Monthly Archives: February 2008

Crowds: Stupid

Posted on February 21, 2008 by Felix

Paul Kedrosky said this morning that he was thinking about "the anti-wisdom of crowds". I wasn’t sure what he meant, until this afternoon: The sort of things people want government to do to help the U.S. economy — cut imports! … Continue reading →

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Carbon Tax Arrives in British Columbia

Posted on February 21, 2008 by Felix

Many congratulations to British Columbia and its finance minister Carole Taylor, who has introduced a revenue-neutral carbon tax. The sums involved are not insignificant: The carbon tax will start at a rate based on $10 per tonne of carbon emissions … Continue reading →

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Zimbabwe Datapoint of the Day

Posted on February 21, 2008 by Felix

Brian Latham reports: The currency slumped to 20 million per dollar, from 6 million yesterday, traders including John Tonganyika said in interviews today from the capital, Harare. It’s the biggest drop since Zimbabwe gained independence from Britain in 1980, said … Continue reading →

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Chart of the Day: Oil and Gasoline Prices

Posted on February 21, 2008 by Felix

Are you ready for a 40% hike in gasoline prices? According to Barbara Kiviat, if the red line converges up to where the black line is now, that would put gas prices at about $4.23 a gallon, or 40% higher … Continue reading →

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TIPS: Great, or Terrible?

Posted on February 21, 2008 by Felix

Min Zeng, on page C2 of today’s WSJ: With oil prices above $100 a barrel and countries from China to the U.S. reporting sharp gains in consumer prices, now may be the time to buy inflation-protected securities. Big bond investors, … Continue reading →

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How to Help Both Homeowners and Lenders, at No Public Cost

Posted on February 21, 2008 by Felix

I really like this idea from the Office of Thrift Supervision: it looks like it can reduce foreclosures and help provide liquidity to struggling mortgage lenders at the same time. Here’s how it works: take a borrower who’s underwater, with … Continue reading →

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Monolines: Ackman’s Latest Plan

Posted on February 21, 2008 by Felix

Has anybody not seen Bill Ackman’s latest plan for what should happen to the monolines? It’s been doing the email rounds for a couple of days now, but finally it’s hit the web: if you want to download the full … Continue reading →

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Did FASB Scupper the Auction-Rate Market?

Posted on February 21, 2008 by Felix

Auction-rate securities certainly don’t look very much like cash equivalents these days, as the WSJ shows, citing retail investor Naveen Ahuja, who is unable to sell $665,000 of the things. For investors like Mr. Ahuja, the unrest in a formerly … Continue reading →

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Middle-Class Kids do Very Well at Bad Schools

Posted on February 21, 2008 by Felix

Please let there be more research along these lines. Do kids who go to "good schools" (either schools in expensive school districts or private schools) do better, academically, than kids who go to underperforming schools in the inner city? Are … Continue reading →

Posted in education | 7 Comments

Extra Credit, Thursday Edition

Posted on February 21, 2008 by Felix

Incredible Correlation: Credit markets just get worse and worse. Fear and loathing, and a hint of hope: The Economist surveys the world of securitization. S&P cuts 28 CPDOs after revising ratings models How Did KKR Financial Become A Buyout Loan … Continue reading →

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State and Local Taxes Shouldn’t be Deductible

Posted on February 20, 2008 by Felix

Back at the end of 2004, the New York Times warned darkly that the Bush Administration had plans up its sleeve to abolish the deductibility of state and local income taxes on federal tax returns. And lo, less than a … Continue reading →

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Chart of the Day: Jerome Kerviel’s P&L

Posted on February 20, 2008 by Felix

Alea has found this amazing chart, showing Jerome Kerviel’s real P&L at SocGen. The thing that fascinates me is that after a very bumpy ride indeed for most of the year, suddenly Kerviel’s profit remains uncharacteristically and astonishingly static for … Continue reading →

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Pimco: Even Bigger Than You Thought

