Felix Salmon

Wednesday links get downsized

The End of Car Culture: Nate Silver on the surprisingly large drop in miles driven in the US.

Chart of the day: Credit convexity (ultrawonky)


This chart comes from a blog entry by Ann Rutledge, which eventually formed some of the basis for a big National Journal cover story by Corine Hegland. It’s not easy to understand, but essentially the action is in the top right hand corner, which I’ve annotated for the sake of comprehension.

Stanford should have been shut down in 2003

The Stanford International Bank Ponzi scheme could and should have been shut down as early as 2003: regulators had more than enough information to do so. Fox Business Network has the story, after receiving 237 pages of SEC documents related to Stanford dating back as far as 2002. This one, I think, is the real smoking gun. It’s worth reading in full — it’s not long — but here are a few snippets:

The speed of the SEC

On October 10, 2006, Bloomberg ran a long and important story about how insider trading was endemic in the CDS market. Now, 31 months later, the SEC has finally brought its first insider-trading case involving CDS, and it’s a rather small and unimpressive case at that. What’s more, the SEC still doesn’t seem to have nailed down jurisdiction in these issues.

BofA’s state of denial

The NYT finally gets one of the stress-test anonymice on the record today, in the person of Steele Alphin, BofA’s chief administrative officer, and what he said is flabbergasting:

A stress test shocker

So much for anchoring. You thought BofA might need $10 billion in new capital? Try $35 billion. Or, in English, lots and lots and lots of money — much more money than the bank could conceivably raise privately.

Why asset managers should ignore credit ratings

Jonathan F (a/k/a my boss) wonders whether Goldman’s decision to ignore credit ratings when it comes to bond-investment mandates might not be counterproductive:

Awaiting PowerMeter

The behavioral sociology of measuring energy usage is simple: the more you know about how much energy you’re using, the less you use. Just getting the information cuts most people’s energy usage by somewhere between 5% and 15%, while people with high electricity bills (like me) find it much easier to isolate exactly what is causing those bills and can then work out how best to reduce them through upgrading appliances or replacing incandescent bulbs with CFLs or any number of other routes to energy efficiency.

The risks of consolidation

I had a short chat with Nassim Taleb this morning about his new paper with Charles Tapiero, entitled “Too Big to Fail, Hidden Risks, and the Fallacy of Large Institutions”.