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Yesterday, another interesting amendment (.pdf) to the House's financial regulation bill made it through committee. It would require an audit of the Federal Reserve. The amendment offered by Rep. Mevlin Watt (D-NC) has the spirit of a bill written up by Rep. Ron Paul (R-TX) calling for a similar end. Paul has been an outspoken critic of the Fed and offered a companion amendment (.pdf), along with Rep. Alan Grayson (D-FL), broadening the audit. It also passed. Some people are worried that the amendments could endanger the independence of the Fed. I think that's an exaggeration.

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In what appears to be a sort of odd answer to Congress' anger over credit card interest rate hikes, Citibank has introduced a new policy that allows some customers to reduce their interest fees -- if they use their card a lot. The idea is that cardholders who meet a minimum spending threshold each month will qualify for an interest rebate, essentially lowering their interest rates. While the move would almost certainly result in greater profits for Citi, it's bad for consumers across-the-board.

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If you pay only a little attention to banking news, then you probably think that the industry has largely healed. After all, big banks like JP Morgan and Goldman Sachs have had fabulous rebounds. Wall Street bonuses are said to be way up this year. But a Reuters article today explains that the smaller regional banks still have a ways to go. The article also rightly points out that, until they fully recover, the broader economy won't either.

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Many troubled homeowners have complained about banks treating them like a number instead of a person. Some blame the impersonal nature of the mortgage industry on securitization, which put the onus on overworked servicers to deal with homeowners, instead of their local mortgage bankers. The front page of the New York Times today contained a story about an attempt to change all that. In Philadelphia, a new law requires that the homeowner and lender meet in person to discuss the situation before eviction can take place. While a quaint idea, I just don't see the point.

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Today in the New York Times, David Leonhardt reports on the latest stimulus scheme gaining steam in Washington, nicknamed "Cash for Caulkers." The idea is aimed at creating jobs in the construction industry by providing a tax credit for Americans who weatherize their homes. Like clunkers, caulkers would also involve "green" cost saving measures, as making sure homes are better at keeping the heat or air conditioning in will reduce energy costs and usage. But I'm just not sure the idea would work.

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Rasmussen reports on a fun and informative poll of credit card consumers today. They found that 50% of respondents have seen their card interest rates increase in the past six months. And the number really might be even higher, as an additional 19% weren't sure whether their interest rates have gone up. This speaks to the complaint that banks have been raising interest rates in response to last spring's credit card regulatory changes. The poll also reveals some interesting aspects of consumer behavior.

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The Washington Post has an article today about the charging station obstacle standing in the way of the much anticipated electric car revolution. Of course, this problem will likely be solved just like the electric car problem itself: the government will end up footing most of the bill. And that's what I found most notable about the article -- the incredible investment that the government will have to make for electric cars to happen in the near-term. I find it quite troubling.

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Former Federal Reserve Chairman Paul Volcker has come out against a regulatory proposal which would provide the new systemic risk regulator the power to altar accounting standards in times of economic instability. The suggestion is being considered this week by the House Financial Services Committee as an amendment to their version of financial industry regulation. I have to side with Volcker on this one -- changing accounting standards to address a crisis is a terrible idea.

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The U.S. Department of Agriculture released a grim report Monday which indicates that, during some time in 2008, 17 million households experienced problems in securing enough food to eat. That number is up from 13 million households in 2007. This news is fairly alarming in a nation as rich as the U.S. and speaks rather negatively about the policy response to the recession.

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There's a lot of fear around the ability of the Federal Reserve to shrink its balance sheet so to avoid inflation. Obviously, such a move can't make much progress until the economy has shown tangible signs that recovery is well underway. In response to the financial crisis, the Fed's balance sheet has grown incredibly. Although this observation isn't news, I think its size in relation to GDP is notable and looks rather shocking as a chart.

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One of the new technologies that I'm most excited about is augmented reality. The New York Times had an article about it this weekend, pondering whether the technology will endure. In case you aren't familiar with augmented reality, it essentially consists of cameras being able to "recognize" objects and then project information about those objects on a screen the user is viewing the image on via the camera. There are other more entertainment-driven uses for augmented reality, but it's the informational aspect that I think could result in the technology one day becoming a major part of our lives.

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Yesterday, I wrote about the how the Federal Housing Authority is on the road to a bailout, with its cash reserves quickly drying up as mortgage losses soar. This would be a significant departure from history -- the FHA has always been self-sustaining. It has done so by its mortgage insurance premiums paying for any losses its portfolio has incurred. Unfortunately, defaults are higher these days than FHA management anticipated, so the premiums might not be enough. This points to an obvious way for the FHA to avoid a bailout: it could increase premiums. While a possible solution, I doubt it would happen.

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The news that Disney will be building a new theme park in Shanghai appears to be a no-brainer from a business standpoint: what company wouldn't want a foothold in a nation with a booming economy and over one billion consumers? Wealthy Chinese travelers sometimes visit other Disney theme parks located in the U.S., Paris or the more convenient Hong Kong. But having a location on mainland China will make it even easier for the entertainment conglomerate to become a part of modern Chinese culture. Yet, could Disney's presence there do much to open up media access for the rest of the West? A Bloomberg article says no, but I think it might.

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Most people would probably answer the question above with a resounding "no!" Of course the poor aren't better off with greater income equality, right? Well, they might have reason to cheer the recent news that Wall Street bonuses will soar this year -- at least according to Robin Hood Foundation executive director David Saltzman. Bloomberg reports that he's thrilled bankers will have big bonuses burning holes in their pockets, because that means a lot more donations for non-profit organizations like his. Is his exuberance warranted?

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Today I listened to a panel discussion at the Cato Institute about the financial crisis. The participants debated aspects of Robert Pozen's new book "Too Big To Save?" In it, he dissects the causes of the crisis and explains how he believes those problems could be prevented in the future. There was an interesting point of disagreement among Pozen and another panelist concerning whether the U.S. government should have provided the banks with such attractive terms for the bailout money they accepted. Pozen doesn't think so, and I agree.

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The Federal Reserve today issued its final rules concerning bank overdraft fees. About a month ago, I wrote about how several prominent banks had already begun allowing customers to opt out of the ability to incur overdraft fees. While clearly good news for chronic overdrafters, I worried about greater cost this policy change could impose on those who never attempted to withdraw more money than they had. The Fed's rules appear mostly in line with that new trend that some of those banks have already begun moving towards.

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In the tech world yesterday, there was a big stink about a Microsoft group manager saying that Windows 7 was partially inspired by Mac's operation system. Obviously, such a comment is sure to make Mac lovers snicker. A Microsoft spokesperson subsequently denied the validity of that manager's statement. I can't help but wonder, is there really any doubt that Microsoft considered Mac in its operating system redesign -- and can anyone really fault it for doing so?

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The commercial real estate market is a mess. I've mentioned this in the past, but a Bloomberg piece today presents some analysis worth highlighting. It includes a fascinating chart, but mostly focuses on a report by Randall Zisler, chief executive officer of Zisler Capital Partners LLC. He says, "A crisis of unprecedented proportions is approaching." If his analysis is correct, then it could happen.

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The last thing Americans want to hear at a time like this is that they're being paid too much. But that's precisely what an article today from Breakingviews.com appearing in the New York Times argues. It says that U.S. wages need to decline in order for the nation's businesses to compete in a global economy. As much as I hate to say it, I think the piece's logic makes a lot of sense.

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As mentioned earlier, I've begun tackling the Senate Banking Committee's mammoth systemic risk-targeted regulatory proposal (.pdf). The first section creates an "Agency For Financial Stability" (the "Agency"), which would function as systemic risk regulator. I want to compare and contrast this with the House draft's approach. Frankly, the Senate's version is better.

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Moodys think so. Reuters reports that the rating agency appears to be impressed with AIG's restructuring plan, saying that the insurer will likely be able to repay its entire government loan and a great deal of the equity stake. That's pretty impressive, considering how much it owes -- up to $180 billion, which includes around $80 billion loans. Is Moodys being a little too optimistic? It depends.

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A question I've often wondered during this recession is -- what will lead us out? With unemployment above 10%, it probably won't be consumers. That leaves business. Yet, some news out from the Federal Reserve makes that hope look a little bit grim as well. In the Fed's "October 2009 Senior Loan Officer Opinion Survey on Bank Lending Practices," trends for banks' credit practices are revealed. In short, credit likely won't be leading us out of the recession either.

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A smaller iPhone -- through Verizon? It could happen. Computerworld reports:

Apple Inc. will launch a smaller "worldmode" iPhone next year that will be ready for Verizon Wireless to sell in the third quarter of 2010, according to an analyst report citing unnamed handset maker sources in Taiwan.

I'm skeptical about the validity of this report for a few reasons. But even if it is true, I just don't see the point.

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As a Netflix user, I have come to enjoy the simplicity and convenience of updating an online queue and having new movies to watch come in the mail. According to a New York Times article this morning, another company seeks to emulate the Netflix model -- but for high-end clothing. This is an intriguing idea to be sure. I just worry about the logistics.

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On Wednesday, I wrote about the odd observation that over the past year workers' hours have decreased while consumption spending has essentially been flat. One thing I noted was that savings have increased over the same period. One commenter, mgoodfel, requested a chart showing that decline. I added one, but in doing so noticed something kind of unexpected: savings suddenly decreased in the third-quarter of this year. What's going on here?

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Things at government sponsored owned mortgage giant Fannie Mae continued to deteriorate in the third-quarter. As a result, it's requested even more capital from the emergency fund set up by the Treasury. Its bailout's price tag now totals $60 billion, and there's no light at the end of the tunnel.

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U.S. unemployment leaped to 10.2% in October, from 9.8% in September, according to the Bureau of Labor Statistics. The U.S. economy lost 190,000 more jobs during the month, putting the number of unemployed Americans at 15.7 million. The 0.4% surge is highest the since May. Wall Street won't be happy either: it predicted the rate to increase modestly to 9.9%. October's losses push the unemployment rate into double digits for the first time since 1983, as it edges closer to the post-Great Depression high of 10.8% hit in 1982. I went through the report, looking for some glimmer of hope, but came up empty.

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Earlier this week, Nouriel Roubini had a column in the Financial Times warning that an asset bubble is forming. He asserts that investors are taking advantage of low interest rates and a weak dollar to speculate on assets, driving up prices. I think he's probably right. He worries, then, that this is forming yet another bubble. That might be true as well, but I need a little more convincing that this asset bubble will be as severe as Roubini appears to believe in the U.S.

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Tomorrow a big economic measure will be announced: the national unemployment rate for October. As we have been doing over the past several months, we'd like to give Atlantic readers the opportunity to weigh in with their predictions for how the labor market fared last month. Vote below!

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In case you went to bed early and haven't glanced at the sports page, the New York Yankees won their 27th title last night after beating the Philadelphia Phillies in the 6th game of the World Series. That's great news for fans of the Bronx Bombers, but should the market also cheer? According to some analysis from Bloomberg, history shows that stocks might have been better off if the Yanks lost.

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The House Financial Service Committee today approved a measure seeking to stiffen fraud oversight by the Securities and Exchange Commission, so you might be surprised to hear that it watered down one antifraud measure in the process. The bill loosened Sarbanes-Oxley audit requirements for small business. Those regulatory changes were put into effect in 2002, as a response to the Enron and WorldCom debacles. Since then, business generally criticized the measure, saying it results in much higher auditor fees. You can debate whether the fraud protection Sarbanes-Oxley provides is worth the costs it imposes, but that those costs are too high for small business seems hard to dispute.

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In what may be an ill-advised move, AT&T has decided to sue Verizon over its television commercial that shows AT&T's 3G data coverage as paltry and Verizon's as robust. But AT&T isn't really disputing that fact. Instead, it's complaining that Verizon is falsely representing the sparse AT&T 3G map as it's more general data coverage map, which would include its slower, non-3G, data speeds. As far as I can see, that's not at all what Verizon is doing.

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I just stumbled over a strong argument in the Washington Post against renewing the first-time home buyers' credit, put forth by the Baseline Scenario blog's Simon Johnson and James Kwak. I've argued in favor of the credit but believe it should remain isolated to first-time buyers. Johnson and Kwak have some valid criticisms, but I think there might still be ways to fix the credit and largely shield it from their worries.

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Each morning, while getting ready for work, I enjoy four egg hard-boiled egg whites, black pepper, a multivitamin and CNBC. Today, their commentators were going on and on about billionaire value investor Warren Buffett's decision to buy up all of Burlington Northern Santa Fe railroad. I couldn't help but picture Buffett like a big kid who just wants a $44 billion train set to play with. But seriously, it's a pretty big acquisition. His rationale? He calls it an "all-in wager on the economic future of the United States." That makes sense, but let's not overanalyze this statement.

