Opinion

Felix Salmon

Bureaucratic fantasy of the day

Felix Salmon
Dec 30, 2009 21:47 UTC

Emanuel Derman wins the day with this:

I had a fantasy in which the Fed and the TSA (Transportation Security Administration) switched roles.

If a bank failed at 9 a.m. one morning and shut its doors, the TSA would announce that all banks henceforth begin their business day at 10 a.m.

And, if a terrorist managed to get on board a plane between Stockholm and Washington, the Fed would increase the number of flights between the cities.

Dow 10,000 in rhyme

Felix Salmon
Oct 16, 2009 20:56 UTC

Bill Radke is some kind of genius. Whose bright idea was it that news should be delivered in prose, anyway? This poetry thing is seriously disruptive technology.

Marketplace Minute 10/16/09 from Marketplace on Vimeo.

COMMENT

MediaCurves.com conducted a study among 385 viewers of a news clip featuring the Dow Jones Industrial topping 10,000. Results showed that more than half of viewers (57%) reported that the national economy is improving. Despite reports of the improved economic conditions, the majority of viewers (68%) who indicated that the economy was improving also stated that they do not plan to increase their spending. In addition, 42% of the viewers reported that they are currently searching for a job.
More in depth results can be seen at:
http://www.mediacurves.com/Culture/J7600 -USEconomy/Index.cfm
Thanks,
Ben

How securitization works

Felix Salmon
Oct 15, 2009 15:21 UTC

It seems so obvious: of course John Bird and John Fortune should simply appear directly on FT.com. Go watch their latest George Parr interview, it’s fantastic:

GP: You can’t have it both ways. Everybody says that banks have got to be boring. Well, you’ve got to have an incentive to be boring.

There’s also a wonderful explanation of how securitzation works, at about 5:30.

GP: We thought we’d found a way where even if house prices didn’t go on rising forever, we wouldn’t have to worry about it.

Q: This is securitization.

GP: Securitization. You see, the problem about lending money who don’t have a glimmer of a chance of paying it back is that there’s a risk.

Q: That they won’t be able to pay it back?

GP: That’s not a risk, that’s a cast-iron certainty. No, no, the risk is that in some very complicated way the bank will lose money. Now what happens with securitization? You see before securitization, we could see the risk. It was there. We had it. And then, after securitization, what that did was, whooooo. The risk was sort of out there. Somewhere. Nobody knew. Then we looked back, and my god, it was still there after all!

Clever, that.

COMMENT

Structured Products Guy:

Of course we cannot call those NINJ subprime loans innocent. They are perpetrated by a different gang of bastards in the field.

If you ask me to agree that there are things worse than securitization in the whole mess, yes I agree. The subprime stuff is the original sin. Securitization aggregates and multiplies that. There is nothing fundamentally wrong with securitization. It is how it was done by WSM gang – using CDO slice and dice, using fraudulent ratings, using CDS trading to cover up the risks and leverage up the profits. I maintain that the combined practice is criminal, prospectus fine prints notwithstanding. Yet no one has been charged. Could this be the perfect crime of the past 4 centuries?

Posted by The Real Deal | Report as abusive

Everything is OK

Felix Salmon
Oct 2, 2009 19:45 UTC

Via Paul comes this montage of highlights from the people who brought you the Everything is OK series. What makes it especially fabulous for me is the fact that a  large chunk of it takes place right outside Reuters HQ in Canary Wharf. Obviously, you shouldn’t watch it. Do your job instead. Or go shopping. One or the other.

COMMENT

Very interesting few words from you.
Lucky to have this freind.
Grand boost to us and to Reuters team.
I expect a big inputs on many lively subjects.
Thanks to Reuters and to with its writers,autors and comments writers.

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