Author Archives: Felix

Dr Seuss on CDOs

A PDF file entitled “Dr Seuss on CDOs” has been doing the email rounds today. The text can be found over at the WSJ’s economics blog, but it’s worth reading the piece in its the original PDF form, if you … Continue reading

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Standard & Poor’s: The Other Victim of the MBIA Announcement

David Gaffen has a good round-up of reactions to MBIA’s announcement that it is carrying $8.1 billion of nuclear waste CDO-squared on its balance sheet. The main puzzle seems to be this: S&P knew all about this when it affirmed … Continue reading

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Why We Shouldn’t Count on Fiscal Policy to Save the Economy

Mark Thoma today has an excellent (implicit) rebuttal of Larry Summers’s proposal that the US government use fiscal policy to fight impending recession. Both fiscal and monetary policy are capable of fighting recessions, Thoma says. But the thing about monetary … Continue reading

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New York’s New Subway Math

The NYT has a good article this morning on the “new subway math” – the way in which anybody refilling their MetroCard is going to have to do some rather recondite calculations in order to ensure they don’t end up … Continue reading

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The Economics of eBay

Aaron Schiff notes, quite rightly, that eBay uses anticompetitive tactics in order to retain its market share: One of the things that probably makes it hard to compete with eBay is that eBay ‘owns’ the reputations of its users. If … Continue reading

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Was Ralph Cioffi Singlehandedly Responsible for Everything Which Went Wrong of Late?

Ralph Cioffi must be feeling pretty beleaguered at the moment. A few months ago, he was just a hedge-fund manager whose bets went horribly wrong. Recently, he learned that he’s being investigated to see whether he committed outright fraud. And … Continue reading

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How Negative Earnings Don’t Seem to Matter

When it comes to earnings, Wall Street wants guidance. Here’s the cri de coeur from Societe Generale’s Bill Kavaler Cavalier, during the notorious conference call with Sallie Mae’s Al Lord yesterday: We’re trying to put together projections here, Al. We’re … Continue reading

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Extra Credit, Thursday Edition

CIC’s opportunistic deal is lesson learnt: The FT on the mechanics of the Morgan Stanley deal. (Also: Setser, on same.) Why I’ve Decided To Abandon (Virtually All) Ads On The Simple Dollar Economics: The Year in Books, 2007 Cerberus’ Feinberg: … Continue reading

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The Problem of Artificially Inflated House Prices

Amidst all the breaking news today, you could be forgiven for not having time to notice the big WSJ article on kickbacks from property sellers to buyers – kickbacks which serve to overstate house-price indices and severely damage the balance … Continue reading

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Is Cramer Advocating Index Funds?

One of the most effective ways to sell anything is to tell your mark that he’s special, and that your product isn’t suitable for just anyone, you know. The masses? The great unwashed? They can make do with mass-market products. … Continue reading

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Can a President Delegate the Economics Stuff?

John McCain says that he’s "really never understood" economics, and that he might give responsibility for economy to a more financially-literate vice-president. Is that realistic? I think that maybe it is. There are certain areas where a president really has … Continue reading

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Albert Lord: The Deathwatch Begins

How did Albert Lord become CEO of Sallie Mae? He hardly showered himself in glory during the whole debacle with Chris Flowers, during which time he was so busy refusing to negotiate on the sale price that (a) the entire … Continue reading

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ACA Reminds the Markets of the Importance of Counterparty Risk

Here’s the chart of ACA’s share price, from when it went public at the end of 2006 at $13 per share, through to yesterday, when it was delisted at $0.31 per share. Today, S&P finally got around to slashing ACA’s … Continue reading

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Morgan Stanley: What Did CIC Know, and When Did They Know It?

Tinbox, in the comments to my last Morgan Stanley post, makes a very good point: that China Investment Corp must have been given lots of material non-public information in advance of Morgan Stanley’s Q4 earnings announcement. I don’t know how … Continue reading

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Ralph Cioffi, Free at Last

On December 3, Roddy Boyd reported that Ralph Cioffi wanted to leave Bear Stearns, but that the bank didn’t want him to leave. Well, it looks like he got his wish. Cioffi left Bear last week, albeit not in the … Continue reading

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Morgan Stanley: Yet More Proof That Stock Moves Make No Sense

I puzzled yesterday over the question of why Goldman Sachs fell in the wake of spectacular earnings. Today, it’s the other way around: how on earth is Morgan Stanley’s stock rising in the wake of losing $3.56 billion last quarter? … Continue reading

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Peter Schiff on the Housing Market and the Rescue Plan

I had some harsh words last week for Peter Schiff, which prompted a comment from Jack: Taking on Schiff? Get ready for a barrage of hate mail from him and his lackeys! In fact, I got no hate mail at … Continue reading

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Morgan Stanley: Eminently Stoppable

Morgan Stanley’s Q3 earnings were bad. "Mack Smacked" was the Portfolio headline, reacting to a lower profit (just $1.54 billion, John Mack’s first quarterly earnings decline) and a nasty $940 million write-down on bad loans. Ah, those were the days. … Continue reading

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Extra Credit, Wednesday Edition

Is Housing Becoming Disconnected from Income? On the hook for £100bn – it’s “business as usual” at Northern Rock Very cool global GDP animation Closing the mortgage barn door: "Incentives to follow prudent lending procedures did not ‘erode,’ as Bernanke … Continue reading

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Why David Viniar Didn’t Cause Goldman’s Shares to Fall

Any given stock, on any given day, even if that day sees the release of an earnings report, moves in an essentially random direction. If you want to see what’s happened to Goldman Sachs shares, don’t look at where they closed today compared to where they closed yesterday: look at where they are now compared to a month, or a quarter, or a year ago.
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In Praise of Kevin Martin

Very few people have anything nice to say about the FCC’s Kevin Martin. The WSJ’s Amy Schatz has a rollicking overview of all the different constituencies he’s managed to piss off since taking over in 2005 – the latest are … Continue reading

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The WSJ Still Has Editorial Independence

Rupert Murdoch has installed his hand-picked man, Robert Thomson, as the boss of WSJ editor Marcus Brauchli. That doesn’t violate the letter of the agreement Murdoch made to preserve the WSJ’s independence: Thomson is nominally the WSJ’s publisher, and Brauchli … Continue reading

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Why US Airline Service is So Bad

Pico Iyer wants to know why US airlines are so crap – why "a place in Northwest’s business class has afforded me less comfort than a seat in the economy class of the national airlines of Bolivia, Cuba and even … Continue reading

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Will the ECB Start Buying CDOs?

We know that the Fed has pretty low standards when it comes to the collateral it will accept. But that doesn’t really matter, since the Fed is mainly relying on getting its money back from the banks it’s lending money … Continue reading

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US Government Finally Getting Serious About Mortgage Reforms

Tyler Cowen thinks that the Fed should not have a consumer-protection function. I’m largely sympathetic – it’s not as though there’s any shortage of other regulators in Washington who could pick up the slack – but in reality the Fed … Continue reading

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