Monthly Archives: January 2008

Why Paying for Web Usage Might Make Sense

Posted on January 18, 2008 by Felix

Time Warner is dipping its toe, ever so gingerly, into charging for data downloaded rather than bandwidth. Kevin Maney explains why this makes sense for them: they’re competing, on the video-content front, with online providers. But that doesn’t necessarily mean … Continue reading →

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Telco Merger Datapoint of the Day

Posted on January 18, 2008 by Felix

Dana Cimilluca: When Sprint and Nextel agreed to combine in a “merger of equals” at the end of 2004, they were worth $70 billion together. The current value of the combined Sprint Nextel after the bleak news today from the … Continue reading →

Posted in M&A, stocks | Comments Off on Telco Merger Datapoint of the Day

The Bush Fiscal Stimulus Plan: Looks Good to Me

Posted on January 18, 2008 by Felix

Bloomberg News has some details of the kind of fiscal stimulus George Bush is looking for: The administration is considering a plan that may include $800 rebates for individuals and $1,600 for households as well as tax breaks to encourage … Continue reading →

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MBIA and Ambac Fight for Their Lives

Posted on January 18, 2008 by Felix

Colin Barr: On Friday, analysts at Citi and Bank of America downgraded MBIA and Ambac shares – to hold from buy. Skeptics might note that the move comes with Ambac stock down 94 percent over the past year and MBIA … Continue reading →

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Email down

Posted on January 18, 2008 by Felix

I’m not receiving any email at my felixsalmon.com address, for some reason. If you need to reach me, my temporary email address is felix.salmon at gmail. Email back up. Crisis over.

Posted in Not economics | 1 Comment

Failed Hedge Fund Strategy Du Jour: Merger Arbitrage

Posted on January 18, 2008 by Felix

Last week, I wondered whether Sam Heyman had lost $1 billion on a merger-arb strategy. And now Dana Cimilluca has found a couple of other companies where merger arbs are likely to have lost a huge amount of money, at … Continue reading →

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Extra Credit, Friday Edition

Posted on January 18, 2008 by Felix

Fed Chief Backs Quick Action to Aid Economy Tyler Cowen on inflation, glossed by Aaron Schiff The Pressure Room: The Epicurean Dealmaker explains investment banking. BF Dome In BF Louisiana Gets BS Treatment: The first industrial-scale geodesic dome, built by … Continue reading →

Posted in remainders | Comments Off on Extra Credit, Friday Edition

The Bonus Bet

Posted on January 17, 2008 by Felix

Some loyal readers may recall that back in October I entered into a wager with Jesse Eisinger, who had written in Portfolio that "bonus season this year will make Montgomery Burns look generous". If aggregate Wall Street bonuses fell by … Continue reading →

Posted in banking, housing | Comments Off on The Bonus Bet

Why Merrill’s Falling

Posted on January 17, 2008 by Felix

I liked the Merrill Lynch earnings call this morning, and when I posted my take on it just after the markets opened, it seemed as though the bank’s stock would avoid much in the way of punishment for its enormous … Continue reading →

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Bankers’ Pay: Should be Changed, Won’t be Changed

Posted on January 17, 2008 by Felix

Why pick on banks, and bankers? Steve Waldman tells us: It’s not because they’re bad people. Most bankers are very nice people. We should pick on them because, as Andrew says, banks intermediate. They are a point where all the … Continue reading →

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Why Goldman Sachs was Short CDOs

Posted on January 17, 2008 by Felix

Michael Lewis has a very peculiar column up at Bloomberg today, tied to Kate Kelly’s December 14 WSJ story about the subprime traders at Goldman Sachs. Lewis says that Goldman’s executives essentially overruled their own traders, thereby saving themselves from … Continue reading →

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The Upside of Low Housing Starts

Posted on January 17, 2008 by Felix

I’m a little bit confused about all the pessimism surrounding today’s housing starts figures. Yes, they’re low – but remember we’re talking about starts here: people and businesses brave or foolhardy enough to start building brand-new homes in an economic … Continue reading →

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Merrill: How to do a Conference Call Right

Posted on January 17, 2008 by Felix

I wasn’t on the Merrill call this morning, but David Gaffen was, and it seems from his live-blog – and the Merrill share price – that John Thain just gave the market a masterclass in spinning negative announcements. Rember that … Continue reading →

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The End of Mortgage Brokers, Part 2

Posted on January 17, 2008 by Felix

I got some very interesting responses to my blog entry yesterday on mortgage brokers, in which I basically said that they were parasites on their way out who wouldn’t be missed. Ken Houghton reckons that there must be some good … Continue reading →

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Extra Credit, Thursday Edition

Posted on January 17, 2008 by Felix

Banking pay just won’t go away: Andrew Clavell defends the banks. "Mortgage borrowers and mortgage-asset investors were both long housing assets, the former with a call option on the upside, the latter by shorting puts on the downside for yield … Continue reading →

Posted in remainders | Comments Off on Extra Credit, Thursday Edition

Bernanke: A Wise Man at the Fed

Posted on January 16, 2008 by Felix

Portfolio contributing editor Roger Lowenstein has an excellent profile of Ben Bernanke in the NYT this weekend; it hit the web today. Lowenstein is sympathetic, and admiring, but not uncritical: he says at one point, for instance, that "Bernanke must … Continue reading →

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Inflation Expectations: Coming Down

Posted on January 16, 2008 by Felix

Back at the beginning of the year, I recommended putting in a non-competitive bid for 10-year TIPS at the January auction on January 10. Now that’s happened, I can link to the results: my hypothetical bid would have picked up … Continue reading →

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The Economics of Second Liens

Posted on January 16, 2008 by Felix

Ruth Simon has a huge piece in today’s WSJ on second liens: home equity loans and lines of credit which are junior to primary mortgages. These things can cause a lot of trouble for homeowners: "The people in the first … Continue reading →

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Mortgage Brokers, RIP

Posted on January 16, 2008 by Felix

"The broker model is broken," says Calculated Risk today, citing comments from Jamie Dimon of JP Morgan saying that delinquencies on broker-originated loans are three times higher than on loans originated in-house. What’s more, says Peter Paul Jackson of Housing … Continue reading →

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The Bigger the Bank, the Better the Return

Posted on January 16, 2008 by Felix

Update: I got this one wrong: see the comments for all the gory detail. Big-bank stocks are riskier than small-bank stocks, which means they go up more than small banks do in up markets, and they go down more than … Continue reading →

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The Argument for Neglecting Laid-Off Workers

Posted on January 16, 2008 by Felix

Steven Landsburg has a provocative op-ed in the New York Times today. Essentially, he says that we should do absolutely nothing about American workers who are on the losing side of globalization: All economists know that when American jobs are … Continue reading →

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Causality in NY Post Headlines

Posted on January 16, 2008 by Felix

"FALL ST." is the headline splashed across the front page of the New York Post this morning. "Plunge sparks recession fear". OK, maybe Tuesday was a bit of a slow news day. But check out the causality there: it’s the … Continue reading →

Posted in Portfolio | 1 Comment

Extra Credit, Wednesday Edition

Posted on January 16, 2008 by Felix

Citigroup, Merrill Lynch Get $21 Billion From Outside Investors: Bloomberg has another one of those handy cut-out-and-keep tables of who’s invested what in whom. Wealth and Fame: Equity Private worries, on behalf of hedge-fund managers everywhere, about the risk posed … Continue reading →

Posted in remainders | Comments Off on Extra Credit, Wednesday Edition

Giving the Poor More Money: Would They be Able to Cope?

Posted on January 15, 2008 by Felix

Greg Mankiw reacts today to the CBO’s declaration that if you want fiscal stimulus, a temporary increase in food stamp benefits would provide the most bang for the buck. I wonder if we really want to target such cyclical measures … Continue reading →

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Whatever Happened to Citicorp?

Posted on January 15, 2008 by Felix

Dana Cimilluca notes that shares in Citigroup, today, are below the level at which shares in Citicorp were trading before it merged with Travelers. Now, that’s not necessarily a fair comparison: Citigroup, today, has a market capitalization of $135 billion, … Continue reading →

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