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Yesterday, the Wall Street Journal reported that Goldman Sachs is attempting to buy tax credits from Fannie Mae, the mortgage giant put into a government conservatorship last year to avoid its failure. Fannie qualifies for lots of government tax credits for its efforts to secure housing for low income Americans. But since turning a profit isn't in the cards for Fannie this year, it can't use the credit to offset taxes: you don't pay taxes on a loss. Goldman Sachs, however, has plenty of profit. So it would love to offset some of its huge tax bill. The Treasury may balk. I have a few thoughts.

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Net Applications has released the internet browser usage statistics for October. While changes weren't dramatic, they do seem to indicate a continuing trend: more are using Chrome and Firefox, while fewer are using Microsoft Internet Explorer. Compared to September, Chrome and Firefox are up 0.4% and 0.3%, respectively, while IE is down a little over 1%.

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Two reports released today on manufacturing and home sales appear to indicate that the U.S. economy may, in fact, be on the mend. Although the third quarter's 3.5% GDP growth appeared to indicate this, subsequent spending and wage data clouded the picture. These reports swing the pendulum back in the positive direction.

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I love to use my DVR to fast-forward through commercials. In a one-hour show, I can knock out generally just under 20 minutes of advertisements. That means DVR makes TV watching around 30% more efficient. I can then use the saved time to do something useful or entertaining. According to a New York Times article today, not everyone has the same attitude as I do when it comes to skipping commercials. In fact, nearly half of DVR users let the advertisements play. While I found this shocking at first, I shouldn't have.

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Any minute now, recovery.gov will have a report that touts 650,000 jobs have been saved or created thus far by February's $787 billion stimulus package. In fact, the White House is already bragging about this on its blog. Am I the only person who's completely unimpressed?

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Bloomberg reports on some poll results I find a little surprising: global financial professionals still pick New York City as the best place for financial services in the near-term. I have hypothesized that the City would fall from its pedestal because Manhattan bankers would pay the price for violating the trust of foreign investors who lost millions on U.S. investments. Moreover, I believed that the massive regulatory constraints that Washington was likely to place on Wall Street could cause it to lose its competitive edge. This poll says otherwise.

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Anyone still celebrating yesterday's 3.5% U.S. GDP growth estimate for the third-quarter might want to take off their pointy party hats. Some new economic indicators out this morning aren't pretty. Wages are growing at a snail's pace, and consumer spending has fallen off a cliff. This data suggests that the economy might not be in nearly as good shape as the GDP number suggests.

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It looks like the debate is heating up about whether to keep the $8,000 first-time home buyer's credit that expires at the end of November. I got press release e-mails today from Senate Banking Committee Chairman Christopher Dodd (D-CT) and Treasury Secretary Timothy Geithner both praising the credit's extension. I support the giving the credit a longer life, because I think that if the government is determined to continue to stimulate the economy, then shrinking the vast inventory of houses is a good way to help stabilize the real estate market. But oddly, a home buyer's credit extension might be opened up to far more than just first-time buyers.

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I'm nearly done tackling the financial stability regulation (.pdf) proposed this week by the House Financial Services Committee. Earlier, I wrote about the securitization provision. Yesterday, I covered a variety of topics as well (links at the bottom of this post). This might be my favorite part: the resolution authority. I've been calling for a non-bank financial firm resolution authority for months. I'm shocked to report that Congress didn't do too badly with this plan. Let's dig in.

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I'll end the day with one last post on the new Financial Stability Improvement Act of 2009 proposal (.pdf). But this hardly marks the end of my toils with the doc. There are at least a few more issues it addresses that I intend to tackle tomorrow including the resolution authority and securitization. Up to now, I've covered the Council, identifying risky firms, heightened regulation and capital requirements. This one will be quick. I found one section a little peculiar. I understood the spirit of this legislation to ensure that the government wouldn't have to bail out financial firms anymore. One part of the draft appears to contradict this principle.

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I'm still reading through the House's new Financial Stability Improvement Act of 2009 proposal (.pdf). So far, I've looked at the Council and how it will identify firms. Next, I think it's important to look at what new requirements will be imposed on firms found systemically relevant.

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The new 'too big to fail' legislation is too big to analyze in one post. It would have to be several thousand words. But it's also too important to ignore. I don't think any other regulatory rules enacted will be as important to prevent future financial crises. So I am going to focus most of the day today on reading through the 253-page draft (opens .pdf) released yesterday, titled the Financial Stability Improvement Act of 2009. I'll provide some highlights and analysis from the major sections in separate posts. I'll start with the proposed Financial Services Oversight Council.

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At this point, I don't think that many doubt that taxpayers are generally not on the better end of the deal when it comes to government bailouts. Still, an article today on Bloomberg accentuates this belief. It explains how the New York Federal Reserve gave banks that had credit default swaps (CDS) with AIG 100% par value to retire the derivatives, essentially ignoring the market value. This is disturbing for a few reasons.

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As Megan noted yesterday, the Wall Street Journal is one of the few newspapers that has gained print subscribers this year. That might be surprising, given that it's also one of the few newspapers that also charges for online content. But its latest strategy in demanding a subscription fee for its mobile news reader has me scratching my head. The full details are about as bizarre as the pricing scheme that Derek wrote about back in June by the Daily News of Rhode Island. I get that the Journal likes to get paid for content, but I don't understand why it's charging wsj.com subscribers even more to utilize the mobile app. And the details are even stranger.

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Today, President Obama will tout $3.4 billion in government grants for projects to improve the nation's infrastructure for electrical transmission. The initiative is a pretty good use of a portion of the $787 stimulus package passed back in February. I just wonder: what took them so long?

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Perhaps one of the most well-known and highly publicized white collar crimes is insider trading. It was the basis for Oliver Stone's famous movie Wall Street. It was even part of what sent America's favorite homemaking expert Martha Stewart to prison.* So it might come as a surprise that some would argue to make insider trading legal. Reasons for doing so were outlined this weekend in a Wall Street Journal op-ed by Donald J. Boudreaux, Professor of Economics at George Mason University. Some of his arguments are quite compelling. I still think, however, the potential harm outweighs the benefits he suggests.

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It's a borrower's dream: the bank can't find your mortgage paperwork, so it can't prove its ownership of your home. As a result, a judge orders that the debt the bank claims you owe is erased, and the house is yours. While such a scenario seems fantasy, it happened in a federal bankruptcy court this month. Gretchen Morgenson reported on this in the New York Times this weekend. While she speculates that this could mark a new paradigm where borrowers have the advantage over negligent banks, I hope this is more the case of an activist judge that won't be made common practice.

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Bloomberg has an article today that explains why California will likely face higher power costs as a result of a boom in plug-in electric cars. Although this is kind of obvious if you think about it for more than 15 seconds, it's still worth noting, because some people might find it initially counterintuitive. Even though electric cars will certainly lower gasoline costs, they will increase electric costs. The point extends well beyond just California as plug-ins become more broadly popular.

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Great Britain's Office for National Statistics announced (opens .pdf) today that the nation's GDP decreased by 0.4% in the third quarter. This marks the sixth straight quarter of contraction. That's the longest period of decline since the Office began keeping records in 1955. Here's what Britain's GDP picture looks like, from the official release:

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If you enjoy watching TV shows for free on Hulu, then today's news won't make you very happy. News Corp., one of the co-owners of the site, has confirmed the rumor that it intends to start charging fees at some point. New Corp. Chairman Rupert Murdoch is a big fan of pay-for-content experiments, so I'd imagine he's pushing for this model and eager to see it in action. At this point details are still sketchy, because they probably haven't been finalized yet. I'm not convinced that charging for Hulu is the best idea, but if it's determined to go that route, how should they do it?

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It was banker pay slashing day in the nation's capital. First, we have the final detail out explaining how Obama administration pay czar Kenneth Feinberg will limit compensation for bailout recipients. Separately, but singing in tune, the Federal Reserve released its pay guidelines for its 28 largest banks. I've written rather extensively on compensation limits, and addressed both topics before. The news is pretty much what I've been expecting, but it's worth taking a few minutes to assess how Wall Street compensation changed today.

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Today, AT&T reported that its third-quarter profit fell 1.2%, year-over-year. Yet, a few days ago, Apple reported a record quarter, due in large part to fantastic iPhone sales. I found this confusing. Since AT&T is the only U.S. iPhone service provider, how could its profit have fallen?

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It sounds like Disney is getting into the entertainment technology game in a big way. The Wall Street Journal is reporting on a really cool new venture it's involved in, codename Keychest. It would seek to change the way people purchase entertainment. DVDs and Blu-rays would become obsolete. Here's how it would work:

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I'm always pleased to hear genuinely good ideas. In perusing Felix Salmon's Reuters blog this morning, I came across a brilliant one. It's actually one that's being considered by Paul Volcker's tax policy panel. Coincidentally, I wrote about another of Volcker's ideas earlier from a New York Times article, which I wasn't as excited about. The one I like is mentioned by the Wall Street Journal, in an article with an entirely different focus. The particular part that I'm intrigued by would end interest tax deductions for corporations.

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About a month ago, I wrote about how well Hyundai is weathering the economic storm, which is particularly severe in the auto space. Its market share is expanding faster than any other carmaker. Other than the fact that it produces cars for cheaper than its rivals, and has recently edged up on the quality ratings rankings, it has another ace in the hole: a weak domestic currency.

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The New York Times today has an article about former Federal Reserve Chairman Paul Volcker's crusade to bring back the Glass-Steagall Act. Obama isn't listening. The Act used to keep separate commercial and investment banking activities. The Gramm-Leach-Bliley Act of 1999 repealed it. Consequently "full service" banking behemoths like Citigroup and JP Morgan came to be, now allowed to participate in every financial activity imaginable. Many, including Volcker, believe this was a big mistake, and one of the causes of the financial crisis. I don't see it. At all.

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I found a statement today made by Obama administration pay czar Kenneth Feinberg extremely odd. According to ABC News, in a speech at a Washington, D.C. conference held by the National Association of Corporate Directors, he said:

I've learned about the incredible gap, the chasm between Wall Street perceptions and Main Street perceptions. It is a formidable chasm that I'm not sure can be bridged, although the law requires me to attempt to bridge that gap.

I think he might want to re-read his job description.

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Bloomberg has a piece today that explains who else will benefit from the rise in banker bonuses. Sure, expensive steakhouses and pricey co-ops are celebrating. But another important beneficiary is New York City and state. This money could go a long way in helping the region, which is surely worried about budgets in the wake of this recession.

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One of my favorite pastimes is noting news articles that appear to directly contradict one another, especially if they're from two big sources. Today I stumbled upon the following two headlines. The first was from Bloomberg on Friday:

Wealthy U.S. Shoppers Boost Spending 29%, Survey Says

This one was on WSJ.com today:

Luxury-Goods Sales Still Soft, Recovery Unlikely Before 2011

So who's right? Well, they both kind of are.

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With consumer credit card reform having taken place last spring, businesses want their share of Congress' concern. Their cries are getting louder for action to be taken to limit interchange fees -- the cost imposed on businesses for credit card transactions. The Wall Street Journal has an article on interchange fees today. I can understand why businesses don't want to pay as much, as it's a huge expense. But the only alternative is for the cost to fall on consumers.

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I just saw this news blurb via Bloomberg:

Keefe, Bruyette & Woods cut the price targets of federally controlled mortgage-finance companies Fannie Mae and Freddie Mac to zero today, saying the government needs to recapitalize the two and wipe out shareholders.

Interesting theory, but I think they underestimate the government's willingness to continue throwing good money after bad.

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The dollar is in something of a pickle these days. On one hand, it would benefit greatly if policymakers moved to close the deficit, increase interest rates and eliminate much of the U.S.'s national debt. On the other hand, the U.S. economy is in no position to stomach any of that in the near future. In the meantime, it looks as though the dollar is going to suffer from an inevitable decline. But what if there was some way to ease the market's fears about its future?

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Last week, I wrote about Great Britain questioning the Ticketmaster-Live Nation merger. I just wanted to provide a quick update, as news today indicates that the U.S. antitrust authorities have similar worries about the deal. The Wall Street Journal reports:

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Amazon.com might be feeling a little paranoid these days -- it seems like everyone is trying to ruin its efforts to be the chief online book seller. First, we hear that internet behemoth Google is going to try to encroach on up some of its e-books market share. Today we find out that retail giant Wal-Mart hopes to compete with paper book sales through its website. The latter effort is particularly notable, since Wal-Mart's threat would extend well beyond just Amazon, to jeopardize the business of other book retailers.

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There's an article today in the Wall Street Journal about the challenges facing social networking website MySpace. A modest goal, it seems, is to grow at all, much the less keep pace with its chief competitor Facebook. According to the article, it is trying to refocus its site by appealing to specific entertainment-driven audiences. Is that enough to stop the bleeding?

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Yesterday, I noted that Wall Street is likely to pay out a record amount of bonuses to its employees. As earnings reports come out, we're seeing some fantastic third quarters from banks like JP Morgan and Goldman Sachs. As a result, it might not seem surprising that the Treasury has begun urging banks to repay their bailout money, if they haven't already. Despite the recent success of some banks, I'm not convinced this is a wise move, and I worry its motivation is more political than practical.

