Banks Lose $836 Million in First Derivatives Loss (Update1) - Bloomberg.com
As I reread this article, it strikes me that the underlyings experiencing the steepest losses were credit, interest rates and equities. Indeed it makes sense
-Credit started it all and as all those credit derivatives became worthless, dramatic losses followed
-Interest rate losses accelerated as money markets froze in the fall. The fed acted, but not enough to change the global picture
- Equities derivatives hedging suffered from the ban on short selling
It occurs to me, particularly on the interest rate and equities derivatives that they were done in by their reliance on dynamic hedging strategies.Had they based their hedging strategies on BICs, those loses would have largely been avoided. Indeed BICs with their contractual pre-agreement features would have forced the execution of the apropriate hedging strategies.
FX which were not affected by these restriction had a field day. What happened to equities is reminescent of what happened to emerging markets fx in 1997-1998.
Tuesday, March 31, 2009
Monday, March 30, 2009
Geithner Plan: The False Dichotomy of Alternate Choices
Based on Meet the Press and This week interviews of Mr. Geithner, nobody at the the treasury seems to have seriously raised to the Secretary's attention, the possibility of a less costly, surgical, and more effective alternative through market making as I have advocated.
The False Dichotomy of Alternate Choices. False dilemma.
I cry a river over this.
The False Dichotomy of Alternate Choices. False dilemma.
I cry a river over this.
Visit msnbc.com for Breaking News, World News, and News about the Economy
Sunday, March 29, 2009
Estimating Asset Costs for TARP/PPIF in a Market Making Framework & BICs - a knol by Phil Kongtcheu
Estimating Asset Costs for TARP in a Market Making Framework & BICs - a knol by Phil Kongtcheu
This article is a follow-up to the knol article "Fair Value Pricing, Government Market Making and TARP" and uses the concept introduced in the knol article " Introduction to Basis Instruments Contracts (BICs) for Mathematics, Finance, and Economics".
In this article we seek to estimate the proportion of assets ultimately held by the Government in a market making model, their cost and the parameters needed to make such estimates.
An important financial insight of this analysis is that we show that market making results in earning a spread that makes market making loss unlikely.
This article is a follow-up to the knol article "Fair Value Pricing, Government Market Making and TARP" and uses the concept introduced in the knol article " Introduction to Basis Instruments Contracts (BICs) for Mathematics, Finance, and Economics".
In this article we seek to estimate the proportion of assets ultimately held by the Government in a market making model, their cost and the parameters needed to make such estimates.
An important financial insight of this analysis is that we show that market making results in earning a spread that makes market making loss unlikely.
Tuesday, March 24, 2009
Geithner plan arithmetic - Paul Krugman Blog - NYTimes.com
Geithner plan arithmetic - Paul Krugman Blog - NYTimes.com
I agree with the subsidy argument made here to reject the Geithner plan but the example while at first very neat, nonetheless misses an element of investors preferences: many investors have already lost a lot and it is not unreasonable for them to demand more to risk what they've got left. Here is how it works:
Let's suppose Dr. Krugman's net worth is $100 million (including job security and reputation) and I say we flip a coin with equal probability of head and tail.
If it falls on head, Dr. Krugman wins and receives $1 billion; If it falls on tail, he loses everything he has got and pays out his net worth of $100 million. Will he take the bait?
I do not know the structure of Dr. Krugman's risk preferences but I am sure most people will not take it, even though their expected gain here would be $450 million.
This is what I call the fallacy of expectations based risk management. Many of the firms that go under in every financial crisis make the same mistake, often advised by very, very smart people. They make their investment decisions based on expectations profiles without full appraisal of the sustainability of downside scenarios that higher order metrics such as variance/volatility or above fail to capture. It seems a lot of very, very smart people out there are still making the same kind of intellectually cute but intrinsically flawed argument.
For this reason, I think the more simplistic example of my earlier post makes a more robust argument explaining the subsidy part of the plan.
I agree with the subsidy argument made here to reject the Geithner plan but the example while at first very neat, nonetheless misses an element of investors preferences: many investors have already lost a lot and it is not unreasonable for them to demand more to risk what they've got left. Here is how it works:
Let's suppose Dr. Krugman's net worth is $100 million (including job security and reputation) and I say we flip a coin with equal probability of head and tail.
