Showing posts with label Atomic Napalm. Show all posts
Showing posts with label Atomic Napalm. Show all posts
Sunday, February 27, 2011
Saturday, February 19, 2011
Sunday, March 28, 2010
An Extended Excerpt from todays' Guardian
Steve Eisman: Maverick Trader
The financial crisis was predictable, but only a handful saw it coming. Of those, even fewer were bold enough to bet against the market. And the boldest of them all was an unknown trader
"He agreed, though: the main effect was to transfer the financial risk to the shareholders."
http://www.guardian.co.uk/business/2010/mar/20/steve-eisman-maverick-trader-financial-crisis
Tuesday, March 23, 2010
Regulatory Reform in the context of financial stability and competition implications
Bailing out the Banks: Reconciling Stability and Competition
The financial crisis of 2008 has seen the fall of several of the mighty US investment banks, the collapse of renowned commercial banks on both sides of the Atlantic and the exhaustion of banks' capital all over the world. With it, standard views of banks, financial markets, their risks and their regulation had to be suspended, at a time when bank bailouts became unavoidable. This raises key policy questions on the way taxpayers' resources should be used: What type of capital should governments inject? How should banks' shareholders and creditors be treated? Does capital injection distort competition? Should the standard rules preventing anti-competitive behaviour be applied? How to contain future risk-taking by banks?
This report assesses two related aspects of the policy response to the unprecedented financial crisis: competition policy and financial regulation. It addresses both the effectiveness of the response to the current crisis, and the lessons that can be drawn in order to reduce the likelihood of future crises.
The links between competition policy and banking stability are central to assessing the crisis policy response, and in particular the effectiveness of state aid control. There have been two contrasting views of the relationship between competition and stability - one is that stability is such an urgent issue in the crisis context that it overrides competition concerns, while the alternative view is that intervention to restore financial stability will lead to massive distortions of competition in the banking sector, and so competition rules should be applied even more vigorously than usual.
In contrast to these two views, this report concludes that competition policy is indeed more important than ever in times of crisis, but that the competition rules appropriate to the banking sector are different from those that apply in other sectors. This is because bailing out one bank in an episode of crisis helps its competitors, and state aid rules should reflect this characteristic. Additionally, while European competition authorities have tried, since the autumn of 2008, to strike the appropriate balance between the insistence on competition concerns and the need for urgent action to respond to the financial crisis, the time has now come for a thorough competitive assessment of the banking sector following the recent bailouts. The fact that aid to individual banks has sector-wide competition implications means that a competition assessment conducted on a case-by-case basis is not sufficient.
The report also makes a series of recommendations about regulatory reform, with regard to both financial stability and competition implications. Critically, the report calls for a strengthening of competences at the European level, beyond coordination mechanisms.
Download the report here [PDF 408 KB]
An analysis of state-supported schemes for financial institutions
Thorsten Beck, Diane Coyle, Mathias Dewatripont, Xavier Freixas and Paul SeabrightThe financial crisis of 2008 has seen the fall of several of the mighty US investment banks, the collapse of renowned commercial banks on both sides of the Atlantic and the exhaustion of banks' capital all over the world. With it, standard views of banks, financial markets, their risks and their regulation had to be suspended, at a time when bank bailouts became unavoidable. This raises key policy questions on the way taxpayers' resources should be used: What type of capital should governments inject? How should banks' shareholders and creditors be treated? Does capital injection distort competition? Should the standard rules preventing anti-competitive behaviour be applied? How to contain future risk-taking by banks?
This report assesses two related aspects of the policy response to the unprecedented financial crisis: competition policy and financial regulation. It addresses both the effectiveness of the response to the current crisis, and the lessons that can be drawn in order to reduce the likelihood of future crises.
The links between competition policy and banking stability are central to assessing the crisis policy response, and in particular the effectiveness of state aid control. There have been two contrasting views of the relationship between competition and stability - one is that stability is such an urgent issue in the crisis context that it overrides competition concerns, while the alternative view is that intervention to restore financial stability will lead to massive distortions of competition in the banking sector, and so competition rules should be applied even more vigorously than usual.
