Monthly Archives: October 2008

Blogonomics: Gawker Kills Pay-Per-Pageview

Posted on October 5, 2008 by Felix

A couple of interesting developments in the world of blogonomics: First, Gawker’s Nick Denton has, at least for the time being, killed his pay-per-pageview model. It’s predicated on the idea that advertising revenues will rise with pageviews, but the outlook … Continue reading →

Posted in blogonomics | 1 Comment

Extra Credit, Friday Edition

Posted on October 4, 2008 by Felix

Schwarzenegger to U.S.: State may need $7-billion loan Things that make you go "eww": Trichet’s unfortunate choice of words. Manhattan real estate prices headed downward

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Iceland: When Too Big To Fail Becomes Too Big To Rescue

Posted on October 3, 2008 by Felix

We know that credit ratings agencies made enormous errors over the past few years when it came to rating structured products. And of course it’s never easy to rate leveraged institutions, like banks, which are susceptible to runs. But what … Continue reading →

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So Much for the Bailout

Posted on October 3, 2008 by Felix

On Monday morning, it looked as though Congress was going to pass the bailout bill, and the S&P 500 opened at 1,204. Here we are on Friday afternoon, and Congress has indeed passed the bailout bill; the S&P closed the … Continue reading →

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Citi Examines its Carrots and Sticks

Posted on October 3, 2008 by Felix

I just got off the phone with Carl Tobias, a professor at Richmond School of Law; I asked him whether the exclusivity agreement between Citigroup and Wachovia was worth the paper it was written on. His take was that it’s … Continue reading →

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How Have Credit Unions Survived the Crisis?

Posted on October 3, 2008 by Felix

John Gapper has post up about "the enduring financial advantages of mutuality", talking about insurers, investment banks, and British building societies. The ones which went public got an immediate windfall upside, but also a longer-term downside: One effect was that … Continue reading →

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The Citi Exclusivity Agreement

Posted on October 3, 2008 by Felix

Here is the exclusivity agreement upon which Citigroup is placing so many of its hopes; it was signed by executives from both Citi and Wachovia. If it holds up in court, Citi might just be able to walk away with … Continue reading →

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How Banks Hedge Counterparty Risk

Posted on October 3, 2008 by Felix

Here’s the long post I promised yesterday on hedging counterparty risk. It’s by someone who wishes to remain anonymous, but who used to do this for a living at a very large bank. It’s also incredibly wonky, even without a … Continue reading →

Posted in banking, derivatives | 7 Comments

Sell Signal of the Day, Greenspan Edition

Posted on October 3, 2008 by Felix

Alan Greenspan’s calling a bottom: Former Federal Reserve Chairman Alan Greenspan said financial markets and the economy will recover "sooner rather than later" from the worst turmoil in seven decades. "Trust will eventually reemerge as investors dip hesitantly back into … Continue reading →

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Bailout Datapoint of the Day, AIG Edition

Posted on October 3, 2008 by Felix

Remember the $85 billion loan that the US government extended to AIG? It turns out the insurer really needed that much money after all: The firm tapped about $61 billion of the federal credit line after saying Sept. 16 it … Continue reading →

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Wells-Wachovia: Good for Everyone but Citi

Posted on October 3, 2008 by Felix

Maybe Warren Buffett changed his mind? Wells Fargo has now snatched Wachovia out of the jaws of Citigroup. This deal is good for the US taxpayer, which no longer has to backstop the acquirer’s losses on the deal, and bad … Continue reading →

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Extra Credit, Thursday Edition

Posted on October 3, 2008 by Felix

Fed Watch: Rate Cuts Increasingly Likely Bailout narratives: "The real financial rescue still lies in the future, probably under the Obama administration." Can we wait that long? Introduction to SwapRent: If debt-to-equity swaps work for banks, why not for houses … Continue reading →

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The Downside

Posted on October 2, 2008 by Felix

The S&P 500 closed today at its lowest end-of-day level since October 2004 — lower, even, than it closed on Monday. I spent much of the afternoon talking to perennial pessimist Bill Rhodes, at Citibank, who was keeping one eye … Continue reading →

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Is Transparency Always a Good Idea?

Posted on October 2, 2008 by Felix

I’m not a fan of this proposal from Josh Rosner, via Gillian Tett: Joshua Rosner, a New York analyst, for example, has made the sensible suggestion that AIG should reveal the banks that have received credit protection as a condition … Continue reading →

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Soundbite of the Day, Customer Service Department

Posted on October 2, 2008 by Felix

Tyler Cowen: Bush, Bernanke, Paulson — we call them leaders. The Chinese think of them as the customer service department. I suspect the Chinese get straighter answers from them than we ever do. Related: Alea has an intriguing answer to … Continue reading →

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Why Mark to Market?

Posted on October 2, 2008 by Felix

How was I not aware, until now, that what looks like a full RSS feed for Justin Fox’s excellent Curious Capitalist blog actually isn’t? He didn’t write 314 words on the pros and cons of marking to market: in fact … Continue reading →

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Why the Bailout Bill Alone Won’t Solve the Credit Crisis

Posted on October 2, 2008 by Felix

I’m not surprised that three-month Libor ticked up again today, to 4.21%. TED’s now at 357bp (chart above), which is really bad, and it’s going up, not down. While the stock market has settled down after the chaos of Monday, … Continue reading →

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There’s No Such Thing as Risk-Free

Posted on October 2, 2008 by Felix

Andrew Hill is, I fear, a bit confused. He starts off with the very important point that in these days of monster bailouts government guarantees ain’t what they used to be: Pause a second before you transfer your sterling deposits … Continue reading →

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Goldman Sachs and the Regulatory Arbitrage Trade

Posted on October 2, 2008 by Felix

Sam Jones has a great piece this morning on regulatory arbitrage under Basel II — which turns out to have been one of the big business lines of the doomed AIG Financial Products. Banks have to have a certain amount … Continue reading →

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Zero-Baseline Datapoint of the Day

Posted on October 2, 2008 by Felix

The $9.3 billion Short Term Fund, offered as a place for schools and colleges to park their cash and get "returns slightly above U.S. Treasury bills", has now been frozen by its trustee, the stub of Wachovia which wasn’t taken … Continue reading →

Posted in hedge funds, investing | Comments Off on Zero-Baseline Datapoint of the Day

A New Derivative

Posted on October 2, 2008 by Felix

What was all that about derivatives being finanial weapons of mass destruction? Not any more! Chicago-based Actuarials Holdings, parent company of the Everest OTC Trade Facility and the AE Clearinghouse, has unveiled what it says is a revolutionary ‘safe’ derivative … Continue reading →

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Extra Credit, Wednesday Edition

Posted on October 2, 2008 by Felix

Making Sense of Manhattan Real Estate: Can’t be done. House Price Calculator: From OFHEO. Seems a bit optimistic. WaMu Changes Stance On Grey: It’s the new blue! Global Derivatives Market now valued at $1.14 Quadrillion: Yet another entry in the … Continue reading →

Posted in remainders | Comments Off on Extra Credit, Wednesday Edition

The Human Toll of the Credit Crisis

Posted on October 1, 2008 by Felix

If you check out Joe Nocera’s blog at the NYT, it’s accompanied by this smiling photograph: But scroll down a little, and you’ll see what the credit crisis has wrought: Legislators, pass the bailout bill! Our journalists can’t take much … Continue reading →

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Don’t Get Sanguine About This Bill

Posted on October 1, 2008 by Felix

After the lessons we learned on Monday, it’s a good idea to pay attention to people who say that the bailout bill is going to have difficulty getting passed in the House. And Andrew Leonard, today, says just that: The … Continue reading →

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Even the Shorts are Losing Now

Posted on October 1, 2008 by Felix

How on earth did David Einhorn’s Greenlight Re contrive to lose 11.5% on its investment portfolio in September, the month that Lehman Brothers went bust? Einhorn has famously been short Lehman for many months, and the short-selling ban didn’t apply … Continue reading →

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