Category Archives: Economics

ARE THE BIGGEST BANKS A CURSE?

Posted on September 21, 2011 by Philip

ARE THE BIGGEST BANKS A CURSE? The notion of national champions has been popular in the last couple decades. Countries seek to have one of the leading oil companies, one of the leading auto companies, one of the leading airlines…. … Continue reading →

Posted in Economics, History | 2 Comments

A 2.3 BILLION DOLLAR LOSS—“WITHIN THE NORMAL BUSINESS FLOW….”

Posted on September 20, 2011 by Philip

A 2.3 BILLION DOLLAR LOSS—“WITHIN THE NORMAL BUSINESS FLOW….” I raised the question here whether the big banks are too big to be competent at performing the activities that banks have traditionally performed. The news that a trader for UBS, … Continue reading →

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“AVANT-GARDE AND KITSCH”.

Posted on September 15, 2011 by Philip

“AVANT-GARDE AND KITSCH”. I posted here about the influential belief that “kitsch” (bad art) was bad for society. In the article I referred to yesterday, Louis Menand writes about Dwight Mcdonald and his protege Clement Greenberg, who were influential in … Continue reading →

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“REGULATORY CAPTURE BY SOPHISTICATION”.

Posted on September 13, 2011 by Philip

“REGULATORY CAPTURE BY SOPHISTICATION”. Professor Johnson recommends and links to a very interesting paper by Martin Hellwig which analyzes attempts after the Financial Crisis to reform the capital regulation of banks. The paper urges raising capital requirements “very substantially” and … Continue reading →

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WHEN GREEK SOVEREIGN DEBT IS CONSIDERED RISKLESS.

Posted on September 12, 2011 by Philip

WHEN GREEK SOVEREIGN DEBT IS CONSIDERED RISKLESS. I posted here about how “top thinkers from all the world central banks were involved in formulating Basel II”, which permitted triple A bonds [many of them toxic, as it turned out] to … Continue reading →

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WERE THE PROFITS OF THE BIG BANKS ALL DUE TO LEVERAGE?

Posted on September 11, 2011 by Philip

WERE THE PROFITS OF BIG BANKS ALL DUE TO LEVERAGE? Almost three years ago, I posted several times, including here, about the extraordinary leverage ratios of some financial institutions. John Lanchester suggested that you try to imagine what you could … Continue reading →

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BANKING 101—LESSONS.

Posted on August 26, 2011 by Philip

BANKING 101—LESSONS. Kids, this financial crisis dramatizes some of the lessons that you would have had if you had taken an intermediate level course in money and banking: Commercial banking requires attention to detail. You have to keep track of … Continue reading →

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BANKING 101—CREDIT ANALYSIS.

Posted on August 26, 2011 by Philip

BANKING 101—CREDIT ANALYSIS. One of the basic functions of a commercial bank has always been assessment of credit risks. Michael Lewis portrays the German banks as being too trusting in their credit analyses: “At bottom…the Germans were blind to the … Continue reading →

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A GERMAN LAWYER LOOKS AT DUE DILIGENCE.

Posted on August 25, 2011 by Philip

A GERMAN LAWYER LOOKS AT DUE DILIGENCE. About 25 years ago I was involved in a transaction where an American company was acquiring a German company. The time came for the important American ritual of “due diligence”, in which Americans … Continue reading →

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BELIEVING THE RATINGS.

Posted on August 25, 2011 by Philip

BELIEVING THE RATINGS. Michael Lewis has another amusing and enlightening article on the financial crisis in the September Vanity Fair. He ridicules the German banks who bought large amounts of toxic securities. He quotes a reporter in Frankfurt who says: … Continue reading →

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