Monday, August 24, 2009

Toxic finance

Munchau today in the FT talks about Toxic Finance and a new research paper writing by Pasini et al (Dauphine, Paris). It is about 120 pages and goes into details of CDO/CDS and the whole alphabet soup. I will be reading this in great detail in the days to come. If anyone fancies following me in this endeavor, please help :)

5 comments:

Jean-Luc Vanhulst said...

I'm fascinated by the discussion in Box 9, (pag 73 onward) on leverage of risk on a global scale and the US 'balance sheet'

Jean-Luc Vanhulst said...

I thought this was interesting too:

http://www.marketwatch.com/story/dismantle-bernankes-happy-conspiracy-now-2009-08-25

Bill Burke said...

Jean-Luc, interesting article. I don't believe in conspiracies though. Many agencies are underfunded. There's also not a lot of talent at any level of government (local, state, fed, congress, bureaucracy). This creates a lot of mistakes due to total and utter incompetence at all levels. Gross incompetence, IMO, can look a lot like "conspiracy".

Jean-Luc Vanhulst said...

I agree Bill. I have to say it's very interesting to watch the requests to disclose the recipients of TARP money just like the fight to get the recipients of AIG money disclosed.

The arguments on both sides are good. I mean we're talking _a lot_ of taxpayer money here (actually unprecedented amounts)so accountability is needed. But yes, disclosure could hurt the recipient, defeating the purpose (and possibly the cost the taxpayer).
But since 'lack of oversight' is the main cause of the crisis to begin with I tend to believe that disclosure is needed. "Walk the talk" I guess.

Marcf said...

interesting article indeed. AIG is a ponzi, and a disgrace that was brought down by CDS.