May 22, 2010
New York Times
Bumper to Bumper
By Tom Friedman
The veteran global investor Mohamed El-Erian, who runs Pimco and has lived through many a financial crisis, recently issued a report describing the new, perilous state of today’s global economy. He described it like this: “The world is on a journey to an unstable destination, through unfamiliar territory, on an uneven road and, critically, having already used its spare tire.”
I like that image. America used its spare tire to prevent a collapse of the banking system and to stimulate the economy after the subprime market crash. The European Union used its spare tire on its own economic stimulus and then to prevent a run on European banks triggered by the meltdown in Greece. This all better work, because we’re not only living in a world without any more spares but also in a world without distance. Nations are more tightly integrated than ever before. We’re driving bumper to bumper with every other major economy today, so misbehavior or mistakes anywhere can cause a global pileup.
And that leads to the real point of this column: In this kind of world, leadership at every level of government and business matters more than ever. We have no margin of error anymore, no time for politics as usual or suboptimal legislation. But what does that mean, “leadership”?
[ Read original article ]
Global Internet Speeds
As the numbers show, the U.S. has dropped well off the forefront of average broadband speeds. Here are some recent numbers and rankings. Looks like the U.S. didn't even make it into the top 20. Sort of a shame for a country that invented the Internet and Ethernet.
Cuddle on Up to the Craps Table
April 19, 2010
NY Times
Gambling With the Economy
By Roger Lowenstein
While the Securities and Exchange Commission’s allegations that Goldman Sachs defrauded clients is certainly big news, the case also raises a far broader issue that goes to the heart of how Wall Street has strayed from its intended mission.
Wall Street’s purpose, you will recall, is to raise money for industry: to finance steel mills and technology companies and, yes, even mortgages. But the collateralized debt obligations involved in the Goldman trades, like billions of dollars of similar trades sponsored by most every Wall Street firm, raised nothing for nobody. In essence, they were simply a side bet — like those in a casino — that allowed speculators to increase society’s mortgage wager without financing a single house.
[ Read original article ]
NY Times
Gambling With the Economy
By Roger Lowenstein
While the Securities and Exchange Commission’s allegations that Goldman Sachs defrauded clients is certainly big news, the case also raises a far broader issue that goes to the heart of how Wall Street has strayed from its intended mission.
Wall Street’s purpose, you will recall, is to raise money for industry: to finance steel mills and technology companies and, yes, even mortgages. But the collateralized debt obligations involved in the Goldman trades, like billions of dollars of similar trades sponsored by most every Wall Street firm, raised nothing for nobody. In essence, they were simply a side bet — like those in a casino — that allowed speculators to increase society’s mortgage wager without financing a single house.
[ Read original article ]
Casino, Zoo, Circus or Asylum, the Result is the Same
(Good article to help untangle another small piece of the Wall Street mess)
April 19, 2010
When Wall Street Deals Resemble Casino Wagers
By Andrew Ross Sorkin
The government’s civil fraud case against Goldman Sachs raises so many provocative questions.
Did the firm deliberately mislead its clients who bought a mortgage-related investment without the knowledge that it was devised to fail? Was it fair that a bearish hedge fund manager helped to pick the parts of an investment marketed as bullish, so that he could bask in the winnings?
Who besides the vice president named in the lawsuit knew details of the deal in question? Were there other deals like this one?
But if there is a larger question, it is this: Why was Goldman, or any regulated bank, allowed to create and sell a product like the synthetic collateralized debt obligation at the center of this case? What purpose does a synthetic C.D.O., which contains no actual mortgage bonds, serve for the capital markets, and for society?
April 19, 2010
When Wall Street Deals Resemble Casino Wagers
By Andrew Ross Sorkin
The government’s civil fraud case against Goldman Sachs raises so many provocative questions.
Did the firm deliberately mislead its clients who bought a mortgage-related investment without the knowledge that it was devised to fail? Was it fair that a bearish hedge fund manager helped to pick the parts of an investment marketed as bullish, so that he could bask in the winnings?
Who besides the vice president named in the lawsuit knew details of the deal in question? Were there other deals like this one?
