400 posts tagged with finance.
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Banking in Trust

Hawala or the Bank that Never Was.
Here's how it works.
However this honorable system has been hijacked by drug smugglers, terrorists, even Pirates; although there are problems.
Regulation has its drawbacks hurting some of the worlds poorer economies.
MI6 believes that terror organisations have used the global banking system to its advantage by investing Hawala money in stocks around the world.
posted by adamvasco on Dec 17, 2008 - 24 comments

Synthetic CDO's: tsunami event when major bankruptcies reaches 9 (currently 6)

Synthetic CDO's are complex little known financial instruments (insurance contracts) that are on the brink of triggering "the most colossal rights issue in the history of the world, all at once .. mandatory." If, out of a list of several hundred major companies, any nine go bankrupt, the CDO's are in default, which would mean a mass transfer of cash (real money) from unsuspecting investors around the world goes into the banking system. How much? Nobody knows, but it’s many trillions. Banks will be flush with cash, perhaps ending the credit crisis, while many investors (individuals, charities, municipalities) will be wiped out. Alternatively, the triggering of default on the trillions of synthetic CDOs could be a disaster that tips the world from recession into depression. Nobody knows, but it won’t be a small event. Thus far the count is six: three Icelandic banks, Countrywide, Lehman and Bear Stearns.
posted by stbalbach on Dec 1, 2008 - 49 comments

Tanta Vive!

The Compleat ÜberNerd: a fascinating series of blog entries detailing the nitty-gritty behind the mortgage industry by Calculated Risk's "Tanta." If you're curious about automated underwriting systems or the ins and outs of mortgage servicing or if you just enjoy some Mortgage Pig Excel art, Tanta was the blogger for you. Tanta, otherwise known as Doris Dungey, passed away on Sunday morning (NYT obit, CR obit).
posted by mullacc on Dec 1, 2008 - 15 comments

AAA?

Anatomy of a Meltdown - Ben Bernanke and the financial crisis (in one page)
posted by Gyan on Nov 24, 2008 - 61 comments

"... first by inflation and then by deflation, ..."

Tangible evidence of deflation? The prices of commodities, houses and a wide range of consumer goods have collapsed, with observers predicting continued declines. While many point back to The Great Depression as an example of damaging deflation, the recession of 1920-1921, a frequently overlooked period in economic history, is perhaps the best example we've got of a deflationary wave similar to what might now taking place. [more inside]
posted by Mutant on Nov 20, 2008 - 92 comments

Letter From Iceland

Letter from Iceland. There you see the Iceland of today – the victim of an economic 9/11 and one of the very few places in the world where the words “financial meltdown” can be used without fear of exaggeration. [more inside]
posted by jason's_planet on Nov 15, 2008 - 33 comments

Money for nothing: a new era of zero interest rates?

The Fed cut 100 bps. BOE cut 150 bps. ECB cut 50 bps. India, Vietnam, The Czech Republic, Switzerland, Denmark, South Korea and other nations have all cut interest rates in recent weeks, with many Central Banks cutting more than once. The G20 is now discussing the possibility of further, coordinated interest rate cuts. As interest rates globally plummet, we are observing what some analysts are calling "The Race to Zero". [more inside]
posted by Mutant on Nov 12, 2008 - 86 comments

Liar's Poker was not intended as a how-to manual.

The End of the Wall Street Era. “We always asked the same question,” says Eisman. “Where are the rating agencies in all of this? And I’d always get the same reaction. It was a smirk.” He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S&P couldn’t say; its model for home prices had no ability to accept a negative number.

The author of Liar's Poker on the collapse of the subprime industry.
posted by bitmage on Nov 11, 2008 - 57 comments

Soros on the Banking Crisis

Soros on the banking crisis:
"A deep recession is now inevitable and the possibility of a depression cannot be ruled out. When I predicted earlier this year that we were facing the worst financial crisis since the 1930s, I did not anticipate that conditions would deteriorate so badly." - Soros lays out some ideas about what can be done to fix the markets ... Planet money had another nicely done piece on the debacle last Friday.
posted by specialk420 on Nov 10, 2008 - 79 comments

