Monthly Archives: February 2007

Appetite for Risk Makes it Easy for Private Equity Funds to Overleverage Companies

I trust readers don’t mind the high proportion of Financial Times stories today. You’ve probably figured out that the FT often runs stories that don’t get reported in the US. While the title of this post is a bit of a mouthful, the concept is pretty simple. As you know, the pricing of risky credit […]

Read more...

Banks May Be Underreserved

The Wall Street Journal reported today, in “No Worries: Banks KeepingLess Money in Reserve,” that banks have been lowering their reserves for loan losses to the point where regulators are now beginning to question whether they are adequate. Now this isn’t exactly surprising. Banks, despite their reputation for being conservative, follow the herd. And it’s […]

Read more...

Positive News on Developing World Response to Climate Change

China and to a lesser degree India have been forcefully asserting the right to pollute as much per capita as the US in the pursuit of economic development. However, the signs of climate change are already sufficiently advanced in their countries that, despite the combattive posturing, officials recognize that these countries too will have to […]

Read more...

"US mortgage default fears grow"

That’s the title of an article in today’s Financial Times, describing how concerns about the implosion of the subprime mortgage market has led to concerns about the broader mortgage market. As the piece sets forth, this isn’t simple speculative precaution; it turns out delinquencies are running higher than expected in mortgages that are rated just […]

Read more...

Budgets and Democracy

UC Berkeley Economics Professor Brad DeLong in his blog has a recurrent item, “Why Can’t We Have a Better Press Corps?” One of today’s posts, “Where Is the Budget Reporting?” nominally falls in that category, but points to something more serious. DeLong cites Stan Collender’s lament that no one, really no one, is covering the […]

Read more...

Green Spin in TXU Buyout Bid

Environmentalists have been cheering that, to win approval of the proposed leveraged buyout of Texas utility TXU Corp., acquirers KKR, Texas Pacific Group, and Goldman Sachs have agreed to drop plans to build 8 of 11 coal-fired electricity plants that TXU had aggressively pursued. According to a story in CNN Money, “Green Groups Strut Their […]

Read more...

Where Have All the Investors Gone?

An article in today’s Wall Street Journal, “Wrong Way? Street Signs Point to Speed,” contained some data that does much to explain the current problems with corporate governance: According to Sanford C. Bernstein chief investment officer Vadim Zlotnikov, the average holding period for stocks on the New York Stock Exchange and American Stock Exchange last […]

Read more...

Markets Not Taking Iran Attack Threat Seriously

As readers doubtless know, the efficient market hypothesis states that prices of publicly traded securities incorporate all available information. We’ve also commented on the wide spread evidence that (except for the subprime sector) investors have a pretty cheery outlook these days. The US stock market has had a nice run so far this year, with […]

Read more...

Update on Big Shareholders vs. CEO Pay

A good piece in today’s Wall Street Journal, “Shareholders Push for Vote on Executive Pay,”recounts the efforts of major institutional investors to exert pressure against excessive CEO pay via non-binding shareholder resolutions. UK funds have been in the forefront of this effort, because similar regulations are already in force there. Although the UK rules have […]

Read more...