The Real Housewives of Wall Street: Look Who’s Cashing In on the Bailout
Matt Taibbi, a first rate reporter for Rolling Stone, unearths a startling aspect of one of the Fed’s alphabet-soup lending programs, in this case the TALF, during the Financial crisis. The numbers he uses are a bit inflated, since it treats a one month loan of say $1 billion, that is then rolled over for a second month as $2 billion worth of loans. Still, a good illustration of welfare for the extremely rich, and an illustration of why more transparency (it is more transparent than it has been before, which is to say it is not totally opaque, but far too many important things are hidden than is healthy in a democracy) is needed at the Fed. While the article is well written, I would warn readers that some of the language used is crude.
The Economist has a nice review of the recent IMF World Outlook section on the medium term (next 10 years or so) outlook for oil demand and supply. The base case is for a 1% drop per year in world oil production, which would exert a significant, but not disastrous drag on worldwide economic growth.
The “Oil Drum” blog, one of the best blogs out there on energy issues, has a post detailing the direction of oil production in the 30 largest oil-producing countries. I am not that familiar with the author of the post, who writes under the pseudonym of “Heading Out,” but most of the people who write for the Oil Drum have deep expertise in the energy industry. The detailed assessment gives credence to the IMF baseline projection above. One thing to note is the position of the US on the list. We are number three in terms of oil production; in 2009, we produced almost as much as Iran, Kuwait and Venezuela combined.
The Economic Effects of the Ryan Plan: Assuming the Answer?
Macroeconomic Advisors, a very well respected, and very mainstream economic forecasting firm (and incidentally the firm we outsource the Zacks Economic Report to) analyzes the underlying economics model that the Heritage Foundation created and is the basis of the forecasted effects that Ryan uses in his plan. While the post is a bit on the technical side, the conclusion is that the Heritage Foundation projections are, to put it charitably, a joke, and probably intentionally deceptive. In any case they are not that theoretically or empirically defensible.
Simon Johnson, former Chief Economist at the IMF, MIT Professor, Baseline Scenario Blogger and co-author of “13 Bankers” argues that if a big Investment bank like Goldman Sachs (GS) were to run into financial trouble, we would have no option but to bail them out again. Higher capital requirements on them — and other “too big to fail” (TBTF) banks, such as Bank of America (BAC) and J.P. Morgan (JPM) — are the best (only?) defense against having a replay of the TARP scenario down the road. I fully agree, and think that the recent Fed decision to allow higher dividends at the TBTF banks was a huge mistake.
Understanding the President’s New Budget Proposal
Lest I be accused of only linking to posts of people who agree with me, here is a fairly thoughtful critique of the Obama budget proposal by Keith Hennessey, now with the Hoover Institution and formerly a top economic advisor to G.W. Bush. He makes some reasonable points, but for the most part I disagree with him.
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