When the United States closed the gold window in 1971, the world entered a new era in which nearly all money was supported by nothing more than the full faith and credit of the governments issuing it.  If one looks back to the history of paper money, no government has had the discipline to maintain [...]

The Wall Street Journal is running a front-page story about John Thain today in which he  accuses Bank of America CEO Ken Lewis of lying about events surrounding the Bank of America – Merrill transaction and the ouster of Thain as a top Bank of America executive.  Thain spent most of his career at Goldman [...]

On Friday, the German daily Süddeutsche Zeitung (SZ) leaked a bombshell – a confidential report by Bafin, the Federal Financial Supervisory Authority, found that German banks were sitting on over 800 billion euros in toxic assets. Just three months ago, the reports coming out suggested the problem was only half as large, 400 billion euros.

We are starting to get a sense of who the winners and losers of the Great Unraveling are. Spain is definitely a loser.
Just think, a few years ago Spain was the envy of Western Europe with a dynamic and booming property market and prodigious GDP growth. The country was THE holiday-maker’s paradise, with many buying [...]

I don’t much like Ken Lewis. It should be fairly obvious to everyone that he is a man who has only his own interests at heart. But, his revelation that BofA bought Merrill Lynch for the agreed-upon September price, despite Merrill’s having an additional $7 billion in losses is grounds for legal action.
Let’s review the [...]

Optimism and the world economy | A glimmer of hope? | The Economist
Apparently the Economist thinks this is a Fake Recovery too. “Optimism is one thing, but hubris that the world economy is returning to normal could hinder recovery and block policies to protect against a further plunge into the depths.”

naked capitalism: On Pelosi’s Duplicity [...]

Marshall Auerback here. Yesterday, Ed made a big to-do about China’s increase in gold reserves. I am going to take a different view here.

CLSA is saying that the increase is from purification and miscellaneous transactions since all the way back to 2003 so that it was not a recent open market purchases but accumulation of 6 years of this process. If this is the situation, then this news really is not as significant as people think.

Markets Cheer Stress Test Double Speak – Yves Smith
I think the title speaks for itself.

Auctions for Troubled Property Loans Jump to the Web – NY Times
Perhaps this additional channel for the loans will help clear the underlying housing inventory.  Interesting development in any event.  Not for the faint of heart.

Funds try to spot the great [...]

George H. W. Bush’s National Security Advisor talks with Charlie Rose and Carlos Pascual, Brookings Institute vice president and director of Foreign Policy. They opine on “the Obama Doctrine” as Barack Obama nears his 100-day mark in office.

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It looks pretty clear that the U.S. regulators are going to clean house this year — at least with small banks.  Hundreds of small banks and credit union will go into receivership in 2009.  However, big banks are getting a free ride. First there was the juxtaposition of the kid gloves treatment of too big [...]