Simon Johnson joins in the chorus advocating a hard cap on bank size:
There is a strong precedent for capping the size of an individual bank: The United States already has a long-standing rule that no bank can have more than 10 percent of total national retail deposits. This limitation [...]
Now that it's obvious that Tiger Woods has had affairs, why would he pay millions of dollars to buy silence from the “Tiger lilies”?
What's the marginal cost to Tiger of the publication of explicit details about an affair, over and above the cost of the revelation of [...]
It looks like Neel Kashkari did manage to get that financial-services job by year-end after all: he's moving to Newport Beach and joining Pimco as a managing director in charge of “new investment initiatives” (which seems to mean, at least in the first instance, equities). You can be [...]
Ken Vogel's very good article on the rip-off gold merchants sliming their way around the broadcast punditosphere never attempts to guesstimate the total amount of money that's changing hands here. But it's clear that the gold bubble is bringing out some most unsavory profiteers, who are singing up right-wing' [...]
Old friends of mine might remember a question about umbrellas I had back in the 1990s. Has Mark Hurst come up with an answer (page 25)?
[...]So, all's well that ends well, right? The government's making an $18 billion profit on its TARP bailout, or at least that part of it which went to the banks. (Never mind the $30 billion in losses on the money that went to AIG.) Kuwait has made $1.1 [...]
Best Venn diagram ever — Clusterflock
What New Yorkers are watching on Netflix — Twitpic
I'm loving this Clayton Homes ad: “Buy a home and receive a can of pork & beans absolutely FREE!” — Columbia Daily Herald
Numbers are really beautiful — UCR
56 newspapers in 45 countries speak' [...]
The Economist has a great report on the market in Warhols, which turns out to have been written by Sarah Thornton. (Incidentally, if the Economist is going to encourage its writers to give radio interviews about their articles, isn't it about time they had' [...]
Renee Richardson Gosline has done some research which, if it turns out to be true, could well show that the cost to established businesses of counterfeit luxury goods is actually negative:
In a working paper she just finished this fall, “The Real Value of Fakes,” Gosline interviewed hundreds of consumers [...]
A friend of mine took out a 5/1 ARM in early 2005, which is about to reset. Lots of other 3/1 and 5/1 ARMs are resetting over the next couple of years, which is one reason it's important to keep interest rates low. The standard reset rate for a prime [...]
TED's Reformist Manifesto is, for all his bluster, a pretty standard wishlist in terms of what kind of regulatory structure you'd set up if you were starting from scratch. It can really be boiled down to one principle: minimize the amount of unregulated financial activity, while also minimizing the' [...]
Today's must-read is Laura Blumenfeld's tale of Neel Kashkari, mountain man, building a wooden shed in the wilds of Northern California:
Kashkari is recalling his testimony before Congress, while splitting logs to feed the stove for the winter. He is down to his last two chain-sawed trees.
“Members' [...]
Yesterday was the EMTA annual meeting, complete with its venerable and always interesting panel of buy-siders. My favorite is always Hari Hariharan of NWI managment: when asked what his favorite trade is, he never says something simple like “long Brazil”. Instead, it's invariably a complex relative-value trade: this year he [...]
Ben Bernanke was contrite yesterday, as well he should have been:
“There were mistakes made all around,” Mr. Bernanke said. “I did not anticipate a crisis of this magnitude and this severity.”
We should have required [banks to hold] more capital, more liquidity,” Mr. Bernanke added. “We should have required more [...]
Today's jobs report is genuinely encouraging, I think. Unemployment is down a little to 10%; employment is “essentially unchanged”, in the words of the release; payrolls in prior months were revised upwards; total hours worked went up; wages went up; what's not to like?
Still, it's early days yet, and [...]
Palin: Obama birth certificate ‘a fair question' — Politico
Gawker, of all outlets, is the first to put the White House pool reports online. ABC, Politico, where were you? — Gawker
Eliot Spitzer and Terry Richardson: what the … ? — Interview
And the winner of the “most egregious listicleization”' [...]
