TOP NEWS: Economy: July 20, 2012
- Weak data fail to dent US businesses
- BOE: NY Fed Gave No Warning on Rate-Rigging
- Why bright spot in housing won’t save economy
- Nation’s Biggest Car Retailer Posts Record Profit
- More Shareholders Saying No on Executive Pay
Excerpts and more top stories
ECONOMIC GROWTH: Weak data fail to dent US businesses
Anjli Raval and Robin Harding, Financial Times – Economic activity in the US “continued to expand at a modest to moderate pace in June and early July”, according to the latest Beige Book survey of business conditions by the Federal Reserve. The report offers some reassurance that weak data recently has not dealt a catastrophic blow to business confidence.
Mark Scott, NY Times – American authorities did not warn British officials about the rate-rigging scandal at the height of the financial crisis in 2008, according to documents released by the Bank of England on Friday. The documents will increase pressure on American and British officials, who have come under mounting scrutiny from politicians about why they did not respond more quickly to potential illegal activity at some of the world’s largest banks.
Zachary A. Goldfarb and Jia Lynn Yang, Washington Post - While many lost because of the rigging, many others, aside from the banks, may have benefitted. For example, Barclays was found to have reported sometimes artificially low rates, so consumers whose mortgages, auto loans or student loans were linked to Libor may have paid less.
Elizabeth Warren Washington Post, opinion - The Libor scandal is more than just the latest financial deception to come to light. It exposes a fraud that runs to the heart of our financial system.
Nin-Hai Tseng, Fortune/CNN Money – Since the 1970s, housing rebounds have served as reliable signs of brightening economic prospects. Not this time around.
Bill Vlasic, NY Times – The strong performance was another indication of the solid comeback of the United States auto market from its recession levels three years ago.
Nell Minow, Bloomberg – Investors are recognizing that excessive pay for chief executive officers does more than shave a few cents off earnings; it also provides important clues about the alignment of executives’ and shareholders’ interests.
Gregory Zuckerman and Serena Ng, WSJ – The U.S. government is speeding up efforts to sell billions of dollars of remaining assets that were acquired in the controversial bailout of the financial system four years ago. The Treasury Department and Federal Reserve are planning to sell assets ranging from bank shares to troubled mortgage securities as part of a final push to extricate the government from the aid doled out in the financial meltdown.
Michael S. Derby, WSJ – The Federal Reserve Bank of New York released a report Thursday that advocates limiting some types of withdrawals from money-market funds in a bid to protect those funds from suffering the equivalent of a bank run.
Christine Harper, Bloomberg – Wall Street’s five biggest banks reported the worst start to a year since 2008.They’re still asking investors to be patient. Most of the banks have failed since 2009 to earn a return that exceeds their cost of capital, said Roy Smith, a finance professor at New York University’s Stern School of Business and a former Goldman Sachs partner.
Josh Mitchell, WSJ – The Obama administration urged Congress to make it easier for people to discharge a portion of certain student debt by filing for bankruptcy protection. The recommendation, in a report by the Education Department and the Consumer Financial Protection Bureau, wouldn’t affect the vast majority of student debt, which is issued by the federal government. It would apply only to the roughly$150 billion, or 15% of total outstanding student debt, issued by private lenders such as SLM Corp.’s Sallie Mae and Wells Fargo & Co.
MICROSOFT: Microsoft Posts Rare Loss
Shira Ovide, WSJ – Microsoft Corp. posted a rare quarterly loss because of a previously announced charge for its money-losing Internet business. The $492million loss reflected a $6.19 billion charge for Microsoft’s online division, which includes the Bing search engine and MSN Web portal. The unit hasn’t met the company’s expectations for advertising sales. The software giant continues to show signs of strength in selling software to corporations.
Abram Brown, Forbes – Despite headlines of an expanding bubble, Jason Wolf and Mike Winer, the men running Third Avenue Real Estate Value fund, are as bullish as ever over the former British colony.
BANKING/HSBC: HSBC Reminds Us Why Anger at Bankers Is the Norm
William Pesek, Bloomberg, Opinion – Turns out, HSBC is a more deserving target for the 99 percent than we knew. While it obsesses over a few demonstrators outside its Hong Kong headquarters, HSBC has been cited for helping terrorists, drug cartels and other criminals launder money, according to a U.S. Senate investigation. That includes, among others, transactions involving North Korea, Myanmar and Sudan, an axis of evil customers.
ECONOMIC THEORY: How the Elites Built America’s Economic Wall
Virginia Postrel, Bloomberg, Op-Ed – An examination of some long-standing economic theories that are no longer working, relating to how income, capital, labor, real estate and regulation interact between varying regions.