"All I Want in Life is an Unfair Advantage" - August 8, 2005. Hank Greenberg built AIG into a monument to his own genius. How did he do it? By pushing hardball tactics to the limit--and then some. As the CEO liked to say before his fall ... (FORTUNE Magazine) – Not long after starting a prestigious new job as general counsel at American International Group, 48-year-old E. Michael Joye received an alarming piece of news. AIG, an employee confided, had for years been improperly booking premiums it received for workers' compensation insurance.
If true, it meant that the insurance company was cheating state governments out of tens of millions of dollars used to pay benefits to injured workers. Joye, a former Navy lieutenant who had left a blue-chip law-firm partnership to join AIG, investigated the matter personally. Greenberg's name--or his initials, by which he was known inside the company--kept coming up.
Nonetheless, Joye reported what he had learned in meetings with Greenberg and Thomas Tizzio, then AIG's president. AIG pushed back hard. How My Nanny Acts Like a Billionaire. Raise your hand if you know how the Treasury’s payment systems work… Anyone? The Blurry Frontiers of Economic Policy by Michael Spence. Exit from comment view mode. Click to hide this space MILAN – Around the world, policies, technologies, and extended learning processes have combined to erode barriers to economic interaction among countries. Pick any indicator: trade relative to global GDP, capital flows relative to the global capital stock, and so forth – all are rising. But economic policies are set at the national level, and, with a few notable exceptions like trade negotiations and the tracking of terrorist funding and money laundering, policymakers set goals with a view to benefiting the domestic economy.
And these policies (or policy shifts) are increasingly affecting other economies and the global system, giving rise to what might be called “policy externalities” – that is, consequences that extend outside policymakers’ target environment. Of course, such externalities have always existed. But they used to be small. The economic crisis and its aftermath is a case in point. The negative carry universe. Economic Indicators Dashboard - Helping Advisors. Paulson’s $32 Billion Funds Prompt Too-Big Concerns (Update1) John A. Paulson, president of Paulson & Co March 29 (Bloomberg) -- Bloomberg's Jon Erlichman reports on the performance of warrants for banks that were rescued under the U.S. government's Troubled Asset Relief Program. March 29 (Bloomberg) -- Bloomberg's Deirdre Bolton reports on major newsmakers in today's Movers & Shakers. March 29 (Bloomberg) -- John Paulson started the year overseeing $32 billion in hedge funds, third in the world behind JPMorgan Chase & Co. and Bridgewater Associates LP.
Unlike many of his biggest rivals, he’s taking in new cash, raising the question of how much money is too much for a hedge-fund manager. “There’s no doubt that Paulson is a big draw for investors at the moment,” said Richard Tomlinson, founder of London-based Tomlinson Investment Consulting, which advises clients on hedge funds. Lessons of Tiger The world’s largest hedge funds are approaching their previous peak assets after recovering from their worst-ever losses and investor outflows in 2008. Gramm–Leach–Bliley Act. A year before the law was passed, Citicorp, a commercial bank holding company, merged with the insurance company Travelers Group in 1998 to form the conglomerate Citigroup, a corporation combining banking, securities and insurance services under a house of brands that included Citibank, Smith Barney, Primerica, and Travelers.
Because this merger was a violation of the Glass–Steagall Act and the Bank Holding Company Act of 1956, the Federal Reserve gave Citigroup a temporary waiver in September 1998.[2] Less than a year later, GLB was passed to legalize these types of mergers on a permanent basis. The law also repealed Glass–Steagall's conflict of interest prohibitions "against simultaneous service by any officer, director, or employee of a securities firm as an officer, director, or employee of any member bank".[3] Legislative history[edit] Final Congressional vote by chamber and party, November 4, 1999 Changes caused by the Act[edit] Remaining restrictions[edit] Privacy[edit]
China Security. July Employment Report: 163,000 Jobs, 8.3% Unemployment Rate. By Bill McBride on 8/03/2012 08:30:00 AM From the BLS: Total nonfarm payroll employment rose by 163,000 in July, and the unemployment rate was essentially unchanged at 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in professional and business services, food services and drinking places, and manufacturing. ... Click on graph for larger image. This was a somewhat better month, and the revisions for the previous two months were mostly offsetting. This was above expectations of 100,000 payroll jobs added. The second graph shows the employment population ratio, the participation rate, and the unemployment rate. The Labor Force Participation Rate declined slightly to 63.7% in July (blue line). The participation rate is well below the 66% to 67% rate that was normal over the last 20 years, although most of the recent decline is due to demographics.
