Although the resignation letter of Peter Doyle, who was an advisor to the IMF’s European Departments, which is running the rescue programs for Greece, Ireland, and Portugal, is more terse that Greg Smith’s resignation from Goldman via a New York Times op ed, it is no less devastating.
Read more...On Monday, the financial services industry association (aka lobbying group) SIFMA said that it would exclude mortgages in localities that had condemned mortgages from the to-be-announced market, which is an important source of liquidity for new Fannie and Freddie loans. The promoters of the program, Mortgage Resolution Partners, issued a wounded-sounding response.
So what does this all mean? The short answer is that on the surface, this looks like a clever bit of banker thuggery.
Read more...By Delusional Economics, a regular blogger at MacroBusiness and a consulting editor at the Macro Investor newsletter. He is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint
It was an all round horrible night for Spain, starting with a bond auction that went a little wrong:
Read more...While the New York Times’ DealBook section generally hews to a financial-services-industry-friendly line, presumably as a Faustian bargain for being a preferred leakee, there’s not even a weak defense for the article by the New York Times’ so called “Deal Professor” Steven Davidoff, “If Little Else, Banker’s Trial May Show Wall St. Foolishness.” It’s yet another brazen effort to diminish the seriousness of rampant fraud by arguing it was just carelessness. But to make his case, Davidoff misrepresents both the facts of the situation as well as the law. Since Davidoff’s lawyer union card is an explicit part of his brand at the Times, this story amounts to another credentialed effort to run the “nothing to see here, it’s too hard to get these guys” line that has become the Administration’s pet excuse for not going after one of its biggest sources of campaign funds.
Read more...By Philip Pilkington, a writer and journalist based in Dublin, Ireland. You can follow him on Twitter at @pilkingtonphil
During the Great Depression and the war years monetary policy in Britain had proved largely ineffective. In the meantime it was shown that government spending could cure economic depressions and return the economy to full or even super-full employment. After the war most political parties in Britain were thus interested in using fiscal policy to generate full employment rather than rely on the vagaries of monetary policy. (This, it should be said, is the polar opposite of our rather more desperate situation today).
Wily conservatives, however, recognised that such policies would mean the expansion of government – which they didn’t like at all. So they tried to resurrect monetary policy as the government’s tool of choice.
Read more...Yves here. The revelation at Alternet by Thomas Ferguson, Paul Jorgensen and Jie Chen (and discussed at NC) that information about certain large donations in the 2007-8 election cycle had disappeared from the FEC website, and the removals could not possibly be corrections, appears to have led to a miraculous restoration of said information this morning. While that’s welcome, it also appears to have been accompanied by a sleazy campaign to discredit the researchers. Not smart, since they have dated downloads to prove that their charges were accurate.
By Thomas Ferguson and Paul Jorgensen and Jie Chen. Cross posted from Alternet
Enough is enough.
Read more...By Philip Pilkington, a writer and journalist based in Dublin, Ireland. You can follow him on Twitter at @pilkingtonphil
While there are pretty stark dissimilarities between the current quantitative easing (QE) policies of many governments and the old monetarism that prevailed in the late-70s and early-80s, the reason that these both policies were ineffective is because they were based on the same flawed ideas. The key difference between the two is that where monetarism was implemented as a deflationary and contractionary policy, QE is currently being implemented as an inflationary and expansionary policy. As a result, examining the failure of monetarist policies thirty years ago provides important lessons considering QE and its offshoots.
Before looking at the similarities between these two doctrines, we will explore the actual historical trial of monetarism.
Read more...A political revelation, while not as momentous as the Libor scandal, does not reflect well on the Federal Election Commission, a post Watergate creation meant to provide transparency in political donations, or to put it more pointedly, to see who is trying to buy influence where. The short story is that a significant type of donor has disappeared from the FEC database for the 2007-8 election cycle, and the question is whether this was a huge fat-fingered error or an effort to remove information from the public view. The latter would be expressly contrary to the mandate of the FEC.
Thomas Ferguson, Paul Jorgensen, and Jie Chen present the details of this sordid mini-affair at Alternet. The background on the info that went poof:
Read more...Bill Moyers starts with the Libor scandal as a way to get Sheila Bair’s perspective on the failure to get meaningful bank reforms. It’s refreshing to see how direct she is in saying the fixes aren’t hard, the problem is lack of will. She also discusses the death of moderate Republicans, and “free for all markets”.
Read more...Real News Network presented a two part interview with Gar Alperovitz, professor of political economy at the University of Maryland, on why and where public provision of services might be preferable to private sector solutions. Alperovitz pointed out how the growth expectations for public companies are at odds with resource conservation and how their rampant short-termism stunts investment. Some economists have recently taken a systematic look at the latter problem.
Read more...We have a video double header, with both clips addressing the question of what action officials might take as a result of the escalating Libor scandal.
Read more...We’ve been mystified with the housing bull argument that things really are getting better. While real estate is always and ever local, and some markets may indeed be on the upswing, there are ample reasons to doubt the idea that an overall housing recovery is in. For instance, the recent FHFA inspector general report stated:
Read more...By Ed Harrison, the founder of Credit Writedowns. Cross posted from Alternet.
The awful experience of the Great Depression made clear to many economists and laymen alike that credit is at the heart of a functioning capitalist system. Without access to credit, many businesses die and many individuals and households run out of money and go bankrupt.
Yet in popular media accounts from the Great Depression, the focus is almost always on the stock market and the Great Crash of 1929. You hardly ever hear that it was the contraction of credit and the seizing up of credit markets that made the Great Depression so traumatic.
Read more...OMG, this is probably too fluffy to warrant posting, but I can’t resist. Can I play host sometime?
Read more...In the “great minds work alike” category, both some readers (Hugh and LaMarchaNegra) and some of my investor e-mail correspondents (Scott, Ed Harrison, Marshall Auerback) took notice of how things are looking bad on the way to worse. Despite an unemployment rate of 25% and rising social unrest, the government just increased sales taxes to 21%. Ed Harrison sent a note to his Credit Writedowns Pro customers describing how Spain’s problem isn’t its government debt levels per se, but its deficits and the way it is soon to be saddled by regional debts and bank bailout costs. And because some of the creditor nations are dead set against debt mutualization, Spain will need to find a way to deal with its banking system losses.
Read more...