http://financeprofessorblog.blogspot.com/Finance News, Academic articles, and other things from FinanceProfessor.com. Remember Finance is not only important, but it is also fun!!!ennoreply@blogger.com (FinanceProfessor)Sun, 12 Jul 2009 18:33:19 PDTBlogger http://www.blogger.com1610125Financeprofessorcomhttp://feedburner.google.comThis is an XML content feed. It is intended to be viewed in a newsreader or syndicated to another site.http://feedproxy.google.com/~r/Financeprofessorcom/~3/fCHuEupdoHc/tim-geithner-inteview-on-cnn.htmlvideoregulationnewseconomynoreply@blogger.com (FinanceProfessor)Sun, 12 Jul 2009 18:33:19 PDTtag:blogger.com,1999:blog-7332340.post-4485391259440515064Here is the video from the CNN interview with Treasury Secretary Geithner that I mentioned on Twitter.Embedded video from CNN Video0http://financeprofessorblog.blogspot.com/2009/07/tim-geithner-inteview-on-cnn.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/6sIkpxq8nic/geithner-defends-white-house-plan-for.htmlderivativesregulationnoreply@blogger.com (FinanceProfessor)Fri, 10 Jul 2009 08:55:01 PDTtag:blogger.com,1999:blog-7332340.post-7292158877811363992Geithner 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"1http://financeprofessorblog.blogspot.com/2009/07/geithner-defends-white-house-plan-for.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/SE1sNPsAC2c/he-fall-of-toxic-assets-plan-real-time.htmlregulationbanksAccountingnoreply@blogger.com (FinanceProfessor)Thu, 09 Jul 2009 14:46:14 PDTtag:blogger.com,1999:blog-7332340.post-8972293553242566788Have 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 holding0http://financeprofessorblog.blogspot.com/2009/07/he-fall-of-toxic-assets-plan-real-time.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/id0F5jwo7kY/cash-flow-better-way-to-know-your-bank.htmlcashAccountingnoreply@blogger.com (FinanceProfessor)Thu, 09 Jul 2009 13:38:48 PDTtag:blogger.com,1999:blog-7332340.post-528858583289094666On 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 explain0http://financeprofessorblog.blogspot.com/2009/07/cash-flow-better-way-to-know-your-bank.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/B0Jur-c3qaI/bernankes-and-feds-hardest-task-taking.htmlFedinflationnoreply@blogger.com (FinanceProfessor)Wed, 08 Jul 2009 08:17:27 PDTtag:blogger.com,1999:blog-7332340.post-237714096121371576Bernanke'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.'"0http://financeprofessorblog.blogspot.com/2009/07/bernankes-and-feds-hardest-task-taking.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/YJ-Qa5T7JGI/ssrn-subprime-crisis-and-board-in.htmlnoreply@blogger.com (FinanceProfessor)Tue, 07 Jul 2009 12:15:31 PDTtag:blogger.com,1999:blog-7332340.post-980926812750005340SSRN-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! :)0http://financeprofessorblog.blogspot.com/2009/07/ssrn-subprime-crisis-and-board-in.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/vTH0SHXlAiI/tweets-of-week-post-july-4th-edition.htmltweets of the weeknoreply@blogger.com (FinanceProfessor)Tue, 07 Jul 2009 11:16:06 PDTtag:blogger.com,1999:blog-7332340.post-2268462795880147373Tweets 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 sources0http://financeprofessorblog.blogspot.com/2009/07/tweets-of-week-post-july-4th-edition.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/nSrmSmoN7R0/new-evidence-on-foreclosure-crisis.htmlnoreply@blogger.com (FinanceProfessor)Tue, 07 Jul 2009 10:12:06 PDTtag:blogger.com,1999:blog-7332340.post-791442965781160566Here 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? Low0http://financeprofessorblog.blogspot.com/2009/07/new-evidence-on-foreclosure-crisis.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/D0dqorbsXFo/heres-real-reason-dollar-is-screwed.htmlnoreply@blogger.com (FinanceProfessor)Tue, 07 Jul 2009 09:46:23 PDTtag:blogger.com,1999:blog-7332340.post-8922004457320454042While 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 that0http://financeprofessorblog.blogspot.com/2009/07/heres-real-reason-dollar-is-screwed.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/6HRZm4BfXI4/are-you-ready-to-manage-in-irrational.htmlnoreply@blogger.com (FinanceProfessor)Tue, 07 Jul 2009 09:42:26 PDTtag:blogger.com,1999:blog-7332340.post-780870007510537613Are 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 motivating0http://financeprofessorblog.blogspot.com/2009/07/are-you-ready-to-manage-in-irrational.