Felix Salmon

Hummer: Too dirty even for the Chinese

June 26, 2009

China is likely to block the acquisition of Hummer by Sichuan Tengzhong:

Hummer, as an expensive, gas-guzzling sports utility vehicle, would not fit in with the government’s policy of encouraging energy-efficient vehicles, the radio said.

Thursday links state the obvious

June 26, 2009

A very sophisticated debate between Nick and csissoko in my comments section

Ah, Citi. “Until Tuesday, mortgages were still being processed without appraisal and income verification docs”

Measuring fun

June 25, 2009

Tyler Cowen raises more questions than he answers in Fast Company:

The traditional gauge of economic success is profit, but over time we’ll find that such statistics as measures of GDP tell us less and less about broader efforts to improve human well-being. Much of the Web’s value is experienced at the personal level and does not show up in productivity numbers. Buying $2 worth of bananas boosts GDP; having $20 worth of fun on the Web does not. And this effect is a big one. Each day more enjoyment, more social connection, and, indeed, more contemplation are produced on the Web than had been imagined even 10 years ago. But how do we measure those things?

Why LTV ratios aren’t always a good default predictor

June 25, 2009

John Carney responds to my post about his anti-CRA crusade this morning:

That deal has a ridiculous LTV. You go wrong by calculating only the bank loan, and not the total financing. A slight drop in home values puts this buyer underwater, which hugely increases odds of default. LTV is meaningless for predicting defaults unless you are considering all the debt that goes into the financing.

Why credit card interchange fees should come down

June 25, 2009

Juan Lagorio is right. The various proposed bills regulating interchange fees — the fees that merchants pay whenever a customer uses a credit card to pay for something — could definitely hurt Visa and Mastercard, despite the fact that Visa and Mastercard don’t actually charge those fees and claim that they would not be impacted by the legislation.

John Carney’s bizarre crusade against the CRA

June 25, 2009

For some unknown reason John Carney has decided that the Community Reinvestment Act was partly responsible for bad lending practices “spreading like wildfire across the country”. His first big blog entry on the subject, yesterday, declared that “the evidence is unequivocal” — without actually presenting any such evidence at all. His second attempt finds something concrete: an OCC pamphlet from 1996 — a good decade before the fullest flowering of the subprime bubble. The pamphlet praises banks for working with local housing authorities to help low- and moderate-income individuals buy affordable housing.

Mutual fund datapoint of the day

June 25, 2009

Leslie Wayne reports:

As the stock market plummeted last year, some 2010 funds — which many investors thought would be invested safely by then to protect their nest eggs — lost 40 percent of their value. That showing was even worse than that of the Standard & Poor’s 500, which fell 38.5 percent.

The SEC/CFTC carve up emerges

June 24, 2009

Swaps asks if I missed the bit of Mary Schapiro’s testimony on Monday in which she proposed how to carve up the world of over-the-counter derivatives — the answer is that yes, I did. But here it is: