending to help the most needy. -
New Rules For Access to Low-cost Loans
2 Feb 2010 | 12:31 pmIn a bid to target concessional financing to the countries in greatest need, the IMF has reviewed the rules it uses to decide whether member states are eligible for concessional loans. -
Crisis Alters Pattern of U.S. Consumption
1 Feb 2010 | 12:40 pmU.S. households are saving more and spending less of their total income, in reaction to the global crisis, according to a new IMF study. -
IMF Proposes "Green Fund" for Climate Change Financing
30 Jan 2010 | 9:13 amThe world must adopt a low-carbon model for growth as it rebuilds from the global economic crisis, IMF Managing Director Dominique Strauss-Kahn says at the World Economic Forum in Davos. To help finance this shift in the global economy, the IMF is working on a set of proposals to create a multi-billion dollar “Green Fund.”