If it falls on head, Dr. Krugman wins and receives $1 billion; If it falls on tail, he loses everything he has got and pays out his net worth of $100 million. Will he take the bait?
I do not know the structure of Dr. Krugman's risk preferences but I am sure most people will not take it, even though their expected gain here would be $450 million.
This is what I call the fallacy of expectations based risk management. Many of the firms that go under in every financial crisis make the same mistake, often advised by very, very smart people. They make their investment decisions based on expectations profiles without full appraisal of the sustainability of downside scenarios that higher order metrics such as variance/volatility or above fail to capture. It seems a lot of very, very smart people out there are still making the same kind of intellectually cute but intrinsically flawed argument.
For this reason, I think the more simplistic example of my earlier post makes a more robust argument explaining the subsidy part of the plan.
Monday, March 23, 2009
Geithner: My Plan for Bad Bank Assets - WSJ.com
Geithner: My Plan for Bad Bank Assets - WSJ.com
From what I understand from this piece, this plan deals with the capital structure of the funds that will purchase the assets, but not the mechanism through which the asset prices will be formed, i.e how the funds will price the assets...Umh...OK.
It seemed to me that the pb is not that there is no money out there, but that money does not want to touch those toxic assets and that the role govt in this is to come up with an efficient pricing mechanism that restores liquidity.
A few hours later,...
Well, in fact this plan is still a big unjustified subsidy to Wall Street compared to what I have proposed. To make it easy, consider this
Suppose you want to buy to buy a toxic asset T. You think that when you dispose of it in a year it will be worth $110. How much will you be willing to pay for it today? It all depends on the cost of borrowing. If you can get a 0% loan you can pay up to $110. If the interest rate is 10%, you will not pay more than $100 for T. So the lender who lends you money at 0% when the market on such loans is 10% is giving you a subsidy that you will share with the asset T seller. Furthermore lending such subsidized money to more than one potential buyer will ensure through competitive forces that the bulk of the subsidy is passed on to the seller. That's probably why Wall Street cheered today..
From what I understand from this piece, this plan deals with the capital structure of the funds that will purchase the assets, but not the mechanism through which the asset prices will be formed, i.e how the funds will price the assets...Umh...OK.
It seemed to me that the pb is not that there is no money out there, but that money does not want to touch those toxic assets and that the role govt in this is to come up with an efficient pricing mechanism that restores liquidity.
A few hours later,...
Well, in fact this plan is still a big unjustified subsidy to Wall Street compared to what I have proposed. To make it easy, consider this
Suppose you want to buy to buy a toxic asset T. You think that when you dispose of it in a year it will be worth $110. How much will you be willing to pay for it today? It all depends on the cost of borrowing. If you can get a 0% loan you can pay up to $110. If the interest rate is 10%, you will not pay more than $100 for T. So the lender who lends you money at 0% when the market on such loans is 10% is giving you a subsidy that you will share with the asset T seller. Furthermore lending such subsidized money to more than one potential buyer will ensure through competitive forces that the bulk of the subsidy is passed on to the seller. That's probably why Wall Street cheered today..
Op-Ed Columnist - Financial Policy Despair - NYTimes.com
Op-Ed Columnist - Financial Policy Despair - NYTimes.com
I could not agree more with Mr. Krugman on the sense of desperation over this plan.
I have cried a river over this, and over and over.
And I cry again...
However we arrive at the same conclusion from different analytic paths and our prescriptions differ. My analysis remains this
I could not agree more with Mr. Krugman on the sense of desperation over this plan.
I have cried a river over this, and over and over.
And I cry again...
However we arrive at the same conclusion from different analytic paths and our prescriptions differ. My analysis remains this
Sunday, March 22, 2009
Op-Ed Columnist - Are We Home Alone? - NYTimes.com
Op-Ed Columnist - Are We Home Alone? - NYTimes.com: "And you will ensure that we’ll never get out of this banking crisis, because the solution depends on getting private money funds to team up with the government to buy up toxic assets — and fund managers are growing terrified of any collaboration with government."
Huh!...
