I live in a very prosperous neighborhood of New York City, the Upper West Side, where the main thoroughfare, Broadway, is full of vacant storefronts. Except for a few recent restaurant closings, this isn’t a product of the recession—it was just as true a couple of years ago. I mainly blame the banks, which at the height of their …
Wall Street & Markets
The meaningless crisis at the FDIC’s meaningless insurance fund
The Federal Deposit Insurance Corp., which insures $4.8 trillion in bank deposits, reported today that its insurance fund was down to $10.4 billion at the end of June.
This news generated some worried-sounding headlines. Think about it for a moment, though: If the resources available to insure $4.8 trillion in deposits (it’s actually …
The Tobin tax is back in fashion. Would it help?
We staggered back into NYC early this morning, cross-country road-trip completed. I’ll write something soon about the important things I learned sitting in a small-to-mid-sized SUV (we had a Mercury Mariner, then traded it in at the Moline Hertz for a Hyundai Santa Fe) for up to 14 hours a day. But for now, the first headline to catch my …
Strictly Business: How Emotions Screw Up Your Investments
Why do many competent, smart people make mistakes with their investments? It turns out that their feelings have been hurt, or they’re trying to save face, or they’re cocky enough to think they’re faster and smarter than the masses. Basically, they get emotional.
New column: Madoff’s other legacy
I’ve got a new column online and in the issue of TIME with Less Vegas on the cover. The Vegas story, by Joel Stein, is pretty great, by the way.
My column is an attempt to put the high frequency trading brouhaha in some historical context. And part of my historical context is Bernie Madoff. As so often happens, there were a couple of …
What will the Colonial Bank failure mean for Auburn football?
Bloomberg has broken the news that the FDIC is about to take over Alabama-based Colonial Bancgroup and sell its branches and deposits to those objectivists at BB&T. This is the biggest bank failure of the year, although not on the scale of last year’s Wamu takeover—Colonial has $26 billion in assets. But for anybody who has lived in …
Why is Andrew J. Hall working for Citigroup?
Andrew J. Hall, Citigroup’s $100 million man, is considering a compromise to please pay czar Kenneth Feinberg. Reports the WSJ:
The discussions include converting a substantial chunk of Mr. Hall’s compensation for 2010 to equity from cash, these people said. A deal wouldn’t affect the head of Citigroup energy-trading unit Phibro LLC’s
…
A very true statement about the efficient market hypothesis
Emanuel Derman writes (via Felix):
[T]he EMH, if you don’t take it too literally and get carried away about axiomatically defining strong, weak and other kinds of efficiency as though you were dealing with axiomatic quantum field theory, does recognize one true thing: that it’s #$&^ing difficult or well-nigh impossible to systematically
…
GM wants to be an eBay Power Seller
General Motors, after prematurely announcing the news back in July (before it actually had a deal with eBay), is really truly going to start selling cars via eBay on Tuesday. You can tell it’s for real this time because the press release announcing the program is available on the eBay website (pdf!) as well as the GM one. And there’s …
The Shark Tank stays intact
The TV critic is on vacation. Plus, Shark Tank is about business and stuff. So I watched the first episode of Mark Burnett’s latest reality offering Sunday night. As did Curious Capitalist Jr., who was supposed to go to bed but kept watching because he was riveted. Hmmm, a 10-year-old (who thinks economics and business are boring) …
A book-related interlude
I’ve had my final say in my CBS Moneywatch “blog war” with Eric Falkenstein over efficient markets. It really hasn’t been much of a war: We both agree that financial markets go nuts sometimes. He’s just a lot more distrustful of government than I am.
Oh, and some Krugman guy has written a review of my book for this Sunday’s New York …
The very circular nature of AIG’s profits
So AIG made a $1.82 billion profit in the second-quarter—its first venture out of the red since 2007. Hmmm, it’ll only take 47 more quarters like that for the company to repay the $87.6 billion in direct aid it’s gotten from the federal government.
I’m no insurance industry analyst, but a brief look at the financials the company …