Weekly Economic News Digest

Some stories you should be reading that might have slipped through the cracks:

• Difference of opinion: Bernanke says economy will grow later in 2009, Roubini thinks we’re headed for 10% unemployment–or could both happen?

• The Chrysler bankruptcy won’t be quick, nor should it be just to ramrod a bad deal through; I also share Megan McArdle’s concerns about UAW involvement. Meanwhile Reason Online’s editor-in-chiefNick Gillespie highlights the Chrysler creditor concerns.

• One part of the financial sector is still growing: lobbying (via MR)

• Defending secondary markets: firms and individuals that have bought distressed assets are not immoral for getting the best price they can. These are real markets that investors have confidence in before they buy, otherwise, why purchase and asset if you don’t think you’ll have a market to sell it too later?

• Banks struggling to maintain foreclosed homes facing fines for causing blight

• It’s not just American auto firms struggling, the industry is down all around in the wake of an Auto Bubble bursting over the past 18 months, resulting in rippling effects through out the market. This is perhaps another problem with the cheap credit that was available the past few years, more people who did not need to, bought new cars. Toyota down 41.9%, GM down 33.2%, Ford down 31.6% (all year-over-year). And, as a side note Ford has gain market share on Toyota for the first time in two years.

• Todd Zywicki and The Volokh Conspiracy discuss BBT Chairman and former CEO John Allison and his Randian banking philosophy. Also see the National Review’s profile of Allison.

• Banks too small to be saved: (via Calculated Risk)
  • America West Bank
  • Citizens Community Bank
  • Silverton Bank
  • Here is a list of all 84 banks that have failed since 2000, 32 have been since January 2009 (there were 22 bank failures in all of 2008)

• Warren Buffet sees the housing market stabilizing, but consumer spending still perilous.

• There might be another scandal at AIG. Reportedly AIG paid a PR firm to attack its critics with bailout money. While inexcusable if true, this is the kind of thing that happens with bailout money, where politics get involved with nitty gritty business decisions like public relations campaigns to attack rivals and critics. On the other hand, as Noam Scheiber points out in this post, AIG has a right to try and defend its image, and if they have received bailout money it’s hard for them to do that without dealing with this kind of criticism.