Opinion

Ben Walsh

from Felix Salmon:

Counterparties: We know what the fiscal deal will look like

Ben Walsh
Nov 19, 2012 22:57 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 fiscal cliff has already found at least one victim, the WSJ reports: “half of the nation's 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next”.

Investors and small business owners, the NYT reports, are worried about about things like higher capital gains taxes -- one lawyer says he’s never seen such a “flood of desire and action to transfer a business and cash out”. For big companies, meanwhile, there’s $150 billion worth of corporate tax breaks to fret about.

Tim Geithner, on the other hand, apparently isn’t terribly concerned about the fiscal cliff (or any of austerity’s other “thousand tortured metaphors”): he says a deal is “doable within several weeks”. Politico’s Ben White surveys the negotiations and finds reason to agree with Geithner:

There seems little chance the cliff battle will go near or past the December 31 deadline. Nearly every signal from Republicans suggests they understand they have lost the war over taxes going up on the wealthiest Americans and are just trying to figure out how to get the least objectionable deal that includes real spending cuts and a trigger for tax and entitlement reform.

from Felix Salmon:

Counterparties: When climate change gets fiscal

Ben Walsh
Nov 15, 2012 22:43 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.

Neither candidate paid much attention to climate change during the presidential election: it wasn’t so much as mentioned in any of the three debates. Then came Superstorm Sandy, Mayor Bloomberg’s climate-motivated endorsement of President Obama, and Businesweek’s mince-no-words cover. There’s also the fiscal cliff (or austerity bomb, if you prefer). What better time to start taxing carbon?

The logic is simple: a carbon tax could raise $1.25 trillion over a decade, and according to Treasury officials, the President could be on board. Even anti-tax crusader Grover Norquist, famous for his pledge to never raise taxes, was open to the idea of a “carbon tax swap” -- until the denialist Koch brothers intervened and Norquist hastily reversed his position.

from Felix Salmon:

Counterparties: The lessons of tuition inflation

Ben Walsh
Nov 14, 2012 22:47 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.

Why have college costs risen 12 fold in 30 years? In a terrific story today, John Hechinger points to “administrative bloat” at public universities like Purdue, which has made a habit of doling out six-figure salaries to armies of administrators:

Purdue has a $313,000-a-year acting provost and six vice and associate vice provosts, including a $198,000 chief diversity officer. It employs 16 deans and 11 vice presidents, among them a $253,000 marketing officer and a $433,000 business school chief.

Wall Street’s rational Romney bet

Ben Walsh
Nov 14, 2012 16:01 UTC

It was never a secret that much of Wall Street put its money behind a Romney presidency. The publicly available tally shows that extent of their support: $19.6 million to Romney directly and more than $100 million to Romney and Republicans via other channels like Super PACs and advocacy groups. Beyond dollars, financial heavyweights like Steve Schwarzman and Leon Cooperman publicly criticized Obama in hyperbolic terms. Other executives, most notably Jamie Dimon, took almost every chance possible to make their deep displeasure with the administration’s policies clear. Some lifelong Democrats, like Lloyd Blankfein, remained pointedly disengaged.

And yet, unlike in 2008 when Wall Street backed Obama, their guy lost.

How stupid, right? Time to mock bankers for screwing this up too! Backing Romney, the argument goes, was Wall Street’s “second worst trade of 2012” (after JP Morgan’s CIO blowup). Couldn’t they see that the numbers pointed to an Obama win? New York Magazine went back to the well of masculinity metaphors, with Kevin Roose saying Obama’s win was a defeat for “Wall Street’s impotent billionaires“. And the statistically savvy Paul Krugman ridiculed their “bad investment decision“:

The limits of their power have been cruelly exposed, and the reelected president now owes them nothing. Did I mention that Elizabeth Warren is going to the Senate — a Senate that will be substantially more progressive and less Wall Street friendly than before?

from Felix Salmon:

Counterparties: The hunt for spurious causality

Ben Walsh
Nov 7, 2012 22:16 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.

