Author Archives: Felix

Extra Credit, Thursday Edition

Posted on January 10, 2008 by Felix

Atomic Madeleines: Daniel Davies against nuclear power. Yale to Use More Endowment Funds: Both Yale and Harvard now pledge to spend 5% of their endowments next year. Eat the Bankers: The Epicurean Dealmaker on Wall Street bonuses.

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Why Microcredit Works

Posted on January 9, 2008 by Felix

Karol Boudreaux and Tyler Cowen look at microcredit in the Wilson Quarterly. This is my favorite insight: Sometimes microcredit leads to more savings rather than more debt. That sounds paradoxical, but borrowing in one asset can be a path toward … Continue reading →

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Has Sam Heyman Lost $1 Billion on Sallie Mae?

Posted on January 9, 2008 by Felix

Sam Heyman is a hedge fund manager, corporate raider, and merger arbitrageur. He came massively unstuck in Australia in May, when his merger-arb tactics relating to the acquisition Qantas by Airline Partners Australia were described as "an elaborate and cunning … Continue reading →

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Why Goldman Sachs Should Implement a Clawback Mechanism

Posted on January 9, 2008 by Felix

Raghuram Rajan attacks banks’ compensation systems in the in the FT, to applause from Yves Smith, Alea, and Alexander Campbell. The problem, says Rajan, is that bankers get paid enormous sums of money for generating "fake alpha": profits which will … Continue reading →

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Was New Hampshire a Truly Historic Result?

Posted on January 9, 2008 by Felix

Justin Wolfers is unapologetic in the wake of Hillary Clinton winning the New Hampshire primary. Clinton’s victory, he says, was "one of the most surprising upsets in U.S. political history": Election-eve trading had suggested that Sen. Obama had a 92% … Continue reading →

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In Praise of New NYC Skyscrapers

Posted on January 9, 2008 by Felix

Back in November, the NYT’s Nicolai Ouroussoff gave a rave review to Jean Nouvel’s proposed new midtown skyscraper, destined for a narrow lot next to the Museum of Modern Art. It "promises to be the most exhilarating addition to the … Continue reading →

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Can Politicians Boost Stock Prices?

Posted on January 9, 2008 by Felix

There’s an interesting letter in the WSJ today, from John Callister in Ithaca. Callister has about $700,000 invested in the stock market, and all he cares about, in terms of the presidential election, is which candidate will make that sum … Continue reading →

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A Simple InTrade Arbitrage

Posted on January 9, 2008 by Felix

While I’m on the subject of prediction markets, I might also add that they’re not even internally consistent, some of the time. Brian Weatherson has looked at arbitrage opportunities across markets, but they exist within markets as well. Here’s some … Continue reading →

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Trading Obama and Clinton, Redux

Posted on January 9, 2008 by Felix

Paul Krugman is right: prediction markets are looking pretty pathetic this morning. On Monday I noted that Obama had become the Democratic heir presumptive more or less overnight, saying that "the speed with which Clinton and Obama have traded places … Continue reading →

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Regulating Carbon Offsets

Posted on January 9, 2008 by Felix

Will the FTC get involved in auditing carbon-offset providers? Louise Story, in the NYT, hints that it might. The present situation is a mess, and it would be great if someone could come in and clean it up. But I … Continue reading →

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Extra Credit, Wednesday Edition

Posted on January 9, 2008 by Felix

Against Fiscal Stimulus Questioning an Adviser’s Advice: Sorkin on Lipton. Turns Out Judges Don’t Like "Efficient" Servicers: A Tanta classic. Ability to track risk has shrunk "forever" -Moody’s Daniel Grant vs Tyler Cowen on the capital-gains treatment of artworks. Deborah … Continue reading →

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Innovations in Coffee

Posted on January 8, 2008 by Felix

The best consequence of all the Starbucks news of late, at least for me, was Mike Mandel’s blog entry on the subject over at Business Week. Mandel wonders whether the slowdown in US Starbucks sales is an early sign of … Continue reading →

