Sunday, August 22, 2010

Former Fed Governor Mishkin Paid $124,000 to Write Glowing Report on Iceland before its Collapse; Mishkin Never Disclosed he was Paid

Former Fed Governor Frederic Mishkin was paid $124,000 in 2006 to write a glowing report on Iceland. He never bothered to disclosed that fact.

Moreover, the title of his report has since been change from "Financial Stability in Iceland" to "Financial Instability in Iceland". What's up with that?

Watch Mishkin squirm in this interview.

VIDEO at the link http://globaleconomicanalysis.blogspot. ... 24000.html

I picked up that video from WC Varones who writes Incompetent paid shill Frederic Mishkin in his own words http://www.wcvarones.com/2010/08/incomp ... shkin.html

In case you were wondering what kind of corrupt idiots are running our entire financial system.

Here's his 2005 take on Too Big To Fail: What, Me Worry? http://www1.gsb.columbia.edu/mygsb/facu ... l.nber.pdf

Then there's his great housing bottom call in April 2007. http://www.reuters.com/article/idUSN2032955920070420

Mishkin Dismisses "Too Big To Fail"

The actual target of that first link above is "How Big a Problem is Too Big To Fail?" http://www1.gsb.columbia.edu/mygsb/facu ... l.nber.pdf

What does the evidence tell us about whether the too-big-to-fail is a bigger problem now than in the 1980s? My reading is quite different than Stern and Feldman’s. The evidence does not support a worsening of the too-big-to-fail problem. To the contrary, the evidence seems to support that there has been substantial improvement on this score.

As has been documented in Ennis, and Malek (2005), after FDICIA was enacted, the banking industry in the United States has returned to profitability, with return on assets that are even higher than in the 1970s . Even more telling is the change in the relative profitability of large and small banks.

In the 1983-1991 period, the largest banks had a return on assets which was less than half that of mid-size banks. After 1991, the return on assets has been quite similar for the largest and mid-size banks, with the largest banks having a slightly higher return on assets. This change could just reflect idiosyncratic features of the recent sample period relative to the earlier period, but an alternative explanation is that the passage of FDICIA has limited the too-big-to-fail problem.

Mishkin droned on and on about bank profits and capitalization ratios. He was hopelessly wrong about both. Miskin simply could not see the bubble in housing or the bubble in leverage and credit on the balance sheets of banks that was allegedly creating all that "profit".

In contrast, I offer this September 30, 2007 flashback: Bank Balance Sheets and Earnings http://globaleconomicanalysis.blogspot. ... nings.html

The above link contains many snips from "Minyan Peter" a former treasurer of a top credit card company and treasurer of one of the largest banks in the Midwest." Here is one such snip.

Bank Earnings 102: The Best of Times, The Worst of Times http://www.minyanville.com/articles/SKF ... ex/a/14058

As much attention as they will get, in the bigger scheme of things, their [the banks'] net incomes this quarter don’t matter. And they don’t matter because of one simple rule for financial services firms:

The income statement is the past. The balance sheet is the future.

Let me repeat it again. The income statement is the past and the balance sheet is the future, especially now.

At the top of a credit cycle, the income statement for a financial institution shows “the best of timesâ€