MetaFilter posts tagged with money and finance

Nails Goes to Wall Street

reenum — Tue, 27 Oct 2009 10:54:21 -0800

Lenny Dykstra was lauded for his heroics with the Mets and Philles. After his career, Dykstra became well-known as a post-career athlete success story. Then the truth started coming out... Dykstra's post career exploits included making stock picks and starting a high end magazine targeted towards athletes. Then, in April of this year, it all came crashing down. In separate articles from GQ and ESPN, Dykstra's financial empire was revealed to be a house of cards. Dykstra subsequently filed bankruptcy in July. For a copy of Lenny's petition, you can go here (Warning: This link is a PDF). Lenny only sees these events as a minor speedbump, and promises to be back on top in no time.

Neil Barofsky reviews TARP

Joe Beese — Sat, 26 Sep 2009 15:30:10 -0800

Neil Barofsky, special inspector general for the Troubled Asset Relief Program, says: If the goal was to increase lending, well we haven't increased lending. ... Banks that were too big to fail are bigger than ever. ... When TARP was announced, the whole purpose was a statement that we're not going to let our large financial instiutions fail. And with that I think we may be in a far more dangerous place today than we were a year ago. (via)

UK and USA might lose AAA rating

memebake — Tue, 26 May 2009 15:11:41 -0800

Standard & Poor’s changed the UK's credit outlook from stable to negative a few days ago, and warned that there is a chance the UK could lose its AAA rating. Meanwhile, Moodys, another of the big 3 rating agencies, has warned that the US might also eventually lose its AAA rating. The UK announcement caused sterling to drop by 1% and the FTSE by 2%. However, many blame the same rating agencies for their part in triggering the subprime crisis. The irony of this is not lost on the Wall Street Journal, who note that "After all, those governments are jacking up spending, in part, to bail out the financial firms who gobbled up those 'AAA' asset backed securities duly blessed by the credit ratings firms." How did the CDO's get AAA rated in the first place? There are reports that it may have been a bug in the rating software, although Greenspan says its because the ratings were based on only the last two decades, giving a too-optimistic outlook. This reseach paper by Vasiliki Skreta and Laura Veldkamp looks through some of the options. Incidentally, all the ratings given by the rating agencies come with a disclaimer: S&P says in small print: "Any user of the information contained herein should not rely on any credit rating or other opinion contained herein in making any investment decision". Joseph Mason, a former economist at the US Treasury Department, points out that "The ratings giveth and the disclaimer takes it away."

Sir Allen Stanford, the Ponzi artist

Gyan — Wed, 29 Apr 2009 00:27:14 -0800

The Dark Knight - On Sir Allen Stanford

it's good to be a banksta

kliuless — Sat, 14 Feb 2009 09:19:06 -0800

Simon Johnson on Bill Moyers [1] (and, prolifically, making the public media rounds on npr [2]) tackling the bailout of the American Oligarchs, a.k.a. banksters... BONUS LISTENING :P Economic Contagion - "Listen to this interview with former Goldman banker John Talbott for some refreshing straight talk (Leonard Lopate Show)." and peripherally related... clay shirky on, essentially, 'change.gov' (42 mb; approx 92 minutes) and bill moyers with nikki giovanni, which was (and whois) also awesome! --- also recently related moyers on the blue 1 2

alternative currencies

kliuless — Sun, 08 Feb 2009 08:32:36 -0800

Hard up for cash? Roll your own :P just like Walmart and Amazon coexist with Costco and Craigslist, or like closed and open source software and operating (eco)systems often feed off of one another (and keep each other 'honest') to make a more vibrant market (and community), I think having various kinds of 'complementary' currency systems and transaction mechanisms alongside fiat central banking would help encourage and enable a greater multitude of economic activity than is currently the case. like having the right tool (or program) for the right job, I think it only makes sense that some currency systems are better suited for certain applications and activities than others, and people would therefore benefit from having a choice (freedom to choose!) of currency to use and conduct business in... along with, for that matter, what laws and accounting frameworks they are governed by and where they reside (freedom to move ;) [incidentally as it stands, (some) privileged people, corporations and 'capital' already enjoy these freedoms and benefit from practising regulatory arbitrage; I do not see why this cannot be extended to everyone] btw, post inspired by pharm, thanks!

