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Correcting Finance Industry Misconceptions

Andy Spero | March 31, 2010 | 0 Comment(s) |

The April 5th edition of National Review has a three-article, Financial Special section, consisting of:

  1. We Didn’t Deregulate by Veronique de Rugy (not on-line, yet)
  2. Break Up The Banks by Arnold Kling
  3. Resolve to Reform by Stephen Spruiell & Kevin D. Williamson (not on-line, yet)

All are worth reading but for slightly different reasons.

Ms. de Rugy does a very nice job of summarizing the misconception that there was general deregulation of financial firms in recent years. She also makes the point that certain policies and responses… Read the rest

Bernanke: No.

Andy Spero | January 24, 2010 | 0 Comment(s) |

FWIW: we say no to a second term.

This weekend there are many reports and commentaries regarding the U.S. Senate vote to confirm Ben Bernanke to a second term as the Chairman of the Federal Reserve. For example, see the article Backers Rally to Bernanke in The Wall Street Journal.

Mr. Bernanke neither deserves a second term nor can we, as a nation and economy, afford it.

Don’t Blame Him for any Bubbles

Many commentators, analysts, and economists blame Mr. Bernanke’s (and his predecessor, Alan Greenspan’s) easy money policies for… Read the rest

SCAP, The Government's Naive Stress Testing Exercise

Andy Spero | May 5, 2009 | 0 Comment(s) |

Or, Is It the Naive Government’s Stress Testing Exercise?

More Lack of Planning and Insight from Our Regulators and Government Officials

About one month ago–on April 7, to be precise–we asked, Where Will the Bank Stress Testing Exercise Lead?

In that post, we wrote that the tests could be designed one of three ways: (1) with a positive bias to ensure that all or almost all of the banks could pass the tests, (2) with no bias to get… Read the rest

And You Thought We Were Depressing

Andy Spero | April 2, 2009 | 0 Comment(s) |

Responding to our request for comments in yesterday’s post, Happy Anniversary to…Us!,  a reader from Australia pointed us to an excellent and quite comprehensive article in May’s edition of The Atlantic Monthly.  (Thanks Steven.)

The article is entitled “The Quiet Coup,” and was written by Simon Johnson, an econ prof at MIT and the former Chief Economist at the International Monetary Fund (IMF). Fortunately, as you can tell by the link, the article is freely available from The Atlantic‘s web site.1

Mr.… Read the rest

The Cure is Worse than the Disease

Andy Spero | March 28, 2009 | 1 Comment(s) |

We very much like James Freeman’s brief column, Fighting Geithnerism, in today’s (Saturday, March 28) edition of The Wall Street Journal.

In it, he summarizes Richard Breeden’s Congressional testimony, particularly his criticism of Treasury Secretary Geithner’s proposed changes in regulations and oversight of financial firms.

We liked it very much, because Mr. Breeden sounds so much like…well, like us, as it turns out.

In early February, we wrote Systemic Risk Regulation and Irony , which we subtitled, “Or Central Planning as a Market Solution,”… Read the rest

Separating the Mortgage Debacle from the Liquidity Crisis

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

Hernando de Soto has an interesting opinion column, Toxic Assets Were Hidden Assets, in today’s Wall Street Journal.

He makes the point that we’ve been making since September: that the mortgage debacle is separate from the liquidity/confidence crisis.

We think that he overstates the effect of derivatives–what he calls hidden assets–in creating the problem; however, we do think that the lack of accounting and the opacity of the contingent claims have exacerbated the liquidity/confidence crisis and make more difficult any restoration of confidence in large financial firms.  Despite the… Read the rest

Poor Mr. Geithner: No Forest, No Trees, Just Lost

Andy Spero | March 22, 2009 | 1 Comment(s) |

In a mistitled article, Geithner Banks on Private Cash, The Wall Street Journal reports that the Treasury Secretary plans to unveil some type of private-public partnership tomorrow, and, of course, “public” means “government,” not you and us.1 (Wasn’t that Neal guy trying to hire private money managers for the TARP stuff since October? How well did that work?)

If only Mr. Geithner would consider a private solution, but we don’t think that the our elected and appointed officials have the discipline (nor guts nor imagination) to offer… Read the rest

Geithner's Augean Stables

Andy Spero | February 11, 2009 | 0 Comment(s) |

Last week, in The Stock Market and the Stimulus Package we wrote how we doubted the efficacy of the proposed “stimulus” packages, and asked if there was any evidence–via the stock market–of expectations of wealth creation from those proposed wealth transfers.  Even prior to Tuesday’s nearly 5% drop, there didn’t seem to be any.

Yesterday, the Senate passed its version of the bill, and minutes after the vote the Dow-Jones Industrial Average increased about ten points before sinking a couple… Read the rest

Systemic Risk Regulation and Irony

Andy Spero | February 5, 2009 | 0 Comment(s) |

Or Central Planning as a Market Solution

We saw in yesterday’s (February 4th) edition of The Wall Street Journal that certain legislators, including Barney Frank, want a government agency, possibly the Federal Reserve, to “control” systemic risk in the economy, particularly in the financial markets.

We’ll ignore the fact that this is the same Barney Frank who induced much systemic risk by insisting for many years that Fannie Mae and Freddie Mac make home ownership affordable for those who could not afford a home.  He was then shocked, shocked,… Read the rest

What Did They Expect?

Andy Spero | January 31, 2009 | 0 Comment(s) |

Geez, The Wall Street Journal editorial board really hasn’t fared well during the ongoing mortgage debacle and liquidity crisis.  They’ve come across looking inconsistent and reactionary and kind of weak.

Now, on their opinion page, they start their “About Us” description with the phrase “We are for free markets and free people…”

We suppose they’re for freedom, except when they’re not–like when the editors supported the original TARP plan.  It seems that they didn’t consider the risks of further politicization of the economy or how government encroachment might… Read the rest

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