Felix Salmon

Annals of dubious research, 401(k) loan-default edition

Bob Litan, formerly of the Kauffman Foundation and the Brookings Institution, has recently taken up a new job as director of research for Bloomberg Government, where he’s going to have to be transparent and impartial. But one of his last gigs before moving to Bloomberg — a paper on the subject of people borrowing money from their 401(k) accounts — was neither of those things.

Counterparties: Britain’s toughest board

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Why Cash WinFall is a model for future lottery games

Last year, the Boston Globe’s Andrea Estes discovered that an obscure state lottery game called Cash WinFall could be — and was — gamed by sophisticated stats geeks. The secret was in the fact that the odds of winning the jackpot were so remote — just one in 9.6 million. As a result, it was almost certain that the jackpot would not be won in any given week.

Counterparties: Can poor nations manufacture wealth?

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Prepaid debit-card datapoints of the day

Almost everybody interested in extending banking services to the unbanked and underbanked is looking very closely at prepaid debit cards. They can do much of what checking accounts do, without the unpredictable fees, the annoying hours, and the general feeling that if you don’t have a lot of money you’re not welcome.

How many U-turns can a bank fit inside a loophole?

The NYT has two excellent articles about the Standard Chartered affair today. Read this one first, about the law which may or may not have been broken; and then move on to this one, about the reaction to the case in London.

Counterparties: Green shoots in the housing market

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Why investors should avoid hedge funds

At the beginning of January, Simon Lack published The Hedge Fund Mirage: The Illusion of Big Money and Why It’s Too Good to Be True. It basically does for hedge funds what the Kauffman Foundation did for private equity, and shows that while fund managers can do extremely well for themselves, fund investors would be better off avoiding the asset class entirely.

Dennis Kelleher, Libor, and high-frequency trading

Dennis Kelleher of Better Markets has responded to my post in which I said, inter alia, that he was wrong about high-frequency trading. He, of course, says that I’m wrong — indeed, that I’m “over the top and just plain wrong in many ways”, and that the post is “self-discrediting”. Blogfight! So, fair warning: this post is my response to his response to my post; if you’re not into that kind of thing I fully understand, and you’re probably much more grown-up than either of us. Anyway.