Susan of Texas has an immortal post on the housing crisis, McMegan’s ratiocination, and the persistence of ignorant memes. The money quote: McArdle doesn’t refute facts, she hen-pecks at the methods used to gather information. That way she doesn’t actually have to prove anything, she just casts enough aspersions on the data to confuse the […]
The next time someone tells you that “the banks need help,” just refer them to Barry Ritholtz: Talk about burying the lead: The Times also noted — in the very last paragraphs — how the big incompetent banks and their very pricey bailouts are screwing these small healthy banks: “Isn’t that the American way?” [Donald […]
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. […]
Reality (h/t Dr. Black): In certain ZIP codes in places like Homestead and Florida City, around 25 percent of the homes are in one stage of foreclosure or another. Countless others were built by developers and sit vacant in ghostly subdivisions, with not a buyer in sight. In the days after Andrew, then-Dade County Emergency […]
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, […]
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, […]
Willem Buiter, whose early posts at Maverecon were the epitome of restraint, calls for nationalisation: By throwing cheap money with little conditionality at the banks, the Fed and the US Treasury may get bank lending going again. By subsidizing new capital injections, they reward bad porfolio choices by the existing shareholders. By letting the executive […]
All (somewhat***) via Mark Thoma: Thomas Frank in the WSJ tells me why I always disagree with Robert (and the Other Economists) on the role of rating agencies: And who makes sure that Moody’s and its competitors downgrade what deserves to be downgraded? In 1999 the obvious answer would have been: the market, with its […]
Greg Mankiw presents Yet Another Reason to regret skipping the AEA this year, though somehow the word “intentional” was left out of the description. Stan Collender, of all people, does the job I wished someone would do on Martin Feldstein’s WSJ op-ed. I may have beaten him by a day in calling it out, but […]
Sometimes, Blog Posts Write Themselves: Cleaning up a hard drive of old files, I ran across these two articles from the middle of last year. First, the WSJ, arbiter of business sanity and purveyor of a positive meme whenever one is to be found, on 28 July 2007—nine months after the general supply of securitizable […]