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Submitted by Edward Harrison of the site Credit Writedowns.
During the last generation, the economics profession has veered toward a ‘science’ model of economics and finance. The intellectual underpinnings for this development began with the Efficient Market Hypothesis (EMH) and has continued in no small measure due to what is often termed ‘University of Chicago School [...]

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The drama at Bank of America continues with Ken Lewis testifying before Congress today.  Most of the events surround claims by Lewis that he was coerced into doing the Merrill deal by Hank Paulson and Ben Bernanke.   I chronicled these events when they were made public back in April.

BofA CEO confirms government coerced him into [...]

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The U.S. Labor Department came out with its latest weekly report.  The data were mixed because initial claims are pointing to recovery, but continuing claims continue to hit new records.  The long and short: the U.S. Labor market remains weak and will continue to be weak for the foreseeable future.
For the week ended June 6th, [...]

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California nears financial ”meltdown” as revs tumble
Can you say “Bankruptcy or Obama?”

Countrywide Exec Warned The Fed On Toxic Mortgages – Tom Lindmark
Apparently, the head of risk at CFC was ignored not only by senior management but by the Fed too. This is Bernanke’s Fed we’re talking about, not Greenspan’s.

St. Regis resort in Dana Point faces [...]

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Since so many economists are signing up to the second-half recovery meme (Berner, Gordon, Krugman, Bernanke), I am going to ask you whether you believe them or not.
What say ye?
(If you can’t read the above it is a poll asking you when we are likely to see recession end in the U.S.)

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I am not the only one who sees events in Latvia as a potential catalyst for further downside risk to the reflation trade.  Mary Stokes over at Nouriel Roubini’s site has a very readable post out on why we should be watching events in that tiny Baltic nation for potential signs of contagion elsewhere.  She [...]

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It seems a Q3 recovery is the new consensus of professional economists.  First, we hear Paul Krugman saying this, now Richard Berner and David Greenlaw are singing the same tune.
The deepest post-war recession likely will end by mid-to-late summer, a bit sooner than we’ve been expecting.  The improvement in financial conditions and incoming data has [...]

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We have just learned that Fiat has successfully completed its deal with Chrysler.  This means that the bankrupt ‘Old Chrysler’ will now have far fewer cash and assets available for creditors and that it will be liquidated with large or total losses likely for creditors.  Dissident creditors tried to get their case heard by the [...]

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Yesterday, I argued that allowing banks to repay TARP funds meant a continuation of overcapacity in financial services, which was a direct contributor to the credit crisis through its dampening impact on unlevered returns.  Some of the banks now free of the TARP restrictions are arguably still undercapitalised, but have been made to look better [...]

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Oil rises near $71 after large fall in U.S. crude stocks
“Oil raced toward $71 a barrel on Wednesday, after settling above $70 for the first time in seven months on a larger-than-expected fall in crude oil stocks and a forecast that falling oil demand may have bottomed.”

1.6% GDP growth forecast for second quarter | The [...]