TOP NEWS: Economy: August 22nd, 2012
- Rally takes S&P to highest in four years
- Should the Fed Risk Inflation to Spur Growth?
- Profits in G.M.A.C. Bailout to Benefit Financiers, Not U.S.
- Orszag: Private-Market Can’t Cut Medicare Cost
- U.S. Companies Worry About Russia in the W.T.O.
Excerpts and More Top Stories
MARKETS: Rally takes S&P to highest in four years - FT
The benchmark S&P 500 index has hit its highest level in more than four years, spurred by solid gains in energy, technology and financial stocks.
MARKETS: Split in Private-Equity Funding - WSJ
The private-equity industry is dividing between haves and have-nots as investors grow pickier and more closely scrutinize recent performance.
MARKETS: Facebook’s stock decline reflects doubts about give-it-away approach - WP
Wall Street seems skeptical of a founding principle of Silicon Valley’s business culture — that the best way to build a company is to ignore profits in favor of growing a huge audience.
MARKETS/TRADING: Time to Treat High-Speed Trading Like Another Risk to Manage - WSJ
No amount of testing or effort will ever ensure error-free software. Better to limit potential mistakes and lessen their financial impact.
MARKETS: Why I’m not buying the “equities are dead” argument - FORTUNE, OP-ED
Jeff Westmont: Don’t believe the naysayers — stock market returns beat real GDP growth over time. It’s all about cash flow.
FED/STIMULUS: Should the Fed Risk Inflation to Spur Growth? - NYT OPINION
ROOM FOR DEBATE: The specter of runaway inflation has haunted many economists since the 1970s. But is this fear keeping the economy stagnant?
STIMULUS: Is Deficit Spending the Answer? - NYT ANALYSIS
CASEY B. MULLIGAN: Different types of deficit spending affect the economy in different ways, some helping with job creation and others rewarding those who do not work.
BANKING/BAILOUTS: Profits in G.M.A.C. Bailout to Benefit Financiers, Not U.S. - NYT ANALYSIS
STEVEN M. DAVIDOFF: The rescue of G.M.A.C. is a case study in how bailouts can linger and profits, when they do come, flow not to the government but to the Warren E. Buffetts of the world.
BANKING/CREDIT: BofA Exits Credit Protection - WSJ
Bank of America said it has stopped selling to credit-card customers products that suspend borrowers’ minimum monthly payments in the event of a job loss or other hardship as regulatory scrutiny of these offerings grows.
BANKING INVESTIGATION: Fed probes RBS over dealings with Iran - FT
Bank is being investigated for possible breaches of sanctions after it volunteered information to Fed and UK regulators 18 months ago.
BANKING SCANDALS: A Scorecard For This Summer’s Bank Scandals - PRO PUBLICA
Libor, credit card overcharges, money-laundering – it can be hard to keep track of it all. So we’ve laid out the details on some of the most notable bank scandals of the summer.
MEDICARE: Peter Orszag: Private-Market Tooth Fairy Can’t Cut Medicare Cost - BLOOMBERG OP-ED
The vast bulk of health-care costs arise from an extremely small share of patients, whose insurance will inevitably bear a substantial share of their expenses. That’s why competition in health care doesn’t work as well as in other sectors.
HEALTHCARE SPENDING: Rationing Health Care More Fairly - NYT ANALYSIS
EDUARDO PORTER: The United States already rations health care, mostly by income level. With more spending cuts inevitable, the question is how to do it fairly.
EXPORTS/RUSSIA/WTO: U.S. Companies Worry About Effect of Russia Joining W.T.O. – NYT
ANDREW E. KRAMER: Congressional inaction on trade rules may put American exporters at a disadvantage in the Russian market.
JOBS/LABOR MARKET: The US labour market doesn’t work - FT, OPINION
SEBASTIAN MALLABY: A quarter of a century ago, the US workforce was a wonder. But over the past decade, a profound change has come about.
JOBS/EMPLOYMENT PRACTICES: More Firms Bow to Generation Y’s Demands - WSJ
As millennials enter the workforce, more companies are jumping through hoops to accommodate their demands for promotions and flexible work schedules–much to the annoyance of their older co-workers.
HOUSING: More time for foreclosure reviews - WP
Pushed out of your home because of a foreclosure? You’ve got an extended opportunity to have the process reviewed for any possible errors.
FEDERAL PAY: President extends federal pay freeze - WP
President Obama told congressional leaders Tuesday that he is extending a two-year pay freeze for federal employees until at least next spring because Congress has not agreed on a budget for the next fiscal year.
DROUGHT/SHIPPING: As Barges Sit Idle Along the Mississippi, the Economic Costs Grow - TIME
As the Midwest experiences its worst drought in 50 years, the Mississippi River is hitting water levels not seen since 1988, a year viewed by those in the industry as a benchmark of hard times.
