What Makes Mr. Zhang Save?

What Makes Mr. Zhang Save?: "Michael Pettis is a finance professor at Peking University and a senior associate at the Carnegie Endowment for International Peace.


Reprinted from Summer 2009 Wilson Quarterly"

China Vies to Be Leader in Electric Vehicles - NYTimes.com

China Vies to Be Leader in Electric Vehicles - NYTimes.com: "TIANJIN, China — Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years, and making it the world leader in electric cars and buses after that."

But electric vehicles may do little to clear the country’s smog-darkened sky or curb its rapidly rising emissions of global warming gases. China gets three-fourths of its electricity from coal, which produces more soot and more greenhouse gases than other fuels.

A report by McKinsey & Company last autumn estimated that replacing a gasoline-powered car with a similar-size electric car in China would reduce greenhouse emissions by only 19 percent. It would reduce urban pollution, however, by shifting the source of smog from car exhaust pipes to power plants, which are often located outside cities.

Op-Ed Columnist - Empire of Carbon - NYTimes.com

Op-Ed Columnist - Empire of Carbon - NYTimes.com: "Historical injustice aside, the Chinese also insisted that they should not be held responsible for the greenhouse gases they emit when producing goods for foreign consumers. But they refused to accept the logical implication of this view — that the burden should fall on those foreign consumers instead, that shoppers who buy Chinese products should pay a “carbon tariff” that reflects the emissions associated with those goods’ production. That, said the Chinese, would violate the principles of free trade.

Sorry, but the climate-change consequences of Chinese production have to be taken into account somewhere. And anyway, the problem with China is not so much what it produces as how it produces it. Remember, China now emits more carbon dioxide than the United States, even though its G.D.P. is only about half as large (and the United States, in turn, is an emissions hog compared with Europe or Japan).

The good news is that the very inefficiency of China’s energy use offers huge scope for improvement. Given the right policies, China could continue to grow rapidly without increasing its carbon emissions. But first it has to realize that policy changes are necessary."

Rating Agencies: Moody’s, S&P, and Fitch (REVISED VERSION) | The Big Picture

Rating Agencies: Moody’s, S&P, and Fitch (REVISED VERSION) | The Big Picture

“Helping spur the boom was a less-recognized role of the rating companies: their collaboration, behind the scenes, with the underwriters that were putting those securities together. Underwriters don’t just assemble a security out of home loans and ship it off to the credit raters to see what grade it gets. Instead, they work with rating companies while designing a mortgage bond or other security, making sure it gets high-enough ratings to be marketable.”

with good links

Las Vegas rides out the recession | The Guide | PE.com | Southern California News | News for Inland Southern California

Las Vegas rides out the recession | The Guide | PE.com | Southern California News | News for Inland Southern California: "Gary Loveman, the CEO of Harrah's, was paid $92.3 million in 2008."

China Economy: The Collapse of Manufacturing and the Baltic Dry Index (BDI) | Economic News | EconomyWatch.com

China Economy: The Collapse of Manufacturing and the Baltic Dry Index (BDI) | Economic News | EconomyWatch.com

Shanghai, 23 Feb 2009. In the summer of 2008, with trade and inflation both rampant, it cost on average $1,400 to transport a container from Asia to Europe. By January 2009, the price from China to Europe had collapsed to $0, excluding fuel and handling.

China Economy: The Collapse of Manufacturing and the Baltic Dry Index (BDI) | Economic News | EconomyWatch.com

China Economy: The Collapse of Manufacturing and the Baltic Dry Index (BDI) | Economic News | EconomyWatch.com

Shanghai, 23 Feb 2009. In the summer of 2008, with trade and inflation both rampant, it cost on average $1,400 to transport a container from Asia to Europe. By January 2009, the price from China to Europe had collapsed to $0, excluding fuel and handling.

China Economy: The Collapse of Manufacturing and the Baltic Dry Index (BDI) | Economic News | EconomyWatch.com

China Economy: The Collapse of Manufacturing and the Baltic Dry Index (BDI) | Economic News | EconomyWatch.com

Shanghai, 23 Feb 2009. In the summer of 2008, with trade and inflation both rampant, it cost on average $1,400 to transport a container from Asia to Europe. By January 2009, the price from China to Europe had collapsed to $0, excluding fuel and handling.

German property giant Hypo Real Estate may need £8.6bn rescue - Telegraph

German property giant Hypo Real Estate may need £8.6bn rescue - Telegraph

The admission is the latest evidence that mounting losses in Europe's banking system have yet to be tackled."The bank clearly has a solvency problem," said Michael Endres, head of the board in an interview with Welt am Sonntag. "It wouldn't surprise me if a capital injection of €10bn proved insufficient."

RealClearMarkets - Articles - The SEC Killed Wall Street On April 28, 2004

RealClearMarkets - Articles - The SEC Killed Wall Street On April 28, 2004

In this unusual case, one particular afternoon, on April 28, 2004, drastically changed the equation.

Credit card debt information (2006-2007)

Credit card debt information (2006-2007)

Credit card industry facts (2006-2007)

• The top 10 credit card issuers controlled approximately 88 percent of the credit card market at the end of 2006, based on credit card receivables outstanding (Source: FDIC)
• With its acquisition of MBNA, Bank of America became the nation's largest credit card issuer in 2006, followed by Chase and Citi. (Source: Nilson Report)

Op-Ed Contributor - The Greenback Effect - NYTimes.com

Op-Ed Contributor - The Greenback Effect - NYTimes.com

Buffet: The United States economy is now out of the emergency room and appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.

