- Credit Slips | Preferred Stock=Subordinated Debt – “The important thing to notice about the Treasury’s “equity” injection into major financial institutions is that it is equity in name only. The preferred stock the Treasury is taking is at a prescribed dividend (5% for 5 years, 9% thereafter) and has no voting rights. Economically, it is a subordinated loan without a term.”;
- Stumbling and Mumbling | Taleb vs economists – “It looks like we were wrong and Taleb right.
But this isn’t because Taleb had any great insights into the nature of risk. It‘s because he thought banks‘ risk managers were idiots, whilst economists didn’t think so – not even me.
In doing this, however, we were just following economists’ standard procedure – of assuming that agents were if not rational then at least not wholly stupid.”
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