Bailout

The Fed?s earnings

Posted on January 12, 2010
Neil Irwin has worked out that the Federal Reserve earned $45 billion in 2009, thanks to the steep yield curve that it engineered and its move into higher-risk, higher return securities. This is good news: all that money is being dividended back to the public fisc, keeping the deficit that little bit lower.

Will banks pass on any new fee?

Posted on January 12, 2010
If and when the Obama administration unveils its new tax on banks, will the banks just turn around and pass that extra cost onto consumers? Matthew Yglesias and Ryan Avent both make the case that if big banks raised the cost of banking with them, that would be a feature rather than a bug...

Why do AIG?s executives suddenly covet its stock?

Posted on January 12, 2010
Paul Smalera asks -- but, sadly, doesn't answer -- the big question surrounding AIG's bonus compensation: why on earth are the company's executives specifically asking for it to be paid in worthless AIG stock, when they already got permission from the special paymaster to pay bonuses with a special ?basket? of stock that reflected the value of four profitable AIG divisions?

The Dubai mess

Posted on January 12, 2010
If you think that the Dubai situation has pretty much been resolved with that cash infusion from Abu Dhabi, think again. Paul Whitfield and Vipal Monga explain that nothing really has been cleared up at all, and that there are far more -- and far bigger -- uncertainties surrounding the emirate's finances than most of us had suspected.

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House-price chart of the day

Posted on January 12, 2010
This is my new favorite toy: a fabulous interactive house-price charting tool from the Economist.

Healthcare scatterchart of the day

Posted on January 11, 2010
Frank Hansen has put together this chart from OECD data:

How to get our money back from the banks

Posted on January 11, 2010
Of course it would be great if the big banks, currently making outsize profits thanks to the Fed's zero interest-rate policy, had to pay back some of the enormous fiscal cost of the financial crisis they were largely responsible for causing.

Citi?s US branch network: Doomed to mediocrity

Posted on January 11, 2010
The departure of Terri Dial from Citibank only serves to underline how dysfunctional Citigroup remains, long after Vikram Pandit was meant to have created small-enough-to-manage Citicorp within the larger behemoth. Tellingly, Dial is being replaced by Manuel Medina-Mora, a manager who has succeeded within Citigroup largely by having enough power from day one to do what he wanted, rather than having to navigate Citi's labyrinthine bureaucracy...

Another proposed deaccessioning rule

Posted on January 11, 2010
Judith Dobrzynski has come up with her own version of the Ellis rule when it comes to museums selling off their art. Adrian Ellis's rule is quite elegant:

Why Apple shouldn?t pay a dividend

Posted on January 11, 2010
Brett Arends -- journalist and published author -- is a real thinker, not a blogger.

Sovereign default of the day: Foxwoods

Posted on January 11, 2010
Peter Applebome notes that dire financial situation at Foxwoods casino looks much more like a sovereign default than a run-of-the-mill commercial real-estate deal gone sour:

Counterparties

Posted on January 09, 2010
Neutra Face. Quite possibly the greatest YouTube video of all time. -- YouTube

Counterparties

Posted on January 08, 2010
How vanilla financial options would help prevent seniors being ripped off -- Rortybomb

The next real-estate bust

Posted on January 08, 2010
Now that Roger Lowenstein has published an article in the NYT Magazine headlined "Walk Away From Your Mortgage!", I think we can safely stay that what started as a controversial and minority stance has at this point become thoroughly mainstream. (The corollary is that arguments in favor of paying one's debts are now contrarian...

Social cohesion and sovereign default

Posted on January 08, 2010
Gillian Tett has an interesting column today on the degree to which "social cohesion" determines whether or not a country in fiscal difficulties will end up defaulting on its debts. The Japanese, she says, are used to the idea of sharing the pain, and would probably not tear themselves apart should the country have to make painful fiscal cuts in order to remain current on its obligations...

