What We’re Reading, 6/6/12
Every morning, we poll the staff and round up their favorite economic, financial and political reads of the day. On our iPads and in our inboxes this morning: further Fed stimulus, the human price of austerity, and the marketing pros/cons of canned and packaged margaritas.
"Fed Considers More Action Amid New Recovery Doubts," by Jon Hilsenrath (Wall Street Journal). Ben Bernanke & Co. are weighing another round of economic stimulus ahead of their June 19 meeting. There was no such talk at the Fed’s last meeting, when things looked rosier … but in light of Europe’s shenanigans, dour jobs reports, and all the other things we round up here each day, the Fed may make some small, cautionary moves.
"Save Us, Ben Bernanke, You’re Our Only Hope," by Matthew O’Brien (The Atlantic). This story is accompanied by a photo of Ben Bernanke as Jedi, which everyone should click to for laughs alone. Beyond that, things get a bit more serious (though, er, no less gimmicky). O’Brien’s argument: The Fed is our last hope to improve the faltering economy, and so far, it’s failed to do so. Manipulating interest rates could help.
"Euro Zone on the Brink," by Roger Altman (Washington Post). Another day, another flood of bummer news from Europe. Today, Greece is pretty close to running out of cash, Spain tells the world straight-up that it really needs that bail-out, and Germany struggles to figure out just what role it wants to play in the whole ordeal. Altman suspects this is mounting to another bump in the recession, a la the Great Depression relapse of 1937. Fortunately, he has a three-step plan! (That seems simple, doesn’t it?)
"Children Lose to Bailed-Out Bankers as Crisis Forces Cuts," by Ben Sills and Rodney Jefferson (Bloomberg). In Spain, this is what austerity looks like: crowded emergency rooms and children who can’t get access to crucial medications. In fact, the handicapped and terminally ill are suffering across Europe, where safety nets are falling out from underneath them.
"Senate Republicans Again Block Pay Equity Bill," by Jennifer Steinhauer (New York Times). The Paycheck Fairness Act fell six votes short of the 60 it needed to pass the Senate yesterday. The law would make it easier for women to sue in instances of gender discrimination — an issue that, incidentally, we take on in the June issue!
"Growing Economic Inequality ‘Endangers Our Future’" (Fresh Air). Nobel Prize-winning economist Joseph Stiglitz dropped by the Fresh Air studio to talk lobbying, tax policy and student loans with Terry Gross. Fun fact: He’s largely credited with popularizing the phrase “the 1%,” which we will now never be rid of.
"The Fortune 400," by David Cay Johnson (Reuters). Speaking of tax policy and the 1%, six American families with incomes over $200 million (each!) paid no federal income taxes in 2009. Cue the Occupy outrage!
"Most Recent High School Graduates Not in College Lack Full-Time Job, Study Says," by Bonnie Kavoussi (Huffington Post). Three out of four high school graduates who took the working route do not actually have jobs, according to a sobering new study by Rutgers’ Center for Workforce Development.
And in other news: Warren Buffett graduated from D.C.’s infamous public schools, New York magazine has some “advice” for Wall Street interns, and a business battle is brewing canned and packaged margaritas. (In a war like this, everybody loses.) Also, the Internet now has 340 trillion trillion trillion addresses (that’s a number?) and Michelle Obama was on Letterman last night.
What We’re Reading, 6/5/12
Every morning, we poll the staff and round up their favorite economic, financial and political reads of the day. On our agendas this morning: emergency conference calls, Wall Street’s best-paid CEO, and the economics of starting a donut empire.
"G7 Hold Emergency Eurozone Talks," by Quentin Pell, Peter Spiegel, Guy Dinmore and Mure Dickie (Financial Times). Your friendly curator has never known a conference call to help with much of anything, but finance ministers from the G7 countries convened via phone line today to discuss the European crisis. By all accounts, little came of it. (Surprise!) The same cannot be said of talks between German chancellor Angela Merkel and European Commission president Jose Manuel Barroso — Merkel announced in a press conference that Germany will at last allow some wiggle room in pooling European debt. The Central Bank is also dreaming up ways to draw Europe closer together.
