Opinion

Felix Salmon

Counterparties

Nick Rizzo
Oct 28, 2011 20:26 UTC

Rogoff: There’s an 80% chance Greece leaves the Euro in the next 10 years — Bloomberg

How Berlusconi and Draghi will determine Italy’s future — Economist

Erste’s “possibly the first bank earnings release in history to tout a complete retreat from the CDS market” — Alphaville

“Ms. Rand, Meet Singapore. Mr. Hayek, Meet Norway” — BusinessWeek

LSE regrets its involvement with Saif Al-Islam Gaddafi — Reuters

8 months of testing convinces JPMorgan that debit card fees are a bad idea — WSJ

WNYC’s The Takeaway has fired our favorite Occupy Wall Street protestor — Gawker

Lots more links where these came from at Counterparties.com

COMMENT

Just so.

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Counterparties

Nick Rizzo
Oct 26, 2011 23:03 UTC

Merkel raised the specter of European war, won a key EU rescue fund Bundestag vote — Telegraph

The big hole in the EU rescue plan: economic growth — BBC

“The Atlas of Economic Complexity” boils down to: know how to make things, stay relatively poor — WSJ Real Time Economics

Six things we’ve actually learned from three years of financial crisis — The New Yorker

“The Corporate Governance of Benedictine Abbeys” — JSTOR

The other shoe finally drops for Raj Gupta — DealBook

The SEC’s yardstick seems to be: “Who wrote the stupidest email?” — ProPublica

Ruth Madoff says she and Bernie attempted suicide — CBS News

BofA’s Moynihan: “You ought to think a little about that before you start yelling us.” Oh snap — Bloomberg

Elizabeth Warren says she “created much of the intellectual foundation” for Occupy Wall Street — The Daily Beast

And Gawker takes the high-road with a sketchy marketer looking to pay for Google-boosting links — Gawker

There are many more links (with amusing category tags) at Counterparties.com

COMMENT

The Warren remarks are being taken out of context, as part of the right’s attempt to paint Warren as some kind of dangerous radical who is both embracing a “dangerous” protest movement, and making overblown claims of her own importance. In reality, of course, she’s a moderate, thoughtful, methodical policy wonk. Furthermore, it is unambiguously true that in terms of academic research on income inequality, the work she did over the last couple of decades was groundbreaking. You can pretty much round up her, Bartels, Mishel, and the Piketty-Saez team, and have the top tier of people doing research on this topic. I suppose she could’ve phrased it a little less directly, but what she said is related to what’s been on the minds of a lot of progressive activists in relation to OWS — that this topic has been important for a long time, and there’ve been policies offered to deal with it that never got traction. “We’re thrilled you’re here; now could you maybe help us actually win some elections so we can enact policies that fix the problems you’re pointing out?” (And, muttered under the breath, “Where the hell were you guys in ’10, or ’04 and ’00 for that matter?” But, oh well, it’s never too late to get engaged. Or at least, not until the GOP imposes a new poll tax, to ensure that the riff-raff don’t mess up their libertarian utopia.)

Here’s the context for the quote, courtesy of Dave Weigel at Slate, who got it from the interviewer, Sam Jacobs:

JACOBS: I’m curious: Is there something that is keeping you away from this movement? Is there a reason why you haven’t embraced it?

WARREN: Look, everybody has to follow the law. That’s the starting point. I’ve been fighting this fight for years and years now. As I see it, this is about two central points: one, this is about the lack of accountability. That Wall Street has not been held accountable for how they broke the economy. The second is a values question, a fundamental fairness around the way that markets have been distorted and families have been hurt. I’m still fighting that fight. I’m just fighting it from this angle. I’m fighting it from … I want to fight it from the floor of the United States Senate. I think that is a place to make this difference.

JACOBS: Is showing solidarity with them going to get in the way of that?

WARREN: It’s not a question of solidarity. I just don’t think that’s the right way to say it. I support what they do. I want to say this in a way that doesn’t sound puffy. I created much of the intellectual foundation for what they do. That’s the right thing. There has to be multiple ways for people to get involved and take back our country. The fight that I’m fighting now is one that is directed towards the United State Senate. That’s just how I see it.

