The Incentive Bubble (
ungated pdf) - "The fraying of the compact of American capitalism by rising income inequality and repeated governance crises is disturbing. But misallocations of financial, real, and human capital arising from the financial-incentive bubble are much more worrisome to those concerned with the competitiveness of the American economy."
[more inside]
posted by kliuless
on Apr 3, 2012 -
54 comments
The New Priesthood - "The hapless economist uses the same tools as acclaimed physicists and astronomers. She has trained for years to speak precisely the same language as them, to understand the same advanced mathematics, to deploy most
complex statistical methods which are an essential part of the scientific toolbox. It is, understandably, incredibly difficult to accept that her work is a form of
higher order superstition;
a religion couched in the language of mathematics and statistics. Tragically, this is precisely what it is."
[more inside]
posted by kliuless
on Apr 2, 2012 -
169 comments
The Higher Education (Debt) Bubble - "[H]igh and increasing college costs mean students need to take out more loans, more loans mean more securities lenders can package and sell, more selling means lenders can offer more loans with the capital they raise, which means colleges can continue to raise costs. The result is over $800 billion in outstanding student debt, over 30 percent of it securitized, and the federal government directly or indirectly on the hook for almost all of it. If this sounds familiar, it probably should...
[more inside]
posted by kliuless
on May 17, 2011 -
185 comments
Out of thin air? "Have you ever said something like 'Let me buy you a beer next week'? I'm sure you have. We all issue promises of this sort. And we frequently use such promises as a form of currency... I have just described a simple credit exchange. Societies rely heavily on promising-making and promise-keeping. It is the foundation of all financial markets. I'd like to point out something about the promises you make. They are made 'out of thin air.' "
[more inside]
posted by kliuless
on Apr 14, 2011 -
47 comments
Plunging into the shadows: "In
thinly traded, lightly regulated and untransparent markets,
the bold can make an awful lot of money—and
they can lose it on an even more extravagant scale... In today's caffeine-fuelled dealing rooms, a barely regulated private-equity group could very well borrow money from syndicates of private lenders, including hedge funds, to spend on taking public companies private. At each stage,
risks can be converted into securities, sliced up, repackaged, sold on and sliced up again. The endless opportunities to
write contracts on underlying debt instruments explains why
the outstanding value of credit-derivatives contracts has rocketed to $26 trillion—$9 trillion more than six months ago, and seven times as much as in 2003."
posted by kliuless
on Sep 24, 2006 -
27 comments
