Looting [modified]
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Someone should forward this[^] to the Messiah. During the 1980s, a number of unusual financial crises occurred. In Chile, for example, the financial sector collapsed, leaving the government with responsibility for extensive foreign debts. In the United States, large numbers of government-insured savings and loans became insolvent - and the government picked up the tab. In Dallas, Texas, real estate prices and construction continued to boom even after vacancies had skyrocketed, and the suffered a dramatic collapse. Also in the United States, the junk bond market, which fueled the takeover wave, had a similar boom and bust. In this paper, we use simple theory and direct evidence to highlight a common thread that runs through these four episodes. The theory suggests that this common thread may be relevant to other cases in which countries took on excessive foreign debt, governments had to bail out insolvent financial institutions, real estate prices increased dramatically and then fell, or new financial markets experienced a boom and bust. We describe the evidence, however, only for the cases of financial crisis in Chile, the thrift crisis in the United States, Dallas real estate and thrifts, and junk bonds. Our theoretical analysis shows that an economic underground can come to life if firms have an incentive to go broke for profit at society's expense (to loot) instead of to go for broke (to gamble on success). Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations. Date of the paper? 1993. Interested parties may contact me using the email link for a copy of the paper. It's 74 pages and mathematical to some extent, but still readable. It will also allow you to see how an economic model is constructed which is relevant to the post below.
modified on Thursday, March 12, 2009 4:58 AM
The more I hear of this mess the more depressing it can become. John, as you already have my e-mail address, could you oblige me a copy. Many thanks. And depression (clinical not the financial kind) is a serious illness. This current financial crisis must be pushing many over-the-edge into this downward spiraling illness.
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The more I hear of this mess the more depressing it can become. John, as you already have my e-mail address, could you oblige me a copy. Many thanks. And depression (clinical not the financial kind) is a serious illness. This current financial crisis must be pushing many over-the-edge into this downward spiraling illness.
Hi Richard, I don't have access to my address book at the moment as I'm back on the road again. Can you send me an email via the email link on the message?
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Hi Richard, I don't have access to my address book at the moment as I'm back on the road again. Can you send me an email via the email link on the message?
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I think I had that problem too with FF. Sorry about that. I only have my laptop with me and all my contacts are on my Mac.
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Hi Richard, I don't have access to my address book at the moment as I'm back on the road again. Can you send me an email via the email link on the message?
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John, I don't think that the email link is working. I read in the Suggestions Forum that it didn't seem to be and my attempts to use it have been singularly unsuccesful
Jon Smith & Wesson: The original point and click interface
Yes, seems that way.
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Yes, seems that way.
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Having only read the precis, it appears that what they wrote as something of a warning, was taken as a how-to manual.
Jon Smith & Wesson: The original point and click interface
Oakman wrote:
Having only read the precis, it appears that what they wrote as something of a warning, was taken as a how-to manual.
Well, it pretty much outlines the conditions under which a firm will take incredible risks because they believe they will be bailed out by the government. They also look at several case examples. It's still relevant as a paper because the current crisis followed exactly what they were talking about like a recipe - like you said. It just goes to show how badly the regulatory framework was out of date. This paper is 16 years old.
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Someone should forward this[^] to the Messiah. During the 1980s, a number of unusual financial crises occurred. In Chile, for example, the financial sector collapsed, leaving the government with responsibility for extensive foreign debts. In the United States, large numbers of government-insured savings and loans became insolvent - and the government picked up the tab. In Dallas, Texas, real estate prices and construction continued to boom even after vacancies had skyrocketed, and the suffered a dramatic collapse. Also in the United States, the junk bond market, which fueled the takeover wave, had a similar boom and bust. In this paper, we use simple theory and direct evidence to highlight a common thread that runs through these four episodes. The theory suggests that this common thread may be relevant to other cases in which countries took on excessive foreign debt, governments had to bail out insolvent financial institutions, real estate prices increased dramatically and then fell, or new financial markets experienced a boom and bust. We describe the evidence, however, only for the cases of financial crisis in Chile, the thrift crisis in the United States, Dallas real estate and thrifts, and junk bonds. Our theoretical analysis shows that an economic underground can come to life if firms have an incentive to go broke for profit at society's expense (to loot) instead of to go for broke (to gamble on success). Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations. Date of the paper? 1993. Interested parties may contact me using the email link for a copy of the paper. It's 74 pages and mathematical to some extent, but still readable. It will also allow you to see how an economic model is constructed which is relevant to the post below.
modified on Thursday, March 12, 2009 4:58 AM
You know me well enough to understand this is not an attack on you :) but I find it slightly amusing that so many people are digging up papers and articles from the 90s that predicted doom, today. I didn't see a rash of such articles being brought to the limelight in, say, 2006. And yes, I'd like a copy too :) I don't pretend I'll understand it, but there's always hope. And I don't have great plans for the weekend either.
