Links 8/6/10

Reader notice: Yves will be on CSPAN Washington Journal this Saturday from 9:15 AM to 10:00 AM. The host Paul Orgel will take viewer calls, and I’d love to get questions from NC readers.

Why World War I Recordings Won’t Enter The Public Domain Until 2049 TechDirt

America’s Most Common Bat Headed for Eastern Extinction Wired (hat tip reader John M)

‘Poo-powered’ car seen on the streets of Bristol BBC

‘Why Has He Fallen Short?’ Frank Rich, New York Review of Books (hat tip reader john). On Obama, natch.

Romer to Resign as Obama Adviser Wall Street Journal. The scuttlebutt is that she was not treated as a core member of the team and increasingly does not see eye to eye on policy (particularly the post finreg cheerleading)

Telling Swiss secrets: A banker’s betrayal GlobalPost (hat tip reader Sundog)

Bankruptcy Filings Ticked Downward In Parts of South, But Rose 9 Percent Overall Planet Money

2010 Social Security Report: Surprising Drop in 75 yr Actuarial Gap Bruce Webb, Angry Bear

Exotic Deals Put Denver Schools Deeper in Debt Gretchen Morgenson, New York Times. Michael M. Thomas notes: “At what point does financial journalism become so superficial that it’s actually dishonest. Funny that the NYT gives Summers a pass for doing the same thing at Harvard.” Well not exactly the same thing, but not that different either.

Caveat Emptor, Continued Floyd Norris, New York Times. Guess the securities industry would rather have no securitization market all rather than one investors might return to.

The Crisis Down Under Joseph Stiglitz, Project Syndicate (hat tip Mark Thoma)

The Flimflam Man Paul Krugman, New York Times

Would you rather have a good bank, or a bad one? Deus ex Macchiato

Wall Street’s Big Win Matt Taibbi, Rolling Stone

BIS: it’s the implicit taxpayer guarantee that drives banks to get bigger Telegraph (hat tip Ed Harrison). If it weren’t so late, I’d post on this. Readers may recall I have been saying this for some time (as in every study ever done in the US showed a slightly increasing cos curve to banking, in particular, that once a certain size level was reached, costs actually rise per dollar of assets. So the idea that banks needed to be larger to capture scale efficiencies is utter bunk.

But there was a dearth of studies in the last few years (perhaps no one was willing to fund work with such a predictable and unflattering to regulators and incumbents result?). The key difference with the BIS work, and it makes it more important, it is focuses on international banks, and the size threshold where cost efficiencies stop is (not surprisingly) higher than for US banks (the threshold varied by study in the US, but a typical level was $1-$5 billion in assets, v. $25 billion for international banks).

Antidote du jour:

Picture 1

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  1. Ina Deaver

    UH, is that an echidna in the mop bucket of a cleaning trolley? In a lavender sweater? Now I’ve seen everything.

    Wherever Larry Summers goes, competence has to flee. Heaven help us.

    1. K Ackermann

      You’ve never seen an echidna in the mop bucket of a cleaning trolley wearing a lavender turtleneck?


      1. Ina Deaver

        Ah. But the word “echidna” is funnier.

        Thanks for the clarification. I don’t know from anteaters. Show me some snakes, I can gender identify on top of the Latin genus name. . . . .yes, snakes. Furry cute stuff I never studied much.

  2. Something rotten?

    re: Telling Swiss secrets: A banker’s betrayal

    a bit surprised to find Danish banks included in a sentence like this
    “…accepting “bundles” of checks from U.S. clients for deposit into Swiss, Liechtenstein and Danish banks and, on one occasion, buying diamonds for an American client and transporting them to the U.S. in a toothpaste tube.”

    Danish banks? Had no idea we were playing in that game. That’s kind of exciting in a sick way – maybe we are not so dull after all.

    re. “UBS agreed to pay $780 million to avoid prosecution, admitting it fostered tax evasion from 2000 to 2007 and consenting to turn over the names of some 4,500 U.S.-based clients”

    Why would the US agree to avoid prosecution, though? (politics? US Jobs?). The same thing with Goldman – why settle for $500m in fines? Why not take it all the way? (not sure where that could end up but it would give a better sense of justice than giving a slap on the wrist amounting to a week’s worth of profit)

  3. Neil D

    Regarding the Gretchen Morgenson comment…

    It’s funny how much bloggers complain about trolls in the comments of articles and blog posts. The back and forth between the “bloggers” and “journalists” strikes me as troll behavior too. You need this conflict and ad hominem to drive page views. Is it any wonder that some of the commenters pile on?

  4. dearieme

    “Cutting back on high-return investments (like education…”: why do so many economist assume that expenditure on “education” is automatically a high-return investment? And why are they so often the sort of economists who, wherever their professorships may nominally be located, spend as much of their time as possible avoiding taking part in the aforesaid “education”?

  5. Maggie Wells


    The Economist Group is launching a premium audience network called the Ideas People Channel. The readers of The Economist have selected Naked Capitalism as one of their favorite sites and we see a strong affinity with your audience. Could we schedule a time to talk?