"Europe’s Fade Becomes a Drag on Sales for U.S. Companies," by Nathaniel Popper (New York Times). No one buys Mac Books and Chevys when the proverbial sky is falling down. That, unfortunately, can also impact U.S. companies and their investors: Cisco, Dell, Netapp and a number of other U.S. firms have already reported a drop in European sales.
"Lower Oil Price Offers U.S. Consumers Hope," by Gregory Meyer and Robin Harding (Financial Times). “Hope” is a word we don’t often see in financial headlines — but oil prices are down 17% in the past month, and that could give both consumers and the overall economy a boost.
"Bitter Wisconsin Recall Race in Voters’ Hands," by Bob Secter (Chicago Tribune). It’s showdown day in Wisconsin, arguably the most polarized state in the country. If you’re not up on the brutal recall election, AP has an FAQ.
"Wall Street CEO Pay Rises 20% with KKR’s Kravis No. 1," by Laura Marcinek and Nikolaj Gammeltoft (Businessweek). Henry Roberts Kravis made $30 million last year — which is, for perspective, about 1/26th the value of the entire Tumblrverse. CEOs saw a 20% pay raise overall, down from 26% in 2010. Ah, how the other half lives!
"How Bank of America Execs Hid Losses — In Their Own Words," by Cora Currier (ProPublica). Shareholders filed suit against Bank of America on Sunday, demanding to know if executives lied about the bank’s losses before it acquired Merrill Lynch in 2008. Lots of skeletons are shaking out, and ProPublica has kindly gathered them up.
"The Last Days of MF Global," by Peter Elkind and Doris Burke (Fortune). MF Global suffered the eighth-largest bankruptcy in U.S. history … and we couldn’t even put a ranking on the broker’s infamy.
"Don’t Eat Fortune’s Cookie," by Michael Lewis (Princeton.edu). Alright, we’re veering from finance a bit — but renowned economics writer Michael Lewis will the commencement speech at Princeton today, and his remarks are really worth reading. A sample: “The ‘Moneyball’ story has practical implications. If you use better data, you can find better values; there are always market inefficiencies to exploit, and so on. But it has a broader and less practical message: don’t be deceived by life’s outcomes.”
What We’re Reading, 6/4/12
Every morning, we poll the staff and round up their favorite economic, financial and political reads of the day. On our radar as the week starts up: economic slowdown, existential crisis, and the many money problems of the ultra-rich and famous.
"Investors Brace for Slowdown," by Jonathan Cheng, Charles Forelle and E.S. Browning (Wall Street Journal). Well, the week is off to a less-than-thrilling start. Investors are getting antsy as Europe, China and the U.S. show fresh signs of economic turbulence. Just a smattering of the rough market news: Asian markets are down sharply, European stocks slumped last week, and on Friday, the Dow dropped to its lowest point in six months. Happy Monday, everyone!
"Euro Zone is Lurching to a Crossroad," by Landon Thomas Jr. (New York Times). The euro zone faces an existential crisis of the most massive (and massively expensive) kind. Key to the region’s proverbial angst: Should it seek greater fiscal unity or just break up? While Spanish and Italian leaders called for euro bonds and central authority this weekend, they face political opposition from the likes of Angela Merkel, who hesitates to bail Spain out. (If this is all starting to sound rather dizzying and Game-of-Thrones-esque, the Times has helpful interactive charts on the timeline of the crisis and the players in it.)
"Remarks at the Festival of Economics," by George Soros (GeorgeSoros.com). While your friendly curator can think of no festival more dull-sounding than the “Festival of Economics” — are there demand-curve roller-coasters? Keynesian funnel cakes? — Soros’ remarks in Trento, Italy are certainly worth a read. The billionaire investor argues, in grandiose TED-talk fashion, that the foundations of economic theory fail to account for human mistakes. Significantly, he also says the eurozone has about three months to right itself. If that seems dense, CNBC has the Spark Notes.
"The Mayor of Mayors," by Gabriel Sherman (New York). He banned trans fat! He shrinks your soft drinks! Michael Bloomberg may be the most visible mayor in the U.S., and certainly one of the most controversial — which leads Sherman to the question, where will he go next?
