Archives of “Economy” category

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China told property risk is worse than in US

  
Analysis, Economy, Education
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UH OH: China told property risk is worse than in US. “The problems in China’s housing market are more severe than those in the US before the financial crisis because they combine a potential bubble with the risk of social discontent, according to an adviser to the Chinese central bank. . . . ‘The housing market problem in China is actually much, much more fundamental, much bigger than the housing market problem in the US and UK before your financial crisis,’ he said in an interview. ‘It is more than [just] a bubble problem.’”

Larry Fink’s $12 Trillion Shadow

  
Analysis, Economy, Education
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Though few Americans know his name, Larry Fink may be the most powerful man in the post-bailout economy. His giant BlackRock money-management firm controls or monitors more than $12 trillion worldwide—including the balance sheets of Fannie Mae and Freddie Mac, and the toxic A.I.G. and Bear Stearns assets taken over by the U.S. government last year. How did Fink rebound from a humiliating failure to become the financial fulcrum of Washington and Wall Street? Through a series of interviews, the author probes his role in the crisis, his unique risk-assessment system, and the growing concern he inspires.

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Controlled vs Uncontrolled Defaults

  
Analysis, Economy, Education
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If I borrow £1,000 from you and then, because of spectacular bad luck cannot pay it back, but I come to you and say, “here is £750, can we call it quits?” – that is a controlled default.

If I borrow £1,000 from you and you ring me up and you get directory inquiries in the Dominican Republic – that is an uncontrolled default.

Right now, Greece’s fate hangs in the balance somewhere between these two. 

Ben Bernanke bails out Time Magazine

  
Analysis, Economy, Education, LINKS, US Market
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timemagazinegreenspan

WASHINGTON – After naming Ben Bernanke Person of the Year for saving us from the crisis that he helped create, Time magazine sales have “dropped off a cliff,” according to one Time magazine employee, speaking on condition of anonymity.

As a result of the drop-off in demand, Time magazine is now going through a liquidity crisis. Because of this situation, Ben Bernanke has decided to provide Time magazine with the necessary liquidity to stave off bankruptcy. The Fed has added millions of editions of Time to its balance sheet.

“From what we can tell, these Time magazines – especially the edition with Greenspan on the cover – have more intrinsic value than do Treasuries. There is actually stuff to read in them. So our balance sheet isn’t impaired in any way by paying cover-price for these issues,” said Fed Chairman Bernanke. “We also felt it would be best for the economy to take these editions out of circulation, and we are asking the American people to sell their Greenspan editions to the FOMC.”

The preliminary numbers are showing that the Fed, through Open Market Operations, has monetized at least 500,000 copies of the edition with Greenspan on the cover – the last time a Fed Chairman appeared on the cover of the prestigious magazine.

“If necessary, the Fed has the tools it needs to remove any excess liquidity from the markets,” said Bernanke. “We could start by selling off the Jim Bunning baseball cards that we have on our balance sheet.”

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