Posts tagged as:

recession

Irrational markets: V-shaped edition

June 8, 2009 in Economics,Finance

The market shot up late this afternoon because Paul Krugman stated:

“I would not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer,” he said in a lecture today at the London School of Economics. “Things seem to be getting worse more slowly. There’s some reason to think that we’re stabilizing.”

In an exceptional display of reverse-causality, Krugman clarified today’s remarks with ones he made last Friday:

Nobel Prize-winning economist Paul Krugman said the world’s economy is showing “not a hint” of a “V-shaped” recovery marked by a swift decline and revival.

The economy is “stabilizing, not recovering,” Krugman, an economics professor at Princeton University in New Jersey, said today at a conference in Dublin. “Things are getting worse more slowly.”

“We have made the transition from sheer panic to chronic anxiety,” Krugman said, adding he’s has a “hard time” seeing what might drive a “full” economic recovery.

Indeed, anyone following Krugman for the last year is certainly aware that he doesn’t see the end of the recession as anything more than a semantic difference. An L-shaped recovery is hardly a “recovery” at all. But don’t tell the day-traders.

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The Inviolate Principle…?

May 29, 2009 in Finance

Those naive financial journalists at The Atlantic are back! Andrew Gelman pointed me toward this misguided look at the latest auto bankruptcy (you know the one I mean). Key quote:

Purists — and virtually every academic economist one happens to encounter — wonder what happened to the once inviolate principle of rewarding risk-takers.

You’ll have to excuse me because I’ve never heard of this sacred principle of rewarding risk-takers. In fact, I always had this funny idea that “risk” represents the chance that an investor won’t receive any “reward.”

Incidentally, the last time I checked in with the Atlantic I discovered a story with the line “when people are investing, they should get a return.” I’m usually joking with the whole naive journalist thing, but this is ridiculous.

Immediately after his “inviolate principle”, the author actually goes on to note that “you can forget about poor unadorned stockholders” as if it’s surprising that equity gets wiped out in bankruptcy. If that’s news to anyone, then I have some Lehman shares and a bridge for sale.

If this quote is indicative of real investor sentiment then the lessons of 2008 will have been sorely wasted.

And I apologize but if we can just back up for a second, the opening line of this article reads:

Bondholders are kicking and screaming, but it appears as if General Motors Corp. is headed for an orderly bankruptcy, and the Obama administration is about to be handed the keys to a venerable corporate institution. Again.

Woah, Silver. Are we talking about the same Obama who demonized the people that “forced” Chrysler into bankruptcy and characterized them as unpatriotic? I don’t think this is a positive development at all. Moreover I don’t think GM’s bankruptcy is going to be remotely “orderly”, especially after seeing how few bondholders agreed to GM’s restructuring plan. The Chrysler debacle shows that a minority group of investors can wreak all kinds of havoc. This isn’t going to be pretty.

I’ll bet my Lehman shares on it.

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First 100 days (of the stimulus bill)

May 28, 2009 in Economics

The White House is praising the stimulus bill, saying that it has created 150,000 jobs in its first 100 days.

Unfortunately, in the last 100 days 9,000,000 people filed jobless claims for the first time. Thus, the stimulus bill has offset less than 2% of the jobs lost, or – to spin it positively – has created almost 2 jobs for every 100 people fired. (Yes, there’s a distinction between layoffs and initial claims. I’m not making it.)

Obama’s advisors expect the bill to ultimately create 3-4mm jobs (i.e. 33-44 day’s worth of losses). Some conservative commentators are using the information that 14% of the stimulus funding has been spent to extrapolate 150k jobs linearly and suggesting only 1mm jobs will be created. I think that approach is a bit ridiculous, but I nonetheless suggest refraining from celebration until there is something worth celebrating.

98% of people who have recently been fired probably agree.

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Green shoots?

May 22, 2009 in General

With all this “green shoots” talk, I almost forgot that R sent me this picture:

I think it speaks for itself.

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Dead shoots?

May 22, 2009 in Economics

Happily, I’ve only used the term “green shoots” one time in the brief history of TGR, and then only sarcastically in the title of this cartoon (which I stand by, as this post should make evident).

The term has always struck me as ridiculous, and not solely because it was first uttered at a time when it was not only false, but utterly misleading. What’s worse is that the manner in which the media has pounced on the phrase has eliminated any shades of meaning, much as our eyes glaze over as reports of “billions of dollars lost” and “hundreds of thousands of jobs eliminated” come out — we have become desensitized by the magnitude of the concept and our overexposure to it (not to mention that no matter how many times we shut our eyes and whisper, it doesn’t seem to materialize).

