Several recent developments reveal how political and institutional fragmentation in the United States has produced self-inflicted wounds for the U.S. abroad. In all of these instances, America’s ability to exercise economic power in the world has been deliberately curtailed through decisions made unilaterally in Washington by American political leaders.
The $9 Billion Witness: Meet JPMorgan Chase's Worst Nightmare. "Meet the woman JPMorgan Chase paid one of the largest fines in American history to keep from talking." [more inside]
Advice on how to survive late capitalism: "Your life is sold to serve an economy that does not serve your life. You don’t seem to be entertained, Bank-robbin’; your white-hot rage festers. It probably doesn’t help that you live in Brooklyn—this place where in the last ten years rent has spiked 77 percent while real median income has dropped, where the rich (the top 10 percent of earners who, as is well known, control 80 percent of the wealth) and their children live right on top of some of the worst poverty known to this country, while 20 percent of Brooklynites survive somehow below the poverty level, such that the widening income and wealth gap becomes achingly visible here. I could advise you to leave Brooklyn. But I don’t want you to leave Brooklyn."
There is much talk today of a financial and economic crisis comparable to the 1930s. With the threat of a currency war and the euro’s collapse looming, the specter of the Great Depression’s bloody aftermath has returned with a vengeance. Several versions of how to make human beings and build society co-existed during the Cold War, when much of the world won independence from colonial empire. Yet, discussion of humanity’s growing interdependence is today limited to a one-world capitalism driven by finance. What have anthropologists to say about that? It would seem very little. But a positive case can be made for the discipline’s contribution to public debate. We make such a case here. We review recent developments in the anthropology of money and finance, listing its achievements, shortcomings and prospects, while referring back to the discipline’s founders a century ago. Economic anthropologists have tended to restrict themselves to niche fields and marginal debates since the 1960s. We hope to reverse this trend by focusing on money’s role in shaping global society and bringing world history into a more active dialogue with ethnography.Money and finance: For an anthropology of globalization by Keith Hart and Horacio Ortiz
The last mystery of the financial crisis. It's long been suspected that ratings agencies like Moody's and Standard & Poor's helped trigger the meltdown. A new trove of embarrassing documents shows how they did it. by Matt Taibbi in Rolling Stone.
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]
"Trusting your child with someone else is one of the hardest things that a parent has to do — and in the United States, it’s harder still, because American day care is a mess. About 8.2 million kids—about 40 percent of children under five — spend at least part of their week in the care of somebody other than a parent. Most of them are in centers, although a sizable minority attend home day cares.... In other countries, such services are subsidized and well-regulated. In the United States, despite the fact that work and family life has changed profoundly in recent decades, we lack anything resembling an actual child care system. Excellent day cares are available, of course, if you have the money to pay for them and the luck to secure a spot. But the overall quality is wildly uneven and barely monitored, and at the lower end, it’s Dickensian."
"Of the top 100 Swiss companies, 49 give shareholders a consulting vote on the pay of executives. A few other countries, including the United States and Germany, have introduced advisory "say on pay" votes in response to the anger over inequality and corporate excess that drove the Occupy Wall Street movement. Britain is also planning to implement rules in late 2013 that will give shareholders a binding vote on pay and "exit payments" at least every three years. Minder's initiative goes further, forcing all listed companies to have binding votes on compensation for company managers and directors, and ban golden handshakes and parachutes. It would also ban bonus payments to managers if their companies are taken over, and impose severe penalties — including possible jail sentences and fines — for breaches of these new rules."
Secret and Lies of the Bailout. "The federal rescue of Wall Street didn’t fix the economy – it created a permanent bailout state based on a Ponzi-like confidence scheme. And the worst may be yet to come." [Via]
Garth Turner, the former politician and now cranky (but funny and more or less accurate) blogger opines on real estate and the economy for 2013.
Alyssa Rosenberg of Think Progress on why CBS's new show 2 Broke Girls is the closest thing we have to a 99% Movement Comedy.
BBC News asks independent trader Alessio Rastani "what would keep investors happy, make them feel more confident?" and gets a surprisingly honest answer: "Personally, it doesn't matter. See, I'm a trader. I don't really care about that kind of stuff. If I see an opportunity to make money, I go with that. So, for most traders, we don't really care that much about how they're going to fix the economy, about how they're going to fix the whole situation; our job is to make money from it. And, personally, I've been dreaming of this moment for three years. I have a confession which is I go to bed every night and dream of another recession, I dream of another moment like this." [SLYT]
"Any industry would be proud of an average annual growth rate of 34% over ten years and of a global reach from Austria to Taiwan. But the headlong expansion of exchange-traded funds (ETFs), which by May this year controlled almost $1.5 trillion of assets (not far short of the $2 trillion in hedge funds), has become a matter for concern among financial regulators. Could ETFs be the next source of financial scandal, or even of systemic risk?" Characterizing the Financial sector "like a hyperactive child" that "can never leave a good thing be", The Economist appears to be wishing for the ETFs to be better regulated because "it would be a shame if reckless expansion spoiled a good innovation".
