Monthly Archives: January 2009

Extra Credit, Monday Edition

Posted on January 13, 2009 by Felix

Why You’ll Love Paying for Roads That Used to Be Free Accountability Time: James Kwak on Warren vs Treasury. Call It Hurricane Alan: Bush "still seems to view the financial crisis as an act of God — and thus to … Continue reading →

Posted in remainders | 1 Comment

The End of Citigroup

Posted on January 12, 2009 by Felix

Citigroup shares closed today at $5.60 apiece. Only twice in recent memory have they closed lower: on November 20 and 21. Back then, the parlous state of Citigroup’s equity caused Treasury to implement an emergency bailout package. Today, the b-word … Continue reading →

Posted in banking | 1 Comment

Explaining US Government CDS Rates

Posted on January 12, 2009 by Felix

What’s going on with credit default swaps on the US government? 5-year CDS are trading in the 50bp to 60bp range these days, which implies a seriously non-negligible risk of default — and the higher the expected recovery value, the … Continue reading →

Posted in derivatives | 2 Comments

Financial Crisis: The Word Count

Posted on January 12, 2009 by Felix

Dear John Thain has a wonderful list of a bunch of the Must-Read Articles that Important Publications have written about the financial crisis. He reckons he really should get around to reading them some time; the scary thing, for me, … Continue reading →

Posted in Media | Comments Off on Financial Crisis: The Word Count

When Stimulus Doesn’t Scale

Posted on January 12, 2009 by Felix

Barack Obama wants ideas from Paul Krugman, who of course is happy to oblige — and to make the good point that "we don’t have many specifics from the Obama people themselves". But hidden in the respectful joshing is a … Continue reading →

Posted in fiscal and monetary policy | 1 Comment

Vikram Pandit, Dead Man Walking

Posted on January 12, 2009 by Felix

Remember Jack Flack’s five levels of CEO hell? The fourth ("On The Ropes") is when the board starts expressing confidence in the CEO; the fifth ("Dead Man Walking") is "when the corporate flacks, who are typically the staunchest of the … Continue reading →

Posted in banking | 2 Comments

A Deaccessioning Thought Experiment

Posted on January 11, 2009 by Felix

This is for Tyler Green, who hates the idea of museums "deaccessioning" (ie selling) art in order to pay their operating expenses. And it’s based around an imaginary institution I’m calling the Museum of Underappreciated Art, or MUA. MUA is … Continue reading →

Posted in art | 1 Comment

Smith Barney Math

Posted on January 11, 2009 by Felix

I’m trying to work out the mathematics of the proposed joint venture between Citigroup and Morgan Stanley, and what it does for Citi’s balance sheet, using stories from the FT and Bloomberg. According to the FT, Citigroup has 15,500 brokers; … Continue reading →

Posted in banking | 2 Comments

Ben Stein Watch: January 11, 2009

Posted on January 11, 2009 by Felix

Ben Stein sat in on some cabinet meetings in 1974, and learned that high-ranking political officials aren’t always super-smart. This, he seems to think, was not a good thing. He then says that since even very smart people have been … Continue reading →

Posted in ben stein watch | 1 Comment

Extra Credit, Friday Edition

Posted on January 9, 2009 by Felix

Accountability for the Troubled Asset Relief Program: The second Warren report (pdf). Nationwide Inquiry on Bids for Municipal Bonds: It’s always been a very sleazy backwater of finance, and it’s good to see it getting its comeuppance. A very good … Continue reading →

Posted in remainders | 1 Comment

Rubin Deserts a Sinking Citi

Posted on January 9, 2009 by Felix

Robert Rubin built the basis of his reputation, and his fortune, at Goldman Sachs. He then went to work on the two in sequence: the former at Treasury, and the latter at Citigroup. It all worked out quite well for … Continue reading →

Posted in banking | 1 Comment

Why Mortgage Payments Should be Lower than Rents

Posted on January 9, 2009 by Felix

It’s clearly Ryan Avent morning here at Market Movers, since I also find myself with a minor case of siwoti upon reading this: We have folks trying to sell homes of necessity (and increasingly this will be due to job … Continue reading →

Posted in housing | 1 Comment

Can We Really Guide the Economy?

