Temple of Olympian Zeus via chrissy575 on Flickr
In the first part of this series about the Greece crisis, we looked at the causes of crises in general and some of the elements that led to Greece’s crisis specifically. Continue reading
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Greece - Acropolis via Titana on Flickr
Inspired by this question at Hacker News, I decided to write a series of posts about the Greece Debt Crisis (as I understand it anyway). Hopefully this is helpful to someone, and if you have any particular questions or sections of the crisis that you would like me to try and explain please feel free to let me know in the comments. Also, don’t forget to subscribe to my feed to get notified when I post additional parts of this series. Continue reading
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The New York Times has a wonderful post that illustrates the web of debt weaved in Europe.
Debt in Europe
To read the full post, click here.
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Gold Coins by Mykl Roventine via Flickr
The Wall Street Journal recently had an article about the Fed getting ready to start off-loading the $1.1T worth of mortgages they bought during the crisis (in an attempt to save the banks).
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Image courtesy of Andres Rueda's via Flickr
Sometimes it is easy for us to get sidetracked by the ‘larger’ challenges that Obama is tackling, that we miss the little things before our very eyes. Americans won’t see the effects of health care reform for another few years, easily. The same would apply to financial reform and a carbon cap/trade/credit law.
However, there is a little bill that was passed in May 2009 that I, personally, have directly seen the effects of. Continue reading
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Following the usual high quality graphs that Mint.com usually puts out, they have added one more feather to their hat.
They have done a nice illustration of the differences between the US and Russia using simple bar graphs. Two of my favorites are listed here.
Russia Through My Eyes - St Basil's Cathederal by BudaKedrova
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It seems that graphical representations of data are all the rage these days. Mint.com has decided to throw their hat in the circle and get in the game. They have an interesting post where they compare specific figures using bar graphs.
Welcome to China by Luo Shaoyang
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Wallstats.com has a nice graphic that illustrates the federal budget and how taxes are spent. It also shows, quite nicely, the gap between what the government makes and what the government spends – which has to be borrowed – otherwise known as the budget deficit (see the bottom right-side of the graphic).
What is money? by Kevin Dooley
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So Goldman Sachs has officially released results for Q1 – 2009. They were significantly better than analysts’ estimates. Surprise, surprise. Most intriguing though, are the details of their earnings. When they just announced the results they caught Wall Street by surprise and there was a rally, but it seems that something changed investors’ minds. Either the $5B equity dilution they announced, or there is something else in their earnings report that investors are acting on. Let’s look more closely at their numbers.
Henry 'Hank' Paulson - Ex-CEO of Goldman
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According to the Dallas Fed, despite as it seems recently, The Fed doesn’t intervene lightly. There are a number of issues they take into consideration before doing so, and only do so if absolutely necessary.
This decision tree summarizes how the Fed responds to potential financial crises. After getting a reading on the economy’s vital signs, the Fed determines whether the threat at hand might compromise the central bank’s three primary goals.
If the Fed sees little risk, no action is taken, avoiding moral hazard and leaving the markets to sort out the difficulties. The Fed reacts this way to nearly all potential troubles in the financial sector.
A pervasive threat to the overall economy or the financial system can justify direct action. The Fed rarely makes these interventions; when it does, it strives to manage the resulting moral hazard in the least costly way.
The first choice entails the Fed’s acting as an outside coordinator to bring together private institutions to defuse the threat. It’s a strategy that minimizes public-sector risk, and the central bank used it with the Long-Term Capital Management hedge fund in 1998.
When this option isn’t feasible, the Federal Reserve Act provides the authority to deal directly with pressing threats. The preferred strategy involves forging partnerships with private institutions, a course the Fed took in March 2008 with Bear Stearns, a troubled investment bank and brokerage with sufficient remaining collateral to support the intervention.
When private partners aren’t willing to step up, the Fed can act alone if troubled firms still have sufficient collateral. In September 2008, the Fed arranged a purely public intervention for AIG, a huge financial services company.
If remaining collateral is insufficient to support taxpayer-financed actions, the Fed under current law is obliged to let the markets decide a troubled firm’s fate. The Fed accepted this outcome with Lehman Brothers in 2008.
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