Among the people who have been updating The Theory of Finance for the ObamaNation is Gregg Sommerville, whose job depends to some significant extent on people not believing the following riff: More music below the fold. The Bailout Rap and the Subprime Mortgage Blues

Via Greg Mitchell’s Twitter feed, lying isn’t just for the IB branch any more: Goldman declined for three years to confirm their suspicions that it had bought their mortgages from a subprime lender, even after they wrote to Goldman’s then-Chief Executive Henry Paulson — later U.S. Treasury secretary — in 2003. Unable to identify a […]

Back in the old days of derivatives (the mid-1980s), there was an international commercial bank that was famous for declaring how much good derivatives had done for it. It was famous because it was common knowledge in the marketplace that the bank would have its swap counterparties “buy out” the positions where it was due […]

by Tom Bozzo Back in 2005, I argued at Old Marginal Utility that “Greenspan exceptionalism” was not very well founded in that observers rarely engaged in a proper counterfactual analysis of how well Alan Greenspan performed relative to the next best monetary policy technocrat. That’s a fairly stringent evaluation criterion, and even Brad DeLong’s glass-half-full […]

I’m just going to “Go Thoma” on him, since I can’t find anything to cut: Barack Obama tells us we should not investigate American intelligence agents or their overlings who are responsible for torturing hundreds of suspects in their custody. We have to forget about the past, he says, to concentrate our attention on the […]

Tom Bozzo I’ve been hearing about various potential schemes to game the PPIP, and Jeffrey Sachs gets in on the action with a pure self-dealing scenario (via Americablog): Here’s how. Consider a toxic asset held by Citibank with a face value of $1 million, but with zero probability of any payout and therefore with a […]

Suppose I told you that there was a crisis with a stock, say, GE. That the price of the stock had dropped around 75% in the past year. And you responded, “But the problem is solved; the prices of long-term Call Options (say, the January 2011 20s) has gone up, as has their Open Interest. […]

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.