US moves warships to track North Korea rocket launch

North Korea launched a rocket in April but it failed after only a few minutes

The US is moving navy ships into position to track a North Korean rocket due to launch later this month.

The warships were moved to achieve "the best situational awareness", the US military chief in the region said.

Japan's government, meanwhile, has formally issued an order to its military to shoot down any rocket debris that infringes on its territory. 

The Migrant Money Machine

The developed world could make a big difference to the global economy simply by helping migrants to do what comes naturally: send money home.

BY PETER PASSELL | DECEMBER 4, 2012

Everybody knows that the tens of millions of migrants from developing countries (documented and undocumented) who work in Europe, North America and the Persian Gulf send home a lot of money. What most don't know, though, is that the sums are triple the development aid budgets of the rich donor countries, and growing rapidly. Nor are many people aware that remittances have morphed from an afterthought to a key component in strategies for transforming poor countries into successful "emerging market" economies. Indeed, it's becoming clear that Lant Pritchett, a brand-name economist now at the Center for Global Development, was ahead of his time in arguing that the best thing rich countries could do for the developing world is to let their migrants do the heavy lifting.  

Top Ten Myths About China in 2012

Posted by Evan Osnos

For China, 2012 was a humbling year. When the history of China’s reform era is written, this moment may prove to be a pivot point, a time when the myths that China and the world had adopted about the politics and economics of the People’s Republic began to wash away, leaving blunt facts about what China’s idiosyncratic national system has and has not achieved. Here are some of the myths that collapsed this year:

Inflation - Not so great expectations

Dec 3rd 2012, 15:09 by M.C.K. | WASHINGTON 

THOSE who criticise central banks for having acted with insufficient vigour generally argue that they have failed to talk a good game. Paul Krugman and Michael Woodford are among the best-known advocates of this view. The underlying theory is that the expectation of faster consumer price inflation causes prices to rise more rapidly as people attempt to offset the anticipated erosion of their purchasing power by spending more on goods and services. According to this model, central banks theoretically have the power to lower real borrowing costs and real debt burdens (and real wages) even when nominal interest rates have hit 0%, simply by talking convincingly.

The Debt Limit Is the Real Fiscal Cliff

December 3, 2012, 6:00 am

Washington is all abuzz over the impending tax increases and spending cuts referred to as the fiscal cliff, an absurdly inaccurate term that both Democrats and Republicans have unfortunately adopted in order to pursue their own agendas. In truth, it is a nonproblem unless every impending tax increase and spending cut takes effect permanently – something so unlikely as to be effectively impossible.

External Shocks and China’s Monetary Policy

By zheng Liu and Mark M. Spiegel

China prohibits its private sector from freely trading foreign assets and tightly manages currency exchange rates. In the wake of the recent global financial crisis, interest rates on China’s foreign assets fell sharply, while yields on Chinese domestic assets remained relatively high, posing a challenge for China’s monetary policy. Opening the capital account would improve China’s capacity to weather external shocks, such as sudden declines in foreign interest rates. However, allowing the exchange rate to float without removing capital controls is less effective.

Fiscal Cliff Talks Turn Into a Game of Chicken

By ERIC PIANIN, The Fiscal Times

November 30, 2012

 

 

The critical negotiations over a way to avoid the fiscal cliff are fast turning into a game of chicken.

Shedding his optimistic disposition, House Speaker John Boehner, R-Ohio, summoned reporters Thursday afternoon to declare it was time that President Obama and the Democrats revealed how they intended to cut spending and slow the rate of growth of Medicare and other costly entitlements as part of a Grand Bargain of deficit reduction.

“I’ve got to tell you, I’m disappointed in where we are and what has happened in the last couple of weeks,” Boehner said.

US Birth Rate at Lowest Level Since 1920

By TARA BAHRAMPOUR, The Washington Post

November 30, 2012

The U.S. birth rate plunged last year to a record low, with the decline being led by immigrant women hit hard by the recession, according to a study released Thursday by the Pew Research Center.

