Harvard Professor Jeremy Stein is apparently throwing his hat into the economic humor ring with his latest piece in the Harvard Crimson:
Washington, D.C., May 27, 2025. Just four months into his first term, President Scott P. Brown faces what is rapidly becoming a severe financial crisis, with the collapse yesterday of yet another Stable Wind Farm Trust. The failed institution, Magna-SWIFT, is the largest thus far, with over $90 billion in assets. Rumors also continued to swirl about the condition of the Houston Power House, one of the nation’s largest clearinghouses specializing in weather and power derivatives. Experts warned that a major clearinghouse failure could have devastating implications.
The full article is here. In case it’s not entirely clear, Stein’s point is that it’s entirely possible to take something that could be a reasonable asset (yes, even CDO’s) and have opportunism and other factors cause it to crash and burn. Furthermore, the details that he describes regarding the subsidies and overnight financing and such are pretty representative of what happened in the mortgage-backed securities market. (Though I would eat my hat if Palin ever a. was in charge, and b. decided to subsidize clean energy.) I am a little disheartened to see that a lot of the comments are focused on the plusses and minuses of wind farms, since I am guessing that Prof. Stein chose wind farms as an example of a clearly useful and legitimate asset and didn’t intend for there to be a discussion on how many birds and bats are injured by existing wind turbines. (I do have to admit, however, that “I don’t like bats” might be my favorite out of all of the comments.)
Thanks to Scott Hirleman for the tip- I like when people send me things like this, since there’s only one of me and I miss things even though I basically spend all day reading. 🙂