Bailout

The ethics of walking away, cont.

Posted on December 30, 2009
Yesterday, I asked Megan McArdle how much of one's life?s savings should be given to the bank before they take one's house. She answers, gratifyingly, that in the particular case I was writing about, "obviously he should have walked away immediately." Good, we're in agreement on that...

Bikinis in Basel

Posted on December 29, 2009
Just how far is the WSJ moving towards UK-style journalism? Well, the editor of its European edition, Patience Wheatcroft, used to edit the Sunday Telegraph -- a broadsheet gently ribbed in media circles for its ability to illustrate just about any story with a picture of a girl in a bikini.

Why credit-card interest rates won?t be capped

Posted on December 29, 2009
What happens if you cap credit-card interest rates at 16%? Yes, at the margin, the amount of credit extended on credit cards would fall. That's a feature, not a bug. But would it fall dramatically? Pamela Yip quotes Odysseas Papadimitriou:

Counterparties

Posted on December 29, 2009
How Goldman Sachs is the guy who can make the Jack of Spades jump out of the deck and squirt cider in your ear -- Kid Dynamite

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Inside the legislative sausage factory, banking committee edition

Posted on December 29, 2009
Ryan Grim and Arthur Delaney have the must-read story of the day, on the politics of the House financial services committee. It's long -- 6,500 words, spread over three pages -- and it took five journalists in all to piece it all together: don't say that HuffPo doesn't do original reporting!

Is 3G wireless doomed in cities?

Posted on December 29, 2009
Is AT&T's inability to provide decent wireless broadband in tech-savvy cities like New York and San Francisco a simple matter of physics? Phorgy says yes:

Don?t trust those servicers

Posted on December 29, 2009
Michael Powell has real-world examples of why it's really just better to walk away than it is to try to deal with evil and/or incompetent mortgage servicers:

Changing banks

Posted on December 29, 2009
Should people move their money from the big four commercial banks to smaller community banks? Arianna Huffington is making a big push, but I'll believe it when I see it: moving banks is hard, and people are lazy.

Where does John Mackey get his power?

Posted on December 28, 2009
Nick Paumgarten's 9,000-word profile of John Mackey, the CEO of Whole Foods, obviously went to press too late to incorporate the news that he's finally stepping down as chairman of the company.

Counterparties

Posted on December 28, 2009
The inverse relationship between CEO pay and shareholder returns -- WSJ Real earnings of the S&P 500 ended the decade 80% lower than they began -- Econbrowser

It?s impossible to price a CDO

Posted on December 28, 2009
The discussion about Goldman's synthetic CDOs just happens to coincide with a separate thread about a working paper by four researchers at Princeton, who seem to have a solid mathematical demonstration that CDOs simply can't be priced: the amount of computing power necessary to do so just doesn't exist.

Spurious academic study of the day, Tiger Woods edition

Posted on December 28, 2009
You knew it had to happen at some point: a couple of economics professors at UC Davis have done an "event study" of the Tiger Woods news cycle, and concluded that In the days beginning with Tiger Woods? recent car accident and ending with his announced ?indefinite leave? from golf, shareholders of companies that Mr...

There?s no tradeoff between dynamism and safety

Posted on December 28, 2009
Raghuram Rajan tells the WSJ's Mark Whitehouse that when it comes to capitalism, there's a natural tradeoff between security, on the one hand, and dynamism, on the other. Justin Fox adds some necessary skepticism:

The return of GDP bonds

Posted on December 27, 2009
GDP bonds are the instrument that refuses to die: Robert Shiller has resuscitated them in the NYT this weekend, this time with equity-like characteristics.

Teflon Buffett

Posted on December 26, 2009
Warren Buffett is a lovable, avuncular chap, not one of those axe-wielding CEOs who are feared by employees and idolized by the kind of red-claw capitalists who think that firing lots of people is a major leadership skill. Yet somehow he seems to have fired 21,000 people -- 8...