Ultimately, the term has become synonymous with the “second derivative” argument – things are getting worse, but they are getting worse at a slower rate – green shoots sprouting! And while I don’t at all equate “not-as-bad news” with “good news”, I was happy to let the second derivative camp savor their banner phrase.

Until this morning.

For some reason, today I finally began to think about what “green shoots” really means: it represents the spring, rebirth and growth. It doesn’t stand for a positive second derivative, but for a positive first derivative – something universally aknowledged not to be the case. I find this revelation infuriating: if we don’t have a positive first derivative, representing growth, then how can there be green shoots, which also represent growth?

For those willing to continue reading, I’ll illustrate what I mean with graphs that may confuse more than they educate. Shall we? Let’s shall.

Follow a plant through it’s life cycle: it grows in spring, flourishes in summer, withers in the fall and essentially hibernates in the winter (I don’t know what the proper horticultural term is). Since I want to tie this back to derivatives and such, let’s get some math involved. A simple graph of the flower’s height above the ground might follow a sinusoidal curve and, courtesy of Wolfram Alpha really coming through, look like this:

Here is its first derivative:

And here is its second derivative:

In all these graphs, 0 is winter, 1 is spring, 2 is summer, 3 is fall, and 4 is winter again. Also, a key point is that because this is a graph of height above the ground, green shoots would be observed somewhere between 0 and 1, as the plant first emerges from the soil.

Now we need to figure out where we are in this hypothetical plant lifecycle. We know we have a negative first derivative, which puts us between 2 and 4 (summer and winter). We also have a positive second derivative – for argument’s sake – which limits us to sometime after 3 (fall). So we are in the space between fall and winter; our economic “plant” is withering away, albeit at a slower pace than it was during the first cold snap.

So, IF the plant metaphor holds (and let’s assume it does, for why else would we use the term “green shoots”?) and IF we are seeing the second derivative turn positive (and I’m not ready to aknowledge that, yet, but the green-shootists are) and IF the first derivative remains negative (no doubts there), we have not yet made it to spring. Only as we reach spring does the first derivative turn positive and green shoots emerge. Just to be absolutely clear: there are no green shoots yet.

(You’re right, I could have spared you and written that much earlier, but I wanted to use the graphs.)

You will notice that in the winter, the plant actually retracts back into the ground, but I suppose “brown shoots” or the titular “dead shoots” doesn’t quite capture the spirit of that positive second derivative. I’m sure there must be other plant metaphors, like “winter blossoms” or “the last leaves to fall”, that are more appropriate.

I suggest ”pushing up daisies”.

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Aggravation (but keep reading)

May 16, 2009 in Finance,Risk

I happen to like this article by Niall Ferguson for the Times Magazine, in particular this bit:

Human beings are as good at devising ex post facto explanations for big disasters as they are bad at anticipating those disasters. It is indeed impressive how rapidly the economists who failed to predict this crisis — or predicted the wrong crisis (a dollar crash) — have been able to produce such a satisfying story about its origins.

But I found the opening chafing to the point that I almost did not continue reading. Witness:

If financial crises were distributed along a bell curve — like traffic accidents or people’s heights — really big ones wouldn’t happen very often. When the hedge fund Long-Term Capital Management lost 44 percent of its value in August 1998, its managers were flabbergasted. According to their value-at-risk models, a loss of this magnitude in a single month was so unlikely that it ought never to have happened in the entire life of the universe. Just over a decade later, many more of us now know what it’s like to lose 44 percent of our money. Even after the recent stock-market rally, that’s about how much the Standard & Poor’s 500 index is down compared with October 2007.

Ugh – such an oversimplification of so many concepts. Highlights: Bell curves do produce large events! LTCM had poor risk management (“value-at-risk models” says it all)! There is absolutely no comparison between LTCM -44% and Joe Investor -44%!

It’s time for financial journalists (or guest journalists, in this case) to decide whether they want to go on critiquing mathematical models for ruining the world, or start making gross mathematical misstatements of their own. I don’t even know where to start with the bell curve statement, so I leave my aggravation to your imagination. Ferguson seems sarcastic when he talks about LTCM’s managers being flabbergasted, even throwing in the disclaimer “according to their models.” But in the next sentence, he seems to imply that the S&P 500 losing 44% is a similarly unlikely event. I don’t know if he is embracing the LTCM models’ results or not (I assume not), but there’s no connection between LTCM and the S&P 500.

