Monthly Archives: December 2007

Extra Credit, Tuesday Edition

Posted on December 25, 2007 by Felix

Alphabet Soup and the Subprime Crisis: Did SWFs kill the M-LEC? Free Fernando Vina (part two) The NYT Invents “Basic Economics” To Hide Upward Redistribution Mud-Luscious: Balloons for UberNerds Now, Even Borrowers With Good Credit Pose Risks: The risk that … Continue reading →

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Merry Christmas Bleg

Posted on December 24, 2007 by Felix

Merry Christmas to you. As for me, all I want for Christmas is… …a very simple WYSIWYG HTML editor. Why can’t I find one? I spend most of my days writing blog entries. Mostly it’s just text inside <p> tags, … Continue reading →

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The Denomination Fallacy, Coffee Edition

Posted on December 24, 2007 by Felix

The denomination fallacy normally rears its economically-illiterate head with respect to oil prices. But in the Washington Post today, Anthony Faiola manages to apply it to coffee: For untold millions worldwide, the weak dollar has emerged as a troubling dark … Continue reading →

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Lawsuits as an Asset Class

Posted on December 24, 2007 by Felix

Patrick Hosking has news of two new hedge funds which seek to invest in lawsuits. I don’t think this is new; in fact, I believe that US hedge fund Elliott Associates has been doing it for some time. The problem … Continue reading →

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The Economics of Sports Writing

Posted on December 24, 2007 by Felix

If you know many print journalists, you’ll know they love nothing more than complaining about how underpaid they are and how word rates for freelancers haven’t risen for half a century. So it’s mildly encouraging for all of us that … Continue reading →

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Ben Stein Watch: December 23, 2007

Posted on December 23, 2007 by Felix

Oh yes he did. Not content with penning what was probably the most thoroughly fisked column that the NYT ran all year, Ben Stein has now revisited the scene of his embarrassment, only to compound the crime. Stein has a … Continue reading →

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Extra Credit, Weekend Edition

Posted on December 22, 2007 by Felix

FHA Secure: Wait, How Do 600 Applications Become 35,000? How Rich Is China? New York Condos Lure Deal-Seeking Europeans Bali Schmali? No Cliff Diving for 08-1: There aren’t enough subprime bonds for a new ABX series. Bain, TPG to Buy … Continue reading →

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Subprime: The Class Action Suits

Posted on December 21, 2007 by Felix

NERA Economic Consulting has a new report out on class-action lawsuits. They dropped a lot from 2005 to 2006, but jumped back up again in 2007, thanks in part to 38 – count ’em – lawsuits relating to subprime lending. … Continue reading →

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The Subprime Boom: Was There a Silver Lining?

Posted on December 21, 2007 by Felix

Paul Krugman, today: The explosion of “innovative” home lending that took place in the middle years of this decade was an unmitigated disaster… I use the words “unmitigated disaster” advisedly. Krugman says that the explosion in subprime lending did not … Continue reading →

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Munis Back Away From Ratings-Agency Domination

Posted on December 21, 2007 by Felix

In the world of credit ratings, it’s generally acknowledged that the most overrated securities are structured products, while the most underrated securities are municipal bonds. (You have no idea how nice it is to be able to use the words … Continue reading →

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Silly Idea of the Day: A Micro-Finance CDO

Posted on December 21, 2007 by Felix

Is there something very weird about this? Citigroup has announced a new $165M CDO backed by 30 micro-finance loans to entrepreneurs in 13 countries including Bosnia, Tajikistan, Mexico and El Salvador. What does the “micro” mean in “micro-finance”? Less than … Continue reading →

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A Good Investment for You is Not Necessarily a Good Investment for Me

Posted on December 21, 2007 by Felix

According to Michael Lewis, one of the standard ways in which a stockbroker tries to sell a stock to a small investor is by invoking the hallowed name of Warren Buffett. The intuition is clear: Warren Buffett became a multi-billionaire … Continue reading →

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How to Avoid Jinxing a Conference Call: Don’t Show Up!

