Author Archives: Lune

Guest Post: Congressional Legislation Part II

Submitted by Lune. As promised, the following is part II about the legislative process. While the first post was primarily about how Congress gathers information, this post will look at some of the forces affecting Congress’s ability to create good legislation. As you’ll quickly notice, IMHO, the news isn’t very good… Anyone who watches Congress […]

Guest Post: Congressional Hearings, the New American Kabuki

Submitted by Lune (N.B.: this post, and a subsequent Part II regarding the legislative process, are focused on the political processes of DC rather than economics per se. However, to the extent that the future of the financial world is now being determined in Washington, I figured there might be some value for Naked Capitalism’s […]

Guest Post: The Fed’s New Tool to Fight Inflation?

Submitted by Lune. As the Fed embarks on quantitative easing, a large number of economists have voiced concerns about the resulting inflation that we may face once the economy starts to recover. The traditional tool for fighting inflation is contracting the money supply, usually by decreasing the reserves available, thus constraining the total amount of […]

Guest Post: The Taxman Cometh, and a Brewing Revolt by Congress?

Submitted by Lune Roll Call is reporting (subscription required) that the House and Senate are taking up measures for taxing bonuses paid out by companies in 2009 that accepted bailout money: House and Senate leaders moved at breakneck speed Wednesday to turn outrage over bonuses at American International Group and other bailed-out companies into retribution, […]

Guest Post: UK Embarks on Quantitative Easing

Submitted by Lune On March 5th, the Bank of England announced that for the first time in its >300 year history, it will begin quantitative easing to lower interest rates and increase the UK’s money supply. Details from The Telegraph: The Bank’s Monetary Policy Committee voted to cut interest rates by half a percentage point […]

Guest Post: Moral Hazard Now Biting GM

Submitted by Lune This blog and many other authors have pointed to the large moral hazards that the federal government’s actions have created so far. It was typically expected that these moral hazards would play out in the next cycle of boom/bust, with financial players taking bigger risks for their own gain while expecting public […]

Project Turquoise: Priming the pump for the next bailout

One of the primary lessons we are learning from the current financial debacle is that the lack of transparency in the OTC derivatives markets is one of the big reasons for the complete breakdown of those markets. Furthermore, the lack of appropriate oversight into those markets allowed problems to fester rather than being noticed and […]

Links of the Day 8/6/08

Now we’ve hit crisis proportions!Hobbit Crisis: The Shire in Foreclosure Citi may be the first to cut a deal with the states over auction-rate securities. Could others follow? And how much will the ultimate settlement be?Citi Talks With Regulators May Bring Billions in Buybacks In case your dog died, your wife left you, and your […]

Futures vs CDSs: the case for regulated markets

In less than a month, NYMEX crude oil futures have dropped about 15% in value. Other commodities ranging from precious metals to agriculture have had significant drops as well. Even for the traditionally volatile commodity markets, this is somewhat unusual and has led many people to scratch their heads to figure out what’s happening. Is […]

Bernanke facing revolt over inflation?

According to the Times, U.S. inflation hit a 27 year high in June: Inflation jumped by 0.8 per cent in the month of June, the most since February 1981, when prices rose by 1.0 per cent, according to the Commerce Department. Bloomberg reports today that while the Fed will likely keep interest rates unchanged for […]

Oil below $120: Has the commodities bubble been pricked?

NYMEX Crude oil futures dipped below $120 today for the first time since May. Furthermore, Bloomberg reports that “Plunging prices for cocoa, natural gas and sugar are sending the Reuters/Jefferies CRB Index of 19 commodities to it biggest one-day decline since March.” Bloomberg cites the slowing U.S. economy, rising inventories, and prospects for improved production […]

Quelle Surprise! Greenspan warns about the dangers of regulation

(Apologies to Yves, but I believe she would have tagged it similarly) Despite the mounting evidence that the worst financial crisis since the Great Depression was at least exacerbated by the lack of appropriate regulation and oversight in numerous markets ranging from the home mortgage lending to the securitization process to OTC derivatives markets to […]

Central Bank Transparency: Good or Bad?

Submitted by Lune… As central banks become more important in dealing with our global financial crises, one important question is how transparent the central banks’ decision-making process should be to the public. Americans had grown used to the cryptic statements of Mr. Greenspan in his day, and the merest pause or grumble would be solemnly […]

More Troubles for Banks from Auction Rate Securities

Submitted by Lune… Yves had previously posted about Massachusetts suing Merrill Lynch over auction-rate securities. A new Financial Times post indicates that Citi is in hot water with New York over the same instruments: Citigroup was on Friday accused of destroying records subpoeaned by Andrew Cuomo, the New York attorney-general, who intends to sue the […]