And the last sentence – “even after the recent stock market rally”? If there are still investors out there who think -50% followed by +50% leaves you flat…

But after you make it through the opener (which I’m going to let slide because, come on, you have to draw people in somehow), it’s actually an interesting read.

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Projections of future losses may appear closer than they are

May 7, 2009 in Finance,News

AK pointed me toward this piece from The New Yorker, “Stress Test Results: In Line With Other Estimates,” which I excerpt here in its entirety. I’ve bolded the last sentence:

From the moment the Treasury Department announced its plan to stress-test the country’s nineteen biggest “bank holding companies,” the process was dismissed as a whitewash. Critics argued that the tests were not going to be difficult enough, and that, as a result, the projected losses for the banks would be too small, making their balance sheets look healthier than they actually were. But Treasury’s report on the stress tests says that the banks’ total losses through 2010 (including the losses suffered in 2007-2008) could total $950 billion. That’s close to the I.M.F.’s estimate that total losses for U.S. banks from the financial crisis will be $1.1 trillion. And when you take into account the fact that the I.M.F. was estimating losses for all 8000-plus banks in the U.S. system, while Treasury’s number is only an estimate for the losses of the aforementioned nineteen biggest banks, Treasury’s projections look very similar to the I.M.F.’s. That at least suggests that the government used reasonable projections of future losses, and did not, as many feared, rig the tests to make the banks look good.

No, it does not. It suggests that the government’s loss projections line up with the current IMF projections and nothing more. Any inference that those loss projections are “reasonable” hinges on the assumption that the IMF’s projections are themselves reasonable. And they may be, but let’s keep in mind that the IMF’s estimate was revised upwards by 25% just last week. Moreover, last spring the IMF expected global GDP growth of nearly 4% in 2009.

I think the safe conclusion is that to this point, the IMF has systemically underestimated the severity of this downturn. (An implausible alternative is that the second derivative has been accelerating downward, but I’m told that in fact the reverse is true. Isn’t it fascinating how people embrace calculus when it might be able to resurrect their portfolios?) Barring further evidence, it appears safe to carry that assumption forward. We could say that the stress test affirms the IMF view, or vice versa, but we can make few judgements about how accurate either expectation actually is.

However, my point isn’t to argue that the stress test necessarily set the bar too low. I have always held that the stress tests would not give the banks a free pass, because I view the tests as the last opportunity for the executive branch to forcibly inject capital into these ailing institutions. There are two reasons: First, as I’ve stated here recently, the government can not afford to suggest in any way that the banks are solvent, only to have them incur further massive losses. This would undermine or eliminate the credibility of the Treasury. Second, I do not think that taxpayers (and, consequently, Congress) are willing to expand the bailout program, which means the only way to force banks to acquire additional capital is via a mechanism that essentially amounts to peer pressure: when the Government announces to the world that you need capital, how can you afford to ignore their claim? The stress tests are a tool to that end, and the result – about half the banks need some amount of capital – is not surprising from that perspective.

Is the test accurate, however? I’ve made the point before that because the economic assumptions of the test are tracking reality, we may be afforded a rare opportunity to see how close the expected losses mirror reality. Of course, there are major problems with ascribing accuracy to a probabilistic model based on a deterministic outcome, but statistical squabbles aside I’m quite curious to how that plays out.

As for the IMF, their expected result proved so rosy that last week they had add a healthy dose of depression. Maybe now it’s depressing enough, or maybe they had it right before – we don’t know. But the fact that the stress tests have come out in the same ballpark merely means that industry models, given similar inputs, yield similar outputs. The frustrating conundrum remains: garbage in, garbage out. Models are just the tool (if I use that phrase enough times, maybe people will start to believe it) and in the absence of hindsight we have no basis to judge reason or accuracy.

Yet.

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From the “future knowledge” file

April 25, 2009 in Finance

Just overheard on Charles Schwab radio (a story for another time):

Astute investors know the stock market typically bottoms before the economy.

If only an investor could identify a bottom without the benefit of hindsight, such knowledge would actually be useful.

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A casualty of chance

April 20, 2009 in Finance,Risk

I discovered this Atlantic article (“Why I Fired My Broker“) on MB’s blog. I came to enjoy it in the end, but while I was reading it I was struck by how representative it is of contemporary financial journalism. This is the new cookie cutter article: naive reporter is encouraged by rich capitalists to invest, loses everything, gets insightful quotes from capitalists on what he did wrong. Along the way, he – and we, his audience – learn a bit about the markets.

