Robert Waldmann I wrote a post below on how economic theory as presented to the public and economic theory are very different. In particular, even given the standard super strong assumptions, economic theory does *not* imply that Laissez faire is the best policy, does not imply that market outcomes are even Pareto efficient (a very […]

Robert Waldmann I have a very low opinion of economic theory. I think that its survival is the result of a bait and switch where the core principles (roughtly Nash equilibrium) can’t be proven false, because they have no implications, and, given the fact that they have not been proven false, economists attempt to convince […]

Robert Waldmann notes a bit of financial news that must be read to be believed. Cliff105 who is between jobs and reading about the financial crisis receives an interesting bit of junk mail. a credit card offer from my recently failed bank, Washington Mutual. Normally, I throw these credit card offers into the recycle bin […]

Robert Waldmann is about to share his ignorance on banking, banking regulation, accounting, And accounting standards all in one post. You know the end is near when ordinary people get interested in accounting standards. A wide variety of politicians have decided that the problem with the US financial system is Mark to Market Accounting. It […]

Robert Waldmann OK what now ? Unless someone has just submitted a post, AngryBear doesn’t have a post on what to do now that the House Republicans (and some Democrats) have voted down the Paulson-Dodd-Frank bailout bill. The contingent consensus of the Left Blogosphere seems to have been to go for the Swedish solution if […]

Robert Waldmann A commenter over at naked capitalism notes that $110b of senior LEH debt went from trading .95 to .12 in a matter of days …. If you include the less senior debt that is trading at essentially zero, LEH had $110b hole in its balance sheet. And just days before this, the market […]

Robert Waldmann Many people are using the term “arsonists” as a loose metaphor for people who share the blame for the current financial crisis. They aren’t suggesting that anyone actually wanted a financial crisis. Cocking my tinfoil hat I will note that it is entirely possible that someone has been making out like a bandit […]

Robert Waldmann’s Pony Plan. This plan is modeled on Buffett’s deal with Goldman Sachs. It is also based on arguments by Doug Elmendorf and Luigi Zingales. I may show how good ideas from smart people can be sliced and diced to make toxic foolishness. One reason the deal had an impact is that it was […]

Robert Waldmann Major financial crisis news. Goldman Sachs Group Inc. said it will get a $5 billion investment from billionaire Warren Buffett’s company, marking one of the biggest expressions of confidence in the financial system since the credit crisis intensified early this month. Look $5 billion is not just a vote of confidence.Goldman Sachs is […]

by Robert Waldmann My post on “what the hell are credit default swaps for” got lots of comments and I learned a lot from the comment thread. I continue my effort at remedial education via blogging. First a very simple article by Martin HutchisonDoes this guy know what he is writing about ? Key quote […]