Planet Finance

Wall Street Lays Another Egg. "Not so long ago, the dollar stood for a sum of gold, and bankers knew the people they lent to. The author charts the emergence of an abstract, even absurd world—call it Planet Finance—where mathematical models ignored both history and human nature, and value had no meaning."
posted by homunculus on Nov 7, 2008 - 63 comments

sovereign risk and the current economy

Another economic post. With the debt and equity markets in a comparative calm, a lot of people are asking what next? One area little examined is the idea of sovereign risk. Basically, those with the armies make to rules, and you don't want to be invested there when they change the rules,. The USA has been the power behind globalisation for over half a century, enforcing the rules of the marketplace we have grown to accept. Some are questioning whether it can maintain this position. [more inside]
posted by bystander on Nov 3, 2008 - 15 comments

Building a real financial system

The origins of central banking or, perhaps, central planning[1,2] and a defense of fiat currency[3] in the information age. [more inside]
posted by kliuless on Nov 2, 2008 - 39 comments

The most obscure but perhaps the most important economic indicator we've got

How best to take the pulse of the global economy? While market driven rates such as LIBOR or US Government T-Bills reveal the state of fixed income and Credit Default Swaps tell the observer much about possible default rates, many analysts prefer a more basal view. The Baltic Dry Index is one such indicator. [more inside]
posted by Mutant on Oct 31, 2008 - 27 comments

In praise of small banks

The nine biggest US banks aren't using $125 billion in federal bailout money to make loans. They're going to use taxpayer dollars to buy other banks. [more inside]
posted by up in the old hotel on Oct 30, 2008 - 80 comments

Waking from "‘the deep slumber of a decided opinion"

Financial Regime Change? Robert Wade, professor of political economy and development at the London School of Economics, "argues that we are exiting the neoliberal paradigm that has held sway since the 1980s" and considers the "causes and repercussions of the crisis, and errors of the model that brought it to fruition." Prof. Wade was making similar predictions last year.
posted by Abiezer on Oct 25, 2008 - 24 comments

You don't really own the shares you think you own

All the stocks and bonds you think you own are actually owned by a company you've probably never heard of, a company owned by the same people who own the US Federal Reserve. [more inside]
posted by Mutant on Oct 24, 2008 - 58 comments

Confused about what caused this whole credit crisis?

Confused about what caused this whole credit crisis? Let me Paddy Hirsch from Marketplace explain it to you in this surprisingly entertaining and easy to understand video. While you're there, check out his explanation of short selling and credit default swaps. I wish this guy was my finance professor.
posted by JPowers on Oct 23, 2008 - 23 comments

Essential Credit Crunch Reading

Afraid to read the daily news? Need some broader perspective on The Credit Crunch? There are lots of different ideas by lots of different authors floating about ... [more inside]
posted by Mutant on Oct 13, 2008 - 34 comments

R.I.P Good Times

Sequoia Capital presentation on the bleak scenarios for the economy and how start-ups should prepare. Last week the famous (the firm funded Apple, Oracle, Cisco and Google, among others) venture capital firm Sequoia Capital held a meeting for the firm’s portfolio companies. There, partners presented their views on what went wrong with the economy, what the prospects are for a quick recovery (Hint: the presentation is called 'R.I.P. Good Times' ) and what startups can do to survive. Here are the PowerPoint slides used in their presentation. I suggest a stiff drink before viewing. VIA [more inside]
posted by mojohand on Oct 12, 2008 - 55 comments

"...market fundamentalism for the last 25 or so years. And now that world is collapsing... "

Bill Moyers interviews George Soros on the financial crisis. Soros discusses market fundamentalism and the causes of the current crisis, as well as what can be done, and how this meltdown will change the global economy. (via The Big Picture) [more inside]
posted by [expletive deleted] on Oct 11, 2008 - 44 comments

Another potentially huge settlement day for CDS contracts ...

Credit Default Swaps (CDS) are derivative instruments providing the purchaser with protection against default on an underlying financial asset. When Fannie Mae and Freddie Mac technically defaulted on September 7th there was much speculation that the CDS market would collapse as a result of protection being invoked on $1.4 trillion dollars worth of debt. On October 6th these derivative contracts settled, and the CDS market didn't collapse with recovery rates of 92% being observed. Today CDS contracts protecting against the default of Lehman Brothers settle. The problem? Because industry lacks a central clearinghouse for these derivatives, nobody is really sure how many CDS contracts were written either by Lehman or by other banks providing protection against a Lehman default. Next on the list are CDS' covering Washington Mutual, which are due to settle October 23rd.