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The Confusing Number of Value-Weighted Index Funds

Posted on January 8, 2008 by Felix

I’m fascinated by this profile of Jonathan Steinberg and his Wisdom Tree ETFs. Instead of going overweight companies with the highest market capitalization, as most index funds do, Steinberg’s funds go overweight companies with the highest dividends. Wisdom Tree’s Jeremy … Continue reading →

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No Respite for Bear Stearns

Posted on January 8, 2008 by Felix

On Friday, I noted that Bear Stearns was trading below its book value ($84.09 per share), and said that the "next milestone to fall" would take place if the share price dropped past $73.41, where the bank has a market … Continue reading →

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Gordon Brown and the Independence of the Bank of England

Posted on January 8, 2008 by Felix

Willem Buiter is shocked that UK prime minister Gordon Brown, along with his finance minister Alastair Darling, might attempt to have any influence at all over the monetary policy of the Bank of England: I could not believe my eyes. … Continue reading →

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Will the CDS Market See $250 Billion in Losses?

Posted on January 8, 2008 by Felix

Bill Gross’s Investment Outlook this month includes the normal mix of hyperbole and mixed metaphors ("securitized WMDs", "the pyramid begins to unravel"). But get past that, and you’ll find him saying that the CDS (credit default swap) market poses a … Continue reading →

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The National Association of Realtors’ Fuzzy Math

Posted on January 8, 2008 by Felix

This is the worst website I’ve seen in a very long time. For one thing, it’s one of those websites which starts talking at you the minute you load it: turn your speakers off before you go there, if you … Continue reading →

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Parsing Starbucks

Posted on January 8, 2008 by Felix

Jack Flack (congratulations, btw) today decodes the jargon-filled press release which accompanied the news that Howard Schultz was returning as CEO of Starbucks. The release certainly needs decoding. The headline, ferchrissakes, is "Starbucks Announces Strategic Initiatives to Increase Shareholder Value": … Continue reading →

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In Praise of a Pessimistic President

Posted on January 8, 2008 by Felix

My favorite line from the NYT coverage of Bush’s speech on the economy: Still, Mr. Bush must be careful not to depress the economy with pessimistic talk, and so his speech in Chicago on Monday offered a delicate balancing act. … Continue reading →

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Extra Credit, Tuesday Edition

Posted on January 8, 2008 by Felix

US newspapers disregard their consumers At Bonus time, No One Can Hear You Scream: "Today’s bulge-bracket fixed income trading floors are strewn with human wreckage which will be reincarnated as tomorrow’s ‘Unicredito Global Head of Globalness’ types." Can Foundations Take … Continue reading →

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Can Alan Schwartz Rescue Bear Stearns?

Posted on January 7, 2008 by Felix

This time last year, Bear Stearns was trading at a hundred and seventy something dollars per share. Today, it closed at seventy something dollars per share, well below its book value of $84. That’s all you need to know to … Continue reading →

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Sino-African Datapoint of the Day

Posted on January 7, 2008 by Felix

Pascal Zachary: There are roughly 2,000 African students in China, most of whom are pursuing engineering and science courses. According to Juma, that number is expected to double over the next two years, making China “Africa’s leading destination for science … Continue reading →

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Paulson’s Most Bearish Speech Ever

Posted on January 7, 2008 by Felix

This is I think one of the most bearish speeches by a sitting finance minister I have ever read; I certainly can’t recall anything like it from any US Treasury Secretary. In it, Hank Paulson seems to be channelling Nouriel … Continue reading →

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The Crisis Meme

Posted on January 7, 2008 by Felix

The Russian crisis was a crisis, as was LTCM: both had very nasty global systemic implications. What we saw in 2007 was not a crisis.
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Why Old Masters Might Not be a Good Investment

Posted on January 7, 2008 by Felix

The price of Old Masters has been lagging that of contemporary art, despite the fact that the supply of Old Masters is shrinking, while the supply of contemporary art is increasing. Jeff Segal of Breaking Views concludes that "the Old … Continue reading →

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