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Most people who have some interest in U.S. politics or economics know that Social Security is a ticking time bomb. It seems like every year we hear time line revisions indicating its collapse will be sooner and sooner. Like a bomb, it's also highly volatile. It's one of those problems that everyone knows exists, but given the strength of the senior vote, virtually all politicians are too scared to even attempt to offer legitimate solutions.

But there's a new problem with Social Security, other than the path it's on, which has gotten some press recently. Unlike the larger issue, this one could be easily fixed -- assuming it is a real problem.

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Yesterday, I wrote about how Goldman Sachs, in particular, is set to have an amazing year, which will include record bonuses. Today, the Wall Street Journal reports that the same can be said for the rest of Wall Street: its bonus pool will hit a new all-time record. As amazingly as this indicates banks have done, their employees will do even better.

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I've written a lot about the plight of the rich in the current recession. Reuters has an article today explaining another way in which they're suffering. Their expensive houses are losing even more value than lower priced homes. That's making matters more troublesome those trying to sell pricey estates.

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Over on the New York Times' Economix blog, University of Chicago Economics Professor Casey B. Mulligan has a good post about how government subsidies go awry. In the piece, he considers the proposed job creation credit for business. It sure sounds like a great idea, until you think about how businesses will actually react to it.

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Earlier, I wrote about banks' absurd push to bring back interest-only mortgages. Subsequent to that, I read the delightful news that California is coming to its senses regarding mortgage origination. The Los Angeles Times reports that Gov. Schwarzenegger signed a number of new mortgage laws late last night. I'd like to highlight several of these new rules, which I think the entire nation should embrace.

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Bloomberg reports:

Banks will push the Obama administration to expand its mortgage-modification program to allow interest-only periods on reworked loans, seeking to bring more homeowners into the initiative while recognizing concern that it may only postpone defaults, according to JPMorgan Chase & Co.

You might remember interest-only mortgages as one of the classic subprime ploys that blew up in banks' faces. Why are they going back down that road?

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The New York Times has a fascinating front page story today about a new strategy by the Walt Disney Company. At a time when most retailers are pulling back, Disney has decided to pour a great deal of money into its retail stores in order to make them an experience that children will beg their parents to be a part of -- like mini-theme parks. They plan to do it by using the Apple Stores as their guide, pumped full of steroids pixie dust.

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A few weeks back, Derek wrote a post about JP Morgan's and Bank of America's new overdraft rules. They will allow customers to opt out of being able to withdraw more than is in their checking account and not incur the fees that result. Fees for overdraft will also generally be lower. Since banks tend to follow one another, others will likely change their overdraft practices as well. Derek commented that this is excellent news for consumers. I think that's partially right: it's excellent news for some consumers. If you pay attention to the money in your checking account, and never would have attempted to draw more than you have, then it won't help you at all. In fact, when you think about it, these new rules might actually make checking more expensive for most consumers.

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Anyone who follows the government's involvement in the mortgage industry with a skeptical eye should find it utterly unsurprising that the Federal Housing Authority (FHA) might be in trouble. The New York Times has an article today indicating that it may go the way of Fannie Mae and Freddie Mac and require a bailout. I think it could go either way, depending on its several factors.

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Last week, many were shocked to hear that Ken Lewis, the embattled CEO of Bank of America, was resigning. Amidst lawsuits and virtually every man, woman and child in the U.S. questioning his judgment, he was surely looking forward to a pleasant retirement. As he wrote his goodbye letter he must have been thinking: you won't have Ken Lewis to kick around anymore. But one of the big labor lobbies, the Service Employees International Union (SEIU) doesn't want Lewis's retirement to be as pleasant as he might have imagined. They want Obama's compensation czar, Kenneth Feinberg, to seize his pension.

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So there's been a lot of talk about the decline of the dollar over the past year. Yet, it's hard to know when you've really got a problem or just a lot of alarmists speaking in unison. (Though a lot of alarmists speaking in unison might be its own problem.) Some news out today might indicate that it's time to worry. How bad has the dollar's slide gotten? So bad that Asian central banks are intervening.

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Ticket distributor Ticketmaster and concert promoter Live Nation have been hoping to merge. Britain's antitrust regulator objected today in a preliminary ruling. It believes the merger would severely limit competition and hurt consumers. I think it's right, and its decision is something of a no-brainer.

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Just a week ago I breathed a sigh of relief hearing the news that government mortgage agencies Fannie Mae and Freddie Mac really appeared to be shrinking. It may have been a case of premature elation. The Wall Street Journal reports that Fannie and Freddie are beginning a new initiative to expand their reach into another aspect of the mortgage market: propping up warehouse lending for smaller banks.

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There was a hearing this morning held by the House Financial Services Committee titled, "Reform of the Over-the-Counter Derivative Market: Limiting Risk and Ensuring Fairness." Much of the discussion centered on Committee Chairman Barney Frank's (D-MA) proposal to regulate the derivatives market, which differs in significant ways from that offered by the Obama administration. I worry that proposed derivatives regulation misses the mark on a few levels.

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The New York Post is reporting that Clear Channel Communications is having trouble getting loans from banks to help pay the interest on its current loans. Clear Channel is by far the largest radio station owner in the U.S. If these problems persist, it's rather difficult to imagine what would happen to radio.

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Earlier, I noted that Kenneth Feinberg, President Obama's pay czar, is seeking to defer a portion of take home pay for some bailout firm employees. I noted that this would be Feinberg's most aggressive move to date and that those employees will not be amused. There's one thing I forgot to mention: this could also potentially damage financial stability.

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The Energy Information Administration provides some rather wonderful news today. We have something to look forward to this winter other than the holidays. Energy costs and carbon dioxide emissions will both be lower. That's enough to provide pretty much anyone with a little holiday cheer.

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I've written several times about the reign of President Obama's Pay Czar, Kenneth Feinberg. He has the rather difficult job of attempting to quell the anger of the masses in cutting pay for employees at firms having received bailout money, without damaging their competitiveness. It probably isn't possible, but it's fun to watch him try. His latest move, reported by the Wall Street Journal, is arguably his most controversial to date. He intends to cut salaries, replacing a portion with deferred stock awards.

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The New York Times' Bits blog has an interesting article about a new technology that Intel will soon be rolling out. It seeks to deliver data more quickly than possible on metal-based cables: at light speed using optical technology. If you've studied any physics, then you know nothing travels faster than light. For years I've been hearing that computers using optics, instead of wires, would ultimately be necessary to increase speed past what's currently possible. Intel is making progress in getting there.

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House Financial Services Chairman Barney Frank (D-MA) today indicated that he would like to see some funds be set aside to help prevent foreclosure for homeowners who have lost their jobs. He indicates that such a bailout would be different from the earlier homeowner bailout, which sought mostly to prevent homeowners with mortgages they could not afford from losing their homes. This time, the borrowers used to be able to pay their mortgage -- before they lost their job. Now facing prolonged unemployment, those Americans' homes are also in jeopardy.

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The Wall Street has an interesting article today indicating that firms are increasingly issuing unsecured debt for questionable purposes. The most controversial: to issue special dividends to shareholders. Not all debt issuance is bad; some is very strategically important. But issuing more debt to pay your equity investors isn't usually advisable, particularly at a time like this.

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Earlier, Megan posted a section from a suggestion from Joe Wiesenthal at Clusterstock on how to fix the rating agencies. He suggests a group of 10 agencies, arbitrarily chosen to rate deals. Since I have some pretty strong opinions about the rating agencies, I thought I might give this proposal some thought.

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Bloomberg had an article that caught my eye this morning. Apparently applications to begin receiving Social Security benefits are up. This is undoubtedly bad news for the Social Security system -- as soon as 2016 benefit payments will begin to exceed the fund's revenues. More people collecting benefits earlier could bring this inevitable result even sooner. The recession appears to be driving this increase in applications. Older Americans who are eligible for Social Security are deciding to retire early or collect some extra money.

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I've written several times now about how adversely this recession has affected the rich. Apparently Forbes' famous list of the richest Americans shows just how badly their fortunes have been hit. This year's article reads like an obituary for the wealth that once was. It also provides some ugly statistics to dig into. It starts:

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The Wall Street Journal today has an interesting article about a new type of security that it claims is taking Wall Street by storm. It's called a "re-remic," which stands for resecuritization of real-estate mortgage investment conduits. Got it? Let me explain.

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Yesterday, the Office of the Comptroller of the Currency and Office of Thrift Supervision released a report (opens .pdf) on mortgage metrics for the second quarter of 2009. As you might guess, it was not pretty. But it showed some interesting insights. I found notable the new trend in mortgage modification strategy, and its staggering re-default statistics.

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Tomorrow marks the first Friday of the month, which means the prior month's official national unemployment rate will be released by the Bureau of Labor Statistics. As we have over the past few months, we'd love for Atlantic readers to weigh in with their predictions. So vote in the poll after the jump!

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Testifying before the House Financial Services Committee, Federal Reserve Chairman Ben Bernanke made a surprising assertion. He said that an oversight council should be in place to regulate the systemic risk of the U.S. financial system, rather than just the Federal Reserve. Some, including the Obama administration, have argued that the Fed alone should have this oversight authority, but the Chairman himself has now stated that he believes otherwise. Sort of. His testimony boils down to a mixed message.

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Bloomberg reports some good news:

Fannie Mae, Freddie Mac and the Federal Home Loan Banks are paying down debt at a record pace, creating a supply void in bond markets that may have saved U.S. taxpayers $3.8 billion and corporations $230 million in borrowing costs.

This has some nice repercussions for the credit markets, but not everyone will be pleased.

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Like most high-profile celebrity relationships, General Motors and eBay's love affair was a short one. The program that began on Aug. 11 will end today. How did it go? The Wall Street Journal reports:

"We thought the program was successful but that this was not the right time," GM sales chief Mark LaNeve said.

Given that a few weeks of the program overlapped with the infamous cash-for-clunkers program, artificially boosting auto demand, this raises the question: when would a better time have been? The little detail we have suggests the program probably wasn't all that successful after all. If it was why end it?

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Bloomberg has a piece out today that suggests the new pay standards decided on by the G-20 might make it impossible for ailing banks like Citigroup and Bank of America to ever recover the talent they need to compete. In particular, the article laments the loss of banks' ability to utilize multi-year bonus guarantees. This has traditionally been a tool used by investment banks to attract new employees. It is also highly criticized since it rewards bankers on performance not yet realized several years in advance. Could its elimination really matter to banks like Citi and BoA?

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Over on the New York Times' Economix blog, Harvard economics professor Edward Glaeser has a post urging a tax on systemically risky institutions to solve the too big to fail problem. He believes the tax will reduce the incentive to take excessive risk as well as provide a fund to bail out these institutions if history repeats itself. I think attempting to avoid regulation sets him on the right track, but he misses something key: we should structure an economy where bailouts never occur. I would propose a similar, but different, alternative.

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In the latest issue of FinReg21's Lombard Street e-Journal on financial regulation, regular Atlantic Business contributor and economist Arnold Kling has a very good piece arguing that mortgage securitization should be allowed to die, rather than fixed. He provides a fascinating perspective, having worked for Freddie Mac during the 1980s, when much of the securitization innovation was going on. His arguments are strong, and I find many of them quite compelling. Still, I ultimately see things differently.

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World Bank President Robert Zoellick delivered an incredibly long speech today at Johns Hopkins University. He talked about the crisis and addressed a number of interesting topics, including regulation, central banks and reserve currencies. He also briefly touched on who he believes should have more power to regulate the financial markets -- and who shouldn't. He favors the Treasury getting this power, instead of the Federal Reserve. I favor an even more balanced approach.

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A new poll out from 60 Minutes and Vanity Fair (odd coupling, I know) has a bunch of fun insights to how Americans see the world. The poll asks a fair diversity of questions from which company best symbolizes America to the future of Twitter. I found several poll question results particularly noteworthy and, well, amusing.

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The G-20 Leaders' Statement is out (opens .pdf). My favorite part is lines 4-5 of the preamble (presented below in their entirety):

4. At that time, our countries agreed to do everything necessary to ensure recovery, to repair our financial systems and to maintain the global flow of capital.

5. It worked.

Indeed. So far, at least. I want to give the statement its full due, so I'll tackle it this weekend. But here are a few quick thoughts, based on what I've read so far:

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I've commented a few times on the call for stricter Federal Reserve oversight, led by Congressman Ron Paul (R-TX). Today, before the House Financial Services Committee, Federal Reserve General Counsel Scott Alvarez said that audits might drive up interest rates. I'm not convinced.

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Floyd Norris's column today in the NY Times is worth reading. It explains the Securities and Exchange Commission's recent rule change attempting to correct the rating agency problem. It seeks to require information be disseminated to more than just the big three rating agencies for structured debt (like securitization). Norris recognizes that this could lead to insider trading issues, but suggests a great solution -- broaden the dissemination of this information even further.

