Alchemy of Finance

I was reading George Soros' book, the Alchemy of Finance , and was impressed by the fact that it has a Foreward to the second edition, a...

Obama Might Allow GM to go Bankrupt

Great news . It would be nice to actually see a big company fail. Currently, GM bonds trade at an average price of 18 cents on the dollar....

AIG Trader Writes Letter

Jake DeSantis explaining why he feels entitled to a $740K bonus (after tax!) rings a bit hollow. This article takes it apart pretty well. ...

Is the Market Better than Regulation?

Someone asked if the market also would fail Geithner's objectives for new regulations. Surely not, if we define 'to serve, protect ...

Geithner Calls for Better Regulation

A bold stand, up there with a call for better health care and education. Timmy's spreech contained this nugget : To address this [crisis...

Is 'Experienced Mortgage Expert' an Oxymoron?

This week's Treasury plan notes 5 criteria for new investors in the PPIF, including this one: 2) Demonstrated experience investing in El...

Not the Time to Own Good Junk

Currently, high yield bonds (aka junk bonds) have spreads of around 1200 basis points to Treasuries, though that is a rather unfair benchmar...

I Love My Commenters

... but only in the way I love hot dogs. Ann Althouse recently got engaged to one of her longtime commenters.

Shiller Did Not Call the Bubble

In Shiller's Irrational Exubrance , 2nd edition, there is a section on the housing prices, and a graph showing housing prices rising. B...

Bad Assumption More Than Bad Intentions

I listened to a bloggingheads by Bill Cohen , a former investment banker who wrote House of Cards. He seems to blame this on hubris, not un...

Prospect Theory Explains Everything, Nothing

I was reading this quote from Kahneman and Tversky, and found this part very revealing: Low probabilities, however, are overweighted, and ve...

Geithner's Plan Not Bad

I really disliked Tim Geithner's ' stress test '. Taking over companies that could be insolvent in the future is a horrible pre...

Economic Inference With Little Data

Interest rates fell sharply last week as news came out about the Fed's new program of buying long term bonds. 10 year yields went from ...

Experimenting with Classes

I read the following story, probably apocryphal: An economics professor at Texas Tech said he had never failed a single student before but h...

2009 NCAA Wrestling Results

The big result was that dominating Brent Metcalf was defeated by Darion Caldwell in the finals at 147 pounds. Caldwell had pinned Metcalf b...

How to Cature Rents Without Seeming To

In many cases, one has something of value, but it is considered impolitic to seize this value. Over on Offsetting Behaviour , Eric Crampton...

Fama on Taleb

From French and Fama's website : Q: It would be very enlightening if you would comment on the Nassim Nicholas Taleb ("The Black Swa...

Charles Murray at the AEI

Charles Murray was honored by the AEI last week, and gave a talk on happiness in the context of modern America. His talk hit on an interest...

Retention Bonus in Cash?

AIG paid 22 people over $2MM each as retention bonuses, even though they worked in the Financial Products Division that basically sets the s...

Value at Risk, Credit Default Swaps, Copulas...Harvard MBAs!

In the ever expanding effort to get down to the root causes of this crisis, journalists are facing a very tough but exciting problem. Perha...

AIG Bonuses

A lot of outrage over $450MM in bonuses, but with 115,000 employees, that's only about 4k per employee. Some are contractual payouts fr...

Closed End Fund Discounts

There are problems with using historical cost accounting, and the move to accounting based on market values seems at first glance to be more...

Why We Make Mistakes

There are many books on 'behavioral economics', but Why We Make Mistakes by a journalist is a pretty good summary. Indeed, I was l...

Review of Taleb's The Black Swan

I wrote this a while ago, mainly based on posts I had done over at Mahalanobis , and posted it on my website . I figure I'd update it a...

Stewart Lectures Cramer

If you haven't seen it , Jim Cramer went on The Daily Show and was totally owned by John Stewart. Cramer went on hoping to merely apolo...

Government Incentives

In abstract, a company run by the government is better than the private sector, because they operate maximizing total social welfare, not ju...