Felix Salmon

Volatility: The flipside of moral hazard

Jim Surowiecki today looks at the flipside of the moral hazard trade: if you can’t count on governments to bail you out in extremis, then you’re likely to have volatile and unpredictable markets.

Why financial reform won’t hurt employment

Meredith Whitney is trying to make an updated case that we can’t pass financial reform because it would cost jobs. I don’t buy it, partly because I simply don’t believe her numbers, which kick off with two interlinked claims:

Counterparties

Overnight markets: Sliding — Alphaville

Bill Clinton is actually, legally, running Haiti — Truthout

The WSJ’s ad campaign hits the L train in Williamsburg, misfires catastrophically — Twitpic

Counterparties

Robert Mugabe sends ‘ark’ of animals to North Korea — Guardian

Chicago’s mayor “gleefully” declares that he’s going to start posting all FOIA requests online — Sun-Times

Why it makes sense to fear Greek default

Is everybody overstating the consequences of a Greek default and/or devaluation? The Economist points out that Europe has seen quite a few defaults in recent decades (Russia, Poland) and also break-ups of currency unions (Czechoslovakia, Yugoslavia) — and that none of these events caused a lot of lasting damage.

When risk becomes uncertainty

It’s going to be another panicky weekend in Europe after today’s torrid market action: the positive effects of last weekend’s emergency meetings clearly didn’t last even until Friday, and the ever-weakening euro is now dragging down the continent’s bourses. This isn’t (just) a sovereign-credit issue any more: the financial markets have worked out that there’s a pretty simple trade-off between fiscal austerity and economic growth.

The silliest derivatives probe yet

The civil and criminal investigations of Evil Financial Products Which Destroyed The World have now officially reached the stage of farce, with “federal regulators and state officials” reportedly investigating the fact that banks traded municipal CDS at the same time as underwriting municipal bonds.

Counterparties

Alex Tabarrok on the fragility of CDO models. Excellent — MR

The key to happiness: Hate your ex — Atlantic Wire

The Google Job Experiment. Clever. — YouTube

Lies, damn lies, and oil spill statistics

Justin Gillis has a great story about how no one with the ability to do anything about it seems remotely interested in measuring the severity of the oil spill in the Gulf of Mexico. The ubiquitous 5,000-barrels-a-day number seems to be a massive underestimate, and the stated reason for not getting a better figure is weak indeed: