Willem Buiter argues that the focus on oil and food price shocks, which economists view as relative price changes rather than inflation, is muddying the discussion about inflation. He sees considerable evidence of widespread inflation and it’s central bankers’ fault. From Buiter: Inflation is rising just about everywhere. Why is this and what can be […]
Read more...Jim Hamilton must feel like a Cassandra. Last August, he warned that the GSEs were in danger of having the ambiguous status of their implied guarantee tested. That came in January, and was finessed with various new Fed facilities. Hamilton has also warned repeatedly that the Fed needs to consider institutional reform, not merely bailing […]
Read more...The fulminating over what to do about our miscreant socialized unrepentant and as yet unreconstituted financial services sector continues. Since massive subsidies have been extended in the form of help to the mortgage business and an alphabet soup of Federal Reserve facilities, with nary a demand made of the beneficiaries of this largess, it seems […]
Read more...Someone needs to tell Microsoft to behave. By way of background, in December 2004, Microsoft lost its final appeal on an EU antitrust case in which it was found guilty of tying its operating system to its media player, undermining competition and hurting consumer choice, and for failing to give rivals the information they needed […]
Read more...One of our pet interests has been how the use of mathematics and models can unwittingly enable people to fool themselves. We see this regularly when working on deals. The model for the target business’ performance somehow becomes more real than the company. When the numbers don’t work, if you can come up with a […]
Read more...Martin Feldstein, who as a Chairman of the Council of Economic Advisers under Reagan and an advocate of Social Security reform, has been a surprisingly open critic of the Fed’s and Bush Administration’s responses to our current economic woes. Feldstein has been regularly writing op eds opposed to some of the viewpoints and actions of […]
Read more...At VoxEU, Luigi Spaventa makes a forceful case that the remedies to the credit crisis are provisional at best and more work needs to be done: The global financial system may be caught in a downward spiral as market and funding illiquidity reinforce each other… Prolonged financial distress, which has now lasted for almost a […]
Read more...MBIA has brazenly advanced its own interests at the expense of investors and policyholders. A partial list: Issuing a disappointing earnings release in the middle of the night in the hopes that it would garner less attention that way Asserting it needed no more capital while the Dinallo-led “save the monolines” effort was still underway. […]
Read more...Below is a provocative line of thought from an anonymous reader. It supports a gut feeling that I have been unable to prove, namely, that lowering of boundaries between markets (ranging from the large number of global macro hedge funds to the large number of retail currency speculators in Japan) is destabilizing. I’ve found the […]
Read more...I get worried when the Financial Times’ Martin Wolf starts adopting Stephen Covey-esque sloganeering, particularly when he goes so far as to call his financial services reform proposal “the seven Cs.” Eeek. Earth to UK: one of the big hidden advantages you have is that the lingua franca is your language. That cloying business jargon […]
Read more...It’s amazing how a problem isn’t a problem until it’s presented as one on television or a respected print outlet. Never mind the fact that the cognoscenti have been worried about the possibility that the two big mortgage guarantors, Fannie Mae and Freddie Mac, were too thinly capitalized relative to their massive balance sheets. Never […]
Read more...Although we have spoken from time to time about the managerial and cultural failings of the financial services industry, an article today in the Telegraph by Roger Bootle provides a nicely balanced, colorful, and deceptively insightful overview of the issue, while also giving a taste of how the British variant of the problem differs from […]
Read more...The headline above may overstate the case a tad. I sincerely doubt the Milken Institute took much note of last Friday’s offering, Hubris, Denial, and the Financial Services Culture. They had plenty of coverage by the mainstream media and reportedly regard blogs with some skepticism (the person who was responsible for our panel on econobloggers […]
Read more...The “end of the credit crisis” apostates looks to be a small and shrinking group (and we don’t mean just the downbeat but nevertheless accurate Nouriel Roubini or Michael Panzner). I’m amazed our number is as small as it is, given the overwhelming counterevidence in the form of the increase in the Term Auction Facility […]
Read more...Here we are, in the midst of the worst financial crisis since the Great Depression, and what do we see? Central banks madly pumping water out of leaky, listing vessels, some discussion of how to patch the most visible holes, but perilous little consideration of how to correct the defects of construction, poor choice of […]
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