Between his admission to FBI agents in December that he’d been running a Ponzi scheme and his sentencing for his crimes last month, Bernie Madoff didn’t say much—at least not where any of us could hear him. Now that he’s in prison for several lifetimes, though, he’s turned chatty. Attorneys Joe Cotchett and Nancy Fineman—who …
Wall Street & Markets
Learning about bubbles by living through them
Alex Tabarrok offers a handy summing-up of what experimental economics has taught us about bubbles:
In the lab we can create artificial assets with known dividend streams and thus known fundamental values. Since Vernon Smith’s classic experiments (JSTOR), we know that even in these cases efficient markets fail and bubbles are common.
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Connecting three pessimistic stock-market dots
The first data point comes from a press release from the Jerome Levy Forecasting Center (it’s not online):
According to the just released July 28 Levy Forecast, while many give the private economy credit for resiliency, “Few understand that the government deficit now accounts for all of the economy’s profits.”
The second is in Mark …
The Great Recession: Is “Great” the Right Word?
Sometimes, an adjective seems inappropriate. Take “great.” It seems both overused and misused. Wayne Gretzky? No doubt about it: GREAT. Alexander the Great? Sure. Muhammad Ali? The Greatest. But plagues, wars, floods, depressions, economic panics, riots, and recessions? If any of these things are occurring, the situation seems less than …
How Wall Street sold out America (the first time around)
Curmudgeon57 has asked that I not forget to blog about a Q&A I did with Karen Ho, a University of Minnesota anthropologist who spent some time working on Wall Street and lays the blame for our rent-a-job work culture firmly at the feet of investment bankers. She says:
What I found in my research was that in many ways investment bankers
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New column: Too much profit?
My column in the new TIME addresses the Goldman Sachs/JPMorgan profitathon. My argument is that they’re making so much money because they’re better at what they do than their peers are. Which doesn’t necessarily mean we need to keep letting them make so much money.
This will probably be it for blogging from me today. We’re off to pick …
Dow 9,000! Which means we’re one-fourth of the way to 36,000!
An editor (I assume he’d prefer to remain nameless) poked his head into my office a little while ago to inform to me that the Dow Jones Industrials average had passed 9,000 today. So I did what every modern journalist does would do in such a situation and Googled “9,000 dow.” That led me to a blog post by Paul Krugman, headlined “Dow …
So much for international financial regulation
John Gapper on where things stand in reforming the global financial system:
This leaves us precisely where we started, with France and Germany tilting misguidedly at hedge funds while the UK and the US fear to clamp down on large banks in case they move from New York to London (or vice-versa) or locate themselves offshore.
It does seem …
How much does securitization hold up loan modification?
In a story about all the former subprime mortgage brokers who are now in the business of “helping” people get loan modifications, the NYT details the unsavory—and, according to the FTC, illegal—practices of a California outfit called the Federal Loan Modification Law Center. In the words of one ex-sales agent: “They basically told …
What mortgage-backed securities and lemons have in common
Stanford profs Kenneth Scott and John Taylor had an op-ed in yesterday’s WSJ arguing for “mandated transparency” in mortgage securitization. This brought to mind a conversation I had last week with Andrew Dubinsky, who runs a lending software company called Encomia and would love it if somebody mandated more disclosure in mortgage …
Financial innovation (What is it good for?)
Tyler Cowen writes, in response to a Felix Salmon dismissal of financial innovation as “net, net … a bad thing,”
I can understand that particular financial innovations might be bad, but financial innovation overall? Surely this claim was false in years 1200, 1900, and also 1950. (Of course you’ll find very harmful financial
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