Mary Schapiro, reported to be the President-elect’s choice to run the Securities and Exchange Commission, is—by several miles—the most qualified person for the job. She’s served a previous six-year stint on the SEC (she was first appointed by Ronald Reagan), including a period as acting chairman. She’s been chairman of the Commodity …
Were the later rounds of Bernard Madoff investors banking on a bailout?
Probably not, but it’s an interesting thought:
We argue in this paper that if agents correctly believe in the possibility of a partial bailout when a gigantic Ponzi scheme collapses, and they recognize that a bailout is tantamount to a redistribution of wealth from non-participants to participants, it may be rational for agents to
…
New article: Hank Paulson is No. 2!
So, in possibly the most shocking development in human history, one Barack Obama was chosen as TIME’s Person of the Year for 2008. (Yeah, I thought it would be Tina Fey too.) And who was the runner up? Why, our friend Hank Paulson. Yay, Treasury Department! Yay, financial crisis!
I wrote the profile of Paulson for the magazine, which I …
Wiping out my savings is one thing. Wiping out Bubbie and Zadie’s is something else entirely
A reader who has been through the experience of having tons of money and then suddenly not having it anymore writes:
I decided to think of the people who lost money in the Madoff scam differently today. At first, I had a vision of old family “blue blooders” who find every tax loophole to keep and make a dime being the real losers here.
…
At the Fed, rate cuts aren’t where the action is any more. Quantitative easing is
In one sense the Federal Open Market Committee’s decision today to move its intended Federal Funds rate down to “a target range … of 0 to 1/4 percent” was historic—never, since it began announcing the target rate in the early 1980s, has the Fed gone below 1%. But it’s also something of a nonevent: the actual Federal Funds rate has …
10 things I’ll miss about my job
1. Morning meeting smackdowns, nerd style. (“In my admittedly jaundiced opinion…” “It’s hard to fathom…” “Of course, you’re familiar with the Cartesian argument…”)
2. Plastic cups of red table wine at closing night dinner.
3. Two-month deadlines.
What’s the difference between a good Ponzi scheme and a bad Ponzi scheme?
Bernard Madoff appears to have operated a Ponzi scheme, in which money from new investors was used to pay off those who got in earlier. But there are other, perfectly legitimate financial endeavors that share this same basic model.
The most obvious is Social Security (and James Pethokoukis has already nominated Madoff for Social …
Me and Bernie Madoff on video, abridged
I’ve already written about my Bernie Madoff panel-moderating experience, but now that other people are posting an abridged YouTube video of the event (with contributions from Madoff and his employee Josh Stampfli, plus a few of my questions), I figure I’d better do the same:
[youtube=http://www.youtube.com/watch?v=auSfaavHDXQ]
A friend …
When did Madoff go from legit to Ponzi?
One of the big questions that one hopes investigators will dig up an answer for over the next few weeks was when Bernie Madoff’s investment strategy made the switch from legitimate to Ponzi scheme. It seems highly improbable that he meant for it to be a scam from the beginning. There just wasn’t anything in it for him. He was already a …
Hanging with Bernard Madoff (it wasn’t memorable)
I spent some time with alleged mega-scammer Bernard Madoff last fall. And ever since I got the WSJ news alert e-mail Thursday afternoon about his arrest, I’ve been thinking I should write something about my experiences. My problem has been that I can barely remember them. Madoff was kind of a cipher: Nice enough guy, seemed reasonably …
I take it all back: Bengt Holmström says securitization wasn’t the problem, but Glass-Steagall repeal might have been
I’ve done a lot of bashing here of those who think the 1999 repeal of the Glass-Steagall Act separating banking from the investment business is to blame for all our troubles. I’ve also argued that securitization—at least fancy-pants securitization—has been partly at fault. So it was interesting to hear an economist I admire make the …
The auto bailout bust
It was pretty clear last Thursday when the Detroit Three CEOs testified before the Senate Banking Committee that a lot of Senators (among them committee Chairman Chris Dodd and ranking Republican Dick Shelby) were interested in punting the auto bailout to the Bush administration or the Federal Reserve. Now they’ve gotten their way, and …