China Datapoint of the Day

Eight of the 20 biggest public companies in the world, by market capitalization, are Chinese. The US has just seven of the top 20. To put it another way, China Mobile is worth more money than Microsoft, and China Life...

Oct 16 2007

The Bumpy Ride Ahead

Dealbreaker has a most germane chart of what happened when Pakistan banned short selling: a brief and large rally, followed by a slow and devastating collapse. Could the same thing happen with the US stock market? Absolutely, yes. Banning...

Sep 19 2008

Incentives for Inflation

Steve Waldman explains that America's net-debtor position (both at the sovereign and at the individual level) means that there's a lot of pressure towards inflation: Inflation helps debtors at the expense of creditors. In democracies where those who can...

Aug 15 2008

Citi's Desperate Straits

America, we have a problem. Citigroup is the largest bank in America, with a balance sheet of over $2 trillion -- and it's also the most dysfunctional. Since Vikram Pandit took over, Citi has lost not only $20 billion...

Nov 13 2008

A Frazzled Market

I have no idea whether or not the government is going to set up the bailout fund to end all bailout funds -- a new RTC which would essentially become one big "bad bank", precluding the need for entities...

Sep 18 2008

Getting Through the Weekend

The latest move in the fiscal and monetary response to the global financial crisis has been to flood the world with money. The Fed boosted its U.S. dollar swap line with foreign central banks by $180 billion.... The Fed...

Sep 18 2008

America's Ad Hoc Fiscal and Monetary Policy

What is this Supplementary Financing Program, under which Treasury is essentially lending money to the Fed? Does it mean that the Fed's run out of money, as Paul Murphy would have it? Does it mean, pace Tyler Cowen, that...

Sep 17 2008

Extra Credit, Wednesday Edition

Morgan Stanley and the $7 Billion Unknowable: Commercial mortgages are now mark-to-model Level 3 assets. IMF Sees World Growth Slowing, With U.S. Marked Down: But the US will avoid a recession, it seems. Lessening the Reliance on VaR: It's...

Jan 30 2008

Boom Times for Analyst Bonuses?

Spring might be arriving late in New York, but Bonus Rumor Season has started early for investment banking analysts. Compensation numbers are already circulating through bullpens up and down The Street, and so far best guesses have the top first years finally breaking the six-digit barrier. And that's just the ...

Apr 18 2007

Goldman Loses Microsoft Mandate

Which banks did Microsoft mandate to put together its monster $44 billion bid for Yahoo? Morgan Stanley - and Blackstone! This is a huge loss for Goldman Sachs, which advised Microsoft in its failed attempt to buy Yahoo last...

Feb 01 2008

Demonic Short Sellers

Jim Surowiecki says, quite rightly, that short selling can cause viciously self-fulfilling downward spirals, especially in financial stocks. But reading the WSJ's long and alarmist tale of what happened to Morgan Stanley in September, I'm more convinced than ever...

Nov 25 2008

Did the End of the Investment Banks Cause the Latest Sell-Off?

Robert Peston thinks that much of the recent sell-off can be attributed to the decision by Goldman Sachs and Morgan Stanley to convert into banks: It was caused, to a large extent, by an exceptional and unprecedented shrinkage in...

Oct 27 2008

Answers for David Cay Johnston

David Cay Johnston has a long list of questions; let me see if I can provide a few answers. Ask this question -- are the credit markets really about to seize up? They already have seized up. That's the...

Sep 23 2008

The Right Kind of Bailout

Today's NYT has an article about the enormous obstacles facing any Detroit bailout bill between now and October, with Senator Richard Shelby of Alabama saying that "the financial situation facing the Big Three is not a national problem but...

Nov 14 2008

Should the Bailout Reduce Other Government Spending?

The most annoying part of the first presidential debate, for me, was when the moderator, Jim Lehrer, asked the same question three times. Basically, he said that if you're spending $700 billion on a financial bailout, then you're going...

