"In terms of holdings, the fund has a heavy focus on health care (41.7%) and industrial revenue (28.3%) bonds which comprise the lion’s share of the assets. State exposure is also pretty spread out as California bonds comprise about 18.3% of the fund while New York bonds are another 11.1%. Beyond these two, the rest of the top five is rounded out by the territory of Puerto Rico (8.5%), and then the states of New Jersey (7.6%) and Ohio (6.9%). Maturity levels are tilted towards the longer end of the curve giving the fund a greater focus on yield but also on interest rate risk as well. Thanks to this, the fund pays out a 30 Day SEC Yield of 5.55%, a level that transfers over to 8.5% in tax equivalent terms for those in the top tax bracket."

"Separating the three decisions has enabled the company to set targets that are more ambitious, intelligent, and motivating, says Bogsnes. As a result, the forecasts are less biased, and resource allocation is more dynamic and self-regulating. "The 'bank' is open 12 months a year, not just six weeks in the fall," he says. "By making resource decisions as late as possible instead of in an annual budget, we have better information — not just about project attractiveness but also about our capacity to fund or man new projects."

Encouraged by positive results from abandoning the budget, Statoil recently decided to abolish the calendar year as a planning tool and introduce a business- and event-driven management process in its stead."

"But so jealously has Glasenberg guarded his privacy that his name means nothing to the man on the street. For years he has avoided speeches and, until recently, had given only one interview – to his old university magazine. If you live outside the world of commodities trading or corporate finance, Ivan Glasenberg is probably the Most Important Businessman You Have Never Heard Of."

"In short, Google is borrowing $3 billion at a yield that is just about the lowest yield in modern U.S. history. The Federal Reserve has been trying very hard to convince the world to borrow dollars, and Google is simply taking its advice. If corporate tax rates decline in the next year or so — a bet that looks more attractive almost every day — and if the economy improves and interest rates rise, Google will have executed a very profitable trifecta: It could repatriate its cash at a lower tax rate and buy back its bonds at a discount.
And even if none of this works out, Google's cost of borrowing $3 billion will only be about 2.3%, which in an historical context is not very much. And if the dollar continues to depreciate, then borrowing dollars today in order to keep cash abroad will also prove to be a profitable strategy."

"The remaining charts compare market performance since 2000 with the equivalent elapsed time following the peak in 1929. As the final chart shows, the current real total return over the past decade is worse than the performance over the equivalent timeframe during the Great Depression."

"Despite the availability of very detailed data on financial market, agent-based modeling is hindered by the lack of information about real trader behavior. This makes it impossible to validate agent-based models, which are thus reverse-engineering attempts. This work is a contribution to the building of a set of stylized facts about the traders themselves. Using the client database of Swissquote Bank SA, the largest on-line Swiss broker, we find empirical relationships between turnover, account values and the number of assets in which a trader is invested. A theory based on simple mean-variance portfolio optimization that crucially includes variable transaction costs is able to reproduce faithfully the observed behaviors. We finally argue that our results bring into light the collective ability of a population to construct a mean-variance portfolio that takes into account the structure of transaction costs."

"Actual accounting systems are based on transactions. But in the current, knowledge-based economy much of the value creation precedes, sometimes by years, the occurrence of transactions. Until then, the accounting system does not register any value created in contrast to the investments made into R&D, which are fully expensed. This difference, between how the accounting system is handling value created and is handling investments into value creation, is the major reason for the growing disconnect between market values and financial information."

"Featuring automatic Walk-Forward Testing, Multi-monitor floating charts, symbol and interval linking, drag-and-drop indicator creation, Industry fastest, Unlimited-symbol True Portfolio-Level Backtesting and Optimization, now with Smart Evolutionary algorithms, scaling, market-neutral system support and multiple currency handling, free Fundamental data, Multiple Time-Frame support, 3D optimization charts, new Account manager, automated trading interface, volume profile, object-oriented charting, drawing layers, multi-window layouts, formula-based alerts, easy-to-use formula editor, equity function, unique composite indicators, built-in web research browser, direct link to eSignal, Interactive Brokers, IQFeed, myTrack, FastTrack, QP2, TC2000, any DDE compliant feed, MS and more..."

