“But,” adds Prof Johnson, “there’s a deeper and more disturbing similarity: elite business interests – financiers, in the case of the US – played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse.” Moreover, “the great wealth that the financial sector created and concentrated gave bankers enormous political weight.” Is America the new Russia? |
Is the US Russia? The question seems provocative, if not outrageous. Yet the person asking it is Simon Johnson, former chief economist at the International Monetary Fund and a professor at the Sloan School of Management at the Massachusetts Institute of Technology. In
an article in the May issue of the Atlantic Monthly, Prof Johnson compares the hold of the “financial oligarchy” over US policy with that of business elites in emerging countries. Do such comparisons make sense? The answer is Yes, but only up to a point. Read more at www.ft.com |
If “domestic rightwing* terrorists” are “not currently planning acts of violence”, then what exactly makes them terrorists?
Who’s more ignorant: Right wingers or the goverment they’re afraid of?
Homeland Security document targets most conservatives and libertarians in the country
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The homeless have lots of signs that don’t get absorbed. Add a .com to one of them, and suddenly something happens. How else can you change the game, say, through dance protests?
Shockingly, many people inside Detroit and GM still like Rick Wagoner. I’ve noticed it as a bit of an undercurrent, but this article does a great job of explaining the Detroit v. Wall Street v. DC battle. Wagoner Didn’t Deserve It
GM’s ex-CEO is a scapegoat. The problems with the auto industry aren’t one man’s fault. Why should he pay when so many Wall Street CEOs remain?
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| In reality, Detroit is actually one of the victims of the financial mess. Terminating Wagoner with extreme prejudice makes exactly as much sense as shooting the witness to a murder and saying the crime has been avenged.
Read more at www.businessweek.com |
This isn’t a recession. It’s a depression. The Labor Department just confirmed it. Worse yet, even the statistical models for calculating unemployment are off. Freelancers and permalancers aren’t even being counted. (Fortunately, the only people I know at BLS work on inflation.) America’s Backdoor Layoffs
Underemployed freelancers and involuntary part-timers are hidden casualties of the deepening recession
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| The latest Labor Dept. job-loss figures came out Friday, Mar. 27, and they were predictably grim: Seven states now have unemployment rates of 10% or higher. And next Friday, Apr. 3, economists expect the federal government to report that another 650,000 jobs disappeared nationwide in March. But the official statistics don’t record the misery of people like Lauren Bender.
Read more at www.businessweek.com |
Oh, what I’d give to be back in B-School right about now. My MBA already feels dated, given how much we fawned over Jack Welch’s time at GE. This article goes over the troubles of his hand-picked successor, Jeffrey Immelt, as he struggles to steer GE through the depression. Of course, his old rivals for the job, James McNerney and Robert Nardelli aren’t doing that well at Chrysler and Boeing, respectively. GE’s Jeffrey Immelt: All Boxed In |
No matter what the CEO does to try to save his company, it has lost its aura of greatness
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On the day before President Barack Obama’s inauguration, Jeffrey R. Immelt tried to give General Electric (GE) investors his own brand of hope. With the world going through a fundamental reset, the GE chairman and CEO told MSNBC viewers: “We’ve got to come out of this a brand-new company.”
That vision has since gotten lost amid the day-to-day concerns that have come to haunt GE. In recent months Immelt has been buffeted by complaints over the company’s struggling GE Capital unit and by slowing growth in some of its industrial operations, leaving him with little choice but to play defense. Instead of rolling out radical new solutions to GE’s problems, Immelt has been bogged down in dealing with finance issues. Instead of announcing bold new acquisitions, he has cut the dividend to help preserve cash. Instead of selling off underperforming units to strengthen operations, Immelt has had to hold on to things he doesn’t want.
Read more at www.businessweek.com |
Goldman is returning its TARP money because the cost of doing business with it is just too high. A fascinating story with pretty massive implications for the rest of the financial services industry. It’ll make everyone else want to return their TARP money–only, nobody else can. |
If Goldman Returns Aid, Will Others?
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Goldman’s sudden urgency to return the money stems, in part, from the uproar over A.I.G.’s bonuses last week, and the criticism of Goldman over revelations that the firm had been the largest recipient of government money as a counterparty of bets placed with A.I.G. It’s also paying a hefty 5 percent interest payment to taxpayers for that money. |
For a guy who built an empire out of an insurance agency, having a AA credit rating in this economy isn’t such a bad thing. However, when you’re Warren Buffet, any signs of weakening will make headline news. Buffett Loses Sterling Credit Rating |
Fitch downgrades billionaire's Berkshire Hathaway to lowly AA because of possible stock and credit market losses. |
For decades, one of the brightest banners to fly above Warren Buffett's castle was his company's AAA credit rating, one of a handful in the United States. In his annual letter to shareholders he bragged that Berkshire Hathaway's credit was “pristine.” But the financial crisis is laying siege to even the mightiest balance sheets. Read more at www.forbes.com |
A very good episode of This American Life put the current economic crisis into very good perspective.
Basically, as the world economy heated up, the rest of the world made lots of money. Our money. They loaned a lot of it back to us in the form of US mortgage debt.
This is the 5 lb rock at the center of the snowball meteor that became the global economic crisis. This Economics Unbound blog post a great job at showing us why this international crisis needs an international solution. A Simple Guide to the Banking Crisis |
| Proposition 1: The boom in the U.S. was funded almost totally by foreign money. |
| Proposition 2: Foreign investors preferred to put their money into investments that were perceived as having low risk. |
Proposition 3: Today, after everything has gone bad, many of the counterparties on the other side of the toxic assets are foreign investors, directly or indirectly. |
| Proposition 4: It’s a lot harder for the Federal Reserve and Treasury to resolve a banking crisis where the main counterparties are not American. |
| Proposition 5: The fact that the counterparties are overseas means that out of the three options: bailout, bankruptcy, or nationalization—none are satisfactory. |
What’s the solution?
Conclusion: Sometime later this year we will have a massive global conference aimed at simultaneously resolving the banking crises in the major developed countries. The goal will be a political negotiation of the value of the toxic assets, and a clearing of the books. Read more at www.businessweek.com |
How can you tell we’re actually in a depression?
Makes me wonder, should we name these new encampments after our former president? Especially since that attempt at naming a waste treatment plant after him failed? Sacramento and Its Riverside Tent City |
A tent city is burgeoning in Sacramento, Calif., prompting local officials to consider whether such an encampment should be made permanent, with plumbing and all. |
The primitive settlement sits in the shadow of the state capitol and is home to about 300 people who have no toilets or running water, creating unsanitary conditions that advocacy groups worry could promote diseases like cholera. With the downturn in the economy and more working-class people losing their jobs and their homes, the tent city is expanding. |
Tent cities — much like the “Hoovervilles” of the Depression — have sprung up elsewhere around the country. But Sacramento, with one of the highest foreclosure rates, has one of the biggest, with a population of “easily 300,” said Rob Fong, a Sacramento city councilman, and it is “definitely growing.”
“It’s an unfortunate sign of the times,” he said. Read more at thelede.blogs.nytimes.com |
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