Felix Salmon

Switching from Treasuries to IMF bonds

June 10, 2009

The buzz du jour seems to be surrounding the good-news-bad-news coming out of Russia. The good news is that the Russians seem willing to pitch in to buy some of these IMF “bonds” (which aren’t really bonds at all, they’re more like loans, seeing as how only sovereigns can buy them and they won’t be traded anywhere). The bad news is that Russia is simultaneously saying that in order to raise the money to buy the bonds, they’ll sell some of their Treasury holdings.

Tuesday links are flying blind

June 9, 2009

Illegal downloads and dodgy figures: Never, ever trust “amount of money lost to” statistics.

S-E-X at the S.E.C.

June 9, 2009

From the Office of the Inspector General’s semiannual report to Congress:

Beginning on October 20, 2008, the OIG conducted an investigation into information showing a Los Angeles Regional Office SK-17 supervisor had been using his SEC-assigned computer to access Internet pornography. The investigation revealed that while using his SEC computer during 17 working days, the employee received approximately 1,880 access denials for Internet websites classified by the SEC’s Internet filter as pornography. The images on these websites included graphic depictions of sexual acts.

Where are the baseline stress-test results?

June 9, 2009

Another datapoint for the annals of regulatory opacity: the Congressional Oversight Panel points out in its report on the stress tests that Treasury never released the results of the baseline-scenario test.

Metaphor of the day, Hank Paulson edition

June 9, 2009


Hank Paulson has decided that the TARP repayment proves that the program “worked to stabilize our financial system”. Obviously, if you give people a bunch of money they don’t want, and then reluctantly accept that you’ll allow them to repay it, then you must have achieved something substantial, right?

Regulatory reform, RIP?

June 9, 2009

According to Damian Paletta, the Obama administration has missed its chance to do some serious regulatory reform, and instead is likely to keep most of the existing alphabet soup intact. He says that the administration “isn’t expected to call for the Federal Reserve, Federal Deposit Insurance Corp. or the Office of the Comptroller of the Currency to cede their primary authority to supervise banks” — which is one of the most depressing things I’ve read in weeks, if only because it’s self-evidently ludicrous.

Why insure munis when you can buy them instead?

June 9, 2009

My fabulous new colleague Agnes Crane notes something interesting: even as he cools on the idea of selling municipal bond insurance, Warren Buffett has been loading up on municipal bonds. Why would Buffett want to take municipal credit risk in the bond market, but not want to take the same credit risk by selling insurance? I think there are at least five reasons:

The case for allowing TARP repayments

June 9, 2009

Reuters’s US commentary team had its first, rather bedraggled, morning meeting today. The news of the day is the TARP repayments. Matt Goldstein is worried that once the money is paid back, Congress won’t allow it to be re-lent, but I’m thinking that actually the opposite is true: if Treasury needs new firepower to rescue banks in real trouble, then — given Congressional opposition to any new bailout bill — the only way to get the necessary funds will be to use money already in the TARP account. Since the TARP is pretty much all spent by now, Treasury has little choice but to let JP Morgan et al replenish it.

Chart of the day: Household equity

June 9, 2009

It’s good to see the return of chartmeister Wcw:


His point is that it’s silly to talk about the number of states where house prices are flattish. The states which matter — the states accounting for the overwhelming majority of housing wealth in the country — have seen their house prices implode. And as a result homeowners are now poorer to the tune of trillions of dollars — or, as the chart shows, almost 50% of GDP.