Audit Notes: Deflation, SEC Wrist Slap, ARMs

It seems odd that the press hasn’t written more about the threat of deflation. Paul Krugman, no inflation hawk he, has been on it in the last couple of weeks, though. Here he has a chart comparing the disinflation of this recession to the 1981 one.

And with no sign that we’re about to have morning in America, the deflationary trend seems set to continue. This is not good.

And he has a chart showing core inflation plunging toward zero.

Gary Weiss at Portfolio points to a little-noticed decision by the SEC to let a wrongdoer off with no more penalty than pointing out he’s a wrongdoer. That would be former head of the American Stock Exchange Salvatore Sodano, who the SEC after a ten-year saga Weiss explains nicely.

In its order last week, the SEC announced that it had come to a settlement with Sodano. It consisted of the SEC re-reciting some of the bad stuff it had said about him in its 2007 charges, and concluding that “the Commission hereby finds that Respondent Sodano, without reasonable justification or excuse, failed to enforce compliance with the Exchange Act, Exchange Act rules and regulations, and Amex rules by Amex members and associated persons within the meaning of Section 19(h)(4) of the Exchange Act.”

Weiss asks the right question in his kicker:

Once the hot light of public attention is shifted elsewhere (as is inevitable), how can we expect the SEC to take any action at all against the Wall Street titans who were responsible for the financial crisis?

— Calculated Risk posts an update to that scary Credit Suisse chart on adjustable-rate mortgage resets. Better hope mortgage rates don’t rise by then. But don’t bet against it.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.