I have been off the Ben Stein beat for quite some times, since it is ably covered by Felix Salmon and I don’t want to encourage Stein by giving him undue attention. But this week’s offering is such a doozy that I had to say something. Now remember, his column is titled, “Everybody’s Business.” So […]
Read more...Our guest blogger Lune (who in one of his past lives worked on the Hill) was just in India and gives us his take on the Satyam Computers case, which has gotten scant coverage in the US. The Indian government’s reaction to its biggest corporate scandal ever makes for a useful object lesson. From Lune: […]
Read more...Bank of America CEO Ken Lewis gave former Merrill chief John Thain an unceremonious heave-ho earlier today, a mere month after the Merrill deal closed, after one too many nasty surprises: the deterioration of Merrill in the fourth quarter, the revelation that Merrill effectively stiffed BofA by paying bonuses early, thus depriving the bank of […]
Read more...Why is it that economics is a Teflon discipline, seemingly unable to admit or recognize its errors? Economic policies in the US and most advanced economies are to a significant degree devised by economists. They also serve as policy advocates, and are regularly quoted in the business and political media and contribute regularly to op-ed […]
Read more...Our new hero Elizabeth Warren (we had always liked her posts at Credit Slips, and it’s to see her kicking ass and taking names) pointed to a paper “Bullshit Promises,” by Curtis Bridgeman and Karen Sandrik. It looks at the concept of “bullshit” as defined by philosopher Harry Frankfurt and discusses the implications for contract […]
Read more...A New York Times report on WaMu’s Grande Bouffe in the mortgage market is worth reading for the former employee quotes alone. For instance, use of controlled substances was acceptable as long as they were the productivity-enhancing sort: “I’d lie if I said every piece of documentation was properly signed and dated,” said Mr. Parsons, […]
Read more...Literature is rife with quotes and vignettes illustrating the gulf between the rich and everyone else. And those quips generally take class differences as a given. Far more interesting and corrosive are the anecdotes that seek to get the public to accept status differences when the basis for them is shaky indeed. One of my […]
Read more...Price deflation isn’t necessarily a bad thing if it is short-lived and does not lead to downward pressure on wages. But falling wages produces a nasty spiral. Not only do consumers have less to spend, but worse, even if they keep their jobs, they can be legitimately worried about even lower pay packages down the […]
Read more...Why is no one willing to call things by their proper names, and instead resort to euphemism and double-speak? A New York Times story today, “On Wall Street, Bonuses, Not Profits, Were Real,” makes its most important point in its headline, and managed to get some good data points on how rich investment bank compensation […]
Read more...Over a weekend, word leaked out that AIG is paying yet more retention bonuses. This move is making a complete and utter sham of the supposed punitive elements of the rescue. But clearly, there was not enough of an adverse reaction to the earlier announcements of retention bonuses to deter the giant insurer. A few […]
Read more...A comment in the Financial Times, “Prudent Asia is unlikely to bail out the west,” by David Piling, provides a badly needed reminder: societies watch out for themselves first. And the way they define their best interest may not correspond with what we think is good for them. Forgive us for repeating ourselves, but we […]
Read more...One of the most pervasive findings in social science, although it is seldom codified this way, is how suggestible people are. Numerous studies in behavioral economics have found that the same underlying bet elicits very different take-up rates when framed as a wager versus as insurance. Even worse, humans are susceptible to obviously exogenous influence. […]
Read more...This ought to be a celebratory event, the scrutiny of a powerful player in the financial system who heretofore seemed immune to criticism. And what is interesting about the spotlight on Citigroup consigliere and board member Robert Rubin is that, unlike Greenspan, the reassessment is starting while he would still appear to have his hands […]
Read more...And he was not the only casualty. From the New York Daily News: A worker died after being trampled and a woman miscarried when hundreds of shoppers smashed through the doors of a Long Island Wal-Mart Friday morning…. “He was bum-rushed by 200 people,” said Jimmy Overby, 43, a co-worker. “They took the doors off […]
Read more...Why are we in the mess we are in? There are lots of proximate causes: overleverage, global imbalances, bad financial technology that lead to widespread underestimation of risk. Readers can no doubt improve on that list. But these still are all symptoms. Until we isolate and tackle fundamental causes, we will fail to extirpate the […]
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