ECONOMIC BLUES

Finally, as things go from bad to worse, more media outlets are paying attention, more questions are being raised, more debates are taking place, even at a retreat on a mountain side outside Jackson Hole where bankers went to commiserate with each other.

The Naked Capitalism Blog tells us about CRC: “cognitive regulatory capture:”

Go Willem Buiter! The London School of Economics prof and former Bank of England and European Bank for Reconstruction and Development official has been saying for some time that the Fed suffer from s “cognitive regulatory capture” and has been far too responsive to the needs of Wall Street. It’s been puzzling to watch his detailed, well argued criticisms go unnoticed, particularly when they have been offered at forums where one would think they’d be impossible to ignore (for instance, a conference co-hosted by the New York Fed where Buiter presented a pretty harsh paper on what he called the North Atlantic Financial Crisis).

Well, he finally seems to have gotten through, perhaps because he is forward enough to criticize Fed officials to their face at an event they are hosting. Or maybe it’s because the pattern of conduct he decries is so patently obvious that the key actors can no longer fool themselves. From Bloomberg:

Former Bank of England policy maker Willem Buiter sparked the biggest debate at the Federal Reserve’s annual mountainside symposium, saying the central bank pays too much heed to the concerns of financial institutions.

“The Fed listens to Wall Street and believes what it hears,'’ Buiter said yesterday in a paper presented to the Fed’s conference in Jackson Hole, Wyoming. “This distortion into a partial and often highly distorted perception of reality is unhealthy and dangerous.’

CREDIT CARD WORRIES

For months now, I have been suggesting that credit cards may be the next bubble. So far the American media which is a marketing tool for credit card companies has downplayed the possibility. That’s not the case in England where the Telegraph presses the painic button:

“The Citizens Advice Bureau and the National Debtline have both experienced a surge in calls from people struggling with credit card debts and personal loans. The Debtline said it has taken 9.2 per cent more calls on the subject in the past six months than last year and CAB has noticed “an increase in demand for our advice”.

G JOE CLARK: Subprime crisis rippling through cities

The subprime catastrophe has just begun to take impact in some areas of our financial lives. The banks have obviously been submerged in a wake of bad news for more than a year, but for some parts of the financial structure, the pain is just beginning. Twenty years from now in business schools across this country, there will be a few old dogs who remember the tech wreck of 2000 and reflect on Y2K – the biggest event ever to not occur. There will also be classes, books and perhaps even four-year programs covering the current subprime crisis.

Similar to an explosion, the subprime catastrophe started in the middle and is working its way to the outer edges. The ripples may be subsiding in some areas, but the ripples on the outer edges could be more viewed as large waves to many unsuspecting municipal bond investors.

My wife’s grandmother passed away a few years ago at the age of 98. On several occasions, I would ask Grandma about the Great Depression. She told me with a laugh that they let her know it had happened about the time it was over.

ANOTHER BANK GOES DOWN

Aug. 23–The Kansas City area suffered its second bank failure of the year Friday when Columbian Bank and Trust Co. succumbed to a silent run on its large deposit accounts.

TRUSTEE CALLS CEDAR FUNDING A ‘DISASTER’: Monterey: Investors Hear More Bad News About Real Estate Lender

A LETTER TO THE FINANCIAL NINJA WEBSITE

Brant said…

I’m just wondering how quick all this will be when the majority of the people who are busy watching American Idol, Lost, and Deal or No Deal finally see whats happening and there is nothing they can do about it. Sometimes I switch my radio from AM to FM and just think how totally out of touch I might be if I only listened to FM or an IPOD.

It took us years/decades/several generations to get here so somewhat “invisible”, I wonder if the deep slide to the trough will be days/weeks/months. Will it basically be like the individual charging, charging, charging and then just leave the house with the unopened mail/bills sitting on the table.

I’ve read that happens around Atl where the family just leaves with everything still in the house and the unopened bills on the table. The bank has to landfill everything (furniture/pictures/kids trophies) due to liability. They can’t even donate stuff to thrift stores, sad. It will be quite scary when that happens on a whole town scale. I guess it already has in the country, I don’t think here in middle/upper class Atl yet.

When I drive home, I see dozens of million dollar homes in “high end subdivisions” built in the last 2 years right in the middle of the country on curvy two lane country roads with no artery roads within several miles. All of these homes are for sale, I don’t even think they’ve ever been sold the first time.

As someone who at least I think I can live on the barest necessities (at least 21st Cent barest needs, reading some books on my front porch), it will be interesting to watch these people knocked down several/many pegs to where they should have been living all along. A psychologists/sociologists dream. You think living next to that abandoned house with waist-high grass is unsettling? Just wait until the prisoners start showing up…

INMATES TO GUARD FORECLOSED HOMES?

From The Suncoast News, in Florida:

Pasco County officials will ask for permission to use county jail inmates to help clean and mow lots of foreclosed homes that have fallen into disrepair.

“We’ve got to get in front of this,” Commissioner Michael Cox said today [August 12] in bringing up the issue. “Last I heard there were 6,000 homes in foreclosure” in Pasco, he said…