Category Archives: Risk and risk management

Borrowers Who Are Bad at Math More Likely to Go Into Foreclosure

The New York Times reports on an intriguing study: Columbia University assistant business professor, Stephan Meier…. found that borrowers with poor math skills were three times more likely than others to go into foreclosure. Mr. Meier conceded that the results were not shocking, but he said he had not expected the connection between math skills […]

On BP’s Many Forms of Less Than Artful Dodging

As the Gulf oil leak continues to spew, albeit at a slightly lower rate now, and the American public is becoming resigned to the dreadful spectacle of continued damage to wildlife and coastlines, BP continues to act as a law unto itself. Not that that should be any surprise; the oil producer clearly believed from […]

Models Show Gulf Oil May Reach US East Coast This Summer

This cheery news from the SunHerald (hat tip reader Dwight Baker): The National Center for Atmospheric Research models showed Thursday that oil could enter the Gulf’s loop current, go around the tip of Florida and as far north as Cape Hatteras, N.C. According to researchers, oil could threaten East Coast beaches by early July, but […]

BP Admits to Being “Not Prepared” (“Low Odds” Fallacy Edition)

A sudden bout of semi-candor from BP suggests the top brass of the miscreant oil company recognized that it is in such deep doo-doo that the normal corporate PR playbook is no longer operative. Companies and governments often refuse to admit error or blame it on circumstances out of their control as a way to […]

It’s Official: Gulf “Top Kill” Fails

From the Washington Post, as foretold earlier by George Washington: BP Chief Operating Officer Doug Suttles said the company determined the “top kill” method had failed after studying it for three days. The method involved pumping heavy drilling mud into a crippled well 5,000 feet underwater. “We have not been able to stop the flow,” […]

Extend and Pretend Reaches A New Level

Just when you thought financial firm accounting couldn’t get more dubious…it gets worse. Deux Ex Macchiato (hat tip FT Alphaville) tells of the disconcerting changes to what was formerly called FAS Rule 157, which brought us Level 1, 2, and 3 accounting. A brief recap: Readers may recall that the Financial Standards Accounting Board implemented […]

This is What a Carry Trade Unwind Looks Like

Ouch. The media has been fixated with the euro versus the dollar, and has paid less attention to some of the dramatic action on other fronts. Mrs. Wantanabe seems to be shedding risk, big time.

Mosler: Fed’s Currency Swaps – A Backdoor Way to Lower US Interest Rates

By Warren Mosler, a fund manager, co-founder and Distinguished Research Associate of The Center for Full Employment And Price Stability at the University of Missouri in Kansas City, and creator of the modern euro swap futures contract. Gillian Tett of the Financial Times wrote today about stress in the dollar funding markets, which she regards […]

Why is the Deepwater Horizon Oil Spill an Information Dead Zone?

It isn’t hard to see that the lack of decent information about how serious the Deepwater Horizon oil spill is is almost certainly due to obfuscation on the part of BP. The puzzling part is how BP can fantasize that it ultimately gains from this conduct, and why the Obama Administration tolerates it. The frustration […]

Even Fewer Deepwater Horizon Inspections Than MMS Claimed Earlier

Ooh, this gets uglier and uglier the harder one looks at this. From the Associated Press via ABC (hat tip reader Glenn Stehle): The federal agency responsible for ensuring that an oil rig in the Gulf of Mexico was operating safely before it exploded last month fell well short of its own policy that inspections […]

You Say You Are a Market Maker? Great, Act Like One

The drama of financial regulatory reform is, to a considerable degree, playing right into the industry’s hands. I have several pet theories as to why this has happened. One is the fact that the drafting of new rules and the related horse-trading started before there had been any meaningful investigations, and more important, there did […]

What is the Proper Libertarian Response to the Deepwater Horizon Oil Spill?

Many of my investor buddies e-mail each other frequently during the day (yes, e-mail, not IM or tweet) and I am on the periphery of some of their discussions. One of them took note of the fact that the libertarians in this crowd had gone silent on the question of the Deepwater Horizon oil spill, […]

Were the Ratings Agencies Duped Rather than Dumb?

The line of thinking that underlies an investigation by New York attorney general Andrew Cuomo is a challenge to conventional wisdom about the financial crisis. The prevailing view is that since credit ratings were one of the single biggest points of failure in the crisis, the ratings agencies were one of the biggest, if not […]

Guest Post: Discussion of Congressional Hearings on Deepwater Horizon

By Glenn Stehle, an engineer who began working in the oil industry in 1974. After a two-year stint with Cities Service Oil Company, he worked for two years for Henry Engineering, a petroleum engineering consulting firm. Upon leaving Henry Engineering he worked as an independent engineering consultant in all facets of the oil and gas […]