Posted on December 21, 2007 by Felix

Did Jimmy Cayne learn a lesson from Al Lord’s disastrous earnings call on Wednesday? Lord was largely responsible for a 20% fall in his company’s share price after he was overly aggressive with analysts. Yesterday, Cayne, who’s not exactly noted … Continue reading →

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Blogonomics: Spelling Things Out for James Ledbetter

Posted on December 21, 2007 by Felix

Is James Ledbetter really incapable of using his remarkable schnozz to sniff through a blog entry and find out what SWF might stand for? The words “sovereign wealth funds” are in there, if you look hard enough. But even if … Continue reading →

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Your Guide to SWF Bank Investments

Posted on December 21, 2007 by Felix

Here’s a handy cut-out-and-keep guide to SWF bank investments, in the wake of the latest speculation about Merrill Lynch selling a stake to Singapore’s Temasek. Date Bank Fund Country Size March 06 Standard Chartered Temasek Singapore $4 billion November 07 … Continue reading →

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Extra Credit, Friday Edition

Posted on December 21, 2007 by Felix

A battle Bush’s EPA can’t win: California is extremely likely to win its appeal of the EPA’s carbon-emissions decision. Citi Lays Off 30 C.D.O. Bankers The Bond Insurance Barge Scam: “For years the investment banks’ internal credit and risk departments … Continue reading →

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Dr Seuss on CDOs

Posted on December 20, 2007 by Felix

A PDF file entitled “Dr Seuss on CDOs” has been doing the email rounds today. The text can be found over at the WSJ’s economics blog, but it’s worth reading the piece in its the original PDF form, if you … Continue reading →

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Standard & Poor’s: The Other Victim of the MBIA Announcement

Posted on December 20, 2007 by Felix

David Gaffen has a good round-up of reactions to MBIA’s announcement that it is carrying $8.1 billion of nuclear waste CDO-squared on its balance sheet. The main puzzle seems to be this: S&P knew all about this when it affirmed … Continue reading →

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Why We Shouldn’t Count on Fiscal Policy to Save the Economy

Posted on December 20, 2007 by Felix

Mark Thoma today has an excellent (implicit) rebuttal of Larry Summers’s proposal that the US government use fiscal policy to fight impending recession. Both fiscal and monetary policy are capable of fighting recessions, Thoma says. But the thing about monetary … Continue reading →

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New York’s New Subway Math

Posted on December 20, 2007 by Felix

The NYT has a good article this morning on the “new subway math” – the way in which anybody refilling their MetroCard is going to have to do some rather recondite calculations in order to ensure they don’t end up … Continue reading →

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The Economics of eBay

Posted on December 20, 2007 by Felix

Aaron Schiff notes, quite rightly, that eBay uses anticompetitive tactics in order to retain its market share: One of the things that probably makes it hard to compete with eBay is that eBay ‘owns’ the reputations of its users. If … Continue reading →

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Was Ralph Cioffi Singlehandedly Responsible for Everything Which Went Wrong of Late?

Posted on December 20, 2007 by Felix

Ralph Cioffi must be feeling pretty beleaguered at the moment. A few months ago, he was just a hedge-fund manager whose bets went horribly wrong. Recently, he learned that he’s being investigated to see whether he committed outright fraud. And … Continue reading →

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How Negative Earnings Don’t Seem to Matter

Posted on December 20, 2007 by Felix

When it comes to earnings, Wall Street wants guidance. Here’s the cri de coeur from Societe Generale’s Bill Kavaler Cavalier, during the notorious conference call with Sallie Mae’s Al Lord yesterday: We’re trying to put together projections here, Al. We’re … Continue reading →

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Extra Credit, Thursday Edition

Posted on December 20, 2007 by Felix

CIC’s opportunistic deal is lesson learnt: The FT on the mechanics of the Morgan Stanley deal. (Also: Setser, on same.) Why I’ve Decided To Abandon (Virtually All) Ads On The Simple Dollar Economics: The Year in Books, 2007 Cerberus’ Feinberg: … Continue reading →

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The Problem of Artificially Inflated House Prices

Posted on December 19, 2007 by Felix

Amidst all the breaking news today, you could be forgiven for not having time to notice the big WSJ article on kickbacks from property sellers to buyers – kickbacks which serve to overstate house-price indices and severely damage the balance … Continue reading →

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