Monthly Archives: November 2007

The John Thain FAQ

Posted on November 14, 2007 by Felix

Many questions accompany John Thain’s appointment as CEO of Merrill Lynch. Here are just some of them: Will Thain be chairman, too? Almost certainly, yes. Whither BlackRock’s Larry Fink, now he’s been passed over for the job as Merrill CEO? … Continue reading →

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Auto Industry Chart of the Day

Posted on November 14, 2007 by Felix

If the Harvard faculty is remotely representative of anything, then Detroit is doomed. Interestingly, Greg Mankiw’s BMW 330xi gets about 17 MPG, in the city, and emits 9.2 tons of greenhouse-gas emissions per year. Does he not believe that his … Continue reading →

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Unsecured Personal Debt: The Next Shoe to Drop?

Posted on November 14, 2007 by Felix

HSBC has been one of the biggest subprime lenders in the US ever since it bought Household International for $15.5 billion in 2003. It was one of the first major banks to take big subprime-related losses, too, and it doesn’t … Continue reading →

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The Fed Gets Its Inflation Target

Posted on November 14, 2007 by Felix

In the Fed’s latest move towards greater transparency, we will now see three-year forecasts for both core and headline inflation four times a year. Greg Ip notes that this is an inflation target in all but name: The projection for … Continue reading →

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Retail Quote of the Day

Posted on November 14, 2007 by Felix

Joe Wiesenthal reads the WSJ: How about this quote from a retail industry trade group VP: "We don’t anticipate a lot of unplanned markdowns."

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Richard Prince Datapoint of the Day

Posted on November 14, 2007 by Felix

October 16, London: At Christie’s, the heat was still on for the fashionable Canadian conceptual artist Richard Prince, whose painting Wayward Nurse, bought originally in 2005 from his New York gallery for $75,000, sold for £1 million ($2.1 million). November … Continue reading →

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Why Newspapers Should Ignore Stock-Market Volatility

Posted on November 14, 2007 by Felix

I get very irritated when newspapers splash one-day stock-market movements all over their front page for no good reason. Every time the Dow drops 300 points or more, it seems, there’s some kind of rule saying that big panicky headlines … Continue reading →

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Extra Credit, Wednesday Edition

Posted on November 14, 2007 by Felix

Crooked Timber’s Dani Rodrik seminar. Featuring Thoma, Quiggin, Farrell, Warsh, Knight, Przeworski, Drezner, Davies, and a response from Rodrik. Truly the econoblogosphere is becoming the best economics education money can’t buy. Plus ça change: Amsterdam’s 17th-Century stock market. Kevin Rose … Continue reading →

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Wall Street: Still Insanely Profitable

Posted on November 13, 2007 by Felix

Bloomberg is running a story headlined "A $45 Billion Writedown Won’t Stop Wall Street Profit", saying that Wall Street is poised to have its second-most-profitable year on record, despite those $45 billion in writedowns: Amid the gloom, analysts estimate New … Continue reading →

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The Carbon Tax Debate: Why a Cap-and-Trade System is Better

Posted on November 13, 2007 by Felix

I spent more three hours this morning at a debate hosted by the New York City Bar Association which was narrowly focused on a single issue: whether the US government should implement a carbon tax or whether it should go … Continue reading →

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Blackstone vs Goldman, Subprime Edition

Posted on November 13, 2007 by Felix

November 12: Blackstone President and Chief Operating Officer Hamilton James said on Monday Blackstone is starting to "go long" the subprime market, after a successful bet against the sector that played out over the last 18 months. November 13: Goldman … Continue reading →

Posted in banking, housing | 1 Comment

Murdoch’s WSJ.com Ambitions

Posted on November 13, 2007 by Felix

Does Rupert Murdoch think he can double or even treble the number of visitors to WSJ.com if when he makes the site free? Don’t be silly. He’s much more ambitious than that: Rupert Murdoch, the chairman of the News Corporation, … Continue reading →

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The Economics of Concert Performances

