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

Markets are "natural" …financial intermediation

Lifted from the comments from an Ezra Klein article in the Washington Post comes an interesting idea that is not only currently debated, but also ties into ‘markets are “natural” idea’… Paul Andrews comments:Yes – lots of saving and borrowing, often in goods rather than money. When money is included its often only a fiat […]

The assumption that markets are ‘natural’

by Brenda Rosserre-posted from Econospeak with permission from the author The assumption that markets are ‘natural’ I’ve just begun to browse the pages of David Graeber’s  2011 book entitled ‘Debt – The First 5,000 Years’.  Graeber is an anthropologist who makes no bones about the historical errors made by many economists on the evolution of […]

Default Events, Legal Contracts, Derivatives, and Greece

Barry Ritholtz, who generally knows better, blew a gasket at ISDA for yesterday’s ruling that Greek bonds are not yet in default. Specifically, “The International Swaps and Derivatives Association said on Thursday that based on current evidence the Greek bailout would not prompt payments on the credit default swaps.” > Here is a question for […]

If You Believe the Market Reacts to Information

The bad news of the day is that about $5B ($5,000,000,000) more than previously believed went to buy goods made in China, Japan, non-major South and Central American countries, and other places outside the U.S. Per the Vampire Squid (tm Matt Taibbi), this should cause a revision to Q2 US GDP from 1.3% to 0.9%. […]

Ratings QOTD

From Crash of the Titans, pp. 33-34: The largest chunks of these [created by Merrill in the winter of 2006-2007] CDOs still carried triple-A ratings, at least in name, because the credit rating agencies hadn’t bothered to recalibrate their antiquated ratings models. But almost no one was willing to buy the triple-A portion of these […]

Is the House Trying to Encourage Criminal Activity?

I left out of the last post why David Vitter (claims) he is blocking the two SEC nominees: Sen. David Vitter (R., La.) will block two nominees to the Securities and Exchange Commission until the agency announces whether victims of R. Allen Stanford’s alleged Ponzi scheme are owed compensation from the Securities Investor Protection Corp….“We’ve […]

Liquidity, Markets, and Pricing: A Contemporary Example

A lot of trading in the Fixed Income (and especially FX) market is done for “liquidity” purposes. There is often an underlying goal involved (e.g., push prices higher with small lots, sell large ones at the elevated prices) and frequently such strategies are discussed as “algorithmic trading.” (Example: the algorithm estimates that you will need […]

Market Failure Cannot Be Resolved Without Regulation

Matthew Richardson, a professor at NYU Stern School of Business, offers his thoughts on risk management and the economy. Market Failure Cannot Be Resolved Without Regulation Matthew Richardson on November 23, 2010, 12:00 AM I am all for free markets and not mucking them up with government intervention. But the economic theory of regulation tells […]