Today's massive market plunge, in full perspective
After the AP’s Twitter account was hacked today, we saw a lot of scary charts on how much the market moved. Here’s the view of today’s stock market volatility that you’ve probably seen: Pay attention to the y-axis though — it’s absurdly cropped. As it is here and many other places, or here, here, and here if you’re interested in the Dow. Sure, the...
“Rebuilding revenue streams [in Stockton] in the short-term is nearly...– Stockton’s bankruptcy brief (PDF)
In Stockton, California, public safety workers earn on average 126 percent of...– Cate Long on how runaway pay for police officers and firefighters contributed to Stockton’s insolvency
U.S. Bankruptcy Court Judge Christopher Klein’s ruling permits Stockton to...– Reuters: Stockton eligible for bankruptcy protection
The idea that American manufacturing is on the cusp of a renaissance is...– The WSJ’s Timothy Aeppel examines whether or not the return of US manufacturing is a real phenomenon. He largely concludes not.
The CFPB proves it takes agency to complain
The Consumer Financial Protection Bureau has released its database of complaints against credit card companies, and “well-to-do neighborhoods of Florida and New York that are supplying the most grievances”: Of the top four zip codes contributing to the 18,539 complaints published as of March 18, two are on Manhattan’s Upper West Side and two in south Florida — Boca Raton and Palm Beach...
The cost of Warren Buffett's imprimatur
Stephen Gandel has a smart post on the Buffett-Goldman deal. Instead of looking at it from Buffett’s perspective, as I did yesterday, he looks at it from Goldman’s perspective. His conclusion is that in the fall of 2008, Goldman “may have been in more trouble than is understood”. It needed Buffett’s investment far more than he needed to make it, and he got very...
Regulatory filing of the week: A123 becomes B456
A123 Systems, a struggling lithium ion battery manufacturer, has filed an 8-K with the SEC to legally change its name to B456. Here’s the full document.
Warren Buffett still has an index problem
As of yesterday, the warrants (rights to buy) that Buffett acquired from Goldman Sachs as part of his fall 2008 $5 billion investment are woth $1.34 billion. Matt Phillips writes that this means that, to-date, Buffett’s investment in Goldman has generated $3.1 billion in returns — a healthy 62%. Over the same period, the S&P 500 with dividends reinvested — the benchmark Buffett...
Europe enters the "post-solidarity era"
As Cyprus rolls out draconian capital controls, the Institute for International Finance calls the outlook for the island’s economy “very grim”: While it is hard at the current time to be confident about the degree of likely declines in GDP, it seems plausible that the cumulative decline could amount to as much as 20% of GDP in 2013-15… The near-term dislocation caused by...
Output on [Cyprus] could easily decline by 25% or more, and I don’t think that...– Tyler Cowen on the shocks on shocks on shocks facing Cyprus
If #Cyprus=Lehman, #Luxembourg=AIG cont’d: ECB says Lux “monetary financial institutions” have assets = 22 times GDP. ft.com/intl/cms/s/3/7… — Anatole Kaletsky (@Kaletsky) March 25, 2013
While last week saw dozens of well-heeled Russians and their representatives fly...– From the FT: “Russians prepare to quit Cyprus”
In a case like Cyprus, there’s just no way to beat the instant access to...– Joe Weisenthal on how Twitter is displacing traditional research reports from Wall Street analysts
It’s hard to imagine now, but for more than three decades after World War II...– Krugman makes the case for capital controls (again).
Income inequality is increasingly "permanent"
We’ve heard about rising income inequality for years — it’s become a post-recession rallying cry. Even Jamie Dimon seems to think inequality is bad. The hope, however, was that this was a cyclical problem — when the economy got cranking again, those of us hit hard by the downturn would start earning more and income inequality would fall. A new paper, however, looking at male and...
felixsalmon: Tom Friedman, today, paragraph 1: I think it’s more revealing to widen the aperture and compare India, China and Egypt… there is one thing all three have in common: gigantic youth bulges under the age of 30. Tom Friedman, today, paragraph 5: According to Tharoor, the average age in China today is around 38, whereas in India it’s around 28.
Have you ever lived in the suburbs? It’s sterile. It’s nothing. It’s wasting...– Ed Koch (via caro)
CHART: China's clean energy failure, America's...
Sure, US carbon emissions have hit their lowest level in 18 years. But the US has barely moved the needle on clean energy capacity in the last four years. China’s still way, way behind, thanks largely to coal use. Germany, on the other hand, has seen a “veritable explosion” of clean energy use: “At times, solar generated-electricity alone accounts for more than half of...
Facebook is a large, inefficient engine for transforming electricity and...– Our quote of the week goes to @mims on Facebook’s latest earnings. Recommended.
