Bloomberg News is continuing with the thankless task of pushing forward with FOIA requests relative to the Fed’s lending programs, and once it eventually gets its troves of documents, having to slog through them to see what they reveal.
Bloomberg has a long article up on its site about its latest findings. And the bottom line is everybody close to the process lied like crazy.
Read more...Australian economist Steve Keen minces no words during this BBC interview, calling our downturn a depression and calling for radical measures, namely large scale debt writedowns. I can’t imagine a discussion like this getting airtime on a US mainstream media outlet.
Read more...After telling readers that the Eurozone leadership looks to be suffering from “dulled reaction times…so out of line with market events that even if they were to snap our of their stupor now, it would be too late,” news reports suggest that they have finally roused themselves.
Or have they?
Read more...Things are only going from bad to worse in Europe.
Read more...This Real News Network interview with economist Bob Pollin of the Political Economy Research Institute in Amherst, Massachusetts focuses on the deficit cutting impasse in Washington and what is needed to create jobs.
Read more...The cynic in me has to note that PBS Newshour decided to cover the issue of why no banksters have gone to jail on what has to be one of their lowest traffic days of the year. And I have a sneaking suspicion I got the call to go on the show because it was not exactly easy to find people willing to be taped late in the afternoon on the day before Thanksgiving.
Read more...As our overly-long headline tells you, Wednesday was a really bad day in credit land. Not only has the reality of the severity and seeming intractability of the Eurozone mess started sinking in, but US investors seem finally to be facing up to the fact that a full blown crisis would not be contained and will engulf American banks. If you thought September-October 2008 events were nasty, they could look like a mere trial run for what may be in the offing.
The Financial Times coverage on the failure of the Bund auction is suitably grim:
Read more...In the sordid underworld of foreclosure-related reporting, certain stories have started to develop a prototypical feel. Bank Forecloses on Wrong Home. Bank Forecloses on Home with No Mortgage. Bank Refuses Even to Talk About Short Sale. Bank Sends Borrower into HAMP-Created Hall of Mirrors and Forecloses Anyhow.
The problem with stories becoming cliched is that the force of the recognition of the injustice loses some of its punch with repetition. But one type of story still seems to trigger well warranted outrage in the public: Bank Breaks Into House.
Read more...Our headline at odds with the media reports on the newest confidence-bolstering ploy by the Federal Reserve, that of new, improved stress tests for the six banks at the apex of the US financial services industry looting operation: Bank of America, Citi, Goldman, J.P. Morgan, Morgan Stanley and Wells.
There’s a noteworthy gap between the scenarios employed in the 1.0 version, which took place in early 2009, when the banks were told to get more capital or else, and the ones about to be implemented.
Read more...Yves here. Andrew Haldane is the most important thinker, bar none, on the financial services industry today. This piece by Haldane and Vasileios Madouros, a fellow member of the Financial Stability team at the Bank of England. contains a key statement that needs to be drummed into policy makers and commentators: “Bearing risk is not, by itself, a productive activity.”
By Andrew Haldane, Executive Director, Financial Stability, Bank of England and Vasileios Madouros, Economist in the Financial Stability directorate of the Bank of England. Cross posted from VoxEU
Whilst few would argue that the financial crisis has not brought the real economy down with it, there is considerably less clarity about what the positive contribution of the financial sector is during normal times. This lead commentary in the current Vox debate on the issue focuses on the value-added of risk and government subsidies in national accounting, and makes an important distinction between risk-taking and risk management.
There is no doubting the financial sector has a significant impact on the real economy. Financial crisis experience makes this only too clear. Financial recessions are both deeper and longer-lasting than normal recessions. At this stage of a normal recession, output would be about 5% above its pre-crisis level. Today, in the UK, it remains about 3.5% below. So this much is clear: Starved of the services of the financial sector, the real economy cannot recuperate quickly.
