Today is the 50th anniversary of the "Nixon shock", the day President Richard Nixon closed the gold window and ended the post-WWII Bretton Woods currency agreement. That agreement, largely a product of John Maynard Keynes, pegged the dollar to gold and most other currencies to the dollar. It wasn't a true gold standard as only other countries that were party [...]
On July 15, 2008, Federal Reserve Chairman Ben Bernanke sat in front of Congress for the second of his required Humphrey-Hawkins reports for that year. The original act meant for these to be more than bland economic obfuscation, where the original Full Employment and Balanced Growth Act of 1978 demanded monetary targets. The Fed stopped being able to produce them [...]
Ten years ago today, one of Carlyle Group’s mortgage funds, Carlyle Capital Corp (CCC), was seized by creditors. Precipitated by dwindling liquidity, the fund’s effective insolvency would amplify those global “dollar” pressures and lead to Bear Stearns’ untimely demise mere days later. The fund’s corporate parent issued a statement on March 6, 2008, that read: The last few days have [...]
For me, the defining characteristic of the late nineties wasn’t the dot-coms. Most people were exposed to the NASDAQ because, frankly, at the time there was no getting away from it. It had seeped into everything, transforming from a financial niche bleeding eventually into the entire worldwide culture. We all remember the grocery clerks who became day traders. Behind all [...]
On December 3, 1999, Enron Communications announced that the company had begun operations selling bandwidth as an energy commodity. After publicizing the venture in May that year, it seemed natural given that they had been selling similar products in the energy sector, pioneering all sorts of products along the way. As the internet matured there was no way Enron would [...]
What is about math that makes us feel comforted? Numbers are objective, of course, but the using of numbers is not. Even in the hard sciences calculations are not strictly calculations for their own sake, they are interpreted and therefore given subjective meaning. I don’t intend to detour this argument into a teleological one, but in some ways that just [...]
From the outside, it appears as if Wall Street operates like a bureaucracy. There is an enormous amount of paperwork, endless committees who conduct endless meetings, and layers of management supposedly managing the movement of that paperwork as well as the meetings of those committees. The idea is simple enough, to make it appear as if there is tremendous weight [...]
The Federal Reserve under Alan Greenspan and then Ben Bernanke has escaped, largely, responsibility for the panic in 2008 mostly because there is no direct link between monetary policy and the housing bubble. The most stinging criticism that comes out of the era is Greenspan’s “ultra-low” interest rate setting for federal funds, but there is no smoking gun in the [...]
While this was meant to be anecdotal, giving the whole rise and fall of eurodollars an actual feel through actual published bank results, the more abstract collections of the derivatives world conforms very well with those singular sketches in JP Morgan and Goldman Sachs. The BIS, for example, publishes its estimates for the give and take of the gross notional [...]
The early 1990’s saw the S&L’s fail on wholesale means but also to be displaced entirely by the GSE’s and securitizations of also wholesale monetarism. Indeed, when LTCM failed in 1998 rather than recognize the glaring limitations evident in the systemic pathology the Fed looked at it the way it wanted, preserving itself at the apex of political-economic planning and [...]
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