Recent Items
- Links 1/7/12 - 01/07/2012 - Yves Smith
- Wolf Richter: “German Success Recipe” or Blip? - 01/07/2012 - Yves Smith
- Whither Volcker Rule and Other Options for Reining in Big Bad Banks - 01/07/2012 - Yves Smith
- NY Fed President Dudley Crosses Swords With GSEs and Board of Governors on Housing/Mortgage Mess - 01/06/2012 - Yves Smith
- Links 1/6/12 - 01/06/2012 - Yves Smith
Friday, January 6, 2012
Wolf Richter: “German Success Recipe” or Blip?
By Wolf Richter, San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Cross posted from Testosterone Pit.
Despite the Eurozone debt crisis, the German economy has been on a roll, with unemployment at a 20-year low. Exports surpassed €1 trillion for the first time ever. The Federation of Wholesale and Foreign Trade even issued a card to commemorate the moment. For the year, exports rose 12%. In 2012—based on demand from Asia, Latin America, Africa, and Eastern Europe—exports are expected to grow 6% to €1.139 trillion—when GDP is only €2.37 trillion ($3.1 trillion)!
But during the financial crisis, export orders fell off a cliff…
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Topics: Economic fundamentals, Globalization, Guest Post
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Posted by Yves Smith
at
12:45 am
1 Comment » Links to this post
Whither Volcker Rule and Other Options for Reining in Big Bad Banks
Gerry Epstein of PERI speaks to the Real News Network about the out of the headlines negotiations on Volcker rule implementation as well as other ideas for bringing major banks to heel.
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Topics: Banana republic, Banking industry, Politics, Regulations and regulators
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Posted by Yves Smith
at
12:25 am
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NY Fed President Dudley Crosses Swords With GSEs and Board of Governors on Housing/Mortgage Mess
A speech by New York Fed president William Dudley is a bit of a surprise, in that it acknowledges the severity of the deepening mortgage crisis and sets forth some specific policy proposals. I still find these recommendations frustrating, in that they are insufficient given the severity of the problem and also fail to come to grips with widespread servicer abuses (not just servicer driven foreclosures, but also what amounts to theft from investors, via schemes such as double charging fees to borrowers and investors, inflating principal balances, reporting REO as sold months later than the transaction closed, and getting kickbacks on third party charges). But they are more serious than other ideas from senior financial officials. Specifically, the Dudley advocates principal relief via a program of “earned principal reduction” which would allow for put options for all severely underwater borrowers who stay current on their mortgages for three years. But as we will discuss, this proposal is less meaningful than it sounds.
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Topics: Banking industry, Credit markets, Federal Reserve, Legal, moral hazard, Politics, Real estate, Regulations and regulators
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Posted by Yves Smith
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7:06 pm
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Quelle Surprise! Banks Plan to Fob off Some of the Costs of Multi-State Mortgage Settlement on Investors
Topics: Banana republic, Banking industry, Credit markets, Politics, Real estate
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Posted by Yves Smith
at
3:00 am
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What if We Focus on Boosting Employment Rather Than Growth?
Although it is remarkably difficult to come up with decent data, from what I can tell, the Japanese bubble was considerably bigger relative to the size of its economy than the US debt binge was. Yet even though the Japanese aftermath has been remarkably protracted, and arguably worsened by a slow and cautious initial response, visitors to Japan find the country wearing its malaise remarkably well.
One of the reasons may be the Japanese preoccupation with employment. Entrepreneurs are revered not for making money but for creating jobs. Japanese companies went to great lengths to keep workers, cutting senior pay to preserve manning. That was done largely for cultural reasons, since companies are seen as being like families.
But was this preoccupation also good economic policy, and might it have played a more direct role in buffering the worse effects of the bubble aftermath?
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Topics: Corporate governance, Economic fundamentals, Japan, Social policy, The destruction of the middle class, The dismal science
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Posted by Yves Smith
at
2:57 am
133 Comments » Links to this post
Philip Pilkington: When Economic Journalists Get Out of Their Depth
By Philip Pilkington, a journalist and writer living in Dublin, Ireland
Working as a journalist and as an opinion writer each have their charms. Journalists have the pleasure of discovery and revelation: uncovering new facts, talking to people, sometimes acting as a catalyst to move events forward.
Opinion writing, aside from being a comfy way to make a living, gives the writer greater stylistic freedom, and the challenge and opportunity of making a dent in readers’ views. The problem is that you have a limited amount of space and, often, an easily distracted readership. Now, that’s fine for something like, say, an observation about an upcoming election or the loutish behavior of a major sports figure but it is a patently awful format from which to raise Big Questions.
