I love market eschatologists. These are, of course, those full-bearded prophets who shout about impending end times for … something or another. It could be equities, or fax machines, or growth stocks, or video rental stores, or pretty much anything. The fun thing is, of course, they’re almost always wrong. Nothing ever truly goes away. […]
An interesting comment from Nassim Taleb at today’s New Yorker Summit. He argues that even 1980s level of economy-wide debt are intolerable today, in part because of the Internet: We have to be a lot more careful going forward, because we have globalization, the internet, and operational efficiency — which cannot accommodate debt. I have […]
Good column from Stephen Roach o how the U.S.-led obsession with avoiding a Depression-repeat may work by reflating debt and spending — right up until it doesn’t: Unwittingly, the Depression Foil might well end up recreating this madness. With the risk of a depression viewed as completely unacceptable to the global body politic, the full […]
I’ll let readers come up with the right headline for this one, but seeing news tonight that an AIG unit is suing Countrywide is one of the more blackly amusing moments in this never-ending crisis. Two of the kingpins of the crisis are now suing each other for misrepresentations? The mind boggles. “As a result […]
Smart, gracefully-written and elegiac piece by Frank Partnoy in the weekend Financial Times wherein he rightly points out that it’s long past time to bury most of the major U.S. banks.
The bottom line is that, given declining assets and increasing liabilities, many – perhaps most – big banks are essentially insolvent and have been for a long time. It is incredible that they lost so much money on derivatives but even more amazing that they stayed alive for so long afterwards.
Henry Ford said it first and best, “History is more or less bunk”. Is financial history any different? I ask myself that question a lot lately, almost every time I read something where the analysis compares the current “recession” to the average of something in a prior recessionary period.
There is a thought-provoking cover piece in the current issue of Prospect by Keynes biographer Robert Skidelsky on where we go from here. A snippet:
New research paper worth scanning on parallels between gambling and lottery-style stocks:
Tonight the NYT unleashed a monster of a Madoff story, with a 5,397-word scale-tipper on the proprietor of the current title-holder for World’s Largest Ponzi Scheme. Not to get all meta or anything, but the piece is not only longer than most Raymond Carver short stories, but it’s got eleven – 11!!! – reporters listed as having worked the piece. I am in awe at the NYT’s zealous flooding of the Madoff zone after the damage has been done.
A thought experiment I like to do is mull what S&P 500 earnings would have been today if we hadn’t had a decade or more of cheap credit. Earnings have grown, on average, 9% a year for years in the U.S., but that has been goosed to an unknown degree by credit.