My only quarrel with the article is the apparent assumption that the plan the government appears to be poised to announce is the obviously best and only game in town...
Once more, Mr. Friedman, would you read this?
Huh!...
My only quarrel with the article is the apparent assumption that the plan the government appears to be poised to announce is the obviously best and only game in town...
Once more, Mr. Friedman, would you read this?
A Medical Madoff: Anesthesiologist Faked Data in 21 Studies: Scientific American
A Medical Madoff: Anesthesiologist Faked Data in 21 Studies: Scientific American
As I was going through the French edition of this article in Le Monde, it hit me once again that the present crisis is also at a deeper level a crisis of defect in the structure of means of attribution of credit that is not limited to finance, but that extend to all learned fields of knowledge in the upper echelons of society.
I have refused to play the "gaming the system" strategy for I believe sooner or later things in such games fall apart.
This gives me hope that someday those who stood up to look for the truth and claim it no matter what the price may receive their due.
Someday, somewhere over the rainbow...
As I was going through the French edition of this article in Le Monde, it hit me once again that the present crisis is also at a deeper level a crisis of defect in the structure of means of attribution of credit that is not limited to finance, but that extend to all learned fields of knowledge in the upper echelons of society.
I have refused to play the "gaming the system" strategy for I believe sooner or later things in such games fall apart.
This gives me hope that someday those who stood up to look for the truth and claim it no matter what the price may receive their due.
Someday, somewhere over the rainbow...
Saturday, March 21, 2009
Toxic Asset Plan Foresees Big Subsidies for Investors - NYTimes.com
Toxic Asset Plan Foresees Big Subsidies for Investors - NYTimes.com
Moronic disgrace.
Design complexity here is no substitute for discernment.
I cry a river over this.
See: http://knol.google.com/k/phil-kongtcheu/fair-value-pricing-government-market/
Moronic disgrace.
Design complexity here is no substitute for discernment.
I cry a river over this.
See: http://knol.google.com/k/phil-kongtcheu/fair-value-pricing-government-market/
Senators Debate Fed's Role in Overseeing Systemic Risk - WSJ.com
Senators Debate Fed's Role in Overseeing Systemic Risk - WSJ.com
Reasonable debate to have. In my book BICs 4 Derivatives Volume I : Theory
(Chapter VIII, pp 192-195), I argued for a central counterparty organization as counterparty of reference on all trades which guarantees the payment of contractual agreements on both sides of a transaction.
The systemic risk overseeing entity should act as central counterparty of reference on all trades whose default may pose a systemic risk or act as a regulator and guarantor of last resort to private entities (exchanges, clearing houses,...) who play such a role.
As a guarantor of last resort, this entity may be best within FDIC; As guarantor of credibility through the power to print money, this entity may be best within the Central Bank authority. What is most important in my view is that its function be articulated as proposed above.
Reasonable debate to have. In my book BICs 4 Derivatives Volume I : Theory
(Chapter VIII, pp 192-195), I argued for a central counterparty organization as counterparty of reference on all trades which guarantees the payment of contractual agreements on both sides of a transaction.
The systemic risk overseeing entity should act as central counterparty of reference on all trades whose default may pose a systemic risk or act as a regulator and guarantor of last resort to private entities (exchanges, clearing houses,...) who play such a role.
As a guarantor of last resort, this entity may be best within FDIC; As guarantor of credibility through the power to print money, this entity may be best within the Central Bank authority. What is most important in my view is that its function be articulated as proposed above.
Thursday, March 19, 2009
Fed Will Inject $1 Trillion More Into the Economy - NYTimes.com
Fed Will Inject $1 Trillion More Into the Economy - NYTimes.com
Not bad. But I think a but in a more structurally efficient way, the fed would expend less and achieve the goal of curbing long term rates if it made markets on overnight functional notionals BICs-FRAs along the term structure. Since this would recompose into long term bonds without immediately disbursing the cash needed to purchase long term bonds, it would use less capital.
In 2005 when the fed was desperately trying to raise long term rates to dampen speculation on mortgages, but considering it prohibitively expensive to get into the business of selling long term bonds, I volunteered a piece to the NYT and WSJ explaining how BICs might help do this efficiently. No one was interested.
