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. The recent financial crisis has shown that the legal and regulatory steps that have been taken to provide information […]
Read more...But opacity, leverage, and moral hazard are not accidental byproducts of otherwise salutary innovations; they are the direct intent of the innovations. No one at the major capital markets firms was celebrated for creating markets to connect borrowers and savers transparently and with low risk. After all, efficient markets produce minimal profits. They were instead […]
Read more...By Tom Adams, an attorney and former monoline executive, and Yves Smith Despite extensive credit crisis post mortems, many of the widely accepted explanations of what happened are at odds with facts on the ground. These superficial explanations are hard to dislodge because they tally with widely held beliefs about how the real estate and […]
Read more...By Tom Adams, an attorney and former monoline executive The SEC’s complaint against Goldman Sachs on its Abacus 2007 AC1 transaction may have impact beyond just the facts in that particular deal. The case has touched off a firestorm of reaction across the globe now that a government enforcement agency has dared use words like […]
Read more...By Yves Smith and Tom Adams, an attorney and former monoline executive Both the traditional media and the blogosphere have taken an almost obsessive interest in the suit the SEC filed against Goldman last week with regard to one of its synthetic real estate related CDOs, Abacus 2007 AC1. Goldman’s shares and the stock market […]
Read more...Things are suddenly getting very interesting… Readers may have taken note that the Treasury has launched a son of HAMP, its ineffective program to get banks to provide undertake mortgage modifications, called 2MP. As far as I can tell, 2MP is a farce. It is simply another back door way to recapitalize troubled banks. Mike […]
Read more...Enjoy! Below is a related discussion by Ann Rutledge of R&R Consulting, another structured credit expert:
Read more...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...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...It is long overdue, but big institutional investors are finally rebelling against the outsized fees charged by large private equity firms. Since the moneybags are an understated lot, their protest, so far, looks rather tame. But by the standards of this clubby world, this is still a serious move. Originally, when funds were smaller, the […]
Read more...We’ve had (depending on when you define the starting point) at least two decades of a concerted push by the US towards more open capital markets (no doubt based not simply on the belief that the Anglo/Saxon model was superior, but also on the notion that US financial firms would come out on top). Many […]
Read more...By Tom Adams, an attorney and former monoline executive I’m usually cynical about these “genius of Wall Street” articles, but the Vanity Fair article “Larry Fink’s $12 Trillion Shadow” by Suzanna Andrews, about the head of the world’s largest money manager, BlackRock, raises the cliche to another level. My skepticism results both from the disconnect […]
Read more...OK sports fans, I’m old school. When I grew up, the uptick rule was in place, and no one seemed troubled by it. The uptick rule simply means that a short sale can be executed only when the last sale of a stock is at a higher price than the immediately preceding sale. It was […]
Read more...Are we going to finally start seeing some pointed mainstream media coverage of the Administration’s limp wristed, industry-favoring financial “reform” plans? While it has been woefully slow in coming, the answer appears to be yes. One has to wonder whether the more skeptical coverage follows the increasing evidence that things may not be working out […]
Read more...By Satyajit Das, a risk consultant and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives Wall Street Revalued: Imperfect Markets and Inept Central Bankers by Andrew Smithers (2009) The Road to Financial Reformation: Warnings, Consequences, Reforms by Henry Kaufman (2009) In a sense, this crisis is about values […]
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