MetaFilter posts tagged with finance

Bruce Sterling's 2010 State of the World

brianstorms — Wed, 06 Jan 2010 18:16:29 -0800

Acclaimed writer Bruce Sterling is back for his annual State of the World interview in The WELL's inkwell conference. It's a must-read. The first question comes from Cory Doctorow who asks him to help him plan for the future now that Cory has a kid, etc. Sterling's answer is hilarious, biting, and brilliant all at the same time. And that's only the beginning...

"Perhaps I can find new ways to motivate them."

zarq — Fri, 01 Jan 2010 13:07:26 -0800

Darth Vader and an entourage of Storm Troopers rang the opening bell at the New York Stock Exchange on December 22nd. Business Insider: This is pretty much the perfect metaphor for 2009: Darth Vader ringing the opening bell at the New York Stock Exchange surrounded by a goon squad of Storm Troopers. NY Times: This seems unlikely to help Wall Street with its public relations problems.

a coherent platform for the grand new party?

kliuless — Tue, 22 Dec 2009 05:01:55 -0800

Keeping America's Edge (via) While the prescriptions are stock conservative boilerplate, I found the diagnosis remarkably congruent with, say, David Simon, altho I have my (not so minor) quibbles that 1) the US faces an existential threat from "those who oppose our values" -- if anything, it's the other way around -- and that 2) he doesn't properly account for regulatory capture, i.e. for libertarianism to be "roughly true in practice" we need something approaching perfect competition and there is far from a level playing field, moreover, "the political system seems incapable of addressing large-scale objective problems." BONUS -America's broken colleges -Do liberals have it wrong on inequality? -Asteroid Deflection as a Public Good -Start-up Visas Can Jump-Start the Economy [1,2,3] -Reforms to help China maintain growth [1,2,3]

Two words: business school.

boo_radley — Mon, 21 Dec 2009 18:22:31 -0800

Why can't Americans make things?

Used for centuries, end of lifed October 31st 2018 - The Cheque

Mutant — Thu, 17 Dec 2009 03:55:21 -0800

They were first known as "Praescriptiones" and used by The Romans from around 100BC ¹. Employed by Perisans of the Sassanid Dynasty during the third century, they were then known as "Saqqs". They have been found in Egyptian ruins dating from the 12th century, about the same time as The Knights Templar bolstered their use by issuing written instruments, redeemable for cash to pilgrims bound for holy land bound. Even so, it took another five centuries for the cheque to be adopted by England. Closely related to Bills of Exchange, cheques were originally issued by Goldsmiths, who allowed depositors to issue negotiable claims - cheques - against gold held on deposit. Later codified by successive acts of Parliament, cheques have remained largely unchanged for centuries. In fact the last big innovation we've witnessed with cheques was the introduction of magnetic ink some 53 years ago. However with the rise of electronic payment systems cheque use has declined sharply, to the point where The Payments Council, the organisation responsible for operating the UK's interbank payments systems, will retire cheques effective 31 October 2018 . Pensioners and others critical of bankers were unimpressed by the move, while banks supported the idea, citing the high per cheque processing cost. ¹ as documented by Durant in The Story of Civilization, Vol 3, Caesar and Christ.

Adnan's World

reenum — Mon, 14 Dec 2009 13:40:13 -0800

Adnan Khashoggi was one of the high society news makers in the 80's, considered by some to be on Donald Trump's level. While things have gone alright for the Donald, Khashoggi hasn't done as well... Khashoggi led a high society lifestyle, even as his finances were in shambles. He went from a life of luxury to prison in the United States within a short amount of time. He is no stranger to political intrigues. Now 74, he works as a consultant.

Obama's Big Sellout

moorooka — Thu, 10 Dec 2009 21:36:11 -0800

Taibbi-filter: Obama's Big Sellout What's taken place in the year since Obama won the presidency has turned out to be one of the most dramatic political about-faces in our history. Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place. This new team of bubble-fattened ex-bankers and laissez-faire intellectuals then proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside.

Follow the money

Abiezer — Thu, 03 Dec 2009 15:58:26 -0800

Secrecy Jurisdictions: Mapping the Faultlines highlights research on 'the jurisdictions and mechanisms used to facilitate illicit financial flows worldwide, including especially flows from developing countries. Those flows, from developing countries alone, are estimated at $850 billion - US$1 trillion per year. At the core of this project is the biggest survey of tax havens, or secrecy jurisdictions as we prefer to call them, that has probably ever been undertaken.' A project of the Tax Justice Network.

