Bailout

Counterparties

Posted on August 13, 2010
The Problem With Financial Journalism -- HuffPo

Deflation and negative TIPS yields

Posted on August 13, 2010
In one of those classic understated TBI headlines, Vincent Fernando today says that "Actually You Should Panic" if TIPS yields go positive. His argument: "if TIPS yields hadn't fallen to where they are now, then we'd truly have something to worry about -- Deflation...

Can Treasury justify suing homeowners in default?

Posted on August 13, 2010
House Democrats John Conyers and Marcy Kaptur have put together a strong and compelling letter asking Tim Geithner and FHFA director Edward Demarco to put an end to the silly and counterproductive way in which Frannie have decided to start suing homeowners they consider to be strategic defaulters: "pursuing expensive litigation against a vulnerable population when there appears to be little to no economic incentive is questionable at best," they write.

How Obama wants to cut taxes on million-dollar incomes

Posted on August 13, 2010
What happens to people on seven-figure incomes when they pay lower taxes on their first $250,000 income, but higher taxes on the rest, as the Obama administration is proposing? It turns out that they end up paying fewer taxes altogether: $6,349 less per year, on average...

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The huge obstacles facing Murdoch?s new tablet newspaper

Posted on August 13, 2010
Rupert Murdoch is launching a new national newspaper, which will be "distributed exclusively as paid content for tablet computers such as Apple's iPad and mobile phones".

Why Santelli is right, and wrong, about housing

Posted on August 13, 2010
In what Zero Hedge calls one of his top 3 rants of all time (beginning around 5:40 in this clip), CNBC's Rick Santelli unloaded today on Steve Ricchiuto of Mizuho. The thing making him angry was a quote from Pimco's Bill Gross, saying that he would only buy mortgages sans a government guarantee if first-time homebuyers were forced to make 30% down payments.

The twitchy, volatile stock market

Posted on August 12, 2010
I did my best to ignore the stock market fall today, but it was certainly important enough to grab the attention of Mohamed El-Erian, who has an interesting theory of why it happened:

Counterparties

Posted on August 12, 2010
Jeff Skilling's legal fees might reach $150m, while Lehman execs are racking up fees at a rate of $5m/month -- NYT

The limits of government debt statistics

Posted on August 12, 2010
The Economist finds some interesting common ground between Larry Kotlikoff, who thinks that America's fiscal situation is worse than Greece's, and Jamie Galbraith, who thinks that it's really nothing to worry about:

Why museums need more art lending

Posted on August 12, 2010
Eli Broad hasn't given up on his rallying cry, which I first wrote about two years ago:

Goldman?s gym tax

Posted on August 12, 2010
Social Workout has photos from inside Goldman's spanking-new 54,000-square-foot gym, but leaves the most interesting factoid in the comments. It turns out that being a Goldman employee might be necessary to gain entrance to the gym, but it's not sufficient: you also need to cough up a monthly membership fee in order to gain access to those standard-issue Russell Athletic t-shirts and gray shorts...

Getting the housing market back on track

Posted on August 12, 2010
David Streitfeld's NYT piece on home-equity defaults is so aggressively anecdotal, rather than quantitative, that he even says at one point that "the amount of bad home equity loan business during the boom is incalculable". I really don't think that's true: a lot of very smart analysts have done a lot of pretty accurate work on that front...

Counterparties

Posted on August 11, 2010
Every point the VIX rises, Berkshire Hathaway loses another $280 million -- Clavell

Rebuilding HP?s board

Posted on August 11, 2010
One of the interesting things about the fall-out from Mark Hurd's ouster at HP is that no one is happy with HP's board. On the one hand, critics like Nell Minow, saying that Hurd "falsified his expense accounts in a tawdry series of incidents", say the board should have fired Hurd for cause, rather than allowing him to resign...

A spinal-tap test for hedgies?

Posted on August 11, 2010
Financial services companies can take advantage of the cognitively weak in general, and the elderly in particular -- especially elderly people suffering from Alzheimer's disease. More generally, people who want to be in full control of their finances today might well want to put in place protections which remove them from full control of their finances in future, if they know that they're going to get Alzheimer's.

