Category Archives: Free markets and their discontents

When is a Fraud Not a Fraud? (Greece-Goldman Edition)

The short answer to the question in the headline is “When there are no rules.” A headline in a current Bloomberg story illustrates the problem: “Goldman Sachs, Greece Didn’t Disclose Swap, Investors ‘Fooled’.” “Fooled” is an unusual choice of words, particularly when applied to to presumed grown-ups like institutional investors and international overseers. Bloomberg seems […]

Alford: My Nominee for Worst Macro Paper, Ever (Courtesy the Fed’s Ministry of Truth)

By Richard Alford, a former economist at the New York Fed. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side. It is award season and I would like to nominate the 13-author “Preventing Deflation: Lessons from Japan’s Experience of […]

Auerback: Will We Have to Blow Up a Continent (Again) Before We Stop Wall Street?

By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0. Surprise, surprise: Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece, Spain, Portugal, and undermined the euro by enabling European governments to hide their mounting debts. This has now […]

Unwinding Global Imbalances

Several readers pointed to a recent post by Michael Pettis, which mainly discussed how expected wage increases in China are a hopeful sign that China is taking steps to become more consumption-oriented. But as much as this is a move forward, changing the mix of China’s composition of demand is at least a decade-long project […]

Open Source Inquiry Opportunity: Some of Goldman’s Greece Swaps Made Public

In a New York Times op-ed late last year, Bill Black, Frank Partnoy, and Eliot Spitzer called for an open source investigation: we know where the answers are. They are in the trove of e-mail messages still backed up on A.I.G. servers, as well as in the key internal accounting documents and financial models generated […]

One American Growth Industry: Lobbying

It turns out some businesses are thriving in the downturn, with lobbyists a prime example. According to the Center for Responsive Politics, lobbyist revenues increased 5% in 2009 versus 2008. As The Hill noted (hat tip DoctoRx): Lobbyists have said business for them managed to remain upbeat throughout 2009 despite the poor economy because of […]

Schwarzman Says Kowtow to Banks or They Will Strangle the Economy

Can someone shut these banking industry narcissists up? The one and only time I met Steve Schwarzman was in 1986, when he and Pete Peterson had just started the Blackstone Group. I was a manager (meaning a mid level working oar) at McKinsey. We had teed up a deal and were assisting our foreign client […]

Das: “Trading Places”

By Satyajit Das, a risk consultant and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives False Economy: A Surprising Economic History of the World by Alan Beattie Misadventures of the Most Favoured Nations: Clashing Egos, Inflated Ambitions, and the Great Shambles of the World Trade System by Paul […]

Is the Need for Simple Stories Getting in the Way of Banking Reform?

Let’s acknowledge the obvious: there are a lot of not trivial impediments to reining in the banking industry: the deregulation policies that put a comparatively small number of firms in charge of infrastructure critical to commerce; the fact that said firms have done a very good job at disguising the rents they collect; that those […]

Are Greek Sovereign Debt Tremors a Start of a New Phase of the Crisis?

After the months of buoyant markets, a return to crisis-type headlines seems troublingly familiar, even though the perturbations of the last day or so are a pale shadow of the worst months of the crisis. And some are making the bull case. For instance, a headline at Clusterstock trumpetss, “Yesterday’s Bloodshed Sent The VIX Soaring […]

Alford: “Why Bernanke Should Resign”

By Richard Alford, a former economist at the New York Fed. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side. There was a long period of time during which I believed that Mr. Bernanke should have resigned the Chairmanship […]

Rosner: “Has the New York Fed been serving the public trust? Has Geithner?”

By Joshua Rosner, a managing director of an independent financial services research firm who writes for New Deal 2.0 In Geithner’s AIG testimony before the House Oversight Committee, the Secretary again tried to sell the notion that ‘if we didn’t act then, millions more would have lost their jobs and thousands of factories would have […]