well austerity is a condition for the ongoing bailout, germany would like greece to do what it says and in return theyll continue to give them money
― lag∞n, Thursday, 24 May 2012 03:23 (11 months ago) Permalink
oh fine u hate yeglesias but u like frum *rolls eyes*
― lag∞n, Thursday, 24 May 2012 03:25 (11 months ago) Permalink
thats a p good piece actually but it kinda dances around how insane things would get if spain left the euro
like this is all spanish banks failing simultaneously: Financial institutions that have bought Spanish credit-card debt (or Spanish mortgages or whatever) may discover equally shockingly late that their bonds also will not and cannot pay off in full.
― lag∞n, Thursday, 24 May 2012 03:32 (11 months ago) Permalink
His explanation of what leaving the euro would do to local commodities like housing and labor vs. "tradable" stuff was helpful
― this guy's a gangsta? his real name's mittens. (Hurting 2), Thursday, 24 May 2012 03:40 (11 months ago) Permalink
it's kind of overstating the case when it says "shockingly late that their bonds ..." because the surprise isn't there anymore. out of that 130 billion euro bailout, 100 billion of it is from investors writing down the greek bond debt. so when they talk about building an additional 700 billion euro firewall around europe what they're talking about is preparing to write down other big chunks of debt.
― the late great, Thursday, 24 May 2012 06:14 (11 months ago) Permalink
I'd be very surprised if anyone owns bonds backed by Spanish credit-card debt and is not extremely aware of the risks at this point.
― o. nate, Thursday, 24 May 2012 15:28 (11 months ago) Permalink
I wonder who was smart enought to buy up Credit Default Swaps on all this debt early on.
― this guy's a gangsta? his real name's mittens. (Hurting 2), Thursday, 24 May 2012 15:31 (11 months ago) Permalink
This is a decent article about European bank exposure to a Greek exit:
― o. nate, Thursday, 24 May 2012 15:40 (11 months ago) Permalink
a fair amount of CDS on European debt is euro-denominated, so there's that too... (wrong-way risk, they call it)
― s.clover, Thursday, 24 May 2012 17:01 (11 months ago) Permalink
― just sayin, Thursday, 24 May 2012 17:02 (11 months ago) Permalink
huh so these gargantuan cds contracts don't contain some kind of exchange risk provisions?
― this guy's a gangsta? his real name's mittens. (Hurting 2), Thursday, 24 May 2012 17:03 (11 months ago) Permalink
I think Hurting 2 led the investigation. Just joking (and yea its the SEC and not Justice ...)
― curmudgeon, Friday, 25 May 2012 15:30 (11 months ago) Permalink
The officials have weighed issuing a public report on their findings that would stop short of an enforcement action while highlighting the firm’s questionable conduct.
― curmudgeon, Friday, 25 May 2012 15:31 (11 months ago) Permalink
hurting: i don't know the numbers. most european cds is USD, but for a time, a fair amount was euro.
― s.clover, Friday, 25 May 2012 16:17 (11 months ago) Permalink
A passage that struck me in The Big Short this morning:
"One of the reasons that Wall Street had cooked up this new industry called structured finance was that its old-fashioned business was every day less profitable. The profits in stockbroking, along with those in the more conventional sorts of bond broking, had been squashed by internet competition."
Sort of set off a light bulb for me. Wall Street would rather have the predictable profits from its old-fashioned businesses -- the old "make other people's money work for you" adage. Profits whether the market goes up or down. Profits from transaction costs. It's when that model is put at risk that Wall Street starts thrashing around and doing crazier, more risky things. It's almost like a gambler doubling down.
― this guy's a gangsta? his real name's mittens. (Hurting 2), Friday, 1 June 2012 15:03 (11 months ago) Permalink
Can you give me a timeline here? Does old-fashioned mean when Glass-Stegall still existed?
― curmudgeon, Friday, 1 June 2012 19:59 (11 months ago) Permalink
alphaville iama on reddit. good reading: http://www.reddit.com/r/IAmA/comments/uflwl/iama_reporter_on_the_financial_times_alphaville/
― s.clover, Friday, 1 June 2012 20:22 (11 months ago) Permalink
When E-trade (or Scotttrade, Ameritrade, Fidelity, Schwab, etc.) advertise $9.99 for unlimited share amount transaction fees, its worth noting that Merrill Lynch et. al. in the 70s used to make around $150 for the first 100 shares traded and a sliding percentage of total dollar amount thereafter. Trading was expensive, investors had to buy and hold, and brokers went out of their way to seek new clients and sometimes even keep them happy to ensure future commissions.
