Bryan Caplan, David Henderson, and Arnold Kling

Finance

A Category Archive (15 entries)

Stiglitz and Orszags on Fannie Mae

Finance
David Henderson
The paper concludes that the probability of default by the GSEs is extremely small. Given this, the expected monetary costs of exposure to GSE insolvency are relatively small -- even given very large levels of outstanding GSE debt and even... MORE

Outsiders

Books: Reviews and Suggested Readings
Arnold Kling
Am I too weak to resist financial crisis porn? The latest example of my shameful indulgence is The Greatest Trade Ever, by Gregory Zuckerman. As with Andrew Ross Sorkin's Too Big to Fail, I could not put it down. Even... MORE

Solvency is No Free Lunch

Finance
Arnold Kling
Bryan writes, Suppose for example that you've got $100,000 in assets. You know with virtual certainty that the market will eventually fall from its present level of 100 down to its fundamental value of 50. The catch: You don't know... MORE

How often have you heard the quip, "The market can stay irrational longer than you can stay solvent"?  The idea: Even if the market is ridiculously overvalued, you won't make money by shorting it.  You'll probably go bankrupt instead of... MORE

Zywicki on Chrysler

Finance
David Henderson
In today's Wall Street Journal, Todd Zywicki lays out how President Obama attacked holders of Chrysler debt. A key paragraph: The Obama administration's behavior in the Chrysler bankruptcy is a profound challenge to the rule of law. Secured creditors --... MORE

Last week, Arnold approvingly quoted Tyler's one-sentence explanation of "systemic risk": If your banks are less risky, often something else is more risky, and vice versa. This morning it just occured to me that this is precisely the opposite of... MORE

J.P. Morgan v. Obama

Central Planning vs. Local Knowledge
David Henderson
It isn't that common any more to find evidence of one of the bailed-out banks making a good decision with its money in the face of government pressure. But the weekend Wall Street Journal reported on such a case. J.P.... MORE

Taylor Rules

Finance
David Henderson
My book review of John Taylor's latest book, Getting Off Track, appeared on Forbes.com yesterday. Two excerpts from my review: Throughout 2007 and 2008, Fed Chairman Ben Bernanke and others in policy-making positions assumed that the problem was that the... MORE

Obama on Leno

Finance
David Henderson
I just finished watching my DVR of President Obama on NBC's "The Tonight Show with Jay Leno." There were some interesting highlights. Of course, Obama was charming: he does that very well. If I judged him only by looks, tone,... MORE

Buffett on Mark to Market

Finance
David Henderson
My favorite Wall Street Journal writer, Holman W. Jenkins, Jr., has an excellent piece today on Buffett's views of Mark-to-Market. It seconds what I quoted Less Antman saying last week and what commenter Patrick Sullivan pointed out. Sullivan linked to... MORE

Mark to Market

Finance
David Henderson
Economist Jeff Hummel sent out the following to a large e-mail list. I'm reprinting the whole thing here and appending my comments. Jeff's e-mail: Mark-to-market accounting has received a lot of criticism during the current financial crisis. But a recent... MORE

Black Swans

Behavioral Economics and Rationality
David Henderson
Joe Nocera has a nice piece on risk management in last Sunday's New York Times magazine. A great line: "The old adage, 'garbage in, garbage out' certainly applies," Groz said. "When you realize that VaR is using tame historical data... MORE

Insider Trading

Finance
David Henderson
The news that the feds are charging Mark Cuban with "insider trading" raises an interesting issue: what's wrong with insider trading? You might think it's obvious. If so, read the articles on insider trading in the 1st and 2nd editions... MORE

Bailout Watch

Finance
David Henderson
"Rescue Plan Faces Delay in Hiring Asset Managers." So reads the headline of a news story in today's Wall Street Journal. The story goes on to say: Treasury won congressional approval for the program on Oct. 3. It said at... MORE

My First EconLog Blog

Finance
David Henderson
First, thank you, Bryan, for your warm welcome. And thank you also to the commenters. Before I get to my first topic, I want to appreciate Bryan back. I'm a big fan of his work. My favorite is his piece... MORE

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