In light of recent events, the news that the SEC charged Goldman Sachs with “defrauding investors” through a subprime mortgage product feels particularly unsettling. Much of the process behind this issue was elaborated upon in last year’s critically acclaimed book, The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History
Wall Street has transformed significantly, showing signs of diminished importance not only due to the fallout from late-2008 but also because of ongoing technological advancements. Many activities that were once central to bankers and investors in major financial hubs like New York and London can now be efficiently conducted from remote locations, potentially at reduced costs. However, the recent charges against Goldman Sachs for fraudulent practices in the subprime mortgage realm indicate that these changes may be accelerating. (Goldman denies the allegations and asserts that the government’s case lacks merit.)
Recent data indicates that the economy is no longer in a state of contraction. Signs of improvement have been visible for several months, and recent updates on housing starts and building permits offer additional statistical backing. However, while it’s easy to speculate that the economy is ready for a strong and sustained period of growth, such conclusions may be premature. As previously discussed over the last year, the interval between the cessation of economic contraction and the onset of growth could be much longer this time around. Consequently, this may leave the recovery exposed to a new wave of challenges once the initial upturn subsides. Though not predestined, this scenario remains a distinct possibility given the enduring complexities stemming from the Great Recession.
The economy is showing signs of recovery in various sectors, yet the labor market remains the missing piece of the puzzle. The recent nonfarm payrolls report was promising, but the latest news regarding new unemployment benefit claims raises questions (again) about whether the cessation of job losses will swiftly lead to new job creation.
Recent updates on consumer prices for March indicate that inflation is currently contained. Is it contained enough?
Some economists are beginning to voice concerns that deflation might be re-emerging in economic conversations. Didn’t we successfully tackle the issue of deflation last year? Perhaps not. One argument for considering inflation as a more significant threat in the upcoming years is the extensive reflation measures that have been a priority for the Federal Reserve, supported by expansive fiscal policies.
Is the recession officially over? Not yet, according to the National Bureau of Economic Research (NBER), the organization responsible for declaring the official dates of business cycles. In a statement issued yesterday, the NBER indicated that it is too early to declare the end of the contraction that commenced in December 2007.
According to Robert Reich’s piece in today’s Wall Street Journal, the significant loss of 8 million jobs during the Great Recession may not return swiftly. However, the March labor market gains provide some optimism that recovery may be underway. Yet, even if this is the case, there are still pressing concerns regarding the housing market, which continues to be a major challenge for the economy.
Since the release of the March employment report, which delivered the most significant increase in nonfarm payrolls since the recession began in December 2007, discussions regarding the strength of the economic recovery have intensified. Here’s a brief overview of the ongoing debate…
According to a report by Gillian Tett in the FT, the “Harvard model” of investing is currently under scrutiny by the Government Investment Corporation of Singapore (GIC), a sovereign wealth fund. This internal deliberation at the fund has significant implications for investors worldwide.