  6. Lyle

    On the Denver Schools bond thing, yet another example of wall street salesmen and bills of goods sold to public entities. Note that this happened to Jefferson Co Al, and other places. States should outlaw subdivision doing anything but vanilla finanace, as salesmen are able to bamboozle the leaders of government. The Salesmen (shysters) tell stories without stressing the downside risks. The government officials forgot the most critical lesson of finance “There is No Such Thing as a Free Lunch” (Heinlein in The Moon is a Harsh Mistress made that point strongly). The school board thought it had bought a free lunch to help its pension situation out and get it out of the consequences of underpaying in the past, wrong.
    Provides again Wall Street does not give a damn about anyone but themseleves after all they are the house of the great Wall Street Casino.

  7. MyLessThanPrimeBeef

    If we can have ‘poo-powered’ cars, why can’t we have ‘poo-powered’ brains to beef up our dismal field of economics?

  8. Bob_in_MA

    Stiglitz’s piece should count as a headline jinx. A big part of the stimulus program in Australia was an extremely generous housing credit program, 2-3 times more generous than ours. And home prices there had never really fallen. What they did was take a big bubble and blow it bigger.

    Another thing that kept the wolf at bay was China’s huge construction-led stimulus program, which required gobs of Australian commodity exports.

    If China slows, Australian unemployment will rise just as they put thousands of people into hopelessly over-priced homes.

  9. emca

    Ever to wonder why for some a Demo-Repub split is little better than a very bad-worst persona of the same beast, “Wall Street’s Big Win” should remove the mystery of the prejudice.

    The script might well read subterfuge, dissimulation, in sum in-house betrayal, at best a kind of self-serving benign neglect, at worst working to insure such neglect is fruitful. Read and weep.

  10. Francois T

    RE: Exotic Deals…

    Michael M. Thomas notes: “At what point does financial journalism become so superficial that it’s actually dishonest. Funny that the NYT gives Summers a pass for doing the same thing at Harvard.”

    Well, it’s not funny; as usual, the reasons why Summers is given a pass are not addressed at all.

    Let’s cut through the bullschreitz: the moral depravity, servility toward the elites and slothfulness of the American mainstream media know no boundaries. And there is a very good set of reasons for that…like 5 million dollars reasons.

    That is the exorbitant advance that John Heilemann and Mark Halperin will collect to write the 2012 version of their vapid and sleazy opus “Game Change”.

    See this devastating critique:

    It goes without saying that other colleagues haven’t failed to take note of this small fortune. Plus, the fact is, no one could write such a book without unfettered access to the politico-financial elite. Therefore, it’ll be the day when any journalist (or what passes for it nowadays) who hope to hit a big financial score (who wouldn’t?) starts asking even mildly hard questions to the powerful, political or financial. For example, Sorkin could never have written his latest book by inserting an expose on executive compensation, couldn’t he?

    So, we got a trifecta: regulatory, political and journalistic capture in this good ol’ US of A.

    And Summers is part of those who can’t be questioned by anyone from the media who hope to hit a big score.

    Follow the money!

  11. Bates

    There is another ‘Down Under’ that Stiglitz didn’t write about and it is a lot closer to the US.

    OFF TOPIC: “Mexico: Cartels Move Beyond Drugs, Seek Domination” from AP, The NY Times, Jesse’s Cafe Americain…

    “MEXICO CITY (AP) — President Felipe Calderon said Wednesday that Mexico’s cartels in many cases have moved beyond drugs as their main money-earner and are even trying to supplant the government in parts of the country.

    Speaking at an anti-crime conference, Calderon said gangs are imposing fees like taxes in towns they dominate, extorting money from both legitimate and unauthorized businesses.

    ”This has become an activity that defies the government, and even seeks to replace the government,” he said. ”They are trying to impose a monopoly by force of arms, and are even trying to impose their own laws.”

    Calderon said cartels may even be taking money from churches. ”I do not doubt that they are also extorting money from priests and pastors in this country,” he said.

    Drugs are becoming less of a focus for the gangs, he said.

    ”Their main business is not anymore even drug trafficking, sometimes,” Calderon said. ”Their business is dominating other people.”

    remainder if article here…

  12. KFritz

    Re Sheila Romer

    It occurs to me that this is the death knell for Elizabeth Warren’s appointment. In this scenario, Romer was told or came by unimpeachable info that Warren wouldn’t be appointed, and decided that almost any other activity would be more rewarding. Does this seem plausible? We’ll certainly find out about Warren.

    On a cheerier note, that is the most elegant anteater in the history of the species!

  13. ecig

    Almost all I can think about is cancer sticks. I i’m sure i don’t wish to smoke and if perhaps anyone offered me a cigarette here and now, I would totally refuse. I feel I’m in a very crappy mood and have been having trouble attempting to sleep but yet I’m sure I will turn out to be strong. The e cig may make it easier in the long run.

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