BofA Cashes Its China Chips
Bank of America Chief Executive Brian Moynihan bought himself some breathing room as the bank agreed to sell more than $8 billion of China Construction Bank stock, its second multibillion-dollar deal in a week.
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Business cycles: Was it housing what did it?
KARL SMITH has been doing some interesting blogging on the nature of the recession and recovery as seen through charts of the composition of economic activity. Do click through and have a look. He makes an interesting point about the contribution of housing to GDP; importantly, its decline began in 2006, over a year before the recession officially began and two years before the recession entered its severest phase. Employment figures tell the same story. Residential construction employment peaked in April of 2006; the economy lost nearly 250,000 construction jobs between then and September of 2008. Total nonfarm employment, however, kept right on growing until January of 2008. Total employment in September of 2008 was 433,000 jobs higher than in April of 2006, despite the bloodbath in residential building. Growth slowed with the collapse of the housing bubble, but it didn’t collapse until two years later; beginning in September of 2008, all sectors of the economy faced a sudden, sharp contraction.What does this tell us about the contribution of the housing bust to the recession? Mr Smith muses that it points to the importance of asset prices in the business cycle. This resonates the with Dean Baker view of the downturn, in which massive losses of housing wealth destroyed the economy. The problem is that prices also peaked in early 2006. According to the S&P/Case-Shiller …
Tax Haven Pays Price for Success
Developed nations from Japan to America are desperate for growth, but the tiny Swiss canton of Zug is wrestling with a different problem: too much of it.
Airlines Cancel Flights in Northeast
U.S. and international airlines started canceling flights to and from New England, New York and Washington, marking the beginning of what was expected to be a widespread service shut down.
Buffett Bets $5 Billion on BofA
Bank of America said it will get a $5 billion infusion from Warren Buffett, giving the nation’s biggest bank a desperately needed jolt of confidence at a time when investors are questioning its health.
Successor Faces Tough Job at Apple
Steve Jobs has arguably disrupted more industries than any other chief executive of his generation. The big question is whether Apple can continue to transform the landscape while making an impact on pop culture in the way that Mr. Jobs has for the past two decades.
Gold Tumbles 5.6%
In a dramatic reversal after weeks of gains, the precious metal’s price abruptly fell $104.20 a troy ounce Wednesday, leaving the price at $1,754.10 an ounce.
Steve Jobs Resigns
Apple’s ailing CEO Steve Jobs is officially stepping down from the helm of the company, an historic shift that hands the reins to COO Tim Cook. Cook has been widely considered as the leading candidate to succeed Jobs, who has been on medical leave since January.
Growth: The variable burden of household debt
EZRA KLEIN echoes a line of thinking that’s increasingly common:If you take the Rogoff/Reinhart thesis seriously — and people should, and increasingly are — what distinguishes crises like this one from typical recessions is household debt. When the financial markets collapsed, household debt was nearly 100 percent of GDP. It’s now down to 90 percent. In 1982, which was the last time we had a big recession, the household-debt-to-GDP ratio was about 45 percent.That means that in this crisis, indebted households can’t spend, which means businesses can’t spend, which means that unless government steps into the breach in a massive way or until households work through their debt burden, we can’t recover. In the 1982 recession, households could spend, and so when the Federal Reserve lowered interest rates and made spending attractive, we accelerated out of the recession.I agree that debt is a problem, but not for the reasons Mr Klein cites. Debt levels have been extraordinarily high for the last two decades, and yet for most of that time households and businesses had no problem spending. Debt alone doesn’t restrain spending; it’s the burden of debt relative to incomes that can put a chill on outlays. The big problem for households is that incomes have fallen below levels that were expected at the time debt was taken on. And incomes are expected to stay below that level for some …
Sprint to Get iPhone 5
Sprint Nextel will begin selling the iPhone 5 in mid-October, closing a huge hole in the No. 3 U.S. carrier’s lineup.