"The presence of new kinds of investors (with motivations and objectives different from the hedgers and speculators) has altered commodity markets. The latter are now subject to forces different from those in the periods covered by the research studies. The actions of passive index investors are new factors impacting the prices of commodity futures. I wouldn’t necessarily expect commodities to continue performing as they may have performed in the decades before the 2000s – i.e. registering average returns similar to stocks at lower levels of risk and with low correlations to stocks."

"We apply multiple testing procedures to the validation of estimated default probabilities in credit rating systems. The goal is to identify rating classes for which the probability of default is estimated inaccurately, while still maintaining a predefined level of committing type I errors as measured by the familywise error rate (FWER) and the false discovery rate (FDR). For FWER, we also consider procedures that take possible discreteness of the data resp. test statistics into account. The performance of these methods is illustrated in a simulation setting and for empirical default data."

"If countries like Germany start to have issues selling their treasury bonds, how long will it take before it impacts the global bond market? It shouldn’t take long. That’s why Europe cannot afford the same quantitative easing as the U.S. has done in the last year. Thus, the Greece Crisis is not well contained yet. Is the Great Depression Avoidable?"

'An experienced investment manager said it well: “The best time to buy stocks is when you hear the term, ‘stock market,’ and you want to throw up.”'

"In the present work we introduce a novel multi-agent model with the aim to reproduce the dynamics of a double auction market at microscopic time scale through a faithful simulation of the matching mechanics in the limit order book. The model follows a "zero intelligence" approach where the actions of the traders are related to a stochastic variable, the market sentiment, which we define as a mixture of public and private information. The model, despite the parsimonious approach, is able to reproduce several empirical features of the high-frequency dynamics of the market microstructure not only related to the price movements but also to the deposition of the orders in the book."

"Unless we get better legislators, and a couple of hundred years of history says not to count on that, enhancing the automatic stabilizers may be our best bet going forward. There's considerable empirical evidence showing that they work, including this new evidence that automatic stabilizers work "always and everywhere"…"

"In plain terms, derivatives are THE cause of the Financial Crisis. They are behind EVERY failure/ default that has occurred thus far. The fact that virtually no one is willing to address this issue or include it in the discussion of how to insure we don’t have a Second Round of the Crisis only confirms the fact that no one has a clue how to resolve this situation."

"Then something bad happens. The new product shows its flaws. And precisely because no one really understands it, the market cracks. Investors all run away at once, as they don't really have the tools to assess the situation. Where lack of knowledge about the product originally drove demand, now it accelerates flight."

'…These guys aren't number-crunching whizzes making smart investments; what they do is find suckers in some municipal-finance department, corner them in complex lose-lose deals and flay them alive. In a complete subversion of free-market principles, they take no risk, score deals based on political influence rather than competition, keep consumers in the dark — and walk away with big money. "It's not high finance," says Taylor, the former bond regulator. "It's low finance." And even if the regulators manage to catch up with them billions of dollars later, the banks just pay a small fine and move on to the next scam. This isn't capitalism. It's nomadic thievery."'

"It is at the three or four times in a 24 hour period that forex traders are well advised to switch tack and reverse near-term directional thinking. The European and NYMEX close are the U.S. based things to get under our belts, because then, maybe, the equity markets can reveal where they really want to go. Traders looking for moves outside of 06:00 and 11:00 EDT, and maybe 14:30 EDT may just find themselves sitting and waiting, wondering why they just bought the high of the day that then reversed.
As the global economy travels through the contraction phase of its business cycle the leaning is towards looking at S&P futures trade to confirm sentiment. The speculators are never too far away from the S&P in times of fear; either selling into the fear of loss, or buying into the fear of missing profits. That is the reason for so much near-term volatility, and that is how things will stay until signs of GDP expansion are seen globally."

"In 2008 and 2009 exports of debt (the toxic stuff plus the nominally non-toxic stuff (US Treasuries)), only accounted for 3%.

