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Tuesday, July 7, 2009

Great Recession Roundup — July 7, 2009

Items of Interest:

Joseph Cassano, former head of A.I.G.’s Financial Products unit, in LondonVanity Fair:
The Man Who Crashed the World -- Almost a year after A.I.G.’s collapse, despite a tidal wave of outrage, there still has been no clear explanation of what toppled the insurance giant. The author decides to ask the people involved—the silent, shell-shocked traders of the A.I.G. Financial Products unit—and finds that the story may have a villain, whose reign of terror over 400 employees brought the company, the U.S. economy, and the global financial system to their knees...

The problem with Joe Cassano wasn’t that he knew he was wrong. It was that it was too important to him that he be right. More than anything, Joe Cassano wanted to be one of Wall Street’s big shots...

Dave Hoffman / Concurring Opinions: What Evil Lurks in the Hearts of Men?
Bill Fleckenstein / Minyanville:
Unemployment Numbers Leading, Not Lagging, Indicator -- Slowly but surely, as green shoots come and go but fail to yield much, a growing number of people will begin to understand the nature of the problem. El-Erian echoes my own oft-stated view regarding employment when he says: "It takes time to restructure an economy that became over-dependent on finance and leverage [i.e., bubble-driven]."

Folks will only realize that we have a real hole to dig out of when they grasp the fact that the Federal Reserve's money printing, aided and abetted by greed on both Wall Street and Main Street, created the bubbles. These, combined with the authorities' abdication of responsibility, caused us to experience more than a decade of "bubblenomics." ...
Goldman Says Morgan Is All Wrong About Fed's Quantitative Exit -- Goldman Sachs Group Inc. says when it comes to inflation, the Federal Reserve can relax. That kind of talk makes Morgan Stanley nervous.

Joachim Fels, co-chief global economist at Morgan Stanley, sees a risk that the Fed will keep the easiest credit since the Great Depression for too long. Ed McKelvey, U.S. economist at Goldman in New York, says those concerns are overblown, and that officials have time to deploy as many as 10 options for ending their $1.1 trillion aid to the banking system and economy without letting consumer prices climb.

The debate underscores a widening division among economists ...
Michael J. Panzner / The Huffington Post: How Long Before the Fed's Days Are Numbered?
Daniel Indiviglio / The Atlantic Business Channel: Inflation Expectations: Goldman vs. Morgan
Ryan Knutson / Wall Street Journal:
Big Banks Don't Want California's IOUs -- A group of the biggest U.S. banks said they would stop accepting California's IOUs on Friday, adding pressure on the state to close its $26.3 billion annual budget gap...
Michael Shedlock / Global Economic Analysis: Tell Wells Fargo, Bank of America, JP Morgan, and Citigroup to Go to Hell
Shamim Adam / Bloomberg:
Obama Adviser Says U.S. Should Mull Second Stimulus -- The U.S. should consider drafting a second stimulus package focusing on infrastructure projects because the $787 billion approved in February was “a bit too small,” said Laura Tyson, an outside adviser to President Barack Obama...
Wall Street Journal: Is a Stimulus Sequel in the Offing?
Consumers Fall Behind on Loans at Record Pace -- Soaring U.S. unemployment and a shrinking economy drove delinquencies on credit card debt and home equity loans to all-time highs in the first quarter as a record number of cash-strapped consumers fell behind on their bills.

Delinquencies on the value of all card debt soared to a record 6.60 percent from 5.52 percent in the fourth quarter as more cardholders relied on plastic to meet day-to-day expenses, the American Bankers Association said...
Shrink Wrapping Unfinished Buildings

A shrink wrapped condominiumThe Real Deal:
Foreclosures could put houses in plastic -- Fast Wrap, a franchise operation based in Reno, Nev., describes its work as asset protection. Think shrink-wrapping on a massive scale. Now trying to get a foothold in South Florida, Fast Wrap claims to physically protect everything from furniture to cars to boats -- and even houses and industrial buildings. It has 11 franchises, and recently opened one in Dania Beach, conveniently close to a slew of foreclosed homes in the tri-county area.

The last ones, in particular are proving to be a boon to Fast Wrap. The company applies a film (available in white and several other colors) that takes the shape of the property to which it's applied. The company increasingly finds itself wrapping incomplete homes and larger developments to protect the properties from the elements and keep out the unwanted...

Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia