Bagehot Was Wrong (?)

Interesting piece by Jim Grant, from his usually subscription only Grant’s Interest Rate Observer:

"Nowadays, the consensus of belief has it that America fills the
bill of a "market-based system," whereas Europe is closer to a
"bank-based system." But the truth is that the worldwide mortgage mess
has pushed America away from markets and Europe away from banks. Both
systems are moving closer to a state of government or central-bank
control. And both the dollar and the euro are, therefore, moving even
further away from an orthodox notion of soundness (not that either was
within hailing distance of it before the credit clouds rolled in last

A Grand Comeuppance

In the United States this election year, the galloping socialization
of the mortgage market proceeds with hardly a peep of discussion, let
alone protest. Thus, mortgage originations by the government-sponsored
enterprises reached 81% of overall originations in the fourth quarter
of 2007, up from 37% in the second quarter of 2006. In the first
quarter of this year, Fannie copped a 50% share of originations, double
its take in calendar 2006. But in comparison to the biggest GSE, Fannie
and Freddie might as well be standing still.

The entire discussion might strike some as a bit wonky, but if you have any interest in how Bagehot’s "Principles of Banking" (1867) applies to today’s credit crunch and central banking’s response, its worth your time to read this.



Walter Bagehot Was Wrong
JAMES GRANT, Grant’s Financial Publishing Inc.
June 19, 2008

Bagehot’s Lender


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Stairway to Heaven is Worth $572 million

Lz Portfolio does a fun analysis as to what the full value of Led Zeppelin‘s Stairway to Heaven would be worth if the band went all out on the licensing side.

They call it a"back-of-the-napkin analysis of the lifetime worth of the most requested rock
tune in history

"In the big, bad game of rock and roll, “Stairway to
Heaven” is undeniably a winner. Released by Led Zeppelin in 1971, the
eight-minute song is considered a musical masterpiece and is one of the
most-played rock tunes of all time. Proving its longevity, “Stairway” hit the
U.K. charts again last fall and was a top download in the U.S., after Zeppelin’s
first downloadable album launched on iTunes. But because the band is notoriously
protective of its work, “Stairway” hasn’t met its full moneymaking potential.
While other artists have made big bucks by licensing songs to Hollywood and
Madison Avenue—think of Bob Dylan’s “Love Sick” in that Victoria’s Secret
commercial—Zeppelin has shunned most opportunities. We consulted executives in
the music, advertising, and entertainment industries to come up with some
numbers, real and potential, for the value of “Stairway."

That seems a little rich to me, but hey! It is Stairway. . .


Stairway Surprise 
Miriam Datskovsky 
Portfolio July 2008 Issue

Led Zeppelin IV (aka ZOSO)

November 8, 1971   

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Led Zeppelin to Make Its Songs Available Digitally
NYT, October 15, 2007

Videos after the jump . . .



Read More

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