Monthly Archives: December 2008

Extra Credit, Sunday Edition

Posted on December 7, 2008 by Felix

Port Authority: You overconfidence is your weakness Fleckenstein Shutting Down Short Hedge Fund Costco: "The kid’s sitting in the cart, and she sees a guy carrying a 19" flatscreen, and she goes, ‘Look! He has a tiny one!’ and the … Continue reading →

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

When Lower Mortgage Rates Don’t Boost House Prices

Posted on December 7, 2008 by Felix

There’s been some very good commentary in recent days about whether a reduction in mortgage interest rates might help boost house prices. Counterintuitively, the answer seems to be that there’s a good chance it won’t: A 2006 study of mortgage … Continue reading →

Posted in housing | Comments Off on When Lower Mortgage Rates Don’t Boost House Prices

Zell’s Not Smiling

Posted on December 7, 2008 by Felix

On April 3, 2007, Sam Zell was triumphant. The headline in the WSJ was "Zell Wins Tribune In Bid to Revive A Media Empire", and the story was accompanied by a dot portrait of a happy, smiling grave-dancer. Today, the … Continue reading →

Posted in Media | Comments Off on Zell’s Not Smiling

When Newspapers Get Lazy

Posted on December 6, 2008 by Felix

The wsj.com home page today features, prominently, an article on fund manager Ken Heebner, who’s long bank stocks, and I can’t for the life of me work out what it’s doing there. Heebner was a media star back when he … Continue reading →

Posted in journalism, Media | Comments Off on When Newspapers Get Lazy

Extra Credit, Saturday Edition

Posted on December 6, 2008 by Felix

Bank of America’s Merrill Takeover May Be Tough Deal: Great quote on Ken Lewis: "The companies he’s been acquiring all make sense strategically, but the timing and price almost always seems to be off." Trump Sees Act of God in … Continue reading →

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

More on Collateral

Posted on December 5, 2008 by Felix

As I suspected, CDS collateral has a lot of complexities that I didn’t get to last time round. So with many thanks to my commenters and also to David Felsenthal of Clifford Chance, here’s more: on questions of buyers posting … Continue reading →

Posted in derivatives | 1 Comment

Mortgage Datapoint of the Day

Posted on December 5, 2008 by Felix

Who can get a 123% loan-to-value mortgage these days? George W Bush, that’s who! He’s just taken out a $3,074,239 loan from Community National Bank in Midland, Texas, to buy an 8,500 sqft bungalow in Dallas which was appraised at … Continue reading →

Posted in housing | Comments Off on Mortgage Datapoint of the Day

The End of Excess

Posted on December 5, 2008 by Felix

Today’s 8,000-word dose of schadenfreude is here, courtesy of Michael Shnayerson and Vanity Fair. All the bankers laid low by ill fortune you could ever want! Still, a look at the real-estate "bargains" shows how much further there is to … Continue reading →

Posted in consumption | Comments Off on The End of Excess

The Great Recession Bites

Posted on December 5, 2008 by Felix

The recession might be one year old already, but as anyone can see from this morning’s payrolls numbers — much worse than even the pessimists expected — it’s still getting worse, and there’s certainly no end in sight. Once upon … Continue reading →

Posted in economics | Comments Off on The Great Recession Bites

Extra Credit, Thursday Edition

Posted on December 4, 2008 by Felix

The Auto Industry As a Play: A wonderful summation of what is wrong with Detroit. Staff Keeps Neuberger After Deal Falls Apart: Essentially buying the liability-free shop, which was meant to be worth $8 billion, for nothing. Central banks need … Continue reading →

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

External Links on the NYT Home Page

Posted on December 4, 2008 by Felix

Times Extra has launched, and it’s even less impressive than I’d feared it would be. This is not, by a long shot, the ideal newspaper site, which leads with its own content where that’s strong and which links to the … Continue reading →

Posted in Media | Comments Off on External Links on the NYT Home Page

Jim Simons’s Incentives

Posted on December 4, 2008 by Felix

Why would anybody invest with Jim Simons? Everybody knows where his love and attention and money is concentrated: in the $8 billion Medallion Fund, which charges 5-and-44 but which in any case is closed to outside investment and basically just … Continue reading →

Posted in hedge funds | Comments Off on Jim Simons’s Incentives

How Does Posting Collateral Work?