Posted on January 9, 2009 by Felix

Ryan Avent says that he thinks the "plausible range of economic outcomes is, at the moment, quite wide indeed", and wonders whether "the size of this conceivable range is actually reflective of potential outcomes, rather than simple ignorance": If it … Continue reading →

Posted in economics, fiscal and monetary policy | 2 Comments

Warren vs Treasury, Cont.

Posted on January 9, 2009 by Felix

I’m not quite sure what to make of the fact that Elizabeth Warren is shamelessly leaking her latest TARP oversight report all over the media — to the NYT, to the WSJ, even, on-camera, to Good Morning America. Doesn’t she … Continue reading →

Posted in bailouts, Politics | 1 Comment

Yet Another Gruesome Employment Report

Posted on January 9, 2009 by Felix

For most of the past decade, I’ve happily ignored the payroll report on the first Friday of every month. The market often got very excited about it, but the headline payrolls number was generally unreliable and full of more noise … Continue reading →

Posted in economics, employment | 1 Comment

Will FHLB Atlanta’s Failure Spark a Major Regulatory Overhaul?

Posted on January 8, 2009 by Felix

Over a year ago, Chuck Schumer said (and I agreed) that the Federal Home Loan Bank of Atlanta was an all-but-unregulated nightmare of enormous proportions. Now, HousingWire’s Paul Jackson tweets a rumor that FHLB Atlanta is going to be taken … Continue reading →

Posted in banking, regulation | 1 Comment

Extra Credit, Thursday Edition

Posted on January 8, 2009 by Felix

Citi, Senators Reach Mortgage Deal: It’s sad but necessary that the banks need to sign on to any plan which allows mortgages to get included in bankruptcy proceedings. It’s promising that Citi has done so. The 12 Most Important Cars … Continue reading →

Posted in remainders | 1 Comment

Buying Equities for their Option Value

Posted on January 8, 2009 by Felix

Commenter dWj makes a good point about stocks: they are naturally going to be more richly valued than bonds, because of their option value. "Stockholders are long volatility," he writes, "at least relative to bondholders" — and he’s quite right, … Continue reading →

Posted in stocks | 1 Comment

The 4.375% Fixed-Rate Mortgage

Posted on January 8, 2009 by Felix

Remember all that speculation about the Fed trying to drive mortgage rates down to 4.5%? Well, they’re pretty close: here’s a screenshot from the Chase Home Mortgage website. According to Bloomberg, these rates "are for borrowers with excellent credit who … Continue reading →

Posted in housing | 1 Comment

Obama’s Big Speech

Posted on January 8, 2009 by Felix

I agree with pretty much everything in Barack Obama’s big speech today about his stimulus plan. And not (just) because I’m some kind of lefty: Alex Tabarrok feels much the same way, as does Evan Newmark. It’s necessarily vague, but … Continue reading →

Posted in fiscal and monetary policy, Politics | 1 Comment

The Decline of Davos

Posted on January 8, 2009 by Felix

When I try to bring up a mental image of Davos Man these days, I envisage a bruised and beaten Danny Aiello at the end of Leon (aka The Professional), telling Natalie Portman that he’s the best place for her … Continue reading →

Posted in Davos 2009 | 1 Comment

Singapore’s Outperforming Merrill Investment

Posted on January 8, 2009 by Felix

The FT says today that the government of Singapore’s $23-a-share investment in Merrill Lynch was worth just $12.10 per share at the end of 2008, a drop of 47%. A paper loss of more than $2 billion is tough for … Continue reading →

Posted in banking | 1 Comment

Why Aren’t Stocks Falling?

Posted on January 8, 2009 by Felix

As SAR notes, the "longer and deeper recession" meme is "becoming the popular view" — it’s increasingly difficult to find people who really think we’ll bounce back in the second half of this year, and economists generally are much more … Continue reading →

Posted in economics, stocks | 1 Comment

Google and Newspapers

Posted on January 8, 2009 by Felix

No, Google’s not going to buy the New York Times. But its CEO, Eric Schmidt, says it might come close: I think the solution is tighter integration. In other words, we can do this without making an acquisition. The term … Continue reading →

Posted in Media | Comments Off on Google and Newspapers

Extra Credit, Wednesday Edition

Posted on January 8, 2009 by Felix

Know When To Hold ‘Em: Why the FDIC shouldn’t have sold IndyMac. PIMCO says too early to buy emerging markets: In Asia, at least. Probability, VIX, Bad Math, and Reporters Who Don’t Know the Difference: How the VIX massively overestimated … Continue reading →

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