Author Archives: Felix

Answers to Four Questions About Financial Journalism

Posted on March 30, 2009 by Felix

Will Ortel, a journalism student at the College of Idaho in Caldwell, Idaho, sent me a few questions about financial literacy for a project he’s doing. They’re good questions, so I’m blogging the answers: Financial education for the layman is … Continue reading →

Posted in journalism | 9 Comments

Why Healthy Banks Shouldn’t Repay TARP Funds

Posted on March 30, 2009 by Felix

I got an interesting response from one reader to my post on whether healthy banks should be able to give back TARP funds. Here it is, with permission; the short version is basically "no". The TARP preferred shares were extended … Continue reading →

Posted in bailouts, banking | 7 Comments

OpenTable, Closed Minds

Posted on March 30, 2009 by Felix

I’m a huge fan of OpenTable, and I’ve always imagined that restaurants are, too. They don’t need to spend hours on the phone telling people what’s free and what’s not, special instructions don’t get garbled, and it’s very easy to … Continue reading →

Posted in food | 4 Comments

Why Big Banks Should be Smaller

Posted on March 30, 2009 by Felix

James Kwak wants to make US financial institutions smaller: There are a few main things that made companies like AIG and Citigroup systematically important. One was interconnectedness: they did business with lots of counterparties. One was complexity: when push came … Continue reading →

Posted in banking, regulation | 5 Comments

Great Moments in Political Rhetoric: Hannan vs Brown

Posted on March 30, 2009 by Felix

From the European parliament, of all places: (Via MAI, although I’m late to this, it’s been viewed almost 2 million times on YouTube already.)

Posted in Politics | 6 Comments

One Easy CDS Fix

Posted on March 30, 2009 by Felix

I’ve had my share of disagreements with Arnold Kling on the subject of credit default swaps in the past, but he has a good idea today: Regulators and accountants could require firms that are net sellers of credit default swaps … Continue reading →

Posted in derivatives | 7 Comments

Why is the NYT Breaking the Web?

Posted on March 30, 2009 by Felix

Websites get old, and need to be redesigned occasionally. That we understand. But the first rule of designing a website is that you make sure you can redesign it without breaking all the incoming links. And the first rule of … Continue reading →

Posted in Media, technology | 2 Comments

Extra Credit, Sunday Edition

Posted on March 30, 2009 by Felix

My Manhattan Project: The first-person story of Mike Osinski, whose software fuelled the mortgage-securitization boom. TR thoughts on ticket re-sellers / scalping: Trent Reznor of Nine Inch Nails explains the economics of concert tickets. Huffington Post launches journalism venture: Arianna … Continue reading →

Posted in remainders | 3 Comments

How the CDS Market is Going to Improve

Posted on March 29, 2009 by Felix

A Credit Trader has a great post on what he calls "risky annuity risk", an artifact of the CDS market which will go away when all credit default swaps start trading on a fixed coupon. If you like to geek … Continue reading →

Posted in derivatives | 2 Comments

Bonuses are Large Because They’re Unpredictable

Posted on March 29, 2009 by Felix

Mike at Rortybomb explains that the whole reason why Wall Street bonuses are so big is that there’s a non-zero chance that they won’t be paid: I’ve heard it from several people that the argument for the bonus is “we … Continue reading →

Posted in pay | 4 Comments

Ben Stein Watch: March 29, 2009

Posted on March 29, 2009 by Felix

Ben Stein counts Jim Cramer as a friend. And millions of people watched the showdown between Jon Stewart and Jim Cramer on The Daily Show. But judging by his column this week, Cramer’s friend Mr Stein wasn’t one of them: … Continue reading →

Posted in ben stein watch | 3 Comments

Who’s Gaining from the AIG Unwinds?

