Happy Thursday. To our great relief, Bill Ackman has never accused the Morning Six-Pack of being a pyramid scheme.» Read More
Ireland to Accept Bailout? (Business Week) Prime Minister Brian Cowen may be signaling a willingness to begin negotiations in earnest over the terms of an Irish bailout by the European Central Bank. Then again, he may not. Says Cowen: “There’ll be further discussions there and, I’m sure, there’ll be discussions thereafter as well.” Although the Business Week article does not explicitly make the point, we can perhaps safely assume that Prime Minister Cowen is referring to ongoing negotiations regarding Ireland's budget plans—and not engaging in a playful imitation of Ireland's celebrated 20th century absurdist playwright, Samuel Beckett.
While a lot of attention has been paid today to the "luminaries letter" in the Wall Street Journal urging the Fed to give up quantitative easing, a similarly aimed if better reasoned piece by federal judge Richard Posner seems to have escaped attention.
In his usual direct style, Posner begins by criticizing the term “quantitative easing” as “a pompous, uninformative term for a central bank’s buying debt (bonds, mortgages, commercial paper, etc.) in quantity in an effort to depress interest rates in order to stimulate economic activity.”
Posner goes on to discuss the problems with quantitative easing. His main objections: It runs the danger of creating runaway inflation; it threatens to upset our global trading partners, and it allows politicians off the hook for making serious economic reforms.
Most importantly, however, he says it won’t work.
Current New York Attorney General —and now governor elect —Andrew Cuomo maybe going after Steve Rattner. Again.
An article in today's New York Time's DealBook allows us all to relive the whole sordid mess of the scandal that brought us here in the first place.
Cuomo's office, it seems, has issued a new subpoena to Rattner's old firm, the private equity fund The Quadrangle Group. The subpoena seeks new information about Rattner's compensation, and the financial terms of his departure from Quadrangle, where he served in the role of managing principal until his resignation in February of 2009 .
As you may recall, the original complaint stems from Rattner's alleged role in a kickback scandal centering around New York State pension fund business. Cuomo's continued investigation of Rattner is presumably to gain a stronger hand in his ongoing settlement negotiations with him. Rattner has already rejected a $20 million settlement offer from Cuomo's office. The SEC has reached a separate, tentative deal with Rattner—which calls for Rattner to agree to accept a multiyear ban from the securities industry, and to pay the potentially more palatable sum of $6 million.
Is the real threat of the European debt crisis being underreported in the US?
When news articles appear in the United States about the serious problems currently plaguing the European debt markets, the articles tend to focus on the fiscal worries—and consequent default risks—of individual nations. (Regular consumers of business news in the US are certainly familiar enough with the recent stories of Ireland's credit woes).
But are we missing the bigger picture?
It’s pretty simple to operate. You get a work sheet with various options to cut spending or increased revenue. The goal is to fill the $418 billion budget hole projected by 2015 and a $1.3 trillion hole by 2030.
I solved the shortfall without raising any taxes or touching the core of Social Security. That is to say, 100% of the fix comes from spending cuts. \(You can read all the details here.\) In the end, I actually overachieved.
In an article in today's Financial Times, Portuguese finance Minister Fernando Teixeira dos Santos was discussing the implications of the current simultaneous credit crises in Greece, Portugal, and Ireland.
In reference to the broader framework of the problems faced in Europe today he said the following:
Despite a huge program by the Federal Reserve intended to provide monetary stimulus to the economy, Nouriel Roubini doesn't think we need to worry about inflation.
In fact, he argues that people who take the position that the Fed should curtail its easing policies do not really understand inflation.
In the first two parts of my interview with economist Nouriel Roubini we discussed two issues: Why Professor Roubini believes a gold standard is no longer a viable option for modern economies, and second why monetary easing is a necessary evil .
So let's take a deeper look at Roubini's theory of inflation.
Let's begin with what seems to be the principal conclusion of Roubini's argument. Simply put: "Inflation is not the problem."
Why does he believe that to be true?
You remember those frightening videos of the McDonald’s hamburgers that sat on a plate in the open air for weeks and weeks but never rotted?
Well, it turns out that a lot of people were drawing exactly the wrong conclusion from the videos. Far from demonstrating that there was something queer about a McDonald’s hamburger—too much salt, too many preservatives, genetic modifications—the video was demonstrating that a McDonald’s burger is pretty much like any other burger.
First, for those of you who haven’t seen it yet, here’s the one of the more famous McDonald’s hamburger videos.
At half past noon today,NASA is scheduled to hold a press conference to discuss the discovery of “an exceptional object in our cosmic neighborhood.”
Now that object is likely just an inanimate thingy hurtling through space. But what if it is something else entirely—a spacecraft containing extraterrestrial biological entities. You know, aliens.
What’s the trade on First Contact with aliens? My initial thoughts turn on two subjects—tech companies and minerals.
Let’s start with tech. It seems likely that any extraterrestrial biological entities—EBEs, for short—capable of reaching the earth would be technologically far more advanced than us. This could undermine existing tech giants that depend on trademarked technology to generate profits. Their tech could rapidly become outdated once EBE tech is introduced. So, we guess, short big tech in case of First Contact.
Last week we noted that opponents of MERS are already gearing up to fight what they see as a government rescue of the fraud-enabling database banks used to facilitate mortgage transfers as part of the securitization process.
Although there’s not yet any explicit campaign underway to lift the threat of catastrophic legal risk to MERS, at least some of the opposition is convinced a legislative rescue is underway.
What’s more, they are convinced that without Congressional action, MERS would not only lose its credibility—but would be snuffed out altogether by the judiciary.
Let’s start by saying that we’re not convinced that courts will destroy MERS. Even though it has suffered some legal setbacks, it has a long history of satisfying courts about its legitimacy. What’s more, courts are much more practical than they are often given credit for. It seems unlikely that they’d throw such a vast and important part of the financial system—3 out of five mortgages in the US are part of MERS—into chaos.
JPMorgan's chief U.S. equity strategist, Tom Lee, said that a "construction boom" seems imminent and should boost stocks.
Global investment management firm Pimco underperformed its peers last month, according to estimates by data tracker Morningstar, following internal strife at the company.
A lot of people think of it as an Old Boys Club but the truth is, Wall Street likes to hire 'em young, says former trader Raj Mahal.