Good afternoon, View fans. Here's some of what I've been reading today.
A well-reported history of how Detroit went bust
The Detroit Free Press published a solid investigative report over the weekend about how its city went broke. Reporters Nathan Bomey and John Gallagher analyzed the city's financial history back to the 1950s: "The numbers, most from records deeply buried in the public library, lay waste to misconceptions about the roots of Detroit’s economic crisis. For critics who want to blame Mayor Coleman Young for starting this mess, think again. The mayor’s sometimes fiery rhetoric may have contributed to metro Detroit’s racial divide, but he was an astute money manager who recognized, early on, the challenges the city faced and began slashing staff and spending to address them."
Five years ago, could anyone have seen this one coming?
Which asset class had the best risk-adjusted return since Lehman Brothers went bankrupt? Polish government bonds did, according to this article by Simon Kennedy and Shin Pei of Bloomberg News. I did not know that, as Johnny Carson used to say.
Struggling Spanish and Italian banks back at the trough
The Wall Street Journal reports that banks in Spain and Italy "are lobbying the government to transform potentially worthless tax assets into government-guaranteed tax credits that would bolster banks' capital positions." Brilliant move: If the numbers look bad and the bank can't raise equity to plug its capital hole, then change the rules.
Paul Krugmam, self-described jobsnik
"Give jobs a chance," writes the Nobel-winning economist and New York Times columnist, who asks the Fed not to slow its bond buying. Give him credit for showing some respect to those who disagree with him by acknowledging that "the arguments for a taper are neither crazy nor stupid," which is high praise by his standards. Here's a question I wish he would have addressed: Under what circumstances does he believe the Fed should slow its bond buying? Sometimes I get the feeling from reading Krugman's columns that he can't envision there ever being a good time to tap the brakes. He tells the Fed not to taper "until you can see the whites of inflation's eyes," which is awfully vague.
Nice catch today by Bloomberg's Noah Buhayar about a newly released comment letter from the Securities and Exchange Commission to Dan Loeb's Third Point Reinsurance Ltd. In the letter, sent in June before the insurer's initial public offering, the SEC questioned Third Point Re's description of its chief executive officer, John Berger, "as one of the leading reinsurance executives of his generation." The letter went on: “Please eliminate this type of subjective statement. Instead consider providing factual information relating to his accomplishments in prior positions.” Later filings described Berger as an “insurance industry veteran with over thirty years of experience."
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)Enter body