Monthly Archives: September 2007

Why the Ratings Agencies Should Fear Congress

There was a lot of bashing of the ratings agencies this morning at the Portfolio subprime panel. It was timely, coming as it did ahead of Congressional hearings on the ratings agencies and their role in the present mess. Investors … Continue reading

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Zhang’s High

My friends don’t tend to collect art, but it seems that their friends do. Yesterday afternoon, I found out that a friend of a friend had sold his Zhang Xiaogang at Sotheby’s for $400,000; and then yesterday evening I found … Continue reading

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How Giving to Charity Will Help You Get Rich Quick

On Monday, I met Jim Whitton, a director of The Hunger Project, in a midtown cafe. The Hunger Project (THP) is a well-run non-profit which works efficiently and tirelessly towards sustainable poverty reduction in the developing world. With Whitton was … Continue reading

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Subprime: It’s Not About Creditworthiness

A bit of a late start this morning, thanks to a Portfolio breakfast (of which more later) hosted by Jesse Eisinger on the subject of the subprime meltdown. Joe Mason of Drexel University was there, and was very rude about … Continue reading

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Angus Maddison’s New Book

I have very few books in my office, which is quite small, but in pride of place on my reference shelf stands Angus Maddison’s masterful reference work "The World Economy". No one has spent more time or effort trying to … Continue reading

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The Price of Luxury

The Economist notes the evolution of the economics of luxury goods over the past year: while the goods themselves have increased in price by 6%, twice the rate of inflation, the income of the rich has increased by 9%, or … Continue reading

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Bonds Without Price Quotes

Paul Kedrosky has found a Greenwich Associates report saying that "more than 60% of participants active in corporate bonds say they have experienced trouble getting a simple price quote from dealers on these usually liquid products". Is this, as he … Continue reading

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Intellectual Property Among Magicians

In my Q&A with Susan Scafidi, I asked about Jim Surowiecki’s assertion that the world of magic tricks manages to be innovative despite a lack of copyright protection. Susan replied that there might be no copyright protection, but that didn’t … Continue reading

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Labor Market Datapoint of the Day

Bo Peabody’s companies pay their ad sales staff well, it would seem: Digital ad sales at the entry level are getting multiple six figure salaries. I tried checking this with my friendly neighborhood digital entrepeneur, who told me that a … Continue reading

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Why the GM Strike Makes Sense

The GM strike makes sense to me. The key issue for the union, quite properly, is the jobs of its members. The last time the UAW went on national strike, in 1970, it had 400,000 members; now, it has 73,000. … Continue reading

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Mortgage Prepayment: Economically Suboptimal

Greg Mankiw reckons that prepayment penalties are a Bad Thing, and approves of David Laibson’s plan to abolish them. Writes Mankiw: When I refinanced my mortgage not long ago, one of my first questions was, Are there any prepayment penalties? … Continue reading

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Speculation in Art

Callen Bair, responding to my post on speculative bubbles, tells me that there is speculation in the art market after all. Who are these speculators? They’re rich; they want to spend their money; and it might as well be on … Continue reading

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Subprime: Reasons to be Thankful

Ten years ago, the GBP/USD exchange rate was 1.61. Today, it’s 2.02. Over that timeframe, the Economist tells us, UK housing prices have risen by 211%, compared to just 120% in the US. Which means that in dollar terms, UK … Continue reading

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Welcome Econospeak

I’m late to this game, I know, but in the wake of links from Mark Thoma, Tyler Cowen, and Megan McArdle, let me be the latest to welcome Econospeak to the blogosphere. Anybody who will join me in defending cap-and-trade … Continue reading

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In Defense of Credit Derivatives

You can always tell when the newsflow slows down in the financial world, because invariably some columnist will trot out another brave reëvaluation of credit derivatives. Here’s Scott Patterson: The power of these derivatives — most of which were launched … Continue reading

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Headline of the Day

The Publisher of Forbes Magazine, a Regular on Fox, Blames the Mortgage Meltdown on Sex Ed Yes, really. (Via Dealbreaker)

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USA 2008 as Russia 1998

Now here’s an interesting recipe for growth: how does utter financial collapse and skyrocketing inflation sound? Writes the Grouse today: When the Russian debt markets blew up, there was a massive devaluation of the ruble, which made it hard for … Continue reading

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The Oil Price Denomination Fallacy

Repeat after me: The fact that oil prices are denominated in dollars means… absolutely nothing. Dean Baker has been banging this drum for a few days now, most recently attacking the Washington Post for saying that "since crude oil is … Continue reading

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Four Reasons Why Time Warner Might Not Spin Off Time Inc

Sean Elder kicks off his guest-blogging stint over at Mixed Media in fine style this morning, with the story that Time Warner is thinking about an IPO of its magazine-publishing arm, Time Inc. I’m not convinced this will happen, for … Continue reading

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Blogging as a Source of Profits

Scott Kirsner asks in the Boston Globe yesterday whether venture capitalists should blog. The general feeling is that the ones who do blog can’t imagine not blogging: it’s a great way of finding ideas, and ideas of course are the … Continue reading

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There’s No Speculative Bubble in the Art World

Lauren Schuker has a big piece entitled "Art’s Anxiety Attack" in the weekend WSJ. Let’s see if we can detect a theme here: The soaring prices for art in recent years partly reflect booming financial markets, with hedge-fund managers delving … Continue reading

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The Forbes 400 Fat Tail

Now that’s what I call a fat tail: have a look at the latest Forbes 400 list, which features 29 individuals worth more than $10 billion. There are three whose net worth has a 10 handle; two on 11; one … Continue reading

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How Deteriorating Crediworthiness Can Make You Millions (If You’re a Bank)

It’s not quite as laughable as it might seem at first glance that the latest tranche of investment-bank earnings reports showed hundreds of millions of dollars in profits from the fact that those banks’ bonds had fallen in value. Morgan … Continue reading

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Transcending English

The Metaphor of the Day award goes to Alex Harrowell: The European issue in Britain has traditionally swung across the political spectrum, like a cow on a rolling deck, blundering into political parties and sending them flying like skittles. Harrowell, … Continue reading

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Ethanol Datapoint of the Day

Remember the ethanol bubble? Looks like it’s burst: The price of ethanol soared earlier this year to record levels of more than $4 a gallon as the Bush Administration vowed to boost production of alternative fuels… Ethanol prices have slumped … Continue reading

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