A Yen for Cash: How the Bank of Japan Could Threaten the Global Economy
Japan has been an experiment in economics ever since its crushing defeat at the end of World War II. First, Tokyo employed inventive techniques to rebuild its economy and wealth – the export-led, state-directed system in which bureaucrats “targeted” industries for special support – that broke with economic tradition and became a development model for the rest of the region to follow. Then after the country’s massive stock-and-property-price bubble exploded in the early 1990s, Japan became a much-examined case study in how to handle (or not handle) a financial crisis. After that, economists have puzzled over why Japan has been unable to escape the long stagnation it has suffered ever since. Now Japan is embarking on yet another set of unconventional policies in an attempt to revive itself, which, if successful, could rewrite the rules of fiscal and monetary policy. Whatever the result, economists will likely be studying Japan for decades to come. On Thursday, the new governor of ...
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Fannie Earns $17.2B in 2012, Biggest Annual Gain
WASHINGTON — Fannie Mae earned $17.2 billion last year, the biggest annual profit in the U.S. mortgage giant’s history, helped by a record fourth quarter. The 2012 gain was driven by the housing recovery, which has reduced delinquencies and lifted home prices six years after the bubble burst. The government-controlled company also said Tuesday that it paid dividends of $11.6 billion to the U.S. Treasury in 2012. Fannie says it expects to remain profitable “for the foreseeable future.” The company did not seek any federal assistance in 2012. That followed a year in which the company reported a net loss of $16.9 billion and requested $25.9 billion in federal assistance. (MORE: Savings Booster: Making It Simpler to Repay Your 401(k) Loan) Taxpayers spent $188 billion to rescue Fannie and smaller sibling Freddie Mac from their exposure to risky loans that trigged the 2008 financial crisis. Fannie received $116 billion and has paid back $35.6 billion. Freddie received $72 billion and ...
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Should Credit Unions Have to Pay Income Tax?
The American Bankers Association, the lobbying group that represents America’s banking industry, has recently launched an ad campaign across Washington D.C. aimed directly at the nation’s credit unions. The print version of the campaign is to the point, reading simply: “Today credit unions are a $1 trillion industry that pays no income tax. That’s nearly $2 BILLION every year that could help shrink the federal deficit. Now, credit unions want even more perks. It’s time to end credit unions’ indefensible and outdated special treatment. Enough is enough.” I think it’s worth noting the irony in such a campaign, given that the for-profit banking sector has recently benefitted from unprecedented amounts of government support. Then again, it shouldn’t come as a surprise to find lobbying groups seeking advantages for its members — it’s kind of their job. (Also it should be remembered that the ABA represents banks of every type and size, not just those that have benefitted ...
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Why the Elites Are Losing Sleep
Who says nothing gets done at the World Economic Forum in Davos, Switzerland? As the weeklong winter fest, which costs tens of thousands of dollars to attend, has grown over the past decade, it has become as much about dealmaking as about brainstorming solutions to the world’s problems. In fact, gray-suited consultants slipping around the Magic Mountain in their city loafers now seem to outnumber genuine thought leaders (to use a very WEF term) by about 2 to 1. Still, the elite haven’t abandoned Davos. This year’s shindig drew several heads of state, the world’s top bankers and a good helping of Fortune 500 CEOs, Nobel laureates and rock-star entrepreneurs (though, for once, no rock stars). Davos remains, as Foreign Policy Group CEO David Rothkopf put it, “the factory in which conventional wisdom is manufactured.” And so it is in that spirit that we offer this year’s best takeaways, factory-direct. A New Bubble? We are now in historically uncharted territory in terms of how ...
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$1 trillion coin is nuts but not $25 billion - Opinion
Policy wonks are debating whether a $1 trillion platinum coin would be a clever or insane way for President Obama to play hardball with Republicans in the upcoming debt limit battle.
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