Cheers, Vıkram.
Carpe Diem.
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Oakman wrote:
Having only read the precis, it appears that what they wrote as something of a warning, was taken as a how-to manual.
Well, it pretty much outlines the conditions under which a firm will take incredible risks because they believe they will be bailed out by the government. They also look at several case examples. It's still relevant as a paper because the current crisis followed exactly what they were talking about like a recipe - like you said. It just goes to show how badly the regulatory framework was out of date. This paper is 16 years old.
73Zeppelin wrote:
Well, it pretty much outlines the conditions under which a firm will take incredible risks because they believe they will be bailed out by the government.
Remember this[^] conversation from a year ago? :) Reading my reply to you in that thread, I didn't think the bailouts would take this dimension either! :omg:
Cheers, Vıkram.
Carpe Diem.
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73Zeppelin wrote:
Well, it pretty much outlines the conditions under which a firm will take incredible risks because they believe they will be bailed out by the government.
Remember this[^] conversation from a year ago? :) Reading my reply to you in that thread, I didn't think the bailouts would take this dimension either! :omg:
Cheers, Vıkram.
Carpe Diem.
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73Zeppelin wrote:
Well, it pretty much outlines the conditions under which a firm will take incredible risks because they believe they will be bailed out by the government.
Remember this[^] conversation from a year ago? :) Reading my reply to you in that thread, I didn't think the bailouts would take this dimension either! :omg:
Cheers, Vıkram.
Carpe Diem.
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73Zeppelin wrote:
Well, it pretty much outlines the conditions under which a firm will take incredible risks because they believe they will be bailed out by the government.
Remember this[^] conversation from a year ago? :) Reading my reply to you in that thread, I didn't think the bailouts would take this dimension either! :omg:
Cheers, Vıkram.
Carpe Diem.
Heh. Yeah. "Woops" on my part. :doh:
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Email me here, Richard:
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You know me well enough to understand this is not an attack on you :) but I find it slightly amusing that so many people are digging up papers and articles from the 90s that predicted doom, today. I didn't see a rash of such articles being brought to the limelight in, say, 2006. And yes, I'd like a copy too :) I don't pretend I'll understand it, but there's always hope. And I don't have great plans for the weekend either.
Cheers, Vıkram.
Carpe Diem.
Ok, will forward to you.
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Vikram A Punathambekar wrote:
Remember this[^] conversation from a year ago?
It is a cruel thing to do, to remind any of us what we believed about the economy a year ago. ;)
Jon Smith & Wesson: The original point and click interface
;P What, I was proved right against Zep and can't gloat about it? ;) I wonder if I'll be invited to be part of the Illuminati? :-D
Cheers, Vıkram.
Carpe Diem.
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Email me here, Richard:
As the CP e-mail link don't work. What's your thoughts of creating a googlemail account as a "dead letter box" : The concept being that we can attach documents etc of all sorts either as drafts or by sending the thing to itself via that googlemail account without being inconvenienced by CPs limitations. This way, our own private e-mail details would never need to be published.
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As the CP e-mail link don't work. What's your thoughts of creating a googlemail account as a "dead letter box" : The concept being that we can attach documents etc of all sorts either as drafts or by sending the thing to itself via that googlemail account without being inconvenienced by CPs limitations. This way, our own private e-mail details would never need to be published.
Probably a decent idea. You can send me email at: Let me know when you get this message so I can remove from the spambot attacks... :)
modified on Thursday, March 12, 2009 3:16 PM
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Probably a decent idea. You can send me email at: Let me know when you get this message so I can remove from the spambot attacks... :)
modified on Thursday, March 12, 2009 3:16 PM
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;P What, I was proved right against Zep and can't gloat about it? ;) I wonder if I'll be invited to be part of the Illuminati? :-D
Cheers, Vıkram.
Carpe Diem.