Thomas Jefferson On Government Economic Intervention
Thomas Jefferson would be surprised. The third president of the United States may have preferred an agrarian economy. He may not have waxed eloquent on modern economic theories. However, he helped lay the foundation for our exalted economic status in the world. He can still contribute to the financial...
Stress Tests Reveal: Banks Need More Money!
We at Invest With An Edge have been dubious about the Treasury’s so-called ‘stress tests” on the country’s 19 largest banks. The testing is now complete and the banks have been informed of the results. The public has not – though some details are leaking out. As expected,...
How To Avoid Black Swans
Nassim Taleb, author of the eerily prescient books Fooled By Randomness and The Black Swan, has a very interesting column in the Financial Times. We have referenced Taleb before here at Invest With An Edge, and with good reason. He sees things most people miss. Black swans are the rare, almost unknown...
Crime Increases in Declining Jobs Market
One of the more psychologically significant government reports is the jobs report. On Friday, the Labor Department released the dreaded report. The US economy lost another 663,000 jobs in March. This number was not completely surprising, but neither did it encourage many buyers in the market. Investors...
No Way Out For Banks
Recently scientists observed the collapse of a star 50 times bigger than our own sun. After exploding into a massive supernova, the star collapsed upon itself and became a black hole whose intense gravity inexorably draws in anything that comes close – even light itself. This is also an apt description...
Get Rid of Debt – It’s That Simple.
So says Nassim Taleb, best-selling author and money manager. Taleb attended a Wall Street Journal conference earlier this week in Washington, D.C., and made some powerful comments regarding the banking and financial services sectors. Big Money has a terrific article by Marion Maneker. Guys like...
Long On Liquidity and Short On Profitability
Bonehead move of the 1st Quarter goes to the FDIC. They placed a negative rating on a bank located in Massachusetts due to the fact that it was not lending enough. You heard that right, the FDIC slapped East Bridgewater Savings with a rare “needs to improve” rating after evaluating the bank under...
Too Late for AIG Bonus Torches
The angry mobs now forming against the idea of AIG employee retention bonuses are, sad to say, running several months too late. The opportunity to stop this sort of outrage was lost last year. Yes, of course the bonuses are an outrage and should not be paid. I say this with all due respect to the AIG...
Is Your Bank A Zombie?
This week bank stocks moved even closer to their target price, i.e. zero. How can this be? Isn’t the government bailing them out? Not exactly. Like the Bush administration before it, the Obama plan involves slapping a lot of band-aids on a sucking chest wound. Both patient and medic are glad...
Understanding the Stimulus
Someone sent me this story by e-mail. I’ll bet it is circulating widely by now. In case you haven’t seen, here is an excellent explanation of why “economic stimulus” is a silly idea. Shortly after class, an economics student approaches his economics professor and says, “I...
