Treasury Methodology Begs Essential Questions

From today's Treasury methodology paper : To guide estimation, the BHCs were provided with a range of indicative two‐year cumulative los...

Treasury tries to bury methodology

The methodology of the Treasury stress tests are going to be released today around 2 pm EST. This is when most companies announce embarras...

Elizabeth Warren Grills Geithner

During a Congressional hearing yesterday Elizabeth Warren pointedly asked Treasury Secretary Tim Geithner about the plan for assisting home...

TARP Anecdote

I was talking to someone at a bank and he said the form needed to receive TARP funds was 4 pages. The form needed to pay it back, 16. He a...

Solow Reviews Posner

Robert Solow is one of my favorite economists even though he's a liberal and I'm not, and he helped focus a lot of attention on agg...

When Government Does You a Favor

The best way to make someone like you is not to do them a favor, but ask for one. That is, ask a new acquaintance for some modest help with...

AIG Pleads Their Case

AIG's memo to legislators, humorously labeled 'strictly confidential', has made it to the internet (see here ). It highlights t...

Stupid Microsoft Issues

1) In the Vista Folders view the default attribute is by 'rating' and tag--you have to add 'modified date'. Modified date, ...

Stress Test Precision

It is important to have realistic objectives. Thus it was discomforting to know that in the words of White House Press Secretary Robert Gib...

Do Global Climate Models Contain Keynesian Macro Models?

In the 1970s there was a period when large scale, multi-equation macro models with hundreds of equations were used to forecast the economy. ...

Merton on the Crisis

Nobelist Robert Merton gave a talk on the crisis, and he had a few novel points. First, everyone castigates the markets for creating really ...

Mortgage Capital

Back in the late 1990's when I was allocating economic capital, residential mortgages had the lowest amount of risk assigned to any majo...

What is the Alternative to Value at Risk?

VAR has taken a lot of heat lately, mainly by people who never use it. If you are managing a desk of diverse instruments, it remains the be...

Religious Questions

We don't go to church, but I'm not stridently atheist. Indeed, I selfishly appreciate my two young son's belief in God right no...

MoonBat Crazy

I kind of wish this crisis happened in 1990 because then Ravi Batra would be head of the TARP oversight committee, and he's looking a lo...

Regulatory Capital Arbitrage

I was in charge economic capital allocations at KeyCorp. We allocated 'economic' or 'risk' capital within the bank. This e...

Emphasis not Helpful

Often you read an essay, and the words in italics, or in ALL CAPS, seems off. The emphasis is unhelpful at best, and makes the passage diff...

More Educated, Less Informed

In Just How Stupid Are We? Rick Shenkman notes that in the 1940, 60% of Americans had not finished 8th grade. Currently, most Americans ha...

Behavioral Finance in Practice

Barberis and Thaler have a survey chapter in the Handbook of Finance on Behavioral Finance. They note the following financial opportunitie...

Will Citi, Goldman et al Game Geithner's Plan?

Doubtful (see scare potential at FT , picked up by many others ). The analogy to Enron is not applicable because there are more players to ...

Technocrat=Good Government

Felix Salmon is blogging at Reuters now. He highlights lots of stuff I like, and a lot I don't like (mainly, too many posts). Felix Si...

Scope of Financial Crisis

One interesting puzzle of this crisis is that while it started with mortgages, it affected every financial sector pretty similarly. Below a...

Economists are Here to Help (heh)

Mark Thoma and Scott Sumner were on Blogging Heads talking about the financial crisis. They seemed to agree that taxing 'excess reserv...

Difference Between Economics and Physics

In physics, there are constants defined to 10+ decimal places. Most economic debates are about the sign: is Coke riskier than GM stock? Do...

Stiglitz is an Idiot

Ok, I read on Tyler Cowen's blog that using negative words like "idiot" and "moron" increases the number of commente...

Chomsky Making Sense

Of course, we have to back to his work on linguistics. In this short BBC interview , he articulates his their of the inherent ability of hu...

Fund Managers Still Don't Outperform

Fama and French have a new paper out on the ability of stock fund managers to outpredict the market. Short answer: no. In their words, ...