NEW YORK SHARES

U.S. stocks rose Tuesday after a better-than-expected​ report on sales of existing homes in April.

The Dow Jones Industrial Average ($INDU) was up by 40.2 points, or 0.3%, at 12,545. The S&P 500 ($INX) was up by 9.4 points, or 0.7%, at 1,326. The Nasdaq ($COMPX) was rising by 16.7 points, or 0.6%, to 2,864.

The National Association of Realtors reported that existing-home sales rose 3.4% to a seasonally adjusted annual rate of 4.62 million in April, which was slightly above expectations for 4.6 million units, according to economists surveyed by Thomson Reuters. The April figure rose from the downwardly revised March rate of 4.47 million.

"It is no longer just the investors who are taking advantage of high-affordability conditions," said Lawrence Yun, the chief economist at NAR. "A return of normal homebuying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices.

"The general downtrend in both listed and shadow inventory has shifted from a buyers' market to one that is much more balanced, but in some areas it has become a seller’s market."

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Total housing inventory at the end of April rose 9.5% to 2.54 million, a seasonal increase that represents a 6.6-month supply at the current pace, up from a 6.2-month supply in March.

The national median existing-home price for all housing types jumped 10.1% to $177,400 in April from a year ago. The March price showed an upwardly revised 3.1% annual improvement.

"A diminishing share of foreclosed property sales is helping home values," Yun said. "Moreover, an acute shortage of inventory in certain markets is leading to multiple biddings and escalating price conditions." He notes some areas with tight supply include the Washington, D.C., area; Miami; Naples, Fla.; North Dakota; Phoenix; Orange County, Calif.; and Seattle. "We expect stronger price increases in most of these areas."

London's FTSE was rising 1.3%, and the DAX in Germany advancing 1.1%.

The Hang Seng Index in Hong Kong settled up 0.6%, and Japan's Nikkei average closed up 1.1%.

Earlier, Fitch downgraded Japan's credit rating, pointing to the nation's mounting public debt and slow response to stemming it.

Fitch cut Japan's long-term foreign currency rating to A+ from AA and lowered the country's local currency ratings to A+ from AA-. Both were reduced with a negative outlook.

In other news on Japan, the Organization for Economic Cooperation and Development said in an economic outlook report that it predicts the country's gross domestic product will expand by 2% in 2012 and 1.5% in 2013.

However, the Paris-based think tank forecasts that eurozone gross domestic product will shrink by 0.1% this year after previously calling for growth of 0.2%.

"The crisis in the eurozone remains the single biggest downside risk facing the global outlook," said Pier Carlo Padoan, chief economist at the OECD. He said that the eurozone could spiral towards a 2% economic contraction this year.

The benchmark 10-year Treasury was falling 8/32, lifting the yield to 1.774%. The greenback was up 0.3%, according to the dollar index.

The July crude oil contract was down 47 cents at $92.39 a barrel. June gold futures were down $12.40 to $1,576.30 an ounce.

In corporate news, Williams-Sonoma (WSM) reported first-quarter earnings of $30.7 million, or 30 cents a share, compared with year-earlier earnings of $31.6 million, or 29 cents. Without what the company called "unusual business events," first-quarter earnings per share were 34 cents, up from 30 cents last year. Revenue in the quarter was $817.6 million.

The upscale San Francisco home products retailer was expected to report fiscal-first-quarter​ profit of 32 cents a share on revenue of $811.7 million.

Williams-Sonoma said it anticipates fiscal 2012 adjusted earnings of $2.42 to $2.49 share, up from its previously estimates of $2.37 to $2.47 a share.

Facebook (FB) remained well below its offering price of $38 Tuesday after making a shaky public debut Friday. Shares of the social network lost roughly 11% Monday.

Bayer and Onyx Pharmaceuticals (ONXX) said a late-stage clinical study evaluating Nexavar failed to show the drug can prolong the lives of patients with lung tumors.

Specialty retailer Urban Outfitters (URBN) on Monday posted first-quarter profit that topped analysts' expectations. Urban Outfitters earned $34 million, or 23 cents a share, for the three months ended April 30, 3 cents above analysts' views.

Dell (DELL) posts fiscal-first-quarter​ earnings after Tuesday's close, and analysts expect the PC maker to earn 46 cents a share on revenue of $14.91 billion.

Electronics retailer Best Buy (BBY) reported earnings per share of 72 cents, beating the average analyst estimate of 59 cents. Revenue rose 2% to $11.61 billion, boosted by an extra week, beating the Wall Street target of $11.50 billion. The company has reaffirmed its 2013 net income forecast of $3.50 to $3.80.

Many people who saw my documentary Inside Job found that the most disturbing portion of the film was its revelation of widespread conflicts of interest in universities, at thinktanks, and among academic experts. Viewers who watched my interviews with eminent professors were stunned at what came out of their mouths.

