Tradememe

Too Big to Fail, Or Too Dumb to Survive?

All we have to do is to compare the situation of the world's financial system before and after the bankruptcy of Lehman. And we will get an idea of the risks that these mammoth financial institutions pose to the economy. Are we ready to take the gamble and let them fail ? There is no going back once it's done.

Mark-to-Market Triggered This Recession; It Will Also Trigger the Recovery

I don't think we should discard mark-to-market altogether. But changing it so that it does not depend on the wild fluctuations of assets would be a good thing. One suggestion I saw on this site was the use of a 3 to 5 year moving average for the valuation of assets.

Waiting for the Government to Act on Banks

The problem is that they don't want to save the banks, but they don't want to see the banks fail either. So, we are in a kind of economic limbo.

Too Late to Complain About Mark-to-Market

It's only in hindsight that we know for sure the full effect of a rule or regulation. With time any rule or regulation can be improved upon. This is not some kind of religious dogma that is permanent.

Citigroup Questions

It is true that the movement of Citigroup should not affect the market. But we are dealing with mass psychology and not rational thinking based on mathematics.

The Wonders of Mark-to-Market: Simultaneously Well-Capitalized and Insolvent

When mark-to-market was making the balance sheet go up, everybody was fat and happy and giving one another big bonuses. But when it starts going in the other direction, then they ask for a change in the rules. That's the dilemma we are facing.

Rethinking Subsidized Finance

"I have no problem with subsidizing private capital formation, even with ceding much of the upside to entrepreneurial investors while taxpayers absorb much of the downside when things go wrong."

This kind of thinking is what created the whole mess in the first place. Have you ever heard of moral hazard ?

Death of the Big Bank Model

Those big banks are financial dinosaurs. They are just not aware of it or they refuse to face up with reality.

Bailouts Support Survival of the Weakest

Those endless bailouts are turning the US economy into a zombie economy. If the disease does not kill the market, the cure will surely finish the job.

Financial Stocks: Playing the Mark-to-Market Suspension

The mark-to-market provision is turning the toxic assets into some kind of black hole where any new money will be absorbed. So, to really fix the banking crisis, the requirement has to be modified.

America's Banks: Are They Really Insolvent?

So, does that mean all we need to do is redefine insolvency and the banking crisis is over ? Just remove the mark-to-market requirement and the problem is gone.

Preview from Europe: Inactive Obama Leads Indices Lower

I guess everyone wants the new administration to fix in two weeks a problem that took years in the making.

Why Capping Pay Is Likely to Work

Right now in the finance industry, I doubt there are many top managers who would sneer at a 500K salary. But in a few years, when the economy is running full speed, the salary cap will be blown away. At this point, I hope a new compensation structure that will favor more longterm objectives will be put in place.

2008: Year of the Global Recession

One month and a few days late. Should have been published on New Year's Day. That would really depress the readers.

Nationalizing Bank Losses

Nothing can make the banking sector's losses go away. We can move them around, but we can't make them go away. If that's what the experts are looking for, well, the banking crisis is going to be with us for some time.