Author Archives: Felix

Art: Kravis Sells to Japan

Posted on November 4, 2008 by Felix

There’s a lot of interesting stuff packed into this one paragraph from Carol Vogel’s auction report today: A Degas gouache, “Dancer in Repose,” that was being sold by the financier Henry Kravis and his wife, Marie-Josée Kravis, was sought by … Continue reading →

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Inequality in New York

Posted on November 4, 2008 by Felix

Ed Glaeser, Matt Resseger, and Kristina Tobio have a new paper out on urban inequality (ungated version here), which declares Manhattan (New York County) to be the most unequal county in the US: While Manhattan is the physical embodiment of … Continue reading →

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Can Gross World Product Shrink?

Posted on November 4, 2008 by Felix

Mish casts his mind back to April, when I declared with great confidence that "it’s pretty much impossible for the entire world to register negative growth in any given quarter". Let me change that a little: I still think the … Continue reading →

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Why Bank of America has to Re-Hire Merrill’s Brokers

Posted on November 4, 2008 by Felix

I just had a very interesting conversation with a Merrill Lynch type who filled me in with much more information on the subject of those retention bonuses. The numbers: Bank of America wants Merrill’s most profitable brokers. Most brokers earn … Continue reading →

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Landsbanki Debt Settles at 1 Cent on the Dollar

Posted on November 4, 2008 by Felix

What happens to unsecured bondholders when a financial institution goes bust? A good place to start is to look at the settlement price in CDS auctions. Fannie and Freddie settled in the high 90s: yes, there was a credit event, … Continue reading →

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Extra Credit, Monday Edition

Posted on November 4, 2008 by Felix

Itau to Buy Unibanco in $12.5 Billion Agreed Takeover: For anybody like me who’s been following Brazilian banking for years, this is huge. Hedge Funds: The Future: As seen by Paul Wilmott. The Mythology Of Credit Default Swaps Crisis management: … Continue reading →

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Exchange-Traded Derivatives: Why Stop at CDS?

Posted on November 3, 2008 by Felix

Donna Block has an overview of all the different groups jockeying to set up a CDS exchange: Businesses trying to establish the new market include CME Group Inc.; NYSE Euronext Inc.; IntercontinentalExchange Inc. or ICE; Eurex, the derivatives arm of … Continue reading →

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Art: The Last-Chance Argument

Posted on November 3, 2008 by Felix

I have little time, in general, for optimistic arguments saying that art will continue to do well as an asset class. But Marion Maneker has an interesting idea about why the upcoming fall sales might not be quite the disaster … Continue reading →

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Driven to Bankruptcy

Posted on November 3, 2008 by Felix

Do you know anybody who bought a new car in October? Most of the country was a little bit preoccupied, I think, for that kind of activity. But even so, the news that GM sold just 168,719 cars last month … Continue reading →

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Will Retail Investors Continue to Buy and Hold Stocks?

Posted on November 3, 2008 by Felix

It’s still too early to tell whether the stock-market crash of the past couple of months has done any lasting damage to the conventional wisdom that a buy-and-hold strategy applied to a diversified stock portfolio is generally a very good … Continue reading →

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Which Markets are the Hardest to Move?

Posted on November 3, 2008 by Felix

Jim Surowiecki this week looks at what he calls "ancillary markets" — things like futures, the VIX, or credit-default swaps — and the effect they have on the stock market: Even if these ancillary markets aren’t being gamed, the attention … Continue reading →

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Financial Crisis: Not Hitting Brokers

Posted on November 3, 2008 by Felix

Just how parlous a state is Wall Street in right now? In one of the more encouraging signs I’ve seen of late, a fight is brewing at Merrill Lynch — over the size of the "retention bonuses" that Bank of … Continue reading →

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How AIG Failed

Posted on November 3, 2008 by Felix

The WSJ shines a bit more light on what went wrong at AIG today, with a story centering on the chap who designed its risk models, Gary Gorton. In a nutshell, anybody writing credit protection runs two risks: the default … Continue reading →

