Monthly Archives: June 2008

The Million Dollar Active vs Passive Wager

Warren Buffett has a 10-year, $1 million bet with some fund-of-funds managers: he reckons that his investment in Vanguard’s S&P 500 index fund will outperform their portfolio of five fund-of-funds. It’s a pretty standard active vs passive bet, albeit for … Continue reading

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Lehman Stock: The Silver Lining

When Lehman Brothers stock closed Friday at $32.29 a share, that put the bank on a price-to-book ratio of 0.82, based on Lehman’s Q1 announcement that it had a book value of $39.45 per share. When Lehman Brothers stock opened … Continue reading

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Silverjet: Phoenix or Zombie?

Are you worried about $140 oil and the concomitant rise in jet-fuel costs? Heritage isn’t. The Ireland-registered Swiss investment company wants to buy Silverjet for ߣ5 million or so (call it 12 cents on the dollar for creditors) and get … Continue reading

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SWF Monday

Today is an excellent day to look for the latest information on the subject of sovereign wealth funds. For one thing, it marks the publication of a 92-page Monitor Group report on the subject, which looks at the funds in … Continue reading

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Lehman’s Slow-Motion Trainwreck Continues

Banks, by their nature, are opaque creatures, and investment banks even more so. Even when they have a public listing and aren’t owned by a much larger financial-services entity, it’s almost impossible to tell from outside what’s going on inside … Continue reading

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Martin Sullivan Deathwatch, Redux

Martin Sullivan is still holding on to the CEO job at AIG, despite last month’s attempt to use the WSJ to oust him. Still, if at first you don’t succeed, try again, and so there’s a new front-page WSJ story … Continue reading

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Geithner’s Plan to Revamp Global Financial Regulation

Tim Geithner has an important article in the FT today, headlined "We can reduce risk in the financial system". He’s entirely right, and his proposals are entirely sensible. Geithner was one of many regulators who warned about the credit bubble … Continue reading

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Europe: Watching Soccer, not the Markets

Late on Friday night, German time, I got an email from Portfolio headquarters in New York. "Not that I need to tell you this," it said, "but give us a little taste of how Europe is shaping up Monday morning." … Continue reading

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Ben Stein Watch: June 8, 2008

Ben Stein this week uses his column to lay a thousand-word guilt trip on his son. Never mind that entire book he wrote about the joys of fatherhood, the main point that Stein wants to get across right now is … Continue reading

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The Second Wave of Bank Troubles

Floyd Norris notes that the S&P financials have sunk back to their mid-March lows. But although the index as a whole is back at its mid-March level, its components generally aren’t. What we’re seeing is pretty much what Mohamed El-Erian … Continue reading

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Extra Credit, Friday Edition

New study calls for $45 trillion to cut greenhouse gases in half by 2050 Billers, Players, and Income Inequality Idiosyncrasy in house prices: "When I had my flat valued, the highest valuation was more than 10% above the lowest. 4.4% … Continue reading

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Journalism by the Column Inch

Is Sam Zell taking a page out of Nick Denton’s book? Denton, overseeing bloggers, judges them on the number of pageviews they generate; Zell, overseeing newspaper journalists, is judging them on the number of column inches they generate: The struggling … Continue reading

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How the FT is Losing the Financial Opinion Wars

Do you read the FT’s "popular and influential Lex column"? The phraseology comes from a Guardian story today, but it’s something of a journalistic cliché: the FT definitely considers Lex to be a flagship franchise. But in fact there’s a … Continue reading

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Valuing Modernist Architecture

Dan Gross has a most peculiar column about collectible architecture, something I’ve been writing about quite a bit: Can historic Modernist homes be treasured, shown, and monetized like Warhols and Gauguins? A recent visit to one of America’s best-known and … Continue reading

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The Public School vs Private School Debate

Tyler Cowen brings up one of my favorite subjects: the dollar value (as opposed to the dollar cost) of private schooling. And I’m happy he comes down on my side of a question which will never be resolved to everybody’s … Continue reading

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How to Reduce Greenhouse Gas Emissions in a World of Corporate Pork

Daniel Hall unwraps a rarely-heard yet very powerful argument in favor of cap-and-trade over carbon taxes. Essentially, coporate pork in a cap-and-trade system (free emissions allowances) is much less harmful than corporate pork in a carbon-tax system (lower taxes, or … Continue reading

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Extra Credit, Thursday Edition

Exodus of the Polish plumber: "There were an estimated one million British-based Poles at one time but half have now left the U.K." Backstage at a Bank Funeral: Feds Swoop In on an Unsuspecting Town The Ascent of Central Bankers … Continue reading

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The Monoline Downgrade Nonevent

How we’ve moved on from the Days of Panic: S&P today downgraded both Ambac and MBIA, and as of now (a couple of hours later) the news still hasn’t made it to the NYT’s business front page; on the wsj.com … Continue reading

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Modelling Financial Stability

Alan Greenspan once complained that "we lack the kind of analytical framework for financial stability that we have for monetary policy" – something which is clearly a problem when central banks are in charge of both things, and especially in … Continue reading

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Left-Wing Democracy in Action, Ecuador Edition

As you surely know, Ecuador is in the process of putting together a new constitution. And this week’s report on Ecuadorean politics and economics from Analytica Securities in Quito (you are on their email list, right?) outlines few of the … Continue reading

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Corporate Taxes vs Income Taxes

Confused by the fight between Greg Mankiw and Brad DeLong over whether or not we should cut the corporate tax rate? Well, this is likely to confuse you even more: Steve Waldman has a great evisceration of Mankiw’s arguments – … Continue reading

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Exxon’s Hoard

I missed this, last week: Exxon Mobil has amassed a large pile of common stock held in treasury. At the end of 2007, the company had 2.367 billion shares held in treasury, for which it paid $113 billion over the … Continue reading

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Why Cap-and-Trade Beats a Carbon Tax

Brad DeLong reckons that the relative merits of carbon taxes and cap-and-trade "roughly offset each other". "To first order cap-and-trade and carbon taxes are the same," he says, but there are second- and third-order differences. Among the second-order differences are … Continue reading

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The Perils of Construction in the US

Did Goldman Sachs know this when it started construction on its new headquarters? According to Department of Labor statistics, more than three construction workers died per day in 2006, the latest available figures. So far, thankfully, no one has been … Continue reading

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The Sorry Story of Jefferson County’s Sewer Bonds

One of Andrew Clavell’s best posts is the one where he was giving advice, retrospectively, to a Pennsylvania school board which was being sold swaptions by investment bankers: Admitting you don’t know is pure alpha; you will not claim to … Continue reading

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