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Counterparties

Nick Rizzo
Oct 26, 2011 04:23 UTC

Some of today’s favorite links from Counterparties.com:

The IMF is considering getting involved with the EU’s bailout investment vehicle — Reuters

Treasury may soon offer floating-rate bonds — Bloomberg

This chart will be handy in the event the supercommittee fails — Washington Post WonkBlog

Could this tweak to CEO pay have prevented the financial crisis? — The Economist

US consumer confidence is at recessionary levels, whether we’re in one or not — FT Alphaville

A very smart profile of Mitt Romney, focusing on his time at Bain — New York

And a giant Legoman has washed ashore in Florida. No word on what was being explainedBoingBoing

Counterparties

Nick Rizzo
Oct 25, 2011 00:55 UTC

Most Greek bailout money has gone to pay bondholders — The Washington Post

The EFSF could become more or less an insurance company — The New Yorker

“If you can show correlation [of greater than zero] then you can buy sovereign CDS” — IFR

Roubini: European policy makers are “hell bent to commit growth harakiri” — CNBC

Sarko to Cameron: “You have lost a good opportunity to shut up.” — The Guardian

The moral case for NGDP targeting — Interfluidity

Already lean US manufacturers could cut further — WSJ

Rhode Island: tiny state, huge debt problem — NYT

Parking passes are an alternative asset class in Connecticut’s Gold Coast — WSJ

COMMENT

I bought 1000 shares of Netflix at $300 because I thought it would continue to rise forever. Now I’m underwater. Can I have a taxpayer-funded bailout, please? If I don’t get one soon, I’ll be in serious financial trouble. You wouldn’t want me to have to declare bankruptcy over a minor error of timing, would you? That wouldn’t be fair!

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Counterparties

Nick Rizzo
Oct 21, 2011 22:42 UTC

Who’s ready for six days of EU debt bickering? — Bloomberg

German newspapers: not such big fans of a leveraged EFSF — Der Spiegel

France could definitely lose its S&P AAA rating. Welcome to the club — Bloomberg

Gordon Brown’s plan to fix the EU. Because he’s exactly who we want in a crisis — Reuters

The Fed might once again buy those mortgage-backed securities no one wants — WSJ

Physicists graph 1300 “super-connected” companies that dominate the world — NewScientist

Steven Schwarzman gives a surprisingly funny speech — Dealbook

A glorious, very very long Bess Levin headline — Dealbreaker

All these links, and many more, can be found at Counterparties.com

COMMENT

Heard on the radio today…

When asked prior to their wedding whether they would prefer a $30k wedding bash (roughly the average cost) or a $30k downpayment on a house, most brides preferred the big party. Once married, when the same brides were asked again, most wish they had taken the downpayment. This suggests a very basic disconnect in the way we are wired?

On the same show, an individual with substantial retirement savings, a fully-funded 529 plan, and a debt-free house was advised to borrow against the equity in his house “as long as the proceeds are invested in a diversified bundle of ETFs, not simply the stock market”.

I understand that rates are very low, however this advice essentially amounts to loaning yourself money (at a profit to the banking intermediary), with that simple fact buried in an investment tangle that neither the individual nor the advisor fully understands.

Is it better to have $400k in assets, wholly invested in stocks, or $500k in assets, invested 80/20 in stocks/bonds, offset by $100k of borrowing? The latter is certainly riskier — when you borrow against your home equity you risk losing your house if your cash flow wilts. Moreover, the expected return on the latter course is weaker, since low bond returns are below the present low mortgage rates. It only makes sense to borrow if you wish to bet on interest rates rising, and in that case you won’t be buying broad-market ETFs with the proceeds.

Especially ironic that the caller described himself as “highly risk-averse” and yet was advised to leverage his finances anyways.