Retiree income datapoint of the day

Posted on December 26, 2009
The group of people hit hardest by interest rates are those used to living on interest payments. "The elderly and others on fixed incomes have been especially hard hit," reports Stephanie Strom. But just how hard have they been hit?

Counterparties

Posted on December 25, 2009
Treasury provides an unlimited guarantee for Frannie, formalizing what's existed de facto for decades -- Reuters

Why Goldman could go short mortgages

Posted on December 24, 2009
Blake Hounshell asks (of me specifically, no less) why "other banks didn't follow Goldman's lead when in December 2006 the firm turned bearish on the mortgage sector".

Is there a Goldman CDO scandal?

Posted on December 24, 2009
The big story on this slow news day is the NYT's 3000-word story on Goldman and synthetic CDOs, which now has a formal response from Goldman itself.

Counterparties

Posted on December 24, 2009
Mean-reversion vs momentum strategies: The former is safer, the latter can make you much more money -- Kid Dynamite

Giving cash or gift cards

Posted on December 23, 2009
Go read Barry Ritholtz's attack on gift cards, and then read Andrew Leonard's response. Actually, don't do either: you should instead take advantage of the fact that absolutely nothing seems to be going on today to go out and buy a proper present or two instead.

Counterparties

Posted on December 23, 2009
If Wall Street Ran the Airlines -- Baseline Scenario

Berkshire?s repellent shareholders

Posted on December 23, 2009
Warren Buffett probably won't be particularly happy with Mattathias Schwartz's cover story in the latest Harper's, behind a subscription firewall here. It's another pilgrimage-to-Omaha story, but this one has a twist: Schwartz finds that Buffett's folksy wisdom really isn't the slightest bit contagious.

Euphemisms of the day, Dubai edition

Posted on December 23, 2009
Maria Abi-Habib reports:

Did Oppenheimer?s Core Plus funds rise or fall in 2008?

Posted on December 23, 2009
Mish has found something very odd indeed from Oppenheimer Funds. Its Fixed Income Core Plus strategy was marketed to the Illinois Bright Start college savings plan, with disastrous results: parents thought they were making a conservative investment for imminent college-tuition needs, bechmarked to the Barclays aggregate index, which rose more than 5% in 2008...

How big of a problem is cybertheft from banks?

Posted on December 23, 2009
The WSJ's front-page story yesterday was clear and unhedged: The Federal Bureau of Investigation is probing a computer-security breach targeting Citigroup Inc. that resulted in a theft of tens of millions of dollars by computer hackers who appear linked to a Russian cyber gang, according to government officials...

Authentic art by telephone

Posted on December 22, 2009
John Quiggin reminds me of Richard Dorment's wonderful NYBR essay on Andy Warhol and the authenticity of his 1965 Red Self Portraits. While my blog entry on the essay was basically about non-profit politics and the art market, the essay itself was largely about the way in which Warhol reinvented authenticity:

The PhD in financial journalism

Posted on December 22, 2009
Did you know that it's possible to get a PhD in financial journalism? Lennie Fuller does -- he's a former Lehman executive who's now thinking of doing exactly that at Stirling University. He asked me if I had any ideas about possible thesis topics, and I thought in my bloggy way that throwing the question open might be interesting...

How to choose a hedge fund manager

Posted on December 22, 2009
You've heard by now about Steve Cohen's appearance on a UK daytime talk show in 1992. The Post seems to think that the story is that he was sleeping with both of his wives at the same time; the first reaction from the rest of us was sheer astonishment that he went on a talk show at all.

The ontological status of gold

Posted on December 22, 2009
I was pleasantly surprised by the volume of email response I got to a passing reference to Kripkenstein on this blog -- clearly quite a lot of you enjoy a bit of analytical philosophy! I went out to lunch today with a couple of philosophically-inclined finance types as a result, and, since I'm still high on Sichuan peppercorns and it seems to be something of a slow news day, I thought I'd put up a poll.

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