Felix Salmon

Wednesday links lose their meaning

April 22, 2009

Infrastructure Madness: Jack Shafer on the meaninglessness of crumbling-infrastructure statistics.

Hedge fund datapoint of the day

April 22, 2009

From Jesse Eisinger’s profile of Bill Ackman:

In 2007, he set up a special fund to invest in a single stock in a highly leveraged way. In a sign of how frothy the markets were, he raised $2 billion from start to finish in a week, about two-thirds of which came from other hedge funds. Investors knew the outlines of the investment but not that it would be in Target.

CDS and valuing control rights

April 22, 2009

Craig Pirrong weighs in with a very long post on the question of whether credit default swaps make bankruptcies tougher. He has a perfectly good way of looking at the problem, but comes to the wrong conclusion, I think because he has a very skewed idea of the costs and benefits involved in the transactions:

Ecuador’s chutzpah-filled exchange offer

April 22, 2009

Here are the official details of Ecuador’s exchange offer — the one where it’s attempting to buy back its own debt at 30 cents on the dollar.

When banknotes expire

April 22, 2009

Greg Mankiw had an unorthodox idea on Sunday:

Imagine that the Fed were to announce that, a year from today, it would pick a digit from zero to 9 out of a hat. All currency with a serial number ending in that digit would no longer be legal tender. Suddenly, the expected return to holding currency would become negative 10 percent.

TARP repayment: An IM exchange

April 22, 2009

John Carney: this issue of TARP repayment conditionality is fascinating

Felix Salmon: It’s a bit like the rules-based vs principles-based debate

John Carney: I’m convinced that Geithner is violating the law by imposing conditions.

When receivers bicker

April 22, 2009

This is unhelpful in the extreme. As you probably know, Stanford International Bank, an Antigua-based financial institution, turns out to have been an $8 billion Ponzi scheme, and now the receivers in both Antigua and the US are trying to pick up the pieces and return whatever money they might be able to find to Stanford’s depositors. Except instead of cooperating, they’re bickering, nastily:

Geithner anecdote of the day

April 22, 2009

Gary Weiss thinks this story, from Bill Seidman, says a lot about Tim Geithner, and I do too:

Tuesday links fail to reduce risk

April 21, 2009

A Central Clearing House Doesn’t Reduce CDS Risk: It’s talking about this paper. I think the key point here is that most non-CDS derivatives are traded over the counter, rather than through clearing houses. And as a result, a CDS clearing house might not result in as much of a reduction in counterparty risk as you might think.