Monthly Archives: December 2008

Defending Credit Default Swaps, Arnold Kling Edition

Posted on December 11, 2008 by Felix

One of the things I’ve been missing in recent months is a smart and detailed attack on credit default swaps: my slogan when it came to CDS is that "the less you know, the worse they look". So I’m very … Continue reading →

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Default Recovery Swaps

Posted on December 11, 2008 by Felix

With Bank of America flip–flopping on whether the appointment of a car czar constitutes an event of default for CDS purposes, Alea, who found the flip-flop, also finds a new default derivative product: the Default Recovery Swap. These things aren’t … Continue reading →

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Homeownership Makes You Fat and Unhappy

Posted on December 11, 2008 by Felix

Grace Wong dived deep into a survey of 809 women in Columbus, Ohio, in 2005 — before the property bubble burst — and came up with some startling results: An interesting portrait of homeowners emerges from my analysis. I find … Continue reading →

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Warren vs Treasury

Posted on December 11, 2008 by Felix

Many thanks to Andrew Leonard, a more adept web surfer than I, for tracking down Elizabeth Warren’s incendiary report to Congress on the disbursement to date of TARP funds. Unfortunately, it’s not only a PDF, but it’s also one which … Continue reading →

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The GMAC Game of Chicken

Posted on December 11, 2008 by Felix

The NYT does a good job today of explaining what’s going on at GMAC, although it doesn’t quantify the haircut that the company is asking bondholders to accept; my commenters put it in the 10% range, which seems roughly right. … Continue reading →

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AIG’s Speculative CDS Bets

Posted on December 10, 2008 by Felix

Did you know that AIG has a Blog Relations department? For real. They sent out a big email earlier today, which wound up in places as varied as Dealbreaker and Welt Online, taking issue with the WSJ’s story about them … Continue reading →

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The Goldman Munipal Conflict Non-Story Refuses to Die

Posted on December 10, 2008 by Felix

Remember the silly ProPublica report about alleged Goldman Sachs conflicts of interest in California? ProPublica subsequently took its act on the road, and used exactly the same Goldman report to produce an almost-identical article about New Jersey, in the Newark … Continue reading →

Posted in banking, journalism, Media, Politics | 3 Comments

How to Deal With GM’s Bondholders?

Posted on December 10, 2008 by Felix

If the comments on my GMAC bond entry earlier this morning are any indication, it’s going to be harder than I think a lot of people anticipate to bail in GM’s bondholders as part of any government bailout. Here’s three: … Continue reading →

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Q Datapoint of the Day

Posted on December 10, 2008 by Felix

Remember Pimco’s graph of Q showing it around the 0.3 level? I wasn’t sure where that number came from, and now CLSA’s Russell Napier has come out with a slightly more realistic (to me) number — which is also a … Continue reading →

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Finding Holes in the TARP

Posted on December 10, 2008 by Felix

Elizabeth Warren is on the warpath. As chair of the Congressional Oversight Panel, charged with making sure TARP expenditures make sense, she’s going to be scathing, according to the WSJ, when she presents her first findings to the House today. … Continue reading →

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GMAC’s Recalcitrant Bondholders

Posted on December 10, 2008 by Felix

Can someone explain what’s going on with this GMAC tender offer? The basics of the situation are clear: back on November 20, GMAC (which is 51% owned by Cerberus and 49% owned by GM) offered to swap existing bonds for … Continue reading →

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Monopoly Money

Posted on December 9, 2008 by Felix

Larry Doyle thinks he’s joking: That’s when the bankers and the C.E.O.s all disappeared into that underground paradise they’ve been building since the eighties; that’s when women’s skin started falling off; that’s when the Treasury Department, in a last-ditch effort … Continue reading →

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Extra Credit, Tuesday Edition

Posted on December 9, 2008 by Felix

Three-Month Bill Yield Goes Negative: I guess the credit crisis ain’t over yet. Liquidity, Default, Risk: Brad DeLong on where the money went. Waldmann comments. Infrastructure: Roads and The Smart Grid: Where infrastructure money should, and shouldn’t, be spent. Deep … Continue reading →

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Don’t Fund Infrastructure Projects Separately

Posted on December 9, 2008 by Felix

Barack Obama wants to spend tens and possibly hundreds of billions of dollars on new infrastructure projects. It’s lucky that the government can borrow money for free, right? After all, whenever the government takes on obligations which are funded through … Continue reading →

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In Defense of the CDS Market

Posted on December 9, 2008 by Felix

John Dizard wants to kill off the entire CDS market. It does no good, he says, and quite a lot of harm, and we’d all be better off without it. I disagree. Dizard says there are only "three possible defences … Continue reading →

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The Auto Bailout, in a Nutshell

Posted on December 9, 2008 by Felix

What is that fugly minivan, anyway? And why do I get carsick just looking at it?

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Civil Society: Falling Apart

Posted on December 9, 2008 by Felix

Yesterday, the idiot was Marc Dreier; today, it’s Rod Blagojevich. Both of them powerful men near the very top of their professions; both of them sworn to uphold the law; both of them resorting to the kind of desperate criminality … Continue reading →

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Nationalizing Detroit

Posted on December 9, 2008 by Felix

David Sanger has an insightful and sober piece in today’s NYT which first calls a spade a spade — yes, we are in the process of nationalizing the Big Three — and then looks at the implications. If the government … Continue reading →

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Extra Credit, Monday Edition

Posted on December 8, 2008 by Felix

The stock market’s 1930s-style behavior: "It’s awfully hard to say at the moment what shares in publicly traded corporations, especially financial corporations, might be worth. A lot of them might be worth nothing at all. So it really shouldn’t be … Continue reading →

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Conspicuous Consumption Datapoint of the Day, Private Jet Edition

Posted on December 8, 2008 by Felix

Times have changed over the past ten years when it comes to attitudes to private jets. In October 1998, Nathan Myhrvold famously wrote a lavishly-illustrated paean to his Gulfstream V in Vanity Fair, and even appeared in a Gulfstream ad … Continue reading →

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Why Elizabeth Warren is an Inspired Choice to Oversee TARP

Posted on December 8, 2008 by Felix

Tom Brown has a peculiar column today taking issue with the inspired choice of Elizabeth Warren to chair the panel overseeing the TARP program. The problem, in his eyes, is that Warren is a fighter for consumers, rather than banks. … Continue reading →

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Re-defaults

Posted on December 8, 2008 by Felix

The word of the day is re-default: Comptroller of the Currency John C. Dugan said today that new data shows that more than half of loans modified in the first quarter of 2008 fell delinquent within six months… A key … Continue reading →

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Thain’s Bonus

Posted on December 8, 2008 by Felix

A bunch of investment-bank CEOs are dangling from a rising hot-air balloon. Dick Fuld, as we know, held on for too long, and by the time he finally let go, there was too far to fall, and he died. Jimmy … Continue reading →

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The Case for Making Bigger Cars

Posted on December 8, 2008 by Felix

I just watched the webcast of Paul Krugman’s Nobel Prize lecture (slides here). In it, he laid out his theories of economic geography, which help explain why industries tend to cluster in certain geographical locations. He ended on a topical … Continue reading →

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Is Goldman Covered by the Community Reinvestment Act?

Posted on December 8, 2008 by Felix

Sanford Bernstein’s Brad Hintz knows much more about banking than I do. And he seems to have discovered a CRA loophole, at least insofar as the Community Reinvestment Act applies to Goldman Sachs: Mr Hintz, who predicts a change in … Continue reading →

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