Author Archives: Felix

Paying M&A Bankers by the Hour

Posted on February 27, 2008 by Felix

Should M&A bankers be paid by the hour? William Cohan thinks so, on the grounds that they would then give more impartial advice, rather than being incentivized to close every deal. The Epicurean Dealmaker, naturally, begs to differ: The average … Continue reading →

Posted in banking | Comments Off on Paying M&A Bankers by the Hour

When Trusted Advisors Have Their Clients Over a Barrel

Posted on February 27, 2008 by Felix

When times are good, investment bankers love to shower their clients with relationship guff. "We’re not just selling products," they say, "we’re building a relationship". They talk a lot about being a "trusted advisor," and the older ones might even … Continue reading →

Posted in banking, bonds and loans | Comments Off on When Trusted Advisors Have Their Clients Over a Barrel

Microsoft: Where Fines are a Cost of Doing Business

Posted on February 27, 2008 by Felix

Neelie Kroes ain’t pulling her punches: "Microsoft was the first company in 50 years of E.U. competition policy that the commission has had to fine for failure to comply with an antitrust decision," Ms. Kroes said. …and so did Microsoft … Continue reading →

Posted in regulation, technology | Comments Off on Microsoft: Where Fines are a Cost of Doing Business

Blogonomics: When a Salary Becomes an Advance

Posted on February 27, 2008 by Felix

At the beginning of the year, Gawker Media moved to a new pay scheme where writers were paid based on their pageviews. According to the memo, the new scheme was pretty simple: While your base monthly pay remains the same, … Continue reading →

Posted in blogonomics | Comments Off on Blogonomics: When a Salary Becomes an Advance

Extra Credit, Wednesday Edition

Posted on February 27, 2008 by Felix

Global carbon market up 56% in 2008 The Latest Carbon Prices The Logic of Privatization Ain’t That Inexorable, Bud Chart of the Day: Why Didn’t People Watch the Oscars? Elliott Sues Cedar Hill For Spying, Stealing: "An overt act of … Continue reading →

Posted in remainders | Comments Off on Extra Credit, Wednesday Edition

How the Optics of Wealth Fuelled the Argentine Debt Boom

Posted on February 26, 2008 by Felix

Megan McArdle and Tyler Cowen are talking today about the optics of wealth, concentrating on Cuba. Why would people think that Cuba is doing better than northern Mexico, when the opposite is true? And more broadly, why do rich countries … Continue reading →

Posted in economics | Comments Off on How the Optics of Wealth Fuelled the Argentine Debt Boom

Municipal Bonds: Eisinger’s Response to Carney

Posted on February 26, 2008 by Felix

Jesse Eisinger is of course eternally grateful for my defense of his article against the imprecations of John Carney. But he has more to add: I’m grateful that John took some time out from reporting on the toilet situation at … Continue reading →

Posted in insurance | Comments Off on Municipal Bonds: Eisinger’s Response to Carney

Dependent Variables in Political Prediction Markets

Posted on February 26, 2008 by Felix

There’s a great example of the mathematics of dependent and independent variables over at InTrade right now. The betting company has just launched a CLINTON.LIFELINE contract, which reflects her chances of winning all three of the Ohio, Texas, and Pennsylvania … Continue reading →

Posted in prediction markets | 1 Comment

In Defense of the Patriot Employer Act

Posted on February 26, 2008 by Felix

Willem Buiter and Anne Sibert are really tough on Barack Obama today, calling his Patriot Employer Act "reactionary, populist, xenophobic and just plain silly". Andrew Leonard doesn’t even attempt to defend Obama on the merits, instead painting this Act as … Continue reading →

Posted in economics, Politics | Comments Off on In Defense of the Patriot Employer Act

Credit Cards Around the World

Posted on February 26, 2008 by Felix

Ronald Mann’s credit-card infographic in Foreign Policy has been getting a lot of attention in the econoblogosphere today. It’s a great little piece, but a little unclear on some things, especially sources. So I sent off an email to Professor … Continue reading →

Posted in personal finance | Comments Off on Credit Cards Around the World

Letter Writer of the Day: Jay Brown

Posted on February 26, 2008 by Felix

I think I’m falling a little for Jay Brown, now on his second tour of duty as MBIA CEO. From his letter to shareholders: As the leading monoline, we are also a convenient and attractive target for self-interested parties such … Continue reading →

Posted in insurance | Comments Off on Letter Writer of the Day: Jay Brown

Chart of the Day: Real Earnings

Posted on February 26, 2008 by Felix

This chart, from the NYT, shows annual growth in real wages. What that means is that workers today are earning significantly less, in real terms, than they were a year ago: their January 2008 earnings were down 19 cents per … Continue reading →

