Yearly Archives: 2011

2011: The Year For Cautious Optimism?

Edward Harrison here with my economic view for the new year. I am generally cautiously optimistic on the U.S. and global economy for 2011. Policy makers have done a pretty good job of avoiding egregious errors so far. I think that gives us enough oomph to get over the hump so the cyclical agents like inventories and cyclical hiring can do their magic. I do have lingering concerns. Let me explain both pieces of the puzzle – the cautious part and the optimistic part – in this post.

Links 1/19/11

Links are short tonight. I sometimes worry that my occasional personal disclosures read as if I am playing for reader sympathy. I still on a MLK weekend trip, and my host developed an incapacitating stomach bug that apparently has been going around. I feel like I may be succumbing to it and if so, you […]

What a “Get Tough With China” Stance Would Really Look Like

Before every get-together with China, the US goes through some ritualized complaining (the value of its currency has been the recent big talking point), the Chinese do some sabre rattling of their own, and perilous little of substance happens, except that the Chinese continue to have an economy with a substantial current account surplus, which not only works to the detriment of its major trade partners, but at this scale contributes to financial instability. So in a perverse way, China’s ongoing trade surplus is everyone’s problem.

Guest Post: Most Economists Fall Back Into Neoclassical Stupor … “If They Don’t Know Anything, Then Why Should We Listen To Them?”

Economists started to reflect in the deficiencies in neoclassical economists after the crisis hit … but now they are falling back into their old stupor.

Links 1/18/11

Genes may play role in friends we choose, says study BBC

Video: SARTRE Self-Driving Road Train Conducts First Test Motor Authority

Wage and inflation risks loom after Australia floods Reuters. Reader Skippy adds:

The response by the citizens over all has been astounding (strengthening of the commons thingy), flip side is that many of the worst effected areas were industrial (toxicity / legacy / ground zero like) plus 100 klm upstream ( west east flows ) AG / industrial pollution. This is occurrence is repeated from Rockhampton to Victoria on both sides of the great divide (east of it to the coast AG / Grazing / Great Barrier Reef and just west of the divide flowing down south to NSW and Victoria ).

The next six months will be telling, its anyone’s guess till then.

Cheers from the wet, muddy, bruised, tired but, feeling satisfied hopeful for me and my fellows gumboot brigade.

The Imagination Trade, or the Tinkerbell Market 2.0

I’ve refrained from discussing the stock market for quite some time, in part because this is not an investment website and in part because I find the netherworld of credit more interesting. But a big reason of late is that the stock market has become so utterly unhinged from fundamentals that anyone opining on it, other than momentum trades and technicians with particularly good crystal balls, is likely to look silly.

We seem to be in a toxic replay of what I called the Tinkerbell market in 2007 and 2008: if the officialdom can get enough people to applaud, the economy will live. They weren’t too successful back then, but the crisis has appeared to have upped the game of the Powers That Be in talking up the price of financial instruments. And having the Fed at ready to provide boatloads of liquidity should anything go awry appears to have put much of the world in “don’t fight the Fed” mode.

Market action is looking a tad manic, yet the dot-com mania proved that unwarranted optimism can persist far longer than cooler heads deem possible. Hedge fund leverage, for instance, is allegedly back to pre-crisis highs.

The Goldman Uncertainty Principle of Securities Regulation

I wish I had bandwidth to cover the Goldman-Facebook egg-on-its-face fiasco long form, but since other able writers are all over this story, I suspect NC readers will not find coverage wanting.

However, I could not let this remark pass without comment. From the Wall Street Journal:

Past Rulings by New York Judge Schack Reached Ibanez-Like Conclusions

Judge Arthur Schack might be the American Securitization Forum’s worst nightmare if more people started paying attention to his rulings. The Brooklyn judge has gotten a lot of media coverage for his lack of patience with “dog ate my homework” excuses from bank plaintiffs in foreclosure cases, as manifested by how often he has dismissed cases with prejudice (meaning those parties cannot return to court on the same matter).

But Schack is treated as a curiosity, a maverick. His colorful, rambling decisions reinforce that perception, which is useful from the banks’ perspective: he can be depicted as an outlier rather than as someone who has looked hard at securitization practices and does not like what he sees.

Pending Legislation in VA Would Give End Use of MERS, Give Borrowers More Foreclosure Defenses

The securitization industry may be about to reap the whirlwind of its failure to take the need for reform seriously. As we’ve indicated, industry incumbents have adopted a denialist approach to widespread evidence of serious documentation problems and procedural abuses, and have fought reasonable, pro investor proposals tooth and nail.

The Washington Post reports on several pending legislative proposals in the state of Virginia, all of which seek to level the power imbalance between the financial services industry and mortgage borrowers. The interesting thing about this pushback is that Virginia is not at all left leaning state. These measures instead appears to result from the fact that it has one of the fastest foreclosure processes in the US.

Links 1/17/11

Increased insurance claims may be due to climate change GreenBlorge (hat tip reader Sugar Hush)

Brisbane floods: before and after ABCNews (hat tip reader Skippy). The visuals are cool even though the situation most decidedly is not.

Despite efforts to improve, U.S. patent approvals move slower Milwaukee Journal Sentinel. Reader Francois T, commenting on the fact that patents are published 18 months after filed, regardless of whether they have been acted upon:

This has to be the most incredibly stupid SOP I’ve ever seen, and I’ve seen quite a few. Isn’t the USPTO supposed to protect a patent application? I wish the journalists would’ve dig deeper into this.

Trust me, patent attorneys are well aware of this fact, but yes, more profile and public pressure would be useful.

Links 1/16/11

Floods hit Australia tourism Raw Story

‘Rhino poachers’ shot dead in South Africa BBC

Toxins found in pregnant U.S. women in UCSF study (hat tip reader May S). Pretty scary.