There are always at least three reasons given for why smart people do something: the reason they tell themselves; the reason they tell others; and the reason an external observer will infer by their words or actions. All of these are real, and have real effects - in essence, all are true.
If you count fewer than three, either you are analyzing someone thinking/behaving simply, or you are yourself thinking simply.
Monday, March 16, 2009
AIG counterparties announced, bonuses revisited
UPDATED 3/16/2009:
The Financial Times reports AIG just announced that they have posted a list of their CDS counterparties (pdf). It's also available on the AIG website(pdf).
If my calcs are correct, here's the breakdown of where money went by region/country:
US - financial institutions: $31.5bn
US - state/municipal governments: $12.1bn
Eurozone: $37.9bn
UK: $12.7bn
Switzerland: $5.4bn
Canada: $1.1bn
Poland: $0.3bn
Not labeled: $4.1bn
Total: $105.3bn
I'm tired - I'll have to revisit these calculations later.
But this means that nearly 55% of the funds left the country.
Amazing. I thought the Eurozone banks were doing worse than our banks. They may still be, but this will definitely boost their capital.
Also courtesy of the FT; in a letter to the Treasury, CEO Liddy says that AIG targets a 30% reduction in 2009 bonuses by making use of "creative restructuring solutions". Additionally, he will propose further changes to the 2008 bonuses for Senior Partners. He cautions about a departure of top talent.
The Financial Times reports AIG just announced that they have posted a list of their CDS counterparties (pdf). It's also available on the AIG website(pdf).
If my calcs are correct, here's the breakdown of where money went by region/country:
US - financial institutions: $31.5bn
US - state/municipal governments: $12.1bn
Eurozone: $37.9bn
UK: $12.7bn
Switzerland: $5.4bn
Canada: $1.1bn
Poland: $0.3bn
Not labeled: $4.1bn
Total: $105.3bn
I'm tired - I'll have to revisit these calculations later.
But this means that nearly 55% of the funds left the country.
Amazing. I thought the Eurozone banks were doing worse than our banks. They may still be, but this will definitely boost their capital.
Also courtesy of the FT; in a letter to the Treasury, CEO Liddy says that AIG targets a 30% reduction in 2009 bonuses by making use of "creative restructuring solutions". Additionally, he will propose further changes to the 2008 bonuses for Senior Partners. He cautions about a departure of top talent.
Saturday, March 14, 2009
AIG to disclose counterparties
This is big news: AIG plans to disclose CDS counterparties.
I'm a bit uncertain as to the timing of it - maybe it has to do with Treasury's increased leverage (no pun intended) with the AIG board and executives. Geithner already ordered AIG to suspend its bonus payments for 2009, and will claw back bonus payments from 2008 (Bloomberg). Maybe it has to do with the Wall Street Journal receiving a leaked document with the identities of some of the counterparties, and how much they've received.
I'm a bit uncertain as to the timing of it - maybe it has to do with Treasury's increased leverage (no pun intended) with the AIG board and executives. Geithner already ordered AIG to suspend its bonus payments for 2009, and will claw back bonus payments from 2008 (Bloomberg). Maybe it has to do with the Wall Street Journal receiving a leaked document with the identities of some of the counterparties, and how much they've received.
Daily Show Interview with Jim Cramer
Ok, I'm going to blog about the Daily Show interview with Jim Cramer, because I hate to feel left out.
It was a great interview. But Jon Stewart didn't win. And Jim Cramer didn't lose.
We all lost, some time ago. And we continue to lose.
It was a great interview. But Jon Stewart didn't win. And Jim Cramer didn't lose.
We all lost, some time ago. And we continue to lose.
Tuesday, March 10, 2009
blogs and expertise
(Comments are based on an email I sent out recently to COMM 566 alums at Cornell)
I came across a blog post on the Economist that might be germane to our class discussions on how to build and maintain a technical blog.
I came across a blog post on the Economist that might be germane to our class discussions on how to build and maintain a technical blog.
Monday, March 9, 2009
Two critically important blog posts
Read two essential blog posts about what's happening right now in the economy. Seriously - these two summarize critical points that you should have in mind should you discuss the economy in anything approaching a serious manner.
Barry Ritholtz at The Big Picture writes a spot-on piece about the conceptual problem of mistaking confidence as a cause, rather than a symptom, of the macroeconomic degeneration.
Forget Confidence - Fix What's Broken First (The Big Picture)
One line summary: "Fix whats broken, namely the financial system. When that’s repaired, confidence will improve."
Karl Denninger at The Market Ticker skewers the leadership on tehir treatment of the financial crisis and offers a list of what needs to happen to restore the "confidence" (and, keeping Ritholtz's point in mind, by "confidence", Denninger really means transparency and effective law enforcement.)
It is a very angry and correct prescription.
