Obama Talks Left To Move Right, As Wall Street Criminals Are Given A Free Pass And Reforms Are Watered Down – In several high profile speeches, Obama lashed out at Wall Street for its greed and mendacity, proposing financial reforms that appeared to be hard hitting, if only because of the way the lobbyists for the financial services industry squealed about them.But even as he was feigning left, he and his main economic operative, Tim Geithner, were moving right, to kill off amendments that the bankers hated, like Senator Bernie Sanders’s proposal for a deep audit of the Federal Reserve Bank and the Brown-Kaufman Amendment that would have broken up the six biggest banks in America.As John Heilman explained in New York Magazine, “Geithner’s team spent much of its time during the debate over the Senate bill helping Senate Banking Committee chair Chris Dodd kill off or modify amendments being offered by more-progressive Democrats.” He used an old trick: embracing reform publicly while modifying its toughest provisions privately. No wonder bank stocks went up when the bill passed.
Condo Shadow Inventory – From the Las Vegas Sun: CityCenter condo closings slow in down economy … Houston-based Metrostudy reported that Las Vegas has more than 8,200 condominium units that are sitting empty, including those still vacant in CityCenter.This is a reminder that unless these condos are listed, they do not show up as either existing or new home inventory (the new home report doesn’t include high rise condos). There are some areas – like Las Vegas and Miami – that have a huge number of vacant high rise condos. But there are also many smaller buildings that are mostly vacant in a number of cities (like in New York, Raliegh, N.C. and Irvine, Ca). This is part of the shadow inventory …
Is there a general glut? – Matt Yglesias writes: We right now have the capacity to produce more—much more—than has ever been produced before in the history of the planet. There are dozens of supply-side policies that could be improved in every country on earth, but that’s not a new fact about the world. What’s new is the lack of demand, the willingness of the key leaders in Tokyo, Frankfurt, Washington, Berlin, and now it seems London as well to tolerate stagnation and disinflation in the face of some of the most exciting fundamental new opportunities for human economic betterment ever. First, I am fully on board with Scott Sumner-like ideas to boost AD through monetary policy, as is Yglesias and are many other Keynesians. There is no practical disagreement, but it remains an open question how effective such measures (or a bigger stimulus) would be.
Fitch’s downward revision on Spain adds pressure on government – The polls are showing that the Jose Luis Zapatero has suffered a collapse in his approval rating, as Spaniards are questioning his handling of the economy, while the opposition would gain a clear majority to govern, the FT writes. The opinion poll was conducted by Sigma Dos for El Mundo also showed that 50.6% of voters wanted early elections. Zapatero is not likely to improve his approval rates with a labour market reform proposal he is currently putting together. El Pais reports that the reform seeks to generalise the permanent contract with cheaper dismissals, and to restrict the use of temporary contracts. Attempts to find an agreement with trade unions and employers federations are about to fail, so that the government is putting together the reform project. Dismissal is one of the most controversial issues and was long rejected by Zapatero, but new circumstances made him reconsider. On Friday afternoon, Fitch Rating downgraded Spanish sovereign debt to AA+, the second highest rating.
‘We Have Nothing to Hide’ – The manufacturer of the oil-dispersing chemicals being used by BP PLC in the Gulf of Mexico said today that injecting the dispersant on a still-gushing wellhead was unprecedented and should be carried out with ample testing."That’s a new approach," said Erik Fyrwald, CEO of Nalco, whose dispersants are marketed under the name Corexit. "Our belief is, because it is a new approach, it needs to be done with a lot of testing to make sure there are no unfavorable impacts, and we encourage that."Scientists have compared BP’s heavy use of dispersants in the Gulf to a massive chemistry and biology experiment, saying it is an exercise in environmental trade-offs. The chemicals break up oil that would otherwise float on the surface into tiny droplets that can sink and be consumed by fish, bacteria and microorganisms.The consensus is that the 870,000 gallons of Corexit that have been either sprayed on the Gulf’s surface or injected underwater at the broken wellhead has likely spared beaches and wetlands from an even worse oil slick, while contributing to the formation of massive, difficult-to-track oil plumes underwater that could have long-term ecological consequences.
