Monthly Archives: November 2007

How Lucrative Are Repos?

Posted on November 30, 2007 by Felix

As 130/30 funds and other long-short plays become increasingly popular, the quantity of short-selling going on in the stock market is only likely to increase. That, in turn, means that the amount of stock lending (repos) going on is going … Continue reading →

Posted in investing, stocks | Leave a comment

Brad DeLong Solves the Balls in the Hat Game

Posted on November 30, 2007 by Felix

Brad DeLong has solved the balls in the hat game, and in his comments section provides the solution, which is a psychologically horrible one: you basically have to run your losses and cut your winnings. Keep playing until you get … Continue reading →

Posted in economics | 1 Comment

The Broken State of US White-Collar Criminal Prosecutions

Posted on November 30, 2007 by Felix

The case of the "NatWest 3" has been all a staple of the UK press all year, but never seems to have got much traction on this side of the pond. In a nutshell, three UK bankers were extradited to … Continue reading →

Posted in law | Leave a comment

Fed Rate Cuts Might be Here to Stay

Posted on November 30, 2007 by Felix

Ben Bernanke speaks pretty clearly, for a Fed chairman, and what he said yesterday left few people in any doubt that he’s minded to cut interest rates again at the next FOMC meeting. This is fabulous for equity markets, since … Continue reading →

Posted in fiscal and monetary policy | Leave a comment

Trade the FX Markets for Fun and Losses!

Posted on November 30, 2007 by Felix

Online poker, it’s a bitch, what with being illegal and all. What we really need is a legal way to lose lots of money online, using an addictive videogame-style interface. Enter eToro: where Reuters 3000 meets Nintendo Wii! There’s some … Continue reading →

Posted in foreign exchange | Leave a comment

Treasury’s Subprime Plan and the Danger of Tactical Delinquencies

Posted on November 30, 2007 by Felix

Of all the ideas floated to help solve the subprime mess, I never really believed that Sheila Bair’s plan to simply lock in teaser rates would be the one to gain traction. As I said when it was first mooted, … Continue reading →

Posted in housing | Leave a comment

The Real Problem with Securitization

Posted on November 30, 2007 by Felix

One of the more annoying memes spreading virulently during this subprime-mortgage crisis is the idea that securitization itself is a ridiculous idea. Subprime borrowers have higher default rates, that’s obvious, and so anybody who honestly thought he owned a AAA-rated … Continue reading →

Posted in bonds and loans | Leave a comment

Chandelier Bidding in Padua

Posted on November 30, 2007 by Felix

The New Yorker’s Mary Norris went to Padua for an auction run by Coys of Kensington, auctioneers of vintage motorcars. She accompanied Giuseppe Favia, who was selling a 1959 Mercedes-Benz 190 D with literally sainted provenance. The auction itself, however, … Continue reading →

Posted in art | 1 Comment

When Corporate Treasury is a Profit Center

Posted on November 30, 2007 by Felix

Two newspapers, two countries, two industries, one story. In the NYT, it’s Southwest, whose oil-price hedges are now worth $2 billion. In the FT, it’s Porsche, whose currency hedges have made $371 million this year, and whose stock-market hedges, linked … Continue reading →

Posted in derivatives | Leave a comment

Extra Credit, Friday Edition

Posted on November 30, 2007 by Felix

Speech by SEC director Erik Sirri: "In retrospect, the super senior ABS CDO was nearly a perfect structure to lull even sophisticated traders and risk managers into a state approaching complacency — and blind them at least temporarily to fundamental … Continue reading →

Posted in remainders | Leave a comment