April 09, 2008

Wednesday Reading

Greenspan self-defense edition...

Apr 9, 2008 12:02:26 PM | Miscellaneous

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Closet Indexing: Worse Than We Thought? We've used this space to draw attention to an under-appreciated problem in financial services: big, diversified mutual funds that behave more like their underlying benchmarks than true instruments of "active management." (Click here for an August post that links to a couple other items we've written on this topic.) In the March issue of the Exchange-Traded Funds Report (subscription required), we ran across an intriguing passage in the edited transcript of a roundtable discussion of the ETF marketplace. Here's the exchange, between a questioner and panelist Joe Keenan of Bank of New York Mellon (emphasis added in bold): Audience Member:...
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Two Housing Crises With the whole world watching, the U.S. housing market continues to weaken. Official Washington's insistence that the bottom was in sight many months ago seemed like Wonderland nonsense even then. Today it's simply laughable. Inevitably, the financial wreckage has been extensive: consumer spending, Wall Street's too-clever innovations, household and corporate balance sheets, employment...all have taken major hits. And the bludgeoning isn't over. That's our acute housing crisis: The rapid, ongoing decline is residential real estate prices. But there's another, more chronic crisis out there: Our excessive allocation of resources to residential real estate in the first place. Partly a function...