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According to leaks on the G-20's progress in Pittsburgh, the major sweeping financial regulatory change the leaders of the world have come up with boils down to a peer review. They might reach a compromise on capital requirements or banker compensation as well. They also decided to let the emerging guys into the party -- G-9 through G-20 will join the G-8 to become part of the permanent council for international economic cooperation. But it's the peer review that I find most noteworthy.

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If there's anything that you would think the G-20 would be able to agree on when it meets in Pittsburgh this week, it's capital requirements. Capital levels at banks were insufficient to absorb the losses they incurred over the past two years, leading to the global financial crisis. Indeed, there's widespread agreement among leaders that capital requirements should increase, but a vast disparity about how much. Europeans don't want their banks to maintain levels as high as U.S. officials are calling for.

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I am somewhat embarrassed to admit this, but earlier this week I decided to start a coupon drawer. Growing up my mother had a coupon drawer, so creating one not only made me feel terribly frugal, but also very. . . middle-aged. The horror! Luckily, it looks like I'm not alone. The New York Times has a story today about a coupon renaissance.

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The Financial Accounting Standards Board today approved an accounting change that would affect how tech companies recognize revenue related to hardware products that include software. The proposed change passed in a unanimous vote. Up to now, tech companies that sold products like cell phones would recognize the sale over a period of time. This change allows tech firms to record the hardware portion of those profits immediately.

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Sunday night, I returned from a quick weekend trip to my hometown in South Florida. It was my first time there since early January. Driving around Fort Lauderdale, it became extremely clear just how big a hit its economy has taken as a result of the real estate market's collapse. It's like a different world compared to what it was like just a few years ago: overgrown grass rises above many curbs and sidewalks; homes and businesses sit empty and abandoned; most blocks display multiple "for sale" or "for rent" signs. In speaking to some of my friends and relatives who still live there, I learned that the state's ongoing foreclosure glut has resulted in an interesting phenomenon -- a "shadow" inventory of foreclosures.

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Andy Kessler has a good opinion piece in the Wall Street Journal today. In it, he explains why pay controls for Wall Street are a red herring. I've made the same comment, but it's worth looking at some of the points he makes, because I think they're strong arguments. Here's his key point:

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Yesterday, I complained about the problems that too much consolidation can pose. I suggested the solution might be to ramp up and broaden antitrust regulation to consider more than just monopolistic advantage. While I stand by my argument, an article from the BBC today also reminded me about one of the bad aspects of antitrust regulation: it's still regulation. And with regulation generally follows bureaucracy and inefficiency.

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There's some news out today that the Federal Deposit Insurance Corporation (FDIC) might turn the tables on banks and get a bailout from them. I find this prospect very, very confusing, because I can't understand why the FDIC would go to banks to borrow money. Better options exist.

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Yesterday, Federal Communications Commission (FCC) Chairman Julius Genachowski spoke about his desire to keep the internet free and open. Most of his talk centers on the idea of "net neutrality." The principle broadly states that internet access should be unencumbered. To most consumers, this probably sounds wonderful. To most internet providers, it probably doesn't. They'd rather have control over the data. This is a complicated issue, with lots of moving parts, but I'd like to focus on the principles of net neutrality that Genachowski explains, especially a new one.

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The Federal Reserve and Treasury have been getting very cozy over the past year or so. But the Fed hasn't become so enamored with Geithner Inc. that it's willing to comply with its every whim. That's clear from today's news. Bloomberg reports that the Fed rejected a request from the Treasury to undergo a sort of audit -- a public review of the central bank's structure and governance. This probably shouldn't be surprising, but might intensify the calls of its critics in Congress for greater transparency.

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There's news out today that we've finally got a winner of Netflix's much publicized contest to award $1 million to whatever team of computer scientists could improve its movie recommendation system by at least 10 percent. And not only that -- they liked the results so much that they're holding another contest to better analyze their customers' preferences based on demographics data. I think contests like these are great on several levels.

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Back in August, I wrote about a ruling where Countrywide was ordered not to modify certain securitized mortgages eligible under the Treasury's foreclosure prevention program. The court ruled that the program ignored investors' contractual rights. That was a legal issue. But the modification program could have some disastrous consequences from an economic standpoint. Blackrock Chairman Laurence Fink voices this concern in a Bloomberg article today. He worries about how mortgage modification will affect the future of the securitization market for packaged mortgages.

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Just yesterday, I wrote about how regulators might be starting to question the heavy involvement of rating agencies in the evaluation of bond insurers. A few weeks before that, I wrote about a judge deciding that the First Amendment's guarantee of free speech does not entirely shield the agencies from lawsuits. In July, I wrote a post about why I believe granting rating agencies that First Amendment protection is absurd. According to news out late yesterday, California agrees with me. The state has launched a probe to determine whether the rating agencies broke state law by incorrectly rating various mortgage-backed securities (MBS).

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Yesterday on MBNBC's "Morning Joe," financial advisor Peter Schiff formally announced that he is running for the U.S. Senate in Connecticut. Schiff developed something of a cult following as one of the most prominent investment gurus that predicted the financial crisis. His entrance into the race is particularly interesting because, if he gets the Republican nomination, then he would be up against Senate Banking Committee Chairman Christopher Dodd. Watch the announcement after the break.

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Three economists, John Cogan, John Taylor and Volker Wieland, co-authored an opinion piece in today's Wall Street Journal with a headline boldly proclaiming: "The Stimulus Didn't Work." Their argument essentially says that their neoclassical economic models were right, and those silly Keynesians were wrong. They go through a few empirical data points to show just how little the stimulus did. While I'm sympathetic to most of their reasoning, I worry they're missing something very key about human psychology that should be considered.

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The Federal Deposit Insurance Corporation (FDIC) is apparently indicating that (its own) reports of the death of the Public-Private Investment Program (PPIP) are largely exaggerated. In fact, the FDIC has completed a deal to sell some toxic assets through its part of the program. But don't get too excited: the seller of those securities didn't exactly participate by its own free will. It was a bank that the FDIC took over last November. Let's dig in!

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The Wall Street Journal reports another positive sign for the securitization market. JP Morgan completed another credit card-backed transaction without the help of the Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF). In late June I mentioned that the market for such deals was beginning to open when another deal was completed and upsized. This latest deal shows how much progress has been made since then.

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The Treasury said today that it will vastly shrink a program it created during the height of the financial crisis to provide the Federal Reserve with additional liquidity. The program used short-term Treasury debt to create a funding cushion for the Fed. It's curbing the program for two reasons: because the economy is strengthening so the program is less necessary and to slow the inevitable approach to the $12.1 trillion debt ceiling in place. So what effect will this have?

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A year after Lehman's failure, the holding company that serves as the empty shell for the former investment bank is complaining about its deal with Barclays. The British bank acquired many of Lehman's assets and most of its investment banking talent, particularly in the U.S. At the time, the deal seemed risky, since the fate of the financial world was still unknown. I have long believed that it may have been the finest acquisition of any bank during the crisis. What's left of Lehman is now complaining that the deal may have been a little too good.

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Since the beginning of the financial crisis, the Federal Reserve has been taking numerous actions to keep credit markets flowing. One such action included buying mortgage-backed securities (MBS). Recently, there's been some talk that this particular program could be one of the casualties as the Fed begins to rein in its spending as the economy improves. Today, an article from the Wall Street Journal casts some doubt on that theory.

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Over on his Reuters blog, Felix Salmon has a fantastic assessment of a looming problem for the securitization market brought to light by a Wall Street Journal piece today. The gist of it is that, if leverage requirements are imposed on European banks, then that will have negative consequences for U.S. banks looking to securitize their assets and sell the resulting bonds to those European banks. Salmon essentially asserts that this isn't really a bad thing. I agree.

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Late yesterday, I stumbled upon this piece over on Andrew Sullivan's Daily Dish. The post refers to an article written by John Steele Gordon in the The American, the Journal of the American Enterprise Institute. In it, he explores the national debt problem. He does a sort of historical tour of U.S. debt over the past 100 years and attempts to explain why it's grown out of control. His essential conclusion is unsurprising: Congress just can't control itself. He offers three ways to reduce the debt through curbing spending. All are on the right track; none will do the trick.

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I know I just wrote a lengthy piece on a few parts of President Obama's speech in New York today, but there was one other aspect that I had to comment on briefly. In one portion of his speech, the President says how big a success the bailout has been for taxpayers thus far. I was extremely bothered by the tone of this claim. Here's what he says:

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The Wall Street Journal's "App Watch" today features a real gem of an iPhone application for anyone living in California who needs their fix of medical marijuana fast. The application provides map pin drops, contact information and ratings of more than 800 medical marijuana dispensaries in California. "iPot" once gain seems to indicate that the sky's the limit for application developer creativity. Or maybe the limit is Apple's fickle approval process.

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Earlier in the week, I wrote a post explaining that cracking down on commodity trader speculation could cause OPEC to gain more power. Commenter Adam asked:

It doesn't seem immediately obvious to me how traders cause higher prices. What's the mechanism that allows oil traders to control and drive-up oil prices? Why would killing a large portion of the oil trading market cause the price of oil to plummet?

I wanted to explain this, in case any other readers had the same question.

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UBS is in some more trouble. A Superior Court judge has ruled that it sold collateralized debt obligations (CDOs) that it knew to be toxic and is liable for damages. The Wall Street Journal reports that the judge believes that UBS had material nonpublic information that was used in the decision to sell the securities to hedge fund Pursuit Partners. I'm not convinced.

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The Government Accountability Office (GAO) has a new report (opens .pdf) out this week analyzing the options for what to do about Fannie Mae and Freddie Mac. The document is rather in-depth, but essentially considers three options:

Reconstitute the enterprises as for-profit corporations with government sponsorship but place additional restrictions on them.

Establish the enterprises as government corporations or agencies.

Privatize or terminate them.

I lean strongly towards the final option. The report presents one amusing, though legitimate, obstacle to it.

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I just stumbled over the following wire story via Reuters:

Citigroup on Thursday said that Comcast and Time Warner Cable should merge, saying there would be a number of benefits to such a deal, including 'robust cost synergies.'

The firm added that a merger between the two would limit bidding wars for future cable assets and counter escalating content costs.

Citi also argued that the regulatory hurdles might be low for such a deal.

And while we're at it, let's merge Target and Wal-mart, Verizon and AT&T, and Microsoft and Apple. Really Citigroup? Really?

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I found an amusing article on Bloomberg from yesterday. You can do more on websites like Facebook than just stalk your former high school classmates. Apparently, firms are increasingly using online social networking for a far more useful end: to save money in legal costs. Huh? The reason how might not be immediately obvious, but Bloomberg explains:

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The Treasury released data (opens .pdf) today on its mortgage modification program's progress through August. In July, banks and mortgage servicers came under fire from Washington for not modifying loans quickly enough and preventing more foreclosures. Does political pressure work? Apparently not.

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Earlier, I considered Goldman Sachs CEO Lloyd Blankfein's comments about Wall Street compensation from a speech (opens .pdf) he gave today at a financial conference in Germany. Now I'd like to move onto his thoughts on financial regulation. Despite the sensational aspect of the bonus talk, I believe that the regulation portion is far more important. As I've noted a few times, the cause of the financial crisis had little to do with Wall Street bonuses. So I'm a lot more interested in what Blankfein thinks about regulation. He outlines several suggestions, which I'd like to comment on.

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According to an article from Bloomberg today, judges are increasingly showing their anger towards the financial community by condemning actions that contributed to the crisis. Bloomberg explains that judges' lack of political pressures paired with their life-long term provides them with a unique opportunity to hold banks, bankers and others involved in the crisis accountable. Although I found most of the examples provided unsurprising or even old news, it did cite one important ruling from last week.

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For many years, the Organization of Petroleum-Exporting Countries ("OPEC") had arguably been the most significant influence in oil prices. Although it denies being a cartel, its members collude to control oil supply, which drives prices. In spite of demand shocks, it has managed to generally move prices where it pleases. Yet, not even OPEC's supply manipulation could overcome recent economic disturbances, which caused oil prices to plummet last year. Forbes.com has an interesting article discussing OPEC's influence these days, and examines whether or not its influence may continue to dissipate.

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In today's edition of the New York Times, Andrew Ross Sorkin penned a column lamenting the fact that so little has been done to pass legislation which would give the government the authority to resolve large financial institutions. The ones he's talking about are those which are commonly referred to these days as being "too big to fail." The financial crisis put the government in the awkward position of feeling forced to save these large firms, rather than allow them to fail, given the systemic risk failure posed to the system. While I agree with Sorkin that such legislation is important, I'm not at all surprised we haven't seen it passed.

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Over on Seeking Alpha, there's a blog post by Rahul Prabhakar raising the question of what a single systemic risk regulator might mean for financial services consolidation. The question was brought about through a recent statement by Federal Deposit Insurance Corporation Chairwoman Shiela Bair. She hates the idea of the Fed taking over as the sole systemic risk regulator for financial services firms. So do I. One reason she thinks it's a bad idea appears to be that she thinks this will increase consolidation. That would seem to get the ball rolling in the wrong direction, since too many firms have already grown too large, and consequently have been deemed too big to fail. I think that this is a legitimate worry.