Marc Dreier's Crime of Destiny

shivohum — Wed, 25 Nov 2009 16:19:17 -0800

"...$48 million of notes due in September, another $15 million in November, a whopping $100 million in December, plus $60 million in January 2009. All told, he would need almost $225 million to cover these redemptions. 'Obviously,' Dreier observes without a hint of irony, 'I had put myself in a ridiculous predicament.'" (Previously)

George Soros on the Way Forward

kliuless — Sat, 21 Nov 2009 19:42:21 -0800

Soros lectures
You can slog through the video, but I preferred the transcripts 1 | 2 | 3 | 4 | 5 + to me, it started off rather abstract* (admittedly on his part) and slow (covered ground; note soros tag) and doesn't really get interesting until 3 -- "The event that forced me to thoroughly reconsider the concept of open society was the re-election of President Bush..." [altho he can get a bit arrogant ("even I, who discovered—or invented—reflexivity, failed to recognize...")] -- and gets better from there... so i'd skip to that if you're so inclined :P kinda previously... and btw, as a bonus, also see... - Why Do We Hate? - What Makes a Nation Rich? - How Much Is Enough? - What the U.S. Long Bond Market Is Telling Us (cf.) - The G20 in 2050 (viz.) - Rare earth: The New Great Game [1,2,3,4,5,6] --- *in fleshing out his concept of reflexivity he goes thru (among other things and in other words) descriptive vs. prescriptive (or normative) theories, instrumental rationality and empiricism, false thinking and truthiness, the law of unintended consequences, &c. so if you're into that sort of stuff... have at it!

Nails Goes to Wall Street

reenum — Tue, 27 Oct 2009 10:54:21 -0800

Lenny Dykstra was lauded for his heroics with the Mets and Philles. After his career, Dykstra became well-known as a post-career athlete success story. Then the truth started coming out... Dykstra's post career exploits included making stock picks and starting a high end magazine targeted towards athletes. Then, in April of this year, it all came crashing down. In separate articles from GQ and ESPN, Dykstra's financial empire was revealed to be a house of cards. Dykstra subsequently filed bankruptcy in July. For a copy of Lenny's petition, you can go here (Warning: This link is a PDF). Lenny only sees these events as a minor speedbump, and promises to be back on top in no time.

Did you even DOOO the reading?

jock@law — Fri, 23 Oct 2009 10:23:05 -0800

Do you feel disappointed in government? Does Obama seem a little too meek for the Presidency? Do you wish he'd make larger structural reforms? Maybe, suggests Matt Taibbi, there's an answer. Citing her ability to speak plainly and her extensive knowledge of the credit system, Taibbi suggests that Elizabeth Warren should run for President. Not in 2016, but in 2012.

Wall Street's Near Death Experience

SeizeTheDay — Tue, 06 Oct 2009 17:21:32 -0800

Wall Street's Near Death Experience

“He who controls the money supply of a nation controls the nation”: James Garfield

Mutant — Sat, 03 Oct 2009 04:31:04 -0800

The First Bank of the United States was Americas first attempt at forming a Central Bank. Inaugurated by Congress in 1791, it was followed by The Second Bank of the United States, which was dissolved in 1836.

And then The United States of America was without a Central Bank for 77 years. Those were hardly halcyon years; as US States and banks shared responsibility for printing money, inflation, asset volatility, market crashes and even depressions were common, for example The Financial Panic of 1837, The Panic of 1857, The Panic of 1873 (aka "The Long Depression"), The Panic of 1893, and the Panic of 1907. Central Banks serve two very important groups of customers: they provide banking services both to the government as well as retail, commercial and investment banks. Also, as recent events have shown, the importance of their role as "lender of last resort" in time of financial stress (systemic as well as specific) can not be underestimated. Regardless, suspicion of Central Banking is very high in post bailout America, leading to a variety of demands ranging from requests for an audit of The Federal Reserve, to more extreme views that The Federal Reserve should be abolished altogether. But if not The Fed then who would control the nation's money supply?

