Monthly Archives: March 2010

A Summary of What Bank Reform Should Be

I’ve thought about the issue for a while, and I want to summarize what the key areas for bank reform are, so that you all can know why legislation like the Dodd Bill won’t achieve much.  There are five key areas that have to be addressed to avoid “Too Big to Fail”: Limit short-dated funding, […]

Book Review: ECONned

Many of you have heard of the blog Naked Capitalism, and its pseudonymous writer, Yves Smith.  Well, she has written what I regard as an ambitious book, ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism.  It is ambitious for several reasons: It tries to be comprehensive about all aspects of the crisis. It […]

Greenspan versus Reality, Part 2

Again, Greenspan’s comments are in italics.  Part 1 can be found here.  Greenspan’s full paper can be found here. Part of the dynamic here is while leverage is increasing, and sham prosperity is growing, there are few that will argue against it, and those who do are regarded as shrill misfits.  In the short run, […]

Greenspan versus Reality, Part 1

This article is derived from Greenspan’s latest paper.  Greenspan’s comments are in italics. Mine are in normal type. Greenspan begins his argument: The bankruptcy of Lehman Brothers in September 2008 precipitated what, in retrospect, is likely to be judged the most virulent global financial crisis ever. Quite a statement, and one that I think is […]

On Credit & Equity

Jake at Econompic Data had a good post on credit and equity.  (He runs a good site generally.)  They are correlated, but not all of the time.  As I commented: When yields are low, equities thrive because financing costs are low. When the defaults come, future equity returns are low, because financing rates rise, killing […]

Where to Invest, When Interest Rates are so Low

Unlike most people who analyze investments, I think there are periods of time where domestic long-only investors may be consigned to low or even negative returns.  As investors, we are generally optimists; we don’t like can’t win situations like the Kobayashi Maru. When money market funds offer near-zero yields, asset allocation becomes complicated.  Near the […]