Daily Brief

It's not giving away toasters yet and John Mack is not about to appear in a folksy commercial inviting you to visit a neighborhood branch (and wouldn't he be great at that?), but Morgan Stanley is looking more like a bank these days.

The firm announced today that it had begun a new campaign to build bank deposits. It has sold $3 billion worth of certificates of deposit in the last four weeks. And it plans to introduce new bank products next year, "such as new savings account products and global currency accounts."

Of course, Morgan Stanley is...

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Why banks should lend out Treasury's funds

Paul Kedrosky has a peculiar argument today, saying that banks shouldn't lend the money they're getting from Treasury:

Banks are looking at a changed world, one with deleveraging everything, consolidation happening apace, and defaults almost certain to rise rapidly over the next 24 months. Imagine that despite all of this banks began "business as usual" lending. What would happen? Almost certainly the banks would see higher levels of non-performing loans and defaults on these new efforts, perhaps even to the point that they would require more capital to reduce solvency fears. And what would we say then?

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Darling reads the last rites over the fiscal rules

Alistair Darling has not set out a new fiscal framework in his much-delayed Mais lecture - but he has read the last rites over the so-called the financial rules. “To apply the fiscal rules in a rigid manner today would be perverse,” he says. Not to say impossible: the rules set a 40% limit on net debt and it was 43.4% last month. Instead there is assurance that “people should be in no doubt that Government will take the decisions necessary, to ensure sustainability in the medium term."

George Osborne –...

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Japan shows the limits of pump-priming

Hamish McRae is one of the few economic commentators to have come out of this crisis in credit. His column today on how to avoid the stagnation that has gripped the Japanese economy for the past twenty years is well worth reading. Here’s the key section but do read the whole piece:

“During the early 1990s the country escaped recession, unlike for example the UK, but the economy was flat and when the recession did come, in 1997, it was a biggie. Then until a couple of years ago

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Drink crazed loons

Alcohol can do appalling things to your capacity to reason, as is shown by this report from the National Audit Office.

The Government recommends a limit of 14 units a week for women and 21 for men, but 31 per cent of men and 20 per cent of women now regularly drink above this level.

“Hazardous” drinkers are women who regularly drink between 14 and 35 units a week and men who drink between 21 and 50 units.

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