Elizabeth Warren talk

The previous fall, Geithner huddled with top aides to develop what one called an “Elizabeth Warren strategy,” a plan to engage with the firebrand reformer that would render her politically inert. He never worked out a viable strategy—a way to meet with Warren without drawing undesirable comparisons—and so, like the president, he didn’t.

-Suskind, Ron (2011-09-20). Confidence Men: Wall Street, Washington, and the Education of a President (pp. 4-5). Harper. Kindle Edition. Related: Consumer Finance Protection Bureau

Something to think about?

'We call the negative outliers "rogue traders". What do we call the positive outliers?

From Junkcharts

Chart of the Day- Interest Rate Spreads

The incentives for governments to stay current on what they owe are hard to measure, but financial market indicators provide a way to gauge investors’ perceptions of the willingness to repay debt. International investors became reluctant to lend to the troubled European governments, especially Greece, as indicated by interest rates on government borrowing. In particular, interest rate spreads for these countries’ debt relative to safer German issuance rose dramatically. Chart 3 shows 10-year bond spreads—the difference between the interest rate on each country’s 10-year bond minus the rate on Germany’s relatively safe 10-year obligations. Movements in these spreads in recent months show that international investors required a much higher rate of return to buy each country’s debt.

Suppose investors can buy a German bond at an annual interest rate of 4 percent with practically no risk, or a Greek bond that has a 3 percent chance of default. Investors will go with the German bond unless the Greek government offers an interest rate around 7 percent—a spread of about 3 percent—to cover the probability of default. Such a relationship can’t be expected to hold exactly in the data, but interest rate spreads can still be used to learn about the likelihood of default.[2] Chart 3 shows that in May 2010, investors’ perceived risk of default increased drastically for Greece and rose by a lesser degree for the other four countries

Book recommendation

The Fat Tail- The Power of Political Knowledge for Strategic Investing
Ian Bremmer and Preston Keat

Related podcast by Ian Bremmer

Robert Engle lecture

Risky Business Managing Portfolios in Volatile Times

Podcast of the Day- Mohammed El-Erian

Pimco's El-Erian Says to Take Investment Risk Incrementally ;

“This is not the time for a pedal-to-the-metal approach to investing,” he said in an interview on Bloomberg Radio today. “We are going toward a highly derisked and slimmed-down financial system, which means there will be less credit available for the economy as a whole.”

El-Erian, 50, said he expects more government regulation, less available credit and an “age of thrift” for the world.

“There will be a lot more caution,” El-Erian said.

Related;
'Setback for All' if Financial Turmoil Slows Globalization

When Markets Collide: Investment Strategies for the Age of Global Economic Change

Discussion on the book at Foray TV


Dealing with Global Fluidity

Demystifying the Hype

A Crisis to Remember

Essential task for G20 leaders is a cinema trip to see 'A Beautiful Mind'
Mohamed A El-Erian and Mike Spence

Paper by Roubini, authorized by Timothy Geithner

A Balance Sheet Approach to Financial Crisis
Allen, Mark | Rosenberg, Christoph B. | Keller, Christian | Setser, Brad | Roubini, Nouriel

Go for Narrow Banking says Edmund Phelps

Phelps Says U.S. Needs Banks Dedicated to Businesses -podcast


Related;
6th Annual Conference: Emerging from the Financial Crisis

A summary of the conference

Ned Phelps of Columbia and Robert Shiller of Yale took up the issue of the housing market, with Phelps arguing that banks should be financing productive business endeavors rather than creating real estate bubbles. Shiller felt it was time to take steps to democratize finance by making professional financial advice more accessible and providing homeowners with simple risk management tools, such as clearly priced mortgage contracts.

John Kay finally on Bloomberg talking heads!

From Sub-Prime to Prime-Time

Panelists:
- Guillermo Calvo, Professor of Economics, International and Public Affairs, Columbia University; former Chief Economist, Inter-American Development Bank.
- Charles Calomiris, Henry Kaufman Professor of Financial Institutions, Columbia University.
- Richard Clarida, C. Lowell Harriss Professor of Economics and International Affairs, Columbia University; former Assistant Secretary for Economic Policy, US Treasury, 2001-2003.
- Vincent Reinhart, Resident Scholar, American Enterprise Institute, Washington, DC; former Director of the Division of Monetary Affairs, and Secretary and Economist of the Federal Open Market Committee.

Investment Advise from Nobel Laureates

Solow, Samuelson and Merton

Still another talk on the Financial Crisis

Brad De long at California Budget Project (recommended).

An update on the Economy

An update on the economy with Paul Krugman, Joe Nocera and Andrew Ross Sorkin - from Charlie Rose show


Related;
Primer: The Financial Stability Plan

'Paul Krugman, where the Hell are You'

Somebody's upset that Krugman didn't join the administration

Geithner's Backup Plan and more

Macro Podcasts

Wachter Says Parts of the U.S. Are in Depression
Susan Wachter, a professor at the University of Pennsylvania's Wharton School, talks with Bloomberg's Tom Keene about U.S. housing, the rental market and the economic crisis

Calomiris Sees Another Financial Shock Ahead From Europe

Clarida Says Geithner Proposal Should Help Economy

Retsinas Says U.S. Built 1 Million Too Many Homes
Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard University, talks to Bloomberg's Tom Keene and Ken Prewitt about U.S. housing.

Does spending work?

Capitalism and innovation
In response to the global financial crisis most commentators equate Capitalism with Wall Street. But Edmund Phelps argues that it's also to do with Main Street: small towns and small entrepreneurs.

Understanding and blame while the money runs out

The Oracle with Max Keiser

The Oracle with Max Keiser

It's the Economy

Understanding LIBOR

Published each day in the UK, it is the rate at which the banks lend to each other and it influences over $150 trillion (£100 trillion) of funds worldwide.

The Libor number is compiled by putting together the estimates of the cost of borrowing from at least eight banks, and then discarding the highest and lowest of the sample to leave an average rate which then becomes the daily 'Libor Fix'.

But the figure's validity is being questioned, with critics dubbing it "the rate at which banks won't lend".

Tim Harford explains the LIBOR