Felix Salmon

The bad news is that the NYC xkcd book party is happening on the same day as the opening for my wife’s super-cool pirate project at the South Street Seaport. The good news, however, is that (a) the number of tickets to the book party is strictly limited; that (b) it probably won’t start until well after 6pm, when the pirate opening will have ended; and (c) the pirate opening is free, which, if Chris Anderson is to be believed, gives it an unbeatable advantage.

So, if you’re going to the xkcd book party, or if you’re not, do make sure to rock up at Cannon’s Walk at 4pm on Saturday. I’ll be there, and Michelle will be too, and I think various other members of the Reuters commentary team might turn up as well. Hope to see you there!

From the WSJ’s Fuld profile:

The U.S. government had supported J.P. Morgan Chase & Co.’s purchase of Bear Stearns months before Lehman collapsed, and, just days later, funded a massive bailout of American International Group. Mr. Fuld couldn’t believe the government couldn’t find a way to save Lehman.

In conversations with friends, he blamed then-Treasury Secretary Henry Paulson Jr. for deciding not to step in. Mr. Fuld’s wife, Kathy, would frequently email him news commentaries critical of Mr. Paulson’s role, say people familiar with the matter.

She sent him one column from Portfolio.com, headlined “Hank Paulson, Revisionist.” The piece asked: “Does Paulson seriously believe that anybody is going to swallow this — the idea that he didn’t want to see Lehman’s failure, but was powerless to prevent it?”

Yeah, that was me. Little did I suspect I was only serving to entrench Fuld’s anger at Paulson.

I got a wonderful email from Bob Millman, of Executive Wine Seminars, on Wednesday, and I knew I had to meet him, so I did just that, this evening*. Bob’s been running blind wine tastings for decades now, and so he knows just what they’re good for and also what they’re really bad at. Here’s a bit of what he wrote to me:

It should be obvious to any thinking person that blind tastings necessarily favor–on a group vote basis–wines which offer immediate pleasure and gratification. Left to their undirected devices, the senses will almost always gravitate to the obvious and miss the subtle. I have fallen victim to the sweeter-is-better trap several times myself. At blind tastings that include left bank and right bank young Bordeaux, the right bank wines almost always garner higher scores from the crowd. Young Merlot simply tastes “better” than young Cabernet Sauvignon. Softer, sweeter, more flattering.

When I did a blind tasting of Pinot Noirs a couple of years ago, I got really excited about the eventual winner, the 2005 Heron. I ended up buying quite a lot of it, and sometimes ordering it in restaurants or bars as well, and, weirdly for a wine which everybody thought was spectacularly good, it didn’t grow on me at all — quite the opposite.

Part of that is maybe just that most wine deteriorates with age, and that the ’05 was better when we first tasted it than when I drank it a year or more later. But another part of it, I think, is that the kind of wines one loves in blind tastings are not necessarily the kind of wines one actually likes to drink in real life. As Bob says, they tend to the soft, and fruity, and sweet. If you normally like that sort of thing, then great, but if you tend to prefer something a bit more austere or elegant, then you might well end up doing yourself no favors at all if you taste a lot of wines blind.

This evening, Bob ordered a gorgeous terroir-based Beaujolais, after which we moved on to a big Californian old-vine Zinfandel. We both preferred the old-world wine, but as Bob said, if you put the two next to each other in a blind tasting, there’s no doubt which would win. In contemporary art terms, it would be a bit like exhibiting Fred Sandback next to Jeff Koons. Even when you’re tasting like against like — for instance, when you’re tasting young Bordeaux — you’re just as likely to steer yourself wrong by tasting blind as you are to find a hidden gem, since the best Bordeaux wines just don’t do very much when they’re young.

“The problem with blind tasting is that you’re working from a position of ignorance,” said Bob. If you know exactly what it is that you’re tasting — a young first-growth wine, for example — then you can taste it in that light. Similarly, if you know that you’re looking at an Ad Reinhardt painting, you’ll be willing to spend a few minutes with it so that you can appreciate its subtleties. If you didn’t know it was a Reinhardt, then you’d probably just read it as a black monochrome and move on. Or think about someone like Joseph Beuys: the whole point of the art is that it’s multi-layered, and responds slowly to the viewer, who has to think things through.

