Average Joes and Janes are not the holders of the other side of complicated, over-the-counter derivatives contracts. Rather, hedge funds are the main holders. The bailout will involve a transfer of wealth — from the American people to financial institutions engaging in reckless speculation — that will be the greatest in history. This is one [...]
My congressman on the bailout. Here’s an idea: capitalize a couple of new banks with clean balance sheets under a new and intelligent regulatory structure. Treat these banks as safe havens for deposits transfered in from the FDIC from other failing banks. Let everybody else fail. Key advantages: Eliminates moral hazard. No secret handouts or [...]
One thing that is continually missing from the debate is any true understanding of what all the “toxic” waste actually is. The Federal Reserve should release the books for Maiden Lane LLC so we can all find out. If you read pro-bailout pundits, you get a lot of napkin math that fundamentally misunderstands structured MBS. [...]
I came up with my own bailout plan. It’s the same as Senator Dodd’s plan, except that the first 10 billion dollars must come from private individuals who have profited from the private financial sector over the last ten years, and furthermore, Paulson himself must put up over 80% of his personal fortune. These people [...]
One name keeps coming up when pundits discuss who accurately predicted the current crisis. Does he pick lottery numbers?
A left of center perspective on the latest bailout. What amazes me is how nobody knows anything about the specifics of the bailout. For instance, where’s my $900 dollars of AIG stock? This could go down as the biggest single swindle in history. Speaking of which, know of any other great historical swindles?
Claims of moral hazard seem common in cases where the government steps in for a bailout. I would not expect any different with the current Fannie Mae and Freddie Mac crisis. This is at least an order of magnitude bigger than the Bear Stearns buyout, though (depending on the extent of homeowner fraud) the underlying [...]
Yahoo has officially rejected Microsoft’s offer. My own opinion is that this reflects more on Microsoft’s desperation (and consequent incentive to raise the price) than any thing else. Remember, don’t charge what something is worth, charge what somebody is willing to pay.
A modest exploration of freedom zero. I wonder how freedom zero will develop in the handset market with the introduction of android.