Chart of the day: TIPS yields

Posted on August 11, 2010
Paul Krugman notes today that 5-year TIPS are trading with a negative real yield, which prompted me -- with the help of the great Frank Tantillo -- to navigate the Fed's data download program to generate this. (Bigger version here.)

Why small-scale bike sharing won?t work

Posted on August 11, 2010
SoBi, short for social bicycles, is a gutsy startup trying to make bike-sharing more accessible by reducing the up-front infrastructure costs. Don't create dedicated parking spaces: allow bikes to be parked anywhere. Don't commission custom bicycles: design a gizmo which attaches easily to any bike instead...

Internet dystopia of the day, Paul Graham edition

Posted on August 11, 2010
Paul Graham, one of the visionaries of the internet's early years, has a decidedly dystopian view of its future, and that of society itself:

Back on the grid

Posted on August 10, 2010
So I'm back from holiday -- what did I miss? I even caught a fish, although it wasn't a very big one; I can certainly recommend Arctic Wild and the Lodge at Black Rapids if you're headed to Alaska any time soon.

The rise of the unemployable underclass

Posted on August 10, 2010
David Leonhardt's latest column is full of interesting employment datapoints. Among them:

Smart parking becomes a reality

Posted on August 10, 2010
I'm very excited that San Francisco has finally launched its new SFpark system.

Ted Stevens, Alaskan to the end

Posted on August 10, 2010
Ted Stevens has died at age 86, and the news is getting a lot of play this afternoon because of the very Alaskan cause of death: a plane crash. Stevens reportedly had a premonition that he would die in such a manner, and at the same time was instrumental in keeping the regulations concerning flying in Alaska as light as possible.

The Fed gives up on tightening

Posted on August 10, 2010
The big market reaction following today's FOMC statement took place in the 10-year Treasury bond, where yields sank to 2.77% right after the statement came out, from 2.82% beforehand. That's a big move by Treasury-bond standards, and constitutes the continuation of a longer trend: the yield was above 3% as recently as July 29, and we're now well into yields not seen except during the very worst part of the financial crisis, when the flight-to-quality trade was in full force.

When urban broadcasters go prospecting for gold

Posted on August 10, 2010
Otto Rock, over at IKN, has uncovered one of the more bizarre prospectuses I've ever seen. It's an attempt to raise up to $370 million in 8% bonds, with the money ostensibly being used to develop a gold mine in California. The mine will make lots of money, we're told, because there's a "proprietary process" involved, which "allows us to extract approximately 98% of the metals, compared to the paltry 20% by current day standards".

Picking on Pyxis

Posted on August 10, 2010
Louise Story continues to talk to the SEC, and it seems that Merrill Lynch is now in the spotlight, and specifically a vehicle it underwrote named Pyxis. I wonder whether Merrill/BofA, like Goldman before it, has received a Wells notice and hasn't bothered to disclose the fact.

Counterparties

Posted on July 23, 2010
Kamer on Kneale -- VV

How the SEC seems set to fix the ratings impasse

Posted on July 23, 2010
Wow, it seems I was actually right for a change! After I declared earlier this afternoon that "repealing AB1120, if only temporarily while the SEC works out some kind of sensible permanent solution, seems to be the obvious way to go", the SEC has gone and done exactly that:

Felix Salmon de-stress test

Posted on July 23, 2010
This is needed, by me and quite possibly by you as well: I'm off on holiday for the next couple of weeks. Alaska, mainly, which if Dave Weigel's tweets are any indication, means that I'll have neither the inclination nor the ability to post anything. So blogging will be intermittent at best between now and August 10...

The silver lining to the lenient stress test

Posted on July 23, 2010
There's a certain amount of relief in the markets that there's absolutely nothing in the way of bad news coming out of the European bank stress tests. Essentially, the tests could be tough or they could be lenient; and there could be significant failures or no significant failures...

Why Obama will nominate Warren

Posted on July 23, 2010
The nomination of Elizabeth Warren to head the Consumer Financial Protection Bureau seems to be a foregone conclusion at this point. Warren and the large team of Warren enthusiasts have been pushing her nomination aggressively, to the point at which no one in the Obama administration is going to want to face the political firestorm associated with not nominating her.

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