Posted on December 4, 2008 by Felix

Reader Dennis Mangan emails asking how and where firms post collateral in the CDS market. It’s a good question, and the answer can get as complicated as you like. But here’s a short(ish) answer. Most of the time, collateral requirements … Continue reading →

Posted in derivatives | 1 Comment

A Weird Argument for Index Funds

Posted on December 4, 2008 by Felix

Daniel Solin has a column at BloggingStocks extolling the virtues of index funds, which is all well and good. But the argument he uses to get there is odd: All information about listed companies is public. It is widely and … Continue reading →

Posted in investing | Comments Off on A Weird Argument for Index Funds

Pricing Parking in Chicago

Posted on December 4, 2008 by Felix

Barbara Kiviat understands, I think, why Chicago sold off its parking meters on the cheap: Chicago hadn’t raised rates on some of its meters in 20 years–there’s a lot of value to be had by the person who doesn’t fear … Continue reading →

Posted in cities | Comments Off on Pricing Parking in Chicago

A Smaller World

Posted on December 4, 2008 by Felix

Lou Jiwei, the head of China’s CIC sovereign wealth fund, is saying some interesting things: “Right now we do not have the courage to invest in financial institutions because we do not know what problems they may have,” Mr. Lou … Continue reading →

Posted in china, fiscal and monetary policy | Comments Off on A Smaller World

How Can GM Bondholders be Bailed In?

Posted on December 4, 2008 by Felix

Is a bankruptcy for GM not only an option, now, but a necessity? At least one of Bloomberg’s interviewees thinks so: The Democrats’ goal of preserving a U.S. auto industry is not doable without a bankruptcy, said Lynn LoPucki, who … Continue reading →

Posted in bankruptcy | Comments Off on How Can GM Bondholders be Bailed In?

Viacom Datapoint of the Day

Posted on December 4, 2008 by Felix

Viacom’s announcing that it’s cutting 850 jobs, or 7% of its workforce, at a cost of between $400 million and $450 million. Which, if you do the math, works out at about half a million dollars per job reduction. You … Continue reading →

Posted in employment | Comments Off on Viacom Datapoint of the Day

Extra Credit, Wednesday Edition

Posted on December 4, 2008 by Felix

Securities lending starting to dry up a little? Worries about counterparty risk are infecting the repo markets. Brown unveils mortgage help plan: The UK plan to prevent foreclosures: deferred mortgage interest, no reduction in principal. When Reactionary Goldbug Austrian Plumber-Economists … Continue reading →

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

Spitzer vs Big Finance, Part 2

Posted on December 4, 2008 by Felix

Eliot Spitzer is blogging! Or he has a column at Slate, anyway: For years, we have accepted a theory of financial concentration–not only across all lines of previously differentiated sectors (insurance, commercial banking, investment banking, retail brokerage, etc.) but in … Continue reading →

Posted in regulation | Comments Off on Spitzer vs Big Finance, Part 2

The Problem With InTrade

Posted on December 3, 2008 by Felix

I recently withdrew money from an InTrade account I’ve had for some years. The total cost of withdrawing the money was $53.10: A $20 fee to InTrade for "processing the bank wire", a €10 ($13.10) wire-transfer fee to National Irish … Continue reading →

Posted in prediction markets | Comments Off on The Problem With InTrade

GM’s Bond Restructuring Plan

Posted on December 3, 2008 by Felix

After reading through GM’s restructuring plan, it strikes me that the $18 billion loan from the government is only the beginning of the money that GM is asking for. Take a look at page 11: GM’s Plan includes, and is … Continue reading →

Posted in bailouts | Comments Off on GM’s Bond Restructuring Plan

Harvard: Still Rich

Posted on December 3, 2008 by Felix

Let’s put this in perspective, shall we. Yes, a 22% drop in 4 months is pretty gruesome. But Harvard’s endowment is still ginormous, by any standards, even those of the relatively recent past. Here’s how Harvard’s endowment has grown of … Continue reading →

Posted in education | Comments Off on Harvard: Still Rich

The Tyranny of the Shareholders

Posted on December 3, 2008 by Felix

What does AIG have in common with the auto industry? Beyond bailouts, of course. One answer is that public shareholders are really part of the problem, rather than part of the solution. In a publicly-listed company, management works, first and … Continue reading →

Posted in bailouts | 2 Comments

Should Treasury Issue 100-Year Bonds?

Posted on December 3, 2008 by Felix

Peter Fisher was, until 2004, the Treasury official in charge of bond issuance. So when he says that Treasury should start issuing 100-year bonds, it’s worth paying attention. "If you issued a 100-year bond and had principal and interest pay … Continue reading →

Posted in bonds and loans | Comments Off on Should Treasury Issue 100-Year Bonds?