September 15, 2008

Waiting for Godot

Paul Krugman asks about the looming financial crisis:

[W]hy were we so unprepared for this latest shock? When Bear went under, many people talked about the need for a mechanism for “orderly liquidation” of failing investment banks. Well, that was six months ago. Where’s the mechanism?

For the same reason we are unprepared for the coming catastrophic climate change. Too many people thought it wasn't worth their while to do anything to fix things.

Over the past few years, I've interviewed scores of experts on climate change, including Hansen. A point that they have stressed to me over and over again is the extreme urgency of the situation. The time "is already five past midnight," said Konrad Steffen, a climatologist at the University of Colorado.

"I've been involved in a number of fields where there's a lay opinion and a scientific opinion," Robert Socolow, codirector of Princeton's Carbon Mitigation Initiative, told me. "In most of the cases, it's the lay community that is more exercised, more anxious. But, in the climate case, the experts -- the people who work with the climate models every day, the people who do ice cores -- they are more concerned. They're going out of their way to say, ‘Wake up! This is not a good thing to be doing.'"

Getting a new president would help. But, obviously it depends on which person gets elected and even then, our government is so screwed, it seems likely we will continue to have the naysayers blocking all action.

What do you want to bet?

Posted by Mary at September 15, 2008 12:43 AM | Economy | Technorati links |

This is what happens when you de-regulate. Twenty years ago,it was the S&L fiasco,now the housing and banking industries. In the 1920's and 1930's,it was everything. Obama needs to regulate!

Posted by: brian at September 15, 2008 10:17 AM

I wouldn't bet against you, Mary. Not here. They couldn't even act when there was an imminent economic collapse coming, which is something we've experienced before and can see the signs of well in advance. Something that's never happened before in recorded history? I just don't see them taking the risk of doing something

Posted by: Cujo359 at September 18, 2008 11:57 PM


Let's say you are Sharky hedge funds. You go to Lehman brothers and you like to borrow 1 mio shares of which company soever for 1 cent per sharefor 3 days what costs you approximately 10000 $. Then you flood the market with 1 mio shares. At first, the course will stay stable because nobody really understands why there is such a huge amount of papers of the respective company suddenly available, let's say they are at 10 dollars per share at the first day. You will still sell them at a stable course, minimum is 9 dollars.

Then you wait 48 hours. The course will have gone meanwhile beserk for the high availibility, let's say it's just at 6 $ only anymore. Then you buy them back at once.

Same symptom: Nobody really understands at first why the course should suddenly rise again, so you buy at a stable low price.

You make 4 dollars per share, what would be 4 mio dollars. Then you as Sharky Hedge Funds give the shares back to Lehman brothers. They simply just lost 4 mio dollars and had a revenue of 10000 dollars.

The market is simply too unflexible to get these sharks.

Lehman Bros had in january 2008 approximately 6 percent of its shares in stock on short sale, the number rose for short-selling itself to 25 percent in sep.

Posted by: ccoaler at September 19, 2008 05:57 AM