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Extra Credit, Sunday Edition

Posted on November 3, 2008 by Felix

Iceland, Mired in Debt, Blames Britain for Woes If we only had a financial system: And how the lack thereof caused the present crisis. GM needs bankruptcy, not a bailout ICE to Buy Clearing Corp. as Big Banks Support Plan: … Continue reading →

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When Wall Street Takes Advantage of the Public Sector

Posted on November 3, 2008 by Felix

Andrew Clavell called it, back in February: Let’s assume you work at a Pennsylvania school board… The more complex the structured product, the more opportunity for agents to extract fees at your expense… If you claim you do know where … Continue reading →

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Liaquat Ahamed’s Lehman Question

Posted on November 2, 2008 by Felix

Add economic historian Liaquat Ahamed to the ranks of those, like Paul Krugman, who think that monetary policy has at this point done all that it can do, and that the next important step will have to be fiscal. I … Continue reading →

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Art: Signs of Desperation

Posted on November 2, 2008 by Felix

The front page of the NYT’s arts section today is dominated by a 2,000-word auction preview by Carol Vogel. The headline is "Tapped Out?" and the article continues on all of page 16, under the hed "Auction Houses Brace for … Continue reading →

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Lehman Europe and Prime Brokerage Counterparty Risk

Posted on October 31, 2008 by Felix

Euromoney has allowed free access to its November cover story on Lehman Brothers Europe for this weekend only, so go there now and read it while you can. It starts off at much the same place as John Hempton’s blog … Continue reading →

Posted in hedge funds | 1 Comment

Unsympathetic Demographic of the Day: HENRYs

Posted on October 31, 2008 by Felix

Do you pity the HENRYs ("high earners, not rich yet")? If you’re Shawn Tully you do. In an astonishing feat of reporting, he’s discovered that if you ask people whether they feel rich, especially if they work hard and have … Continue reading →

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The 50bp Lower Bound on Interest Rates

Posted on October 31, 2008 by Felix

There’s been lots of talk in recent days of the "zero bound" on the Fed funds rate — which is exactly where the Taylor Rule would put it. But the real bound might be halfway between here and there, at … Continue reading →

Posted in fiscal and monetary policy | 1 Comment

Extra Credit, Thursday Edition

Posted on October 31, 2008 by Felix

It’s time: "The Economist does not have a vote, but if it did, it would cast it for Mr Obama. We do so wholeheartedly." The £5,000bn bailout: "£5,000bn has implicitly or explicitly been made available by central banks and governments … Continue reading →

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Blogonomics: The Cost-Benefit of Bloggers

Posted on October 31, 2008 by Felix

Thanks very much to Tyler and Brad for the kind words; I hope to be here for a while yet. But Tyler also makes an interesting point about blogonomics: Media, like new library books, are being hurt by the downturn … Continue reading →

Posted in blogonomics | 1 Comment

Chart of the Day: The Russia-Brazil Spread

Posted on October 30, 2008 by Felix

After writing about my BRIC decoupling thesis, I asked the friendly chaps at Markit if they could share with me the 5-year CDS spreads for the four countries in question. It turns out that India isn’t really much of a … Continue reading →

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The Homeownership Bubble

Posted on October 30, 2008 by Felix

The US goverment still, it seems, thinks that encouraging homeownership is a very good idea: Four former secretaries of the Department of Housing and Urban Development told a packed meeting room… that just because the financial system is flawed doesn’t … Continue reading →

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When Banks Stop Underwriting

Posted on October 30, 2008 by Felix

Citigroup and Credit Suisse are so damaged by the financial crisis, it seems, that they’ve given up underwriting loans to their biggest and most valuable corporate clients, including Nestle and Nokia. Instead, they’re linking those loans to the companies’ CDS … Continue reading →

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