Sep 28 2008

Lehman Europe and Prime Brokerage Counterparty Risk

Euromoney has allowed free access to its November cover story on Lehman Brothers Europe for this weekend only, so go there now and read it while you can. It starts off at much the same place as John Hempton's...

Oct 31 2008

Mark-to-Model on Wall Street: The Numbers

Nouriel Roubini hoists a nice piece of detective work from his comments: Bernard has gone down the list of Wall Street banks, looking at how much they have in the way of level 3 ("mark to model") assets, compared...

Nov 06 2007

Why Citi Can't Be a Global Universal Bank

Vikram Pandit still needs to do some work on the Vision Thing, I think. His big idea, as unveiled on Friday? Citigroup is - wait for it - a "global universal bank". At this point, he's perilously close to a...

May 12 2008

Citi: From Bad to Worse

Shares in Goldman Sachs are down 3% this afternoon to a new low of just $60 a share -- a level not seen since 1999. To give you an idea of the straits that the financial sector is in,...

Nov 19 2008

Hedge Fund Managers Aren't Hated For Their Money

Any complaints from hedge-fund managers about the politics of envy risk turning into self-fulfilling prophecies. There's no sign of such rhetoric thus far.

Apr 27 2007

The Phony Populist, Part II

Clinton, at least has the excuse of desperation. Obama, who prides himself on hard truths, doesn't have that modest fig leaf.

Feb 26 2008

Extra Credit, Friday Edition

A battle Bush's EPA can't win: California is extremely likely to win its appeal of the EPA's carbon-emissions decision. Citi Lays Off 30 C.D.O. Bankers The Bond Insurance Barge Scam: "For years the investment banks' internal credit and risk...

Dec 21 2007

The Crazy, Upside Down World of Credit Swaps

Why did credit default swaps on Morgan Stanley and Goldman Sachs rise today? The cost to insure Morgan Stanley's debt rose by 50 basis points to 480 while Goldman's cost rose by 40 basis points to 240. A Clusterstock headline...

Oct 15 2008

Stocks: Recession Bites

For some reason, I started paying more attention than usual to the stock market today. The closing prices are sobering: Sears Holdings and Goldman Sachs, down 10% to new lows. Google below $300. Citigroup below $10. Morgan Stanley down...

Nov 12 2008

Extra Credit, Sunday Edition

Those stupid bankers and their stupid stupidity: Dsquared on why blaming people is a little bit silly. Now do something about the interbank market - directly: Willem Buiter on how central banks can bring down Libor. Libor to Decline...

Oct 19 2008

Bringing Back Regulation's Good Name

Jesse Eisinger's column this month is about the different regulatory structures in London and New York, and how they both failed. I asked him about it: Jesse, you travelled to London for your latest column, and came away with...

Aug 14 2008

Finally, Drama! A Geithner vs. Bair Clash?

The president-elect's campaign staff motto was "no drama with Obama." But there may be some serious backstage moves by his economic team. Timothy Geithner, the president of the Federal Reserve Bank of New York who has been designated the next...

Dec 04 2008

Byron Wien's 10 Surprises Coming in 2008

If it's the first business day of the new year, it's time for Bryron Wien's annual forecast of the biggest surprises to come. On cue, Wien, who was Morgan Stanley's chief strategist for years before jumping to Pequot Capital a...

Jan 02 2008

Government Hypocrisy in GSE Bailout?

In a sign that the more things change, the more they stay the same, the FT speculated today that the Treasury Department's takeover of Fannie Mae and Freddie Mac was constructed in such a way as to keep the pair's...

Sep 08 2008

Let the Hedge Fund Lawsuits Begin

Looking for a good reason why hedge funds shouldn't market themselves to the broader investing public? Look no further. An investor in West Palm Beach, Florida is suing Citigroup Alternative Investments for defrauding investors by falsely marketing one of its...

Apr 10 2008