The normally sound Clive Crook fell into this trap in an opinion piece at Bloomberg, “A Crisis of Leadership, Not a Crisis of Capitalism.” Bluntly, this article is a train wreck.
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Topics: Guest Post, Media watch, Politics, The dismal science
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Posted by Yves Smith
at
12:39 am
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Yes, Virginia, Brokerage Firms Keeping Client Ripoff Provisions in Customer Agreements in the Wake of MF Global
In the wake of the collapse of MF Global, and the evaporation of funds in customer accounts, even ones with no margin lending, investors big and small have become duly concerned about the safety of their funds. For those of you who are not brokerage customers, one of the big achievements of the 1930s security law reforms was their success, up until now, in putting rules in place that protected customer assets. Numerous broker/dealers have failed but their clients’ funds were recovered.
In support of our consumer protection efforts, reader Don H has sent evidence that the banks are keeping their rights to misuse customers firmly in place in the wake of MF Global:
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Topics: Banana republic, Banking industry, Legal, Regulations and regulators
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Posted by Yves Smith
at
5:05 pm
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The Reactionary Mind – The Truth About Conservatism: An Interview with Corey Robin Part II
Corey Robin teaches political science at Brooklyn College and the CUNY Graduate Center. His latest book, The Reactionary Mind, is available from Amazon.com.
Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.
PP: Okay, let’s move on. One of the chapters in the book deals with Ayn Rand. I’m going to quote from it directly as I don’t think there is a better way to sum it up.
“Saint Petersburg in revolt gave us Vladamir Nabokov, Isaiah Berlin, and Ayn Rand. The first was a novelist, the second philosopher. The third was neither but thought she was both.”
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Topics: Guest Post, Politics, Social values, The dismal science
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Posted by Yves Smith
at
2:59 am
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Quelle Surprise! Fed Sees We Have a Big Mortgage Problem
It certainly is gratifying to see the Board of Governors of the Federal Reserve, via a paper released on Wednesday, “The U.S. Housing Market: Current Conditions and Policy Considerations,” (hat tip Calculated Risk) finally acknowledge that US has a mortgage/foreclosure mess that is not going to go away by virtue of QE or other efforts to goose financial asset prices. However, just as the Fed was late to see the global housing bubble (even the Economist was on to it in June 2005), so to is it behind the curve in its take on the housing problem. This paper at best constitutes a good start, when, pace Churchill, the Fed is at the end of the beginning when it really needs to be at the beginning of the end.
However, before we get to the housing/mortgage market issues, we wanted to focus on a political element of the paper which may be more important that its analytical content. The Fed is openly crossing swords with the FHFA.
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Topics: Banana republic, Banking industry, Credit markets, Federal Reserve, Legal, Politics, Real estate, Regulations and regulators
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Posted by Yves Smith
at
1:47 am
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Is Management Getting Worse?
To some readers, the answer to the headline may seem obvious: Yes, American management is clearly worse than it was, say, thirty or fifty years ago, because short-termism is endemic among public companies, and short-termism leads to all sorts of bad outcomes, like underinvestment and accounting gaming.
But that analysis is simplistic. Short-termism simply shows that management has adopted good for them, bad for pretty much everyone else (save maybe their bankster allies) goals and are pursuing them aggressively.
A comment by John Kay of the Financial Times has the effect of raising much more fundamental questions about the caliber of top managers.
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Topics: Corporate governance, moral hazard, Ridiculously obvious scams, Risk and risk management
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Posted by Yves Smith
at
1:34 pm
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Obama to Make Recess Appointment of Richard Cordray to Head Consumer Financial Protection Bureau
I have not seen this hit the news wires, but got this via Lisa Epstein, in turn from Our Financial Security, which is part of the Center for American Progress, which is a heavyweight Democrat think tank (with of course a whole list of talking points to rebut Republican kvetching about the use of a recess appointment).
This move raises the obvious question: why didn’t Obama make a recess appointment of Elizabeth Warren?
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Topics: Banana republic, Banking industry, Politics, Regulations and regulators
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Posted by Yves Smith
at
10:42 am
80 Comments » Links to this post
Philip Pilkington: The Reactionary Mind – The Truth About Conservatism; An Interview with Corey Robin Part I
Corey Robin teaches political science at Brooklyn College and the CUNY Graduate Center. His latest book, The Reactionary Mind, is available from Amazon.com.
Interview conducted by Philip Pilkington, a journalist and writer based in Dublin, Ireland.
Philip Pilkington: The overarching thesis of your new book The Reactionary Mind is a provocative one. In it you contend that conservatism has always been a radical doctrine.
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Topics: Guest Post, Politics, Social values, The dismal science
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Posted by Yves Smith
at
1:50 am
67 Comments » Links to this post