No, not that car. I think they look horrible, and they seem to be driven entirely by idiots. The company. The following should be illegal. I guess that it isn’t. But note that I have no idea if the sequence of actions discussed actually happened. From the comments section of this post at FT alphaville, [...]
There is a meme going around at the moment concerning size in banking. The basic idea is that too big to fail banks are a bad idea. Various people have various ideas of what ‘too big’ is, with numbers like 300B total assets (a number floated in a nice post at Dealbreaker) being discussed. Interfluidity [...]
While we cannot of course in any way support Jacqui Smith in the current expenses row, honestly if you were married to the Home Secretary, wouldn’t you need a lot more than a few minutes watching Jodie Marsh, or whoever, to get you through the day?
Interfluidity has a nice hypothetical: Consider a hypothetical asset manager, PIMROCK. PIMROCK reviews a pool of loans held by the bank J.P. Citi of America, and its analysts determine they are worth 30¢ of par value. The bank holds them at 80¢ on its book. PIMROCK agrees to put down $10B to purchase loans from [...]
Even by the intolerably low standards of this blog, this one is going to be obscure… I want to talk about gears. Bicycle gears. For ordinary people, rather than, say, drug crazed Americans who have recently broken their collar bones. So, what does a reasonable rider want from his or her gears? A bottom gear [...]
Simon Johnson has an excellent article in the current issue of The Atlantic magazine. His basic premise, as an ex-IMF chief economist, is that crony capitalism is a fundamental part of many emerging market crises, and it is only when the cronies are forced to take some pain that the crisis can be resolved. Furthermore [...]
I don’t always agree with Michael Meacher, but this letter in the Guardian is so good, and hits the tone which is lacking in both the government and the official opposition so well, that I am going to quote it nearly in full: We urgently need … an alternative to the prevailing Tory-New Labour orthodoxy. [...]
The FT article is titled Geithner lays out new financial rules, but that is a little misleading. Rather our lad Timmy has laid out a framework under which new rules will be written, but we have no idea what the rules will be yet. What details there are do not allow one to form any [...]
The Geithner plan, understandably, has generated many column inches since it was unveiled on Monday. There is little consensus among the commentariat, but the markets have taken it well. What should we take from Timmy’s last (or at best next to last) stand? First, it might actually work either by accident – because we are [...]
I think China is all talk and no action on the dollar at the moment. But if they are not, there is a fortune to be lost or made when the Wile Coyote moment arrives. Update from the Huffington Post here. My favourite quote is from Chalongphob Sussangkarn, a former Thai finance minister and now [...]
Greg Mankiw writes some complacent nonsense: At Harvard, we have not instituted any radical reforms in the introductory economics curriculum in response to recent events. We have had some guest speakers, such as John Campbell and Andrei Shleifer, give excellent and well received lectures about the current crisis to assure students that, despite all the [...]
Is it a Barclays tax structurer or is it a carnivorous plant? A tricky one I know so take your time.
The Guardian had another set of articles on Barclays’ tax structuring group yesterday. The point is not whether the practices of this group are legal. Some may be; some are borderline; some may not be. The point is the continuing reputational damage being done to the Bank as these articles continue. Any firm with a [...]
The best comment on bonuses and social inequality so far: (HT Jonathan Hopkin.)
Martin Wolf is a little harsh on Lord Turner in the FT. He says: First, it does not explain why we can hope to contain the behaviour of companies too important to fail. True, but increased capital requirements will certainly help, along with better supervision of liquidity risk. The devil is in the details, I [...]
This is so incredible, so bizarre that I have to blog. The FASB has lost its mind. It is proposing that: U.S. companies would be allowed to report net-income figures that ignore severe, long-term price declines in securities they own. Not just debt securities, mind you, but even common stocks (Quotation from an excellent Bloomberg [...]
I am looking at hosting Deus Ex on my company website, and so posting will be light over the next little while as I investigate alternatives. Probably I’ll go for Word Press. Any comments from those with experience of such things would be very welcome.
The FSA’s regulatory response to the global banking crisis is out: see here. My first reaction is that it is fairly sensible. Some highlights: Section 1.1 is a really nice summary of the development of the crunch. There is an interesting, and perhaps surprising, insistence on the inadequacy of current transnational arrangement to cope with [...]
My apologies for an incendiary title. I don’t really mean it of course. I think I have a slight case of hyperbole from Francine McKenna. Still, in this article at The Huffington Post, she points out that The Big 4 public accounting firms haven’t yet been asked the hard questions by governments, legislators, or regulators. [...]
Oh dear me. The biggest tax arb house on the street is being investigated by the Inland Revenue. The Guardian has the details. But clearly anyone structuring transactions whose main aim is to reduce tax (an international avoidance factory perhaps?) has reputational risk. That risk appears to be biting. If a senior politican says that [...]
The TALF says: please take a seat. (The FED press release is here. Useful commentary from Philip Gelston of Cravath, Swaine & Moore via Marketpipeline is here.)
A few years ago, in a fit of patriotism, or the desire to support local industry, or something equally foolish, I bought a British-built PC. A Mesh. Goodness, what a mistake. It wasn’t delivered when it was promised. When it arrived, it felt shoddy. And ever since, it has had issues. The CPU cooling fan [...]
(HT The Big Picture.) What is interesting about this is the GIAs. I _think_ that these are GICs, i.e. guarantees of minimum investment returns, sometimes on variable balances. Obviously as rates have fallen, GICs have become more valuable to the holder and riskier to the writer. Insurers have conspicuously underpriced the implied puts in GICs [...]
Willem Buiter has a discussion of how good bank/bad bank separations might work in detail: the mechanics come from Robert Hall and Susan Woodward. I will simplify the argument a little, and discuss the issues. Consider a bank with: Assets Liabilities Good loans 1000 Deposits 1200 Bad loans 500 Bonds Issued 600 Other assets 380 [...]
I have a terrible confession. I have never liked Elvis. But aside from dead musicians, Bloomberg is doing a great job on chronicling the absurdities of accrual. David Reilly says: Of the $8.46 trillion in assets held by the 12 largest banks in the KBW Bank Index, only 29 percent is marked to market prices, [...]
Paul Volcker suggests that: the US could perhaps do with a new version of Glass-Steagall, this time splitting hedge funds, private equity funds and proprietary trading off from Wall Street banks. How would you enforce it, though? You can’t force them to take no risk, not least because banks cannot precisely maturity and FX match [...]
The big Mac is now not only little, but actually less than nothing. Bloomberg explains.