Posted in charts, pay | Comments Off on Chart of the Day: Real Earnings

Sovereign Wealth Funds: Hard to Regulate

Posted on February 26, 2008 by Felix

Bob Davis has an excellent front-pager in today’s WSJ on the dance between sovereign investors and sovereign investees. Both the US and the EU are looking for sovereign wealth funds to become more transparent, although it’s far from obvious what … Continue reading →

Posted in economics | Comments Off on Sovereign Wealth Funds: Hard to Regulate

Why the Web won’t Kill Television

Posted on February 26, 2008 by Felix

Print media were the first victims of the World Wide Web – something which makes sense, given its text-heavy nature. Now that video is increasingly important to the Web, will television be next to implode? I don’t think so. Sophia … Continue reading →

Posted in Media | Comments Off on Why the Web won’t Kill Television

Why Yield Spreads Aren’t the Same as Credit Risk

Posted on February 26, 2008 by Felix

John Carney is one of those people who seems to think that if you’re contrarian you must be right. His latest broadside is directed against Jesse Eisinger, of all people; in it he tries to assert that there’s really nothing … Continue reading →

Posted in bonds and loans | Comments Off on Why Yield Spreads Aren’t the Same as Credit Risk

Extra Credit, Tuesday Edition

Posted on February 26, 2008 by Felix

Fun with I-Banker Compensation Morgan Stanley Balks at New CICC Bids: They fell to $600 million from over $1 billion. Greenspan’s Oil Call: And all the other times he’s been wrong. Vegetable Capital Ripens: Equity Private on hedge-funders in Hollywood. … Continue reading →

Posted in remainders | Comments Off on Extra Credit, Tuesday Edition

Tilda Swinton: Upset of the Night

Posted on February 25, 2008 by Felix

How did InTrade do at the Oscars? Pretty well, it turns out. All the favorites – anybody trading above say 65 – won in their category. Immediately before the announcements were made, No Country For Old Men was trading in … Continue reading →

Posted in prediction markets | Comments Off on Tilda Swinton: Upset of the Night

Monolines: S&P to the Rescue

Posted on February 25, 2008 by Felix

Now that S&P has affirmed the triple-A ratings on both MBIA and Ambac, Bill Ackman et al are going to have to start playing the long game. With their triple-As seemingly firmly in hand for the time being, any implosion … Continue reading →

Posted in insurance | Comments Off on Monolines: S&P to the Rescue

Is JP Morgan Conflicted in the Visa IPO?

Posted on February 25, 2008 by Felix

Floyd Norris is worried about conflicts of interest in the Visa IPO: The lead underwriters for the offering are JP Morgan Chase and Goldman Sachs. JP Morgan may have set the modern record for conflicts of interest by a lead … Continue reading →

Posted in banking | Comments Off on Is JP Morgan Conflicted in the Visa IPO?

Charitable Donations: The Next Backdating Scandal?

Posted on February 25, 2008 by Felix

Are CEOs backdating charitable stock donations? They might well be, according to Zubin Jelveh, who has been talking to NYU professor David Yermack: Yermack estimates that while most of the 90 chief executives and chairmen in his sample are playing … Continue reading →

Posted in stocks | 1 Comment

The New Market for $700,000 Houses

Posted on February 25, 2008 by Felix

Now that Fannie and Freddie can buy jumbo mortgages up to $729,750, there’s new demand for houses up to that range. Dean Baker thinks the demand isn’t likely to be enormous, however: The law as it is written is time-limited. … Continue reading →

Posted in housing | Comments Off on The New Market for $700,000 Houses

Visa IPO to Help Recapitalize US Banks

Posted on February 25, 2008 by Felix

The Visa IPO, which could raise as much as $18.8 billion, is going to dwarf what until now was the largest IPO in US stock market history, AT&T Wireless’s $10.6 billion offering at the height of the dot-com boom in … Continue reading →

Posted in banking, stocks | Comments Off on Visa IPO to Help Recapitalize US Banks

Krugman in Tokyo

Posted on February 25, 2008 by Felix

French bank CLSA is putting on "a five-day gala gabfest" in Tokyo this week, according to Gwen Robinson. Along with expensive musical entertainment there’s more highbrow stuff as well: Among the 30-plus speakers being wheeled out for the assembled multitudes … Continue reading →

Posted in economics | Comments Off on Krugman in Tokyo

Adventures in Swapland

Posted on February 25, 2008 by Felix

The Economist reports on something known as a "CMS spread ladder swap," which apparently was reasonably popular among German municipalities before it blew up. They were paying a relatively high fixed interest rate on their debt, and Deutsche Bank helpfully … Continue reading →

Posted in derivatives | Comments Off on Adventures in Swapland

Is Mark-to-Market a Doomsday Machine?

Posted on February 25, 2008 by Felix

John Dizard has a very good column in the FT today, comparing the rules about marking to market in the banking industry to the Doomsday machine in Dr Strangelove. He also has some ideas about how the vicious cycle can … Continue reading →

Posted in banking | Comments Off on Is Mark-to-Market a Doomsday Machine?