Felix Salmon

ProPublica is my favorite one-stop shop for presenting the Fed data dump in an at-a-glance format. The main thing that jumps out is that three banks, more than any others, were the primary recipients of the Fed’s lending facilities:

I’ve included the banks in positions 4 and 5 just to make clear how big the gap is here: Citi, Merrill, and Morgan Stanley each borrowed more than $2 trillion from the Fed in total. No one else borrowed even $1 trillion.

Of course, a lot of these were overnight loans being rolled over day after day: it’s not like the Fed ever lent this much money at any one time. But the sums involved are still astonishing, especially for Merrill Lynch and Morgan Stanley. We all know what happened to Citi and to Merrill, but this underlines just how rocky Morgan Stanley was at the height of the crisis.

The only time I’ve ever got a genuine death threat from my blogging was when I wrote this, on October 9, 2008:

It looks like we’re getting close to one of the market’s vicious syllogisms here: without the market’s trust, Morgan Stanley is nothing. The market doesn’t trust Morgan Stanley. Therefore, Morgan Stanley is, well, toast.

My guess is that at some point over the weekend, Hank Paulson will announce that he’s using his new authorities under the TARP to effectively nationalize Morgan Stanley, following Gordon Brown’s lead in the UK. And Morgan Stanley will only be the first of many banks to suffer such a fate.

I was right about the government stepping in to save Morgan Stanley from a vicious market where it couldn’t stand alone; I was just wrong about which arm of the government would be intervening. It wasn’t Treasury, it was the Fed.

How should bike-share services pay for themselves? Up until now, the main model has been sponsorship and advertising. But CityRyde has a bright idea: why not sell carbon offsets?

The idea’s pretty simple: as bike-share use rises, the amount of carbon-emitting vehicle use falls. So bike shares save carbon; CityRyde even has a methodology to determine exactly how much. (One thing I’d like to see, though: virtually all bike-share programs involve trucking bikes from the center of town back into the periphery, not to mention transporting broken bikes to be fixed. So somewhere in the methodology there should be an accounting for the amount of carbon emitted by the bike-share program itself.)

In any case, if the bike-share program sold carbon offsets to companies which want to claim to be carbon-neutral and to individuals wanting to offset their carbon emissions, that could raise some revenue: CityRyde co-founder Jason Meinzer told me his rule of thumb is that you could bring in between $25 and $100 per bike per year that way. For a scheme with 50,000 bikes in New York City, that would equate to between $1.25 million and $5 million per year: hardly chump change.

Meinzer didn’t share with me exactly how he got his numbers, though, so I ran a smell test. Let’s say each bike travels 15 miles per day, 350 days per year: that’s 5,250 miles per year. A lot of bike rides are simply for pleasure, and others—especially in a city like New York—replace walking or taking mass transport. Those are activities with negligible marginal carbon emissions.

But let’s say that 1/3 of bike journeys would otherwise have been taken in a car of some description. That means that each bike saves 1,750 passenger-miles in cars. If one car carries the same number of people as two bikes, on average, then that’s 875 car miles saved. At 1.2 pounds of CO2 per mile, that’s basically half a ton of CO2 emissions saved per bike per year. And while the market in carbon offsets is far from transparent, my feeling is that you’d be lucky to get $5 per ton, which would equate to $2.50 per bike per year. That’s a full order of magnitude lower than Meinzer’s lower estimate.

Meinzer’s methodology is a lot more sophisticated than that, and I’ll update this post if he wants to share his own math. But at $5 per ton, selling carbon offsets would gross only about $125,000 a year—which, by the time you subtract the cost of measuring the carbon saved and administering the sales, leaves you with little or nothing in net revenue. So while it’s an intriguing idea, I’m not yet convinced it’s a practical one.

