Commentaries

from Rolfe Winkler:

Lunchtime Links 11-23

November 23, 2009

Reader note: I'm taking the week off for Thanksgiving, so blogging will be light. Back next Monday.

from Rolfe Winkler:

Lunchtime Links 11-22

November 22, 2009

The talented Mr. Pang (Maremont, WSJ) Maremont uncovered the long and sordid history of Mr. Pang. The Journal also broke the Norman Hsu story. Both were high-flying con-artists before the Journal got on their case. Great stories.

from Rolfe Winkler:

Morning Links 11-20

November 20, 2009

Bill Gross says chase risk! (PIMCO) In his December letter, Gross laments the ultra low yields available to investors. Holding cash is a terrible idea he argues. (Luckily he's not saying to go far out on the risk curve.) Still, I disagree. While I believe there's an outside chance of a dollar crisis (highly inflationary...hence the reason many investors have a 5-10% position in gold for insurance), the more likely scenario over the next few years is the one laid out by the SocGen guys: debt deflation. In that case the purchasing power of cash goes up. Looking at the .01% nominal yield on cash equivalents is therefore unfair. The deflation-adjusted yield would be much higher. This is not a reason to try to "inflate away" debt however as that's not actually a solution. It just gets us closer to the dollar crisis scenario. 90% cash + 10% gold has done very well over the past two years (especially on a risk-adjusted basis!) I guess you can jump back into risky assets if you feel you "need" yield. Of course that's the mistake so many people made in response to Alan Greenspan's low rates. How well did that strategy work?

from Rolfe Winkler:

Midnight Links 11-18(19?)

November 19, 2009

Rep. DeFazio calls for Geithner and Summers to be fired (YouTube) Geithner has done many other things wrong besides paying out 100% to AIG's counterparties. Slamming banks together to avoid resolving their balance sheets was another big one. As for Summers, I still don't understand why he's so revered at the top of Democratic policy circles. His prior support of the CFMA and Gramm, Leach, Bliley -- two of the biggest regulatory blunders of our time -- should be enough to disqualify him from his current post.

from Rolfe Winkler:

Morning links 11-16

November 16, 2009

Taxpayers on hook as some bailed out firms prove frail (Tse, WaPo) TARP investments in CIT and United Commercial bank were recently wiped out (= $2.6 billion). AIG and GM have received tens of billions they'll never be able to pay back. Taxpayers may have purchased a bit of breathing room with TARP, but busted balance sheets will eventually have to be recapitalized anyway, as shareholders are wiped out while certain creditors eat their share of losses.

from Rolfe Winkler:

Weekend links 11-14

November 14, 2009

Lawyer crashes after life in fast lane (Koppel/Esterl, WSJ) Big Florida ponzi.

Buffett admits: Burlington not cheap (Frye, Bloomberg) Buffett was so eager to deploy his cash that he was willing to overpay for Burlington. What I think may be going on in his head: in a world likely to experience many more bubbles and busts, lots of paper wealth will be wiped out. Not a bad idea to turn cash into tangible assets.

from Rolfe Winkler:

Lunchtime Links 11-12

November 12, 2009

Wall Street faces "live ammo" as Congress aims to unravel banks (Vekshin/Schmidt, Bloomberg) Yves complains that this isn't enough, that size isn't the only problem. She's right, but I think these are good discussions to have. We'll have to wait to see what's in theKanjorski amendment, but I like where his head's at. To Smith's point, we desperately need to SIMPLIFY banks, not just shrink them. Ironically, today is the 10 year anniversary of theGramm-Leach-Bliley Act, which repealed the last vestiges of Glass-Steagall. Besides GLB, we also need to dump the CFMA....

from Rolfe Winkler:

Afternoon Links 11-10

November 10, 2009

Mishkin defends bubbles (Yves Smith) Yves tears apart former Fed Governor Frederic Mishkin's op-ed in FT, for good reason.

from Rolfe Winkler:

Lunchtime Links 11-8

November 8, 2009

The economics of trust (Harford, Forbes) A great article. I've argued that markets need rules because without them the division of labor breaks down.

from Rolfe Winkler:

Lunchtime Links 11-6

November 6, 2009

Fannie asks for another $15 billion (press release) That brings the company's total draw on Treasury to $59.9 billion. Here's the paragraph that scares me: "Total nonperforming loans in our guaranty book of business were $198.3 billion, compared with $171.0 billion on June 30, 2009, and $119.2 billion on December 31, 2008. The carrying value of our foreclosed properties was $7.3 billion, compared with $6.2 billion on June 30, 2009, and $6.6 billion on December 31, 2008." Why is the value of nonperforming loans growing so much faster than foreclosures? If Fannie's not going to foreclose, then why bother paying the mortgage?