Monthly Archives: December 2008

How Sticky are Wages?

David Leonhardt on deflation, Wednesday: The drop in prices, which isn’t over yet, will make life easier on millions of people. It’s possible, in fact, that the current recession will do less harm to the typical family’s income than it … Continue reading

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Extra Credit, Wednesday Edition

Can She Save the S.E.C.? Norris on Schapiro. "If anyone can force a merger of the S.E.C. and the C.F.T.C., she can." Henry Paulson: Justin Fox’s spot-on profile. Chasing Bernard Madoff: The WSJ on Harry Markopolos. See also the Boston … Continue reading

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Bernie Madoff, Confidence Destroyer

A large number of fund-of-funds firms and other advisory shops are crowing these days about how they looked at Madoff, saw red flags, and didn’t invest. But the fact is that every fund manager who is looked at by fund-of-funds … Continue reading

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Why Isn’t ProPublica Attacking Citigroup?

ProPublica got its knickers in a twist when it discovered that Goldman Sachs had put out negative research on California, which had the potential of raising California’s borrowing costs. Just imagine what would have happened if a major bank put … Continue reading

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Adam Levitin on Credit Card Minimum Payments

In behavioral economics, "anchoring" is a well-known phenomenon, and so it’s not surprising that when people get credit-card statements, the lower the minimum payment, the less they’re likely to pay. According to the Economist, the minimum-payment boxes are actually a … Continue reading

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The Saddest Sentence of the Day

From Alexandra Penney, Madoff victim: I suddenly had a lot of money. I was in my late forties, and I felt that I was just too old to have it in a plain old bank account. (HT: Wiesenthal)

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When Monetary Policy Is Fiscal Policy

Martin Wolf is good at startling sentences. Today he preps us with this left hook: As Robert Mugabe has shown, anybody can run a printing press successfully. Only to follow up with this right jab: At the zero-rate boundary, fiscal … Continue reading

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Filial Affection Datapoint of the Day

Cityfile NY reports: Although the millions in Bernie’s foundation were managed by his own investment firm, neither son entrusted their charitable trusts to their dad. Mark Madoff’s $5 million account was parked at Lehman Brothers. Andrew’s $2 million trust was … Continue reading

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Madoff’s Innocent Victims

The saddest aspect of the Madoff scandal is the number of people who gave Bernie Madoff money they couldn’t afford to lose. Many charities fall under this general heading: they were formed for the purpose of giving money to the … Continue reading

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More Evaporating Billions at Morgan Stanley

Morgan Stanley’s earnings this morning are truly dreadful. When your stock is trading around $15 a share, a quarterly loss of $2.24 per share is a big deal. But in fact it’s worse than that: the bank recorded "net revenue … Continue reading

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Extra Credit, Tuesday Edition

Yale President Richard Levin Letter on the Yale Endowment: A pitch-perfect, unpanicked reaction to the endowment’s decline. Continuing woes of FT.com: Alphaville was so broken today it had to move to Facebook. Robust, thorough due diligence is off: The evolution … Continue reading

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The Madoff Game

The Excel-based BreakingViews Bernie Madoff game, which I could never get to work, has now showed up online, which allows me my own guess at how Madoff got to $50 billion. Hugo Dixon assumed an initial investment of $1 billion … Continue reading

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Did Geithner Bail Out Goldman Sachs?

Add the NYT editorial board to the Goldman Sachs conspiracy theorists. It asks some good questions about Lehman revisionism, but then ends up with this: The revised version of the story sidesteps questions about whether the bailout of A.I.G. — … Continue reading

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Zirpish

It’s not 0%, but rather a "target range", which sounds like somewhere you go to fire a gun. I can kinda see what the Fed is driving at here: given the difficulty of using open-market operations to set the Fed … Continue reading

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The Diet Soda Paradox

John Gapper worries that taxing non-diet sodas would be regressive. I worry that it wouldn’t even do what it is designed to do, which is reduce obesity: all it would do is increase the amount of diet sodas consumed, and … Continue reading

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Lehman Revisionism Watch, Unexpected Loan Edition

Andrew Ross Sorkin seems to have caught Hank Paulson and Ben Bernanke out in a bit of a fib. They couldn’t bailout Lehman, said first Paulson and then Bernanke, because Lehman didn’t have the collateral needed to put up against … Continue reading

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Vegas Q: 0.26

MGM Mirage has sold its Treasure Island casino for $775 million to Phil Ruffin Sr: "I knew to build a 3,000-room hotel today would cost $3 billion," Mr. Ruffin told The Wall Street Journal. "I think it’s a good value." … Continue reading

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Is Carl Shapiro a Madoff Victim?

The WSJ has found what seems, on its face, to be one of the most tragic stories of the Madoff affair: Carl Shapiro, a 95-year-old apparel entrepreneur and investor, had $545 million with Mr. Madoff — creating what could become … Continue reading

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Goldman Starts Getting Smaller

Thanks to the tactical leak to the WSJ a couple of weeks ago, today’s Goldman Sachs results are not particularly surprising, even if they are genuinely atrocious. And it’s also not news that all of the losses came from the … Continue reading

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Extra Credit, Monday Edition

Profitable Until Deemed Illegal: "About as close to pure, distilled evil in a business plan as I’ve ever seen." A Pennsylvania Save, Funded by Tarp: TARP saves 9,000 jobs! There, that was surely worth $350 billion. Fairfield Greenwich Group: We … Continue reading

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Madoff’s Trading Statements

One of the things which reassured Bernie Madoff’s investors was the detailed trading records he sent to investors. Zachery Kouwe has one such document, and thinks even that one smells a little fishy: A spot check of the November statement … Continue reading

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The Difference Between Televisions and Pianos

Costco sells televisions. Here’s what its CFO had to say on the subject of recent sales, as reported by Jeff Matthews: Our television sales have been way up in November…. [W]e had unit sales up over 50% in the four … Continue reading

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Ecuador Own-Goal Datapoint of the Day

Just how much damage can one president do by defaulting on a single $30 million coupon payment? Well, he can cut off his country’s access to US markets, via the Andean Trade Promotion and Drug Eradication Act, and he can … Continue reading

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National Lampoon’s Farcical Market Manipulation

From the SEC complaint against National Lampoon: The complaint alleges that Laikin and Barsky paid at least $68,000 that went to Rodriguez, Dougherty, and the CW to cause the purchase of at least 87,500 shares of National Lampoon stock. Through … Continue reading

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Can Hedge Funds Be Fraudulent?

I’ll be on NPR’s Planet Money podcast today, trying my best to explain what a hedge fund is. As John Gapper says, it’s crucial to understand that Bernie Madoff did not have a hedge fund, and that hedge funds tend … Continue reading

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