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Counterparties

Nick Rizzo
Oct 20, 2011 23:27 UTC

Germany and France still can’t agree on how to leverage the EFSF — Reuters

The EU considers issuing a temporary ban of sovereign credit ratings — WSJ

Don’t expect a repeat of America’s six-year “productivity miracle” — Bloomberg

A new bill would throw in a visa with every expensive American home sold to a foreigner in an all-cash sale — WSJ

Wall Street posts its worst quarter since 2008 — Bloomberg

Millionaires and billionaires control nearly 40% of global wealth — WSJ The Wealth Report

The NYT paywall seems to be working — Mashable

“are we screwed” — Paul Kedrosky

 

 

COMMENT

How exactly do you ban credit ratings?

S&P: We can’t officially rate Italy anymore but let’s just say that if we did, it would rhyme with me me me shminus. *wink* * wink*

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Counterparties

Nick Rizzo
Oct 19, 2011 22:31 UTC

Debt is “like a drug” in Europe’s second-most indebted nation — Der Spiegel

The housing crisis has changed some young people’s attitudes towards homeownership — WSJ Real Time Economics

Median pay is back to ’99 levels — Reuters

Orszag: Labor’s value is shrinking and there’s not much we can do about it — Bloomberg

David Einhorn has some ideas about the price of coffee — WSJ

News Corp execs reportedly knew about the WSJ Europe circ scam for almost a year — Bloomberg

The Economist gives in to Apple’s app terms — paidContent

And Groupon will IPO next week — Reuters

These are just a few of the links available at Counterparties.com. Search the site for “Groupon” for all the best articles on that company in the last two months.

COMMENT

“It was a non-ethical practice.” Oh, such a neutral, such a detached and, shall I say it, non-threatening term this.

Non-ethical.

Sorry, Mr. Van Mol formerly of News Corp. The circulation-inflating was a scam. A lie. A calculated malfeasance.

It was UNethical. Not “non-ethical.”

And people still wonder why the Occupy people are upset?

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Counterparties

Nick Rizzo
Oct 19, 2011 00:55 UTC

Some of the best links from Counterparties.com:

The S & P downgrades twenty-four Italian firms — Reuters

Not to be outdone, Moody’s cuts Spanish sovereign ratings two notches — Reuters

Bernanke: We may use monetary policy for “financial stability.” Or maybe not — Federal Reserve

Only 1 in 7 US workers are normal weight with no chronic health problems — WSJ

Alabama scares away its migrant farmworkers, has trouble harvesting with only fat, unhealthy US citizens — AP

Goldman reports only its second-ever quarterly loss since going public — Business Wire

BofA turns a profit, thanks to asset sales and wonky accounting — Bloomberg

New York has the most super-rich people, though San Francisco also has a lot — WSJ

The brave analyst who dared to downgrade Apple — WSJ

Robots have learned how to play ping pong – yet still cannot love — Youtube

How Groupon’s auditors and underwriters got it so very wrong — Dealbook

Steve Jobs offered nine figures for Dropbox, and was turned down — Forbes

Counterparties

Nick Rizzo
Oct 17, 2011 22:41 UTC

A few of the links available on Counterparties.com:

Schauble admits that banks will take bigger losses on Greek loans — Guardian

Another German admits the obvious: the EU’s crisis will last into next year — Bloomberg

Citi’s accounting adjustment hides some “truly terrible trading figures” — FT Alphaville

Wells Fargo revenue is down, earnings are up, amidst an i-banking “bust” — Dealbook

CalPERS has lost $78 million on vineyard investments — Sacramento Bee

Enron’s former president is a billionaire — WSJ Deal Journal

America’s biggest growth industry: declinism — Reuters

Apple sold 4 million iPhone 4Ss in three days, the highest sales for a phone everAppleInsider

Obama will make anti-Wall Street anger a “central tenet” of his campaign — The Washington Post

Would you like to see a video of Herman Cain singing John Lennon’s “Imagine” with lyrics about pizza? Of course you would — The Daily Beast

COMMENT

“Tff, china is set to crash in the 1-2 year period.”

Yeah, strong signs of that.

Still, they have FOUR TIMES THE POPULATION of the US. They cannot help but pass the US in GDP some time in the near future. Our personal productivity would need to be 4x theirs for that not to happen, and that simply isn’t a sustainable margin. Not even for a “dominant player” like the US.