The Employment-Population ratio declined to 58.4% in July (black line). Libor scandal: How I manipulated the bank borrowing rate. The discussion was so open the behaviour seemed above board. In no sense was this a clandestine gathering. The main business of the day was to deal with the deepening crisis. And questions were raised about what we, in one of the bank's sales teams, could be doing to earn our wages. The answer was fire-fighting. Helping the corporate bank with clients – predominantly explaining why the customer's loan was being moved from base rate to Libor and why their interest margin was increasing sharply. We accompanied the relationship managers to meetings to explain what was happening in the economy – why base rate lending could not be sustained, why margins had to increase, and of course to explain the general economic backdrop.
As part of that, we had to explain the "dislocation of Libor from itself". What that meant was that even though Libor may have been, for example 2pc, the real Libor rate the bank was paying was more like 5pc or 6pc. Looking back, I now feel ashamed by my naivety. Libor manipulation and the invisible whistle. A Risk Management Approach to Monetary Policy. It is my pleasure to be here in Muncie today to speak to you about my views on the progress of the recovery and on the course of monetary policy. I would like to thank Steve Smith, president of the Muncie Forecasting Roundtable, for that kind introduction. For those of you who follow monetary policy deliberations, you will certainly be aware that I was the lone dissenter at the last policy meeting held in early November.
So it should come as no surprise when I say that the views that I am presenting today are my own and not necessarily those of the Federal Open Market Committee (FOMC) or my other colleagues in the Federal Reserve System. Four years ago the U.S. economy entered what developed into the deepest recession since the Great Depression. Two and a half years ago the recovery began. Earlier this year, most forecasters thought that the recovery was gaining traction and that economic activity would increase at a solid — though not spectacular — pace through 2012. JPMorgan Gave Risk Oversight to Museum Head With AIG Role. (Corrects ending year of director’s tenure in penultimate paragraph of story originally published May 25, 2012.)
The three directors who oversee risk at JPMorgan Chase & Co. (JPM) include a museum head who sat on American International Group Inc.’s governance committee in 2008, the grandson of a billionaire and the chief executive officer of a company that makes flight controls and work boots. What the risk committee of the biggest U.S. lender lacks, and what the five next largest competitors have, are directors who worked at a bank or as financial risk managers. The only member with any Wall Street experience, James Crown, hasn’t been employed in the industry for more than 25 years. “It seems hard to believe that this is good enough,” said Anat Admati, a professor of finance at Stanford University who studies corporate governance. “It’s a massive task to watch the risk of JPMorgan.” James "Jim" Crown, president of Henry Crown and Co., and Paula Hannaway arrive to a... Close Open “Given Ms. Gold, Treasuries & SPX: Returns Since The Greek Crisis.
Europe contemplates centralized authority. Jump to navigation Menu 🔊 Listen European Debt CrisisEuro Debt Crisis Share1Share5Share1 Europe contemplates centralized authority Play Pause Support Us Sean Gallup/Getty Images German Chancellor Angela Merkel awaits the arrival of heads of state at the 2012 Council of Baltic Sea States Summit on May 30, 2012 in Stralsund, Germany. Interview by David Brancaccio Monday, June 4, 2012 (All day) Transcript David Brancaccio: It used to be a pipe dream of some European officials just a year ago. Douglas Rediker, senior fellow the New America Foundation argues that the latest chapter of the euro crisis is bringing life to all sorts of previously impossible policy options. Douglas Rediker: Good morning. Brancaccio: So among the possibilities are a actual budget union -- it's going to be a little hard to swallow in the individual countries, taking orders from a central authority, but this may be what Europe has come to.
