Relevant and even prescient commentary on news, politics and the economy.

Felix Salmon explains it all (or at least a few tens of trillions) to me

Robert Waldmann asked Felix Salmon a question in a comment at Market Movers. He just responded by AIM (hey does that mean I’m on Felix Salmon’s AIM friends list ? sure does and all I had to do was download and install AIM). felixsalmon (8:31:29 PM): But I’m interested in a comment you left on […]

Inflation and interest groups in the Carter Years

Robert Waldmann Matthew Yglesias is very smart, but he is not omniscient. In particular he doesn’t remember things that happened before he was born and it appears that he has fallen for some Republican propaganda. He writes In the late 1970s, it just so happened to be the case that the structure of Great Society […]

CDS zero net supply

Robert Waldmann notes that some have argued that Credit Default Swap demonization is silly because they are in zero net supply so they can’t bring down the financial system (no names or links I will be rude below). This argument is crazy. If half the financial firms end up bankrupt and the other half make […]

Kevin Drum makes me blow a gasket

Robert Waldmann can’t help but argue at very great length that one sentence by Kevin Drum is totally utterly completely wrong. “The public face of his economic policy, after all, was almost entirely based on tax cuts, a distinctly conservative notion.” Andrew Sable makes a much better counterargument than mine here. Mr Drum has fallen […]

Exit Pollster Hell

Robert Waldmann update: OK after getting burned in 200 and 2004 (to paraphrase our President:fool me once shame on you fool me uh fool … you can fool me twice) only a fool would believe in exit polls tonight (and note the obvious below). But I just can’t help myself. Looks like the exit pollers […]

WaPo on AIG

Robert Waldmann read Carol Leonnig’s article which quotes many people arguing that the feds should have let AIG file for chapter 11. The point of the complainers is simple, the takeover has been very (realtively) good for counterparties but not so good for the treasury or, it is alleged, AIG shareholders. I don’t see how […]

Behavioral Economics and Conservatism

David Brooks has noticed the increasing popularity of behavioral economics. He argues that it would be a mistake to allow the recognition that people aren’t perfectly rational to convince us that policy makers should intervene more in the economy, since they aren’t rational either. My reaction is that, of course, the level of sophistication required […]

Hedge fund crisis on shedule

Robert Waldmann In a particularly silly op-ed Sebastian Mallaby argued that deregulation wasn’t the cause of the financial crisis and presented as evidence the fact that hedge funds, which are regulated even less than investment banks, are doing fine. Of course the reason that there wasn’t a run on hedge funds is that investors can’t […]

Selling equity in your house

Robert Waldmann was working on a post about how financial innovation is profitable and pernicious. The ideas are that profitable new financial instruments are used to evade prudential regulations and to make financial markets more confusing so unsophisticated investors can be fleeced. Then I thought of a kind of financial innovation which might be profitable […]

Did Lehman Manage that ?

Robert Waldmann had a post entitled “How did Lehman manage That?” asking how Lehman’s debt could sell for about ten cents on the dollar. A commenter told me I was confused and that Lehman’s accountants would have warned investors if there was anything, along the line of the things I imagined, lurking in their detailed […]