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Counterparties

Nick Rizzo
Oct 14, 2011 22:23 UTC

A few links from Counterparties.com:

Greece’s bondholders are preparing for some pain — Bloomberg

The S&P cut Spain’s credit rating — Reuters

Credit Suisse will reportedly close its commercial-mortgage-backed securities desk — WSJ

The US labor market is becoming less dynamic — FT Alphaville

America might not enter a recession, because the economy’s already so weak — Washington Post

State and local pension shortfalls total $4.4 trillion — State Budget Solutions

Pepsico has dreams of becoming a “global dairy powerhouse” — WSJ

Spotify already has more than 250,000 US users – Reuters

COMMENT

“America might not enter a recession, because the economy’s already so weak”

Reminds me of the lyrics, “Freedom’s just another word for nothing left to lose…”. There is some truth to that.

Another perspective to consider: True wealth lies in a frugal lifestyle. If you habitually spend a lot of money, then you need to MAKE a lot of money to balance the budget. That is a chancy proposition, even at the best of times. But if you live cheaply, saving/investing the rest, then you are far less likely to come up short.

Would be interested to see Felix’ perspective on Herman Cain’s 9-9-9 tax plan. Supposedly that would replace the personal income tax, corporate income tax, and FICA tax? (Do the numbers actually work for that?)

This would definitely be less progressive than our current system, since lower-income families are effectively exempt from the federal income tax. Yet they still pay 7.65% FICA tax — so this would add roughly 10% to their tax burden. Might be ways to ameliorate that impact?

I’ve seen suggestions that it would create a disincentive for businesses hiring, since the 9% corporate tax would be assessed on labor costs as well as profits, however that would more or less replace the existing FICA tax. Not much change there? Moreover, the exemption for capital expenditures would presumably be limited to goods purchased from American companies or subsidiaries (thus ensuring that the tax is collected from somebody). That would go a long way towards putting American business on a more even footing with imports.

The effect on the ultra-wealthy would be minimal. Buffett’s tax bill would actually rise. I’m sure he’s not alone in that.

Truly, the primary selling point for this plan (or something similar) is that it would dramatically expand the tax base and thus reduce the marginal tax rates required to raise the same revenue.

* A national sales tax tags imports and domestically produced goods equally. No more advantage to off-shoring production and profits.

* A 9% corporate tax rate would be far less of a deterrent to repatriating foreign profits than the present 35% corporate tax rate. I suspect most companies would happily bring the profits home at even a 15% rate. The money is more useful in the US than when it is stuck overseas.

* Eliminating the morass of deductions, credits, exemptions, and special rules that presently confuse the income tax system would be a huge accounting savings for individuals and corporations alike. You earn money, you pay 9%. And yes, I would lose the deductions I take for mortgage interest, charitable deductions, and state taxes. But at a 9% marginal rate, I’ll end up paying roughly the same amount that I do today and with MUCH less bookkeeping.

Would be interested to hear criticisms, hear ways that this might be improved without a dramatic increase in the marginal tax rates at any level of the system. My sense is that a 15% tax doesn’t much affect behavior, but a 35% tax rate obviously does.

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Counterparties

Nick Rizzo
Oct 13, 2011 22:54 UTC

More than two-thirds of big EU banks would fail revised stress tests — Bloomberg

The Euro voting process explained — The Reformed Broker

Loan sharking in China amounts to 10% of its GDP — NYT

What high-yield bond spreads are telling us — Credit Writedowns

Another explanation for late-day market volatility: FT articles — FT Alphaville

Dimon: “All things considered” our Q3 earnings were “reasonable” — Reuters

Let’s revisit the perverse accounting where banks record bond losses as gains — Bloomberg

Economists predict US median incomes won’t bounce back until 2021 — WSJ

Raj will be spending up to the next eleven years in the pokey — Dealbook

Have start-ups seen funding dry up? — TechCrunch

This is a small sample of the full smorgasbord of links available on Countparties.com

