TOP NEWS: Economy: July 13, 2012
- In Latest Data on Economy, Experts See Signs of Pickup
- America’s economy is once again reinventing itself
- Banks’ Libor costs may hit $22bn
- Bankruptcy in California Isn’t Seen as a Trend
- The Spreading Scourge of Corporate Corruption
Excerpts and more top stories
Annie Lowrey, NY Times – Despite the recent run of disappointing economic data, a broad range of experts and forecasters expect the economy to improve slightly in coming months, thanks to lower oil prices and new signs of life from sectors like automobiles and housing.
Economist – America’s economy is certainly in a tender state. But the pessimism of the presidential slanging-match misses something vital. Led by its inventive private sector, the economy is remaking itself (see article). Old weaknesses are being remedied and new strengths discovered, with an agility that has much to teach stagnant Europe and dirigiste Asia.
Brooke Masters and Alex Barker, Financial Times – Twelve global banks that have been publicly linked to the Libor rate-rigging scandal face as much as $22bn in combined regulatory penalties and damages to investors and counterparties, according to Morgan Stanley estimates.
MUNICIPAL BANKRUPTCY: Bankruptcy in California Isn’t Seen as a Trend
Mary Williams Walsh, NY Times – As San Bernardino, Calif., moved toward bankruptcy this week, municipal bond analysts were questioning how widespread the fiscal distress may prove to be, but were not predicting a wave of defaults.
CORPORATE ETHICS: The Spreading Scourge of Corporate Corruption
Eduardo Porter, NY Times – Perhaps the most surprising aspect of the Libor scandal is how familiar it seems. Sure, for some of the world’s leading banks to try to manipulate one of the most important interest rates in contemporary finance is clearly egregious. But is that worse than packaging billions of dollars worth of dubious mortgages into a bond and having it stamped with a Triple-A rating to sell to some dupe down the road while betting against it?
Michael Rothfeld, Scott Patterson, and Jacob Bunge, WSJ – Futures-industry regulators missed multiple possible warning signs over the years about major problems at Peregrine Financial Group Inc., including several raised by their own investigators.
Jia Lynn Yang, Washington Post – While president of the Federal Reserve Bank of New York, Timothy F. Geithner pressed British regulators to reform the way a critical global benchmark called the London interbank offered rate, or Libor, is calculated, according to a June 1, 2008, e-mail obtained by The Washington Post.
J.P. MORGAN: J.P. Morgan Second-Quarter Profit Fell 8.7%, Losses from “Whale” much bigger than previously reported
Saabira Chaudhuri and Dan Fitzpatrick, WSJ – J.P. Morgan Chase & Co.’s second-quarter earnings fell 8.7% from a year ago, on a double-digit decline in revenue and a $4.4 billion trading loss at its Chief Investment Office.
Sharon Terlep and Sam Schechner, WSJ – General Motors Co. and France’s PSA Peugeot-Citroën SA took dramatic steps aimed at overhauling their ailing European operations that could spark a broader restructuring of the Continent’s beleaguered auto industry.
SEC INVESTIGATION: In China, Little Urge to Audit the Auditors
Floyd Norris, NY Times – Optimism appears to be rising that the Securities and Exchange Commission can reach some sort of accommodation with Chinese authorities to get help in investigating a wave of frauds at Chinese-based companies. The deceits have humiliated auditors and money managers who trusted or vouched for the companies, while enriching short-sellers who spotted the frauds early.