Author Archives: Yves Smith

Links 10/18/12

It’s Time for a Tax to Kill High Frequency Trading

It’s frustrating to know that there’s a simple solution to a serious problem but no one seems willing to do the obvious.

Quelle Surprise! Spain Shows Bank Stress Tests Living Up to Their Bad Name, Dud Loans Rise 0.6% in One Month

Bank stress tests have become a contemporary exercise in “the emperor has no clothes”. Everyone by now (or at least everyone who pays attention) knows that the stress tests are an exercise in confidence building, with emphasis on the “con”.

Yanis Varoufakis: The Euro Crisis as a Spectacular Political Failure

Yves here. This post is the text of a speech Yanis delivered in Melbourne at the CPA annual conference, as part of a debate with Norman Lamont, the UK’s former Chancellor of the Exchequer under John Major.

The Business of Health Insurance and “Obamacare”: What Can We Expect?

By Robert Prasch, Professor of Economics at Middlebury College. Cross posted from New Economic Perspectives

Over the past couple of years there has been considerable back-and-forth over what has been accomplished by the Patient Protection and Affordable Care Act of 2010 (PPACA). While a short post cannot survey the entirety of this multifaceted law, several elementary confusions have been repeated in public discussions and should be addressed in the interest of clarification.

Link 10/17/12

Citigroup’s $900 Million Man Departs Abruptly

The mainstream media and Internet were abuzz with the Big Surprise of the day, the sudden exodus of Citigroup CEO Virkam Pandit, the most overpriced and underperforming CEO in the history of corporate America.

The Myth of Affordable Energy — Interview with Ed Dolan

In the interview Ed talks about the following:

• Why cheap energy is not vital to economic growth
• Why high oil prices aren’t necessarily a bad thing
• Why the U.S. Oil and gas boom is hurting Russia’s global influence
• Why Obama’s desire to cut oil industry tax breaks could be a great idea
• Why energy policy needs to be completely reformed
• Why Russia’s Arctic Exploration could cause the worst environmental disaster to date
• Why renewable energy investors should be very worried about the Natural gas boom
• Why the EU was flawed from the start
• Why subsidies for renewables are just plain wrong.
• Why we should give QE3 a chance
• Why abundant natural resources can bring a curse of riches

Introducing New Video Series, The Bottom Line

This is the introductory video in a series sponsored by Econ4. From their website:

Links 10/16/12

Quelle Surprise! Sorkin Tells Remarkable Whoppers to Defend His Wall Street Sources

Andrew Ross Sorkin has a remarkable piece of hogwash masquerading as a story today. His new piece, “Nowadays, Wall Street Saviors May Wish They Weren’t,” blatantly rewrites crisis history claiming that buyers of failed firms were “pressured” by the government do transactions during the crisis and the Big Bad Government got the better of them.

Iberian Pain Only Getting Worse as Spanish Population Falls, Portugal Goes All in For More Failed Austerity

Yves here. Wolf Richter’s latest post may seem a bit breathless, but my assumption is that this rhetorical choice is an effort to try to penetrate Eurocrisis fatigue. The continuing decay, the ongoing last minute patch-ups, the Punch and Judy show between Germany and anyone who dares say anything bad about its perverse creditor moralism, is feeling so stale that it’s easy to tune out.

Yet even though the headlines all seem to be of a muchness, they mask an ongoing deterioration that at some point will produce a state change.

Michael Olenick: Mortgage Industrial Complex Continues Its Push Against Rule of Law

By Michael Olenick, creator of NASTIACO, a crowd sourced foreclosure document review system (still in alpha). You can follow him on Twitter at @michael_olenick or read his blog, Seeing Through Data

The meaning of the word “chutzpah” varies by context. In criminal court, it might refer to murdering one’s parents then asking for leniency because the perpetrator is an orphan. In family court, it might be invoked when abandoning a child, then pleading the child has been alienated from the parent who left.

We now have a property court usage: perpetrating a massive, well documented fraud then complaining that court bottlenecks – which exist solely because of fraud perpetrated by bank lawyers – cause expensive delays.

Rajiv Sethi: Of Bulls and Bair

By Rajiv Sethi, Professor of Economics, Barnard College, Columbia University & External Professor, Santa Fe Institute. Cross posted from his blog

Sheila Bair’s new book, Bull by the Horns, is both a crisis narrative and a thoughtful reflection on economic institutions and policy. The crisis narrative, with its revealing first-hand accounts of high-level meetings, high-stakes negotiations, behind-the-scenes jockeying, and clashing personalities will attract the most immediate attention. But it’s the economic analysis that will constitute the more enduring contribution.

Bill Black: The Vampire Squid Morphs into Jilted Valley Girl

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Cross posted from New Economic Perspectives.

Matt Taibbi famously dubbed Goldman “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Taibbi knew his metaphor worked a deep injustice on Vampyroteuthis infernalis, a small animal that feeds on carrion and excrement (I will let the reader explore the metaphorical possibilities). Goldman Sachs’ leaders were always secretly flattered by Taibbi’s metaphor. They like being thought of as hyper-aggressive and intimidating. Saying that an investment banker’s goal is to make money is to state the obvious and causes no embarrassment.

The news flash is that Goldman Sachs has revealed her new, softer side.