Morning Reading – December 15, 2010
WSJ Blogs // Real Time Economics: Retail Sales Make Fourth Quarter Look Stronger
Many economists are responding to today’s merry news on consumer spending by increasing their overall economic growth forecasts.
The New York Times Blogs // Economix: Does Economic Inequality Cause Crises?
Did inequality cause the recent housing and financial crisis? For decades, a growing literature has tried to establish links between inequality and adverse outcomes, such as low economic growth, weak social cohesion and mortality and, most recently, financial crises.
The New York Times Blogs // Green: Does China Face a ‘Peak Coal’ Threat?
China’s ravenous appetite for energy puts the country at risk of reaching a point of “peak coal,” when demand for coal will outstrip domestic production capacity, a growing number of experts believe.
FT.com Alphaville: Primary concerns with secondary markets
Secondary transactions — sales of private stock by company shareholders via private exchanges or placements — have received increased attention in the last few months.
FT.com Alphaville: Spain: the storm clouds gather
Moody’s puts Spain’s Aa1 ratings on review for possible downgrade
FT.com Alphaville: Good luck, Mr Gross
Pimco’s Bill Gross last week poured $4.4m of his own money into the municipal bond market in the States — which would be, you know, that thing that’s been tanking ever since the Build America Bond programme looked set to expire.
FT.com Alphaville: King of the WikiLeaks – and global bailouts
WikiLeaks is making for all sorts of financial fun.
Especially where it concerns Mervyn King.
FT.com Alphaville: HM Banks ad infinitum
Calling experts in placing shares – a lot of shares…
… Your Majesty needs you.
Calculated Risk: Lawler: Early Read on November Existing Home Sales
“Based on available data I’ve seen so far, I estimate that existing home sales ran at a seasonally adjusted annual rate of 4.57 million in November, up 3.2% from October’s pace, though down 29.6% from last November’s tax-credit-goosed pace. The YOY % decline in sales on an unadjusted basis should be around 27.2-27.3%, with the “SA/NSA” difference related to the calendar/different business day counts….”
Calculated Risk: Mortgage Rates pushing 5%
Usually I track Freddie Mac’s Primary Mortgage Market Survey® (PMMS®) and it appears 30 year rates will be pushing 5% this week. “Gruesome” is the word for those in the mortgage industry, especially for refinance activity.
The Big Picture: What Do Bernie Madoff and Uncle Sam Have in Common?
Two years ago, Bernard M. Madoff revealed that he took Charles Ponzi’s notion of an investing “scheme” to heights unimagined by its inventor. What his clients thought was $50 billion in real money simply vanished. Though I am saddened at the recent loss of his son, Bernie Madoff has rightly been the object of scorn these past two years for erecting what was the largest Ponzi scheme in history. He didn’t hold the title for long, however, since the U.S. government — aided and abetted by the Fed — now holds this dubious honor. Bill Gross is right. When it comes to Ponzi schemes, Bernie Madoff is a piker compared to Uncle Sam.
The Big Picture: Stat check
Stat check: This further spike higher in interest rates today now has the 10 yr yield up just shy of 100 bps since Aug 26th and the 30 yr FNMA mortgage coupon up by 92 bps. We will likely see the average 30 yr mortgage rate above 5% tonight. Also, the CRB index is up 21% since Aug 26th. Some are saying that this shows QE2 is working…
The Big Picture: Report Bank Intimidation to Your State AG
…This may turn out to be a smart tactic. Elected Senators and Congressmen seems to be bought lock stock and barrel by the banking lobby. And the State AGs seem to be harder to buy off. Congress does the bidding of their banking masters, so looking for any positive outcome there is futile. But ion the Fraudclosure issue, the state AGs have been dead on…
Reuters Blogs // Felix Salmon: Don’t buy that internet company
“The history of the Internet is, in part, a series of opportunities missed,” says Jim Surowiecki in this week’s New Yorker. Blockbuster could have bought Netflix for $50 million dollars; Excite turned down the chance to buy Google for less than $1 million.
The Economist: Our Peter Orszag problem
LAST July Peter Orszag stepped down from his post as the head of the Office of Management and Budget. As budget director, Mr Orzsag helped shape the first stimulus package and, more visibly, the health-care reform legislation. Apparently, the market values this sort of experience. Last week, Mr Orszag accepted a senior position at the investment-banking arm of Citigroup, an institution that exists in its present form thanks to massive infusions of taxpayer cash. Exactly how much Citigroup pay Mr Orszag is not public knowledge, but swapping tweed for sharkskin should leave him sitting pretty. Bankers who spoke to the New York Times ballparked his yearly salary at $2-3m.