Morning links 11-16
Taxpayers on hook as some bailed out firms prove frail (Tse, WaPo) TARP investments in CIT and United Commercial bank were recently wiped out (= $2.6 billion). AIG and GM have received tens of billions they’ll never be able to pay back. Taxpayers may have purchased a bit of breathing room with TARP, but busted balance sheets will eventually have to be recapitalized anyway, as shareholders are wiped out while certain creditors eat their share of losses.
Bankruptcy rise slows with thaw in lending (Spector/Haywood, WSJ) Great article. The writers emphasize how the supposed “thaw” in lending markets is largely a head fake, that junky companies are being allowed to paper over their problems because the Fed is forcing investors to chase risk.
Unemployment rates by county (americanobserver, ht MW) Seeing maps like this, one understands why Krugman and other liberals are calling for another stimulus jobs bill. The trouble is, the reason we have so much unemployment today is because of all the debt we’re trying to work off from yesterday. Adding more debt doesn’t solve this problem.
After a summer of mixed messages, Roubini is back! (Wiesenthal, BusinessInsider)
GM says it will start paying back taxpayers (Isidore, CNN Money) Taxpayers shouldn’t expect to get much back. The $1 billion payment GM says it will make in December would be about 2% of what we put in…
The Great Wallop (Ferguson/Schularick, NYT) Talking Chimerica.
Chinese bank regulator says low rates inflating asset bubble (Zengerle/Choonsik, Reuters) The Fed maintains there’s no pressure on inflation. Trouble is, they don’t measure inflation the right way. They’re looking at things like the cost of goods and labor in the U.S. They’re ignoring the inflated price of assets, for instance junk debt (see again second link). Greenspan also ignored asset bubbles, choosing instead to focus on the unemployment rate and goods prices. How well did that work out?
DIY glasses for the world’s poor? (Addley, Guardian)
Crocodile attacked and killed by angry hippos (Telegraph) And see below…