The entire financial system is rendered riskier when all of the largest...– A really smart thought by John Carney on the newly-watered down Basel III regulations, which broadens what banks can count as “high-quality liquid assets”. Here’s the Counterparties rundown on the kinder, gentler “QEBasel” from yesterday’s email.
One has to ask whether or not a more innovative monetary policy framework could...– The macroeconomics of Middle Earth: Smaug the dragon as a “severe monetary shock”.
Say what you want about Taleb’s writing—and Romano is not the only...– “This is not a profile of Nassim Taleb” by Tom Bartlett.
"The only deficit reduction policy that matters"
That’d be economic growth, says Business Insider’s Joe Weisenthal: As Paul Krugman points out in a recent post, the current deficit is mostly about the slump in the economy combined with the standard counter-cyclical spending, that naturally tapers off as the economy improves. He notes two key numbers: One is that, if the economy were operating at about full potential (as...
We have a press release coming out in the next week or so and I am pretty sure...– #flackthreats (via felixsalmon)
Jack Whittaker’s downfall began at the Pink Pony strip club in Cross Lanes, W....– Best paragraph Business Week has ever written? Lottery Winner Jack Whittaker’s Losing Ticket - Businessweek (via greghaystuff)
Today in subtly damning phrasing
Ben Protess and Mark Scott of Dealbook as a significant scoop on the UBS Libor charges (emphasis ours): Federal prosecutors are close to securing a guilty plea from a UBS subsidiary at the center of a global investigation into interest rate manipulation, the first big bank to agree to criminal charges in more than a decade. It can be so hard to get those pesky multinational Too Big to Fail...
It’s really frustrating to see someone get a PhD in chemistry and decide what...– The best quote we’ve heard about the current state of the startup world is from an entrepreneur who’s trying to revolutionize scientific research. Sarah Lacy has more.
How does that translate into a $5 billion write-off?” said Lynn E. Turner,...– The second day stories on HP’s disastrous Autonomy acquisition are pointing the finger at HP. Here’s our round-up of the HP / Autonomy news so far.
Today in bureaucracy, college administration...
Bloomberg’s John Hechinger has a great piece today on the rise of “administrative bloat” at increasingly unaffordable public universities. Not only are high-level bueracrats pulling in mid six-figure salaries at this institutions, but there are now armies of vice presidents, “engagement” officers and maginally useful functionaries, all of which are being paid for by...
HOW TO SHARPEN PENCILS: The People's Bailout →
howtosharpenpencils: This is a long post but it’s about something pretty interesting so I hope you’ll indulge … Like many folks, Occupy Wall Street has been some doing good work in the aftermath of Hurricane Sandy, helping people on the ground. Now OWS is launching the ROLLING JUBILEE, a program that has been in…
Mahoney, the firm’s specialist in global securities and derivative structures,...– COLLEGE STUDENTS LAUNCH HEDGE FUND! And they’re “Chairman and Principal Managing Partner” can already speak in nonsense like “Globalization has increased correlation and volatility among international financial markets”!
In 2010, researchers from Harvard and Toronto found all the trials looking at...– Absolutely shocking story on the reality of drug trials. Pharmaceutical companies very rarely release negative trial results for new drugs. Another study found industry-funded trials were four times more likely to produce positive results. Researchers are often contractually prohibited from...
Sheila Bair reconsiders the bailouts
From Fortune’s excerpt of the former FDIC chair’s new book “Bull By the Horns”. Maybe, Bair wonders, we kind of overdid it: The fact remained that with the exception of Citi, the commercial banks’ capital levels seemed to be adequate. The investment banks were in trouble, but Merrill had arranged to sell itself to BofA, and Goldman and Morgan had been able to raise...
In the very near term [QE3] has virtually no transfer mechanism whatsoever to...– That’s an anonymous executive at a “leading lender,” quoted by the FT on why QE3’s impact on homeowners could be smaller than you think.
Citigroup Puts the Fun Back in Taking Huge Losses... →
You know, now would be a really great time for banks to finally recognize their massive hidden losses
Pre-orders for Apple's iPhone 5 sell out in less... →
“Last year it took 22 hours for iPhone pre-orders to stock out. This year it took less than an hour.”
FT Alphaville » When the US sneezes at the edge of... →
Why we need to worry that the US economy is damn close to “stall speed”
Chart of the Day: We're missing out on low rates
If you’re looking to buy a house, from a financing perspective, you’re getting something like a historically great deal from the rates the Fed has kept so low. But, for taxpayers, there’s a corollary to the era of low rates: now is also a great time for the U.S. government to finance large-scale projects. As Ezra Klein and many others have suggested, today’s ultra-low...