by Dino

Mr. Taleb thinks that asking people to use common sense is like asking them to stop their heart beat (impossible). Yet, not all people who had a prominent role in the financial crisis lacked common sense. The problem was that several people who failed to exercise common sense were in positions of great power. Some [...]

by Dino

The weekend of September 13-14 brought some of the most dramatic news of this credit crisis: Lehman Brothers had filed for bankruptcy, Merrill Lynch had been sold to Bank of America, and AIG needed a rescue by the Federal Reserve. Yet in the following two weeks the S&P 500 stock index was down just 3%. [...]

by Dino

Remember excessive leverage and its role in the collapse of the Long-Term Capital Management hedge fund, a collapse that threatened the stability of the entire financial system?Remember Enron, misleading accounting and the crisis in corporate governance? Well, a lot of people on Wall Street, including SEC secretary Christopher Cox, have forgotten all about it. As Ben [...]

by Dino

In a scene reminiscent of Jeff Skilling’s congressional testimony over the bankruptcy of Enron Corporation, today’s 800-point intraday drop in the Dow was accompanied by a hearing on the “Causes and Effects of the Lehman Brothers Bankruptcy” held by the House Committee on Oversight and Government Reform, and testimony by Lehman’s (ex-) CEO Dick Fuld. [...]

by Dino

Investors fear not! The rocket scientists at the SEC have carried out a rigorous and methodical analysis of the facts and, based on their findings, “acting in concert with the U.K. Financial Services Authority, took temporary emergency action to prohibit short selling in financial companies to protect the integrity and quality of the securities market [...]

by Dino

On July 17, angry Pakistani investors stoned the Karachi Stock Exchange, smashed windows and cursed regulators after the benchmark index fell for a 15th straight day, the worst losing streak in 18 years. US and UK regulators must have been thinking of these spiteful reactions when they decided to take the matter of falling share [...]

by James

The bloodbath continues. In volatile trading, developed markets held up well last week. The S&P 500 gained 0.75%, while oil slipped 4.75% and has now broken the $100/bbl mark. The dollar also closed relatively flat, down 0.50% against the euro. Again though, the news was made over the weekend, and is only beginning to come [...]

by Dino

Consider this July 18 cnbc.com article: “Lehman Brothers denied market rumors that it is going to take a writedown related to subprime exposure. The rumor dented stock prices and spurred buying in Treasurys, traders said. “The rumors regarding subprime exposure are totally unfounded,” a Lehman spokeswoman said. Rumors have been circulating since mid-morning that Lehman [...]