I wonder what it was like to be Ben Bernanke today, on the receiving end of an absolute lashing from Senator Jim Bunning. Here's a taster:
Chairman Greenspan’s attitude toward regulating banks was much like his attitude toward consumer protection. Instead of close supervision of the biggest and most dangerous [...]
Amidst the orgy of one-year-on reminiscing in September, I missed Kirsten Grind's 4,000-word story on the failure of WaMu, which is well worth reading.
She gives a great impression, for instance, of what a bank runs look like, circa 2008:
A longtime customer in Orange County brought a cake to her' [...]
Banks' public disclosures have always been on the opaque side. But now things are worse than ever, according to Nomi Prins, who should know:
In the cases of Bank of America, Citigroup and Wells Fargo, the preferred tactic is re-classification and opaqueness. These moves make it virtually impossible to get' [...]
Is the US government powerless to prevent the return of the plutocrats? Or does it actually, secretly, need the plutocrats to return? Here's Tim Geithner, today:
“You cannot address those long-term deficits, you cannot put the government of the United States in a position that we can go back [...]
It's December, which means it's bonus season, and time for more than the usual amount of bellyaching about pay. Will Bank of America's TARP repayment give it a bit more wiggle room in terms of CEO compensation, thereby broadening the field of potential successors to Ken Lewis? Will [...]
Seeking Alpha to Pay Contributors? — Red Herring
The Too Much Joy Royalty Statement — TMJ
“Isn't a 42-disc set of Dr. Quinn, Medicine Woman taking things just a bit too far?” — Slate
Gay marriage decisively defeated in NY senate, by 38 votes to 24. Unutterably depressing. —
The FDIC's EconomicInclusion.gov website is a fantastic resource for information on the unbanked — it has all the latest figures, including the rather depressing fact that if you look at the black and hispanic population in the US, one in five is unbanked. Single mothers, too, are disproportionately likely [...]
David Reilly has a good column today about bank health and capital ratios, honing in on the crucial fact that having a fair amount of capital is not in and of itself sufficient to reassure investors — or even the FDIC — that a bank is healthy. 96% of [...]
Tim Ogden is on the warparth, blogging and tweeting and putting out press releases all trying to “kill the myth of overhead ratios”:
The month between Thanksgiving and Christmas is often known as giving season, not just for Christmas and Hannukah gifts but because many people make major [...]
I've always had a soft spot for the original logo, dataing back to when Roubini Global Economics first launched at rgemonitor.com in April 2005:
Soon, however, it turned blue, although the monitor lizard remained:
And then it got even more gussied up:
Now, the' [...]
For really impressive stock-market returns, go to Haradheere, Somalia:
Piracy investor Sahra Ibrahim, a 22-year-old divorcee, was lined up with others waiting for her cut of a ransom pay-out after one of the gangs freed a Spanish tuna fishing vessel.
“I am waiting for my share after I contributed a rocket-propelled [...]
We got a hint of it when the government ousted Ken Lewis as chairman of Bank of America; it became more obvious with the decisions of pay czar Kenneth Feinberg. And then of course there's the revolving door into the corner office at AIG. But the defenestration of Fritz [...]
Did you know that there are more rich households (anything over $192,000 a year for a family of four) in Bay Ridge than there are on the East Side south of 14th Street?
I'm not surprised that the East Village and Chinatown have more extremely poor households, with household income for' [...]
You're a bank, and one of your customers owes you $2,000 on her credit card. You have two choices:
(a) You cut off her credit, convert the $2,000 to a loan, and she pays it off with 6% interest over four years.
(b) You keep the credit card open, she struggles to' [...]
Whither overdrafts? The Fed is cracking down on some of the most egregious practices, but there's still a lot more to be done on the overdraft front, including limiting the number of overdraft fees that any bank can assess per day; extending the Fed's protection to bounced checks as [...]
