Take a page from Douglas North et al., I will simply note that if the institutions charged with managing the process are corrupt, the chance of success approaches zero. Case in point, Christopher Cox (R-BoughtAndPaid) and the SEC: The interesting thing here is that we have already heard that the S.E.C. staff almost immediately demanded […]
by Ken Houghton It’s not been a Good Weekend for me to read Berkeley-based Economists. (Though DeLong is on fire, in a good way, and has been since that initial post.) Via Mark Thoma, this from Barry Eichengreen: In the United States, there were two key decisions. The first, in the 1970’s, deregulated commissions paid […]
We already gave them $900 Billion. (Or, as I would prefer to write it, just so everyone understands: $900,000,000,000. About 3,000 a person, or 26.7% of the annual median household income, assuming a family of four.) What would makes anyone think another $700,000,000,000 will solve the problem? Just because “sooner or later, you’re talking about […]
I believe that’s the English translation of this headline.
I like Brad DeLong, conceptually. Even his errors in judgment are based on rational principles. And he has a really useful piece up right now about “dealing with financial crises.” (One of the nice things about it is that it also completely undermines his earlier suggestion that the Fed was wrong not to ease on […]
Documentation of a minor disruption: Lehman won’t return “billions” of frozen prime-brokerage assets “in the short term,” said PricewaterhouseCoopers, administrator for the Lehman bankruptcy. Meanwhile, several hedge funds are planning to sing the Bono phrase from “Do They Know It’s Xmastime?”* to their cohorts at Morgan Stanley: Hedge funds that account for less than 10 […]
Perception, per the NYT: Fed Leaves Key Rate Steady as It Worries About Growth Reality: TSLF (Mar 11), PDCF (Mar 16), expanded acceptable collateral pool (multiple times, most recently Monday), loans to the parent from the subsidiaries to cover capital needs.* And it may not be enough. (Of course it’s an AIG link.) There’s more […]
Floyd Norris lists the Unlucky 13, a.k.a., my portfolio.* Ignoring AIG (of which more later, maybe), here are the top Market Cap losers in the S&P 500 YTD, who combined have dropped by more than half a trillion dollars: EXXON MOBIL GENERAL ELECTRIC MICROSOFT AT&T CITIGROUP BANK OF AMERICA After reading that list, I fully […]
Let’s stipulate what “everybody knows”: There are some assets in the capital markets, many of which are mortgage-related, that were seriously overvalued over the past several years. Many of the others are Credit-related (CDS and CDOs and the like). Most of the two asset types listed above are reasonable concepts that, if they are commoditized, […]
Let us assume: That there is an equity premium ([PDF] UPDATE: Link modified to Brad De Long posting in which the PDF is embedded. Hat tip: Don Lloyd in comments.) That the equity premium can be derived from a linear relationship (y = ax(1) + bx(2) + ….) of the most significant variables. That equity […]