Monthly Archives: March 2008

The Bear Facts

Posted on March 14, 2008 by Felix

Are here.

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Liveblogging the Bear Stearns Conference Call

Posted on March 14, 2008 by Felix

12:56: It’s over. They put on a brave face, and clearly tried to indicate that they’re profitable, they have high-quality collateral, and they’re looking out for shareholders. It didn’t seem to help the share price, though. 12:55: "This is a … Continue reading →

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Bear Stearns Could Go Bust

Posted on March 14, 2008 by Felix

So, those liquidity rumors? Turns out they were true – or, at the very least, self-fulfilling. The official statement from Bear Stearns CEO Alan Schwartz: Bear Stearns has been the subject of a multitude of market rumors regarding our liquidity. … Continue reading →

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John Mack: Overrated

Posted on March 14, 2008 by Felix

Dan Colarusso takes his stiletto knife to John Mack today, and I’m very happy he did. As Dan shows, Mack has a long history of pulling defeat from the jaws of victory, and it’s far from obvious why he’s the … Continue reading →

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Google: Not Buying the New York Times

Posted on March 14, 2008 by Felix

Russ Mitchell has a must-read interview with Eric Schmidt in the April issue of Portfolio. It gets off to a cracking start, with Schmidt saying that a combined Yahoo-Microsoft would have "certain applications–like instant messaging and email–that could be used … Continue reading →

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The Prius Conundrum

Posted on March 14, 2008 by Felix

Dan Ariely asks why people are more willing to shell out for a Prius than they are to spend a similar amount of money to save much more CO2 by making their houses energy-efficient. And I think a large part … Continue reading →

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Extra Credit, Friday Edition

Posted on March 14, 2008 by Felix

Credibility and public borrowing: "Forecasts for public borrowing have always been subject to huge margins of error. There’s a rule of thumb, which dates back at least as far as Nigella’s dad, which says that the average error is 1% … Continue reading →

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The Price-to-Book League Table

Posted on March 13, 2008 by Felix

It’s not just Bear Stearns which is trading below book value. Here are some closing prices from Yahoo Finance: Bank Price/Book Countrywide 0.19 Bear Stearns 0.73 Wachovia 0.74 Citigroup 0.93 JP Morgan Chase 1.06 Lehman Brothers 1.12 Bank of America … Continue reading →

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Off-Target Reporting

Posted on March 13, 2008 by Felix

A lot of people are very worried about credit card debt right now: there’s a feeling that it might be the next shoe to drop, now that people can’t use home equity to pay off their plastic. So you can … Continue reading →

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Crazy Like a Bear

Posted on March 13, 2008 by Felix

Bear Stearns stock first traded this week at $70.28 a share. Earlier today it was at $50.48 a share: basically a $20 drop in the space of three and a half trading sessions. Right now, it’s at $54.68, which puts … Continue reading →

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What’s Missing in Paulson’s Report: Regulatory Consolidation

Posted on March 13, 2008 by Felix

Looking over the full report from the President’s Working Group today, I’m struck by one thing above all: that it makes no mention of the alphabet soup in Washington which enabled regulatory arbitrage and a general lack of accountability or … Continue reading →

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Steve Schwarzman Takes a Pay Cut

Posted on March 13, 2008 by Felix

Talk about adding insult to injury. Not only have Steve Schwarzman’s Blackstone shares plunged since its IPO, knocking billions off his net worth, but the firm has also cut his annual pay to less than $1 million per day. Stephen … Continue reading →

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Fuel Datapoint of the Day

Posted on March 13, 2008 by Felix

Steven Mufson reports on rising gas prices: Gasoline rose to a nationwide average of $3.246 a gallon for regular unleaded. Diesel, which has been setting records almost daily for the past three weeks, hit a nationwide average of $3.876 yesterday. … Continue reading →

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Carlyle Deserved to Collapse

Posted on March 13, 2008 by Felix

Should Carlyle Capital be aggrieved that its lenders are seizing its assets? There is a case to be made – and it’s made quite well by Robert Peston – that this is all the fault of the Fed and its … Continue reading →

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Moody’s to Rerate Munis

Posted on March 13, 2008 by Felix

Laura Levenstein of Moody’s says that she’s going to start rating munis on the same scale as corporates. Alistair Barr reports: "Moody’s recognizes that the municipal bond market has evolved, and with it we have taken steps to respond to … Continue reading →

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Should the US Government Buy Bank Equity?

Posted on March 13, 2008 by Felix

David Wessel has been hanging out with Myron Scholes, who wants the US government to start buying equity in US banks. Yikes! Should the government (the U.S. government, that is, not foreign governments’ sovereign wealth funds) put capital into banks? … Continue reading →

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Paulson Seeks to Prevent Future Crises

Posted on March 13, 2008 by Felix

We’ll get all the details later this morning, but judging from Damian Paletta’s curtain-raiser in the WSJ, Hank Paulson has some pretty good ideas about shoring up the US financial system and ensuring that a crisis like the one we’re … Continue reading →

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Extra Credit, Thursday Edition

Posted on March 13, 2008 by Felix

What Role did Langone Play in Spitzer’s Fall? Time travel & real interest rates The Scalps of the Credit Crunch

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Why Bonds are Unloved by the Media

Posted on March 12, 2008 by Felix

Dear John Thain pleads with the financial media to stop with the stock-market obsession, already: The S&P 500 represents about $13 trillion (slightly lower, as of this posting). The bond market, though, is over $27 trillion dollars (a statistic from … Continue reading →

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How the CDS Market Can Support the Bond Market

Posted on March 12, 2008 by Felix

I’m glad that Equity Private quoted herself yesterday, because I missed this the first time round: Are we surprised when people point fingers at Bear and suggest, for instance, that they are buying up the underlying assets and loosening credit … Continue reading →

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Cramer on Spitzer

Posted on March 12, 2008 by Felix

Just, wow. Cramer as you’ve never seen him before. (HT: Levin.)

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Never Lend Money to Gisele Bundchen!

Posted on March 12, 2008 by Felix

Enrichetta Ravina studied 11,957 loan requests from 7,321 borrowers and concluded: Borrowers whose appearance is rated above average are 1.41 percentage points more likely to get a loan and, given a loan, pay 81 basis points less than an average-looking … Continue reading →

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The Latest Argentine Default

Posted on March 12, 2008 by Felix

Sovereign debt has long had a semi-fluid system of seniority, what Anna Gelpern calls a "seating chart". Back in the 1980s, countries were generally pretty happy to default on foreign bank loans. They occasionally defaulted to their fellow governments, too, … Continue reading →

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The Fool of Last Resort

Posted on March 12, 2008 by Felix

The Fed is worried about a lack of liquidity in the credit markets. The Fed acts to make the markets more liquid. Is the Fed’s action foolish? We hope so! We like to think: "market — trade — liquidity — … Continue reading →

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Spitzer: The Monoline Angle

Posted on March 12, 2008 by Felix

It looks very much as though Eliot Spitzer is toast right now: the NYT is reporting that he’s expected to resign this morning. If and when that happens, whither the monoline insurers? Gari does some analysis: It’s interesting to note … Continue reading →

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