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The Untouchables

August 9, 2011

Standard & Poor's is the Al Capone of modern financial markets. For many years, we went along with their protection racket: we paid the firm, and they made sure we knew which investments were safe. They got involved in politics, spending incredible sums to lobby the government for support, and eventually were mandated into perpetuity […]

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A funny thing happened on the way to the downgrade

August 9, 2011

The most interesting thing about yesterday's market action was the behavior of the Treasury market: It rose. If the market collapse was really about investors reacting negatively to the United States' new, lower credit rating, why on earth would replace their stocks with a direct investment in that very same government? We can only know […]

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S&P's tit for tat

August 6, 2011

Thanks to the time difference, I went to bed last night thinking the markets had stabilized, but woke up to learn that the United States -- the unassailable risk-free issuer -- had been downgraded by S&P. This is embarrassing -- on S&P's part. As we all recall, S&P was blamed squarely for contributing to the […]

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Inferred ratings and modelling teacher comments

June 24, 2009

Another aspect of my conversation dealt with inferred ratings, a problem I've crossed before in other areas. There are two primary cases in which this arises: censored data and self-selection bias. In the first case of censored data, a problem is caused by the ratings system not eliciting useful responses. An example is a system […]

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It is not only possible - it is essential!

May 3, 2009

It has just come to my attention that the most highly rated comedy on Rotten Tomatoes is Dr. Strangelove. Stanley Kubrick's dark comedy about the Cold War shouldn't be missed by anyone. Therefore, as a public service (and thanks to the magic of the internet), I present the Peter Sellers extravaganza in its entirety. Please enjoy […]

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April 22, 2009
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