Update: Meinzer says that he does account for the carbon costs of the program, in the “Project Emissions” and “Leakage” sections of his methodology; I don’t see it myself. And he explains that he gets his much higher estimate for total revenues from selling carbon offsets at a much higher price:

Our credits most certainly will be sold at a premium due to the novel co-benefits associated with their generation even outside of the carbon mitigated; e.g. health and social (and remember some credits sold for as high as $111 last year). This has been validated by the carbon brokers we’ve been working with over the years. Moreover, outside of the “price-point” per carbon a key angle we are taking to obtain an even higher premium on our credits is via creative bundling; by lumping the carbon credits w/ the sponsorship and advertising. Case in point – Blue Cross Blue Shield donated $1.5 million to have their name tied to the existing 1,000-bike Minneapolisbike share. Had they been able to purchase the offsets stemming from that program the donation would have been MUCH higher. This argument is reinforced by the fact that this donor in particular clearly has a key interest in health, and so the aforementioned co-benefits of our credits would prove even more attractive given the health-benefits of biking. Most big names companies are already offsetting their carbon emissions each year anyways for a variety of reasons, even outside of a regulatory mandate.

Very few changes in the fiscal commission’s final draft — Prospect

Google says it’s fixed the DecorMyEyes problem — Google Blog

A fantastic op-ed from George W Bush, I agree with every word he says — WaPo

The big Euromoney cover story on putbacks is outside the paywall — Euromoney

Hal Scott has an op-ed in Forbes, taking the Obama administration to task for supporting the Argentine government in its court fight against holdout creditors. As the prospect of sovereign default spreads from emerging markets to the euro zone, Scott wants the US to do everything it can to encourage other governments to never default. “Default,” he writes, “should only be a last, disgraceful resort.”

What I’m most interested in here is the way that Scott is identified:

Hal S. Scott, a professor of international finance at Harvard Law School, has filed an amicus brief in the Argentine litigation.

This is true, but it needs to be parsed very carefully to be properly understood. In reality, Scott is a paid partisan in the Argentine-debt wars, and has been for years. In September 2006, he released a paper entitled “Sovereign Debt Default: Cry for the United States, Not Argentina”, which can be found hosted on the website of ATFA, the vulture-fund-backed pressure group which is the lobbying arm for Argentina’s holdout creditors. (ATFA also emailed me to make sure I’d seen Scott’s piece in Forbes.)

Scott’s 2006 paper was very radical: it suggested massive changes to the Foreign Sovereign Immunities Act which would be tantamount to repealing the entire thing. He said that “the US should endeavor to give creditors the same rights against sovereign borrowers that they have against private borrowers” and that if foreign central banks have assets in the US or Switzerland, those assets should be “available to be attached in satisfaction of debts owed by the sovereign” — as should sovereign payments to the IMF. Creditors should also, he said, be able to seize state-owned companies if those companies were owned by a state in default.

This is very extreme stuff, and violates every norm in international diplomacy: it’s never going to happen. Scott’s paper was a salvo in the court battle over Argentina’s debt, and I have always assumed that it was paid for—as was his amicus brief—by Argentina’s creditors. (Scott was writing briefs siding with them as long ago as 2004.) But as Charles Ferguson showed so well in his movie Inside Job, academics are incredibly bad at disclosing even when they’ve been paid by vested interests, let alone how much they’ve been paid.

Scott, then, is hardly a disinterested law professor here, as a naive reading of his Forbes bio might suggest. Is it too much to ask that he disclose that he’s been paid by Argentina’s creditors, even if he doesn’t have to give a dollar amount?

Gawker Media’s big company-wide redesign, a year in the making, will finally come out of beta on January 3. It will the biggest event in Gawker Media history, for all three arms of the company—editorial, sales, and technology. It’s a concerted attempt for Gawker Media to stop being a blog network and start being something much more ambitious. And while that will be most immediately visible in the way that the blogs look, a massive change is taking place on the sales side, too: Chris Batty, Gawker Media’s semi-legendary head of sales, is leaving the company.

