September 22, 2008
So, yeah, the economy. Good time for a job hunt. This American Life had a really excellent piece in May about what the subprime mortgage crisis is and why it hurt Wall Street so badly. It really taught me a lot and explained how the herd mentality and a veneer of legitimacy let it all get so out of hand. (Hilarious bonus: the piece ends optimistically but it was made well before the recent major failures). The site ProPublica puts recent bailouts in historical perspective. WaPo had a recommended reading article that had some hits and some whaaaaaa?s. A Nobelist has some prescriptions but they might make too much sense. Housing prices in SoCal are off 34% and falling fast (driven mostly by foreclosures). Good luck getting a loan though! Remember: Always privatize the gains and socialize the losses!
I really liked the ProPublica graph -- but I think they buried the lede:
So huge bailouts only happen when we have a Democrat controlled Senate? (j/k, ISWYDT)
Twitter led me to a podcast/blog resource that might be worth keeping up with: NPR's PlanetMoney. Some of the contributors were responsible for that TAL story linked at the top. Anyway, their blog and twitfeed have been interesting mostly because they post several times a day with short interviews and opinions that have been easy for me to digest. For example, this one.
The Senate is only nominally Democratically controlled. Harry Reid is as centrist as you get, and there are a good number of Liebercrats always anxious to mess things up. The Republicans have always been way better at whipping their votes.
And people need to be reminded that John McCain was at the center of that 1989 bailout, and very nearly was censured over it.
If you don't have time to listen to these podcast's you can get the reason behind the crisis in stick figure form.
John McCain:
Someone from the internet attends the paulson hearings, as published in the Denver post:
Hey, speaking of all this, why bother to try to compete with more nimble and advanced companies (that, you know, understand how to run a business) when you can get some free government cheese? Of course I'm talking about the Big 3 auto makers, one of which isn't even publicly traded.
Someone at NPR writes up the reasonable opinion that no one cares and people will just get away with whatever anyway.
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OK I'm glad to hear Stiglitz endorse what has always seemed common sense to me: while we eventually need to talk about CEO compensation, etc. -- can we do something immediate and easy, which clearly acts to align incentives?
Hold CEO compensation in rolling escrow, dispensing it over a 10-year period, and similarly vest stock options and grants... Similarly the ridiculous end-of-year bonuses given to financial analysts.
posted by mrflip at 07:40PM CST on September 22