Random Links XXXIV
Mexico Downfall & Oil Production:
Black Market Chinese Credit:
Bank Failures and C&D Loans:
Capital Gains & Inflation:
Dollar Crash Watch:
Robotic Nation Watch:
Newspapers & Category Error:
The distinction between journalism – i.e., creation & dissemination of a record of newsworthy events – and newspapers (the mere medium whereby said recordation & dissemination has historically occurred) is an important one. Perhaps focusing on “save the newspapers” – rather than “save journalism” – is a category error.
Apparently the recent increase in spreads may not have been driven by default fears.
US Sovereign Default:
Interesting to see this idea getting more play. Salmon’s point re. hedgies & self-fulfilling bond haircuts is interesting to consider – once the bond market starts to incorporate “haircut risk” into (decreased) bond prices, and those who originally bought the bonds have already sold them off at a loss to speculators plying the moral-hazard trade (i.e., buying bank bonds well below par, in hopes that the USG will redeem them at par) the case for actually making whole those owning the bonds at the time of the haircut becomes much weaker. The bonds’ original holders, who’d actually bought on the expectation of little or no loss, will have already taken losses, so there’s no point in bailing them out; and of course, a bailout of moral-hazard-trade bondholders would be indefensible (certainly politically – taxpayers bailing out hedge funds – and probably morally as well (such bondholders knew what they were getting into, and – as with shareholders who were basically speculators – are therefore undeserving of any bailout).