Deals of the Day

SeizeTheDay — Thu, 22 Jan 2009 17:39:09 -0800

House Financial Services Committee Chairman Barney Frank gave a bank, whose capital ratio equaled only 1.88% of assets at the bank, versus a desired level of about 6%, TARP money after heavy lobbying. Frank inserted into the bill a provision to give special consideration to banks that had less than $1 billion of assets, had been well-capitalized as of June 30, served low- and moderate-income areas, and had taken a capital hit in the federal seizure of Fannie Mae and Freddie Mac. (WSJ link) In other news, Merrill disclosed compensation and benefits expenses of $15 billion for 2008, down 6 percent from 2007. That number includes salaries, benefits, retirement payments, commissions for financial advisers and severance for laid-off employees. Bank of America, which has four times as many employees, reported $18.4 billion in personnel expenses in 2008, down slightly from 2007. ~ Charlotte Observer Merrill, through John Thain, former CEO of Merrill and who recently resigned from BofA (this morning), paid this bonus to his employees in December as opposed to January (a highly unorthodox move), just prior to the deal's consummation (as he was still CEO). Meanwhile, BofA, in a memo earlier this month, Lewis said the bank has “significantly reduced the targets for yearend compensation,” with higher-ranking employees taking the bigger reductions. Lewis has recommended that he and his top reports not receive bonuses for 2008. In other news, regional banks, once thought to be spared from the worst credit losses, have shown mixed results.

How's YOUR bank?

St. Alia of the Bunnies — Wed, 31 Dec 2008 16:42:39 -0800

Wonder how your bank is doing these days? Here's how to interpret the data.

If Admiral Ackbar had dyslexia, he'd say...

Asparagirl — Mon, 29 Dec 2008 13:05:22 -0800

TARP, SSFIP, EESA, CPP, TALF, MMIFF... Are you feeling overwhelmed by all the new acronyms coming out of the US Treasury Department lately? Here's a handy PDF reference guide to untangling the US government efforts to rescue banks, financial corporations, and other companies.

AAA?

Gyan — Mon, 24 Nov 2008 06:47:35 -0800

Anatomy of a Meltdown - Ben Bernanke and the financial crisis (in one page)

sovereign risk and the current economy

bystander — Mon, 03 Nov 2008 04:37:30 -0800

Another economic post. With the debt and equity markets in a comparative calm, a lot of people are asking what next? One area little examined is the idea of sovereign risk. Basically, those with the armies make to rules, and you don't want to be invested there when they change the rules,. The USA has been the power behind globalisation for over half a century, enforcing the rules of the marketplace we have grown to accept. Some are questioning whether it can maintain this position. Many countries have used their power to set the law to default on external debt, or in some cases, nationalise external investments. It is the last resort when your economy is in trouble, and a growing number of people see it on the cards for the USA (admittedly, with not much credibility). But who will be next?

Confused about what caused this whole credit crisis?

JPowers — Thu, 23 Oct 2008 17:20:58 -0800

Confused about what caused this whole credit crisis? Let me Paddy Hirsch from Marketplace explain it to you in this surprisingly entertaining and easy to understand video. While you're there, check out his explanation of short selling and credit default swaps. I wish this guy was my finance professor.

Zeitgeist: Addendum

Baldons — Tue, 07 Oct 2008 16:40:49 -0800

We already talked (self-link, sorta) about Zeitgeist: The Movie. Its author, Peter Joseph, recently released Zeitgeist: Addendum. (beware: last two links are two hour movies) This time, it’s about money and debt, scarcity and resources. The first, financial part may look like an extended Ron Paul ad, but then there’s a sudden turn towards resource-based utopian techno-communalism, and an endorsement for The Venus project. It seems to me like "Kropotkinian anarchism meets The Matrix". In these rough times, is it time for a big leap? [Also announced: The Zeitgeist Movement, still not active]

"There will be enormous, enormous losses..."

justkevin — Sun, 05 Oct 2008 21:04:39 -0800

This American Life gives you Another Frightening Show About the Economy.. The guys who brought us The Giant Pool of Money (previously) explain the credit crunch and why it's so scary. And not in the Halloween fun-to-be-scared sense.

Food cartels - haven't we seen these before?