Still, policy makers have not figured this one out...What else can I do?
Not bad. But I think a but in a more structurally efficient way, the fed would expend less and achieve the goal of curbing long term rates if it made markets on overnight functional notionals BICs-FRAs along the term structure. Since this would recompose into long term bonds without immediately disbursing the cash needed to purchase long term bonds, it would use less capital.
In 2005 when the fed was desperately trying to raise long term rates to dampen speculation on mortgages, but considering it prohibitively expensive to get into the business of selling long term bonds, I volunteered a piece to the NYT and WSJ explaining how BICs might help do this efficiently. No one was interested.
Still, policy makers have not figured this one out...What else can I do?
Wednesday, March 18, 2009
Financial Journalists Fail Upward - WSJ.com
Financial Journalists Fail Upward - WSJ.com
Dear Mr. Frank:
I loved your piece, loved it, loved it. As the late poet Aime Cesaire once said for himself, in this piece "your mouth is the mouth of the mouthless and your voice, the liberty of those whose voice rests in the dungeons of despair"
I am one of those marginalized, laboring at out-of-the-way blogs. I have been and I am still excluded and ridiculed because my larger understanding of the economy was and is not one that fit well with the sort of Wall Street or academia worship preached by the likes of CNBC.
I published my book in 2005 questioning the mathematics underlying derivatives risk management, the systemic risk they posed and proposing an alternative.
In this crisis I feel that better than anyone I have heard so far I know how to most effectively get us out of this crisis stronger, faster at the least cost. I spent a decade working precisely on this.
On the most pressing issue of the day, how to deal with the toxic assets clogging the system, I have tried without success for two months now to have this published in the NY Times or the WSJ to attract the attention of decision makers. I know the public/private plan the administration seem set on adopting is going to be very expensive for taxpayers while fattening pockets of financiers. No one seems to realize how a government market making approach is simpler and more efficient. I have seen so far no one discussing that possibility
Check my blog at http://kongtcheu.blogspot.com/
Anyway, Thank you.
Your piece made me feel less lonely for a moment,
Phil Kongtcheu
Dear Mr. Frank:
I loved your piece, loved it, loved it. As the late poet Aime Cesaire once said for himself, in this piece "your mouth is the mouth of the mouthless and your voice, the liberty of those whose voice rests in the dungeons of despair"
I am one of those marginalized, laboring at out-of-the-way blogs. I have been and I am still excluded and ridiculed because my larger understanding of the economy was and is not one that fit well with the sort of Wall Street or academia worship preached by the likes of CNBC.
I published my book in 2005 questioning the mathematics underlying derivatives risk management, the systemic risk they posed and proposing an alternative.
In this crisis I feel that better than anyone I have heard so far I know how to most effectively get us out of this crisis stronger, faster at the least cost. I spent a decade working precisely on this.
On the most pressing issue of the day, how to deal with the toxic assets clogging the system, I have tried without success for two months now to have this published in the NY Times or the WSJ to attract the attention of decision makers. I know the public/private plan the administration seem set on adopting is going to be very expensive for taxpayers while fattening pockets of financiers. No one seems to realize how a government market making approach is simpler and more efficient. I have seen so far no one discussing that possibility
Check my blog at http://kongtcheu.blogspot.com/
Anyway, Thank you.
Your piece made me feel less lonely for a moment,
Phil Kongtcheu
Sunday, March 15, 2009
TALF Is Reworked After Investors Balk - WSJ.com
TALF Is Reworked After Investors Balk - WSJ.com
This subsidized lending program just looks like major league subsidy to the securities industry with layers of transaction costs that incentivize people to trade in potentially irrational way with cheap money and are likely to contribute to TARP assets price inflation . Why not just do market making as I have repeatedly suggested?
The key mistake here is that policy makers seem to confuse
- incentivizing trade on securities with high economic impact which should be the mission of the government here and would lead to a more rational underwriting industry practices going forward
vs
- encouraging the potential reckless issuance of new securities which may in fact perpetuate the practices that led to this mess.
This subsidized lending program just looks like major league subsidy to the securities industry with layers of transaction costs that incentivize people to trade in potentially irrational way with cheap money and are likely to contribute to TARP assets price inflation . Why not just do market making as I have repeatedly suggested?
