Now that mobility is increasingly restricted. Unable to sell their homes easily and move on, tens of thousands of people… are making the labor force less flexible just as a weakening economy puts pressure on workers to move to wherever companies are still hiring.
The Times reports that moves across state lines fell a “startling” twenty-seven percent in 2007 after rising nearly that much in previous years.
Junking the junk
The FT reports that Wall Street is—again—trying to move its junk assets off its balance sheets to “restore investors’ confidence in the financial sector.”
The pink(ish) paper says the investment banks are looking to follow the lead of Swiss giant UBS in “ring-fencing” assets into subsidiaries and selling big stakes to investors.
The planned creation of “bad banks” comes as US and European lenders are also discussing the creation of a common fund to buy devalued assets.
According to people familiar with the matter, banks are discussing a joint proposal to regulators to set up a fund, which would absorb US subprime assets and other troubled securities, as a way of restoring confidence in the banking system and ending the pressure to recognise mark-to-market losses.
Wall Street tried something similar in the fall with the so-called super-SIV. That went a whole lotta nowhere.
Ben got up on the wrong side of the bed
Federal Reserve Chairman Ben Bernanke stated the obvious yesterday, that “a recession is possible”, and the papers go wild this morning. The WSJ leads its Business & Finance column with the news and puts its story above the fold on A1. The Financial Times spreads it across five columns on its first page, and the NYT puts it on C1.
The Journal warns that “his comments risk adding to economic gloom” as if people should be worried that the guy who runs the economy is actually not out of touch with reality.
Once again, we turn to Dana Milbank of The Washington Post, who gets it just right in mocking the kabuki Fed testimony.
But the Fed chairman’s willingness to invoke the R-word carries particular weight because of his consistent habit of understating the nation’s economic problems. Just six weeks ago, he was still forecasting “sluggish growth” for the first part of this year. Last July, he forecast that 2008 would be a time of “strengthening” above an already “moderate pace.”
His view of the subprime lending debacle has been equally cheerful. A year ago, he testified before Congress that the subprime mortgage problem “seems likely to be contained.” With characteristic optimism, he forecast: “We don’t see it as being a broad financial concern.”
With that history of prognostication, Bernanke’s warning yesterday of a “possible” recession meant it might be a good time for people to hide their valuables and get a shotgun. “He came as close as he possibly could, given his responsibility to be a bit of a cheerleader,” Schumer judged after the recession session.
Bush out of touch? That’s crazy talk
The NYT goes big with a page-one look at what a non-issue President Bush has been so far during the economic crisis.
For a man who came into office as the nation’s first M.B.A. president, Mr. Bush has sometimes seemed invisible during the housing and credit crunch. As the economy eclipses Iraq as the top issue on voters’ minds, even some Republican allies of the president say Mr. Bush is being eclipsed and is in danger of looking out of touch.
“He’s over there arguing about who should get into NATO, and the American people are focused on what’s in their pocketbooks,” said Kenneth M. Duberstein, who was chief of staff to President Ronald Reagan in his second term. “He has talked about the economy, but it is not viewed as being a satisfactory response. Unfortunately, the lasting image is of not knowing of $4-a-gallon gas.”