MetaFilter posts tagged with financialcrisis

The Economist: The World in 2010

goodnewsfortheinsane — Sat, 14 Nov 2009 17:09:43 -0800

In 2010, Obama will have a miserable year, NATO may lose in Afghanistan, the UK gets a regime change, China needs to chill, India's factories will overtake its farms, Europe risks becoming an irrelevant museum, the stimulus will need an exit strategy, the G20 will see a challenge from the "G2", African football will unite Korea, conflict over natural resources will grow, Sarkozy will be unloved and unrivalled, the kids will come together to solve the world's problems (because their elders are unable), technology will grow ever more ubiquitous, we'll all charge our phones via USB, MBAs will be uncool, the Space Shuttle will be put to rest, and Somalia will be the worst country in the world. And so the Tens begin.

The Economist: The World in 2010. Previously: 2009, 2008, 2007. How did we do last time around? Guest contributions: President of the European Commission José Manuel Barroso lines up Europe's priorities President of Russia Dmitry Medvedev argues for dialogue and cooperation President of the Maldives Mohamed Nasheed wants his island nation to remain above water President of Indonesia Susilo Bambang Yudhoyono would like for Islam and the West to live in harmony President of South Africa Jacob Zuma says Africa should rise to the occasion Director-General of the World Health Organisation Margaret Chan predicts the development of the flu pandemic Managing director of the International Monetary Fund Dominique Strauss-Kahn explains how to prevent another crisis CEO of Yahoo! Carol Bartz believes business leaders should tap into the information flood Chairman of HSBC Stephen Green argues that the financial sector should welcome emerging economies CEO of Fiat Group and Chrysler Group Sergio Marchionne thinks greener cars require bolder action CEO/CTO of SpaceX Elon Musk says the private sector should handle space travel

Gramm-Leach-Bliley, Ten Years On

HP LaserJet P10006 — Thu, 12 Nov 2009 15:30:57 -0800

Ten years ago today the government reversed one of the key elements of the Depression-era banking laws, knocking down the firewall between commercial banks, which take deposits and make loans, and investment banks, which underwrite securities. The repeal of the Glass-Steagall Act of 1933 was seen at the time as a way to help American banks grow larger and better compete on the world stage. But not everybody at the time saw it as a good thing: Senator Byron Dorgan, Democrat of North Dakota, was one of eight senators who stood up to oppose the repeal of Glass-Steagall in 1999, and today many are wondering if re-instating Glass-Steagall or something like it might go a long way towards preventing future financial meltdowns. What does Dorgan himself advocate today? "Three things," the senator [says, see "who stood up to oppose" link above]... "One is to separate investment banks and FDIC-insured banks. Second, prohibit FDIC-insured banks from dealing in risky financial instruments on their own proprietary accounts... And third, abolish 'too big to fail.' If you're too big to fail, you're too big. Too big to fail is what I call no-fault capitalism."

The Warning

HP LaserJet P10006 — Tue, 20 Oct 2009 15:32:50 -0800

Tonight on PBS, Frontline airs a new investigative report entitled The Warning (sneak peaks 1 & 2), which profiles Brooksley Born, who (as head of the CFTC from '96-'99) was almost alone among regulators in warning of the potential dangers of derivatives.

The Fate of Derivatives Regulation

HP LaserJet P10006 — Sun, 18 Oct 2009 13:48:25 -0800

Last week the House Committee on Financial Services approved legislation to regulate derivatives. Some critics contend that the legislation does not go far enough, and there is fear that there are too many exemptions to the rules: reforming the $42 trillion market for credit swaps is crucial if taxpayers are to be protected from future rescues of institutions deemed not only too big but also too interconnected to fail. Derivatives have been called the crystal meth of our financial sector, and the "financial weapons of mass destruction" that were the single greatest cause of the economic meltdown. Calls for their regulation have been growing since the financial crisis began last year. Recently, amid the continued outcry and criticism about the handling of the financial crisis, a team of computer scientists has concluded that: ...derivatives may be computationally intractable to price even when buyers know almost all of the relevant information, and furthermore this is true even in very simple models of asset yields... [.pdf link to their findings.]

