Monthly Archives: December 2007

Extra Credit, Weekend Edition

Posted on December 15, 2007 by Felix

Insolvency is philosophy, illiquidity is fact Church and state on the Journal masthead Q: What’s the worst thing you can do with an iPhone? Chris Anderson discovers iPhone international data roaming, and the atrociousness of AT&T customer support. Injecting Liquidity: … Continue reading →

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Why Bloomberg Should Embrace Cap-and-Trade

Posted on December 14, 2007 by Felix

Michael Bloomberg is not a man to shy away from brainless cliché: "cities are increasingly becoming incubators of change and drivers of innovation," he blathers meaninglessly in the Economist. But at least he’s on the side of the angels when … Continue reading →

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What do US Consumers Have to Fall Back On?

Posted on December 14, 2007 by Felix

Even as the economy has been growing over the couple of decades, people have been feeling increasingly insecure, perhaps because they have less and less to fall back on. Lane Kenworthy puts it well: Households now appear to be more … Continue reading →

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How Cerberus’s Cost Cutting Threatens the US Economy

Posted on December 14, 2007 by Felix

There’s bad news at Cerberus, and that could mean bad news for all of us. Cerberus has lost a lot of money on its mortgage-servicer investments, and is now hoping to merge its main mortgage asset, GMAC, with Chrysler’s lending … Continue reading →

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VaR: For a Crappy Tool, It’s Really Important at Goldman Sachs

Posted on December 14, 2007 by Felix

In Kate Kelly’s narrative of Goldman Sachs’s mortgage-trading gains, thrice the traders want to keep their bearish bets but are forced to unwind their positions by higher-ups. What fascinates me is the way in which value-at-risk, a very quick-and-dirty risk … Continue reading →

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Tax the Privately Educated

Posted on December 14, 2007 by Felix

Chris Dillow wants to tax the privately educated more heavily. I think this is a great idea. And in fact it’s not all that far from one idea which really has been taken seriously in the UK: a higher rate … Continue reading →

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Criminals in the CEO Suite, Jewelry Edition

Posted on December 14, 2007 by Felix

We’ve all heard of CEOs who are convicted of felonies and go to jail. But it’s rarer to see the sequence reversed: convicted felons becoming CEOs. Is that the American Dream? In July 2004, Peter Bacanovic was sentenced to five … Continue reading →

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Citi: Still Partially Insulated from SIV Losses

Posted on December 14, 2007 by Felix

Alea has the scoop on Citi’s SIVs: they’ll have to decline in value by $2.5 billion, or more than 5%, before Citi takes a penny in losses. No wonder Citi found it relatively easy to sell tens of billions of … Continue reading →

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Lufthansa: No Savior for JetBlue

Posted on December 14, 2007 by Felix

In the wake of Lufthansa’s $300 million investment in JetBlue, it’s worth looking at how JetBlue CEO David Barger is doing after just over six months on the job. If you recall, he replaced founder David Neeleman in May, mainly … Continue reading →

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Extra Credit, Friday Edition

Posted on December 14, 2007 by Felix

The next subprime: Reverse mortgages Lessons in demand elasticity: Daniel Hall on the politics of public-transport prices. Lehman’s 2007 Bonus Pool Rises Almost 10% on Higher Revenue Contest: Fun with Farecast — Home for the Holidays: Paul Kedrosky finds LA-Kansas … Continue reading →

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Citi Bails In its SIVs

Posted on December 13, 2007 by Felix

Even a stopped clock is right twice a day, or something. Somehow – more by luck than judgment, I’m sure – I managed to call this one pretty well. December 11: If Citi can carve off some large chunks of … Continue reading →

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New Fed Window Still Carries a Little Stigma

Posted on December 13, 2007 by Felix

One way of looking at the Fed’s new Term Auction Facility is that it’s the discount window without the stigma. But stigma, it seems, is in the eye of the beholder, and Dean Baker, for one, still seems to think … Continue reading →

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Evelyn Davis and Rich Zannino: Frenemies Forever!

