Links 2/24/09

Tech layoffs: The scorecard CNet (hat tip reader John)

Shiller: House Prices Still Way Too High Clusterstock

U.S. Consumers Driven Away From Drink Spending: Chart of Day Bloomberg (hat tip reader John). Gee, I am not part of this trend, although it would be better if I were.

US natural gas prices could hit $2/MMBtu this year: analyst Platts (hat tip reader Michael) $4 was not too long ago considered an uber bearish forecast.

The right way to create a good bank and a bad bank Financial Crisis and Reform (hat tip reader Paul). Clever, and I’ve only looked at this superficially, but I am suspicious of any arrangement where equity depends to a significant degree on cross shareholdings. That helped rationalize rampant overvaluation in Japan. I’ve also seen it create useless accounting within companies (Citi was a prime example) where double counting lead to the sum of profit center earnings (the internal business unit profit measure) being two or three time reported profits.

American Express Wants To Help You ‘Simplify Your Finances’ — Will Pay You $300 If You’ll Close Your Account Credit Matters

Lawmakers Aim at Fine Print in Financial Agreements Bloomberg

Antidote du jour:

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  1. Anonymous

    The AMEX link is interesting. It mentions this in the article, but essentially they’re offering a prepaid $300 bank card if you close out your account before the end of April.

    The catch — its only for customers they’ve targeted, and contacted. A clever way to get some quick cash from questionable customers before circumstances make clear that they have more pressing debts to settle.

    If AMEX is combing their customers’ profiles well enough to take this, step you have to wonder why others haven’t (or more likely, have, but unlike AMEX, didn’t think up a clever scheme to temp payment or uncover positive info they could float in the media to reassure confidence.)

  2. Anonymous

    U.S. Consumers Driven Away From Drink Spending: Chart of Day Bloomberg (hat tip reader John). Gee, I am not part of this trend, although it would be better if I were.

    Just another example of Opportunity. Micro brews may benefit since they are locally owned and not highly leveraged like most of the Giant Booze Industry. Then there’s is the homebrewed possibility plus moonshining.

    Beyond that there are chemical substitutes for alcohol cheaply grown marijuana or manufactured crystal meth.

    Folks will not be short good mind bending substances but the guvmint may be short a lot of tax revenoo.

  3. Woland

    Yves: May I direct your attention to a Paul Kasriel
    piece on the Northern Trust website, “Channeling Bob Laurent for a market based Bad Bank Solution”. It is
    perhaps the most sensible proposal I have seen to date.

  4. Stephen Lins

    How long until some blowhard politician complains that Amex is depriving hard-pressed consumers of badly needed access to credit at a time of great financial distress for the average hardworking American, etc., etc.?

  5. Chris

    On the Issue of Fine Print and Real Estate Settlements.

    It is misleading of Bloomberg to write that RESPA required lenders to define terms.

    RESPA required lenders to provide borrowers with a Good Faith Estimate of closing costs at the time they were applying for their loan. The GFE used to be an itemized breakdown which included estimates for direct costs, fees, taxes and premia and stuff. The APR was included. Borrowers could shop for loans with their GFE’s, and as far as I know, still can. They are better than getting on the web to find the lowest rate out there.

    Under the law this document needed to be in writing and signed by the lender and the borrower. The idea was that it provided a check on the costs at the settlement which were broken down on the HUD-1 form which was created by RESPA.

    This is a legal definition of a process, not a simple matter of disclosure. The process protected lender and borrower alike. Like many things it got undermined by short cuts and pandering to ignorance and emotion. I don’t know how many times I heard over the years, “don’t worry about the APR, its just one of those numbers we have to put together, it doesn’t mean anything.”

    That didn’t make the lender a predator, nor did it make the borrower greedy. It just meant people didn’t know what they were doing or why, and that the professional standards of organizations of lenders and realtors were not up to the level needed to get their members to understand what the lsw involved.

    Probably still does involve.

  6. Anonymous

    A hedgie with tunnel vision? That’s not an antidote, that’s something we have to deal with every day!

  7. dearieme

    @Keenan: I’m glad to see that Ferguson is semi-optimistic, but can’t help pointing out that he apparently plans to live in London for a while. If Cambridge Mass is more dangerous than London, the world is in a pickle.

  8. Keenan

    Prhaps Mr. Ferguson is lulled by the notion, however dubious, that the vast video surveillance network throughout greater London makes it somehow safer.

