City of Glasgow Crash

I was interviewed last week by Share Radio in their History of Booms, Busts and Bubbles series about the City of Glasgow Bank crash in 1878. You can listen to the interview by clicking here. I cover this collapse at length in my book Banking in Crisis and I have co-authored a paper with Graeme Acheson on the bank's failure.

How Valuable Are Connections?

Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms. Below is the paper's abstract and the full paper is available here . The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small ne...

Bitcoin Bubble?

According to Robert Shiller , speaking at Davos, Bitcoin is a perfect example of a bubble - story here . Shiller sees Bitcoin as a backwards step in the evolution of money. George Selgin , a free banker, takes an opposing view - click here . Although he doesn't believe that Bitcoin is money, he sees its development as a fascinating turn in the evolution of money. In particular, he lauds the fact that Bitcoin production is constrained and cannot be infinite. There is a short video below where Bitcoin explain how it works.

Facebook

My previous posts ( here and here ) on Facebook indicated that I thought Facebook stock was a poor investment. Yesterday Facebook made its maiden quarterly report to the market and investors did not like what they heard. Facebook shares were floated at $38. In after-hours trading yesterday, they were trading at $23.75! The Daily Telegraph's coverage of Facebook's maiden financial report is available here .

Finance: Past, Present and Future

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