Felix Salmon

When should we aid Detroit?

John Cassidy and Steve Rattner agree that the destruction which has been visited upon Detroit, in recent decades, is at least as devastating, and as worthy of federal support, as the chaos which was wreaked by Hurricane Sandy in richer parts of the country.

How not to compete with payday lenders

I’m in the UK at the moment, where it’s quite amusing to see the amount of attention paid to national institutions for which there is no American equivalent. Obviously, there’s the way in which a woman having a baby became front-page news for days on end, generating astonishing quantities of coverage despite the fact that all the facts could be summed up in a single tweet. And then, on the financial side of things, you have the Archbishop of Canterbury, Justin Welby.

Don’t send Summers to the Fed

Quickly: can you name the only person to have served as both Fed chair and Treasury secretary? The answer is William Miller: he was Fed chair for 17 months in 1978-79, and Treasury secretary for another 17 months, in 1979-81. He was an unmitigated disaster as Fed chair, and his tenure at Treasury was undoubtedly more helpful to Ronald Reagan than it was to his boss, Jimmy Carter, in the 1980 election.

The SEC’s important case against Stevie Cohen

Stevie Cohen is one of the greatest stock-market traders of all time. Indeed, there’s a strong case to be made that he’s the greatest. Cohen is not the greatest investor — he doesn’t really go in for buy-and-hold positions which steadily accumulate enormous value over decades. He’s not even the greatest hedge-fund manager: he doesn’t go in for the big macro bets (Soros vs. the pound, Paulson vs. mortgage-backed securities) which are the stuff of legend. Instead, he’s a trader, and while normal people pretty much understand what someone like Warren Buffett does, or what someone like John Paulson does, it’s much harder to understand what a trader does, or what differentiates a good trader from a bad trader.

from Shane Ferro:

HSAs: When your health insurance becomes a retirement account

A few weeks ago, we received an email from a reader who had some questions about his health savings account. The email raised two interesting questions: Are these tax-favored insurance products becoming retirement accounts, and, to quote the email, “does anybody regulate these clowns”?

Why Paulson’s talking

The ostensible job of a hedge fund manager is to deliver alpha, in the words of today’s conference, just like the ostensible job of a legislator is to govern. But just as the real job of a legislator it to get re-elected, the real job of a hedge fund manager is to raise money — to maximize the amount of funds under management.

The silly trial of Fabrice Tourre

There’s a huge amount of legal firepower on display in lower Manhattan right now, all centered on a University of Chicago grad student named Fabrice Tourre. Arrayed against him, in this civil case, is the might of the SEC, which has tapped the head of its trial unit, Matthew Martens, to take a lead role. Tourre’s own lawyers, who have been representing him for the past three years, include none other than Sean Coffey.

Art, venture capital, and down-round phobia

Ben Horowitz has a great guide to the dreaded “down round” today — that unloved point in the evolution of a venture-backed technology company when it’s forced to raise money at a lower valuation than it received in previous rounds. Certainly, such things shouldn’t be unexpected. As he explains:

How do you restructure a contingent liability?

Lee Buchheit and Mitu Gulati have another great paper out on the subject of how on earth a sovereign is meant to restructure its contingent liabilities.