It is common practice to ignore exports of debt when calculating America’s balance of trade. But, conceptually, there is not much difference between selling a foreigner or a foreign government a toxic synthetic CDO (that blows up in his face) and selling him a ship-load of genetically engineered soya-beans (or melamine tainted milk).

The logic for leaving exports of debt out of the calculation is presumably that at some point in the future the CDO that was “sold” will need to be paid back, which will require funds to flow out of USA into the pockets of foreigners, who may then decide to exchange those dollars for something else."

"Where management has a significant portion of its net worth invested along with shareholders, agency costs are likely to be at a minimum. Shareholders can easily determine how invested management is in a company by looking in the same place that a company's executive compensation can be found. Unfortunately, the use of equity swaps, becoming more common in the financial world, can render the information on management's stake in the company essentially useless."

"We continue this protocol until the future date (1 May 2010) at which time we upload our final version of the master document. For this final version, we include the URL of a web site where the .pdf documents of all of our past forecasts can be downloaded and independently checked for consistent MD5 and SHA-2 hashes. For convenience, we will include a summary of all of our forecasts in this final document."

"I mean, we all know that major labels are supposed to be venal masters of hiding money from artists, but they’re also supposed to be good at it, right? This figure wasn’t insulting because it was so small, it was insulting because it was so stupid."

"Think back to the dot-com era, when venture capitalists were spending all their money laying fiber-optic cable under the street. The right solution wasn’t for the Fed to raise interest rates until even punch-drunk venture capitalists could realize all this investment in fiber wouldn’t be profitable. The right solution was to take their money away. Give it to the poor, who will spend it on something useful, like food and clothing.

So those are Keynes’ prescriptions for a successful economy: low interest rates, government investment, and redistribution to the poor. And, for a time — from around the 1940s to the 1970s — that’s kind of what we did. The results were magical: the economy grew strongly, inequality fell away, everyone had jobs."

"People forget what the markets were like in the late 1970's when the pits were dead and the average person wanted nothing to do with the US equity markets. The creation of 401k's and more gambling tables like the options exchanges helped to perk things up. This latest generation of jokers will not stop until they have trashed the markets once again."

"Not that anyone involved in these transactions is a war profiteer, mind you—they’re merely taking a lemon (the fall of the Berlin Wall) and learning how to make extremely profitable lemonade (the first Gulf War)."

[R tools for financial time-series analysis, among other things]

"The top performers of 2009 thus far can basically be summed up with the acronym BRIC. This stands for Brazil, Russia, India, China -- the 4 countries that many perceive to be the "future economic superpowers". Such popular single-country ETFs as Russia (RSX), Brazil (EWZ), and India (WPI) (PIN) are near the top of the list. Several Asia region ETFs are spotted, many ex-Japan. Another region that is represented is Latin America, through the (ILF) ETF. A couple of other smaller country names appearing on the list are Thailand (THD), Austria (EWO), and Israel (EIS)."

"If anyone is interested in chatting about what makes a fund a more "successful business" drop me a line. Getting more AUM (assets under management) is the goal of most funds. The maintenance fees of 2% are ridiculously high.

The magic threshold in the business is $100m AUM with +36 months of exposure because these are the operational levels, where most institutions start looking around at allocations. Please note instituional sales cycles for allocations are 9-12 months, while family offices are estimated at 12-18 months."

"But perhaps there are internal numbers that work out that justify this differential of fees. If so, why aren’t the funds shouting them from the rooftops? In an age when individuals have had a lot of their financial risks shifted to them from institutions, where every single individual is expected to be a financial entrepreneur of his or her own future, the idea that individuals are getting hit with much larger fees than larger agents should worry all of us for our financial futures. Making sure that informed traders at the largest institutions are negotiating the price to its optimal setting for all of us, instead of for their insider status, is the definition of how the price mechanism is supposed to work, and can work if fiduciaries are allowed to take these differentials into account."

"Below are the 20 hottest ETFs (excluding leveraged funds) at the end of August, based on the 6 month performance. Data excludes leveraged ETFs and the data source is FINVIZ.com. The theme? Financials, unlike last month which featured China as a staple. A link is available on the right hand side of Scott's Investments with this data updated monthly."

"Kickstarter is a new way to fund ideas and endeavors.

