Less than a month ago I discussed the disaster being experienced by the Royal Bank of Scotland (RBS) and its Irish subsidiary as a result of a software installation screwup. For RBS the nightmare continues as it now calculates the huge losses it experiencing as a result of the technology meltdown, its “mis-selling” of interest…
One of my favorite commentators and the coauthor of one of the most important books on the recent financial crisis, James Kwak, has just posted a profound and timely addition to his blog. He notes the developing interest in behavioral economics and the importance of understanding irrationality in decisionmaking, most prominently by my pathbreaking colleague,…
A thoughtful but scary post by Charles Hugh Smith this afternoon demonstrates the amazing parallels in the corporate, government and public reactions to the financial crisis as triggered by the collapse of Lehman, on the one hand, and the Deepwater Horizon catastrophe in the Gulf. 1. The extreme levels of inherent risk in each system were…
Regulation is necessary to ensure that companies, pressured by the contraints of competition and the need to generate profits, take the precautions necessary to ensure public safety. The recent revelations about decisions made by BP before the gas blowout in the Gulf are once again a demonstration that strong, sophisticated and effective regulation must accompany…
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