Ben Walsh

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Here’s a type of attention that has escaped most of the financial world in the last few years: resounding praise. And it’s being directed at practitioners of that dullest of financial professions, central banking.

Mario Draghi, the head of the European Central Bank, is the FT’s person of the year. Draghi gets the nod for standing against an existential threat with almost Churchillian resolve and rhetoric: “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro... And believe me, it will be enough”. The FT calls that July statement a “turning point in the three-year-old crisis”  that “in effect dared financial markets to challenge the ECB’s unlimited firepower”. Draghi has necessarily made the job deeply political: Matt Yglesias compared Draghi’s ECB to a “shadow government” enforcing budget cuts.

Draghi’s peers around the world are also receiving lavish plaudits from just about everybody (except, of course, those US politicians with their subtle threats). Zachary Karabel writes that central bankers are not only being forced to repeatedly save the world, “they are tending to the financial system with greater nimbleness, creativity and maturity than their political counterparts or any other societal actor”. The Economist calls this “the grey man’s burden” and says that today’s central bankers are the “most powerful and daring players in the global economy”.

If you’re looking to put a number on central bankers’ value: The Atlantic’s Matthew O’Brien, comparing nominal and potential GDP, found that a team of “superstar” central bankers can be worth a trillion dollars a year. No wonder the UK imported its next central banker. -- Ben Walsh  

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For the first time, the Fed has explicitly tied its interest rate policy to specific levels of unemployment and inflation. Short-term rates will stay at essentially zero as long as unemployment is above 6.5% and inflation is under 2.5%, the Fed announced today. WaPo’s Neil Irwin says Fed policymakers “unveiled a huge surprise”.

If you’ve been following Chicago Fed president Charles Evans, this policy -- a version of which is known as the “Evans Rule” -- is familiar. The surprise is that Bernanke delivered almost exactly what Evans advocated: monetary policy that is tied to economic conditions, rather than the Gregorian calendar. Jon Hilsenrath and Brian Blackstone point out that the move comes in the context of increasingly coordinated and unprecedented actions by central bankers around the world; this is certainly the latter, if not the former.

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Facebook is unlikely to become your go-to source for corporate announcements any time soon. In July, Netflix CEO Reed Hastings said on his Facebook page that viewers had watched over one billion hours of video using his company’s service in June. Now, the SEC may bring a civil suit against the company for improperly disclosing that information.

As the NYT’s Michael de la Merced reports, the regulator is “concerned that the post violated the Regulation Fair Disclosure rule...which requires a company to announce information that is material to its business to all investors at the same time”.

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American manufacturing has gained boosters recently, with politicians from President Obama to Rick Santorum championing its merits. The Atlantic’s current cover proclaims “Comeback”. Even Apple -- the epitome of the Made-in-China multinational -- is bringing a mini portion of its manufacturing back to the US: CEO Tim Cook says that “next year, we will do one of our existing Mac lines in the United States”.

Cook’s announcement, which came in the form of an interview with Businessweek, is a savvy move by a company that has faced questions about its reliance on an overseas suppply chain. Still, it’s not much of a homecoming. The FT’s Tim Bradshaw, looking at the $100 million that Cook says he will invest in US manufacturing, notes that it pales in comparison to the billions Apple has invested in Asian manufacturing in the last year alone.

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Citigroup will fire 11,000 employees as part of a “series of repositioning actions”. The full press release is a meticulously assembled monument to business-speak. If only its first paragraph, appropriately skewered by Derek Thompson, could be laughed off as parody instead of pink slips for 4% of the company’s workers:

Citigroup today announced a series of repositioning actions that will further reduce expenses and improve efficiency across the company while maintaining Citi's unique capabilities to serve clients, especially in the emerging markets. These actions will result in increased business efficiency, streamlined operations and an optimized consumer footprint across geographies.

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President Obama said in an interview with Bloomberg today that to reach a deal on the fiscal cliff, “we’re going to have to see the rates on the top 2 percent go up, and we’re not going to be able to get a deal without it”. The President pushed back against a proposal from Speaker Boehner, saying an insistence on tax increases is “not me being stubborn; it's not me being partisan. It's just a matter of math”.

Josh Barro was not impressed by Obama’s comments:

The President’s frame on what the fiscal cliff is is completely wrong. The fiscal cliff is an austerity crisis...we are going to have tax increases and spending cuts that are going to drag down the economy in 2013 if they are not reversed. [The President’s] top priority going forward is a tax increase...but raising taxes has nothing to do with relieving austerity. And then what he talks about giving in exchange for that is entitlement cuts.

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Greece is buying back €10 billion of bonds it issued earlier this year, at between 30% and 40% of face value. As Landon Thomas notes, the expected average price of 32-34 cents on the euro represents a “premium of 4 cents above the level where the bonds traded at the end of last week”.

The program is part of the agreement Greece reached on November 27 to decrease its debt burden to 124% of GDP by 2020. That agreement allowed Greece to remain on track to receive more than €40 billion in vitally needed aid.

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Two things you don’t expect to see together are the nation’s highest foreclosure rate and a housing shortage. Yet as Bloomberg’s John Gittelsohn and Prashant Gopal report, that’s exactly what Stockton, California is experiencing right now. While there are lots of foreclosures, they’re not happening at heavily-discounted prices. “People see a foreclosed home for sale in this area and they’re going to jump on it”, said one longtime Stockton realtor.

There’s also evidence that Obama administration’s much-maligned foreclosure relief program is now picking up pace. Susan Wachter, a Wharton professor, was particularly impressed:

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Thanksgiving is getting more expensive. The WSJ’s Ian Berry reports that wholesale turkey prices are up 26%, on the East Coast, compared to last year. That’s far above the modest increases in other food prices.

As Ben Bernanke noted in his speech at the New York Economic Club yesterday, for most consumers, short-term commodity price spikes don’t translate into higher grocery bills. Despite “the increase in farm prices brought on by this summer's drought”, he said consumer price increases have averaged “almost exactly 2%”. Turkey is an exception, Berry says, thanks to the peculiarities of a seasonal, capital-intensive industry loathe to expand production in the aftermath of the 2008 recession.

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The fiscal cliff has already found at least one victim, the WSJ reports: “half of the nation's 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next”.

Investors and small business owners, the NYT reports, are worried about about things like higher capital gains taxes -- one lawyer says he’s never seen such a “flood of desire and action to transfer a business and cash out”. For big companies, meanwhile, there’s $150 billion worth of corporate tax breaks to fret about.