Posted on December 13, 2007 by Felix

Kenneth Li was at the shareholder meeting where Dow Jones lost its independence and got sold to News Corp. To nobody’s surprise, shareholder activist Evelyn Davis was there too, and decided to turn the event into a pop quiz for … Continue reading →

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Why IEDs Aren’t Giffen Goods

Posted on December 13, 2007 by Felix

I’m having a bit of a debate over at Zubin’s economics blog, and rather than continue it in the comments there, I thought I might as well hoist it up here, into its own blog entry. Zubin’s found a chap … Continue reading →

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Lehman Profits From Earlier Write-Downs

Posted on December 13, 2007 by Felix

There’s an art to the write-down. On the one hand, you don’t want to scare people by writing down too much money unnecessarily. But on the other hand, you want to be conservative, and you certainly don’t want to have … Continue reading →

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The Schlubby Side of Stevie Cohen

Posted on December 13, 2007 by Felix

Do you know what Stevie Cohen looks like? Time had an official photo of him in its "Time 100" feature earlier this year. He looks well-groomed, with a clear, level gaze. But today the NYT runs a picture of him … Continue reading →

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The Wolfowitz Ouster, Redux

Posted on December 13, 2007 by Felix

Fox News journalist James Rosen has a long and largely sympathetic account of Paul Wolfowitz’s ouster from the World Bank in the November issue of Playboy. At the beginning of the piece he’s unambiguous: What happened to Wolfowitz was more … Continue reading →

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Home Equity: Down. Home Equity Withdrawals: Still High.

Posted on December 13, 2007 by Felix

A major driver of the US economy in recent years has been home equity withdrawal – individuals tapping the equity in their homes to fuel consumption. Obviously, total home equity rises very quickly when house prices are rising, and it … Continue reading →

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Bonus Watch, Goldman Sachs Edition

Posted on December 13, 2007 by Felix

At Goldman, all is sunny: Many were celebrating Wednesday. “Are people happy? I think broadly yes. The message was that in a year when the firm has done well, it pays its people well,” said a delighted banker.

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Why is the Fed Discriminating Against Investment Banks?

Posted on December 13, 2007 by Felix

In ES Browning’s WSJ stocks report today, he mentions something I haven’t seen anywhere else: Traders pointed to several culprits for the stock pullback: warnings from Bank of America and Wachovia of more credit-loss provisions to come, a gloomy-sounding comment … Continue reading →

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Extra Credit, Thursday Edition

Posted on December 13, 2007 by Felix

Greenspan and Housing Inventory BofA Chief Sees More Pain Ahead The Magazine Subscription problem: Solved, in the comments, by Jason Kottke. How To Destroy An Analyst by POT Who is more independent than whom? John Gapper on ownership structures at … Continue reading →

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Citigroup Should Cut its Dividend Now

Posted on December 12, 2007 by Felix

Morgan Stanley thinks Citi will cut its dividend. CIBC thinks Citi will cut its dividend. And according to Alea, the markets think Citi will cut its dividend, too: Based on implied forward prices derived from options markets, a 40% dividend … Continue reading →

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There’s No Transparency in the Carbon-Offset Market

Posted on December 12, 2007 by Felix

Adam Piore today profiles Tom Arnold of TerraPass, a for-profit company selling carbon offsets to guilty gas-guzzling liberals. TerraPass is very secretive about its "revenue, profits, or even how much it has invested so far in carbon-offset projects", which means … Continue reading →

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The Fed’s Collateral Requirements: It’ll Take Anything

Posted on December 12, 2007 by Felix

The Fed won’t just lend out $40 billion in an attempt to inject some liquidity into the banking system, oh no. It requires collateral. But, as jck says in the comments to my earlier blog entry, it seems as though … Continue reading →

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Did Arminio Fraga Turn Down the Harvard Endowment Job?

Posted on December 12, 2007 by Felix

The Harvard Management Company, under the interim leadership of Robert Kaplan, is looking for a permanent replacement for the departing Mohamed El-Erian. In the meantime, it’s taking a 12.5% stake in Gávea, the hedge fund run by former Soros fund … Continue reading →

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