Economist attacks Krugman as superficial and partisan.

shivohum — Mon, 28 Sep 2009 09:42:26 -0800

Paul Krugman attacked professional macroeconomists (previously). John Cochrane, an economist at the University of Chicago, returns the favor, arguing that Krugman deeply misrepresents current economic ideas because he's abandoned economics as a "quest for understanding" in favor of trying to be the "Rush Limbaugh of the Left."

"Man has an invincible inclination to allow himself to be deceived..."

peachfuzz — Tue, 15 Sep 2009 11:34:32 -0800

Matt Latimer worked as one of Dubya’s speechwriters during the president’s final twenty-two months in office.

Inside the financial crisis, from a speechwriter's point of view. And from a different vantage.

Sometimes When You Give, You Get Back

saulgoodman — Mon, 31 Aug 2009 07:57:34 -0800

TARP investments yield 15% returns. Almost trom the start, critics characterized the TARP program that first began under the Bush administration and that continued through early this year under President Obama as a taxpayer funded giveaway, while government officials insisted it was a long-term investment program whose initial costs would eventually turn a profit as economic recovery began. Now the NY Times reports that the program has already yielded $4 billion in profits, and a separate report reveals that related Federal Reserve loan programs aimed at economic stabilization have returned $14 billion in profits.

Obama's Bank Changes

atmosphere — Wed, 17 Jun 2009 18:32:08 -0800

US unveils banking reform plans. But will the proposed measures adequately address the causes of the current crisis? The bottom of the article contains some US media reactions, inluding the Huffington's "The Good, The Bad and The Ugly".

Edmund Andrews writes about his credit crisis

russilwvong — Thu, 14 May 2009 18:03:17 -0800

My Personal Credit Crisis. By Edmund Andrews, economics reporter for the New York Times. I felt foolish, ashamed and angry.... Why had I been trying to live a lifestyle that I couldn’t afford? Why had I tried to keep up the image of a conventional suburban family man, when nothing about my situation was conventional? How could I have glossed over the fact that we had been spending about $3,000 more than we were earning, month after month after month? How could a person who wrote about economics for a living fall into the kind of credit-card trap that consumer groups had warned about for years? Via Brad DeLong.

Hey Brother Can You Spare Some Change I Can Believe In?

saulgoodman — Wed, 13 May 2009 13:16:54 -0800

President Obama has announced he will seek broad new authority to regulate the financial derivatives markets. As has been discussed many times previously here on the blue, the massive unregulated financial derivatives markets (estimated to be in excess of hundreds of trillions of dollars in overall scale) have been one of the major contributing and complicating factors in the current global financial crisis. Warren Buffet once famously described derivatives as "Weapons of Financial Mass Destruction." And more recently, even stalwart anti-regulation crusader Allen Greenspan has had a change of heart, conceding that he was mistaken to oppose tighter regulation of the derivatives markets. So the real question now becomes: With an emerging consensus and executive support on the side of these reforms, will congress finally be able to get the job done?

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.

bankers with a herd mentality?

Pants! — Mon, 20 Apr 2009 12:04:55 -0800

Sodnomdarjaa Khaltarkhuu never expected to be a metaphor for the far-reaching impacts of the financial downturn.

"The Lighter Side of Pain: What’s Up with Our Global Economy" with P.J. O'Rourke

inkyroom — Mon, 06 Apr 2009 19:35:41 -0800

"The Lighter Side of Pain: What’s Up with Our Global Economy" with P.J. O'Rourke. The keynote talk at the annual Tom Wolfe Weekend Seminar at Washington & Lee University. Prefaced by some rambling remarks by Tom Wolfe '51 himself.