The overall birth rate declined by 8 percent between 2007 and 2010, with a decrease of 6 percent among U.S.-born women and 14 percent among foreign-born women. The decline for Mexican immigrant women was more extreme, at 23 percent. The overall birth rate is now at its lowest since 1920, the earliest year with reliable records.

Shocking Chart on Tuition vs. Earnings for College Grads

By BLAIRE BRIODY, The Fiscal Times

November 30, 2012

 

Student debt levels have reached a new high – rising $42 billion in the last quarter to $956 billion, according to a report this week from the New York Fed. At the same time, tuition rates have seen a staggering 72 percent increase since 2000.

Obama’s economic philosophy, in 8 charts

Posted by Zachary A. Goldfarb on November 28, 2012 at 5:27 pm

If you look at President Obama’s biography and policies, you see one unifying theme more than any other: Obama wants to reduce income inequality.

His policies seem designed to achieve other objectives. The 2009 stimulus sought to end the recession. The 2010 Affordable Care Act strove to expand health-care coverage as widely as possible. And in the upcoming tax policy debate, Obama is seeking to shrink the nation’s deficits over time. But in each case, Obama is also trying to reverse three decades of growing income disparity in the United States.

Egypt Crisis Raises Fears Of 'Second Revolution'

Protesters run as they face Egyptian riot Police during clashes on Omar Makram street, off Tahrir Square, on November 28, 2012 in Cairo. Police fired tear gas into Cairo's Tahrir Square, where several hundred protesters spent the night after a mass rally to denounce President Mohamed Morsi's assumption of expanded powers. (GIANLUIGI GUERCIA/AFP/Getty Images) 

CAIRO -- Faced with an unprecedented strike by the courts and massive opposition protests, Egypt's Islamist president is not backing down in the showdown over decrees granting him near-absolute powers.

Activists warn that his actions threaten a "second revolution," but Mohammed Morsi faces a different situation than his ousted predecessor, Hosni Mubarak: He was democratically elected and enjoys the support of the nation's most powerful political movement.

Inequality Breeds Resistance to Globalization

Don’t blame globalization for inequality – but rather policies hijacked by a few

Pranab Bardhan

YaleGlobal, 27 November 2012

Rich economy, poor management: China’s rich flaunt their wealth (top); India’s poor children wait for a mid-day meal

BERKELEY: Economic globalization in the sense of expansion of foreign trade and investment is, of course, somewhat anemic, reflecting the impact of global recession, although still vigorous in the sense of continuous international transmission of technology, information, ideas and social media.

But in the world of politics and policymaking a cold wind is blowing, dimming earlier enthusiasm for global integration and market liberalization. The Doha round of trade negotiations is moribund. Economic integration in Europe is in disarray. Not merely is the fuming against imports from China and immigrants from Mexico now a staple of American electoral politics, the populist anger in all countries, rich or poor, against the galloping rise in inequality is often directed at the dark forces of global intrusion and competition.

The Fiscal Cliff: Absolutely everything you could possibly need to know, in one FAQ

Posted by Suzy Khimm, Ezra Klein, Dylan Matthews and Brad Plumer on November 27, 2012 at 9:00 am

Washington is engaged in an all-consuming debate about how to resolve the “fiscal cliff” — which we like to call, for reasons that will soon be explained, “the austerity crisis.” But what is that and why does it matter? We at Wonkblog put together a FAQ to sort it out. And we’ll keep updating this FAQ as the debate rages on.

Want to tax capital and income equally? Try the Buffett rule

Posted by Dylan Matthews on November 27, 2012 at 10:09 am

Warren Buffett (Daniel Acker — Bloomberg)

Enthusiasm is building for a “minimum tax” for the wealthy, in which millionaires would have to pay, say, 30 percent of their income in taxes, no ifs or buts. Republicans in Congress have floated taxing the entire income of high-earners at 35 percent, while Warren Buffett has renewed his call for a minimum tax of 30 percent for millionaires.

Let’s hope the austerity crisis is holding back business spending

Posted by Neil Irwin on November 27, 2012 at 10:18 am

Can they reach a deal? Business investment spending may hang in the balance.

There are new signs that businesses are pulling back on their investment spending in advance of the looming austerity crisis. And that’s the good news.

Shipments of core capital goods, a measure that excludes defense spending and aircraft — a common measure of business investment — fell 0.4 percent in October, the Commerce Department said Tuesday. There is an obvious and likely explanation: Firms were becoming all the more wary of what might happen with the “fiscal cliff,” the wave of tax hikes and spending cuts scheduled to take effect on Jan. 1 absent a new agreement. If you are a corporate executive weighing the purchase of a piece of industrial equipment or a truck for your delivery fleet, you may well decide “I’ll just wait to see how all this shakes out.”

Does advertising help or harm the economy?

Posted by Brad Plumer on November 27, 2012 at 11:21 am

It’s impossible to escape advertising. Truck ads on billboards, beer ads on television, pop-up ads for credit cards on the Internet. It’s everywhere. Last year, U.S. companies spent about $144 billion on commercials and other forms of marketing—about 1 percent of the GDP. So what effect do all these ads have on the economy?

The dangerous fiscal deadline isn’t Dec. 31 – it’s February 2013

Posted by Suzy Khimm on November 27, 2012 at 2:43 pm

(Source: Mark Lennihan / AP)

The debt ceiling has largely taken a backseat to the looming fiscal changes that are scheduled to take effect on Dec. 31. But unless it’s dealt with in the lame duck Congress, we’re going to hit another debt limit come February 2013, according a new analysis by the Bipartisan Policy Center.

What’s holding back the economy, in 10 charts

Posted by Zachary A. Goldfarb on November 27, 2012 at 3:09 pm

Lately, there has been quite a bit of excitement that the big overhang of debt left over from the financial crisis may be starting to ease. Treasury Secretary Timothy F. Geithner has noted that there’s been a “significant reduction” of debt, and a number of indicators point to American households getting their finances in better shape.

How U.S. can once again define the future

By Patrick Doherty, Special to CNN

November 27, 2012 -- Updated 1859 GMT (0259 HKT)

 

Editor's note: Patrick Doherty is the deputy director of the National Security Studies Program at the New America Foundation and author of the forthcoming report, "Grand Strategy of the United States of America."

(CNN) -- Washington is all about the fiscal cliff these days. In Doha, Qatar, world leaders are negotiating over climate change. Federal debt and carbon emissions are indeed two big problems on the nation's front burner. But they are just the beginning.

Tobacco companies ordered to admit they lied over smoking danger

Reuters in Washington guardian.co.uk, Wednesday 28 November 2012 04.59 GMT

US judge says tobacco firms must spend their own money on a public campaign admitting deception about the risks of smoking

The public advertisements are to be published in various media for as long as two years. Photograph: Alex Segre/Alamy

 

Major tobacco companies who spent decades denying they lied to the US public about the dangers of cigarettes must spend their own money on a public advertising campaign saying they did lie, a federal judge ruled on Tuesday. 

The ruling sets out what might be the harshest sanction to come out of a historic case that the justice department brought in 1999 accusing the tobacco companies of racketeering.

Greece, markets satisfied by EU-IMF Greek debt deal

By Jan Strupczewski and Luke Baker

BRUSSELS | Tue Nov 27, 2012 4:58pm EST

 

(Reuters) - The Greek government and financial markets were cheered on Tuesday by an agreement between euro zone finance ministers and the International Monetary Fund to reduce Greece's debt, paving the way for the release of urgently needed aid loans.
The deal, clinched at the third attempt after weeks of wrangling, removes the biggest risk of a sovereign default in the euro zone for now, ensuring the near-bankrupt country will stay afloat at least until after a 2013 German general election.

Xi feels threat of a China Spring

By Brendan O'Reilly

Recent statements from China's new leadership suggest a growing awareness of serious economic and political problems. The era of relative political stability garnered through rapid economic growth may be coming to an end. A rising tide lifts all boats, but structural problems in the world's second largest economy have the potential to dam the flow of increasing prosperity. Concrete reforms must accompany the promising slogans if the Communist Party is to maintain its monopoly on political power.

