"If money isn't loosened up, this sucker could go down" - George W. Bush warned in September 2008

Friday, April 23, 2010

Really great links - The power of banks - FOMC - Goldman - Unemployment - SEC

Tyler Cowen - Do big banks control our government? - "If you do wish to break or limit the power of the major banks, running a balanced budget is probably the most important step we could take. It would mean that our government no longer needs to worry so much about financing its activities. Of course such an outcome is distant these days, mostly because American voters love both high government spending and relatively low taxes."

Tim Duy's Fed Watch - The Sweet Spot - "The real question is when will the easy money end. And on that point, Fed officials last week suggested they intend to let the good times roll and remain on the sidelines.
        Bottom Line: A more aggressive policy stance might be correct for Main Street, but I suspect would upend what is currently a nice little equilibrium on Wall Street. Raising the prospect that the Fed was trying to raise the inflation target would cement fear that interest rates will move dramatically higher in the years ahead. In contrast, the current state of the economy, with steady growth combined with low inflation and high unemployment, offers considerable certainty for market participants by putting the Fed on the sidelines. And that certainty is a valuable commodity."

Greg Zuckerman - Goldman - "Q.: So do you think even if Goldman had disclosed what the S.E.C. says it should have, regarding Paulson’s role, the investors would’ve made the same decision on it?
        Zuckerman: Yeah, I don’t think many investors would have had a second thought about taking the other side of a trade of John Paulson’s back in 2006 or early 2007. He was seen as a tourist investor dabbling in real estate, and some people thought he was out of his league—even Goldman Sachs thought he was out of his league. Josh Birnbaum, a top trader at Goldman, sat across from Paulson in his office and warned him about what he was doing."

Tyler Cowen - Is current unemployment all about aggregate demand? - "I don't want to oversell the minimum wage hike + unemployment compensation extension + means-testing hypothesis here, but surely it deserves a mention as one relevant factor. Those are real factors too.
        I also see that wages, and the job market, are more flexible today than in a long time, with so much service sector employment, so much flex-time and part-time, and such a low rate of unionization. In most AD theories that implies the job market bounces back relatively quickly yet that is not what we observe."

Stephen Bainbridge - The Timing of the SEC's Goldman suit - "I agree that there's reason to be concerned about the timing of the suit, but I suspect the suit's not about helping Obama's Wall Street legislation. Instead, I suspect the WSJ got it right:
        Last Friday, the same day that the government unexpectedly announced its Goldman lawsuit, the SEC's inspector general released his exhaustive, 151-page report on the agency's failure to investigate alleged fraudster R. Allen Stanford. Mr. Stanford was indicted last June for operating a Ponzi scheme that bilked investors out of $8 billion. He has pleaded not guilty.
        Guess which of these two stories was pushed to the back pages? The SEC did its part by publishing the Stanford report so deep in its Web site that more than a few of our readers had trouble finding it. Yesterday, the SEC management's response to the report was available on the agency's homepage, yet it provided no links to the report itself.
        In its own way, the Stanford calamity is arguably worse than the SEC's Madoff bungle. In the Madoff case, passionate outsider Harry Markopolos could find no one at the SEC who took the time to understand the scam, cared enough and had enough authority to shut down the fraud. In the Stanford case, we see numerous SEC insiders over many years urging—at times begging—the enforcement staff to take action, to no avail."

1 comment:

  1. tyler cowen has no idea how finance system works.

    US has fiat regime and could stop issuing treasuries tomorrow. treausries do not "fund" anythings.

    running a balance budget means private sector would not have any way to increase its net savings, and would collapse. a terrible idea by MORON


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