Paging Duncan Fletcher...

saulgoodman — Mon, 23 Mar 2009 10:56:49 -0800

Who will be our era's Duncan Fletcher? Fed up with widespread financial sector double-dealing, profiteering and opportunism in the aftermath of the 1929 stock market crash that triggered the Great Depression, a soft-spoken, conservative Democrat senator from Jacksonville, Florida stepped up to play an instrumental role in shaping post-Depression era financial policies. Known previously throughout his career for tending to side with banking industry and big business interests on policy matters, Fletcher's crusading campaign to establish more effective financial regulations earned him the title "Dixie's Reluctant Progressive" (as an interesting aside, note how accurately the Amazon tags for Fletcher's biography reflect these historical nuances). In addition to both the Securities Act of 1933 and the Securities Exchange Act of 1934, Fletcher played a key contributing role in shaping the Glass-Steagall Act of 1933. Many analysts consider the repeal of this act (which was gradually whittled away under pressure from the banking industry before its repeal by the Republican legislature under the Clinton White House in 1999) to have played a major contributing role in the US's current financial crisis.

What the FEC couldn't figure out

shii — Fri, 20 Mar 2009 23:16:04 -0800

Matt Taibbifilter: Among other things, the GAO report noted that the entire OTS had only one insurance specialist on staff — and this despite the fact that it was the primary regulator for the world's largest insurer! This week's MeFi stories have generally failed to explain the reasoning that caused the recession, even though Jon Stewart was basically on the mark. Now, Rolling Stone's only reporter lays it all out The Big Takeover, a typical combination of zealous snark and the overlooked, damning facts needed to clear up a ridiculously complicated story.

Where did all the money go?

pharm — Fri, 20 Mar 2009 03:35:26 -0800

Where did all the money go? is just one of the enties to GOOD's financial crisis infographic competition. The winning entry (Part 1,Part 2) is excellent, but the economics geek in me liked the extra information on the nature of money in the first link.

The Pirate Pose

VicNebulous — Fri, 13 Mar 2009 08:53:56 -0800

Hilarious and incisive piece by Tom Wolfe about (pre-Crisis) hedge fund managers, tensions between old and new money in Greenwich, on Park Ave., etc.

Can Vegetarians Still Eat the Rich?

saulgoodman — Fri, 06 Mar 2009 10:42:56 -0800

Newsweek discusses Obama's "War on the Rich," a timely story, considering Bloomberg's recent christening of the "Obama Bear Market." And on a tangential note, TPM points out that those bankruptcy law reforms enacted under the Bush administration specifically included new provisions aggressively lobbied for by the "International Swaps and Derivatives Association," which were designed to protect the derivatives and swap industries. Yet another example of good timing. Meanwhile, something smells foul at Merrill Lynch.

Wall Street on the Tundra

shii — Wed, 04 Mar 2009 18:41:55 -0800

"Iceland is no longer a country. It is a hedge fund." Also: exploding Range Rovers and the environmental impacts on elves. (Pre-vi-ous-ly.)

Treasury paid $100 for every $66 in assets in top-ten TARP deals

shivohum — Thu, 19 Feb 2009 20:40:02 -0800

The Congressional Oversight Panel, headed by Harvard Law professor Elizabeth Warren, notes in its third monthly report that for every $100 Treasury spent on its ten largest TARP deals, it received back only $66 worth of assets -- significantly less than for roughly comparable private parties.

Homo Evolutis

homunculus — Wed, 18 Feb 2009 21:15:35 -0800

Juan Enriquez: Tech evolution will eclipse the financial crisis. "Even as mega-banks topple, Juan Enriquez says the big reboot is yet to come. But don't look for it on your ballot -- or in the stock exchange. It'll come from science labs, and it promises keener bodies and minds. Our kids are going to be ... different."