The World According to Xi

This illustration is by Paul Lachine and comes from NewsArt.com, and is the property of the NewsArt organization and of its artist. Reproducing this image is a violation of copyright law.

BEIJING – On November 15 Xi Jinping became General Secretary of the Chinese Communist Party and Chairman of the CCP’s Central Military Commission, giving him supreme authority over China’s armed forces. Next March, he will become President of China as well.

China’s Leadership Change Puts Pair Ahead of Their Peers for 2017

By EDWARD WONG

Published: November 26, 2012

BEIJING — When American diplomats in China scanned the political landscape this year for officials on a fast track to the Communist Party’s top ranks, one name jumped out: Hu Chunhua. 

So in June, the United States ambassador, Gary F. Locke, traveled to Inner Mongolia, the coal-rich region of grasslands and boom cities, where Mr. Hu is party chief. At a banquet in Hohhot, the regional capital, Mr. Hu proudly opened a bottle of local liquor, and Mr. Locke joined in a toast.

Sun Zhengcai, A Rising Star

Last week Sun Zhengcai, 49, was named as the secretary general of Chongiqong Province, the same position that Bo Xilai held before being purged from the CCP.

Sun is part of a small group of young rising stars in the Chinese Communist Party (CCP) that many believe are being prepared as China's 6th generation leaders who are expected to take power from Xi Jinping and Li Keqiang in 2022. Sun became one of the fifteen new Politburo members at the 18th Party Congress.

Sun obtained a doctorate in agriculture from Beijing Agriculture University in 1987 and spent a year in the British countryside as a visiting fellow at Britain’s Rothamsted Experimental Station.

Reconsidering Vietnam’s political system

November 26th, 2012

Author: Benedict J. Tria Kerkvliet, ANU
Despite being a one-party state, Vietnam’s political system has often been responsive to peasants, workers and others pushing for better economic, social and political conditions.

Major policy shifts in the last 25 years — especially replacing a centrally planned economy with a market economy and abandoning collective farming in favour of individual household farming — have been consequences, to a considerable measure, of bottom-up pressure for change, to which the country’s Communist Party leadership has acquiesced.

Is China Up to the Challenge?

Long menu of problems: New Party Secretary General Xi Jinping (top); angry protesters demand cancellation of polluting petrochemical plant in Zhejiang

WASHINGTON: China has ended the suspense by announcing the new leadership headed by Xi Jinping to the nation and the world. While the Communist Party and Central Military Commission elites are now identified, we must wait until March for a clearer idea of the policy orientations of China’s new elite, when the National People’s Congress will appoint ministers of State Council and other government officials. But it is not premature to identify their main challenges and speculate about how the leaders  may respond.

There exists a surprisingly strong consensus inside and outside of China on the principal problems and what reforms are needed. They essentially constitute significantly relaxing state and party control and allowing private sector and civil society greater leeway, while redirecting resources to spurring innovation and reducing social inequities. Specifically, urgent tasks include: 

 – reorienting the economic growth model away from investments into physical infrastructure and subsidized exports to one driven by domestic consumption and innovation, emphasizing the knowledge economy and service industries;

Businessman paid for Vietnam bank governor's son to attend British university to 'curry favour', court hears

SFO takes tough line on bribery by foreign companies  Photo: REUTERS

A business tycoon “desperate” to secure a £90million printing contract paid for the son of a Vietnamese bank governor to attend a British university to "curry favour", a court has heard. 

Bill Lowther, 73, is accused of paying £18,000 in tuition fees and thousands of pounds more for student accommodation for the son of a Vietnamese bank governor to attend Durham University.

China's princelings come of age in new leadership

By Benjamin Kang Lim

BEIJING | Sun Nov 25, 2012 4:19pm EST

Xi's ascension, along with the other members of the red aristocracy, came at an awkward moment for the princelings.

In this photo released by China's Xinhua news agency, China's new leaders, from left, Communist Party General Secretary Xi Jinping, Li Keqiang, Zhang Dejiang, Yu Zhengsheng, Liu Yunshan, Wang Qishan, and Zhang Gaoli, arrive for a press conference after being elected members of the Standing Committee of the Political Bureau of the 18th Central Committee of China's Communist Party at the Great Hall of the People in Beijing on Nov. 15. (AP Photo/Xinhua)

(Reuters) - In China they are known as "princelings" — the privileged children of the revolutionary founders of the People's Republic of China. And in the generational leadership change that just took place in Beijing, it could not have been clearer that having the right family bloodlines is among the most important attributes an ambitious cadre could possess.

Foreign Policy Under Xi Jinping

By M. Taylor Fravel

Following the conclusion of the 18^th Party Congress, a new Politburo Standing Committee, the top leadership body of the Chinese Communist Party, has been named.  Much of the recent commentary has revolved around whether or how China’s new leaders will pursue much-needed economic and political reforms.  An equally important question concerns the future direction of Chinese foreign policy under Xi Jinping.

Euro Ministers Take Third Swing at Clearing Greek Payment

Antonis Samaras, Greece's prime minister, center, arrives to speak at a news conference following the European Union (EU) leaders summit meeting at the European Council headquarters in Brussels, Belgium, on Friday, Nov. 23, 2012. Photograph: Jock Fistick 

Euro-area finance ministers try for the third time this month to clear an aid payment to Greece and forge a blueprint to keep the country a solvent member of the currency bloc.

Finance chiefs from the 17-member single currency return to Brussels today, less than a week after an all-night meeting failed to yield agreement and days after a European Union summit broke up without a proposed seven-year budget. At stake at the euro meeting is the continuation of a three-year mission to return Greece to financial health.

Fiscal Cliff Talks Sure to Rattle Wall Street Nerves

By RODRIGO CAMPOS, Reuters

November 24, 2012

 

Volatility is the name of this game.
With the S&P 500 above 1,400 following five days of gains, traders will be hard pressed not to cash in on the advance at the first sign of trouble during negotiations over tax hikes and spending cuts that resume next week in Washington. President Barack Obama and U.S. congressional leaders are expected to discuss ways to reduce the budget deficit and avoid the "fiscal cliff" of automatic tax increases and spending cuts in 2013 that could tip the economy into recession.

How Big Banks Can Spread Bigger Financial Ills

By The Staff of FUTURITY.ORG, Futurity.org

November 25, 2012

 

Looking at large national and international banks in terms of ecosystem stability and contagion models reveals that their influence and potential power for destruction far exceeds their actual size.

Vietnam’s November Inflation Accelerates to 6-Month High

(Bloomberg) – Vietnam’s inflation quickened to a six-month high as health care and education costs climbed.
Consumer prices gained 7.08 percent in November from a year earlier, after rising 7 percent in October, the General Statistics Office in Hanoi said today. That was the biggest increase since May and the third straight acceleration. Prices rose 0.47 percent from the previous month.

Analysis: "Caveat emptor" as foreigners rush to ride China rebound

By Vikram Subhedar

HONG KONG | Sun Nov 25, 2012 8:33pm EST

Investors look at computer screens showing stock information at a brokerage house in Shanghai in this June 8, 2012 file photo. Foreign investors have started rebuilding their China equity portfolios, tempted by low valuations after two years of market underperformance and signs economic growth may be stabilizing. They have pumped nearly $4 billion (2 billion pounds) into Chinese equity funds in the past two months alone, trying to get in early on what they hope will be a sustained rally. Picture taken June 8, 2012. 

(Reuters) - Foreign investors have started rebuilding their China equity portfolios, tempted by low valuations after two years of market underperformance and signs economic growth may be stabilizing.
They have pumped nearly $4 billion into Chinese equity funds in the past two months alone, trying to get in early on what they hope will be a sustained rally.

