The Federal Reserve will print money to buy $500 billion worth of mortgage-backed securities by June, specifically MBS issued by Fannie, Freddie and their sister Ginnie Mae. And guess who the Fed has hired to manage the purchases? PIMCO, Goldman, BlackRock and Wellington.
As the Obama administration prepares its trillion-dollar “stimulus” package, economists like Paul Krugman are providing rationalizations for why such a package is necessary. In his column today, he expands his spend-anything-to-get-the-economy-going-again argument, excoriating indebted states and municipalities for cutting back. He makes it clear that his preferred solution would be for the Federal Government to take over state budget items currently facing cutbacks.
Finally, a good article in the NYT’s series “The Reckoning.” Past articles in this series have been weak, as Yves noted over at Naked Capitalism. Besides the two pieces she cogently criticized, I was unimpressed with the story on Herb and Marian Sandler, the inventors of the option ARM. I felt useful details were left out.
Haggling is up at the nation’s retailers, according to AP (via Drudge).
If you’re looking for an extra bargain before the holidays, you may only have to ask. With holiday sales shaping up to be the lowest in years, possibly the worst since the industry began annual comparisons in 1969, retailers say they’re taking consumers’ demands for good deals seriously. Some are extending return policies, while others are matching competitors’ prices. Many are volunteering on-the-spot discounts and even letting customers haggle prices well down from what’s marked in a desperate bid to make the cash register ring.
CATHERINE RAMPELL asks a very good question—how does the architect of a Ponzi scheme plan to bring said Ponzi scheme to a satisfactory end? Given the finite number of suckers on the planet (though admittedly, the illusion of limitlessness is often convincing), any Ponzi scheme, once begun, must end (generally in tears). So what’s the exit strategy? Ms Rampell notes that in small-time scams, the perpetrator can just hope to flee the scene once the jig has run its course. Or, he can try and turn the business legit before the sucker supply runs thin. Or he can live it up, recognizing that death or jail looms. But there is a fourth possibility:
Investors will have to keep waiting for BankUnited to publish its latest financials. Today Florida’s largest regional bank, an option ARM specialist, released a “non-timely filing notice,” noting that they will be unable to make their annual filing with the SEC by the Dec. 15th deadline.
Not only is the Bernie Madoff story fascinating, there is a lesson in it for all of us as the title of this post suggests. How did he keep the scam going so long? Why weren’t regulators asking tougher questions? How did he lose $50 billion? Where did all that money go? That’s the crucial question to me. And it’s a question we must ask of ALL our financial institutions.