RGE - Roubini Project Syndicate Op-Ed: A Phantom Economic Recovery

RGE - Roubini Project Syndicate Op-Ed: A Phantom Economic Recovery: "he end of this severe global recession will be closer at the end of this year than it is now, the recovery will be anaemic rather than robust in advanced economies, and there is a rising risk of a double-dip recession. The recent market rallies in stocks, commodities and credit may have gotten ahead of the improvement in the real economy. If so, a correction cannot be too far behind."

FT Alphaville » Blog Archive » How the failure of Lehman Bros is like SARS, and swine flu

FT Alphaville » Blog Archive » How the failure of Lehman Bros is like SARS, and swine flu
An external event strikes. Fear grips the system which, in consequence, seizes. The resulting collateral damage is wide and deep. Yet the triggering event is, with hindsight, found to have been rather modest. The flap of a butterfly’s wing in New York or Guangdong generates a hurricane for the world economy. The dynamics appear chaotic, mathematically and metaphorically.

'We're in the Middle of a Crash': Black Swan - Financials * Europe * News * Story - CNBC.com

'We're in the Middle of a Crash': Black Swan - Financials * Europe * News * Story - CNBC.com
Black swan--things will get worst before we get better, and we have to de-leverage big time

There's no quick fix to the global economy's excess capacity - Telegraph

There's no quick fix to the global economy's excess capacity - Telegraph: "Too many steel mills have been built, too many plants making cars, computer chips or solar panels, too many ships, too many houses. They have outstripped the spending power of those supposed to buy the products. This is more or less what happened in the 1920s when electrification and Ford’s assembly line methods lifted output faster than wages. It is a key reason why the Slump proved so intractable, though debt then was far lower than today.

Thankfully, leaders in the US and Europe have this time prevented an implosion of the money supply and domino bank failures. But they have not resolved the elemental causes of our (misnamed) Credit Crisis; nor can they. Excess plant will hang over us like an oppressive fog until cleared by liquidation, or incomes slowly catch up, or both. Until this occurs, we risk lurching from one false dawn to another, endlessly disappointed. "

Iceland's krona proves the magic wand as Europe ails - Telegraph

Iceland's krona proves the magic wand as Europe ails - Telegraph: "Those who point to Iceland as a scarecrow exhibit of what happens to a small country caught in a financial storm without the shield of euro membership have the matter backwards, as will become ever clearer over the next two years.

The OECD expects Iceland's economy to shrink 7pc this year. This is much better than Ireland at minus 9.8pc, and recovery will come sooner."

Credit tightening threatens China's 'giant Ponzi scheme' - Telegraph

Credit tightening threatens China's 'giant Ponzi scheme' - Telegraph: "Credit tightening threatens China's 'giant Ponzi scheme' China's loan growth plunged in July while exports fell 23pc from a year ago after grinding lower for nine months as consumers in the West tighten their belts further."

Reforming Credit | The American Prospect

Reforming Credit | The American Prospect: "he retail abuses were connected to the wholesale collapse most explicitly through the whole sub-prime loan system: Mortgage companies marketed loans to moderate-income consumers on terms that would become unaffordable after a brief period of 'teaser' rates. These retail loans were connected to the wholesale part of the system through an elaborate web of overlapping relationships. The mortgage companies were bankrolled by big Wall Street investment banks; the loans were bundled into high-risk securities; packages of those securities were then blessed with triple-A ratings by corrupt rating agencies; big commercial banks bought some of the securities through off-balance-sheet affiliates; and some of these securities were insured by firms like AIG. When the retail loans began going bad, the entire system collapsed, bringing down the giant banks and investment banks whose bets on these loans were very highly leveraged. The sub-prime circuit provides a snapshot of the rot in the entire system."

Insiders Detail How Bottom Line Drove Credit Ratings - ProPublica

Insiders Detail How Bottom Line Drove Credit Ratings - ProPublica: "During the mortgage boom, the agencies gave much of the risky securities their highest credit rating, effectively preserving the illusion that they were risk-proof."

Study Finds Flawed Practices at Ratings Firms - NYTimes.com

Study Finds Flawed Practices at Ratings Firms - NYTimes.com

The analyst at the credit ratings agency was blunt: “Let’s hope we are all wealthy and retired by the time this house of cards falters.”

Waiting for Dough

Waiting for Dough: "More than any other country over the past two decades--more even than China--Ireland has given up its traditional culture for the global economy. In a quarter century, it went from being a little, poverty-stricken, priest-ridden agricultural backwater to a swingin', low-tax, wide-open, unregulated global-economy entrepôt. Last year, on paper, it was the seventh-richest country, per capita, in the world, ahead of the United States and trailing only a few oil exporters and tax havens. In the decade up to 2007, Ireland's GDP increased 350 percent. House prices quintupled."

No Rhyme or Reason

The Heads I win, tails you lose Banking Bonus Culture

NY Attorney generals Report

http://www.ft.com/cms/097ca69e-7d28-11de-b8ee-00144feabdc0.pdf?source=cmailer

FT.com / Companies / Banks - Bonus breakdown

FT.com / Companies / Banks - Bonus breakdown: "JPMorgan Chase and Goldman Sachs paid the most million-dollar bonuses in 2008, while two banks that lost almost $28bn each last year, Citigroup and Merrill Lynch, also made hundreds of their employees millionaires, according to a newly released report on bonus payments by government-supported banks."