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I want to provide a little more detail related to my earlier analysis on this morning's unemployment numbers. I provided a bit of optimism in my prior post, and as Derek noted, some seem to be scoffing. First, don't get me wrong. 9.7% is a heinous unemployment rate. That's the highest number in decades. In fact, it's the highest rate we've seen other than a short period from 1982-1983 since as long as Bureau of Labor Statistics data goes back (to 1948). I don't mean to minimize this. I'm just trying to understand the overall trend. That's where I think you need to consider how seasonality and discouraged workers are affecting the picture.

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Over on his Reuters blog, Felix Salmon has a post today pondering the difficulties that some graduates are having dealing with huge amounts of student loan debt. He says that it can sometimes be hard for students to grasp just how much they're borrowing when amounts turn out to be astronomical. I agree. He also provides a good example and concludes that the government should be more selective about who it gives student loans and for how much. This sounds nice in theory, I just don't think it could ever happen.

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There's news out today that YouTube might start allowing users to view films through its website for a fee. It's reportedly in talks with a few major movie studios. Traditionally, YouTube has been all about free content, so charging for some video would be a departure from that precedent. Still, I see no reason why this couldn't be a successful venture, in theory -- especially given recent technological developments.

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So it's that time of the month again. As Derek Thompson pointed out earlier, Friday the Bureau of Labor Statistics releases the much-talked-about monthly national unemployment statistics. Naturally, the business team here at the Atlantic hopes to provide some analysis on what those number mean once they are announced. But until then we can only speculate -- just like you. So please do so in the poll below.

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If you're like me, then you've been eagerly awaiting the day that all airlines equip their planes with Wi-Fi. But if you're really like me, then you also don't want to pay much for it. The New York Times yesterday explained that this is a serious problem for airlines wanting to ramp up their in-flight Wi-Fi services. Even though all planes offering Wi-Fi seems inevitable with the vast proliferation of the internet, the cost is holding airlines back. I wonder, though, if the problem could be airlines' pricing decisions.

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There's big news today in the oil market. British Petroleum made a huge find in the Gulf of Mexico. It estimates that the new pool beneath the ocean's surface could contain more than 3 billion barrels. That's a lot of oil. While this seems significant, I think the bigger news is the optimism that this might create for future oil exploration.

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Megan commented earlier on the news that Sony is jumping on the 3-D bandwagon. After some of its rivals have announced a commitment to making TVs capable of displaying 3-D video, Sony also intends to do so too -- by the end of 2010. If 3-D technology really is the next big thing, then that's a wise move. Megan thinks so. I think she might be right, though I agree that the market embracing the technology could still be quite a ways off.

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The financial crisis sparked a great deal of doubt about the United States' prominence as the reigning financial superpower. Those worries partially inspired an article today in the Wall Street Journal. It explains that some very prominent world leaders would like to see the dollar dethroned as the dominant reserve currency for foreign nations. Could this really change?

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Yesterday, President Obama asked Congress to cap the annual cost-of-living pay increases that federal employees receive at 2%. That's a pretty bold move, considering it would be the lowest increase since 1988, according to USA Today. I'm actually pretty impressed by this move, as it makes sense on many levels.

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Earlier, I wrote about how the government subsidizing the mortgage market through government-sponsored entities Fannie and Freddie contributed to the size and severity of the housing bubble. Today, the Wall Street Journal has an article that explains how Wall Street banks are flocking to yet another industry seeing substantial government subsidies: wind farms. Wall Street is savvy enough to know that it's generally a good idea to take advantage of free money from Uncle Sam. That has them chasing wind.

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There's a nice opinion piece from breakingviews.com in today's edition of the New York Times. Its author, Rob Cyran makes a strong argument for winding down Fannie Mae and Freddie Mac, the two largest government owned companies that purchase mortgages and mortgage-backed securities (MBS), as well as guarantee mortgages. He explains the central problem and the challenge for lawmakers. I think he's right.

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In one of the most notable acquisitions in some time, Disney announced today that it will acquire Marvel Entertainment. Marvel is best known as a comic book company with a broad portfolio of over 5,000 characters. Some of its most notable comics include Iron Man, Spider-Man, X-Men, Captain America and Fantastic Four. Disney will pay around $4 billion in stock and cash for the firm. Find the official press release here. I listened to the conference call regarding the acquisition this morning and had several thoughts.

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Yesterday, Gallup released the results a new poll. It explains how different generations have pulled back spending since 2008. The results are interesting, though not entirely unsurprising. I think you can learn a lot from the behaviors and attitudes of the different generations by looking at the differences in how they've reined in their spending.

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You know that excess leverage that helped cause the collapse of Bear Sterns, Lehman Brothers and nearly every other investment bank? It's back. Bloomberg reports that big banks are quickly increasing their use of debt to make new investments. We haven't seen as high an increase in leverage since before the recession. I find this trend troubling, though unsurprising.

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Digital video recorder (DVR) company TiVo filed lawsuits yesterday against Verizon and AT&T in regard to various aspects of their DVR technology patents. I have long wondered why anyone would bother buying a TiVo when you can get virtually the same service through your cable provider with a DVR box. This partially answers my question: TiVo has patents. And yet, my new Verizon FiOS package has strikingly similar DVR capabilities. Hence, the lawsuit. So I decided to see whether or not I'm convinced that TiVo's patents should hold up in court.*

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California's fiscal problems are pretty bad. Some of its residents would probably refer to them as "gnarly." Its economy isn't helping matters. A major casualty of the real estate bubble, its unemployment rate in July was about 12%, according to the Bureau of Labor Statistics. One clearly bad idea when an economy is doing that bad would be to raise taxes. Consequently, California's next move should be obvious: it's raising taxes.

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Back in early July, I complained about the Federal Deposit Insurance Corporation (FDIC) proposing rules too harsh for private equity firms interested in buying failed banks. In a climate like this, the more banks that can be saved without the FDIC needing to resolve them, the better. As a result, I think private equity involvement, while not ideal, is certainly better than the alternative -- lots more failures. This week, the FDIC voted on the final rules. They're better, but still probably not good enough to encourage much private equity firm participation.

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Earlier this week, Bloomberg had an intriguing piece about Apple. The article explained that it may very well be the highest grossing retailer on New York City's posh Fifth Avenue. And that's not just because the economy is so bad -- the statement holds during good times as well. With some boutiques like Chanel and Louis Vuitton earning thousands of dollars on their products and others like Tiffany & Co. or Harry Winston fetching tens and hundreds of thousands on some of its inventory, that's pretty impressive. So what's the secret to Apple's success? Its products provide both form and function.

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Bloomberg has an article out today that I found a little surprising. Apparently Americans are increasingly leaving Great Britain to return to the States. The article singles out London's financial industry as one of the major areas losing talent. That might challenge the notion that London will be the financial capital of the world. I'm just not sure what jobs those who flee London's world of finance hope to find in the U.S.

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Last week, we got a bit of good news that this year's deficit would only be around $1.6 trillion, as opposed to the earlier estimate of $1.8 trillion. Only $1.6 trillion? If that's good news, then you probably don't want to hear the bad news, but I'm going to tell you anyway: in its Mid-Session Review, the White House Office of Management and Budget today predicts a 10-year deficit projection of over $9 trillion. That's nearly $2 trillion more than the Congressional Budget Office recently estimated (opens .pdf). I thought it might be depressing fun to figure out how much you'd have to increase taxes to eliminate that $9 trillion.

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I am pleasantly surprised to see the news this morning that President Obama has decided to give Ben Bernanke a second term as the Federal Reserve Chairman. Bloomberg reports that the President made the announcement today:

Bernanke "has led the Fed through one of the worst financial crises that this nation and the world have ever faced," Obama said in Martha's Vineyard, Massachusetts, with Bernanke at his side. "As an expert on the causes of the Great Depression, I'm sure Ben never imagined that he would be part of a team responsible for preventing another," Obama said. "But because of his background, his temperament, his courage, and his creativity, that's exactly what he has helped to achieve."

That's exactly right. His performance, thus far, has been stellar. Though, his job in managing the crisis is far from over.

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The Wall Street Journal this weekend ran another article that frustrates me. It complains that bankers are continuing to try to trick investors into buying garbage in repackaged securitizations. This kind of article bothers me for several reasons, all of which relate to the ignorance that many people share regarding securitization and asset-backed securities.

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This morning the Bureau of Labor Statistics released its monthly regional and state unemployment report. The July data isn't exactly good news, but the results are somewhat mixed. Compared to June, 26 states reported unemployment rate increases, while 17 states showed decreases and 7 states were unchanged. Unfortunately, that unemployment data does not reflect discouraged workers, as this report does not track that. So it's hard to put this into perspective. But let's go through some highlights.

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In response to my post yesterday about Countrywide's court loss that will make mortgage modifications harder, one commenter, newdealanne, wrote:

I hate to be a simpleton about this, but am I missing something? The investors took a risk. It didn't go in their favor, or in ours. They toppled our economy. And now the best way out of the mess they helped caused is if we allow the modification and they have to eat their losses. What's the problem here?

I wanted to address this, because she's probably not alone in her belief. I have a few comments.

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Over on New York Times Economix blog, economist Simon Johnson has an interesting post about a phenomenon he believes might be going on within this recession. He thinks that, since Americans with the most credit are disproportionally affected by this recession, the middle class is likely to suffer worst. As a result, the recession may increase the gap between the rich and the poor. I think he's mostly right, but possibly underestimates the effect that the recession has had on the rich.

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Last week, I reported on JetBlue's innovative All-You-Can-Jet program, allowing participants to pay $599 and fly as much as they want from September 8th through October 8th. If you were interested in the program, I hope you got your pass already, because it's sold out.

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In more bank lawsuit news, Wells Fargo is being sued due to at least one customer being angry about the bank decreasing his home equity line of credit. These lines of credit are kind of like credit cards, except the amount of credit available is based on the equity you have in your home. Once the housing bubble popped, virtually all banks began reining these credit lines in. As home prices decreased, so did the equity that people thought they had in their homes. The plantiff believes that Wells Fargo went too far.

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I wrote a post not too long ago about the future of advertising. In it, I asserted that the internet was the future of advertising. To be more specific, mobile internet is the future of advertising. And it presents an even greater challenge to advertisers than the regular internet: they have less viewable space to work with and lower connection speeds, at least for the time being. But today, upon perusing the New York Times' iPhone application I saw the coolest mobile phone ad ever. I took some screen shots below.

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Every once in a while, economists worth listening to agree about something important. This week such an occurrence took place through the Financial Times and Bloomberg Radio. Robert Merton and Myron Scholes are two such economists. They, along with Fischer Black, developed the Black-Sholes option pricing model some years ago. Merton and Scholes were awarded the Nobel Prize for economics in 1997 for the method. They both have come out in support of banks providing more transparent, market-based values for all if their assets, also known as marking-to-market.

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Over on his Reuters blog, Felix Salmon has a post today about why he believes banks should not poach talent. He says that, even if you look beyond the claim that social ills might follow bankers getting huge guaranteed bonuses, the practice fails miserably anyway from a business strategy standpoint. I see where he's coming from, but I think we might as well broaden the question in order to look for an alternative.

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I am a little surprised to see myself write this, but perhaps all states should be more like Vermont -- when it comes to their banks' mortgage origination practices. A fascinating article in today's Wall Street Journal explains that in Vermont, the mortgage industry has felt no pain. But it also didn't see the kind of expansionary growth that now troubled states like California and Florida saw. Vermont's style for mortgage regulation might bother some, but the practices should be common sense for banks anyway.

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Some of the changes required of credit card companies through last spring's credit card legislation begin to take effect this week. Those changes force companies to give customers longer notice when changing the interest rate and to provide more time to pay their bill after it's mailed. A new credit card market is beginning to take shape, based on companies' reactions to the new regulation. The outcome will likely be something Congress didn't expect.

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Bloomberg has an article out noting that pension funds are slowly backing away from the stock market. Given last year's stock market collapse, these funds saw huge losses from seemingly safe bets, like highly valued bank stocks. As a result, no one should be too surprised that they still feel the sting and are a little wary about diving back into the stock market. The Wall Street might lament this trend, but I think it's a good thing.

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Atlantic Correspondent Richard Posner has good piece out this morning about British economists trying to explain to the Queen why economics failed so miserably to predict the financial crisis. He suggests, as many others have, that economists must admit they don't know everything when it comes to business cycles, and should refocus their efforts so to learn from their mistakes here. I think he's right, but I worry it won't help much.

