» Posted by Martin Weil on September 28, 2009

Today's increasingly bewildering financial and economic problems explained in layman's terms. Planet Money podcasts are an excellent way to spend 30 minutes a week while commuting. Do not be put off by the "gee whiz" folksy approach. These guys know their stuff.

» Posted by Martin Weil on September 23, 2009

Economist James Grant, not known for his rosy forecasting, turns roaring bull in this unlikely piece in the WSJ (subscription required).

Grant, pointing to the extraordinary stimulus provided by the US Federal Reserve, claims that the risks to growth are to the upside, and he expects the current recovery to be a "barn-burner." At a time when most investors and professionals as well, from Warren Buffett to Bill Gross, are expecting sub-par growth and a potential for the economy to fall back into recession, Grant, ever the maverick, takes a startlingly contrarian point of view.

» Posted by Martin Weil on September 22, 2009

Apparently folks at HSBC are worried that some of their clients might.

A businessman... arrived at a branch of HSBC in Manchester to be met by what he was told was a new risk management strategy. This involved the bank staff being required to take personal alarms into meeting rooms. The man asking why this was necessary was told: "I guess there will be some difficult conversations with clients happening at the moment."

From The Daily Mail

» Posted by Martin Weil on September 17, 2009

One guy decides to something about it and makes a short video.

» Posted by Martin Weil on September 16, 2009

While the bankruptcy of Lehman (a year ago yesterday) is largely held responsible for setting off last year's global financial meltdown, one can make the case that it was in fact AIG that was the real culprit. AIG collapsed on September 16, 2008, a day after Lehman, with a liability exposure reportedly valued at $3 trillion.

How big is $3 trillion? In 1998, Long Term Capital Management famously failed with liabilities of $130 billion, scaring the NY Fed into organizing a rescue in order to avert a destabilization of the US financial system. AIG had exposure that was more than 20 times larger, equal to 25% of the entire GDP of the United States.

AIG, as Barry Ritholz points out , was operating the world's largest hedge fund. Thanks to the magic of the CFMA (Commodities Futures and Modernization Act, 2000), written at the behest of Enron lobbyists, passed by a Republican Congress and signed into law by President Clinton, these $3 trillion worth of contracts were "exempt from ALL regulation and ALL supervision... they had no oversight, no listing of derivative trades, no disclosures of risk, no transparency, no counter-party information. Most damaging of all, these derivatives required zero reserves in case of a claim. No other traded financial instruments receive this special treatment"

Sobering, to say the least.

» Posted by Martin Weil on September 15, 2009

They are the four countries from which we import the most oil. Add Russia, Angola, Nigeria, Iraq and one or two other less than friendly nations and you account for the nearly 66% of our oil consumption that we imported in 2007 according to this map courtesy of O&G.

» Posted by Martin Weil on September 14, 2009

Almost everyone I've ever spoken to in Hank Paulson's old Treasury Department agrees that without the immediate panic caused by the Lehman default, the government would never have agreed to make the loans needed to save A.I.G., a company it knew very little about. In effect, the Lehman bankruptcy caused the government to panic, which in turn caused it to save the firm it really had to save to prevent catastrophe. In retrospect, if you had to choose one firm to throw under the bus to save everyone else, you would choose Lehman.

So writes Joe Nocera in the NY Times.

One might suggest that it was the government's business to know everything it could about A.I.G., one of the largest financial intermediaries on the planet and the biggest of the "too big to fail" institutions. But that is another discussion.

» Posted by Martin Weil on September 14, 2009

And you can do it too. Sign up here to become an organ donor.

» Posted by Martin Weil on September 10, 2009

So argues Simon Johnson in this Washington Post piece. Johnson is the former chief economist for the IMF and a prominent critic of the 2008 bank bailouts. He makes the point that out of control health care costs are the most serious threat to the US' long-term economic prosperity and that reform that addresses this issue should be taken seriously.

» Posted by Martin Weil on September 04, 2009

This video from Britain may just slow them down. Warning: very graphic.

» Posted by Martin Weil on September 04, 2009

If the sacred cow gets mad cow disease, you've got to put it down.

That's Barry Ritholz on why the Treasury should have taken over Citi and other major banks that were insolvent in 2008 instead of bailing them out. He continues, "The problem with bailouts in general is when an industry or company goes bankrupt it typically means that there is a structural flaw in the setup of that company.

Instead of fixing the problem we're essentially covering up the cracks with a lot of cash. We (still) have banks that are engaged in any manner of highly leveraged, highly reckless speculation. We have yet to fix that."