Back on October 9, we asked whether the TED spread is the new VIX: At this moment, the TED spread is the most important indicator to watch, because until the banks can honestly claim some hope of solvency and are able and willing to resume something approximating normal functioning, any other market activity is epiphenomenal at best. While the VIX deserves its popular title as the “fear index,” in this climate even it may be too broad a tool. The perception…
Wednesday, October 15, 2008
INT. CLASSROOM. CAPITALISTS are assertive, industrious, and creative teenagers, trying to make up in earnestness what they lack in wisdom and good judgment. As the scene opens, Capitalists are pacing the room, clearly panicked. Capitalists: Oh, s#@t, this is not good. This is not good. UNITED STATES FEDERAL GOVERNMENT peeks its head in the doorway. United States Federal Government is best described as bipolar, alternating as it does between a personality that strives to protect its citizens from dangers both foreign and domestic,…
Thursday, October 9, 2008
People have ideological reasons for opposing the nationalization of U.S. banks, in whole or in part, and that’s understandable. But at this moment, the only viable ideological positions seem to be Keynesian or anarchist. Paul Kedrosky summarizes the situation well: People keep talking about the perils of nationalizing the banking system. Newsflash: There currently is no banking system, if by that you mean a network of organizations lending to one another and to quality companies in a predictable way. (Look at…
Tuesday, September 16, 2008
First of all, we would be amiss if we didn’t congratulate our readers, and especially our subscribers, on staying cool and collected yesterday. It’s very easy to get swept up in the panic and the buzz and forget that the S&P 500 is only 20% off its all time high from back in October. A 20% decline is standard bear market fare; a few large companies failing is standard bear market fare; and despite what all the financial media are…
Monday, September 15, 2008
We struggled for the one descriptor that would capture all of the below examples. Avarice? Incontinence? Duplicity? But surely these are the core virtues of advanced capitalism. No, the real problem that US markets are now working through is that the wise men of Wall Street failed on a merely practical level - they weren’t able to trick us and each other for long enough to ride out the storm. Dick Fuld - the man of the hour, who said as…
Friday, October 24, 2008
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