Monday, 6 Dec 2010 | 11:05 AM ET

QE2: Beware the Perils of its Success

Posted By: Vitaliy N. Katsenelson

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen. The bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.

» Read More
  Monday, 6 Dec 2010 | 10:29 AM ET

McGraw: The Korean Free Trade Agreement Is a Test of Our Commitment to Markets

Posted By: Lori Ann LaRocco

On Friday, the Obama administration announced that it had reached a free trade deal with the South Korean government in Seoul. Trade organizations for both the automakers and meat growers chimed in with support for the pact. But Senator Max Baucus, the Montana Democrat, has said he is "deeply disappointed" with the agreement. It's not clear whether Baucus will attempt to block the treaty from being approved in the Senate.

I decided to speak with Terry McGraw, Chairman and CEO of McGraw-Hill Companies . McGraw is a strong advocate of free trade. He is chairman of the Emergency Committee for American Trade (ECAT), chairman of the U.S.-India Business Council, chairman of the United States Council for International Business, as well as a member of the U.S. Trade Representative’s Advisory Committee for Trade Policy and Negotiations (ACTPN).

McGraw was in Korea for the G-20 Business Summit. He also spread the message of the importance of opening the markets while he was in India with President Obama last month. I started the discussion on what impact this agreement will have on the U.S. economy.

» Read More
  Monday, 6 Dec 2010 | 10:08 AM ET

Steve Schwarzman Headed to Paris

Posted By: John Carney

The mystery of where in Europe Steve Schwarzman is going has been solved.

Stephen A. Schwarzman
Stephen A. Schwarzman

He's headed to Paris.

Last week, Reuters reporter Megan Davies revealed that the chief executive and co-founder of private-equity powerhouse Blackstone Group was decamping from the United States in favor of residence in Europe.

On Saturday Davies learned that Schwarzman is headed to Paris.

» Read More
  Monday, 6 Dec 2010 | 9:13 AM ET

'Madoff trustee sues HSBC for $9 billion'

Posted By: Ash Bennington

Banks Contemplate Moving up Bonuses Due to Possible Tax Hikes (CNBC) "Congress is debating tax rates, and that has Wall Street nervously eyeing the calendar. Worried that lawmakers will allow taxes to rise for the wealthiest Americans beginning next year, financial firms are discussing whether to move up their bonus payouts from next year to this month." As Bush-era tax cuts are about to expire, many of the big banks are reviewing their options and holding discussions with pay consultants. Goldman Sachs is rumored to be among those considering such plans, and is considered to be something of a bellwether."

»Read more
  Friday, 3 Dec 2010 | 4:47 PM ET

'Weak Jobs Data Dash Hopes of Accelerating Recovery'

Posted By: Ash Bennington

"Recovery Jolt: Few New Jobs as Jobless Rate Rises to 9.8%" (New York Times) "In a jolting surprise to the economic recovery and market expectations, the United States economy added just 39,000 jobs in November, and the unemployment rate rose to 9.8 percent, according to the Department of Labor. In a jolting surprise to the economic recovery and market expectations, the United States economy added just 39,000 jobs in November, and the unemployment rate rose to 9.8 percent, according to the Department of Labor. In a jolting surprise to the economic recovery and market expectations, the United States economy added just 39,000 jobs in November, and the unemployment rate rose to 9.8 percent, according to the Department of Labor."

"Weak Jobs Data Dash Hopes of Accelerating Recovery" \(Wall Street Journal\) The unemployment rate has now been above 9% since May 2009, or 19 months. That matches the longest stretch at such an elevated level since the Second World War. In the previous deep recession of the early 1980s, the jobless rate crept to 9% in March 1982 and remained above that mark until September 1983.

"US jobs market woe dampens optimism" \(The Telegraph\) "Given the country's retail and manufacturing sectors have shown signs of strengthening in recent weeks, others cautioned that it's too early to draw firm conclusions from just one report. Retailers had reported strong sales during last weekend's Thanksgiving sales, the start of a critical period of consumer spending. While a separate report today from the Institute of Supply Management showed that the US services industry grew at the fastest pace in six months in November. Nigel Gault, the chief US economist at IHS Global Insight said that he suspects the report from the Labour Department is an "an outlier—on the downside—but it does underline that the recovery remains a gradual one."

» Read More
  Friday, 3 Dec 2010 | 4:35 PM ET

Six Banks Got Over 98% of the Fed's PDFC Money

Posted By: Ash Bennington

After you crunch the Primary Dealer Credit Facility (PDCF) numbers, you can see through the noise. What is revealed is this: The Fed's overnight lending to primary dealers concentrated staggering sums of government cash in the hands of a tiny circle of financial institutions. The story of PDCF lending is the story of those few financial institutions that went on to become just six banks.

