Author Archives: Felix

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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When the Markets are Wrong

Posted on February 19, 2008 by Felix

The markets don’t always make any sense, and this headline from Bloomberg gives a prime example: Northern Rock Credit-Default Swaps Rise on Nationalization Yes, in the wake of the news that the Northern Rock was going to be owned by … Continue reading →

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Did Black-Scholes Cause the Housing Bubble?

Posted on February 19, 2008 by Felix

Michael Lewis gets his nerd on in the March issue of Portfolio, wading into the Taleb vs Black-Scholes debate. But he actually seems to go even further than Taleb. Think of three levels of skepticism when it comes to the … Continue reading →

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This Is Financial Meltdown

Posted on February 19, 2008 by Felix

Nouriel Roubini: The numbers all go to eleven. Look, right across the board, eleven, eleven, eleven and… Larry Summers: Oh, I see. And most blogs go up to ten? Nouriel Roubini: Exactly. Larry Summers: Does that mean it’s grimmer? Is … Continue reading →

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News Corp’s Cutest Board Member

Posted on February 19, 2008 by Felix

"I’m not just some idiotic girl in piggytails yodeling," says Natalie Bancroft in an interview for the March issue of Portfolio, who was photographed by João Canziani. "I’m working my little butt off." The daughter of Joyce Bancroft, a Dutch-Brazilian … Continue reading →

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The End of the Monolines

Posted on February 19, 2008 by Felix

It looks like the end of the monolines to me. FGIC has already said it’s splitting – something which, legally, is fraught at best. Ambac is trying to raise $2 billion in new equity before, yes, splitting. And now MBIA … Continue reading →

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Should the US Government Buy Distressed Bonds?

Posted on February 19, 2008 by Felix

The Federal reserve, and the Federal Home Loan Banks, and Fannie Mae, and Freddie Mac, between them, have injected a huge amount of liquidity into the banking system during this credit crunch. But it’s been done in a reactive manner, … Continue reading →

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The Credit Suisse Writedown: Less Than Meets the Eye

Posted on February 19, 2008 by Felix

Credit Suisse has $34 billion in CMBS, RMBS and CDO exposures. Or, hang on a minute, cut that by $2.85 billion: apparently there were some "mismarkings" going on. There seems to be a lot of people who are very shocked … Continue reading →

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