Yves here. As much as the post below is a very useful recap of data in terms of the impact of QE, I need to hector “Unconventional Economist” for being pretty conventional. His headline question, whether intentionally or not, reinforces the notion that it was reasonable to think that QE, or super low rates generally (as in ZIRP) would lead to increase lending….
Read more...The lead investigator in the Federal prosecution against JP Morgan has said he doesn’t think it makes sense for banks to have made bad loans.
Read more...I’m sure some readers will protest that comparing Jamie Dimon to Lance Armstrong is unfair. After all, Dimon is better looking than Armstrong. But this post will demonstrate that the big reason that Armstong’s reputation has crashed while Dimon’s remains largely intact is first, that bank CEOs have a powerful and largely compliant messaging apparatus in the financial media and second, that we hold sports stars to much higher standards than titans of finance and commerce.
Read more...I was glad to get the chance to discuss the misnamed JP Morgan settlement on Democracy Now yesterday. It’s misnamed because it’s not a single settlement, but a series of settlements, mainly if not entirely FHFA and state actions, bundled together, plus fines. Plus as you will see soon that’s far from the only way it’s been misreported!
Read more...I thought readers would have fun taking apart a reply by the Thomas Curry, the Comptroller of the Currency, to some written questions posed by Elizabeth Warren after a July 11 Senate Banking Committee hearing on systemic risk.
Read more...Don’t get too excited.
Read more...Nothing like having a credulous, leak-dependent media to carry your messages.
Read more...Just because a taboo has been broken does not necessarily mean that more radical action is in the offing. But the flip side is that, while we’ve been busy following debt ceiling and budget hijinx in the US, there are some surprising developments on the other side of the pond. One is that, as anti-Euro candidate Marine Le Pen is leading in polls in France, respected members of its ruling bureaucracy are deeming the Euro as a failed experiment and presenting detailed plans as to how an breakup could be executed.
Mind you, the Eurozone has been limping from crisis to crisis for so long that it’s hard to take new signs of trouble seriously.
Read more...Yves here. This Real News Network interview with Yilmaz Akyüz, chief economist at the South Centre and former director and chief economist at UNCTAD, focuses on the conundrum of the Fed’s need to exit from QE from an international perspective, and layers in the further complication that China is not going to keep up its investment spending at the same level. Akyüz argues that “….we have problems at the end of the crisis which are as big as the ones during the crisis, and these problems are largely due to mismanagement of the crisis, particularly in the U.S. and Europe.”
But I’m not sure it’s as simple as mismanagement.
Read more...You cannot make this stuff up.
Obama gave his usual adult talking to the children, meaning American citizens, type of speech to mark the cease-fire in the budget battle so that the two sides can work out a peace accord. These speeches are unpleasant to read because the blarney is so thick it could be packaged and sold as an industrial lubricant. But underneath the greasy veneer is the message that the Important People in the Beltway, meaning Obama, Democrats, and “responsible Republicans” in Congress must dedicate themselves to the pursuit of prosperity…of the 1%.
Read more...If you make a quick scan of the headlines, which is the way a lot of people interact with the news, you’d see numerous reports stressing that Senate leaders had made “progress” in the “let’s try not to crash into the debt ceiling” talks and were hopeful of getting a deal done. Stock markets took cheer from these reports.
Read more...Yves here. I have to confess that I love this title. It serves as a reminder that the meme that lenders in the crisis were somehow victimized by borrowers is a lame defense of rank incompetence or worse. The basic rule of lending is that all you have is downside from a credit perspective. The borrower is never going to perform better than the terms of the agreement, and he may well do worse. Any competent lender knows that borrowers can be overly optimistic, naive, unlucky, or downright crooked. Lenders therefore need to take prudent measures to protect themselves from these well-known borrower foibles, the most important being not lending to obvious bad risks, and adding enough margin to your cost of borrowing to cover debtor bad luck and your own miscalculation. So to have a huge explosion of borrower defaults, including a meaningful swathe of subprime borrowers defaulting in the first 90 days, is proof not of massive borrower chicanery, but massive lender incompetence or corruption (as in presuming they could dump the dodgy loan on the next fool in the securitization pipeline).
Read more...A lot of readers, when we’ve discussed the budget/shutdown/debt ceiling negotiations, have done the equivalent of declaring it all to be kabuki, that the fix is in.
While I have no doubt that any resolution of this impasse is certain to make matters worse for what is left of the endangered species known as the American middle class, what is going on in DC is not a pretty scripted stagefight.
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In the hostage negotiations otherwise known as the budget deal, the movement on Thursday, that of the Republicans meeting with Obama and offering the idea of a limited extension of the debt ceiling with some thin conditions attached, is indeed progress. But don’t confuse progress with much progress.
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The two sides in the budget staredown have finally agreed to talk.
Read more...