Monday, March 25, 2013

That's the news

The Dutch finance minister said if banks needed restructuring and were unable, then euro zone officials would turn to shareholders, bondholders and uninsured depositors to contribute to a bank rescue.
It seems to me that depositors shouldn't be held accountable for a bank's failure, even if they are uninsured.  But then again, it just goes to show that it's a good idea for depositors to keep track of just how much they can deposit and be insured for.  The banking system is dependent on depositor confidence.  Shareholders and bondholders should be aware of the risk they're taking on.  Those investors should bear the cost of restructuring.  Unfortunately, this "model solution" may lead to some withdrawals, which may cause further problems for other banks.  I don't really know, and I don't know if anyone knows.  What I do know is that my bank doesn't pay enough interest for me to take on any kind of risk, but as I watch the developments around the world, I feel like the little I have is becoming increasingly at risk.

This Housing Recovery Is Different: Investors Are Now Big Buyers

What happens when these investment firms leave the market?

“That’s a huge risk," says The Daily Ticker’s Aaron Task. “If they decide…they don’t really want to be in this business all of a sudden you could have a ton of new homes coming back into the market and then that supply situation will get flipped very badly against the market itself.”
Yes, that's true, but at the same time, the number of cash deals is huge, and part of what made the housing bubble so bad was the amount of debt involved.  The problem is that rents rose substantially after the housing collapse, and now putting all those houses into the rental market is, of course, going to add significantly to the rental supply, and rents will have to drop sooner or later, if they haven't started already.

Japan, EU agree to start free trade negotiations

Although resistance to lower tariffs is high in some Japanese industries, such as long-protected rice farmers, manufacturers and others are concerned about being left behind by the trade agreements that other countries are negotiating.

Among the likely beneficiaries of free trade are Japan's giant manufacturing exporters such as Toyota Motor Corp., the world's biggest automaker.
 Well, that's always the problem with the whole free trade idea.  It's sold to people on the idea that each country ends up better off overall, but there will be some individuals that will be worse off.  Economists like to minimize that last part and make it sound relatively simple for those that are worse off to find new employment.  It kind of makes me wonder how many politicians would be in favor of free trade if they were the ones that would end up worse off.  I doubt there would be many.

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