Many readers reminded us of what no-one can have failed to hear: that the Congress passed and the President signed a $700B bailout bill in an attempt to avert the meltdown of the US economy. The bill allocates $700 billion to the Treasury Department for the purchase of so-called “toxic assets” that have been weighing down Wall Street balance sheets. This isn’t particularly a tech story, though tech will be affected as will virtually all parts of the economy, and not just in the US. Among the $110B in so-called pork added to the bill to sway reluctant legislators are extensions of popular tax benefits for business R&D and substitute energy, relief for the growing pool of people subject to the alternative minimum tax, and a provision raising the FDIC’s ceiling of guaranteed deposits to $250,000. Some limits were also imposed on executive compensation, though it’s unclear whether they’ll be effective.

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Iddo Genuth writes “Researchers at the Surface Science Laboratory at Universidad Autonoma de Madrid have created an ultrasmooth mirror that could be used to create a revolutionary new atomic microscope within the next several years. The new atomic microscope — using helium atoms for imaging — has the potential to provide the same resolution as existing electron microscopes but without many of the problems which have plagued them for years.”

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Filed under: Economic data, Housing, Federal Reserve, Financial Crisis

Ever since this mortgage mess started I’ve been wondering what lit this catastrophic fire that has already destroyed so many major financial institutions, as well as the lives of millions of Americans who have lost their homes to foreclosures. While we’ve talked about the abuses of the mortgage mess, the true culprit is the simple money that was made available.

An asset bubble needs simple money in order to inflate the bubble and today’s New York Times makes a good case that a 2004 rule change by the SEC gave the green light to major U.S. investment companies. This rule change lit the match that fueled this entire mess. So let’s take a look at what the change is and how failures to use the tools available to the SEC led to our current disaster. And, by the way, our current Treasury secretary, Henry M. Paulson, Jr., headed Goldman Sachs (NYSE: GS) at the time of this disastrous rule change. Goldman was one of the five investment banks that pushed for this change.

In 2004, investment bankers wanted an exemption from an old tried-and-true regulation that limited the amount of debt they could take on. They thought they were grown ups who should be trusted to know how much risk they could take on and how they would control this risk to preserve their companies. Five commissioners of the SEC decided to believe them and quietly changed capital rules freeing up the companies to make their own debt level decisions. To make matters worse, they established a program that let these banks police themselves.

Continue reading Rule change that blew up the banks

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The New York Times has an interesting tool for reviewing the debate. Alongside the actual video, there is a transcription (which you can click on to go to that section of the video), a search tool (that counts the number of usages by each candidate), a topic segmentation view, and even a fact checker that links to corrections.

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An anonymous reader writes “Cameron Freer, an instructor in pure mathematics at MIT, is working on an intriguing project called vdash.org (video from O’Reilly Ignite Boston 4): a math wiki which only allows true theorems to be added! Based on Isabelle, a free-software theorem prover, the wiki will say all of known mathematics in a machine-readable language and verify all theorems for correctness, thus providing a knowledge base for interactive proof assistants. In addition to its benefits for education and research, such a project could reveal undiscovered connections between fields of mathematics, thus advancing some fields with no further work being necessary.”

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