Posts filed under “Really, really bad calls”
Of all the outrages endured during the financial crisis, perhaps the most perplexing involved money-market mutual funds. In an example of moral hazard writ large, this uninsured risk instrument — with $2.57 trillion in assets — somehow became too big to fail. Five years later, the Securities and Exchange Commission is finally taking steps to address this.
Money-market funds invest in a variety of short-term securities whose values fluctuate. You know, kinda like everything else that trades on a market. However, the funds’ net asset value, and thus the share price, was always $1, regardless of what the underlying assets were really worth.
This is quite bluntly, a fraud, with a couple of twists. First, the true value of these funds was almost never exactly $1, as credit markets moved up and down.
The second part of the charade is that these fund companies were making an implicit guarantee that they would stand behind an investor’s account — until they couldn’t.
There is a group of folks who believe that inflation is much higher than the numbers in the official reports. Paul Krugman calls them “inflation truthers.” In the 2000s, I might have been considered part of that crowd. I recognized that inflation data wasn’t being reported accurately, and said as much. I coined the phrase…Read More
I love this article: F-Bombs Tolerated in Recession Cause CEOs Trouble Later It turns out that public profanity among top executives is sensitive to economic conditions, according to a Bloomberg News review of thousands of CEO calls with investors and analysts from 2004 to last month. It spiked in the aftermath of the recession in…Read More
Click for even more interactive data and assorted interesting things. Source: Brookings Institute
Category: Really, really bad calls
In today’s “Global Outlook,” Bloomberg’s Barry Ritholtz discusses Israel weighing a possible ground operation to quell weeks of Palestinian rocket fire into its territory. He speaks with Trish Regan on Bloomberg Television’s “Street Smart.”
Will the U.S. Intervene in Israel-Hamas Conflict?
Source: Bloomberg, July 8 2014
Spying On – and Blackmailing – Politicians, Generals, Judges, Lawyers and Citizens The newly-published revelations from Edward Snowden show that the NSA and FBI spied on an American citizen running for political office: The NSA also surveilled a U.S. citizen while he ran for political office: https://t.co/UzFya8ltmjpic.twitter.com/3jZdsYxQRG The Washington Post’s report last week also shows…Read More
Give credit where credit is due: Faber admits his prior crash forecast(s) were wrong.
How wrong? Calculated Risk observes that the market is up 40% since his 2012 prediction.
Marc Faber: The asset bubble has begun to burst, here comes the bear market
Today’s must read comes to us from Fortune, where editor at large Allan Sloane rails against “Positively un-American tax dodges.” Its your must read for today. Let’s see if the our elected representatives can manage to stop behaving like 10 year olds long enough to resolve this.