"Who Has the Spine to Fix the U.S. Economy?" By Fred Hiatt (Washington Post). Spoiler alert: No one. “It’s hard to be optimistic,” Hiatt writes. “Obama has the eloquence, but neither Obama as president nor Romney as governor showed much patience for legislative jawboning or relationship-building … It would be nice to think that the forthcoming campaigns will focus on this issue enough to give voters a basis on which to do more than guess. Judging by the debate so far, any optimism on that score seems even more naïve than refusing to give up on a grand bargain in 2013.”
"Small Fish Burned in Facebook IPO Knew Better," by William Cohan (Bloomberg). Critics railed against Wall Street, Morgan Stanley, Nasdaq, and Facebook itself — but if you fall in Cohan’s camp, small investors who lost big can only blame themselves.
"Life After the NFL a Struggle for Many Former Players," by Jeffri Chadiha (ESPN). Today in people-we-don’t-feel-very-sorry-for: “Terrell Owens hasn’t officially retired yet, and he already has blown the $80 million he earned during his career. Warren Sapp recently filed for bankruptcy. Former first-round picks Michael Bennett and William Joseph currently face federal charges of tax fraud and identity theft.” Apparently uber-rich ex-athletes can’t manage their millions! Seventy-eight percent of NFL retirees are bankrupt or financially strained.
"Mitt Romney Reports He’s Worth Up to $255 Million," by Reid Epstein (Politico). In other breaking news, Mitt Romney’s still rich. (More interestingly, Obama’s tax plan would cost him $5 million. Mo’ money mo’ problems, as they say.)
Happy reading, Tumblers!
What We’re Reading, 6/1/12
Every morning, we poll the staff and round up their favorite economic, financial and political reads of the day. On our minds as we wrap up the short week: Job numbers, the long-term unemployed, and George H.W. Bush’s questionable taste in socks.
"U.S. Added 69,000 Jobs in May; Jobless Rate at 8.2%," by Shaila Dewan (New York Times). The new jobs numbers are out, and they’re far worse than anyone expected. The unemployment rate is up very narrowly, from 8.1%, new jobs fell to 69,000, and The Labor Department revised its April jobs number down, from a measly 115,000 to a measlier 77,000. Analysts suspect all these ups and downs could have more to do with number-crunching flukes and euro fears than with the actual U.S. economy. In either case, it will take many years to close the jobs gap. Perspective: Euro-zone unemployment just hit 11%!
"Back to Work" (Businessweek). We rarely recommend photo stories, but Businessweek’s latest cover package is a must-view: The magazine sent photographers to follow 17 long-term unemployed people, from lawyers to poker dealers, as they return to work.
"For Many Teens, Summer Jobs May Be Thing of the Past," by April Fehling (NPR). Your friendly curator wishes she had the “it’s the economy” excuse when her mother made her get a summer job at the ripe age of 14. In either case, kids these days might not have a choice: Teen employment is expected to hit a new post-World War II low. Last year it was 29.6%, down from more than 50% in 2001.
"U.S. Steps Up Pressure on Europe to Resolve Euro Crisis," by David Jolly (New York Times). Circling around from one crisis to another, President Obama renewed pressure on German, French and Italian leaders to get their respective economic acts together. He’s not the only one. In Greece, multinational companies are changing contracts and moving cash reserves to prepare for the worst. In Brussels, the European Central Bank pushed for a joint guarantee on bank deposits. Sounds like these guys could use a long weekend.
"Anatole Kaletsky on A New Capitalism" (The Browser). Anatole Kaletsky (econ consultant, Times columnist, all-around pro commentator) goes long on the context and history of Europe’s economic crisis. If you’re looking for some light summer reading, he also suggests five books on modern capitalism. Beach reads, if you will!
Further #longreads for your weekend:
"The Amazon Effect," by Steve Wasserman (The Nation). Jeff Bezos hasn’t just changed the way you read books and watch movies — he’s also wrecked the brick-and-mortar book business and revolutionized online retail.
"Tyrone Gilliams: Ivy League Scam Artist," by Stephen Fried (Philadelphia). Ordained minister, UPenn grad and Philadelphia golden boy Tyrone Gilliams is charged with running a complex Ponzi scheme.
