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Posts Tagged ‘banks’

Nassim Taleb speaks out in Davos, Switzerland, about how crises keep repeating because of the moral hazard of bailing out bad financial practices. Only if a system of punishment is in place (as it is in Switzerland) will future crises be averted.

In the same conference, Taleb records an impromptu video for Youtube to express his views. Great insights from our favorite skeptical empiricist.

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citigroup-market-capGot this image from a Bloomberg email. It shows the market capitalization of Citigroup last January 2009 (green circle) compared to its value last 2007 (big blue circle). This shows how much the bank’s value has fallen in just one year.

How many of us would have thought back then that great banks like Citigroup would be less than 10% of their worth a year or two later? How many experts, journalists or economists could have made that forecast? And yet, our media, internet, books, and magazines are inundated with 5-10 year economic and earnings forecasts made by analysts, using probably nothing more than simple look-back regressions on the past.

Here are similar images of other major banks:

banks-market-cap

Scary food for thought.

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Paulson will now use half of rescue plan for consumer loans; Paulson reverses course on rescue, drops bank asset purchases; Paulson scraps plan to buy troubled bank assets; Lawmakers, economists differ on bailout for car makers;

Where do we draw the line?

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Saw this on Finance Manila. It’s a humorous but surprisingly accurate assessment of how the housing and mortgage bubble created the financial crisis gripping the US and the world presently. It’s also a good analysis of investor psychology and herd mentality.

The scary part is: what comes after bailout?

visualguidecrisis2sv5

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