Economics and finance links

Congressional Research Service Confirms Big Banks Borrowed Cash For Next To Nothing, Then Lent It Back to the Federal Government at Much Higher Rates

Fed Softens 'Swipe' Fees

Homeowner Foreclosures on Bank of America (Yes, You Heard That Right)

The German Jobs Miracle Continues

Germany just booked its 24th straight month of falling unemployment.
Think about that: An aging Western nation, not thought of as being on the vanguard of high technology right now, without an abundance of natural resources, in the midst of an existential crisis all around it, just keeps cranking out the jobs.

Basically, Deutsche Bank Just Wrote The Eulogy For The Euro

Pay Tally Up 19% for Finance Chiefs

Bad Mortgages Weigh on Banks

U.S. banks hold a much higher rate of defaulted mortgages on their books than do mortgage giants Fannie Mae and Freddie Mac, according to a report issued Wednesday by the Office of the Comptroller of the Currency, which regulates national banks.
The report said 19.7% of mortgages in banks' portfolios were delinquent at the end of March. By contrast, nearly 6.8% of mortgages backed by Fannie and Freddie were nonperforming, as were 11.4% of all mortgages.

QE2: Fed bond purchases end, leaving mixed legacy as economic recovery lags

Why austerity alone risks a disaster

Is Brazil's economic boom a bubble ready to burst?

FRBKC Pres Hoenig: “Big Banks Put Capitalism at Risk”

Go Swedish, part 47

For many years, I have been an advocate of going Swedish. In addition to a surplus of beautiful Scandinavian blondes, Sweden understands what to do in a financial crisis.  They do not rescue banks, they rescue the banking systems. They do not bailout creditors but instead, ensure credit can move freely through the economy. Lastly, they do not place the burden of failure on taxpayers, but rather leaves it where it belongs — with bond and equity holders.
The Washington Post discussed this truism last week in an article titled Five economic lessons from Sweden, the rock star of the recovery.

Here's Why The US Is An Even Bigger Kleptocracy Than Greece

Forget Oil: 15 Countries Sitting On A Fortune Of Metals And Minerals

Mined to Death: Why Bolivia's Cerro Rico Mountain Is Collapsing

Adapt Or Die: Some Jobs Are Never Coming Back

The trials of measuring and managing in a global economy

Since 1989, the Commerce Department has surveyed large U.S.-based multinationals — the most global of U.S. companies — to determine the scope of their foreign activities. The results are pretty striking. Among nonbank multinationals, the portion of sales attributed to foreign-owned affiliates has jumped from 33 percent in 1989 to 62 percent in 2009. During the same period, the foreign share of total employment has jumped from 21 percent to 33 percent, while the foreign share of capital expenditures has risen from 22 percent to 27 percent.
This data confirm the anecdotal impression one gets from corporate executives that big U.S. companies are growing much faster abroad than they are at home. And it is largely because of this that their profits are near record levels despite the lackluster recovery at home.

America's Hottest Investment: Farmland

Do You Know Who Produces The World's Biggest Commodities?

Real Union Enemy Isn’t Boeing, It’s Competition: Ramesh Ponnuru

Fed Extends Lending Program for Central Banks

Jim Grant: To Solve The US Debt Crisis We Need To Go Back To Gold

Biggest Tax Avoiders Win Most Gaming $1 Trillion U.S. Tax Break

Obama Eyes Ex-Banker for Consumer Chief

PIMCO: The Goldilocks Age Of Strong Growth And Weak Inflation Is Over

25 US Mega Corporations: Where They Rank If They Were Countries

The 10 Countries That Will Dominate World Trade In 2050

The Frightening Solution To Everyone's Problem From Bernanke To Democrats To Republicans

The solution is inflation. The government has got to get out of its inflation indexed obligations. You don’t have to raise tax brackets to raise revenues or cut expenses. You can mess with inflation adjustments to achieve these ends. Both sides can appear to win if this is accomplished.
Consider the words last week of Brian Graff of ASPPA (Lobby for pensions and actuaries) (The conference was sponsored by the IRS!!)
"Eliminating indexing is one of the proposals receiving serious consideration as Congress enters “uncharted territory” with legislation to raise the debt ceiling, If Congress were to stop indexing for a period of time, which would affect tax brackets, individual retirement account contributions, and contribution limits under tax code Section 415, “you could raise a lot of money, and those are the kinds of things they are talking about.”

