Baum on Money: Real Job for Geithner?
Morning, all. Here's a glance at what I'm reading to usher in the new week.
How's that recovery going?
The National Bureau of Economic Research Business Cycle Dating Committee, the official arbiter of the U.S. business cycle, uses four coincident indicators to assess peaks and troughs: employment, industrial production, real personal income less transfer payments, and real manufacturing and trade sales. While these measures are supposed to approximate gross domestic product, in recent years the NBER has thrown both GDP and GDI (gross domestic income) into the mix to determine when an expansion ends and a recession begins. Bill McBride at Calculated Risk provides graphs of four components, which helps explain why the current recovery feels so lousy. Both industrial production and employment are still below their respective 2007 and 2008 peaks.
It sounds like a real job
Unlike one of his predecessors, former Treasury secretary Tim Geithner seems to have landed a real job. As of March 1, Geithner will be president and managing director at Warburg Pincus LLC, a private equity firm. Recall that Bob Rubin was paid millions to sit in an office at Citibank with his eyes closed. The bank required several government bailouts. The Wall Street Journal's Washington Wire provides a brief history of who went where after leaving the top Treasury post.
A rule shouldn't take three years to write
The Federal Reserve may be forced to delay the Volcker Rule because the I's aren't dotted and the T's aren't crossed just yet. The rule, which prohibits banks from proprietary trading, was supposed to take effect in July. But the final rule won't be completed until December, and that's not enough time for banks to comply, according to the Financial Times. The rule is part of the Dodd-Frank Act on financial regulation, which was enacted in July 2010. Just maybe it says something about the law if 3 1/2 years later the rules are still being written.
All good things must end
An estimated 1.3 million Americans will see their extended -- up to 99 weeks -- unemployment benefits end unless Congress acts by year-end. An additional 850,000 will lose those benefits in the first quarter, according to the New York Times' Annie Lowrey. "With Congress still far from a budget deal and still struggling to find alternatives to the $1 trillion in long-term cuts known as sequestration, lawmakers say the chances of an extension before Congress adjourns in two weeks are slim." At this point, is there anyone who thinks the chances of Congress doing much of anything are better than slim?
Peaking without popping?
What some economists have warned are bubble-like conditions in farmland prices seem to be peaking, or at least rose at a slower rate in the third quarter, according to the Wall Street Journal. Reports from the Federal Reserve Banks of Chicago, St. Louis and Kansas City confirmed the moderating trend. Economist Robert Shiller, now with "Nobel laureate" in front of his name, has said that farmland prices had potentially separated themselves from fundamentals. Shiller published "Irrational Exuberance" at the peak of the tech bubble in 2000, so his bubble-identification credentials may be better than most.
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