Relevant and even prescient commentary on news, politics and the economy.

The Counterpoint to CR’s Argument, as Stated Below

We already gave them $900 Billion. (Or, as I would prefer to write it, just so everyone understands: $900,000,000,000. About 3,000 a person, or 26.7% of the annual median household income, assuming a family of four.) What would makes anyone think another $700,000,000,000 will solve the problem? Just because “sooner or later, you’re talking about […]

What is an Asset?

I like Brad DeLong, conceptually. Even his errors in judgment are based on rational principles. And he has a really useful piece up right now about “dealing with financial crises.” (One of the nice things about it is that it also completely undermines his earlier suggestion that the Fed was wrong not to ease on […]

We have part of an answer

Documentation of a minor disruption: Lehman won’t return “billions” of frozen prime-brokerage assets “in the short term,” said PricewaterhouseCoopers, administrator for the Lehman bankruptcy. Meanwhile, several hedge funds are planning to sing the Bono phrase from “Do They Know It’s Xmastime?”* to their cohorts at Morgan Stanley: Hedge funds that account for less than 10 […]

Perception v. Reality

Perception, per the NYT: Fed Leaves Key Rate Steady as It Worries About Growth Reality: TSLF (Mar 11), PDCF (Mar 16), expanded acceptable collateral pool (multiple times, most recently Monday), loans to the parent from the subsidiaries to cover capital needs.* And it may not be enough. (Of course it’s an AIG link.) There’s more […]

Is Anyone Crawling to the USA???

Floyd Norris lists the Unlucky 13, a.k.a., my portfolio.* Ignoring AIG (of which more later, maybe), here are the top Market Cap losers in the S&P 500 YTD, who combined have dropped by more than half a trillion dollars: EXXON MOBIL GENERAL ELECTRIC MICROSOFT AT&T CITIGROUP BANK OF AMERICA After reading that list, I fully […]

Roubini’s not wrong, but…

Let’s stipulate what “everybody knows”: There are some assets in the capital markets, many of which are mortgage-related, that were seriously overvalued over the past several years. Many of the others are Credit-related (CDS and CDOs and the like). Most of the two asset types listed above are reasonable concepts that, if they are commoditized, […]

Let’s Play a Game: Connect the Dots

Let us assume: That there is an equity premium ([PDF] UPDATE: Link modified to Brad De Long posting in which the PDF is embedded. Hat tip: Don Lloyd in comments.) That the equity premium can be derived from a linear relationship (y = ax(1) + bx(2) + ….) of the most significant variables. That equity […]

There’s almost $200 lying on the street; WWTD?

Since I’m cash-strapped for the next few years, I’m looking for ways (legally, semi-legal, other) to make money. Thank the L-rd for WaMu. Let’s see: HELOC is at Prime – 0.76%, currently 4.24%. So I can: Take $25,000 from HELOC. Invest in FDIC-insured WaMu CD for 12 months at 5.00%. Profit until the fourth 0.25% […]

Variation on "Pay the$2" Joke

My Loyal Reader sends this link, with this pull quote: “They had four major and respected law firms advising them, as well as Lazard,” said Markel. “And all of them, all of them were advising the board that there was zero value in a bankruptcy for shareholders as well as losses to creditors.” When are […]