Gundlach on another crisis: “How much currency do you have?”

Forget about gold for the time being. Investors need to own cash – currency, simply as a hedge against the risk of another derivatives mess down the line

‘Too Big To Fail’ in 80 seconds

Apparently, the upcoming film on the credit crisis ‘Too Big To Fail’ can be boiled down in these 80 seconds of preview clips.

Enjoy.

Is it time for the US to disengage the world from the dollar?

Michael Pettis argues that Reserve currency status is a global public good that comes with a cost, and people often forget that cost

Why markets fail

George Soros makes the case for economics as a social science using his theory of reflexivity. Here are some additional thoughts to help understand why markets fail

Steve Waldman on the futility of blogging and the monopoly of lobbyists in policy making

This is really motivated by being incredibly frustrated with what happened a couple of years ago. Obviously there was a financial crisis; that’s not what frustrated me. I am one of the naysayers who was not at all surprised there was a financial crisis. I was expecting such a thing. What I was not expecting

“The Fed lent freely, but at a low rate, on dodgy collateral”

In September 2008, the Federal Reserve let banks turn more than $118 billion in junk bonds, defaulted debt, and other securities into cash.

The role of a central bank in a crisis is to act as a lender of last resort by helping market participants discriminate between the truly insolvent and the unfortunate illiquid. If the Central Bank lends against good assets at a penalty rate, the truly insolvent financial institution goes bust but the unfortunate illiquid institution gets bailed out. I have been making this point for quite some time

They Missed the Money

Frederick J. Sheehan is the author of Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession  (McGraw-Hill, 2009) and "The Coming Collapse of the Municipal Bond Market"(Aucontrarian.com, 2009) The Federal Crisis Inquiry Commission (FCIC) had as much chance of satisfying the public as the Warren

Debt Defaults, Austerity, and Death of the “Social Europe” Model

By Jeffrey Somers and Michael Hudson A spectre is haunting Europe: the illusion that Latvia’s financial and fiscal austerity is a model for other countries to emulate. Bankers and the financial press are asking governments from Greece to Ireland and now Spain as well: “Why can’t you be like Latvia and sacrifice your economy to

Spain’s bank nationalisation and the euro zone crisis

On Monday I first learned that Spain was to partially nationalise its banking system via the Financial Times Deutschland. The title of this article is the most appropriate I have seen discussing the issue, "Madrid riskiert für Cajas seine Staatsfinanzen", which means "Madrid risks state finances for savings banks". Appropriately, the article began with a

The real cost of Chinese NPLs

by Michael Pettis Once again I am starting to hear investors tell me that they have been advised by bank analysts not to worry too much about the impact of a banking crisis in China.  According to this argument, China has developed a very efficient and low-cost way to address banking crises, and the proof

The Fall of the New Monetary Consensus

By L. Randall Wray The following is a paper given at the ASSA conference in Denver this past week for a panel organized by James Galbraith, titled Pressures on the Paradigm, sponsored by Economists for Peace & Security. The Queen famously asked her economists why none had seen the global crisis coming. Obviously the answer

Markets Vanish – In a Flash

Frederick J. Sheehan is the author of Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession (McGraw-Hill, 2009) and "The Coming Collapse of the Municipal Bond Market"(Aucontrarian.com, 2009) The following is a short excerpt from "War of the Nerds," which I wrote for the December,