Wednesday, June 22
Eurozone Brinksmanship: Ministers Walk Back Greek Rollover Commitment, Demand Austerity Measures Fir
"All the delay of the inevitable does is allow for more extend and pretend while Western financial firms strip the economy for fun and profit. And this is terribly inefficient looting; their profits from this pilferage will be small relative to the pain inflicted on the Greek populace."
Posted by Yves Smith on Naked Capitalism
Tuesday, March 30
counting
'(...) Most governments release a ton of data on economic trends but not enough on trust and other social conditions. In short, modern societies have developed vast institutions oriented around the things that are easy to count, not around the things that matter the most.'
David Brooks, NY Times here
David Brooks, NY Times here
Tuesday, January 26
The suburbanization of poverty
While the US Congress is busy preparing to battle a timid proposal to reform health insurance (not health care) and attacking one of the key public officials that prevented a new Depression, an article published last week by BoB herbert in the NY Times commenting on a new study ‘The suburbanization of poverty: trends in Metropolitan America, 2000 to 2008’ by the Brookings Institution provides a stark reminder of is going on in the real economy.
According to the study, from 2000 to 2008, the number of poor people in the U.S. grew by 5.2 million, reaching nearly 40 million. That represented an increase of 15.4% in the poor population, which was more than twice the increase in the population as a whole during that period. In 2008 alone, a startling 91.6 million people – more than 30 percent of the entire U.S. population - fell below 200 percent of the federal poverty line, which is a meager $21,834 for a family of four.
The authors point that while poverty has grown on the whole, the most recent data also makes clear that American poverty is becoming an increasingly suburban phenomenon. Little explanations are advanced on why poverty as a whole increased during that period and why suburbs are increasingly affected – the authors only mention that ‘since the late 1990’s jobs in almost every major metro area have continued to shift away from the urban core toward the metropolitan fringe, regardless of industry or whether the regional job was expanding or contracting – arguing that metro areas with higher levels of employment decentralization over this decade also exhibit a greater suburbanization of poverty’.
A few other arguments might also be useful in explaining such trends…Bush anyone?
According to the study, from 2000 to 2008, the number of poor people in the U.S. grew by 5.2 million, reaching nearly 40 million. That represented an increase of 15.4% in the poor population, which was more than twice the increase in the population as a whole during that period. In 2008 alone, a startling 91.6 million people – more than 30 percent of the entire U.S. population - fell below 200 percent of the federal poverty line, which is a meager $21,834 for a family of four.
The authors point that while poverty has grown on the whole, the most recent data also makes clear that American poverty is becoming an increasingly suburban phenomenon. Little explanations are advanced on why poverty as a whole increased during that period and why suburbs are increasingly affected – the authors only mention that ‘since the late 1990’s jobs in almost every major metro area have continued to shift away from the urban core toward the metropolitan fringe, regardless of industry or whether the regional job was expanding or contracting – arguing that metro areas with higher levels of employment decentralization over this decade also exhibit a greater suburbanization of poverty’.
A few other arguments might also be useful in explaining such trends…Bush anyone?
ex post facto
In reviewing yet another book on the financial crisis, Edward Cahncellor adds to the typical causes mentioned, the failing of academic economists for failing to warn of pending bubles. He cites an American provost that complains of having an 'entire department of economists who can provide a brilliant ex post facto explanation of what happened - and not a single one saw it coming'.
Friday, January 22
The Volcker Rule
As GS was reporting the most profitable year in its history, Obama introduced the ‘Volcker Rule’: a call for a return to a Glass-Steagall type of separation between commercial and investment banking activities. The proposal aimed at addressing some on the implicit moral hazards currently existent in the US financial system.
Bank holding companies with government-insured deposits and access to cheap financing from the Federal Reserve should not be allowed to engage in proprietary trading or co-invest and sponsor riskier alternative investment vehicles such as hedge funds or private equity types of structures;
Firms that underwrite new issues of stocks and bonds and act as broker-dealers for their institutional clients should not be allowed to trade for their own accounts;
Such proposals would probably be more effective at constraining profits and resolving moral hazard issues than actually addressing the structural problems that almost brought the entire financial system to a halt in 2008.
Bank holding companies with government-insured deposits and access to cheap financing from the Federal Reserve should not be allowed to engage in proprietary trading or co-invest and sponsor riskier alternative investment vehicles such as hedge funds or private equity types of structures;
Firms that underwrite new issues of stocks and bonds and act as broker-dealers for their institutional clients should not be allowed to trade for their own accounts;
Such proposals would probably be more effective at constraining profits and resolving moral hazard issues than actually addressing the structural problems that almost brought the entire financial system to a halt in 2008.
Thursday, January 21
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