Lunchtime Links 6-29
(Send links, pics, vids to optionarmageddon at gmail)
China’s banks are an accident waiting to happen (Telegraph) Bank balance sheets are much messier in China compared to the U.S. For the moment, though, China is still at high tide. Those swimming naked aren’t being exposed.
No way out: Treasury and the price of TARP warrants (Baseline Scenario) In a wonkish post, Simon Johnson notes that Treasury has come up with yet another scheme to gift taxpayer money to banks. As part of TARP, taxpayers got warrants in order to participate in the upside if banks recovered. They have, for the moment, and the banks now want to exit TARP. To do so, they have to buy back the warrants. But they don’t want to pay fair value. Johnson argues that Treasury has come up with a scheme to let them underpay. To be sure, regulators’ goal was never to make money for taxpayers. It’s to recapitalize the banks in a way that protects existing management and creditors. See, for example, the collateral payments that went to AIG’s counterparties.
Pillow fights at the Four Seasons (NYT) Owners of Four Seasons franchises are in a bind: they need to cut expenses but have no control over the checkbook. Often the only choice is to walk away…
Sheila Bair cancels house listing after cutting price (WSJ) The FDIC Chairwoman is waiting for the market to improve.
Paper avalanche buries plan to stem foreclosures (NYT) Loan modifications are increasingly difficult to complete. The question this piece doesn’t discuss is whether some banks are deliberately complicating the process. Since Bernanke/Geithner have committed themselves to the reflation solution, banks would appear to have an incentive to delay the day of reckoning as long as possible.
Obama is choosing to be weak (FT) “The greatest waste of talent in all this, however, is that of Mr Obama himself. Congress offers change without change – a green economy built on cheap coal and petrol; a healthcare transformation that asks nobody to pay more taxes or behave any differently – because that is what voters want. Is it too much to ask that Mr Obama should tell voters the truth? I think he could do it. He has everything it takes to be a strong president. He is choosing to be a weak one.”
Priced to Sell: Is Free the Future? (New Yorker) A book review in which author Malcolm Gladwell questions the conventional wisdom that “information wants to be free.” He doesn’t go far enough. Yes, there is lots of information available for free, but if you want someone to organize it in a fashion that makes it intelligible, you need to pay them.
Building cantilevered structures with pennies, etc. (fincher.org) Ultra cool. Scan through the 26 pages of samples and be amazed.