Late in the House Financial Services Committee hearing today with Tim Geithner, Ben Bernanke and Bill Dudley, California Democrat Joe Baca asked Bernanke an interesting question: When did the financial system break? What year did everything go bad? Bernanke demurred, but I have an answer: 2003, or maybe 2004.
It was late in 2003 that …
There’s been some good-ish news on the housing front the past couple of days. First, the National Association of Realtors said that existing-home sales rose 5.1% in February from January (the caveat is that 40-45% of those were distressed sales). Today, the Federal Housing Finance Agency (FHFA) is saying (PDF) that home prices were up …
A certain Nemo has put together a nice illustration of how exactly the structure of the Legacy Loans Program that Treasury announced yesterday amounts to a big subsidy to private investors, and Felix Salmon and Paul Krugman have given it wider currency. It’s a great post, and a clear illustration both of how option-pricing works and how …
The WSJ reports that People’s Bank of China Governor Zhou Xiaochuan has:
called for the creation of a new currency to eventually replace the dollar as the world’s standard, proposing a sweeping overhaul of global finance that reflects developing nations’ growing unhappiness with the U.S. role in the world economy.
This is not a new idea. …
James Surowiecki nails something that also bothers me about many of the critiques of the Geithner plan:
Much of the discourse around the Geithner plan, and around the nationalization debate more generally, seems to assume that Obama’s economic policymakers don’t understand the gravity of the situation or the virtues of
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In a comment to my post channeling John Hempton’s idea that the Treasury’s new asset purchase plan could be a step along the path to a better-informed selective nationalization of banks, tc125231 writes:
Please explain why saying nationalization without this expensive subsidy of a few entities consitutes a “dagger at the heart of
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From a reader:
1. A ‘scandal’ will surface a few months from now from the headline “TARP recipients giving [50%-150%] raises to replace banned bonuses”.
2. Bank employees in areas where the revenue generated can be directly traced (sales, trading, private banking, money management, maybe investment banking) will now be paid
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John Hempton describes what he thinks should happen after the Treasury’s Public-Private Investment Program is up and running:
I want the regulators to come into the banks and say – now you have a ready – if somewhat subsidized market for your assets then it is no longer tenable for you to say that the market price for them is
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Ian Bremmer makes a living measuring political risk (he has a new book out, The Fat Tail, on the importance of such measures for businesses and investors). And while his business has long focused on obviously risky places like Russia and Pakistan and Venezuela, the financial crisis has him looking more closely at the U.S. He writes, in a …
Economist Paul Samuelson says that financial markets are “micro-efficient” but “macro-inefficient.” That is, the great mass of investors and speculators is very good at winnowing out differences in value between similar securities, but not so good at establishing rational values for the market as a whole.
This is, to a large extent, the …
My speech Friday to the assembled geniuses at the Hertz Foundation Symposium in Santa Clara went okay, I think. It was my first-ever PowerPoint presentation, and there was a fraught moment beforehand where my laptop and the projector simply would not—despite the efforts of several first-rate physicists and mathematicians who sprang to …
Marc Gunther asks:
Do you care who in the government knew about the AIG bonuses, and when they knew it? Do you think the AIG executives who collected bonuses deserve opprobrium? I don’t. Although the $165 (or $218) million in bonuses have become a symbol of executive compensation gone wild, pointing fingers at Tim Geithner or Chris
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