April 01, 2009
Back in October, not long after Lehman Brothers collapsed and triggered a meltdown on Wall Street, one of the hottest e-mail forwards making the rounds among finance types was a letter by Andrew Lahde, a hedge-fund manager who had posted eye-popping 866 percent returns in 2008 by betting on increases in U.S. subprime mortgage defaults.
The Making And Unmaking Of The Bubble
March 31, 2009
Technology investor Glenn Hutchins had a useful essay in Fortune a few weeks back on the causes of the bubble. Some of the statistics he pulls together really help make things concrete: From 1930 to 1997, U.S. house prices grew by .7% annually. From 1998 to 2006, they rose at an 8% clip. This was of course enabled by cheap mortgages of all stripes offered to less and less creditworthy borrowers.
Will The Banks Go On Strike?
March 29, 2009
There is no question that the Obama administration has abandoned any vestige of laissez-faire capitalism. It may not be socialism, and it’s certainly not fascism, as some idiots--sorry, conservative thinkers--have declared, but it is at the least capitalism with a very strong dose of state planning. The real question is on behalf of whom, or under whose dictates is the planning being conducted.
Whistling Past The Graveyard
March 16, 2009
Simon Johnson is a professor at MIT Sloan School of Management and a senior fellow at the Peterson Institute for International Economics. He is co-founder of the global economy website, BaselineScenario.com. Expectations were low for this weekend's G20 meeting of finance ministers and central bank governors. Despite that, we should be disappointed with the outcome. There was no substantial progress on any policies that will help pull us out of a severe recession. The U.S.
What That Swedish Model Actually Looks Like
February 24, 2009
Not quite as buxom or blonde as you might think, but not bad either... Swedish economist Anders Aslund has a very helpful post over at the Peterson Institute blog: Sweden did not nationalize its banks. It was Norway that did so, which is an alternative model. In Sweden, a temporary emergency bank authority was set up on the model of the US Federal Deposit Insurance Corporation. ... The banks were forced to write off their bad debts and transfer them to bad banks. Sweden had no aggregator bad bank and the bad banks were not nationalized. Each big bank set up its own bad bank. ...
Will The Banks Come Clean On Their Own?
February 17, 2009
One thing struck me as a little goofy from that second FT piece I cited: In early April, big institutions will publish their first-quarter results. If the intervening Treasury stress tests have not by then revealed the true state of their balance sheets, then their first-quarter results may do so. "The first week in April - that's when the children's party is over," says Chris Whalen, co-founder of Institutional Risk Analytics.
November 21, 2008
If you've been following the auto industry's crisis, then you've probably read or heard a lot about overpaid American autoworkers--in particular, the fact that the average hourly employee of the Big Three makes $70 per hour. That's an awful lot of money. Seventy dollars an hour in wages works out to almost $150,000 a year in gross income, if you assume a forty-hour work week. Is it any wonder the Big Three are in trouble?
A Suspended Apocalypse
October 27, 2008
We are living in an extraordinary time. The world has been badly shaken. In the space of a few days a system that we thought was as secure and assured as the air we breathe lost all its landmarks, its clarity, and was seemingly swallowed up by a black hole. Money--essential to the spirit of peace--congealed, like blood in veins. Credit--this fine word is also expressive of people's faith in others--like a machine that jammed, and then stopped. Confidence--the famous "confidence" that is also integral to the pact among citizens and the reasons it must be perpetuated--like a spell that is evapor
527 Watch: American Future Fund
October 22, 2008
Here's a transparently shameless approach to skirting campaign-finance law. This slick spot by the American Future Fund is simply an attack ad that slams Colorado's Mark Udall on education--until right at the end, when it tells voters that Udall should support an arcane Senate bill that has stalled in committee. (Most of the bill's provisions were rendered moot by the bailout package.) Since 501(c)4 groups are only allowed to act as issue advocates, the final second serves as a highly implausible fig leaf.
From The Business Pages: October 21, 2008
October 21, 2008
An OECD report out this morning shows that the United States isn't the only country experiencing a widened rich-poor gap--on average, inequality is increasing across the developed world.