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A recent article from Reuters seems to imply that American's obsessive love affair with credit cards might not be a problem only the U.S. grapples with. Even the savings-minded Chinese are beginning to see just how much fun it can be to run up credit card bills that you can't pay. Reuters explains:

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As the debate on whether or not to reappoint Ben Bernanke as the Federal Reserve chairman continues to heat up, I've seen strikingly few reasonable arguments for giving him the boot. I believe his performance very well saved us from a depression, and that the Fed's effectiveness in stabilizing the economy eclipsed even that of former Treasury Secretary Paulson's bank bailout. I also think blaming him for the real estate bubble is nonsense. It was already almost fully inflated by the time he took over for Alan Greenspan in 2006. Nonetheless, a recent opinion piece in the Wall Street Journal argues that Bernanke should take a hike.

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Bloomberg is reporting that the Obama administration is considering paying for their proposed Consumer Financial Protection Agency (CFPA) by imposing new fees on big banks. I'm highly skeptical of a CFPA, but if you are going to have one, this actually sounds like a pretty good idea for how to fund it. Generally, when I find myself agreeing with a government idea, it means I haven't thought about the implications for long enough, so I reserve the right to change my mind on this one. But at this point, this plan seems like a good way to preserve competition.

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In an interesting new strategy, JetBlue has decided to offer a new pass that allows you to fly on its airline as much as you like for 31 days for only $599. Those 31 days are from September 8th and October 8th (careful not to include Labor Day or Columbus Day weekends, though Rosh Hashanah and Yom Kippur are both in there). The pass is a really interesting idea, but it won't appeal to everyone.

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Washington is beginning a pre-emptive strike on speculation in the upcoming carbon-emissions market. Bloomberg reports that the big banks like Goldman and JP Morgan will be restricted from driving the market. Some in Congress are worried about the wild price swings that have been seen in oil and other commodities over the past few decades, for which Wall Street is generally blamed. Preventing bank speculation would remove Wall Street from the equation, but that will also result in some undesirable consequences.

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As widely expected, the Federal Reserve Open Market Committee decided this week to leave the federal funds rate in the 0% to 0.25% range. And don't expect that to change anytime soon. Its press release said:

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Yesterday, I wrote a piece about GM's upcoming Volt plug-in hybrid. In it, I explained that the new car may appeal to wealthy Americans who want exhibit their love for the environment, but its supposed 230 miles per gallon can't justify its $40,000 price tag from an economic standpoint, unless you plan on driving in excess of 229,000 miles. Atlantic Correspondent Lisa Margonelli has some more bad news: the Volt won't get anywhere near 230 miles per gallon on long trips.

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The Mortgage Bankers Association reports that mortgage applications for purchasing or refinancing a home were down 3.5% last week. In what seems to be an ocean of positive signs for the economy, this one sounds like a step in the wrong direction. So what's causing the problem? There are several factors at play, but the most significant is mortgage rates.

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Today marks the beginning of the Federal Open Market Committee's August meeting to decide monetary policy. The meetings produce minutes that are carefully reviewed by financial masterminds across the nation. But the biggest decision that everyone looks for is whether they decide to change the federal funds rate. That's the overnight interest rate at which banks lend to each other, through the Federal Reserve. It's directly linked to money supply. Since December, that rate has been set at between 0% and 0.25%. Major market players overwhelmingly believe that the rate will remain unchanged. But what do Atlantic Business readers think? Vote after the jump!

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The New York Times reports one of the early casualties of Congress' recent credit card "bill of rights" legislation. A few prominent credit card companies are actually taking a right away from many in response to the new regulation: the right to exceed your credit limit. The Times says:

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Currently, Netflix subscribers have the option of streaming some films on-demand online. But a new cable channel, Epix, hopes to bring online movie streaming to the next level. The channel will function like most other premium TV cable channels, but on steroids. Reuters reports that, since it is owned by companies that take in approximately one-third of Hollywood's film revenue, its subscribers will also have access to a similar proportion of films to stream on-demand through its website, epixHD.com. If it gains popularity, more studios may sign-on, or start other similar services. But will it?

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The Wall Street Journal reports that Treasury Secretary Geithner has asked Congress to increase the nation's debt limit past its current cut-off of $12.1 trillion. Given the massive spending by Congress and the President, paired with what's sure to be unusually low tax revenue for 2009, the request is not surprising. What is kind of amusing, however, is the rationale he cites for why the debt needs to increase.

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Most economists agree that protectionism is a pretty bad idea. Just ask former President Herbert Hoover whose Smoot-Hawley trade tariff helped create the Great Depression. Still, it's hard for politicians to learn this lesson, as trying to protect American jobs through legislative measures sounds like a great idea in theory. In practice, that's a different story. We're beginning to see some bad protectionism in action. The stimulus package's "Buy American" provision is making projects harder and associated job growth slower.

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A few days ago, I wrote about how difficult it is to combat bubbles. Bubbles are something that all economies have to worry about. Bloomberg today has an article about China's struggle to avoid a real estate bubble. They may be learning from our mistakes. Unlike the banks here, at least one of theirs seems to have a little more foresight.

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Many have suggested, snidely, that bankers should get what they deserve: their bonuses paid in those toxic securities that they created -- the ones that caused the financial crisis. It seems that Credit Suisse employed some of that much talked-about banker innovation and decided to do exactly that, and so far so good. The Wall Street Journal reports that a fund consisting of toxic securities used for their bonus pool is doing quite well:

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After earlier dissecting Larry Summers' claim that the Obama administration is responsible for the economy's improvement, I wanted to address another assertion made in his recent letter (opens .pdf-like document) to Congress. He also outlines the path he believes the country needs to take for future economic prosperity. He says one of those steps is healthcare reform. Let's think about his logic.

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Tomorrow an important economic indicator is announced: July's national unemployment rate. That statistic was 9.5% for June. I thought it would be fun to see where Atlantic readers believe the number will come out tomorrow, so you've got until tomorrow at 8:00am EST to vote. Just how good are Atlantic readers in determining the state of economics? Now's your chance to weigh in! Check out the results of the poll tomorrow and compare them to the number BLS releases. (Vote after the jump!)

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Earlier today, one of my colleagues here at the Atlantic made a point about something he believes we should learn from the financial crisis. He thinks the free market does not necessarily ensure that the greatest rewards go to the most talented. He made the point in reference to all the talk of high frequency trading, saying that talent had little to do with it, but instead better technology helped reap significant rewards in that case. I think that's partially true, though free marketers might argue that the talent of programmers writing the computer code for trading and the innovation of thinking to engage in high frequency trading in the first place might be responsible for those profits. Still, I agree with his general idea, but would take it a step further: the reason talent sometimes has nothing to do with profit results from barriers to entry.

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I came across this post by Alex Tabarrok today about bubbles (hat tip: Matthew Yglesias). It's got some interesting observations about experiments involving bubbles. The bottom line: bubbles are hard to deal with. They're hard to stop once they're growing. They're hard to prevent in the first place. Still, if there's something Washington can do to prevent them, without harming the economy, I think pretty much everybody agrees that action should be taken.

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As Washington's spending continues to outpace tax revenues, so will its debt issuance. Since spending does not appear to be decreasing anytime soon, and tax revenues will have a difficult time increasing during a recession, the national debt will continue to expand. Many have argued that at some point, the buyers of that debt will become uncomfortable with the U.S.'s debt levels. When that happens, they will demand greater yields. But when will that day come? It may have already.

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Richard Posner has a good piece out this morning where he dissects the question of how the government will solve its debt problem. Since the President has refused to raise taxes on those earning less than $250,000, that leaves few options. After all, the rich might have a lot of money, but even they can't pay off the enormous debt Washington has been racking up over the past decade. Is U.S. insolvency a real possibility?

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Anyone who has been laid off during this recession probably does not need any more bad news. Unfortunately, that's exactly what a New York Times article provides today. The Times explains that the loss to a person's career income who has been laid off lasts a lot longer than the duration of the recession. That's a grim reality not only for those who have lost their job, but for the economy on a whole.

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There are so many delicious subtleties that complicate the health care debate. A new study out from the National Institute of Health raises another: alternative medicine. Presumably, procedures like acupuncture and preventative measures like Tai Chi are not at the top of Congress' list of coverage priorities. But alternative medicine continues to grow in popularity. According to NIH, $34 billion was spent, out-of-pocket, on alternative medicine in 2007. How might that impact the healthcare debate?

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Given all the troubles banks have had over the past year, it should come as no surprise that they will be held to higher standards going forward. The Wall Street Journal reports today that banks are beginning to feel the sting of that additional regulation. It says:

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In his unending crusade to shame Wall Street into submission, New York Attorney General Andrew Cuomo has released a detailed report of bonuses paid for 2008 (link opens rather large .pdf of report). You might recall, it wasn't a very good year for Wall Street -- much like the year that giant asteroid hit the earth wasn't very good for the dinosaurs. But the dinosaurs didn't have Bruce Willis and a team of misfit oil drillers to save the day like Wall Street bankers had Hank Paulson, Ben Bernanke and Congress to bail them out. Cuomo's report shows, despite a year of pure ugly, bankers can still afford to party like it's 2006.

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It looks like Congress is finally getting around to trying to send those scoundrels to jail. The Wall Street Journal is reporting that a Senate panel is subpoenaing financial institutions to determine whether their investment bankers knew the mortgage-backed securities (MBS) and other toxic assets that they were selling were going to blow up. Their outrage is unsurprising, as those securities were the catalyst for the financial crisis. I think their anger, however, is misdirected. This is just another Congressional witch hunt.

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The problem of firms being too big to fail became a prominent theme during the economic crisis. After reading a recent article on CFO.com about which firms face most of the risk in derivatives, I think it's easy to see why certain firms failing would be so problematic. In particular, there are five banks that control the vast majority of the derivatives market. Thus, almost by definition, they might be considered too big to fail based on their derivatives alone.

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Today, I stumbled upon a really fascinating research report on the future of charity created by Barclays Wealth. I got there via a short video clip from Reuters, which turned out to be worth little more than the reference. The Barclays report itself, however, is fantastic. It concludes that we are entering a new age of charity. You can read it here (opens .pdf). I took a few key points away from reading it.

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According to a Wall Street Journal report, fund manager BlackRock is creating a mutual fund made up of toxic assets for the general public to buy shares in. The securities in the fund will be purchased by BlackRock through the Treasury's Public-Private Investment Partnership. It could turn out to be a great investment, or it could turn out to be a disaster.

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California's $85 billion spending compromise is finally complete. Governor Schwarzenegger signed the bill today. In doing so, he chose to unilaterally eliminate some additional parts of the budget through his line-item veto power. Through the Associated Press report of these items, you might think that the Governor hates the weak -- as that's who most of his cuts affect. Let's test this theory.

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Atlantic Correspondent Richard Posner has another great column out today. In it, he considers several pieces of evidence that all point to the same conclusion: mortgage modifications are not doing a very good job of prevent foreclosure. Recent findings also suggest that securitization might do more good than harm. He smartly notes that Washington probably would have benefited by actually asking some mortgage bankers if their mortgage modification efforts were likely to be effective.

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The United States has long been portrayed as a kingdom of debt. Its people like to live beyond their means, whether that's through mortgages they can't afford or credit cards run up to the limit. At least that's the common wisdom. The Financial Times, however, reports that things aren't a whole lot better across the pond. Their credit card defaults are also rising and Great Britain's debt to income ratio is actually higher than that of the U.S.

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All those firms that the government deemed "too big to fail" are reaping the benefits of their largeness. According to the Wall Street Journal, these firms will have their borrowing costs reduced by billions. After all, when the government guarantees your debt, you will have cheaper funding costs. That's great news for them, but bad news for a capitalist economy.

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Floyd Norris has a good column out in the New York Times today. He asserts that the era of financial globalization is over, at least for now. I've argued for some time that New York City's status as a major financial center may be one of the causalities of the financial crisis. Even if Washington doesn't manage to over-regulate the financial industry and drive away global business, global financiers might be wary of doing business in the U.S. again after incurring huge losses. This, combined with Norris' argument produces a potential location for the new financial capital of the world: everywhere.

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There's a new poll out today that paints a grim picture of what Americans think of their nation. Here's a blurb from the National Journal reporting on one of the findings of its Allstate/National Journal Heartland Monitor poll:

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Over at Slate's The Big Money, J. Lester Feder has a good piece about unions throwing a wrench into health care reform. Unions are against one of the most effective and politically acceptable ways to pay for healthcare -- rolling back the tax break for employer-based health benefits. Feder says President Obama won't allow Congress to consider getting rid of this tax break due to his allegiance to unions.

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Economist Simon Johnson has a post today on the New York Times Economix blog. He argues that banks and their lobbyists should be supporting a Consumer Financial Protection Agency. Such an agency would look at financial products, like wacky subprime mortgages, and determine whether or not they're safe for consumers. It would be kind of like what the FDA does for drugs. I think his assertion is right, but I think the broader public should not support it.

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Gallup has some new health insurance poll results out today. Perhaps they're just in time for the President to use for his presser tonight. One item from Gallup's report really surprised me. Apparently, the percentage of uninsured has not increased significantly since January 2008. Unemployment has. What gives?