Much wine — and most great wine — is similar: it grows on you, slowly. But in the artificial environment of a blind tasting, where you’re running through a dozen or more wines, it’s impossible for the vast majority of us to do such wines justice. Hell, its hard enough to do even one bottle of great wine justice: while every so often, while you’re drinking a bottle, it all comes together spectacularly, there will also always be times when you take a sip absentmindedly between bites and miss a lot of the beauty and flavor.

On top of that, blind tastings by their nature become guessing games, and the people doing the tasting, rather than simply approaching each wine with an open mind, are constantly asking themselves which wine it might be, whether it’s famous, or expensive, or maybe even the one that they brought to the tasting. Such thoughts are not conducive to the appreciation of great wine, just as someone looking to see whether a painting was genuine or not is likely to miss out, while doing so, on much of its aesthetic appeal.

In any case, the various different factors which go into the enjoyment of a wine are so multitudinous that when you try to eradicate them all in order to allow different wines to compete on a level playing field, you at the same time eradicate much of what makes a wine so enjoyable in the first place. You might love your spouse’s [insert body part here], but it would be pointless and invidious for someone to test that love by presenting you with a series of carefully anonymized body parts and asking you which one you liked the most.

On my first anniversary, my wife and I drank a spectacular bottle of wine which was given to us as a wedding present by a good friend; what’s more, it came from the cellar of a wonderful restaurant and we drank it at that selfsame restaurant, with delicious food and friendly service and in general everything going right. We’ll both remember that bottle for years, it was everything you could ever hope for from a wine, and more. That’s by far the best way to drink great wine: with good food, on a special occasion, with people you love, purely for enjoyment. If you take most of that away, and drink wine blind, surrounded by serious men spitting into buckets, you’re doing something qualitatively very different indeed. And it should come as no surprise that there might not be much if any correlation between how much you like a wine in the former context and how much you like it in the latter.

There’s also a pretty strong argument to be made that blind tastings are positively bad, harmful things: that the hot, sweet, oaked, fruit-forward, soft-tannined wines which tend to excel in blind tastings are precisely the wines that everybody in the world is trying to make right now. Blind tastings, in many ways, might well have caused the homogenization of global wine culture — something which pretty much all wine lovers abhor but which seems at the same time to be unstoppable. And they’ve done it through the mechanism of the 100-point tasting scale, as invented by Robert Parker.

Wines sell based on how many points they garner, and they garner points by being tasted, blind, by critics like Parker. It used to be that if one importer or wine merchant didn’t like your wine, another one would. Nowadays, it doesn’t matter what those individuals like personally: it matters what the blind tasters at the Wine Advocate and the Wine Spectator like. And the importers and merchants flock to the high-point wines, because those are the wines that their customers want.

What is blind tasting good for? Well, for one thing it’s very good at showing how important knowledge of price, as opposed to price itself, is as a contributing factor to a wine’s perceived quality. If you know that a wine you’re drinking is expensive, you’ll probably like it much more. If you’re deceived into thinking that a wine is expensive (if someone poured Yellowtail into a Lafite bottle, say) you’ll like that much more, too. And if someone poured Lafite into a colorful screw-top bottle, you’d like it less.

When I say, then, that in wine there’s no correlation between price and quality, what I mean is that there’s no correlation between price and quality except for in the 99% of cases where in fact the correlation is very strong — the cases when you know, more or less, how expensive the wine you’re drinking is.

I’m trying to train myself out of that ingrained mindset, by drinking quite a lot of cheap wine and buying large quantities of the good stuff. And there really is a lot of good cheap wine out there. But I know that I do still have the same prejudices as everybody else, no matter how much I write about negative price-quality correlations. If I open a cheap bottle and I don’t think much of it at first, I’ll assume it’s not very good. On the other hand, if I open an expensive bottle and I don’t think much of it at first, I’ll let it breathe, I’ll revisit it later, I’ll try to see if I can discern some subtlety and sophistication which might not have been immediately apparent. And if I look hard enough, I’ll probably find it.

*Um, I mean yesterday evening. I wrote this on Friday, but finished it late, and for some weird reason my internet seems to go down every evening at about 10pm — it’s done it four nights in a row. I spent an hour on the phone to Time Warner tech support on Thursday night, to no avail, and they’re sending someone out on Tuesday morning, when the internet will probably be working fine. Any ideas what the problem might be? The internet doesn’t go down entirely — the lights on the cable modem are still right, and I can occasionally download emails or the Google home page (which takes literally minutes to load). But it’s unusable, and the signal, as seen by Time Warner’s techs, is all messed up.

