Editor's Note: This is a monthly publication on economic trends and financial policy issues. In this publication you can read "The Longbrake Letter", an analysis of economic trends and conditions written by Bill Longbrake, as well as commentary on financial regulation and policy written by members of the law firm Barnett, Sivon & Natter, P.C., a Washington, DC based law firm that specializes in financial services law.

ISSUE: #31, November 2012

The Longbrake Letter
- Bill Longbrake
Employment and other data reports, such as housing prices, while nothing to get overly excited about, have been a little better. Financial conditions have eased considerably in Europe since ECB President Draghi's August promise to do whatever it takes, but Europe's fundamental problems remain unresolved. But, the road ahead for the U.S. economy to return to full employment and eliminate the extremely high output gap is long indeed. In this month's letter, Bill Longbrake reviews recent developments for U.S. GDP growth, personal income, consumption, employment and housing. He also summarizes post-election prospects for financial policy, legislation and regulation and discusses possible options for avoiding going over the fiscal cliff. The remainder of the letter provides updates on developments in Europe, China, India and Japan.

Reset Necessary
- Bob Barnett
Major changes have occurred in our economy, and resets of expectations and of business practices to adapt to those changes are the critical challenges the economy faces going forward.

Basel III Treatment of Sovereign Debt
- Raymond Natter
The Basel III proposal is intended to more closely link capital charges and risk. However, the proposal would assign a 0 percent risk weight to sovereign debt issued by many countries suffering significant economic stress. This is but one example of why the regulators need to reevaluate the proposal to make sure that it does not increase, rather than decrease, the risks in our banking system.