L’affaire Madoff continues to garner front-page coverage. Yet I find the stories peculiarly unsatisfying, since they are peeling the onion one layer at a time, failing to answer the questions I find most interesting: was his fund ever a legitimate operation, or was it a con from the beginning? And where did the money go? […]
Read more...The end of days must be closer than I realized. Conservative stalwart Fox News is not only taking on the officialdom, it is going after Republican authorities. This is almost as much fun as learning that J. Edgar Hoover was a cross-dresser. But then again, Fox is going after the AIG rescue and the TARP, […]
Read more...Why is no one willing to call things by their proper names, and instead resort to euphemism and double-speak? A New York Times story today, “On Wall Street, Bonuses, Not Profits, Were Real,” makes its most important point in its headline, and managed to get some good data points on how rich investment bank compensation […]
Read more...There had been rumors that Treasury would unveil a rescue plan for the Big Three on Wednesday. The day came and went with no announcement. Tonight we learn, via the Wall Street Journal, that Cerberus has revived merger talks for Chrysler with GM. The possibility of a deal would seem to complicate vastly an attempt […]
Read more...The Madoff revelations continue apace. The latest tidbit is that the records are such a mess that it may take the Securities Investors’ Protection Corporation six months (!) to make meaningful headway in unravelling Madoff books and records. From the Financial Times: Bernard Madoff left behind a trail of “falsified” and “unreliable” records, hampering efforts […]
Read more...Admittedly, China announced a raft of worst than expected economic data yesterday, even when analysts anticipated further weakening in November. So the comment by the head of China’s central bank, that further rate cuts may be coming sooner rather than later, would seem to be entirely predictable. But one has to wonder at the timing. […]
Read more...The advocates of having GM and/or Chrysler file for Chapter 11 make their case often implicitly or explicit resting on certain assumptions. The fundamental notion is that Chapter 11 will produce less, or at least no more, economic damage than some combination of rescue funding and auto industry downsizing. Now we are willing to grant […]
Read more...Markets in Asia are staging a peppy rebound rally on the assumption that US rescue of the Big Three is in the cards. No one seems to be taking seriously the possibility that bankruptcy is inevitable for GM and perhaps Chrysler. And were that to take place, opinion is sorely divided as to what that […]
Read more...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...Over a weekend, word leaked out that AIG is paying yet more retention bonuses. This move is making a complete and utter sham of the supposed punitive elements of the rescue. But clearly, there was not enough of an adverse reaction to the earlier announcements of retention bonuses to deter the giant insurer. A few […]
Read more...If $50 billion really went poof in Bernie Madoff’s self-described Ponzi scheme, where did the proceeds go? This has to top what any dictator ever siphoned out of a banana republic. (Note that the Journal suggests that at least $17 billion has disappeared, so inflation adjusted, the Perons may be ahead). The story also suggests […]
Read more...Banks are, if nothing else, entirely predictable. If there is a way to game the system, they will avail themselves of it. Readers may recall that the Financial Standards Accounting Board implemented Statement 157, which required financial firms to identify how they arrived at the “fair value” for their assets. Level 1 are ones where […]
Read more...The Wall Street Journal reports in a story frustratingly sketchy on key details that AIG has sprung another leak, or more accurately, had an ongoing leak that has just now come to light. The amount at issue, $10 billion, seems small compared to the $150 billion the insurer has already managed to extortsecure from the […]
Read more...By way of background, we posted this on November 27: How can you give cash compensation to an executive, yet claim it is not a salary or bonus? You call it a “retention bonus,” No, I am not making this up. Note that AIG chose to make this disclosure the day before Thanksgiving, selecting a […]
Read more...As credit default swaps have come in and out of focus over the last year, I have been struck by the assumption that this product would of course continue to exist. I have trouble seeing their legitimate uses. In theory, they could allow banks to diversify and hedge credit risks better, but once risks rise […]
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