Update: Thomas Matthews, the executive editor of Wine Spectator, leaves a comment defending blind tasting and saying that if you want to be objective about things, “there is no better methodology”. I agree. But I think that objectivity is overvalued sometimes, and in any case it’s important to be aware of the weaknesses of the blind-tasting methodology, even if you can’t come up with a better alternative.

Daniel Posner notes that Robert Parker himself rarely tastes wines blind any more — this is true, and I think does speak to the limitations of blind tasting.

And londenio draws the comparison between wine and cola: Pepsi generally wins in blind tastings, ‘cos it’s sweeter. But most people still prefer Coke.

David Einhorn is short both Moody’s and McGraw-Hill, S&P’s parent. NB Buffett is selling down his Moody’s stake. (Market Folly)

Pictures of the amazing Wells Fargo party house (Clusterstock, ibid )

“By trying to help dolphins, groups like Greenpeace caused one of the worst marine ecological disasters of all time.” (Southern Fried Science)

The Kroll-Stanford connection (Goldstein)

No primetime reservations for civilians at Minetta Tavern: “I’m sorry to say that’s the new policy, sir.” (Eater)

Alterman on why big media matters. Has Harvard been captured by Big Pharma? (The Nation)

What business journalists can learn from Sesame Street. (CJR)

This Spotify messaging makes no sense: How is a US “freemium” service different than what’s in Europe? (WSJ Blogs)

Charles Komanoff presents his Balanced Transportation Analyzer (NNYN)

Well done, Gordon, and well said. (Downing Street)

I’ve finally got around to reading the Vanity Fair TARP investigation, and there are some good bits, like this:

There were no internal controls to gauge success or failure. The goal was simply to dispense as much money as possible, as fast as possible. When Treasury began giving billions to the banks, the department had no policies in place to ensure that the banks were using the money in ways that met the purposes of the program, however defined. One main purpose, as noted, was to free up credit, but there was no incentive to lend and nothing to stop a bank from simply sitting on the money, bolstering its balance sheet and investing in Treasury bills. Indeed, Treasury’s plan was expressly not to ask the banks what they did with the money.

Given the sheer number of banks which received TARP funds after the most cursory oversight — indeed, every single bank which applied for such funds was approved — it’s inevitable that there will be some bad apples among them, and Vanity Fair has found a few of those apples. And more generally, as Andrew Leonard points out, it’s not clear what the alternative was:

They drop the ball by not tackling the $64,000 question more directly: Would it have been better to do nothing at all, and let the big banks fail, thus running the very substantial risk that the worst credit crunch in living memory metastasize into a full-fledged depression? Barlett and Steele could have found plenty of economists who, despite holding their nose at how irresponsibly the mass infusion of capital into the banking system was conducted, do believe that immediately stabilizing the system was a critical priority in the feverish months of last fall.

But the authors don’t quote a single economist.

I think it’s entirely fair to criticize TARP for having no stated aims or criteria of success. But there is an argument that there simply wasn’t time to do anything more considered. The problem isn’t that Treasury veered wildly from the original idea behind TARP — buying up bad loans — to a new idea of injecting equity. The problem is that after it made that decision, no one stopped to ask how best to enact the new policy.

Remember this?

Jackie Speier (D-Calif): Do you use email?

Hank Paulson: Do I use email? No, I don’t use it, personally.

JS: You don’t use it personally, or professionally?

HP: Yeah, I just don’t. So I’ve never used it for any business communications. Just never use it.

JS: So while you were secretary of the Treasury you never used email?

HP: No.

JS: How did you communicate with people?

HP: Telephone.

I wonder if Eric Falkenstein had it in mind when he wrote this:

People who meticulously avoid email should not be trusted, because it is simply too calculating, as if they know they are regularly committing crimes. A phone conversation can always be disavowed, you just say you were talking about last weekend’s bar mitzvah.

(Via Weisenthal)

Unicef reports:

UNICEF today released new figures that show the rate of deaths of children under five years of age continued to decline in 2008.