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Pretty much every aspect of the auto bailout frustrates me. One great frustration is Congress wanting to have its cake and eat it too. The prime example of this is their attitude about dealership closings. Sure, Congress wants the auto companies to succeed. But some lawmakers aren't okay with so many dealerships closing. You can't have it both ways. According to the New York Times, Obama's auto task force head Ron Bloom is trying to persuade Congress to back down and let the dealerships die. At last, the voice of reason.

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Today, Federal Reserve Chairman Ben Bernanke testified before the House Financial Services Committee in his semiannual appearance required by the Humphrey Hawkins Act. One question on the minds of many -- especially Republicans -- is whether the Federal Reserve can eventually tighten monetary supply to avoid inflation. In fact, Bernanke wrote an op-ed for the Wall Street Journal today addressing an exit strategy to do exactly that. I don't have much doubt that he can do it, but that's different from saying that he will do it.

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Recently, we've been hearing a lot about the suggestion that the rich should pay for some form of universal health care. Today, the Wall Street Journal suggests that the rich should also be paying for everybody's retirement -- by the government removing the income ceiling on Social Security taxes. It does so with the bold headline: "Pay of Top Earners Erodes Social Security." That's not exactly right.

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The New York Times today has an article about a practice that it claims is growing in popularity due to the bad economy: home burial. And not just for your cat or hamster -- it means for your loved ones. In an example it gives, after a family member passes, the family cleans up the corpse, builds a coffin and buries him on their farm in New Hampshire. This family only spent $250, compared to $6000 for average funeral services. Could this really catch on?

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This is an exciting week for the lowest wage earners in the U.S. and teenagers. On Friday, the federal minimum wage rate will jump from $6.55 to $7.25, about a $1,456 increase on an annual basis. Who will it affect? Strikingly few adult full-time workers.

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We all watched in horror as the residential mortgage market collapsed over the past few years. Mortgage problems seemed isolated to residential mortgages due to the causes: subprime borrowers, wacky mortgage products, poor underwriting standards and unemployment. That last factor -- unemployment -- has also had drastic effects for the rest of the economy, increasing credit card charge-offs, slowing consumer spending, and now affecting the commercial mortgage market.

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In an effort to decrease executive compensation levels, the Obama administration today provided Congress a bill encouraging shareholders to be more involved in determining compensation. The so-called "say on pay" legislation has three concerns: executive pay, golden parachutes and compensation committee independence. It's a nice political move, but I don't think it will amount to much else.

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One of the few locations that seemed to be resilient in the face of the housing crash a year ago was Manhattan. Sure, there had been some layoffs, but the mood was to stay the course and everything would be okay. An article from Bloomberg today reports that things aren't going so well there anymore. Storefront vacancies are climbing and rents dwindling. It seems that the city that never sleeps is getting drowsy.

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I stumbled upon a fascinating video news clip over at Reuters today. Unlike in the U.S., educators in South Korea can make incredibly good money. How good? Reuters reports that some make as much as $4 million per year. One tutor it features commands a salary higher than almost all baseball players in the country. South Korean parents are willing to pay more for tutors, due to a cultural emphasis on education that the U.S. lacks.

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Remember in school when you learned that drugs won't solve all your problems? California must have been under the bleachers that day, smoking some hash. Lawmakers there have introduced a bill that would generate nearly $1.4 billion in revenue by taxing and regulating marijuana in California. Here are some details, via the Associated Press:

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Some news hit late yesterday that the California Public Employees' Retirement System (Calpers) is suing the rating agencies for $1 billion for incorrectly rating structured investment vehicles (SIVs). A while back, I mentioned the possibility of suing the rating agencies for negligence. It looks like that's essentially what Calpers is doing. I wanted to break down a few of its arguments, as found in an article at CNN/Fortune, to see how they hold up.

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I hate the green shoots metaphor, but I'll use it anyway. And I worry that we'll start hearing it a lot again: earnings season is underway on Wall Street and quarterly numbers are largely looking better than expected. Should we pop the champagne? I wouldn't yet.

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Yesterday, I explained some reasons why a mortgage payment deferral plan for unemployed homeowners troubled me. Reuters reports yet another plan being considered by the Obama administration. This plan would have distressed homeowners rent their houses, rather than foreclose. As the administration continues throwing ideas at the wall, will this one stick? I doubt it.

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Matthew Lynn, a Bloomberg columnist, doesn't think so. He argues in an op-ed that a chief executive's health -- no matter how important that executive is to the firm -- is personal, not public, information. Of course, he uses Apple CEO Steve Jobs as his prototypical example. I generally agree, but I think the SEC still needs to monitor important CEO health news on some level.

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Today, President Obama is set to unveil a plan to provide $12 billion to community colleges. Given the emphasis on the President's other priorities like health care and cap and trade, education has received little press coverage thus far. Although some might debate whether the federal government ought to continue to ramp up its spending, if it's determined to do so, I think it's hard to argue against an initiative like this.

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Last week I heard about the Pope's new writing Caritas In Veritate. For those whose Latin is rusty, that translates to "Charity In Truth." Most news I read indicated that the Pope was finally taking a stand regarding the financial crisis, condemning the capitalist swine who created it. That's not exactly true.

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The New York Times has an article out that raises some interesting questions for the future of blogging. It ponders whether it's okay, and if so under what circumstances, for bloggers to receive some form of sponsorship with or without disclosure. I think that this is an interesting question.

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AIG has another $2.4 million wave of retention bonuses to pay out. But this time, rather than anger pretty much the entire world, they decided to pass the buck to Kenneth Feinberg, the Obama administration's Special Master for Compensation (yes, that's really his title). This sets up a fascinating situation: will the administration pay out those bonuses or will it refuse?

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A few weeks back I wrote about how China struggles with bubbles, just like us. One ongoing battle is to stop another stock market bubble from forming. In response they've taken a few steps to try to extinguish irrational investor exuberance. It doesn't seem to be working.

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There was a fun bit of news out last night regarding the latest in California's IOU (I-Owe-You) fiasco. You might have heard that banks didn't want IOUs. Consequently, the Securities and Exchange Commission has ruled that the IOUs can be treated as securities and sold in the market. So how are those IOUs different than usual state-issued municipal debt? They're not really, except in some of the details. Here's an excerpt from an Associated Press article:

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The financial news world is buzzing today that the Doha trade talks seem to have been revived at the G8 meeting in L'Aquila. Everyone agreed to have a "comprehensive" trade deal in place by the end of 2010. That's great news for global commerce, but it won't go over well with everyone. It also shows that President Obama might be more of a free trader than some people expected.

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The news outlets are buzzing with analysis about what it might mean that the Treasury's Public-Private Investment Program (PPIP) has nine participants. I can still remember that some people predicted that no one would participate, because the government was sure to put investors reaping big returns under a microscope, like they did the banks who got bailout money. Indeed, that might be why some prominent names like Pimco and Goldman aren't participating. When I spoke to the Treasury in March about the program, a source there insisted that no such strings would ever get attached to the PPIP. I can't help but ask: why not?

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Despite news yesterday that the Treasury's Public-Private Investment Program (PPIP) is going forward, people are still talking about why it failed. That's because, despite the fact that the program still exists, if it works at all, it will likely be scaled way down in comparison to what was originally intended. The Wall Street Journal's Real Time Economics blog offers a theory today from guest contributor Lucian Bebchuk, professor of law, economics, and finance at Harvard Law School. He blames the PPIP's failure on the mark-to-market rule changes announced this past spring. I see things differently. I would contend that the PPIP, even if only marginally successful, could actually nullify those mark-to-market rule changes.

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When the mortgage market began to plummet, I made a prediction: rent prices would increase. I expected the millions foreclosing being forced to rent, which would increase demand for rentals. That would increase the price of renting. I was wrong.

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Despite what you may have read, the Treasury's Public-Private Investment Program (PPIP) is falling into place, according to Bloomberg. Geithner may be gloating. The ten asset managers have been selected, and we will learn their names later this week. Bloomberg says that Blackrock, Invesco, and Wellington are among the chosen. That's not surprising. What will be surprising is if they actually have much to buy.

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Last week, the Bureau of Labor Statistics released its new official unemployment rate for June of 9.5%. I explained that, if you include discouraged workers, that number is actually 10%. And if you include "marginally attached" workers, that number is even higher. But what about workers being asked to cut back hours? Laura Conaway over at NPR's Planet Money blog (hat tip: Matthew Yglesias), tells us that the news gets worse.

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It seems that Washington could learn a thing or two from France. Like the U.S., France is in the throes of a nasty recession. Like the U.S., France responded with a stimulus package choc full of government spending. Unlike the U.S., France's stimulus package is actually working. The New York Times explains:

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News is out today that the U.S. Commodity Futures Trading Commission is considering placing limits on commodities trading. Regulators want to stop speculation in the commodities market. Presumably, their purpose is to prevent commodities from having as much price volatility and also to prevent bubbles. While their fear is understood, I believe that the outcome of imposing these restraints will not be as positive as they anticipate.

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Earlier, I commented on an opinion piece from the Wall Street Journal which asserted that a large portion of foreclosures can be blamed on borrowers not having enough equity in their homes at origination. Apparently it came a few days too late for Fannie Mae and Freddie Mac.

In order to get more mortgages modified under the Treasury's housing bailout, the two government-sponsored enterprises are relaxing standards. How so? By backing refinanced mortgages with loan-to-value ratios of 125% instead of 105%. That's right: they're encouraging lenders to refinance mortgages with even less equity at origination.

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On Friday, an interesting opinion piece was featured in the Wall Street Journal. Professor Stan Liebowitz, an economics professor at University of Texas, Dallas explains that the mortgage crisis can't really be blamed on subprime borrowers. Instead, he blames mortgage products where borrowers had little, or even negative, equity in their homes. I partially agree.

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Earlier I wrote a piece about the SEC's new suggestions for preventing Madoff-esque hedge fund fraud. A few I liked, a few I didn't. But I unabashedly professed my love for the idea of enhancing bounties for tips that lead to catching fraudsters. As promised, I wanted to expand on why that idea is so good.

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Ever since the Madoff fiasco, Congress and the public have demanded action to prevent something like it from happening again. Yesterday, Securities and Exchange Commission Inspector General David Kotz responded in a letter to Congressman Paul E. Kanjorski (D-PA), the Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises. Kotz outlines four steps the SEC proposes to prevent fraud in hedge funds and other investment companies. Some of these ideas are very good, while others probably won't do much.

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Today, when the June unemployment numbers came out, the market probably had mixed feelings. The report said 467,000 jobs were lost, and unemployment had risen to 9.5%. The market expected around 325,000 jobs to be lost and unemployment to rise to 9.6%. The bad news: more jobs were lost than anticipated. The kind of good news: unemployment only increased by 0.1% instead of 0.2%, as anticipated. But that kind of good news does not look so good when discouraged workers are considered.

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Earlier in the week, I wrote about my skepticism regarding banks no longer needing the Public-Private Investment Program (PPIP). Ezra Klein seems to be skeptical as well. But he also claims that the program failed, not because the Treasury decided it was no longer necessary, but because banks refused to participate. I don't agree with his logic

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I have long been a critic of the financial industry not being as smart as advertised. I believe the chief cause of the recession cutting so deep has more to do with stupidity than fraud, or even negligence. As a result, a Wall Street Journal article today about how the financial sector is cutting down on its lobbying efforts should not have surprised me. And yet, it still did.

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The Obama administration unveiled their plan for creating an agency to regulate the financial products offered to consumers. Measures from the government to attempt to protect consumers from products leading to unfair or deceptive lending are not novel. But this agency hopes to take consumer protection a step further by intensifying such efforts and promoting access to financial products as well. I applaud the administration's desire to protect consumers but wonder if its dual purpose will lead to internal conflict.

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GM is back in bankruptcy court today, trying to piece together what the company will look like going forward. An article from the Washington Post today indicates that many find prospect of GM becoming profitable enough to pay back its $50 billion bailout unlikely. From the Post:

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The Wall Street Journal today declares that we needn't worry about inflation with the headline, "Inflation Fears Seem to Be, Well, Inflated." I'm not buying it. Its author points to the fact that the market bet on inflation and is now backing down on that bet. Drawing a conclusion about future inflation merely based on recent investor behavior is like drawing conclusions about international culture by going to Ebcot's World Showcase. Some deeper analysis is warranted.

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Several months ago, the U.S. Treasury announced a slew of efforts to bribe encourage servicers to modify underwater mortgages. There were incentives for servicers, banks, investors and others. Virtually everyone gets a cut of the government pie. Although these foreclosure prevention efforts have gotten underway, the New York Times reports today that banks and servicers are not working quickly enough. I would offer two theories to what could be going on here.

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Uncle Sam has yet another program out to help distressed borrowers. This one bails out anyone with more federally-sponsored student loans than they can afford. Instead of repaying your student loans on a usual time- and interest-based schedule, the government is allowing people to pay based on income. It's an interesting idea, but I worry it could have some bad consequences.

