TOP NEWS: Economy: October 15th, 2012
Top Five News and Analysis Links (Excerpts Below)
- Fed Should Push to Cut Biggest Banks Down to Size
- Fundamental Economics For Next President
- In the High-Tech Patent Wars, an Inventor’s Lament
- Citigroup: Making The Good Bank-Bad Bank Model
- 2 From U.S. Win Nobel in Economics
Excerpts and More Top News and Analysis: (New updates shortly)
REGULATION: Fed Should Push to Cut Biggest Banks Down to Size - BLOOMBERG
Daniel Tarullo, a governor of the Federal Reserve System, spoke for the first time last week about potentially imposing a size cap on the largest U.S. banks. His language, naturally, was that of a central banker.
REGULATION: Dodd-Frank? Not Such a Drag After All – BUSINESSWEEK, NICK SUMMERS
From the perspective of hedge fund managers, the Dodd-Frank Act is, in so many ways, a huge drag. The law requires them to register with the Securities and Exchange Commission. To supply reams of sensitive data on trading positions. To screen potential investors more carefully. To hire compliance officer after compliance officer. How could all of this not eat into profits and hamstring competitiveness?
REGULATION: The Speculators Win a Round – NYT, EDITORIAL
A court ruling on derivatives trading could threaten other needed reforms.
POLITICS/ECONOMY: Fundamental Economic Requirements For Next President – FORBES, CHARLES R. SCHWAB
Every American voter is approaching a critical decision. Of the two presidential candidates before us, who is best suited to lead our nation through the next four years? The answer to that question is a simple test: can they ignite economic growth?
POLITICS/ECONOMY: Don’t blame China for America’s decline – WP, ZACHARY KARABELL
Two things seem certain in modern presidential campaigns: Candidates will spend more time attacking each other than offering constructive alternatives, and one or both will attack China.
POLITICS/ECONOMY: Economic tug of war – WP, LAWRENCE SUMMERS
The dangerous austerity-vs.-demand cycle.
POLITICS/ECONOMY: To the Winner: Good Luck—You’ll Need It - WSJ
Whoever wins the presidential election will have to tackle five big economic problems.
PATENT LAW: In the High-Tech Patent Wars, an Inventor’s Lament - NYT
In high-tech industries, the patent system is tilted in favor large companies that are mainly engaged in incremental innovation, according to Stephen Perlman, a well-known inventor and entrepreneur.
BANKING: Citigroup: Making The Good Bank-Bad Bank Model Work - FORBES
A revised value for Morgan Stanley Smith Barney delivered a big hit to Citigroup‘s earnings in the third quarter, but the bank’s other businesses made up the slack according to the financial figures released Monday morning.
BANKING: Can Morgan Stanley’s Gorman Save Wall Street? – BLOOMBERG, WILLIAM D. COHAN
Like it or not, Wall Street, your industry has a new visionary: James Gorman, the 51-year-old, Australian-born chief executive officer of Morgan Stanley. Gorman stands out because he has chosen the opposite tack of the leaders at other major global financial services companies, “We are unambiguously business not as usual,” he told the Financial Times last week, “and have dramatically changed the shape of our firm.”
BANKING: Citi Profit Slides – WSJ
Citigroup’s third-quarter profit fell 88% to $468 million as the bank took charges tied to its debt and its brokerage joint venture, but core revenue in its main businesses continued to improve.
BANK BAILOUTS: Questions From a Bailout Eyewitness - NYT, GRETCHEN MORGENSON
Sheila C. Bair, the former F.D.I.C. chairwoman and author of a new book on the financial crisis, is well positioned to challenge the dogma of bank bailouts.
BANK BAILOUTS: Amazon.com Exposes Fraudulent Nature Of 2008 Bailouts – FORBES, John Tamny, Forbes Staff
A regular response from bank bailout apologists back in 2008 was that absent the use of taxpayer money to prop them up, lending would freeze and businesses would collapse. The above arguments were naturally ridiculous.
NOBEL ECONOMICS: 2 From U.S. Win Nobel in Economics – NYT
Alvin Roth and Lloyd Shapley were given the award for their work on market design and matching theory, and how to help make markets work better.
