Is Wells Fargo a Lehman in the Making?
Banking maven Chris Whalen has a must-read piece on the reckless real estate risk taking underway at Wells Fargo, the sanctimonious #4 bank.
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Dan Kervick: The Astonishing Case of the Impenetrable Zero Bound
Yves here. I rather like the storytelling format of this post.
By Dan Kervick, who does research in decision theory and analytic metaphysics. Cross posted from New Economic Perspectives
In a small, peaceful town there once lived three people: Abbie, Baker and Carlie.
Read more...Satyajit Das: The European Debt Crisis Redux
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). Jointly posted with Roubini Global Economics
The half-life of solutions to Europe’s debt problem is getting ever shorter.
Recent hopes have relied on the ostensible success of the European Central Bank’s (“ECB”) LTRO – Long Term Refinancing Operation, more appropriately termed the Lourdes Treatment and Resuscitation Option.
Read more...Frontline’s Astonishing Whitewash of the Crisis
Several of my savviest readers wrote expressing disappointment and consternation with the Frontline series on the crisis, “Money, Power, and Wall Street.” The first two parts of the four part series have been released, and it’s probably safe to say that this program is far enough along to be beyond redemption.
Read more...Pavlina Tcherneva: No, Mr. Krugman, Bernanke’s Conundrum is Completely Different
By Pavlina Tcherneva, Assistant Professor of Economics at Franklin and Marshall College, Research Scholar at The Levy Economics Institute, and Senior Research Associate at the Center for Full Employment and Price Stability. Cross posted from New Economic Perspectives
Our mainstream colleagues keep banging their heads against the wall. “Why, oh why wouldn’t Chairman Bernanke do more to rescue the economy?” Today Paul Krugman took on this question again, arguing that Chairman Bernanke should listen to Professor Bernanke who had far more sensible ideas about rescuing an economy from a deflationary environment, as seen in his research on Japan during the 90s.
Krugman revisits a 2000 paper by then professor Bernanke, which many of us have scrutinized before, titled “Japanese Monetary Policy: A Case of Self-Induced Paralysis?” Krugman faults Bernanke for not following his own advice…..
The difference is that, unlike Paul Krugman, I actually read Bernanke’s paper from start to finish.
Read more...The ECB is on Mars
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 http://www.macrobusiness.com.au/2012/04/spain-has-only-denial/“>MacroBusiness.
Overnight the president of the European Central Bank, Mario Draghi, gave a speech to the Hearing at the Committee on Economic and Monetary Affairs of the European Parliament. The speech was not particularly out of line with what Mr Draghi usually says…
Read more...Mirabile Dictu! Goldman CEO Lloyd Blankfein Makes Case for Breaking Up Big Banks
Goldman seems to be making a renewed effort at PR in the wake of the letter by derivatives staffer Greg Smith accusing the firm of caring only about profits and treating customers as stuffees (“muppets” was revealed to be the new term of art). That observation probably came as no surprise to anyone save Goldman staffers, most of whom probably thought they had conned their clients into believing otherwise, and a few like Smith who believed the party line.
The Goldman CEO, Lloyd Blankfein, had an interview today with a very friendly outlet, Bloomberg News. The chat served to remind viewers of how inward looking and self referential the financial services industry has become.
Read more...Fed Paper on Repo Exposes Inadequacy of Financial Reforms
I’m late to write on a terrific and largely unnoticed paper presented at the Federal Reserve Board’s research conference on “Central Banking: Before, During and After the Crisis” in late March (hat tip Michael C). “A Proposal for the Resolution of Systemically Important Assets and Liabilities: The Case of the Repo Market” by Viral V. Acharya and T. Sabri Öncu could be more accurately titled, “What Financial Reform Missed.”
Read more...Daniel Alpert: Earth to Paul Krugman
By Daniel Alpert, the founding Managing Partner of Westwood Capital. Cross posted from EconoMonitor
This past Sunday, Paul Krugman penned a screed in the New York Times Magazine (entitled, somewhat unflatteringly in my opinion, “Earth to Ben Bernanke”) that expanded on the content of an ongoing debate in the economics blogosphere over the contents of the mind of Federal Reserve Board Chairman Ben Bernanke.
Professor Krugman has posited for months now that Bernanke has come up short…..
Read more...Philip Pilkington: Matt Yglesias’ Plan to Seize Your Savings for the Good of the Economy
By Philip Pilkington, a writer and journalist based in Dublin, Ireland. You can follow him on Twitter at @pilkingtonphil
“Oh no! This is going to get silly!” That’s what I thought when I read the first few lines of Matthew Yglesias’ post on how, in a cashless economy central banks would be able to ‘cure’ recessions.
Read more...The Burgeoning Student Debt Problem
Even though other consumer debt-bombs have done more damage, student debt is producing significant social and economic distortions.
Read more...Andrew Haldane on the Arms Race in Banking
Regular NC readers have seen us repeatedly invoke the work of Andrew Haldane, the executive director of stability of the Bank of England. His thoughtful and original work on the risks and costs of our financial system have provided serious ammunition for reform advocates.
At the recent INET conference in Berlin, Haldane recapped some of his recent observations under the rubric of an arms race, in which efforts of individual players to improve their own position wind up leaving everyone worse off.
Read more...Stephan Ewald: What Hypocrites Are Working at the ECB?
Yves here. While hypocrisy is hardly uncommon in official circles, it is supposed to be kept well out of public view.
Read more...More Proof of Obama Mortgage Settlement Lies: Woefully Underresourced Investigation Not Fully Staffed Yet
Eric Schneiderman is finding out he sold out to the Administration for far too little.
Read more...Bill Black: The Silver Anniversary of the “Keating Five” Meeting – Citizens United’s Precursor
Yves here. One of the themes in this Bill Black post is that a senior official who understands the importance of effective regulation can have an impact in a relatively short period of time. It’s important to keep that in mind as a reminder that the obstacle to reining in banks isn’t feasibility but lack of political will.
Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Cross posted from New Economic Perspectives.
April 9, 2012 is the twenty-fifth anniversary of the most infamous savings and loan fraud, Charles Keating’s, successful use of five U.S. Senators to escape sanction for a massive violation of the law. The Senators were Alan Cranston (D. CA), Dennis DeConcini (D. AZ), John Glenn (D OH), John McCain (R. AZ), and Donald Riegle (D. MI). They became infamous as the “Keating Five.” I was one of four regulators who attended the April 9, 1987 meeting. I took the notes of the meeting, in transcript format, that were so detailed and accurate that the Senators testified that they were sure I had tape recorded the meeting. (The reality is that I owe my note taking abilities to Bill Valentine, my high school debate coach, and experience debating for the University of Michigan.)
Reviewing my (near) transcript of the April 9 offers a large number of important lessons that would have allowed us to avoid future crises.
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