Posted on November 13, 2007 by Felix

Last night I went to a truly magnificent show at Carnegie Hall: Sir Simon Rattle conducting the Simón Bolívar Youth Orchestra of Venezuela in Shostakovich’s 10th Symphony. My front-row seats were $44 each. This evening, Sir Simon returns, conducting the … Continue reading →

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The Economics of Broken Deadlines

Posted on November 13, 2007 by Felix

Why were the second and third Matrix films shot at the same time? Why are TV series shot all at once? Simple: economies of scale. You can shoot all your scenes at a given location at the same time, rather … Continue reading →

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The Return of Stock-Based Compensation on Wall Street

Posted on November 13, 2007 by Felix

Everything old is new again, as Yves Smith points out with respect to UBS’s bonuses. Apparently the poor Swiss bankers won’t get cash this year: everything above a measly $750,000 is going to be paid in stock. Is this kind … Continue reading →

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Extra Credit, Tuesday Edition

Posted on November 13, 2007 by Felix

Citi’s giant write-downs: What did it know, and when did it know it? Blackstone’s M&A Biz Provides No Relief: You thought Blackstone was an M&A advisory shop as well as a private-equity firm? Turns out, not so much. Also: Blackstone … Continue reading →

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E*Trade: In Defense of Prashant Bhatia

Posted on November 12, 2007 by Felix

Just as one shouldn’t shout "fire" in a crowded theater, one shouldn’t shout "run on the bank" in an analyst’s report. If you do that, as Citigroup’s Prashant Bhatia notoriously did in his report on E*Trade, you risk your report … Continue reading →

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Earnings Datapoint of the Day

Posted on November 12, 2007 by Felix

Ken Rogoff: "If you are earning $540,000 an hour, it does not take too long to save up to buy an apartment, even in London." The sum in question is the minimum amount you need to earn in order to … Continue reading →

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Counting Foreign Students

Posted on November 12, 2007 by Felix

Dani Rodrik gives the NYT a slap on the wrist today for its article saying that foreign students "added to the economy" to the tune of $14.5 billion last year. The article was based on a press release from the … Continue reading →

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Holiday Party Datapoint of the Day

Posted on November 12, 2007 by Felix

Battalia Winston runs its annual survey: 85 percent of businesses will be conducting some type of holiday celebration this year, a nine percent decrease from 2006… In addition, while a majority (54%) of parties will be evening events and 70 … Continue reading →

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When Athletes IPO

Posted on November 12, 2007 by Felix

Remember the jock exchange that Michael Lewis wrote about in the first issue of Portfolio? The idea was that an exchange could be set up where the assets traded were not shares in companies but rather shares in athletes. Well, … Continue reading →

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When is a Hedge Not a Hedge?

Posted on November 12, 2007 by Felix

Allison Pyburn has some numbers on just how much the notorious "super-senior" tranches of subprime-backed CDOs are actually worth in the market. It’s probably no surprise that the junior tranches are changing hands in "the high single digits," but more … Continue reading →

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Next Rate Move: Up And Down at the Same Time?

Posted on November 12, 2007 by Felix

Steve Waldman, provocative as ever, resuscitates a 2002 speech by Ben Bernanke, wherein the future Fed chairman notes that the central bank has more tools at its disposal than simply raising or lowering the Fed funds rate. Specifically, he says, … Continue reading →

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The Economist Debates: Bloggers Win!

Posted on November 12, 2007 by Felix

The Economist has brought its debate series to New York, and the first two debates took place in the magnificent Gotham Hall on Saturday. The first one was on wealth and happiness, and pitched two bloggers (Tyler Cowen and Will … Continue reading →

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Ugliness in Industrial Design

Posted on November 12, 2007 by Felix

Sometimes, good design is good business. Just look at Apple. And sometimes, bad design is bad business: look at Detroit. But sometimes, the beauty of the object plays precisely zero role in purchasing decisions. That’s obviously the case for things … Continue reading →

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