Central banks like credit swaps,

because they can monitor market participants’ beliefs about credit worthiness.
Oh oh: UPDATE 1-U.S. Treasury CDS hit record wides-CMA DataVision | Markets | Markets News | Reuters
NEW YORK, Nov 24 (Reuters) – The spread or risk premium on
10-year U.S. Treasury credit default swaps hit record wide
levels on Monday, prompted by worries about how the cost of
rescuing [...]

Here is what I learned this week-

there are about 52 million mortgages in the US. About 3 million are not paying. Any government scheme that allows people to write down mortgages that gives the 49 million people who are paying incentive to default early is going to be expensive. But any other scheme will annoy those 49 million [...]

mathmatical sciene as beauty, eh

Beauty Is Truth In Mathematical Intuition: First Empirical Evidence

Here is the upside of the subprime mess

Maybe we can get more of these lenders…
How the subprime good guys give home loans to poor people, strengthen communities, and still make a profit. – By Daniel Gross – Slate Magazine
In a ‘free market’ such lenders would be much more important. And notice that they are for-profit entities.  Such lenders need to use [...]

Yesterday,

I became a citizen.
My wife made the best comment on the financial crisis I have heard in a while.  NPR told us that the Treasury wants the banks to start making profitable loans.  Her comment was: Why don’t the banks want to make them anyway?

Gulp.

Lobbyists Swarm the Treasury for Piece of Bailout Pie – NYTimes.com

Sensible investment advice.

Is Now the Time to Buy Stocks? – WSJ.comEspecially
The average person must end up holding the stocks and bonds that are out there. Therefore, you should only ever buy, sell or rebalance if you’re different than the average person. We all like to think we’re smarter than average, but at least half of us are [...]

My favorite hedge fund quote

Too few shorted enough stock or managed risk prudently. Recent months have made it clear that hedge funds as an industry were, as the wisecrack had it, a pay scheme masquerading as an asset class.

from www.portfolio.com

Be scared.

The 700B for the bank bailouts was simply a big number pulled out of the air.  As far as I can see, the number we will pick for the fiscal stimulus will  probably also pulled out of the air–or more likely, pulled out of which people in the House are the best negotiators. 
/cynicism.

How can so many people be so confused?

Economist’s View: “Stop Lying about Roosevelt’s Record”
Here is my (likely incomplete and confused) summary of the current state of knowledge about the Great Depression.  I am not a macro-economist, but, I did learn some macro.  There is no consensus on how important the New Deal was at reducing the severity of the Great Depression.
The basic [...]