Monthly Archives: January 2008

A Bear Market: Where Good News is Punished

Posted on January 15, 2008 by Felix

Stocks in general are down about 2% today, but the big losers are all the companies in the news. Merrill Lynch has found itself $6.6 billion of new equity? Down 3.9%! Citigroup has found even more, to offset an $18 … Continue reading →

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Which is Risker: Hedge Funds or Index Funds?

Posted on January 15, 2008 by Felix

Veryan Allen, the blogosphere’s favorite hedge-fund apologist, spent New Year in Las Vegas. He’s quite excited about his slot-machine returns (he won $1000 after putting in $20), which he semi-facetiously describes as "alpha". He does seem serious, however, when he … Continue reading →

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The Downside of Road Tolling

Posted on January 15, 2008 by Felix

Peter Swan and Michael Belzer don’t think much of toll-road privatization. If you hike road tolls to maximize profits, they say, then you end up with a large number of trucks taking second-best routes – something which is inefficient, unpleasant, … Continue reading →

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Why is The Weill Family Foundation Injecting Capital into Citigroup?

Posted on January 15, 2008 by Felix

Among the investors bailing out Citigroup with new equity capital is The Weill Family Foundation, a charitable foundation set up by Sandy Weill. Now the way that these charitable foundations work, they generally give away some small amount (maybe 5%) … Continue reading →

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Citi: Negative Revenues

Posted on January 15, 2008 by Felix

I’ll leave the live-blogging of the Citi conference call (slides here) to David Gaffen and Floyd Norris. Norris has already made two excellent points: he’s wondering why Citi’s still paying a dividend at all, and he’s noted that US revenues … Continue reading →

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Extra Credit, Tuesday Edition

Posted on January 15, 2008 by Felix

Running Numbers: Surowiecki on how much the payrolls report can be trusted. Citi and the Kitchen Sink Theory: "Banks cannot just arbitrarily decide how large they want their write-downs to be. But assigning values to mortgage-related securities these days is … Continue reading →

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The Economics of Cheap Sofas

Posted on January 14, 2008 by Felix

Tim Harford on Ikea: When a typical London home costs £300,000, why are cheap sofas to put in it still such a tempting offering? Unfortunately, Harford doesn’t answer his own question. Maybe it’s precisely because houses are so expensive that … Continue reading →

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Predatory Borrowers

Posted on January 14, 2008 by Felix

Barry Ritholtz, econoblogger extraordinaire, fired harshly at Tyler Cowen, econoblogger extraordinaire, on Sunday, with a blog entry originally entitled "Tyler Cowen, Apologist for Fraud?". Ritholtz has since toned down the headline, but the substance of his criticism stands, and it’s … Continue reading →

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CNBC-Related Stock Moves, Part 2

Posted on January 14, 2008 by Felix

Interested in buying stock in Converted Organics? Too late. The Peanut Gallery has the intraday chart: Today, another stock I have been following was mentioned on CNBC, (COIN: 12.40 +42.53%). Look at the chart and see if you can tell … Continue reading →

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The CDS Losses Arms Race Continues

Posted on January 14, 2008 by Felix

There seems to be some kind of an arms race going on to see who can come up with the scariest number for total losses in the credit default swap (CDS) market. Remember Bill Gross with his $250 billion? Well … Continue reading →

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When a Forecast Shouldn’t be Charted

Posted on January 14, 2008 by Felix

Silly chart of the day comes from Morgan Stanley, whose Jonathan Garner thinks that emerging-market infrastructure spending is likely to grow by about 12% per year over the next decade. That’s an interesting forecast, but it’s basically one number. Charts, … Continue reading →

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How a Bullish Trade on Subprime CDOs Made Good Profits

Posted on January 14, 2008 by Felix

From Merrill Lynch to Morgan Stanley, everybody who lost boatloads of money on subprime-backed CDOs seemed to be following the same big-picture strategy: they went short the riskiest, most junior tranches of the CDOs, and hedged their bets by buying … Continue reading →

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Why China Doesn’t Want to Invest in Citigroup

Posted on January 14, 2008 by Felix

The WSJ’s Rick Carew reports today that the Chinese government might prevent the latest proposed injection of Chinese capital into a troubled US institution. For a good backgrounder on where the Chinese government is coming from, it’s worth checking out … Continue reading →

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Why Schultz Might Not be Right for Starbucks

Posted on January 14, 2008 by Felix

Jack Flack is underwhelmed by Joe Nocera’s column on Saturday, in which the veteran NYT columnist has a bearish take on Starbucks. I’m more impressed, partly because it came out on the same day as a similar column from equally-veteran … Continue reading →

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Why WSJ.com Will Go Free

Posted on January 14, 2008 by Felix

Last week, Henry Blodget made a good point about WSJ.com going free: The first indication that you WSJ holdouts may not suddenly get your free lunch is this: Murdoch’s owned the thing for several weeks now and it hasn’t yet … Continue reading →

Posted in Media, publishing | 7 Comments

Extra Credit, Monday Edition

Posted on January 14, 2008 by Felix

If, When, How: A Primer on Fiscal Stimulus: "Policies that are potentially most effective include temporary and refundable tax credits, temporary increases in food stamps, and a temporary extension of unemployment insurance benefits. Policies that are especially counterproductive include permanent … Continue reading →

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Steve Jobs on “Pungent Odors”

Posted on January 13, 2008 by Felix

This might be a little off-topic, but it’s too good not to share. It’s from the Fort Greene Kids listerv on Yahoo, where a member shared an email she sent to Steve Jobs: hi steve, i have enjoyed watching apple … Continue reading →

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Ben Stein Watch: January 13, 2008

Posted on January 13, 2008 by Felix

It’s been three weeks since the last installment of the Ben Stein Watch: had no column appeared today, I would have been ready to declare victory. But it was not to be, and a predictably bad column has arrived, along … Continue reading →

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Japanese Garbage Datapoints of the Day

Posted on January 12, 2008 by Felix

The value of indium in Japan’s garbage dumps: $833 million The value of lead in Japan’s garbage dumps: $15 billion The value of silver in Japan’s garbage dumps: $30 billion The value of gold in Japan’s garbage dumps: $178 billion … Continue reading →

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Extra Credit, Weekend Edition

Posted on January 12, 2008 by Felix

Huckabee’s Tax Plan Is Brilliant: Landsburg defends the Fair Tax. Kleiman rebuts. Mozilo severance: $110 million and change Street Smarts: Economists Take on Traffic Safety

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Nick Denton’s task at Gawker

Posted on January 12, 2008 by Felix

I’m quoted* in Allen Salkin’s NYT article on Gawker tomorrow. I thought that he’d place more emphasis on the importance of Gawker’s commenters for generating pageviews, since we talked quite a lot about that, but I guess Sunday Styles doesn’t … Continue reading →

Posted in Not economics | 7 Comments

Trading Recession Probabilities

Posted on January 11, 2008 by Felix

According to InTrade, there’s a 58% chance that the US will see a recession in 2008. That number is higher than the 43% probability assigned to recession by economists polled by the WSJ. But there’s no real discrepancy there, says … Continue reading →

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How to Trade a Bear Market

Posted on January 11, 2008 by Felix

Baruch at Ultimi Barbarorum gives us his tips on how to trade a bear market: Let the Constanza Doctrine be your guide: do The Opposite of what feels good. You are not alone, and at the moments of maximum stress … Continue reading →

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Why FT.com Charges for Subscriptions

Posted on January 11, 2008 by Felix

Jeff Bercovici has an interesting interview today with John Ridding, the chief executive of the Financial Times. He does his best to defend the FT’s weird and counterproductive online pricing model, and it’s worth reading between the lines of some … Continue reading →

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BofA-Countrywide: The Main Street Implications

Posted on January 11, 2008 by Felix

I’m going to be on Fox Business this afternoon at 4pm, talking about the Countrywide acquisition. Befitting the channel’s "Wall Street meets Main Street" concept, I’m sure they’re going to ask me less about the finances of the deal and … Continue reading →

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