Here's an interesting twist on the efficient markets hypothesis: if you can't generate alpha in an efficient market, then all excess returns must be illegal! Christopher Holt has been talking to some anonymous types:
Along these new lines has emerged a very quiet yet growing subset of individuals who believe' [...]
Bethany McLean has a big 8,500-word profile of Goldman Sachs in the latest Vanity Fair, in which she somehow manages to get Lloyd Blankfein to recapitulate the famous words of GM president Charlie Wilson:
“I’m charged with managing and preserving the franchise for the good of shareholders, and while I [...]
Sudip Roy has gone me one further today. I pointed out the contrast between the expected actions of Sheikh Mohammed bin Rashid al-Maktoum in Dubai, on the one hand, with those of normal homeowners in the US, on the other: while American individuals are ceaselessly told that they have [...]
Beware sleazy broker David B. Lerner and anything he sells, especially if it's called “Apple REIT” — Harry Hat, Kurtis Ward, Investimonials
G.E. and Vivendi Agree on Value of NBC Universal — NYT
Nassim Taleb announces he will “withdraw as immediately as possible into the Platonic quiet” — [...]
I am pleased, proud and honoured that Willem Buiter has chosen the comments section of my blog to make what is as far as I know his first public statement since being appointed Citigroup's chief economist:
I joined Citi for two reasons. First, because Citi is the one truly global [...]
Good news on the corporate-bully front: Hertz, which was behaving abominably towards Audit Integrity, has utterly caved, dropping its libel suit on the grounds that it was “not worth pursuing now”. Or, one assumes, ever again. A small but important victory for freedom of speech in the financial [...]
Fama and French have a very long blog entry (over 5,000 words) about the latest version of their paper on mutual fund returns. As you might expect from research sponsored by an index-fund company, it shows that active mutual-fund managers fail to outperform the market. But at least [...]
If a home is not an investment, what about a Treasury bond? In my comments, Dan responds forcefully to Urban Legend, who was trying to make the case that low interest rates do a lot of harm to those poor millionaires looking to live on their risk-free [...]
Ryan Grim gets a great quote out of Treasury today, trying to explain why they're pushing to allow banks to open branches in any state they like, despite the opposition of small banks, individual states, and Barney Frank:
“This eliminates a difference between thrifts and banks. While banks are subject' [...]
It seems the housing speculators are back, and Daniel Indiviglio is joining their ranks, now that mortgage rates are back at record lows. “If you're in the market for a home as a long-term investment, say at least 10-15 years, it's pretty hard to make an argument against' [...]
Back in April, Willem Buiter called Citigroup “a conglomeration of worst-practice from across the financial spectrum”; he followed up in June with a blog post entitled “Too big to fail is too big“, in which he likened Citi's former chairman and CEO, Win Bischoff, to Ayatollah Ali Khamenei. [...]
Willem Buiter is joining Citigroup as its chief economist. It's an important role — so important, in fact, that Buiter should be able to demand that he be allowed to continue to write his rather fabulous blog, either in its current location at the FT or else somewhere [...]
The FT has the list of 30 international financial institutions which the international Financial Stability Board considers systemically important.
The first thing to jump out from the list is that just 5 of the 30 companies are American, and none of the six insurers: the likes of Mizuho, Intesa [...]
Brent White shows that underwater homeowners across America are signally failing to take my advice (or that of Mark Gimein) and walk away from their homes:
Only about one-fourth of homeowner defaults are strategic, with the other three-fourths triggered by job losses, divorce or other financial difficulties, which [...]
Most people, if they've hired a legendary fund manager on a multi-million-dollar salary to look after investments and liquidity, would listen to the advice of that person. But most people aren't Larry Summers:
It happened at least once a year, every year. In a roomful of a dozen Harvard University [...]
Jackie Ramos was fired by Bank of America for being too nice to their customers. Of her three commandments — do the right thing for the customer; think of yourself as a customer; and do the right thing for the company — it turns out that only one mattered.
