A heartfelt congratulations to the United State of Georgia (from whose namesake “University of” I got my Finance MBA), which today passed California in the battle for Most Failed Banks (9 v 8) in the past year. In fairness, California did not have a failure until July, while Georgia waited until August. The two states […]

Reality (h/t Dr. Black): In certain ZIP codes in places like Homestead and Florida City, around 25 percent of the homes are in one stage of foreclosure or another. Countless others were built by developers and sit vacant in ghostly subdivisions, with not a buyer in sight. In the days after Andrew, then-Dade County Emergency […]

This is why we don’t believe the bailout will work the way you think it will (i.e., to increase lending): Recently, securities rated AAA have changed hands for roughly 30 cents on the dollar, and most of the buyers have been hedge funds acting opportunistically on a bet that prices will rise over time. However, […]

Via Instaputz, an explanation of why stealing tax dollars in order to decouple securities from the assets they are allegedly securitizing is A Really Stupid Idea, presented directly, yet also in a way an econometrician wiill understand.

The idea that they aren’t inviting Yves, CR, and Roubini onto the calls either led me to wonder for a moment if there was another factor in the invitations. But skipping Felix, even if he is a short-timer, means that they weren’t judging by the blog in the first place.

Via Robert’s Twitter Feed, and to avoid ranting about 401(k)s before the end of May, here’s a Rant Well Worth Reading. (Warning: PG-13 or R rating; D. Aritophanes channels The Rude Pundit). Clean Excerpt: What’s the catch? That’s the beautiful thing … there is none! It’s all totally risk-free for you from start to finish! […]

Effect Cause

Ken Houghton wants to sidebar today into looking at the general application and implications of an Accounting Identity: Assets = Liabilities + Equity (A=L+E, or the ALE Rule). Let us assume that, since the housing bubble burst, I believe that my house has fallen in value by too much. I would understand a 20% decline, […]

Following up on Robert’s post (he started later and finished earlier): Dr. Black: [T]he idea that all this came about simply because the banksters decided a bit of extra risk was good is an idea only a macro finance person could sanely entertain. All right, I represent that remark in more ways than one. So […]

UPDATE: Dr. Black twists the knife. The Geithner Plan FAQ is worth reading; it’s a classic example of treating an incomplete market as if it were the entire market. And note that “skin in the game” is limited to a part of the local pool. Unfortunately, while Treasury plays in the wading pool, hedge funds […]