links for 2010-04-28
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FS: "When Goldman Sachs noticed a pattern of regular losses in its mortgage book at the end of 2006, it decided to start going short, in a move which helped to position it as the most successful bank in the financial crisis. The markets have learned their lesson: now that Greece and Portugal have been downgraded, the rush to the exits is palpable: the flight to quality is on, and bond yields in the European periphery are going stratospheric.... The trick about going short an imploding asset class, of course, is that it only works if you’re in the minority. If everybody is doing it, you just get overshooting asset markets and chaos — which is what we’re seeing now. As far as the financial markets are concerned, if any bailout comes now, it’ll be too late: no country can sustain Greece’s combination of funding costs and debt-to-GDP ratio, no matter how much German money it burns through..."
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BB: "This morning the New York Times published a story about the “epistemic closure” debate that I commented on earlier. Unfortunately, there was a small error in the Times that I wish to correct. It says that I was fired by the Heritage Foundation for writing a book critical of George W. Bush’s abandonment of conservative principles. In fact, it was another conservative think tank called the National Center for Policy Analysis that fired me, which the Times reported when it happened in 2005. That said, I don’t mean to imply that Heritage is innocent of enforcing a doctrinaire approach to conservative thought that is at the heart of the epistemic closure debate..."
