Bailout

Reducing the shame of default

Posted on December 21, 2009
Steve Waldman has been doing a spectacularly good job of teasing out the moral and financial implications of homeowners walking away from their mortgage obligations, and delivers another great post today:

Christian values, only $25.98

Posted on December 21, 2009
Baptist values are going cheap! They're only $25.27 per share, while Methodist values are $25.55, Lutheran values are $25.56, and Catholic values are $25.98 -- the same price as general Christian values.

The Fed?s regulatory errors

Posted on December 21, 2009
Binyamin Appelbaum and David Cho have a very clear-eyed summary of where the Fed screwed up in terms of bank regulation over the past few years. Two things are clear: that the Fed had the power to prevent the excesses that banks got involved in over the course of the Great Moderation; and that it didn't even come close to beginning to wield that power until after the Great Moderation had become the Great Recession and it was far too late.

Why harsh white-collar sentences make sense

Posted on December 21, 2009
Matthew Kelley asks whether the 14-year sentence for the former head of El Paso Corp.'s natural gas trading business isn't excessive; my feeling is that it makes a certain amount of sense.

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What price better credit

Posted on December 21, 2009
First Premier Bank is offering one of the most usurious credit cards I've ever seen. The APR is reasonable, at 9.9%, but just check out those fees:

The winner-takes-all smartphone

Posted on December 21, 2009
Baruch reckons that Apple has pulled off something very clever indeed: a "phase transition" in the mobile-phone market.

Counterparties

Posted on December 21, 2009
There are 4.22 Citi shares for every person in the world -- BIG

Those Harvard swaps: Even more of a fiasco than we thought

Posted on December 18, 2009
Bloomberg takes a dive into the Harvard swaps fiasco today, and uncovers some pretty juicy information. For instance, check out Larry Summers's state of mind when he was entering into the swaps:

Be careful what you wish for, Vikram

Posted on December 18, 2009
The WSJ adds color to the story of Citigroup's flop of a stock offering on Wednesday. Citi, it seems, is deciding to blame the government, which allowed Wells Fargo to do its own TARP-exit stock offering at the same time. Treasury, of course, is having none of it:

Weakening derivatives? super-priority

Posted on December 18, 2009
Thanks to Brad Miller for pointing me to Mark Roe's excellent column on super-priority for derivatives in bankruptcy:

The Fiscal Times

Posted on December 18, 2009
There's the serious, and then there's the frivolous. The epitome of serious grappling with complex issues is Pete Peterson, and his crusade against fiscal excess. Frivolous, meanwhile, would be someone like Jackie Leo, who made a career of simplification as editor-in-chief of Reader's Digest, and whose new book is characterized by Amazon thusly:

Counterparties

Posted on December 18, 2009
What do the Copenhagen protestors want? And just how counterproductive are they being? -- Foreign Policy, FT

California issuing

Posted on December 18, 2009
Who does Bloomberg think has the appetite to wade through 4,000 words on a single Californian bond deal in October? The answer is "probably no one" which means that most of the people reading Michael Marois's article will read the first five paragraphs, conclude that California got royally ripped off by the troika of JP Morgan, Citigroup, and Goldman Sachs, and move on.

Counterparties

Posted on December 18, 2009
The Bank of England financial stability report -- BoE

Distressed debt datapoint of the day

Posted on December 18, 2009
Henny Sender reports:

Wine inflation

Posted on December 18, 2009
The Economist has a brief history of the wine industry:

Flyglobespan, holdbacks, and E-Clear

Posted on December 17, 2009
What was the proximate cause for the overnight failure of Flyglobespan airlines, which has stranded thousands of passengers far from home as Christmas fast approaches? Douglas Fraser explains:

Don?t invest in art funds

Posted on December 17, 2009
File this one under "you could see that one coming a mile off. The Art Trading Fund, which was doomed before it launched, doomed at launch, and even more doomed a year later, has finally failed: its liquidators are holding a creditors' meeting in January.

How the Citi stock offering flopped

Posted on December 17, 2009
The Citigroup secondary offering yesterday, which went much worse than planned, is a prime example of the difference between primary and secondary markets. A lot of investors simply assume without thinking too much about it that a rising stock price is always a good thing for the company in question, and they're right to do so...

Counterparties

Posted on December 17, 2009
ProPublica tries its hand at crowdsourcing a CDO story -- ProPublica

Media relations emails of the day, Interoil edition

Posted on December 17, 2009
On Monday, Barry Minkow put out a press release accusing a NYSE-listed company, InterOil, of being "nothing more than hype". InterOil has had a large short interest for some time, and it seems that Minkow touched a nerve, because InterOil's senior manager for media relations, Susuve Laumaea, went borderline insane via email in response:

Which blogs does Jim Bunning read?

Posted on December 17, 2009
The NYT quotes Jim Bunning quoting "a blogger":

Guy Hands and Citi?s Chinese walls

Posted on December 16, 2009
Terra Firma has filed a slightly batshit lawsuit against Citigroup, in which the poor sheeplike Guy Hands claims he only bid for EMI because Citi's David Wormsley told him he ought to.

Ben Bernanke, Person of the Year

Posted on December 16, 2009
Reading Michael Grunwald's homage to Ben Bernanke, the 2009 Person of the Year, what's striking is the list of defenders and opponents. At the top of the piece, Grunwald talks about how he has been assailed by "criticism from all directions", but doesn't really name names, relying instead on generalities such as "bleeding-heart liberals and tea-party reactionaries alike"...

Counterparties

Posted on December 16, 2009
Wherein the WSJ describes interest-rate expectations as "an epic fail" -- WSJ

The rise of India?s moneylenders

Posted on December 16, 2009
Ketaki Gokhale has a fascinating article on the way in which traditional high-interest moneylending has grown in India alongside microfinance, rather than being marginalized by it:

Why decline $80,000 for doing nothing?

Posted on December 16, 2009
This Elizabeth Wurtzel piece has been gnawing at me all day:

Lawless Russia

Posted on December 16, 2009
Just in case you were feeling all happy about the book giveaway, let me bring you down to earth by pointing you to Law and Order in Russia, a website set up by Hermitage Capital Management in memory of their noble Russian lawyer, Sergei Magnitsky. Do read his story, it's horrific, and I hope it shames the Russian government to do more than simply fire major general Anatoly Mikhalkin of the Moscow Interior Ministry (although that's a good start).

Holiday book giveaway

Posted on December 16, 2009
Many thanks to Abnormal Returns for inspiring me to give away the large pile of books that has slowly been accumulating on my desk over the past year. Some are galleys, some are duplicates, some I've started reading but know I'll never finish; all of them will have much better homes elsewhere...

The risk-averse rich

Posted on December 15, 2009
What's the correlation between wealth and risk appetite? I suspect that it's somewhat bell-shaped: when you're very poor you can't afford to take any risks, while if you're entering the middle classes you often feel that you have to take risks, especially with your retirement assets, if you're going to have a chance of maintaining your standard of living once you stop working...

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