Get this: insurance companies have long been very big institutional investors. They get cash from premiums and have to pay it out in the future. If they are in the property and casualty or health insurance business, there isn’t that long a time between premium payments and when the losses might show up, but other […]
Read more...Now it is getting closer to being official. This Bloomberg story reports that not only do Wall Street firms screw their clients (hardly a novel revelation these days) but a large group of firms allegedly conspired to price-fix on guarantee investment contracts, a product used by government issuers to park cash raised via bond issues […]
Read more...A post by Edward Harrison Greek Prime Minister Papandreou asked the European leaders to "put the loaded gun on the table" at this summit i.e. do something concrete to ward off speculators. So they have. The deal which European leaders have now struck is the best we could have hoped for given the political constraints […]
Read more...The current number one non-fiction best seller, Michael Lewis’ The Big Short: Inside the Doomsday Machine, addresses the question “Who got it right? Who saw the real estate market for the black hole it would become, and eventually made billions from that perception?” It is hailed as meeting the usual Lewis high standards of engaging […]
Read more...Economists are often in the “it works in practice, but does it work in theory?” mode, but here we see a case where some are grappling with why some of their prized notions pre-crisis came a cropper. A clever post at VoxEU discusses why financial innovation isn’t what it is cracked up to be, and […]
Read more...While we have enjoyed a period of relative calm after the 2007-2008 financial crisis, the improvement in economic conditions exists in parallel with growing geopolitical tensions. None of the causes of the crisis have been resolved. We still have global imbalances. We still have powerful, predatory, and unconstrained capital markets players firmly in control of […]
Read more...By Eliot Spitzer, former governor of New York who blogs for Slate.com and guest posts on New Deal 2.0, and Josh Rosner, the managing director of an independent financial services research firm It doesn’t take a rocket scientist — and certainly not an accountant — to deduce one thing from the Lehman scandal. The misleading […]
Read more...The so-called Valukas report on the Lehman bankruptcy has put a harsh light on the final months of the floundering firm and the regulators who stepped up their oversight, in particular, the New York Fed. Some of the NY Fed’s moves have been so indefensible as to in and of themselves warrant full bore investigation. […]
Read more...So which theory is it: stunning bureaucratic incompetence, wishful thinking and denial (a better gloss on theory #1) or a cover up? Or a combination of the above? No matter which theory or theories you subscribe to, the continuing revelations of how the SEC and perhaps more important, the New York Fed conducted themselves in […]
Read more...The Lehman Examiner’s report gives an unintentionally damning portrayal, both of the the structure of financial regulation in the US and how regulators failed to use the powers they had effectively. Section III.A.6: Government shows that even with its imperfect grasp of the situation, the authorities recognized Lehman had a large negative net worth. Yet […]
Read more...A reader wrote to tell me his firm had been shown transactions at the end of 2007 from an investment bank (not Lehman) that he was confident were to tart up its balance sheet. This confirms the hardly shocking idea that window dressing was not limited to Lehman: Around Dec 2007 bank I work for […]
Read more...By Rob Parenteau, CFA, sole proprietor of MacroStrategy Edge, editor of The Richebacher Letter, and a research associate of The Levy Economics Institute This 2009 analysis by UBS, presented in FT Alphaville, debunks a central tenet of the deficit terrorist camp: If the deficit terrorists were correct, there should be a much more defined population […]
Read more...Relations between the US and China have been deteriorating. Although both sides have poked each other in various ways (Obama meeting with the Dalai Lama, China dissing Obama in Copenhagen by standing him up for a meeting, some tit for tat on tariffs), the major, unresolved bone of contention is China’s pegging of its currency, […]
Read more...By Frank Partnoy, Professor of Law and Finance University of San Diego School of Law and author of Fiasco, Infectious Greed, and The Match King The buzz on the Lehman bankruptcy examiner’s report has focused on Repo 105, for good reason. That scheme is one powerful example of how the balance sheets of major Wall […]
Read more...I chatted at the Book Salon on FireDogLake on Saturday (yes I screwed up completely in not notifying Naked Capitalism readers). The conversation was hosted by masaccio and led to a wide ranging discussion. The chat started with his summary of the book: Yves Smith brings the same clear and concise writing to ECONned: How […]
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