Yesterday Americans were choosing a president and the S&P 500 was up 0.8%. As one trader put it, “any time you take an element of uncertainty off the table, volatility comes down and the market tends to look higher”. We have now chosen Barack Obama to be president and the S&P is down 2.4%.

Is Wall Street reacting sourly to the possibility of four more years of hurt feelings, increased regulation, and (shudder) Elizabeth Warren sitting on the Senate Banking Committee? The outcome really shouldn’t have been any surprise: an Obama re-election has been clear to numerate observers for quite a while.

from Felix Salmon:

Counterparties: White collar crime

Ben Walsh
Nov 6, 2012 23:29 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.

HSBC is now almost certain to face the largest anti-money laundering fine in history. The only question is how large it will be.

The bank is negotiating a civil settlement in the US for executing thousands of transactions for drug cartels and organizations with terrorist connections between 2001 and 2010 (full 334-page Senate report here). Among HSBC’s actions: providing at least $1 billion in financing to Al Rajhi Bank of Saudi Arabia, even though some of the owners of the firm were linked to the financing of terrorism; and funnelling at least $7 billion from Mexico to the US, despite being warned that such sums had to include drug proceeds.

Vikram Pandit, “create and capture” victim

Ben Walsh
Oct 26, 2012 21:06 UTC

When Vikram Pandit was ousted just a day after Citigroup reported earnings last week, he tried defuse most observers’ surprise, insisting that he had “been thinking about this for a long time”. That was a pretty feeble defense: in August he was telling people that he planned to say on as CEO for “several years“.

Thanks to reporting from Jessica Silver-Greenberg and Susanne Craig in the NYT, we now know Pandit didn’t see any of last Tuesday’s events coming:

Having fielded congratulatory e-mails about the earnings report in the morning that suggested the bank was finally on more solid ground, Mr. Pandit strode into the office of the chairman at day’s end on Oct. 15 for what he considered just another of their frequent meetings on his calendar.

from Felix Salmon:

Counterparties: Earnings #fail

Ben Walsh
Oct 25, 2012 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

The routine is simple: four times a year, public US companies release their results (54 companies reported today alone). Traders react, analysts weigh in, the media explains and we all move along, ready to repeat the whole thing in three months. How hard can it be? Plenty hard, it turns out.

First out of the blocks this week was Google. Or, rather, RR Donnelley, the financial printer that accidently filed Google’s earnings release early, incomplete and without authorization; the shares had to be suspended for most of the afternoon.

from Felix Salmon:

Counterparties: Why did markets move?

Ben Walsh
Oct 23, 2012 22:06 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

Today, the Dow Jones ended down 1.82% and the S&P 500 was off 1.44%. Of course, the media needed to come up with a reason why.

Here's a video from CNBC this morning that's just over five minutes long but offers a dozen reasons why stocks are down:

The Yogi Berra refi market

Ben Walsh
Oct 18, 2012 20:00 UTC

Last week I pointed to JP Morgan and Wells Fargo’s earnings as the latest evidence of refinancing boom in the US housing market. Cue a lengthy piece by Chris Taylor that seems to dent my thesis by highlighting the “hell” of actually refinancing a mortgage.

Anecdotally, Taylor’s piece is worrying, if not entirely shocking. Banks are capable of incredible feats of bureaucratic annoyance and the refinancing process is no different (see the comment here that echoes Taylor).

But these annoyances aren’t stopping the refi boom on a macro level. At the beginning of the month refinancing applications reached their highest levels since 2009 and and bank earnings show these applications are being converted into loans. Applications have dropped off slightly over the past few weeks, but there hasn’t been a real change in the dynamics that have driven refinancings for the last three quarters. And with an unlimited amount of QE3 fuel to burn, high levels of refis will continue.

  •