House Approves Tougher Rules on Wall Street

December 12, 2009, New York Times

By CARL HULSE

WASHINGTON — The House approved a Democratic plan on Friday to tighten federal regulation of Wall Street and banks, advancing a far-reaching Congressional response to the financial crisis that rocked the economy.

After three days of floor debate, the House voted 223 to 202 to approve the measure. It would create an agency to protect consumers from abusive lending practices, set rules for the trading of some of the sophisticated financial instruments that fueled the crisis, and take steps to reduce the threat that the failure of one or two huge banks or investment firms could topple the entire economy.

Whether all of those measures will become law, however, is uncertain because the Obama administration wants certain revisions and the Senate will not take up its version of the legislation until next year.

Debt Raters Avoid Overhaul After Crisis

December 8, 2009

Back to Business

By DAVID SEGAL

When the financial crisis began, few players on Wall Street looked more ripe for reform than the Big Three credit rating agencies.

It wasn’t just that Moody’s Investors Service, Standard & Poor’s and Fitch Ratings, played a crucial role in the epochal housing market collapse, affixing their most laudatory grades to billions of dollars worth of bonds that went bad in the subprime crisis.

Across U.S., Food Stamp Use Soars and Stigma Fades

November 29, 2009, NYT

The Safety Net

By JASON DePARLE and ROBERT GEBELOFF

MARTINSVILLE, Ohio — With food stamp use at record highs and climbing every month, a program once scorned as a failed welfare scheme now helps feed one in eight Americans and one in four children.

It has grown so rapidly in places so diverse that it is becoming nearly as ordinary as the groceries it buys. More than 36 million people use inconspicuous plastic cards for staples like milk, bread and cheese, swiping them at counters in blighted cities and in suburbs pocked with foreclosure signs.

How Big is Too Big?

As legislation on restructuring the banking industry moves forward, attention on Capitol Hill is increasingly drawn to the issue of bank size. Should our biggest banks be made smaller?

Aus der New York Times: NYT-20091126_HowBigIsTooBig

A bizarre complacency

Paul Krugman,  November 24, 2009, 1:24 pm <!– — Updated: 6:58 pm –>

Even as the conventional wisdom seems to have converged on the view that despite the continuing willingness of bond investors to buy US debt at low interest rates, the deficit is terrible, scary, awful — you know we’re in herd behavior mode when phrases like “time bomb” start appearing in news stories — a weird complacency has settled in on the state of the actual economy. We’re recovering, everyone says — no need to do anything more.

Role reversal

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November 22, 2009, 5:49 am Paul Krugman

Many people on Wall Street are now warning that there’s a huge bubble in government debt, that interest rates will spike any day now; it’s a warning that clearly has the Obama administration’s ear. A good sample is this piece from Morgan Stanley, according to which “Our US economics team expects bond yields to rise to 5.5% by the end of 2010 – an increase of 220bp that outstrips the 137bp increase in the fed funds rate expected over the same horizon.”

Btw: what? Almost everyone expects unemployment in late 2010 to remain close to 10%. Why, exactly, would the Fed funds rate rise sharply?

Anyway, I was wondering: it’s my impression that the same people now warning about the alleged Treasury bubble dismissed warnings about the housing bubble. Is this true?

10 Years Later, a Much Less Expensive Dow 10,000

November 15, 2009, NYT

By PAUL J. LIM

 

INVESTORS may take some comfort now that the Dow Jones industrial average is back above 10,000 after slipping to around 9,700 at the end of October.

But the return to 10,000 also serves as a bitter reminder that stocks have gone virtually nowhere, on balance, for more than a decade. It was in March 1999 that the Dow first climbed above 10,000, before soaring as high as 14,164 two years ago and plummeting as low as 6,547 this past March.

Finance mythbusting, third world edition

from: Paul Krugman’s Blog:

November 9, 2009, 1:44 pm

And another: one assertion I keep hearing in comments is that well, maybe China never got much capital from abroad, so you can’t attribute its takeoff to modern finance, but lots of other fast-growing developing countries did.

To which the answer has to be a question: who are you talking about?

Since the early 1980s there have been three big waves of capital flows to developing countries.

Innovation Spending Looks Recession-Resistant

Source: The New York Times, Nov. 2, 2009

A look at patent activity and economic slumps back to 1925.

Companies may have chopped capital investment, marketing and payrolls during the steep recession, but new studies suggest that research and development spending and patent activity held up remarkably well.

Bill Seeks to Shift Rescue Costs to Big Banks

aus der heutigen NYT: endlich – die Verursacher tragen die Kosten! Aber nur in den USA! Das erste positive Signal über Regulierung(wenn auch überhaupt nicht vollständig, weil es die systemischen Probleme nicht angeht!), das ich seit einem Jahr höre!  Mal sehen, ob es beschlossen wird, vor allem aber, wie es exekutiert wird???

By STEPHEN LABATON

WASHINGTON — The Obama administration and the head of an important House committee unveiled legislation on Tuesday to give the government broad new powers to shift the cost of rescues of big, troubled financial institutions from taxpayers to other large companies.

The legislation, drafted jointly by Treasury officials and Representative Barney Frank, the head of the House Financial Services Committee, would create a special fund, paid by assessments on financial companies with more than $10 billion in assets, to bear the costs of big firms that fail.

A statement by the committee said that the legislation followed a “polluter-pays model where the financial industry has to pay for its mistakes — not taxpayers.”