In contrast to these two views, this report concludes that competition policy is indeed more important than ever in times of crisis, but that the competition rules appropriate to the banking sector are different from those that apply in other sectors. This is because bailing out one bank in an episode of crisis helps its competitors, and state aid rules should reflect this characteristic. Additionally, while European competition authorities have tried, since the autumn of 2008, to strike the appropriate balance between the insistence on competition concerns and the need for urgent action to respond to the financial crisis, the time has now come for a thorough competitive assessment of the banking sector following the recent bailouts. The fact that aid to individual banks has sector-wide competition implications means that a competition assessment conducted on a case-by-case basis is not sufficient.
The report also makes a series of recommendations about regulatory reform, with regard to both financial stability and competition implications. Critically, the report calls for a strengthening of competences at the European level, beyond coordination mechanisms.
Download the report here [PDF 408 KB]
Monday, March 22, 2010
Saturday, March 20, 2010
The Fiscal Sustainability Conundrum... a return to PayGo?
Economic Scene
The Perils of Pay Less, Get More
"In 1900, federal taxes amounted to just 2 percent of gross domestic product. By 2000, the share had risen to 21 percent.
Over the last couple of decades, though, we have repealed Wagner’s Law — or, more to the point, only partly repealed it. Taxes are no longer rising. They fell to 18 percent of G.D.P. in 2008 and, because of the recession, to a 60-year low of 15.1 percent last year.
Yet our desire for government services just keeps growing. We added a prescription drug benefit to Medicare. Farm subsidies are sacrosanct. Social Security is the third rail of politics,"
http://www.nytimes.com/2010/03/17/business/economy/17leonhardt.html?adxnnl=1&ref=economy&adxnnlx=1269111870-fWWg/DxTzmw2BNJ8OhTSvQ
Wednesday, March 17, 2010
Michael Lewis on "the seers who see 'debt' people" interview on Fresh Air with Terry Gross on NPR
"Everybody [on Wall Street] was working with the same set of facts about subprime mortgage lending — about how subprime mortgage loans were turned into bonds and repackaged and turned into CDOs and so on and so forth," Lewis tells Terry Gross. "[And] the vast majority of the people in the markets took those facts and painted one kind of picture with it; it was a very pleasant picture. And a very small handful of people took the same facts and painted a completely different kind of picture with it. [I wanted to find out] 'What is it that enables [the people who bet against the market] to paint that picture?' and 'Why do these people look at the world differently?' "
The Big Short: Inside the Doomsday Machine
By Michael Lewis
Hardcover, 288 pages
W. W. Norton & Co.
List price: $27.95
The Big Short: Inside the Doomsday Machine
By Michael Lewis
Hardcover, 288 pages
W. W. Norton & Co.
List price: $27.95
Tuesday, March 16, 2010
Brilliant clarification of Lehman's REPO 105 by Paddy Hirsch, very Khanesque
Repo 105 from Marketplace on Vimeo.
&
Investment Banking
The Origins of Lehman’s ‘Repo 105’
"It’s not clear that there was a crime committed in the fall of Lehman Brothers. But the court-appointed examiner’s report makes it clear that there was financial massaging going on.
The examiner, Anton R. Valukas, refers repeatedly to “Repo 105,” a name for a set of accounting tactics originated by Lehman that temporarily shuffled about $50 billion off the firm’s balance sheet for the two fiscal quarters before it collapsed."
