By George Washington of Washington’s Blog. A 2005 letter in premier scientific journal Nature reviews the research on trust and economics: Trust … plays a key role in economic exchange and politics. In the absence of trust among trading partners, market transactions break down. In the absence of trust in a country’s institutions and leaders, […]
Read more...Even though there has been an increasing level of revolutionary saber-rattling in comments, it’s hard to see what the outlet for the anger against the banking industry will be. The brief surge of letter-writing, e-mails, and calls to Congressmen to forestall the TARP proved useless. But Americans don’t go to the barricades or do general […]
Read more...Dear patient readers, I am currently in Maine. This would normally be a good thing (the house here on the island has great water views, for instance), except I am having to work full time while supposedly on a holiday with some family members. Thus all that has happened is that I have lost productivity […]
Read more...From derivatives expert Satyajit Das of Traders, Guns & Money fame: In the 1980s, the Japanese were taking over the world. In the 1990s, it was going to be an ‘Asian’ century. These days the pundits are betting on the ‘Chinese Age’. Like all such glib predictions, despite their superficial appeal, they mask complex undercurrents […]
Read more...Tim Duy pointed out this priceless remark from AIG’s new CEO, Robert Benmosch: Benmosche told employees that he “had the luxury to say to the government, I’m not going to rush to do this. I’m appalled at how much pressure has been put on all of you to just sell it no matter what, because […]
Read more...Readers may know that William Black, who teaches economics and law at the University of Missouri, Kansas City, has been a vociferous critic of US policy on the financial crisis. In this lecture, he not only revisits one of his favorite topics, fraud, but also examines a wealth transfer from the middle classes to the […]
Read more...Submitted by Marshall Auerback, an investment manager who writes for New Deal 2.0. In “The Holy Grail of Macroeconomics”, Richard C Koo’s account of post-bubble Japan, Koo illustrates that highly indebted corporations with depressed asset holdings and a positive cash flow will embark on sustained debt repayment until their balance sheets are healthy once again. […]
Read more...Reader Alex C sent a link to an article in the Guardian by Mark Weisbrot in which he surveys some recent findings aht disproved cherished myths about the US economy. Two are related to the widely-held fantasy that America is a land of dynamic entrepreneurship. In fact, a recent study found that the US ranks […]
Read more...Rolfe Winkler of Reuters and Louise Story of the New York Times sat in on the hearings on the SEC-Bank of America settlement today. Those who have followed this little drama may recall: Merrill paid its employees bonuses of $3.6 billion prior to the close of the deal with Bank of America. It was very […]
Read more...Japan may be on the verge of some major shifts, The fact that what amounts to one-party rule in Japan appears at an end ought to be significant, but the proof will be in the pudding. The island nation has been ruled by the Liberal Democratic Party for virtually the entire postwar period, with politics […]
Read more...One of the most remarkable aspects of the success of Wall Street in subordinating the real economy to its wishes and needs is the con job implicit in the application of the word “innovation” to what might more accurately be described as tax evasion, regulatory arbitrage, and chicanery. Martin Mayer once described innovation as “using […]
Read more...Americans on average are more liberal than sterotypes about US attitudes would suggest. So why do most Americans, and more important their representatives, act as if the country is conservative-leaning? The cynical take is the most persuasive: while the numbers may be skewed to the left, the money is weighted to the right. With TV […]
Read more...A paradox arises to the extent that it is true that the market is dependent on normative underpinning (to provide the pre-contractural foundations such as trust, cooperation, and honesty) which all contractural relations require: The more people accept the neoclasical paradigm as a guide for their behavior, the more the ability to sustain a market […]
Read more...There are times I think I am hopelessly naive. For three years in the early 1990s, I had a cutting-edge Chicago-based derivatives firm, O’Connor & Associates, as a client. They had 750 employees and no customers, at least initially, which gives you an idea of the scale of their business. O’Connor did statistical arbitrage, which […]
Read more...Readers have been sending various Pangloss/Orwell sightings on a daily basis, with one’s take on whether they fall in the absurdist or merely creeping authoritarian camp depending on one’s degree of cynicism. I have only posed about 1/10th of them simply because it often takes a fair bit of parsing (headline v. meaningful comment close […]
Read more...