We believe that...

A good idea, communicated well, can spread fast and wide.
A large group of people can be a tremendous source of money and encouragement."

"The slower traders began issuing buy orders. But rather than being shown to all potential sellers at the same time, some of those orders were most likely routed to a collection of high-frequency traders for just 30 milliseconds — 0.03 seconds — in what are known as flash orders. While markets are supposed to ensure transparency by showing orders to everyone simultaneously, a loophole in regulations allows marketplaces like Nasdaq to show traders some orders ahead of everyone else in exchange for a fee."

"We use the term "bagholder" all the time, and it seems to me we've forgotten where that metaphor comes from. It didn't used to be considered acceptable to find some naive rube you could manipulate into holding the bag when the cops showed up, while the seasoned robbers scarpered. I'm really amazed by all these self-employed folks who keep popping up in our comments to defend stated income lending. It is a way for you to get a loan on terms that mean you potentially face prosecution if something goes wrong. Your enthusiasm for taking this risk is making a lot of marginal lenders happy, because you're helping them hide the true risk in their loan portfolios from auditors, examiners, and counterparties. You aren't getting those stated income loans because lenders like to do business with entrepreneurs, "the backbone of America."... You're getting stated income loans because you're willing to be the bagholder."

"While demurrage is a natural feature of private commodity money it has at various times been deliberately incorporated into currency systems as a disincentive against hoarding of money, as well as to achieve other perceived benefits. In particular, with regards to long term investment financing it has the effect of changing the dynamics of net present value (NPV) calculations. All else being equal, a currency system with demurrage places an increased emphasis on the value of long term returns on an investment. As such it may create an incentive to invest in initiatives which offer more in the way of longer-term returns."

After hearing several testimonials recently.

"For the long term investor, cleantech is one of the best sector plays out there. And the best way to play a sector is with a low-cost ETF. This guide will review all 16 cleantech ETFs traded in the US, and offer investors the information they need to add a slice of long term growth to their portfolio. Not all cleantech ETFs are made alike, and we'll show you which funds are the best bets for future returns:"

"In short, leveraged ETFs, as assets increase, represent a new source of systemic risk in the market as their managers rebalance them at market close every day."

"In other parts of the book, Brandeis goes on to challenge the conventional stereotype of the banker as conservative—on the contrary, he noted their “financial recklessness”—and he argued that Americans had systematically been “confusing the functions of banker and business man.” He argued for a system of smaller, more local banks.

I’ve been thinking of this lately, as our old friend urbino (who, alas, doesn’t come around here no more) has beaten almost every major pundit to the punch in arguing that if banks have grown too big to fail, then perhaps they ought to be stopped from supersizing themselves...."

"Analysts, regulators, and politicians are beginning to recognize that most if not all of the widely touted benefits of modern finance redounded only to its purveyors. The decidedly retro Canadian banking system, with simple products, high equity requirements, and relatively modest securities operations that focus on domestic customers, is the soundest in the world."

"According to various distinguished sources including the Bank for International Settlements (BIS) in Basel, Switzerland -- the central bankers' bank -- the amount of outstanding derivatives worldwide as of December 2007 crossed USD 1.144 Quadrillion, ie, USD 1,144 Trillion. The main categories of the USD 1.144 Quadrillion derivatives market were the following:"

"Deep Capture is a work of investigative journalism examining the growing threat to our financial system posed by illegal naked short selling, stock manipulation, and the destruction of public companies."

"The point of these two examples is to say that, at this moment in time (subject to change with a portfolio-crushing lack of notice) short-term mean-reversion is the stock market play du jour. Not respecting this shift in the markets and following the CNBC’esque view of the world (the market rallied today, the bottom is here!) is quite possibly the easiest way to underperform even the sad saps on Wall Street."

