Submitted by Thomas Forest Outliers: The Story of SuccessMalcolm Gladwell, Little Brown and Company, (2008) Have you read Fooled by Randomness by Nassim Taleb? Malcolm Gladwell has, “(Fooled by Randomness) is to conventional Wall Street wisdom approximately what Martin Luther’s ninety-five theses were to the Catholic Church.” And Taleb has been reading Gladwell. For example […]
Read more...I am throwing a line of thinking out in the hope of getting reader input. I put a post up a couple of days ago on looting and am still puzzling the question. I believe that deregulation led to looting, in the Akeloff/Romer sense, that people at Wall Street firms were overpaid relative to the […]
Read more...The last person one might expect to criticize the Obama Administration bailout of GM is a unapologetic liberal like Robert Reich, labor secretary under Clinton. Yet he does precisely that in today’s Financial Times. And his logic is similar to the arguments made here and elsewhere against the bank rescue operations. Unlike some other commentators, […]
Read more...The Columbia Journalism Review takes apart an interview by Adam Davidson of NPR’s Planet Money, which we linked to earlier this week and caused some consternation among readers who listened to the program. Davidson took a combative stance towards Warren, painted her as out to get the banking industry and out of step with mainstream […]
Read more...Stanford Law Review has a great interview with Warren Buffett’s longstanding partner, Charlie Munger. Munger offers much less corn pone and more direct opinion than Buffett does. The entire piece is very much worth reading, but I wanted to hone in on some key topics. One is the neglect of the role of what amounts […]
Read more...Americans are a profoundly optimistic people. While it’s part of the national mythology that it makes us resilient, it comes with a price. As Susan Webber noted in “The Dark Side of Optimism“: Overly positive thinking is difficult to reconcile with the need to make realistic, objective assessments. Finding the right balance between healthy optimism […]
Read more...In another disheartening development on the banking front, the Senate defeated legislation giving judges the authority to modify residential mortgages in bankruptcy. Note that the popular description is often misconstrued in short form descriptions. Judges would not have had open-ended authority to make changes. The construct is that mortgages are collateralized loans. The mortgage balance […]
Read more...The New York Times reports that the Chrysler brinkmanship continues, with some small hedge funds acting as pigs in the hope of extracting yet more concessions from the government, as the bankruptcy deadline looms. The reason the funds can play such hardball is that the Administration does not want to BK Chrysler. Despite all the […]
Read more...In America, the 1990 census showed a marked decrease in childbearing. 25% of the women between 30 and 34 were childless, while the comparable figure in 1976 was 16%. By 1985, the birthrate expected per average woman over her lifetime had fallen to 1.8, slightly below Europe’s level and below the “replacement rate”, the level […]
Read more...Rasmussen just released the results of a recent poll on political attitudes. It found only 53% clearly preferred capitalism (hat tip reader David H): Only 53% of American adults believe capitalism is better than socialism. The latest Rasmussen Reports national telephone survey found that 20% disagree and say socialism is better. Twenty-seven percent (27%) are […]
Read more...One of the disturbing trends of the financial crisis hasn’t simply been the willy-nilly shifting of costs onto the taxpayer, even when there were investors in risk capital, aka bondholders and stockholders, who properly should take the hit first. As distressing is the repeated, flagrant disregard for the rule of law, starting with the Treasury […]
Read more...Let us go back to some basic principles: 1. Despite bank and Administration smoke-blowing to the contrary, the problem with the so-called toxic assets on bank balance sheets is NOT that they cannot be priced, but that banks do not like the prices on offer from willing buyers. We have read anecdotes suggesting that the […]
Read more...Submitted by Swedish Lex, who helped unwind Sweden’s imploded banks in the 1990s: The U.S. Secretary of the Treasury appears to be close to proposing a Faustian bargain that, seemingly, will involve considerable Government subsidies towards a limited number of economic operators. In return for the sacrifice – the creation of massive moral hazard – […]
Read more...Hoisted from comments: Say I am SAC Capital. I get to be one of the bidders on bank assets covered by the program Citi holds $100mm of face-value securities, carried at $80mm. The market bid on these securities is $30mm. Say with perfect foresight the value of all cash flows is $50mm. I bid Citi […]
Read more...Full disclosure: I am normally a fan of the Financial Times’ Gillian Tett, but her latest piece reveals she has been co-opted by the industry she covers. While there are matters of substance I take issue with (we’ll get to those soon), the whopper is the positioning. How can Tett possibly depict Gordon Gekko as […]
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