Lunchtime Links 11-8

Nov 8, 2009 17:23 UTC

The economics of trust (Harford, Forbes) A great article. I’ve argued that markets need rules because without them the division of labor breaks down.

Big bank break up idea gains ground in Congress (Drawbaugh, Reuters) Senator Sanders just introduced a bill to do that. As noted earlier, Kanjorski is working on amendment to do same.

Treasury to block sale of Fannie Mae tax credits to Goldman (Reuters)

Hedge fund giant surfaces in insider trading probe (Pulliam, WSJ) Steve Cohen’s SAC Capital is now under the microscope.

Einhorn: first let’s kill all CDS (NakedCapitalsim) The post refers to comments from Einhorn’s speech at VIC, but expands on it nicely, arguing among other things, that these financial weapons of mass destruction probably can’t be made safe no matter how aggressively you regulate them…

Michael Jackson’s father seeks allowance from dead son’s estate (BBC) His expenses are $20k per month, but he only gets $1700 from Social Security.

Why doesn’t exercise lead to weight loss? (Reynolds, NYT)

A symbol of the resilience of all indigenous people (TED) A great video, but the best tidbit begins at the 19:00 minute mark…

Jim Chanos, famed short-seller, not a fan of munis (Sullivan, Barron’s)

COMMENT

Fat bonuses result in thin people. Consolidation of smaller and community institutions result in middleweight fighters, in any playing field.

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Lunchtime Links 11-6

Nov 6, 2009 18:35 UTC

Fannie asks for another $15 billion (press release) That brings the company’s total draw on Treasury to $59.9 billion. Here’s the paragraph that scares me: “Total nonperforming loans in our guaranty book of business were $198.3 billion, compared with $171.0 billion on June 30, 2009, and $119.2 billion on December 31, 2008. The carrying value of our foreclosed properties was $7.3 billion, compared with $6.2 billion on June 30, 2009, and $6.6 billion on December 31, 2008.” Why is the value of nonperforming loans growing so much faster than foreclosures? If Fannie’s not going to foreclose, then why bother paying the mortgage?

Fannie owed $15.8 billion by Lehman (Fannie 10-q) see page 103.

With tax break, a bigger carbon footprint (Glaeser, Boston Globe) “The real problem with the [home buyer tax] credit is that it continues the long-standing federal push toward far-flung McMansions and away from dense, apartment living.” It’s not just about carbon consumption. It’s about encouraging the expansion of a footprint that our incomes can no longer support.

Goodbye to reforms of 2002 (Norris, NYT) Floyd chimes in on Sarbox.

Pre-retirees in denial on savings (CalculatedRisk) Future generations (including mine) will look back in wonder at the 20-year retirements that were typical through the 80s/90s/00s.

950th time is the charm for learner driver (Couzens, Sky News, ht Troy M) Is this multiple choice? Surely a monkey filling ovals at random would have managed the necessary 60% at some point. Nevermind that the questions can’t change all that often. A regular should figure out the right answers by a simple process of elimination…

Student stuns Iran by criticizing Ayatollah Khamenei to his face (Faramarzi, AP)

Anne Frank offends Hezbollah (Yazbeck, AFP) “Anne Frank’s diary has been censored out of a school textbook in Lebanon following a campaign by the militant group Hezbollah claiming the classic work promotes Zionism.”

Women’s college soccer? Or UFC? (ESPN) How did this girl not get red carded?

You know you’re a redneck when …. (imgur) Click to zoom in.

COMMENT

Sure, there’s some can kicking going on at Fannie, but Fannie is also selling inventory out of OREO at the same time that they’re making new foreclosures. OREO inventory is also booked at current appraised value, so if FNMA forecloses a $400,000 mortgage and appraises the house at $200,000 they charge off $200,000 and book $200,000 to OREO.

Also, in a lot of areas the courts are really backed up, so it’s taking a long time to get foreclosures through.

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Lunchtime Links 11-5

Nov 5, 2009 18:01 UTC

Fight over blog comments hits NH high court (NHPR, ht AK) Aaron Krowne is fighting the good fight for bloggers everywhere.

