Raghuram Rajan of the University of Chicago, along with William White, former head of the Bank for International Settlements’ monetary and economic department, are arguing for an increase in interest rates. Interest rates near zero risk fanning asset bubbles or propping up inefficient companies, say Rajan and William White, former head of the Bank for International Settlements’ [...]
The bond market is booming, with investors (some say) diving into safe securities, driving bond prices up and yields down. In addition, the Fed has kept interest rates low for one of the longest periods in history. As a consequence, lots of interesting things are happening in the bond markets. For instance: Companies are issuing [...]
Scientist Jeff Schweitzer has an interesting and unique, but disturbing (and very real) application of the time value of money concept. He says environments in developing countries are being destroyed because of the infinite discount rates of their starving populations. They prefer the immediate provision of (say) fish from the sea, rather than the distant [...]
James Surowiecki (over at the New Yorker), wrote about financial illiteracy in the issue from a couple of weeks ago. The bad news is that we Americans are clueless about finance, and particularly, our personal finances: The depth of our financial ignorance is startling. In recent years, Annamaria Lusardi, an economist at Dartmouth and the [...]
I found this on Capital Gains and Games, but really, it is a debate (mostly) between Paul Krugman and Raghuram Rajan. Here is a brief synopsis: Of all the canards that have been offered about the financial crisis, few are more repellant than the claim that the “real cause’’ of the mortgage meltdown was blacks [...]
A little late in the posting, but Brad Delong on banning naked CDSs: I say, narrowly, no–that if we can get proper clearing, transparency, and capital adequacy requirements in place banning naked CDOs would not do any good and would do a little bit of harm. But it is a close call. And if we [...]
While the reform bill has gone through, there is still a lot of cleaning up to do. The WSJ talks about firms that can still shop around the ratings agencies, getting the best “deal” for themselves: In the wake of the financial crisis, the companies that rate bonds have been lambasted for being asleep at [...]
If you thought the Hunt brothers story we discussed in class had a moral which was implemented, think again. It was repeated almost two decades later, with very similar consequences. This time though, it wasn’t silver, it was copper. And it wasn’t the US, it was Japan. And the firm was in on it. And [...]
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In March, we read that Cantor Fitzgerald was about to monetize the moviegoing industry by taking what the website HSX.com had done with play money, and bringing it to the real world. For those of you who have not heard of HSX (short for Hollywood Stock Exchange), it is a site where you can bet play [...]