Felix Salmon

The Abacus pitchbook

Here is the Goldman Sachs pitchbook for the Abacus deal in question today. It spends 30 pages talking in great detail about ACA and its qualifications to manage CDOs; it never mentions Paulson. Here’s my favorite bit:

Levering up your retirement account

Barbara Kiviat has a Q&A with Ian Ayres and Barry Nalebuff, who have taken their paper explaining why young people should buy stock on margin, and have turned it into a book.

Goldman’s Abacus lies

The SEC suit against Goldman Sachs (full complaint here, and well worth reading) is explosive stuff. Essentially the SEC seems to have nailed down the kind of behavior that ProPublica was looking for in its story on the Magnetar Trade — a hedge fund which was short mortgages, in this case Paulson, was carefully picking nuclear waste to put into synthetic CDOs, unbeknownst to the final investors in those deals.

The punitive bank tax

Jamie Dimon’s attempt to push back against the Obama administration’s proposed bank fee only goes to prove just how out-of-touch Wall Street really is:


Argentina Offers 66.3% Haircut in $20 Bln Bond Swap — iMarketNews

Clark Hoyt, the NYT public editor, adjudicates Krugman vs Sorkin, comes down in favor of Krugman — NYT

When right-to-rent meets principal reduction

What happens when you cross right-to-rent with mortgage principal reductions, and turn the whole thing into an entirely voluntary private-sector program with no government involvement whatsoever? It might look a little bit like American Homeowner Preservation, a for-profit company which has a very interesting idea for keeping people in their homes.

Shleifer vs Milken on financial innovation

Yesterday I went to a seminar at NYU where I heard Andrei Shleifer defend his paper on how financial innovation causes crises. At the same time, Mike Milken published an op-ed saying that financial innovation is a wonderful thing, and that what we really need to worry about is too much leverage and too little assiduous underwriting. “Over the long run,” he writes, “the best way to maximize profitability is not to increase leverage, but rather to analyze credit properly”.

Pirrong on the CME and Lehman

Craig Pirrong has a thoughtful response to the unredacted Valukas report on the CME and Lehman, and in particular to my take on it. He explains clearly the reasons why Lehman’s CME positions were sold for $1.2 billion less than their market value:

Worrying about a Greek bank run

I haven’t previously heard of Cumberland Advisors, a money manager in Sarasota, Florida. But they’ve been writing some great stuff on the subject of Greek bank runs.