Systemic Banking Problem: A Japanese Experience

I have been reading excellent analyses by Chris Whalen on potential systemic banking crisis. I missed the RGE Monitor Panel Discussion, but I enjoyed reading the report by Naked Capitalism. I find Whalen’s and others’ argument that a systemic banking crisis involving many U.S. banks is likely, starting with the failure of the Bank of […]

Famine Futures: Deregulated Markets and Food Insecurity

In a week when Hormel celebrates another surge in Spam sales, my preferred indicator of US food insecurity, it is appropriate to raise the market and regulatory failures that are driving global food insecurity. Like so much that we have observed in the past eight years of the Bush administration, the origins of the current […]

FX Swaps Misbehaving

You’re in the middle of planning a summer tour of “classical” Greece for your family: The Parthenon in Athens, the spectacular oracle in Delphi, the ancient theater of Epidauros, a few beaches in between. But you need around 15,000 euros. What do you do? Well, a number of things: Spots and forwards: (a) You can […]

The Sad Tale of Lewis Ranieri and Franklin Bancorp

We put out a comment this week in The Institutional Risk Analyst about the financial problems at Franklin Bancorp (NASDAQ:FBTX), the $5 billion asset TX state chartered bank which Lewis Ranieri helped to found. Our comment follows below. A couple of questions occurred to me after writing this comment: 1) How is it possible that […]

Alpha, Beta Sigma: Understanding the Greeks

No, I’m not referring to some new fraternity here, dedicated to the promotion of enlightenment, upliftment and/or collective drunkenness. Besides, I wouldn’t know. I got my college education on the other side of the Atlantic, at a place where the frat-boy equivalents preferred to vomit in their tailcoats and where, rather than Greek letters, social […]

Capital-ist Economies to Capital-less Economies

A farmer who eats the seed corn over the winter must borrow to plant in the spring. He must repay the loan from the harvest, leaving him with even less to live on come the following winter if the crop does not yield a greater harvest. The misfortune of one bad harvest can start a […]

Will the Real Shareholders Please Stand Up? Principals and Agents in the Sarbanes-Oxley Era

Discussions of corporate governance using a simplified model of “shareholders as principals versus management as agents” fail to reflect today’s reality. The reality is interactions of various kinds of agents, such as “stockholders” who are usually the paid employees of investment intermediaries–in other words, management agents of organizations that are themselves agents. Related issues include […]

Overview: The Commodity Squeeze

Rising commodity prices are putting a strain on corporate costs, which are taking many investors by surprise. Most analysts focus on sales volume to initially judge a company’s ability to meet its debt obligations. Strong levels of demand, particularly across many emerging market countries, imbued an air of complacency. However, the accelerating inflation rate around […]

Central Bank as the “Market-Maker of the Last Resort”

In my blog last week titled “Jusen,” I described how the financial regulators in Japan delayed the process of cleaning up the housing loan companies (jusen) after the fall of land prices (early 1990s) and ended up worsening the problem. I appreciate the comments, which I find right on the mark and prompted me to […]