The data shows a 28 per cent decline in the under-five mortality rate, from 90 deaths per 1000 live births in 1990, to 65 deaths per 1000 live births in 2008…

The data shows global under-five mortality has decreased steadily over the past two decades, and that the rate of the decline in the under-five mortality rates has increased since the 1990s. The average rate of decline from 2000 to 2008 is 2.3 per cent, compared to a 1.4 per cent average decline from 1990 to 2000.

The bad news is that infant mortality is still far too high, and is highly concentrated: just three countries — India, Nigeria, and the Democratic Republic of Congo — between them account for 40% of the world’s under-5 deaths. And in countries like South Africa where a large number of women of child-bearing age have HIV/AIDS, that’s going to show up in infant-mortality figures as well.

But the good news is that significant advances in things like infant mortality can be made even when wealth and growth are low, especially with targeted development aid. Let’s have more bed nets!

Well done to Jane Mendillo for increasing the transparency of the Harvard endowment, moving from a relatively terse “John Harvard letter” to a more discursive “Endowment Report”. Whence comes this chart:

At the height of the worst recession in living memory, it seems, donations to Harvard went up.

I actually called this, back in May, saying that Harvard’s alumni might be more likely to donate to a university when their donations weren’t dwarfed by endowment returns. But then the Times said that donations were correlated with endowment returns, and I thought that donations might fall. I guess there was nothing to worry about.

(Incidentally, the annual donations to Harvard, at over $1.6 billion, are now pretty much the same as the size of the entire endowment at Wellesley College, whence Mendillo came.)

Update: Wow, I really got this one wrong. As my commenters rightly point out, the chart shows donations from the endowment to the university, not donations to the university. Those did indeed fall.

As a blogger, Barry Ritholtz ought to be super-alert to one obvious consequence his proposal that newspapers charge micropayments for their content: that content will simply migrate to free blogs. One way of building a large following on a blog (I’m thinking Mark Thoma or Yves Smith, here) is to marry analytical added value with long quotes from newspapers which obviate the need to click through to the actual article. If all those articles disappear behind firewalls, I can guarantee you that thousands of new blogs will spring up featuring extremely extensive quoting from MSM sources which have now walled themselves off from the blogosphere.

Yes, the newspapers in question could try to send cease-and-desist letters to any blogger behaving in such a manner, but those letters are expensive, and time-consuming, and they don’t always work, and most importantly they only serve to antagonize bloggers and turn a relationship which is good right now into something more akin to the relationship between the music industry and teenagers.

And even if newspapers manage to solve the blog problem, they won’t solve the equally-inevitable email problem, where people will just start emailing articles to each other, or posting them on their Facebook page, or that kind of thing. Newspaper websites at the moment are unrivalled as the first best source of any given newspaper’s content. That won’t continue if they start putting up firewalls.

We’re entering a share-and-remix culture, where the idea behind micropayments — that a small sum must be paid just to read something, and republishing or remixing are pretty much barred entirely — is increasingly untenable. Newspapers have always made money not by selling content but by building a strong relationship with a large number of readers, and then monetizing that relationship — mainly by charging advertisers large amounts of money for the privilege of inserting themselves into it. If readers become resentful of their newspapers, because they have to pay for every article they read and because they can’t easily pass that article on to others, then that’s a great way of destroying a valuable relationship.

My view is that the internet has been magnificent at vastly increasing the number of readers that newspapers have, and at strengthening the relationship that print subscribers have with the newspaper brand. By rights, those relationships, in aggregate, should now be more valuable, not less valuable. But because of problems with the ad market — including the tyranny of the CPM and the fact that advertisers in general are not big fans of buying online inventory — newspapers profits have gone down even as their readership has skyrocketed.

The trick to succeeding in the internet era is to take what’s good about the present situation and monetize it. Ritholtz, by contrast, would take the one good thing which newspapers have going for them, and kill it.

Congo-Brazzaville spent over $6 million lobbying for an anti-vulture-fund act in DC, after losing to Elliott Associates. A rare example of vulture-fund-friendly investigative reporting. (Al Jazeera, Part 1 here)

Bloomberg is the front-runner to buy BusinessWeek?! (NY Post)

How much would you pay for a shorter commute? (Streetsblog)

Vanity Fair has 6,400 words on TARP (VF)

A better healthcare reform flowchart (Donkeylicious)

“Capitalism never tried to touch god, it was all about touching satan.” (Artnet)

New details on Steve Brill’s pay-for-news firm, Journalism Online, including what they’re charging clients (Nieman)

About a month ago, I got an advance copy of this paper, in which Lee Buchheit — the godfather of the sovereign bond markets, and good friend to sovereign issuers around the world — essentially apologizes for two things he did during the Ecuadorean debt restructuring of 2000 and in many other sovereign bond issues to boot: dropping the restriction on the issuer repurchasing defaulted debt; and including boilerplate trusteeship language in the bond documentation rather than something stronger.