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/agKv0bA3u6I/public-pensions-cook-books-wsjcom.htmlnoreply@blogger.com (FinanceProfessor)Mon, 06 Jul 2009 07:52:46 PDTtag:blogger.com,1999:blog-7332340.post-4194068230207646361Sometimes 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 raise0http://financeprofessorblog.blogspot.com/2009/07/public-pensions-cook-books-wsjcom.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/ynuS77HkIhU/rangers-borrow-money-from-mlb-mlb-yahoo.htmlnoreply@blogger.com (FinanceProfessor)Thu, 02 Jul 2009 22:50:31 PDTtag:blogger.com,1999:blog-7332340.post-1985453573412022567Rangers 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 was0http://financeprofessorblog.blogspot.com/2009/07/rangers-borrow-money-from-mlb-mlb-yahoo.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/ITmewzBzHXE/co2-traders-hedging-against-climate.htmlderivativesnoreply@blogger.com (FinanceProfessor)Thu, 02 Jul 2009 08:26:53 PDTtag:blogger.com,1999:blog-7332340.post-1757825379812811575A 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’ Certified1http://financeprofessorblog.blogspot.com/2009/07/co2-traders-hedging-against-climate.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/TpO5qYK6NR0/jenkins-too-bernanke-to-fail-wsjcom.htmlnoreply@blogger.com (FinanceProfessor)Wed, 01 Jul 2009 05:45:41 PDTtag:blogger.com,1999:blog-7332340.post-1596195195789030126Well 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 to0http://financeprofessorblog.blogspot.com/2009/07/jenkins-too-bernanke-to-fail-wsjcom.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/4t6iGduh-j8/dollar-cost-averaging-famafrench-forum.htmlnoreply@blogger.com (FinanceProfessor)Wed, 01 Jul 2009 05:41:59 PDTtag:blogger.com,1999:blog-7332340.post-2262504268175584022A 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 cost0http://financeprofessorblog.blogspot.com/2009/07/dollar-cost-averaging-famafrench-forum.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/bRbpZFRqcqE/armstrong-celebrity-directors-targeted.htmlnoreply@blogger.com (FinanceProfessor)Tue, 30 Jun 2009 15:38:16 PDTtag:blogger.com,1999:blog-7332340.post-4439238589646165701Will talk about this after the workout, but since it has both Lance (Asrmstrong) and David (Becher) in it, it has to be a good article! Armstrong, ‘Celebrity’ Directors Targeted in SEC Rule (Update1) - Bloomberg.com: "Recruiting celebrity directors can bring benefits, such as helping a company burnish its image or pursue new business opportunities, said David Becher, an associate finance0http://financeprofessorblog.blogspot.com/2009/06/armstrong-celebrity-directors-targeted.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/UBAERq_Ekd8/tweets-of-week-june-22-29.htmltweets of the weeknoreply@blogger.com (FinanceProfessor)Mon, 29 Jun 2009 14:05:34 PDTtag:blogger.com,1999:blog-7332340.post-8696538657359733638BTW I will fix the links and make it look better later....getting something online better than zero...Tweets of the Week!Lots of good ones this week. Take a look at some. Not in any real order. researchpuzzler RT @BrightScope: Steven Covey would be proud: The 7 habits of highly suspicious hedge funds. http://bit.ly/Txqf7researchpuzzler investment news on twitter and compliance issues for0http://financeprofessorblog.blogspot.com/2009/06/tweets-of-week-june-22-29.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/6rK2041dm8A/no-such-thing-as-free-lunch-revisited.htmlBehavorial Financemarket efficiencynoreply@blogger.com (FinanceProfessor)Mon, 29 Jun 2009 10:10:15 PDTtag:blogger.com,1999:blog-7332340.post-4224938528186825763Whether you believe markets are efficient or not, this one has something for you. It will be a definte "MUST read" for my students this coming semester. It is by Ed Glassnor of Harvard. No Such Thing as a Free Lunch, Revisited - Economix Blog - NYTimes.com: "The absence of arbitrage possibilities does not imply that market prices always and everywhere reflect some sort of fundamental values.0http://financeprofessorblog.blogspot.com/2009/06/no-such-thing-as-free-lunch-revisited.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/UNagRHTs5nY/using-psychology-to-save-you-from.htmlBehavorial Financenoreply@blogger.com (FinanceProfessor)Sun, 28 Jun 2009 22:48:53 PDTtag:blogger.com,1999:blog-7332340.post-3291927899732757492Seems like everywhere we look we see another Behavioral Finance Story. This story (also in audio format) is from NPR:Using Psychology To Save You From Yourself : NPR:"...devotees of behavioral economics — a school of economic thought greatly influenced by psychological research — which argues that the human animal is hard-wired to make errors when it comes to decision-making, and therefore0http://financeprofessorblog.blogspot.com/2009/06/using-psychology-to-save-you-from.