Felix Salmon

How do you restructure a contingent liability?

July 12, 2013

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.

Information wants to be expensive

July 12, 2013

What a difference a decade makes. In 2003, when the SEC announced its big settlement on Wall Street research, everybody greeted with joy the way in which it provided more than $400 million to fund independent research over five years. While sell-side research has its place, there are good reasons why investors want research shops to be independent, and the SEC settlement was designed to give such shops something of a running start, with guaranteed income.

When hedge funds go online

July 11, 2013

Many people are worried about the fact that the SEC has finally got around to ending the ban on “general solicitation” by hedge funds. The Reuters story alone features a host of unhappy characters: Heath Abshure, the president of the North American Securities Administrators Association; Democratic SEC commissioner Luis Aguilar; Senator Carl Levin; Barbara Roper, the investor protection director at the Consumer Federation of America. All of them have pretty much the same view: the job of the SEC is to protect consumers from being fleeced by cunning hedge funds, and now those cunning hedge funds will have more ability than ever to fleece the unsuspecting public.

History repeats itself, financial-regulation edition

July 10, 2013

Here’s a quick and dirty way of judging the quality of your country’s financial regulation: to what extent do you create and impose tougher-than-international standards?

Wage deflation charts of the day

July 9, 2013

NELP, the National Employment Law Project, has taken a detailed look at what happened to wages during the recovery — specifically, between 2009 and 2012. They looked at the annual Occupational and Employment Statistics for three years — 2007, 2009 and 2012 — and created a list of wages for 785 different occupations. They then split those occupations into five quintiles, according to income; the lowest quintile made $9.49/hr, on average, last year, while the highest quintile averaged $40.23/hr.

Universities shouldn’t be tax exempt

July 8, 2013

I have a piece up at Architect Magazine on Cooper Union, and the real (if slim) possibility that it will lose the tax break from which most of its current income flows. Cooper Union will get $18 million this year in “tax equivalency payments” stemming from its ownership of the land under the Chrysler Building — money which would normally flow to New York City in the form of property taxes, but instead gets diverted to Cooper Union for its own uses. Do the math, and that works out to about $18,200 per enrolled student — a much greater subsidy than New York City provides to any of the students being educated at its own colleges.

The optics of selling financial information

July 8, 2013

Thomson Reuters (my employer, but I’m not speaking on their behalf here) pays the University of Michigan a seven-figure sum every year. In return, it gets the distribution rights for the university’s closely-followed bi-monthly consumer confidence survey. It’s an arm’s-length commercial transaction: free enterprise in action. But it’s also controversial.

When the government outsources employment policy

July 5, 2013

America is creating jobs — but they’re not well-paid jobs, and they don’t seem to be going to the previously unemployed.

Why mobile payments will never take off

July 3, 2013

Dan Rowinski has a fantastic piece on Clinkle, the latest hot payments startup. (Its $25 million seed round came from Accel Partners, Andreessen Horowitz, Jim Breyer, Marc Benioff, Owen Van Natta, Peter Thiel, and many other members of the Silicon Valley elite.) Rowinski’s message: payments technology is the easy bit. The hard bit is changing behavior.