Language of the new economy ala CNN

CNN has come up with an interesting list of new terms to understand our new economy. Here is an example:

Toxic asset: An asset on a company's balance sheet that is difficult to value or sell because the market for those assets has dried up. Companies have struggled to sell many loans and asset-backed securities, like those backed by mortgage and credit card loans, because of worries that the borrowers of the underlying loans will default. Toxic assets have plagued companies with steep losses, oftentimes resulting in diminished stock prices.

When will the media learn?

Bank Nationalization: What Is It? Should We Do It?

Given the continuing pressure and need to inject public funds into the stressed banks I am convinced that the time has come for the implementation of a 21st Century: hybrid form of Nationalization. As Douglas J. Elliott argue:

Although nationalization is a serious and extreme step with high social and financial costs...full nationalization may be needed only as a last resort for one or two of the nation’s larger banks, with more widespread nationalization unlikely...it may make sense for the government to partially nationalize additional large banks now, in an effort to bring some certainty to the markets...

Lets call it Finationalizaion !

Three Cheers for Treasury’s Plan for Regulating Systemic Risk

The Treasury Department released the first part of its plan to fix the financial system, which concentrates on reducing systemic risk. The Treasury’s suggestions, if enacted into law, would go a long a way toward achieving this objective. One of the central elements in the plan is to establish a systemic risk regulator.

I would agree that is a step in the right direction.

Bursting of the Bubble

The Brookings Institute sums it up:

Low interest rates fueled an explosion of sub-prime mortgages; securitization of these assets masked credit risk. In 2008, the housing bubble burst with declining home values causing a financial crisis to hit U.S. banks, financial institutions, the auto industry...

Are these the real causes? To what extent was this driven by systemic deficiencies in a consumption driven high dept economic system?

WHY Toxic

All this talk about Toxic Assets has anyone asked why, what and who Pays?
This blog explores the root causes of the issue, the culprits, solutions and their evaluation, follows what the various banks are doing and collects all the wacky stories related to the topic. Enjoy !!