March 29, 2024

Economix Blog: Weekend Business Podcast: European Debt, Bank Fees and Beats Headphones

New governments have been installed in Italy and Greece and Greek debt restructuring is under way, but European credit markets remain shaky.

One cause may be the questions that are being raised about the status of credit default swaps that were bought as insurance in the event of a Greek default, Gretchen Morgenson says on the new Weekend Business podcast.

In her column in Sunday Business, she says that not all the holders of Greek bonds have agreed to take a “voluntary” discount, or haircut, on the debt. Some of them bought credit default swaps that, they believed, provided insurance in the event of a Greek default. If that insurance provides solid protection, then it may not be in their interest to agree to a reduction in the value of their bonds. But the usefulness of the credit default swaps isn’t entirely clear in this situation, adding another layer of difficulty to resolving the Greek crisis.

In a separate discussion, Richard Thaler, the behavioral economist, says that while business executives realize that they shouldn’t allow their companies to become the butt of jokes on late-night talk shows, many of them don’t seem to know how to act on that principle. A case in point, he says, is the recent controversy over Bank of America’s decision to impose a fee for use of its debt cards — a fee that was later scrapped. In the Economic View column in Sunday Business, he writes that customers tend to be outraged when businesses appear to be “gouging” them. And people may get that impression when businesses begin to charge for services that had previously been free.

In another conversation on the podcast, David Gillen and Andrew Martin talk about the pricey Beats headphones being purveyed by Dr. Dre, the hip-hop artist, in a new business venture.

You can find specific segments of the podcast at these junctures: Gretchen Morgenson on European debt (27:05); news headlines (18:05); Beats headphones (14:32); Richard Thaler (7:25); the week ahead (1:49).

You can download the program by subscribing from The New York Times’s podcast page or directly from iTunes.

Article source: http://feeds.nytimes.com/click.phdo?i=555c4387e6f82b5111eb48565133c0e6

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