But that does not answer the question of what positive contribution finance makes in normal, non-recessionary states. This is an altogether murkier picture. Even in concept, there is little clarity about the services that banks provide to customers, much less whether statisticians are correctly measuring those services. As currently measured, however, it seems likely that the value of financial intermediation services is significantly overstated in the national accounts.
Read more...By Mitch Green, a Ph.D. student at the University of Missouri, Kansas City. Cross posted from New Economic Perspectives
The following letter reflects my view on the subject of civil disobedience…I offer my opinion as an Army veteran, student of the economy, and critic of an ongoing effort to wage economic war on the vast majority the population. If these words move you, I urge you to consider honestly the consequences if you decide to act.
As the Occupy movement continues to grow in defiance of the heavy-handed police action determined to squelch it, a natural question emerges: What point will the military be summoned to contain the cascade of popular dissent? And if our nation’s finest are brought into this struggle to stand between the vested authority of the state and the ranks of those who petition them for a redress of grievance, what may we expect the outcome to be?
Read more...Yves here. I’m putting myself in the rather peculiar position of taking exception to a guest post. One might argue as to why I’m featuring it. Das gives an articulate but nevertheless fairly conventional reading of views of market professionals about the US debt levels. For instance as you’ll see, it conflates state government deficits (which do need to be funded in now skeptical markets) with the Federal deficit. And this sort of thinking, due to fear of the Bond Gods, is driving policy right now.
In addition, he posits that depreciation of the US dollar continues apace. I’m always leery of what amount to trend projections. Complex systems often have unexpected feedback loops. There is an interesting question of whether markets have over-anticipated QE3. In addition, the dollar has fallen to the point where it is becoming attractive for manufacturers to repatriate activities. But given the loss of managerial “talent” (and here I mean people who know how to run operations, not executives) and infrastructure, there will be a marked lag before the weakened dollar produces the next leg up of domestic production.
By Satyajit Das, derivatives expert and the author of Extreme Money: The Masters of the Universe and the Cult of Risk Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – Revised Edition (2006 and 2010)
Extortionate Privilege…
Given the magnitude of the US debt problem and the lack of political will, the most likely policy is FMD – “fudging”, “monetisation” and “devaluation”.
Read more...By Warren Mosler, an investment manager and creator of the mortgage swap and the current Eurofutures swap contract and Philip Pilkington, a journalist and writer based in Dublin, Ireland
The Eurozone has certainly seen better days. The mess – to paraphrase a dodgy Irish politician – is only getting messier.
This is all avoidable, of course, and if the European authorities decided to take action and have the ECB backstop the sovereign debt of the periphery the whole crisis would come to an end. But the European authorities, for a variety of reasons, do not seem to want to do this. And even if they did there would be the issue of austerity: would they continue to force ridiculous austerity programs down the throats of the periphery governments? And if so, then for how long? Leaked documents from within the Troika show the austerity programs to be an abject failure and yet European officials continue to consider them the only game in town. So, we can only conclude at this stage that, given that European officials know that austerity programs do not work, they are pursuing them for political rather than economic reasons.
So, we contend that the periphery governments should have a credible exit strategy on hand and it is to this that we now turn.
Read more...Hubris knows no bounds. AIG’s former CEO Hank Greenberg, who was a significant shareholder of AIG stock via C.W. Starr (which was basically an executive enrichment vehicle) is suing the Treasury and Fed over its rescue of AIG. He has hired litigation heavyweight David Boies, who famously made Microsoft CEO Bill Gates squirm when he put him on the stand in the Microsoft antitrust case.
While the public might similarly enjoy the spectacle of Timothy Geithner, Hank Paulson, and Ben Bernanke through the wringer, based on the report from Gretchen Morgenson, this case reads like a stretch
Read more...The Financial Times gives prominent play to a story that I suspect will go largely unnoticed in the US, that of the way that the Switzerland’s bank regulator, the Swiss National Bank, has forced its two biggest banks, UBS and Credit Suisse, to shed risk in a serious way and shrink.
Read more...