FHA delays release of financial audit (ElBoghdady, WaPo) The dog ate my homework…

Wells Fargo defers reckoning on troubled mortgage balances (Eckblad, DJ) Wells’ book of option ARMs threatens to blow up in the next few years as the loans recast, forcing borrowers to start paying down principal, not just making a minimum payment as they might on a credit card. Turning them into 6-10 year interst only loans pushes back the pain for the borrower…extend and pretend. The example used in the article notes that as part of the modification, this borrower gets a $100k reduction in principal owed. That’s not nothing. Writing down principal reduces the borrowers leverage, and it means the bank is taking a loss on part of the loan balance. Call it a silver lining.

Mirabile Dictu! Goldman lost money one day last quarter (Yves Smith) In its quarterly filing with regulators, Goldman published a “frequency distribution” for daily profits. That’s a fancy way of describing the average amount of money it made each day last quarter. Out of 65 trading days, only once did it lose money. And a pittance at that. (Alphaville published the chart yesterday.)

FDIC reduces risk-weight to 0% on TLGP-backed debt (FDIC) Yuck, that sounds complicated. Say you’re a bank, and you hold GMAC bonds that were sold with an FDIC guarantee. Normally when you have a bond on your balance sheet (an asset) you have to carry capital against it just in case the bond’s value declines. But for regulatory capital purposes, FDIC-backed debt is now the functional equivalent of Treasuries. “Risk-free” as it were. This will allow banks to hold more TLGP-backed debt on their balance sheet.

Goldman benefits from debt gold mine (Eavis, WSJ) Speaking of cheap funding, the average interest rate on Goldman’s long-term debt is down to 0.92% from 3.53% a year ago. Eavis notes this is due to clever hedging. Pretty easy to make money as a bank when your cost of funds is close to zero. Helps to have the implicit backing of the government.

Bald bears baffle zookeepers (Daily Mail) This must be what Cerberus looks like…with two more heads I guess.

Dutch smoke less pot than other Europeans (The Australian) Who’d a thunk it.

Squirrel deterrent (photobucket)

African Gothic…

africa1

Lunchtime Links 11-4

Nov 4, 2009 18:19 UTC

BofA’s counsel had no legal authority in Merrill deal (DeCambre/Wilner/Whitehouse, NY Post)

Congress agrees to keep homebuyer tax credit (NYT)

Fitch downgrades Ireland (Kennedy, Marketwatch)

Berkshire may lose AAA rating from S&P on Burlington deal (Frye, Bloomberg)

The deferred tax asset disaster (Tracy Alloway, Alphaville) A very helpful reminder from Tracy about DTAs. Banks still count these as capital (and yes, it’s included in TCE) even though, in a stressed situation, they don’t provide any cushion whatsoever to absorb losses.

In Somalia, cheap mobile calls help more young couples elope (Skeikh, Retuers) Stick with the article to the second page in order to get the gist.

Zimbabwe plane veers off runway after colliding with warthog (David Smith, BBC)

Film-makers want government money (Schweizer, Bloomberg)

The viper logo upside down is daffy duck (imgur)

Hilarious….the “action” shots in the middle are the best

COMMENT

soo…. is that chair the modern version of the machine that would vibrate a belt around your waist and shake your gut around? I thought we’d moved past the stage of thinking just because your body is moving then you must be getting excercise…

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Evening links 11-3

Nov 3, 2009 22:14 UTC

It’s Japan we should be worrying about, not America (Evans-Pritchard) There’s no pretty way to de-lever…

Buffett splits “B” shares 50:1 (Jonathan Stempel/Lilla Zuill, Reuters) This will put shares in reach of regular folks. Look for index funds to load up. Oh and by the way, this should make it easier to short Buffett too…

Santelli vs. Liesman (CNBC) Santelli has a penchant for getting worked up, but how can you blame him when he’s talking to Liesman, who seems so worried about losing access to top policy-makers, he never takes a contrary position?

