Lunchtime Links 3-27
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Today’s Must-Read: The Quiet Coup (The Atlantic) Baseline Scenario’s Simon Johnson, former Chief Economist of the World Bank, explains why our crisis is so similar to emerging market implosions of the past: “to IMF officials, all of these crises looked depressingly similar. Each country, of course, needed a loan, but more than that, each needed to make big changes so that the loan could really work. Almost always, countries in crisis need to learn to live within their means after a period of excess.” Johnson also argues that financial elites need to be removed from the equation as they are a chief impediment to successful economic restructuring.
Facebook is hunting for money (Business Week) Eventually, Web 2.0 companies will have no choice but to start charging for their services. Ads on your Facebook page don’t generate enough revenue to support the page’s continued existence.
China vs. U.S. Money Market Funds (Setser) Fascinating data as always from Brad. Guess who’s not buying all of the excess debt being dropped on the market?
Treasurys Climb After Solid Auction (WSJ) On the heels of a poor auction, Treasury proves that it can still find buyers for its paper. Truth is, more panic will probably cause more flight to Treasurys in the short run, keeping a lid on yields. Even if the market can absorb this year’s supply, continued budget deficits will keep supply rising year after year. This will keep a lid on growth even if the economy returns to “normal:” By that point, Treasury will have accumulated trillions more in debt, all of which will have to be rolled over at higher interest rates, making debt service even more oppressive.
FDIC request for comments on Geithner plan (FDIC) FDIC will be providing non-recourse financing to enable private investors to leverage up their positions in toxic loans (see the example for legacy loans at this OA post). Anyway, this is a place to share your views on what you think of the plan.
Learning How to Think (Kristof) The NYT columnist on why “experts” are often “a stunningly poor source of expertise.”
AIG Exec whines about public anger, expects pity. Yeah, right (Matt Taibbi) Some of you might have seen the NYT op-ed that was a resignation letter from Jake DeSantis, formerly an employee of AIG’s Financial Products unit. Taibbi, who wrote the scathing critique of AIG in Rolling Stone, has some choice words for Mr. DeSantis.
Aaron Spelling’s House put on market for $150 million (LA Times) What’s a “winding motor court?”
“South Park” on the Bank Crisis (Comedy Central) They actually cover a lot in this episode, and fairly accurately.