Yves here. We ran an earlier post by Ashoda Mody, he argued that Eurozone was failing in resolving its recurring crises successfully. That is a coded way of saying that the odds of breakup are rising. Needless to say, that view elicited a lot of commentary from his readers. Mody addresses their reactions and objection below.
Read more...In the aftermath of the Great Recession, we all wax “desperate with imagination”, looking for explanation. For solution. For retribution!
The financial system is rotten. Our banking regulators and supervisors failed us in the run-up to the crisis, they failed us in the response to the crisis, and they are failing us in the reform that we expected in the aftermath of the crisis.
Read more...The protracted legal saga between Argentina and NML Capital, Paul Singer’s hedge fund, owner of a fraction of Argentina’s non-restructured, pre-2001’s default debt, went through a decisive moment last week, when the Supreme Court of the United States declined to hear Argentina’s appeal. With the “stay” order lifted after the Supremes Court’s decision, Argentina faced a huge conundrum that needs solving before June 30th, when an interest payment on its restructured debt is due.
Read more...Ann Pettifor has penned an effective rebuttal of the Chicago Plan, which has been taken up in the UK as “Positive Money”. Its advocates call for private banks to have their ability to create money taken from them, and put in the hands of a committee, independent of the state, that would decide on the level of money creation. Banks would be restricted to lending money that they already have on deposit.
Pettifor explains how the enthusiasm for the Chicago Plan rests on a fundamental misunderstanding of the nature of money and confusion about its relationship to credit. While readers may not like the notion that credit, and therefore money creation, is best left in the hands of banks, the problem is much like the one that Churchill articulated about democracy: it looks like the worst possible system until you consider the alternatives.
Read more...The Financial Times has an article on how corporate bond dealers are going to create a new trading hub to try to preserve their market position while “boosting liquidity” in the market. Narrowly speaking, there’s nothing wrong with the piece as a description of investor unhappiness and planned bank responses. But it curiously missed how Fed policy has helped generate conditions that are reducing corporate bond market liquidity.
Read more...Contrary to conventional wisdom in economics, a bigger role for finance, also known as “financial deepening,” has gone well beyond the point of maximum return. It is promoting more crises rather than more growth.
Read more...Rob Johnson, political insider and executive director of INET, discusses the role of Big Finance in state and local budget woes.
Read more...Repeated foreclosure attempts against an on-time borrower reveal why servicing remains hopelessly broken. That also means government guaranteed mortgages are here to stay.
Read more...Now that homes are coming on the market in large numbers, buyers, faced with sky-high prices and higher mortgage rates, went on strike.
Read more...Anat Admati, deemed by Time as one of the 100 most influential people in the US, debunks the idea that the too-big-to-fail problem has been fixed. And she takes some swipes at Timothy Geithner.
Read more...In demanding tougher regulations, SEC commissioner Kara Stein is taking the unheard-of step of crossing swords with Mary Jo White, a chairman from the same party.
Read more...How the Vietnam War helped usher in neoliberalism, financialization of the economy, and the use of military spending as stealth stimulus.
Read more...I’m getting a bad case of déjà vu from reading the Financial Times over the last week.
Read more...Student loans are a millstone that is crushing college educated young adults, and with them, key parts of the economy.
Read more...Leverage-on-leverage vehicles were the big driver of the global financial crisis. Some investors are going back to their overly-risky ways.
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