News from around the web: 2009-08-27

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  • July U.S. new home sales jump most in four years

    Sales increased 9.6%, the most since February 2005, to a 433,000 annual pace, figures from the Commerce Department showed Wednesday in Washington. The number of houses on the market dropped to the lowest level in 16 years.

  • Northern Trust Pays Back TARP Warrants – DealBook Blog – NYTimes.com

    Northern Trust said Wednesday that it had repurchased warrants issued to the Treasury Department for $87 million, becoming the latest bank to free itself from the government bailout program…Northern Trust joins Goldman Sachs, Morgan Stanley, U.S. Bancorp, American Express, State Street and other big banks that have so far paid back their bailout money.

  • F.D.I.C. Eases Some Rules for Buying Banks – DealBook Blog – NYTimes.com

    Very much in line with the article I just wrote: "Facing a dearth of traditional bank buyers, the Federal Deposit Insurance Corporation board moved Wednesday to relax some of its proposed rules while still imposing tough standards on private equity firms seeking to buy troubled financial institutions, Eric Dash of The New York Times reports."

  • US hotels cut back on luxury as corporate hospitality slumps

    Luxury resorts let star ratings lapse and reduce service levels amid slump in corporate hospitality with companies fearing criticism if they send staff to conferences

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  • AEI – China: Bogus Boom?

    China’s aggressive attempts to maintain an 8 percent growth rate for an economy that is export-oriented in a world in which global trade volumes are collapsing carry substantial risks. It is already clear that China’s ambitious production goals are outstripping the capacity of the domestic economy to absorb fully the output generated under those growth goals. Clearly, China’s State Council, by overruling the central bank’s wish to rein in rapid money growth, is prepared to risk higher inflation in order to keep China’s economy on the 8 percent growth path laid out at the start of the year.

  • Mossberg Solution: Iphone vs. BlackBerry – WSJ.com

    The old adage that the grass is always greener on the other side of the fence can be extended to our technology cravings. Even the person holding the shiniest new gadget can’t help but eye a neighbor who has a different device and wonder, "What does that do that mine doesn’t?" Thoughts like these are especially prevalent when it comes to the devoted owners of BlackBerrys and iPhones. All too often, the people carrying these smart phones are curious about what one device has that the other lacks. This week, I’m going to save you the trouble and outline some of the personal usage ups and downs to each device.

  • U.S. Investors Abandon Europe – WSJ.com

    At the peak of the real-estate boom, U.S. investors dominated the game in European property. Now, with the exception of a few deals, the Americans have retreated and are now net sellers of European commercial property.

  • Thomas Frank: Health Care and the Soul of the Democratic Party – WSJ.com

    At this point, it’s fair to ask whether Democrats remember why health care is their issue in the first place. As health-care debates always have done, this one has pushed to the fore all the big questions about the rightful role of government, and too many Democrats have sought to avoid them with mushy appeals to consensus and bipartisanship. The war is on and if Democrats want to win they need to start fighting.

  • Wall Street Fox Beds Down in Taxpayer Henhouse: David Reilly – Bloomberg.com

    Hat tip Scott "What do you do with someone who played a key role in the deregulatory push that ultimately led to the government’s $700 billion Wall Street bailout? In Washington, the answer is easy: Have him help oversee the rescue."

  • The Next Credit Bubble Is Now | The Big Money

    Hat tip Judith. "Mortgage-backed securities—and the bankers who loved them—wreaked havoc last year, helping to pitch us into the deepest downturn since the Great Depression. Are you ready for a replay? Gird your loins. The signs are growing that there’s a new Wall Street gold rush under way—for those complex bundles of mortgage loans that fueled banks’ profits between 2005 and 2007. This year, prices for mortgage-backed securities are rocketing as federal stimulus dollars flood the market. But the difference with this "boom" is the center of gravity has shifted: from giddy, cowboy bankers to the Federal Reserve."

