To anyone who has noticed that theParetoCommons has been dormant during the past six months I owe an explanation for the hiatus and my thanks for bothering to read this post after so much time. (Indeed, were it not for Jennifer’s boundless energy, the gap in time would be nine months, not six.) A number…
In yesterday’s New York Times, Joe Nocera incisively attacked the persistent falsehood that Fannie Mae and Freddie Mac were “ground zero” for the financial crisis. In “An Inconvenient Truth,” Nocera correctly observed that: “The reality is that Fannie and Freddie followed the private sector off the cliff instead of the other way around.” In an…
Possibly my two favorite things are 80s music and Goldman Sachs-related grandiosity. So, a combo is a special treat. We have them together with the BBC-broadcasted-boastings of independent trader Alessio Rastani. Rastani proudly proclaimed today, “This is not a time right now for wishful thinking that governments are going to sort things out . .…
TURNING and turning in the widening gyre The falcon cannot hear the falconer; Things fall apart; the centre cannot hold; Mere anarchy is loosed upon the world, The blood-dimmed tide is loosed, (from William Butler Yeats’ The Second Coming (1919)) Sometime in the late 1980s bank executives discovered that their institutions should be “high performance…
I tell my class that a crisis can spring from the most unexpected sources. You never see the lightning that strikes you. Now we focus on some of the most obvious risks, such as a sovereign debt default. As Howard Schneider reported in the Washington Post yesterday, “European banks are facing a reckoning over hundreds…
I am one of those who believes that we cannot possibly meet the challenges presented by the modern financial system, whether global or domestic (it’s almost all the same now), by using the traditional precepts of regulation. These precepts presuppose unrealistic methods of diktat, they involve static views of the agents that operate withing the…
This morning the British Independent Banking Commission (ICB) released its long-awaited Final Report. Given the clear direction signalled by the ICB in its Issues Paper: Call for Evidence released a year ago, the recommendations in the report had already been anticipated for months. The British Government has accepted the report, at least in principle. The…
We ended part i, with some questions. The answers to these questions could fill volumes. Yet, a high-level response is in order. First, can Dodd-Frank prevent another similar crisis? This is far from certain. The law depends too much on regulators to actually use the powers they have been granted. Past behavior suggests that they…
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