Category Archives: Economics

NOT CHECKING YOUR WORK.

NOT CHECKING YOUR WORK. With the European debt markets in turmoil, Standard & Poor’s Ratings Services threw a match on the gasoline yesterday by mistakenly announcing that it had downgraded France’s debt from triple-A. Then, a couple hours later, it … Continue reading

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STILL HUNTING THE MISSING SIX HUNDRED MILLION DOLLARS.

STILL HUNTING THE MISSING SIX HUNDRED MILLION DOLLARS. Ten days after MF Global filed for bankruptcy, they can’t find the six hundred million dollars that are missing from the accounts of MF Global. Scott Patterson and Aaron Lucchetti have an … Continue reading

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WE ARE STILL VULNERABLE TO BANK BAILOUTS.

WE ARE STILL VULNERABLE TO BANK BAILOUTS. Geoffrey Smith reported in an article in the weekend Wall Street Journal (November 5-6) that the enforcement agency for financial stability of the Group of 20 had published the list of banks that … Continue reading

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IF GREECE DEFAULTS….(COMMENT).

IF GREECE DEFAULTS….(COMMENT). I posted a couple days ago that bank runs were infrequent in the United States since the introduction of federal deposit insurance but that runs on an institution by counterparties were still to be feared. Nick commented … Continue reading

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OTHER ACCOUNTING MISADVENTURES THIS WEEK.

OTHER ACCOUNTING MISADVENTURES THIS WEEK. This week’s Economist (November 5) reported on page 12 that Germany’s finance ministry had discovered an accounting error at a nationalized bank which meant that the country’s debt had been overstated by $77 billion and … Continue reading

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LOOKING FOR A LOST SIX HUNDRED MILLION DOLLARS.

LOOKING FOR A LOST SIX HUNDRED MILLION DOLLARS. I posted a number of times, for example, here, on how long it took, after Lehman filed for bankruptcy, to find out what Lehman owned. Also astonishing is the difficulty that MF … Continue reading

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HOW MICHAEL LEWIS FORETOLD THE FINANCIAL CRISIS IN 1989.

HOW MICHAEL LEWIS FORETOLD THE FINANCIAL CRISIS IN 1989. Michael Lewis has had some wonderful articles about the financial crisis, but I have been thinking that his book LIARS POKER had perhaps the most important insight about what was going … Continue reading

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RUNS ON BANKS TODAY—COUNTERPARTIES, NOT DEPOSITORS.

RUNS ON BANKS TODAY—COUNTERPARTIES, NOT DEPOSITORS. I have posted several times (including here and here) about the risk that a bank or other institution faces whenever it borrows short and lends (or invests) long. With deposit banks, before the FDIC … Continue reading

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MONEYBALL AND PIG FARMING.

MONEYBALL AND PIG FARMING. Lindy Hinkleman, a pig farmer in Idaho, has just had his second success in three years in national fantasy baseball contests. He won a grand prize of $100,000 this year and over $240,000 in 2009. This … Continue reading

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ADDRESSING TOO BIG TO FAIL.

ADDRESSING TOO BIG TO FAIL. Since the collapse of Bear Stearns and Lehman Brothers, we have lived with the risk that another institution that is too big (or too interconnected) to fail will in fact fail and require rescue. The … Continue reading

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