Wednesday, March 10, 2010
A Slew of Academics take a shot at a Post Mortem
WSJ Blogs
Real Time Economics
Economic insight and analysis from The Wall Street Journal. Annamaria Lusardi, Dartmouth College
On financial literarcy: “Levels of financial knowledge are strikingly low and, moreover, there is a sharp disconnect between how much people think they know and what they actually know. “
Read full remarks.
http://blogs.wsj.com/economics/2010/02/27/academics-on-what-caused-the-financial-crisis/
Reporting to THIS Task Force (Just curious where the task force for actually doing something about it is?):
On financial literarcy: “Levels of financial knowledge are strikingly low and, moreover, there is a sharp disconnect between how much people think they know and what they actually know. “
Read full remarks.
http://blogs.wsj.com/economics/2010/02/27/academics-on-what-caused-the-financial-crisis/
Reporting to THIS Task Force (Just curious where the task force for actually doing something about it is?):
Tuesday, March 9, 2010
Recovery... or behavioral reinforcement?
"Make Markets Be Markets" From Roosevelt Institute
Excerpts and Commentary from ABC:
Economists: Another Financial Crisis on the Way
Nonpartisan Group Led by Nobel Winner Calls for Stronger Financial Reforms
By MATTHEW JAFFE
March 2, 2010 —
Even as many Americans still struggle to recover from the country's worst economic downturn since the Great Depression, another crisis one that will be even worse than the current one is looming, according to a new report from a group of leading economists, financiers, and former federal regulators.
The report warns that the country is now immersed in a "doomsday cycle" wherein banks use borrowed money to take massive risks in an attempt to pay big dividends to shareholders and big bonuses to management and when the risks go wrong, the banks receive taxpayer bailouts from the government. "Risk-taking at banks," the report cautions, "will soon be larger than ever."
Without more stringent reforms, "another crisis, a bigger crisis that weakens both our financial sector and our larger economy is more than predictable, it is inevitable," Johnson says in the report, commissioned by the nonpartisan Roosevelt Institute.
The institute's chief economist, Nobel Prize-winner Joseph Stiglitz, calls the report "an important point of departure for a debate on where we are on the road to regulatory reform."
Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner "oversaw policy as the bubble was inflating," write Johnson and Boone, and "these same men are now designing our 'rescue.'"
The study says that "In 2008-09, we came remarkably close to another Great Depression. Next time we may not be so 'lucky.' The threat of the doomsday cycle remains strong and growing," they say. "What will happen when the next shock hits? We may be nearing the stage where the answer will be just as it was in the Great Depression a calamitous global collapse."
Europe Snubs Wall Street....
• Leading US banks blamed for triggering financial crisis
• Policymakers propose a rival European monetary fund
• Policymakers propose a rival European monetary fund
Sunday, March 7, 2010
Economics Bear BLOG, Delong at UCB
This paper uses panel data from four developed nations to estimate permanent income inequality, measured by averaging equalized household income across multiple years. In general, I find that permanent income inequality has followed similar trends to annual income inequality, rising particularly sharply in the United States over the 1980s and 1990s. Comparing levels of permanent income inequality across countries, the ranking of triennial pre-government inequality is Germany, the US, Britain, Australia. However, a more progressive systems of taxes and transfers in Britain and Germany changes these rankings substantially. In terms of triennial post-government inequality, the ranking is the US, Australia, Germany, Britain. Additionally, I calculate mobility rates across countries, and find some evidence that mobility rates rose during the 1990s in both Britain and the US. Ranking the four countries in terms of mobility, and taking the effects of government policies into account, I find that in the most recent year, the most mobile of the four countries is Australia, while the least mobile is Germany...
Saturday, March 6, 2010
Art and Money
and a SAMPLER from:
Creative Accounting: Dollar Bill Art
Brooklyn-based artist Mark Wagner’s work can be called anything but cheap. His collages are created entirely from one-dollar bills, which he describes as “the most ubiquitous piece of paper in America.”
Friday, March 5, 2010
A Superb Selection of Crisis Visualizations
27 Visualizations and Infographics to Understand the Financial Crisis
"I've said it before, and I'll say it again. If there's anything good that has come out of the financial crisis it's the slew of high-quality graphics to help us understand what's going on. Some visualizations attempt to explain it all while others focus on affected business. Others concentrate on how we, as citizens are affected. Some show those who are responsible. After you examine these 27 visualizations and infographics, no doubt you'll have a pretty good idea about what's going on."
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