The Economist: Survey of Financial Risk

The latest issue of The Economist magazine includes a special report on financial risk. The videographic shown below illustrates the manner in which banks (and others) misread financial risks in the period leading up to the crisis. The assumption that financial assets would adhere to a normal distribution, or bell curve, proved to be false and the distribution had fatter tails than models had predicted. The videographic is a well illustrated basic account of this fundamental misreading of financial risk in recent years. Read this article for more details.

Can Forced Recapitalization Solve the “Too Big To Fail” Problem?

Can Forced Recapitalization Solve the “Too Big To Fail” Problem?

From the perspective of an outside observer, the debate over financial regulatory reform can seem like nothing more than the typical Beltway chatter full of shrill voices and political posturing. While the current debate is not free of the usual nonsense, it is important to note that the discussion has at least refocused on the “too big to fail” problem rather than fixating on consumer protection issues that consumed a great deal of time last year. There is nothing wrong with inquiries into whether credit card and overdraft fee regulations should be changed, but action in such areas will do nothing to prevent the next financial meltdown. Read this article for more information on a proposal to “bail in” banks in the event of a crisis.

Will Steve Jobs Deliver Salvation for Newspapers?

Will Steve Jobs Deliver Salvation for Newspapers?

Over the past few years, many obituaries of the newspaper business have been written. The growing tsunami of instant information combined with increasing accessibility to this information has shaken the comfortable “moat-like” business model of newspapers to the core. Few other case studies better define Joseph Schumpeter’s concept of “creative destruction”. Can Steve Jobs’ iPad save the industry?

Newspapers: Era of Unprecedented Plenty?

Newspapers: Era of Unprecedented Plenty?

Barron’s published an interesting article this weekend by Jonathan A. Knee, director of the Media Program at Columbia Business School and co-author of The Curse of the Mogul. (Note: Mr. Knee’s co-author for the book is Bruce Greenwald who has been discussed in the past.) Mr. Knee’s article pertains directly to an topic that appeared here in May regarding newspapers and “creative destruction”. Read this article for more details.

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