Hello Mr. President; How 'Ya Like This? (The Market Ticker)
In summary, he recommends the following dramatic steps:
- eliminate CDS market
- send FBI after everyone involved in CDS embezzlement
- reinstate Glass-Steagall
- force the Fed to comply w/Bloomberg's Freedom of Information Act request/lawsuit and disclose who is receiving funds from the various lending facilities, and what assets are being taken as collateral
- eliminate a ton of FHA programs that incentivize fraud, and go after the fraudsters.
- force every company trading on a public exchange in the US to produce a consolidated balance sheet and financials - no more off-balance sheet stuff
To that list, I might add organized bankruptcy for a few problem financial instituions and large corporations (Citigroup and GM). Safeguarding bondholders is going to take more money than God or the US Treasury can raise. Keep in mind that unlike previous debt-related financial crises around the world, the majority of US debt is private, not public.
Barry Ritholtz at The Big Picture writes a spot-on piece about the conceptual problem of mistaking confidence as a cause, rather than a symptom, of the macroeconomic degeneration.
Forget Confidence - Fix What's Broken First (The Big Picture)
One line summary: "Fix whats broken, namely the financial system. When that’s repaired, confidence will improve."
Karl Denninger at The Market Ticker skewers the leadership on tehir treatment of the financial crisis and offers a list of what needs to happen to restore the "confidence" (and, keeping Ritholtz's point in mind, by "confidence", Denninger really means transparency and effective law enforcement.)
It is a very angry and correct prescription.
Hello Mr. President; How 'Ya Like This? (The Market Ticker)
In summary, he recommends the following dramatic steps:
- eliminate CDS market
- send FBI after everyone involved in CDS embezzlement
- reinstate Glass-Steagall
- force the Fed to comply w/Bloomberg's Freedom of Information Act request/lawsuit and disclose who is receiving funds from the various lending facilities, and what assets are being taken as collateral
- eliminate a ton of FHA programs that incentivize fraud, and go after the fraudsters.
- force every company trading on a public exchange in the US to produce a consolidated balance sheet and financials - no more off-balance sheet stuff
To that list, I might add organized bankruptcy for a few problem financial instituions and large corporations (Citigroup and GM). Safeguarding bondholders is going to take more money than God or the US Treasury can raise. Keep in mind that unlike previous debt-related financial crises around the world, the majority of US debt is private, not public.
Saturday, March 7, 2009
500,000 lawyers versus 500,000 engineers
Last hope, last stand: China's petitioners find a system under strain (Financial Times)
A fascinating set of videos taken by the FT of Chinese citizens petitioning the central government for justice.
Neil DeGrasse Tyson once pointed out that the US graduates 500,000 lawyers a year, while China graduates 500,000 engineers each year. Looking at the Chinese judicial system, one wonders whether our apportionment of social resources is really all that bad.
A fascinating set of videos taken by the FT of Chinese citizens petitioning the central government for justice.
Neil DeGrasse Tyson once pointed out that the US graduates 500,000 lawyers a year, while China graduates 500,000 engineers each year. Looking at the Chinese judicial system, one wonders whether our apportionment of social resources is really all that bad.
Wednesday, March 4, 2009
Kepler will find Earth-like planets
Comments - To the Sun-like stars: Life beyond Earth (Financial Times)
To be fair, Kepler is doing a photometric study. It won't be able to use the light of these incredibly dim (relative to their parent star) planets to look for oxygen, the clue that life exists on that world. But it will hopefully achieve the 10^7 contrast ratio for Sun-like stars in the near-infrared (or 10^10 in the visible) needed to identify a planet around a star.
Disclosure: In case you didn't know, I used to work on ground-based detection of low-mass companions to M-dwarfs in the near-Infrared at Palomar. Not nearly as glamorous, but I did find about ten new stars.
Glad to see astro made it in the financial pages. :)
To be fair, Kepler is doing a photometric study. It won't be able to use the light of these incredibly dim (relative to their parent star) planets to look for oxygen, the clue that life exists on that world. But it will hopefully achieve the 10^7 contrast ratio for Sun-like stars in the near-infrared (or 10^10 in the visible) needed to identify a planet around a star.
Disclosure: In case you didn't know, I used to work on ground-based detection of low-mass companions to M-dwarfs in the near-Infrared at Palomar. Not nearly as glamorous, but I did find about ten new stars.
Glad to see astro made it in the financial pages. :)
Tuesday, March 3, 2009
American brain drain
Why Skilled Immigrants Are Leaving the U.S. (Businessweek)
It's an interesting shift, one that started to happen after September 11 made the visa process hell. Also possibly contributing was the use of a full one-third of H-1B Visas to train employees to return to their home country (outsourcing).
I expect to see a similar study ten years from now showing that the US has permanently lost its dominance in higher education. It may not be reversible, or even undesirable, but it does have implications for the recovery and future growth.
It's an interesting shift, one that started to happen after September 11 made the visa process hell. Also possibly contributing was the use of a full one-third of H-1B Visas to train employees to return to their home country (outsourcing).
I expect to see a similar study ten years from now showing that the US has permanently lost its dominance in higher education. It may not be reversible, or even undesirable, but it does have implications for the recovery and future growth.
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