March 6th, 2010 by Paul
New Fortune.com managing editor (and ‘95 Medill grad) Daniel Roth (@danroth) gave me a chance the other day to write a guest column on transparency and financial recovery and XBRL. It’s now here.
Thanks to another Fortune.com editor, I’m reminded of a lesson I learned myself at Medill (‘86) about the value of good editing. My original draft was distracted with details about California’s financial crisis and tortured by metaphor mania. Now it gets to the point. Hope you enjoy it.
By the way, Fortune embedded a video of SEC Risk Director Henry Hu in the piece, explaining credit default swaps in plain English. He compares “empty CDS” to short selling. Requiring sellers to have “skin in the game” — the solution implied by the video — is a perfectly legitimate way to discourage both empty CDS and short selling. The downside, however, is that doing so restricts market flexibility. Then again, so do better disclosure requirements, like GAAP for public companies and XBRL for ABS.
In opaque markets, substantive “skin in the game” regulations may be essential. The advantages of information to make markets transparent are more market scrutiny and lower barriers to finding prices that are closer to the ideal of equilibrium. By all means, don’t sell insurance to potential arsonists! Better yet, create building codes that protect structures from arson and accidental fire alike.
By the way, if you’re curious about the California point in my piece before it was wisely edited for length, it was this: Despite the state budget crisis, good teachers and good financial building codes could yet combine to restore our status as the Golden State.
Things looked pretty bleak after the 1906 quake, too, but this photo — which data tagging technology automatically inserted into WordPress for me — is a nice reminder that many forms of progress are always possible.
February 20th, 2010 by Paul
I’ve been the strongest possible advocate for global free trade ever since my Soviet Economic Institutions professor diverged from the syllabus to draw Ricardo’s theory on the board and prove unequivocally and concisely that it makes everyone better off. I still am. Dennis Santiago, however, makes strong arguments for local investing for California and Los Angeles — and good news: they don’t contradict the case for global free trade. Continue reading ‘Local Investing Can Build Global Markets’
February 14th, 2010 by Paul
I watched a C-SPAN replay tonight of a Jan. 29 panel at Davos in which five industry leaders pontificate about the future of the world. This was after tonight’s 60 Minutes lead report on the exclusive Davos gathering. The 60 Minutes report was as good as ever, but a failure of vision makes itself apparent in the Davos C-SPAN tape.
First, the CEO of a global bank, in response to an all-too-polite question about why the financial sector isn’t moving toward XBRL technology to support transparent securitization, dismissed the question with a statement to the effect that it failed to consider the “quality of the assets” — implying that only the most revered debt securities can hope to return to marketability.
Paternalistic balderdash. Continue reading ‘Davos Mistakes about Securitization’
January 28th, 2010 by Paul
BRUSSELS–As I’m enjoying outstanding Belgian cuisine with the family of a CLOUD, Inc. colleague after a day of meetings about how computer standards can improve the clarity and efficient use of information and provide for more accurate evaluation of the trust that one might place in information, a 500-mile drive south of here the world’s financial leaders are contemplating the future of finance.
My hope is that my modest contribution (Chapter 2.2, page 72) to a book published at the World Economic Forum in Davos entitled “Trust Meltdown: The Financial Industry Needs a Fundamental Restart” finds its way into enough reading stacks of enough of those in attendance to make a difference. Continue reading ‘My Davos Contribution: How Finance and XBRL Can Restart Sustainable Growth’
January 10th, 2010 by Paul
The Dragon App for the iPhone works pretty well too — it seems faster and almost as accurate as V10 of the full program on my PC, although as someone who was trained to write on a keyboard, I’m more comfortable typing — even though I think my writing may sometimes be better when it’s dictated first and then manually edited. Continue reading ‘Commented on “A VC”’
January 5th, 2010 by Paul
Some choices are better made economically, with individuals able to decide for themselves how to maximize their own utility by allocating their own resources as they see fit. Other choices are better made politically, with groups deciding how to allocate their collective resources to maximize their collective utility.
Continue reading ‘Economic Choice vs. Political Choice’
December 28th, 2009 by Paul
We taped this story at the intelligence facility responsible for passenger manifest information. Given the focus of attention on the use of intelligence about passengers in recent days, the choice of location seems all too prescient. The reason we chose the location was to illustrate the point of the story: the homeland security budget process was broken and needed to be fixed. Continue reading ‘What if Some of this Waste Had Instead Gone to Passenger Intelligence IT?’
