Author Archives: Felix

Financial Innovation of the Day: E*Trade’s Springing Lien Notes

Posted on December 6, 2007 by Felix

Peter Eavis has dug up E*Trade’s 8K relating to the Citadel investment, and has discovered something rather weird. Citadel’s E*Trade bonds mature in 2017. And it seems that they are pari passu with all the rest of E*Trade’s debt until … Continue reading →

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The Subprime Plan: Now, It’s Political

Posted on December 6, 2007 by Felix

The Paulson subprime mortgage plan, it would seem, is now the Bush subprime mortgage plan. According to the WSJ, the plan "includes" a non-binding agreement by servicers and investors to freeze the teaser rate on some loans for five years. … Continue reading →

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NYT Revisits Goldman’s Mortgage Underwriting, Sensibly

Posted on December 6, 2007 by Felix

If I was an editor at the New York Times, the first thing I’d do after Chris Dodd started waving a Ben Stein column around would be to wonder if there was anything in it at all which could be … Continue reading →

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Google Battles the France-Microsoft Alliance

Posted on December 6, 2007 by Felix

Jonathan Last has an entertaining attack on Google Book Search in the latest Weekly Standard. Last starts off well, but he does rather disappears off the deep end by the time he finishes, alleging that "Google is trying mightily to … Continue reading →

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Extra Credit, Thursday Edition

Posted on December 6, 2007 by Felix

Looking for the Weaknesses in United Rental’s Lawsuit Spiky America I lost my appetite: How come risk appetite seems to be so volatile? Peter Orszag: blogging! Fake it until you make it: A housing flipper saga Productivity Is Revised Higher, … Continue reading →

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Subprime Datapoint of the Day, Auto Loan Edition

Posted on December 5, 2007 by Felix

And you thought subprime mortgages had high default rates. William Adams, Liran Einav, and Jonathan Levin examine subprime auto loans: The average purchaser finances around 90 percent of the price of the automobile, with the average loan size being around … Continue reading →

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Cost Inflation in Hollywood

Posted on December 5, 2007 by Felix

Tyler Cowen has high praise for the FT’s coverage of the Hollywood writers’ strike, and for this passage in particular: While broadcasters have more rights, they also have to fund production, which is increasingly expensive. The cost of a one-hour … Continue reading →

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Second Thoughts on Malawi’s Fertilizer Subsidies

Posted on December 5, 2007 by Felix

When the word "simply" appears in a headline about development issues, be very, very cautious. That’s what happened in story that the NYT splashed on its front page Sunday: "Ending Famine, Simply by Ignoring the Experts", by Celia Dugger. The … Continue reading →

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What’s a CDO?

Posted on December 5, 2007 by Felix

I could tell you, but it’s more fun to show you.

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Subprime: It Never Did Help Homeownership

Posted on December 5, 2007 by Felix

Student of the Tao goes mythbusting, after reading the Seattle Times: Myth 1: Sub-prime mortgages allow bad credit risks to buy homes. Locally and nationally, nearly all of Ameriquest’s loans went to people who already owned homes, The Times found. … Continue reading →

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Subprime Prescience at MetLife

Posted on December 5, 2007 by Felix

Lavonne Kuykendall quotes Steven Kandarian, MetLife’s CIO: Mr. Kandarian said MetLife identified the risk from subprime loans early and stopped buying subprime mortgage-backed securities rated single-A and below in late 2004. Note that MetLife’s fund managers aren’t the kind of … Continue reading →

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Cuomo Stalks Wall Street, Mortgage Edition

Posted on December 5, 2007 by Felix

Andrew Cuomo is on a fishing expedition for mortgage-related malfeasance on Wall Street, specifically sins of omission: The inquiry raises questions about the extent to which securities firms are obligated to dig into the mortgages before slicing them up to … Continue reading →

Posted in bonds and loans, housing, law | 1 Comment

Silvio Berlusconi for Citigroup CEO!