Happy reading, Tumblers!
What We’re Reading, 5/31/12
Every morning, we poll the staff and round up their favorite economic, financial and political reads of the day. On our collective radar for Thursday: More euro-drama, the incomprehensible wealth of Walmart, and the relative pros/cons of keeping an ATM in the kitchen.
"Europe Fears Bailout of Spain Would Strain Its Resources," by Landon Thomas Jr. (New York Times). If you thought the Greek bailout was stressful, Spain is a problem of an entirely different scale. It’s Europe’s fourth-largest economy, which means a theoretical Spanish bailout would leave very few funds in the EU’s $867-billion emergency fund. Added complication: These endless economic spats are weakening the ties between euro-zone countries. (But look, optimism! The Peterson Institute’s Jacob Kirkegaard sees signs of European progress.)
"After Facebook, Kayak IPO Stalls," by Anupreeta Das, Gina Chon and Brett Philbin (Wall Street Journal). Will the Facebook fallout ever end?! Early evidence suggests that the botched offering was bad not only for small investors, but for the state of California, the stock market, and now, new IPOs — Kayak is stalling its offering until things look up.
"Older Americans Learn New Trades in Tough Jobs Market," by Lucia Mutikani (Reuters). A quarter of Americans aged 50+ lost their life savings during the recession, and 43% of those still haven’t earned it back. That’s led many to seek a new job (or jobs) in unconventional, often minimum-wage fields. Bad news for job-seekers of all ages: HR software may be working against them.
"On Campus, New Deals With Banks," by Andrew Martin (New York Times). Despite reforms, financial institutions are creeping into schools — and they’re banking on students for new customers and profits. Student IDs double as credit cards, banks disburse financial aid, and consumer advocates predictably freak out.
"Woman Who Couldn’t Be Intimidated by Citigroup Wins $31 Million," by Bob Ivry (Bloomberg Markets). Sherry Hunt is the unlikely woman who sounded the alarm on bad mortgages at Citigroup, where she worked as a senior manager for more than eight years. Intriguingly, Hunt grew up in rural Michigan, married at 16, and never went to college. Now she’s won $31 million in a highly publicized lawsuit against her former employer.
"The One Percent’s Problem," by Joseph Stiglitz (Vanity Fair). The combined wealth of the six Walmart heirs equals the combined wealth of the bottom 30% of Americans. (… I’ll just let that sink in for a second.) That’s obviously a bummer for we little folk, Tumbling away for starting salaries. But Stiglitz argues it’s rough on the top earners, as well — in the long-term, inequality will make their lives and work more difficult.
"Facing Down the Bankers," by Annie Lowrey (New York Times). On Dennis Kelleher: Wise guy and powerful finance-reform lobbyist.
"Some Teens Aren’t Liking Facebook as Much as Older Users," by Jessica Guyn and Ryan Faughnder (L.A. Times). Lyke ZOMG, Tumblr is the new Faceook, guys.
Happy reading, Tumblers!
What We’re Reading, 5/30/12
Every morning, we poll the staff and round up their favorite economic, financial and political reads of the day. What we’re perusing over coffee this morning: Spain, Greece, India, and Amercia (sic).
"Spain Rattles Markets, Greeks Warned of Catastrophe," by Julien Toyer and Karolina Tagaris (Reuters). Oh look, Spain is the new Greece — but in this case, it’s not a fashionable distinction. Spain’s fourth-largest bank is on the brink of collapse, and the European Central Bank rejected a plan to bail it out. Meanwhile, Greece’s biggest bank warned that living standards, incomes and employment would suffer dramatically post-euro. (Considering all that pathos, a lot of investors have begun banking on U.S. treasury notes instead.)
"Most Aid to Athens Circles Back to Europe," by Liz Alderman and Jack Ewing (New York Times). Europe gave Greece 130 billion euros in bailout funds. But like a recent college grad with too many loans, Greece can only use that money to pay off interest on its debts — and not, you know, provide basic services to its beleaguered citizens.
"India’s Economy Slows, With Global Implications," by Jim Yardley and Vikas Bajaj (New York Times). In case all this talk of Europe is boring you, inflation and deficits are also up in India, where government officials only recently predicted growth rates of more than nine percent.