BP’s Robots to Begin Next Attempt to Curb Record Oil Spill – (Bloomberg) — BP Plc will use undersea robots to begin cutting damaged pipe from its leaking oil well off Louisiana as early as today, risking temporarily increasing the flow as it seeks to end the largest oil spill in U.S. history. “The chances of success are probably comparable with top kill but the risks are higher because what they’re going to do is cut off the existing riser which has been kinked on the sea- bed for the past month,” Geoffrey Maitland, a professor of energy engineering at Imperial College in London, said in an interview with Bloomberg Television today. Using remote-controlled vehicles at the mile-deep well, BP plans to shear away most of the damaged pipe that once rose from the well to the Deepwater Horizon. Then it will make a more precise cut with a diamond-toothed band saw, BP Managing Director Robert Dudley said in television interviews yesterday. That will make a clean junction for a gasket-lined cap intended to catch most of the oil and route it to the surface through a pipe, Dudley said.
The Role of Home Equity Extraction -Daniel Cooper of the Boston Fed has posted a summary of his recent study of household consumption and its relationship to home equity extraction. He uses the Panel Study on Income Dynamics (PSID), because it has detailed information on all the relevant household financial information. What Cooper wants to know is, to what extent did households use their rising home values during the bubble years to finance higher levels of consumption? His study is useful in many ways but ultimately doesn’t answer the question he is asking. The shortcomings are instructive. First the results. The summary can be seen in this table, a condensed version of Table 8 in Cooper’s original paper.
Radioactive fish near nuclear plant said ordinary – State health officials say Vermont Yankee most likely was not the source of the radioactivity in the fish, a yellow perch. Fish and other living things – including humans – around the world have been absorbing tiny amounts of strontium-90 since the United States, Russia and China tested nuclear weapons in the atmosphere in the 1950s and 1960s. A fresher dose was released by the Chernobyl nuclear disaster in 1986. "It’s clearly consistent with the background levels from Chernobyl and weapons testing that went on until 1965," said Michael Dumond, chief of prevention services, which includes radiological health, for the state of New Hampshire. The river between the states is New Hampshire territory, though Dumond said New Hampshire has largely deferred to Vermont on testing samples from it. Does that mean strontium-90 is present in fish caught around the world? "Yes. It’s everywhere,"
The “gas now, pay later” myth – In today’s UK Guardian there was an article – A worldwide financial crisis couldn’t happen again. Could it? – that exemplifies the growing sense I have that policy makers are steering the world economy back into recession.The article compares the viewpoints of the optimists who “see economies shaking off recession and corporate results improving” with the perspectives of the pessimists who “see a growing debt crisis and a new slump that the world would be powerless to halt”.\The direction of fiscal and monetary policy at present in many countries would suggest that the pessimists will be closer to the mark but for the wrong reasons. Indeed, the very arguments they present as informed economic commentary are the very reasons their predictions are likely to be fulfilled.So it is case of not understanding the problem and its solution; implementing the opposite policy stance; and making things worse as a result.
Hurricane Season Complicates Gulf Oil Spill — As hurricane season approaches, the giant oil spill in the Gulf of Mexico takes weather forecasters into nearly uncharted waters.\The season officially starts Tuesday, and while scientists seem to agree that the sprawling slick isn’t likely to affect the formation of a storm, the real worry is that a hurricane might turn the millions of gallons of floating crude into a crashing black surf.Some fear a horrific combination of damaging winds and large waves pushing oil deeper into estuaries and wetlands and coating miles of debris-littered coastline in a pungent, sticky mess.And the worst effects of an oil-soaked storm surge might not be felt for years: If oil is pushed deep into coastal marshes that act as a natural speed bump for storm surges, areas including New Orleans could be more vulnerable to bad storms for a long time.Experts say there are few, if any, studies on such a scenario.