We start out by meeting our journalist, Jeffrey Goldberg, who promptly informs us “I took a random walk down Wall Street and got hit by a bus.” Good start. He follows it with the obligatory quote from a “financial advisor” (Richard Bernstein, Chief Investment Strategist of Merrill Lynch), urging him to adopt a buy and hold strategy so to give his “strategy time to reach gestation.” To which Goldberg wryly observes

But my investment strategy gestated for 15 years. And then it died.

This was, for me, a red flag that maybe Goldberg wasn’t going to be as insightful as I hoped. If he’s had a portfolio for 15 years, then this is his portfolio’s second death, the first coming seven years ago. But the disclaimers come marching – worst recession in history, going to get worse, everything is bad – so we’ll give him the benefit of the doubt.

And it’s a good thing we do, because his interview with Robert Soros is worth the price of admission and then some:

I went to see [Soros] at his office, where he spent two hours performing an autopsy on my assumptions.

“You think a brokerage should be a place you go to pay commissions for fair and unbiased advice, right?” he asked.

“Yes,” I said.

“It’s not. It never has been.” He then cited another saying of Buffett’s: “‘Wall Street is a place where whatever can be sold will be sold.’ You are the consumer of their dreck. What they can sell to you, they will sell to you.”

“But they told us—”

“They lied.”

He went on: “You should be disheartened and disappointed. But don’t kid yourself. You’re a naive capitalist. They were never your advisers. Do not for a moment think that a brokerage firm is your friend.”

“So who’s my friend?”

“You don’t have one. This is the market.”

“Okay, that’s Merrill Lynch. What about the others?”

“They’re not your friends,” Soros said patiently.

“What about Chuck Schwab?”

“All brokers move products based on volume and commission,” he said.

And so we have insight #1: brokers are salesmen. Period. Cynically, if they could pick stocks better than anyone (because presumably, that is their qualification), then they would be. Now there are in fact excellent brokers out there – but do not confuse paying for their insight with paying for their execution.

Goldberg imparts a second important point via parable, when two close friends alternatively give him convincing arguments for why he should/should not buy gold. Insight #2: anytime someone gives you investment advice, he is wrong. If two people give you completely opposite pieces of advice, they are both wrong. Even when history bears out one of their opinions, it remains nonetheless wrong.

If you took bets on whether a fair coin would land heads or tails, would you attribute the winners with any special knowledge of coin dynamics? (I’m such a statistician… I can’t even write about a coin toss without specifying it’s “a fair coin”) So it is with stocks: reality will end up reflecting one opinion or the other, but that is merely a casualty of chance. One could argue that the stock market is not random, that there is real reaction to news and if you can predict the news you can predict the market. In my mind this is like saying that the coin’s path is deterministic: it is subject to the initial velocity and rotation it gets from my finger as well as friction from air molecules it passes, not to mention wind. Sure, with knowledge of the exact state of the world you can tell me what side will land face up. But you don’t have it. And as long as there are people willing to take opposing opinions in the markets, you don’t have it there either.

The eventual outcome of an asset’s price is determined by the push and pull of millions of people expressing their various opinions. The result of that outpouring of noise is that, by chance, one side will win out, because the marginal person agrees with that opinion. And to the extent that everyone suddenly acquires the same opinion, the market will jump quickly and – yes – efficicently to reflect that fact, leaving you (the naive journalist) no time to participate. Compound that with a constant flow of new information and the market participants’ fickle mindset and you have an absolutely unsolvable puzzle. So the next time someone claims to know exactly how the market will turn out, remind them that enough people must find the alternative just as obvious, or there would be no opportunity for debate. There are people who actually do know what’s going to happen. Most of them are figments of overblown marketing and bull market longs, but they’re out there. Maybe your friend with the stock tip is one of them.

Interestingly, the Wikipedia article on Brownian motion (the statistical behavior most commonly used to model asset prices) includes the following example:

Consider a large balloon of 10 meters in diameter. Imagine this large balloon in a football stadium. The balloon is so large that it lies on top of many members of the crowd. Because they are excited, these fans hit the balloon at different times and in different directions with the motions being completely random. In the end, the balloon is pushed in random directions, so it should not move on average. Consider now the force exerted at a certain time. We might have 20 supporters pushing right, and 21 other supporters pushing left, where each supporter is exerting equivalent amounts of force. In this case, the forces exerted from the left side and the right side are imbalanced in favor of the left side; the balloon will move slightly to the left. This type of imbalance exists at all times, and it causes random motion of the balloon. If we look at this situation from far above, so that we cannot see the supporters, we see the large balloon as a small object animated by erratic movement.

