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Tuesday, November 4, 2008

The Politicis of Scarcity

Items of Interest:

David Brooks / NY Times:
A Date With Scarcity -- Nov. 4, 2008, is a historic day because it marks the end of an economic era, a political era and a generational era all at once.

Economically, it marks the end of the Long Boom, which began in 1983. Politically, it probably marks the end of conservative dominance, which began in 1980. Generationally, it marks the end of baby boomer supremacy, which began in 1968. For the past 16 years, baby boomers, who were formed by the tumult of the 1960s, occupied the White House. By Tuesday night, if the polls are to be believed, a member of a new generation will become president-elect.

So today is not only a pivot, but a confluence of pivots...

His [Obama's] upscale, post-boomer cohort has rallied behind him with unalloyed fervor. Major college newspapers have endorsed him at a rate of 63 to 1. The upscale educated class — from the universities, the media, the law and the financial centers — has financed his $600 million campaign (which relied on big-dollar donations even more heavily than George W. Bush’s 2004 effort). This cohort will soon become the ruling class.

And the irony is that they will be confronted by the problem for which they have the least experience and for which they are the least prepared: the problem of scarcity...

related:
Doug Kass / TheStreet.com:
Welcome to Dystopia -- In summary, my vision of the next three to five years is one of less economic clarity, more economic conservatism, rising populism, a more youthful government and muted investment expectations and returns.

It is a vision not of utopia but of dystopia.

Robert J. Samuelson / Newsweek:
A Darker Future For Us -- It's not just the financial crisis: higher taxes, energy costs and health spending also threaten growth...

Could the economy now be at one of these historic inflection points, when its past behavior is no longer a reliable guide to its future? That is the central question confronting the next president. Only the most hardened among us cannot have been rattled by recent events that were scarcely conceivable two years ago...
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Bloomberg:
Paulson Said to Consider Non-Bank Firms for Bailout -- Treasury Secretary Henry Paulson is considering taking stakes in non-bank financial companies after already allocating $250 billion for government investments in banks, two people briefed on the matter said.

Paulson hasn't made a final decision, and the department is still looking at how the potential program would work, one official and a person briefed by the Treasury said on condition of anonymity. Companies that could be helped include General Electric Co.'s GE Capital unit and CIT Group Inc., they said.

The move would expand the $700 billion rescue package, which has up to now focused on cash infusions for banks. It also could slow Treasury's effort to purchase assets that clog companies' balance sheets. The department may revise that plan and abandon the use of reverse auctions to value the troubled securities, the official said...
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Bloomberg:
NYC Commercial Property Sales Plunge in Credit Freeze -- New York City commercial real estate transactions plunged 61 percent in 2008 through October as the global credit crisis roiled lending and sidelined buyers.

About $17 billion of transactions have closed so far and the market is headed for its worst year since 2004, according to data from Real Capital Analytics Inc. of New York. Sellers have made 237 deals of $5 million or more, a four-year low in a market that posted a record $51 billion in sales in 2007.

``The banks are not lending, and most of them are saying we're done for the year,'' said Scott Latham, executive vice president for New York investment sales at Cushman & Wakefield Inc., the largest closely held commercial brokerage. ``In all likelihood, you will see next to no transactions between now and the end of the year.''

The property recession that began in housing during 2006 is spreading to the commercial market...
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Paul Kedrosky / Infectious Greed:
Top 20 CDS by Net Exposure: Italy/Spain Rule -- I’m having oodles of fun playing with the new credit default swap data...

Apparently the future of the financial world hinges on Italy and Spain not defaulting. Who knew?...
----
USA Today:
Lawmakers want closer scrutiny of Wall Street exec pay -- Last December, Wall Street firms paid a total of $33.2 billion in bonuses for 2007, according to New York state's comptroller ...
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Reuters/ IHT:
RBS writes down $1.9 billion and may post annual loss
-- Royal Bank of Scotland Group could suffer an annual loss after it announced Tuesday that it had been forced to write down $1.9 billion of bad assets in the third quarter.

related:
BBC News
RBS braces for first annual loss — RBS signals it expects to make its first annual loss as it makes further write-downs on assets hit by the credit crunch...
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Lehman was involved at all ends of this dirty subprime businessGraham Rayman / Village Voice:
Wall Streetwalkers: The Sleazy Lehman Brothers Subsidiary -- "Lehman was involved at all ends of this dirty [subprime] business, so deeply involved that it set up shop at every single money-making stage," Ackelsberg says. "Basically, it was just a gold rush: a huge wealth transfer from middle-class families to Wall Street."

And it was a sweet proposition while it lasted. But like any racket, the subprime business had its seamier side. And for that, Lehman kept its squeaky-clean image by turning to a less holy subsidiary.

Call her Aurora.

When the mortgage market collapsed and the huge investment bank failed last month, it dragged other financial markets down with it. Lehman's executives walked away with buckets of cash...
----
Dealnews.com:
How to eat for free on Election Day
-- At participating Krispy Kreme locations, receive a free star-shaped doughnut in celebration of Election Day. Customers must present an "I Voted" sticker to receive their free doughnut...

discussion:
Jonathan / My Money Blog : Election Day Freebies: Starbucks, Ben & Jerry’s, Krispie Kreme, and More
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Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

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Safe Haven

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