"The plan was money. The architect was money. The designer was money and the builder was money. And if you ever wondered what money would look like if it were left to its own devices, it's Dubai."
"People have always thought of tax havens as sideshows to the main event, whereas in fact they are central to the global economy". . . Treasure Islands: Tax Havens and the Men who Stole the World [more inside]
"The World", an ambitious real estate project conceived at the height of the real estate boom, is sinking back into the sea.
There is a firestorm in Bedford, New Hampshire, because a parent wants the school board to take the book "Nickel and Dimed: Not Getting By In America" off the reading list for a high school personal finance class. [more inside]
The once shining beacon of capitalism in the Persian Gulf has lost a lot of its luster since the global financial crisis in 2008. But is it too soon to declare Dubai dead? [more inside]
Major market indices fell almost 10% this afternoon before recovering half of that value. Some blame the failing Greek economy and the related loss of confidence in the Eurozone. But a lot of attention is being paid to the role of automated trading systems. Accenture's stock, for example, dropped from $41 to one penny in two minutes and then recovered just as quickly. Will this trigger a loss of confidence in automated trading?
Today, while testifying for only the second time on Capitol Hill since the financial crisis began, [former Fed chairman] Alan Greenspan said the Fed closely monitored the subprime market [...]"I was right 70% of the time, but I was wrong 30% of the time, and there were an awful lot of mistakes in 21 years...". But Greenspan's defense of his record today rang hollow to many seasoned observers, if not downright deceitful.
Last week, economist Simon Johnson (his blog; previously on MeFi) spoke at the Roosevelt Institute about the failure to regulate the financial industry, and the doomsday cycle of our economy (via).
Standard & Poor’s changed the UK's credit outlook from stable to negative a few days ago, and warned that there is a chance the UK could lose its AAA rating. Meanwhile, Moodys, another of the big 3 rating agencies, has warned that the US might also eventually lose its AAA rating. The UK announcement caused sterling to drop by 1% and the FTSE by 2%. However, many blame the same rating agencies for their part in triggering the subprime crisis. The irony of this is not lost on the Wall Street Journal, who note that "After all, those governments are jacking up spending, in part, to bail out the financial firms who gobbled up those 'AAA' asset backed securities duly blessed by the credit ratings firms." [more inside]
In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets) says Simon Johnson, a professor of entrepreneurship at MIT’s Sloan School of Management, in the next issue of The Atlantic. He was previously Economic Counsellor and Director of the Research Department at the IMF from March 2007-August 2008. [more inside]
Matt Taibbifilter: Among other things, the GAO report noted that the entire OTS had only one insurance specialist on staff — and this despite the fact that it was the primary regulator for the world's largest insurer! This week's MeFi stories have generally failed to explain the reasoning that caused the recession, even though Jon Stewart was basically on the mark. Now, Rolling Stone's only reporter lays it all out The Big Takeover, a typical combination of zealous snark and the overlooked, damning facts needed to clear up a ridiculously complicated story.
"Iceland is no longer a country. It is a hedge fund." Also: exploding Range Rovers and the environmental impacts on elves. (Pre-vi-ous-ly.)
The Dalai Lama blames the financial crisis on a decline in spirituality. Hindus blame it on greed. Saudi Grand Mufti, Abdul Aziz al-Sheikh, blames the crisis on ignoring God's rules. Jewish scholars say we could have avoided a crisis by following Talmudic traditions. Pope Benedict sees the global financial system as "self-centred, short-sighted and lacking in concern for the destitute." Is it right to pray for the economy? (a Christian perspective). A Malaysian conference brings together Buddhists, Christians, Muslims, Hindus, Taoists, and Sikhs to discuss the 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.
The Compleat ÜberNerd: a fascinating series of blog entries detailing the nitty-gritty behind the mortgage industry by Calculated Risk's "Tanta." If you're curious about automated underwriting systems or the ins and outs of mortgage servicing or if you just enjoy some Mortgage Pig Excel art, Tanta was the blogger for you. Tanta, otherwise known as Doris Dungey, passed away on Sunday morning (NYT obit, CR obit).
