We've been having a lot of fun with the "Asia" theme of the week, with which we will conclude - so be sure to read to the end.
But five articles in today's New York Times, both individually and especially in combination, make the stark nature of our current predicament all too painfully evident:
things are still a mess / we need a strong political response to improve them / and, with the possible exception of China, the necessary global leadership seems far more absent than present.
Leaving aside the really complex and crucial issue of the FDIC potentially going bankrupt - which deserves its own examination and we're planning to analyze in detail next week - let's start with the bad news in the US housing market:
Guess what??? It's down - what a surprise - and this bogus stock market rally was also stopped in its tracks by the "unexpected" decline in home resales.
Sales of previously owned homes fell unexpectedly last month, an industry group reported Thursday, showing that a budding recovery in the housing market remains weak and faltering.
A four-month streak of improvements in existing home sales gave way to a seasonally adjusted 2.7 percent dip in August, according to the National Association of Realtors, as prospective buyers of condos and single-family homes pulled back across the Northeast, the South and the Midwest ...
Housing and real estate groups like the National Association of Realtors have called on Congress to extend or expand the tax credit for first-time buyers, saying that sales could slide back once it expires at the end of November.
While the program has helped to drive sales higher this summer, some economists say its effects are waning because most interested buyers have already taken advantage of the $8,000 credit.
The Realtors' group estimated that 30 to 40 percent of all buyers were first-time homeowners.
Which, of course, makes clear that much of the "recovery" in housing is a direct result of "stimulating" Federal policies - and not the "magic" of a still deeply-disturbed marketplace - and it doesn't look like things are going to get any better soon. Why ???
[Some] economists said the fluctuations in home sales could reflect rising unemployment across the country.
Some 15 million people are now out of work and economists expect the unemployment rate to hit 9.8 percent when the government reports its monthly employment figures next week.
"The job market is the biggest thing that's going to keep sales down next year," said Patrick Newport, an economist at IHS Global Insight. "When people can't find a job, they don't move. They can't buy or sell a home."
Ya think ???
The housing market, a source of so many of the country's economic problems, caused more headaches for Wall Street on Thursday.
Stocks fell after a real estate group reported that sales of existing homes had dropped 2.7 percent in August. The figures disappointed economists and investors, who had been expecting a fifth straight month of gains, and shares skidded lower ...
The selling ran through many sectors of the market.
Big banks and regional lenders that offer mortgages and construction loans were down. Shares of major home builders like Lennar and D. R. Horton sank, as did big industrial companies like Caterpillar and manufacturers that make the materials used to build homes and offices.
The dip in sales of existing homes reflected broader worries about how the economy will perform as a panoply of support programs from the government slowly wind down.
Yeah, guess it's time to fret about inflation and those big Federal deficits that conventional economists - wait until you read our analysis of the joke they are, both in and out of academia - are so worried about.
Car dealers raised similar concerns about whether their sales would hold up after the conclusion of the government's popular "cash for clunkers" rebate program.
On Wednesday, the Federal Reserve said it would gradually slow down a $1.45 trillion program to buy mortgage-backed securities, which aims to keep interest rates low, stretching it out it through the end of March.
Gee, wonder what the impact of that move - taken out of fear of those oh-so-powerful Republicans in Congress - is going to have.
Well, according to two dissident "blue bloods" - one American, the other British - there are still plenty of disasters waiting to occur - the tragedy of which is that they could be avoided, but almost certainly won't, due to the concentration of economic power in the banking industry and its colossal domination of the political process in both countries.
The less gutsy, naturally, is American: Paul Volcker, former head of the Fed who is - wrongly, in my view [ see Lectures 16 & 17], but that's a discussion for another day - credited with driving out US inflation in the late 70s, and is now head of President Obama's Economic Recovery Advisory Board.
Volcker, a top White House economic adviser, said Thursday the Obama administration's proposed overhaul of financial rules would preserve the policy of "too big to fail" and could lead to future banking bailouts.
Mr. Volcker, a former Federal Reserve chairman, told Congress that by designating some companies as critical to the broader financial system, the administration's plans would create an expectation that those companies enjoy government backing in tough times.
