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Archive for October, 2008

Scary Thoughts on the Lack of Size and Humor

Andy Spero | October 31, 2008 | 0 Comment(s) |

Disparate issues linked by their overwhelming smallness.

It’s been a few of weeks since our last post, and such a long gap is highly unusual as we’re rarely at a shortage for words.  We’ve been busy, but more importantly, we didn’t feel compelled to write about our normal topics of interest; despite the market volatility, little has changed in the intervening days.

In addition, the accumulated effect of seeing so many behave in such small ways over large matters was and is rather sad and depressing.  No, we’re not talking about… Read the rest

TARP? Garp? Is There a Difference?

Andy Spero | October 14, 2008 | 0 Comment(s) |

We must admit, this is our first post that is truly in bad taste, but it seems so appropriate that we just could not help ourselves.  TARP. TARP.

We’re trying to write seriously about the government’s–the Treasury Department’s–latest expediencies and tactics to … well, we’re not sure of the objective… presumably, to make it all go away so that Mr. Bush and his appointees can enjoy their last Autumn and Christmas in D.C.  (Why would anyone want to ruin Mr. Bush’s last Christmas in the White House by causing the possible financial ruin of much… Read the rest

It's Time!

Andy Spero | October 12, 2008 | 0 Comment(s) |

As the IMF, the G7 and the President “endeavor to persevere,” we have of own recommendation to end the global financial crisis.

We’re Not Socialists or Statists:

We very much believe in freedom and personal responsibility; strongly prefer private enterprise to government services and bureaucracy; prefer democracy–well, republican democracy, at least–to centralization and authoritarianism (except in matters of religion); and prefer free markets and capitalism to any of their failed alternatives.  We’re not libertarian, but on economic issues, we’re not that far away.

We’re certainly not leftists.

We’ll hold our nose and… Read the rest

Eliminate Proprietary Trading at Insured Institutions

Andy Spero | October 11, 2008 | 0 Comment(s) |

Today, October 11, we’ve been organizing our thoughts about the ongoing financial crisis.  We’ll have more to say about ways to remedy the immediate crisis, but this post contains a specific recommendation for when the crisis ends, which today may seem to be far, far off.  We’re sure that–whether justified or not–many laws and regulations will be revised and toughened, and this should be one of them.

We make this recommendation because from our experience and from the inferences that we’ve made about firms throughout this crisis, it seems that… Read the rest

Where Have All the Grownups Gone?

Andy Spero | October 11, 2008 | 0 Comment(s) |

When will they ever learn?

Peggy Noonan has another excellent opinion column in today’s The Wall Street Journal.  It is entitled, Playing Frisbee on a Precipice.  The title and the column’s blurb say it all: “Our political class lacks the seriousness this moment demands.”  Clearly, her essay is about the smallness of our present day politicians and their advisers.

She has perfected the ability to lament, yet simultaneously expect, the fallen nature of man.

We’ve written about our admiration for Ms. Noonan on a number of occasions, and once again she… Read the rest

The Unexamined Crisis

Andy Spero | October 10, 2008 | 0 Comment(s) |

Update (October 14): Dennis Berman has a nice article about last week’s panel discussion, Street’s Demands May Stir Public Wrath, in The Wall Street Journal.  It is very similar to this post from Friday.  While we lament the lack of intellectual curiosity–or any type of curiousity or self-examination or self-criticism–in our entry, Mr. Berman mentions the possible implications of such obtuseness.  Being self-absorbed and self-involved makes it difficult to know when the hoi polloi and politicians have turned against oneself.  We like Mr. Berman’s seemingly… Read the rest

Well, This Is a Fine Mess You've Gotten Us into….

Andy Spero | October 10, 2008 | 0 Comment(s) |

Messrs Paulson, Bernanke, Bush, Reid, and Mrs. Pelosi.

(Edited and slightly revised on 10-11-08)

We’re always deeply suspicious when a politician tells us how he or she is going to “fix the economy.”  The best they can do is get out of the way, but unfortunately they rarely do.  That’s the sinful, human problem created by that all-too-common combination of hubris and ignorance.

As we mentioned in a previous post, the most honest moment of the current Presidential campaign was an ad in which McCain admits that he doesn’t know much about economics, and it… Read the rest

10-09-08: The Expiration of the Short-Selling Ban

Andy Spero | October 9, 2008 | 0 Comment(s) |

We’re not sure whether to start this post on a sarcastic tone or not.  The sarcastic start is “it’s too bad the short-selling ban expired, could the dear reader imagine how far stocks would have fallen without it?”  But, the market did tank again today.

Instead, we’ll note that when such a ban is arbitrarily imposed during a seemingly negative event, most participants infer/conclude that the event is worse or much worse than they would have otherwise thought or were led to believe–possibly worse than anyone ever imagined.  (By arbitrarily, we mean spur-of-the-moment and not due to a… Read the rest

When the U.S. Sneezes…

Andy Spero | October 9, 2008 | 0 Comment(s) |

the rest of the world complains.

On Tuesday, we posted The Importance of the Rule of Law, which describes how Russia’s problems are unique from the West’s and, as we see it, are the result of self-destructive policies and desires.

In that entry, without providing additional links to articles, we insinuated that The Wall Street Journal‘s reporters seemed to be agreeing with Russian leaders that, of course, Russia was an international victim of the credit crisis in the USA. … Read the rest

implied RISK NEUTRAL probability of default, redux

Andy Spero | October 9, 2008 | 0 Comment(s) |

Update: we have newer posts on the topic, too, including Risk Neutral Valuation: There Are at Least Two Expected Values, that describes the difference between real and risk neutral distributions.  We also have: Price Implied Default Rates that provides an example more like a risky bond, and a multi-period example: Multi-period Bond Price Implied Default Rates and CDS.

The Wall Street Journal has an article about Iceland’s financial problems in today’s paper: Aftershocks Felt From Iceland.  It turns out that the country has more problems than being a… Read the rest

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