Exurbs: ‘Tomorrow’s Low-Income Housing?’ As the housing bust and recession has turned the exurbs from engines of growth to economic laggards, many [families who bought recently] have the worst of both worlds. They are still on the fringes but have no equity. In many cases the amenities they hoped would follow — new shopping centers,...Read More
Wall Street Who-Dunnit: No One?? Victory has a thousand fathers, but defeat is an orphan. –John F. Kennedy Hurricane Katrina was an act of nature. The economy’s Wall Street-triggered financial collapse is not. If and when anyone is actually held accountable for that, you can expect to hear variants (combinations?) of the following defenses. (Im)plausible...Read More
Everything Clear Now? Going short on bonds by buying a Credit Default Swap (“CDS”) contract carries limited risk but almost unlimited profit potential. By contrast, selling CDS offers limited profits but practically unlimited risks. This asymmetry encourages speculating on the short side, which in turn exerts a downward pressure on the underlying bonds. The negative...Read More
Today’s Wall Street Journal has a nice Q & A discussing eligibility requirements for the $8,000 tax credit. Hint: it’s more complicated than you think. Here’s the link: “Cracking a Valuable Home Buyer Credit“Read More
AIG Tries to Bury (the latest) Bad News Anyone reading the *Sunday papers is likely to notice the blaring headlines: AIG senior executives are being paid millions in bonuses. That, notwithstanding the almost $200 billion of taxpayer money already injected into the company. What’s interesting, though, is how the news first broke online, then changed...Read More
How Culpable is Wall Street? “The pressure on financial engineers . . . has been to compete to get new products out the door quickly, with their firms showing little patience for multi-year research and development. It’s too bad these new products could not be labeled “beta” . . . to warn that products are...Read More