ECONOMY: No More Industrial Revolutions? - NYT, THOMAS B. EDSALL
An economist’s prediction that the United States faces a future of ‘epochal decline in growth’ has serious political consequences.
ECONOMY/BRIC: Sorry, But the BRIC Countries Can’t Save Us – RCP, Robert Samuelson
Just in case you didn’t hear it, that was the sound of the BRIC bubble popping.
The acronym stands for Brazil-Russia-India-China. Coined by economist Jim O’Neill of Goldman Sachs, it symbolizes the rise of once-poor countries (“emerging markets”) into economic powerhouses.
FED: Fed chief rounds on stimulus critics – FT
US stimulus ‘good for global economy’, says Bernanke
FISCAL CLIFF: Economists argue about sequestration’s effect on jobs - WP
Jobs have become a key discussion point when it comes to sequestration, or about $1 trillion in federal spending cuts set to take effect in January.
FISCAL CLIFF: Consumers Unfazed by ‘Fiscal Cliff’ - WSJ
The Outlook: Consumers appear unfazed, or just inattentive, to the “fiscal cliff” of tax increases and federal spending cuts that could kick in at the start of 2013.
SPRINT DEAL: Sprint Agrees to Sell Majority Stake to SoftBank – NYT
The $20 billion deal to sell most of itself to SoftBank of Japan is Sprint’s boldest move yet to revive its fortunes.
SPRINT DEAL: Sprint Stake - WSJ
Japan’s Softbank said it will buy a 70% stake in U.S. mobile carrier Sprint Nextel for about $20 billion, in the biggest-ever overseas acquisition by a Japanese company.
SPRINT DEAL: Softbank: From Japan’s #3, To The World’s Number #3 – WSJ
Softbank’s founder Masayoshi Son provided a refreshing — and rare — moment of male honesty this morning in acknowledging the primordial macho urges that can power corporate dealmaking.
CURRENCY: Euro steady as EU summit looms - FT
Dollar gains as traders bet on strong retail sales data.
TAX REFORM: Schumer to Tax Reform: Drop Dead - WSJ
A Senate Democratic leader lays down a partisan 2013 marker.
MARKETS: High-Speed Trading No Longer Hurtling Forward - NYT
Once the hottest new thing on Wall Street, lightning-quick computerized trading is expected to make less money this year, with profits down 35 percent from last year.
MARKETS/ IPO’S: Tone Shifts in Market as IPOs End Dull Spell - WSJ
The IPO market roared to life this past week, but no deals stand ready to take advantage of the momentum.
MARKETS: Almost There – BARRONS, Andrew Bary
At 13,329, the Dow Jones Industrial Average is in striking distance of an all-time high, driven by IBM, Home Depot, and McDonald’s. How it could get there, and what comes next.
MORTGAGE LAWSUIT: A.C.L.U. to Sue Morgan Stanley Over Mortgage Loans - NYT
In a complaint expected to be filed Monday, the American Civil Liberties Union is accusing Morgan Stanley of fueling the production of risky, expensive loans that targeted African-American borrowers.
MORTGAGES: A Risky Lifeline for Seniors Is Costing Some Their Homes - NYT
Regulators are noting new abuses tied to reverse mortgages, which let people 62 and older borrow money against the value of their homes and not pay it back until they move out or die.
RETAIL: Retail Sales Point to Stronger Consumer Spending - REUTERS
U.S. retail sales rose in September as Americans bought more cars and gasoline, while a gauge of consumer spending pointed to stronger-than-expected economic growth in the third quarter.
RETAIL SALES: U.S. Retail Sales Rise 1.1% – WSJ
U.S. retail sales rose for the third straight month in September as Americans snapped up the latest iPhones, a sign that consumers may be a little more optimistic about the recovery.
REAL ESTATE: Luxury Real Estate: Can’t Sell? Try Asking More – WSJ
In a bid to attract trophy hunters, some high-end sellers are taking a counterintuitive and risky step: raising the price.
REAL ESTATE: Buyers Are Back After Foreclosure - WSJ
Millions of families lost their homes to foreclosure after the housing crash hit six years ago. Now, some of those families are back in the housing market. Call them the “boomerang” buyers.