Rediker: I'm not sure it's going to end up there, at least in the interim step. More. Soros Pushes EU to Start Joint Debt Fund or Risk Summit Fiasco. Billionaire investor George Soros called on Europe to start a fund to buy Italian and Spanish bonds, warning that a failure by leaders meeting this week to produce drastic measures could spell the demise of the currency. Policy makers should create a European Fiscal Authority to purchase sovereign debt in return for Italy and Spain implementing achievable budget cuts, Soros said in an interview in London yesterday. Funding for the purchases would come from the sale of European Treasuries, which would have low yields because they would be backed by each euro member, he said.
France and Italy are urging Germany to take decisive action to end the 2 1/2-year-old debt crisis after Spain’s 10-year bond yields jumped to more than 7 percent last week, a level that economists consider unsustainable. Leaders are at an impasse as they prepare to meet in Brussels on June 28. ‘Wrong Direction’ “Merkel has emerged as a strong leader,” Soros said.
Borrowing Costs Market Reaction. China warns on lending to steel plants. Fear miners set to fall off ‘supercycle’ How the Great Recession was Ended. How to End This Depression by Paul Krugman. The depression we’re in is essentially gratuitous: we don’t need to be suffering so much pain and destroying so many lives. We could end it both more easily and more quickly than anyone imagines—anyone, that is, except those who have actually studied the economics of depressed economies and the historical evidence on how policies work in such economies. The truth is that recovery would be almost ridiculously easy to achieve: all we need is to reverse the austerity policies of the past couple of years and temporarily boost spending. Never mind all the talk of how we have a long-run problem that can’t have a short-run solution—this may sound sophisticated, but it isn’t.
With a boost in spending, we could be back to more or less full employment faster than anyone imagines. But some readers will wonder, isn’t a recovery program along the lines I’ve described just out of the question as a political matter? And isn’t advocating such a program a waste of time? Nothing Succeeds Like Success. The Federal Reserve's Dual Mandate. Last Updated: 04/04/2014 In 1977, Congress amended The Federal Reserve Act, stating the monetary policy objectives of the Federal Reserve as: "The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates.
" This is often called the "dual mandate" and guides(external) the Fed's decision-making in conducting monetary policy. On January 25, 2012, the Federal Open Market Committee (FOMC) released the principles(external) regarding its longer-run goals and monetary policy strategy. Inflation and Unemployment These charts plot the current rates of inflation and unemployment, as well as the FOMC participants’ most recent projections over the next three years and in the longer run.
Everyone Hates Inflation Because They Don't Understand What It Is. I basically agree with Pascal-Emmanuel Gobry about the failure of the "independent" central bank concept, but I think the question of why the politics of the price level have shifted requires a different explanation than this one: I think the real issue here is the changing structure of the economy, not the changing structure of central banking. William Jennings Bryan's constituency was farmers, which is to say sellers of primary commodities. If that's your occupation, then it's obvious that higher nominal prices means higher nominal incomes.
Even in Bryan's day, urban workers were not in love with this message and today almost everybody is an urban worker and almost nobody is a farmer. Now a fancy-pants economics blogger can tell you that the most important price in the economy is the price of labor and the price of labor is equal to workers' incomes, so a general increase in the nominal price level is necessarily a general increase in nominal incomes. Fed’s Dudley Downplays Inflation Risk. New York Federal Reserve Bank President William Dudley said today that he believes that the 2% inflation “objective” the Fed has adopted will eventually be higher than the real inflation rate: More generally, there are several reasons to think that inflation will remain moderate and close to our objective. First, and most obviously, the economy continues to operate with significant slack. Second, measures of underlying inflation show little upward pressure.
In fact, one—the Federal Reserve Bank of New York’s Underlying Inflation Gauge—is turning down. This measure uses a very wide set of variables to forecast the underlying inflation trend. Third, it is hard to be very concerned about inflation risks when the growth rate of nominal labor compensation is so low and stable. It is noteworthy to me that the employment cost index has risen only 2.1 percent over the past four quarters and has shown no acceleration.
The full text of Dudley’s remarks are available here. Paul Ausick.