After Europe emerged from the worst war in human history, its cities lay in ruins. Its economy was in tatters. It was in this environment that an Iron Curtain fell over Europe dividing it into east and west, separating Europeans from each other for four decades. Now, another twenty years later, we risk another great divide in Europe, the Ukrainian Prime Minister Yuliya Tymoshenko has warned.

Marshall Auerback here. I have a few words about the Term Asset-Backed Securities Loan Facility – otherwise known as the TALF. Economist Paul Kasriel of Northern Trust confirms my interpretation, namely that we get stuffed holding these assets (See my views on this here and Ed’s here). Kasriel is one of few economists that was bearish [...]

The details on Obama’ new mortgage relief plan are out. The key parts are the following:

Treasury Loan-Modification Guidelines – Real Time Economics
The unfortunate uselessness of most ’state of the art’ academic monetary economics – Willem Buiter
New York Tenants Could Benefit From Foreclosure – NY Times
Property: What You Get for… $375,000 A one-bedroom one-bath house in Mission Hill or A four-bedroom house with one full and two half baths in Minnesota [...]

About a week ago I reported on an Austrian story that the EU was gearing up for a bailout of any eurozone members which found themselves in difficulty (see my post, “EU planning 200 billion euro package for Eastern Europe“. This report is now being confirmed by multiple sources including Joaquin Almunia, the economics commissioner of the European Union.

The widely followed ADP Employer Services jobs report shows that 697,000 jobs were lost last month, suggesting a very large unemployment number when the government data is released on Friday. I have indicated in the past that seasonal factors have artificially kept down jobless claims and I anticipate large surprises to the upside as these seasonal factors become apparent.

Below is an interview with an expert on the issue of mortgage cramdowns. Basically, this issue is all about debt forgiveness for borrowers and writedowns for lenders. Lenders do not like cramdowns for that reason. See below for a view on cramdowns from Paul Van Valkenburg of the Mortgage Industry Advisory Corp.

Warning: you should expect him to have a negative bias given who he works for. I actually like cramdowns. Van Valkenburg is looking at this from an investor’s perspective and wants senior creditors not to be negatively impacted by the coming cramdown legislation. Nevertheless, I am posting this video because it is informative as to the impacts on mortgage-backed securities, mortgage servicing and housing.

U.S. SEC charges Sunwest Management with fraud – Reuters
FT.com – Ukraine risks unrest as ills worsen
China built enormous stake in US equities just before crash – Telegraph
Moody’s: US Credit Card Debt Indicators Continue to Weaken – Research Recap
FT.com, James Baker – How Washington can prevent ‘zombie banks’
FT.com, Wolfgang Munchau – Global policy shortcomings will cost [...]

Bezos talks to Charlie Rose about internet retailing, the new Kindle 2, and more.

The following is a translation of an article by Dr. Artur P. Schmidt, a well-known economist and economic journalist in Switzerland. Schmidt is also a keynote-speaker, who speaks regularly about new media, technology, future trends and knowledge creation.

Recently, he warned that Switzerland faces potential bankruptcy if it does not act to stem losses by its banks and in Swiss Francs in Eastern Europe.

Now he turns to the United States. While I do not agree with everything he writes (I see Glass-Steagall as less important than lack of regulatory oversight), the general tone and overall analysis is spot on regarding interest rates, bailouts and savings. He also has some interesting words to say about how the inflationary policy in Washington is making other nations pay for debts incurred in America.

I should warn you that this analysis at the end of this missive is ‘leftist’ in tone — quite a bit more than what you have seen me write. However, given the huge disparity in income that has built up over the last 35 years in the United States, Schmidt’s analysis does have merit. For my take on similar issues of wealth distribution, see my post, “A populist interpretation of the latest Boom-Bust cycle.”