Dubai: The World in Peril

filthy light thief — Fri, 02 Oct 2009 14:54:10 -0800

The pitch was extravagent: a man-made archipelago of 300 islands constructed to approximate the land masses of Earth, located 4 kilometers off the coast of Dubai. Claim part of The World for your own, or as an investment. Angelina Jolie And Brad Pitt bought Ethiopia, Tommy Lee bought Greece for ex-wife Pamela Anderson, David Beckham and Rod Stewart were each rumored to have bought an island, joining other celebrities who had purchased part of The World. The environmental impact of World-creation was raised, and Sir Richard Branson warned that the islands would be submerged in 50 years if global governments did not address climate change. The warning in 2007 did not dissuade the developers, and the final rock was placed in the breakwater in January 2008. The end of The World has not been brought about by rising tides, but financial woes have put the development on long-term hold, potentially ending the project. The World is not the only mega-development in trouble. The Times Online article stated that "about $300 billion of building is on hold after prices began tumbling," and Maktoob Business cited other research stating that "UAE's construction sector has been hardest hit by the downturn in the Gulf Arab region, with more than 500 projects on hold or canceled."

As bad as inflation is deflation is much, much worse

Mutant — Sun, 27 Sep 2009 10:38:24 -0800

Why is deflation far worse than inflation? After all, prices are falling, goods and services get cheaper, what's not to like? Modern Central Bankers are well armed to wage war against inflation; high interest rates effectively slows the circulation of money, extinguishing inflation as the United States did by raising the Fed Funds rate to a record 20% in 1981. But these same tools don't apply to deflationary scenarios, as nominal interest rates can not be cut below zero, a barrier recognised by Fed Chairman Ben Bernanke who in 2004 concluded ¹ "the nominal policy interest rate may become constrained by the zero lower bound." [ .pdf ] And one must not underestimate the destructive power of deflation; as deflation pressures drive down prices, as the demand for goods and services first drops, then accelerates as businesses layoff workers, leading to further declines in wages even as unemployment rises. As deflationary expectations take hold defaults on loans of all types rise as the value of assets plummets and banks first curtail then totally stop lending, leading to the emergence of a vicious cycle much Japan's deflationary spiral. Adding to contemporary deflationary pressures, we know bank lending is declining, even among firms receiving government funds. So the question is how can we incentivise banks to begin lending again? Harvard Economist Greg Manikw has an idea - penalise banks for hoarding cash by canceling a percentage of currency held dormant in reserve and not lent to consumers and businesses; effectively achieving negative interest rates. In a similar vein, last July Sweden starting charging interest for funds held dormant by banks, effectively penalising institutions for hoarding cash and driving an increase in personal sector lending, while The UK considers the same approach. Will Bernanke and The Fed follow suit? ¹Bernanke, B., S., Reinhart, V., R., Sack, B., P., 2004, "Monetary Policy Alternatives in the Zero Bound" Finance and Economics Discussion Series, Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, Washington, D.C.

Neil Barofsky reviews TARP

Joe Beese — Sat, 26 Sep 2009 15:30:10 -0800

Neil Barofsky, special inspector general for the Troubled Asset Relief Program, says: If the goal was to increase lending, well we haven't increased lending. ... Banks that were too big to fail are bigger than ever. ... When TARP was announced, the whole purpose was a statement that we're not going to let our large financial instiutions fail. And with that I think we may be in a far more dangerous place today than we were a year ago. (via)

free as in beer money

kliuless — Fri, 25 Sep 2009 03:33:40 -0800

Illustrating the cause of, and solution to, too much debt: *ahem*

In a sleepy European holiday resort town in a depressed economy and therefore no visitors, there is great excitement when a wealthy Russian guest appears in the local hotel reception, announces that he intends to stay for an extended period and places a €100 note on the counter as surety while he demands to be shown the available rooms. While he is being shown the room, the hotelier takes the €100 note round to his butcher, who is pressing for payment. The butcher in turn pays his wholesaler who, in turn, pays his farmer supplier. The farmer takes the note round to his favourite “good time girl” to whom he owes €100 for services rendered. She, in turn, rushes round to the hotel to settle her bill for rooms provided on credit. In the meantime, the Russian returns to the lobby, announces that no rooms are satisfactory, takes back his €100 note and leaves, never to be seen again. No new money has been introduced into the local economy, but everyone’s debts have been settled.

which leads us to The Future of Global Finance by liaquat ahamed:

It has long been recognized that the global financial structure — built as it is around the dollar as the world’s reserve currency — has a fundamental design flaw that makes it inherently unstable. The problem was first identified back in the early 1960s by the Belgian-American economist Robert Triffin, in “Gold and the Dollar Crisis.” Writing about Europe’s accumulation of dollars, he argued that the system carried the seeds of its own destruction. Foreigners could acquire dollars only if the United States ran current account deficits — that is, spent more than it earned. But lending money to someone who lives beyond his means has obvious dangers, and the same is true of countries. Thus, the American deficits necessary to supply dollars to the world for international transactions simultaneously undermined confidence in the currency. It was only a matter of time, Triffin predicted, before the system would be hit by a crisis...