Here comes the “second stimulus” (Pimm Foxx/Mark Drajen, Bloomberg) It won’t be the last. Economists of all stripes are convinced that we have to stimulate as long as unemployment is high. But none of their models account for debt, so this will all end badly…

Economists reach for new paradigm (WSJ) Speaking of not accounting for debt in their models…Good article…but no mention of Minsky? There were plenty who read him years ago and were appropriately positioned to avoid the crash…)

Cell phone users miss the obvious, like a unicycling clown (Kie Relyea, Bellingham Herald)

Kitty doing math (Reddit)

How come the monkey gets top billing? (The coolest part is just past the three minute mark)

COMMENT

“Economists reach for new paradigm”:- Rolfe, the only way to sort out this mess is a new (not-accountant-only) value system, where everybody still ends up with the same asset and liability values. An example: a liter of water might soon be worth more than an ounce of gold, or a bird in the hand…

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Morning Links 11-2

Nov 2, 2009 05:45 UTC

CIT files for bankruptcy (Wilchins/Comlay, Reuters) The $2.3 billion they got from TARP? It’s gone. We’ve known that for a while….another dagger in the heart of the we-made-money-on-TARP argument…

Senate health bill won’t reduce health costs as % of the economy (PGPF)

Can Citigroup carry its own weight? (Martin/Morgenson, NYT) “Over the past 80 years, the United States government has engineered not one, not two, not three, but at least four rescues of the institution now known as Citigroup.”

Aussie dollar channeling Yuan shows increased trading in China (Zachariah/Goodman, Bloomberg) The Aussie currency is in good shape thanks to strong demand for the country’s national resources. Look for another rate increase there today.

PA judge accepted millions in kickbacks to send juveniles to private jails (AP)

fxbrc

COMMENT

the citigroup article link doesn’t seem to be working, Rolfe.

Posted by Bob | Report as abusive

Afternoon Links 10-29

Oct 29, 2009 18:50 UTC

(Reader note: from here on out, instead of citing the publication in which a piece appears, I plan to cite the writer….where possible anyway.)

Goldman sends back some collateral to AIG (Liam Pleven) Interesting. Recall that AIG served as a slush fund through which the Fed sent money to banks that had been AIG’s counterparties. Goldman was the biggest recipient of this cash with $13 billion (though as Barry Ritholtz would be quick to point out, they got additional collateral before the government takeover). With asset prices climbing, some of the collateral has returned to AIG.

A three-way split is most logical (John Gapper) A very good column adding color to the argument that banks need to split according to their various functions: commercial banking, investment banking (and trading), asset management. Also insurance should be separated probably.

San Francisco Fed sees FHA reviving subprime (Diana Golobay, ht ML)

Motor Vehicles add 1.66% to Q3′s 3.5% growth (EconompicData) A very interesting chart…

Mutual funds getting in on TALF party (Miles Weiss) Like the PPIP program sponsored by FDIC (which never really got off the ground), TALF provides non-recourse debt to investors that want to buy toxic assets. Investors can put up a sliver of equity and take a flier on some busted assets. If it doesn’t work out, the Fed is left holding the bag. As of 9/30, the Fed had lent $43 billion under the program.

And then there were none… (NY Fed) After today’s purchase of $1.9 billion, the Fed has completed its program to buy $300 billion worth of Treasuries. Quantitative easing isn’t done, however. There’s still plenty of agency MBS and agency debt left to buy.

The $10 phone bill (Scott Woolley) Fighting to deflate your cell phone bill.

It may be BYOB as fewer firms plan holiday parties (Ian Sherr)

How basketball star blew $100 million (Shira Springer) “Bankrupted Boston Celtics player kept entourage of 70, spent wildly on cars, watches, gambling, mansions.”

COMMENT

I believe the basketball star blew $100 million, not $100 billion. Those additional zeroes would have meant he was renting the Empire State building for the last ten years, or something!

==Bob D.

