Redacted Version of the January 2012 FOMC Statement
December 2011 January 2012 Comments Information received since the Federal Open Market Committee met in November suggests that the economy has been expanding moderately, notwithstanding some apparent slowing in global growth. Information received since the Federal Open Market Committee met in December suggests that the economy has been expanding moderately, notwithstanding some slowing in global...
On Financial Intermediation
I appreciate Steve Randy Waldman, who writes the excellent blog Interfluidity. Even before I started blogging, while I was at RealMoney, we interacted over CPDOs, along with Alea, and several others that were onto the scam. That was a fun time, because aside from the Canadian rating agency Dominion, there was no one else questioning...
The Rules, Part XXIX
Risk premiums should never be capitalized, they should only be taken into income as earned. This may end up being another odd post of mine. I’m going to start writing about bank regulation, but I will end up talking about monetary policy. There are many people who hate the rating agencies. They hate them because...
Too Many Par Claims versus Sub-Par Assets
The world is a maze of debt. Debts layered on debts. The Earth and its productivity is roughly the same or better than prior years. What is the problem with the economy then? The problem is this: there are entities that made bad loans in the past that expect to be paid back in full. ...
Goodbye 2011
I tried to think of a post where I would bring out the best of 2011 economically, but the best I could some up with was, “It could have been worse.” That doesn’t convey much fondness. 2011 was characterized by using debt to “solve” debt problems. Avoid default, extend the loan. Or, let a public...
2011 Financial Report of the US Government
There is little to no fanfare for the release of this report, (why do they release at such a distracted time of year, where people will ignore it?) which strips away a lot of the malarkey that the US Government delivers by providing data on an accrual basis, rather than on a cash basis, which...
Returns on Equity Amid the Financial Crisis, Response
I appreciate constructive criticism. I particularly appreciate comments at this blog, regarding my long article on how return on equity changed during the financial crisis. The reviewer said, In a world in which I didn’t have only 20 minutes to read, analyze and write about this paper, I’d like to think through his model choices....
Risk-Based Liquidity
When there is financial failure, it comes as a result of illiquidity. Now, truly, these parties are insolvent, because they took the risk of not being able to pay cash when it was due. Illiquidity and insolvency are really the same thing, though many obfuscate. If you can’t pay cash, it doesn’t matter what your...
Risk-Based Liquidity
When there is financial failure, it comes as a result of illiquidity. Now, truly, these parties are insolvent, because they took the risk of not being able to pay cash when it was due. Illiquidity and insolvency are really the same thing, though many obfuscate. If you can’t pay cash, it doesn’t matter what your...
Returns on Equity Amid the Financial Crisis, Redux
To have a full version of my article, with the equations that explain my reasoning, Returns on Equity amid the Financial Crisis. Thanks to all who read it.
Returns on Equity Amid the Financial Crisis
I wrote the following for the 2012 Baltimore Business Review. When it is publicly available on the web, I will highlight it. For now, I will offer you the unedited version of my paper that will be published there: -==-=-=-=-=-=-=-=–==-=–=-=-=-==–==-=–=-=-==-=-=-=-=-=-=-=-=-=-=-=-=- Returns on Equity amid the Financial Crisis Abstract From 2005-2010, the change in public...
Musing Over Glass-Stegall
This is one area where I would like feedback from my readers. My view is that the repeal of Glass-Stegall had little impact on the crisis. Most of the crisis occurred as a result of ordinary failures in investment banking, and commercial banking, with little change from combining them. I would argue that the overall...
