BBC World Service - Business - Does microlending really help the poor?

BBC World Service - Business - Does microlending really help the poor?: "Academics have been trying to work out from the evidence whether microcredit does actually raise people's incomes.But it's been hard to do a proper scientific survey, since you need to compare those who do get a loan with a control group of similar people who don't.Dean Karlan, professor of economics at Yale University, has

A look at whether futures market contracts inpact spot pricing

Interesting:FRB: FEDS Abstract 2009-29: "This paper finds no evidence that speculative activity in futures markets for industrial metals caused higher spot prices in recent years. The empirical analysis focuses on industrial metals with and without futures contracts........comovement between metals with and without futures contracts has not weakened in recent years as speculative activity has

Whose house is this? "He must know nothing about finance"

This is hilarious.The Daily Show With Jon StewartMon - Thurs 11p / 10cHome Crisis Investigationwww.thedailyshow.comDaily ShowFull EpisodesPolitical HumorJoke of the DayThanks to Greg Mankiw for the link via WayneMarr

House Panel Approves Restraints on Executive Pay - NYTimes.com

House Panel Approves Restraints on Executive Pay - NYTimes.com: "The bill does not set pay limits. Instead, it gives shareholders the right to vote on pay and requires that independent directors from outside of management serve on compensation committees.The shareholder votes would not be binding on company management.The measure tries to reduce the potential conflicts of interest involving

SSRN-House Prices and Fundamentals: 355 Years of Evidence by Brent Ambrose, Piet Eichholtz, Thies Lindenthal

As a part time landlord, I will definitely agree with this this one. I am not sure the reason, but rent prices take much longer to adjust than do real estate prices. Now we have 355 years of data (amazing btw) to back up that statement.SSRN-House Prices and Fundamentals: 355 Years of Evidence by Brent Ambrose, Piet Eichholtz, Thies Lindenthal: "This paper examines the long run relation between

YouTube - Inflation or Deflation?

Ok, another song. I had never hear this one either. Pretty funny but so bad. LOL. By Merle Hazzard and Bretton Woods. lol.YouTube - Inflation or Deflation?: "Inflation or Deflation? "BTW if you can decide between inflation or deflation, vote on the front page of FinanceProfessorblog.blogspot.com

H-E-D-G-E song

No one will ever confuse this with a country classic, but it is very funny and actually is all about finance. Thanks to PlanetMoney for the tweet.

Rethinking Brownian Motion With The 'Emperor's New Clothes'

Thinking back to the classes that covered this, I NEVER thought Brownian Motion would be interesting but this is.....Rethinking Brownian Motion With The 'Emperor's New Clothes': "'Like Einstein, we used to think we could describe Brownian motion with a standard bell-shaped curve,' Granick said. 'But now, with the ability to measure very small distances much more precisely than was possible 100

Bernanke Feared a Second Great Depression - WSJ.com

Bernanke Feared a Second Great Depression - WSJ.com: "Federal Reserve Chairman Ben Bernanke on Sunday said he engineered the central bank's controversial actions over the past year because 'I was not going to be the Federal Reserve chairman who presided over the second Great Depression.....And later:"Mr. Bernanke responded that "nothing made me more frustrated, more angry, than having to

Is Your iPod Unpatriotic? Why America Shouldn't "Buy American"

A well-done piece showing the silliness of trying to only "Buy American" on many(indeed most) items. As much as some may not like it, it is an integrated world. (Uh I should worn you, their are bikini clad women (and one man), not sure if you want to watch at work or not.)YouTube - Is Your iPod Unpatriotic? Why America Shouldn't "Buy American": "Is your iPod unpatriotic? Its 451 parts are made

Can Lance Armstrong Save RadioShack?

If you missed it this week, Lance and Radio Shack teamed up for next year.Yes this is the same RadioShack that the Onion lampooned back in 2007 joking that even their CEO can't understand how they are in business.So can Lance turn their fortunes around? What does the market think? There was no impact on the announcement of the deal (12:00 on Thursday) which was timed to correspond with the

Seven banks were closed today. Is that a big number?

I just tweeted this but I am so amazed I have to report it here too.Seven banks failed today. That is more the same number as were reported on July 2. But for a recent history perspective it is quite high.Indeed from January 1 2000 to December 31, 2008 53 banks failed.Data from FDICBank Failing July 24, 2009: 7Bank Failings per year2000 022001

Did Goldman learn anything? Did shareholders?

