Was a Swan to Blame?
—WSJ has perhaps the definitive story on what caused the market crash last Thursday. So who is to blame? Nassim Taleb, Mr. Black Swan himself. Felix Salmon, Reuters’ uber blogger, thinks pinning the drop on Taleb is poppycock. It’s a disturbing revelation and more than anything else reason why we need new rules to stop this from happening again. There is no evidence that Taleb was placing his trade to try to make the market go down, so he could profit. But that is in essence what he did. And now that we know, it seems likely that someone else will try.
—Speaking of fixes for the market. I have a story up on TIME.com about what some possible solutions to prevent another electronic trading induced market drop. Indeed, the SEC may have already brokered a deal among the exchanges to coordinate market shut downs, or so called circuit breakers.
—Michael Kinsley weighs in on bailouts and financial reform. The two, he finds, are linked.
—The excellent Colin Barr over at Fortune.com reports that Morgan Stanley got a sweet deal from Treasury when it bought back the governments stock warrants. How sweet? An inside tip from Treasury to Morgan may have cost taxpayers $375 million. While this appalling, I think the bigger issue is why the government didn’t hang onto the warrants longer. The Treasury didn’t have to sell any of the warrants. But in their rush to get out and cater to the banks, Geithner cost taxpayers far more than $400 million. Perhaps tens of billions.
—Estimating the cost of the Gulf oil spill: $350 million so far.
What did I miss?