Links: 2009-05-05
- FT.com – Spanish banks lead the way in risk management
Spain’s banks are beig praised for risk management, much as Canadian banks are. The Cajas are a different story. “Managers believe that this intense board-level focus on risk is one reason why Spain’s large banks have so far weathered the credit crunch in better shape than many of their European rivals.”
- Bernanke’s Conundrum: Stuck Between a Rock and a Hard Place — Bruce Krasting: Seeking Alpha
The rock and a hard place is the Scylla and Charybdis of higher interest rates from excessive QE versus the deflationary spiral of deleveraging. This is a very difficult policy environment.
- Distortions in the Chinese lending environment – Michael Pettis
This suggests any de-coupling will be short-lived. “The almost certain reversal over the next few years of American ability to grow consumption at a faster rate than GDP will put huge pressure on the Asian development model, and will require Asian consumption to grow much faster than Asian GDP. However if the current loan explosion is mismanaged, this may itself sharply constrain Chinese consumption growth, thus locking China into a long transition period of turgid growth.”
- Michael Panzner: You Know the Answer
Unlike what Dick Cheney will tell you, deficits do matter. Running up large deficits as far as the eye can see is a problem, no matter how necessary stimulus is.
- Number of children continues to fall | The Japan Times Online
“There were an estimated 17.14 million children under the age of 15 in Japan as of April 1, marking a record low for the 28th straight year, according to a government report released Monday.”
- Google crosses line with controversial old Tokyo maps | The Japan Times Online
“The maps date back to the feudal era, when shoguns ruled and a strict caste system was in place. At the bottom of the hierarchy were a class called the “burakumin,” ethnically identical to other Japanese but forced to live in isolation because they did jobs associated with death, such as working with leather, butchering animals and digging graves.”
- Ten Rules of the Road for Air Travel – WSJ.com
“To help travelers improve their journeys and restore some of the excitement of air travel, I’ve developed some basic rules of the road — the Ten Commandments of Travel. These basic principles can help you avoid problems and even enjoy business and leisure trips.”
- Small Banks Face Hits on Commercial Real Estate – WSJ.com
“On Monday, Moody’s Investors Service said it downgraded $52.9 billion in so-called collateralized debt obligations stuffed with commercial real-estate debt as part of its review of $83.1 billion in such CDOs amid worsening market conditions.”
- 401(k)s Hit by Withdrawal Freezes – WSJ.com
“Some investors in 401(k) retirement funds who are moving to grab their money are finding they can’t. Even with recent gains in stocks such as Monday’s, the months of market turmoil have delivered a blow to some 401(k) participants: freezing their investments in certain plans.”
- Filene’s Basement Seeks Chapter 11 Protection – WSJ.com
“Retailer Filene’s Basement Inc. filed for Chapter 11 bankruptcy protection Monday, the latest casualty of the economic downturn but one that could have a different outcome than recent retail bankruptcies that quickly became liquidations.”
- Google, Apple Scrutinized by the FTC – WSJ.com
Google is now a target under anti-trust as it should be. “The Federal Trade Commission is looking into whether the overlap of directors on the board of Apple Inc. and Google Inc. violates antitrust laws, according to people familiar with the situation. Google Chief Executive Eric Schmidt and Arthur Levinson, the former chief executive of Genentech Inc., sit on the boards of both companies. Antitrust regulations allow the government to intervene if directors sit on the boards of two competing companies and their presence could reduce competition.”
- We Can’t Subsidize the Banks Forever – WSJ.com
“The stress tests’ conclusions are too optimistic about the banks’ absolute health, although their relative assessment is more precise, because consistent valuation methods were used. Still, with Thursday’s announcement of the results, it shouldn’t be a surprise when the usual suspects emerge. We fear that we are back to bailout purgatory, for lack of a better term. Here are some suggestions for how to extricate ourselves.”
- Foreclosure Trouble Spreads to Those Who Bet the Farm – WSJ.com
“The home-foreclosure crisis, which began in cities and suburbs, has spread to rural America… But rural homeowners, it turns out, were just as susceptible to subprime loans and easy lending as the rest of the country, often refinancing existing mortgages to take out cash or pay off debts.”
- More Banks Will Need Capital – WSJ.com
“The U.S. is expected to direct about 10 of the 19 banks undergoing government stress tests to boost their capital, according to several people familiar with the matter, a move that officials hope will quell fears about the solvency of the financial sector. The exact number of banks affected remains under discussion. It could include Wells Fargo & Co., Bank of America, Citigroup Inc. and several regional banks. At one point, officials believed as many as 14 banks would need to raise more funds to create a stronger buffer against future losses, these people said, but that number has fallen in recent days.”
- FT.com – Andy Xie – If China loses faith the dollar will collapse
“Emerging economies such as China and Russia are calling for alternatives to the dollar as a reserve currency. The trigger is the Federal Reserve’s liberal policy of expanding the money supply to prop up America’s banking system and its over-indebted households”
- FT Alphaville » “The Lehman Brothers bankruptcy is fading into history”
Bloomberg has been running a lot of upbeat stories of late. “Bloomberg appears to be a paid-up member of the green shoots brigade, if recent stories are any indication.”
- BBC NEWS – European economy ‘will shrink 4%’
“the European Commission has forecast, in a massive revision from its earlier prediction.”
- The Brighter Side of ‘Evil’ Credit-Default Swaps – Deal Journal – WSJ
Should we eliminate Credit Default Sweaps? No. This is the argument why. Regulation and standardization will probably be the best route forward.
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