John At The Center

* the irony is of course, is that the millions in banker wodge financing the lobbyists is at least partly the hot money doled out by the Fed to banks in that extraordinary money machine called ” quantitative easing”: Fed buys up at full whack the treasuries it issues to banks at a discount, financed by cheap rates set by the Fed itself. Said banks, busting out with Fed-invented cash, or more properly, “trading profits”, refuse to lend it to small businesses like they’re supposed to in the textbooks and support the economy. No, they plow it into awarding themselves big bonuses and, most pricelessly, pay lobbyists to pay off politicians to subvert both good sense and a public opinion which is as viscerally opposed to big banking as it is ignorant and pliant, and make sure the status quo ante crisum is restored. An edifying spectacle.

via Econobloggers need their crisis back « Ultimi Barbarorum.

The “new mix” is out to topple the “new normal” as the paradigm for America’s economic future.

The 5.9 percent annualized surge in fourth-quarter growth

– the fastest since 2003 — was powered more by exports and business investment than the traditional drivers of consumption and housing. This new mix of demand will boost the economy by 3.7 percent in 2010 and pave the way for 3.5 percent annual average increases thereafter, said Joseph Carson, an economist at AllianceBernstein in New York, who coined the phrase.

His forecast contrasts with the 2 percent rate penciled in for later this year and the longer term by new-normal proponent Mohamed El-Erian, chief executive officer of Newport Beach, California-based Pacific Investment Management Co., who argues that growth will be depressed by consumer retrenchment and financial regulation.

via New Normal Becomes Old Normal as Exports Propel U.S. Recovery – BusinessWeek.

As the value investor Benjamin Graham pointed out, “most true bargains are not available in large blocks.” That puts small investors, who buy a few hundred shares at a time, at an advantage. Yet many individual investors try to beat the pros at their own game—a fruitless effort, since fast trading is a game even most of the pros can't win. As Mr. Laporte's career has shown, less is more.

via The Intelligent Investor: A Star Fund Manager’s Secrets – WSJ.com.

Hal Varian, who left a teaching post at the University of California, Berkeley, to become chief economist at Google Inc., conducted an analysis of searches using a Google tracking function called Insights that pointed to the trend in initial claims for unemployment benefits seven days before the government released them.

via Web Searches Preview Hiring Trends – WSJ.com.

White House adviser Paul Volcker said it’s too soon for U.S. policy makers to withdraw the stimulus measures and interest-rate cuts used to fight the worst slump since the Great Depression.

“This is not the time to take aggressive tightening action, either fiscally or monetary-wise,” said Volcker in an interview in Berlin today, pointing to “high” unemployment. “So I think we have to, as best as we can, maintain the expectation that it will be taken care of in a timely way.”

via Volcker Says Too Soon to Cut U.S. Monetary, Fiscal Stimulus – BusinessWeek.

Signs of exuberance are everywhere. An investor in Shanghai recently bought 54 apartments in a single day; a villa sold for $30 million last year; and in December a consortium of developers paid more than $3.5 billion for a huge tract of land in Guangzhou, one of the highest prices paid for any property, anywhere. In the city of Tianjin, in north China, developers have created a $3 billion “floating city,” a series of islands built on a natural reservoir, featuring villas, shopping malls, a water amusement park and what they say will be the world’s largest indoor ski resort.

“This is wild,” said Andy Xie, a former Morgan Stanley economist who is now an independent analyst. “By all the traditional measures, like rental yield, this is a bubble.”

Speculators are snapping up properties on the expectation that prices will continue to rise, as prices have nearly every year for more than a decade. And powerful developers are working with local governments to transform old cities into urban dreamscapes.

via Skyrocketing Prices May Point to a Real Estate Bubble in China – NYTimes.com.

. “The fundamental disequilibrium at the root of the crisis, both in the U.S. and the global economy lies elsewhere: in the imbalance between the global demand for safe and liquid debt instruments –both within and outside the U.S.—and the limited supply of this asset.”

via Academics on What Caused the Financial Crisis – Real Time Economics – WSJ.

Not surprisingly, Buffett had a hand in the bailouts but don’t let the mainstream media tell you that. During the height of the credit crisis, Buffett sent Hank Paulson an interesting letter which I have attached. The letter is priceless. Not only does Buffett again take potshots at hedge fund managers those bastards and their fees!, but he describes personal conversations with Bill Gross and Lloyd Blankfein about how they would all contribute to the bank bailout. Of course, Buffett was talking his book. He knew what was at stake. But it all makes me wonder – was the great Warren Buffett bailed out? Did genius nearly fail? Or has the myth of Warren’s genius failed us all? I have no idea, but what I am certain of is that the media’s misportrayal of Warren Buffett has been astounding and perhaps even damaging to the small investor.

via THE PRAGMATIC CAPITALIST » » THE MANY MYTHS OF WARREN BUFFETT.

The property market will probably weaken because the government has signaled that it wants prices to fall, billionaire Zong Qinghou, the chairman of Hangzhou Wahaha Group Co., said March 3.

China may struggle to fix economic imbalances because key leaders are nearing the end of their tenures and vested interests can block measures such as a property tax that could help to wean local governments from dependence on land sales and taxes on industrial production.

‘Election Mode’

“China’s in severe election mode,” said Jim McGregor, a senior counselor in Beijing at APCO Worldwide, a public-affairs group advising clients including China Cosco Holdings Co., Asia’s biggest shipping company. “They have 2 1/2 years left in their term,” he said before the meeting. There is “a lot of jockeying for position.”

Wen has said China’s growth model is unbalanced and unsustainable.

via China to Cut Infrastructure Spending, Aims to Spur Consumption – BusinessWeek.

“This alternative source of funding is healthy – Beijing may have realized the risk that local governments borrowed too much from banks last year,” said Mark Williams, an economist at Capital Economics in London who worked at the U.K. Treasury as an adviser on China from 2005 to 2007, in a telephone interview.

via China Plans to Sell $29 Billion of Yuan Debt in 2010, Wen Says – BusinessWeek.