Asymmetric and short-term oriented pay packages have largely been seen as major causes of the financial meltdown we saw last year. So since everyone has seen the problems, we are no longer going to pay people in the same manner. Right? Well, hold on, not so fast.First from the NY Times:"Goldman posted the richest quarterly profit in its 140-year history and, to the envy of its rivals,

Banning ‘Naked’ Default Swaps May Raise Corporate Funding Costs - Bloomberg.com

What's next? No "Skinny Dipping?"Ok, before I get fired, let me explain. Naked trading is when a speculator trades a derivative security without a position in the underlying asset. For instance, if I were to short a corn futures contract, I would be "naked" since I do not own corn to sell. So prior to settlement I either have to buy back the contract or purchase corn to cover the trade. (The

Buffett’s Goldman Stake Pays Richly - DealBook Blog - NYTimes.com

Buffett’s Goldman Stake Pays Richly - DealBook Blog - NYTimes.com: "Mr. Buffett’s stake in Goldman is now worth $9.1 billion, or about $4.1 billion more than what he paid 10 months ago, according to an analysis by Linus Wilson, an assistant professor of finance at the University of Louisiana at Lafayette.According to Mr. Wilson’s calculations, Mr. Buffett would realize an annualized return of

Catching up with MicroFinance

A while ago (May 28th) we discussed a paper that claimed to be the first randomized study proving microfinance did not seem to work . The conclusion of that was that such studies that the studies could not be definitive. Specifically:"...more research is needed to determine what about microfinance works (or under what conditions), and when it does not."This morning I had several follow ups

SSRN-Dark Omens in the Sky: Do Superstitious Beliefs Affect Investment Decisions? by Gabriele Lepori

Rabbits feet, avoiding black cats and not walking under ladders, baseball players jumping foul line and refusing to talk to pitchers with no-hitters going, and not buying stocks? Who knew? SSRN-Dark Omens in the Sky: Do Superstitious Beliefs Affect Investment Decisions? by Gabriele Lepori: "...empirical analysis focuses on some beliefs associated with eclipses, phenomena that are typically

Two great calculators from PoliticalCalculations

In prepping for a class today, I found these. They are literally perfect for any introductory finance class as well as for investors who are just curious.1. Historic Rates of return from any two points of time: It really is important to realize that the past may not repeat itself. From PoliticalCalculations:" Now however, everything has changed because we here at Political Calculations

Behavioral Finance: The Role of Psychology

From Yale's Econ 252 classYouTube - 7. Behavioral Finance: The Role of Psychology: "Behavioral Finance is a relatively recent revolution in finance that applies insights from all of the social sciences to finance. New decision-making models incorporate psychology and sociology, among other disciplines, to explain economic and financial phenomenon, such as erratic stock price variations.

FT.com | Willem Buiter's Maverecon | What to do with the Fed

Phenomenal piece. Great work by Willem Buiter for the Financial Times.The article is on the problems the Fed has had, but stressed that that while flawed, it is still important not to let it lose its independence.Read it all. It is long, but very well done.I will give a few tidbits to tempt you to read the whole thing. It really is worth it.FT.com | Willem Buiter's Maverecon | What to do with

Embracing the efficient market hypothesis can be a bit like stepping out on “the Ledge” « Nudge blog

GREAT article from the Nudge blog/Economist.Embracing the efficient market hypothesis can be a bit like stepping out on “the Ledge” « Nudge blog:"...in the wake of last fall’s stock market collapse, fully embracing the efficient market hypothesis can be a scary proposition – a bit like stepping out on “the Ledge” at Willis Tower. (An absolute must if you’re in Chicago, by the way.) The events of

Balancing Financial Innovation and Consumer Protection - NYTimes.com

Robert Shiller in the NY TimesEconomic View - Balancing Financial Innovation and Consumer Protection - NYTimes.com:"That is how innovation often proceeds — by learning from errors and hazards and gradually conquering problems through devices of increasing complexity and sophistication."then"We need consumer products that people can use properly, and if this is what “plain vanilla” means, that’s a

The Scholarship of Collapse | Gregor.us

I attack most things by beginning with the worst case scenario and going from there. And while this may not be the worst case scenario, I think you can see it from here.And I should warn you, that if you are from the US, this version could hurt. The Scholarship of Collapse | Gregor.us: "The June issue of Gregor.us Monthly, The Scholarship of Collapse, addresses several views of economic and

Lauren Cohen FinanceProfessor/ Star Weight Lifter

LOVE IT! I have always said FinanceProfessors are the coolest people on earth. Well except me.Harvard professor tackles economics and strongman competitions - The Boston Globe: "Lauren Cohen’s hands hint at his double life. Overworked veins bulge beneath the Harvard Business School professor’s skin, calluses mark his fingers, and his shins - covered by the pleated pants he wears for work - are

Calpers Sues Over Ratings of Securities - NYTimes.com

Well we all knew this was coming from some large investor and no one should be surprised it comes from Calpers.!Calpers Sues Over Ratings of Securities - NYTimes.com: "Calpers maintains that in giving these packages of securities the agencies’ highest credit rating, the three top ratings agencies — Moody’s Investors Service, Standard & Poor’s and Fitch — “made negligent misrepresentation” to the

A SBU grad to the rescue at Citigroup??

