Petition halts Iceland’s repayment plan (UPI) Icelanders want bank creditors — in this case foreign depositors — to eat the loss of bank failures. Probably sensible. Depositors were foolish to chase returns in Iceland to begin with. Putting Icelanders into debt slavery to pay them off does little good.
Lessons learned but not applied (Simon Johnson) Summers/Geithner know the right prescription to handle bank failures. They just aren’t willing to follow it themselves… (ht Walker Todd)
The year in Review (Doug Noland) Skip to the last section at the bottom. Reader Paul M. points to Doug’s comment that healthy corporate leverage ratios are misleading because their customers (and the system in general) are still leveraged to the hilt.
(Reader note 1: posting will be light through the weekend….taking a few days off)
(Reader note 2: Just saw Avatar, the IMAX 3D version. I highly recommend it.)
Food stamps altering how retailers do business (Maestri/Baertlein, Reuters) “At 11 p.m. on the last day of the month, shoppers flock to the nearest Walmart. They load their carts with food and household items and wait for the midnight hour. That’s when food stamp credits are loaded on their electronic benefits transfer cards.”
The Protocol Society (Brooks, NYT) “When the economy was about stuff, economics resembled physics. When it’s about ideas, economics comes to resemble psychology.”
One cheer for Barney Frank (WSJ editorial) WSJ editorials tend not to be very useful, but I thought the last line of this one was notable: “Perhaps the House and Senate should simply … start over with a new mission for [financial] regulatory reform: break up the too big to fail racket.” More evidence that all sides of the political spectrum agree on this. I wonder how they would propose we do it.
Everyone’s defaulting, why don’t you? (Gross, Slate) I have a short column running later this week in the biz section of NYT on this topic. I’m sympathetic to McArdle’s view that folks who strategically default are gaming the system and leaving the rest of us to pick up the pieces. Yet savers themselves were part of the arrangement. Our savings were intermediated by the banking sector into more home loans. When guys like me say banks messed up and have to eat losses, we mean the shareholders and creditors of banks. That includes depositors. I’m speaking very generally of course, but de-levering the economy means writing down debts on one side of the ledger and paper wealth on the other side.
Malcolm Gladwell’s stickiness problem (Wise, Psychology Today) “[Malcolm] Gladwell [is] masterful at brewing up memes so potent that they travel far beyond the realm of where the mere modest truth would go. They spread. And they stick. And having stuck, they proceed to affect the decisions that people make, the policies they implement, the laws that they pass. A normal person, when he is wrong, adds a little drop of erroneousness in the great sea of human conversation. Gladwell, when he is wrong, creates a tsunami of wrong.“
View of space shuttle launch from a commercial flight (better muted)
The opinions expressed are the author's own.
Rolfe no longer works at Reuters. You can find him on Twitter here.
Prior to joining Reuters, Rolfe was an analyst at long/short U.S. equity hedge fund Matador Capital Management. He is a CFA Charterholder and graduated from the University of Chicago with a degree in economics.