Category Archives: Free markets and their discontents

Fed Disqualifies Itself as Systemic Risk Regulator

If anyone had any doubts as to whether the Federal Reserve should assume the role of systemic risk regulator, a comment in the Financial Times by Board of Governors member Kevin Warsh, based on a speech he is to give later today, puts the matter firmly to rest. No matter how logically positioned a central […]

FDIC Proposes Tough-Minded Securitization Reforms; Industry Howls

As readers may know, the financial reforms proposed by the Obama administration barely deserve the name. The late-in-the-game efforts to rebrand the effort by putting Paul Volcker in the forefront and patch up one of the gaping holes, that the government is backstopping risky trading businesses (Goldman Sachs has issued FDIC guaranteed bonds) illustrates the […]

Lloyd Blankfein: $100 Million Man?

The folks at Goldman, and Blankfein in particular, really do not get it. From Times Online: Goldman Sachs, the world’s richest investment bank, could be about to pay its chief executive a bumper bonus of up to $100 million in defiance of moves by President Obama to take action against such payouts. Bankers in Davos […]

Volcker Does Not Get It

Paul Volcker has an op-ed in the New York Times that made my stomach sink. I had considerable hopes for Volcker’s involvement in financial reform; he’s one of the few regulators with the stature (literally and figuratively) who can say things to bankers, the media, and government officials that are unpalatable yet need to be […]

UK Claims Global Support Increasing for Transaction Tax

We’ve said that a Tobin tax, meaning a tax on transactions, could help both as a financial reform measure and as a tax generator. The logic is that trading, particularly OTC trading, involves costs (periodic taxpayer-funded bailouts) that are not borne by the buyers and seller (ie, they should be paying for rescue insurance as […]

Steve Keen: The Economic Case Against Bernanke

By Steve Keen, Associate Professor of Economics & Finance at the University of Western Sydney and author of Debunking Economics: The Naked Emperor of the Social Sciences The US Senate should not reappoint Ben Bernanke. As Obama’s reaction to the loss of Ted Kennedy’s old seat showed, real change in policy only occurs after political […]

Administration Bank Tax Plan: An Empty Populist Gesture by Design?

With its talk of new taxes on banks, is Team Obama reverting to its now well established pattern of crony capitalist giveaways with the occasional phony populist reform as an increasingly ineffective disguise? The extraordinarily unenthusiastic, perhaps inept by design, discussion of its plans to tax banks in some yet undetermined manner certainly says so. […]

UK Not Backing Down in Row Over Banker Pay

Bankers ’round the world howled when the UK imposed a one-time 50% bonus supertax. The levy was meant as a shot across the bow, to warn the firms that were posting generous earnings in large measure thanks to government assistance (particularly super low interest rates) to act sensibly. The officialdom’s message was that financial firms […]

Hawks at the Fed Warn Re Inflation, Bubbles

Although investors have been worried about the Fed’s exit strategy for some time, you wouldn’t see much evidence if you looked at the markets. While gold prices are an exception, the stock market appears to reflect optimism about recovery (although cynics would say it really is a function of liquidity, not fundamental views). Either premature […]

Limiting the destruction wrought by irrational exuberance in a one-party state

By Edward Harrison of Credit Writedowns As a writer, Matt Taibbi is a lot more vitriolic than I am. He curses, makes some pretty over-the-top personal attacks, and divines a policymaker’s intent where I don’t think he can. But, this goes mostly to style. Substantively speaking, he has a lot to say and we should […]

“WWKD – What Would Keynes Do”

By Satyajit Das, a risk consultant and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives Keynes: The Return of the Master By Robert Skidelsky (2009) John Maynard Keynes is having an excellent crisis. Dead for over a half a century, the British economist is enjoying a comeback as […]

Tainted Burgers Show That Corporate Profits Trump Public Safety (Cargill and McDonalds Edition)

Reader Crocodile Chuck pointed out a set of articles at the New York Times that illustrates how skewed priorities in America have become. They also reveal how little public ire there is in the face of large-scale abuses that affect the average Joe. If corporate prerogatives cannot be reined in when personal safety is at […]

“Reviving Confidence in the American Economy – China, Investment and the Deficit Hawks”

By Robert Johnson, former chief economist of the Senate Banking Committee and Senior Economist of the Senate Budget Committee who writes at New Deal 2.0. Since the early 1980s, rises in the living standard of middle class United States citizens have not kept up with the gains in labor productivity. Wages in the middle class […]

Is kleptocracy a relevant term for discussion about the origins of the crisis?

By Edward Harrison of Credit Writedowns Yesterday, I indicated I would write a few thematic posts as a look back at some of the more important economic topics that this credit crisis has uncovered. Tying posts together in a theme definitely gives a better holistic view of a the themes than the posts do in […]