The key mistake here is that policy makers seem to confuse
- incentivizing trade on securities with high economic impact which should be the mission of the government here and would lead to a more rational underwriting industry practices going forward
vs
- encouraging the potential reckless issuance of new securities which may in fact perpetuate the practices that led to this mess.
Friday, March 13, 2009
John Stewart Vs. Jim Cramer
The Daily Show with Jon Stewart | Stewart vs. Cramer:
A few thoughts:
1) "Is collective responsibility an alibi?"
This topic of my high school philosophy dissertation exam seems to me like something that out to be debated or revisited here. All the culprits in the present crisis seem to think collective responsibility is an alibi. I differ.
How at the very least about a journalistic or governmental effort to search and single out the heroes?
2) "It is much easier for a man to fail conventionally than to stand against the crowd and speak the truth" John Maynard Keynes
The usual expectation is that the one(s) who stood against the crowd and spoke the truth at great cost to themselves would reap the benefits when convention fails.
Painful as it was to watch for Mr. Cramer, I suspect he is still going to be having his show and make even more money "head he wins, tail you loose".
I have spent a decade on BICs, and BICs would have helped and can still help get out of this... And here am I, just as pitiful, out of the public sight and out of the public mind.
Where is the morality of all of this?
3) Is it time to debunk the Financial Investment Equity Risk Premium Fallacy
which says over the long term stocks outperform bonds?
(1976 Ibbotson Brinson) .See also:
http://www.dailyspeculations.com/scholarly/LongTermStockReturns.html
http://corporate.morningstar.com/ib/documents/MethodologyDocuments/IBBAssociates/IntnlRiskPremium.pdf
How about saying "Lies, damned lies, and statistics"
I bet that buying government I-Bond (inflation bonds) would yield a better return net of management fees and taxes than the large majority of index funds.
But saying that would destroy the entire financial advisory industry. So let's keep it quiet....
4) Finance and Economics is a complex and serious business that must be handled with nuance, intellectual sophistication that can sound very boring to simply minded persons; by attempting to be simplistic and entertaining to attract huge audiences, CNBC & Cramer dig for themselves huge holes in which they ultimately fall
The Stewart clip evidence against Cramer:
CARLY SIMON - YOU'RE SO VAIN referred to by stewart in the interview
A few thoughts:
1) "Is collective responsibility an alibi?"
This topic of my high school philosophy dissertation exam seems to me like something that out to be debated or revisited here. All the culprits in the present crisis seem to think collective responsibility is an alibi. I differ.
How at the very least about a journalistic or governmental effort to search and single out the heroes?
2) "It is much easier for a man to fail conventionally than to stand against the crowd and speak the truth" John Maynard Keynes
The usual expectation is that the one(s) who stood against the crowd and spoke the truth at great cost to themselves would reap the benefits when convention fails.
Painful as it was to watch for Mr. Cramer, I suspect he is still going to be having his show and make even more money "head he wins, tail you loose".
I have spent a decade on BICs, and BICs would have helped and can still help get out of this... And here am I, just as pitiful, out of the public sight and out of the public mind.
Where is the morality of all of this?
3) Is it time to debunk the Financial Investment Equity Risk Premium Fallacy
which says over the long term stocks outperform bonds?
(1976 Ibbotson Brinson) .See also:
http://www.dailyspeculations.com/scholarly/LongTermStockReturns.html
http://corporate.morningstar.com/ib/documents/MethodologyDocuments/IBBAssociates/IntnlRiskPremium.pdf
How about saying "Lies, damned lies, and statistics"
I bet that buying government I-Bond (inflation bonds) would yield a better return net of management fees and taxes than the large majority of index funds.
But saying that would destroy the entire financial advisory industry. So let's keep it quiet....
