Links 6/17/09

Obama frets on debt, sees U.S. unemployment rising BBC News

MySpace cuts ‘bloated’ staff FT. We’re talking 30% here. Think of MySpace as the Yahoo to Facebook’s Google.

The recession tracks the Great Depression Martin Wolf, FT

High Housing Starts Do not Reflect Reality CNBC. We saw a lot of spec building that doesn’t necessarily translate into sales.  But, homebuilders are up anyway.

Blame the B-Schools? CNBC Video. One guy says blame the B-Schools. The other says don’t. Who is more convincing?

Large U.S. corporate bankruptcies accelerate Reuters

Alcohol’s Good for You? Some Scientists Doubt It NY Times

$13.9 Trillion Total Maximum Government Support Announced CR

Recycling, Larry Summers-Style  WSJ. A must-read. Summers is using Paulson metaphors to describe policy agenda. What does that tell you about the likely reform agenda to be presented by Obama?

Banking Problems In Southern Europe Send The Whole World Running For Cover Edward Hugh

Union anger as BA asks staff to work for free Guardian

Caja Madrid y Santander financian los fichajes galácticos de Florentino Finanzas (Spanish). Apparently Caja Madrid and Banco Santander are the banks financing the enormous spending spree by Real Madrid who have recently purchased Ronaldo from Man U and Kaka from Milan. This Spanish-language article gives the details.

Inventories ahead – Alphaville. Cushing, OK is the actual hub for which the WTI oil contract is traded. Population: 9,000. This post shows what the inventories are by company and what the tanks actually look like.

Transparency: The Largest Bankruptcies in History Here is a good visual on the largest bankruptcies ever. (hat tip, Michael)

Nach Insolvenz: Arcandor zieht Sparten in den Strudel – Unternehmen FT Deutschland. For those of you who cannot read German, this is a Financial Times Germany article highlighting Arcandor, a major German retailer. They have gone bust as the government refused aid saying their problems pre-dated the downturn and are company-specific. This bankruptcy is now having knock-on effects for suppliers. Germany’s economy is in very bad shape.

Spanish house sales suffer record fall FT. The percentage drop was 47.6 percent! That is massive and a testament to why I have put Spain in the same class with Ireland, the U.S. and the U.K. as the bubble markets.

Antidote du Jour (hat tip Paul):


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About Edward Harrison

I am a banking and finance specialist at the economic consultancy Global Macro Advisors. Previously, I worked at Deutsche Bank, Bain, the Corporate Executive Board and Yahoo. I have a BA in Economics from Dartmouth College and an MBA in Finance from Columbia University. As to ideology, I would call myself a libertarian realist - believer in the primacy of markets over a statist approach. However, I am no ideologue who believes that markets can solve all problems. Having lived in a lot of different places, I tend to take a global approach to economics and politics. I started my career as a diplomat in the foreign service and speak German, Dutch, Swedish, Spanish and French as well as English and can read a number of other European languages. I enjoy a good debate on these issues and I hope you enjoy my blogs. Please do sign up for the Email and RSS feeds on my blog pages. Cheers. Edward


  1. Diego


    it is an excellent idea to link articles in other important languages. I used to read Naked Capitalism's links for the Anglosphere, then read other non-English newspapers; so I would definitely benefit from non-English article selections. (However, I also think most of your readers may feel uncomfortable with this, so it may be better to put them last/apart).

    On the other hand, I must sorrily say I still find some anti-Spanish bias in both this and previous selections (e.g. Edward Hugh's link, comparing Spain's situation to Latvia's!).

    As you seem to read Spanish, may I recommend you this piece by the Spanish Minister for Industry, where he points to 7 Spanish economic strengths analysts usually forget? (pages 4-15 and page 18).

    Best regards,

  2. Edward Harrison


    thanks for your comments. I will take them onboard. And I have also noted your worries about anti-Spanish bias. But, you should know that I am very much pro-Spanish. I am anti-bubble and I have the same worries for Spain and their banks that I have for Ireland or the U.S. and the U.K.

    Try to view any stories on Spain from that vein – i.e. Spain as a victim of a massive property bubble.

    Thanks again for the link.


  3. Sivaram Velauthapillai

    You guys know a lot more about Spain than me…but speaking as an outside observer, my concern with Spain isn't the real estate bubble. Although it was pretty bad, Spain's debt-to-GDP isn't that high (lower than France, Netherlands, Canada, Germany, etc) and the government can theoretically absorb the losses (not that they necessarily will or the population will agree to it–or that the capital markets will fund the government debt cheaply).

    If I have a problem with Spain, it's the structure of their economy. They are inefficient, inflexible, and not diverse enough. For instance, the high unemployment sort of indicates the problem I have in mind. You can end up with all sorts of social problems with the labour situation doesn't improve…

  4. Hugh

    Did anyone notice in the bailout money article from Calculated Risk that $3.2 trillion of the current $6.788 trillion the government and Fed have extended to the financial industry went to the money markets? I thought the story was that the MMs were flush with cash that the government wanted them to get in the game and use to re-inflate the bubble economy. But that degree of aid would argue for the opposite or that the MMs are being used by the government as a funnel to prop up markets. Or am I missing something obvious?

  5. Diego


    you are right that seeing Spain as a victim puts it on a different light. Anyway, if you want to succeed in your forecasts for them, ignore the "Spain is the next Argentina" crowd and add a pinch of Spanish optimism to them.

    Remember Spain may have had a housing bubble, but it did not have a financial bubble (can you name a Spanish hedge fund/investment bank?), which puts it apart from the US and the UK.


    I can't see how Spain may be inflexible, inefficient or not diverse. What's your example for a diverse economy? It is easy to find developed countries far less flexible (France) and diverse (financial-heavy UK, manufacturing-heavy Germany and Japan). Low productivity has much to do with newly employed people, as they don't have enough experience yet. This may sound odd, but Spain has been creating half the EU employment for nearly a decade now, so there are lots of newly employed.

    The Spanish unemployment rate is misleading. With nearly 20% unemployment, you'd think there are fewer employed people than in the boom years (as is true for the US). However, the reverse conclusion holds: there were 13m employed people in 1997, 15m employed people in boom year 2000, 17m in 2004 and we have around 17.5m employed now, in the middle of a deep recession.

    The unemployment rate has shot up because of: 1) an extremely high immigration rate (the US would have received 40m immigrant in the last decade had it had the Spanish immigration rate); 2) young women wanting to work while old women were out of the labour market, so every new generation means more new unemployed; 3) people working in informal jobs while collecting subsidies; 4) the fact that those not working not only receive social benefits, but are also helped by their families (which tend to be more socially diverse than in the US).

    That's why the US would explode with a 20% unemployment rate, while Spain has survived with a multi-year 20+% unemployment rate during the early 90s (with no significant social problems) and will do it again.

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