Barbara Kiviat pulls this chart from a paper by Ryan Bubb and Alex Kaufman, who have an op-ed in today’s NYT about credit cards. It basically makes the same point, in empirical and visual form, that Mike at Rortybomb made in a more theoretical and mathematical form last month.
JC makes a very good point in the comments on my blog entry about how new banks are no more likely to succeed than old banks: why on earth should we think, in that case, that if we tear down the SEC and start again, we’ll end up with any improvement on what we have right now?
I was offline most of yesterday attending a high-intensity series of presentations hosted by Esquire magazine in the magnificent suite of rooms at the top of the new Hearst tower. GE’s Eric Loewen was there, talking about nuclear power, and specifically what he calls a PRISM reactor — a fourth-generation nuclear power station which runs on the nuclear waste generated by all the previous generations of nuclear power stations.
Are you ready for 3,000 words on Gannett newspapers, credit default swaps, and the negative basis trade? In that case, Richard Morgan is your man. But boiled down to its essentials, Morgan is making a strong form of the same argument we’ve been hearing for a while — that when bondholders are fully (or more-than-fully) hedged in the CDS market, they can have an incentive to push a company into default.
One of the great things about making your entire book available for free online is that it gets read by all types — even Glenn Hubbard. And since Hubbard has a book of his own to plug, he’ll even enter the aid debate in public. He doesn’t have his own blog, so here’s Glenn Hubbard on Charles Kenny.
Hedge fund managers have very similar incentives to rogue traders: both of them, if they have a big loss, are going to be tempted to take a huge risk to get back into the black. If they succeed, they’re lauded as a genius; if they fail, they’re out of a job anyway.
When the TARP was being unrolled last fall, a simple question was often asked: rather than pouring good money after bad into banks which clearly had inadequate risk controls, why not just use that cash to start up fresh new banks unencumbered by toxic assets?