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Krugman: Tax the Traders into Oblivion

Such a tax, unless it is universal, will move the financial activity off-shore and cause a major economic disruption in the US. Who will want to invest in an IPO, if selling the shares incurs a special tax? It is very important to limit the number of taxable activities. Small taxes become very easily large taxes. The time to stop taxes is before they become law. The excuse "it is just a small tax you will not notice" is the same as "we will limit your rights, but we have the best intentions and we will never use this to eavesdrop on regular citizens or hold them in jail without trial". Laws and taxes don't care about intentions, and have their own life.

Time for the U.S. Economy to Reindustrialize

I do wonder. If we were supposed to manufacture in Asia... and sell to Asia.. and design in Asia... because people in Asia are less expensive... who would pay us? and if we don't get paid, and can't afford to buy stuff, why do we matter? why can't the likes of GE and GM be eventually Korean and Japanese and Chinese companies? and we can't even migrate there!

The Hard Truth, Courtesy of the FDIC

So the FDIC needs more money now, and they hope they will need less money in the future. If their prediction are not correct, they will have to levy a special assessment in the future. This is a reasonable solution in our non-perfect world. Some optimism is allowed.
Regarding the accounting aspects, if they were not banks the treatment would have made no difference regarding their (in)solvency. Since they are, the government will have to decide on whether to use CSAP (Common Sense Accounting Principles) or GAAP.

Questionable Stories of Life After Foreclosure

There ain't no such thing as a personal responsibility (and a free lunch). If you give a $400K present people will take it. It is not their responsibility to look after the bank's finances. Why did the bank believe that a headhunter, whose business is notoriously prone to economic forces, could reliably repay $5,600 a month? the headhunter himself may have been less sophisticated. the bank has no excuse.
A bank should be held to a different standard, because managing finance is its core business, and because we have regulations that are supposed to align its incentives such that it will try and manage itself to stay solvent in a crisis. Sometimes the crisis is larger than was reasonable to predict, and then the Government steps in.
We, the people, are the ultimate underwriter. That is why we have the responsibility and the right to regulate financial institutions. This was not done properly and is not done properly yet because of false and misleading adherence to doctrines.
Adherence to false doctrines toppled the communists. If people in Government will not pull their head out of that dark place it is in and start making decisions based on science, common, and uncommon sense, we will end up just the same.
It is my opinion that all financial managers, geniuses, and irreplaceable managers in banks, down to the managers of departments that caused unreasonable bank failures, should be barred from the financial industry for life. Reagan did that to the flight controllers, and nobody complained.
Leave the people who were given the money alone. They paid for their mistakes as much as they could. It is time to point a finger at the real culprits.

Have Market Speculators Pushed Small Investors to Real Estate?

Answering nym: My experience varies from yours. Since I have a choice of where to invest, even with 60% churn rate per year I have a (slightly) positive cash flow. This is incredibly better than the stock market.

Why Leveraged and Derivatives-Based ETFs Are Dangerous

I love being short 3x ETFs, and made reasonable amount of money shorting them over the last 4 months. I do agree that being long in them is suicide, but the same is true for many other "investments", for example investing in time shares. Gamblers get a kick out of having a very volatile and falling portfolio. And yet, in the free land of the free, we should give people all the information and let them make their own decisions. There is no incentive for people who understand these investments to create unnecessary risk, on the contrary, when used correctly these are risk reduction vehicles.

Long and Shot Leveraged ETF's: A Decay Theory

An example using some mathematics. Please figure out the proof on your own:
Assume a bear and a bull daily ETF behave exactly as they should (you will find that in reality even a small daily difference makes a large difference in the end)
They both have exactly the same price to begin with, P1. A trader buys one of them. They trade for some time, and one day they happen to close with both having the same price, except now it is a different price, P2.
What is P2, given that the gain of the bull ETF over the intervening days was the series G1,G2...Gn, for example: 0.01(1%),0.02,-0.04,0.... ?
Answer:
Calculate for each trading day a number (Ni) which is 1 or less, Ni=(1-Gi squared) The new price P2 will be P1 multiplied by the square root of the product of all Ni's for all the trading days between P1 and P2. If the ETF moved at least twice during this period then P2 it is guaranteed to be lower then P1.

ETFs Are Just Exposure - Ratings Matter Little

A useful rating for most ETFs would be related to how well the ETF tracks its expected behavior (index tracking for simple ones; more complicated algorithms for complex ETFs). There are some measures that could be used. Any other analysis is only relevant to the industry group or asset class represented by the underlying - not the ETF itself - and should not be connected directly to the ETF.

Boston Fed: We Don't Understand Foreclosures

Another issue - the system was always geared towards foreclosing at maximum equity loss. This makes sense if the loan+expenses can be recovered easily, but the homeowner's remaining portion after the foreclosure sale needs to be minimized (punish the defaulter). Foreclosure sales were not traditionally heavily advertised, and the cash requirements and sales conditions (no time to review the property) reduce the recovered equity to a minimum.
This system does not work well when house equities are upside down.
The banks work around this by retaining the property (REO). That does meet the target of causing maximum damage to the defaulter, but also does not work very well for the banks.
The system will not change as long as the government bails the banks out. Self-interest works only when you are exposed to the results of your mistakes.

FAS and FAZ: A Short-Seller's Dream?

I have shorted both, and rebalanced when the hedge became too lopsided, since March 13. Made about 30% with very few down days. You must track it and sort of rebalance if it goes too far in one direction. Too late now, the money is made off volatility, no volatility at present. Will probably cover soon.

Housing Recovery: Where Will Demand Come From?

Demand can come from investors, if the Government will agree to treat them as they would any commercial investor even if they buy single family homes, and if lenders will be willing to take any risk without Government guarantees. It is possible to rent out houses in many parts of the country and make money without relying on appreciation.

Mindful of the Market - A Financials Volatility Trade

Just short both and rebalance every week. Very boring and profitable.

Mindful of the Market - A Financials Volatility Trade

Why not just short both of them (buy puts if you insist on options, but then you need to balance delta) and rebalance from time to time?

Is 'Reducing Principal' a Good Principle for the Fed?

What principle is involved? I did not think you could loan principles. They can be either taught or deduced. Loans only involve principal and interest.