My PM train reading:

• What Is Dow Theory Telling Us Now? (Ciovacco Capital)
• Goldman to Citigroup Miss World’s Worst Selloff in China (Bloomberg)
• Worry wanes about a mortgage-loan reckoning. (WSJ)
• The Great Hedge-Fund Mystery: Why do they make so much? (New Yorker)
• Tim Geithner: More Banker Than the Bankers (New Republic) see also Tim Geithner’s sorry legacy on housing (Salon)
• On the Phenomenon of Bullshit Jobs (Strike Magazine)
• Absurdities of Copyright Protection (Conversable Economist)
• The Politics of Income Inequality (NY Times)
• Photos Show How Climate Change Melting The World’s Glaciers (BI)
• Poll Says Anti-Semitism Is Global Matter (WSJ)

What are you reading?


Worry Wanes About Mortgage Loan Reckoning

Source: WSJ


Category: Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

10 Responses to “10 Wednesday PM Reads”

  1. RW says:

    The Consensus Is That Tim Geithner’s Blocking of Mortgage Foreclosure Relief Was His Biggest Unforced Error as U.S. Treasury Secretary

    …In the “real world” Geithner did have full control over the GSEs and the FHA–because Paulson nationalized them in the summer of 2008.

    In the “real world” Geithner submits his recommendation that Glenn Hubbard be nominated as head of the FHFA to President Obama on January 21, 2009, it is approved by the senate in February 2009, and thereafter there are no constraints on technocratic use of FHFA and the GSEs to rebalance the housing sector and aggregate demand.

    Geithner should not say “I wanted the FHFA to act but I did not have the authority to get the FHFA to act” and at the same time say “having the FHFA act would have made no difference”; Geithner should not say “you cannot blame me because of the constraints” when we know that it was his own actions and inactions made those constraints.

    Look: Tim Geithner did much better as a 2009-2010 finance minister than any of his peers.
    Look: the stress tests worked, and worked very well.
    Look: Christina Romer and company say that if you need a bank rescued in 48 hours, Tim Geithner is your man.
    But the purpose of “Stress Test” is to explain to us what Tim Geithner thought and why he thought it and thus why he did what he did.

    And in Stress Test, on housing policy, he doesn’t.

    NB: The Obama administration made a number of unforced economic policy errors and although the stories don’t all lay out neatly it sure seems as if Tim Geithner played a rather large role in many of them. Surprisingly large considering he was hired as a technocrat and tactician rather than a strategist and his knowledge of macroeconomic policy was clearly not great; compared to advisers like Christina Romer it was laughably miniscule. So why did Obama ask his opinion and, worse yet, seem to prefer it? God only knows the answer to that but I don’t think you can blame Geithner for it.

    • Laocoon says:

      RW – You’re on the right track but the issue goes much further.

      Recent passionate critics of Geithner haven’t done their homework on what the Secretary of the Treasury’s charter actually is. It’s financial management, NOT housing policy. Civics lesson to uninformed journalists – The Administration’s authorities come from the Constitution and the Congress, by delegation to the departments of the administrative branch, all held in check by the court system.

      Geithner could have been more forceful to try to steer housing policy, since much of it is driven by finance. However, that’s an influence-without-authority matter that critics expect Geithner should have taken on during an enormous crisis. While Geithner has been hammered also for weaknesses in bank supervision, the guts of the crisis were with the subprime loans, fraud, and other unregulated activities (AIG, for example). These were not directly within the jurisdiction of the Fed or of the Treasury.

      As a practical matter, the crisis was not helped by the change of administration in 2008-2009, which was just the timing of the election cycle. And the wars were going on at that time also, big distractions and big fiscal expenses.

      Congress, especially, as well as the two Administrations, failed utterly in taking leadership to correct the housing problem. Housing programs are spread out all over the federal government. Most people are unaware that housing programs are not just Fan and Fred, but pop up at HUD (and its subs FHA, GNMA, etc.), SBA, disaster relief, USDA (Rural Housing), VA, state and local housing authorities, private lenders, finance companies, and I’ve forgotten the rest. Oh, and any banks who might lend for housing are subject to their own multiple regulators.

      Correcting the housing mess involves a cohesive rewrite of all these dispersed elements into a unified structure. Given the entrenched interests in so many existing programs, how is that supposed to happen without committed and sustained leadership from (primarily) the Congress and (to the extent possible) the Administration?

      Whether Geithner could have shown more dynamic leadership is moot. Whether such leadership would have been effective is a low-odds probability. We need to stop scapegoating Geithner for the failures of many others who could have and should have set an entirely new direction.

  2. willid3 says:

    can’t wait for Glass in your workplace?

  3. Biffah Bacon says:

    “unforced error” I would quibble as really meaning “policy cognitive dissonance.” As Krugthulu noted at the time we had a perfect opportunity to go Swedish on the banking system and reign in the banking demons for another generation; policy choice was to keep the people who caused the problems in charge, as Bill Black keeps pointing out. Banksters.

  4. David Goodridge says:

    The (apparently) bedrock notion of perpetual future economic growth is fantasy. Do the math. Read This is obvious, not anywhere near rocket science.

    • noncist says:

      I agree with the conclusion of that article, but not the analysis.

      The fundamental reason that growth will taper is demographic, not technological. Over this century, efficiency will increase and technology will improve, but the economic growth will stagnate as population growth declines and most of the world becomes saturated with their basic needs.

      I specifically find fault with the “Unphysical Economy” section of that article. The author asserts without providing any evidence that food will never be arbitrarily cheap. This stands in stark contrast to the available evidence: population growth declines as countries develop and food costs decline dramatically as a portion of household expenses. Just because something seems bizarre doesn’t mean it can’t happen.

      Do the math. In 100 years, basic tangible necessities could very well be incredibly cheap. People will work to afford premium experiences that are essentially “unphysical” and that sector will dominate the economy nominally. Farmers will get very little money per unit, but their volume will be enormous and their costs will be tiny as well, so they will be profitable.

      The author seems to assume that the unphysical, low energy, economy will be only some Matrix-y world that many will find unpalatable, but he overlooks the human capacity for art. A huge part of the future economy will be unique things that people make (both digital and physical) for their own pleasure and those around them. With basic necessities being cheap, there is little risk and a huge upside for some talented artisans. To put this in a slightly tongue-in-cheek form, etsy is the future. Why is this so unbelievable?

      Deflation, unemployment, and inequality will ultimately be the most serious macro challenges assuming wars and/or natural disasters don’t set humanity back as they have in the past.

      Obviously, growth is constrained by the laws of thermodynamics, but the limits of what is possible are further out than that article claims.

  5. willid3 says:

    Verizon has it both ways being regulated and deregulated, but only when it suits them. and its not just them either

  6. willid3 says:

    just how slow will out internet get? maybe that California electricity deregulation will give us a preview

  7. rd says:

    I can’t believe that somebody wrote an entire article on “Bullshit Jobs” without ever citing Parkinsons’s Law “work expands so as to fill the time available for its completion” derived by C. Northcote Parkinson. This 1955 Natural Law was a landmark of 20th century understanding of bureaucratic systems and is in full bloom today. It is one of the primary reasons that university tuitions have risen as universities keep adding more administrative people to supervise the same number of students and professors.

    Clearly, the author of this recent piece did not spend any of the time available to complete the task in researching the issue. It appears that he will need to hire an assistant to do the research the next time that he writes something.