That implies those financial companies "will be sheltered by access to a federal safety net," he said. He urged lawmakers to make clear that nonbank companies would not be saved with federal money.
Not that Volcker is saying anything like his British counterpart, as we will see shortly, but his caution re Obama policies - largely continuations of those inaugurated by Bush - is noteworthy.
[H]e took "as a given" that banks would be bailed out in times of crisis. But he said he opposed bailouts of insurance companies like the American International Group, the automakers' finance arms and others.
"The safety net has been extended outside the banking system," Mr. Volcker said. "That's what I want to change."
He said the administration's proposal to create a new system for winding down large nonbank companies would make that easier.
Which does nothing more than make him a pre-Karl Rove "traditional" Republican - as do his ideas about drawing somewhat clearer lines within the banking industry.
The administration should make it clearer that a "safety net" would apply only to commercial banks, not investment companies or others.
Investors must understand that if a nonbank company fails, stockholders and bondholders' money will be at risk, he added. He did, however, endorse other options for these companies, including forced mergers or liquidation ...
In his appearance before the House Financial Services Committee on Thursday, Mr. Volcker endorsed a stricter separation between banks that hold deposits and investment banks. He said the "safety net" should be limited clearly to commercial banks, while investment banks should be excluded.
"Commercial banks are the indispensable backbone of the financial system," Mr. Volcker said, giving consumers safe deposit accounts and financial advice.
Investment banks take on more risk and face conflicts of interest when they combine consumer financial services with major corporate deal-making. Mr. Volcker said it would be logical to prohibit commercial banks from trading in securities and derivatives.
So Volcker is no radical, and that he is seen as a "leading internal critic" of the Obama "policies" indicates something about the low level of public discourse in America.
In recent speeches, Mr. Volcker has expressed little enthusiasm for some of the initiatives under discussion in Washington, including regulating bankers' compensation. He has said there is "ample justification" for public anger at pay practices that were "wildly excessive" and encouraged risk-taking at the expense of stability. But he warned against too much political involvement ...
Contrast this with the unvarnished rhetoric - and action - of the UK's top financial regulator, Adair Turner, nicknamed by the irreverent British press "Red" Adair, after the American firefighter, for his lack of reverence towards his country's banking system.
While unclear about the substance of a crucial policy initiative - the Tobin Tax - the article does do a great job of highlighting Turner's much more confrontational stance towards his own and the global financial sector.
Mr. Turner, Britain's chief financial regulator ... insists on posing some uncomfortable questions for London financiers - and he is raising a bit of a ruckus in the process.
Mr. Turner is daring to ask the very question that many Britons, and indeed, many Americans, are asking themselves:
What good are banks if all they do is push money around and enrich themselves?
As he sees it, the City takes too much from British society and gives back too little.
It has grown too big and too powerful. And, he contends, the bankers have co-opted many of the regulators who watch over them.
So Mr. Turner is proposing a few changes, none of which would make the bankers very happy. Tax financial transactions. Increase capital requirements. Shrink the financial industry, which, at its peak, accounted for roughly 11 percent of the British economy. Only then, he argues, can banks' excessive profits - and bankers' pay - be curtailed.
He said his agency, the Financial Services Authority, would recommend to leaders of the Group of 20 nations, who are meeting this week in Pittsburgh, that banks use their new profits to strengthen their finances, rather than to pay out lavish bonuses or stock dividends.
Which explains why we included the current G-20 meeting in Pittsburgh in the title above.
Banks "need to be willing, like the regulator, to recognize that there are some profitable activities so unlikely to have a social benefit, direct or indirect, that they should voluntarily walk away from them," Mr. Turner [argues] ...
Mr. Turner's critique of modern finance is turning heads on both sides of the Atlantic. His central thesis - that banking has assumed an outsize role in economic life - is anathema to many of his establishment peers....
Unfortunately, it's at this point we can see how Britain resembles, rather than differs from, the US in the domination of the political process by the powers of finance.
Labour and Conservative politicians seem to have finally found a point on which they agree: The City is vital to Britain, and imposing the kind of tax that Mr. Turner suggests would threaten London's status as a premier financial center.
But to Mr. Turner, the point has been less about his proposal - a pragmatist, he realizes that there is little chance such a tax would win international support - than the reaction to it.