"Romney Clinches Nomination," by Ginger Gibson (Politico). Surprise, surprise. The real story here is Donald Trump, who tagged along but kept mercifully mum on Obama’s “disputed” birthplace.
"As Governor, Romney Picked Winners and Losers of His Own," by Andy Sullivan (Reuters). New Romney ads skewer Obama for granting tax breaks and extended loans to favored industries. The problem? As governor of Massachusetts, Romney granted similar favors to firms like Bristol Myers-Squibb and Spherics Inc. — the latter of which shut down and defaulted on its loans.
"Campaigns Mine Online Data to Target Voters," by Beth Fouhy (AP). TV ads and direct mail are so 2008. Now, Obama and Romney are spending hundreds of thousands of dollars to target online ads to tiny niches — and collect data on the people in them. Writes Fouhy: “The 2012 election could be decided by which campaign is best at exploiting voters’ Internet data.”
"Could Latino Voters Turn Deep-Red Texas Democratic by 2020?" By Jason Margolis (The Atlantic). Some thought-provoking demographics, in light of Romney’s Texas win: Fifty percent of the state’s youth are Latino, and Latinos overwhelmingly vote for Democrats.
"Networks Built on Milliseconds," by Anton Troianovski (Wall Street Journal). To some people, high-frequency trading isn’t frequent enough. A number of firms are developing microwave relays between Chicago and New York, which will work even faster — 2.3 milliseconds faster — than the current fiberoptic system. That could work out to an extra .08 cents per share traded, by some estimates.
"Apple’s Cook Says Focus Remains on Products," by Dan Gallagher (Marketwatch). Apple CEO Tim Cook sat down for an extensive interview at this week’s All Things Digital conference, with some telling revelations for Apple investors and fans. Among them: Cook wants to move more manufacturing to the U.S., and Apple’s hard at work on that fabled TV. (A more detailed live blog from All Things D is here.)
And in other news: Jaguar was pleasantly surprised by its Mad Men cameo, the author of the Black Swan thinks a euro breakup would be no big deal, and someone on the Romney staff is about to lose her job — the campaign’s “With Mitt” iPhone app misspelled America and inspired a parody Tumblr.
Happy reading, Tumblers!
What We’re Reading, 5/29/12
Every morning, we poll the staff and round up their favorite economic, financial and political reads of the day. Our our radar as we return from a lovely three-day weekend: unemployment benefits, stock market woes, and the sweet relationship between weird ice cream and the economy.
"U.S. Winds Down Longer Benefits for Unemployed," by Shaila Dewan (New York Times). If you thought Congress extended long-term employment benefits back in February, then you didn’t read the fine print. New restrictions will unexpectedly shorten aid for half a million people — more than 70,000 in June alone. The drop could put an extra drag on the economy, potentially contributing to a recession next year.
"Stock Market Loses Face," by Joe Light (Wall Street Journal). Some small investors are dumping stocks in the wake of Facebook’s messy IPO. Like all jilted exes, they’re feeling vindictive: Small investors pulled $3 billion from U.S. stock mutual funds in the week that ended Wednesday, which, if you’re keeping score, is about how much money J.P. Morgan lost.
"Spring Revival for America’s Housing Market," by Leah Schnurr and Jilian Mincer (Reuters). Finally, some good news! Home sales and prices indicate that the troubled housing market may be ticking up. But don’t call your realtor just yet — even a solid recovery will take some time.
"Dewey & LeBoeuf Files for Bankruptcy," by Linda Sandler, Sophia Pearson and Joe Schneider (Bloomberg). Dewey & LeBoeuf once employed 1,300 lawyers in 12 countries, advised the L.A. Dodgers on their restructuring … and accumulated $245 million in debt. The high-powered firm’s Chapter 11 filing earns it the dubious honor of being the largest law-firm collapse in U.S. history.
"Hope: The Sequel," by John Heilemann (New York). A new election issue seems to spring up every day: private equity, jobs reports, dogs on roofs, “interceptions.” But from where Heilemann sits, the only factors that matter for Obama are how the economy fares and where demographics fall. Says one very confident strategist: “If you’re a woman, you’re Hispanic, you’re young, or you’ve gotten left out, you look at Romney and say, ‘This … guy is gonna take us back to the way it always was, and guess what? I’ve never been part of that.’” In related news, Talking Points Memo suspects that many voters are a bit more split than that — especially in swing states.
