The Financialization of America – Scott Sumner tries to explain why finance is so much more lucrative today than it was in the 50s and 60s: Finance becomes extremely important in an economy where it is not at all clear what should be produced, or on what continent that production should take place. This seems pretty unpersuasive. If Wall Street were making truckloads of money on their VC investments, then OK. Maybe he’d have a point. But I’m pretty sure that true venture capital constitutes a tiny fraction of finance sector earnings. Likewise, allocating capital to old-line industries is just….allocating capital to old-line industries. Why does it matter whether those industries are in Pittsburgh or Mumbai? If the finance sector were truly creating lots of extra value, then most of us probably wouldn’t mind that bankers were taking home outsize paychecks. But are they? Are overall global growth rates higher today than they were 50 years ago? Is productivity growth higher? Is modern finance repsonsible at all for higher economic growth than it was in 1965?
Researchers Find "Alarming" Decline In Bumblebees (Reuters) – Four previously abundant species of bumblebee are close to disappearing in the United States, researchers reported Monday in a study confirming that the agriculturally important bees are being affected worldwide. They documented a 96 percent decline in the numbers of the four species, and said their range had shrunk by as much as 87 percent. As with honeybees, a pathogen is partly involved, but the researchers also found evidence of inbreeding caused by habitat loss. "We provide incontrovertible evidence that multiple Bombus species have experienced sharp population declines at the national level," the researchers reported in the Proceedings of the National Academy of Sciences, calling the findings "alarming." "These are one of the most important pollinators of native plants," In recent years, experts have documented a disappearance of bees in what is widely called colony collapse disorder, blamed on many factors including parasites, fungi, stress, pesticides and viruses. But most studies have focused on honeybees. Bumblebees are also important pollinators, Cameron said, but are far less studied. Bumblebees pollinate tomatoes, blueberries and cranberries, she noted.
Armageddon Can Wait, by Kenneth Rogoff – After three years of huge, crisis-driven exchange-rate swings, it is useful to take stock both of currency values and of the exchange-rate system as a whole. And my best guess is that we will see a mix of currency wars, currency collapses, and currency chaos in the year ahead – but that this won’t spell the end of the economic recovery, much less the end of the world. Let’s start by acknowledging that the modern system of floating exchange rates has, on the whole, acquitted itself remarkably well. True, given complex risk factors and idiosyncratic policy preferences, it has been particularly challenging of late to divine the logic underlying big exchange-rate swings. For example, even though the United States was at the heart of the financial crisis, the dollar initially soared. But, even if exchange rates work in mysterious ways, their cushioning effect is undeniable. In hindsight, these exchange-rate swings mirrored the initial collapse and subsequent rebound in global trade, helping to mitigate the recession.
How the mortgage clearinghouse MERS became a villain in the foreclosure mess – On March 4, 1994, the MBA unveiled its plan to county recorders who were charged with keeping track of titles signifying the ownership of land. Not everyone was sold on the idea. "There needs to be some outside control or oversight," one recorder said, according to a transcript of the meeting. Another said that if errors were put into the electronic system, "they’re really hard to track further down the road." Sixteen years down the road, the mortgage business is a mess. The electronic clearinghouse has become a reality; Virginia-based Mortgage Electronic Registration Systems, a registry with 67 million mortgages on file, has become part of the industry’s standard operating procedure. Critics say promises to increase transparency and iron out wrinkles in recordkeeping haven’t panned out. The firm, which tracks more than 60 percent of the country’s residential mortgages but whose parent company employs just 45 people in a Reston office building, is now on the firing line.
A health-care fight Democrats should welcome – If the incoming Republican leadership in the House of Representatives is serious about trying to repeal health-care reform, there’s only one appropriate Democratic response: "Make my day." Just to be clear, there’s no earthly chance that a bill repealing the landmark health-care overhaul could make it through Congress and be signed into law. Even if Republicans managed to hold together their new majority in the House, they would face the inconvenient fact that Democrats still control the Senate. And even if a repeal measure somehow sneaked through the Senate, President Obama would veto the thing faster than you can say "preexisting conditions." So this exercise in tilting at windmills can’t even be described as quixotic, since that would imply some expectation of success, however delusional. The whole thing is purely theatrical – and woefully ill-advised.