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Afternoon Links 10-28

Oct 28, 2009 20:00 UTC

Apollo shares plunge on government inquiry (Bloomberg) The for-profit education industry is shady in the extreme. Fully 86% of Apollo’s revenue comes from student loans financed by the government. It’s a great scam. Find a warm body that qualifies for federal student aid, and then sell ‘em as much education as they’re willing to borrow against. And when the government offers to increase aid, companies like Apollo (and private universities) just raise their prices, forcing students to take on more debt for the same education. In the end, its taxpayers that take the hit when student loans default…

Stressful jobs that pay badly (CNN, ht Rej) #2 has a funny anecdote.

Goldman’s lies of omission (Janet Tavikoli, ht Jesse)

Couple alive after car pins them to bed for almost an hour (CNN)

Extension of homebuyer tax credit not a done deal (CR)

A drop in the wrong bucket (David Leonhardt) Pandering to seniors.

Cell size and scale (Utah.edu) Ultracool. Zoom in slowly by scrolling to the right.

Schwarzenegger vetoes bill, sends message to Cali legislature (imgur)

Jaws (Telegraph) A larger predatory fish?? Wow.

COMMENT

I had so much fun writing that comment about Janet Tavakoli, that I turned it into a post on my blog. I added pictures and even some video. I call it…

Goldman Sachs – liar, liar pants on fire!

Enjoy!

Afternoon links 10-27

Oct 27, 2009 20:21 UTC

New York Fed’s Secret Choice to pay for swaps hits taxpayers (Bloomberg) Remember the $13 billion that Goldman got via AIG after the government takeover? Turns out the NY Fed instructed AIG to pay out 100¢ on the dollar. Just another fact to keep in mind next time someone says the banks are “earning” their way through this crisis.

Senate Dems reach deal on homebuyer credit (Reuters) Realtors everywhere rejoice! Details coming later, but it appears the credit will shrink slightly and the expiration date will be pushed out to the middle of next year.

The tax breaks that ate America (Salon) The first-time homebuyer credit is just a drop in the bucket.

Death of the soul of capitalism (Paul Farrell, ht Winks) Farrell is always an interesting read. Like Ambrose Evans-Pritchard, but more shrill.

Tax refugees staging escape from NY (NY Post)

Case-Shiller shows fourth monthly increase (CR) But what will prices do when government support — both lending and low rates — go away? I don’t know, maybe they never will, see again link #2…

For runaways, sex buys survival (NYT)

Decorating…

ditto

COMMENT

Short but insightful information about AIG. Not many columnists and bloggers are stating this fact. Thanks for a different perspective.

Morning Links 10-26

Oct 26, 2009 14:12 UTC

Detroit house auction flops (Reuters) “Despite a minimum bid of $500, less than a fifth of the Detroit land was sold after four days.” The article notes that “total vacant land in Detroit now occupies an area almost the size of Boston.”

Underpricing risk: Rescuers fear Yuppie 911 (MSNBC) A parable for risk management in the modern age. Since the government has proved itself adept at rescues, folks across the investing spectrum end up in sticky situations they were never prepared to handle on their own. What happens when so many people end up in the same situation that the government’s rescue facilities are overwhelmed? What happens when contingent liabilities break the federal government’s balance sheet?

Rally fueled by cheap money brings sense of foreboding (FT) One of Gillian Tett’s correspondents thinks October ’08 may just have been a dress rehearsal for the crash to come…

The “benefit” of Somali pirates (channel4) Somali’s get to catch their own fish…

Great Depression-esque bad debt at US banks (Alphaville) A great post from Tracy Alloway, using Moody’s data.

Reckless strategies doomed WaMu (Seattle Times, ht CR) Part 1 of 2.

Geithner wides bills-to-bonds gap with new sales (Bloomberg) Smart. The average maturity for Treasuries had reached just 49 months recently as Treasury sold more short-term debt. Better to lock in low rates now to reduce rollover risk.

