News round-up: 30 Aug 2008 – blog version

Originally, I thought I might say something here about Joe Biden or Sarah Palin. But, I’ll give the politics a rest and wait for more information, especially on Palin, before I take a stab. He goes….

Alice Cook at UK Bubble does a good job of rebutting Alistair Darling’s claims that the present crisis in the UK is the largest in sixty years. One must note that UK equities lost 90% in real value as a result of the 1973-1975 bear market and inflationary spiral. This downturn is nowhere near that bad yet.

The worst in 60 years? – UK Bubble

VoxEU has an interesting analysis of how the 1930s or 1970s does not exactly it today’s crisis. I tackled the historical analogy question in my post Credit deflation and the Japanese problem. The general implications of the Vox piece is that policy makers are well-advised to look at crises individually based on the substance using historical analogy only as a backdrop. Otherwise, they risk fighting yesterday’s battle.

Back to the ‘Thirties with a Twist – VoxEU

Interesting post from Yes Smith at naked capitalism. She has noticed that the FDIC is taking large losses on failed banks as a percentage of the banks’ assets. As with the ‘subprime’ crisis and its surprisingly large writedowns, this does suggest that the losses to the FDIC will be greater than their assets. Either the FDIC will have to receive bank/taxpayer assistance to takeover failed banks or a different vehicle will have to be used to deal with the coming onslaught of failures.

This Week’s Bank Failure Surprisingly Costly – naked capitalism

Brad Setser does an effective job of tackling the question of 21st century protectionism. He notes that the German government is looking to stop state-owned Sovereign Wealth Funds from buying strategic German assets but that German companies do want the capital (see related article on Siemens). I also gave my view in my post about Dresdner Bank.

German Government and Business Responses to Sovereign Wealth – Brad Setser

The Big Picture has a good guest post on real estate bottoms and whether we have reached one in the US. I highly recommend this thoughtful piece.

Fundamentals of Residential Real Estate Market Bottoms – Barry Ritholtz’s Big Picture

Barry Ritholtz also has a mean take on the new GDP numbers (sorry not to have said anything on them yet; my short ake – the domstic economy in the U.S. is still slow. The high number is all due to the low GDP deflator and exports.).

Q2 GDP = 3.3% (kinda) – Big Picture

Fially, over at the Big Picture, Ritholtz questions the increasing gap in the BEA’s inflation measure and the CPI. I have tosay, it makes you disbelieve government statistics.

Is BEA Measuring Growth or Inflation? – Big Picture

Have a good, safe weekend.