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 […]
In this corner, as previously mentioned, Yves Smith goes for the slam dunk: Let’s see, the credit default swaps market, due to some netting, is now somewhere north of $30 trillion (as opposed to its earlier “north of $60 trillion” level). Investment banks were believed to have hedged most of their exposure via offsetting contracts, […]
Dr. Black (you know the site) links to AIG Strike Three. And unlike the Citi debacle previously discussed (relatively) positively and rather negatively here, this one makes some form of sense. The difference comes down to the meaning of an accounting concept: ongoing concern. More below the break (yes, this might get wonkish. It’s me, […]
I’ve spent most of the past two weeks alternating between dizziness and sleep. Maybe the dizziness explains why I find myself in agreement with a WSJ editorial: In a better world, Citi would have long ago been put into bankruptcy. The FDIC could have taken over and disposed of the bank’s assets, while protecting insured […]
by divorced one like Bush Let’s talk jazz: Still cashing the income inequalityberries, clams, dough, heavy sugar, jack, kale, mazuma, rubes, simoelan, voot. It’s all money. I started this series to develop a simple model of income inequality so that I wouldn’t sound like I was chewing gum and people wouldn’t get all balled up […]
Duff and Phelps, which tends to be the rating agency you go to if S&P or Moody’s won’t rate you highly enough, provides a convenient evaluation table (p. 22 of this report) for the marvelous negotiating techniques and acquisition skills of the previous Administration. Since the current Administration is now threatening to continue with the […]
I was pontificating earlier today about how many of the now-unemployed Financial Services workers were, in a previous life, engineers of one stripe or another, and if we’re going to be doing things with the stimulus bill such as re-engineer the power grid, some of them may well decide to return to their previous life. […]
Dr. Black graciously asks: Am I the only to whom it’s occurred that monetary policy through the banking channel (as opposed to, say, actually dropping money from helicopters) is only likely to be effective if banks are pretty good at allocating capital efficiently, and recent history tells us that the existing set of clowns in […]
A correspondent notes CJR found a good scoop by the FT: Merrill Lynch paid out about $4 billion in bonuses just days before Bank of America took it over, the Financial Times says this morning. What raises the eyebrows is the timing: Merrill paid its bonuses before the year was even up, “an unusual step” […]