note this isn't about the crisis just past so much as it is the perpetuation of a system -- prone to boom and bust -- requiring ever greater ~~innovation~~ swathes of the world's population going into debt (servitude). as bsetser writes: "borrowing by U.S. households cannot be the main source of global demand growth in the future." it just so happens that it was borrowed in a currency that the federal reserve can print and that the rest of the world has bought into (predicated implicitly upon future productivity...) so i've been reading God and Gold by walter russell mead [a favourite of SDB] and was struck by the passages on the legacy of the bank of england:

Britain fought a series of wars with France for a century and a quarter. France was a far larger and wealthier foe - the strongest power on the continent. The conflicts repeatedly left France financially exhausted and bankrupt. Britain's debts mounted astronomically as we have seen, but Britain went from one peak of economic and financial strength to ever higher peaks after each conflict. The secret financial weapon was public credit and the Bank of England which managed the debt. A million pounds were borrowed in 1692 to fight the French. By the time Louis XIV died, the debt was over 50£ million. The War of the Austrian Succession pushed the debt to 140£ million. It was almost 250£ million by the end of the wars that included the American Revolution, and 800£ million by the time Napoleon was safely ensconced on St. Helena. These were HUGE sums. They have been calculated as 222% of GDP after the American Revolution, and 268% of GDP at their peak in 1822. Mead explains how the Bank helped finance these wars. It sold government bonds that became assets in private hands and facilitated the development of the financial system that aided commerce. Influential people came to rely on government bonds and Bank notes and Bank shares for income and liquid wealth. The nation's civil and business leaders thus quickly had a stake in the success of the new monarch, William III, who had recently chased James II from the throne. "Government debt, historically a source of weakness, had been transformed into an instrument of strength." Alexander Hamilton copied the English financial system, and the young United States enjoyed similar financial and economic success.

now, not everyone was happy, but it's worked more or less over the centuries and, depending on how you're counting, we're apparently on version 3.0 (BW2 edition) of central bank mediated finance. yet while obama seems unable to, as schama puts it, "make – as American history yearns for him to do – money moral again," perhaps mead is on to something when he concludes that...

Lula is right: the global crisis emerged from a system built, with all its many flaws, by blue-eyed palefaces. But if countries like Brazil can stick with their own versions of Dutch finance, the future of the system will increasingly be shaped by people who look more like Lula—and the palefaces are going to have to run hard to keep up.

afterall, as lula sez, "when my presidency ends, I will go back to my home industrial city town, 800 meters from my local trade union that projected me my political life. And if I fail, when I go back to my hometown, it's going to take another century for another worker, another member of the working class to reach the presidency, because they're going to say that the workers do not have the competency to run a country."

Goldman Sachs acquiring media equity

Joe Beese — Wed, 23 Sep 2009 19:18:55 -0800

... one wonders why [Goldman Sachs] and [JP Morgan] were so eager to provide "rescue" financings to virtually the entire distressed media space: both companies knew too well that sooner or later they would end up with full equity control over essentially the most coveted industry: thousands of TV stations, radio channels, newspaper and magazines. (via) (previously)

Hopefully they won't screw it up.

ericales — Mon, 14 Sep 2009 18:56:35 -0800

Discussed several times in the green, Mint.com announced today that the company will be acquired by Intuit.

If Paul Krugman Was So Right

kliuless — Thu, 03 Sep 2009 20:00:24 -0800

How Did Economists Get It So Wrong? - The Great Recession was the result not only of lax regulation in Washington and reckless risk-taking on Wall Street but also of faulty theorizing in academia. Can economists learn from their mistakes? (via mr & ev) bonus :P