But if there is a larger question, it is this: Why was Goldman, or any regulated bank, allowed to create and sell a product like the synthetic collateralized debt obligation at the center of this case? What purpose does a synthetic C.D.O., which contains no actual mortgage bonds, serve for the capital markets, and for society?
Evolve or Die
April 28, 2010
NY Times
Failure Is Not an Option
By THOMAS L. FRIEDMAN
China is having a good week in America. Yes it is. I’d even suggest that there is some high-fiving going on in Beijing. I mean, wouldn’t you if you saw America’s Democratic and Republican leaders conspiring to ensure that America cedes the next great global industry — E.T., energy technology — to China?
But, before I get to that, here’s a little news item to chew on: Applied Materials, a U.S. Silicon Valley company that makes the machines that make sophisticated solar panels, opened the world’s largest commercial solar research and development center in Xian, China, in October. It initially sought applicants for 260 scientist/technologist jobs. Howard Clabo, a company spokesman, told me that the Xian center received 26,000 Chinese applications and hired 330 people — 31 percent with master’s or Ph.D. degrees. “Roughly 50 percent of the solar panels in the world were made in China last year,” explained Clabo. “We need to be where the customers are.”
[ Read original article ]
NY Times
Failure Is Not an Option
By THOMAS L. FRIEDMAN
China is having a good week in America. Yes it is. I’d even suggest that there is some high-fiving going on in Beijing. I mean, wouldn’t you if you saw America’s Democratic and Republican leaders conspiring to ensure that America cedes the next great global industry — E.T., energy technology — to China?
But, before I get to that, here’s a little news item to chew on: Applied Materials, a U.S. Silicon Valley company that makes the machines that make sophisticated solar panels, opened the world’s largest commercial solar research and development center in Xian, China, in October. It initially sought applicants for 260 scientist/technologist jobs. Howard Clabo, a company spokesman, told me that the Xian center received 26,000 Chinese applications and hired 330 people — 31 percent with master’s or Ph.D. degrees. “Roughly 50 percent of the solar panels in the world were made in China last year,” explained Clabo. “We need to be where the customers are.”
[ Read original article ]
Complexity Squared
(just when you feared life wasn't as simple as it seems, along comes a great illustration of why complexity may be getting the better of us)
May 2, 2010
It's Complicated
NY Times
By David Segal
Ladies and gentlemen, the state of our union is stumped.
The Great Recession and the wars in Iraq and Afghanistan, arguably the toughest problems we've confronted in decades, are nothing if not spectacularly complicated. Trying to size up these puzzles is like gaping at a homemade contraption that has mysteriously evolved into something even its designers can no longer fathom, let alone operate and dismantle. Is there an owner's manual for this thing? Can it be unplugged? If we figure out where it's getting fuel, can we starve it and hope it expires?
Look at the military's PowerPoint slide of the Afghanistan war, a labyrinth of cross-thatching lines and arrows swirling around words like INSURGENTS and COALITION CAPACITY & PRIORITIES. ''When we understand this slide,'' said Gen. Stanley A. McChrystal, who leads the American effort in Afghanistan, ''we'll have won the war.''
At the same time, we're learning more about the financial instruments that caused our economic collapse, and it's now clear that ''exotic,'' the adjective of choice, won't suffice. Synthetic collateralized debt obligations are impenetrable on purpose, built for maximum opacity. They're also lethal mysteries to companies like A.I.G., an insurance firm whose supposed expertise is assessing risk. A.I.G. needed an $85 billion government loan to remain solvent.
[ Read original article ]
May 2, 2010
It's Complicated
NY Times
By David Segal
Ladies and gentlemen, the state of our union is stumped.
The Great Recession and the wars in Iraq and Afghanistan, arguably the toughest problems we've confronted in decades, are nothing if not spectacularly complicated. Trying to size up these puzzles is like gaping at a homemade contraption that has mysteriously evolved into something even its designers can no longer fathom, let alone operate and dismantle. Is there an owner's manual for this thing? Can it be unplugged? If we figure out where it's getting fuel, can we starve it and hope it expires?
Look at the military's PowerPoint slide of the Afghanistan war, a labyrinth of cross-thatching lines and arrows swirling around words like INSURGENTS and COALITION CAPACITY & PRIORITIES. ''When we understand this slide,'' said Gen. Stanley A. McChrystal, who leads the American effort in Afghanistan, ''we'll have won the war.''