Bob Ivry has the definitive obituary of Mark Pittman, a giant in the world of financial journalism, who died far too young on Wednesday. Ivry is polite enough not to call me out by name, although I deserve it:
His June 29, 2007, article, headlined “S&P, Moody’s Hide Rising [...]
Paul Krugman today argues in favor of a financial-transactions tax on the grounds that it would discourage over-reliance on ultra-short-term repo markets, among other reasons. In other words, reliance on repos is a bad thing, and it's a good idea for government policy to “nudge” financial institutions away from' [...]
The Economist has a good short overview of the situation in Dubai, which includes this interesting take:
Investors had half-expected Dubai World to seek forbearance from its bankers, asking them to extend their loans. But they felt sure the emirate would make good on publicly traded instruments, and in particular [...]
It's almost quaint that there are still people out there who believe that all market participants are always rational actors making decisions in their own economic best interest. Take Daniel Indiviglio, who even stands up for IndyMac and its “inequitable, unconscionable, vexatious and opprobrious” regional manager, Karen Dickinson:
I'm [...]
One quote jumped out at me from the Reuters Dubai round-up this morning:
“We have seen a classic risk aversion reaction in the markets over the past 24 hours. The dollar has slumped, the yen is stronger,” a Societe Generale note said.
Needless to say, this isn't exactly a classic risk-aversion' [...]
The Dubai World default is big news — big enough that it's even made it into Gawker. Your one-stop shop for bloggy coverage this Thanksgiving is Alphaville, which features for instance this wonderful chart of the debt structure which is now being crawled over by lawyers' [...]
Why You Should Support The Lynch Amendment: Don't let banks own more than 20% of derivatives exchanges! — Rortybomb
A very sad day for the financial blogosphere: the invaluable John Jansen is giving up his blog to move to the sell side — Across the Curve
Hedge fund prospectus says' [...]
John Carney is right: a very large number of Americans is always going to be financially illiterate, and there's nothing we can do about it. Indeed, if we try too hard to do something about improving financial literacy, there's a good chance we'll only end up creating a' [...]
Keith Bradsher's NYT story on Australian credit-card fees kicks off with an eye-opening anecdote:
When Steve Franklin bought four plane tickets on Qantas last June, he faced an unexpected expense: a surcharge of 7.70 Australian dollars on each of the 136.70 dollar ($126) tickets — just for using his Visa' [...]
File under “about time too”: HIV-positive immigrants will be able to apply for a green card as of January 4. But I don't like this part of Anna Gorman's article:
Mark Krikorian, executive director for the Center for Immigration Studies, said the decision to remove HIV as a bar was [...]
Even capital controls, it seems, are powerless in the face of the global carry trade:
Brazil’s real is the “most overvalued” currency as a “wall of money” coming into Latin America’s biggest economy may overwhelm government efforts to curb its rally, said Goldman Sachs…
“After some initial success with capital controls, [...]
Anybody who thinks that banks always act in their own best interest when a mortgage goes into default (I'm looking at you, Indiviglio) should read the wonderful judgment of Jeffrey Spinner, of Suffolk County Supreme Court, in the case of . Indymac Bank F.S.B. v Yano-Horoski. Apologies' [...]
After putting up a slightly hurried blog entry yesterday, I've spent a large part of this afternoon doing a deep dive into the sale of the license to run Chicago's parking meters: many thank to the Parking Ticket Geek and Daniel Strauss of Gapers Block for prompting [...]
Many thanks to Brad Miller, one of the co-sponsors of the Miller-Moore amendment, who has been doing the rounds of the blogs trying to explain what it does and doesn't do. He left a comment on my blog on Sunday, and another on Yves Smith's today; I' [...]
