Author Archives: Felix

Parsing the Global Recession

We all know what a recession is: two consecutive quarters of negative growth. Easy. So a global recession, that’s the same thing, but on a global level, right? Actually, no. Recessions happen, in all countries, but they don’t happen in … Continue reading

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Extra Credit, Friday Edition

July 2008 LHC End of the Universe Puts I Have the Best Job in the World: Berkeley coffee shops really do have more interesting conversations. Lehman Deal: ‘Creative’ Financing Rides Again In times of complexity, common sense must prevail: John … Continue reading

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Does the World Need Rich Venture Capitalists?

Fred Wilson’s blog entry about "a new path to liquidity" has resulted in a spectacular outpouring of very high-level comments, as well as responses from other bloggers such as Roger Ehrenberg. But I’m not at all convinced that there’s really … Continue reading

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Judging GDP

Justin Fox defends GDP as a useful indicator: Over the years, GNP and GDP have proved spectacularly useful in tracking economic change–both short-term fluctuations and long-run growth… The issue with alternative benchmarks is not whether they have merit (most do) … Continue reading

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WSJ and FT Buck the Newspaper Trend

These are desperate times for the newspaper industry, and they’re not much better in the world of finance. So it’s interesting to see Jeff Bercovici and Jon Fine lauding impressive growth at the WSJ and the FT respectively. Is this … Continue reading

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Bankruptcies: Still Rare

I’m signed up to the WSJ’s email alert service, which sent me a couple of messages last night. At 12:14 am there was this: WSJ NEWS ALERT: Linens ‘n Things Is Expected to File For Chapter 11 And at 2:19 … Continue reading

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Blogonomics: Seeking Alpha Plays the Ultimatum Game

The Ultimatum Game, in game theory, has two players. It’s very simple: The first player proposes how to divide a sum of money between themselves, and the second player can either accept or reject this proposal. If the second player … Continue reading

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Extra Credit, Thursday Edition

You can’t spell "subprime" without "UBS" Diamonds are forever: A nicely contrarian take on the concept of "blood diamonds". Greenspan: "This is really quite unfair": Greenspan never really retracted his statement recommending ARMs. Beware the ninja Prius

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The Yahoo Yawn

With all the news about Yahoo that emerged after the market closed yesterday – Google! Microsoft! AOL! Murdoch! – the stock today erupted in a frenzy of highly volatile trading, closing well above Microsoft’s offer price. Or, you know, it … Continue reading

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Attractive Lenders

If I were a chartist, which I’m not, I’m sure I would consider the chart of KKR Financial to be surpassingly ugly. But I had lunch today with Brian McMahon, the CEO and CIO of Thornburg Investment Management, and he’s … Continue reading

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Are There Low-Risk, Low-Return Hedge Funds?

Megan Barnett reckons that all hedge funds are high-risk investments. Because of their performance fees, she says, they’re incentivized to take greater risks because it’s there that the big money lies. I like these arguments from incentives, because they do … Continue reading

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Blogonomics: Narrow Blogs

Liquidity Freeze is, in its own words, A blog following the catastrophic failure in auction rate security markets, concentrating on closed end funds. The author even adds a note saying that anything not associated with closed end funds is "out … Continue reading

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Agricultural Subsidies: Still a Bad Idea

If you want proof that the free-market intelligentsia really doesn’t get what it wants, all you need to do is look at agricultural subsidies. The right hates them because, well, they’re subsidies, and the left hates them because the beneficiaries … Continue reading

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Why Hedge Funds Lose Money in Volatile Markets

Insight from Baruch: The strategists at my beloved employer told the punters, correctly, that this year would see a lot of volatility in equities. So, they said, increase allocation to equity long short, which struck me as precisely the wrong … Continue reading

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The Fight for Yahoo

The more I think about it, the more I like this idea of a joint bid for Yahoo from Microsoft and News Corp. The bits of Yahoo which Microsoft doesn’t want – call them "content", if you like – are … Continue reading

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The Euro Under Attack

Avi Tiomkin has a provocative article in the latest Forbes on "the demise of the euro". His thesis is not only that the euro will fall against the dollar, but that the entire currency will fall apart, and that Europe … Continue reading

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Sheila Bair’s Plan B

FDIC chairman Sheila Bair’s Plan A for modifying troubled mortgages is, by her own admission, not working out very well. But never worry, she’s got a Plan B: One idea is to provide loans directly to troubled borrowers to pay … Continue reading

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Sebastian Mallaby Still Loves Hedge Funds

Every so often over the past few months, as yet another hedge fund or private-equity legend came unstuck, I wondered how Sebastian Mallaby’s book was doing. After writing an astonishingly upbeat article on hedge funds for Foreign Affairs, he decided … Continue reading

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Extra Credit, Wednesday Edition

Survey of economics blog readers: If you have a minute, take it! A Tax Break for Bubble Heads: More problems with the housing bill. The Bear Stearns Tombstone.

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Blogonomics: Leaving Seeking Alpha

I feel I have to mention Barry Ritholtz’s very public abandonment of Seeking Alpha. After they mistakenly edited a couple of his headlines, he put up an anguished post on his personal blog, asking if he should quit the relationship; … Continue reading

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Apollo’s Discount IPO

One thing the stock market has in common with the art market is a very strong allergy against primary-market offerings which have fallen in price from the last time round. It’s one of the reasons why gallerists invariably sell their … Continue reading

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Petrochemical Datapoint of the Day

Darren Rovell is on the baseball-cap beat: New Era raised prices on its 59Fifty hats by $4 last year because of a change in material from wool to polyester. No, that’s not a misprint. Polyester, it seems, is now more … Continue reading

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Wall Street Euphemism Watch

At Citigroup, the guy in charge of firing people is known as the "head of productivity". Someone give Vikram Pandit a bloody shovel already.

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Hedge Fund Losses Blamed on Volatility

There’s more than a little schadenfreude doing the rounds at the news that one of Jim Simons’s funds is down 12% from its peak last May – especially since it’s meant to provide "lower, yet steadier, returns" than your average … Continue reading

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Where Private Equity Meets Public Debt

Back in October, things were so much smaller. The idea then was that KKR would put up $2 billion of equity, leverage it up to a total of $10 billion by borrowing $8 billion from Citigroup, and then use the … Continue reading

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