Recommended Reading: Finreg, Policy, Economics & More!

6 Jan

At the end of any given day I have roughly 20 tabs open in my internet browser with things I meant to read/respond-to but simply didn’t get around to.  Some of these end up in my bookmarks, some ultimately just get nixed (a relatively random/impulsive process), and some I get-to ages after they’re initially published/brought to my attention.  Here are a few that I finally got around to reading that I think are most definitely worth your time, along with a little commentary on each (as usual, in no particular order):

  • Compliance Week: SEC Non-Prosecution Deal Credits Extensive Cooperation – Like most SEC (or really any Regulatory) actions, this one seems to set a precedent that can go either way. “The SEC alleges that, from 2004 to 2009, Elles inflated the company’s earnings by giving Kohl’s, its largest wholesale customer, huge discounts to buy more clothing and hid it by getting the Kohl’s to defer subtracting the discounts from payments. He also created and signed false documents that misrepresented the timing and amount of those discounts, and pocketed $4.7 million in profit from insider trading in shares of Carter’s common stock between May 2005 and March 2009, according to the Dec. 20 SEC complaint. ” So, Carters’ CEO got nailed on financial fraud, yet because the Company cooperated with the SEC promptly and effectively, the SEC agreed not to put the screws on the firm but is prosecuting the executive since the fraud was isolated, etc.  My criticism of the SEC (& the effectiveness thereof) is no secret but this is potentially promising that the SEC is focusing its efforts & not simply going after broad punishments when so doing would be largely inappropriate.  I look forward to seeing if the SEC will continue approaching financial wrongdoings with similar efficiency going forward.  I honest hope so, really!  Reading all the SEC Inspector General and internal documents takes alot of time, I’d love to be able to trust the SEC was on top of things so I could focus my efforts elsewhere.
  • The Money Illusion: Does Finance Deserve Its Earnings? – The Pitchfork & Torch crowd seems to think the answer is a definitive “Hell No!” but this article paints what appears to be a black & white issue in slightly more color (which is necessary, as very few things in this world can be viewed in shades).
  • Becker-Posner Blog: American Wage Stagnation –  This explains several facts and considerations I’ve been trying to highlight recently that are so painfully often missed by Economic commentators (journalists and others who should know better included).  It’s not just about stagnant wages of the lower-income brackets, things like Standard of Living and other issues matter.  Unfortunately, (often poorly-informed) political ideas of “fairness” etc cloud most of the discussion.  That is not to say income inequality isnt something we should be concerned about, quite the contrary, only that we can’t approach it without looking at the underlying causes thereof.
  • Jack H. Barnes: Global Data –  Important stuff, regardless of your investment approach you’d be doing yourself a disservice.
  • The Economist: Are the Rich Making You Poor? This topic has been increasingly concerning, from a data/statistics perspective and a political ideology one as well (although it seems much of the latter is the result of poor understanding of the former, economics, etc).  While just a quote, I really don’t buy into Tyler Cowen’s quoted point about how its obvious that wealth will accrue disproportionally to the Financial Sector  (The Economist doesn’t buy it either, thankfully).  It seems many – if not most – of those who whine the most about income inequality are likely in denial about their own regrets that they didn’t make the choices that lead to opportunities to get rich themselves: i.e: they’re jealous haters.  I don’t think we should be taxing the ever-loving-crap out of high-earners (although I do support a substantial tax on inherited wealth above a certain point likely in the low to mid 7 figures) and redistributing that wealth to low earners, that creates too many perverse and just downright silly incentives.  As always, this is not nearly the black & white issue many in the media and academia would have you believe.
  • Boston Globe: Silent Partners; When Economists Advise the Government, Who Else Are They Working For? – I’ve talked about this one before, but just to re-hash as it came up again in twitter conversation of late, some other critics of “Academic” economists who’d have us believe they’re unbiased “scientists” have suggested they, as a group, adopt some sort of honor or ethics code.  While it’s better than the current state of things, I think such an approach is crap.  At the very least such advisors should be subject to something as stringent as Reg FD and similar policies to which financial professionals must currently adhere.  Working for the Government?  Good for you, now tell us where your income actually comes from.  Any other conflicts of interest?  Out with ’em!  Don’t like it?  Tough!
  • Cleveland Fed: Group Effects & Economic Outcomes – This has some implications to the above issues on income inequality and the drivers thereof.  Dry (you’d expect less from the source?) but worth struggling through if you care about income inequality/wealth policy.
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