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/EBnROMaUNR8/heres-how-community-reinvestment-act.htmlregulationHousing bubbleeconomynoreply@blogger.com (FinanceProfessor)Sat, 27 Jun 2009 20:57:00 PDTtag:blogger.com,1999:blog-7332340.post-15147068463799758The following is John Carney's explanation of how he now believes the Community Reivestment Act of 1977 helped lead to the housing bubble.Here's How The Community Reinvestment Act Led To The Housing Bubble's Lax Lending: "Contrary to my initial conclusion, the evidence is overwhelming that the CRA played a significant role in creating lax lending standards that fueled the housing bubble."It is5http://financeprofessorblog.blogspot.com/2009/06/heres-how-community-reinvestment-act.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/ZYXvAnVi4wc/time-out-for-laugh.htmlfunnoreply@blogger.com (FinanceProfessor)Sat, 27 Jun 2009 08:30:27 PDTtag:blogger.com,1999:blog-7332340.post-8048928883653999744LOW FINANCE CONTENT...but if you are a professor who does research in any field, I am sure you will find this funny.Someone left this site as a comment on an old post. The cartoons are really funny. Go ahead click on it!High & Low Impact Factors- "Life in Research" Cartoon | VADLO Biology Databases Search Engine1http://financeprofessorblog.blogspot.com/2009/06/time-out-for-laugh.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/Kg1NkhUrpgs/holders-of-season-tickets-are-having.htmlnoreply@blogger.com (FinanceProfessor)Fri, 26 Jun 2009 13:48:18 PDTtag:blogger.com,1999:blog-7332340.post-2882449108680471038Is it the economy or the product? Either way the teams (and likely MLB in general) have some work to do!Teaching point: all too often students ask why should the company care if the stock price in teh secondary market goes up or down. The standard answer includes a mention of what happens when they want to sell more shares in a SEO. This is quite similar. Here the article focuses on the0http://financeprofessorblog.blogspot.com/2009/06/holders-of-season-tickets-are-having.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/D-EFnXf5umY/news-from-1930.htmlnoreply@blogger.com (FinanceProfessor)Fri, 26 Jun 2009 12:36:42 PDTtag:blogger.com,1999:blog-7332340.post-1803947508875460259Fascinating! A blog that is redoing the news from 1930. Eerily similar in some ways. News from 1930: "In hindsight it's easy to see the optimism then was mistaken and the downturn was worse than expected, but this was impossible to predict at the time. Also, the conferences did some good - they reduced the panic and pessimism of the time, and helped keep employment and wages from plunging as0http://financeprofessorblog.blogspot.com/2009/06/news-from-1930.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/rgPfFoIyNw8/cbc-podcast-on-behavioral-finance.htmlBehavorial Financenoreply@blogger.com (FinanceProfessor)Thu, 25 Jun 2009 08:06:26 PDTtag:blogger.com,1999:blog-7332340.post-6412810712381155546Why good people make bad money decisions.Interesting podcast on Behavioral Finance from the CBC. Definitely want to listen to this one!CBC Radio | Quirks & Quarks | June 20, 2009: "Dr. Richard Thaler, Professor of Economics and Behavioural Science at the Booth School of Business in Chicago is one of the leading researchers in the relatively new field of behavioural economics. This is the field0http://financeprofessorblog.blogspot.com/2009/06/cbc-podcast-on-behavioral-finance.htmlhttp://feedproxy.google.com/~r/Financeprofessorcom/~3/_syBSHT48JY/todays-crystal-ball-award.htmlregulationnoreply@blogger.com (FinanceProfessor)Wed, 24 Jun 2009 13:03:04 PDTtag:blogger.com,1999:blog-7332340.post-8614052186897098690First let me make the typical excuses: "There is so much information out there, sometimes something slips through the cracks and is missed; I was busy; I was out of town then; I was going to but....."Having provided those excuses, let me add that there really is no excuse for my missing Ed Kane's piece for so long. Thankfully, the NY Times had my back and drew it to our attention. Fair Game -0http://financeprofessorblog.blogspot.com/2009/06/todays-crystal-ball-award.html