Substitute “stock price” for “balloon”, “buy” for “right” and “sell” for “left”, and you have quite an interesting piece of financial journalism there.

But I digress.

Goldberg then descends into the world of the survivalists and I’m going to skip that part because, while entertaining, it’s hardly relevant. He does have an interesting conversation with Seth Klarman, in which one of the fundamental truths about the American economy is revealed:

“I haven’t leveraged myself,” I said.

He asked me if I had a mortgage. Yes. He then asked me if the amount of money I had invested in the stock market was greater than the amount I owed on my mortgage—could I liquidate what remained of my portfolio to pay off my mortgage? I could.

“So you are leveraged.”

America runs on Dunkin debt. It’s how we got where we are, and it’s how our government plans to get us out. But most of us don’t realize that. There is nothing inherently wrong with leverage, it is merely a tool of capitalism (albeit a sometimes dangerous one). But there is a massive problem with not understanding how it impacts one’s finances.

But the most important line in the whole article was when Goldberg protested thusly:

“But if I dump my portfolio now, I make my losses real.”

This is not the first time I’ve heard the very strange notion that losses on paper are somehow less than real. It’s not an attitude restricted to naive journalists. In fact, it is similar to the attitude which has frozen our markets – banks hoarding assets, terrified of marking them to market, as if hoisting its value on the balance sheet somehow translates to reality. The very crux of the mark to market argument is that your asset is only worth what someone will pay for it. The second your investment drops $1, you just lost $1.

I think part of this is grounded in the idea that equities will, inevitably, go up. In that world, to exit a position is to surrender the opportunity to make money when they resume their climb. The catch, of course, is that equities don’t always go up. That seems to be the underlying assumption of every naive journalist piece – how come my stocks stopped going up? Stocks are a risky asset; if they weren’t, then they wouldn’t rise much at all (see: Treasury bonds). Risky assets fall sometimes; that’s what makes them risky. There was a lot of attention lately to the finding that over a long timespan bonds had outperformed stocks. Is there anything else in the world about which people would be surprised when a less risky strategy outperformed a more risky one over time?

One of Goldberg’s early arguments revolves around the notion that you have a 46% chance of losing money by investing in stocks on any given day, but the chance decreases over time (an obvious statement). Unfortunately, probability of loss is not really the metric by which we make investment decisions. Otherwise we would all own CD’s and nothing else. Instead we balance the promise of return with the risk of loss, massaging our personal utility functions until we feel comfortable with an investment’s profile. Unfortunately, we are utterly unequipped to asses either risk or return. Goldberg finally resigns himself to ”3 or 4 percent gains a year, or 1 or 2, if necessary.” I’m left wondering if he realizes that can be had – with absolutely no risk – if he just buys Treasuries. But in naive journalist form, he remains confident in equities, feeling that now that he’s seen how bad it can get (for the second time, remember) he’ll be wiser for the lesson.

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“Bright” ideas

April 20, 2009 in Economics

It’s hard to believe FT Alphaville is taking this seriously, but they are: markets and sunspot cycles. Apparantly, as this very convincing graph shows, recessions correspond with the regular sunspot cycle:

As this plainly demonstrates, there is a perfect correlation with sunspots and recessions. Except for that little recession in the 1930′s, but that one doesn’t count, right? And this isn’t the first time that sunspots have been tied to the economic cycle – researchers have found an impact on the price of wheat.

What I see here is an overlay of two cyclical occurances, and a somewhat forced conclusion of causality based on their correlation (have we learned nothing?). While the wheat price study is somewhat more convincing, is it such a stretch to think that maybe wheat prices and recessions are linked, and that the sunspots are a spurious correlation that really have nothing do to with either? That argument can be made with equally sound “analytics” (by which I mean looking at pictures).

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Where green shoots come from

April 17, 2009

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TIME: “It’s over!”

April 14, 2009

TIME magazine has called it over – thanks for coming, everyone, and please watch your step as you disembark the ride. In an article titled “More quickly than it began, the banking crisis is over,” the intrepid financial analysts at TIME lay out their argument: But, the great banking crisis of 2008 is over. It [...]

