Felix Salmon

The truth about Blackstone and Codere

I’ve always felt that the Daily Show should do more financial stuff, and there’s no doubt that Wednesday’s piece on Blackstone was funny. But it was also extremely credulous about a single Bloomberg article from October.

When the cost of sovereign default plunges

CMA is out with its quarterly Global Sovereign Debt Credit Risk Report, which includes this league table:

Synthetics rise from the dead

Remember synthetic CDOs, the monsters of the financial crisis? Well, according to Mary Childs, they’re “making a comeback”:

Hero of the day, CPDO edition

I’d never heard of Australian federal judge Jayne Jagot before today, but she’s my new favorite jurist, thanks to her decision in a recent court case which was brought against ABN Amro and Standard & Poors.

The HP capital-structure arbitrage

Last week, Arik Hesseldahl — a tech writer who’s the first to admit he’s no expert on finance — discovered the wonderful world of credit default swaps in general, and single-name CDS on Hewlett-Packard, in particular. The cost of single-name protection on HP has been going up, and that can only mean one thing: it’s “mainly a barometer of the state of anxiety over its finances and its balance sheet”, he wrote.

The dangerous Gaussian copula function

I’m not sure which is more flattering: someone getting the Gaussian copula function tattooed across his arm, or Donald MacKenzie titling his latest paper after my Wired story on that function.

Could Spain’s bank bailout trigger its CDS?

Matt Levine has an excellent post on the latest storm in a CDS teacup, which has been prompted by Europe’s bailout of Spanish banks. If you feel any need to follow this kind of thing at all, here’s basically what you need to know.

Why banks shouldn’t play in CDS markets

There are a few different ways to look at the seemingly-unstoppable rise of the amount of “excess deposits” that JP Morgan ended up handing to its Chief Investment Office, rather than lending out to individuals and businesses needing loans. Maybe big corporations are flocking to deposit their billions at Chase because they know it’s too big to fail. Maybe Chase just can’t find anybody who both wants to borrow money and is likely to pay it back. Maybe — and more likely — Jamie Dimon funneled increasing sums to the CIO just because the CIO could generate a higher internal rate of return than his plain-vanilla lenders could.

How Bruno Iksil lost $2 billion

In February 2009, Deutsche Bank announced that its Credit Trading desk had managed to lose €3.4 billion in the fourth quarter of 2008, with €1 billion of those losses directly attributable to the bank’s prop desk.