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]
Another economic post. With the debt and equity markets in a comparative calm, a lot of people are asking what next? One area little examined is the idea of sovereign risk. Basically, those with the armies make to rules, and you don't want to be invested there when they change the rules,. The USA has been the power behind globalisation for over half a century, enforcing the rules of the marketplace we have grown to accept. Some are questioning whether it can maintain this position. [more inside]
Financial Regime Change? Robert Wade, professor of political economy and development at the London School of Economics, "argues that we are exiting the neoliberal paradigm that has held sway since the 1980s" and considers the "causes and repercussions of the crisis, and errors of the model that brought it to fruition." Prof. Wade was making similar predictions last year.
Sequoia Capital presentation on the bleak scenarios for the economy and how start-ups should prepare. Last week the famous (the firm funded Apple, Oracle, Cisco and Google, among others) venture capital firm Sequoia Capital held a meeting for the firm’s portfolio companies. There, partners presented their views on what went wrong with the economy, what the prospects are for a quick recovery (Hint: the presentation is called 'R.I.P. Good Times' ) and what startups can do to survive. Here are the PowerPoint slides used in their presentation. I suggest a stiff drink before viewing. VIA [more inside]
Banning short selling? Firing Chris Cox? Treasury Secretary Paulson has reportedly floated the idea of an 80s-style "Resolution Trust Corporation." Maybe we're finally turning the corner...or at least stopping the hemorrhaging.
Argentina Didn't Fall on Its Own. (Single-page, printer-friendly version here.) I don't normally read long articles on economic subjects, but this one is riveting, because it links Argentina's collapse to larger issues of how the world of money works today.
"The time has come to do our mea culpa," Hans-Joerg Rudloff, chairman of the executive committee at Barclays Capital, said at a conference of bank and brokerage executives in London a few months ago. "Argentina obviously stands as much as Enron" in showing that "things have been done and said by our industry which were realized at the time to be wrong, to be self-serving."
...It is like "a bizarre AA program in which you remove booze from the homes of people who are reducing the amount they drink and put it into the homes of people who are drinking more every day," Pettis said. "This is probably not the best way to reduce drunkenness."
Could he be right yet again? : Interview with Bob Prechter (and another one) If he is, we're all in for a world of hurt. In this three part interview, Elliott Wave International president Robert Prechter discusses his new book, “Conquer The Crash: How To Survive and Prosper in a Deflationary Depression.” During the 1980s, Bob Prechter won numerous awards for market timing as well as the United States Trading Championship, culminating in Financial News Network (now CNBC) granting him the title, "Guru of the Decade." In 1990-1991, he was elected and served as president of the nation-al Market Technicians Association in its 21st year. He has also published a seminal book on Elliott wave analysis titled, “Elliott Wave Principle – Key To Market Behavior,” three books on the major practitioners of wave analysis, and books on his own views in Prechter's Perspective and At the Crest of the Tidal Wave.
Post a great earnings quarter then cut jobs and send them to India. Nice job Bank of AMERICA
US Airways Bankrupt. It had to happen to one of the big airlines eventually, what with 9/11 and the hesitancy to fly following. But on top of everything else financially as of late... it just deepens that already sick feeling. Who's next?
"Nobel Prize-winning economist Joseph Stiglitz talks about the corporate looting spree and Bush's woeful mismanagement of the economy."
"Nobel Prize-winning economist Joseph Stiglitz talks about the corporate looting spree and Bush's woeful mismanagement of the economy." "The fiscal mismanagement of the current administration -- leading to a change in the fiscal position of the United States over the past year -- is absolutely phenomenal; going from huge surpluses to huge deficits and the deficits are probably going to be larger than people anticipated."
High Finance Run Amok [latimes free reg req] is a Kevin Phillips editorial on the "financialization" of the US economy. "As the financial sector, in short, became too important to fail, the Fed and the Treasury abandoned market economics to embrace socialization of credit risk. No other sector of the U.S. economy, save possibly defense, received such governmental assistance."
CEOs Slash Jobs, but Not Their Pay Too many cheifs and not enough indians. An article I found interesting.
Will the rich be nicer to the poor? The way the stockmarket keeps plunging the rich might be asking the rest of us how to survive.
The House has passed the bankruptcy reform bill that Clinton vetoed at the end of the last session. I'm mildly optimistic that it won't pass the Senate, given that the Democratic vote in the House was split. But should we be worried at all? At first glance, it doesn't seem like a bad idea. But so many consumer groups are against it, and it seems to benefit credit card companies while hurting individuals, so I'm inclined to think we should leave things as-is. Especially since personal bankruptcies are down and credit card issuers' profits are up. Anyone know more about this?