Felix Salmon

Stocks are rubbish

Quote of the day:

“Japan had the highest correlation of garbage output to stock market performance of around 90%.”

A turning point in the financial crisis

If CIT really has dodged a bullet here and avoided bankruptcy, that’s spectacularly good news. I’m assuming here that a deal has done, based on nothing but a single one-line headline on WSJ.com; these things tend to be fraught and fractious, however, so I’m not counting my chickens just yet. But if CIT has really avoided bankruptcy, that’s a major turning point in the history of the financial crisis.

Friday links have secret techniques

I’m off to Shanghai tomorrow, so blogging’s going to be light for much of next week. Do let me know if you’re in Shanghai and would like to meet up, or if there’s anything I absolutely must do when I’m there.

Summers speaks

Larry Summers gave a big speech at the IIE this morning, and his prepared remarks — all 3,412 words of them — are now up on the IIE website, maybe because the NEC’s web presence is barebones in the extreme. Of course, when you let someone else publish your remarks, you lose a certain amount of control over how they’re presented; I do wonder what Summers thinks about the fact that when you get to the bottom of his speech, you find yourself faced with a cute little button saying “twit this”.

The Gates Foundation’s reckless risk-taking

Why is the Gates Foundation speculating in distressed UK equities? The foundation has received a lot of criticism for the way it invests, but put that to one side — it seems to me that charitable foundations in general should be pretty risk-averse, even when they have tens of billions of dollars. The Gates Foundation is praiseworthy in that it has a mandate to spend down its principal quite quickly. But as a result, its investment arm should be a boring place; it certainly shouldn’t be gravitating towards the riskiest parts of the capital structure of overleveraged retailers in overleveraged economies like the UK.

Who cares about future house prices?

James Kwak wonders about the housing market, and price-to-rent ratios:

The fact is that most people buying houses aren’t going to be renting them out, and what they care about is the price at which they will be able to sell that house in 10 years.

Annals of fictional market manipulation, cont.

Rick Bookstaber, after mentioning that “we have no clue” how Goldman is making all that money, then adds:

Citicorp: Not very American

Beyond a vague notion that Citicorp is the “good bank” and Citi Holdings is the “bad bank”, I’ve been a little unclear on exactly where Citi is going with this cleavage. But today’s quarterly report is helpful in that it gives not only the Q2 2009 numbers for Citicorp, but also the Q2 2008 numbers. That helps us see how the good bank is structured, especially as regards its geographical balance. And the result might be surprising: North America is much less important to Citicorp than you might think.

Thursday links spell it out

TED on how bankers’ obsession with growth caused the mess we’re currently in. (He doesn’t use the word “mess”.)