Monthly Archives: September 2008

Frannie’s Future

The NYT talks today of "Mr. Paulson’s long-term desire to wind down the companies’ portfolios, drastically shrink the role of both Fannie and Freddie and perhaps eliminate their unique status altogether". It’s not a bad idea, and I like the … Continue reading

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The Frannie Bailout and the Prisoner’s Dilemma

John Hempton has an interesting take on the Frannie bailout: the markets forced Treasury to take this step by being irrational. It’s almost as though there was some kind of collusion going on. Remember the prisoner’s dilemma? Given the choice … Continue reading

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Chart of the Day: U6

Brad DeLong sums up in two words: "Recession city". U6 is a very broad gauge of unemployment, but even so, any unemployment figure which is above 10% and rising has to be very worrisome indeed.

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Drilling for Revenues

Free Exchange has it right, I think, and Tyler Cowen is being needlessly self-abnegating. Drilling for US oil might well make sense as a matter of fiscal policy, especially for Alaska; it gets us nowhere fast as a an "energy … Continue reading

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Too Many Shorts

CEOs often worry that if there are lots of shorts, that’s bad for their stock price. Meanwhile, the likes of John Hempton worry that a lot of short interest could be very good for the stock price. Me, I think … Continue reading

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Rescuing Frannie

It’s easy to get caught up in the minutiae — should shareholders be wiped out, or merely massively diluted? What should happen to preferred shareholders? Can the government create a new class of senior subordinate debt, and if so, should … Continue reading

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Extra Credit, Friday Edition

A masterwork goes missing: By Fernand Leger. "’It’s the largest loss Travelers ever had,’ said Andrew Gristina, director of fine art insurance for the company." All locked-up: A $2.3 billion fund with a 25-year lock-in. Moody’s and model risk, redux: … Continue reading

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Unemployment Passes 6%

I don’t know much about GDP, but this feels like a recession to me. The unemployment rate of 6.1% is up from just 4.9% in the first quarter of this year: that’s one torrid growth rate you don’t want to … Continue reading

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When Universities Manage Other People’s Money

I’ve finally found some concrete examples of university endowments managing other people’s money — and it turns out to be quite a large business. Anne Tergesen gave a good overview of one way this happens in a BusinessWeek article from … Continue reading

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Climate Engineering Proposal of the Day

Freeman Dyson waxes imaginative in the NYRB: Snow-dumping in East Antarctica would be a good way to stop sea levels from rising… East Antarctica is much colder and larger than Greenland and West Antarctica, and the ice cap on East … Continue reading

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Rent vs Buy Datapoint of the Day

How do we know we’re in a housing bubble? One way of knowing is by looking at house prices, which during the bubble were rising much more quickly than rents. That was clearly unsustainable. But today, in a CPI FAQ, … Continue reading

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Hyperbole on the Front Page

The WSJ’s stylebook editor, Paul Martin, issues a hyperbole alert: In times of economic anxiety, it is tempting to use scary words to try to dramatize the situation. But we should curb the urge. "Plummet? A highway-tax revenue decline of … Continue reading

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How are Covered Bond Ratings Determined?

Remember covered bonds? They’re ever so safe, because not only are they overcollateralized, they’re also guaranteed by the issuing bank. As a result, Hank Paulson has been dropping hints that he’d like to see the mortgage industry move in the … Continue reading

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Extra Credit, Thursday Edition

Citi Adds Client Chief to Its C-Suite: They might have called him Chief Customer Service Representative, but then once the bloggers got his phone number, it would have been all over. Does Windows Still Matter? Microsoft has been doomed since … Continue reading

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Global Property Bubbles: Not Bursting

The housing bubble was not confined to the United States. If anything, the bubble here was later and smaller than in most of Europe. So it’s hardly surprising that house-price declines are not confined to the US either. According to … Continue reading

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LPs vs Shareholders at Blackstone

A Blackstone spokesman is quoted in the WSJ today, saying that the investors in the company’s funds are very happy that Blackstone went public. "Our LPs are very comfortable with our status as a public company," said a Blackstone spokesman. … Continue reading

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Cut Short

Many corporate executives, and a fair few politicians, like to rail against evil short-sellers. Large investors, by contrast, tend not to, even if they’re long-only. Part of the reason is that they actually like short-sellers. For one thing, they can … Continue reading

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Zimbabwe Photo of the Day

This quadrillion-dollar check was written back in July. Just as well the amount was rounded off to the nearest million dollars, or the written-out part might not have fit in the space available. (Via Prieur du Plessis, via Humble Money)

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Interns and Signalling

It’s not an irony, it’s simple causality: the New York Sun treats its interns so atrociously because it could fail at any minute. The Sun’s memo to interns is worth reading. It seems to dwell on the hardships of the … Continue reading

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How Universities Manage Other People’s Money

A high-profile philanthropist got in touch with me after reading my blog entry on the Harvard endowment yesterday. He made an excellent point about why would-be Harvard replicators are never going to be likely to achieve Harvard’s returns: they don’t … Continue reading

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Extra Credit, Wednesday Edition

Platform Blogging: Do the Republicans think that WWII cost less than the Iraq war? Wile E. Coyote Won’t Make Mark on South Korea You Must Remember This? KKR Hopes Not: "During 2007, when KFN lost $100 million, its managers made … Continue reading

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Sports Profit of the Day

The NYT reports on Abu Dhabi’s purchase of Manchester City FC, and then zooms out to cover the bigger story of rich foreigners buying English football clubs: As the Emirates get richer, Western entrepreneurs who bought into British soccer on … Continue reading

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How Jamie Dimon Manages Risk

Fortune’s Shawn Tully has a highly complimentary profile of Jamie Dimon which tries to explain exactly how he managed to dodge the subprime bullet: One red flag came from the mortgage servicing business, the branch that sends out statements, handles … Continue reading

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Quinn’s Built-In Hedges

One of the most visible effects of the astonishing run-up in contemporary art prices is the soaring budgets for new works. It’s not just Damien Murakoons, either — everybody from Noble & Webster to Mariko Mori is making million-dollar sculptures … Continue reading

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Call to (Broken) Arms of the Day

Jokes are far from unheard-of in academic papers, but an entire series of belly laughs is rare indeed. Run don’t walk to Hazardous Journey, the full title of which is "Parachute use to prevent death and major trauma related to … Continue reading

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