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We’ve Nationalized the Home Mortgage Market. Now What?
They would lobby to reduce the amount of capital they have to reserve for an emergency, and to lower the fees charged for mortgage insurance so they could compete on price. If another crisis hits,...
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The People Versus The Bankers
To understand why bankers love the status quo you have to understand how they pay themselves. Unlike most enterprises, labour actually has more power than capital at the big banks because debt plays...
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Three Things Investors Can Learn from Surfers
Ocean conditions can be calm one day only to be rough the next. This volatility is an important aspect of surfing because different ocean conditions call for different surfboards. Avid surfers know...
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The Messy (and Risky) Ways That Governments Try to Manage Risks
We are at serious risk because of the subjective nature of the way all these factors shape the risk management policy making we depend on to protect us. But in a democracy there is no way around this...
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Greed + Confirmation Bias = Disaster
It’s a natural human tendency to seek out conforming opinions – people who agree with us. It makes us feel “right” and good about our decisions. In the investing world, however, this is dangerous. When...
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Shadow Banking And The Global Financial Ecosystem
In either case, the fundamental problem we are dealing with is a financial ecosystem that has outgrown the safety net that was put around it many years ago. Today we have new types of savers (cash...
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University of California : Swapping For A Loss
The bankruptcy automatically terminated the swap. Under the contract, the university was required to pay a $25 million termination fee to the now-bankrupt bank. But at that point, there was one upside....
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A Man in the Mirror
Bill Gross on our relationship to success, the heydays of investing and Michael Jackson : Since the early 1970s when the dollar was released from gold and credit began its incredible, liquefying, total...
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It Never Rains in California
Bill Gross on liquidity : While private equity and hedge funds have built-in “gates” to prevent an overnight exit, mutual funds and ETFs do not. That an ETF can satisfy redemption with underlying bonds...
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Volatility As An Opportunity Class
Like navigating busy Southern California freeways, volatility option trading is path dependent: Whether one makes or loses money depends on the path taken from point A to point B – as well as what...
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Black Box Trading : Why They All “Blow-Up”
While in Greenwich Ct. one afternoon I will never forget a conversation I had with a leading quantitative portfolio manager. He said to me that despite its obvious attributes “Black Box” trading was...
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Wall Street Banks Admit They Rigged CDS Prices Too
Tyler Durden : Here is a system that ultimately allows banks to control the pricing for the instruments they use to bet against securities that they themselves create. This is just part and parcel of a...
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Liquidity : Never There When You Need It
Markets are dominated by a few large investors, creating problems of concentration. Similar portfolios and strategies exacerbate risk and the problems of illiquidity if a large number of participants...
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Trading The Equity Curve
Some trading systems have prolonged periods of winning or losing trades. Long winning streaks may be followed by a prolonged period of drawdown. Wouldn’t it be nice if you could minimize those long...
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Black Monday Really Did Look Like 1929 Again
A short and informative recollection of what happened roughly three decades ago, from Barry Ritholtz : Where were you on Monday, Oct. 19, 1987? Today is the first time since 2009 that Oct. 19 has...
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Lunch with the FT: Ben Bernanke
Martin Wolf : I ask him whether he is confident that the improvement in the resilience of the banks is adequate. “It’s a fool’s game to predict that everything is going to be fine, because either it is...
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