4) Finance and Economics is a complex and serious business that must be handled with nuance, intellectual sophistication that can sound very boring to simply minded persons; by attempting to be simplistic and entertaining to attract huge audiences, CNBC & Cramer dig for themselves huge holes in which they ultimately fall
The Stewart clip evidence against Cramer:
CARLY SIMON - YOU'RE SO VAIN referred to by stewart in the interview
Thursday, March 12, 2009
Charlie Rose - A conversation with Timothy Geithner, U.S. Treasury Secretary
Charlie Rose - A conversation with Timothy Geithner, U.S. Treasury Secretary
In this interview he made a lot of sense. His enunciation of principles is coherent; however the actual tools to effect those principles, while not entirely unacceptable are not always the most effective I would think of.
"Ars sine scientia nihil est"
For example, when he is talking about doing the private public partnership to unclog tarp assets . They are going to lend money to private investors so that the can go and buy tarp assets. The contention I have repeatedly made is: why would this be better than setting up a market making operation on those assets traded at a refined level of granularity?
In this interview he made a lot of sense. His enunciation of principles is coherent; however the actual tools to effect those principles, while not entirely unacceptable are not always the most effective I would think of.
"Ars sine scientia nihil est"
For example, when he is talking about doing the private public partnership to unclog tarp assets . They are going to lend money to private investors so that the can go and buy tarp assets. The contention I have repeatedly made is: why would this be better than setting up a market making operation on those assets traded at a refined level of granularity?
Monday, March 9, 2009
Mathematical Model and the Mortgage Mess - NYTimes.com
Mathematical Model and the Mortgage Mess - NYTimes.com
Yes, BICs 4 Derivatives Volume I : Theory chapter IX pp 203-232, showed that this was faulty and proposed the coherent alternative. When will you wake up people? when?
I cry a river over this. I cry a river over this....
As I have described at length in other writings(See this or this ), this crisis was a failure of the existing mathematical modeling framework at describing the real world dynamics of underlyings. Therefore the corresponding hedging and risk management strategies failed to represent reality and this fact becomes most obvious at times of crisis. One of the reasons for this development is the over-representation of former physicist at the highest levels of "quantdom" who have forced the adoption of a framework coming from another world. But "It ain't physics". It just ain't.
And I cry a river over this. I just cry a river over this....
Yes, BICs 4 Derivatives Volume I : Theory
chapter IX pp 203-232, showed that this was faulty and proposed the coherent alternative. When will you wake up people? when?I cry a river over this. I cry a river over this....
As I have described at length in other writings(See this or this ), this crisis was a failure of the existing mathematical modeling framework at describing the real world dynamics of underlyings. Therefore the corresponding hedging and risk management strategies failed to represent reality and this fact becomes most obvious at times of crisis. One of the reasons for this development is the over-representation of former physicist at the highest levels of "quantdom" who have forced the adoption of a framework coming from another world. But "It ain't physics". It just ain't.
And I cry a river over this. I just cry a river over this....
They Tried to Outsmart Wall Street - NYTimes.com
They Tried to Outsmart Wall Street - NYTimes.com
The newsy or useful point the article is trying to make kind of eludes me. From the front page snapshot, I thought there would be some statistic showing demand for quants has shot up with the crisis other than the discrete opinion of a quant professor who has a conflicted interest in selling his academic curriculum to prospective students. The reporter apparently just opened his quant rolodex and got a number of known quants say something that would make them look good and prop their books. Unlike what the title "They Tried to Outsmart Wall Street" would suggest, it does not try to hold any of those accountable.
How about BICs Sir, how about BICs, it actually would help...
I cry a river over this...
As I have described at length in other writings(See this or this ), and keep on saying, this crisis was a failure of the existing mathematical modeling framework at describing the real world dynamics of underlyings. Therefore the corresponding hedging and risk management strategies failed to represent reality and this fact becomes most obvious at times of crisis. One of the reasons for this development is the over-representation of former physicist at the highest levels of "quantdom" who have forced the adoption of a framework coming from another world. But "It ain't physics". It just ain't.
And I cry a river over this. I just cry a river over this....
The newsy or useful point the article is trying to make kind of eludes me. From the front page snapshot, I thought there would be some statistic showing demand for quants has shot up with the crisis other than the discrete opinion of a quant professor who has a conflicted interest in selling his academic curriculum to prospective students. The reporter apparently just opened his quant rolodex and got a number of known quants say something that would make them look good and prop their books. Unlike what the title "They Tried to Outsmart Wall Street" would suggest, it does not try to hold any of those accountable.