Noam Scheiber has the fascinating behind-the-scenes story of how the derivatives-regulation sausage is being made — and how Wall Street, amazingly, seems to be losing the lobbying war, at least for the time being. In a nutshell, the banks sought to get around proposed new derivatives regulations by creating [...]
Remembering collateral costs in synthetic ETFs — Index Universe
Daily Intel commenter says the only cure for Goldman's PR troubles is PUPPIES FOR EVERYONE — NYM
Man puts $25k downpayment on a “Warhol” dated 1996 (he died in 1987) featuring “Matthew Baldwin” (who doesn't exist) — SLT
Guy invites 700' [...]
File under “events which don't happen every day”: Gawker describing a newspaper article as being “real journalism” (their emphasis) and “what news alarmists say will be missing if and when we lose newspapers”.
But the fact is that the article in question, an investigation into Chicago parking-meter revenues by
The Fund seeks to provide qualified investors with an opportunity to achieve long-term capital appreciation through investment in Emotional Assets. Its objective is to deliver a stable target growth rate of 15% per annum, with predictable volatility - at the same time preserving capital.
Edmund Andrews has a long front-page story today on what he calls “the United States’ long-term budget crisis” — and has occasioned a strangulated “Urg” out of Paul Krugman in doing so. Krugman wrote a very smart blog entry on Friday (Tyler Cowen called it one [...]
Bill Ackman has sold his huge apartment at the Majestic, which means he also needs to sell the baby 1BR one floor down that he bought in 2007 for $450,000. (How baby? It's 322 square feet; that's smaller than the 406-square-foot living room in the apartment he just [...]
It's over a year old now, but this paper, by Norm Cimon, is still very interesting for where it places the blame for a large part of the financial meltdown: the rise of computing power generally, and the relational database in particular.
All securitizations, after [...]
Why was Josh Tyrangiel hired to be the new editor of BusinessWeek? One reason, the pundits agree, is that he successfully dragged Time — another weekly — onto the web. Ryan Chittum writes about “his eye-popping numbers at Time.com”, with pageviews rising from 400 million in 2006 to an [...]
Friday was the Financial Follies — which means that most of New York's financial journalists descended on the Marriott Marquis for the evening. The joke going around was that Friday afternoon would be a great day to bury bad news, a la Jo Moore, on the grounds [...]
Alex Pareene has a wonderful rant about New York's MTA, which picks up on this astonishing line from the Daily News:
In addition to the 2010 budget, the MTA released a four-year fiscal plan. It envisions 7.5% fare and toll hikes in 2011 and 2013 as the agency tries' [...]
Last Friday, Jason Kelly put up a very funny blog entry about his launch of a pair of fictional 100x levered ETFs, with the ticker symbols SOAR and SINK:
Kelly Capital will reset and relaunch the funds at the beginning of each trading day. The company is in talks with [...]
John Jansen reprints some BarCap research on the Miller-Moore amendment, and now I think I understand why so many finance types are so scared by it: they've misread it!
Here's BarCap:
Proposed by Reps. Miller (D) and Moore (D), it would effectively replace existing repo and secured funding with unsecured [...]
What are the consequences of allowing multi-billion-dollar systemically important multinational corporations to report their assets using proprietary mark-to-model tools involving discredited Monte Carlo simulations? I think we all know the answer to that one. But unbelievably, after such shenanigans contributed enormously to the greatest financial meltdown in living memory, the [...]
Ira Stoll notes that the Miller-Moore amendment has passed. He calls it the “Bair-Miller-Moore Haircut”, and he doesn't like it; I, on the other hand, think it's a spectacularly good idea. This is the meat of it:
Payments to Fully Secured Creditors: Notwithstanding any other provision of law, in [...]
Dear Henry,
I'm not annoyed by you! How could I be, when you call me the “king of financial bloggers” no fewer than four times in one piece? I think you've created a powerful, innovative, and disruptive franchise in The Business Insider, which employs some very smart people and [...]
