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POPSIn Denial About Financial Reform Also see Dan Indiviglio over at The Atlantic: http://business.theatlantic.com/2009/09/why_is_washington_ignoring_the_real_causes_of_the_crisis.php The danger of putting a lawyer in charge of something like this is, in my opinion, best exemplified by Neil Barofsky, the attorney they put in front of TARP oversight. Barofsky has used his pulpit to put out some really meaningless and misleading numbers. We need real information from these guys, not noisy innumerate numbers. See: http://www.forbes.com/2009/07/27/bailout-bad-math-business-washington-barofsky.html
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POPSExodus Out of the Big Banks There's an intriguing idea here that it's good for the talent to disperse to smaller institutions. That it will be a sort of Darwinian process that whittles big banks down until they're no longer too big to fail. And it creates a more diverse Wall Street in the process. Well, really? It seems to me that's no longer true if a handful of the big banks (say Goldman Sachs or JPMorgan) are able to pay off their TARP funds early. Shrinking Citi and Bank of America to beef up Aladdin Capital and Broadpoint may be dandy and help the too-big-to-fail problem. But aren't we just as likely to be shrinking Citi and Bank of America to enlarge Goldman and JPMorgan? I'm not suggesting anything in particular other than that I'm not sure this talent reallocation really does anything material to the bank size issue.
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POPSHarvard Business School Examines Its Failure I find it hard to imagine there's really much soul-searching in many MBA programs. Is the metric they focus on still salary-upon-graduation? Where's the incentive there not to chase and inflate the next bubble?
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POPSSpitzer's New Column It's interesting that Eliot Spitzer is writing a column for Slate. An interesting topic too, that doesn't seem to be talked about enough: Why do we allow the creation of firms that are too big to fail? Is that a rational free market policy to allow the creation of firms that, if they fail, require massive government intervention? Would a superior "free market" policy be to actually disallow the creation of firms of such size?
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POPSBailout More Expensive than World War II? Now Treasury Secretary Henry Paulson and Fed chair Ben Bernanke would be quick, I think, to dispute that $4.6165 trillion dollars is a cost. A lot of apples and oranges (and grapes and berries and pomegranates) to get to that figure. The point that either way we're talking about a lot of fruit, howvever, is an important one.
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POPSBetter, Not Just More, Regulation A lot of people are framing this current mess as "we had too little regulation, now we need more." I tend to think this misses the point. Sarbanes-Oxley was passed six years ago. That's more regulation. Had Sarbanes-Oxley been just beefed up would it have stopped the crisis? Along with this professor, I worry that the discussion about regulation is going to focus on the size of regulation, rather than its quality.
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POPSMy Hedge Fund to God Reminds me of one of my favorite stories of the crisis: http://nymag.com/daily/intel/2008/09/georgetown_offers_condolences.html
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POPSEconopoly Note those cities in the front row... Detroit, Riverside... http://www.forbes.com/2008/10/15/economy-housing-recession-biz-beltway-cx_jz_1015econocities_slide.html?thisSpeed=15000
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POPSFew Options for Next President Am I alone in thinking that the *best* vice-presidential candidate pick for either candidate would have been somebody who genuinely understands, can talk reassuringly, confidently, and clearly, about economics? Am I alone in thinking the campaigns need to start talking *now* about who their Treasury Secretary would be, and start having him or her clued in on these meetings?
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POPSHousing TV -- Immune to Housing Crisis Ah, the golden days two years ago when a husband and wife who didn't know anything about home repair would buy a house, invite in the "Flip This House" camera crew, put in new linoleum, paint the walls, upgrade the bathroom fixtures (the realtors insisting that, this alone, raises the price of the home by $20-25,000), and sell the thing a few months later for a $125,000 in profit (if the new sink handles are fancy enough). Of course that doesn't work anymore. But happily, shows about home renovation are as popular as ever!
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POPSHere Come the Asteroids "The odds that a potentially devastating space rock will hit Earth this century may be as high as one in 10. So why isn’t NASA trying harder to prevent catastrophe?" Guess it sort of puts this whole credit crisis thing in perspective, huh?
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POPSAmerican housing: Map of misery The Economist looks at Ben Bernanke's new color-coded map of where the housing crisis is hitting. Looks like some regions are quite a bit less stressed than others. Hey! That reminds me of a look that somebody (wonder who?) here at Forbes.com did on America's Recession-Proof Cities: http://www.forbes.com/realestate/2008/04/29/cities-recession-places-forbeslife-cx_jz_0429realestate.html Our results line up nicely with these (think it's because of the overwhelming role housing prices are playing in the economy?) with the notable exception of San Jose.
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POPSEconomics and the Entrepreneur A lengthy look at how the recession of the 70s changed our thinking about economics. A history lesson, a primer on Joseph Schumpeter, and an argument for the importance of the entrepreneur. Well worth the read for the casual fan of economics who has nothing to do on a Friday afternoon. (If you're not an economics fan, consider yourself warned.)
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POPSHousing Crisis Helps Bankrupt a City Although it's clear the city of Vallejo, California faced a host of problems, a key factor in its bankruptcy was decreasing property tax revenues as home prices fall and homes go into foreclosure. Bankrupt homeowners is bad enough. Bankrupt cities?
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