Lunchtime Links 8-2
Billions in Lehman claims could bury an elusive insurer (NYT) A fascinating story. My colleague Felix correctly compares the situation to AIG, the massive insurer that underpriced tail risk when it sold CDS on toxic paper. Here we have an interesting problem where this insurer appears to have been regulated, just not very well. If it can’t be successfully regulated, and it poses huge systemic risks, should we outlaw insurance on tail risks that are potentially very fat?
Schumer tops House, wants $4 billion for C4C (CBS2) And President Obama will likely jump on board. Reader JL comments: “What better way to waste capital than pay it to people to buy crappy cars they don’t need, that get barely better mileage than their current crappy car? Nice way to disguise a giveaway to Detroit and its unions as ‘green.’ BO is looking more Soviet all the time.” One better way to waste capital has been to finance home purchases with taxpayer cash. We’re hundreds of billions in the hole there!
Chart of the Day: Durable Goods shipments since 2000, military vs. non (NYT) Wow.
PIMCO’s McCulley: Fed won’t raise rates till 2011 (Bloomberg) I think I agree with him. Our trajectory will likely track ’90s Japan. Though if Congress successfully destroys confidence in the dollar, the downturn will be more violent. And if it doesn’t? Well, Japan is now headed into its third consecutive “lost decade” and demographics suggest this one won’t be an improvement over the last two. It’s a depressing thought, that we’re headed in that direction.
Why the FCC wants to break open the iPhone (TechCrunch) …because it thinks “the the same rules of open access that rule the wired Internet should apply to the wireless Internet.”
UBS not to pay fine in tax settlement with U.S. (Reuters) UBS’ will avoid a big fine for enabling tax cheats by giving up many of their names to the IRS.
Prolonged aid to unemployed is running out (NYT) 79 weeks of unemployment insurance isn’t enough for many workers. So there have been calls to extend it, again. (I certainly have more sympathy for this kind of deficit spending than I do for C4C)
Schadenfreude alert: Billionaire Ponzi-schemer Allen Stanford can’t afford his own lawyers (CNBC) The fraudster lost his big budget legal team because he can’t pay them; his assets are frozen.