Friday links mess things up again

By Felix Salmon
April 17, 2009

Obama’s Economics Speech: POTUS is by far the best communicator of economic concepts in the administration.

Why credit swaps encourage bankruptcy: It’s easier to buy protection than it is to negotiate.

More bad news on the recovery: Two more reasons why things are going to get worse before they get worse.

The Failure of #amazonfail: Emotion will always trump rationality.

Why do people like streetcars so much? A great discussion in the comments. Count me in among the streetcar-lovers, too.

A Heartbreaking Work of Staggering Hubris: I would so buy The Copula Identity in a heartbeat.


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Thanks, Felix. I’ll be sure to send you a review copy once I get John Grisham to ghost write it for me. By the way, I think I may owe you royalties.


Mostly I have been in agreement that CDS are generally a good thing, but I had never considered the BK angle before. Reducing incentives to negotiate an outcome other the BK seem to be a fairly horrible side effect, maybe one worse than CDS benefits. thoughts?

Posted by vm | Report as abusive

on credit swaps and bankruptcy:

Imagine you sell fire insurance to homeowners. one day, a customer has a small fire in their kitchen. they can put it out with some damage, but instead they decide to let the whole house burn down, so they can collect insurance. Who is going to want to sell insurance to people like that?

My guess is the same people who sold CDSs. The geniuses who know how to assess risk.

So maybe one of the defenders of the swap out there can provide the names of some CDS sellers who can actually price risk somewhere in the ballpark of reality. I’m guessing not.

Posted by KenG | Report as abusive

For some time there have been worriers about this issue (CDS/Bankruptcy) with regards to EM Sovereign CDS.

Posted by Matthew | Report as abusive