Obama withdraws judicial nominee blocked twice by Republicans

NEW YORK (Reuters) – The White House on Friday admitted defeat on its choice of New York lawyer Caitlin Halligan for a judgeship on a powerful appeals court, withdrawing her nomination two weeks after Senate Republicans blocked her for the second time.

Jamie Dimon Gets Big Paycut

NEW YORK (AP) — The CEO of JPMorgan Chase, Jamie Dimon, received $18.7 million in compensation last year, according to regulatory documents the country’s largest bank filed Friday.

That’s 19 percent less than Dimon received in 2011, when his $23 million pay package made him the highest paid bank CEO in the country.

JPMorgan & Co. had already said that it would dock Dimon’s pay, largely because the bank took a $6 billion loss from a complex derivatives trade that went bad last year.

In January, the bank’s board said it would slice Dimon’s pay in half, lowering it to $11.5 million. But nearly all of that pay cut came from a reduction in his incentive compensation, which takes three years until it is fully vested.

Earlier this month, a Senate committee issued a scathing report on JPMorgan that spread the blame for the trading loss to the bank’s key executives, including Dimon.

Calls from investors for Dimon to give up the job of board chairman have intensified, but the bank defended Dimon’s dual role. “The Board has determined that the most effective leadership model for the Firm currently is that Mr. Dimon serves as both Chairman and Chief Executive Officer,” the board said in a statement.

Dimon, 57, has led the New York bank as president and CEO since Dec. 31, 2005. He was appointed chairman the following year.

His compensation included $1.5 million in salary, stock awards worth $12 million and options of $5 million. His pay package also counts $64,437 for his personal use of aircraft and $68,379 for guarding Dimon’s residence.

Unlike previous years, Dimon didn’t receive a cash bonus in 2012.

The Associated Press formula calculates an executive’s total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest that the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.

The value that a company assigned to an executive’s stock and option awards for 2012 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company’s stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.

France, Britain fail to win easing of Syria arms ban

DUBLIN (Reuters) – France and Britain failed to persuade the European Union to back their call to lift an arms embargo on Syrian rebels on Friday despite warning that President Bashar al-Assad could resort to using chemical weapons.

Barnes & Noble offers a Nook Simple Touch for free with purchase of Nook HD+

Pity the underdog e-reader—you know you’re in trouble when you have to give your goods away.

On Friday, Barnes & Noble announced it would be giving away a Nook Simple Touch (which normally retails for $79) with the purchase of a Nook HD+ tablet ($269). The reality is, B&N just can’t sell enough of the e-readers: in its most recent quarter, the company sustained a net loss of over $6 million.

The book retailer heavyweight has had so much trouble selling the Simple Touch, it’s trying to give it away as part of a limited promotion going on from March 24 until March 30, 2013. B&N may have had a rough time selling the lower-end model as consumers seem to be more in favor of more general-purpose tablets, like the iPad or the Kindle.

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Diane Swonk: A Turning Point for Housing

Bullish Conditions for Prices

In economics, price is the ultimate equalizer. Prices rise when something is scarce, and fall when that something is plentiful. Hence, the precipitous drop in home prices and sales as the housing bubble burst in 2007 and 2008. Now, years of underproduction, tight credit market conditions, fewer distressed sales and reluctance by would-be sellers to list their homes for sale have all taken a toll on inventories. What was once an overhang in homes for sale has become a shortage.

In January, the National Association of Realtors reported that the total month’s supply of housing had reached the lowest level since April 2005, down to 4.2 months supply; that’s down more than 25 percent from a year ago. Raw, unsold inventories, which dipped to 1.74 million, fell to the lowest level since December 1999.

Prices have risen but not enough to persuade owners who are still unsure to get off the fence and list their homes for sale. Home prices are still about 30 percent shy of the 2006 peak, despite recent increases. So, would-be sellers are opting to remodel and eventually recoup those investments by waiting for more substantial increases in home values, instead of realizing their perceived losses by selling now.