"Obama’s ‘Kill List’ Proves a Test of Obama’s Principles and Will," by Jo Becker and Scott Shane (New York Times). The second (very lengthy) installment in the Times’ series on Obama’s record takes us into the White House Situation Room, where Obama personally approves every entry on a military hit list — and oversees unprecedented amounts of the war on al Qaeda. His record is “paradoxical,” to say the very least.
"Mitt Romney’s Economic Failure in Massachusetts," by Michael Tomasky (Daily Beast). While we’re talking political records, Tomasky has a damning column on Mitt Romney’s job-creation history as governor of Massachusetts. It isn’t worse than Obama’s necessarily, he writes — but Romney’s “record here is so lame from any ideological perspective … [he] can make no claim whatsoever that he has access to some magic tonic that grows jobs.”
"College Dropouts Have Debt But No Degree," by Ylan Mui and Suzy Khimm (Washington Post). Just when we thought the student debt situation couldn’t get any scarier, it turns out that nearly 30 percent of students who take out loans later drop out of school.
And in other news: This semi-grating "super intern" scored 47 job offers after a four-month interning stunt, this man has ridden an ostrich (and thus thinks you should vote him into Congress), and these chains think sushi, pizza and hamburger ice cream are the key to sales in a slow economy.
Happy reading, Tumblers!
What We’re Reading, 5/25/12
Every morning, we poll the staff and round up their favorite economic, financial and political reads of the day. On our minds this morning: beaches, barbecues, and the impending three-day weekend. (Er — make that oil prices, Tim Cook and really rich CEOs.)
"Gas Prices Moderately Lower as Driving Season Starts," by Clifford Krauss (New York Times). Some good news to get you in the Memorial Day mood: Gas prices are modestly lower now than they were a year ago, which should make traveling easier for all you weekend road-trippers. Even better, tensions with the Middle East have relaxed, making oil prices less volatile overall. Now for the bad news!
"New Signs of Global Slowdown," by Jon Hilsenrath and Joshua Mitchell (Wall Street Journal). A number of brow-furrowing economic reports dropped this week: U.S. business spending on long-term goods is down, business sentiment in Europe declined, manufacturing around the world dropped off and several international organizations cut their 2012 growth forecasts. “A new economic threat is emerging,” Hilsenrath and Mitchell explain, “… activity is slowing in sync around the globe and not just in a few markets with their own isolated problems.”
"J.P. Morgan Gave Risk Oversight to Museum Head Who Sat on AIG Board," by Dawn Kopecki and Max Abelson (Bloomberg). The guys who oversaw risk at J.P. Morgan are about as qualified for the job as your friendly curator — which is to say, not qualified at all. Of the three, none have worked at banks or as financial risk managers. Only one has Wall Street experience, and it is 25 years (!) out of date.
"Obama Stumbles Out of Gate," by Mike Allen and Jim Vandehei (Politico). The race to the 2012 election is a long one, and things that seem to matter now could fade by November. But there’s no ignoring the fact that President Obama is off to a slow start: Between sluggish fundraising and the Bain back-and-forth, he might lose the edge that Democrats expected.
"CSI: Housing Bust," by Beth Raymer (The Atlantic). While your friendly curator doubts that Digital Risk boasts the theme music and cheesy punchlines of a primetime crime show, the company’s work is pretty intriguing. Analysts there look for evidence of bust-era fraud — as in the case of a Las Vegas man who applied for 15 mortgages in a week, or a Michigan woman who refinanced her house five times in five years (and didn’t tell her lender she didn’t have a job).
"The Choice" (The Economist). While the “Grexit” was on everyone else’s minds, The Economist dreamt up another solution to Europe’s fiscal woes: a semi-federalist “superstate,” where countries rely on each other more than they do now. (What horrible portmanteau can we devise for this? The Euperstate, perhaps?)
