Monthly Archives: September 2009

Obama caves to pressure on consumer financial protection

Submitted by Edward Harrison of Credit Writedowns At issue here is the news that the Obama Administration dropped plans to force financial institutions to offer “plain vanilla” financial products that are simple enough for consumers to understand. My headline is editorial enough on this issue.  So, rather than editorialize this latest announcement, I’ll quote from […]

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Paul Volcker, Lord Turner & the EU’s new take on the intoxicating effects of global finance

The following is a submission from Naked Capitalism contributor Swedish Lex. While some observers of U.S. politics lament the lack of progress in reforming the country’s financial system, the European financial industry has abruptly awoken to the EU’s new resolve re-shape the continent’s financial system. How far and how fast the EU intends to go […]

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Guest Post: William K. Black’s Proposal for “Systemically Dangerous Institutions”

By George Washington of Washington’s Blog. William K. Black, Associate Professor of Economics and Law at the University of Missouri – Kansas City, and the former head S&L regulator, has written the following fantastic new proposal concerning the giant, insolvent banks. Posted/reprinted with Professor Black’s permission. William K. Black Associate Professor of Economics and Law […]

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Guest post: Blame the Regulators

Below is a guest contribution by reader Michael Dokupil. Michael points out that ratings agencies and banks are incented to support a market in so-called toxic assets rated triple-A because of a strange regulatory arbitrage. Basel II rules allow a bank to keep much less capital on hand to support AAA assets than is necessary […]

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Guest Post: Deflation?

By George Washington of Washington’s Blog. As Absolute Return Partners wrote in its July newsletter: The most important investment decision you will have to make this year and possibly for years to come is whether to structure your portfolio for deflation or inflation. So which is it, inflation or deflation? This is obviously a hot […]

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Railroad Traffic Decline Accelerates (Withering Green Shoot Watch)

One indicator of commercial activity is shipments, such as train and truck traffic. Reader Marshall Auerback provided this sighting which shows that the decline in shipments is accelerating. Note that one of the general reasons for optimism is that many indicators are getting worse less quickly and some appear to be stabilizing. Now this is […]

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The FDIC to get credit from banks even while banks restrict lending

Submitted by Edward Harrison of Credit Writedowns In the latest inexplicable move to extricate the U.S. banking system from crisis, the FDIC is reportedly close to asking the very banks it regulates for a loan to top up its balances. The plan is “strongly supported by bankers and their lobbyists” according to the New York […]

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The origin of the U.S. dollar as legal tender and its link to Depression

Submitted by Edward Harrison of Credit Writedowns I have been very interested in the concept of legal tender of late because of the revelation this summer that the State of California was issuing I.O.U.’s to honour its debts instead of paying in U.S. Dollars, which are legal tender and I.O.U.’s from the U.S. government (see […]

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Links and Reader Notice 9/22/09

Dear patient readers, I have to drop out for a week. The book stuff is just too much. I have not even looked at Bloomberg today. I have a hard deadline of next Tuesday (publisher is bizarrely rigid, you do not want the shaggy dog story, but trust me, I have tried every leverage point […]

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Guest Post: If Credit is Not Created Out of Excess Reserves, What Does That Mean?

By George Washington of  Washington’s Blog. We’ve all been taught that banks first build up deposits, and then extend credit and loan out their excess reserves. But critics of the current banking system claim that this is not true, and that the order is actually reversed. Sounds crazy, right? Certainly. But as PhD economist Steve […]

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