Good morning. Hope you had a good weekend. To start the week, an interview with Michael Lewis about his fascinating new book. Might AIG actually pay us back? And a scary number:
Goldman Sachs derivative liability = 33,823% of assets (The Bankwatch)
The part that awed me, is that BofA and Citi now have more derivative exposure than they did in 2007! Huh! What is Timothy Geithner being paid for? I have to admit after TARP and the apparent hands on approach I like most assumed things were being fixed, but apparently not.
This simply adds to the point that despite all the histrionics and efforts in Washington, nothing has been learned and the American Banking system is now at least at as much risk now as in 2007, pre crash.
It's time to take on China (Paul Krugman/NYT)
Most of the world's large economies are stuck in a liquidity trap -- deeply depressed, but unable to generate a recovery by cutting interest rates because the relevant rates are already near zero. China, by engineering an unwarranted trade surplus, is in effect imposing an anti-stimulus on these economies, which they can't offset.
So how should we respond? First of all, the U.S. Treasury Department must stop fudging and obfuscating.
AIG might actually pay us back (Slate)
...it turns out that the efforts to prop up AIG are also working out much better than expected. AIG still owes the Fed and the Treasury a combined $127 billion. But--surprise!--AIG is paying a lot of its debts back. And there's a not too far-fetched scenario in which we come close to breaking on our reluctant investment in the company.
Will the national broadband plan come up short? (NPR) It's being unveiled tomorrow...
When it comes to speed and price of Internet connections, Benkler found that American cities trail far behind their counterparts in South Korea, Sweden -- even eastern Slovakia. The big reason, Benkler says, is competition. You need lots of different companies competing for your Internet business, hustling to provide better service at a lower cost than their rivals. The way other countries do this is by essentially forcing the big companies to share their wires with the smaller ones. Benkler admits that won't be an easy sell in the U.S.
The Big Short: Inside the Doomsday Machine (CBS) Fascinating 60 Minutes interview with Michael Lewis about his new book on those who bet against the subprime market: