Monthly Archives: October 2008

Learning From Japan

Posted on October 17, 2008 by Felix

Has there been a more demoralizing and disappointing major stock market, over the course of the past 20 years, than Japan’s? It reached its nominal all-time high of 38,957 in December 1989; it closed today at 8,693, just 800 points … Continue reading →

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When Bloggers Debate

Posted on October 17, 2008 by Felix

On November 2, the Economist is returning to the magnificent Gotham Hall for its debate series, part of its Off the Page weekend of events. The first debate features bloggers Clive Crook and Will Wilkinson attacking the idea of corporate … Continue reading →

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Art Is Not An Investment

Posted on October 17, 2008 by Felix

Annie Deakin is acting editor of the website mydeco. The header of the homepage says this: Home furniture and interior design: beds, sofas, curtains, paint, wallpaper, tables and chairs Not on the list? Art. You can get that at mydeco … Continue reading →

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The Admirable Suze Orman

Posted on October 17, 2008 by Felix

I was recently flattered to be on a list of media winners from the credit crisis. But arguably the biggest winner of all wasn’t on the list: Suze Orman, who’s the subject of a mildly skeptical article in today’s WSJ. … Continue reading →

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Credit: No Easy Answers

Posted on October 17, 2008 by Felix

Robert Aliber has a peculiar op-ed in the FT, presenting a TARP plan "that should revive the market in mortgage-related securities, greatly enhance bank capital and earn several tens of billions of dollars for the US Treasury". It’s peculiar because … Continue reading →

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Surowiecki, Blogger

Posted on October 17, 2008 by Felix

O frabjous day! Jim Surowiecki now has a blog! It’s called The Balance Sheet, and he put up no fewer than six entries yesterday alone. The RSS feed is here: go add it to your feed reader now.

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Extra Credit, Thursday Edition

Posted on October 16, 2008 by Felix

LIBOR Stress could = $730B in damage already Chart of the Day: The Magic Hour: These crazy end-of-day swings are actually a new phenomenon. A Simple Hedge Fund Outflow Model: Last in, first out? Gold darn it: "When Crimnex opened … Continue reading →

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Adelson’s Losing Streak

Posted on October 16, 2008 by Felix

Back in March, when his company, Las Vegas Sands, was trading at over $80 a share, I reckoned that Sheldon Adelson’s bubble was ripe for bursting. Today, it’s bumping along at about $11. Is Adelson still the richest Jew in … Continue reading →

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Blogonomics: When Blogs and Links are Second-Class

Posted on October 16, 2008 by Felix

Econoblogs are now mainstream enough that even the Richmond Fed is publishing articles about them — even if this one is the kind of article which doesn’t exist in HTML format; explains that blog is "short for web log" and … Continue reading →

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More on Detroit Housing

Posted on October 16, 2008 by Felix

When I said yesterday that the median house price in Detroit was less than $10,000, Matt, in the comments, quite reasonably doubted the stat: That just does not pass any kind of smell test. $8,500 for a house or a … Continue reading →

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Great Moments in Punditry, Even-A-Stopped-Clock Edition

Posted on October 16, 2008 by Felix

Which prescient commentator wrote this, all the way back in January? The Fed is still behind the curve. There is a real solvency fear out there right now — a fear to lend at all, even at apparently advantageous rates. … Continue reading →

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Why Banks Can Lend at Less Than 5%

Posted on October 16, 2008 by Felix

Sprizouse asks, in the comments: If the banks all got capital injections at 5% why do we expect LIBOR to fall? The banks have to make 5.01% on the money, just to make a profit. Why isn’t this troubling for … Continue reading →

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Hexed

Posted on October 16, 2008 by Felix

Posting’s going to be light today: the volatility in the markets seems to have had, shall we say, some physical contagion. Either that or Charlie Gasparino put a hex on me. But of course I have to give you your … Continue reading →

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Extra Credit, Wednesday Edition

Posted on October 15, 2008 by Felix

Bailouts At a Glance: US vs UK. Candide, or Optimism: Why Paulson’s no hero. Next Victim of Turmoil: Your Salary Now Might Be a Good Time to Take the Social Security Trust Fund Balance Out of Treasuries and Move It … Continue reading →

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The Unreassurable Markets

Posted on October 15, 2008 by Felix

Megan Barnett has a good question: how come investment banks’ CDS spreads are widening, even in the face of an all-but-explicit government guarantee that they won’t be allowed to fail? The easy answer is that the markets are panicking. Boy … Continue reading →

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Detroit Housing Datapoint of the Day

Posted on October 15, 2008 by Felix

Greta Guest reports: The median price on a house or condo sold in Detroit last month plummeted 57%, to $9,250, from $21,250 a year ago, according to figures released Monday by Realcomp, a multiple listing service based in Farmington Hills. … Continue reading →

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Ben Bernanke, Revisionist

Posted on October 15, 2008 by Felix

This, from Ben Bernanke, is disingenuous: The difficulties at Lehman and AIG raised different issues. Like the GSEs, both companies were large, complex, and deeply embedded in our financial system. In both cases, the Treasury and the Federal Reserve sought … Continue reading →

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The Exercise of Raw Power

Posted on October 15, 2008 by Felix

Arnold Kling on Hank Paulson: This American Mussolini has captivated Washington by demonstrating the exercise of raw power. Which if you ask me is ridiculous. Paulson’s ears are much higher up on his head than Mussolini’s.

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The Unintended Consequences of Deposit Insurance

Posted on October 15, 2008 by Felix

Alan Blinder and Glenn Hubbard make a good point today: Memo to Washington: Take a deep breath and ask, "What is the problem that unlimited deposit insurance is meant to solve?" It is not people lining up to take their … Continue reading →

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Annals of Regulatory Arbitrage, German Structured Products Division

Posted on October 15, 2008 by Felix

What is it about German banks selling credit derivatives to their retail customers? Back in 2000 I wrote about a scandal involving Dresdner bank and many others, who used credit derivatives to transform Ecuadorean PDI bonds (dollar denominated, coupon 3.5%, … Continue reading →

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A Dark Morning

Posted on October 15, 2008 by Felix

A hardy perennial in sci-fi movies is the scene where people start firing ever-larger weapons at some alien object, only to see it wobble a little instead of getting obliterated as expected. I’m beginning to see the TED spread (432bp … Continue reading →

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Extra Credit, Tuesday Edition

Posted on October 14, 2008 by Felix

Taleb vs economists: "What we economists have to learn from Taleb has nothing to do with the nature of risk – we’ve all known that – but about others’ rationality." Related: I told you so: bankers are brainless. Bulls, Bears, … Continue reading →

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Investor Notes: BRICs and Credit Default Swaps

Posted on October 14, 2008 by Felix

A couple of notes from the lunch I went to this afternoon put on by Natixis Asset Management: •Ron Holt of Hansberger Global Investors passed along a provocative datapoint: that the total market capitalization of all Russia’s oil companies is … Continue reading →

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Will the Banks Lend?

Posted on October 14, 2008 by Felix

The NYT’s lead headline this afternoon is unambiguous: "Treasury Chief Says Banks Must Deploy New Capital". But in 2,300 words of reporting, reaching as far as a run on the Hungarian currency, this is the only mention of any requirement … Continue reading →

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Treasury’s Standardized Terms

Posted on October 14, 2008 by Felix

The details of Treasury’s recapitalization plan are out, and it’s more or less what I expected, but with a lower coupon. In fact it looks very much like Warren Buffett’s investment in Goldman Sachs, or MUFG’s investment in Morgan Stanley, … Continue reading →

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