REAL ESTATE: Flipping houses is back in vogue - WP
Flipping got a bad rep during the housing bubble, but it’s becoming popular again as the market revives.
ENERGY/PRICES: U.S. Oil Boom Falls Short of Pump - WSJ
Surging U.S. oil production is driving down domestic benchmark crude prices and delivering a windfall to some refiners and their investors. But the oil boom is providing little relief for consumers.
ENERGY/OIL: Big oil must rediscover exploration mojo - FT
The majors have had a poor record of finding enough new reserves.
ENERGY/OIL DRILLING: Obama’s Great Alaska Shutout - WSJ
Interior bans drilling on 11.5 million acres of ‘petroleum reserve.’
BANKRUPTCY: Dewey Defied ‘Law of the Jungle’ - WSJ
A settlement to pay off some of the debt of failed law firm Dewey & LeBoeuf gave hundreds of former partners an escape hatch from ugly litigation. It also showed that such an early deal—while tricky—is possible when a law firm collapses.
EDUCATION: Why College May Be Totally Free Within 10 Years - TIME, DAN KADLEC
Higher education is in transition and with a coming proliferation in online courses could be totally free for many within a decade. The status quo won’t yield easily. But this is looking like a real answer to runaway student debt.
HEALTHCARE COST: Let Doctors Cure Health-Care Costs - WSJ, Mitchell Rabkin, John Cook
The ailing fee-for-service model could be replaced by salaried-physician groups working within a fixed budget.
HEALTHCARE: Hospital Pay Tied to Patient Happiness – WSJ
Hospitals are making changes to improve patient satisfaction in response to a shift in how the federal government pays hospitals for treating people on Medicare.
BIRTH CONTROL/ECONOMY: Contraceptive Economics - NYT, NANCY FOLBRE
Public support for effective contraception choices makes good economic sense, by a cost-benefit analysis of the sort Republicans otherwise embrace.
HEALTH/PHARMACEUTICALS: Pharmacies Fought Controls - WSJ
Compounding pharmacies, like the one at the center of the recent meningitis outbreak, lobbied in recent years to beat back more regulation by the FDA.
DIGITAL PRIVACY: Seeking Privacy in a Networked Age – NYT, NICK BILTON
While you’re going about your daily life, having dinner with friends or going to a concert, people are watching you on Twitter, Facebook, Foursquare, Path and an interminable list of other social networks.
TRADE: At Trade Fair, Chinese Exporters a Bit More Optimistic – NYT
With only a few exceptions, exporters at the opening day of the Canton Fair, China’s main export show, said that demand from emerging markets and the United States was beginning to recover.
AGRICULTURE: Farming’s Future: In the City? – WSJ
Advocates of “vertical farming” say growing crops in urban high-rises will eventually be both greener and cheaper than conventional agriculture.
BUSINESS NEWS & ANALYSIS
TECH: Microsoft Makes New Push Into Music - NYT, By NICK WINGFIELD
After past disappointments, Microsoft has paired its latest digital music offering with the Xbox and Windows as part of a broad set of bets to regain ground it has lost to Apple and other competitors.
TECHNOLOGY/EARNINGS: Siemens warns of fragile global growth
Weaker performance of emerging countries cited.
TECHNOLOGY: New Gadgets Assist the Blind – WSJ
A number of companies are developing technologies, such as smartphone apps and voice-controlled TV controls, that they say can help visually impaired users to feel more connected to society.
ADVERSTISING: ‘Mayhem,’ Crowds and Musicians Drive Conference - NYT, STUART ELLIOTT
Allstate Insurance’s case study of a campaign featuring its Mayhem character was among the best received presentations at this year’s Association of National Advertisers conference.
MEDIA: Radio Is Alive as Ever, Bob Pittman Says - WSJ
After almost a decade of self-imposed corporate exile, Bob Pittman is back in the corporate saddle and on a mission. In his new role heading Clear Channel, he has a grandiose goal: to reinvent radio.
HIRING/VETERANS: Firms Press to Hire Young Vets - WSJ
Corporate initiatives to spur the hiring of U.S. military veterans are proliferating. General Electric Co. is to unveil the latest such step on Monday.
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