China's role in Southeast Asia questioned

FILE - In this Nov. 20, 2012 file photo, China's Premier Wen Jiabao, right, chats with U.S. President Barack Obama, left, as Cambodia's Prime Minister Hun Sen stands between them during a family photo at the 7th East Asia Summit Plenary Session in Phnom Penh, Cambodia. China's finding the once friendly ground of Southeast Asia bumpy going, with anger against Chinese claims to disputed islands, once reliable ally Myanmar flirting with democracy and renewed American attention to the region. (AP Photo/Vincent Thian, File)

BEIJING (AP) - China is finding the once friendly ground of Southeast Asia bumpy going, with anger against Chinese claims to disputed islands, once reliable ally Myanmar flirting with democracy and renewed American attention to the region.

Lobbying, a Windfall and a Leader’s Family

Ping An, one of China’s largest financial services companies, is building a 115-story office tower in Shenzhen. The company is a $50 billion powerhouse now worth more than A.I.G., MetLife or Prudential. 

SHENZHEN, China — The head of a financially troubled insurer was pushing Chinese officials to relax rules that required breaking up the company in the aftermath of the Asian financial crisis.  

The survival of Ping An Insurance was at stake, officials were told in the fall of 1999. Direct appeals were made to the vice premier at the time, Wen Jiabao, as well as the then-head of China’s central bank — two powerful officials with oversight of the industry.

Pilotless aircraft

This is your ground pilot speaking

Autonomous civil aircraft could be flying before cars go driverless

Nov 24th 2012 | from the print edition 

WITHIN the next few weeks a twin-engined Jetstream will take off from Warton Aerodrome in Lancashire, England, and head north towards Scotland. Like any other flight, the small commuter airliner will respond to instructions from air-traffic controllers, navigate a path and take care to avoid other aircraft. But the pilot flying the aircraft will not be in the cockpit: he will have his feet firmly on the ground in a control room back at Warton.

Why Black Friday Is a Behavioral Economist’s Nightmare

By Kevin Roose

Your yearly dose of economic irrationality.

There are many, many reasons not to participate in Black Friday. Maybe you like sleeping in and spending time with family more than lining up in a mall parking lot at 2 a.m. Maybe you object on humanitarian grounds to the ever-earlier opening times, which force employees of big-box retailers to cut their holidays short by reporting to work in the middle of the night. (Or, increasingly, on Thanksgiving itself.)

Micro stars, macro effects

Meet the economists who are making markets work better

Nov 24th 2012 | from the print edition

ON THE face of it, economics has had a dreadful decade: it offered no prediction of the subprime or euro crises, and only bitter arguments over how to solve them. But alongside these failures, a small group of the world’s top microeconomists are quietly revolutionising the discipline. Working for big technology firms such as Google, Microsoft and eBay, they are changing the way business decisions are made and markets work.

Take, for example, the challenge of keeping costs down. An important input for a company like Yahoo! is internet bandwidth, which is bought at group level and distributed via an internal market. Demand for bandwidth is quite lumpy, with peaks and troughs at different times of the day. This creates a problem: because spikes in demand must be met, firms run with costly spare capacity much of the time.

The urge to smurf

When government gets greedy, some people turn to crime

Nov 24th 2012 | RICHMOND | from the print edition

THE busy interstate highway that zips through Richmond, Virginia, and up to the crowded cities of the north-east has long been a conduit for handguns bought wholesale in Virginia and sold to drug-dealers in New York. Now I-95 is siphoning northwards another form of contraband: black-market cigarettes.

Unruly Asean not playing Beijing's game on territorial disputes

Even with client state Cambodia chairing the bloc, China finds it hard to keep members in line on how to deal with territorial rows

Greg Torode in Phnom Penh greg.torode@scmp.com 

The frustration and sarcasm were evident as Foreign Ministry spokesman Qin Gang outlined the "mathematics" at play this week behind China's troubled relations with the Association of Southeast Asian Nations.

A Water Bottle That Can Fill Itself Up

Kecia Lynn on November 22, 2012, 3:25 PM 

 What's the Latest Development?

Deckard Sorensen, a scientist and co-founder of NBD Nano, has created a prototype of a bottle that fills itself up by collecting water from the surrounding atmosphere. The water comes when air from a fan passes over a surface layered with nanoscale water-attracting and water-repelling coatings. Until now all tests have been done with solar cells and a rechargeable battery, but even that might not be necessary in order for the technology to work: Anything that moves fast enough to create an airflow -- "a car or a boat, or even a running human" -- could cause water to condense on the surface.

