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Financial innovation vs. consumer protection (Robert Shiller)  Ugh.  This is a pretty terrible op-ed from an economist who thinks he understands banking.  He doesn’t.  The thesis that financial innovation benefits society can be dispatched with two deep thoughts.  One from Martin Mayer, who has said that financial innovation just means finding new ways to do what the old rules prohibit.  And one from James Grant, who argues that while innovation in science is cumulative, innovation in finance is cyclical.  The bottom line is that financial innovation primarily benefits financiers.  The bottom line is that a consumer protection agency is quite sensible.  No, I don’t like subjecting the free market to unnecessary rules and regulations.  But if this credit debacle has taught us anything it’s that the free market is broken.  Sensible rules will help fix it.

Cocksure: banks, battles and the psychology of overconfidence (New Yorker)  Malcolm Gladwell’s latest.  Always a fun read.

Is GLD a good deal (Hard Asset Investor)  A must-read for gold investors, particularly the last section.

Fiscal Ruin of the western world beckons (Evans-Pritchard) He argues that we need to cut spending, and offset the deflationary effects with monetary stimulus.

California’s budget gap won’t stay closed for long (Reuters)  The moral of the story is it’s better to make cuts sooner rather than later…

Governors fear Medicaid costs in health plan (NYT)  Governors, regardless of party, are opposed to Obama’s health care plans.  It would stick them with much higher costs at a time when they’re already facing yawning budget deficits.

The real price of Goldman’s giganto profits (True Slant, ht Geoffrey V.)  Matt Taibbi keeps up the heat on Goldman.

Moody’s: CRE prices down 16% in two months (CalculatedRisk)  16% in two months?  That’s a CRAZY rate of decline.  House prices are down 32% from the peak, but that’s over three years.  I’m going to look into this….

As boom times sour in Vegas, upward mobility goes bust (WSJ)