Government as Risk Manager
Keynesian reforms could stop us falling into more economic foxholes
On the "Course" to a New Normal
"Because I Said So..."
Too much of a very good thing
U.K. Wants Bank Buffers, Not Bonuses
Making Greed Good
Greed & The Other Seven Deadly Sins
White House to Propose Big Reserves at Banks
It's not the regulators, it's the politicians
The systemic threat posed by megabanks
Shrinking banks
All Those Arrows
Fool's Gold
The Value Every Business Needs to Create Now
What good is finance?
What Is Finance, Really?
The Nature of Modern Finance
Can We Afford Health Care Reform? We Can't Afford Not to Do It.
Why Paying for Health Care Reform Is Difficult and Essential
Health Care Lie #493: Rationing
Examining the Public Option in Health Care Reform
The Divisions in the White House Over Health-Care Reform - "hinge on Sen. Olympia Snowe"
What Leverage Do Republicans Have on Olympia Snowe?
Health Insurers vs. Big Corn? - "[If] health insurers can no longer pick and choose their clients, and throw sick people out, they will develop a much stronger interest in prevention, which is to say, in changing the way America feeds itself. When health insurers realize they will make thousands more in profits for every case of type II diabetes they can prevent, they will develop a strong interest in things like corn subsidies, local food systems, farmer's markets, school lunch, public health campaigns about soda, etc."
The Rotten Core - "Late empires are known for several things: a self-obsessed, self-serving governing class, small over-reaching wars that bankrupt the Treasury, debt that balloons until retreat from global power becomes not a choice but a necessity, and a polity unable to address reasonably any of these questions - or how the increasing corruption of the media enables them all."
$9 trillion -- what, me worry?
Obama on Bernanke - "his 'bold, persistent experimentation' has brought our economy back"

that is all!

UK and USA might lose AAA rating

memebake — Tue, 26 May 2009 15:11:41 -0800

Standard & Poor’s changed the UK's credit outlook from stable to negative a few days ago, and warned that there is a chance the UK could lose its AAA rating. Meanwhile, Moodys, another of the big 3 rating agencies, has warned that the US might also eventually lose its AAA rating. The UK announcement caused sterling to drop by 1% and the FTSE by 2%. However, many blame the same rating agencies for their part in triggering the subprime crisis. The irony of this is not lost on the Wall Street Journal, who note that "After all, those governments are jacking up spending, in part, to bail out the financial firms who gobbled up those 'AAA' asset backed securities duly blessed by the credit ratings firms." How did the CDO's get AAA rated in the first place? There are reports that it may have been a bug in the rating software, although Greenspan says its because the ratings were based on only the last two decades, giving a too-optimistic outlook. This reseach paper by Vasiliki Skreta and Laura Veldkamp looks through some of the options. Incidentally, all the ratings given by the rating agencies come with a disclaimer: S&P says in small print: "Any user of the information contained herein should not rely on any credit rating or other opinion contained herein in making any investment decision". Joseph Mason, a former economist at the US Treasury Department, points out that "The ratings giveth and the disclaimer takes it away."

"There needs to be a general acceptance that the current model has failed."

Kattullus — Tue, 26 May 2009 13:10:18 -0800

It's Finished is a witty and erudite essay by MeFi lurker John Lanchester in The London Review of Books on how completely and utterly screwed the British economy is. In the process of laying out his case Lanchester touches on varied issues, such Scottish banknotes, why Alan Hollinghurst's phrase "tremendous, Basil Fawltyish lengths" is applicable to the reaction by the US and UK governments to the banking meltdown, the value destruction of corporate mergers, the invention of modern accounting, and why no one really knows how large a share of the failed banks is owned by governments.

Why the US won't see hyperinflation

Mutant — Wed, 13 May 2009 01:16:13 -0800

The Bulls vs. Bears? The incessant back and forth between equity market longs and shorts is well known to most retail investors via a variety of distribution channels; financial television, the print media, online news. But the really big market battle, one with the potential to impact the entire US economy, happens, as is usual in finance, just out of sight of retail eyes ... Not seen since the 80's, Bond Vigilantes is a phrase applied to institutional class investors who purchase government treasuries to satisfy their long dated obligations. Cognizant of the risks of inflation, they actively demand compensation in real terms for their investments. In recent weeks they have caused a UK government bond auction to fail, and have driven US bond yields higher. But even as Bond Vigilantes drive interest rates higher, the US Treasury is actively purchasing securities in the open market. This is, by any measure, an epic battle, one taking place almost sight unseen and one with very high stakes: can Ben Bernanke and the yet unseen US economic recovery tolerate higher bond yields? Speaking of the power of Bond Vigilantes to compel honesty in government spending, Clinton policy advisor James Carville, was famously quoted: "I used to think if there was reincarnation, I wanted to come back as the president or the Pope or a .400 hitter. But now I want to come back as the bond market. You can intimidate everybody"

Waiting for CNBC

chunking express — Fri, 08 May 2009 07:59:22 -0800

Waiting for CNBC: A tragicomedy in one long act. The Colombia Journalism Review also has an extensive list online of what the business press did (and didn’t do) while the financial crisis was brewing.