At the same time, we're learning more about the financial instruments that caused our economic collapse, and it's now clear that ''exotic,'' the adjective of choice, won't suffice. Synthetic collateralized debt obligations are impenetrable on purpose, built for maximum opacity. They're also lethal mysteries to companies like A.I.G., an insurance firm whose supposed expertise is assessing risk. A.I.G. needed an $85 billion government loan to remain solvent.
[ Read original article ]
Burqas, Veils and Niqabs, Oh My!
(an interesting article which lays out the issues building in Europe for allowing or banning veiled clothing)
May 5, 2010
NY Times
Tearing Away the Veil
By JEAN-FRANÇOIS COPÉ
Paris
MOMENTUM is building in Europe for laws forbidding the wearing of garments that cover the face, like the Islamic burqa and niqab, in public. Just last week, the lower house of the Belgian Parliament overwhelmingly passed a ban on face coverings. And next week, the French Assembly will most likely approve a resolution that my party, the Union for a Popular Movement, has introduced condemning such garments as against our republican principles, a step toward a similar ban.
Amnesty International condemned the Belgian law as “an attack on religious freedom,” while other critics have asserted that by prohibiting the burqa, France would impinge upon individual liberties and stigmatize Muslims, thereby aiding extremists worldwide.
This criticism is unjust. The debate on the full veil is complicated, and as one of the most prominent advocates in France of a ban on the burqa, I would like to explain why it is both a legitimate measure for public safety and a reaffirmation of our ideals of liberty and fraternity.
Who is Rating the Raters?
(There is more than enough blame to go around for the current and ongoing financial crisis. This article by Paul Krugman shines a light in a corner that seems to have gone un-noticed by the current bills coming out of congress and seems to me to be at the very core of the collapse. If free-markets need transparency to operate correctly, how is this possible if the ratings of various debt instruments are determined by a tilted, self-serving system?)
(Above is aa MUST SEE Jon Stewart clip giving a great simple explanation of the types of actions that caused the financial collapse. Skip to 5 minutes in and watch it from there)
April 26, 2010
NY Times
Berating the Raters
Paul Krugman
Let’s hear it for the Senate’s Permanent Subcommittee on Investigations. Its work on the financial crisis is increasingly looking like the 21st-century version of the Pecora hearings, which helped usher in New Deal-era financial regulation. In the past few days scandalous Wall Street e-mail messages released by the subcommittee have made headlines.
That’s the good news. The bad news is that most of the headlines were about the wrong e-mails. When Goldman Sachs employees bragged about the money they had made by shorting the housing market, it was ugly, but that didn’t amount to wrongdoing.
No, the e-mail messages you should be focusing on are the ones from employees at the credit rating agencies, which bestowed AAA ratings on hundreds of billions of dollars’ worth of dubious assets, nearly all of which have since turned out to be toxic waste. And no, that’s not hyperbole: of AAA-rated subprime-mortgage-backed securities issued in 2006, 93 percent — 93 percent! — have now been downgraded to junk status.
What those e-mails reveal is a deeply corrupt system. And it’s a system that financial reform, as currently proposed, wouldn’t fix.
April 26, 2010
NY Times
Berating the Raters
Paul Krugman
Let’s hear it for the Senate’s Permanent Subcommittee on Investigations. Its work on the financial crisis is increasingly looking like the 21st-century version of the Pecora hearings, which helped usher in New Deal-era financial regulation. In the past few days scandalous Wall Street e-mail messages released by the subcommittee have made headlines.
That’s the good news. The bad news is that most of the headlines were about the wrong e-mails. When Goldman Sachs employees bragged about the money they had made by shorting the housing market, it was ugly, but that didn’t amount to wrongdoing.
No, the e-mail messages you should be focusing on are the ones from employees at the credit rating agencies, which bestowed AAA ratings on hundreds of billions of dollars’ worth of dubious assets, nearly all of which have since turned out to be toxic waste. And no, that’s not hyperbole: of AAA-rated subprime-mortgage-backed securities issued in 2006, 93 percent — 93 percent! — have now been downgraded to junk status.
What those e-mails reveal is a deeply corrupt system. And it’s a system that financial reform, as currently proposed, wouldn’t fix.
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