Lunchtime Links 3-9
Treasury getting more comfortable with principal write-downs, sort of (Nasiripour, HuffPo) Principal writedowns are the only sure-fire way to slow foreclosures, but that means hitting banks’ capital big time. Consider, for instance, that three-quarters of the ~$1 trillion of second-lien mortgages in the U.S. are on commercial bank balance sheets. Writing down principal to some level that again gives folks equity in their home would wipe out a meaningful share of these second-liens. Many banks may not have the capital to withstand that. And if folks think principal writedowns will become official policy, suddenly many will just stop paying their mortgage. These are big reasons this is so controversial inside the administration. Nasiripour has done a great job outing that controversy…
Must Read — Finance: An exposed position (FT)
Dumping “dirt bonds” (Hart, Bloomberg) No sense waiting for a housing rebound that may not come till “the early 2030s.”
PDF — The Buffett short thesis (Raj Rajagopal) A Cornell MBA student forwards this presentation of his short thesis on Berkshire Hathaway. Good piece, though it lacks a catalyst. Buffett seems to be in very good health and is as active on the media circuit as ever. For me the short thesis is wrapped up in the fact that Buffett has totally flipped his investing style, focusing on capital intensive, lower-return businesses. I hope to have more on this later this week.
China says committed to U.S. debt, wary on gold (Chiang/Wheatley, Reuters)
Video — MIT Prof on personalized solar energy (Vimeo, ht Reddit) Can a new process to split hydrogen and oxygen solve the world’s energy needs?
To kill or not to kill Shamu (Esterl, WSJ) Actually, euthanasia appears to be out of the question, even after SeaWorld’s biggest Orca was involved in perhaps his third death. Killer whales are very big business….
Betty White to do SNL (CNN) Prayers…answered.