Monthly Archives: November 2008

Extra Credit, Sunday Edition

Posted on November 30, 2008 by Felix

Burning Down His House: Steve Fishman on Dick Fuld. "At night, Fuld has trouble sleeping. Most of the time, he lives in Greenwich, Connecticut, in one of his five houses." U.K. Takes Majority Stake in Royal Bank of Scotland: Historic. … Continue reading →

Posted in remainders | 1 Comment

Further Adventures in Fried Pork

Posted on November 30, 2008 by Felix

Have you been to Back Forty recently? The first thing on the menu is a $4 starter of “Pork Jowl Nuggets with Jalepeno Jam” which is, I swear, the single greatest dish being served in New York City right now. … Continue reading →

Posted in Not economics | 2 Comments

Geithner isn’t Rubin

Posted on November 30, 2008 by Felix

Edward Helmore, of the (London) Observer, provides this weekend the neatest distillation of the "Geithner is Rubin" meme that I’ve yet seen: For Obama, the selection of Rubin acolytes suggests vulnerability. Yet defenders of the Rubinistas say it is not … Continue reading →

Posted in Politics | 1 Comment

Ben Stein Watch: November 30, 2008

Posted on November 29, 2008 by Felix

Ben Stein, last week, was all in favor of the government spending vast amounts of money. A truly serious stimulus package is very much in order. It has to be big enough and last long enough that Americans do not … Continue reading →

Posted in ben stein watch | 1 Comment

Rubin’s Teflon Finally Wears Off

Posted on November 29, 2008 by Felix

In one of the most ill-advised pieces of PR I can remember, Bob Rubin has given an on-the-record interview to the WSJ, in which he takes no blame or responsibility for anything which has gone wrong at Citigroup. The reaction … Continue reading →

Posted in banking | 1 Comment

Understanding Synthetics

Posted on November 28, 2008 by Felix

Over the past few days, two very smart people have asked me about a passage in Michael Lewis’s cover story for Portfolio in which he talks about synthetic CDOs without actually using the term. They said that they didn’t quite … Continue reading →

Posted in bonds and loans, derivatives | Comments Off on Understanding Synthetics

When a Publicly-Listed Hedge Fund Blows Up

Posted on November 28, 2008 by Felix

For the overwhelming majority of investors in hedge funds — and fund-of-funds managers, and hedge-fund consultants, for that matter — it’s really hard to get a solid grasp of any given fund’s risk management procedures. All funds will tell you … Continue reading →

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Extra Credit, Wednesday Edition

Posted on November 26, 2008 by Felix

Record U.S. CDS: 56 bp Things to be thankful for tomorrow: That we can pay real money for financial instruments insuring against the end of the world, which have almost zero chance of paying out if the end of the … Continue reading →

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

Blogonomics: Blodget’s Shopping List

Posted on November 26, 2008 by Felix

At the end Daniel Roth’s profile of Henry Blodget and Alley Insider, he reveals that Blodget and his main shareholder, Kevin Ryan, might want to go shopping: Blodget is broadening beyond tech to get ready for what he sees as … Continue reading →

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Did Citi Suffer a Run on Deposits?

Posted on November 26, 2008 by Felix

Vikram Pandit was on Charlie Rose last night, and was asked point-blank whether there was a run on Citi’s deposits last week. Here’s the exchange, at around the 10:40 mark: Charlie Rose: So you go to them and decide that … Continue reading →

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Is Volcker the Man for This Job?

Posted on November 26, 2008 by Felix

In theory, I like the idea of an Economic Recovery Advisory Board which will provide to the President "a ground-level sense of which programs and policies are working for people, and which aren’t". But I’m not at all convinced that … Continue reading →

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The Downside of Falling Mortgage Rates

Posted on November 26, 2008 by Felix

I’m scared by the latest uptick in mortgage financing. Mortgage rates fell sharply yesterday, which is good news for people with good credit. But it might also be good news for people with bad credit — and very bad news … Continue reading →

Posted in bonds and loans, housing | Comments Off on The Downside of Falling Mortgage Rates

