Monthly Archives: January 2009

The Nationalization Debate

Posted on January 20, 2009 by Felix

I’m very encouraged by the breadth and seriousness of the nationalization debate as it has unfolded in the blogosphere in recent days; Steve Waldman, at the bottom of his latest post, has done a sterling job of rounding up most … Continue reading →

Posted in banking | 1 Comment

The Murky Lewis-and-Thain Story

Posted on January 20, 2009 by Felix

The WSJ has two important articles on Bank of America’s acquisition of Merrill Lynch today, concentrating on Ken Lewis and John Thain respectively. Both men were very quiet in mid-to-late December, before the acquisition closed, when they were CEOs of … Continue reading →

Posted in banking | 1 Comment

The Urgent Financial Crisis Facing Obama

Posted on January 20, 2009 by Felix

Washington’s grandees clearly had better things to do this past weekend than orchestrate another bank bailout. Which is bad news for Ken Lewis: Bank of America is down 17% in early trade, at less than $6 a share — the … Continue reading →

Posted in banking | 1 Comment

Extra Credit, Monday Edition

Posted on January 19, 2009 by Felix

How Obama Really Won the Election: Nate Silver says it was all about the cities. The Bad News: Is Obama’s presidency doomed before it even starts? Cost of Borrowing Zooms Up for Corporations: Nabors, for instance, just issued 10-year debt … Continue reading →

Posted in remainders | 1 Comment

Insolvent Banks: Why a Debt-for-Equity Swap Won’t Work

Posted on January 19, 2009 by Felix

Henry Blodget has convinced himself that he’s worked out "the right way" to fix banks. It’s a big debt-for-equity cramdown, basically, which, he says, will "avoid another Lehman" and involve spending "no taxpayer money". Which got me wondering: what do … Continue reading →

Posted in banking | 2 Comments

Bank Capitalization Datapoint of the Day

Posted on January 19, 2009 by Felix

From Robert Peston: Barclays’ share price has fallen again today. At the current price of 90p, this bank’s entire market value is ߣ7.5bn. And remember, this is a bank that said on Friday night that its profits for 2008 were … Continue reading →

Posted in banking | 2 Comments

Felix Salmon Smackdown Watch

Posted on January 19, 2009 by Felix

Jim Surowiecki provides proof that I’ve been writing too much and too hastily about bank nationalization of late: At one point, Felix describes nationalization as "elegantly" putting an end to the current morass, while at another he describes it as … Continue reading →

Posted in bailouts, banking | 2 Comments

Sovereign Default: A Conversation

Posted on January 19, 2009 by Felix

I’m trying out an experiment, here: Paul Kedrosky and I will be chatting live on the subject of sovereign defaults. Feel free to join in!

Posted in bonds and loans, emerging markets | Comments Off on Sovereign Default: A Conversation

More on Bank Nationalization

Posted on January 19, 2009 by Felix

I’m not sure why I bothered writing my blog entry on nationalization last night, since Paul Krugman wrote essentially the exact same thing, only more concisely and with much greater elegance. Still, I did get some interesting comments, both on … Continue reading →

Posted in bailouts, banking | 1 Comment

Extra Credit, Early Monday Edition

Posted on January 19, 2009 by Felix

OECD says EU Should Consider Single Financial Supervisor Citigroup Plans to Sell Japanese Brokerage: An abrupt volte-face, especially considering how recently they bought it. Russia and Ukraine Reach Deal on Gas Interest Rate Drop Has Dire Results for Legal Aid: … Continue reading →

Posted in remainders | 1 Comment

The Behavioral Economics of the Stimulus

Posted on January 19, 2009 by Felix

I knew that there was some serious behavioral economics behind the Obama team’s plans to structure a tax rebate by reducing withheld tax! Jim Surowiecki has chapter and verse: In the words of the behavioral economist Richard Thaler, people put … Continue reading →

Posted in economics, fiscal and monetary policy | 2 Comments

Why Nationalization is the Best Alternative

Posted on January 19, 2009 by Felix

Kevin Drum is a bit like Joe Nocera: he’s reluctant to nationalize, but he doesn’t really say why. It’s wise to be wary of nationalization. It should be a last resort, and I’ve gotten a sense recently that a lot … Continue reading →

