High prices are driving more motorists to rent tires. 'Chains such as Rent-a-Wheel and Rimco are seeing business boom. Many consumers pay double or triple the cost of buying and face aggressive repossession policies.' 'Customers pay huge premiums for their tires, sometimes four times above retail. Those who miss payments may find their car on cinder blocks, stripped of their tires by dealers who aggressively repossess. Tire rental contracts are so ironclad that even a bankruptcy filing can't make them go away.' [LA Times link; use privacy setting in browser]. [more inside]
Wall Street begins playing again with the same matches that burned the economy in 2008 From the New York Times: "The banks that created risky amalgams of mortgages and loans during the boom — the kind that went so wrong during the bust — are busily reviving the same types of investments that many thought were gone for good. Once more, arcane-sounding financial products like collateralized debt obligations are being minted on Wall Street. " (View article on a single page) [more inside]
"We decided to go on an adventure through the financial statements of one bank [Wells Fargo], to explore exactly what they do and do not show, and to gauge whether it is possible to make informed judgments about the risks the bank may be carrying. We chose a bank that is thought to be a conservative financial institution, and an exemplar of what a large modern bank should be."
Huge crowds gathered yesterday on the streets of Barcelona to demand autonomy for Catalonia. Police estimated that 1.5 million people protested. [more inside]
Will we be all right in the end? David Runciman on democracy, fatalism, and the European crisis (LRB)
What caused the financial crisis? The Big Lie goes viral. Barry Ritholz writes in the Washington Post about the story (the "Big Lie") that it wasn't irresponsibility on the part of the banks that caused the crash--it was really misguided government policies! [more inside]
Political revolution, the Tea Party, and Occupy Wall Street notwithstanding, what actual policy steps could be taken to prevent the U.S. from falling into a Japanese-like decade of stagnation (or worse)? Economists from the New America Foundation offer a rather balanced, clearly articulated, and comprehensive proposal: The Way Forward. [more inside]
Paul Krugman and Robin Wells have a long two-part essay in the New York Review of Books on the current economic slump. The Slump Goes On: Why? And The Way Out of the Slump.
Since around June 2009 many indicators have been pointing up: GDP has been rising in all major economies, world industrial production has been rising, and US corporate profits have recovered to pre-crisis levels. Yet unemployment has hardly fallen in either the United States or Europe--which means that the plight of the unemployed, especially in America with its minimal safety net, has grown steadily worse as benefits run out and savings are exhausted. And little relief is in sight: unemployment is still rising in the hardest-hit European economies, US economic growth is clearly slowing, and many economic forecasters expect America's unemployment rate to remain high or even to rise over the course of the next year.[more inside]
The Downie/Schudson Report, as it's widely called, is cautiously optimistic that journalism will survive, but doesn't beat around the bush. It urges a number of fairly radical, controversial suggestions on how to reinvent the news media without killing "accountability journalism," that critical, dirt-digging, power-questioning but expensive journalism America is famous for.
Certain clues seem to indicate that we may be facing a second depression. But what would another Depression mean in literary terms? Would it produce a second 'Gatsby'? While circumstances might be different this time around, perhaps it's worth revisiting some of the experiences of some who lived and wrote through the first Great Depression.
U.S. Attorney General Eric Holder is signalling that marijuana policy will now be considered a matter of state jurisdiction. For obvious reasons, medical marijuana champions are celebrating the administration's committment to depart from the Bush and Clinton eras' previous policies of conducting frequent DEA Raids on medical marijuana dispensaries in California. But with recent signs of a U.S. economy in even more rapid decline than anyone anticipated, and with California being particularly hard hit, some California politicians are suggesting the time has finally arrived to end the prohibition and put full legalization of marijuana on the table, pointing to potential windfalls in the range of a billion dollars in new tax revenue annually. [more inside]
In the name of transparency, all the Fed’s stimulus-spending data will be posted at a new government site, Recovery.gov - more than a minor victory for the democracy, it could be a stimulus in and of itself - databases released in machine-readable formats - like RSS, XML, and KML—spawn new business and grease the wheels of the economy.
Peter Wallison, an economist who arguably predicted the housing crash and bailout in 1999 explains his current views on the crash: "Other players...played a part" but "...government policy over many years--particularly the use of the Community Reinvestment Act and Fannie Mae and Freddie Mac to distort the housing credit system-- underlies the current crisis."
TARP, SSFIP, EESA, CPP, TALF, MMIFF... Are you feeling overwhelmed by all the new acronyms coming out of the US Treasury Department lately? Here's a handy PDF reference guide to untangling the US government efforts to rescue banks, financial corporations, and other companies.
Letter from Iceland. There you see the Iceland of today – the victim of an economic 9/11 and one of the very few places in the world where the words “financial meltdown” can be used without fear of exaggeration. [more inside]