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On revisions, episode II

April 4, 2009

It occurs to me in looking at the revised payroll numbers that each month’s revision creates the illusion of a bottom having occurred in that month, since the revisions to past months are almost always below the reported number of the most recent month. But it is widely accepted that the employment bottom will lag other indicators, [...]

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Policy & Depression

April 4, 2009

UCLA Economist Lee Ohanian, who recently published a paper on the role of the New Deal in prolonging the Great Depression (I covered it here), wrote to Professor Mankiw with a preview of his follow-up implicating Hoover’s policies as well: I conclude that the Depression is the consequence of government programs and policies, including those [...]

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Industrial production in perspective

April 3, 2009

This post by Krugman inspired me to take a look at how the industrial production index has fared lately. At first glance, the recent drop is pretty massive: But looking at it on a log scale tells a very different story: Krugman makes the point that the plunge paused in 1931 before resuming, and that [...]

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On revisions

April 3, 2009

A lot of headlines this morning are noting that the jobs report is “in line with expectations”, with a change of 663,000 vs the survey median of 660,000. What gets ignored is the revised number. For 13 straight months, the prior month’s number has been revised lower by a significant amount after the fact – [...]

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Bank Holiday Ends?

March 28, 2009

Now that Dimon has admitted that “March was a little tougher,” does the party end? Can we go back to thinking of the banks as villainous institution which can’t manage their own risk to save themselves (poor choice of words)? We don’t always get a look into the month-by-month performance of the big banks; their [...]

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Misreading misleading charts

March 26, 2009

This chart caught my eye because it is potentially misleading (click to zoom). It shows the year-over-year change in hotel occupancy rates, from 2001-2009. My first impression, on viewing the small chart, was that we haven’t hit the low of the last recession. But (as the box very clearly points out) the low of the [...]

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Worst Weekend: Roundup

March 23, 2009

Unusually, the NYTimes published three opinions this weekend which all slammed Obama – from authors who usually gush about the administration. I don’t back off my own opinion that the Times editorial writers are a bunch of pseudo-populist fair-weather fans, but as usual they manage some salient points in their rants: Let’s kick it off with [...]

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Empty lot > Trump?

March 20, 2009

Las Vegas real estate summarized in one picture:

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Andy Kindler visits Wall Street

March 14, 2009

Clip from David Letterman featuring an excellent Krugman montage:

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Ken Lewis makes dubious claims

March 9, 2009

BOA chairman Ken Lewis has written an opinion for the WSJ (“Some Myths About Banks”) containing the following “myth” and rebuttal: The banks are insolvent. In the past 18 months, we’ve seen fewer than 50 bank failures. That compares to about 2,000 failures or closings of commercial banks or savings institutions between 1986 and 1991. There may [...]

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Maybe they don’t get it

March 4, 2009

Thomas Friedman’s opinion in today’s NYTimes (Obama’s Ball and Chain) contains the following two paragraphs: I’m worried. We’ve just elected a talented young president with many good instincts about how to propel our country forward, extend health care to more people, make our tax code fairer and launch a green industrial revolution. But do you [...]

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The Crisis of Credit Visualized

March 2, 2009

This visualization of the credit crisis is fantastic:

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Hot wheels

March 1, 2009

German youths are protesting their country’s economic troubles by torching Porsches and BMWs. Unfortunately I don’t think their strategy is going to improve anything.

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A sense of despair

February 27, 2009

For once, I agree with Paul Krugman when he writes: There’s so much to like about where Obama is going — health care, transparency in government, ending the war in Iraq. And the stimulus bill is OK, though not big enough. But on the question of fixing the banks, many of us are feeling a [...]

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Bank of America?

February 26, 2009

Excellent graphic from the NYTimes magzine article, “More Than One Way to Take Over a Bank:”

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Is this the bottom?

February 23, 2009

It’s sort of like when little kids ask, “Are we there yet?” over and over and over: www.IsThisTheBottom.com

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But names will never hurt me

February 11, 2009

There is a fascinating debate raging right now among the world’s most prominent economists, who are kicking and screaming at each other across newspaper columns, interviews, and their personal blogs. The diatribe was ignited by this January 22 opinion in the WSJ by the esteemed Robert Barro, whose class I was fortunate enough to attend one [...]

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Thoughts on Obama’s first primetime press conference

February 9, 2009

Remember this, the controversial “3am phone call” ad? How about this response? Last Thursday, President Obama wrote an opinion for the Washington Post which contained the following paragraph: And if nothing is done, this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will [...]

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