In the new issue of Time (with the Dalai Lama on the cover) is my attempt at explaining the Credit Crisis/The Big Unwind/Jenga to millions of people with better things to do than read the FT and WSJ:
It was, no question, one of the most dramatic episodes in American financial history. A famously scrappy Wall Street investment bank, Bear
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Mark Thoma points out that the Federal Reserve Board is now stocked entirely with Bush appointees, which isn’t really how the Fed is supposed to work. But he doesn’t go into why.
Fed governors serve staggered 14-year terms, so clearly the idea is to keep any one president from appointing the entire board. But nowadays Fed governors …
He held off for a while in hopes that maybe Washington could come through with enough monetary and fiscal stimulus to stave it off, but now Mr. Business Cycle himself is saying it: We’re in a recession. From CNNMoney:
Lakshman Achuthan, the managing director of the Economic Cycle Research Institute, said the economy has now fallen into
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The news that something like one-third of Bear Stearns stock, which ain’t worth what it used to be, is in the hands of employees has raised lots of hue and cry about the idiocy of putting your retirement savings in company stock. Writes Megan McArdle:
Unbelievable. Five years after Enron and WorldCom went down, taking not only thousands
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A reader writes:
I attended the FT’s (heavily advertised) “View from the Top” conference in New York on Tuesday, at the high-end Four Seasons Hotel, where the admission fee was $1,900 (I passed myself off as a journalist to secure admission for $0). Expecting a large conference hall, instead I was ushered into a rather small (and
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So it turns out that Darren Gersh, Washington Bureau Chief for the Nightly Business Report, addressed the question of what we should call this financial crisis of ours way back in January. He even did some actual research on the subject. What a concept!
Anyway, Gersh shared my concern that any name with “subprime” in it is too limiting. …
It was with a sigh of relief that I read that Visa went through with its record-breaking IPO and started trading on the New York Stock Exchange today. Not because I have any money at stake, but because the column I wrote a couple of weeks ago would have looked pretty silly if the IPO hadn’t happened. An excerpt:
Giant IPOS are usually a
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New Delhi-based economist Ajay Shah has a fascinating column in India’s Business Standard (via Bayesian Heresy) in which he makes the case that the current financial troubles in the U.S. may bring a recession, but can’t really be called a crisis. I recommend reading the whole thing, but here are a couple of key passages:
In such
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Okay, so we’re in a middle of a big crisis brought on, in part, by the failure of financial institutions to maintain large enough capital bases as insurance against the risks they’re taking. So now, in an effort to make the crisis go away, the Office of Federal Housing Enterprise Oversight announces this morning that it’s going to let …
So they went with 75 basis points (that’s three-quarters of a percentage point to you and me). Big, but slightly less than markets were expecting. Which would seem to mean that Bernanke & Co. are convinced that the economy really is in a recession now, but would prefer not to be seen as entirely doing Wall Street’s bidding. Or something …
Goldman and Lehman reported better-than-expected results this morning, stock markets opened on a decided upswing, and “the iTraxx Europe, which measures the cost of protecting 125 investment-grade credits against default, fell about 17 basis points to 143bp.” (No I don’t entirely know what that means either, but it sounds good.) Which …
Paul Krugman writes:
Justin Fox suggests that we learn from the way Sweden dealt with its financial crisis at the beginning of the 90s. I’m looking into it.
What Justin doesn’t mention, however, is that (according to Reinhart and Rogoff [pdf!] ) the resolution of Sweden’s financial crisis imposed a fiscal burden — that is,
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