The Basel Committee on Banking Supervision last week issued new guidelines for mark-to-market accounting by banks. The new guidelines relax the requirements for using mark-to-market in downturns, failing to address the fundamental problems that helped to get the financial system into the current mess. Mark-to-market accounting, like the credit default swap, is a novel technique […]

As the world awaits with bated breath the revised Congressional Budget Office projections for the federal budget deficit in 2009, 2010 and beyond, one thing must remain perfectly clear. There is no way that the capital markets will put up with sustained US budget deficits over 10% of Gross Domestic Product. Since the current political […]

“I don’t see how you young chaps are going to make any money at all” said Sir Kenneth Keith to me in 1978 when told that insider trading was about to be made illegal in the UK, as it already was in the US. How wrong my esteemed merchant bank chairman was. Far from its […]

July’s Scientific American carried a fascinating article “The science of economic bubbles and busts” that summarized current biological research into the economic irrationality of human behavior. At the risk of boring readers whose coverage extends to biological research literature as well as the Wall Street Journal, I thought it worth exploring its implications for how […]

Shares are trading on 35 times earnings. Banks in the last six months have lent more than the entire Gross Domestic Product for the period. Interest rates are below the inflation rate, while monetary growth is far above it. The seven largest bond transactions in the world in 2009 were domestic deals in this country.