Counterparties

Nick Rizzo
Oct 13, 2011 00:13 UTC

Just a few of our favorite story links today on Counterparties.com

People don’t really trust banks right now — Pro Publica

UK unemployment is at a 17-year high — BBC

Pennsylvania capital city Harrisburg files for Chapter 9 bankruptcy — Bloomberg

A Teach For America for startups in struggling cities — NYT You’re the Boss Blog

Economic policy as culture war – The Economist

41% of WSJ Europe’s circulation was completely bogus; the publisher has resigned — Guardian

Groupon and Zynga’s accounting crises are self-induced — Dealbook

Siri on the iPhone 4S is a “life changer” — Wired

 

Counterparties

Nick Rizzo
Oct 11, 2011 21:42 UTC

EU bank stress tests will be getting a bit more stressful — Reuters

A bond market indicator suggests a 60% chance of another recession — Bloomberg

The Super Committee has six weeks left to cut $1.2 trillion; it now meets in private — NYT

Unemployment benefits for six million looks dicey next year without a new jobs bill — CNNMoney

Only 10 people work at an institute Rick Perry says created 12,000 jobs — WSJ

Investment banks are doing badly, while some retail banks are up — Bloomberg

Nouriel Roubini’s research firm is for sale, claims 40% revenue growth in 2013 — CNBC

Are ETFs responsible for all the late-day selloffs and rallies we’ve been seeing? — Dealbook

Elizabeth Warren’s great sin: “she knew what she was talking about” — Vanity Fair

Please stop sending t-shirts to Haiti — Foreign Policy

You can find many more stories, just as good as these, at Counterparties.com

 

 

COMMENT

Great stuff! How about we add: “Romney proves that #OccupyWallStreet movement has done more in 3 weeks to change the “Overton Window” of “acceptable” range of debate than the entire American Liberal Establishment in the past 3 years and $500m in spending”

http://economicmaverick.blogspot.com/201 1/10/thermometer-mitt-romney-offers-proo f.html

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Counterparties

Nick Rizzo
Oct 10, 2011 22:25 UTC

This is just a sample of the curation available today on Counterparties.com. Please give it a look, if you haven’t already.

The mystery of US banks’ huge second lien mortgage problem — FT Alphaville

Facing a recovery with little investment, innovation, or business growth — NYT

Paulson’s gold fund is down 16.4% in September alone — WSJ

Short-selling is at its highest rate in five years, despite the very low equity valuations — Bloomberg

Some at pension funds admit that their return assumptions might be a bit unrealistic — WSJ

The debt ceiling standoff might have had the highest policy uncertainty in the last 25 years — Modeled Behavior

Here’s Nobel economics laureate Chris Sims’s web page — Princeton

Tyler Cowen on the other Nobel laureate, NYU’s Tom Sargent — Marginal Revolution

How Tom Sargent was lured to NYU nine years ago — NYT Magazine

Groupon’s being “transparent about our lack of transparency” — Groupon Blog

Apple has sold more than one million iPhones 4S in one day — AllThingsD

“I’m the only working class person you’ll see on Sunday news… maybe ever” — NY Observer

And an Italian Cabinet member thinks market volatility could be the result of stock traders’ cocaine use — Businessweek

 

COMMENT

I guess Paulson doesn’t design “portfolios designed to fail” like he used to….

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Counterparties

Nick Rizzo
Oct 7, 2011 22:24 UTC

You can find all these stories, with witty tags and amusing pictures, on Counterparties.com

The ECB has picked a really bad time to have an existential crisis — Washington Post

Canadian job growth is surging; U.S. job growth: not so much — Business Insider

Here’s why they’re doing so well — Reuters Canada

Three simple policy steps to restore “macroeconomic resilience” — Macro Resilience

Nassim Taleb is a big believer in his own “influence as an intellectual” — Bloomberg

The leaked Volcker Rule memo — American Banker

Lehman sues Goldman over the collapse of a Virginia real estate deal — WSJ

Companies that spend a lot on lobbying outperform the S&P 500 by 11% — The Economist

British Energy Minister Chris Huhne made a “marginal” (if Machiavellian) Twitter error — BBC

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