This paper is essentially the formal version of the remarks that Buchheit made at EMTA in June. And like he was then, Buchheit is clear that a large amount of blame can be laid on the shoulders of the “bovinely passive” trustee of those Ecuador bonds. Buchheit’s a wonderful writer, and you should read the whole thing, but here’s a taster:

The movement toward the use of trust structures for emerging market sovereign bonds was not intended to dilute creditors’ legal rights, but merely to centralize those powers in the hands of a trustee who would exercise those rights for the ratable benefit of all creditors. Naturally, this approach assumed that the entity appointed to exercise these centralized powers (the trustee) would, if and when necessary, acquit itself of its duty to preserve, protect and defend the interests of the bondholders.

These assumptions, and this legal architecture, were tested for the first time in connection with Ecuador’s 2008 default… As things turned out, the assumptions proved to be fragile and the legal architecture failed in its principal purpose…

Even though the issuer had publicly repudiated the instruments (it’s hard to imagine a more serious provocation), the trustee did not exercise its discretion to accelerate either series of bonds or to commence an enforcement action..

This much seems certain — the closing of the cash buyback represented the first, the best and perhaps the only opportunity for the creditors to recover a sizeable portion of their claims. The trust indenture deprived the individual bondholders of their ability to pursue legal remedies on their own; they were thus wholly reliant on the trustee’s vigilance and enterprise to protect their interests.

Buchheit never actually outs the trustee, but I can tell you that it’s US Bancorp. I can also tell you that I forwarded the article to US Bancorp as soon as I received it, to get their side of the story. In the weeks since then I’ve called and emailed multiple times — probably two or three times a week, depending on how busy I was — and have heard nothing back from them whatsoever. “Bovinely passive” is one way of putting it; I’d say that they’re positively aggressive in their inaction.

It’s notoriously difficult to get a fiscal agent to do anything on behalf of bondholders — that’s one of the reasons why the structure was switched to using a trustee instead. But the lesson of Ecuador is that even though the trustee works for bondholders and not for the issuer, they’ll still do nothing to protect the bondholders’ interest, when push comes to shove. Hell, it’s a miracle if they even so much as return your phone calls.

Leon Wieseltier’s attack on the NYT magazine is doing the rounds of the Twitterverse today, which is understandable, since it’s always fun to watch a brutal smackdown. But the fact is that the smackdown is profoundly unfair, and that Wieseltier has picked a most peculiar target for his ire.

It’s worth remembering here that the NYT magazine is just that — a glossy magazine, produced so that the NYT has a venue suitable for the kind of expensive, high-production-value ads produced by fashion companies and the like. “I understand that The New York Times Magazine is not Mind“, Wieseltier writes, but really he doesn’t: indeed, he doesn’t seem to have grappled at all with the idea that different parts of the NYT have different sensibilities, and that the glossy magazine, by its nature, is going to be the most fashion-friendly, “Urban Modern” part of the paper.

Given that, Wieseltier should really be astonished by the depth of the magazine’s seriousness and ambition: the fact that it devoted an entire issue to the question of women’s rights, especially in the developing world; or the fact that it is regularly home to the most insightful and important financial journalism that the NYT produces, such as Joe Nocera’s investigation of value-at-risk or Paul Krugman’s 8,000-word essay on inequality.

Wieseltier might fancy himself above the mundane considerations of newspaper economics, but the editor of the NYT magazine cannot be. And every section of the NYT outside the daily news hole has to be able to pay for itself, and ideally cross-subsidize the central newsgathering operation. Wieseltier claims that there is “a mark of decadence” upon the magazine — well, yes, of course there is, glossy magazines are fundamentally decadent institutions. What’s impressive is that the NYT has taken this decadent institution and used it to commit great journalism. Good for them, and long may they continue to do so.

For all that Rick Bookstaber has taken potshots at Nassim Taleb in the past, his testimony today in front of the House committee on science and technology ultimately ends up in pretty much the same place as Taleb’s does.