Posted on February 20, 2008 by Felix

Are you in the mood for 4,500 words on how Pimco is alleged to have illegally squeezed the Treasury market in 2005? Then run along to Bloomberg forthwith. The details of the lawsuit bore me, with the exception of the … Continue reading →

Posted in bonds and loans | 2 Comments

When Economics is Relevant

Posted on February 20, 2008 by Felix

David Leonhardt today applauds Esther Duflo and Abhijit Banerjee of the Poverty Action Lab at MIT for "making economics relevant again". His column is the result of his second annual survey of economists; the first came up with a list … Continue reading →

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Investment-Banking Bullshit Watch, Global Coordinator Edition

Posted on February 20, 2008 by Felix

Lauren Goldstein Crowe has a question: J.P. Morgan Chase & Co. and Mediobanca will be the global coordinators on the Ferragamo IPO. UBS is the joint book-runner. And no, I don’t know what that means either. The answer is that … Continue reading →

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Obama a Comfortable Favorite in Texas?

Posted on February 20, 2008 by Felix

Over at InTrade, Hillary Clinton is tanking. Her chances of winning Ohio were 65% yesterday; that contract last traded at 47.5%. Meanwhile, her chances in Texas have plunged from 48% yesterday to just 30% now. The last time we saw … Continue reading →

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Crocs: On the Down Escalator

Posted on February 20, 2008 by Felix

Crocs, manufacturers of extraordinarily ugly popular shoes, released spectacular fourth-quarter earnings yesterday afternoon, with both revenue and earnings almost doubling their levels from a year previously. Obviously no one’s particularly worried about the escalator problem. The stock, however, is down … Continue reading →

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Will Bond and CDS Prices Ever Converge?

Posted on February 20, 2008 by Felix

If bond and stock prices are out of whack, then maybe it shouldn’t come as any surprise that bond and CDS prices are also trading miles apart from each other. In fact, you have to be careful when you try … Continue reading →

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Will Bond and Stock Prices Ever Converge?

Posted on February 20, 2008 by Felix

I feel I’ve been having this conversation for over a year now: are bonds too cheap, or are stocks too expensive? Yves Smith points out today that the FT is on the case, with John Authers taking the view that … Continue reading →

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The Only Way to Win is Not to Play

Posted on February 20, 2008 by Felix

A great post from Andrew Clavell today, which can be distilled down to one simple piece of advice: Just Say No to Derivatives. If you’re buying derivatives and you’re not a banker, or if you’re buying a derivatives product which … Continue reading →

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From Financial Supermarket to Supermarket

Posted on February 20, 2008 by Felix

Citi, it seems, is exiting its consumer-finance business – at least in the key foreign markets of Japan, Mexico, and the UK, according to the WSJ. And Citi’s loss might well be Wal-Mart’s gain. The move gives some insight into … Continue reading →

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Extra Credit, Wednesday Edition

Posted on February 20, 2008 by Felix

What I really think of the new popular economics books: Tyler Cowen on Freakonomics and Tim Harford. Astute. Global 10-Year Government Bond Yields: A handy country-by-country comparison. $100 Oil: It’s Baaack… If the Dollar Could Speak Stuff White People Like

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Predicting Earthquakes

Posted on February 19, 2008 by Felix

InTrade has just launched a new contract: The Exchange has listed a market on an earthquake of at least 9.0 on the Richter Scale ocurring anywwhere in the world in 2008… This contract will settle (expire) at 100 ($10.00) if … Continue reading →

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Art and Excess, Miami Edition

Posted on February 19, 2008 by Felix

Jay McInerney goes to Art Basel Miami Beach: At the Margulies Collection, a mind-boggling private trove of Modern and contemporary art housed in a humongous warehouse, I overhear this: EUROPEAN ACCENT: That’s a portrait of Komar and Melamid. TEXAS ACCENT: … Continue reading →

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London House Price Datapoint of the Day

Posted on February 19, 2008 by Felix

The average house on Courtenay Avenue, in north London, is worth £6,803,900, or $13.3 million. Well, it is very convenient for the Highgate Golf Club, after all. In total, there are thirteen streets in London where the average house is … Continue reading →

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