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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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JPM, AXP ask taxpayers for money to pay back taxpayers

June 1, 2009

Almost like a Ponzi scheme, but not quite: JP Morgan and American Express plan to issue common stock in order to pay back their TARP funds. Essentially, the two firms are going to sell parts of themselves to taxpayers in order to increase their cash, which will then be used to buy back, yes, parts […]

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Projections of future losses may appear closer than they are

May 7, 2009

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. […]

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How (not) to design a stress test

April 25, 2009

Of course the big news of Friday afternoon was the preliminary release of the metrics used in the bank stress tests.  Unfortunately it didn't turn out to be much news at all; few hard figures were revealed and those that were came largely within expectations.  The NYTimes published an excellent copy of the document right […]

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The way things work

March 26, 2009

South Park finally reveals how the Treasury decides what to do (via Calculated Risk):

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The Man who Broke the CDS?

March 24, 2009

George Soros has written an opinion in today's WSJ calling for the regulation - and elimination - of CDS. He notes that CDS are instruments which allow speculation on default: What makes [CDS] toxic is that such speculation can be self-validating. I find his nature-of-the-security argument severely lacking: The negative effect is reinforced by the […]

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About those things I said before...

February 24, 2009

Does it strike anyone else as odd that the same greedy, irresponsible, "shameful" people who got us into this mess are the same ones Obama is relying on to get us out?  They may call it "private money" but the reality is that taxpayers are going to subsidize loans allowing Wall Street et al. to […]

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The Tragedy of Citigroup, in III Acts

February 23, 2009

Deus ex machina, literally "god from the machine," refers to a literary device in which a miraculous turn of events occur, solving a conflict. The origin of the phrase is from ancient Greek theatre (though, they probably said it in Greek), in which actors portraying gods were lowered to the stage via crane (hence, a […]

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"We hate you guys."

February 12, 2009

Update!  The FT is reporting that China will buy treasuries after all, according to Luo Ping, a director-general at the China Banking Regulatory Commission: “Except for US Treasuries, what can you hold?” he asked. “Gold? You don’t hold Japanese government bonds or UK bonds. US Treasuries are the safe haven. For everyone, including China, it is the […]

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Something about a pot and a kettle

February 12, 2009

In his confirmation hearing (pdf link), Tim Geithner made the bizarre and potentially embarrasing statement: President Obama - backed by the conclusions of a broad range of economists - believes that China is manipulating its currency. President Obama has pledged as President to use aggressively all the diplomatic avenues open to him to seek change in China's currency practice. […]

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