Mutant — Mon, 05 May 2008 06:55:05 -0800

Oil's got one. So does cocaine. There used to be one for light bulbs and another for uranium. While we know one currently exists for diamonds, some folks think the music industry has one. An effective cartel needs both product homogenity and a relatively limited number of suppliers. Standardised products offer consumers price reductions driven by economies of scale and supplier substitution effects. However a relatively small number of suppliers of any commodity gives rise to the possibility of price fixing and collusive behaviour. Supplier actions threatening financial disadvantage to consumers can occur in any industry, however who would not view food cartels negatively? We last saw food cartels in the 1990's [e.g., but not limited to lysine [.pdf], citric acid, vitamins A & E ]. Aggressive antitrust actions, coordinated across the EU and America, effectively levied fines in excess of $10 billion dollars on some 167 international cartels [.pdf] operating at the time. With global food prices already at record levels, will any good come from Thailand's moves to organise a rice cartel? While some are skeptical this (latest) effort will succeed, comments from government spokesmen "With the oil price rising so much, we import expensive oil but sell rice very cheaply and that’s unfair to us ..." aren't very helpful to already nervous consumers. The idea of a rice cartel isn't new; India suggested forming a rice, tea and sugar cartel in 2000, only to have the initiative die due to the difficulties of controlling rice production.

wooo realestate implosion buddy! ^5

Stynxno — Fri, 28 Mar 2008 08:10:52 -0800

The Most Important Article You Did Not Read This Week Now, it is true that the most important article you probably didn’t read contains all the usual hair-raising things you’d expect to see about the real estate market, including “developers under siege,” “signs of weakness in key markets,” developers “slashing prices,” and the head of a major builder advising “that people wait three to four years before purchasing a new home.” But the most important article you probably didn’t read is not about real estate markets in Naples, Florida, or Sacramento, California. It is about China. [ full WSJ article here]

But if the vaults are empty, what will Scrooge McDuck swim in?

Asparagirl — Tue, 29 Jan 2008 20:58:40 -0800

According to the latest biweekly numbers released last Thursday by the Federal Reserve, for the two weeks that ended January 16th American banks had negative $1.3 billion in non-borrowed reserves. This is, historically, extremely unusual; just two months ago they had $30 billion (positive, of course) in non-borrowed reserves. The only reason some banks haven't been shut due to insufficient -- negative! -- reserve requirements is that the Federal Reserve is currently loaning them enough money through the brand new TAF (Term Auction Facility) program (also running in Canada and Europe) to make up their shortfalls. Today's TAF press release says that 52 American banks or institutions are currently receiving loans totaling ~$40 billion -- but the Fed refuses to name who they are. The banks' collateral for these TAF loans are those same yucky hard-to-price CDO's that caused the banks' liquidity problems in the first place -- and the Fed is purposely using outdated prices for the collateral to prevent their being marked-to-market and thus collapsing CDO prices and freezing matters even further. Not surprisingly, some economists see the creation of the TAF as a backdoor bailout of banks in trouble. But how much longer can this go on? [via] Coincidentally (one hopes), the banking system in the virtual online world Second Life has just collapsed following a run on their banks due to inappropriate valuations and bad counterparty risk, wiping out many players' real-world investments...

Look out below...!

Asparagirl — Tue, 22 Jan 2008 00:18:35 -0800

While the US equities markets were closed on Monday for Martin Luther King Day, stock markets around the world took a nosedive, losing billions in equity; the markets in Australia, South Korea, Japan, China, Indonesia, Hong Kong, Germany, France, the UK, and more countries have dropped at least 5% each (Canada only fell 4.75%), even though most of those markets had already been seriously down for several days prior. India has been hit particularly hard, at one point down a whopping 11%, tripping their markets' automatic "circuit breakers" for a mandatory time-out period, before scraping back up to close at 8% down. US futures markets are currently predicting a 650+ point drop just at the open Tuesday morning, before even a single trade goes through. In a bit of serendipitous timing (for us, not for him), one poor young daytrader started posting unedited videos of his daily trading activities on YouTube several weeks ago, which meant that his Sunday night breakdown and Monday night quarterbacking (both videos NSFW for language) are both online for the world to see. (He was long the futures market without stops and lost about $40k out of his $55k account.) I suspect similar sentiments to the ones he expressed in his Sunday night video are going to be echoing throughout many offices on Wall Street this week...