Installing Windows (imgur)

More U.S. children being diagnosed with Youthful Tendency Syndrome (The Onion)

Super cool…(funnier the second time through)

Lunchtime Links 10-23

Oct 23, 2009 18:59 UTC

Macklowe’s Worldwide Plaza Successor wrestles towering dilemma (Bloomberg) “The partnership [that bought Macklowe's busted property] paid $370 a square foot for Worldwide Plaza, while competitors paid $1,000 a foot or more for similar buildings at the height of the five- year U.S. property boom.” That means they can drop rents to $30-$50 per sq foot from $80-$100 that was common not long ago. That’s bad for CMBS holders and banks who own the debt on busted properties, but fantastic for folks in the real economy who suddenly have much more money to spend on things besides rent. But instead of allowing price adjustments like this to happen, policymakers scream “deflation” and institute all manner of spending schemes to prop up asset prices.

The payroll hidden in plain sight (AAO) A rare blog entry from accounting expert Jack Ciesielski.

John Meriwether is back, risk must be too (Ed Harrison) He blew up his first fund, LTCM, in the late ’90s. He blew up his second fund last year. Now he’s back for thirds. No doubt he’ll find some investors stupid enough to back him…

Man staged nearly 100 car crashes in cash scam (Reuters) Interesting gig.

Religion flowchart (holytaco)

Woman flashes $27k at bar, gets robbed (AP)

$13 an hour? 500 sign up, 1 wins job (NYT)

Cirque du Soleil trampoline practice (We get the point after a minute, but it’s pretty cool)

Afternoon links 10-22

Oct 22, 2009 19:53 UTC

CFPA clears house panel (Bloomberg) A step in the right direction.

More aid for Pakistan (Newsweek) But is the money doing any good?

Why mortgages aren’t modified (Ed Harrison)

How the current economy has affected dentists, vasectomies, guns and shark attacks (CoinbyCoin) A good video, though be careful re: his chart of “leverage,” which looks to me like excess reserves in the banking system. A better measure of the economy’s leverage is debt to gdp.

The problem is not TBTF, it’s TDTR (NakedCapitalism)

Court deals blow to owner of huge apartment complex (NYT)

Pay curbs are not the answer (Reuters) Ken Feinberg’s pay restrictions feel awfully good, but they aren’t enough (not least because only TARP assistance counts as extraordinary. What about TLGP!) What we need is a wholesale redesign of the financial sector. Probably impossible, unless the biggest banks actually fail and have to be rebuilt from the ground up.

Dick Bove says WFC a “standout” bank, downgrades to “sell” hours later (ZeroHedge) See the video for yourself.

Scary good Tom Cruise impression (YouTube)

Job posting: Charmin ambassador (Charmin)

Anvil shooting (for the guys…)

COMMENT

Being that Israel’s politicians want to change the rules of war so that they can order the killing of civilians, perhaps we could ask other alleged criminals what changes they would like in the criminal code.

Posted by colin dale | Report as abusive

Evening Links 10-20

Oct 20, 2009 22:48 UTC

IRS examining 100,000+ suspicious claims for homebuyer credit (WSJ) It’s a credit, which means folks without tax liability can get cash back from the IRS. Also, “taxpayers don’t have to file their claims as part of a real-estate transaction, and can instead” file/amend their 1040 to claim the credit, making it easier to commit fraued.

Congress waters down ratings agency legislation (Reuters) Ratings will continue to be referenced in federal laws, and a provision was scrapped that would have–for one year—prevented new employees from rating the debt of companies for which they’ve previously worked. But what did you expect?

The secret Paulson-Goldman meeting (Felix) Another excerpt from ARS’s book.

Massive furloughs in Chicago (CBS2)

Wall Street 40% bonus rise feeds spending on $43 steaks, co-ops (Bloomberg) Fed/Treasury policies mean we’re doing just fine in NYC, thank you very much……or are we?…..

NYC wages fall hardest of anywhere in the country (BLS, ht Business Insider) But these are average wages, not median wages. The fall off is due to a steep drop in bonuses in financial services.

Why the dollar is falling (Economist) A helpful summary.

How big is Antarctica? (twitpic)

Close call (Youtube)

Funny resignation e-mail (dump.com)

Anti-theft lunch bag (skforlee, ht JP)

“Are you a Predator that’s been fatally wounded? There’s an app for that” (imgur, ht Reddit)

Hi!

