So how did Madoff get away with his $50 billion fraud? Time will tell when and how it started, although I’d hazard the dot com bust. Madoff may have been unwilling to report losses, and assumed (initially) that no one would be hurt if he fibbed if he could eventually trade his way out of […]
Read more...Yet another credit crunch casualty: venture capital firms, and potentially, their portfolio companies. The Wall Street Journal reports that VCs are seeing an increasing number of rebuffs, some borne of necessity, when they hit up their limited partners for dough (reader note: investors in private equity and venture capital funds do not remit the full […]
Read more...The situation described in this Financial Times story is not earth shaking in dollar terms, but illustrates that corporate bankruptcies leave a trail of destruction in their wake. A number of funds were caught when Lehman failed, and the UK bankruptcy process may take a decade to resolve, leaving assets frozen in the meantime: Several […]
Read more...Um, a bit late to come to that realization, don’tcha think? From Barron’s (hat tip reader Michael): That ‘’super spike” in oil prices that Goldman insisted would lift crude to $200 a barrel ….? ….It never really turned out to be that prescient: instead of the 50% jump in oil that Goldman anticipated back in […]
Read more...In the stone ages, when I worked for a short while at Goldman, it would have been unthinkable to trade openly against clients. But those proprieties were abandoned long ago. In 2007, the firm was unapologetic about its decision to short the subprime market (a big, perhaps the big reason for its departure from industry […]
Read more...The high concept of this Wall Street Journal story is that because the stocks have fallen so badly, institutional investor may have to cut their real estate exposures to keep them from becoming a disproportionately large component of their portfolios. Note however that this may not be achieved via sales, but simply by not making […]
Read more...It looks like the perenially optimistic analyst community is finally getting the message that the recession will be nasty. From Bloomberg: Analysts are slicing profit forecasts for U.S. companies in the fourth quarter and 2009 as third- period results miss projections at the highest rate in almost 11 years. “Estimates have been coming down with […]
Read more...I am leery of formulaic approaches to investing and this New York Times article confirmed my prejudices. Conventional wisdown says forget market timing (you are bound to get it wrong and lose out). However, today Mark Hulbert advocates an anti-market-timing strategy: go into cash when markets become volatile. But that seems as difficult to execute […]
Read more...Morgan Stanley’s money market funds were hit by major redemptions in September, and the firm stepped in to fund half of the withdrawals itself, presumably out of a view that selling the underlying fund assets into a deteriorating market would only lead to distressed prices. But one has to wonder whether the positions that Morgan […]
Read more...Steve Waldman has a longish and very useful post “I sing the praises of financial innovation” in which he seeks to identify some good and bad financial innovation (I very much support Martin Meyer’s observation that, for the most part, what is called financail innovation is finding new technology that makes legal what was illegal […]
Read more...Now that the horse has left the barn and is in the next county as far as the damage of overly lax financial industry regulations is concerned, a lot of people are in favor of having tougher rules. Even Tyler Cowen, who hews to the conservative side of the political spectrum, cites lax supervision as […]
Read more...On the one hand, I was mystified that the stock market was up in the morning session given that the money market seize up was not at all improved and several key measures had worsened overnight. I was wiling to accept the view that we might have an oversold bounce and saw several bloggers indicate […]
Read more...Oh boy, this is badly timed. The run on money market funds appears to have abated, thanks to the insurance plan implemented by Treasury, but the commercial paper market, important for day-to-day business funding is still under big-time stress because the amount of money committed to short-term, non-government holdings has contracted. The new bit of […]
Read more...The statistics on retail brokers at banks are a bit dated, since they don’t reflect the fact that Merrill, aka The Thundering Herd, is soon to be part of Bank of America (I am not certain whether the deal has actually closed). Nevertheless, the fact that WaMu has a meaningful broker-dealer operation was seldom mentioned […]
Read more...Oh boy, bye bye the US AAA rating (at some point, not due specifically to this move, but from the philosophy it represents) and the dollar. The financial markets are simply too large for the US taxpayer to stand behind them all, but that isn’t going to prevent the authorities from trying. And like the […]
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