"As it happens, the fledgling United States was completely ripped off by the manufacturer of the first official penny. At the time, the United States didn’t yet have a national Mint, so they outsourced currency production to James Jarvis of Connecticut, who had bribed the head of the Treasury board with $10,000 for the contract. Jarvis was supposed to produce 300 tons of pennies, but ultimately only produced four tons of slightly underweight coins. Furthermore, a congressional report stated that “Jarvis had received a large quantity of federal copper but had only paid for a small portion.” (Louis Jordan, University of Notre Dame)"

"The myth of the riskometer is alive and kicking. In spite of a large body of empirical evidence identifying the difficulties in measuring financial risk, policymakers and financial institutions alike continue to promote risk sensitivity.
The reasons may have to do with the fact that risk sensitivity is intuitively attractive, and the counter arguments complex. The crisis, however, shows us the folly of the riskometer. Let us hope that decision makers will rely on other methods."

"A logic question. Which financial professionals would be more likely to be audited: bad ones or good ones? Logically, I would say good ones – if you’re bad, you want to hide it – if you’re good, you want to prove it. Now I’m not saying all audited professionals are good, or all unaudited professionals are bad, but on par I think it’s fair to say that audited professionals are better."

"The last six months — if not the last year — logged what felt like a decade’s worth of financial news. So perhaps it isn’t surprising that swings that normally would attract an enormous amount of attention have gone almost unnoticed. Like the near-total collapse of private capital flows."

"One we realize that that’s not the case, that there’s no “magic” at work in the financial field and people are just mucking around I think that has quite radical implications. If nothing the CEOs and top fund managers are doing makes them worthy of taking the blame when the crash hits, then they also don’t deserve nearly the share of the credit — and money — that they got while things were going up."

Best money quote for some time:

"There is something fitting and just in the timing of this. It is emblematic of America since Reagan and the Great Leveraging. Something for nothing. Thank you Mr Laffer. But as a philosophy and modus operandi it is quite literally, bankrupt and without merit. And Laffer has since been proven to be full of shit. Now, Americans will have to confront this, the premise that greed is good and self-guiding and somehow omnisciently beneficial for it has had repurcussions down to the core of our society and values. "Sorry everyone....what you've been pursuing has all been a lie, a big ponzi, a rat-hole to nowhere....". Re-boot."

"Altruistically, we want to be the good guys. This industry is rife with charlatans and snake oil salesmen, touting their successes and conveniently forgetting their failures. We want all of the strategy developers we grow through Timer Seeds to succeed the right way - on the back of strong audited track records. This improves the legitimacy of our industry which (a) makes us feel good because this is what we do for a living, and (b) encourages more investors to employ market timing.

There's also a profit-motive. We spend a lot of time working directly with our timers sharing our hard fought experience and we stake our reputations on their work. In exchange, as is customary in this industry, we receive a percentage of the compensation from any contracts we negotiate or introduce. This is a very transparent process and our timers always have the absolute final decision on any contracts involving their strategy."

"The next frontier may turn out to be options strategies associated with these 3x and -3x ETFs. All eight of these ETFs are optionable and options activity seems to be picking up rapidly, particularly in BGU, the large cap 3x bull ETF, which currently sports an implied volatility of about 150 and a historical volatility in excess of 200."

"Many investors believe that ETFs, especially the ultra or 3x funds, such as Direxion Shares ETF Trust Large Cap Bull 3X (BGU), are to blame for the roller coaster ride in market volatility that is being seen on Wall Street. This is actually not the case.
A research study conducted with data from LakeView Asset Management LLC, suggests that it is in fact futures that influences the activity of speculators and hedgers and therefore is the indicator for market volatility and manipulation, states Scott Rothbort for the Street.com."

"So, once again, by popular demand, here is our newest list, The Complete List of Commodity ETFs and ETNs, as of October 20, 2008."

"I think the thesis of the Monetary History has just taken a hit."

"Flight to quality? Some real hedge funds are positive for the year even when the aggregate returns for the industry are negative. Performance dispersion is enormous in such a diverse universe. Several strategies have not been affected by prime brokers imploding, changes in short selling rules or the leverage lockdown. The best managed futures CTAs, global macro and options traders have been generating absolute returns throughout the equity and credit mayhem. Strategy diversification is so important since forecasting is difficult. Transitions from one market regime to another often requires a financial revolution."

