Links 6/2/09

Posted on by

Dolphin and whale climate fears BBC

Supreme Court to Review ‘Business Method’ Patents Business Week

The Summer Home Bust Daniel Gross, Slate

GM fallout set to be windfall for Japan automakers MarketWatch

High Anxiety (about Interest and Inflation Rates) Menzie Chinn, Econbrowser. Particularly useful.

Grand Theft Auto: How Stevie the Rat bankrupted GM Greg Palast. Palast does hyperventilate, but that doesn’t mean he isn’t on to something.

JPMorgan’s Exposure to GM: What You Don’t Know TheStreet (hat tip reader Dan F)

Geithner tells China its dollar assets are safe Reuters. And the Chinese students in the audience laughed when he said that.

Subprime meltdown over; now comes the bad part Daily Kos (hat tip reader Tiago). Today’s must read

Antidote du jour:

Print Friendly, PDF & Email


  1. Brick

    Since by some strange quirk of democracy in Europe they passed a law about business patents it seems only natural the same should occur in the US. In Europe the law was proposed by a commissioner and then rejected three times by parliament and so was passed (Not what I would call democracy). The objection to this is not that intellectual property should not be protected but that it will take a great deal of cost and effort to check that every time you come up with something new that it does not violate any existing patents. It makes innovation costly and to some extent is specifically targeted at open source or free software, which interferes with the business models of certain big business entities.
    Those that really do innovate like IBM will be strongly against this while those who have stopped and are relying on an income stream will most likely be supportive. For any new start up company (read competition for the big players) this will be pose a real litigation risk. On a personal level I find that this opens up avenues where the ruling could be abused down the road in the future. For instance the business method of a list is currently owned and you could argue that each time you produce a shopping list you ought to pay the patent holder.

  2. DownSouth

    @Subprime meltdown over; now comes the bad part Daily Kos

    This is really quite an eyeopener.

    It leads one to ask if instead of being in 1931, we are not really closer to being in 1928 or 1929. Now, as in the late 20s, there seems to be quite a disconnect between the stock market and the underlying real economy.

    Frederick Lewis Allen in Only Yesterday documents how during the 1920s there were a series of real estate bubbles that developed similar to those that evolved in 2000-2007.

    The most notorious and first to implode was that in Florida, which began to collapse in the spring and summer of 1926. According to Allen, in “1928 there were thirty-one bank failures in Florida; in 1929 there were fifty-seven.”

    But the real estate mania was hardly limited to Florida. There was a similar boom in farm lands. There was a “boom in suburban lands outside virtally every American city.” As these real estate booms imploded, the result was that “between 40 and 50 per cent of the banks which had been in business prior to 1920 had failed before 1929.”

    The last of these booms was in commercial real estate. As Allen explains:

    The final phase of the real-estate boom of the nineteen-twenties centered in the cities themselves. To picture what happened to the American skyline during those years, compare a 1920 airplane view of almost any large city with one taken in 1930. There is scarcely a city which does not show a bright new cluster of skyscrapers at its center.~

    But what is most interesting is what happened after the real estate boom imploded. Allen continues:

    After the Florida hurricane, real-estate speculation lost most of its interest for the ordinary man and woman. Few of them were much concerned, except as householders or as spectators, with the building of suburban developments or of forty-story experiments in modernist architecture. Yet the national speculative fever which had turned their eyes and their cash to the Florida Gold Coast in 1925 was not chilled; it was merely checked. Florida house-lots were a bad bet? Very well, then, said a public still enthralled by the radiant possibilities of Coolidge Prosperity: what else was there to bet on? Before long a new wave of popular speculation was accumulating momentum. Not in real-estate this time; in something quite different. The focus of speculative infection shifted from Flagler Street, Miami, to Broad and Wall Streets, New York. The Big Bull Market was getting under way.~

    But the fundamentals underlying the Big Bull Market were poor. Allen continues:

    While stock prices had been climbing, business activity had been undeniably subsiding. There had been such a marked recession during the latter part of 1927 that by February, 1928, the director of the Charity Organization Society in New York reported that unemployment was more serious than at any time since immediately after the war.~

    What we see happening today, could it not be a repeat of what happened in 1928-1929?

  3. Keenan

    RE: Geithner in China

    In the Grimm fairytale it was the little kid who, like the students,
    recognized reality & spoke truth about the parading emperor.
    If Volcker was setting policy with his history of backing up the buck with 14% interest rates the reception would likely have been different. But the shifty-eyed, rodent-faced tax cheat Timmy and the burgeoning deficits belie the credibility of the statement.

    RE: the Anitdote – The standard defensive alignment of musk oxen. Circle the vulnerable, facing outward to confront the threat eye-to-eye no matter the direction it approaches.

  4. Peripheral Visionary

    The Supreme Court review of business patents (which is likely to reflect on the larger issue of intellectual property protection) is welcome and timely. The rapid expansion of the bounds of intellectual property has turned into a minefield for businesses, and clarity on the issue would be very helpful.

    The main problem as I see it is that “creative” use of the patent system, whether patenting business methods or aggressive “patent troll” lawsuits, have given IP protection a bad name. Enemies of IP protection have used it as an opportunity to attack the system as a whole, pushing for a total dismantling of IP protection from patents to copyrighted materials. That would have an incredibly destructive effect on the U.S. economy (and would not be Constitutional, as patents are specifically protected), but as long as abuse of the patent/IP system continues, there will be some sympathy for the anti-IP cause.

    Addressing the abuses and “creative” use of the patent system will actually strengthen it and help ensure that it’s providing the appropriate incentives.

  5. moslof

    great post re 1929. Hamilton Bolton of the old Bank Credit Analyst wrote about the conditions and timing of all the deflationary busts in US history. There is always enough of a difference to convince everyone that this time will be different. Instead of 1928 or 29, look at the chart of the Dow in Feb. 1930. The current S&P 500 PE ratio of 127 ( supports this view.

  6. Hugh

    The Subprime meltdown over article from Kos is excellent. Highly recommended. It is this kind of information that needs to be at the center of policy discussions. It shows instead how far off the policy and debate and smiley faces we have been getting have been.

Comments are closed.