Typically I would not blog on a shakeup at the top sice they are seemingly so commonplace, but this one does merit some attention (even if belatedly so).From last week:Citigroup Shuffles Top Ranks Again, in a Bow to Regulators - NYTimes.com: "...the bank announced its third sweep of top management in less than a year, elevating John C. Gerspach, the chief accounting officer, to Mr. Kelly’s post,

A Cure for Diversification-Deficit Disorder from M.I.T.'s Andrew Lo- NYTimes.com

Short version: Andrew Lo has created a mutual fund that tries to replicate hedge funds returns in order to allow small time investors improved diversification.Longer version: The NY Times looks at one of the biggest names in academic finance Dr. Andrew Lo of MIT.A New Fund From an M.I.T. Professor - NYTimes.com: "Dr. Lo and his staff use futures and forward contracts to invest in the stock, bond

What'll it be? Inflation or deflation? Or both?

Lost in the fear of inflation that has gripped many for months, is the reverse and almost silent bull market killer, deflation. In recent days however we have seen that deflation has again made the news.In Japan it was reported that "."..wholesale prices fell a record 6.6 percent in the year to June, as the world's No.2 economy slides deeper into deflation",In Ireland, the TimesOnline reports

Buying High and Selling Low - NYTimes.com

More evidence that suggests we are not very good at market timing.From The NY Times:Strategies - Buying High and Selling Low - NYTimes.com: "A study that appeared in the September 2007 issue of the Journal of Banking and Finance has found that poor market-timing decisions are the rule rather than the exception. Titled “Mutual Fund Flows and Investor Returns: An Empirical Examination of Fund

John Bogle on FORA.tv - The Culture that Spawned the Crisis: A Closer Look

FORA.tv - The Culture that Spawned the Crisis: A Closer Look: "The Culture that Spawned the Crisis: A Closer Look"Bogle is a great presenter and this definitely does not disappoint. VERY good. It will definitely be used for classes dealing with governance and even financial institutions.The Bogle piece that I used here is part of a longer (1:27) presentation on the crisis. The entire thing is

Simoleon Sense » Blog Archive » Understanding Bounded Rationality

Simoleon Sense continues to do an amaizing job giving us lessons in Behavioral Finance. Good stuff!Simoleon Sense » Blog Archive » Understanding Bounded Rationality: "Findings from behavioral organization theory, behavioral decision theory, survey research, and experimental economics leave no doubt about the failure of rational choice as a descriptive model of human behavior. But this does not

Dividend lecture: "Dividends are like getting married, stock buybacks are like hooking-up"

Aswath Damodaran from NYU is truly one of the best professors I have ever seen--a true genius. He is one of a handful of financeprofessors I will drop everything to see his presentation at any conference.YouTube - Damodaran on Dividends: "Professor Aswath Damodaran, Professor of Finance from the New York University Stern School of Business, lectures about stock buybacks and dividends. See http://

Tim Geithner inteview on CNN

Here is the video from the CNN interview with Treasury Secretary Geithner that I mentioned on Twitter.Embedded video from CNN Video

Geithner defends White House plan for derivatives - MarketWatch

Geithner defends White House plan for derivatives - MarketWatch: "Geithner's plan calls for greater reporting, capital, leverage and disclosure standards for all derivative traders and dealers, but some lawmakers are seeking to have these specialized derivatives cleared through more transparent clearinghouses, which serve as an intermediary between buyers and sellers in transactions"

The Fall of the Toxic-Assets Plan - Real Time Economics - WSJ

Have you noticed that the plans to buy the so called toxic assets to spur more lending has not caught on? Harvard's Lucian Bebchuk gets to the heart of the matter in today's WSJ. EXCELLENT Piece that it well worth reading.Short version?: Due to changes in accounting and regulatory practices, banks have no incentive to sell off their bad loans. So guess what? They aren't. They are holding

Cash Flow: a Better Way to Know Your Bank? - - CFO.com

On the first week of almost any introductory finance class the professor will begin off the lecture with a discussion of why cash flow matters more than accounting based numbers that depend on assumptions and choices that are often influenced by agency cost problems and a desire to abide by various loan covenants and even public opinion. Depending on the class, the discussion might then explain

Bernanke's and Fed's hardest task: Taking back $1 trillion - Jul. 6, 2009

Bernanke's and Fed's hardest task: Taking back $1 trillion - Jul. 6, 2009: "'Your timing has to be perfect,' says David Jones, former Fed economist and president and CEO of DMJ Advisors LLC in Denver. 'If you do it too soon, you keep us in a deep recession. And if you do it too late, you get inflation.'"

