Monthly Archives: December 2007

The Fed’s New Facility, Explained in English

When I said this morning that more details of the Fed’s Term Auction Facility would surely emerge over the course of the day, I didn’t expect Steve Waldman to be the person providing them. But I’m very glad he is. … Continue reading

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Still Awaiting In-Flight WiFi

JetBlue launched a crippled WiFi service yesterday – well ahead of schedule, since it seemed in July that JetBlue wifi wasn’t going to arrive until 2010. So props to them for getting this thing off the ground before Row44 and … Continue reading

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Greenspan’s Legacy: The Housing Bust

Alan Greenspan accepts little if any responsibility for fueling the housing boom: I do not doubt that a low U.S. federal-funds rate in response to the dot-com crash, and especially the 1% rate set in mid-2003 to counter potential deflation, … Continue reading

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Fed: Second Rate Cut in Two Days

Greg Ip has the first best gloss on the Fed’s liquidity-injection announcement: The Fed said today it would create a new "term auction facility" under which it would lend at least $40 billion and potentially far more, in four separate … Continue reading

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Still Underwhelmed by Pandit

Vikram Pandit, it turns out, has something of an online fan club. When I described him yesterday as "a dull technocrat who has never achieved very much," I was immediately slapped down by commenters – most of whom spent much … Continue reading

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How to Test the Accuracy of the ABX

The WSJ takes a look at the notorious ABX today, and although it’s more polite than me, it still shows how bad the index is as a gauge of the subprime mortgage market Wachovia Capital Markets analysts Glenn Schultz and … Continue reading

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Extra Credit, Wednesday Edition

Morgan Stanley: Recession Likely: Northern Trust, too, has a recession call. Realigning English into gobbledegook Saving Banks: How the Mortgage Bailout Strains Accounting I Agree With Clinton on Mandates

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The Best and Worst Bank Deals of 2007

Time’s Bill Saporito says that the takeover of ABN Amro by the RBS-led consortium was the 4th best business deal of 2007. Wha? RBS overpaid massively: the consortium decided to pay mainly in cash, but by the time the deal … Continue reading

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WSJ.com Having Difficulties Correcting Stories

This is a cock-up, not a conspiracy: it speaks to the WSJ having a crap website, and not to any conscious attempt to downplay its mistakes. But if you do a search for Susan Pulliam’s erroneous front-page article on Merrill … Continue reading

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How Blogs are Changing Business Journalism for the Better

Herb Greenberg is asked: Q: How do you see online business journalism changing in the next 10 to 20 years? A: More blurring of the line between what is and what isn’t real journalism. People whose backgrounds and biases haven’t … Continue reading

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Fed, Citi: Mildly Disappointing

It’s obviously a day for mildly-disappointing expected decisions. The Fed has cut by a quarter point, and Citigroup has decided to appoint Vikram Pandit its new CEO. I doubt that many people can gin up much in the way of … Continue reading

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The Economics of the Harvard Tuition Announcement

Why did Harvard announce yesterday that its tuition fees, for students whose families earn between $120,000 and $180,000, would be 10% of family income? Frankly, I buy the official story: that those students were getting less than the maximum benefit … Continue reading

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The SF Chronicle’s Atrocious Mortgage Conspiracy Theorizing

The San Francisco Chronicle published on Sunday a grossly irresponsible opinion piece from one Sean Olender, headlined "Interest rate ‘freeze’ – the real story is fraud". I would dearly like to hold someone at the Chronicle to account for printing … Continue reading

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How Citi is Solving its SIV Problems

Citigroup was always understood to be the prime beneficiary of the SuperSIV plan. But yesterday, Eric Dash dropped hints that Citi had been working on a Plan B, saying that "Citigroup, the financial giant that first proposed the initiative, is … Continue reading

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The Upside of Sloppy Drafting

Good lawyers draft contracts in clear English. Bad lawyers draft contracts in dense legalese. But here’s the thing: sometimes dense legalese gets the job done, where clear English would serve only to clarify the fact that the parties to an … Continue reading

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Who Says the Mortgage-Freeze Plan Doesn’t Benefit Investors?

(HT: Alea)

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Extra Credit, Tuesday Edition

Baywatch: Bigger than Aid? The Trading Game: Where Losers Can Win and Lose Again: "The mere ability to lose hundreds of millions and wake up in the morning does not a great trader make". Ten things to know about the … Continue reading

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Why Shuttered Galleries Don’t Mean the Art Bubble is Bursting

During the housing boom, the only thing rising faster than house prices was the number of realtors. Yes, a handful of superstar agents became fabulously wealthy and successful. But the median realtor was in many ways worse off than before … Continue reading

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Takeover Speculation of the Day: JPMorgan to buy Citigroup?

When Merrill Lynch put out a research note saying that Bank of America might buy Barclays, Alphaville was not impressed, calling the Merrill research "bolshy" and "spivvy". When CreditSights puts out a research note saying that JPMorgan Chase might buy … Continue reading

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Google Copies Everything. Is That Legal?

Noam Cohen brings up the last taboo subject in the search-engine world: The law has largely been silent on how much copying is fair use by search engines. How much copying? A search engine spiders (ie copies) everything. That’s the … Continue reading

Posted in law, technology | 1 Comment

The Myth That Lending Rates Rise in Response to Policies

There’s a credit crisis going on right now. Credit is what you get when a lender lends money to a borrower. Therefore, any attempt to address any credit crisis is, by definition, going to affect lenders. For pundits of a … Continue reading

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Recession: A Very Useful Indicator

Most people have a good intuitive understanding of first derivatives: you’re going up or you’re going down, you’re going backwards or you’re going forwards. It’s an important distinction to make, and it’s the reason why people focus on the concept … Continue reading

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Why a Nissan Altima is Faster Than a Ferrari Testarossa

The reason why US fuel economy hasn’t improved over the past 20 years is not that cars are becoming less efficient, but rather that they’re becoming bigger and more powerful. If you keep size and weight constant, cars are much … Continue reading

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Banking: It Pays To Be Conservative

It turns out that it’s relatively easy to survive a subprime crisis, if you’re a conservative Swiss bank. The problems at Citigroup and Fannie Mae and Freddie Mac are basically that their losses are eating into their capital, leaving them … Continue reading

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Barney Frank’s Opposition: It’s Not Hank Paulson

Paul Krugman blogged the mortgage-freeze plan on Friday; today he has a column on the subject in the NYT. What’s interesting to me is that the column is so much more partisan than the blog entry was. Krugman’s take on … Continue reading

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