Thomas J. Gordon

Understanding the AIG Decision

I think Felix makes some good points. I remember when gs was trading (I think it was like 50 or 60) and it wasn't a given that it would survive. If gs goes under then there's another investment bank you have to go into another counter party exercise. but big bonuses coming from gov't bailout money or counterparty payments, if that's really where they are coming from, is hard to swallow.

10 Notes on the Current Markets

Go Lakers, Thanks. I like David a lot. He's measured, careful, and non-sensational. I understand that the chinese should think about their treasury holdings. But it seemed like David was holding default over their head like a club. It seemed out of character, and as you and I agree, default is not in the cards for the u.s.

10 Notes on the Current Markets

I don't understand why David is talking seriously about the u.s. defaulting on its debt (last 2 subpoints on item #4). The Fed can print money. If the u.s. defaulted on its debt that really would cause Great Depression II. Why is David talking about that. I don't think we're anywhere near that.

Bail Out for Dummies - Part I

One point I have not seen mentioned is that the gov't should only buy assets of companies that have declared bankruptcy. The successful s&l workout of the 80's disposed of the assets of institutions that had failed. I don't know what it means when the gov't is tryiing to buy toxic assets from companies that are still operating. That seems like a formula for mischief. I guess it could be argued that these large banks would fail without gov't help, but I say: let the institution fail, let fdic make sure the depositors are whole up to the limits, and then dispose of the toxic assets at the best prices you can get.

U.S. Government Changes Message, Boosts Confidence - For Now

Dave,
Good point. It's one or the other. I have the feeling this financial panic thing is overdone. A few investment banks, some players in the mortgage arena, and 80 people at AIG did some stupid things. Does that mean we should scrap our economic system? I even think the falling home prices thing is overdone. How many people bought in the last 5 years? I think the economy is healthier with lower home prices. Main street is driving us back to normality as far as I can see. We just need to get a handle on the unemployment situation, and maybe the best way to do that is to just temporarily increase and lengthen unemployment benefits.

The Bane of Broken Balance Sheets

One glaring fact is that there was no inflation during the 30's depression. So these recessions/depressions seem to be very deflationary. This is relevant now because if the fed can print any amount of money and we don't get inflation that's important from an investor standpoint. I think more lip service was paid to a gold standard in the 30's than now. Anyone have any ideas on this?

Fixing the Economic Crisis in Six Easy Steps

A regulator was told directly and correctly that Madoff was a crook and couldn't push it through to a correct concusion. Federal regualators get paid whether they sit in their office or they do something effective. Why is your new regulatory regime more effectiive than the one we've had for the last 20 years?

10 More Notes for the Current Crisis

good article. David makes a good point about the incentives of federal employees. Those who say regulation is the answer have to account for the motivation of federal employees. We had lot's of regulation (Sarbannes Oxley, FDIC, Ofheo) the last 10 years and it didn't come through for us in our hour of need. Suppose Obama/dems make up more rules for financial companies. Do the federal employees in charge of enforcing these new rules (the he/she men that made the rules consider enforcing them boring) go out and do hard things like figuring out what their charges are really doing, and asserting their way through private sector employees to find out what is really going on, or do they sit in their office, send each other e-mails lamenting the lack of co-operation, and hold meetings with each other to fill the time. My guess is the latter. As federal employees, they get paid if taxes are collected, not if they make profound and correct decision about what their charges are doing. Systems and processes are only as good as the actors who operate in them. Read Freakonomics and stick that in your pipe Barney Frank and Nancy Pelosi.

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