Meanwhile efforts to create a clearing house continue, as some folks speculate that the settlement of Credit Default Swaps is a major reason why banks are hoarding cash.
posted by Mutant on Oct 10, 2008 - 155 comments

Frugality may be termed the daughter of prudence, the sister of temperance, and the parent of liberty

If you listen to BBC radio, especially in these troubled times, you may have heard consumer expert Martin Lewis (on one, two or four). His moneysavingexpert site is comprehensive and UK-centric (and regularly referenced on the green). However, the real gem is the site's huge forum, with masses of information that might be useful to just about anybody. [more inside]
posted by primer_dimer on Oct 8, 2008 - 12 comments

Zeitgeist: Addendum

We already talked (self-link, sorta) about Zeitgeist: The Movie. Its author, Peter Joseph, recently released Zeitgeist: Addendum. (beware: last two links are two hour movies) This time, it’s about money and debt, scarcity and resources. The first, financial part may look like an extended Ron Paul ad, but then there’s a sudden turn towards resource-based utopian techno-communalism, and an endorsement for The Venus project. It seems to me like "Kropotkinian anarchism meets The Matrix". In these rough times, is it time for a big leap? [Also announced: The Zeitgeist Movement, still not active]
posted by Baldons on Oct 7, 2008 - 21 comments

"There will be enormous, enormous losses..."

This American Life gives you Another Frightening Show About the Economy.. The guys who brought us The Giant Pool of Money (previously) explain the credit crunch and why it's so scary. And not in the Halloween fun-to-be-scared sense.
posted by justkevin on Oct 5, 2008 - 169 comments

Suckers going down in Iceland

While the Wall Street financial crisis gripped the world Icelanders woke up one day to find that the Icelandic state had forcibly taken over the country's 3rd biggest bank, Glitnir. The worry is now that one of the two larger banks could also fail and the state wouldn't have the resources to do anything as the two remaining of the big 3 have assets totaling 10 times the GDP of Iceland. While the Central Bank claims it was the only option in a bad situation, prior bad blood between one of the Central Bank's directors, a former Prime Minister, and the main owner of Glitnir have some wondering if Icelanders have just been witness to "the biggest bank robbery in Icelandic history." [Warning: The story you are about to read may make you reconsider the verisimilitude of soap operas]
posted by Kattullus on Oct 3, 2008 - 25 comments

Steamcreditcrunch

A housing boom and bust, interbank lending rates reaching record highs, people losing faith in complex financial instruments, a stock market crash. We've seen it all before... The Great Depression of 1929? No, the Panic of 1837...
posted by fearfulsymmetry on Oct 3, 2008 - 33 comments

The $1.4 Trillion Question

"Through the quarter-century in which China has been opening to world trade, Chinese leaders have deliberately held down living standards for their own people and propped them up in the United States. This is the real meaning of the vast trade surplus—$1.4 trillion and counting, going up by about $1 billion per day—that the Chinese government has mostly parked in U.S. Treasury notes. In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People’s Republic of China." James Fallows on how the trade deficit between China and America works and what it means for the future.
posted by afu on Sep 30, 2008 - 41 comments

Stochastic cascades, credit contagion, and large portfolio losses

"In the limit of an infinite economy, the number of initial downgrades is Poisson distributed. This captures the idea that the shock initially affects only a small number of firms. Nonetheless, the distribution of the total number of defaults has slowly decaying tails ... A firm might well be able to absorb its shock, but it might not be able to absorb both the shock and the resulting deterioration in the average rating. The initial downgrades may thus trigger additional defaults that, in turn, further deteriorate the average rating, and so on. In a large economy, this cascade can be described by a branching process." Ulrich Horst, Journal of Economic Behavior & Organization, 2007. (Internet supplement!) [more inside]
posted by geoff. on Sep 30, 2008 - 8 comments

This is not your FDIC. This is the Rich White Man's FDIC.

A private FDIC?

