Nice interactive WSJ graphic looking at how the new FinReg bill impacts various finance sectors:
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click for interactive graphic
Source: WSJ.com
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
"Dollar depreciation leads to higher inflation and ultimately forces foreign creditors to question their rationale and indeed their sanity for continuing purchases of U.S. Treasuries." -Bill Gross
Signs continue that European markets are getting tired. The Spanish and Italian stock markets, big beneficiaries of the sharp decline in their bond yields over the past few months are falling to the lowest since Feb 1. The European bank index is at a 1 1/2 week low after earnings reports from Commerzbank and Credit Ag (RBS bouncing although reporting weaker than expected earnings) were disappointing. This market action is in spite of the German IFO business confidence figure which rose to a 7 month high coming in a touch above expectations and Italian consumer confidence which bounced more than...
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July 22nd, 2010 at 11:49 am
Can someone help me find a good video to show a high school class on what caused the financial crisis, about 30min long? Thanks
July 22nd, 2010 at 11:53 am
can someone explain to me how suing ratings agencies will work? after all, a given rating is supposed to indicate some given probability of default. Of course, if your BBB bond defaults (or even if your AAA bond defaults), that doesn’t mean that the bond was rated incorrectly!
would the point be that ratings agencies get sued when they are grossly incompetent like they were during the crisis, and the number of defaulting bonds is many many standard deviations away from what would be possible if the probability assessments implied by the ratings were accurate?
July 22nd, 2010 at 12:07 pm
I can’t wait to get that broker fiduciary responsibility law.
Imagine that, your financial “Associate” puts you first. How novel. How could anyone vote against that?
July 22nd, 2010 at 12:24 pm
“when they are grossly incompetent like they were during the crisis”
I find the term “incompetent” when discussing the debacle at the ratings agencies to be like a backdoor excuse for “corrupt”. They are not incompetent – they were/are professionals. They were paid-off by companies who had a lot to gain by mis-rating the securities. Saying they are “incompetent” is like saying the bribe-taking cops in “Serpico” were incompetent. No. Corrupt and corrupted (by those with deep pockets).
July 22nd, 2010 at 12:36 pm
tarkus – the scariest thing is that I don’t think they actually realized how wrong they were. it’s actually even worse than being corrupt, probably. If you’re corrupt, you’re immoral, but you know that you’re doing something wrong. If you’re incompetent, you don’t even know that you’re acting foolishly. i THINK that the ratings agencies actually believed their horribly flawed models, and actually believed that they could turn lead into gold (or BBB MBS into AAA CDOs).
July 22nd, 2010 at 12:48 pm
Come on KD!!! You know better than that. Remember the ratings agency staff IMs stating that they would rate an instrument that was structure by cows!?!?!? They know what they were doing and they did it anyway… corrupt, not incompetent.
July 22nd, 2010 at 12:48 pm
@Tarkus & KD: I actually think it’s a combination of the two. When the money being made is that easy, it’s also quite easy to believe what you’re doing leads to gold (to “drink the kool aide” if you will).
July 22nd, 2010 at 12:50 pm
And Wall Streeters (even ratings agency peeps) naturally think they’re entitled to all their pay because they’re oh so much “smarter” than everyone else, so of course they “believed” in their models. They were making the money hand over fist, and that end result was/is all that mattered (and still does) to them. It’s the ONLY justification for their belief.
July 22nd, 2010 at 1:11 pm
I must take this opportunity to issue a slightly off-subject mea culpa:
On several occasions when commenting on posts here, I am now ashamed to admit, I have dissed the venerable Wall Street Journal. But today the WSJ brought fourth an article which I’m convinced could not have been accomplished by a team of Nobel laureates quarterbacked by Edward R. Murrow—nay, not even Her Holiness, the Lioness of Intellect, Ayn Rand could have accomplished this journalistic tour de force.
Right there on A3 the entire episode of recently resigned USDA employee Shirley Sherrod was completely dealt with and laid to rest with no mention of the Fox Television Network nor any of its on-air personalities.
I humbly stand corrected and chastened.
July 22nd, 2010 at 1:29 pm
@thatguy – right. i forgot about that gem of a quote.
again, i think the ratings agencies were grossly incompetent. I think they legitimately didn’t realize how absurd it was that they couldn’t enter a negative number into their model for change in housing prices. I think there were certainly cases where the ratings agencies were incentivized to push a rating up one grade, but I would guess that there were very very very few cases where the person rating a CDO legitimately thought it was a CCC piece of paper but rated it AAA anyway because he was getting paid to do so by the broker dealers.
anyway, my original question in my first comment still stands… on what grounds do you sue the ratings agencies? (basically, my point is that just because your bond defaults, even if it was AAA, doesn’t mean it was rated incorrectly)
July 22nd, 2010 at 3:47 pm
kmoney01 Says:
July 22nd, 2010 at 11:49 am
Can someone help me find a good video to show a high school class on what caused the financial crisis, about 30min long? Thanks
your class will love this guy–Paddy Hirsch
http://vimeo.com/1933993
This from 2 years ago just after Lehman went under. Personally I would make these mandatory in any economics class.
July 22nd, 2010 at 7:04 pm
Patrick Neid, thanks alot, GREAT videos.
July 22nd, 2010 at 11:28 pm
your welcome….
July 24th, 2010 at 12:01 pm
Staging a Fraud:
http://si.wsj.net/public/resources/images/P1-AW360_Consum_F_20100721194930.jpg