Your humble blogger is a beached whale as a result of the steady march of police state practices on the Internet. And to calibrate how heinous the underlying situation is, Lambert, who has 20 years of experience as a computer professional, calls my current mess the technology equivalent of being shoved into a minefield without any signs. And as you’ll see below, I’ve already stepped on one mine.
Read more...Yves here. The American higher education system has been sucking more and more of the economic life out of the children that supposedly represent our best and brightest, the ones with intelligence and self-disipline to do well enough to be accepted at college.
But even though the press has given some attention to how young adults, and sometimes their hapless parent/grandparent co-signers, can wind up carrying huge millstones of debt, there’s been comparatively less focus on the for-profit segment of the market. While their students constitute only 13% of the total college population, they account for 31% of student loans. Why such a disproportionately high debt load? As this post explains, the for-profit colleges are master predators, seeking out vulnerable targets like single mothers who will do what they think it takes to set themselves up to land a middle class job. This is the new American lower-class version of P.T. Barnum’s “a sucker is born every minute.” These social aspirants are easy to exploit because they haven’t gotten the memo that the American Dream is dead.
Read more...With the recent Global Crisis, the interest in systemic risk and the interconnection between financial institutions has increased. This column investigates the case of European financial firms, where several factors can jeopardise a firm’s financial health. Using data since 2000 to evaluate the firms’ systemic risk, the authors find that for certain countries, the cost to rescue the riskiest domestic banks is too high. They might be considered too big to be saved.
Read more...Yves here. A new ruling by the European Union Court of Justice is tantamount to shutting the gate door after the horses are in the next county. Nevertheless, it’s a striking if not well publicized indictment of US casualness about lobbing charges against countries on its enemies list.
Read more...A new article in Bloomberg gives a well-researched overview of a mess-in-the-making that regulators are choosing to ignore: the leveraged loan market. For newbies, “leveraged loans” means “risky loans to big companies”. For the most part, they fund private equity buyouts and restructurings. The juicy fees on these financings, 1% to 5% of the amount raised, versus an average of 1.3% for junk bonds, is a big reason why none of the incumbents is particularly eager to change a market that is working just fine for them in its current, creaky form.
Read more...We’re expecting to have some more thoughtful commentary in the next day or so from some close observers of the Scottish independence vote. On the surface, the results look more decisive than expected earlier. The margin of victory, at 55% against and 45% for, was wider than the forecast 54%/46% split. And the English press looks to be rubbing it in, with most UK media outlets showing celebratory images of the victors.
But keep a few things in mind….
Read more...Yves here. It is gratifying to see economists take up the question of when laws work, and perhaps even more important, how to make laws work even when they conflict with social norms. In typical economists’ fashion, they contend that as far as businesses work, fines work but more rules don’t. On further examination, that conclusion may not be well founded.
Read more...As Wolf points out, despite stock touts’ talk of “escape velocity” and other confidence-fairy boosterism, the Fed has been quietly making more and more negative assessments of the economic outlook.
Read more...Yves here. Even though the cease fire and the self-rule/amnesty deal for the eastern part of Ukraine might be the beginning of the end of that proxy war, the US is far from giving up its efforts to weaken Russia. John Helmer describes how the US is deploying one economic weapon, that of targeting Russia’s titanium exports.
Read more...I received a message last week from a savvy reader, a former McKinsey partner who has also done among other things significant pro-bono work with housing not-for-profits (as in he has more interest and experience in social justice issues than most people with his background). His query:
Read more...We both know that financialization has, among so many other things, turned large swaths of the capital markets into a casino
Here’s my thought/question: is there a house?
The common wisdom is that the ‘house wins’ in casinos.
So, who or what was really the ‘house’?
Yves here. Bill Black shellacks a New York Times article that gives a big dose of unadulterated neoliberal propaganda supporting austerity. To give you a sense of the intellectual integrity of this piece, it including citing a Peterson Institute staffer without cluing readers in to the fact that the Institute has what is left of the middle class in its crosshairs.
Black stresses that one of the major lies behind the continuing for more, better hairshirts for long-suffereing Europeans is that the explosion in debt levels in Europe was the result of overly-generous social safety nets. In fact, as in the US, the tremendous rise in government debt levels was the direct result of the crisis. Tax revenues collapsed due to GDP whackage (and the costs continue as GDP is well below potential). And any economist worth their salt will also say that social safety nets ameliorated the severity of the damage, that those automatic stabilizers increased government spending when it was needed most, at the depth of the implosion, and prevented a spiral into a much deeper downturn.
Read more...Some older readers might recall that during 2010-2013 politicians and the media manifested great anxiety over the unmanageable level of the deficit and a disastrously high public debt. So how has that movie ended?
Read more...
