Lunchtime Links 9-16
Building code? We don’t need no stinking building code (PDF, ht Danny Watts)
Is the Fed on the side of investors? (Jack Ciesielski) No. Fed Governor Elizabeth Duke wants to give banks more leeway to use “amortized cost” accounting, i.e. to ignore fair value. But without fair value, “how else can investors assess whether or not management is dragging its feet on recognizing impaired assets? They can’t – not with straight amortized cost accounting, which demands an impairment model requiring a high-voltage cattle prod to get managers to recognize writedowns.”
Warren Buffett might have saved Lehman! If he knew how to check voice mail… (Time) Nah, he’s too smart….he wasn’t going to jump on the Lehman grenade…
Facebook says it’s “cash flow positive” (Bits) I’m curious: Over what period are they measuring? And what are the components of the revenue line? Are they cash flow positive this month? Or for the full year and going forward? It would be easy to make a claim like this in a month when they aren’t making big CAPEX investments, for instance. And what about the top line? Is the revenue all recurring? Their ad revenues can’t be that great. Last I checked, social media was not a popular ad buy with advertisers. Ad rates are pretty low relative to content sites like, for instance, NYT.com. So I have my doubts…
As banks shrink, so does the economy (Chris Whalen) “You can’t have economic growth without credit growth.” I disagree with Chris that it’s a bad idea to make banks raise more capital. He’s right that means economic pain, but that misses the point. Levering up balance sheets to manufacture artificial growth will only lead to another systemic crash. A good piece nonetheless.
Bernanke says recession is over (Bloomberg) This is just indicative of the inanity of the way we measure recessions. A big reason economists say the recession is ending is that GDP growth — and other measures of economic activity — are perking back up. But GDP growth is just a measure of spending in the economy, and one of the biggest components is government spending. It matters not what’s being purchased, or where the money is actually coming from. As long as we’re spending more, the economy is said to be “growing.” But if all the money is being borrowed? Are we really in better shape?
FDIC’s debt guarantee program, August update (FDIC) One of the biggest emergency facilities shrank in August, sort of. Financial companies are issuing less short-term paper, but they are issuing more long-term paper. Compare with this table for July. This program is schedule to end soon, though FDIC is kicking around a proposal to extend it.
Secretary by day, royalty by night (WaPo, ht RB)
Johnnie Walker commercial….long, but very cool….had to be shot in one take, and the actor has to have fantastic timing. If the history is all true, it’s also very interesting. (Took 40 tries)