On the back of the last article, here are some proposals on how to mitigate the pro-cyclical effects of compensation and leverage
A look at how leverage and compensation in the financial sector had pro-cyclical effects of amplifying the bubble and bust.
Analysis of what the terrible unemployment forecasting at the White House means for Obama. Hat tip Mark Thoma.
Great article which takes on the deep banking crisis in Europe. Concentration is on KBC in Belgium. But from Ireland, Spain and Greece to Belgium, Sweden and Latvia, there are a lot of problems, many of which are covered here. Hat tip Mark Thoma.
According to economic historian Angus Maddison, this is Britain’s worst contraction since 1931. That’s big given the war years and the recession following.
Huge increase in the savings rate in Spain due to the credit crisis. The savings rate is now 7.9% where a year ago it was 3.1%. This is something that is also happening in the US.
"Japan’s Shinsei Bank and Aozora Bank have agreed to merge to form the country’s sixth largest bank, with assets of 18tn yen ($186bn; £113bn)."
This post caught my eye since I have een talking about malinvestment in China. You have to see the pictures to believe. Wow.
"The cuts will come from the company’s Community Publishing division, which groups more than 80 local dailies, the newspaper citing a person familiar with the company’s thinking as saying."
Manslaughter for bank executives!
"Citigroup has sharply increased interest rates on up to 15m US credit card accounts just months before curbs on such rises come into effect, in a move that could fuel political anger at the treatment of consumers by bailed-out banks."
This is a French-language article in the Swiss daily Le Temps which says Credit Suisse is handing over names to the French. It is not just UBS and not just the US where Swiss banking laws are being re-written. I know the Germans are all over this as well. (No mention of Luxembourg yet, where many Germans go). Oh, and that giant sucking noise you hear is assets being pulled out of the Swiss banking system.
Daniele Antonucci, of Capital Economics, said it was too early to sound the all-clear on deflation, given that capacity utilisation is at a record low of 70pc and producer prices are falling at rate of 5.7pc. "There is a clear risk of a prolonged and damaging period of deflation. "
This is a nice little house 40 minutes from Reykjavik
Good discussion of why PPIP died an early death: capital has been raised. But what about those dodgy assets?
These are depression-like statistic. Construction was down a massive 54%
"Independent housing analyst Ivy Zelman notes that such a “double dip” in the index in the second half of 2009 could materialize because the Case-Shiller index is value-weighted, which means that repeat sales of higher priced homes figure have an outsized impact."
This sounds like a really bad idea.
Distraction of the Day: Michael Jackson’s 1984 Pepsi Commercial