Felix Salmon

The Satoshi Paradox

By Felix Salmon
March 7, 2014

Newsweek wanted a scoop for its relaunch cover story, and boy did it deliver: it uncovered the identity of Satoshi Nakamoto, the inventor of bitcoin. Who then promptly came out and denied everything. Which means that one of the two is wrong: either Nakamoto is lying through his teeth, or Newsweek has made what is probably the biggest and most embarrassing blunder in its 81-year history.

The unintended consequences of cheaper remittances

By Felix Salmon
March 5, 2014

Once upon a time, remittances, especially to Mexico, were the next big thing. In 2002, for instance, Bank of America bought 24.9% of one of Mexico’s big three banks, Serfín, mainly for the remittance business:

Why Puerto Rico’s bonds are moving to New York

By Felix Salmon
March 3, 2014

Puerto Rico, which is already junk-rated and which is facing yet another downgrade to its credit rating, is in no position to call any shots when it comes to raising new debt. If it wants to borrow new money — and it looks like it wants to borrow a hefty $3.5 billion in the next few weeks — then it’s going to have to make whatever concessions its lenders want. That means paying a very hefty interest rate in the 10% range, of course. But it also means changing the governing law of the bonds, from Puerto Rico to New York.

Incompetent Banamex

By Felix Salmon
February 28, 2014

A couple of weeks ago, I was at a lunch discussion of immigration policy, of all things, in which I defended Citigroup’s decision to move various risk-management operations from New York to Mexico. I was talking to a woman who was complaining about the move and about the amount of time that the Mexico office would sometimes take before arriving at a decision. But my view was that moving such operations to Mexico was probably a good thing, on net. After all, Citi’s Mexican bank — Banamex — is one of the most efficient banks in the Americas, and makes a lot of money while taking very little in the way of risk. And on the other side of the trade, the New York office was precisely the place where Citi’s risk management was worst. After all, it was New York which missed the entire subprime problem, along with many other incidents in which Citi managed to blow itself up.

Can bitcoin capitalize on the death of Mt Gox?

By Felix Salmon
February 26, 2014

In November, I said that I was waiting for bitcoin to get boring – and it certainly isn’t boring yet. The death of Mt Gox has created headlines saying things like “Bitcoin future in doubt” and “Mt. Gox Meltdown Spells Doom for Bitcoin”; those, in turn, have sparked their own backlash of people saying that in fact this development is one of the best things that could have happened to the cryptocurrency.

The bank tax rises from the dead

By Felix Salmon
February 26, 2014

Back in January 2010, Barack Obama — flanked by Tim Geithner, Larry Summers, and Peter Orszag — unveiled a new tax on big banks, or a “financial crisis responsibility fee”, as he liked to call it. Of course, this being Washington, the initiative never got off the ground, and was largely forgotten — until now:

It’s time for Bill Gross to retire

By Felix Salmon
February 25, 2014

A word of entirely unnecessary advice for anybody on the Pimco trading floor Tuesday morning: do not look Bill Gross in the eye. Or talk. Or do anything at all to make yourself stand out or be noticed. Because Gross, who for most of his career has been the subject of some of the most glowing press imaginable, has just been brought down by a downright brutal article on the front page of the WSJ. Neither Gross nor Pimco will ever be seen the same way again, and indeed, if Gross cares at all about the long-term fortunes of the company he built, the best thing he can do right now is simply retire.

Charts of the day, female risk-aversion edition

By Felix Salmon
February 24, 2014

Catha Mullen of Personal Capital, an online wealth-management company, has an intriguing post about what she calls “gender bias in investing”. Looking at the Personal Capital user base, she found that “women are on average 7% more risk-averse than men”, and that “the effect of gender on risk tolerance is greater than that of any other variable” — bigger even than net worth.

Felix Salmon smackdown watch, pensions edition

By Felix Salmon
February 23, 2014

Many thanks to John Arnold for responding to my post about how he (and his foundation) should approach pension reform. We agree on many things, it turns out; but there’s one big area where we disagree, which is encapsulated most cleanly in the question of what exactly is going on in San Jose mayor Chuck Reed’s Pension Reform Act. I characterized Reed’s ballot initiative as “allowing governments to default on their pension obligations”, and “an attempt to renege on governments’ existing pension obligations”. Arnold says I’m entirely wrong about that: