Monthly Archives: January 2008

Gordon Brown and the Independence of the Bank of England

Posted on January 8, 2008 by Felix

Willem Buiter is shocked that UK prime minister Gordon Brown, along with his finance minister Alastair Darling, might attempt to have any influence at all over the monetary policy of the Bank of England: I could not believe my eyes. … Continue reading →

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Will the CDS Market See $250 Billion in Losses?

Posted on January 8, 2008 by Felix

Bill Gross’s Investment Outlook this month includes the normal mix of hyperbole and mixed metaphors ("securitized WMDs", "the pyramid begins to unravel"). But get past that, and you’ll find him saying that the CDS (credit default swap) market poses a … Continue reading →

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The National Association of Realtors’ Fuzzy Math

Posted on January 8, 2008 by Felix

This is the worst website I’ve seen in a very long time. For one thing, it’s one of those websites which starts talking at you the minute you load it: turn your speakers off before you go there, if you … Continue reading →

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Parsing Starbucks

Posted on January 8, 2008 by Felix

Jack Flack (congratulations, btw) today decodes the jargon-filled press release which accompanied the news that Howard Schultz was returning as CEO of Starbucks. The release certainly needs decoding. The headline, ferchrissakes, is "Starbucks Announces Strategic Initiatives to Increase Shareholder Value": … Continue reading →

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In Praise of a Pessimistic President

Posted on January 8, 2008 by Felix

My favorite line from the NYT coverage of Bush’s speech on the economy: Still, Mr. Bush must be careful not to depress the economy with pessimistic talk, and so his speech in Chicago on Monday offered a delicate balancing act. … Continue reading →

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Extra Credit, Tuesday Edition

Posted on January 8, 2008 by Felix

US newspapers disregard their consumers At Bonus time, No One Can Hear You Scream: "Today’s bulge-bracket fixed income trading floors are strewn with human wreckage which will be reincarnated as tomorrow’s ‘Unicredito Global Head of Globalness’ types." Can Foundations Take … Continue reading →

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Can Alan Schwartz Rescue Bear Stearns?

Posted on January 7, 2008 by Felix

This time last year, Bear Stearns was trading at a hundred and seventy something dollars per share. Today, it closed at seventy something dollars per share, well below its book value of $84. That’s all you need to know to … Continue reading →

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Sino-African Datapoint of the Day

Posted on January 7, 2008 by Felix

Pascal Zachary: There are roughly 2,000 African students in China, most of whom are pursuing engineering and science courses. According to Juma, that number is expected to double over the next two years, making China “Africa’s leading destination for science … Continue reading →

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Paulson’s Most Bearish Speech Ever

Posted on January 7, 2008 by Felix

This is I think one of the most bearish speeches by a sitting finance minister I have ever read; I certainly can’t recall anything like it from any US Treasury Secretary. In it, Hank Paulson seems to be channelling Nouriel … Continue reading →

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The Crisis Meme

Posted on January 7, 2008 by Felix

The Russian crisis was a crisis, as was LTCM: both had very nasty global systemic implications. What we saw in 2007 was not a crisis.
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Why Old Masters Might Not be a Good Investment

Posted on January 7, 2008 by Felix

The price of Old Masters has been lagging that of contemporary art, despite the fact that the supply of Old Masters is shrinking, while the supply of contemporary art is increasing. Jeff Segal of Breaking Views concludes that "the Old … Continue reading →

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Trading Obama and Clinton

Posted on January 7, 2008 by Felix

In April, Obama was Google and Clinton was General Electric. By Friday, Obama was the alternative-energy sector while Clinton was Citigroup. Today, we’re told that Obama is Apple, and Clinton is Dell. None of these metaphors are very useful, but … Continue reading →

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Goldman’s Global Alpha Fund: Down 39% in 2007

Posted on January 7, 2008 by Felix

How did the big investment banks’ flagship hedge funds do in 2007? Highbridge Capital, which is controlled by JP Morgan, ended in positive territory for the year (+6%), despite going through a nasty patch this summer. The Global Alpha fund … Continue reading →

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The Power of Market Capitalization

Posted on January 7, 2008 by Felix

What is the correlation between a company’s size, as measured by market capitalization, and its power? I’m not sure how one would measure power, but I don’t think that market cap is a good proxy for it. ADM is worth … Continue reading →

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The $100 Oil Trade: Was Arens the Seller?

Posted on January 7, 2008 by Felix

On Thursday, it seemed that the single $100 oil trade was a bit of a prank: Nymex trader Richard Arens basically spent $600 of his own money in order to be the person who first hit that mark. Now, however, … Continue reading →

Posted in commodities | 1 Comment

Gawker’s decline

Posted on January 7, 2008 by Felix

Nick Denton has for some time been goosing Gawker’s pageviews by encouraging long comments threads on Gawker posts. There’s nothing wrong with that, and Gawker’s comments system is excellent. But it turns out that even Gawker’s loyal commenters will exit … Continue reading →

Posted in Not economics | 36 Comments

O-ba-ma!

Posted on January 6, 2008 by Felix

I watched the New Hampshire debates last night, the first debates I’ve watched this election season. (I would have watched more, I’m sure, but for the fact that I don’t have a television.) And after watching first the Republicans and … Continue reading →

Posted in Not economics | 1 Comment

Against Traffic Lights

Posted on January 6, 2008 by Felix

Roundabouts (traffic circles) are great. But traffic can be astonishingly good at navigating busy intersections even in their absence, and even without traffic lights. The point is that the absence of any traffic lights forces drivers to slow down and … Continue reading →

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Extra Credit, Weekend Edition

Posted on January 5, 2008 by Felix

E*Trade figure does not compute… New Type of Analysis on the Iowa Results: How the big Republican winners in Iowa were McCain and Giuliani more than Hucakbee. But: Are Political Markets Really Superior to Polls as Election Predictors? A link … Continue reading →

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Payrolls: An Apology

Posted on January 4, 2008 by Felix

Why did I pick today to resuscitate my extremely occasional series of blog entries on the uselessness and irrelevance of the payrolls report? In reality, it would seem that the report was responsible for the decimation of technology stocks, the … Continue reading →

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Witchcraft, and the Profitability of Goldman Sachs

Posted on January 4, 2008 by Felix

Timothy Burke has a long piece up on the limits of rationality; Lance Knobel blurbs it as "the most fascinating post-Iowa analysis I’ve read", but it’s not really about Iowa, and although it’s mainly about politics it’s not only about … Continue reading →

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Bear Stearns: Now Trading Below Book Value

Posted on January 4, 2008 by Felix

Bear Stearns is being clobbered today, down more than 5% to just $79 per share. And it’s passed a major milestone, too. Here’s its fourth-quarter earnings report: Book value on November 30, 2007 was $84.09 per share, based on 136.2 … Continue reading →

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What, Exactly, is Finra Investigating?

Posted on January 4, 2008 by Felix

Paul Jackson has a smart take on the news today that Finra is investigating sales of mortgage-backed securities to retail investors. Basically, MBSs come in two flavors: very safe, and very dangerous. Since sales of very-safe securities wouldn’t trigger a … Continue reading →

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Do Pickup Truck Sales Make Any Sense?

Posted on January 4, 2008 by Felix

I have lived all my life in cosmopolitan cities, I was in my 30s before I got a driver’s license, I know little about cars and less about trucks. So do please help me out on this one: I am … Continue reading →

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Will Buyout-Related Deals Flood the CMBS Market?

Posted on January 4, 2008 by Felix

The CMBS market, where mortgages based on commercial paper office and retail space are traded – has been extremely quiet of late. Good prices are hard to find, but what’s clear is that the primary market has all but disappeared, … Continue reading →

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