"How Tim Cook is Changing Apple," by Adam Lashinsky (Fortune). Apple’s new CEO worked in an Alabama paper mill, eats in the company cafeteria, and cares far more about investors than Steve Jobs did.
“Johns Hopkins Commencement Speech,” by Tim Geithner. Treasury Secretary Geithner talked economic recovery, Barack Obama and public image to graduates at the Nitze School. An excerpt: “If you are going to make a difference, especially in public life, you need to be willing to get close to the flame. You need to be willing to take risk and feel the heat … There was no precedent and no playbook available to any of us, other than the graveyard of mistakes from other crises. But we knew we had to act.”
And in other news: Jack White could teach econ 101, the FTC has its eyes on your POM, people rob banks to pay for dentures, and the country’s highest-paid CEO made — wait for it! — $137.2 million last year.
Happy reading, Tumblers!
What We’re Reading, 5/24/12
Every morning, we poll the staff and round up their favorite economic, financial and political reads of the day. On the agenda this morning: Europe’s crisis spills over, Google does evil, and the economics of all-you-can-eat buffets.
"Euro Woes Will Cross Pond," by David Wessel (Wall Street Journal). Fun fact: Greece’s economy is roughly the size of Massachusetts’. Less fun fact: If Greece drops the euro and Europe suffers, we’ll feel a crunch in credit and imports here at home. (WSJ has also rounded up the forecasts and suggestions of several major banks; they vary in their pessimism. Deutsche Bank recommends the creation of a parallel currency called the “Geuro,” which sounds ugly, if nothing else.)
"Facebook’s IPO Debacle: Fear, Greed, Hubris …," by Heidi Moore (Guardian). If you read one more Facebook IPO autopsy, make it this clever, biting takedown from Marketplace’s Heidi Moore — she considers the failed IPO “a tale of financial chaos fit for the history books.” Why, you ask? “At nearly every junction where wisdom, care and moderation ought to have intervened, they did not.” Welp.
"Some Big Firms Got Facebook Warning," by Gina Chon, Jenny Strasburg and Anupreeta Das (Wall Street Journal). Not all investors are created equal. Before the Facebook IPO — and, more importantly, before IPOs in general — major firms score access to reports and warnings that the average investor never sees.
"Can Anything Take Down the Facebook Juggernaut?" By Steven Johnson (Wired). We’re a week late to this, but it makes especially interesting reading after all the Facebook fallout. Short answer: Yes, another service could displace Facebook. Slightly longer answer: Yes, but Johnson remains upbeat about the social network’s prospects. (Perhaps too upbeat: “… the company charges toward what will likely be the most successful public offering in the history of capitalism,” he writes.)
"As Computing Changes, Hewlett-Packard Struggles to Follow," by Quentin Hardy (New York Times). From one digital meltdown to another … the old-school stalwart HP just underwent a major restructuring, cutting 7.7% of its global workforce. (That’s a sobering 27,000 jobs.) But there’s a silver lining! HP’s shares rose sharply after the cuts.
"Google Privacy Inquiries Get Little Cooperation," by David Streitfeld and Kevin O’Brien (New York Times). Google Street View made life easier for travelers and stalkers the world over. Unfortunately, those cute little camera cars aren’t just taking photos — they also collect data from personal, unprotected Wi-fi networks, downloading as much as 250 kilobytes of information per network. Moral of the story: Put a password on it!
"Vallejo, Calif., Once Bankrupt, is Now a Model for Cities in the Age of Austerity," by Ariana Eunhung Cha (Washington Post). You might remember Vallejo as the setting of Michael Lewis’ stark 2011 story on economic collapse in California. Well, there’s good news on that front: Four years after the city declared bankruptcy, it’s used technology, referendums and an increased sales tax to scrape its way toward solubility. Now, for the first time since 2007, “the city expects to have enough money to do such things as fill potholes, clear weeds, trim trees and repair tennis courts.” (Hey Greece, didja see this?)
"How We Got the Crash Wrong," by William Cohan (The Atlantic). Stop talking about leverage, start talking about risk.
"Writing Chapter One in Life’s Sequel," by Lindsay Cunningham (The Local). The Times’ Local project picked up a quirky, pseudonymous and rather sad new columnist. From her bio: Lindsay had “a great job, a good apartment in Fort Greene and a life in the fast lane of young Brooklyn. But then she lost her job and her boyfriend — and now she’s doing this column.”
