I’ve seldom seen so much rubbish written by people who ought to know better in a single day. Many critical thinkers have heaped the scorn and incredulity on three articles, one a piece on Rahm Emanuel slotted to run in the Sunday New York Times Magazine, another an artfully packed laudatory piece on Timothy Geithner […]
Read more...A post by Edward Harrison About a month ago I wrote a post called “The coming wave of second mortgage writedowns” the gist of which was that the big four banks (Citi, JP, BofA, and Wells) had a shed load of exposure to now worthless second mortgages. With many first mortgages now hopelessly underwater, it […]
Read more...By Richard Smith, a London-based capital markets IT specialist Hmm, I wonder if Yves’s resolution authority post will become the econoblogosphere’s equivalent to Clochemerle’s shattered urinal and its entourage of rioters. Surely not; yet it’s impressive how often such modest, utilitarian objects – a pissoir, a blog post about a financial reform proposal – can […]
Read more...Self-deception is a remarkably useful form of mental disturbance. Calculated liars have to keep their stories straight, while the deluded are sincere and often unshakable in their misguided beliefs. The Powers That Be insist that a magic bullet called a special resolution authority will solve many of the problems with the “heads I win, tails […]
Read more...The Financial Times give us yet another sorry update in the bankster vs. the general public saga, and the banksters continue to gain ground. Their latest about-to-be-cinched victory is beating back a pro-reform idea sponsored by Senator Dodd (yes, even he can have the occasional “Nixon Goes to China” moment). Dodd had wanted bank regulation […]
Read more...Gretchen Morgenson has a fair number of critics among readers of this blog, which I think is a tad unfortunate. Most of her articles are in fact sound; she is very reliable on executive comp, anything in the equity markets, or where she is working form legal documents, generally lawsuits. It’s when she wanders into […]
Read more...By Satyajit Das, a risk consultant and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives A question of values… Derivative contracts are valued on a mark-to-market (“MtM”) basis. This requires valuation of the contracts based on the current market price. OTC derivatives trade privately. Market prices for specific […]
Read more...The Fed, having performed abysmally in recognizing the growth of a global debt bubble, and then having botched the early-stage reactions (after each of the first three acute phases, it went into Mission Accomplished mode), now is pushing not simply to hold its turf, but expand its sphere of influence. From the New York Times: […]
Read more...I felt certain when I read the Financial Times headline, “Proposal sees consumer watchdog role for Fed,” that I must have woken up in a bizarre parallel universe (but that is probably unfair to pretty much all universes parallel to ours: I imagine it would be very difficult to have one more perverse than ours). […]
Read more...I’ve missed Willem Buiter, who offered wonderfully trenchant commentary at his Financial-Times hosted blog, only to be forced into dreary moderation (at least in his public pronouncements, I suspect his has difficulty containing himself in private) by taking a job as Citigroup’s chief economist. Buiter has long been concerned about the vulnerability of the UK, […]
Read more...Credit default swaps played a much more central role in the financial crisis than is widely understood, and they continue to get a free pass in financial reform proposals that they do not deserve. As we have discussed on this blog, and recount in more detail in the book ECONNED, central clearing and/or putting them […]
Read more...We have pointed out more than once that a major impediment to reform of the financial services industry is that a small number of firms control infrastructure crucial to modern capitalism: 1. Credit is essential to any society beyond the barter stage 2. Debt markets are now at least as important in providing credit as […]
Read more...From the Independent: Chief executives from the world’s banks discussed the plans at a secret dinner held at Claridge’s, the London hotel, last October, at which several leading British bankers are said to have suggested that the sector should take greater responsibility for its part in the crash, and do more to reduce the vast […]
Read more...Bloomberg reports that former Treasury Secretary and Citigroup board member Robert Rubin will be summoned before the Financial Crisis Inquiry Commission in April, with Alan Greenspan and Chuck Prince likely to be tapped as well. On the one hand, it’s a welcome sign that the FCIC will be interviewing many of the major figures responsible […]
Read more...By Edward Harrison of Credit Writedowns Over the past few days, a number of major European banks have announced earnings results. Two of the most dismal results were registered at the British company Royal Bank of Scotland (RBS) and at Germany’s Commerzbank. However, the similarity ends there because, while Commerzbank investment bankers received no bonus, […]
Read more...