Posted on March 29, 2009 by Felix

Tyler Durden has a scary post up, connecting banks’ profitability in January and February to the fact that those were the months when AIG Financial Products was unwinding an enormous number of its contracts en masse. These trades, initiated by … Continue reading →

Posted in bailouts, derivatives | 5 Comments

Newsweek’s Fearful Krugman Profile

Posted on March 29, 2009 by Felix

Evan Thomas has a profile of Paul Krugman on the cover of Newsweek. The 2,825-word article has six on-the-record quotes about Krugman; none of them — not even the one from his mother — are particularly flattering. No one is … Continue reading →

Posted in economics, Media | 3 Comments

What they Used to Teach You at Stanford Business School

Posted on March 29, 2009 by Felix

Chris Wyser-Pratte, who got his MBA from Stanford in 1972 and then spent the next 23 years as an investment banker, sent me the following note last night. I’m reprinting it here with his permission: I learned exactly seven things … Continue reading →

Posted in banking, education, investing | 3 Comments

Whining Executive of the Day, AIG Financial Products Edition

Posted on March 29, 2009 by Felix

Executives at AIG Financial Products are not happy bunnies these days, and they’re starting to make their views public. Jake DeSantis, for instance, published his resignation letter as a NYT op-ed. But Paul Harriman and his wife, Jan Ellen Harriman, … Continue reading →

Posted in pay | 3 Comments

Long-Term Stock Market Volatility Datapoint of the Day

Posted on March 29, 2009 by Felix

Warren Buffett, take note: Although mean reversion makes a strong negative contribution to long-horizon variance, it is more than offset by the other components. Using a predictive system, we estimate annualized 30-year variance to be nearly 1.5 times the 1-year … Continue reading →

Posted in stocks | 3 Comments

CDS: The No-Natural-Seller Meme

Posted on March 27, 2009 by Felix

I was on a panel last night with Simon Constable of Dow Jones Newswires, and I’m sure that to our lay audience a peculiar exchange in the middle of the conversation must have sounded a bit like dolphin squeaks. He … Continue reading →

Posted in derivatives | 2 Comments

Miami Beach Datapoint of the Day

Posted on March 27, 2009 by Felix

Josh Giersch finds a Zillow map of the SoFi district of Miami Beach – a five-by-five block are south of Fifth Street which has 317 properties for sale, including 21 in just one building. The problem is that with that … Continue reading →

Posted in housing | 2 Comments

Obama’s Housing Plan Unveiled

Posted on February 18, 2009 by Felix

I have to say I like the look of Obama’s housing-bailout plan. It’s quite elegant, and makes full use of the fact that Fannie and Freddie are now owned by the US government — which means they can be forced … Continue reading →

Posted in housing | 3 Comments

Did the Feds Kill the SEC’s Stanford Investigation?

Posted on February 18, 2009 by Felix

There’s a tantalizing tidbit at the end of the NYT’s Stanford report today: The current S.E.C. charges stem from an inquiry opened in October 2006 after a routine exam of Stanford Group, according to Stephen J. Korotash, an associate regional … Continue reading →

Posted in fraud | 4 Comments

Stanford: Criminal Charges Almost Certain

Posted on February 18, 2009 by Felix

The SEC case against Allen Stanford comprises little more, right now, than a civil complaint; more private cases are now being filed. What does this mean for Stanford himself? Is he subject to arrest anywhere in the world? I asked … Continue reading →

Posted in fraud | 4 Comments

MBIA’s New Structure

Posted on February 18, 2009 by Felix

It’s taken rather longer than anybody exepected, but MBIA has finally put in place its long-promised plan to split up the company into its component parts, with the relatively strong public finance insurer getting a new name — National Public … Continue reading →

Posted in insurance | 3 Comments

Extra Credit, Tuesday Edition

Posted on February 17, 2009 by Felix

Automakers Seek $14 Billion More in Aid: And will surely seek more still, in a couple more months, if they get this now. Bill Moyers interviews Simon Johnson: Video here. Investors caught as regulators swoop on Stanford: The game was … Continue reading →

Posted in remainders | 1 Comment

Adventures in Flackery, Private Jet Edition

Posted on February 17, 2009 by Felix

Two high-profile financial columnists filed two strikingly similar opinions on corporate jets today: A private plane is really a flying office. It is a way for a busy executive to get from one place to another as efficiently as possible, … Continue reading →

Posted in ben stein watch, Media | 2 Comments

Allen Stanford, Ponzi Operator

Posted on February 17, 2009 by Felix

Patrick Kidd says that Allen Stanford is "another victim of the biggest economic crisis since the 1930s"; Joe Wiesenthal says that nobody is accusing Stanford of being another Ponzi scheme. So before this meme takes root, let’s be clear about … Continue reading →

Posted in fraud | 5 Comments