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One of Treasury Secretary Timothy Geithner's chief duties when he took the job was to solve banks' toxic assets problem. His solution: The Public-Private Investment Program ("PPIP"). The program was unveiled on March 23rd. Over three months later, part has been scrapped, and none of it has gotten off the ground. An article from the Wall Street Journal today implies that it might not have needed to.

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Let's hope that the old adage is true that everything starts out in California. The Wall Street Journal reports that the California real estate market might finally be on the mend. From the WSJ:

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The Associated Press reports that China might block GM's sale of Hummer to Chinese company Sichuan Tengzhong Heavy Industrial Machinery Corp. The Chinese government has the power to block its firms' foreign acquisitions. Here's why they might block it, according to AP:

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According to the Wall Street Journal, there's a hugely positive indicator that credit markets are really thawing. JP Morgan is completing a wildly successful credit card asset-backed security ("ABS") transaction. They upsized the deal twice: it started at $1 billion on Monday, was quickly increased in size to $1.525 billion, and today was reopened and increased again today to $1.825 billion. That investors are showing strong demand for asset-backed securities again has to be a huge sigh of relief for banks.

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I loaded up the Financial Times website just now and realized that I had suddenly struck blogger gold: it contained a link to a new op-ed penned by the father of the housing bubble, Alan Greenspan. No matter your view of Greenspan, many argue that he was the most powerful figure in the U.S. during his reign as Fed chairman, so his opinion is worth noting. I was tempted to dissect his piece, paragraph-by-paragraph. But instead, I'll just focus on one controversial part.

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I love IMAX. Seeing Christopher Nolan's The Dark Knight on IMAX (twice) was easily the most amazing movie experience I've ever had. I can still remember almost getting queasy, feeling like I was really there looking down from a skyscraper in Hong Kong. The crisp, gorgeous picture on the gigantic screen is a game-changer. I believe it is the future of films. Yet, as a company, IMAX has not managed to be profitable for some time. Fox Business interviewed its CEO, Rich Gelfond yesterday, and he explained that's about to change. I believe him.

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Earlier this week, I mentioned that Google seems to be cooperating with China's requests that it censor websites that its government deems harmful. Today, the Wall Street Journal reports a new wrinkle in China's battle to censor computers: it might conflict with its obligations under the World Trade Organization. U.S. Secretary of Commerce Gary Locke and U.S. Trade Representative Ron Kirk sent a joint letter to China today that demands China lift a requirement that computers sold to its people include software to censor the internet. They claim it violates World Trade Organization guidelines. I'd give them an "A" for effort, but find it unlikely their argument will change China's censorship policy.

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About a month ago, I wrote about why it's bad that government bonus caps and public perception have led to banks deciding to shift their compensation models to bigger salaries and smaller bonuses. The New York Times reports today that Citigroup, arguably the most troubled of the big banks, will raise workers' salaries by as much as 50%. Obviously, a raise like this might will cause some outrage. The Times article implies there's little the government can do. I'm not sure that's true.

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Today at 2:15pm, we'll learn if the Federal Reserve Board will decide to increase, decrease or do nothing to the Federal Funds Rate. Let me spoil the surprise for you: they're going to leave it alone.

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Fox Business has an article out about a lull in insiders buying stocks. I don't see any way to interpret this news as good. But it also might not be as bad as the article indicates for a couple of reasons.

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Saturday, upon seeing the line outside my neighborhood Apple Store, I knew something must be up. The new iPhone 3G S was on sale. The Washington Post reports good news:

Evidently, a faster iPhone is enough to get consumers to reach for their wallets again. Apple announced yesterday that it sold 1 million units of its latest iPhone over the weekend.

The article celebrates the fact that apparently nothing can stand in the way of the iPhone, not even a deep recession. I have a few observations that might dampen the news a bit.

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Yesterday, there was a terrible train crash on the Washington DC metro rail line. Nine people were killed and dozens injured. It was horrific to be sure. But as tragic an event as it was, I think it's important that people don't overact -- especially federal regulators.

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If you think the market for houses is rough, you should see the condo market. The Wall Street Journal today says that Fannie Mae and Freddie Mac aren't helping matters: they've recently tightened their requirements to guarantee condo mortgages. As might be expected, some in Congress, including House Financial Services Chairman Barney Frank (D- MA), aren't happy. But it's a little unclear to me why Fannie and Freddie should listen to Congress, since guaranteeing condos poses greater risk to taxpayers' wallets than single-family home mortgages.

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If you've ever tried to buy anything on your mobile phone, then you've probably experienced what I have: frustration. This requires keying in a website password, a sixteen digit credit card number, expiration and probably even those couple of numbers on the back of your credit card. That means, no matter how sure-fingered you might be, you'll probably screw something up and have to start over once or twice. Yet, the New York Times has a good article today about investors predicting that paying by cell phone may be the wave of the future. I think they could be onto something.

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Economists have offered all sorts of competing theories about exactly what went wrong to cause the financial crisis. Those theories place the blame on lots of different parties. But the one thing that most everyone agrees on is that the credit rating agencies should shoulder some of the blame. Oddly, however, the rating agencies seem to have been of little concern in the Obama administration's regulatory suggestions released earlier this week. I have three suggestions for reforms Washington might want to consider.

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Just kidding. Sort of. The Washington Post reports today that, in typical Washington fashion, Congress slipped the "Cash for Clunkers" legislation into an Iraq war spending bill, which they passed yesterday. The bill now heads for President Obama's desk. He's expected to sign it.

For Democrats, the legislation nicely satisfies two of its most important lobbies -- environmentalists and unions -- in one fell swoop. The idea is to give anyone with a car that gets poor gas mileage a $3,500 to $4,500 incentive to buy a new one that gets better gas mileage. The Congress expects the program to cost around $1 billion.

But what happens to the cars that get traded in?

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Derek pointed out this morning that Krugman seems to have an interesting point that, during the Great Depression, the U.S. public was concerned about too much deficit spending -- just like they are now. Back then, they tried to tighten fiscal policy, and things got even worse. As a result, Krugman is praying that Obama and Congress will ignore the people and trust brilliant Keynesian economists like him. I'd argue, however, that a few key things make current deficit spending fears more legitimate than they were in the 1930s.

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A few days ago, I wrote a piece where I mentioned that for financial markets to work they must eliminate stupidity, evil and negligence.

Albert Einstein once said, "Only two things are infinite, the universe and human stupidity, and I'm not sure about the former." So stupidity is a hard one. My only thought was to have some kind of strange licensing program where investors prove they're smart. That sounds like a dubious idea to me, so feel free to suggest something better.

The evil part, however, should be easy. Fraud laws should do the trick in most of those situations. Of course, you have to actually enforce them.

So that just leaves negligence. How do we eliminate it?

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Anal_yst commented on a piece I wrote yesterday about Obama's financial regulatory suggestions saying:

None of the "solutions" proposed thus far address the lying and fraudulent behavior in the mortgage market, from both the borrower and originator (broker) level.

Good point. But fraud is already illegal, so in theory, you shouldn't need additional legislation or regulation to stop it. You just need Johnny Law to roll in and start handcuffing people. So why hasn't that happened?

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Over at Simon Johnson's Baseline Scenario blog, James Kwak wades into a discussion with a few other journalists about reverse convertibles. He asks:

What the hell is the point of this product?

He concludes, along with Felix Salmon, that it has none and that financial products that don't raise any capital should be outlawed by a possibly soon-to-be-created Financial Product Safety Commission. I'd like to disagree on both accounts, but instead suggest that if such a commission must be created, it should not outlaw any products. At most it should require licensing (to prove the risks are understood) before investors can purchase very complex financial products.

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Free market lovers have had little to celebrate over the past year or two, but an interesting outcome of the Los Angeles Lakers' recent NBA championship win might make them feel a little better. No, Kobe Bryant has not come up with an explanation of how to solve market failures without regulation. Presumably he'll leave that to the Washington Wwizards. Instead, the Lakers' victory parade today will be an event that would make Adam Smith smile.

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The New York Times had a strange article in today's edition about credit card companies beginning to aggressively settle with defaulted accountholders. Basically, if you're severely delinquent on your credit card balance, at some point the credit card company gives up on getting you to pay the full balance. That leaves them with few options: sue to possess your assets or settle for whatever you are willing to pay.

The article celebrates that, due to the severe recession, credit card companies are increasingly choosing the second option. The article is written with a sort of tone as if to say: you too can settle with your credit card company and get out of half of your debt! Isn't that great?

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The Atlantic's Business Channel has been buzzing with a debate on whether unregulated shadow banking caused the financial crisis. It all began by a Washington Post blog piece by a University of Oregon economics professor named Mark Thoma. I agree with very little of what he wrote. Instead of dissecting his entire post, I'd like to focus broadly on the chorus that continues to grow in volume lamenting that greater regulation could have prevented the crisis.

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I'm currently listening to Amazon.com's Founder, Jeff Bezos, speak about the Kindle. It's a glorified advertisement. I have never heard Bezos speak, and was struck how much he sounds like Keanu Reeves from Bill & Ted's Excellent Adventure. He's sold on the electronic book format and thinks we should be too.

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Also coming out of Elon Musk's talk was an interesting revelation about why we've seen so little innovation in the U.S. auto market. As I mentioned in my prior post, he founded a car company and a private space company. That's why his comment about the car market actually came out of him explaining the difficulties in private space travel.

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Megan posted earlier asking how a libertarian economist might respond to the claim of a market failure for non-smoking bars not cropping up on their own. She theorizes that this must occur because bar owners would not want to alienate the large, profitable customer base that smokes. This explanation, however, does satisfy those who believe efficient markets should have produced smokeless bars through non-smoker demand.

I'd have a few suggestions.

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Today I'll be liveblogging from WIRED magazine's "Disruptive By Design" technology and business conference. The first talk was by their editor in chief, Chris Anderson. In July, he has a book coming out called Free: The Future of a Radical Price. He spoke on that topic, giving a historical overview of how businesses give stuff away for free at first to eventually produce a profit. He even tried to apply his theory to newspapers.

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No that's not a typo: that's the statistic according to USA Today. The folks over there have done some really great work this week with another interesting interactive chart attached to an article about the nation's debt. If they keep this up, I'll have to stop considering it a useless free newspaper I step over when leaving a hotel room. The numbers it reports are staggering.

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An article from the Washington Post today credits unnamed sources saying that the Obama administration is leaning towards creating a single agency to regulate banking. Additionally, these sources reveal that the Federal Reserve will take on systemic risk regulation -- it will regulate institutions that are so large their collapse would have a catastrophic effect on the overall economy. AIG and Citigroup come to mind. Giving the Fed this power sounds like a disastrous idea to me.

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USA Today has a fantastic little interactive map of the U.S. attached to an article about how money from stimulus contracts has been divvied up across states. I wish I could reproduce it here, but I can't. So I strongly suggest you check it out and scroll over some states to see how they've fared. The article itself is critical about this distribution of stimulus money, complaining that states hit hardest by the recession have not been blessed most abundantly by federal dollars.

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Watching CNBC this morning, I saw a very amusing segment about OPEC. The story being discussed was today's news that OPEC is maintaining oil quotas. But the side story was about a conversation between their correspondent Melissa Francis and Saudi Arabian Oil Minister Ali al-Naimi. While walking back to his Vienna hotel with him, she made the mistake of referring to OPEC as a cartel. Here's the video, and the transcript:

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Yesterday, I wrote a piece about why I believe business probably doesn't need to worry about President Obama nominating Sonia Sotomayor for the Supreme Court. One of the loudest criticisms I've heard from conservatives has been about Ricci v. DeStefano, a case where she effectively said it was okay to disregard firefighter test scores to ensure minorities were hired. This essentially says affirmative action is okay.

Speaking to someone outraged about this verdict yesterday, I explained that this was a social issue, not a business issue, so it was not relevant to what I wrote about. Upon reflection, I am starting to wonder if this case matters after all.

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How bad is the U.S. job market? So bad people are padding their résumés to get interviews? Not exactly -- it's more like the opposite. People have begun watering down their résumés to seem more appealing to jobs below their experience level. This is bad news for job seekers, but it's also bad news for the U.S. economy.

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No, you haven't just woken up from a terrible dream to realize it's still 2005. This is current news that mostly got lost in today's other news. An interesting article from Bloomberg today explains how some of the big banks who made major acquisitions, like JP Morgan (Washington Mutual), Wells Fargo (Wachovia) and Bank of America (Countrywide) will reap huge profits from the mortgages held by the trouble institutions that they purchased.

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The big news today, is that consumer confidence got its highest reading in April since last September. Good news to be sure, but I would be careful in trying to read too much into these numbers.

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Tuesday, Ryan Avent wrote about credit cards, so I don't want to oversaturate people's interest, but I thought it might be helpful to understand just where credit card companies are coming from. And why those in Congress would really benefit from a class or two in basic economics. I'm talking to you Maxine Waters. Okay, she probably requires more than a class or two.

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