From the FT:
A good stimulus should put cash in poor pockets - Roger Altman
Europe needs to show it has a crisis endgame - Wolfgang Munchau
How to make a bank raise equity - Oliver Hart and Luigi Zingales
China’s metropoli bubble fear - Izabella Kasminska, FT Alphaville

From elsewhere:
Europe risks another global depression - Simon Johnson, The Baseline Scenario
Citi reinvents end-of-the-world insurance - Felix Salmon
Monetary policy: What’s the real worry? - Free Exchange blog, The Economist
The mystery of Chinese savings - Shang-Jin Wei, Vox

From the FT:
Britain has been hit harder than you think - Samuel Brittan
Warning to Toyota: speeding can kill - Editorial comment
India: Potholes in the road - James Lamont
The race is on for Greece before the ECB exits - Gillian Tett

From elsewhere:
Chanos bullish on Cisco, bearish on China, Greece - CNBC video
Goldman Sachs and the Republicans - Simon Johnson, The Baseline Scenario
Mystery men of the financial crisis - William D Cohan, Opinionator

By James Park

In October 2008, the flow of money stopped. As Lehman Brothers teetered on bankruptcy, the US financial system went into septic shock - from toxic assets representing worthless derivatives and collateralised debt obligations. To capture the gravity of the situation, the media latched onto metaphors.  Warren Buffett called that October the economic equivalent of a Pearl Harbor.

While Buffet’s martial analogy serves to highlight the fall in the inter-institutional lending, a more apropos analogy is that the financial system found itself in the intensive care unit with the diagnosis of septic shock.

Continue reading "The financial crisis: Of Lasix and liquidity"

From the FT:
Another housing market bubble? - Simone Baribeau, Money Supply
It is the poor that pay for the weak renminbi - Arvind Subramanian
Greeks in bondage - Editorial comment

From elsewhere:
Can Greece avoid the lions? - Kenneth Rogoff, Project Syndicate
Torry fiscal policy: The axeman reconsidereth - Bagehot’s Notebook

By Michael Pomerleano

The Basel II accord has done more harm than good for stability. In a previous post last month on the failure of financial regulation, I pointed out that Basel II has glaring deficiencies that virtually provide a navigational map to creating off-balance sheet instruments.

The regulatory incentives regarding capital requirements in Basel II contributed to the subprime crisis. It gave banks incentives to:

• “originate and distribute” as opposed to originate and hold
• securitise every asset and buy it back without changing the credit risk profile
• use credit default swaps to reduce capital requirements even further
• stuff toxic securities into structured investment vehicles       

Continue reading "The Basel II concept leads to a false sense of security"

From the FT:
Medicine for Europe’s sinking south - Nouriel Roubini and Arnab Das
Why ‘too big to fail’ insurance is the world of all worlds - John Kay
Toyota: sorry is the hardest word to say - Dan Bogler
Central bank DeathMatch - Neil Hume, FT Alphaville

From elsewhere:
Are sovereign wealth fund investments politically motivated? -Roland Avendano and Javier Santiso, Vox
Deflation - Economist’s View
How China won and Russia lost - Paul R Gregory amd Kate Zhou, Hoover Institute
Never short of country with $2 trillion in reserves? - Michael Pettis, China Financial Markets

From the FT:
The shared hypocrisy about tax and spend - Philip Stephens
How the bottom fell out of  ‘old’ Davos - Gideon Rachman
The best course for Greece is to bring in the Fund - Jean Pisani-Ferry and André Sapir
Bank greekery - Tracy Alloway, FT Alphaville

From elsewhere:
Fed policy and mortgage choice - Economist’s view
Achieving long-term fiscal discipline: a lesson from Chile - Jeffrey Frankel, Roubini Global Economics
Volker rule: dead on arrival? And is Obama a lame duck - Naked Capitalism

From the FT:
America can square its fiscal circle - Clive Crook
The fight begins - Editorial comment
How do you say ‘Notice’ in Greek? - Tracy Alloway, FT Alphaville
What the eurozone must do if it is to survive - Wolfgang Munchau
Pension funds and the lure of infrastructure investing - Tony Jackson

From elsewhere:
Canadian banks: good and boring - Paul Krugman, New York Times
Blankfein’s eight-figure bonus - Felix Salmon
The roots of China’s rapid recovery - Fan Gang, Project Syndicate
Is Russia’s economic crisis over? - Irina Yasina, Project Syndicate
A framework for central banks and bank supervision - Hans Gersbach, Vox