Monthly Archives: March 2008

Deteriorating Statistics

Posted on March 6, 2008 by Felix

Mike Mandel asks what statistics I would like to see improved. Answer: all of them. Back in the post-war years, some of the smartest economists in the world set up statistical agencies in the leading industrialized nations. If they can’t … Continue reading →

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Carlyle Capital Brings Back the LTCM Memories

Posted on March 6, 2008 by Felix

Remember Long Term Capital Management? The problem there wasn’t that it was investing in risky securities, like Russian bonds. Instead, Russia’s default set off a more generalized spread widening and flight to liquidity, which hit super-safe assets like off-the-run US … Continue reading →

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China IPO Datapoint of the Day

Posted on March 6, 2008 by Felix

Helen Thomas keeps an eye on the China Railway IPO: The Hong Kong retail portion of the $5.5bn dual listing was 250 times oversubscribed – representing orders worth about $58bn. And this in a market which is far from surging: … Continue reading →

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Extra Credit, Thursday Edition

Posted on March 6, 2008 by Felix

Learning from history at the LSE: "Citi shareholders must act, Goodhart said: all prospective chairmen should be tested for their quotability, and any with a talent for phrasemaking should be passed over ‘in favour of someone more boring’." Annals of … Continue reading →

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Google: Expensive, or Cheap?

Posted on March 5, 2008 by Felix

Herb Greenberg poses the conundrum, which I’ve translated into table form. Date Price p/e ratio IPO: August 2004 $100 52.3 July 2006 $386 65.3 March 2008 $444 23.6 By historical standards, the Four Horsemen are trading on very, very low … Continue reading →

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Blogonomics: Exit Through Acquisition

Posted on March 5, 2008 by Felix

Breakingviews, one of the least web-savvy websites in the world, ran a column by Jeff Segal on Monday about blog valuations. And given that breakingviews tries to disable copying and for all intents and purposes bans hyperlinks, it’s probably not … Continue reading →

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Zubin Jelveh, Pacesetter

Posted on March 5, 2008 by Felix

February 25: Portfolio’s Zubin Jelveh publishes a definitive article about NYU’s David Yermack and his research into CEOs’ gifts to their family foundations. March 5: The WSJ and NYT write copycat pieces. Maybe they thought that if they waited for … Continue reading →

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Delphi: The Post-Default Aftermath

Posted on March 5, 2008 by Felix

Were you someone who wrote credit protection on Delphi? If so, you’re feeling a bit as though you dodged a bullet write now. Alea reports: In 2005 when Delphi went bankrupt there was some fear of a short squeeze in … Continue reading →

Posted in bonds and loans, derivatives | 2 Comments

The Limits of Unemployment Statistics

Posted on March 5, 2008 by Felix

The Federal Reserve has a dual mandate: to promote maximum employment and low inflation. Note that it’s maximum employment, not minimum unemployment: that’s a very good thing, as any readers of today’s column from David Leonhardt will know. The average … Continue reading →

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Blogonomics: Tipjoy

Posted on March 5, 2008 by Felix

Did you follow my link to Francisco Torralba’s blog entry on mortgage securitization in Spain? If you did, and if you read his entry all the way to the end, you might have seen a little button there: Clicking that … Continue reading →

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Healthy Stocks, Unhealthy Economy

Posted on March 5, 2008 by Felix

Warren Buffett loves to talk about "moats": things which protect his portfolio companies from competition. And his core business – reinsurance – has some of the highest barriers to entry in the world. Chris Dillow takes these ideas to their … Continue reading →

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Foreclosure Datapoint of the Day

Posted on March 5, 2008 by Felix

From Barry Ritholtz’s Florida correspondent: There is currently an 8-10 month wait to get a court date to have a foreclosure filing heard in Dade and Broward counties… As one broker said to me, "these bums sitting in $3,000,000 homes … Continue reading →

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The Downside of Marking to Market

Posted on March 5, 2008 by Felix

Holman Jenkins has an excellent column today headlined "Mark to Meltdown?" on the degree to which mark-to-market accounting standards have exacerbated the current crisis. Certainly the present system is pro-cyclical, helping both to inflate credit bubbles and make their bursting … Continue reading →

Posted in accounting, banking | 1 Comment

Citi Trading Below Book

Posted on March 5, 2008 by Felix

Citigroup stock fell below book value yesterday – which is either despite or because of a long series of write-downs which served to lower that very value. Citi’s market capitalization is now $115 billion, which compares to, say, $177 billion … Continue reading →

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Don’t Trust Prediction Markets in the Final Hours

Posted on March 5, 2008 by Felix

After the polls closed in Texas last night, the DEM.TX.OBAMA contract on InTrade – the one judging his chances of winning the Texas primary – spiked up to 85, before embarking on a long and steady decline to zero. Clearly … Continue reading →

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Blogonomics: Peer Effects

Posted on March 5, 2008 by Felix

On Friday, David Harper asked me to introspect a little: he was impressed at how many blog entries I produced last week, and wondered how that happened. I try to answer any genuine questions which are asked of me, so … Continue reading →

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Extra Credit, Wednesday Edition

Posted on March 5, 2008 by Felix

This is what happens when you don’t blog for a day but you did have offline access to your RSS reader: the end-of-day roundup starts to get very long. Treasury Five-Year TIPS Yields Fall Below Zero for Third Day Will … Continue reading →

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Is it a Good Time to Sell Gold Yet?

Posted on March 4, 2008 by Felix

With gold topping $980 an ounce, talk of the IMF selling some of its gold reserves is resurfacing again – apparently the US is in favor of "limited" sales, but might still veto any gold-sale proposal, if that makes any … Continue reading →

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Are You a Global Visionary?

Posted on March 4, 2008 by Felix

There’s nothing quite like wading through a pile of backed-up email after a long day of travelling. I get my fair share of vapid press releases, but the one I got at 1:36pm this afternoon is in a class of … Continue reading →

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Auction-Rate Securities, RIP?

Posted on March 4, 2008 by Felix

Do auction-rate securities have a future? I’m not sure myself, so I put a couple of questions to Floyd Newton, a partner in King & Spalding’s finance practice. Floyd has a long history in the auction-rate market, and seems to … Continue reading →

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Watch Out Below!

Posted on March 4, 2008 by Felix

Enjoy.

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Extra Credit, Tuesday Edition

Posted on March 4, 2008 by Felix

I’m on assignment (or travelling, or at a board meeting) for most of Tuesday, so posting will be light to nonexistent. In the meantime… Against ambition: "Ambition is counter-productive for those who possess it, and for the economy generally." A … Continue reading →

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Homeownership Datapoint of the Day

Posted on March 3, 2008 by Felix

James Surowiecki: A study of several major developed economies between 1960 and 1996, by the British economist Andrew Oswald, found a strong relationship between increases in homeownership and increases in the unemployment rate; a ten-per-cent increase in homeownership correlated with … Continue reading →

Posted in housing | 1 Comment

Can Municipalities Wrap Themselves?

Posted on March 3, 2008 by Felix

The Prince of Wall Street has an intriguing idea: why can’t municipalities set up their own monoline? Why do we not see the big issuers of municipal bonds i.e. the Port Authority of New York and New Jersey, the State … Continue reading →

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NY’s Proposed Foreclosure Moratorium: Too Early

Posted on March 3, 2008 by Felix

Manny Fernandez reports that a pair of New York State lawmakers is attempting to implement a one-year-long moratorium on foreclosures. He illustrates the extent of the problem with this graphic: Now have a look at what Hank Paulson said today: … Continue reading →

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