Items of Interest:
Chairman Ben S. Bernanke / Board of Governors of the Federal Reserve:
Testimony — Current economic and financial conditions and the federal budget -- We continue to expect overall economic activity to bottom out, and then to turn up later this year. Our assessments that consumer spending and housing demand will stabilize and that the pace of inventory liquidation will slow are key building blocks of that forecast. Final demand should also be supported by fiscal and monetary stimulus, and U.S. exports may benefit if recent signs of stabilization in foreign economic activity prove accurate...
Globe & Mail:
Bernanke raises alarm on spending -- Federal Reserve chairman Ben Bernanke warned Wednesday that the U.S. spending spree now threatens the country's financial stability, amid growing questions over whether governments and central banks around the world have gone too far...
Mohamed El-Erian / Financial Times:
Why Bernanke Is Right to Be Worried -- Fed chairman Ben Bernanke’s congressional testimony on Wednesday warrants careful attention by market participants – this at a time when policy measures play an unusually large role in determining both absolute and relative values in many markets...
Felix Salmon: Bernanke's fiscal focusMartin Wolf / Financial Times: Rising government bond rates prove policy worksEzra Klein: What Will Become of the Federal Reserve?TIME.com: Angela Merkel's Criticisms of the FedAssociated Press: Rallies for Stocks and Oil Begin to FalterRyan / The Bellows: What's Bernanke Getting At?Mark Thoma / Economist's View: Bernanke: Current Economic and Financial Conditions and the Federal BudgetJack Healy / New York Times: Fed Chief Calls for Plan on DeficitsHughS / Wizbang: Has Bernanke Had An Epiphany? — Fed chairman Ben Bernanke …Steve Keen / The Foundry: Bernanke Calls for Deficit Reduction
Pick a Side: Hyperinflation or Deflation? -- The banking system, stymied with credit dependency, is not operating normally. Hidden behind bailouts, stimulus packages, super-conduits, term auction financing, mortgage rate freezes, foreclosure freezes, working groups and Public-Private Investment Programs are politicians attempting to engineer a business cycle that long ago lost its way.
The qualifier of this discussion is the elasticity of debt, which is stretched by historical standards. Total outstanding credit obligations are 350% of GDP and the consumer (70% of GDP) is hamstrung by wealth destruction and depleted savings. As such, I would place back-of-the-envelope odds at 3-1 that deflationary forces continue to manifest...
Tom Fant / Minyanville:
Qualitative Easing: Markets on the Edge of a Knife -- I’m not sure the Fed understands the depths of the problem it's created by letting 10-year rates back up 100 basis points since March. I can’t help but feel the same way I did when George W. Bush landed on the aircraft carrier and proclaimed, "Mission accomplished." ...
Stasis in the zombie economy -- My silence during the past several days reflects lack of things to say rather than lack of time or interest...
Lack of things to do, absence of ideas, and low volatility are hallmarks of the zombie economy...
Over time I expect a long, slow decoupling of Asia from the US economy — nothing drastic, no Chinese dumping of Treasuries, no grandstanding. No-one is in a position, nor has a motivation, to do anything quickly.
GM, Chrysler say dealer cuts key part of revival -- Top executives of General Motors Corp and Chrysler LLC were pressed by angry U.S. senators on Wednesday to rethink plans to slash more than 2,300 dealerships as a key part of their restructuring.
Industry analysts have long said that the sprawling retail networks hurt Detroit automakers because they force dealers -- particularly those in the suburbs of large cities -- to compete more against each other than rival automakers.
The automakers have set aggressive deadlines to identify the showrooms they will retain after emerging from bankruptcy with the help of billions of dollars of taxpayer funds...
- No Reason GM Can't Make a Comeback - James Stewart, Wall Street Journal
- GM's Rose-Colored Predictions Continue - David Leonhardt, New York Times
- Bring Back The Artistic American Car - Jeff Sabatini, Forbes
- The Peril of 'Buy American' - Editorial, New York Times
- The UAW's New GM Stake Will Defang the UAW - Daniel Gross, Slate
- GM: The Road to Hell Is Paved with Good Incentives - Minyanville
- Ford's Production Rising As Rivals Are Struggling - Washington Post
- Even Under a Cloud, G.M. Is Predicting Sunshine - New York Times
Geithner Faces Sluggish Market, Rents out NY Home -- The real estate market's troubles are hitting close to home for Treasury Secretary Timothy Geithner.
After reducing the price on his house in a tony New York City suburb to less than he paid for it, Geithner still couldn't sell and recently rented it out instead, according to real estate agents familiar with the deal.
Geithner put his five-bedroom Tudor near leafy Larchmont on the market for $1.635 million in February, after heading to Washington for his job as the nation's top economic official.
A few weeks after the asking price was dropped to $1.575 million, the home was rented for $7,500 a month on May 21, said the agents, Scott Stiefvater of Stiefvater Real Estate and Debbie Meiliken of Keller Williams Realty New York. . .
Housing Doom blog: Geithner Can’t Unload His House Either
Zilow: Geithner’s Larchmont House for Sale
I Pine, You Pine, We All Pine for Subprime -- Alas, those days -- our national bacchanalia devoted to the attainment of that which we cannot afford -- are done and dusted, left rotting and festering in the past like so much road kill.
But my question is this: why must I suffer for the sins of the fathers? . . .
Did the Madoff Sons Know? -- Friends of Mark and Andy Madoff tell Vanity Fair writer David Margolick that Andrew has called what his father did to him and his brother “a father-son betrayal of biblical proportions,” and has said that to categorize it as being blindsided would amount to the understatement of the century. But others, including Madoff alumni, don’t believe the boys could have been unaware of the scheme.
Margolick talks with their friends, surrogates, and former colleagues, and reveals that when Bernie Madoff broke the news of his Ponzi scheme to his sons, in the kitchen of his penthouse apartment, Mark was angry and Andrew was on the floor, sobbing. . .
Dealbook / NY Times: How Much Did the Madoff Sons Know?
- Bonds Not Safe In Obama’s Shared-Sacrifice Plan - David Reilly, Bloomberg
- Note to Paul Krugman: Reagan Didn't Do It - Robert Scheer, The Nation
- Is Jamie Dimon Sailing Too Close to the Wind? - Antony Currie, Fortune
- Capitalists Only Beijing Could Love - Harold Meyerson, Washington Post
- Geithner Takes His Act to China - Editorial, Investor's Business Daily
- Rising U.S. Treasury Rates Prove Policy Is Working - Martin Wolf, FT
- The Alan Greenspan Gamble - Alex Pollock, The American
- Larry Summers Adapts His Combative Style - David Lynch, USA Today
- The Hidden Purposes of High Finance - Brad DeLong, Project Syndicate
- If Obama Had Carter's Courage... - Holman Jenkins, Wall Street Journal
- The Presidential Cycle Is Bullish for 2009 - Mark Hulbert, MarketWatch
- The Peculiar War Against Unions - Kate Bronfenbrenner, Washington Post
- Militant Unions Raise Muni Risk - Steven Malanga, RealClearMarkets
- Another Reason to Hate Goldman Sachs - Charles Gasparino, Daily Beast
- The Looming Third Wave of Foreclosures - Michael Brush, MSN Money
- Has Inequality Destroyed the Middle Class? - Thomas Cooley, Forbes
- Does the Economy Really Need $787 Billion? - Russell Roberts, Cafe Hayek
- The Stagflation Myth - Paul Krugman, Conscience of a Liberal