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REMINDER: All investment, economics, and finance related material now appears at the new IaconoResearch.com. For the time being at least, this has become a personal blog covering a variety of mostly unrelated topics.
Tom Toles, whose cartoons have shown up here frequently at this blog over the years, now has a blog of his own over at the Washington Post, and he talked about it recently with Robert Wright of bloggingheads.
His archive is still located here (where I’ve gone hundreds of times to see his latest work) but, when you click on the most recent link or two it takes you to the new blog where, in addition to all of his latest cartoons, you get a bit of commentary as well. Pretty neat!
Robert Reich had these thoughts in the green room earlier today as former Fed Chairman Alan Greenspan was talking to ABC’s Jake Tapper about how there were only a handful of people in the world who could have possibly seen what was to come back in 2007:
He says he bore no responsibility for the housing bubble that catapulted the nation into a financial crisis in 2008 because no one could have known about the bubble when he chaired the Fed in the years before it burst.
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What?If any single person is most responsible for the financial crisis, it’s Alan Greenspan. He presided over a Fed that lowered interest rates to zero (adjusted for inflation) but failed to prevent banks from using essentially free money to speculate wildly. You do not have to be a brain surgeon to understand that if money is free, banks will take it and lend it out. And if oversight is inadequate, the banks will lend the money to anyone who can stand up straight and to many who cannot. The result will be a giant subprime lending bubble that will burst.
If any three people are most responsible for the failure of financial regulation, they are Greenspan, Larry Summers, and my former colleague, Bob Rubin. In 1999 they advised Congress to repeal Glass-Steagall, which since 1933 had separated commercial from investment banking. By 1999, Wall Street was salivating over the repeal because it wanted to create financial supermarkets that could use commercial deposits to place bets in the financial casino. That would yield the Street trillions.
Reich then goes on to talk about the Brooksley Born derivative regulation debacle as chronicled in the PBS Frontline documentary The Warning, one of the most damning critiques of the role Greenspan, Summers, and Rubin played in the financial market crisis, before coming to a conclusion that, sadly, far too few have arrived at.
Back to that in a minute…
White House officials were out in force yesterday, talking up the economy in the wake of the best jobs report in almost three years. Senior economic adviser Larry Summers thinks we’ve about reached “escape velocity” according to this report in the Financial Times and Treasury Secretary Tim Geithner told Bloomberg the self-sustaining recovery is here.
While Geithner had earlier said the unemployment rate is “going to stay unacceptably high for a long time”, that view was tempered a bit in this interview. On housing, he noted that “a million Americans are now benefiting from an average of $600 a month in lower monthly payments on their mortgage debt”, a statistic that is very deceptive in a number of ways, the most significant being that only a small portion of the million loan mods are permanent.
What he should really tout is that, thanks to the government’s efforts to delay foreclosures, some seven million Americans have stopped paying their mortgage and another five million underwater homeowners may soon join them (per Amherst Securities last week), all of which will boost consumer spending and the economy as a whole…
After what we saw in the markets over the last week or so, it’s looking like economic growth and rip-roaring inflation (in no small part due to the massive amounts of money printing and record levels of credit creation) might arrive sooner than anyone thought just a month or two ago. Reuters reports on the latest concerns voiced by China.
China’s central bank said on Friday that it expected the dollar to strengthen this year, but it raised the specter of worldwide asset bubbles and inflation.
In a lengthy report on the global financial markets, the People’s Bank of China also warned that huge, hidden bank bad loans in the West could pose a threat to the global economy.
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The central bank said the ultra loose monetary policies, including quantitative easing adopted by major central banks, had pumped huge liquidity into the global financial markets.“Once the real economy turns better, the massive liquidity being released out will definitely add to inflationary pressure,” the bank said.
“It is an urgent task faced by central banks in the world to avoid the forming of asset bubbles and inflation.”
Curiously, the bank said that they expect higher oil prices this year but didn’t think much of the prospects for gold to go much higher. At first it might seem odd that any central bank would comment on the gold price, but, when you consider that the central bank in China wants to buy thousands more tonnes of the stuff, their comments make a lot more sense.
As is the case around Washington, D.C., it seems that the economy isn’t so bad around some state capitals and, if you happen to have colleges nearby (as they do in Harrisburg, PA, not far from where your humble scribe grew up), things may be even better.
A quick check of the Case-Shiller Home Price Indexes from the other day shows that the nation’s capital kept its title as the best housing market since 2000. Recall that, after trailing areas like Los Angeles, Miami, San Diego, and New York for much of the last decade, when government hiring ramped up to manage all the bailout money flowing from Washington, the local housing market held onto its price gains better than any other area.
The intrigue continues following revelations about manipulation in metals markets at last week’s CFTC (Commodities Futures Trading Commission) hearing as GATA (Gold Anti-Trust Action Committee) reports that the King World News website was the target of a denial-of-service attack not long after an interview with GATA officials was posted yesterday.
King World News today received more detail about yesterday’s attack on its Internet site, which happened soon after the posting of Eric King’s half-hour interview with GATA Chairman Bill Murphy, board member Adrian Douglas, and your secretary/treasurer about last week’s hearing of the U.S. Commodity Futures Trading Commission.
The major Internet hosting company that maintains the King World News site reported to King World News: “Your hosting account is the target of a distributed denial of service attack. To protect the network resources, we have temporarily placed your Web site behind a network filter. Once the attack has ended, service will be restored to normal. … Computers were attacking your account.”
For those of you who aren’t familiar with King World News, host Eric King does some of the best interviews around with such luminaries as Jim Rogers, John Hathaway, Harry Markopolos, and others who are not always welcome at more mainstream news outlets.
In recent days, King World News has posted interviews with whistleblower Andrew Maguire and GATA officials as noted here in Gold, Silver, the CFTC & Conspiracy Theories from yesterday which also happened to appear at GATA’s website today.
By Tim Iacono, Since 2005
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