"But it comes at a price. When the entrepreneur returns to the VC, an epic battle ensues over valuations. In a climate of fear, the power pendulum swings back to the VCs. The VC knows that an entrepreneur won’t be as likely to get money elsewhere, so he plays hardball. The entrepreneur is more ready to cave in on the valuation. That means when a VC gives the entrepreneur money, the VC can claim more ownership of the company with a given amount of investment (because the company is worth less.) Tension rises, and boardroom fights begin. I saw it all unfold last time, when I started covering venture capital in 2001."

"We've never actually seen a true global recession in a Web 2.0 world. What's it going to look like? How is it going to differ from a recession in a pre-internet world? Is it going to accelerate the hollowing-out of the retail high street as economy-conscious shoppers increasingly move to online shopping and comparison systems like Froogle? Are we going to see homeless folks not only living in their cars but telecommuting from them, using pay-as-you-go 3G cellular modems, cheap-ass Netbooks, and rented phone numbers to give the appearance of still having a meatspace office? Is the increasing performance curve of consumer electronics going to give way to a deflationary price war as embattled producers try to hold on to market share as Moore's Law cuts the ground away from beneath their feet?"

"My thoughts exactly, Don. Plus the durations target the drawdown precisely on the capital we need most. We're desperately short of 3 month working capital, and here comes Paulson to take $700 BB of what we've got left away and dump it in the mortgage industry. I don't think you could devise a worse plan. We might be better of if he *did* steal it."

"Credit-card issuers have been decreasing credit limits in the wake of the subprime meltdown. Folks with good credit scores and solid credit histories are now getting caught in the fray.

"Most banks are cutting their credit limits," says Carol Kaplan, spokeswoman for the American Bankers Association. "They're doing it to everyone.""

"Various readers wrote us, and it was confirmed by a detailed report on the call at DealBreaker, that the Treasury Department held a conference call this evening for analysts on the bailout bill. A memo was evidently sent to SIFMA members; others may have been contacted by other means. But the report I got from one person who was on the call was the the questions came from financial services industry members. In other words, this was most assuredly not intended to be a call open to the public at large. If anyone from the media or other member of the great unwashed was listening in, it was by accident."

"Hedge funds are preparing to return between 10 per cent and 50 per cent of their assets under management to investors who want their money back at the end of yet another quarter of dire investment performance.

One prime broker said: “Many funds will have to close. There were a flood of redemption notices at the beginning of the quarter but many investors said they wouldn’t actually withdraw the money if performance improved. It hasn’t.”

One hedge fund said: “We’ve produced 15 per cent returns for 10 years. This year has been bad and our funds under management have been reduced from $2billion to just $300m. This is decimation.”"

"Clearly, these are not your everyday sharks. Great Whites think alike and because of their size, they all think BIG. The Feds know this and are going to loan them (indefinitely) any amount of money they want - whenever they want it - at 2% or less so they can turn around and loan this money to you and I and every business in America at newly restrictive but higher "credit rates". How did the Feds solve the world's biggest credit crunch? They gave its perpetrators an offer they couldn't refuse. And this is euphemistically called re-liquefying.
Now, the crew who's angry about all this can ask themselves the alternative. What else could have been done? Wall Street could have sold the American financial industry to the Arabs for $1 trillion, a fee about equal to ARAMCO's 1H2008 oil profits. Or they could have sold it to Singapore, or China, or some of the fat cats in India or Japan. Instead, the U.S. Treasury bought it, rotten fish heads and all."

"I don’t know the answer to these questions. But, the arguments made by people who believe in the so-called “PPT” are interesting. If true, it would serve to explain a lot of the irrational market action we all observed over the past years. One thing I do know. Dow Jones’ Marketwatch reported that China has announced new regulations that order Chinese banks to temporarily not lend money to American financial institutions, because of the danger of default."

""According to one GOP lawmaker, some House Republicans are saying privately that they'd rather "let the markets crash" than sign on to a massive bailout.

"For the sake of the altar of the free market system, do you accept a Great Depression?" the member asked.""

"The underlying resistance to Paulson’s latest and most expensive attempt to unlock financial markets comes down to what Fed Chairman Bernanke yesterday referred to as “market psychology.” Congress and Main St. are annoyed that Paulson is spending government money on silver bullets that never reach their intended target. Now that his gun has run out of bullets, he’s trying to scare America into giving him a nuclear warhead."

