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Reforming the Banks


Minyanville's daily roundup of some of the best commentary from around the Web.

This column highlights the most interesting and useful business and financial commentary from around the Web each day. Feel free to send along your own suggestions for blog content that you've read or written.

Credit Writedowns
Reforming the Banks
"The reason debt levels always seem to grow unsustainably, I suspect, is that in the initial stages of the growth model much if not all of the investment is economically viable as it pours into building necessary infrastructure whose profits and externalities exceed the cost of the investment. The result is real growth. At some point, however, the combination of subsidies, distorted incentives (in which investment benefits accrue to those making the investment while costs are shared broadly through the banking system), and very cheap financing costs leads inexorably to wasted investment and debt rising faster than asset values. This is when the debt burden begins to rise in an unsustainable way."

Apple Patent Application Shows Second Display
"An Apple patent application that surfaced online Thursday indicates that Apple could add a secondary display on the exterior of a future iPhone. According to the patent application, which was discovered by the blog Patently Apple, this new display could potentially be used to highlight additional ways a user could interact with the phone beyond just touching the traditional front-facing screen. The application states that Apple could use the secondary exterior display to highlight virtual buttons around the phone's edge that could "morph into various controls" on an application-per-application basis."

The Curious Capitalist
Europe Interest Rate Hike: Will the Fed Be Forced to Follow?
"On Thursday, the European Central Bank for the first time in nearly three years raised interest rates. Even though the rate is only going from 1% to 1.25%, it's a significant move because the ECB becomes the first central bank among so-called wealthy nations to raise interest rates since the beginning of the financial crisis. And it's a major shift from just six months ago, when central bankers around the world seemed to be doing anything possible to lower the value of their currencies, in order to make their countries' products cheaper to the rest of the world and boost growth. And that meant keeping interest rates low. But that was before this year's rapid rise in food and other commodities prices. That has caused a number of emerging market economies to raise interest rates. China has raised rates a number of times. And now Europe. So will that put pressure on the Federal Reserve to raise rates in 2011 as well? Perhaps a little. Here's why..." (See also When Will Fed Created Melt-Up Turn Into a Meltdown?)

Free Exchange
Fraud and Death in Indonesia
"For a week now, Jakarta's rich and connected have been appalled by twin scandals at Citibank's Indonesia operations. A relationship manager at the bank's wealth management division appears to have stolen Rp. 17 billion ($2m) from clients. In what must be a terrible coincidence, Citibank debt collectors also seem to have killed a customer-a local politician, it turns out-who disputed his credit card bill. The Financial Times piece linked above focuses on the $2m fraud, presumably because embezzlement tends to have higher material impact to earnings, but the recent murder at Citi's premises is arguably more damaging to the bank's reputation." (Also read Culture Clash Between US Firms and Indonesia.)

China Realtime Report
Disney's Iger on New Shanghai Theme Park
"What did it take for Walt Disney Co. to finally break ground on its $4.4 billion theme park in Shanghai? According to Disney CEO and president Robert Iger, a lot of talk. "We've been in communication with various government entities here for over a decade not only on deal structure but our approach to creativity and the overall operation of the park," said Mr. Iger, citing their "mutual interests" in creating "experiences that last a lifetime." Disney's relationship with Shanghai authorities was a topic of great interest as Iger, president and chief executive of Disney, and Thomas O. Staggs, chairman of Disney Parks and Resorts, spoke with a small group of reporters following the park's groundbreaking ceremony on Friday."

Lasting through April 15, 100% of the donations made to The Ruby Peck Foundation for Children's Education will be channeled to the children of Japan as they attempt to find their footing following this natural disaster; and to kick off this drive, we'll pledge $5000 to get it started. Please do what you can, as it will add up, and thanks.
No positions in stocks mentioned.

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