The next, worse financial crisis

Brett Arends on the next financial crisis:

Why? Here are 10 reasons.

We are learning the wrong lessons from the last one. Was the housing bubble really caused by Fannie Mae, Freddie Mac, the Community Reinvestment Act, Barney Frank, Bill Clinton, “liberals” and so on? That’s what a growing army of people now claim. There’s just one problem. If so, then how come there was a gigantic housing bubble in Spain as well? Did Barney Frank cause that, too (and while in the minority in Congress, no less!)? If so, how? And what about the giant housing bubbles in Ireland, the U.K. and Australia? All Barney Frank? And the ones across Eastern Europe, and elsewhere? I’d laugh, but tens of millions are being suckered into this piece of spin, which is being pushed in order to provide cover so the real culprits can get away. And it’s working.

via The next, worse financial crisis Brett Arends’ ROI – MarketWatch.

2011 A Year of Unprecedented Losses

I remain a big fan of tracking insurance losses, especially natural hazard-related, as a way of tracking the tectonic changes (literally) in our world.

An exceptional accumulation of very severe natural catastrophes makes 2011 the highest-ever loss year on record, even after the first half-year. Already, the approx. US$ 265bn in economic losses up to the end of June easily exceeds the total figure for 2005, previously the costliest year to date US$ 220bn for the year as a whole. Most of the losses were caused by the earthquake in Japan on 11 March.

Altogether, the loss amount was more than five times higher than the first-half average for the past ten years. The insured losses, around US$ 60bn, were also nearly five times greater than the average since 2001. First-half losses are generally lower than second-half losses, which are often affected by hurricanes in the North Atlantic and typhoons in the Northwest Pacific. The total number of loss-relevant natural events in the first six months of 2011 was 355, somewhat below the average for the previous ten years 390.

via Munich Re – Accumulation of very severe natural catastrophes makes 2011 a year of unprecedented losses.

Twitter Digest: 2011-07-11

Surfing Longest Wave in the World

Robbie Naish surfing one of the longest waves in the world, at Pavones, Costa Rica. 2m15s ride, and 1.09 km. Epic.

Great Recession is Costing $175 Per Person/Month

New FRBSF paper:

Gauging the Impact of the Great Recession

The Great Recession of 2007-2009, coming on the heels of a spending binge fueled by a housing bubble, so far has resulted in over $7,300 in foregone consumption per person, or about $175 per person per month. The recession has had many costs, including negative impacts on labor and housing markets, and lost government tax revenues. The extensive harm of this episode raises the question of whether policymakers could have done more to avoid the crisis.

via FRBSF Economic Letter: Gauging the Impact of the Great Recession (2011-21, 7/11/2011).

Amazon is a Lovely Company, But Its Tax Position is Indefensible

Amazon is a lovely company, but its California retail sales tax position is indefensible.

Amazon said Monday that it would back a California ballot initiative that would roll back a new state law that forces more online retailers to collect sales tax.

via Amazon Backs End to Online Sales Tax in California – NYTimes.com.

Adventures in Bad Cisco Ledes

Before:

Cisco Systems Inc. (CSCO) may begin one of its largest workforce reductions in August by eliminating about 5000 jobs.

After:

Cisco Systems Inc. (CSCO), the largest networking-equipment company, may cut as many as 10,000 jobs, or about 14 percent of its workforce, to revive profit growth, according to two people familiar with the plan.

I’m so sad. I really liked the implied calendar bucketing in the first (bad) lede.

San Francisco Before the 1906 Quake

I love pretty much everything about this 1906 San Francisco footage. The pace is wonderfully glacial.

Soros: Greece Headed for “Disorderly Default”

From an FT column tonight by George Soros:

As integration has turned into disintegration, Europe’s political establishment has also switched from spearheading further unification to defending the status quo. Now, anyone who finds the status quo undesirable, unacceptable or unsustainable must take an anti-European stance. As heavily indebted countries are pushed towards insolvency, the number of the disaffected grows, together with support for anti-European parties such as True Finns in Finland.

Yet Europe’s establishment still argues there is no alternative. Financial authorities resort to ever more desperate measures to buy time. But time is working against them. Greece is heading towards disorderly default and/or devaluation, with incalculable consequences.

via Europe need not slide into disintegration – FT.com.

Drought, Beef Prices & Calendar Spreads

Not to take anything away from the ongoing drought, but this seems a natural calendar spread trade on cattle/beef prices. Sadly, however, the COW ETN is illiquid and has mammoth bid/ask spreads.

“One of the biggest impacts of the drought is going to be the shrinking of the cattle herd in the United States,” said Bruce A. Babcock, an agricultural economist at Iowa State University in Ames. And that will have a paradoxical but profound impact on the price of a steak.

Ranchers whose grass was killed by drought cannot afford to sustain cattle with hay or other feed, which is also climbing in price. Their response will most likely be to send animals to slaughter early. That glut of beef would lower prices temporarily.

But America’s cattle supply will ultimately be lower at a time when the global supply is already low, potentially resulting in much higher prices in the future.

via Drought Spreads Its Pain Across 14 States – NYTimes.com.