Links 12/1/09

Dubai Crisis Tests Laws of Islamic Financing New York Times. Some alert readers mentioned this issue early on.

Senator wants to use gambling laws on Wall Street Economic Populist

Good Bye! The reappointment of Bernanke is too much to bear Nassim Nicholas Taleb, Huffington Post

Bankruptcy, mortgage default, and foreclosure Wenli Li and Michelle J. White, VoxEU. Finds the 2005 bankruptcy law changes made matters worse.

Hussman: 80% Chance Of A Market Crash Over The Next Year Clusterstock.

Mark Pittman, Reporter Who Challenged Fed Secrecy, Dies at 52 Bloomberg

Morgan Stanley fears UK sovereign debt crisis in 2010 Ambrose Evans-Pritchard, Telegraph (hat tip Jesse)

Zombie Capitalism: Bernanke “Marching Ignorantly Forward” Michael Shedlock

Antidote du jour (hat tip reader Max):

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  1. Andrew Foland

    When a 52 year old guy who won “an Aug. 24 victory in Manhattan Federal Court affirming the public’s right to know about the central bank’s [Federal Reserve’s] more than $2 trillion in assistance to financial firms” dies, and “[t]he precise cause of death wasn’t known”, that doesn’t make me curious at all. Nope. Not one bit.

  2. fresno dan

    Sorkin article – Nothing to do with anything here, but I can’t resist noting it:
    “That had to be what Citigroup, with its firsthand expertise with bailouts, must have been thinking when it lent $8 billion to Dubai last year. Oh, and here’s an interesting fact: Citigroup made the loan to Dubai on Dec. 14, 2008. Take a look at the calendar — that’s after it received tens of billions in TARP funds. Citigroup’s chairman, Win Bischoff, said at the time, “This is in line with our commitment to the U.A.E. market in general, and reflects our positive outlook on Dubai in particular.” Good call. And what became of all those Shariah-compliant financial instruments that were the hot topic of that panel I attended? It turns out that many of them that were sold prior to the crisis weren’t compliant at all.”

    hmmmmm…I guess thats why that TARP money isn’t being lent out here. O, and it kinda shows that great banking intelligence, all that expertize we have to save, cause these guys know all the high falutin ways of “investing” Yeah, people in the desert really, really want to ski.

  3. MyLessThanPrimeBeef

    We need a new Nobel prize – honesty.

    And the winner of the 2009 Nobel prize in Honesty is ….

    Similarly, Time magazine has been focusing on the wrong thing. What we need is Time magazine Honest Man Of The Year.

  4. Jason C. Rines

    CB model is going to need to compete against the East, specifically BRIC nations.

    While the Chinese head of the Central Bank nods and smiles at the other CB’s, meanwhile they build their own P2P banking system with more stable and historic lending models. They do have large vaults of writings of what works and what doesn’t that stretch back almost two millenia in that regard.

    The last thing China wants to see is massive volatility in their country that comes with the exhaustion of the fractional reserve model. Revolts are more common in their culture. A disruption in their food supply chain by a major revolt from the farmers would be an outright disaster of biblical proportions to them. It is the biggest reason they are moving away from CB and that is not much of a surprise to me.

    The Chinese are becoming extremely tech saavy. Perhaps the Clinton Administration should not have been too hasty in allowing the sale of U.S. supercomputers in the late 1990’s. When a nation’s technology treasures are for sale for cheap, competitors take notice. It didn’t take them too long to figure out the quant mathematical model of CB with this equipment.

    The core problem with the CB model is the lack of representation. It is not a Democratic process, AT ALL. Hence why the former NYF economist Mr. Alford mentions a compromise that continues the process of appointment versus election by the public. A Democratic society (the US was formed as a Republic) does not do well with a bifurcated process. The statistical compound interest model runs its course and then it breaks.

    The West is at that point and needed real fiscal policy by the late 1990’s. Monetary stimulus has run its course. The economy engine of the West is on life support but few realize it, although the information is out there for the public to discover.

    Mandraking to China was the game plan, but some in NYC and Washington assumed the East would just go along with the plan and share all spoils. This was hubris more than malicious intent but I would not excuse a few bad banking apples in that statement.

    The world is evolving, globalization was at first viewed as wildly beneficial to particular groups of power. The awful portions that hurt Western interests are what is known as evolution. But so are now the benefits of citizens all over earth being able to communicate and decide how we wish to spend the next few hundred years together. Because our species is an evolving one, having the means to suppress natural evolution is also part of the process. The snapback of such a suppression for close to three hundred years in the West is going to be severe.

    I do not root for the West or East in this Clash of the Titans phase of mankind. I speculate it will be bloody and full of surprising twists over the next 10-15 years. I am merely a technical scientist of sorts. Governments come and go as do non-representative processes. None of us here on the blogosphere started this chain of events. We report cause and effect to be sure, but most times we are simply reporting news without the spin.

  5. ozajh

    Ambrose Evans-Pritchard has beaten the anti-euro (both union and currency) drum for years. OK, this is in line with general editorial policy at the Torygraph but AEP has been exceptionally strident.

    Things must look REALLY dire for him to write an article like this without the usual spin about how much worse things are on ‘the continent’.

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