Felix Salmon

The cost of Bernanke’s failure-aversion

John Cassidy has very little patience for Ben Bernanke’s latest attempt, in front of the FCIC, to explain how Lehman Brothers was allowed to fail so catastrophically. Bernanke is now saying that Lehman was in such bad shape that it would have failed whether or not the Fed had stepped in to guarantee its debts; like Cassidy, I’m very suspicious of that argument, since a Fed guarantee would have stopped any bank run cold in its tracks.

Will the FCIC report be a whitewash?

Barry Ritholtz was unimpressed with the way that the Financial Crisis Inquiry Commission was quite soft on Dick Fuld:

Payrolls: Flat is the new up

Everybody was so nervous going in to this morning’s payrolls report that even though employment fell and unemployment rose, markets are looking extremely exuberant.

Counterparties

Tony Blair, tagged — Yfrog

Blu-ray edition of “Withnail & I” coming out shortly. It’s like selling hippie wigs in Woolworth’s — National Post

A unified theory of New York biking

Most bikers in New York have their fair share of road rage. Commuting by bicycle in Manhattan has many things to be said for it, but it’s certainly not relaxing. And bicyclists as a group have surprisingly little public support. The question is, why? And I think I’ve worked out something approaching the Unified Theory of New York Biking:

Microfinance datapoints of the day

Here’s three takes on microfinance, all from the past month:

    Indian microfinance lender SKS goes public, raising $358 million and making its founder dynastically wealthy. The decision was controversial, and was largely responsible for an entire non-profit organization, Unitus, disappearing. When that kind of money is at stake, noble non-profit principles have a tendency to evaporate. Steven Schwarcz of Duke University, has a bright idea: why not use the magic of securitization to provide funds for microfinance lenders? “Such disintermediation,” he writes, “would enable microfinance loans to be funded directly from low-cost, and virtually limitless, capital market sources”. What could possibly go wrong? Hema Bansal reports from a roundtable in New Delhi, which found that many microfinance lenders don’t know their effective interest rate, and the ones who do know it tend not to reveal it.

The lesson I take from all of this is that microfinance is much, much messier than its advocates normally like to admit. I’m constantly astonished at the number of people I meet who are all excited about some microfinance fund or initiative, with some vague idea that the main problem is finding people to loan out dollars at low interest rates; after that, the magic of the market will help bring billions of people out of poverty.

Why houses are like dishwashers

A lot of people have been quoting this passage from Chip Case’s op-ed on housing as an investment:

When bankers are more dangerous than warlords

Amy Davidson has a good round-up of the tragic bank run at Kabul Bank, which is threatening not only the largest and most important bank in Afghanistan but also what remains of that country’s shattered political economy. But you can pretty much learn everything you need to know from reading two sentences from the excellent WaPo report:

Quants merge with humans

Eleanor Laise has found an interesting trend in the world of quant funds: a lot of them are looking much more human, these days.