The Certificate of Deposit Account Registry Service, or CDARS, is a way to conveniently spread bank accounts across multiple banks. CDARS, run by privately held Promontory Interfinancial Network, offers its customers up to $50 million of deposit insurance, or exactly 500 times single account limit mandated by the FDIC. Promontory does this by arranging to distribute client funds nationwide in $100K increments to over 2,300 banks. Promontory is nothing if not well connected: while founders Mark Jacobsen previously served as Chief of Staff at the FDIC, co-founders Alan Blinder was Vice Chairman of the Federal Reserve and Eugene Ludwig was Comptroller of the Currency, several former members of the FDIC currently serve on Promotory's board.

Not surprisingly, some folks are openly critical of Promotory, some going so far as to state "It undermines a lot of the safeguards around the FDIC deposit fund."
posted by Mutant on Sep 26, 2008 - 64 comments

teh free markets, ur doin it wrong

LOLFed. Doan cry, emo banker! If you hate the latest financial crisis news, but love image macros, then this is the site for you. It's like I Can Has Cheezburger meets the Wall Street Journal.
posted by Asparagirl on Sep 22, 2008 - 61 comments

Saturday night poker night is about to get a lot more interesting ...

Hedge Funds employ many different strategies to make money. There are long/short funds, event driven funds, emerging markets funds [.pdf], funds looking to profit from global macroeconomic trends and a large number of funds employing a wide range of arbitrage techniques to make money.

But these techniques are the tried and the true. As both assets under management and market turmoil have grown significantly, hedge funds are rapidly branching out into domains far, far detached from finance: art, litigation funding and now even poker.
posted by Mutant on Sep 22, 2008 - 44 comments

RTC II

Banning short selling? Firing Chris Cox? Treasury Secretary Paulson has reportedly floated the idea of an 80s-style "Resolution Trust Corporation." Maybe we're finally turning the corner...or at least stopping the hemorrhaging.
posted by uaudio on Sep 18, 2008 - 124 comments

Banking shares: New Day or False Dawn?

A bottom for banking? Buying or selling shares in a company one manages - insider trading - is legal in The United States, provided the relevant forms are filed with The SEC. This information is then made available to the general public via EDGAR, Sec Form 4, or high level aggregators. Investors scour web sites for such filings, as purchases or sales of a companies shares by insiders are public evidence of managements private opinions regarding the future prospects of the firm they are running.

Even before yesterdays relief rally insider buying in banking shares hit a two decade high. So does this surge in buying indicate the worst is over in banking? When trading its best to pay close attention to a broad range of signals, because sometimes even the insiders get it wrong.
posted by Mutant on Sep 9, 2008 - 23 comments

Those markets? Well, it seems they work like they are supposed to ...

Are funds calling a bottom to the US housing market? Even as house price declines are beginning to slow, home sales may have stablised and resales look healthy, big money - $5B here, $3B there, over there $2B and lots and lots of smaller amounts - is being deployed to take housing assets off banks balance sheets.

Meanwhile, Fannie Mae and Freddie Mac are actually booking the biggest profits on new mortgages since 1998. It ain't over 'til it's over, but in the markets you take what you can get.
posted by Mutant on Aug 28, 2008 - 39 comments

"A national debt will be to us a national blessing." Alexander Hamilton, Secretary of Treasury,1780

Even as I.O.U.S.A, a documentary looking at the United States' $53T national debt, is to be shown at both the Democratic and Republican conventions, economists are beginning to openly discuss the previously unthinkable - should America should default on some or perhaps all it's obligations? [more inside]
posted by Mutant on Aug 26, 2008 - 84 comments

The Material Girl is now a tangible investment

Follow the money: for the past year, the big trade was short bank stocks, and use the cash to go long oil. Massively profitable, but now that trade is unwinding. So where is the big money being invested now? Lots of places: diamonds, fine art, guitars, and Madonna.
posted by Mutant on Aug 20, 2008 - 36 comments

It's the end of the world as we know it... lalala

Upclose and personal on the man, Nouriel Roubini, who predicted the subprime crisis. Apparently we're in for a long long haul out of this mess. Oh, and it may be the end of America (reg req'd) as we know it. [more inside]
posted by blahblah on Aug 16, 2008 - 99 comments

Most countries treat tourists better than citizens

The Perpetual Traveller wields Five Flags in the quest for personal freedom.
posted by Mutant on Aug 10, 2008 - 22 comments

Unusual Public Offering

When a young company is in need of some dough, they often will issue an IPO. But what if, instead of a company, an author decides to sell shares of his book royalties? Tao Lin is doing exactly that. [more inside]
posted by thatbrunette on Aug 2, 2008 - 45 comments

While this is timely information bank failures are normal part of life.

