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Saturday Reads Around The Internets - Hurricaine Hype

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Welcome to the weekly roundup of great articles, facts and figures. These are the weekly finds that made our eyes pop.

 

Hurricane Hype for Advertising Bucks

In the wee hours of Saturday morning, MSNBC had some knuckle head reporter position himself on the Outer Banks so it gave the illusion waves were lapping at his back. Stay Safe was said during every interview in a voice of dire concern, the reporter would be swept out to sea, live on air. With that, we bring you Get Real: Hurricane Irene Should Be Renamed Hurricane Hype:

Bernanke Jackson Hole Speech Kicks the Can Over to Obama and Congress

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bernake say whatFederal Reserve Chair Ben Bernanke gave his long awaited Jackson Hole speech this morning. Now all are reading between the lines on whether more quantitative easing will be done and picking apart every single word as if Bernanke speaks in cryptography.

 

First, here is the speech paragraph that will generate quantitative easing, or QE3 buzz:

In addition to refining our forward guidance, the Federal Reserve has a range of tools that could be used to provide additional monetary stimulus. We discussed the relative merits and costs of such tools at our August meeting. We will continue to consider those and other pertinent issues, including of course economic and financial developments, at our meeting in September, which has been scheduled for two days (the 20th and the 21st) instead of one to allow a fuller discussion. The Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate to promote a stronger economic recovery in a context of price stability.

Clearly QE3 is still on the table from this speech.

I Like Statistics and So Should You

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statistically significantFunny title for an article. Numbers, statistics, stats....those boring people with their spreadsheets, graphs, always showing you up at a party in a game of Trivial pursuit.

Facts! Who needs 'em! Uh, we do. A very obscure thing is happening in Washington D.C. All of those dusty agencies with their legions of geeks and geekettes, cranking through numbers and collecting data are under attack.

Here are some of the statistical and science programs cut....so far the BEA has not been cut, but the Census was, by -$6.2 billion. This is before the infamous super Congress was created to cut much more out of the budget.

As a result the Statistical Abstract is about to go bye-bye. People are speaking out trying to save this treasure trove of data. According to this op-ed requesting America save the statistical abstract:

The agency’s 2012 budget would eliminate the Statistical Compendia Branch, which compiles the Stat Abstract and other publications (example: the “County and City Data Book”). The cut: $2.9 million and 24 jobs. Both the book and online versions of the Stat Abstract would vanish. This is a mighty big loss for a mighty small saving.

$1.2 Trillion to Banks, You 0

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Bloomberg News has researched a bombshell story, the Federal Reserve gave $1.2 trillion in secret loans to banks during the financial crisis, from August 2007 until April 2010. This is in addition to the TARP bail outs which was publicly known.

The $1.2 trillion peak on Dec. 5, 2008 -- the combined outstanding balance under the seven programs tallied by Bloomberg -- was almost three times the size of the U.S. federal budget deficit that year and more than the total earnings of all federally insured banks in the U.S. for the decade through 2010, according to data compiled by Bloomberg.

The top three banks at peaking borrowing are: Morgan Stanley, $107.3 billion, Citigroup took $99.5 billion, Bank of America $91.4 billion, or a total of $298.2 billion. Gets worse, foreign banks amounted to half the loans.

Half of the Fed’s top 30 borrowers, measured by peak balances, were European firms. They included Edinburgh-based Royal Bank of Scotland Plc, which took $84.5 billion, the most of any non-U.S. lender, and Zurich-based UBS AG (UBSN), which got $77.2 billion. Germany’s Hypo Real Estate Holding AG borrowed $28.7 billion, an average of $21 million for each of its 1,366 employees.

Can Financial Globalism Reverse?

Originally published in a collection of opinions on the question Is Financial Globalization Beginning A Process of Reversal? (pdf) The collection notes The European Banking Sector is 65% of all global banking.

Globalism is a conspiracy against First World jobs. It is the process by which capital extracts surplus and appropriates the earnings of labor. By moving offshore the production of goods and services for the home market, corporations benefit from labor arbitrage. Because of large excess supplies of labor, corporations can hire employees in China, India, Indonesia, and elsewhere at wages below the value of the marginal product of labor, thus raising the returns to capital.

 

cross capital flows gdp advanced emerging 2009
Source: OECD, Economic Outlook 2011

 

Saturday Reads Around The Internets - It Could Have Been Worse

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shocknews
Welcome to the weekly roundup of great articles, facts and figures. These are the weekly finds that made our eyes pop.

 

It Could Have Been Worse

About the only thing Populist Progressive Democrat Congressman Peter DeFazio can say about Obama these days is it could have been worse. Long slide down from the irrational exuberance of 2008.

 

SEC Bombs and Moody's Blasts

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spy vs spyKing of the Click Business Insider has alerted us all to an obscure comment on a proposed SEC rule for Nationally Recognized Statistical Rating Organizations. William J. Harrington, is a former Moody's Senior Vice President in the derivatives analyst group from 1999-2010. In Harrington's 80 page comment, he starts with this opening salvo:

Moody’s argues that RMBS committees could not have factored the collapse of real estate prices into their opinions, given that the scale of the collapse was both unprecedented and unforeseeable. This rationale is as unconvincing as it is disingenuous, for it pretends that Moody’s and other financial players were not designing and operating the conveyances that carried real estate prices to unsustainable levels in the first place. A roller coaster inexorably chugs up to stomach-turning heights before it hurtles downward, and both a carnival operator
and a thrill seeker understand the nature of the ride’s operations.

The rationale of “who could know?” is wholly undone through even a cursory examination of the actions of Moody’s and other financial players in the structured finance sector. Moody’s and other financial players took care to protect their earning should the real estate bubble that they were ushering into the world subsequently collapse.

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