9px5t

Lunchtime Links 10-19

Oct 19, 2009 14:38 UTC

Stopping by the Value Investor Congress today….still getting over the Bears’ ATROCIOUS loss last night….

MUST READ: How Moody’s sold its ratings — and sold out investors (McClatchy) Great stuff from Kevin Hall.

Sorry, no jobs. This is California (Reuters) 12.2% unemployment rate in the Golden State.

With privilege comes…? (PIMCO) Downward pressure on the dollar to continue, but will it be a rout?

FDIC failed to limit commercial real estate loans (Bloomberg) Regulators had plenty of power to corral the bubble. They just didn’t use it.

Goldman, can you spare a dime (Frank Rich) Obama is modeling himself on the wrong Roosevelt. We need Teddy, not Franklin…

Everything you know about China is wrong (Newsweek) I think economic power is shifting from West to East. But it’s going to be a very bumpy ride. China’s got LOTS of its own problems. And the author doesn’t even mention they may be inflating a dangerous credit bubble…

Man tries to euthanize dog, dog’s owner tries to euthanize man (postandcourier.com)

Human jumbo-tron…

COMMENT

Rolfe, a military weather satellite was launched from Vandenberg, we observed a pulsing green halogen like object at 8.55pm on Sunday moving from 45 degrees looking south above the Southern Cross Pointer Alpha Centauri and horison which also had a little pulsing dot in the middle and ended up in Scorpio’s head, traveling northwest. Apparently the rockets fell away over Europe, but what we were seeing was actually ‘rocket exercises’. Quite a few of my friends also saw it in different locations, so it could not have been Hindu sky rockets. I looked at the trajectory on my portable globe of the Earth and the ‘exercises’ part sounds like BS. Maybe NASA has an answer or Felix can research it for us ?

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Lunchtime Links 10-17

Oct 17, 2009 18:54 UTC

Quote of the day. Terry Teachout, the WSJ’s theater critic, commenting on John Stamos’ performance in the Broadway revival of Bye Bye Birdie: “Mr. Stamos couldn’t carry a tune in a bucket with the lid welded on.”

Harrods moves into flourishing gold market (Reuters) At 14% over spot, you’re probably better off working with a reputable dealer.

Credit Suisse still ♥ gold (Alphaville) Paul Murphy with a really helpful summary laying out the bull case for gold. Be sure to read the caveat at the end.

Housing market getting worse Warren says (Tech Ticker) Part 2 of Aaron’s 3-part interview with Warren. BTW, Robert Shiller — creator of the Case-Shiller index — was on a panel with Warren at the Buttonwood conference. He repeated his forecast that recent stability seen in house prices isn’t going to last. He sees the trajectory turning back down.

Six charged in vast insider trading ring (WSJ) The first time a wiretap was used in an insider-trading investigation. Prosectors say they’ll use wiretaps more often to fight financial crimes on Wall St.

FHA (and Quicken) dutifully following subprime playbook (Adam Sharp) No income verification, no appraisal, low down payments, and a teaser rate!

Ezra Klein on the balloon boy hoax (WaPo) “Whether or not the drama was staged, it certainly served as a perfect metaphor for cable news: America spent hours riveted by a powerful and gripping story that turned out to be totally meaningless, and will have no significant impact on anybody’s lives going forward.” I linked to the story too…not proud of that…

The Collider, The Particle, and a theory about fate (NYT) “A pair of otherwise distinguished physicists have suggested that the hypothesized Higgs boson, which physicists hope to produce with the collider, might be so abhorrent to nature that its creation would ripple backward through time and stop the collider before it could make one, like a time traveler who goes back in time to kill his grandfather.”

VIDEO: Baby in stroller run over by train survives unhurt (Youtube)

For hippies (and A & C fans)….

COMMENT

Professor W. Pauli, (Nobel laureate) had many years of conversations with Dr. Carl Jung, and
their conclusions relate to the idea that “acausal connections” exist in the space-time continuum.
Jung called these connections a “synchronicity principle.”
The letters between them were published under title, “atom and archetype” 1932-1958….
My blog shown offers an example, with appropriate comments from senior researchers at
Princeton University, School of Applied Science….

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