Moreover, many of the worst underwater properties have already gone through foreclosure and been sold. This, coupled with a drop in underwater mortgages, has further curtailed the stock of homes for sale.

At a presentation for the National Association for Business Economics (NABE) last week in Washington, Mike Simonsen, CEO of Altos Research, equated the shortfall in housing inventories to a sharp drop in the supply of a key commodity like oil; there is nowhere for prices to go but up, given the shortages. The drop in the number of listings is so acute in the West that it has already constrained sales. Foreclosures, which once lured investors into the market, have been bought while the stock of turnkey properties is so tight that bidding wars have broken out over what is left, at least in some markets.

Add to that, an increase in demand, and it is little surprise that home prices are on the rise. Buyer traffic jumped 40 percent in January compared with one year ago, while the number of properties selling at or above the asking price increased.

Some worry that a bubble may be forming but we still have a long way to go to meet pent up demand, let alone any level considered “normal.” Richard DeKaser of Wells Fargo has calculated that housing affordability would remain near record highs, even if mortgage rates rose 2 percent from current levels.

This special report takes a closer look at the outlook for housing in 2013. The stars have come into alignment: The rebound in housing is finally here…

Read all of Themes on the Economy, including this excerpt.

Egypt activists clash with Islamists

Opposition protesters in Egypt clash with Muslim Brotherhood supporters in several towns, ransacking and setting ablaze the Islamist movement’s offices.

Jared Bernstein: Liquidity vs. Stupidity: Two Early Lessons From Cyprus

If Chairman Mao said, after two centuries, that it was still too soon to judge the impact of the French revolution, it’s probably a bit premature to learn much from the ongoing Cyprus bank debacle. That said, we at OTE are obliged to briefly speculate:

#1: OK, I’m gonna go out on a limb on this one, and assure you that we don’t need a lot of time to transpire to learn this lesson: unless you’re trying to start a bank run, don’t spring a tax on bank depositors. As I’ve always stressed, the problems in the Eurozone are deep and not amenable to simple solutions, so I’m willing to be told I’m missing something important. But didn’t someone around the table in Brussels raise their hand and say, “Hey, wait a sec… do we really want to levy this tax on a banking system that’s already teetering?”

#2: The above is obvious. This one, less so, but it’s a lot more important: Large imbalances often lead to underpriced risk, over-leverage, and systems’ failure (default, near-default, long recessions with over-corrections (Minsky moments). The Cypriot case looks like one where a lot of offshore money, some allegedly hot from Russia, found its way to a tiny nation selling international banking services. Some reports suggest the banking sector grew to seven times GDP, though Yves Smith tells a more nuanced story with convincing data here. But the lesson still holds.

Banks, commercial or otherwise (I-banks, S&Ls, mortgage lenders), don’t make money by sitting on it. They must lend. And when they’re experiencing large inflows, whether from Asian investors in the U.S. housing boom or Russian gangstas, they go shopping for places to amplify those flows.

That’s finance — there’s nothing wrong with it (except maybe the gangsta part). To the contrary, the text book case is that these excess savings find their way to the most productive uses and the virtuous cycle is off and running. But the real world case looks a lot different.

In the U.S. and some parts of the European meltdown, sloppy underwriting and “innovative” finance plowed the excesses into a massive housing bubble that lost trillions and from which we’re only now recovering (while much of Europe remains mired). Greece over-leveraged on imbalanced surpluses from northern Europe with no fiscal structures in place to finance its debts, and Cyprus invested in Greece.

Again, I’m grossly simplifying and more time must pass before these autopsies reveal their real lessons, but I suspect once they do they will show the following: capitalism in this era ran amok in no small part because policy makers accepted the teachings of the high-priests of economics that modern economies self correct. They work out their excesses and imbalances without state intervention, oversight, or regulation. Those functions, the priests said, would only cuff the free hand.

I’d like to think that we now know that the free hand, uncuffed, is often all thumbs. I’d like to think that our policy makers are interested in systems that identify the types of destabilizing imbalances from which we’ve suffered in recent years. That’s what I’d like. I doubt it’s what I’ll get.