When Banks Retain Depositors by Cutting Rates

Posted on November 26, 2008 by Felix

After Citibank confirmed to me that it was reducing the interest rates on its checking accounts to qualify for unlimited FDIC insurance, it’s now put out a big email to that effect — without quite coming out and saying so: … Continue reading →

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Extra Credit, Tuesday Edition

Posted on November 25, 2008 by Felix

A tsunami of hope or terror? How synthetic CDOs might end up saving the banking system. FHA-Backed Loans: The New Subprime: Those subprime lenders never went away, and the FHA is outmatched. The Brad DeLong question – and how to … Continue reading →

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Why We’re Ignoring Big Stock-Market Moves

Posted on November 25, 2008 by Felix

Megan Barnett notes today that extraordinary volatility is being met with shrugs. It’s true that it’s something to which we’re getting accustomed; I think there are two main reasons. The first is that in normal markets, a huge swing tends … Continue reading →

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The Difference Between Rubin and Paulson

Posted on November 25, 2008 by Felix

The Economist compares two Goldman Sachs chairmen turned Treasury secretary: Mr Rubin rose to the top through risk arbitrage. As a trader, he knew that the important thing was to understand the big picture, and get big calls right. He … Continue reading →

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Wall Street CEOs vs Geithner

Posted on November 25, 2008 by Felix

The single most important job on Tim Geithner’s impressive resume, in terms of qualifying him to be Treasury, secretary, is the job he holds now: president of the New York Fed. As such, he’s the Fed’s chief liaison to Wall … Continue reading →

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Berkshire’s Puts: Not Such a Great Idea

Posted on November 25, 2008 by Felix

Andrew Clavell delves into the murky world of Berkshire Hathaway’s equity put contracts, and concludes: The put owner has been forced into purchasing a lot more credit cover in a nasty cross gamma effect. No wonder BRK’s credit spreads have … Continue reading →

Posted in derivatives, insurance | 1 Comment

Art World Cost Saving Datapoint of the Day

Posted on November 25, 2008 by Felix

According to Alexandra Peers, the trendy way to economize these days is to increase Champagne consumption: at Art Basel Miami Beach, she says, "many events are doing just Champagne, to cut out the bartenders." I can’t make the sums work … Continue reading →

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Shrinking Outstanding CDS

Posted on November 25, 2008 by Felix

Good news on the CDS front: Markit and Creditex are quietly and efficiently netting out contracts, bringing down notional amounts in single names alone by more than $1 trillion at this point. This is a sensible way to reduce risk … Continue reading →

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The Broken Treasury Market

Posted on November 25, 2008 by Felix

If you want to worry about naked shorting, don’t worry about the stock market, where it’s vanishingly rare. Worry instead about the Treasury market, where it’s a major problem. Helen Avery has a huge and important story up about failures-to-deliver … Continue reading →

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Demonic Short Sellers

Posted on November 25, 2008 by Felix

Jim Surowiecki says, quite rightly, that short selling can cause viciously self-fulfilling downward spirals, especially in financial stocks. But reading the WSJ’s long and alarmist tale of what happened to Morgan Stanley in September, I’m more convinced than ever that … Continue reading →

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Citi: Will the Bailout be Enough?

Posted on November 25, 2008 by Felix

The WSJ has details of how the Citi bailout was structured: If the U.S. were to take another equity stake, Treasury Secretary Henry Paulson wanted it to be small, since otherwise the government would end up owning Citigroup. The officials … Continue reading →

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Extra Credit, Monday Edition

Posted on November 24, 2008 by Felix

The 7 Who Could Have Saved Citi: "Sandy Weill’s dream of creating an impenetrable financial colossus really has been realized." At JP Morgan, under Jamie Dimon. Headline du Jour: Move Along — No Rescue Talks Here: Apparently the White House … Continue reading →

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

Art Market Datapoint of the Day

Posted on November 24, 2008 by Felix

There aren’t many minimalist artworks with their own Wikipedia page, but Carl Andre’s Equivalent VIII is one of them, thanks to the uproar it caused in the UK press in the 1976. To this day, a huge proportion of the … Continue reading →

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