January 24, 2021

Economix Blog: Weekend Business Podcast: Too Big to Fail, Global Growth, Robert Frank and a Madoff Update

In the recent financial crisis, the federal government spent billions of dollars bailing out institutions that were deemed too big to fail.

In the new Weekend Business podcast, Gretchen Morgenson says that despite the passage of the Dodd-Frank law, some financial institutions have grown even bigger. As she writes in Sunday Business, though, there is still some interest in Congress in changing that, despite lobbying from banks.

European leaders reached an agreement aimed at averting a possible breakup of the euro zone, as I discuss in the news update portion of the podcast. But neither Europe nor the United States is likely to be the fastest-growing region in the world in the decades ahead, in the view of Jim O’Neill, the chairman of Goldman Sachs Asset Management, whom I interview in my column in Sunday Business. He says Brazil, Russia, India and China — plus Indonesia, Mexico, Turkey and South Korea — are likely to be global growth engines in the decades ahead.

In another part of the podcast, Diana Henriques provides an update on the case of Bernard Madoff, who ran the biggest Ponzi scheme in history, and who has continued to correspond with her from his prison cell.

Also on the podcast, Robert Frank of Cornell University says the economy depends on better government, not less government, and cites a personal experience at his local Department of Motor Vehicles office as an example of the benefits that more efficiency can bring.

You can find specific segments of the podcast at these junctures: Gretchen Morgenson on scaling back banks (27:03); news headlines (21:03); Diana Henriques on the Madoff case (17:49); Robert Frank (8:20); the week ahead (1:48).

As articles discussed in the podcast are published during the weekend, links will be added to this post.

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=617b4f03e9b8ed878ba5522624d60f14

Economix Blog: Weekend Business: Podcast: European Debt, Bank Settlement Talks, Fed Policy and Jim Collins

European leaders reached agreement this week on a far-reaching package aimed at resolving the Greek debt problem, recapitalizing vulnerable banks and bolstering the euro zone’s financial rescue fund. Stock markets around the world rallied on the news.

But in the new Weekend Business podcast, Nelson Schwartz, a Times financial writer, says that the details of the plan are vague — and that many questions remain. There have been several European rescue packages, with euphoric reactions in the market, but the mood has dampened after each one, he says, and it may well do so again.

Gretchen Morgenson discusses the settlement talks under way between financial institutions that may be responsible for mortgage foreclosure misconduct and, on the other side, state attorneys general and the federal government. As she writes in her Sunday Business column, actual cash payments of $1,500 are envisioned in a possible settlement for people who were erroneously evicted from their homes. This may strike people who have lost their homes as a low figure, she suggests.

In a conversation with David Gillen, Jim Collins discusses a new book, “Great by Choice: Uncertainty, Chaos, and Luck — Why Some Thrive Despite Them All,” which he wrote with Morten T. Hansen. An article adapted from the book appears in Sunday Business.

And Christina Romer, the Berkeley economist who was chairwoman of the Council of Economic Advisers, discusses her suggestions for a new approach at the Federal Reserve. In the Economic View column in Sunday Business, she recommends that Ben S. Bernanke, the Fed chairman, take bold action, much as Paul Volcker did when he was the chairman years ago. Mr. Volcker began to target the growth of the money supply in his fight to curb inflation. Now, she says, the Fed should begin to target nominal growth of the gross domestic product in an effort to restore vitality to the economy.

You can find specific segments of the podcast at these junctures: Europe’s debt accord (35:33); news headlines (28:22); Jim Collins (25:16); the mortgage settlement talks (15:17); Christina Romer (10:06); the week ahead (2:01).

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=0ca9c94c9994184beb4caa721616ddaa

Economix Blog: Weekend Business Podcast: On the Fed, Christine Lagarde and China

The Federal Reserve started Operation Twist, but the stock market was unimpressed.

