US accuses Deutsche Bank of lying

This article is about the U.S suing Deutsche Bank for making false claims in order to buy insurance of its loans from the Federal Housing Administration. They are trying to hold this company responsible for mortgage loans that it issued and went bad. These losses ended up with the U.S gov (taxpayers) forking out almost $400 million in insurance payments to Deutshe Bank.

This case is specifically addressing some of things we have talked about including incentives for banks to make as many loans as possible because they are not on the hook for losses due to insurance or because the debt is resold as asset backed securities.

I think this is a good sign but I wonder why we have not taken similar action against domestic companies. What do you guys think? Do you think we have a chance to win this case?

Theory and data

The budget cuts in Washington will have many unintended consequences.  One of the worst, in my opinion is the loss of good data.  A case in point is the EIA which publishes data on energy production and consumption.  (see here) 

One of the big and current debates in economic theory and policy is whether QE2 has led to an increase in commodity prices (including oil) or whether the jump in commodity prices stems from increasing worldwide demand for commodities.  Another way of asking the question is whether the jump in gas prices stems from real or nominal events.  If the data is not collected, we can't answer the question empirically. If we can't investigate the issue empirically, we are back in the world of competing ideologies leading to theoretical conclusions and policies.   If data comes from vested interests, it can not be trusted.  So who and what can we believe?

What is regulation?

I keep thinking about last night's debate.  You all struggled with the lack of absolutes:  policy responses are not right or wrong as much as better and worse.  The lack of definitive data led you to argue theory against value.  But I'm left with some questions that I will be asking you this week.  The first concerns regulation, deregulation, and efficiency.  From your perspective, what is inefficient regulation?  What would be an example?  Is there efficiency-improving regulation?  If so, what?

Portugal gets its Bailout

Within the last hour, Portugal got its bailout from the EU and the IMF. Portugal said it would have run out of money within the next month.

BBC Link Here

I will post more links as more information comes available.

Pakistan

I have been glued to the UBL coverage the last few days...And I have become very curious about our government's choices to provide Pakistan with significant amounts of money.

"Pakistan received an estimated $1.2 billion in military and security aid in the last fiscal year and another $1.4 billion in economic aid from the U.S.

That will have to be re-examined, Levin said, especially if the U.S. doesn't get satisfactory answers to its concerns about bin Laden's stay in Pakistan. Levin said he's not ready to call for hearings, but that could change. He'll be briefed on the operation today and may change his mind." From Lawmakers wonder how much of an ally U.S. has in Pakistan.

How could they not know that UBL was living so close to the country's capital in an ostentatious compound? I think Glenn Beck brings up some really great points in THIS 2 minute video.

My question is, Should the U.S. and us as Taxpayers continue to fund this country? OBVIOUSLY - there are details to figure out and I don't want to jump to unfair conclusions, but how do you feel about this issue?

Asia's growth too fast?

http://www.bbc.co.uk/news/business-13218835

This article is about the IMF's warning that some Asian countries growth could experience rapid inflation due to their fast growth. They recommend tighter monetary policy to avoid careening into a period of high inflation that could cause recession. China is the main example cited but other countries in the region have the potential to overheat as well. Do you guys think that monetary policy will be sufficient to keep inflation in check? And will the high growth rates lead to an influx of foreign investment that could drive asset prices up even higher?

Oil Company Subsidies

I read an interesting blog post today from the Washington Post. The topic is the subsidies that oil companies receive. Article is Here

Obama: “When oil companies are making huge profits and you’re struggling at the pump, and we’re scouring the federal budget for spending we can afford to do without, these tax giveaways aren’t right,” Obama said. “They aren’t smart. And we need to end them.”

One of the biggest oil companies, Exxon Mobil — which reported Thursday that its profit rose 69 percent to $10.65 billion during the first three months of the year -- shot back this week: “We understand that it’s simply too irresistible for many politicians in times of high oil prices and high earnings — they feel they have to demonize our industry,” Exxon Mobil’s vice president for public and global affairs, Kenneth Cohen, said on the conference call with analysts. He added that there has been “predictable political positioning but no action to actually help bring down energy prices.”

What do you guys think about this problem? Obviously, if there is legislation that can be done to lower the price at the pumps, I would be in favor of it. However, the GOP argues that there would be jobs lost. Should we revisit the idea of using our energy reserves, or even ANWR?