Monthly Archives: March 2009

Another Reason for Banks to be Small

Mike at Rortybomb finds some empirical research on what happens to loan rates when banks get bigger and more consolidated. The results make intuitive sense: as competition falls, loan rates go up. The exception is loans which can be securitized, … Continue reading

Posted in banking | 68 Comments

GM’s Whining Bondholders

Andrew Ross Sorkin takes aim at GM’s bondholders today: Not three hours after the president spoke on Monday I received an e-mail message from a group representing G.M. bondholders — people who are likely to have an enormous influence over … Continue reading

Posted in bailouts, bonds and loans | 48 Comments

Moving to Reuters

As you might have heard, I’m moving my blog from Portfolio to Reuters. The new blog will be here, and the Reuters RSS feed will be here. But if you read my by subscribing to the “all posts” feed, … Continue reading

Posted in Announcements | 76 Comments

Extra Credit, Monday Edition

Why size matters: Steve Waldman is a fan of banks getting smaller. In Market Cap, Google Now Bigger Than GE The Taiwanese war against tax evasion: Clever. The Government Crackdown on Peer-to-Peer Lending: I think it should be regulated by … Continue reading

Posted in remainders | 15 Comments

Whither This Year’s MBAs?

One thing drilled into every MBA student is that sunk costs are irrelevant, while opportunity costs are paramount. Which is a lesson this year’s graduating class will put to good use. Let’s say that in any given year, there’s a … Continue reading

Posted in education | 13 Comments

Answers to Four Questions About Financial Journalism

Will Ortel, a journalism student at the College of Idaho in Caldwell, Idaho, sent me a few questions about financial literacy for a project he’s doing. They’re good questions, so I’m blogging the answers: Financial education for the layman is … Continue reading

Posted in journalism | 9 Comments

Why Healthy Banks Shouldn’t Repay TARP Funds

I got an interesting response from one reader to my post on whether healthy banks should be able to give back TARP funds. Here it is, with permission; the short version is basically "no". The TARP preferred shares were extended … Continue reading

Posted in bailouts, banking | 7 Comments

OpenTable, Closed Minds

I’m a huge fan of OpenTable, and I’ve always imagined that restaurants are, too. They don’t need to spend hours on the phone telling people what’s free and what’s not, special instructions don’t get garbled, and it’s very easy to … Continue reading

Posted in food | 4 Comments

Why Big Banks Should be Smaller

James Kwak wants to make US financial institutions smaller: There are a few main things that made companies like AIG and Citigroup systematically important. One was interconnectedness: they did business with lots of counterparties. One was complexity: when push came … Continue reading

Posted in banking, regulation | 5 Comments

Great Moments in Political Rhetoric: Hannan vs Brown

From the European parliament, of all places: (Via MAI, although I’m late to this, it’s been viewed almost 2 million times on YouTube already.)

Posted in Politics | 6 Comments

One Easy CDS Fix

I’ve had my share of disagreements with Arnold Kling on the subject of credit default swaps in the past, but he has a good idea today: Regulators and accountants could require firms that are net sellers of credit default swaps … Continue reading

Posted in derivatives | 7 Comments

Why is the NYT Breaking the Web?

Websites get old, and need to be redesigned occasionally. That we understand. But the first rule of designing a website is that you make sure you can redesign it without breaking all the incoming links. And the first rule of … Continue reading

Posted in Media, technology | 2 Comments

Extra Credit, Sunday Edition

My Manhattan Project: The first-person story of Mike Osinski, whose software fuelled the mortgage-securitization boom. TR thoughts on ticket re-sellers / scalping: Trent Reznor of Nine Inch Nails explains the economics of concert tickets. Huffington Post launches journalism venture: Arianna … Continue reading

Posted in remainders | 3 Comments

How the CDS Market is Going to Improve

A Credit Trader has a great post on what he calls "risky annuity risk", an artifact of the CDS market which will go away when all credit default swaps start trading on a fixed coupon. If you like to geek … Continue reading

Posted in derivatives | 2 Comments

Bonuses are Large Because They’re Unpredictable

Mike at Rortybomb explains that the whole reason why Wall Street bonuses are so big is that there’s a non-zero chance that they won’t be paid: I’ve heard it from several people that the argument for the bonus is “we … Continue reading

Posted in pay | 4 Comments

Ben Stein Watch: March 29, 2009

Ben Stein counts Jim Cramer as a friend. And millions of people watched the showdown between Jon Stewart and Jim Cramer on The Daily Show. But judging by his column this week, Cramer’s friend Mr Stein wasn’t one of them: … Continue reading

Posted in ben stein watch | 3 Comments

Who’s Gaining from the AIG Unwinds?

Tyler Durden has a scary post up, connecting banks’ profitability in January and February to the fact that those were the months when AIG Financial Products was unwinding an enormous number of its contracts en masse. These trades, initiated by … Continue reading

Posted in bailouts, derivatives | 5 Comments

Newsweek’s Fearful Krugman Profile

Evan Thomas has a profile of Paul Krugman on the cover of Newsweek. The 2,825-word article has six on-the-record quotes about Krugman; none of them — not even the one from his mother — are particularly flattering. No one is … Continue reading

Posted in economics, Media | 3 Comments

What they Used to Teach You at Stanford Business School

Chris Wyser-Pratte, who got his MBA from Stanford in 1972 and then spent the next 23 years as an investment banker, sent me the following note last night. I’m reprinting it here with his permission: I learned exactly seven things … Continue reading

Posted in banking, education, investing | 3 Comments

Whining Executive of the Day, AIG Financial Products Edition

Executives at AIG Financial Products are not happy bunnies these days, and they’re starting to make their views public. Jake DeSantis, for instance, published his resignation letter as a NYT op-ed. But Paul Harriman and his wife, Jan Ellen Harriman, … Continue reading

Posted in pay | 3 Comments

Long-Term Stock Market Volatility Datapoint of the Day

Warren Buffett, take note: Although mean reversion makes a strong negative contribution to long-horizon variance, it is more than offset by the other components. Using a predictive system, we estimate annualized 30-year variance to be nearly 1.5 times the 1-year … Continue reading

Posted in stocks | 3 Comments

CDS: The No-Natural-Seller Meme

I was on a panel last night with Simon Constable of Dow Jones Newswires, and I’m sure that to our lay audience a peculiar exchange in the middle of the conversation must have sounded a bit like dolphin squeaks. He … Continue reading

Posted in derivatives | 2 Comments

Miami Beach Datapoint of the Day

Josh Giersch finds a Zillow map of the SoFi district of Miami Beach – a five-by-five block are south of Fifth Street which has 317 properties for sale, including 21 in just one building. The problem is that with that … Continue reading

Posted in housing | 2 Comments