Geithner in the hot seat

Posted on January 08, 2010
The New York Fed has announced that its decision to try to squelch AIG disclosures had nothing whatsoever to do with Tim Geithner. Who was the president and CEO of the bank at the time, and is famous for his attention to detail. But Geithner had every opportunity, both at the Fed and at Treasury, to agitate for greater transparency and for the release of even more emails...

The upside of the Move Your Money campaign

Posted on January 08, 2010
I'm puzzled by Yvette Kantrow's supercilious dismissal of Arianna Huffington's Move Your Money campaign. Kantrow paints the campaign as being about "optics" over substance, and complains that "it emphasizes symbolism over reality and feeling over fact"...

How Jeffrey Gundlach treats his clients

Posted on January 08, 2010
TCW's lawsuit against Jeffrey Gundlach -- Dealbreaker has the whole thing here -- is nominally asking for lots of money. Of course it is. But I suspect that at heart it's a strong message to all of those clients who haven't (yet) left TCW for Gundlach's new shop...

No hiring yet

Posted on January 08, 2010
Today's payrolls report is entirely consistent with the kind of recovery where the employment situation is going to remain grim even if and when corporate profits start picking up. I like the fact that the unemployment rate for adult men, at 10.2%, is down 0...

Deutch finally leaves the Citi board

Posted on January 08, 2010
John Deutch, one of the many grandees with no financial experience who populated bank boards in the run-up to the financial crisis, is finally stepping down from his sinecure at Citigroup:

Counterparties

Posted on January 07, 2010
The dreams of avarice are coming back -- Cartoonbank

The debit-card interchange scam

Posted on January 07, 2010
Mike Konczal has a detailed response to Tyler Cowen on the subject of debit-card fees, but before disappearing any further down this rabbit hole, I think it's worth clearing up one misconception which Tyler might have, given that he seems to think that his experience shows that maybe "things aren't so bad after all".

Does Feinberg want to control bankers? pay or not?

Posted on January 07, 2010
In the wake of that massive Steve Brill profile, Ken Feinberg is now appearing on Bloomberg TV, and saying something very odd indeed:

The costs and benefits of grad school

Posted on January 07, 2010
I'm a great believer in the benefits of an undergraduate education when it's done right (which is rarely). But grad school is a different matter entirely: the opportunity costs are much higher, the amount of debt involved rises substantially, and the range of jobs you can do at the end of it in many ways goes down rather than up.

The Fed?s culture of secrecy

Posted on January 07, 2010
If and when the Fed embarks upon its soul-searching project, it shouldn't just look at its regulatory failures and its inability to spot or care about the housing bubble. It must also think long and hard about its culture of secrecy, which seems generally designed to further the interests of its big-bank shareholders while keeping the public as ignorant as possible.

The value of hedge-fund experience

Posted on January 07, 2010
A lot of asset-management professionals dream of one day running a hedge fund. But in the case of Maxime Carmignac, it looks more like it's the other way around: the heir apparent to the $48 billion Carmignac Gestion fund-management empire is now running an internal $100 million hedge fund as part of her preparations for taking over from her father as CEO, CIO, or both.

Counterparties

Posted on January 06, 2010
Brett Arends holds me up as an exemplar of deplorable financial blogging, and implies that I don't do "real thinking" -- Marketwatch

Loan sharking datapoints of the day

Posted on January 06, 2010
Are legal payday lenders a superior alternative to the loan sharks of old? Or are they they loan sharks of old? Just look at what happened in New Mexico, which tried to crack down on payday lenders by limiting the amount of money a company could charge in interest on a short-maturity loan...

Does predatory lending rise when other credit contracts?

Posted on January 06, 2010
Megan McArdle writes that access to credit is good for the poor:

Iceland stands up to bullies

Posted on January 06, 2010
There's a reason why people are often reluctant to stand up to bullies, especially when those bullies have an enormous size and strength advantage and are credibly threatening to hurt you very badly. And so it's going to be very interesting to see what happens now that Iceland's figurehead president, Olafur Grimsson, has suddenly decided to cause a major international incident by vetoing a bill which would have put his country's citizens into billions of dollars in debt to bail out the UK and Dutch governments.

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