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Morning Reading
Good morning. Today, a New York Times budget memo, the price of drugs (legal and illegal) and the battle of the stand-up economists.
New York Times cuts all newspaper and magazine subscriptions (NY Observer) From the internal memo:
Sorry about this but the money we spent on these papers can be put to better use like paying freelancers. As always, thanks for your cooperation and understanding.
The cocaine problem at London banks (Bloomberg) Bonuses have plummeted but so has the price of blow.
"I was buzzing at work because of flickering screens, and I was managing lots of money," Freedman says, as he smokes a cigarette and nurses a glass of water at a pub in North London. "When the market shuts, how do you keep that buzz going?"
Brownfields turn green (Daily Climate) Very smart:
Known as "brownfields," old industrial sites and landfills that have been cleaned to a certain standard often languish for years waiting redevelopment. Most are already connected to the electric power grid, eliminating the need to build miles of costly transmission lines across pristine lands to bring the power to market.
Goldman's CEO says the right things about risk (Financial Times):
It is not enough even that all exposures be identified. An institution's assets must also be valued at their fair market value - the price at which willing buyers and sellers transact - not at the (frequently irrelevant) historic value. Some argue that fair value accounting exacerbated the credit crisis. I see it differently. If institutions had been required to recognise their exposures promptly and value them appropriately, they would have been likely to curtail the worst risks. Instead, positions were not monitored, so changes in value were often ignored until losses grew to a point when solvency became an issue.
How drug ads changed health care (NPR) NPR continues its series on how health care got so expensive.
Battle of the Stand-Up Economists (PBS NewsHour)
Actually, you weren't the first, NewsHour. I interviewed him a year and a half ago.
Goldman's CEO is NOT quite saying the same things, and quite frankly, I think he's a hypocrite. Take for example this quote:
"Understandably, there has been much discussion about the concept of “too big to failâ€. There is consensus that a clear resolution authority – the mechanism to oversee and execute an orderly liquidation of a failing firm – is necessary. But, when systemic problems surface, regulators need the tools to limit their impact and minimise the need for public capital. "
Goldman garanteed that they would not fail buy making risks and then pawning off the risk on the public sector.
It's big-corporate socialism. We live in a corporate socialist state where corporations can take all the risk they want and then use the government as insurance on the risk.
There's a story in on NPR today about peer-to-peer micro lending company making inroads into the U.S. Who knows how many other better solutions to these giant banks the market might have produced if we'd not bailed them out. The short-term pain might have been a little worse but in the long run we'd have been better off because the market would have produced better solutions.
Now, we've got the same old big banks around doing the same old thing, turning the market into a giant hedge-fund casino, writing derivatives on everything and leveraging investment instead of actually MAKING investments into the economy.
(Yes, I saw Michael Moore's film, but I knew this already.)