Here’s Taleb:

Leverage is a direct result of underestimation of the risks of extreme events –and the illusion that these risks are measurable. Someone more careful (or realistic) would issue equity. April 28, 2004 was a very sad day, when the SEC, at the instigation of the investment banks, initiated the abandonment of hard (i.e. robust) risk measures like leverage, in favor of more model-based probabilistic, and fragile, ones.

And here’s Bookstaber:

There are two approaches for moving away from over-reliance on VaR.   

The first approach is to employ coarser measures of risk, measures that have fewer assumptions and that are less dependent on the future looking like the past. The use of the Leverage Ratio mandated by U.S. regulators and championed by the FDIC is an example of such a measure. The leverage ratio does not overlay assumptions about the correlation or the volatility of the assets, and does not assume any mitigating effect from diversification, although it has its own limitations as a basis for capital adequacy.

Happily, I think they’re both likely to get what they want: the G20 seems determined to move to simple measures of capital adequacy, rather than the failed, complex measures which were embedded in Basel II. How long that will take, however, is unclear: bank regulation moves slowly at the best of times, and slower still when the changes are big.

There’s no good news in today’s data from the Census bureau. Unless you’re the kind of person who worries about inflation, that is: in that case you’re probably reassured that real median household income fell 3.6% between 2007 and 2008, from $52,163 to $50,303. That’s a drop of over $1,800: real money.

Naturally, the pain was concentrated in the poorer parts of the US: incomes in the South fell by 4.9% to $45,590, while incomes in the Northeast were unchanged at $54,346.

Oh, and the number of people in poverty increased by a whopping 2.5 million, to 39.8 million: 13.2% of the population, the highest poverty rate in over a decade. How poor do you need to be in order to be counted as living in poverty? Very poor:

As defined by the Office of Management and Budget and updated for inflation using the Consumer Price Index, the weighted average poverty threshold for a family of four in 2008 was $22,025; for a family of three, $17,163; for a family of two, $14,051; and for unrelated individuals, $10,991.

The poverty rate for children under the age of 18 is now an eye-popping 19%: basically one child in every five is living in poverty in the US. And even if a slow economic recovery is beginning to take hold, I can’t see that number declining much in the foreseeable future. Which is unconscionable, in the richest country in the world.

Update: Emily Monea and Isabel Sawhill of the Brookings Institution have a paper out which says that “the poverty rate will increase rapidly through 2011 or 2012, at which point about 14.4 percent of the country will be in poverty”, and that the number of children living in poverty could rise by 5 million, or 38%, to 18 million.

Update 2: David Leonhardt points out that real incomes fell over the course of the past decade, from $51,295 in 1998 to $50,303 in 2008:

In the four decades that the Census bureau has been tracking household income, there has never before been a full decade in which median income failed to rise. (The previous record was eight years, ending in 1986.) Other Census data suggest that it also never happened between the late 1940s and the late 1960s. So it doesn’t seem to have happened since at least the 1930s.

My colleague Matt Goldstein has got his hands on the judgment in the UBS vs Pursuit case which the WSJ writes about here. It’s a fun read, and I’ve uploaded it here. Neither of the parties to the case comes out smelling of roses: Pursuit seems to have completely missed the triggers in the CDOs despite two of its principals reading the offering memoranda, and as for UBS, well, the judge puts it very well:

The court takes UBS employees at their word when they referenced their Notes, these purported “investment grade” securities which they sold, as “crap” and “vomit”, for UBS alone possessed the knowledge of what their product, their inventory, was truly worth.

I’m not at all sure that Pursuit is going to win this case — this is just a prejudgment remedy asking UBS to put up $35 million in case it loses. The key to the case is insider knowledge on the part of UBS: it seems that senior UBS employees were in close contact with Moody’s and were informed that the CDOs in question were about to be downgraded. Since UBS knew that the notes would be wiped out in the event of a downgrade, they then went to great lengths to sell the CDOs before the downgrade happened.

The judge has thrown out most of the complaints that Pursuit made against UBS, leaving only one or two for UBS to defend; the bank, in turn, has said that it “is confident that it will prevail on the merits of the case”. But even it if does prevail, UBS has been revealed as being extremely sleazy at best. And it would be fair for anybody dealing with the UBS fixed-income desk to assume that they’re being ripped off, and treat any proffered paper with extreme prejudice.