Davidson Kempner continues to make money by focusing on beat up loans—despite the general perception that bonds have little to offer investors.» Read More
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.
Congress is back in session this week and there are two weighty issues for them to tackle: whether to extend the Bush tax cuts and the deficit reduction from the President's bipartisan National Commission on Fiscal Responsibility and Reform. The political rhetoric has already heated up. Fingers are pointing and heels are being dug into slippery slopes.
If Americans were "sending a message to Washinton" in the midterm elections, the message has been scrambled. The conservative Tea Partying wing of the GOP, believing Americans have voted for change, read it as a message for smaller government, less spending, and smaller deficits. Others say voters were demanding government solutions to unemployment. Still others think Americans were just voting against Wall Street.
One of my close contacts who knows very well the process in which tough economic decisions are made and the ramifications of standing his ground is Larry Lindsey, President and Chief Executive Officer of The Lindsey Group. Lindsey, a former director of the National Economic Council and assistant to the president on economic policy for the U.S. President George W. Bush, was one of the key players in Bush's $1.35 trillion tax cut plan. He called it an "insurance policy" against an economic downturn. Lindsey left the White House in December of 2002 after he estimated the price tag of the Iraq war could reach $200 billion.
Even though Lindsey left "politics" doesn't mean his economic opinons aren't sought out. The Obama White House contacted Lindsey to get his original thoughts on the $800 billion stimulus package. He told them the size of the package was right, but the allocation of where the money would be spent was not. Lindsey called the results of the stimulus an"absolute disaster" because the money appropriated went to areas that had little benefit to the economy or job-creation.
Goldman Delayed in Attempt to Repay Buffet?(CNBC via Reuters) Goldman Sachs has apparently hit a snag with the Fed in its bid to repay Berkshire Hathaway's $5 billion investment. The delay may be related to the Fed's unwillingness to allow Goldman to make adjustments to its capital levels before allowing other banks the same opportunity. Goldman Sachs is paying a burdensome 10 percent annually on the debt — and would presumably wish to replace it with funding at a better rate, now that the debt markets have unfrozen and financing costs have dropped dramatically.
Hedge funds have seen the worst start to the year since the financial crisis, as returns in January and March were both in the red.
The Fed indicated to Citi that it would get more time to fix "stress test" planning problems before rejecting its capital plan.
Goldman Sachs reported quarterly earnings and revenue that topped analysts' expectations on Thursday.