Ups and downs in the world of high art

psmealey — Thu, 15 Nov 2007 16:07:16 -0800

Is the high end Art market finally tanking? A week or so ago, it sure looked like it. An important van Gogh piece did not sell, Sotheby's stock price went into shock. However, all is well this week as both Christie's and Sotheby's kicked it into high gear and set some new records. Some more chatter on the events of the past week can be found here: The Wall Street Journal's art blog: focused on the business of art. Art news Artopia - John Perrault's art diary Modern Art notes Artforum, and CultureGrrl

Leave the SIV, take the cannoli

Asparagirl — Tue, 16 Oct 2007 16:24:33 -0800

At a time when fed-up American citizens are petitioning Congress to end the imprudent financial practices that caused the ~~housing bubble~~ ~~sub-prime mortgage crisis~~ ~~liquidity crisis~~ impending recession -- including the banning of SIV's and refusing any bailouts for Wall Street, banks, or mortgage companies -- the United States Treasury Department has just announced the creation of a giant-mega-ultra SIV called "M-LEC" made up of assets from several of the largest American banks. Already unofficially nicknamed "Sivie Mae" (or worse, "the Frankenstein Fund"), it would be an off-balance-sheet way for these banks to pool and price the ABCP's that they've lately been having trouble pricing and thus selling -- i.e. the liquidity crisis. But one financial blogger looks at this odd occurence using the film "The Godfather" as a reference point and concludes that something fishy is going on with Citibank, in particular. Phrases like "smoke and mirrors" and references to deck chairs on the Titanic are being thrown around the blogosphere. The suspicion grows: is the real problem facing these "too big to fail" banks "just" a temporary one of liquidity...or one of solvency? As Don Corleone might say, this wacky pseudo-bailout idea might be an offer that the Treasury Department can't refuse.

Cui bono?

Pastabagel — Thu, 20 Sep 2007 09:41:30 -0800

On Tuesday, the Federal Reserve cut interest rates by 0.5%. Wall Street aggressively demanded the cut to stop the sub-prime mortgage contagion from triggering a credit crisis among large US and foreign investment banks and the collapse of their over-leveraged hedge funds, which ultimately threatened to drag the US economy into recession. The market rallied this week in response to the Fed's move. But there is no free lunch. Oil rallied also, to an all-time high of $81/bbl. The rate cut shattered the dollar, sending it to new lows against the Euro and to parity with the Canadian dollar. The falling dollar puts pressure on China, whose dollar-pegged currency has attracted the ire of many US politicians, causing China to threaten the US with the "nuclear option" of diversifying its foreign currency reserves away from the dollar. Meanwhile, Saudi Arabia refuses to cut its interest rates in lockstep with the US for the first time ever, signaling that it may break its long standing dollar peg as well. In other words, foreign investors who currently own roughly 50% of the publicly-owned portion of the US national debt may flee the US bond markets. Result? We'll probably slide into recession anyway. But there is a silver lining: it turns out that many of those large investment banks and hedge funds were making far more money than anyone thought all along. Confused? Some background: Currency carry trade - how currencies are related to one another How interest rates, inflation, exchange rates, and trade deficits are interrelated How interest rates and bonds are related Peviously 1 2 3 4

What's up at the Fed?

landis — Fri, 17 Aug 2007 14:01:00 -0800

A fairly lucid description of recent actions of the Federal Reserve.

Learn About the Stock Market While Wasting Time Online

ThePinkSuperhero — Tue, 09 Jan 2007 19:49:12 -0800

Want to learn about investing? Morningstar, an independent investment researcher, is offering 172 free online "classes" on stocks, bonds, funds, and portfolio building. And there's nifty quizzes at the end of each lesson where you can earn points that can be used for Morningstar products.

Peronal finances, or how I learned to stop worrying and invest in a 401k

knave — Tue, 01 Aug 2006 10:35:32 -0800

Get Rich Slowly, a personal finance web site (created by our jdroth), has been educational to someone who spent most of his life until now pretending financial matters don't exist. His blog is updated frequently, and contains insightful tips on living frugally, eliminating debt, saving and investing. Between his site, and another very educational site entitled I Will Teach You To Be Rich (start here), I've greatly expanded my knowledge about managing my money effectively. Perhaps most importantly, they're both consistently interesting and easy reads. [more inside]

IOU 2.0

runkelfinker — Mon, 23 Jan 2006 09:25:15 -0800

BillMonk is a new way of tracking informal debts with your friends. Web 2.0 nonsense or a viable solution to those awkward 13-way restaurant bills? Not to be confused with Zopa, another social money project...