"Austere Illusions" - @RSkidelsky on the predictable failure of fiscal #austerity http://t.co/3FJNOmqIlt
14 minutes ago
Category Archive: United States
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Time to Lift the Veil
A clearinghouse for credit derivatives trading? The severe stress in the credit derivatives markets since the inception of the sub-prime crisis has been reported in great detail in the financial press. Hitherto arcane CDOs and CDSs (Collateralized Debt Obligations and Credit Default Swaps) have become part of the popular vocabulary. An important aspect of these markets is that these products are traded over-the-counter (OTC) in bilateral transactions between banks and other institutions. In this sense, they are fundamentally different from other financial instruments such as stocks or equity options, which are mainly traded on exchanges. This distinction has many implications, the most important being that relative to exchange trading, OTC markets feature greater counterparty and operational risks as well as lower transparency. Counterparty risk arises from uncertainty about whether one side of the trade will fulfill its obligation in future. Operational risk arises from uncertainty about whether trades will be cleared and settled in an orderly manner by counterparties. Differences in transparency arise from the fact that information about trading volumes and prices is easily available in the case of exchange-traded markets, while in the case of OTC products it is difficult to obtain such data, and hence trading is more opaque.
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Coordinated Stimulus at the G-20: Why and How
Getting agreement on general language in support of all countries undertaking counter-cyclical macroeconomic stimulus measures at the upcoming G20 Summit will be easy, especially now that China and the United States have signaled plans for their own major fiscal packages. Getting a commitment to specific common policy actions will be difficult, as past summits have demonstrated.
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10% Intraday Swing
No one knows the future, but we can play the odds when they are in our favor. -
Investment advice for a wild market
Your retirement nest egg might have lost 40% of its value since this summer and 10% the last 2 weeks. What should you do? Here’s the advice I’ve been giving to friends who ask, as well as what I’ve been doing with my own portfolio.
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Back of the queue!
While the newsflow continues unabated, market engagement remains tepid at best; as noted, many punters (and banks) seem content to limp into year-end.
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Do Not Read This!
Evidenced by the fact that you re reading this, shows me you do not know how to follow directions. Great! You have taken the first step towards independent thought. I’d like to have a little fun, and take a break from Alt Energy (Chapter 2 is under construction).
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Fed Watch: Misguided Policies
Tim Duy:Misguided Policies, by Tim Duy: From the wires:15:30 *PAULSON SAYS MARKET TURMOIL WON’T ABATE UNTIL HOUSING REBOUNDSSuch comments always leave me with a sick feeling in my stomach – if policymakers are waiting for the housing market to rebound, they had better be prepared for a long wait. Sort of liking waiting for the NASDAQ to revisit the 5,000 mark. I think the biggest potential for policy error lies in maintaining the delusion that preventing housing, and by extension, consumer spending, from adjusting is central to fixing the nation’s economy. Policy would be best focused on supporting the inevitable transition away from debt-supported consumer dependent growth dynamic.
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Don’t Even Think About It
Ours is a world hopelessly addicted to looking at the past. The recent past in particular. That’s how the mind of homo economicus is wired and only with hefty doses of discipline can we alter the psychological fate that otherwise awaits the crowd. And so we all look over the past 2 months or so and come to hard and fast conclusions about where we’re headed.
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Why Bailouts Attract Handout Seekers
“The biggest surprise was how quickly it went from ‘I don’t need this,’ to ‘How do I get in? -Michele A. Davis, Treasury Department, head of public affairs
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Must-See Bailout TV Tomorrow: Waxman Power Hour
There is some must-see bailout TV tomorrow. Hedge fund managers John Paulson, Jim Simons, George Soros, Phil Falcone, and Ken Griffin will all be testifying tomorrow before the House Oversight Committee. I genuinely hope it doesn’t turn into a blame game and shouting match, but I don’t have a lot of confident that it won’t. The most interesting thing will likely be whatever prepared material they submit, so watch for that early tomorrow.
