financial crisis

“I guess the bailouts are working…for Goldman Sachs!” The Daily Show With Jon Stewart

Goldman Sachs reported $3.4 billion second quarter earnings. Mises Economics Blogger Peter Klein says these earnings are the result of political capitalism – earned in the “nebulous world of public-private interactions.” Klein points to an interesting perspective offered by The Streetwise Professor (Craig Pirrong at University of Houston): Moral Hazard.  read more »

Olivia S. Mitchell, of the Wharton School at the University of Pennsylvania, told ABC News that “roughly $2 trillion has been lost in 401(k)s and pension plans during the recession.” (According to The Economist, worldwide private pension funds lost $5.4 trillion last year. I wonder if/when the media will start calling it a depression?)  read more »

More than once in this space, I’ve said that derivative financial products set up a perverse incentive where investors have more to gain from the failure of companies and homeowners than their success. If you haven’t seen it yet, take a look at the longer version of my description of the causes and consequences of the current crisis to understand how failed financial innovations, like credit default swaps, contributed to the meltdown of 2008.  read more »

The House Committee on Oversight and Government Reform held a hearing Wednesday – “AIG: Where is the Taxpayer Money Going?” Questions are being raised about whether the bailout better serves the interests of AIG’s customers and trading partners or the interests of U.S. taxpayers.  read more »

Billionaire investor, Warren Buffett, is hosting the Berkshire Hathaway shareholder meeting “Capitalist Woodstock” in Omaha this weekend. Every news truck this side of Kansas City has been moved into town to cover the event.  read more »

Jo Becker and Gretchen Morgenson (she reported on the lack of mortgages behind mortgage-backed securities) did a long piece on Treasury Secretary Timothy F. Geithner in the New York Times.  read more »

It also wasn’t that long ago that Congress held hearings on the bonuses paid to AIG employees after the bailout. Now, according to New York Times reporter Louise Story Wall Street compensation is rising back to where it was in 2007 – the last year that these firms made oodles of money with investment strategies that turned toxic the next year.  read more »

Of the three monitors established by the legislation that created the Troubled Asset Relief Program (TARP), only one has the authority to prosecute criminals.  read more »

The Housing & Economic Recovery Act of 2008 was passed last August. It created the HOPE for Homeowners Program, which the Congressional Budget Office estimated would help 400,000 homeowners to refinance their loans and stay in their homes. Here's a stunning revelation: According to the Federal Housing Authority (FHA), in the first six months since the law was passed, exactly one (1) homeowner refinanced under the program!  read more »

On April 3, 2009, R. Glen Ayers spoke at the American Bankruptcy Institute in Washington, D.C. Mr. Ayers is a former bankruptcy judge, now with the law firm Langley & Banack in San Antonio, Texas. He spoke on a subject I covered here on March 4 – not all mortgage backed securities are actually backed by mortgages. The rush to write more mortgages and to issue more bonds meant that mistakes were made in the paperwork.  read more »