The Dull Compulsion of the Economic (iii)

by Dollars and Sense

Links only today; there's lots of stuff out there, and I have a headache anyway:

(1) Some people may have missed these Financial Times articles earlier in the week (I didn't see them covered on any of the blogs I monitor): (i) it seems that half of all Collateralized Debt Obligations (the favored vehicle for peddling subprime-mortgages) created out of other securitized bonds (namely, asset-backed securities, or ABSs) have failed; (ii) Could the TALF lead to a two-tier market? and (iii) in a sign that the yen carry trade, which played no small role in channeling Asian savings into wacky investments in the US, is kaputt, Japanese retail traders have started buying yen.

(2) On climate change, a member of the International Panel on Climate Change refers to two mechanisms which may make climate change worse than forecasted. He also notes that the 2007 IPCC report, covering 2000-2007, seriously underestimated the amount of carbon emissions, largely because it failed to take into account the vast increase in coal-generated electricity use in India and China.

(3) Ambrose Evans-Pritchard writes that Eastern Europe may prove to be the ruin of many Western European banks, if not the countries in which the banks are domiciled. He comments on the frantic efforts of Austria to cobble together a rescue plan, and notes that as European banks are more leveraged than American ones, they could be more harmed by losses in Eastern European than US and UK banks have been by the subprime mess and exposure to property bubbles. This is an extremely dangerous situation, particularly with the EU being pulled in several different directions in dealing with the crisis as it is.

(4) The Independent on Sunday reports that the HBOS (which just announced a cool 10 billion pound loss) whistle-blower whose revelations led to the resignation of a top UK regulator plans to make public documents he says will show Prime Minister Gordon Brown's personal culpability in the banking crisis (Brown was Chancellor of the Exchequer during the lead-up to the crisis).

(5) Business Week's Michael Mandel on the end of the "trade bubble".

(6) Japan's 4Q GDP falls a jaw-dropping 3.3% (or 12.7% annualized).

(7) Inquiries into the role of US officers in graft schemes in Iraq. This is important because, as the report says, "The wider investigation raises the question of whether American corruption was a primary factor in damaging an effort whose failures have been ascribed to poor planning and unforeseen violence."

(8) Michael Perelman makes an important point about the lack of bank lending (short).

(9) Marxist writer David Harvey reveals Brad DeLong's refuge in pedantry. Hat tip to Ian J. Seda-Irizarry of the Marxmail list. John Hicks' IS/LM formalization, which DeLong alludes to in support of his screed against Harvey, is dissected by Steve Keen in his book Debunking Economics; it's also referred to in several of his works available online for free, but I can't remember the titles right now.

Larry Peterson

Labels: bailout, Brad DeLong, climate change, David Harvey, Eastern Europe, financial crisis, Gordon Brown, HBOS, Iraq, Larry Peterson, Steve Keen, Trade

 

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2/15/2009 07:37:00 PM