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Economist Brad DeLong weighs in with a brilliantly clear explanation of the Geithner Plan. The most interesting part is where he compares the economics of the plan to the costs of hiring hedge fund managers on the standard 2% management fee/20% carry system. You should read the whole thing, but the first two paragraphs alone … Continue reading Brad DeLong Explains The Geithner Plan
A tidbit from a Citigroup report, courtesy of Time, with a hat tip to Matthew Yglesias. Here’s a look at some different time periods and the number of days the S&P 500 has moved up or down more than 5% during the trading day: 1950-2000: 27 days 2000-2006: 7 days Jan. 1-Sept. 30, 2008: 20 … Continue reading Think the Stock Market Has Gotten More Volatile? You’re Right!
Looks like SNL has its fastball back. The two biggest beneficiaries of this crazy year have got to be Barack Obama and SNL. In this sketch (which I found courtesy of Auren Hoffman), SNL puts the Democrats and American people on blast for trying to shirk responsibility for the crisis. It lampoons Pelosi and Frank, … Continue reading Best Mortgage Crisis Video Ever (Thanks SNL)
Megan McArdle has a great post up with boatload of zingers. Here’s the best one: To those who are averse to bailing out Wall Street rather than Main Street, it’s worth noting that Main Street will suffer worse than Wall Street. Because of the way that their compensation is structured, Wall Street bankers tend to … Continue reading Quote of the Day: Wall Street bankers tend to do things like buy their houses for cash
As I predicted last week, Goldman Sachs turned to Warren Buffett for additional liquidity. While it’s not an outright purchase, Buffett did agree to invest $5 billion in cash…considering Goldman has a market cap of around $50 billion, that’s a pretty significant stake. And Warren got a sweet deal too…perpetual preferred shares that pay a … Continue reading BRK + GS: You heard it here first
Alex asks (via comment) So, what solution would you favor? Admittedly I haven’t searched much, but it seems like I’ve yet to find a well thought out, pragmatic solution. So far I’ve seen “It sucks, but may be the only option” and “no bailouts for billionaires”. An excellent question. In my opinion, the best solution … Continue reading My Solution To The Credit Crunch
I’ve been fielding questions from various friends and relatives about the credit crunch. I guess they see me as some kind of business expert! At any rate, I’ve been casting about for a good plain-English explanation of the current crisis. Well, I’ve found it:Here’s the problem with having lots and lots of debt and no … Continue reading The best simple, plain-English explanation of the credit crunch
Goldman Sachs is now trading for less than book value, and has enough liquidity to take itself private…and at least a few folks inside the company are angry enough to contemplate the unthinkable.
From the department of unintended consequences…Yahoo’s recent launch of del.icio.us 2.0 expanded the notes field for bookmarks to 1,000 characters. As a result, my del.icio.us feed now includes a fair number of mini-essays. Here’s the latest, summarizing Taleb’s latest essay on risk and today’s credit crunch: “Great essay by Taleb on the current crisis, and … Continue reading Taleb on Risk (in less than 1,000 characters)
As the financial crisis continues to spin, the unthinkable may happen. Goldman Sachs, the proudest of the investment banks, may be forced to sell. As this post on the Freakonomics blog notes, this isn’t because Goldman is poorly run, or is a bad business. It’s simply that it’s nearly impossible for anyone to obtain short … Continue reading BRK + GS?