10/15/2012 08:07 am ET

World Leaders Pretend: Seven And A Half Things To Know

Thing One: Talking Heads: The good news is that the global economy is not yet ablaze. The bad news is that there is a heap of oily rags smoldering in the living room, and the firefighters are arguing about how to put it out.

The world's finance ministers met this past weekend in Tokyo and largely agreed to disagree about the many problems, economic and otherwise, confronting them right now, the Wall Street Journal writes. The contentious meeting left Europe's debt crisis, the looming fiscal cliff in the U.S. and the China-Japan rift -- to name just a few of the world's larger economic issues -- decidedly unsolved. The world's leaders just can't stop arguing about the right approach to take in dealing with their economic problems. Their choices appear to be Keynesian government splurging or Austrian austerity. Mainstream economic thought, and the evidence, support the idea of at least delaying austerity until economies can handle it better. But austerity has some powerful fans in its corner, such as Germany, so it has been mostly winning the argument, with predictable results.

Immediately following the unproductive Tokyo meetings, Europe's leaders will convene in Brussels this week to continue the talking/fighting. Again, nothing much is expected out of this meeting. Bloomberg notes that the agenda is daunting: Stop the crisis, ready the safety net for Spain, and tighten the continent's banking and fiscal bonds. The trouble is that Europe has lost some of its sense of urgency, Bloomberg notes: Financial markets are calmer, and Europe just got a Nobel Peace Prize for its awesomeness. Hey, we're not killing each other over this, Europe's leaders might be saying, so what's the hurry? Reuters writes that the euro zone will most likely not break up, but that its problems will probably not be solved any time soon, either, raising the prospect of an endless, loveless marriage for the EU.

The problem is that Europe's perpetual dysfunction is affecting the growth engines of the world economy -- emerging markets such as China and Brazil, Bloomberg writes. China's GDP seems likely to fall short of government growth targets in the third quarter, Reuters writes, the first such miss since the Great Recession. Meanwhile, the U.S. is also frozen by similar political dysfunction. A stimulus package that could have boosted growth and jobs has been dead for more than a year in Congress, and the fiscal cliff looms.

Thing Two: Softbank Gambles On Sprint: Japanese mobile-phone giant Softbank is buying 70 percent of Sprint, the No. 3 U.S. wireless provider, in what is either a brilliant move or a disaster in the making. Sprint has lost money for 19 straight quarters, and both companies are loaded down with debt. Softbank's stock and debt prices tumbled on the news. Softbank sees the potential for growth in the U.S. market, while Japan's market is stagnant. But, yeah, jamming two sick companies together doesn't always work out so well.

Thing Three: How Are Banks Screwing Us Now? People in finance are always wondering why non-financial people hate them so much, and then days like today come along and answer the question. Jessica Silver-Greenberg of The New York Times has not one but two stories today about how finance is screwing people in new and interesting ways. The first story is about how older homeowners are getting pushed out of their homes by new abuses in reverse mortgages, which let people borrow money for long stretches against the equity in their homes. Silver-Greenberg writes: "Some lenders are aggressively pitching loans to seniors who cannot afford the fees associated with them, not to mention the property taxes and maintenance. Others are wooing seniors with promises that the loans are free money that can be used to finance long-coveted cruises, without clearly explaining the risks."

In the second story, the American Civil Liberties Union is suing Morgan Stanley over its role in pitching risky mortgages to African-Americans before the financial crisis. Again, Silver-Greenberg: "Morgan Stanley packaged the loans made by New Century and sold them to pension funds and other large investors. But, the lawsuit claims, the bank went beyond the traditional role of an investment bank by requiring that the mortgage company churn out the wildly profitable loans that came with 'dangerous' characteristics."

Oh, and there's a third story about the banks that will likely not help repair the bank-human rift: Big banks being sued for their pre-crisis behavior are fighting back rather than settling, Reuters writes, feeling they are unfairly being forced to pay over and over again for the same misdeeds.

Thing Four: The Humans Strike Back: Humans might be winning some battles in the fight against the proliferation of risky high-speed trading, The New York Times writes. Sure, high-speed trading still dominates financial markets, and possibly always will. But high-speed trading firms are starting to think twice about their rapid takeover, as profits fall and regulators start thinking about maybe getting aggressive-ish.

Thing Five: Boom Not Boon: You have doubtless heard by now that the U.S. is fracking and drilling its way to a glorious energy independence. But what you might not have heard is that all of the fracking and drilling we're doing here and in Canada is not really translating into lower prices at the gas pump, the Wall Street Journal writes: "Rising U.S. crude production may seem like an attractive antidote, but it is proving ineffective on its own at a time when the world's appetite for energy remains voracious and Middle East tension is a reminder that supplies could be disrupted." Let's recall, though, we still pay less for gas here than they do in Europe.

Thing Six: Flipping On The Rebound: Want more proof that the housing market is back? Flipping houses is a thing again, the Washington Post reports.

Thing Seven: Microsoft Tries Another Consumer Thing: Aww, look, Microsoft is challenging Apple again, this time with an iTunes killer called Xbox Music. It promises to do to iTunes what the Zune did to the iPod.

Thing Seven And One Half: Homo Supersonicus: In case you missed it, some guy went almost all the way into space in a balloon yesterday and then jumped off the damn balloon, breaking the sound barrier, along with several records and the Internets, on the way back down.

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Calendar Du Jour:

Economic Data:

8:30 a.m. ET: Retail Sales for September

8:30 a.m. ET: Empire State Manufacturing Index for October

10:00 a.m. ET: Business Inventories for August

Corporate Earnings:



Heard On The Tweets:

@jimcramer: "I am a man, and every man wants to be number one, not number two or number three." Actual quote from Softbank's Son on $S deal

@moorehn: Discovery shows Felix Baumgartner's mother weeping "with joy at liftoff." I might suggest she could be weeping for other reasons.

@MJMcKean: Imagine how much more valuable Justin Bieber would be if he were still in his original packaging.

@david_j_roth: Consistent conflict between what I imagine my words-per-day capacity to be and what it actually is. I find farting around on Twitter helps?

@shelbyfero: Internet, you've made a compelling argument. Sleep: present your case.

And you can follow me on Twitter, too: @markgongloff



Euro Area Countries With High Unemployment