Felix Salmon

What about perpetual TIPS?

By Felix Salmon
August 27, 2010

Eddy Elfenbein thinks the time is right for the U.S. government to issue perpetual bonds:

The driveway tax

By Felix Salmon
August 26, 2010

How to get drivers to help pay for the direct costs and negative externalities they cause? A congestion charge is one obvious way, but it’s expensive and complicated to implement. A driveway tax isn’t quite as elegant, but it’s much simpler, and it seems to be catching on even outside Oregon: it’s just been implemented by Mission, Kansas.

ETFs are not created equal

By Felix Salmon
August 26, 2010

Paul Amery grabs this chart from a recent Deutsche Bank report:

Performance_of_Euro_Stoxx_50_ETFs.jpg

The different lines are various ETFs, all of which seek to replicate the Euro Stoxx 50, which is the black line in the chart. Nearly all of them managed to outperform the index over the 20-month period in question, although if I were an investor in UBS’s ETF I’d certainly be asking questions. And it’s pretty clear that the degree of outperformance in many cases is a much larger component of total returns than is the headline expense ratio on the funds.

Paul Singer’s litigation strategies

By Felix Salmon
August 26, 2010

Paul Singer’s Elliott Associates hedge fund navigated the crisis well, and kept on going strongly through 2009. In 2010, it’s had modestly positive returns: +5.3% in the first half, but just +0.4% in the second quarter.

Getting the housing market moving

By Felix Salmon
August 25, 2010

It’s a bit too wet to schlep into the office today, but I did manage to make it in there yesterday, and shot this reaction to the housing numbers. Warning, lots of hand-waving ahead:

Why going to Monte Carlo loses you money

By Felix Salmon
August 25, 2010

One of the key tools used by fixed-income analysts during the Great Moderation was their beloved Monte Carlo simulation. They would take an instrument like a CPDO or a subprime-backed CDO, and they would run it through tens of thousands of possible future worlds. If it held up in all or nearly all of those worlds, then, presto, it got a triple-A credit rating.

Corporate optimism datapoint of the day

By Felix Salmon
August 25, 2010

Randall Forsyth reports on the magical math of corporate defined-benefit pension plans:

Insider trading datapoint of the day

By Felix Salmon
August 25, 2010

It’s barely credible, but it seems to be true:

On August 12,13, and 16, 2010, Defendant Juan Jose Fernandez Garcia (“Garcia”), a Madrid, Spain resident and the Head of European Equity Derivatives at Banco Santander, S.A., an advisor to BHP in connection with its tender offer, purchased a total of 282 call options for approximately $13,669, all of which he sold on August 17, 2010 for a profit of approximately $576,000.

Counterparties

By Felix Salmon
August 25, 2010

Great clip from Inside Job, putting Ric Mishkin on the spot about why he didn’t disclose a $124,000 conflict — Yahoo