Posted on December 5, 2007 by Felix

In the wake of Saturday’s NYT story that Vikram Pandit looks set to take over Citigroup, a bit of color is emerging: essentially that he’s the best man for the job only insofar as he’s the only person willing to … Continue reading →

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Blogonomics: The Gulf Between Bloggers and Professional Journalists

Posted on December 5, 2007 by Felix

Professional journalists tend to think of their article as the end of a process of reporting, while bloggers tend to think of their entries as the beginning of a process of commenting.
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Extra Credit, Wednesday Edition

Posted on December 5, 2007 by Felix

US house price index only now indicating depth of crisis Small-town America: The new Bangalore? Homeowners With Negative Equity The Samwick Family Fund: Giving stock to charity, made easy. Subsidising rootedness: "When people speak of ‘putting down roots’, they generally … Continue reading →

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Chris Dodd Has Lost His Mind

Posted on December 4, 2007 by Felix

Dennis Kucinich, maybe, I could understand. Even John Edwards, with his populist streak. But Chris Dodd? I know the chap’s presidential campaign is struggling, but has he forgotten that he’s chairman of the Senate Banking Committee? It would seem so. … Continue reading →

Posted in ben stein watch, Politics | 2 Comments

A Chinese Bid for Rio Tinto?

Posted on December 4, 2007 by Felix

It makes sense all the sense in the world that China, broadly defined, should make a bid for Rio Tinto. If it doesn’t, there’s a very good chance that the BHP-Rio merger will go through – a merger which would … Continue reading →

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Subprime Paper of the Day

Posted on December 4, 2007 by Felix

Kristopher Gerardi, Adam Hale Shapiro, and Paul Willen of the Boston Fed: This paper provides the first rigorous assessment of the homeownership experiences of subprime borrowers… We present two main findings. First, homeownerships that begin with a subprime purchase mortgage … Continue reading →

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The Weakness of Marking Subprime Bonds to Market

Posted on December 4, 2007 by Felix

In the case of subprime bonds, marking to market is a pretty crappy way of working out how much those bonds are worth.
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Which Bondholders Benefit From the Paulson Plan?

Posted on December 4, 2007 by Felix

Last week, when the Sheila Bair subprime-modification plan became the Hank Paulson subprime-modification plan, I tentatively suggested that junior bondholders might be winners, while senior bondholders could lose out: In reality, it’s almost certain that some bondholders would benefit from … Continue reading →

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David Woo Defends the Oil Price Denomination Fallacy

Posted on December 4, 2007 by Felix

David Woo, global head of foreign exchange strategy at Barclays, knows a hell of a lot more about the FX market than I do. And it turns out that Woo doesn’t dismiss the oil-price denomination fallacy out of hand. In … Continue reading →

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Optimism in Bali

Posted on December 4, 2007 by Felix

UN secretary general Ban Ki-moon marked the beginning of the huge climate conference in Bali yesterday with an excellent and upbeat op-ed in the Washington Post. "Largely lost in the debate is the good news," he wrote: "We can do … Continue reading →

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Scenes From the Credit Crunch, UK Edition

Posted on December 4, 2007 by Felix

It’s really bad out there right now. If you took a snapshot of financial conditions, especially in London, you’d have to conclude it’s now much worse than during the worst days of the summer – the only thing missing is … Continue reading →

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Extra Credit, Tuesday Edition

Posted on December 4, 2007 by Felix

Conversations with the Trading Desk: Rick Bookstaber on the trader’s mindset. Editorialists Gone Wild: The Post on Nafta CRUSHING BEAR HUG FOR HEDGE HONCHO: Ralph Cioffi failed at running hedge funds, now he’s failing at starting them. How to save … Continue reading →

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Ben Stein Watch: The Aftermath

Posted on December 3, 2007 by Felix

Dear God what hath Ben Stein wrought? His latest column was as dreadful as most, but it seems to have touched one hell of a nerve. I have a weekly Ben Stein Watch; I had to respond to it. But … Continue reading →

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