Opinion

Ben Walsh

from Felix Salmon:

Counterparties: To coin a phrase

Ben Walsh
Apr 12, 2013 21:24 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.

“To say highly speculative would be the understatement of the century.” – Steve Hanke

“People say it’s a Ponzi scheme, it’s a bubble... We have elected to put our money and faith in a mathematical framework that is free of politics and human error.” – The Winklevii

“Bitcoins are not an investment. They are an investment fad that someday could be a real digital currency, but if they continue to behave as they have, they will instead be nothing.” – Kurt Eichenwald

“Three eras of currency: Commodity based, e.g. Gold; Politically based, e.g. Dollar; Math based, e.g. Bitcoin” – Chris Dixon (VC and alternative currency investor)

from Counterparties:

The last big Lauder gift?

Ben Walsh
Apr 11, 2013 15:30 UTC

The big news early this week in the often overlapping worlds of art, philanthropy, and sophisticated tax strategies was Leonard Lauder's $1 billion donation of cubist art to the Met. It's Lauder's largest charitable donation to-date, and even though he has a long history of philantrophy and is still worth more than $7 billion according to Forbes, it's unlikely he'll ever make a bigger gift. Lauder's wealth is tied up in Estée Lauder stock you see: he simply isn't rich enough to give away much more money or add to his museum worthy art collection, and maintain his controlling stake in the family's business.

The more likely scenario is that Leonard, along with his brother Ronald, will maintain their earlier level philanthropy. While large, their earlier gifts were far below the billion dollar level. Leonard has given $131 million to the Whitney, and Ronald is a large supporter of Jewish charities. Both brothers and their wives have also founded, endowed, and serve on the boards of numerous non-profits (the full lists run for text dense paragraphs on the Carnegie Foundation and Estée Lauder websites).

Despite their giving, the Lauder brothers' net worth has increased.  According to the AP, they inherited a total of $5.1 billion in 2004. Per Forbes, Leonard's wealth grew to $3.6 billion in 2008, and topped $8 billion just before his gift to the Met. Ronald's net worth in 2008 was $3.4 billion, took a dive to $2 billion in 2009 and is now $3.6 billion. Particularly for Leonard, that's not the pattern you'd expect from a lauded  philanthropist. Personal net worth should decline, not dramatically increase. That's especially true late in life.

from Felix Salmon:

Thatcher’s economic legacy

Ben Walsh
Apr 8, 2013 22:05 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.

Margaret Thatcher, Britain's longest serving Prime Minister, died today at the age of 87.

Thatcher famously said “there's no such thing as society. There are individual men and women and there are families”. The BBC’s Stephanie Flanders sums up Thatcher’s economic legacy by saying that before her, there was “no such thing as the consumer. When she left, politicians spoke of little else... she helped force the rise of the individual at the expense of the collective”.

from Felix Salmon:

Counterparties — Richie Havens: Here Comes the Sunlight

Ben Walsh
Apr 4, 2013 22:22 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.

The International Consortium of Investigative Journalists has quantified the size of the offshore tax haven bubble, and is doing its darndest to burst it.

The group, led by Gerard Ryle, and working with 38 media outlets, has amassed 2.5 million documents containing details of more than 120,000 offshore companies and trusts, as well as the identities of almost 130,000 individuals.

from Felix Salmon:

Counterparties: The most profitable insurer in America

Ben Walsh
Apr 2, 2013 22:41 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.

If you’re looking for evidence of just how far the housing market has come since its implosion triggered the financial crisis, consider Fannie Mae. The housing giant seized by US government five years ago reported a record profit of $17 billion for 2012, after a roughly equal loss in 2011. It’s Fannie’s first annual profit since 2006; as  Clea Benson notes, the profit eclipsed that of companies like Wal-Mart, GE and Berkshire Hathaway.