Worried about bank failures? First step: check if your bank is insured by the Federal Deposit Insurance Corporation (FDIC). If so, then your first $100K is insured against loss so no worries.

Got more than $100K? Well then, you'd better speak with EDIE. [more inside]
posted by Mutant on Jul 14, 2008 - 60 comments

Sir John Templeton, 1912-2008, RIP and thank you for the investing lessons.

The simple phrase "it's different this time" are the four most expensive words in the English language. Sir John Templeton, 1912-2008, we thank you for this lesson and countless others. [more inside]
posted by Mutant on Jul 9, 2008 - 67 comments

Bringing Down Bear Stearns

Bringing Down Bear Stearns, from Vanity Fair's August issue.
posted by SeizeTheDay on Jul 1, 2008 - 17 comments

Floating university moored

The Scholar Ship, an international floating university stewarded by top universities in Morocco, the United Kingdom, China, Australia, Mexico, USA, and Ghana, have temporarily suspended all voyages due to lack of funds - mainly caused by the withdrawal of main sponsor and initiator Royal Caribbean International. The program ran two voyages in 2007 and 2008 before shutdown. Alumni and prospective students on Facebook and Ning are busily sourcing options to revive the organization, while Semester at Sea is offering spaces to students who were accepted for the now-cancelled voyages. [more inside]
posted by divabat on Jun 14, 2008 - 9 comments

Is Ben Bernanke a finally coming out of the closet?

While the wild crowd call it "Woodstock for Central Bankers", others get festivities off on a sour note, referring to it as "Understanding Inflation and the Implications for Monetary Policy". Regardless of what your invitation to this party reads, it starts today, Monday June 9th on the 50th anniversary of The Phillips Curve, a previously discredited forecasting tool which may be revived by Ben Bernanke at The Federal Reserve. [more inside]
posted by Mutant on Jun 9, 2008 - 6 comments

Islamic Banking - a compelling mix of religion and finance

While western banking institutions continue to reel from the credit crunch, Islamic banking, with assets approaching one trillion dollars, is growing at roughly 20% pa by offering Sharia compliant - and only Sharia compliant - financial products. But compliance to Sharia law in matters financial is not easy (previously). [more inside]
posted by Mutant on Jun 6, 2008 - 44 comments

They're messing with LIBOR - UhOh!

Underlying several hundred thousand Student Loans, millions of Adjustable Rate Mortgages and trillions of dollars worth of financial derivatives is the London Interbank Offered Rate, or LIBOR. Launched in 1986 by the British Bankers' Association (BBA), LIBOR is the most widely used benchmark of short term interest rates.

And with the recent credit market difficulties still fresh in the minds and impacting the balance sheets of many market participants, the way LIBOR is calculated - and the interest rates charged - may be changing. [more inside]
posted by Mutant on May 30, 2008 - 22 comments

Dark pools of liquidity, or the secret stock market

The rapid growth of electronic trading since 1976 has benefited equity market participants by improving competition, reducing cost and increasing liquidity while insuring better pricing.

One unexpected side effect has been the recent emergence of "dark pools of liquidity", or the secret stock market. [more inside]
posted by Mutant on May 20, 2008 - 21 comments

Sell in May and go Away but buy back on St. Leger Day

Academic discussions of stock markets frequently reference The Efficient Markets Hypothesis; an idea that share prices are fairly valued, their prices reflecting all available information. However folklore such as "Sell in May and go away", which proved prudent in 2007, clashes with this theory. [more inside]
posted by Mutant on May 15, 2008 - 11 comments

Why everything new in finance has already been new at least once before

The year was 1978. The US Dollar was collapsing, inflation was beginning to surge, the American economy was on the brink of recession and many warned of the perils of easy money. Needless to say, Arthur Burns, 10th Chairman of the US Federal Reserve, had a tough job. [more inside]
posted by Mutant on May 8, 2008 - 91 comments

Food cartels - haven't we seen these before?

Oil's got one. So does cocaine. There used to be one for light bulbs and another for uranium. While we know one currently exists for diamonds, some folks think the music industry has one. [more inside]
posted by Mutant on May 5, 2008 - 21 comments

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