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Intended Consequences

By | October 27th, 2009|

In the middle of a recovery, in comes F-Troop! The gist of the ‘60s sitcom was that nothing was too certain for those dopey Feds to mess it up. Whether it was a new peace treaty or a new railroad, Captain Parmenter and Sergeant O’Rourke were fully capable of fouling up the works. So just as the banks are beginning to show signs of life [...]

Bubblenomics

By | October 26th, 2009|

Are we in a new bubble? That’s the question today. As stock prices make record-setting gains after falling record-setting amounts, some wonder whether a new bubble is in the works. To answer this, it helps to understand what it takes to form a bubble. First, you need to have a new technology that seems to “change the game” in a major way. Second, the new [...]

The King is a Fink

By | October 22nd, 2009|

Well, he ought to know. Larry Fink, CEO of Blackrock, says that a slew of money managers will put themselves up for sale rather than pay to meet new fiduciary standards. The head of the $2.7 trillion asset manager was speaking to a group of fellow predators—er, large money managers—and he noted that mid-sized firms will be subject to greater scrutiny from the SEC. He [...]

Predicting the Past

By | October 21st, 2009|

Your mind can deceive you. That’s one old lesson from the new emphasis on brain science and investing. For example, two-in-a-row of anything tends to make us expect a third. We may not admit this expectation to ourselves, but it is real, automatic, and uncontrollable. Our belief that the recent past will be repeated informs most of our actions—from where we plan to see a [...]

Trading Places

By | October 20th, 2009|

Is trade an unvarnished good? Before the financial crisis, we were frequently offered humorous pictures of anti-trade militants protesting a World Trade Organization meeting. They were reportedly concerned that global trade would wreak havoc with indigenous cultures and exploit vulnerable populations. While some could see their point, it was usually undercut by the simple fact that none of these activists were looking to move in [...]

In Banks We Trust

By | October 19th, 2009|

This is Doug Tengdin from Charter Trust Whither the banks? As our historic financial panic settles out, what is the likely future of bank regulation? Clearly, we are not going back to the status quo. A hostile Congress and trillions in bailouts guarantee that. But what is the reform going to be? A Financial Consumer Protection Agency and that’s it? A mandate to break up [...]

The Wedge

By | October 16th, 2009|

What are taxes, anyway? Governments have to collect taxes to pay for their services. They also collect taxes to encourage or discourage various activities. For example, the mortgage interest deduction and homestead property tax exemption are designed to encourage people to own their own homes. Our governments have tax policies that affect our actions. But taxes also act as a wedge between economic actors, distorting [...]

JP More!

By | October 15th, 2009|

Was it all just a bad dream? With the Dow hitting 10 thousand and many stocks at one-year highs, was last year’s market panic just a piece of underdone potato? That’s the way it feels as we watch the market climb ever higher. Credit spreads have come in and global markets go up. Yesterday’s big news was from JP Morgan. Even though they bought Wamu’s [...]

Doin’ the Grind

By | October 12th, 2009|

Are junk bonds really golden? Since the march lows, junk bonds have been on a roll, adding over 40%. At the same time, investment grade debt has grown, although not as much, advancing about 15%. But in the past week the situation has gotten confusing. Most corporate bonds have fallen, while junk bonds continue their roll. So what gives? Part of the answer lies with [...]