  9. donna

    Why is it only people with crappy credit get the breaks? I would close my Amex if they offered me $300, but I only owe them $38 right now…


    Also a little sad that I would take that offer, since I’ve had an Amex card for over 30 years now…

  10. Scattershot

    I think that is the best suggestion for a good bank/bad bank split that I have read yet. It solves many of the issues related to a bank split by having the bad bank hold the equity in the good bank. There is no longer a need to find immediate buyers for either the good or the bad assets. The split is not so dependent on determining a value for the assets. The length of time the government needs to be involved in the business is minimized. Finally, the question of who is benefiting from further bailouts of the bad banks becomes much more clear – it’s the bondholders and shareholders, not the public.

    I’m not saying there are no remaining issues, but they seem much more manageable than other proposals I’ve read.

  11. Rod

    @Keenan – Thanks very much for for the Niall Ferguson piece.

    And thanks to Yves for everything else of course.

  12. Anonymous

    Thanks very much for for the Niall Ferguson piece.

    Niall Ferguson needs to sell books. Probably more of them today, given the environment. Who can blame him?

    Now, he could take the usual route of putting some smiling babes on the cover of the book, and a little T&A sprinkled throughout.

    But would that be seemly for such a distinguished Professor?

    That leaves only pure, raw, fear. "Civil war!" "Ten years of grinding, merciless, poverty awaits us all! My models and opinions are superior!"

    I exaggerate, but then again, so does Mr. Ferguson.

  13. sjc

    Regarding the Ferguson interview, he writes: “If Russia is looking for trouble the way Mr. Putin seems to be, I still have some doubt as to whether it can really make this trouble, because of the weakness of the Russian economy. It’s hard to imagine Russia invading Ukraine without weakening its economic plight. They’re desperately trying to prevent the ruble from falling off a cliff. They’re spending all their reserves to prop it up. It’s hardly going to help if they do another Georgia.” I would disagree. I would think its in Russia’s best interests TO invade Ukraine. Like the corporate conglomerates in 1960’s America, who [apparently] strengthened themselves by buying additional companies. When the conglomerate began to weaken, it would buy another! Tyco, in modern times, played a similar game.

  14. doc holiday

    Is this some type of insult directed at Galileo groupies? Perhaps this is a metaphor for Galileo being placed under house arrest by the authorities, who failed to see what was in front of their eyes. Hence, Galileo represents the truth of the bloggers that are confined to their homes, tapping away and spitting out crap on-the-fly, collectively hoping that this time will pass and that a new day will dawn for those that stand long … but what about Rome, which is Obama, who is bound to his chambers, living in the darkness of denial, surrounded by serpents and devils that keep him in his micro-world.

    As many will recall, Galileo forgot to turn around the tube and grind the lens and it would take a few more years until Newton started playing with that idea and looking at things on the other side of the coin, but I digress and if I had time, I would give this more, but the clock is ticking…

  15. ruetheday

    Bernanke said the recesion might end later this year. The equity markets are tripping over their dicks to rally on this good news. It seems to me that the ONLY thing driving the market these days is the ever-varying expectation of exactly how much money Bernanke and Geithner are willing to shower upon them.

  16. Cathryn Mataga


    What a graph! One of those charts that explains so much. Local governments may be screwed — property taxes are going down.

  17. Anonymous

    “Local governments may be screwed”

    you mean, bond holders of local governments may be screwed…local gov’ts are sovereign…i.e. the huntington beach pier can’t be liquidated to pay off SoCal creditors. And besides, MBIA has got their backs…

  18. Anonymous

    A toast to drinking …

    — Parent Maker —

    The tribe is my parents,
    It can do no wrong,
    It has taught me to sing,
    The obedience song …

    The cruelty of love,
    Administered for my own good,
    Makes me feel the shame,
    And do what I should …

    Manipulation and beatings,
    Abusive acts of control,
    State promoted dogma,
    Shapes my subservient soul …

    I love my tribe,
    And my social convention,
    My parents have formed me,
    With noble intention,

    But I have no self,
    When I am my tribe,
    And my feelings are buried,
    When I am forced to subscribe …

    And I can not express …

    My doubts,
    My fears,
    My unbearable pain,
    And my rage,
    That I must kiss,
    And forgive,
    The hand,
    That shapes and beats me,
    And so,
    I turn to the language of
    And addiction,
    In order to be heard …

    Deception is the strongest political force on the planet .

    i on the ball patriot

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