Bill Gross isn't earning much interest on his cash: in fact, he's only earning 0.01%. Tell us, Bill, what's an appropriate metaphor to explain how it feels to earn such a low interest rate?
My point is to recognize, and to hope that you recognize, that an effective zero percent' [...]
Buried in Peter Goodman's 2,300-word tale of Christopher Hall's foreclosure woes is a gem of a program in Philadelphia:
Under the rules adopted by Philadelphia’s primary civil court, no owner-occupied house may be foreclosed on and sold by the sheriff’s office before a “conciliation conference,” a face-to-face meeting between the [...]
The indispensable Abnormal Returns has a smart post up on aggregation:
Aggregators, investment or otherwise, are not the cause of the downfall of traditional news gatherers like newspapers. They are simply a sign that people are hungry for information and analysis presented in an efficient manner. For better or worse, [...]
John Hudson has an interesting round-up of responses to the signs of humanity from Goldman Sachs on Tuesday: I'm definitely the outlier in a sea of commentators saying that they're tiny, meaningless, and an attempt to deflect attention from the bigger issues surrounding the bank.
Leave it to [...]
I had a very interesting lunch with Jen Bekman of 20×200 last week — a woman who has just raised $825,000 in venture funding to help expand her project of bringing art to everybody. “I want anyone who's educated and even remotely affluent to feel self-conscious if they' [...]
Up until yesterday, Michael Whitney was a presenter on Bloomberg TV; he would occasionally get his byline on Bloomberg News stories. Whitney was fined $55,000 last year by the CFTC and is subject to a permanent injunction, after being charged with false reporting and attempting [...]
When I wrote my blog entry on currency ETCs yesterday, I wasn't aware of the various carry-trade products available on US exchanges. But after a very informative conversation with Morningstar's Bradley Kay this morning, I'm now much more up to speed. And while there's nothing in the US quite [...]
Megan McArdle is cutting up her credit cards, but she doesn't want to force anybody else to do the same thing. She responds to my sentiment that credit should come from loans, not cards, thusly:
I don't think personal loans are a very good substitute for the kinds of [...]
Paul Krugman is right to be worried about the unintended consequences of the AIG bailout:
We’ve greatly increased the chance of a Japanese-style lost decade, with I would now give roughly even odds of happening. Why? Because bank-friendly policies have squandered public trust in all government action: try talking to [...]
Flâneur points me to the 35-page staff report for Jay Rockefeller on “Aggressive Sales Tactics on the Internet”. It concentrates on three extremely sleazy companies, all based in Norwalk, Connecticut: Affinion, Webloyalty, and our old friends Vertrue, the employers of Ben Stein. Here's a typical datapoint:
In discussing methods [...]
Hipsters discussing Cyclocross — Xtra Normal
Get an email per week from Maria Bartiromo for only $300! — Investor Place
Conversion Closing Rap — YouTube
Baumkuchen is my favorite cake ever! So it's sad the article on it isn't online. But the summary is great — TNY
NFL stadium sells' [...]
Today the squid is showing its human face — you know, as opposed to wrapping itself around one. Goldman deserves to be applauded for two things today: first of all Lloyd Blankfein's admission and apology that his bank “participated in things that were clearly wrong and have reason to [...]
Lynnley Browning looks today at the 4,450 clients that UBS is going to give up to the IRS, going down the list of characteristics that UBS is going to look for when deciding which of its accounts to choose.
What's interesting is that it looks as though more than 10,000' [...]
Whenever there's a surprise takeover bid at a significant premium to the (formerly) prevailing stock-market price, dozens of journalists and bloggers immediately pull up options-volume data. Much of the time, they discover a suspicious spike in options volume just before the deal was announced. The conclusion is obvious: insider' [...]
As Dean Baker notes, Neil Barofsky's report on the 100% payments to AIG's counterparties is the news of the day. It's sexy stuff, revisiting the dramas of the week of Lehman's collapse, and of course going into great detail about the way in which the crisis's designated villain,' [...]