See Which Brands Dominate Ad Spending In Every Industry

Madoff trustee seeks $19 billion from JPMorgan

Nevada Treasurer Shreds Meredith Whitney And The Other Muni Doomers

Bribery, but Nobody Was Charged

Banking’s Moment of Truth

Americans' equity in their homes near a record low

African Farmland Purchases Have Surged 1500% Since 2008

GREECE and EUROPE

Is a Greek default so bad for Greece?

Ailing Greece Tries National Tag Sale

Not the Greeks, But Their Creditors Get Bailed Out

Can Greece Survive?

Greek Yields: "Certain Default, But Not Yet"

Plan to Spoon-Feed Greece to Death; Greece to Receive Another $124 Billion in Small Bites, Details Postponed; 33% Chance of Italy Debt Downgrade

Soros Says a Euro Exit Mechanism Is ‘Probably Inevitable’ Amid Debt Crisis

Greece Is a Kleptocracy

Why The Current Crisis Will Not Bring Europe Closer Together

Top German Economist Buys Greek Bonds Because He Believes In "Boundless Stupidity Of German Government"

A Frightening Documentary About How Europe Is 'Torturing' Greece

Europe Working On A 'Plan B' If The Greek Government Blows It

French banks agree to Greek debt rollover

European leaders prepare for a Greek default

Some Greeks Fear Government Is Selling Nation

Greek Banks Feel Hostage to Debt Crisis

Greek tourist industry thriving despite debt crisis and unrest

Greek Protesters Are Better Economists Than The European Authorities

Does Europe Have A Death Wish?

Satellite Images Show Spain's Expensive New Airports Are Empty Too

How European Elites Lost a Generation

Europe’s Naked Banks

Derivatives Cloud the Possible Fallout From a Greek Default

How the Euro Became Europe's Greatest Threat

Greek austerity vote may only be temporary salve before larger battles to come

Deutsche Bank’s Chief Casts Long Shadow in Europe

Iceland Shows Default Doesn’t Lead to a Deep Freeze

 Last decade, Iceland's deregulated banks stormed out of the North Atlantic like Vikings, amassing huge deposits and liabilities all over the world — some $85 billion in total. When Iceland's banking industry capsized in the fall of 2008, the government nationalized the banks. It then faced the question of whether its 320,000 citizens should make the banks' global bondholders and depositors whole. The answer was something of a no-brainer. Iceland's banks had assets that amounted to ten times the country's Gross Domestic Product. And so while the country received an IMF-led bailout, it let the bondholders suffer losses. "Bondholders should not rely on the government stepping in and bailing them out," Iceland Central Bank Governor Mar Gudmundsson said last December. "They should do their due diligence."  The Icelandic banks had also taken lots of deposits from savers in the U.K. and the Netherlands, who were lured by competitive interest rates. These savers were bailed out by their own governments. But in 2010, the question as to whether Icelanders should reimburse some $5.3 billion to the governments of the U.K. and Netherlands was put to a referendum. And the answer was a resounding "no." In April 2011, even as Iceland was put on notice that failing to step up would inhibit its ability to borrow on international markets, the referendum failed again. As Bloomberg noted: "This will force the government to postpone its plans to enter the international bond markets."

And yet just two months later, Iceland was back in the international borrowing markets for the first time in five years.  In early June, Reuters reported, the government sold $1 billion in five-year bonds that yielded just under five percent. "According to the Finance Ministry, the order book was two times oversubscribed, with the majority of the bonds purchased by U.S. and European investors." Given the world's low interest rate environment, that's not so hot. (The U.S. pays just 1.47 percent to borrow for five years.) But Iceland is paying about one-third the interest rate that other crisis-ridden European countries are paying.