Category Archives: Markets

Regulating financial activities or organizations?

Two ways to regulate futures markets are by regulating the organizations that comprise the financial markets, or by regulating the financial activities in which any organization participates. This is an attempt to think about these differences.

Hey look, the NYT is fellating Goldman Sachs again

Oh Yes, it’s their ‘trading prowess’, their ability to “embrace risks that its rivals feared to take and, for the most part, manage those risks better than its rivals dreamed possible.” Don’t pay attention to those last few sentences, though. The $13 billion government subsidy via the bailout of AIG, and the $28 billion in […]

What criticism with knowledge looks like

I complained last week that Duncan Watts’ editorial was an argument without much substance, effectively an argument based on deep knowledge of networks but shallow knowledge of markets. At the end of last week, James K. Galbraith testified for the Subcommittee on Domestic Monetary Policy and Technology. And it was pretty awesome. First, it was […]

When you have a hammer, all the world's a nail – network edition

I’ve read a few times the editorial by my former colleague Duncan Watts, and despite some interesting discussion, I can’t help thinking that this is a guy who knows a lot about networks and not so much about financial markets. The article is about the problem of size and complexity in financial services organizations. Watts […]

Valuation of Warrants

From the CBO’s June update on TARP funds (that’s a .pdf): The market value of outstanding warrants held by the Treasury is around $6 billion, CBO estimates.14 Of the total, about $1 billion is from warrants issued by the 10 banks that recently repaid their TARP funds. However, those calculations are sensitive to the assumptions […]

Cap and Trade irony

I love that when Cap & Trade was introduced in the 1990s, Democrats and environmentalists derided it as putting a price on the environment and capitulating to business. Republicans pushed it as a market-based solution to a social problem. Now, Democrats and environmentalists embrace C&T as the greenest thing around (well, other than structurally-similar carbon […]

Banks, TARP, Treasuries

This week, we find out that 10 banks are returning TARP money. Or more specifically, 10 banks are repaying $68.3 billion in federal bailout money. This does not mean that these banks are freeing themselves from the yoke of government (only, says the snark in me, it allows them to pay themselves obscene amounts of […]

The rise of futures trading, part who knows what

The financial crisis has made it appear as though futures markets have been humming along famously and unproblematically until the past few years, when credit default swaps and esoteric derivatives made the otherwise functional system toxic. And this may be. But let’s not pretend that futures markets were always just hedging mechanisms with an added […]

Socially acceptable markets

Cedric Cowing, in his wonder book Populists, Plungers, and Progressives, writes about the distinctions between futures and options in the 19th century and the tenuous myth of deliverability: Probably the greatest difficulty the exchange forces faced was the task of differentiating between a simple option and a futures contract. Options permitting fulfillment by settlement of […]

Asshole corporate doublespeak

from their website: AMERICAN EXPRESS ANNOUNCES REENGINEERING PLAN TO GENERATE $800 MILLION COST BENEFIT from the New York Times: American Express to Cut 4,000 Jobs, Saving $175 Million