Although the markets stabilized on Friday, global stock prices fell sharply after the Federal Reserve announced on Wednesday that it would shift its bond portfolio toward longer-term maturities, in a reprise of a 1960s maneuver known as Operation Twist. In a conversation on the new Weekend Business podcast, Floyd Norris says that the Fed’s initiative was overshadowed by concern over the Greek debt crisis and its threat to banks in Europe and elsewhere around the world.

The International Monetary Fund has been playing a prominent role in the crisis, with Christine Lagarde, the agency’s new director, openly urging European governments to be much bolder. David Gillen talks to Liz Alderman in Paris about the former French finance minister’s surprisingly independent stand in her first weeks as I.M.F. chief.

The rapid growth of China’s economy has been one of the major developments of the last few decades. David Barboza, a reporter based in Shanghai, says that while China is likely to continue growing at a rate that many other countries would envy, the chances of a major setback appear to be growing as well.

And in a separate conversation in the podcast, Christina Romer, the Berkeley economist and former Obama economic adviser, says that the president’s current jobs plan is sound, though she says it should, perhaps, be even more ambitious.

You can find specific segments of the podcast at these junctures: Floyd Norris on the Fed (36:43); news summary (28:22); Liz Alderman on Christine Lagarde (24:56); David Barboza on China (17:41); Christina Romer on the jobs plan (9:11); the week ahead (1:42).

As articles discussed in the podcast are published during the weekend, links will be added to this post.

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=3f8ede8ec135fffb533e56998bb332f4

Economix Blog: Podcast: Eurobonds, Star Analysts and Productivity

Financial markets have been showing more signs of stress. The daily swings of stock markets have been growing wider, and investments presumed to be safe, like Treasury bonds and gold bullion, have been rising sharply in price.

While these market movements are global, many of the problems over the last week emanate from Europe. In the new Weekend Business podcast, Graham Bowley and Floyd Norris discuss proposals to create eurobonds as a way to provide financing for troubled members of the European Union. Political opposition in relatively rich countries like Germany, however, makes such bonds unlikely in the near future. Meanwhile, banks in Europe and elsewhere retain considerable exposure to European sovereign debt. No simple solution is at hand, and the markets remain skittish.

In a separate conversation in the podcast, and in an article on the cover of Sunday Business, Susanne Craig says that despite the uncertain market outlook, a bidding war has developed for stock analysts specializing in Internet and social media companies. We haven’t returned to the manic mood of the late 1990s, she says, but the sums being paid to some stock analysts may suggest that we are heading in that direction.

Tyler Cowen, the George Mason University economist, explores the implications of declining labor productivity in his Economic View column in Sunday Business, and in a podcast conversation. This may be the most serious of the many economic problems facing the United States, he says.

Feeling blue about the economy and the markets? Paul Lim, who writes the Fundamentally column for Sunday Business, says in the podcast that he sees a silver lining for stocks. While big American companies have not been hiring in large numbers, they have begun spending in two ways — on tangible things like technology and on acquisitions of other companies. Both should bolster share prices.

The news section of the podcast includes a discussion of Google’s plans to acquire Motorola Mobility.

You can find specific segments of the podcast at these junctures: Europe’s troubles (32:13); news roundup (21:33); star analysts (18:38); Tyler Cowen on productivity (11:51); Paul Lim on stocks (6:30); the week ahead (2:08).

As articles discussed in the podcast are published during the weekend, links will be added to this post.

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=8f93b6c2c681ee3dc1ff022ff0f5775d

Economix: Podcast: Double-Dip Fears and Grab-and-Go Food

August is off to a rocky start.

Despite an agreement to raise the debt ceiling just hours before the government’s borrowing authority was set to run out, investors quickly switched their focus to the European debt crisis and weak prospects for the United States economy and pummeled stocks.

In the Weekend Business podcast, Floyd Norris, chief financial correspondent for The Times, discusses the possibility of a double-dip recession for the United States and the troubles plaguing Europe. In addition, he suggests that the unemployment report for July, which showed a better-than-expected gain of 117,000 jobs, could be overstating seasonal adjustments.

