financial crisis :: Spero Consulting

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Information? Knowledge? and Wisdom?

Andy Spero | July 18, 2010 | 0 Comment(s) |

Which One (or more) Is (are) Missing?

Peggy Noonan has an excellent column in this weekend’s edition of The Wall Street Journal: Youth Has Outlived Its Usefulness.

In it, she laments the lack of wise old men (and women) in positions of power or near those in powerful positions.

That’s something that we have written about by asking “where have the grownups gone?” (See the first second and third fourth results; we forgot to consider this post now appears at the top of the search results.) In those posts we lamented the

… Read the rest

It’s the Uncertainty, Stupid.

Andy Spero | June 22, 2010 | 0 Comment(s) |

We’re a couple days late in mentioning it, but if you haven’t seen the excerpt of the new book, Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis, by Anatole Kaletsky, we suggest that you read it. The excerpt, The Benefits of the Bust, was published in this past Saturday’s edition of The Wall Street Journal.

Much of it deals with the inadequacy of economics as a science, including economists inability to say anything relevant about the financial crisis and the implications about various proposed solutions… Read the rest

Worse than Katrina?*

Andy Spero | January 14, 2010 | 0 Comment(s) |

The Government’s Response to the Financial Crisis of 2008

A confluence of events during the past few days reminded us of how the federal government failed the nation during the financial crisis of 2008. At the time, we mentioned that our public servants panicked, but now we think that we can offer a better explanation of why that occurred. Bank regulators, including the Fed, the lender of last resort, were utterly unprepared for it.

The news the past two days shows how utterly unprepared the nation of Haiti was to face… Read the rest

This Isn’t Good News for CMBS Holders and Erstwhile Pipelines

Andy Spero | August 15, 2009 | 0 Comment(s) |

We occasionally write about CMBS or Commercial Mortgage-backed Securities and the CMBX index. For example, last November, we wrote CMBS Is Like Lumpy MBS and That’s Not Good. We tend to get more hits on our tongue-in-cheek post, How to Trade CMBS? and find that a bit scary.

What should truly frighten both CMBS holders and banks with large commercial-mortgage loan portfolios more than our discussion of our page rankings is this article in Saturday’s edition of The Wall Street Journal: Hotels Deliver Some ‘Jingle Mail.’ The… Read the rest

An Out-of-this-World Analogy

Andy Spero | July 25, 2009 | 0 Comment(s) |

The physicist Michio Kaku has a short opinion column in Thursday’s edition of The Wall Street Journal: Jupiter Gets a Black Eye. In it, he mentions the Jupiter’s recent collision with a comet or asteroid–it created a fireball as big as the earth–and then discusses our planet’s vulnerability to relatively large and unknown space objects.

We like the column because it provides a nice–though not complete–analog of risk management at financial institutions. Actually, this is one instance where the government may do it better. (Wow, we can’t believe that… Read the rest

Of Rats and Men

Andy Spero | July 3, 2009 | 0 Comment(s) |

We are in the midst of writing a rather long post on the similarities between teenage girls with low blood sugar and daily and intra-day changes in equity prices. Namely, one can see huge swings in behavior, attitudes, and mood caused by seemingly very minor underlying events, e.g., “she looked at me the wrong way.” The “she” in this case being an eight-year-old sister.

However, we couldn’t complete that post because another thought keeps diverting our (limited) attention from it.

We were driving with the Chairman earlier today when she… Read the rest

Paul Volcker Has It Right

Andy Spero | June 18, 2009 | 0 Comment(s) |

(His Recommendations Were Ours)

Paul Volcker had an excellent op-ed column in Tuesday’s edition of The Wall Street Journal that we’re finally getting around to mention. It is entitled, “Moral Hazard and the Crisis.” It’s not actually a column but excerpt of a speech that he recently gave in Beijing.

If they haven’t read it, regular visitors of our site can skip Mr. Volcker’s speech because we have already discussed just about everything that he proposed, including the elimination of prop-trading at insured institutions; the titular problems of… Read the rest

Business Schools, Incentives, Uncertainty, and the Financial Crisis

Andy Spero | April 30, 2009 | 0 Comment(s) |

What Should It Mean to Earn a Master’s Degree?

We don’t answer that question here, but shouldn’t one be required to master something?

It Was a Matter of Time

Since early October, we’ve wondered when we’d see the first editorial criticizing MBAs and business schools for their role in the ongoing financial crisis.¹ In our mind, much of the blame should be shared between business types, i.e., MBAs, and so-called “quants,” with the majority of the blame placed on senior managers who permitted lax controls and misaligned incentives to… Read the rest

Some New Evidence to Support Mr. Johnson's Conjecture

Andy Spero | April 3, 2009 | 0 Comment(s) |

Yesterday, in And You Thought We Were Depressing we referred readers to an excellent article about the financial crisis by Simon Johnson: The Quiet Coup.

Regardless of your level of interest (or disinterest) in finance and the financial crisis, it’s definitely worth reading, and it is an excellent single source by which to understand the crisis. (It’s not short.)

One of the phenomena that he describes is how individuals move from jobs in the finance industry into government jobs and back.… Read the rest

Clawbacks: the Good, the Bad, and the Ugly

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

The Wall Street Journal has an article today entitled, Mack and Thain Lose ’08 Bonuses.

We’re neither sympathetic nor antagonistic towards Mr. Thain, who has only been in his position for a year; so, we take no glee in his being shut-out. Hopefully, he’ll be able to make-do with his $750,000 salary, $15-$20 million signing bonus from late 2007, and his other accumulated wealth from his past executive positions.

What interests us in the article is the mention that Morgan Stanley plans to implement compensation schemes that include “claw… Read the rest

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