Resolution Strategies

While Washington pundits play parlor games pondering changes to the regulatory architecture, the real work of resolving failed assets is beginning. The fact that the work is beginning is not so much testimony to price stability nor a turning point, but merely to the fact that investors facing losses finally realize that the losses are […]

Pass-through Ails

What do a barrel of Belgian ale and a barrel of feta cheese have in common? How about a dental-extraction forceps and a Rolex watch? Dying to find out??? Ok ok, I’ll give it away. It’s their levels of “pass-through”: That is the degree to which a depreciation of the dollar will translate into higher […]

Consequences of a long, deep recession – part III

Summary:  this series speculates about the consequences of a deep and long recession over the next few years.  How might we react?  How might this change America?  The first post examined our alternatives.  The second discussed possible changes in our financial system.  This chapter looks at the effect on Americans, and America.  This series is an expanded version of my post of […]

Consequences of a serious US recession – part II

Summary: this series speculates about the consequences of a deep and long recession over the next few years. How might we react? How might this change America? The first post examined our alternatives. This post discusses possible changes in our financial system. The last chapter looks at the effect on Americans, and America. This series […]

Consequences of a long, deep recession – part I

Summary: this series speculates about the consequences of a deep and long recession over the next few years. How might we react? How might this change America? This post examines our alternatives. The second post discusses possible changes in our financial system. The last chapter looks at the effect on Americans, and America. This series […]

State and Local Finance and the Storm Surge of the Housing Bust

Hurricane Katrina was violent and frightening, but it was the relentless pounding of storm surge that forced the flooding that caused the most serious damage to property and degradation to communities. In the same way, the subprime crisis which has roiled the financial markets may be violent and frightening, but it will be the storm […]

Wizards of Odds: The Rise and Fall of Rating Agencies

Ratings, an information business, have been linked to the growth of the largest capital market in the world since the 1920s. By 1995, the reach and power of rating agencies was such that Thomas Friedman commented in the New York Times, “you could almost say that we live again in a two-superpower world. There is […]

Goldman’s Super-SIV: Some Questions

Anousha Sakoui and Gillian Tett of the FT have an excellent overview of the mechanics of Goldman’s ‘Cheyne SIV Restructuring Model’: “- Assets held by the SIV will be auctioned to establish a transparent cash value. About seven investment banks will be invited to bid on buckets of assets as well as the whole portfolio. […]

Dissecting the Oil-Dollar Affair

Don’t we all have a penchant for drawing inferences from patterns! Put that together with a fascination with gossip, and you get all sorts of (wild) stories—great for entertainment’s sake but potentially dangerous if they lead to, say, a suicide attempt or… the wrong investment idea! Take for example the rumor that Tom Cruise has […]