The Failure of the Business Press

ornate insect — Wed, 11 Feb 2009 13:25:55 -0800

How Could 9,000 Business Reporters Blow It? A former Wall Street Journal writer dissects why business reporters bought the bull—and missed the biggest story on their beat. from the linked Mother Jones article: FOR CASUAL readers of business coverage—that is, most of us—the past 18 months have been a crash course in things we never knew existed but that, we are told, have already done us all irreparable harm. Not only are the problems catastrophic, goes the somewhat frustrating message, but it is already too late to do anything about them—other, that is, than pay for them.[...]business journalists as a rule are as smart, sophisticated, and plugged-in as they seem. And yet that army of professional business reporters—an estimated 9,000 or so nationwide in print alone—for all practical purposes missed the biggest story on the beat. Why? ** In addition to examining the question of why the mainstream business press mostly failed to recognize, predict, or properly understand the current financial crisis, the author of the article, Dean Starkman--who worked as a Wall Street Journal staff writer for eight years ending in December 2004 and now critique[s] the business media full time at the Columbia Journalism Review--also addresses the dismal failure of the financial regulators: IT WASN'T JUST the media abdicating their watchdog role: Just as financial news outlets were weakening, regulators were also abandoning the field, leaving business reporters starved of the investigative leads they rely on.[...] In 2002, the [FTC] announced a then-record $240 million predatory lending settlement involving Citigroup's giant subprime units, and covering no fewer than 2 million customers. Since then the FTC has brought no major consumer lending cases. Zero. The last such case brought by the Office of the Comptroller of the Currency, against Providian National Bank, came in 2000.[...] It is worth remembering that prior to the Enron, WorldCom, Adelphia, and Tyco scandals earlier this decade, the SEC had already opened formal investigations into each doomed company—forcing disclosures that tipped off investors, yes, but also providing road maps and official cover to the financial press. (The problems at Enron, a special case, were first uncovered by a short seller, who tipped off reporters.) Contrast that with the most recent disasters: Bear Stearns, Lehman Brothers, AIG, Fannie Mae, and Freddie Mac had all collapsed before the SEC had even launched an investigation....

Icelandic grannies and anarchists protest shoulder to shoulder demanding new elections in Iceland

Kattullus — Thu, 22 Jan 2009 10:43:54 -0800

Protests have rocked Reykjavík since Tuesday: Envious of Obama, Icelanders hurl yogurt and stage riots for new leaders, Global financial crisis overwhelms tiny Iceland, Flickr set of pictures of Tuesday's protest in front of parliament (complete with pepper spray on camera lens), AFP photos from Tuesday's protest, video from protests 1, 2, 3 & 4, Icelandic protesters pelt PM's car (includes short video). New age of rebellion and riot stalks Europe, The Icelandic "Facebook Revolution", Iceland is Burning part 1 & part 2 and Reuters factbox on Iceland and its economic crisis.

The bubble to end all bubbles?

up in the old hotel — Mon, 05 Jan 2009 16:29:40 -0800

The cover of a major financial publication warns: If you're holding U.S. Treasuries, GET OUT NOW! As has been noted previously, investors have headed for the financial equivalent of a bomb shelter -- U.S. Treasury bills and notes -- triggering an epic rise in prices and pushing yields (which move inversely to prices) to zero. Now, with a weakening dollar and gold prices holding steady, some see Treasuries as a bubble that's about to pop. Who will apply the pinprick?

Will it be Japan, which holds half a trillion of our debt? The president of a Japanese credit rating agency says the land of the rising sun should write off its holdings of U.S. Treasuries or start building U.S. roads and bridges in what he sees as Marshall Plan II.

Japan's holdings of U.S. debt is second only to China's, which has announced plans to build its way out of economic collapse. Analysts worry that it may dump its massive stockpile of U.S. debt to pay for it.

Another ominous sign: the price of an index funds that shorts (bets against) long-term Treasuries is on the way up.

If the bears are right and this bubble pops, it could be really bad:

Because foreign holdings represent a significant proportion of the stock of Treasuries outstanding, a collapse in Treasuries prices might soon be reflected in a collapse of the US dollar, with the accompanying threat of hyper-inflation in the USA and depression elsewhere. At that point, many investors might wish they still enjoyed the comparative calm of the ‘credit crunch’.

Via the FT's excellent Alphaville blog.

"Please pay no attention to the problems we are failing to address"

homunculus — Mon, 05 Jan 2009 00:12:55 -0800

The End of the Financial World as We Know It. "We have a brief chance to cure ourselves. But first we need to ask: of what?" How to Repair a Broken Financial World. "There are obvious changes in the financial system to be made, to prevent some version of what has happened from happening all over again."