Information about finance, the economy and business. Entertaining and informative. Seeking Alpha Certified Mark Sunshine Chairman & CEO
  1. Consumer Credit Needs Common Sense Reform

    Pres­i­dent Obama’s effort to reform the bank­ing sys­tem doesn’t address the system’s biggest prob­lem which is how con­sumer credit is under­writ­ten in the United States. With­out excep­tion, no mate­r­ial con­sumer loan is made in Amer­ica with­out the borrower’s credit bureau first being pulled by prospec­tive lenders and a credit score used to clas­sify the bor­rower as good, bad or mid­dle risk. Credit scores are sup­posed to accu­rately pre­dict the prob­a­bil­ity of default by con­sumers, but in prac­tice credit scores don’t pre­dict much of any­thing. Banks blindly rely upon the junk put out by con­sumer credit rat­ing agen­cies and are get­ting burnt by ignor­ing the most basic rule of under­writ­ing which is to know their cus­tomer. While banks know borrower’s credit scores and infor­ma­tion on the credit bureau that isn’t the same thing as know­ing their cus­tomer or things like their customer’s assets, lia­bil­i­ties and earn­ing power. [read full story]

    Posted in: BANKS, Credit Crisis, economy, Finance, Obama, Politics, Public Policy, REGULATION, Regulatory Reform
  2. How Did Economists Blow It? Part 3 – The Assumed Markets Theory

    Two week­ends ago Paul Krug­man explained in a New York Times Mag­a­zine arti­cle that many econ­o­mists can’t fore­cast the econ­omy because they have a cultish belief in the nearly always wrong effi­cient mar­ket the­ory. Mr. Krugman’s solu­tion, an aca­d­e­mic exor­cism where econ­o­mists renounce their loy­alty to the effi­cient mar­ket the­ory and swear alle­giance to neo-Keynesianism, has cre­ated quite a stir in the pro­fes­sion and prompted a num­ber of per­sonal and pro­fes­sional attacks on Mr. Krug­man. Unfor­tu­nately, both Mr. Krug­man and the effi­cient mar­kets believ­ers are both wrong. The the­ory is cor­rect but the con­di­tions nec­es­sary for the effi­cient mar­kets the­ory to work don’t exist. [read full story]

    Posted in: Credit Crisis, economy, New York Times, Paul Krugman, Public Policy, REGULATION
  3. Playing The Patterns — A Guest Article By Phil Davis

    The below is a guest arti­cle from Phil Davis of, one of the fastest-growing stock and option trad­ing newslet­ters on the Web.  Phil will be my spe­cial guest on Saturday’s Sun­shine Report, my weekly radio show which runs from 12 PM to 2 PM on Boston WWZN 1510 and is simul­cast on I know you […] [read full story]

    Posted in: economy, Finance, Guest Blog, Phil Davis, Stock Trading
  4. How Did Economists Blow It (Part 2)? – They Missed The Negative Externalities of America’s Limited Liability Society

    Paul Krugman’s New York Times Mag­a­zine arti­cle of Sep­tem­ber 6th main­tains that exter­nal­i­ties are the most impor­tant fac­tor in mar­ket fail­ures, but then never con­sid­ers whether or not large “exter­nal­i­ties” caused the fail­ures of 2007. By ignor­ing exter­nal­i­ties, the usu­ally bril­liant Mr. Krug­man illus­trates why econ­o­mists didn’t see the mar­ket crash and Great Reces­sion. The unin­tended and unrec­og­nized effects of neg­a­tive exter­nal­i­ties were prob­a­bly the largest fac­tor that con­tributed to the sum­mer of 2007crash, yet econ­o­mists vir­tu­ally ignore these cul­tural and soci­o­log­i­cal phe­nom­ena that almost resulted in eco­nomic sep­puku. [read full story]

    Posted in: economy, Finance, New York Times, Paul Krugman, Politics, Public Policy
  5. $11 Trillion In Debt — Who Cares? – A Guest Post By James Sunshine

    OK…I confess…James Sun­shine is my son. He is a fresh­man at Emory Uni­ver­sity and wrote the below op/ed for the Emory Wheel. Of course I am very proud of his work. He says that he writes bet­ter than his Dad and that he is smarter. What do you think? He may be right!! As the national […] [read full story]

    Posted in: China, Economic Statistics, economy, Finance, Guest Blog, James Sunshine
  6. Paul Krugman Gets It Really Wrong In His Analysis Of The Economics Profession

    Paul Krugman’s New York Times Mag­a­zine arti­cle explain­ing the dis­mal state of the eco­nom­ics pro­fes­sion is itself an object les­son in what is wrong with the eco­nom­ics pro­fes­sion.  While Mr. Krug­man is one of the most tal­ented econ­o­mists alive, this arti­cle isn’t an exam­ple of Mr. Krug­man at his best.  Instead of try­ing to fig­ure […] [read full story]

    Posted in: Credit Crisis, economy, Finance, New York Times, Paul Krugman, Politics, Public Policy
  7. W, V, U, L or Z: What Direction Is The Economy Going?

    Almost every day I am asked about the eco­nomic recov­ery and whether or not it is sus­tain­able.  Peo­ple ask because there is a con­stant bar­rage of eco­nomic pre­dic­tions by econ­o­mists that pre­tend that they know what will hap­pen in the future even thought they still can’t fig­ure out what hap­pened in the past.  Lis­ten­ing to econ­o­mists […] [read full story]

    Posted in: Economic Statistics, economy, Public Policy
  8. The Hyper-Inflation Myth

    Con­ven­tional wis­dom is that the Fed’s print­ing presses are run­ning over­time and the econ­omy is awash with liq­uid­ity.  Just yes­ter­day the National Asso­ci­a­tion for Busi­ness Eco­nom­ics reported that almost half the econ­o­mists they sur­veyed believed that Fed­eral Reserve Pol­icy is infla­tion­ary.  Too bad the NABE sur­veyed econ­o­mists and con­ven­tional wis­dom are wrong. Econ­o­mists, pun­dits and jour­nal­ists […] [read full story]

    Posted in: BANKS, Economic Statistics, economy, Federal Reserve, Finance, Inflation, monetary policy, Money Supply
  9. When Things Got Tough Hank Paulson Went Skiing

    Hank Paul­son said the unimag­in­able last week. He tes­ti­fied that he was off on ski­ing when he had his famous tele­phone call with Ken Lewis where he strong armed Lewis and Bank of Amer­ica to com­plete the acqui­si­tion of Mer­rill Lynch. Lewis had pre­vi­ously tes­ti­fied that he thought that Paul­son was on a bike ride […] [read full story]

    Posted in: Credit Crisis, economy, Executive Fitness, Finance, Politics, Public Policy
  10. Small Business Lending Programs Aren’t Working and Need To Change

    Pro­grams to get small busi­ness lend­ing mov­ing aren’t work­ing. Instead of a resur­gence of small busi­ness lend­ing the sit­u­a­tion is get­ting worse. Last week the Wall Street Jour­nal reported that the White House was search­ing for ways to help small busi­ness by unlock­ing frozen credit. This week CIT, the largest small busi­ness lender in the U.S., […] [read full story]

    Posted in: Credit Crisis, economy, Finance, Obama, Politics, Public Policy, Robert Blum, Small Business Lending