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The recent volatility paints the image of a herd of lemmings running back and forth between two cliffs - with waves of them falling off in each direction. The violent market drops are due to forced sale of assets for liquidity in a market where there are no buyers; the bumpy period is not over as the hedge funds will dump their assets in the coming ( Read more... )

Once I was very surprised to find out how few people really understand the numbers behind derivatives and options. Most of the practitioners are liberal arts graduates after crash course in finance & accounting (MFE/MBA), and at the investment houses they are supplemented by a larger bunch of theoreticians. The result is not surprising. For the ( Read more... )

What's wrong with simply letting the recession run its course? It is indisputable that the last decade generated unprecedented excesses which are not simply going to vanish in the face of fiscal stimulus. At best, the stimulus will yield no response; at worst, it will inflate a new credit bubble which will result in an even greater crash later. The ( Read more... )

Despite the fact of my wild enthusiasm about Porche's old school cornering culprit, my opinion about short selling is still the same - it must be banned. Yes, I am aware of the theory that short selling helps to keep prices from share moving too far up... but the reality is stock markets are supposed to be methods of people investing in a company ( Read more... )

Brilliant, hedge funds moaning about a lack of tranparency... Remind me, wasn't it precisly a lack of transparency in the market that allowed them to rack up such huge profit by short selling massively without anybody noticing? Suddenly the champions of free market all cries because of a lack of regulation, I must be dreaming! Naked short selling ( Read more... )

There is something that I do not get in all these prescriptions. The basic problem was cheap money that fuelled credit expansion which in turn lead to above trend real asset inflation as manifested in sky high property prices (and corporate transaction prices). Now these real assets are re-pricing downwards and the net effect is that households ( ( Read more... )

Previous crashes occurred because of tight monetary policies while the fiscal position of the US was also in much better shape. Then, by slashing rates and providing fiscal stimulus bailed out the economy. Today, rates are very low and slashing them is the equivalent of pushing on a string. The fiscal situation is stretched and financed by ( Read more... )

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Eventually! "The story of the credit-rating agencies is a story of colossal failure,'' House Oversight and Government Reform Committee Chairman Henry Waxman said at the hearing. Gosh, why is so late? It is absolutely clear for me that a statistical models i.e. pattern models based on historical data implemented by all rating agencies are works only ( Read more... )