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M-P

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  • The Reagan Counterrevolution [View article]
    The author makes some good points and some points that could be challenged. I'm amazed (not really) at all the partisan rhetoric in the comments. Most people view the world in a partisan fog on both the left and right. The dualistic view of the world is scary indeed. The issues today are not the result of one party - both are culpable. When you socially engineer the free market, you will get many unintended consequences - add a mix of high-leverage, malfeasance, misguided incentives, etc. and you get a significant event. Most people in this country are centrists, some with slighly left leanings and some right. The challenge for our president elect is whether he will be able to govern from the center given a strong pull from the far left. I'm hoping that he will be able to do that and not succumb to heavy protectionism, unionization, or regulatory frameworks - the balance is tight. We need some additional regulation (e.g., CDS marketplace), but remember that many in Congress thought Fannie/Freddie were fine three months before they went bust - their opaque balance sheets and financial ledgerdemain were not without some eyes on them. Most importantly, we need to ensure good jobs are created as that is the ultimate foundation for a growing economy. The Ireland precedent gives some credence to creating a tax-friendly corporate environment - note that personal tax rates were not changed much, but jobs were created given the low corporate tax rates. They are now in the trough of the business cycle, but not without 10 years of 6.5% GDP.
    Nov 9 12:52 PM | 5 Likes Like |Link to Comment
  • A Bad Day, Yes, But Enough with the Hyperbole [View article]
    Agree w/ a number of comments here. The story of why it's a crisis and the root causes is a little convoluted. At the end of the day, many of the institutions had too much leverage - see the waiver around the net capitalization rule in '04 - too much opaque derivative exposure (CDS's and it's breathren), and too much correlated risk (one domino falls, and ...). Look at the increadible rise of the derivative market over the last 10 years. Look at the same rise in sub-prime. I think we need to do something - and we have been - I'm just not convinced it's 700B and/or the players really know their exposures and root causes.
    Sep 30 07:32 AM | Likes Like |Link to Comment
  • The Biggest Money Grab in History [View article]
    This is a good piece. I think John hits some of major issues - too much of X and too little buyers ... will take some time to find the equilibrium. With unemployement likely to go up (finserve alone), I don't see a happy picture for the next 9-12 months. The other point that hit home was the '03 to '05 "bull" market, which was built on unsustainable risk and, at times, malfeasance. The real tradgedy is that the US comes off as a big hypocrit. Our bailout plan is not what we tell other countries to do when they have a financial crisis, etc. I always struggle with people who can't take their own advice. Add-in that Paulson and Co. have been spinning a fairy tale over the last year - it's all contained and getting better - and the credibility of the key players is dubious at best.
    Sep 29 11:14 AM | 1 Like Like |Link to Comment
  • When It Rains, It Pours [View article]
    You have to love the Fishman story ... it's emblematic of the whole rotting corpse. The average business professional makes $3-4M in a lifetime (salary, bonus, etc.). I'm all for pay-for-performance, but pay for malfeasance and non-performance is wrong. The bailout vs. workbout goes against everything we teach our children and what firms try to instill in their employees. Own up to your responsibilities and take some accountability for your actions. The bailout mindset is like a virus that eats away at personal responsibility and blows-up the whole risk-reward profile that finance is based on. The moral hazard is ripe and smells bad. Too much leverage + too many exotic derivative instruments + too much living beyond one's means = a poor outcome.
    Sep 26 04:15 PM | Likes Like |Link to Comment
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