Gawker Media has had more than its fair share of staff turnover, of course. Much of it, especially at the Gawker flagship, has been detailed obsessively in the press. But above the editorial fray, the executive team has been constant all along: Nick Denton, the owner and CEO; Gaby Darbyshire, the general counsel and COO; Tom Plunkett, the CTO; and Batty, the VP of sales and marketing, working alongside the VP of sales, Gabriela Giacoman. Batty’s departure marks the first visible fracture in this team, and is a sign of just how far-reaching Denton’s changes really are.

This is a monster post, so I’ll put the rest below the fold. The stuff about Batty and Gawker Media’s revenues comes near the top, the stuff about corporate structure and valuation is near the bottom.

(more…)

It’s far too difficult to send money to your friends, family, or acquaintances.

At the moment, in the U.S., you basically have three options. You can try to do it physically, in person, with cash; that’s cumbersome, and often the reason you want to send them money is precisely because they’re paying cash for something and you want to pay them back. You can write them a physical check, which is even more cumbersome, and requires you to either carry your checkbook around or else start sending the payment in the mail. Or you can send them money through PayPal, which requires that they set up a PayPal account, and which often leaves them with less money than you sent, if you attached your PayPal account to your credit card.

If you live in Europe, or Canada, or just about anywhere else in the world, however, it’s easy—all they need to do is give you their account details, and you can transfer money directly from your account to theirs, for free. The lack of this basic banking functionality essentially explains why PayPal was created in the first place—by rights, if the U.S. banking system were remotely efficient or sensible, PayPal would never have existed.

Finally, however, that’s changing—and not just at forward-thinking credit unions and community banks. Citibank is now offering Popmoney, a service from CashEdge which allows Citi customers—and customers of 164 other banks—to send money easily to anyone in the U.S. with a bank account. If you send it straight to their account, the money simply appears there, just as it does in Europe. Alternatively, you can send it to their email address or mobile phone number, as you would with PayPal; in that case, they need to provide their bank account details to Popmoney before they can get the cash.

Citi has another service, too, called Inter Institution Transfers, which allows you to transfer money from your bank accounts at other banks straight into your Citi account.

These are basic wire transfers, but they don’t come with fees of $25 or more for the privilege: instead, they’re free. (Although, slightly ominously, Citi says that Popmoney pricing “is subject to change.”)

Tom Noyes had a good blog post about this back in October—I’m late to this story—saying that with this move, “Citi is now the leader in mobile payments.” But in fact he understated the extent of Popmoney: you can send money to anybody with a bank account, not just to anybody with a bank account at a Popmoney-enrolled bank.

For reasons I don’t understand, the big three retail banks are not following Citi down this path; instead, they’re laboriously trying to build their own systems to replicate Popmoney.

It’s all a bit depressing that these kind of systems have to be built at all, and aren’t just baked in to the national payments operating system, as it were. I’m sure that while Citi is offering Popmoney free to its customers, it’s still paying CashEdge some serious money for use of their technology.

The only thing I wonder about is whether Americans will ever get into the habit of happily giving out their bank account details to their friends and acquaintances. Most Americans, in my experience, think there’s a huge security risk to doing that. I think they’re probably wrong, but I’m not sure: is there a good overview, anywhere, of how safe or risky it is to give out such information?

What your $3,000 bought in Haiti. The principal of a rural school dreamed of a new schoolhouse. It didn’t work out — NPR

Google beatbox — Kottke

Investing in America’s Economy: A Budget Blueprint for Economic Recovery and Fiscal Responsibility — Our Fiscal Security

Do you have a No Pre-Set Spending Limit Credit Card? Are you worried about your FICO score? Then read this — CardHub

Fiji Water Reverses Plans to Quit Fiji — NYT

Pentagon says ‘don’t ask, don’t tell’ repeal unlikely to hurt military effectiveness — ABC

Kardashian Kard pulled amid complaints of “egregious fees” — LAT

The Telegraph Media Group’s head of technology on why paywalls make no sense — Telegraph

Gavyn Davies with a smart big-picture take on Europe — FT

My favorite bit of the Taiwanese-animated Ireland-crisis story is the protestor with Father Ted’s “careful now” sign — NMA

The only fair way to admit people to Harvard is to randomize admissions — Crimson