Linking ≠ endorsement. Enjoy and share:
- We’re All Still Hostages to the Big Banks – NYTimes.com
A scathing view of the current practices of Wall Street banks and their regulators by Anat R. Admati, “a professor of finance and economics at the Stanford Graduate School of Business”:
STANFORD, Calif. — NEARLY five years after the bankruptcy of Lehman Brothers touched off a global financial crisis, we are no safer. Huge, complex and opaque banks continue to take enormous risks that endanger the economy. From Washington to Berlin, banking lobbyists have blocked essential reforms at every turn. Their efforts at obfuscation and influence-buying are no surprise. What’s shameful is how easily our leaders have caved in, and how quickly the lessons of the crisis have been forgotten.
Bankers and regulators want us to believe that the banks’ high levels of borrowing are acceptable because banks are good at managing their risks and regulators know how to measure them. The failures of both were manifest in 2008, and yet regulators have ignored the lessons.
What do you think? Are the banks still being under-regulated?
- Home builders may need to lower prices, Dutta says: Bloomberg (Video) – Milwaukee – The Business Journal
Some of this was even beginning before Ben Bernanke raised “tapering.”
Aug. 23 (Bloomberg) — Neil Dutta, head U.S. economist at Renaissance Macro Research LLC, talks about U.S. home sales data released today. Sales of newly built homes declined 13.4 percent to a 394,000 annualized pace, the weakest since October, Commerce Department reported from Washington. Dutta speaks with Erik Schatzker and Stephanie Ruhle on Bloomberg Television’s “Market Makers.” (Source: Bloomberg)
Read the source article … https://www.bizjournals.com/milwaukee/mo rning_roundup/2013/08/home-builders-may- need-to-lower.html
- Germany’s Eurozone Policy Is Completely Incoherent by Christopher T. Mahoney – Project Syndicate
Funny but, unfortunately, quite possibly true, from Christopher T. Mahoney:
4. Germany has no idea what it really wants.
I vote for #4.
We are in the middle of the German parliamentary election, and no country is coherent during an election.
The tragedy is that all of this could be easily and instantly cured with massive deficit monetization and 5% inflation evenly spread throughout the zone.
Bernanke in 2002:
“Deflation is in almost all cases a side effect of a collapse of aggregate demand–a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers. Likewise, the economic effects of a deflationary episode are similar to those of any other sharp decline in aggregate spending–namely, recession, rising unemployment, and financial stress.”
We couldn’t agree more with Ben Bernanke’s statement there.
However, Germans associate “massive deficit monetization” with near-certain hyper-inflation. The truth though is that as one may readily see by the Fed’s efforts, creating inflation really takes a truly massive dose, much larger than the Fed has been able to inject and get moving in the real economy. Of course, “deficit” refers to fiscal spending (governmental), which is not what the Fed does but rather has wanted government to do more.