Drilling down into Fannie’s filing gives you a snapshot of the American housing market. The company set aside less to cover future losses on loans it guaranteed ($62 billion, compared to $76 billion in 2011); suffered lower delinquency rates; had higher loan volume and higher fees; and saw the value of its derivatives positions improve. Bill McBride at Calculated Risk pulls out another bright spot: Fannie says that there was a “4.7% increase in home prices in 2012 compared with a home price decline of 3.7% in 2011.”

from Felix Salmon:

Counterparties: Hoard of directors

Ben Walsh
Apr 1, 2013 21:32 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.

Of the 27 million Americans working part-time jobs, very few land positions that pay $488,709. That’s the average annual pay for a director at Goldman Sachs, Susanne Craig writes:

Some of the firm’s 13 directors make more than $500,000 because they have extra responsibilities... Goldman’s board is the best compensated of any big American bank and the fifth-highest paid of any company in the country... Some of its rivals are not that far behind. The nation’s biggest banks paid their directors over $95,000 a year more on average in 2011 than what other large corporations paid.

from Felix Salmon:

Counterparties: Why the young are falling behind

Ben Walsh
Mar 20, 2013 22:08 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints toCounterparties.Reuters@gmail.com.

Things are better, but they’re also still bad. That’s the shorter version of the Fed’s view of the job market: “Labor market conditions have shown signs of improvement in recent months but the unemployment rate remains elevated”.

The economy may be puttering steadily along, but young people are falling behind. Annie Lowrey reports that younger workers are doing worse than one particularly personal gauge of success -- their parents. A study by the Urban Institute finds that Americans under 40 have accumulated less wealth than their parents at the same age. As Lowrey points out, “because wealth compounds over long periods of time”, that puts young people at a distinct long-term disadvantage, and also lowers economic expectations. The usual culprits -- stagnant wages, the financial crisis, student debt -- are to blame. Surveys from Pew and Gallup also highlight the damage the current economy has inflicted on the young.

from Felix Salmon:

Counterparties: No hope for change

Ben Walsh
Mar 19, 2013 21:06 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com.

“Mistakes were made”, Ina Drew said last week, somehow managing to both accept and reject responsibility for JP Morgan’s $6.2 billion trading loss. But reading the Senate’s exhaustive report on the London Whale, Jesse Eisinger doesn't think lessons were learned. Despite repeated assurances to the contrary, he argues, things haven’t changed since the financial crisis:

Bankers aren't acting cautious and chastened. Risk managers aren't in the ascendance on Wall Street. Regulators remain their duped and docile selves.

from Felix Salmon:

Counterparties: Ina the belly of the whale

Ben Walsh
Mar 15, 2013 21:56 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints toCounterparties.Reuters@gmail.com.

Last night, the Senate Permanent Subcommittee on Investigations released its 307-page report (plus a 598-page appendix) on JP Morgan’s disastrous London Whale trades. The report comes 11 months after trades were first reported, and, as DealBook notes, it details how JP Morgan “ignored internal controls and manipulated documents”, all while withholding information from regulators.

FT Alphaville’s Cardiff Garcia pulls some of the most damning excerpts. For instance, the report says that JP Morgan’s assertion that they had been fully transparent with regulators had “no basis in fact”. Or take then-CFO Douglas Braunstein’s comments on an earnings call that the CIO’s trades were a hedge against rising rates. On page 283, the report says that “none of the scenarios that Mr. Braunstein himself said he relied on indicated that the book functioned as a hedge”. Matt Philips writes that JP Morgan has lost that battle: "JP Morgan now freely admits—including Braunstein under oath this afternoon—that the CIO’s problematic position didn’t act as a hedge" and that the Senate report calls them out as proprietary trades.

from Felix Salmon:

Counterparties: Retiring the 401(k)

Ben Walsh
Mar 13, 2013 21:19 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints toCounterparties.Reuters@gmail.com.

The first generation of 401(k) holders is retiring. Duncan Black, in USA Today, reports just how bad things are looking:

According to the Center for Retirement Research at Boston College, the median household retirement account balance in 2010 for workers between the ages of 55-64 was just $120,000. For people expecting to retire at around age 65, and to live for another 15 years or more, this will provide for only a trivial supplement to Social Security benefits... And that's for people who actually have a retirement account of some kind. A third of households do not.

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