Yearly Archives: 2011

Links 12/15/11

Michael Olenick: NAR’s Big Miss on Home Sales Underscores Lack of Transparency and Accuracy in Mortgage/Housing Data

By Michael Olenick, founder and CEO of Legalprise, and creator of FindtheFraud, a crowd sourced foreclosure document review system (still in alpha)

The National Association of Realtors (NAR) has announced that their estimates for home sales have been materially incorrect since 2007, and that they plan to restate the number of homes sales downward. Apparently the NAR derives their homes sales information from the Multiple Listing Services, the proprietary “want-ads” real-estate agents use to list houses for sale.

Revisiting Rehypothecation: JP Morgan Markets Its Latest Doomsday Machine (or Why Repo May Blow Up the Financial System Again)

Yves here. One of our ongoing frustrations at NC is when the media and blogosphere get up in arms about what we think are secondary issues.

We’ve been loath to comment on a Thomson Reuters article that claimed that rehypothecation of assets in customer accounts was the reason MF Global customer funds went missing. The reason we’ve stayed away from this debate is that the article, despite its length, did not provide any substantiation for its claim. While it did contend that US customer accounts were set up so as to allow assets to be rehypothecated using far more permissive UK rules, and described how rehypothecation could be abused, it did not provide any proof that this was what took place at MF Global. Note that this does NOT mean we are saying that rehypothecation did not play a role, merely that the article was speculative.

The bombshell testimony of CME chief Terry Duffy yesterday, that a CME auditor heard an MF Global employee say that “Mr Corzine was aware of the loans being made from segregated [customer] accounts,” suggests that some of the money went missing via much more straightforward means, namely, taking it and hoping to be able to give it back if the firm survived.

But there is plenty of reason to be worried about rehypothecation.

“Let Them Eat Pink Slips”: CEO Pay Shot Up in 2010

One of the big differences between private companies and public ones is private ones care a lot more about preserving their franchise, which includes their staff. In the old days of Wall Street (which I do not romanticize as a golden era, but man, it looks better than what we have now) partner would take bare bones pay in bad years to keep comp level for everyone else adequate. Similarly, in the 1970s and 1980s, when a company faced headwinds, and in particular, had to cut staff, it would be seen as a sign of poor leadership to a CEO to raise his pay.

Now that a two decades of executive pay increases way in excess of economic fundamentals and stock price increases have firmly established that shareholders be damned, CEOs have become even more aggressive in playing their “heads I win, tails you lose” game with stakeholders.

JP Morgan Hit by Ripple Effects of Rakoff Decisions Nixing SEC No Admission Settlements

The wisdom of Judge Rakoff’s tough and controversial decisions taking issue with the decades-long SEC practice of entering into settlements in which companies admit to no wrongdoing is becoming apparent. This is the essence of Rakoff’s beef, as represented in his latest ruling on this topic:

Links 12/13/11

From Bad to Worse for the IMF

By Delusional Economics, who 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. Cross posted from MacroBusiness.

For some time now I have been pointing out poor economic policy implementations within the European economy and how those policies are likely to effect the real economies of European nations. As I re-stated on Monday, my major concern with the current thinking from European economic leaders is their misguided belief that implementing austerity before credit write-downs/offs is a credible policy for a highly indebted, non-export competitive nation with a non-deflatable currency.

Satyajit Das: School for Economists

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)

Nicholas Wapshott (2011) “Keynes/ Hayek: The Clash That Defined Modern Economics”; Scribe Melbourne

John Mauldin and Jonathan Tepper (2011) Endgame: The Debt Supercycle and How It Changes Everything; John Wiley, New York

To borrow from David Letterman, there might be no business like show business, but there are many businesses like economics.

Hallelujah Corporations

Some holiday black humor. I have to point out that doing a choral piece with only four voices is pretty impressive. Hat tip reader Helaine.

Links 12/13/11

CME to Customers: Drop Dead

When I worked for Sumitomo Bank, I needed to buy a pricey book that catalogued the equipment in cotton spinning mills for a client (we’d been engaged to help him acquire a manufacturer, and he was interested only in certain types of machinery).

I sent one of the guys in my department to get the expense approved by the General Affairs department (no approval, no reimbursement). For convenience, we’ll call the person I sent A and the General Affairs fellow Mr. Noh.

Matt Stoller: Why Does the Dallas Fed President Want to Destroy West Coast Port Unions?

By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller. Cross posted from New Deal 2.0

The FOMC is far more secretive than most government agencies, and after reading the transcripts of its meetings, it’s not hard to see why.

Philip Pilkington: A Scribbler’s Response to Marc Lavoie on MMT

By Philip Pilkington, a journalist and writer living in Dublin, Ireland

Recently the eminent monetary economist Marc Lavoie published a paper engaging with Modern Monetary Theory (MMT). The paper was interesting for a number of reasons, not least the discussion of the European banking system; speculation about which in the media has generated much mythology in the past few months.

Lavoie is largely supportive of MMT and sees it as being essentially correct. However, he also finds that it has much ‘excess baggage’ that he thinks it needs to do away with.