Bailout

A real Goldman Sachs scandal

Posted on May 19, 2010
When Matt Taibbi published his famous "vampire squid" article about Goldman Sachs, people accused him of throwing everything and the kitchen sink at the company; today's broadside from the NYT feels similar. It's basically the same story, repeated many times: Goldman had clients who were invested in X going up, and yet at the same time Goldman had investments which would benefit from X going down.

A granular look at finance job losses

Posted on May 19, 2010
Many thanks to Mark Beauchamp of EMSI, who has provided a very granular breakdown (Excel file) of exactly where the job losses are in the finance and insurance industries. The numbers cover 2007, 2008, and 2009: so far the data for 2010 are too inaccurate to be useful...

Has Wall Street escaped job losses?

Posted on May 19, 2010
Mike Mandel has the chart of the day, asking why the finance industry has lost so many fewer jobs than much of the rest of the private-sector economy:

Why Spain?s in worse shape than Greece

Posted on May 19, 2010
Note the circular reasoning in Martin Wolf's latest column:

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Counterparties

Posted on May 18, 2010
HAMP Update: Twice As Many Homeowners Kicked Out Of Obama Foreclosure Program As Given Permanent Relief -- HuffPo

Chart of the day, Goldman Sachs edition

Posted on May 18, 2010
On this day in 2009, Goldman Sachs closed at $141.85 per share, adjusted for dividends; since then, it's announced $24 per share in earnings. It's now trading at $137. Somehow, the bank has managed to lose value over the past 12 months, even as the S&P 500 has risen by 25%...

Should wine writers be experts?

Posted on May 18, 2010
Spencer Bailey has a piece on old-school wine journalists vs new-school bloggers, in which he essentially says that the former are qualified to do their jobs, while the latter have freshness and an appealing voice. The oddest part of the column, for me, was the emphasis on the qualifications of the old guard:

Why people invest in stocks

Posted on May 18, 2010
Eric Falkenstein has a great blog entry on the relationship between risk and return, riffing off my post on what stock-market volatility should do to investors' asset allocation. Essentially, he says, the idea that returns increase with risk is simply wrong:

Is the European crisis good for America?

Posted on May 18, 2010
Tim Duy has a provocative thesis: that the Europe crisis is good for the US economy, at least for the next few quarters.

How to attack the mortgage-interest tax deduction

Posted on May 18, 2010
Barbara Kiviat is right that (a) it makes perfect sense to abolish the mortgage-interest tax deduction, and that (b) it's not going to happen any time soon. But rather than get defeatist about this, I think the answer is to take Paul Volcker's advice and embark on an ambitious root-and-branch overhaul of the way that debt is treated everywhere in the tax code...

Counterparties

Posted on May 17, 2010
Overnight markets: Sliding -- Alphaville

More arguments for box-office futures

Posted on May 17, 2010
Last week, I published an op-ed in favor of movie box-office derivatives, which was followed up by an argument against them from Joshua Brown. Brown gives six reasons why box-office futures are a bad idea, in order:

The farce of structured credit ratings

Posted on May 17, 2010
Structured credit ratings history repeats itself, the first time as tragedy, the second time as farce:

Volatility: The flipside of moral hazard

Posted on May 17, 2010
Jim Surowiecki today looks at the flipside of the moral hazard trade: if you can't count on governments to bail you out in extremis, then you're likely to have volatile and unpredictable markets.

Why financial reform won?t hurt employment

Posted on May 17, 2010
Meredith Whitney is trying to make an updated case that we can't pass financial reform because it would cost jobs. I don't buy it, partly because I simply don't believe her numbers, which kick off with two interlinked claims:

Counterparties

Posted on May 15, 2010
Europe = Marge Simpson -- Ritholtz

Counterparties

Posted on May 14, 2010
Alex Tabarrok on the fragility of CDO models. Excellent -- MR

Lies, damn lies, and oil spill statistics

Posted on May 14, 2010
Justin Gillis has a great story about how no one with the ability to do anything about it seems remotely interested in measuring the severity of the oil spill in the Gulf of Mexico. The ubiquitous 5,000-barrels-a-day number seems to be a massive underestimate, and the stated reason for not getting a better figure is weak indeed:

Regulation by litigation

Posted on May 14, 2010
Nelson Schwartz and Eric Dash win the Cryptic Anonymous Quote award for the kicker to their story on a possible Wall Street settlement which would include, essentially, everyone:

Why it makes sense to fear Greek default

Posted on May 14, 2010
Is everybody overstating the consequences of a Greek default and/or devaluation? The Economist points out that Europe has seen quite a few defaults in recent decades (Russia, Poland) and also break-ups of currency unions (Czechoslovakia, Yugoslavia) -- and that none of these events caused a lot of lasting damage.

When risk becomes uncertainty

Posted on May 14, 2010
It's going to be another panicky weekend in Europe after today's torrid market action: the positive effects of last weekend's emergency meetings clearly didn't last even until Friday, and the ever-weakening euro is now dragging down the continent's bourses...

The silliest derivatives probe yet

Posted on May 14, 2010
The civil and criminal investigations of Evil Financial Products Which Destroyed The World have now officially reached the stage of farce, with "federal regulators and state officials" reportedly investigating the fact that banks traded municipal CDS at the same time as underwriting municipal bonds.

Counterparties

Posted on May 13, 2010
Lean hogs in gold: the only financial indicator that matters -- TBI

The CDO-prosecution bandwagon gathers more steam

Posted on May 13, 2010
Louise Story says that Andrew Cuomo, NY attorney general and would-be governor, is piling onto the CDO bandwagon, sending subpoenas to eight (count 'em) banks, asking if they misled the ratings agencies when they were putting together their structured products...

How PR people break the blogosphere

Posted on May 13, 2010
Mike Arrington has a classic Arrington rant today, directed at Fortune.com and entitled "You?re Welcome, You Bastards". To cut a long story short, Fortune's PR people got in touch with Arrington to flack a couple of excerpts they were running from David Kirkpatrick's new book...

In search of an everything bagel

Posted on May 13, 2010
This morning I worried that a set-it-and-forget-it buy-and-hold investment strategy of any description is prone to failure -- but at the same time it's fair to say that the track record of people trying to do anything more active is unimpressive. So, in a world where stocks look far too risky to invest in, what should people do with their money?

How much information does Cuomo have?

Posted on May 13, 2010
Joe Weisenthal points out that we've diverged in unusual directions when it comes to the story about Andrew Cuomo investigating the banks over providing misleading information to the ratings agencies. He's normally the libertarian caveat-emptor guy, but thinks this could be a big deal:

Pimco?s risk-filled global outlook

Posted on May 13, 2010
Mohamed El-Erian has released his 8-page summary of the medium- and long-term outlook for the global economy, and while there are few surprises, it makes for a most worthwhile read.

What was special about the Dead Presidents?

Posted on May 12, 2010
The Dead Presidents CDOs now reportedly being investigated by the Justice Department were not your garden-variety synthetics:

Counterparties

Posted on May 12, 2010
Michelle Vaughan's wonderful oyster prints are now on 20x200, buy the pair -- Salty, Slurp

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