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  • China moves to address overcapacity in emerging sectors like wind power – English – Xinhua

    China’s State Council, the Cabinet, warned Wednesday of overcapacity in emerging sectors such as wind power, saying the country would move to "guide" development troubled by overcapacity and redundant projects. Overcapacity has persisted in the steel and cement sectors, while redundant projects have surfaced in the emerging sectors of wind power and polysilicon, said a statement issued after an executive meeting of the State Council, presided over by Premier Wen Jiabao.

  • Durable goods orders surge on aircraft | Reuters

    Durable goods orders jumped 4.9 percent, the largest advance since July 2007, after falling by a revised 1.3 percent in June, previously reported as a 2.2 percent drop, the Commerce Department said.

  • Japan exports dip, stimulus effect may be waning | Reuters

    Japan’s exports slipped in July as annual drops in exports to the United States and China accelerated, in a sign that the impact of stimulus measures in major economies worldwide may be starting to wane.

  • The credibility of farmers, priests and prostitutes – and bankers? – Michael Pettis

    the current financial crisis was not “caused” by derivatives or complex securitizations. It was caused, as nearly all financial crises in history have been caused, by banks being forced to accommodate excess liquidity and taking on too much risk – something they must do when monetary conditions are too loose for too long. Making opaque investments in derivatives and complex securitizations is, of course, one way to take on too much risk, but it in no way caused the excessive risk-taking…This is one of the reasons why I take it almost as an article of faith that the massive expansion in Chinese credit will lead inevitably to a massive expansion in bad lending, and that the “great” economic data is actually worryingly weak given the amount of resources, especially banking resources, expended to produce those numbers.

  • Sarkozy tightens bank bonus rules – FT

    Mr Sarkozy unveiled a series of measures aimed at tightening French rules on banking pay and improving the disclosure of bonus payments. These include deferring traders’ bonuses over three years, paying one-third of awards in shares, and imposing strict long-term performance criteria in order to receive full payment. The government has also appointed bonus watchdogs at banks that have received state aid.

  • Senator Edward Kennedy dies at age 77 | Politics | Reuters

    U.S. Senator Edward Kennedy, a towering figure in the Democratic Party who took the helm of one of America’s most fabled political families after two older brothers were assassinated, died at age 77, his family said.

  • To Opponents Of The Stimulus – Bruce Bartlett

    According to a recent USA Today poll, 57% of Americans think the $787 billion fiscal stimulus enacted in February either has had no effect or made the economy worse… But there is still the substantive question of whether we would be doing as well or worse if there had been no stimulus.

  • French Bank’s Parent to Guarantee Toxic Assets – NYTimes.com

    The French investment bank Natixis said on Wednesday that its partially state-owned parent company would guarantee about €35 billion in toxic assets on its books, in what amounts to a government-engineered reinforcement of its troubled finances.

  • Saying ‘I’m Sorry’ Influences Jurors

    Apologizing for negative outcomes—a practice common even with children—may lead to more favorable verdicts for auditors in court, according to researchers at George Mason University and Oklahoma State University. The results of the study will be available in a forthcoming issue of Contemporary Accounting Research.

  • What She Sees In You: Facial Attractiveness Explained

    "We have found that women evaluate facial attractiveness on two levels — a sexual level, based on specific facial features like the jawbone, cheekbone and lips, and a nonsexual level based on overall aesthetics,"

  • The Final Days of Merrill Lynch – William Cohan

    Last September, as Wall Street turned to rubble and panic threatened to come unleashed, Ken Lewis, the CEO of Bank of America, agreed to swallow one of the country’s most toxic investment houses. The deal was not altogether voluntary; as details have slowly emerged, the coercive role of the Fed and Treasury has loomed larger. What exactly happened in the weeks leading up to the merger? Did the deal save us all from economic apocalypse? And what does the government’s unprecedented role in it portend for the future of our economy?

     

    Distraction of the Day: Drew Brees is scary accurate

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