Over the lifecycle of the PDCF program, The Federal Reserve lent a total of about $8.95 trillion to primary dealers of government securities. (This group is already a very small club: Currently, the New York Fed lists a total of 18 institutions authorized to perform this function.)

But the concentration of the vast majority of PDFC funds was far narrower than that. Institutions that ultimately went on to become just six banks—Bank of America, Citigroup, Morgan Stanley, Barclays, Goldman Sachs, and JPMorgan—received at total of about $8.78 trillion through the PDFC program.

» Read More
  Friday, 3 Dec 2010 | 3:25 PM ET

John Kinnucan Needs a Lawyer

Posted By: John Carney

John Kinnucan, the guy who turned down an FBI request to wiretap clients as part of an insider trading probe, needs a lawyer.

Getty Images

He was subpoenaed today by the government. But the Portland, Ore.-based analyst says that the costs of hiring an attorney are too much for him. So he’s going to represent himself.

“The costs of hiring a lawyer would leave my family homeless. I’d rather go to jail than have that happen,” he told me today.

» Read More
  Friday, 3 Dec 2010 | 3:24 PM ET

What If Low Interest Rates Don't Matter?

Posted By: John Carney

Friday Link Fest: What If Low Interest Rates Don't Matter? How the Government is Creating Another Housing Bubble. (The American) Thanks to expanded government lending, 60 percent of home purchase loans now have down payments of less than 5 percent, compared to 40 percent at the height of the bubble. Time to restart the mortgage implode-o-meters.

Fannie and Freddie Suspend Foreclosures (Consumerist) Freddie Mac and Fannie Mae are issuing a brief moratorium—December 20 through January 3—on evicting people from foreclosed properties during the holiday season.

NYC’s Got A New FinTech Incubator (Venture Capital Dispatch) The New York City Investment Fund is teaming up with consulting firm Accenture to launch FinTech Innovation Lab, a seed program that will provide work space, $25,000 in funding and advice from banking technology executives and venture capitalists to financial start-ups.

Do Low Interest Rates Matter? (pdf via Journal of Economic Perspectives via Tyler Cowen ) Everyone attributes the credit boom (at least in part) to the Federal Reserve having kept the federal funds rate "too low for too long," but in reality the increase in lending was greatest in 2006 and the first half of 2007, after the federal funds rate had already returned to a level consistent with normal benchmarks.

How Banks Pawned Junk to the Fed (DealBook) The day after Lehman’s collapse JPMorgan, Goldman Sachs, Citigroup and Morgan Stanley collectively pledged more than $100 million in collateral that was rated Triple-c or below.

Nothing Is More Noticeable In America Than The Level Of Inequality (Business Insider) Are you a low-skilled worker? Move to Australia, where you’ll have a much easier time earning a living wage.

Keeping up with the Jones: Billionaire lights up the night (Greenwich Time via DealBreaker ) Paul Tudor Jones is putting the final touches on his annual Christmas spectacular.

»Read more
  Friday, 3 Dec 2010 | 2:46 PM ET

Elaine Kaufman Has Died

Posted By: John Carney

Elaine Kaufman, the owner of the legendary Upper East Side saloon, died shortly after noon today.

»Read more
  Friday, 3 Dec 2010 | 1:52 PM ET

Berliners Throw Nude Parties to Protest Rising Rents

Posted By: Cadie Thompson

All the protesting going on in Europe seems to have finally stirred the Germans to action.

berlin naked rent protesters
Odd Andersen | AFP | Getty Images
berlin naked rent protesters

Apparently, some young Berliners, who call themselves the "Hedonist International," are fed up with rising rents and are retaliating by crashing apartment viewings dressed in nothing but their birthday suit.

The protesting is going on in East Berlin, which is an area that has apparently seen a significant increase in its yuppie population. The Local describes it as being "transformed from a hang-out of squatters and punks to a haven for hipsters and buggy-pushing young couples."

» Read More

About NetNet

  • NetNet is where you'll find the low-down and the high jinks of Wall Street. It's the place for insider stories, trader gossip, and tales of the foibles of the moneyed crowd and the culture of finance.Wall Street news and commentary served fresh all day long.


  • Jeff Cox is finance editor for CNBC.com.

  • Lawrence Develingne

    Lawrence Delevingne is the ‘Big Money’ enterprise reporter for CNBC.com and NetNet.

  • Stephanie Landsman is one of the producers of "Fast Money."

Wall Street