One place where workers seem pretty happy is Pret A Manger, the British fast-food chain. Its annual work force turnover rate is about 60 percent — low for the fast-food industry, where the rate is normally 300 to 400 percent. As David Gillen discusses with Stephanie Clifford, the chain is slowly expanding in New York and other American cities with its own brand of grab-and-go food and, more significant, a fresh approach to service. At Pret, the goal is to serve customers within 60 seconds, and with maximum currency.

You can find specific segments of the podcast at these junctures: Floyd Norris (15:51); news headlines (10:52); Pret A Manger (8:28); the week ahead (0:58).

As articles discussed in the podcast are published during the weekend, links will be added to this post.

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=3a001047df1966ccd1e8221195ac5e3a

Economix: Podcast: I.M.F., the Mortgage Crisis and the Dollar

Since it was founded in 1945, the International Monetary Fund has often played an important role in global finance. But it has rarely received as much news coverage as it has recently.

The recent burst of attention, of course, wasn’t the intention of the organization’s leadership. It came as a result of the arrest of Dominique Strauss-Kahn, who has resigned as I.M.F. managing director after being charged with sexually assaulting a maid at a Manhattan hotel. Mr. Strauss-Kahn, a prominent political figure in France, had helped to arrange the bailouts of Greece, Ireland and Portugal, and with debt problems flaring up again in Europe, his problems have complicated matters.

But in a conversation in the Weekend Business podcast, Floyd Norris, the chief financial correspondent for The Times, says the I.M.F.’s deep executive ranks should be capable of keeping the organization operating smoothly for a while, until a permanent replacement has been named. In the meantime, John Lipsky, an American who had been Mr. Strauss-Kahn’s top deputy, is serving as acting managing director.

In a separate discussion on the podcast, David Gillen and Gretchen Morgenson discuss the subprime mortgage crisis, the subject of Ms. Morgenson’s new book, “Reckless Endangerment,” an adaptation of which appears on the cover of Sunday Business.

And I chat with Christina Romer, the Berkeley economist and former Obama administration adviser, who writes in the Economic View column in Sunday Business about what government officials would say if they could speak openly about the dollar. The official line is that the dollar is the purview of the Treasury, and that the government favors a strong dollar. The truth is that the dollar is subject to market forces, and that sometimes it is helpful if the dollar weakens.

You can find specific segments of the podcast at these junctures: Floyd Norris (28:46); news summary (19:36); Gretchen Morgenson (18:02); Christina Romer (9:38); the week ahead (1:51).

As articles discussed in the podcast are published during the weekend, links will be added to this posting.

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=48d5509747440cdd7a44ec8fd0c14205

Economix: Podcast: Insider Trading, Robo-Signing and Food Claims

The Galleon hedge fund trial was perhaps the most prominent insider-trading case in a generation — and the conviction of Raj Rajaratnam, the hedge fund’s co-founder, has been portrayed both as a great victory for the prosecution and as a chilling warning that lawbreaking, even by the very rich, will be harshly punished.

But will the case have broader implications for Wall Street and for law enforcement?

Peter Lattman, who covered the trial for The Times, addresses these questions in the new Weekend Business podcast. Investigations continue into the use of expert networks to provide information to hedge funds, and the use of wiretaps in the Galleon case may have a deterrent effect on those who may be tempted to violate the rules, he says. Still, the hedge fund investigations don’t bear directly on the major issues that arose in the financial crisis, he says, and very few criminal cases have been brought against those who might be responsible for the economic cataclysm from which the United States is still recovering.

In a separate conversation, Gretchen Morgenson focuses on evidence of widespread robo-signing and other shady practices by mortgage servicers who helped to force troubled borrowers out of their homes. Some of those firms have offered to pay $5 billion to settle allegations brought by state attorneys general, who have apparently demanded much more. Evidence of extensive and abusive servicing practices, meanwhile, has been amassed by the United States Trustee, the Justice Department unit that monitors the bankruptcy system. Ms. Morgenson writes about these issues in her column in Sunday Business.