Additionally, stock prices used to be quoted in 1/4th, 1/8th and sometimes 1/16th of a dollar, ensuring that the spread between bid and ask that the brokerage could pocket if they were doing a interclient trade was at least $0.06 and usually more like $0.25, per share. With decimalization of share prices, the spread on liquid securities has dropped to fractions of a penny.
The disintermediation of discount, and later, internet trading totally destroyed the business model of the brokerage industry.
― The Painter of Blight™ (Sanpaku), Friday, 1 June 2012 22:49 (11 months ago) Permalink
But to detail what went wrong in the CIO, Dimon has repeatedly promised to be an “open kimono” — a phrase that we hope he will wean himself off.
― just sayin, Friday, 22 June 2012 18:06 (10 months ago) Permalink
― BIG HOOS aka the steendriver, Saturday, 23 June 2012 00:02 (10 months ago) Permalink
sooo what do we think of the LIBOR SCANDAL?
huge deal in the UK, not a blip stateside
― goole, Tuesday, 3 July 2012 18:17 (10 months ago) Permalink
yeah super big deal here, which seems fair enough?? affects a lot of things (it seems)
― just sayin, Tuesday, 3 July 2012 18:21 (10 months ago) Permalink
Barclays apparently planning to strip Bob Diamond of most of his stock options and such that generally soften the blow of being run out of town.
― Andrew Farrell, Tuesday, 3 July 2012 18:25 (10 months ago) Permalink
The LIBOR scandal hasn't taken off here (USA) as a story, but it is getting some play. It's this kind of casual manipulation of the market that destroys trust in banks and bankers, and someone needs to point out that without a certain amount of trust to grease the wheels the whole financial system would freeze up as solid as a rock. The punishments for such abuses should be commensurate with the damage they do to the whole system.
― Aimless, Tuesday, 3 July 2012 18:26 (10 months ago) Permalink
It's this kind of casual manipulation of the market that destroys trust in banks and bankersIt's this kind of casual manipulation of the market that destroys trust in banks and bankers
destroys what now?
― goole, Tuesday, 3 July 2012 18:29 (10 months ago) Permalink
er, didn't mean to paste that twice
cheap joek. if people really had no trust in banks, bank assets would evaporate so fast you could hardly blink twice.
― Aimless, Tuesday, 3 July 2012 18:31 (10 months ago) Permalink
Libor should really be getting more play in the US. There's $500trn based on it in one way or another, and a lot of public money (via states and cities) made or lost via it. Be surprised if there aren't fraud investigations and a shit-ton of lawsuits from the US over this.
― stet, Tuesday, 3 July 2012 18:34 (10 months ago) Permalink
i think people assume everybody holding their money is a blood-drinking bandit, probably gives them a lot of room to maneuver in shit like this, perversely enough.
― goole, Tuesday, 3 July 2012 18:34 (10 months ago) Permalink
if the fdic didnt exist banks assets might dry up over night
― lag∞n, Tuesday, 3 July 2012 18:44 (10 months ago) Permalink
Libor getting virtually no coverage on US cable news outlets. Nor on the PBS Newshour yesterday.
― Fas Ro Duh (Gukbe), Tuesday, 3 July 2012 19:03 (10 months ago) Permalink
At least that I've seen.
Didn't realise that half of all US floating mortgage rates are directly based on Libor http://www.lrb.co.uk/v30/n18/donald-mackenzie/whats-in-a-number
― stet, Wednesday, 4 July 2012 09:40 (10 months ago) Permalink
this, and the economist article it links are pretty good: http://blogs.reuters.com/felix-salmon/2012/07/06/barclays-first-mover-disadvantage/
my sense is that libor basically was always a big lie packaged up as an actual number, and everyone who actually interacted with it and knew how it was generated must have pretty much known that.
basically, bankers are not stupid when it comes to considering how people might attempt to break the rules to screw them over. and so when you have a rate that everyone knows is the average of people just saying whatever numbers they want to, every trader and banker must have understood that this never was something at all meaningful or reliable, or only was to the extent that it was an average of what different people wanted it to be in the first place.
― s.clover, Friday, 6 July 2012 16:34 (10 months ago) Permalink
Ah, yes, another incarnation of the she-was-asking-for-it defense.
― Aimless, Friday, 6 July 2012 17:23 (10 months ago) Permalink
ritholtz blog runs down stories questioning libor as a sound number as far back as 07
― goole, Friday, 6 July 2012 18:12 (10 months ago) Permalink
not exactly. not a defense even.
just that libor never made sense, and everyone was always cynical about it and i mean yes go ahead fine the banks, they deserve it, but don't pretend that libor ever was or could be (or can be if we fine enough banks) anything but a mechanism for big banks to "vote" on short-term rates.
libor, remember, is a number that a bunch of banks got together and colluded to make up to begin with!
this is more of a gambling in rick's cafe sort of situation.
