Thursday links look at fixed-income investing

By Felix Salmon
April 9, 2009

Regulatory Capital Arbitrage: “With hindsight, there was too little capital allocated for mortgages originated between 2005 and 2007. Then again, with hindsight, they had a negative NPV, and should not have been issued by any rational profit maximizing firm.”

U.S. Imagines the Bailout as an Investment Tool: It’s still extremely unclear what kind of retail investors are supposed to want to invest in this stuff. What kind of risk profile fits a potential retail investor?

REO Hack Job: Paul Jackson takes on the NYT. “This isn’t insight; it’s a poorly-executed witch hunt masked as real journalism.”

Google and the Temptations of Being Cash-Rich: Why Google should give up its cash for reasons of self-discipline.


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re: bailout bond

If a small investor can participate on terms similar to those being offered to the plutocracy, then the risk profile is pretty much anyone with capital they’re willing to risk. If I can effectively get cheap 10-15:1 leverage –with no recourse– why would I not take a flyer? If the junk assets are worth zilch, all my investment can do is go to zero. If they’re actually worth something in the long run, the opportunity is there to earn outsized returns. If we agree that the PPIP is in fact legislated looting of the treasury, why would any rational small investor not want to participate?

My suspicion is that should this program actually see the light of day, the terms on offer to private investors will be substantially inferior to those on offer to PimRock. If that’s the case, never mind…

Posted by matt | Report as abusive

The Times, after allowing people like Morgenson and Sorkin get up the learning curve, looked to have got a handle on the nuts and bolts of the crisis (we’ll, um, leave Ben Stein to one side for now). But it seems to have decided to set its general assignment reporters on the job now. There was something truly awful in there yesterday about derivatives and municipal bonds that was very irresponsible (follows shameless plug for own post on the subject).

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I believe the government should not bail out these big companies. They are hurting because we, the people are having a hard time paying our debts. What I don’t understand is why the government, instead of just “giving” the banks and big companies money why they don’t pay a certain amount or percentage of our debt. By doing this the government will be helping the banks by getting them the money they need, but they will also be helping us, the taxpayers pay a little on our debts and in the cases where people are losing their house it will save them from losing it. It just makes more sense to do it this way becuae it will be helping everybody in the long run.

Posted by Anna Whittington | Report as abusive

The apparent five-minute auto-reload feature of your new blog is annoying, because the period is so short. And at least in Firefox 3.0.8 on Linux, the refresh returns me to the top of the page. This and having to scroll down again to the post I was reading invariably disrupts my train of thought.

The blog’s content remains, as ever, as affably thought-inducing as before.

A suggestion: Reload to the same place, unless there’s a new post. Better yet: Always reload to the same position, but flash an unobtrusive new post indicator in a corner. And yes, I could open each new post in its own tab, but time is money, or something.

Posted by Slightly Annoyed | Report as abusive