The uproar shows that the "quasi-religious" dogma of finance - that the markets are always right and that governments should let money flow freely around the world - is as ingrained as ever, he said. But now more than ever, given the events of the past year, regulators must challenge such notions, he said.
"We have begun to accept this idea that liquidity is the new God," Mr. Turner said in an interview earlier this month.
"The ideology of efficient markets became deeply embedded within the regulatory community," he continued. "And if you are of the belief that we have to challenge this, then you can't help not to make speeches about it."
And that is exactly what Mr. Turner has done, almost from the day that he took over as chairman of the Financial Services Authority during the very week Lehman Brothers collapsed.
Part Cambridge don, part moralist, he has, in effect, been running a tutorial on the origins of the crisis, and what must be done, to a class consisting of his fellow regulators, politicians, bankers and the broader public.
In March, he published the Turner Review, a 126-page report that combined eye-catching charts, intricate economic analysis and an overlay of thinly veiled disgust.
Kind of like what we aspire to here at EconomyWatch.com.
It became required reading in the City, as well as on Wall Street and in Washington.
To which we also aspire.
Mr. Turner is certainly an unlikely rebel. He became wealthy working at McKinsey, the consulting company, and in 1995 became head of the Confederation of British Industry, Britain's main business lobby.
Chairmanships to high-level policy panels followed, covering topics from the minimum wage, pensions and climate change - all sandwiched between a job as vice chairman of Merrill Lynch Europe from 2000 to 2006.
Some suspect Mr. Turner - nicknamed Red Adair in the 1990s after he wondered aloud if British workers had an adequate share of the economy - takes a dim view of free markets in general and enjoys railing against them.
Prime Minister Gordon Brown has played down Mr. Turner's tax proposal. Such a tax would be impossible without international cooperation, the prime minister maintains. He made it clear that the British government would not be pushing for the tax at the Group of 20 meeting.
Which brings us to our final topic - a potentially very interesting proposal by a joint French / Chinese group to establish a clear market standard for carbon emissions in China.
Now the environmental issue re China is basically simple: while its per capita emissions /consumption are nowhere near global leader in environmental despoliation America, its much larger population means its total volume is large and getting bigger all the time.
A French emissions exchange and a Chinese exchange are forming a carbon market standard for China, marking a step toward a voluntary system to limit greenhouse gas emissions from agriculture and forestry in the world's top emitter.
The French company BlueNext, which is 60 percent owned by N.Y.S.E. Euronext, and the China Beijing Environment Exchange, a government-backed program, hope to expand the standard eventually to cover voluntary emissions reductions in Chinese transportation, construction and manufacturing ...
Voluntary carbon standards provide a framework for developers of environmental projects - like reducing deforestation or storing carbon in soil through no-till farming - to get emissions reductions verified.
The standards can also lead to the creation of credits that can be sold in emissions markets.
The groups said they hoped the standard would help attract investments from Chinese companies in these projects and make it easier for American companies to pay others to reduce emissions, rather than cut their own.
Which doesn't say too much about how the rest of the world thinks the US is going to make great strides in lowering its per capita emissions, but at least it's a practical way to deal with American obstinacy.
Details about how the standard would work are to be released during United Nations climate talks in Copenhagen this December.
Which, of course, is why we mentioned Copenhagen in the title - a name soon to supplant Kyoto in discussions about world ecological standards and practices.
Companies are racing to expand carbon markets in China before the meeting in Copenhagen, when 190 countries will try to reach a deal on global warming to succeed the Kyoto Protocol.
The talks are bogged down on how to share the burden between rich and poor countries on taking actions to reduce emissions.
Which brings us back to our initial point: the almost total lack of global leadership on a whole range of issues, both economic and ecological, that pose visible and direct threats to the present and future of our planet -
with, of course, the potential exception of China, where, despite an evidently poor record to date in environmental issues, a forward-looking leadership may, in fact, be serious about dealing with its own volume of carbon emissions, even as it continues the historic mission it shares with Asian neighbor India:
the head-long rush into the amazing project of bringing a billion people out of poverty, and into the middle-class, within the space of two generations.