Posting will be light today and tomorrow, I have a speech and an article I need to put to bed, plus holiday stuff…apologies! And I am SOOO annoyed about the reform bill headfake I don’t know where to begin.
Poor Children Likelier to Get Antipsychotics New York Times. I think the odds are non-trivial that 10 or 15 years from now, we will see some Big Pharmas go bankrupt due to class action suit resulting from long-term damage done to kids that were given psychoactive drugs.
Retail Data Shows Strong Start to Holiday Season New York Times. This contradicts the Discover Card report we featured on consumer intentions, which said average consumers planned to pare spending. Was spending more front-loaded than in the recent past, or will this season be better than expected? Jesse is not convinced:
About Those Strong November US Retail Sales Numbers
Fernholz vs Taibbi Felix Salmon
The Book of Lists Satyajit Das
The American Who Manages the Decline of a Japanese Hamlet Wall Street Journal
A windfall tax in the US? Krishna Guha, Financial Times. This makes a ton of sense, which of course means it will never happen.
Outside Edge: Yakuza solutions for errant bankers John Plender, Financial Times.
Overplaying Goldman’s Bonus Move Ryan Chittum, Columbia Journalism Review
Goldman Fueled AIG Gambles Wall Street Journal. This partially confirms one of our pet theories, namely, that there was not enough subprime related insurance capacity ex AIG to handle all the subprime-related risk (including CDOs) that was insured in 2006. Recall that the urban legend, which we can trace only to Joe Cassano (who has lied before) was that AIG quit insuring subprime related risk as of end of 2005. This article includes some 2006 deals. However, it also omits some other Goldman-related deals that included subprime that we are aware of….and we suspect were far more profitable to Goldman than the ones covered here.
The trades yielded Goldman less than $50 million in profits, which were mostly booked from 2004 to 2006, according to a person familiar with the matter. But they piled risks onto AIG’s books, which later came to haunt the insurer and Goldman. The trades also gave Goldman a unique window into AIG’s exposure to losses on securities linked to mortgages.
I have to wonder, cynically, if a large number of not hugely profitable deals to Goldman were ‘fessed up to to mask the existence of others that were very profitable to Goldman. And note the timing of this story: the evening the audit the Fed provision passed as part of the House financial services reform bill. Oh, silly me, that is a paranoid line of thinking…
Antidote du jour. A cute bat!