Another nominee for the Nobel Prize for Evil

This guy is apparently the brain behind the whole financial crisis. The article claimed that to hold him responsible is like holding Albert Einstein responsible for nuclear weapons, but I think a more apt comparison is to Robert Oppenheimer. After all, he didn't publish this paper and then disappear, but chose to stay in the financial industry to promote a new way of doing things.

Maybe the government should sit on the banks' boards

We need to find some way to make sure the banks use the bailout money for its intended purpose, which is to free up credit, not to acquire other banks.

Sign of the Times

Recently the national debt has crept up beyond the 10 trillion threshold. The famous National Debt Clock in Time Square ran out of space for all those zeroes, so they had to squeeze a 1 into the same space as the dollar sign.

How can one tell if the financial market is healthy again?

Does the DOW, the S&P, the consumer price index, or the unemployment tell you anything about the state of the financial market? Well, it turns out they don't. The only useful metric when assessing the health of the financial system is the TED Spread. In short, it is the difference between the three-month T-bill interest rate and three-month LIBOR (London Inter Bank Offered Rate). TED is the acronym for the T-Bill and ED, the ticker symbol for the Eurodollar futures contract.

The TED Spread is an indicator of perceived credit risk in the general economy. This is because T-bills are considered risk-free while LIBOR reflects the credit risk of lending to commercial banks. The size of the spread is usually denominated in basis points (bps), which is the value of the difference multiplied by 100. The best way to check its current value is on Bloomberg.
In a good year, where the risk is low, the TED spread hovers below 50 bps, but as of now it is at its all time high at 414.

When the TED spread drops to two digits then that means the financial system is showing signs of life and it might be time to invest again.

so much for my "BRIC" firewall

Between 2006 and the early part of this year I have been diligently building up an investment portfolio based on BRIC stocks. I had thought, perhaps a bit naively, that by investing overseas I can insulate myself from the turmoils on the US stock market. Well, guess what, the so-called Credit Default Swaps (CDS) that were responsible for the near-collapse of the US financial market were also used to finance oversea investments in Russia and South America, and so my holdings in these regions are in as deep of a hole as their US counterpart.