In other news: All-you-can-eat buffets should not exist (according to econ), “extreme fear” is driving the market right now (according to CNN’s new “Fear & Greed” index), and $24 omelettes are fueling New York’s rich and powerful (according to this 27-slide “Power Breakfast” slideshow, which your friendly curator, God help her, clicked through in full.)
Happy reading, Tumblers!
What We’re Reading, 5/23/12
Every morning, we poll the staff and round up their favorite economic, financial and political reads of the day. What we’re perusing over coffee this morning: Private equity, Facebook fall-out, and why college students don’t study.
"Both Parties Struggling with How to Talk About Private Equity Industry," by David Fahrenthold and Tom Hamburger (Washington Post). Romney’s Bain Capital tenure has pushed private equity into the spotlight, and even within parties, every politician seems to have a different take. Does it create jobs? Does it kill them? (Does anybody know the difference?) A Post editorial claims that Obama wants it both ways.
"Tall Tales About Private Equity," by Steven Rattner (New York Times). Steven Rattner: Frequent op-ed writer, former Obama Treasury advisor, private equity apologist. “That’s not wrong; it’s part of capitalism,” he says of job cuts under Bain. “Whatever its flaws, private equity has made a material contribution to sharpening management.”
"Inside Fumbled Facebook Offering," by Shayndi Raice, Anupreeta Das and Gina Chon (Wall Street Journal). The size and hype of Facebook’s IPO weren’t the only things setting it apart from other recent offerings. According to WSJ, Facebook Chief Financial Officer David Ebersman also stayed unusually involved in the plans — even green-lighting the last-minute share boost that kept first-day prices low. (In related news, Facebook’s once-hot IPO may officially have crossed into hot mess territory: Both the SEC and Massachusetts regulators are investigating.)
"Facebook Stock Collapse Contributes to Mistrust of Wall Street," by Mark Gongloff (Huffington Post). The Facebook IPO is a symbol of everything people hate about Wall Street, Gongloff writes: “Media and analyst cheerleading? Check. The destructive influence of high-speed trading? Check. A system built for insiders to profit while retail investors pick up scraps? Duh.”
"The Facebook Fallacy," by Michael Wolff (Technology Review). Where was Michael last week, when everyone came down with Facebook fever? He argues that Facebook’s business model is fundamentally flawed — and thus likely to fade out, a la Yahoo or AOL.
"Doubts Over EU Summit Send Shares, Euro Lower," by Richard Hubbard (Reuters). Between the crises at Facebook and JP Morgan and the drama around Bain Capital, we’ve had little attention to spare for our beleaguered friends in the EU. But they are indeed beleaguered, and hopelessly so: A summit in Brussels is expected to yield little beside Merkel-Hollande bickering, and European markets have reacted poorly. (The Dow doesn’t seem to like the stalemate much, either.)
"Two Cheers for Our Peculiar Politics: America’s Political Process and the Economic Crisis," by Pietro Nivola (Brookings). One reason to pay more attention to the Europe — the U.S. economy looks magnificent, by comparison!
"Obama Spending Binge Never Happened," by Rex Nutting (Marketwatch). Government spending hasn’t grown much under Obama; in fact, his 1.4% growth rate is the lowest since the early ’80s, when Reagan expanded spending by 8.7% per year.
"History Shows U.S. Can Cut Now, Stimulate Later," by Peter Orszag (Bloomberg). Orszag’s latest editorial argues that stimulus and austerity aren’t necessarily at odds — a refreshing perspective to anyone who’s followed the bitter debates both in Congress and overseas. “Enacting more stimulus today and more deficit reduction to take effect later is exactly what the U.S. needs,” he writes. “It’s also what makes the ongoing jobs-versus-austerity debate so frustrating. What we really need is to be bolder on both jobs and austerity, by pursuing a combination policy.”
"New Rules for Prepaid Debit Cards," by Ben Protess and Jessica Silver-Greenberg (New York Times). At last! Thank the Consumer Financial Protection Bureau for this one.
Happy reading, Tumblers!