Felix Salmon

How poverty has tracked global population

By Felix Salmon
October 31, 2011

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184x558_popchart_left_align.gif The world officially hit 7 billion people today, and so to celebrate I decided to take a look at what’s happened to poverty in the world as its population has increased — many, many thanks to Nick Rizzo and to Laurence Chandy and Homi Kharas at Brookings, two Englishmen who provided him with unpublished data and were extremely generous with their time.

Word clouds done right

By Felix Salmon
October 31, 2011

Jacob Harris is absolutely right to hate word clouds. You take a long and complex text, and then you boil it down to a group of individual words, with the most-used words being the biggest? That’s just silly. “Reporters sidestepping their limited knowledge of the subject material by peering for patterns in a word cloud,” he says, is “like reading tea leaves at the bottom of a cup”. Word clouds are crude, inaccurate, misapplied, and place the onus of understanding onto the reader.

CDS demonization watch, Bloomberg edition

By Felix Salmon
October 31, 2011

Bloomberg View’s Mark Buchanan has been taking a long, hard look at a 2009 paper by Italian physicist Stefano Battiston, Joe Stiglitz, and others; he explains what it says quite clearly and accurately on his personal blog. Basically, the paper quantifies the concept of “too interconnected to fail”: when you have a financial system with lots of banks, all of which have exposure to each other, then the system itself becomes much more fragile.

Occupy Wall Street and media ethics

By Felix Salmon
October 31, 2011

Occupy Wall Street seems to be throwing up much more than its fair share of media-ethics questions — from a news-organization perspective, it’s a movement which seems to be very easy to respond to badly, and very difficult to respond to well.

Counterparties

By Nick Rizzo
October 28, 2011

Rogoff: There’s an 80% chance Greece leaves the Euro in the next 10 years — Bloomberg

The impunity of the Big Four auditors

By Felix Salmon
October 28, 2011

Are the big four auditors too big to fail? Agnes Crane makes a strong case that they are, in the wake of a very tough report from the Public Company Accounting Oversight Board about Deloitte. The problem is that the PCAOB has no real teeth: with the number of auditors already far too low, at four, no one can afford a potentially-fatal attack on any of them. And that gives each of the Big Four effective impunity when it comes to mistakes and lack of professionalism.

Why the Greek CDS market is OK

By Felix Salmon
October 28, 2011

All the talk about sovereign CDS of late — pegged off the fact that the Greek restructuring might not trigger an event of default — is I think missing three big points. First, why ISDA’s rules make sense. Second, why Greece’s CDS spreads are still extremely wide. And third, what sovereign CDS are used for.

Jed Rakoff puts the SEC on notice

By Felix Salmon
October 28, 2011

Jed Rakoff has been a hero for a while now, but his questions for the SEC with respect to its Citigroup settlement are truly great even by his standards. It’s worth transcribing them for internet posterity:

How to justify Groupon’s valuation

By Felix Salmon
October 27, 2011

Henry Blodget has a smart post on how to value Groupon today. Is he right that it’s vastly overpriced at a $10 billion valuation?