Yet we should not be surprised. Over the past couple of decades medical professionals have amply demonstrated the influence money can have in a supposedly objective, scientific field. In general, medical schools and journals have responded well, adopting disclosure requirements. The economics discipline, business schools, law schools and political science schools have reacted very differently.

Over the past 30 years, significant portions of American academia have deteriorated into "pay to play" activities. These days, if you see a famous economics professor testify in Congress, or write an article, there is a good chance he or she is being paid by someone with a big stake in what's being debated. Most of the time, these professors do not disclose these conflicts of interest, and most of the time their universities look the other way.

Half a dozen consulting firms, several speakers' bureaus and various industry lobbying groups maintain large networks of academics for hire for the purpose of advocating industry interests in policy and regulatory debates. The principal industries involved are energy, telecommunications, healthcare, agribusiness – and, most definitely, financial services.

Some examples. Glenn Hubbard became dean of Columbia Business School in 2004, shortly after leaving the George W Bush administration. Much of his academic work has been focused on tax policy. A fair summary is that he has never seen a tax he would like. In November 2004 Hubbard co-authored an astonishing article, jointly with William C Dudley, then chief economist at Goldman Sachs. The article, How Capital Markets Enhance Economic Performance and Facilitate Job Creation, warrants quotation. Remember, this is November 2004, with the bubble well under way: "The capital markets have helped make the housing market less volatile ... 'Credit crunches' of the sort that periodically shut off the supply of funds to home buyers … are a thing of the past."

Hubbard refused to say whether he was paid to write the article. He also refused to provide me with his most recent government financial disclosure form, which we could not obtain otherwise because the White House had destroyed it. Hubbard was paid $100,000 (£63,000) to testify for the criminal defence of two Bear Stearns hedge fund managers prosecuted in connection with the bubble, who were acquitted. Last year, Hubbard became a senior economic adviser to Mitt Romney's presidential campaign.

Larry Summers has held almost every important government position in economics. Treasury secretary under President Clinton, in 2009 he became director of the National Economic Council in the Obama administration.

Although sensible about many issues, Summers has made a succession of well-documented mistakes and compromises. And his views on the financial sector would be hard to distinguish from those of, say, [Goldman Sachs chief] Lloyd Blankfein or [JP Morgan boss] Jamie Dimon.

Most of our information about Summers comes from his mandatory government disclosure form. Summers' 2009 disclosure form stated his net worth to be $17m-$39m. His total earnings in the year prior to joining the government were almost $8m. Goldman Sachs paid him $135,000 for one speech.

Summers is a compromised man who owes most of his fortune and much of his political success to the financial services industry, and who was involved in some of the most disastrous economic policy decisions of the past half century. In the Obama administration, Summers opposed strong measures to sanction bankers or curtail their income.

Harvard still does not require Summers to disclose his financial-sector involvements. Both Harvard and Summers declined my requests for information.

The problem of academic corruption is now so deeply entrenched that these disciplines, and leading universities, are severely compromised, and anyone considering bucking the trend would rationally be very scared. Consider this situation: you're a PhD student, or a junior faculty member, considering doing some research on, say, compensation structures on risk-taking in financial services, or the potential impact of public disclosure requirements on the market for credit default swaps. The president of your university is … Larry Summers.

The chairman of your department is …Glenn Hubbard. Or you're at MIT, and you want to examine the decline in corporate tax payments. The president of MIT is Susan Hockfield, on the board of GE, a company that has managed to avoid paying hardly any corporate taxes for several years.

How much do these forces actually affect academic research and policymaking? The available evidence suggests that the effect is large.

Academic commentary on the financial crisis by economists has been remarkably muted. There are, to be sure, some notable exceptions. But for the most part, the silence has been deafening. How can an entire industry come to be structured such that employees are encouraged to loot and destroy their own firms? Why did deregulation and economic theory fail so spectacularly?

The release of the film Inside Job clearly touched a nerve with regard to these questions. I was contacted by a large number of students and faculty, and there has been a great deal of debate. Departments including the Columbia Business School have adopted disclosure requirements for the first time. But most universities still have no such requirements, and few if any have any limitations on the existence of conflicts of interest. The same is true of most academic publications. Newspaper reporters are strictly prohibited from accepting money from any industry or organisation they write about.

Not so in academia.

There has been one significant positive development. Earlier this year, the American Economics Association adopted a disclosure requirement for the seven journals it publishes. But most institutions continue to oppose further disclosure and, when I was making my film, refused even to discuss the subject.

This is an edited extract from Inside Job: the Financiers Who Pulled Off the Heist of the Century by Charles Ferguson, published by Oneworld at £12.99. Order a copy for £10.39 with free UK p&p here or call 0330 333 6846. Charles Ferguson will appear at the Edinburgh international book festival on Sunday 12 August.

Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.

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