Massive Insider Trading Probe

Economists Hold Mixed Views on Inflation Risks (CNBC via Reuters) The debate about whether deflation or inflation is a bigger risk to the U.S. economy isn't merely political: "About a third of NABE [National Association for Business Economics] panelists view the Fed's second asset purchasing program as somewhat lessening the risks of deflation, while another 33 percent saw the step as risking inflation." While that may seem less than definitive, note the following: "Still, they forecast the Fed's preferred measure of consumer inflation—the personal consumption expenditures price index excluding food and energy —to rise to 1.5 percent by the end of 2011 from a projected 1.0 percent this year." That range would be "below the Fed's considered comfort zone between 1.7 percent and 2.0 percent." One imagines that those who see inflation as the bigger threat may quibble with the exclusion of more volatile food and energy prices from the sample.


Ireland Appears to have Taken the Deal on an Aid Package (New York Times) Details are still a little unclear: "The total amount of the package was not announced, but several officials said it would be €80 billion to €90 billion, or $109 billion to $123 billion. Last spring, Europe disbursed €110 billion to Greece to save it from bankruptcy." Also, formal definitions notwithstanding, the Brits are in: "On Monday, the British Chancellor of the Exchequer George Osborne said Britain’s share would be around £7 billion, or $11 billion, via bilateral aid to Ireland as well as through its I.M.F. commitments." The explanation:

“'We are not part of the euro and don’t want to be part of the euro,'

Mr. Osborne told the BBC. 'But Ireland is our very closest economic neighbor so I judged it to be in our national interest to be part of the international efforts to help the Irish.'" Nice touch by Osborne to mention "and don't want to be,"— don’t you think?

"Ireland May Get Aid in Jan.; Portugal Safe: EU Officials" (CNBC via Reuters) "Eurogroup chairman Jean-Claude Juncker said the quick action taken on Ireland showed the determination of the single currency area's 16 member states to safeguard its stability, and other countries should be spared Ireland's problems." But guess what? "[H]is comments failed to convince financial markets, which retreated on Monday on concerns that contagion could spread to other parts of the euro zone periphery." Of which, more in the next headline.

Reality Check on EU's Reassuring Statements (BusinessWeek via Bloomberg) In case you'd begun to doubt the warm fuzzies coming from Brussels, here's a nice summary of how well the news is being received across the big pond: "Bank of Ireland Plc led a selloff in banks, plunging 22 percent in Dublin, as Moody’s Investors Service warned it would likely downgrade the nation’s credit rating by several levels. Vestas Wind Systems A/S fell 4.8 percent after the company’s outlook disappointed investors. Porsche SE and Renault SA paced advancing shares after BofA-Merrill Lynch Global Research recommended the carmakers. The benchmark Stoxx Europe 600 Index fell 0.4 percent to 268.51 at 12:33 p.m. in London after gaining as much as 0.8 percent earlier today. The gauge retreated last week as investors awaited confirmation on whether Ireland would accept a bailout. Standard & Poor’s 500 Index futures slipped 0.2 percent percent today, while the MSCI Asia Pacific Index rose 0.6 percent."

Doubts Linger on QE2 (Wall Street Journal) "Amid widely publicized skepticism about the efficacy and wisdom of the bond buying, investors and traders are questioning whether the Fed would be able to expand its bond purchases beyond $600 billion—even if inflation continues falling and unemployment remains high. Those doubts have contributed to an increase in yields on U.S. Treasury bonds since the Fed announced the program on Nov. 3, they say." So it would seem…

Massive Insider Trading Probe(Wall Street Journal) Rumors are swirling, but no one has yet been charged, in what may be the largest insider trading probe in U.S. history. The typical speculation —of who will be indicted and when —formally commences.

(Also, shoulder shrugs: Will anyone actually get convicted—and not reversed on appeal?) The details keep leaking—or gushing—out: "Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts across the nation, according to people familiar with the matter. The criminal and civil probes, which authorities say could eclipse the impact on the financial industry of any previous such investigation, are examining whether multiple insider-trading rings reaped illegal profits totaling tens of millions of dollars, the people say. Some charges could be brought before year-end, they say."