Weil's Views on Finance, Afternoon Edition
Good afternoon, View fans. Here’s some what I’ve been reading today, with annotations.
Does this criticism of Larry Summers look unfair to you?
President Barack Obama told lawmakers in a private meeting today that Larry Summers is being unfairly criticized in the public debate about whether he should become the next Federal Reserve chairman, according to Bloomberg News. Surely he couldn’t have been referring to the above-linked Washington Post column by Katrina vanden Heuvel, because that was totally fair. “Summers’s feelers ran into the incipient but growing reaction against the destructive hold that the Wall Street wing of the Democratic party has on this White House and its economic policy,” she wrote. “Summers is a poster boy for this Wall Street wing — literally.” Obama also told House Democrats he’s considering former Federal Reserve Vice Chairman Don Kohn to replace Ben Bernanke. The selection process is officially a fiasco.
Goldman putting clients first, including those under indictment
Gary Cohn, president of Goldman Sachs, said the bank continues to do business with SAC Capital, the hedge fund indicted last week on charges of insider trading, calling it an important client. “We continue to trade with them, and they’re a great counterparty.” Good for them. Innocent until proven guilty. And why risk spooking the market if you don’t have to?
China builds more ghost cities, and people don’t come
Global Times, an English-language newspaper in China, sent a reporter to Changzhou in the Yangtze River Delta to see if it was a “ghost city,” as some media reports claimed. There were lots of skyscrapers, not so many inhabitants: “At Injoy Plaza, the biggest shopping mall and apartment complex on Wuyi Road which opened in May 2012, a resident named Wang who moved in last year said only one-third of floor space in her building was occupied. Wang told the Global Times an easy way to judge whether an apartment is really inhabited or not -- by counting the air-conditioning units, indispensable in this hot part of China. There are not many to be seen in big compounds with a dozen buildings, each over 30 floors.”
Meanwhile, Guangzhou may have trouble paying its bills
China sure looks like it’s going to blow, but when? This comes from Beijing-based Caixin Online, writing about Guangzhou, the capital of Guangdong province and China’s third-largest city: “One of the most affluent cities in the country has published figures that indicate it is on the verge of falling short of meeting scheduled debt repayment. This comes amid mounting concern that local governments may have trouble paying off the debts they racked up in recent years amid spending intended to stimulate the economy.” The article went on: “Guangzhou is not alone in feeling this debt pressure. The results of an audit of 36 local governments published in June found 10 of them with outstanding debt exceeding last year's income.”
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)