Matt Stoller is a fellow at the Roosevelt Institute. You can follow him at http://www.twitter.com/matthewstoller.
The big economic strategy for the next term of whoever is Presidenti is essentially, “turn those machines back on”. It’s fracking to replace cheap oil and a new real estate bubble in housing.
Read more...An important piece in the Financial Times by Manmohan Singh, a senior economist at the International Monetary Fund, describes persuasively how one of the central vehicles for reducing derivatives risk, that of having a central counterparty (CCP) and requiring dealers to trade with it rather than have a web of bi-lateral exposures, or rely on banks to act as clearers (making them too big to fail) has gone pear shaped. While the immediate reason for this outcome is the unwillingness of national banking regulators to cede powers to an international clearinghouse, Singh fingers an equally important cause: the reluctance to recognize that the underlying problem was and remains undercollateralized derivatives positions. His introduction to the mess:
Read more...By Delusional Economics, who is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.
So it’s yet another two days where the leaders of the EU get together for a dinner (this time it’s tarte, fine eggs/mushrooms, braised veal on bed of fresh spinach followed by a chocolate trio) and attempt to thrash out greater economic integration.
Read more...It’s frustrating to know that there’s a simple solution to a serious problem but no one seems willing to do the obvious.
Read more...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”.
Read more...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.
Read more...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.
Read more...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.
Read more...It’s troubling that some stinging charges against the very biggest names in private equity are getting only passing attention in the financial media.
Read more...This American Banker interview with Sheila Bair has the Republican former regulator describing how Romney isn’t up to speed on Dodd Frank. Not to worry, she also gets a dig in at Geithner too.
Read more...While deathbed conversions might earn you a spot in heaven in some religions, they don’t carry you very far here on Planet Earth.
Christine Lagrade has taken too small a step in the right direction far too late to do much good.
Read more...Via e-mail, some updates from Michael Crimmins, a bank compliance expert and member of Occupy the SEC, on the continuing failure of the media to portray the real significance of the JP Morgan London Whale losses: that it revealed glaring deficiencies in internal controls that warrant prosecution of Jamie Dimon under Sarbanes Oxley.
Read more...Starting late last week, there’s been a marked shift in the mix of headlines in the major media outlets. While it may simply be post fall equinox moodiness or a confluence of downer reports leading to a rare moment of sobriety, suddenly the big venues are concerned about the economic outlook.
Read more...A New York Times profile of Ina Drew, the former head of the JP Morgan Chief Investment Office, almost certainly produced high fives in the bank’s corporate communications office. This piece is the best sort of PR you can get: it treats the trading losses as yesterday’s news, of interest only as point of entre into the downfall of a heretofore unknown but once hugely successful and personally appealing trading manager.
Read more...During the Microsoft antitrust case, some institutional investors were keen for Microsoft to lose, and not because they were short its stock. They felt that Microsoft being in both the operating systems business and the applications business had become a negative. They believed that separating the two businesses would not only produce higher multiples over time for each as “purer” plays, but having each new business more narrowly focused would be better for growth in the long term.
We have a similar discussion taking place regarding the big banks, and the pro-breakup case is even stronger there than for the software giant.
Read more...