SSRN-Subprime Crisis and Board (In-)Competence: Private vs. Public Banks in Germany by Harald Hau, Marcel Thum

SSRN-Subprime Crisis and Board (In-)Competence: Private vs. Public Banks in Germany by Harald Hau, Marcel Thum: "Our data confirms that supervisory board (in-)competence in finance is related to losses in the financial crisis. Improved bank governance is therefore a suitable policy objective to reduce bank fragility."Yeah! What we teach in class is right! :)

Tweets of the week (Post July 4th edition)

Tweets of the Week. With the July 4th holiday, travel, and nicer weather this will be a bit shorter than normal (which might be a good thing!) I even added some of my own tweets near the bottom. Simoelon Sense. Miguel had an amazingly good week. Literally could have posted almost any of his tweets Behavioral Economist Richard Thaler: [Talks About How To] Make Mortgages Simpler: If my sources

New Evidence on the Foreclosure Crisis - WSJ.com

Here is a little game for you. Do ask ten people on the street what caused to all of the defaults and problem loans that led to the bank failures that led the the economy falling?Chances are subprime lending and lying banks will be fairly high on the list of answers. Unfortunately, an article in the WSJ by Stan Liebowitz suggests that these common answers are wrong.What caused the problem? Low

Here's The Real Reason The Dollar Is Screwed

While dramatically oversimplified this does bring a very good point to light: namely that as other countries improve their transparency and governance, the US dollar loses its relative advantage. There is more to the article, but the below quote catches the flavor well.Here's The Real Reason The Dollar Is Screwed:(from Clusterstock)"...what's the real reason to fear a dollar decline? It's that

Are You Ready to Manage in an Irrational World? — HBS Working Knowledge

Are You Ready to Manage in an Irrational World? — HBS Working Knowledge: ".....Things become much more complex in the world of irrationality. Much of traditional economics becomes outmoded when complex relationships based on often counter-intuitive behaviors are taken into account. Instead of a management philosophy centered around the manager as the play-caller, assigning tasks and motivating

Public Pensions Cook the Books - WSJ.com

Sometimes all I can say is wow. Oh sure it is predictable. And it happens more often in all fields (so not just government), but it is still disappointing to see. Short version? Hide the bad news. Public Pensions Cook the Books - WSJ.com: "Here's a dilemma: You manage a public employee pension plan and your actuary tells you it is significantly underfunded. You don't want to raise

Rangers borrow money from MLB - MLB - Yahoo! Sports

Rangers borrow money from MLB - MLB - Yahoo! Sports: "Major League Baseball within the last week loaned millions to Tom Hicks, the evidently cash-strapped owner of the Texas Rangers, and will continue to offer financial assistance to Hicks until he is able to sell the team.....The Rangers’ opening day payroll this season was around $68.1 million, which ranked 22nd among MLB’s 30 teams and was

CO2 Traders Hedging Against Climate Laws, RNK Says (Update1) - Bloomberg.com

A simple rule: "In times of uncertainty, options (calls or puts due to Put call parity) have more value". A case in point:CO2 Traders Hedging Against Climate Laws, RNK Says (Update1) - Bloomberg.com:"Ken Schneider, an options trader at New York-based environmental hedge fund RNK, said investors are buying put options on speculation there will be new restrictions on United Nations’ Certified

Jenkins: Too Bernanke To Fail? - WSJ.com

Well said. Jenkins: Too Bernanke To Fail? - WSJ.com: "The effort of congressmen to uphold the distinction between the public and private sectors is noble, and doomed to fail in this case. Last week's hearing reflected unmedicated unease over two facts legislators recognize but resist acknowledging: There is no practical solution to 'too big to fail,' and no alternative to the Fed's ability to

Dollar Cost Averaging - Fama/French Forum

A really good video of Ken French on Dollar Cost Averaging. :Dollar Cost Averaging - Fama/French Forum: "Does it make sense to dollar cost average? It depends. Standard financial analysis says dollar cost averaging is suboptimal. If you focus on only your investment outcome, investing a lump sum immediately lets you construct the best portfolio you can today; slowing the process with dollar cost