Links 4/24/09

Catastrophic to Awful!” – The Banking Spin Cycle Satyajit Das, Eurointelligence

Pound Weakens on Speculation U.K. May Lose AAA Credit Rating Bloomberg (hat tip reader Dwight)

European Manufacturing Crash – February EconomPic Data

Summers Caught a-Snoozin’ The Caucus, New York Times (hat tip reader Steve A). The topic was credit cards. However, it appears the president is holding the line on at least one bankster issue: Obama Pressures Credit Card Issuers on Rates New York Times

Financial Innovation Takes the Homework Out of Banking Matt Yglesisas

Investors move against mortgage securities bill Financial Times

Bank of America’s Lewis May Face SEC Probe of Merrill Testimony Bloomberg

Morgan Stanley Eyes Big Trading Change Wall Street Journal. As I have been saying, these firms should not be taking big trading bets on the taxpayer dime. This is a good move. Why aren’t we seeing the same sort of thing from Goldman, or for that matter, BofA, assuming Merrill’s prop trading desk is still operational?

Finger of blame points to shadow banking’s implosion Gillian Tett, Financial Times. Makes the oft forgotten point that what has imploded is securitization, not so much bank lending. But I still think she misses the point a tad. Securitization ex government guarantees appears not to be coming back any time soon ex reform, which also does not appear to be a big priority. And so that does mean more lending is needed, even if you accept the proposition that less lending ought to be extended (as in credit standards need to be tightened). Put more simply, if securiitzation is broken, or only to come back as a pale imitation of its former self, banks will have to have bigger balance sheets in aggregate.

James K. Galbraith on the Recovery to Come MInsky Conference presentation

China gold reserves apparently doubled MarketWatch

Reclaiming America’s Soul Paul Krugman

Simon Johnson says: “Break up the banks” Andrew Leonard

Control without accountability Steve Waldman

Antidote du jour:

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  1. lineup32

    re: TETT

    After all, no politician wants to see the government buying mortgage-backed bonds forever; but nobody really believes that traditional, old-fashioned lending can take up all the slack. So either the system needs to find a way to restart securitisation or we face a world where credit will remain a highly rationed commodity for a long time to come.”

    All the slack happens to be a very big pile of debt. Mortgage debt in the U.S. has grown from 4-5 trillion to over 12 trillion since 2002. Securitization help super size the mortgage debt market but gov’t funding looks to be the longterm creditor.

  2. emca

    The picture in “Obama Pressures Credit Card Issuers on Rates” of Sumner’s sleeping while Obama pontificates on credit card excesses in a classic.
    Nice show, but no real go, or to paraphrase Faulkner (once again), ‘all sound and fury signifying nothing’.
    If there was no popular sentiment against higher fees and rates, would this meeting have even taken place? Are the credit card companies interested in arguing their cause, or complicit in another PR stunt to make Obama look “decisive”, busy working in the background to insure their concerns are actually addressed.

    Of course, some would argue that increasing one’s ability to acquire more debt is not a solution at all. And there is the logical argument, as the article points out, that if your agenda is to support banks, then restricting their means of acquiring assets (in the form of more IOU’s) is counterproductive. Part of the conundrum in manufacturing salvation, I guess.

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