DROUGHT: Drought Gets Its Close-Up - WSJ
On an annual tour of America’s farm fields, many analysts and investors said they were taken aback by the poor state of the crops.
FED: How Volcker Created a Gold Standard Without Gold - BLOOMBERG, OP-ED
William L. Silber: On Aug. 14, 1979, a week after he took office as chairman of the Federal Reserve, Paul Volcker led his first meeting of the Federal Open Market Committee.
ECONOMY: Anstalt’s Shadow Looms Over Excessive Credit Today – RCM
Robert Romano: Our current economic cycle bears a striking similarity to global events some 80 years earlier at the onset of the Great Depression.
FANNIE-FREDDIE MAC: Treasury Revision of Fan/Fred Payments Seals Their Fate - RCM
Peter Wallison: The Treasury Department’s announcement last Friday-changing the payment arrangements on the preferred stock it holds in Fannie Mae and Freddie Mac-seems to seal their fate.
REGULATION/EPA/COAL: Court Voids Rule on Coal Pollution - WSJ
A federal appeals court rejected the EPA’s latest effort to limit soot- and smog-forming air pollution that blows across state lines, providing a short-term lifeline for aging coal-fired power plants.
REGULATION: A Coca-Cola Solution to High Gas Prices - WSJ OP-ED
Andrew Morriss, Donald Boudreaux: Regulations interfere with competitive markets and render all of us more vulnerable to supply disruptions.
REGULATION: GM Faces Its Own Regulatory Cliff - WSJ OP-ED
Holman W. Jenkins, Jr.: Don’t blame the UAW for the next auto company bailout.
ROMNEY/FISCAL POLICY: Romney’s 400 Economists Made One Big Whiff - FORBES, OP-ED
BRIAN DOMITROVIC: One big thing is missing from Romney’s economic plan: where is the plank on monetary reform?
ROMNEY/FISCAL POLICY: Economists Risk Labeling as Political Hacks - BLOOMBERG, OP-ED
Laurence Kotlikoff: Some 500 of my colleagues in economics have signed a statement applauding Mitt Romney’s economic plan and condemning President Barack Obama’s handling of the economy. The statement represents a disservice to the economics profession as well as to the statement’s signatories, five of whom are Nobel laureates.
FEDERAL INTERVENTION: White House Worked With Buyout Firm to Save Plant - WSJ
The story of how a Sunoco refinery in Philadelphia was rescued is an example of how the private-equity industry is a more complicated place than the image kicked up by this year’s presidential election.
RULE OF LAW: A Nation Adrift From the Rule of Law – WSJ OP-ED
David Skeel: In our crumbling commitment to the rule of law, we are losing sight of the basic principles that made us great in the 20th century.
ENERGY/TAX CREDITS: Extend Wind-Power Tax Credit Now, So It Can Die Later - BLOOMBERG, EDITORIAL
Since U.S. President Barack Obama brought it up, repeatedly, last week during his campaign swing through Iowa, wind power has emerged as one of the most clear- cut issues of the political season.
PATENT LAWSUIT: Apple-Samsung patent battle nears end - FT
Both the US and South Korean technology groups lay claim to the spirit of Silicon Valley innovation as they deliver their closing arguments.
PATENT LAWSUIT: Sue Different - NEW YORKER, OP-ED
Nicholas Thompson: If our goal is a technology industry that innovates, then we should hope for Apple’s patent lawsuits to be dismissed.
PATENTS: Googlers are getting publicly fed up with software patents as a whole - WP
While some might see this stance as a reaction to Google’s legal woes, the company has been adamantly anti-patents for a while.
APPLE/MANUFACTURING: Audit: Conditions Improve at Foxconn - WSJ
Top Apple supplier Foxconn has fixed some of the most pressing workers’ rights violations at three of its Chinese factories, according to a progress reportan auditor.
MOBILE: Are Unlimited Data Plans Dead? T-Mobile USA Says No - NYT
T-Mobile USA said that it will begin offering a plan that does not limit the use of data for things like browsing the Web and watching videos.
NIKE/CONSUMER PROTEST: Nike Urged to Drop LeBron X Shoes - WSJ
The National Urban League’s president urged Nike to abandon plans to release its new LeBron X sneakers, due to complaints about the athletic-gear maker’s rising sneaker prices.
BEST BUY LOSSES: Best Buy Net Sinks as Turmoil Builds - WSJ
Best Buy may be running out of time to turn around its business after posting a 91% drop in profit and suspending its annual earnings forecast.
DELL PROFITS: Dell Outlook Gloomy as PCs Slump
WSJ Dell reported sagging second-quarter profits and warned of more tough times ahead as the company continues to transition away from its original business selling personal computers.
FOOD/SMALL FARMING: Celebrate the Farmer! - NYT OP-ED
MARK BITTMAN: To give more people access to our bounty of fresh food, we need to support real farmers, not businessmen riding half-million-dollar combines.
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