Posted in bailouts, banking | 1 Comment

Extra Credit, Sunday Edition

Posted on January 18, 2009 by Felix

Expand transfers, not credit: Steve Waldman on why "we ought to phase out banks as we’ve known them since before Bagehot’s time". Flat N All That: The best part of Thomas Friedman coming out with a new book is that … Continue reading →

Posted in remainders | 1 Comment

Why We Should Nationalize Now

Posted on January 18, 2009 by Felix

Joe Nocera says he’s looking for a bold new plan to tackle the financial crisis — but the one he spends essentially his entire column talking about is the creation of a government-owned "bad bank" — an idea which is … Continue reading →

Posted in bailouts, banking | 1 Comment

Bankers First

Posted on January 17, 2009 by Felix

The Economist says that this photo is "one of the most apt visual metaphors for the crisis yet". I’m not sure that it isn’t literally true. After all, Charlotte is a banking center, and 23 of the passengers worked at … Continue reading →

Posted in travel | 1 Comment

The US Airways Share Price

Posted on January 17, 2009 by Felix

Can we please do something about the reporting of US Airways’s stock price? The NYT says today that "the airline’s share price shot up 13 percent Friday", and even the Economist is blogging the same thing. The clear implication is … Continue reading →

Posted in journalism, stocks | 1 Comment

TARP Datapoint of the Day

Posted on January 17, 2009 by Felix

The CBO has done the hard work of marking to market all the assets purchased with TARP funds, including preferred stock in various banks. It concludes that today’s mark-to-market value of the $247 billion spent in 2008 is just $183 … Continue reading →

Posted in bailouts, banking | 1 Comment

John Bird and John Fortune are Back!

Posted on January 17, 2009 by Felix

Happy weekend to you all.

Posted in humor | 1 Comment

Bailout Incrementalism Continues

Posted on January 16, 2009 by Felix

According to the WSJ, Treasury and the Fed are considering two big ideas. The first is to create a new state-owned "bad bank" to buy up toxic assets — TARP I, essentially, rebranded. The second is to institutionalize the deals … Continue reading →

Posted in bailouts | 1 Comment

Extra Credit, Friday Edition

Posted on January 16, 2009 by Felix

The Leveling of Citigroup: A wonderful, must-read brief history of Citigroup from a former insider. What a way to succed in leveling the playing field! "The playing field is now level. Bear Sterns, Lehman Brothers, Merrill Lynch, and Citi have … Continue reading →

Posted in remainders | 1 Comment

More Arguments for Bank Nationalization

Posted on January 16, 2009 by Felix

Why have shares in Barclays suddenly cratered? No one really knows, but it’s surely not a complete coincidence that the short selling ban on UK financials expired today. On the other hand, maybe Barclays shareholders were reading Willem Buiter, who … Continue reading →

Posted in banking, Politics | 1 Comment

Merrill Lynch Datapoint of the Day

Posted on January 16, 2009 by Felix

This comes from Heidi Moore’s excellent round-up of today’s BofA/Merrill news, which included the astonishing figure that Merrill Lynch managed to lose $15 billion in the fourth quarter. “To put [the] $15 bn after-tax [loss] in perspective, 60% of the … Continue reading →

Posted in banking | 1 Comment

Executives’ Heads on a Pike

Posted on January 16, 2009 by Felix

Fortune’s Roger Parloff can paint quite a picture: An angry mob of investors and taxpayers is assembling, and they want to see some executives’ heads on pikes. Astonishingly, this photo just came in from the wonderful David Sunstrum. The angry … Continue reading →

Posted in defenestrations, humor | 1 Comment

Risk Managing the News

Posted on January 16, 2009 by Felix

This is my new favorite story: The Thomson Reuters system uses news alerts that feed directly into an algorithm, or computer model, to try to predict future market volatility which can in turn be used to better inform a trading … Continue reading →

Posted in risk | 1 Comment

Citigroup Datapoint of the Day

Posted on January 16, 2009 by Felix

Citigroup’s earnings this morning could hardly have been worse: a $12.1 billion operating loss, which was reduced to a still-whopping $8.3 billion after counting in gains from selling Citibank Germany. But here’s a datapoint you might have missed: Citi’s book … Continue reading →

Posted in banking | 1 Comment