A dispute over the validity of food companies’ health claims is the subject of a Sunday Business cover article by Natasha Singer and of a podcast conversation between Ms. Singer and David Gillen. Federal regulators, who require that statements about a food’s beneficial qualities are supported by scientific evidence, have maintained that some company marketing has crossed a line.

Darwinian economics — drawn from evolutionary theory — can provide insights that are lacking in the otherwise very useful theories of behavioral economics, according to a Sunday Business column by Robert Frank, a professor at Cornell University. As he explains on the podcast, because the human brain was forged through millions of years of natural selection, many of our instinctive responses are extremely useful, even if they cause us immediate discomfort and don’t make us happy.

Worrying about getting a specific job, for example, may seem to make little sense if you will be just as happy if you never get that job. But up to a certain point, that fretting provides motivation that helps us survive as individuals and as a species.

Surviving as investors is the subject of my Sunday Business column about gold and other commodities. I also discuss it on the podcast, recounting a parable written by John Ruskin, the English economist:

A rich man carrying a heavy bag of gold coins on a sea voyage decides, before his ship capsizes, to tie the bag to his waist and jump overboard. He sinks with his fortune, never to be seen again. “Now, as he was sinking, had he the gold?” Ruskin asks. “Or had the gold him?”

Investors may want to ask the same question today. Gold and other commodities have been very volatile. Should they be part of a typical investment portfolio? The answer isn’t simple. I explain why in the podcast and, in greater depth, in the column.

As articles discussed in the podcast are published during the weekend, links will be added to this posting.

You can find specific segments of the podcast at these junctures: the Galleon case (35:30); news headlines (28:00); investing in commodities (25:13) functional foods (20:45); Gretchen Morgenson on mortgage abuses (13:57); Robert Frank (8:36); the week ahead (2:18).

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=9784bc30c6f0a3d7cbb40918b35e8972

Economix: Podcast: Good Euros, Bad Euros and Market Worries

Gresham’s Law is a centuries-old economic principle that is often defined quite simply as “bad money drives out good money.”

Because gold is more valuable on the open market than copper, for example, copper coins with the same nominal value as gold coins would quickly drive the gold coins out of circulation; the gold coins would be hoarded or melted down, to extract every last bit of value from them.

There’s more to Gresham’s Law than that, though, and Tyler Cowen says it helps to explain some of the problems in the euro zone.

In the Economic View column in Sunday Business and in a conversation in the new Weekend Business podcast, Professor Cowen, who is based at George Mason University, says that many bank depositors in Ireland have begun to doubt that country’s commitment to the euro.

As a result, depositors have begun moving money from Ireland to banks elsewhere within the euro zone. In effect, euros held in a bank in, say, Germany, are being perceived as being more valuable than euros held in Ireland.

Gresham’s law is relevant in this case because it holds that if two assets — in this case, euros held inside and outside Ireland — are deemed by traders to have different values, sooner or later the legally fixed price parity will break down. This breakdown is already occurring, Professor Cowen says, and it is causing enormous problems within the euro zone. The various patches being applied won’t be enough to cure this problem, in his opinion.

The financial problems in Europe are part of the “wall of worry” that investors have been climbing in the long rally under way in many stock markets around the world since March 2009. Calamities abound, as I write in the Strategies column in Sunday Business, but markets have been rising anyway.

As I explain in the podcast, the markets have been weighed down by a host of troubling issues. These include the weak economic recovery in the United States, turmoil in the Middle East and North Africa, the rising price of oil, and the prospect of budget cuts in the United States and an end to the Federal Reserve’s expansionary monetary policy. On the other hand, corporate profits are rising, and even if the economy is less than robust, it is certainly growing. Whether you emphasize the pros or the cons will go a long way toward determining your market outlook.

Compared to the dark days of the financial crisis in 2008, the markets have become calm and stable. But after a series of investigations into what went wrong, no high-level participants in the disaster have been prosecuted, as Gretchen Morgenson and Louise Story wrote this week in The Times.

