The grim toll that the U.S. mortgage crisis has taken on financial markets has been felt worldwide, from traders in Hong Kong to small-town mayors in Europe to pensioners in the American Midwest.

But largely spared have been financiers on Wall Street, a place where brokers, bankers and traders are called into corner offices at the end of each year and told how large a bonus they’ll receive for the year’s work. The size of the figure reflects their value to the company, and many feared — even complained out loud — that the amount would be badly affected by the subprime mess.

They needn’t have worried. Wall Street bonuses totaled $33.2 billion in 2007, down just 2 percent, by the estimates of the New York state comptroller’s office.

The Bonuses Keep Coming: Year-End Payouts Dipped Only Slightly on Wall St.

Even as thousands of people were losing their homes in the subprime mortgage lending mess that many economists say set off instability in the US and world financial markets, the mortgage lending industry spent generously in Washington on federal lobbying and campaign contributions and fended off attempts at regulation and oversight, a Common Cause study shows.

The report shows that even as record numbers of people began home foreclosure proceedings after receiving mortgages they could not afford, the mortgage lending industry spent nearly $32 million in 2007 lobbying the federal government and donating to Members of Congress and the national political parties. That came on the heels of $187 million the industry spent lobbying in Washington from 1999 to 2006, and likely contributed to Congress’ hands off approach to oversight or regulation, even as consumer advocates predicted problems with subprime lending.

While campaign donations favored Republicans prior to 2007, mortgage industry donations moved toward Democrats once they took control in 2006. The industry contributed $1.23 million to Democrats and $1.21 million to Republicans from January to June 2007.

Mortgage industry spent generously in Washington, even as subprime lending mess heated up

John Hagel and John Seely Brown, in Business Week:

What the risk-taking, big-wave-surfing community has to teach executives about finding new ideas and riding the curl of growth

Catching the Innovation Wave

From the man who puts the Long in Long Bet:

A World Economic Forum (WEF) panel featuring such futurists as Paul Saffo of Stanford and Peter Schwartz, chairman of Global Business Network, suggested Thursday that print newspapers will disappear by 2014. But ever since the Internet became a powerhouse we’ve heard similar predictions on the end of print, so, no need to pay attention to this prediction either. Right?

I mentioned another Saffo prediction last year: Paul Saffo: USA to disappear in 50 years.

A Futurist Panel At The World Economic Forum Suggests Print Newspapers Will Cease By 2014 So Should We Start Packing Our Bags?

After more than a century of relative stagnation, the economies of India and China have been growing at remarkably high rates over the past 25 years. In 1820 the two countries contributed nearly half of the world’s income; by 1950, with the industrialized West having pulled away, their share had fallen to less than one-tenth. Today it is just less than one-fifth, and projections suggest that by 2025 it will rise to one-third. (In 2008 the World Bank is expected to issue revised numbers about cost of living in China and India, which may somewhat reduce these estimated income shares, both current and future).

The consequences of this expansion are extraordinary. The Chinese economy in particular has made the most headway against poverty in world history, with hundreds of millions of people moved out of the most extreme poverty within just a generation. (The environmental consequences are comparably remarkable, though perhaps proportionately disastrous).

What explains this strikingly rapid growth?

What Makes a Miracle: Some myths about the rise of China and India

“Our economy is in serious trouble,” writes Eric Janszen in the cover story for the February Harper’s. “Both the production-consumption sector and the FIRE [finance, insurance and real estate] sector know that a debt-inflation Armageddon is nigh, and both are praying for a timely miracle, a new bubble to keep the economy from slipping into a depression.” A well-known venture capitalist, Janszen is the founder and owner of iTulip.com. His is hardly the only voice on the markets today invoking apocalyptic notes.

The Bubble Bursts

Andrew McAfee, in a follow-up to The Problem with the Legal Profession, from a year ago:

Two recent articles in the New York Times caught my eye. The first, by Lisa Belkin in the January 24 ThursdayStyles section, was titled "Who’s Cuddly Now? Law Firms." This article builds on an earlier one by Alex Williams in the Times chronicling the declining prestige of law as a career. Belkin’s article describes a number of radical (by the profession’s historical standards, anyway) steps taken by many law firms in order to make them better places to work, especially for bright young people.

These steps include a move away from the traditional laserlike focus on billable hours as the desideratum for a lawyer who wants to rise within the firm. Some law firms, according to the article, have done away the concept of billable hours altogether.

Have you seen Michael Clayton?

In the “Ocean’s” franchise and earlier movies, Clooney played guys who were on top of everything. He’s very intelligent, and it’s easy enough for him to point his chin, glare, and tell people off. But in “Syriana” and now in “Michael Clayton” he has done something more interesting: he’s playing clever guys who lack the killer instinct, who have some strain of personal honor that holds them back from simply winning. People in and outside Michael’s firm keep condescending to him, but he’s forty-five years old and broke, and he’s not a man who can afford to lose his temper, even if he wanted to. He has to deflect other people’s contempt into a strategy of survival. Gilroy has a sardonic, rather than a melodramatic, view of life: Michael will never be an anti-pollution crusader like Julia Roberts’s Erin Brockovich or John Travolta’s lawyer in “A Civil Action.” The fixer is hardly shocked to discover that the world is corrupt; he has just had enough of it.

Signs In the Times: The End of Billable Hours

Why do presidential candidates touting their concern for the economy pose with factory workers rather than with ballet troupes? After all, the U.S. now has more choreographers (16,340) than metal-casters (14,880), according to the Bureau of Labor Statistics. More people make their livings shuffling and dealing cards in casinos (82,960) than running lathes (65,840), and there are almost three times as many security guards (1,004,130) as machinists (385,690). Whereas 30 percent of Americans worked in manufacturing in 1950, fewer than 15 percent do now. The economy as politicians present it is a folkloric thing.

Old-School Economics

Striving so mightily to make one and one add up to three or four or five, Wall Street, Main Street and Washington collectively brought us to the impasse of 2008, in which a debt crisis is superimposed on a downturn in the economy, which is overlaid on a bear market in real estate, which is conjoined with a persistent and worrying weakness in the overseas value of the dollar. As for the crackup in complex mortgage-backed securities, now at the center of the debt predicament, the global bank UBS has justly called it “the biggest failure of ratings and risk management ever.”

Paying the Price for the Fed’s Success

Ben Stein, in a follow-up on a Cramer rant from last year.

As I see it, this is what traders do all day long — and especially what they’ve been doing since the subprime mess burst upon the scene. They have seized upon a fairly bad situation: a stunning number of defaults and foreclosures in the subprime arena, although just a small part of the total financial picture of the United States. They have then tried — with the collaboration of their advance guards in the press — to make it seem like a total catastrophe so they could make money on their short sales. They sense an opportunity to trick other traders and poor retail slobs like you and me, and they generate data and rumor to support their positions, and to make money.

MORE than that, they trade to support the way they want the market to go. If they are huge traders like some of the major hedge funds, they can sell massively and move the market downward, then suck in other traders who go short, and create a vacuum of fear that sucks down whatever they are selling.

Note what is happening here: They are not figuring out which way the market will go. They are making the market go the direction they want.

Can Their Wish Be the Market’s Command?