Edward here. The overall gist of Jim Chanos’ comments on Bloomberg the other day were that China has off-balance sheet contingent liabilities due to its implicit commitment to state-owned enterprises which are knee-deep in land and property speculation. This speculative excess will lead to credit writedowns. Chanos repeated his contention from CNBC last week that […]
Read more...Readers gave high marks to Andrew Dittmer’s summary of a dense but very important paper by Claudio Borio and Piti Disyatat of the BIS and asked if he could produce more of the same.
While Andrew, a recent PhD in mathematics, has assigned himself some truly unpleasant tasks, like reading every bank lobbying document he could get his hands on to see what their defenses of their privileged role amounted to, he has yet to produce any output from these endeavors that are ready for public consumption.
However, I thought readers might enjoy one of Andrew’s older works.
Read more...I don’t mean to sound as if I am hectoring Shahien Nasiripour, since he has doggedly and successfully broken quite a few banking stories when he was at Huffington Post, which lead the Financial Times to snatch him up. That’s tremendous validation for a young reporter.
However, the conventions of reporting (and it may reflect FT style preferences) are having two unfortunate side effects on his latest article about the so-called 50 state attorney general settlement.
Read more...By L. Randall Wray, a Professor of Economics at the University of Missouri-Kansas City and Senior Scholar at the Levy Economics Institute of Bard College. Cross posted from EconoMonitor
Sorry, this is a day late (but hopefully not a dollar short).
Back in fall of 2008 I wrote a piece examining what was then the biggest bubble in human history: http://www.levyinstitute.org/pubs/ppb_96.pdf.
Say what? You thought that was tulip bulb mania? Or, maybe the NASDAQ hi-tech hysteria?
No, folks, those were child’s play. From 2004 to 2008 we experienced the biggest commodities bubble the world had ever seen. If you looked to the top 25 traded commodities, you found prices had doubled over the period. For the top 8, the price inflation was much more spectacular.
Read more...Mr. Market so far is not at all impressed with the announcement today that the Fed will be changing the composition of its portfolio by selling $400 billion of near-dated Treasuries and buying the same amount of longer maturity Treasuries. Since the Fed will maintain the same Fed funds target rate, the Fed’s intent is to keep short term rates low and also reduce longer term rates.
The fallacy with the Fed approach, as our Marshall Auerback has pointed out repeatedly, is that targeting a quantity means the central bank has no idea what result it will achieve.
Read more...Yves here. This is a subject near and dear to my heart. There is one bit that Black is missing, however. McKinsey advised the Treasury on the stress tests. They discussed it openly at a presentation at an alumni meeting.
By Bill Black, an Associate Professor of Economics and Law at the University of Missouri-Kansas City. He is a white-collar criminologist, a former senior financial regulator, and the author of The Best Way to Rob a Bank is to Own One. Cross posted from New Economic Perspectives
One of the many proofs that banking regulators do not believe that financial markets are even remotely efficient is their continued use of faux stress tests to reassure markets. But why do markets need reassurance? If markets do need reassurance that banks can survive stressful conditions, why are they reassured by government-designed stress tests designed to be non-stressful?
Read more...We continue to follow the Scott Brown reelection fight because the presumed Elizabeth Warren v Brown matchup will probably be the most closely watched Senate race in 2012.
Public Policy Polling released the results of its latest survey, which show that the press surrounding the Warren campaign launch has led to a big change in the results:
Read more...By Richard Smith
The little story NC carried a couple of months ago about New Zealand scam companies has come out from behind the paywall, courtesy of the NZ Herald (hat tip: John G.). We hinted at the time that the problem’s large and nasty, and the NZ Government admits this in a cabinet paper:
Read more...Everyone knew that Obama doesn’t care about unemployment … now we know why.
Read more...Admittedly, my RSS reader is hardly a definitive check, but it does cover a pretty large number of financial and economics websites, including those of academics. And from what I can tell, an extremely important paper by Claudio Borio and Piti Disyatat of the BIS, “Global imbalances and the financial crisis: Link or no link?” has been relegated to the netherworld. The Economist’s blog (not the magazine) mentioned it in passing, and a VoxEU post on the article then led the WSJ economics blog to take notice. But from the major economics publications and blogs, silence.
Why would that be? One might surmise that this is a case of censorship.
Read more...The Wall Street Journal has a sobering but much needed piece on the recession-induced rise in suicides in Greece and the rest of the Eurozone.
Read more...By June Carbone, Edward A. Smith/Missouri Chair of the Constitution Law and Society University of Missouri-Kansas City. Cross posted from New Economic Perspectives
The New York Times told two separate stories earlier this week, with no apparent recognition that they might be related. On September 12, David Brooks published a column decrying the moral “relativism and nonjudgmentalism” of the young. On September 13, a front page story announced that “Soaring Poverty Casts Spotlight on ‘Lost Decade,’” explaining how the economic decline of the bottom half of the population over the past decade has grown worse during the financial crisis.
What do the two stories have to do with each other?
Read more...
