Marketplace Scratch Pad

Morning Reading

Scott Jagow Jun 8, 2009

A world economic group gives a somewhat optimistic report about the global economy this morning. The OECD says there’s a “reduced pace of deterioration” in most of its member countries with stronger signs of a possible trough in Canada, France, Italy and the UK. The new “better,” it seems, is things getting worse more slowly. Other items of interest:

American journalists may have a lot to complain about these days, but this kind of puts things in perspective. Two American reporters, Laura Ling and Euna Lee, have been sentenced to 12 years hard labor in North Korea. The two young women, who work for Al Gore’s Current TV, were convicted of crossing into North Korea’s territory. The good news for them is that they’ll probably be used as bargaining chips. From AP:

Washington’s former U.N. Ambassador Bill Richardson called the sentencing part of “a high-stakes poker game” being played by North Korea. He said on NBC’s Today show that he thinks negotiations for their “humanitarian release” can begin now that the legal process has been completed. Other South Korean analysts also said they expect the two to be freed following negotiations.

NPR considers the arguments for and against taxing employee health care benefits to help pay for a health care overhaul:

“This is one of the rare circumstances where you could actually raise money while improving efficiency,” said Katherine Baicker, an economist at Harvard’s School of Public Health.

She cites an economic axiom: When you tax an activity, you get less of it. When you subsidize an activity, you get more. “We’re subsidizing health insurance,” Baicker said. “So we’re getting more and more and more health care consumed.”

But unions and other groups oppose the idea:

“The justification comes from all of the ivory tower economists who say if you were to tax these benefits, it would make everybody more cost-sensitive in health care and help to hold down costs — for which, I submit, there is no factual evidence,” said Gerald Shea, who monitors health policy for the AFL-CIO.

Over the weekend, the New York Times had a disturbing story about Wells Fargo and its lending practices in Baltimore. The city and the bank go to court later this month over the issue. The Times interviewed one of the loan officers quoted in affidavits:

Wells Fargo, Ms. Jacobson said in an interview, saw the black community as fertile ground for subprime mortgages, as working-class blacks were hungry to be a part of the nation’s home-owning mania. Loan officers, she said, pushed customers who could have qualified for prime loans into subprime mortgages. Another loan officer stated in an affidavit filed last week that employees had referred to blacks as “mud people” and to subprime lending as “ghetto loans.”

“We just went right after them,” said Ms. Jacobson, who is white and said she was once the bank’s top-producing subprime loan officer nationally. “Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.”

Wells Fargo responds this way:

“We have worked extremely hard to make homeownership possible for more African-American borrowers,” wrote Kevin Waetke, a spokesman for Wells Fargo Home Mortgage. “We absolutely do not tolerate team members treating our customers or others disrespectfully or unfairly, or who violate our ethics and lending practices.”

Definitely a court case to watch.

Guess who’s baaack? Steve Jobs returns to Apple later this month, apparently just in time for the company to announce a new, cheaper iPhone model. From ABC News:

“We’ve confirmed with a supplier in Taiwan that they’re producing a new iPhone, probably to go on sale in mid-July,” said Gene Munster, an analyst with Piper Jaffray who tracks Apple, the iPhone and Jobs’ health.

Munster said he expects the price to be $149, while Kathryn Huberty of Morgan Stanley writes that a $99 model, which she thinks could be announced today, might double iPhone sales.

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