"And Mr. McCain has a special advantage to bring to any such investigation -- many of the relevant witnesses are friends or colleagues of his. In fact, he can probably get to the bottom of the whole mess just by cross-examining the people riding on his campaign bus. So the candidate should take a deep breath, remind himself that the country comes first, pull the Straight Talk Express over at a rest stop, whistle up his media pals, and begin."

"...Fifth, fulfilment of this last misgiving, in the shape of abrupt disappearance of the buying demand throughout the country, this particular phenomenon being prolonged through a period of months and sometimes years."

"We have said before that this program is an inefficient, covert way to recapitalize the financial system. If I were a foreign central bank, I'd have a lot more confidence if the US imposed regulatory reform, took over dud banks, got rid of top management, and then did the good bank/bad bank split. That's a model that has worked and could be modified and improved. But for some unknown, the powers that be are refusing to employ formulas that have worked and prefer their own home-cooked brew."

READ

"But not everyone did better. Workers, in real terms, did not get a share of the profits from the boom, their wages stagnated over this time period. So why should they pay for the bailout? This is nothing more than The Little Red Hen run backwards, they ate the bread first and now the hen is asking "Who will help me pay for the bread?" It shouldn't be those who weren't allowed to sit at the table.

So I would increase taxes progressively, and I would do it in proportion to the changes in the distribution of income over this time period. And I like this a little better than Luigi Zingales' solution for precisely that reason, it puts the burden directly on those who benefited from the boom."

"Further, the word confidence keeps coming up, we must restore confidence in the American financial system. It is not enough that we hand over our money, we must hand over our trust as well. Surely, then, if this is a new era of trust, there should be no problem with requiring sellers to disclose at precisely what value the assets for sale had been booked on their financial statements, with criminal penalties for misstatement. We should be able to evaluate, in the light of day, how forthright financial institutions have been in representing their true condition to potential investors and the public-at-large. We may find that some have played things relatively straight, while others survived by sleight-of-hand and exaggeration. The former group will have earned our confidence. The latter will have earned something else."

"This proposal is an expensive boondoggle and should be opposed by all. As one bit of evidence here, how many noticed that mortgage rates went up on the day the deal was announced? Here is a graph for Fannie 30-year fixed-rate mortgages (click to enlarge):..."

"Bruised by stock market losses, Americans bought houses. The mortgage industry used securitised bonds to ensure that the people who initiated the mortgage did not worry about getting paid back; risk was packaged and sold to others. This time Mr Greenspan did not just stand aside. He said repeatedly that housing was a safe investment because prices do not fall. Home owners could wait out any downturn. Is it any surprise that so many people thought if the world’s financial genius held this view it must be all right?

Even as things went completely wild, Mr Greenspan dismissed those who warned that a new bubble was emerging. It was just a case of a little “froth” in a few areas. Later, after waiting until 2007, two years after he left office, he conceded that “froth” had been his euphemism for “bubble”. “All the froth bubbles add up to an aggregate bubble,” he told the Financial Times."

"The sooner you “drop out” of the speculative economy and its abstract concerns, the sooner you will be able to create and provide real value for the people all around you, and the better position you will be in to get what you need for yourself and your family.

This is not bad; it is good. The pain that people are about to go through now is not the product of the speculative economy’s failure, but its former and intentional unjust success."

"...But those who speak for the Princes of Wall Street--well, they really believed that the Princes earned their fortunes by virtue of their virtue--their intelligence, their nerve, their skill, and their willingness to run great risks for great rewards. The idea that there is a public safety net to catch the Princes when they all fall off the tightrope at once--that they are not actually rugged Randite individualists running great risks--that they are people in the right place at the right time with enough low animal cunning to cover themselves with glue and then step outside at 57th and Park or on Canary Wharf as the money blows by so that a bunch of the money sticks to them--well, this strikes those who speak for the Princes of Wall Street on the editorial page of the Wall Street Journal or in Investors' Business Daily as a betrayal of the moral order."