In a discussion of the financial crisis on the podcast, they say that the current situation differs markedly from other periods in history. In the aftermath of the savings and loan crisis of the late 1980s, for example, more than 800 bank officials went to jail. But financial regulators have referred very few cases stemming from recent events to the various prosecutors.

The podcast covers a lot of ground this week. It also includes a discussion between David Gillen and Adam Bryant of the lessons that C.E.O.’s have given over the last several years in Mr. Bryant’s Corner Office column in Sunday Business. Mr. Bryant’s book about these lessons is excerpted in the section this Sunday.

And Randall Stross discusses apps that show where sobriety checkpoints are located, a subject that he covers in the Digital Domain column in Sunday Business. In his view, this may be one of those rare occasions when too much information is being made available for the public’s own good.

The podcast also updates the week’s business news, including President Obama’s proposal for paring down the budget deficit.

You can find specific segments of the show at these junctures: prosecutors and the financial crisis (28:59); news headlines and the “wall of worry” (21:02); lessons from the Corner Office (16:50); 4. Tyler Cowen on the euro (11:05); Randall Stross on controversial apps (6:45); the Week Ahead (2:04).

As articles discussed in the podcast are published during the weekend, links will be added to this posting.

You can download the show by subscribing from the New York Times podcast page or directly from iTunes.

Article source: http://feeds.nytimes.com/click.phdo?i=49160a4d2a561bebf1a7ef00183333b8

Economix: Podcast: Taxes, Debt and Regulation

General Electric is the biggest corporation based in the United States, and it had a very successful 2010, with billions of dollars in profits.

But it paid nothing at all in taxes in the United States. As David Kocieniewski writes in The Times, the company actually claimed a tax benefit of $3.2 billion. What is the basis of G.E.’s extraordinarily successful tax strategy — and what are its implications for the fiscal health of the United States? We discuss these issues at length in the latest Weekend Business podcast.

In the Economic View column in Sunday Business, Greg Mankiw, the Harvard economist, adopts the voice of a future president of the United States on a day of avoidable crisis: the day the country’s debt finally comes due. In the podcast, I talk to Professor Mankiw about the current crisis that prompted this dystopian vision, and about his prescriptions for making sure it never happens in the real world.

The Dodd-Frank law emerged in response to the financial crisis of 2007 and 2008. It is hundreds of pages long, but Congress left many of the regulatory details to the Treasury and other government entities to decide. Gretchen Morgenson joins me in a conversation about some major issues that are being resolved behind the scenes.

One is whether foreign-exchange contracts should be exempt from the requirement that financial derivatives be cleared and traded on exchanges or swap facilities. Another involves the classification of mortgages: Which of them should be deemed risky enough to require that some of their credit risk be retained by issuers of asset-backed securities? And a third involves what are known as covered bonds — pools of debt obligations whose assets could be out of the reach of regulators in the event of a bank failure. In her column in Sunday Business, Ms. Morgenson writes about these controversies — and calls for much greater transparency to protect investors.

In another conversation on the podcast, David Gillen and Natasha Singer discuss Estée Lauder, the woman and the global business based on the promise of beauty. Ms. Singer writes in Sunday Business about how the Lauder family — and other top managers at the company — are trying to preserve the legacy of the company’s founders, while also making the business nimble enough to compete in a world where Lady Gaga is a trendsetter.

A discussion of the week’s news also includes the supply-chain disruptions caused by the disasters in Japan, the financial and political problems in Portugal, ATT’s proposed merger with T-Mobile, and the legal decision that sets back Google’s plans for digitizing books.

As articles discussed in the podcast are published, links will be added in this post.

And you can find specific segments at these junctures: General Electric and corporate taxes (36:31); headlines (29:15); Estée Lauder (26:48); financial regulation (17:54); Gregory Mankiw on the federal debt (9:03); the week ahead (2:04).

Article source: http://feeds.nytimes.com/click.phdo?i=50b3b93e17155cdb05a2b6b52134d8a9