― s.clover, Friday, 6 July 2012 18:14 (10 months ago) Permalink
― iatee, Friday, 14 September 2012 14:44 (8 months ago) Permalink
― s.clover, Friday, 14 September 2012 14:56 (8 months ago) Permalink
bold prediction: there won't be a lot of jobs where untrained 21 y/os make 150k in 10 years
― iatee, Friday, 14 September 2012 15:04 (8 months ago) Permalink
WASHINGTON (Reuters) - The New York Stock Exchange will pay $5 million to resolve U.S. civil charges that it gave certain customers "an improper head start" on trading information, marking the first time a U.S. exchange has faced a financial penalty from market regulators. http://www.nytimes.com/reuters/2012/09/14/business/14reuters-nyse-sec.html?hp
Good that they are being charged. However, it's probably a slap on the wrist compared to how much money was made in the 2 years they did this.
― Emperor Cos Dashit (Adam Bruneau), Friday, 14 September 2012 15:30 (8 months ago) Permalink
Ok, so since QE and monetary policy is being discussed on the Taibbi thread, and since I also just heard Galbraith Jr. on NPR talking about related issues, I have these nagging doubts/questions about the standard line that "we're not at risk of inflation."
It seems to me that the reason we're not seeing inflation is that the economic recovery is so paltry. But the point of QE and other uses of monetary policy is to jumpstart the economy, right? And also, we keep hearing about how a lot of the liquidity the government is attempting to inject is not making its way into the system because banks aren't lending enough, correct? I mean maybe this is no longer true, but I thought so. Well what happens if the economy really does start to pick up, and all that extra liquidity starts to make its way into the economy again -- then aren't we finally going to start seeing some inflation? And then isn't the Fed faced with a problematic choice of either allowing inflation or putting the brakes on the recovery?
― look at this quarterstaff (Hurting 2), Thursday, 27 September 2012 01:13 (7 months ago) Permalink
i think a lot of the recent stuff amounts to the fed saying that it is willing to have a period of higher inflation in once the economy starts to recover. paul krugman had a blog post recently noting the increased spread between inflation-protected and regular govt bonds and bascially saying that this is a feature, not a bug, even if they prefer not to explain it that way.
― circles, Thursday, 27 September 2012 01:25 (7 months ago) Permalink
hah, i basically just reworded http://krugman.blogs.nytimes.com/2012/09/18/inflation-expectations-a-feature-not-a-bug/
― circles, Thursday, 27 September 2012 01:27 (7 months ago) Permalink
One thing that is true about bubbles is that you can't reinflate them. Investors generally stay shy of whatever it was that went bust until the memory of it fades somewhat. That means that pumping banks full of reserves to loan to investors will probably result in that money flowing elsewhere than detached single-family housing.
Because this is not a housing-led recovery as is often the case in the past, it has not been a recovery led by strong gains in employment. So, there is a pretty good chance that some of those banks loans will flow toward speculation. A good candidate would be commodities, especially oil and food. That certainly does bring some risk of inflation with it, but not the hyper-inflation bugbear that the far right keeps waving around. That is also why government infrastructure projects would have been a far better vehicle for jump-starting the recovery. Such projects do employ people and also increase demand for industrial production, such as steel or concrete.
Again, it was our idiot, ideologue Congress that failed to understand basic economics, blinded by their stupid free-market fundamentalism.
― Aimless, Thursday, 27 September 2012 01:30 (7 months ago) Permalink
also were perfectly happy w/ a shitty economy under obama
― iatee, Thursday, 27 September 2012 01:39 (7 months ago) Permalink
I certainly get that we're not at immediate risk of hyperinflation, and the paultard myopic focus on hyperinflation is lulzy. But I am also wondering if the left mantra of "a little inflation never hurt anyone" is myopic in this scenario too. I mean maybe higher oil and food prices are not hyper-inflation, but maybe they are exerting pressure against meaningful recovery, or inflicting additional pain on the hardest hit.
It seems to me like a competent, stable government would never allow hyperinflation. But they might be faced with a sophie's choice of doing serious harm to the economy to prevent it.
Since you can't "reinflate a bubble" I also wonder if the aim of current economic policy is really not to help the economy "recover" (to a state that it can't naturally return to), but to kind of give us a slow, soft landing into a new poorer existence.
― look at this quarterstaff (Hurting 2), Thursday, 27 September 2012 01:52 (7 months ago) Permalink
the hardest hit don't have jobs right now
― iatee, Thursday, 27 September 2012 01:55 (7 months ago) Permalink
― just sayin, Thursday, 27 September 2012 07:19 (7 months ago) Permalink