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 […]
by Robert Waldman I missed this at the time. * MARCH 19, 2008 Fannie, Freddie Lending Power May RiseBy JAMES R. HAGERTY and DAMIAN PALETTA The regulator for Fannie Mae and Freddie Mac is expected to announce a plan this morning that will give the government-sponsored mortgage investors more scope to prop up the home-mortgage […]
Henry Paulson promises that he will spend the 700,000,000,000 of our dollars over which he wants total control wisely. I say he be required to put his money where his mouth is. Ask him how much he expects them to be worth after he has spent them on mortgage backed assets and tell him he […]
There are three reasons that the give Paulson $700,000,000,000 to play with plan might save world finance 1) the value of a pool of all the mortgage based assets is easier to determine than the value of particular assets — making a huge pool of all the toxic sludge will cause it to melt, that […]
I stress again that I am technically an economist, but I have focused on everything except for money and banking (OK everything but money, banking and Neo-Austrian theory) so I am ignorant on this topic. I am interested in understanding why financial innovation is profitable. I can think of two key reasons for new instruments. […]
I have posted a deliberately unsophisticated discussion at my other blog After the jump, I try to add something to Tom Bozzo’s post below (which you should read first because he actually knows something about the issues). Here I take as fact Buchmueller et al’s assertion (as summarized by Bozzo but at least I admit […]