Fiscal Cliff War Games: Who Plays, Who Wins?

By STAFF, Reuters

November 21, 2012

 

President Barack Obama and the U.S. Congress hope to start serious negotiations after this week's Thanksgiving holiday on Thursday on how to avoid the "fiscal cliff," which has politicians and economists worried about the direction of the world's largest economy.

A ‘Cliff’ Deal Could Still Cost Consumers $218B

By YUVAL ROSENBERG, The Fiscal Times

November 21, 2012

 

Even if the country doesn’t slide over the fiscal cliff, any deal to blunt the impact of the scheduled tax hikes and spending cuts is likely to create at least some drag on an economy that is still growing only modestly. The full package of changes set to take effect in January would suck more than $600 billion out of the economy, according to the Congressional Budget Office. And while the outlines of any deal are still sketchy to say the least, Goldman Sachs economists are modeling a $233 billion economic hit as their “base case scenario.”

Why President Barack Obama should not visit Russia.

BY LEON ARON | NOVEMBER 20, 2012

Kremlin spokesman Dmitry Peskov announced last week that President Vladimir Putin had called to congratulate Barack Obama on his reelection and claimed that the American president accepted an invitation from Putin to come to Russia. Obama's plans, which have not yet been publicly announced, seem truly puzzling.

New Trading Case Casts a Deeper Shadow on a Hedge Fund Mogul

By PETER LATTMAN and PETER J. HENNING

Evidence in a criminal case suggests that Steven A. Cohen of SAC Capital Advisors participated in trades that the government says illegally used insider trading information.

In 2010, the billionaire hedge fund manager Steven A. Cohen gave a rare interview to Vanity Fair. He said that he wanted to combat persistent rumors that his firm, SAC Capital Advisors, routinely violated securities laws by trading on confidential information.

“In some respects I feel like Don Quixote fighting windmills,” Mr. Cohen said at the time. “There’s a perception, and I’m trying to fight that perception.”

Five economic trends to be thankful for

Posted by Neil Irwin on November 21, 2012 at 10:24 am

There is a dirty little secret about economics writing. The thing that offers the surest path to glory — to front page play for a story, to lots of Web traffic, to a pat on the back from editors — is doom and gloom. When we can point out something that is awful, whether it is a collapsing job market or rising poverty or skyrocketing gasoline prices, the world seems a whole lot more interested in what we have to say. It’s not for nothing they call economics the dismal science.

Why is housing such a popular investment? A new psychological explanation

Thomas Alexander Stephens, Jean-Robert Tyran, 23 November 2012

Despite its meagre real returns in the long run, many people still think that investing in housing is a good idea. This column argues that a major reason for the tendency to buy houses is that it’s rare to lose money. Recent research shows people’s perceptions of housing transactions to be shaped by whether they gain or lose money – above and beyond the real returns.

In the wake of the economic crisis that began in 2007, homeowners in many countries have faced substantial losses. Prices have fallen in both nominal and real terms. In the US, for example, house prices in the first quarter of 2012 were down more than 40% in real terms from their peak (Shiller 2012).Nevertheless, housing remains a popular investment¹. This popularity is surprising because, over the post-war period, US house prices have been essentially flat in real terms while the US stock markets have risen more than fourfold in real terms over the same period².

Banking Union and ambiguity: Dare to go further

Sylvester Eijffinger, Rob Nijskens, 23 November 2012

The Eurozone is moving towards a banking union, with the ECB at its centre. This column argues that there are worrying problems with the proposals, suggesting that the ECB ought to follow a principle of ‘constructive ambiguity’ if it wants to maintain and improve its credibility as a supervisor.

On September 12, the European Commission published a proposal to establish a banking union in the Eurozone¹. This proposal delegates the supervision of large cross-border banks to the ECB. The ECB will also be responsible for supervising smaller banks, in cooperation with national supervisors. The European Banking Authority (EBA) can coordinate this through the proposed Single Supervisory Mechanism.