How about BICs Sir, how about BICs, it actually would help...
I cry a river over this...
As I have described at length in other writings(See this or this ), and keep on saying, this crisis was a failure of the existing mathematical modeling framework at describing the real world dynamics of underlyings. Therefore the corresponding hedging and risk management strategies failed to represent reality and this fact becomes most obvious at times of crisis. One of the reasons for this development is the over-representation of former physicist at the highest levels of "quantdom" who have forced the adoption of a framework coming from another world. But "It ain't physics". It just ain't.
And I cry a river over this. I just cry a river over this....
LinkedIn: Answers: What are the best ways to enable grassroots stimulus, esp. with entrepreneurship?
LinkedIn: Answers: What are the best ways to enable grassroots stimulus, esp. with entrepreneurship?: "How about simply providing stimulative loans/ investments directly to all those educated professional in the financial services and media sectors that are being laid off in droves to start up anew?
Simple criteria: US Citizen or Permanent resident+college degree
Max amount 50K - No paperwork -Checks mailed by the IRS"
Simple criteria: US Citizen or Permanent resident+college degree
Max amount 50K - No paperwork -Checks mailed by the IRS"
Sunday, March 8, 2009
Saturday Night Live - Geithner Cold Open - Video - NBC.com
Dear Mr. Secretary Geithner,
Please , read this:
Please, please, please
Please , read this:
How to Value Illiquid Toxic Assets clogging up the banking system
Please, please, please
Friday, March 6, 2009
Fed Moves to Free Up Credit for Consumers - WSJ.com
Fed Moves to Free Up Credit for Consumers - WSJ.com
Why such a tortuous and costly scheme? Why not simply let the fed lend the money to consumer directly. In conjunction with the IRS, individual taxpayers account can be set up in the same manner as some of the the I-bonds where individual taxpayers can borrow directly from the treasury. Setting this up on an Internet architecture would make it relatively straightforward and stimulate the economy faster than any other mechanism.
Why such a tortuous and costly scheme? Why not simply let the fed lend the money to consumer directly. In conjunction with the IRS, individual taxpayers account can be set up in the same manner as some of the the I-bonds where individual taxpayers can borrow directly from the treasury. Setting this up on an Internet architecture would make it relatively straightforward and stimulate the economy faster than any other mechanism.
Op-Ed Columnist - The Big Dither - NYTimes.com
Op-Ed Columnist - The Big Dither - NYTimes.com
This article shows how even the "best and the brightest" seem not to see that the best approach to address this issue is as I describe in my article with the government becoming a market maker on TARP's illiquid asset. Nationalization in my view is not the answer, nor is some of the establishment of some of the private/ public funds. This structures merely add transactions cost and may only tangentially address the core issue
This article shows how even the "best and the brightest" seem not to see that the best approach to address this issue is as I describe in my article with the government becoming a market maker on TARP's illiquid asset. Nationalization in my view is not the answer, nor is some of the establishment of some of the private/ public funds. This structures merely add transactions cost and may only tangentially address the core issue
Steve Forbes Says Barack Obama's Economic Policy Repeats George W. Bush's Mistakes - WSJ.com
Steve Forbes Says Barack Obama's Economic Policy Repeats George W. Bush's Mistakes - WSJ.com
I strongly disagree with this argument against mark to market. As for dealing with market illiquidity, as I explain in my article on how to price illiquid TARP assets, when trading of assets economically vital is disrupted, government should set in to play a market maker's role, one of the additional positive results of such an approach being to enable effective market to market.
It is unfortunate that many it is shaping as republican vs. democrat thing.
I strongly disagree with this argument against mark to market. As for dealing with market illiquidity, as I explain in my article on how to price illiquid TARP assets, when trading of assets economically vital is disrupted, government should set in to play a market maker's role, one of the additional positive results of such an approach being to enable effective market to market.
It is unfortunate that many it is shaping as republican vs. democrat thing.
Monday, March 2, 2009
BICs Trivia
Introduction to BICs Exchange Systems
In this post, I just added a presentation that hopefully more clearly stresses the relevance and applicability of BICs as a sorely needed risk management tool
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