Tuesday, 23 Nov 2010 | 3:26 PM ET

Here's Why the Fed Plan Is Failing: We’re All Austrians Now

Posted By: John Carney

It’s no accident that Austrian economics is newly popular. It provides the best explanation for the business cycle we just lived through.

Stockbyte | Getty Images

But the resurgent popularity of Austrian economics may actually be hampering the ability of the Federal Reserve to reflate the economy with low interest rate policies. Businesses, now aware of the dangers of a low inflation- sparked economic bubble, may simply be refusing to fall for the age-old boom-bust trap.

The Austrian theory of business cycles is rather straightforward:

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  Tuesday, 23 Nov 2010 | 2:46 PM ET

Janus Halted and Wellington Receives Insider Trading Inquiries

Posted By: John Carney

*Update: Janus has resumed trading, as of 2:40*

*Update: MFS tells us that they have not received any request for information in connection with the federal insider trading probe.*

Trading in shares of the Janus Capital Group have been halted, apparently in anticipation of an announcement that federal authorities are looking at Janus as part of their insider trading dragnet.

Bloomberg makes it sound like not too big of a deal :

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  Tuesday, 23 Nov 2010 | 1:35 PM ET

Heroic Analyst Tells of FBI Threats in Insider-Trading Probe

Posted By: Gennine Kelly

John Kinnucan , an independent analyst, said the FBI approached him and said, "there was a very large insider trading ring investigation that they were conducting and one of my clients was a focus of the probe and they wanted my help in basically incriminating this individual."

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  Tuesday, 23 Nov 2010 | 1:20 PM ET

The Weird Love Affair Between TPG and J. Crew

Posted By: John Carney

What a strange love affair it's been between TPG Capital and J. Crew.

This morning the news broke that TPG Capital, with help from a Los Angeles private equity firm called Leonard Green & Partners, is close to a deal to acquire the preppy-clothing company for about $3 billion in cash, or around $43.50 per share. This news comes just 18 months after TPG Capital sold off the last of its previous stake in J.Crew at an average price of $14 .

The turnabout, while continuing a convoluted TPG/J.Crew affair, also may speak volumes about the state of private money today.

TPG first acquired a stake in J.Crew way back in 1997. It was one of the private equity firm’s first and most notable deals. Back then J.Crew was a huge brand, with a highly recognizable name and look, but with sales of just $600 million per year. In the catalogue business, Eddie Bauer and Land’s End have sales more than twice J. Crew’s. Banana Republic dwarfed it in brick-and-mortar retail.

Perhaps even more importantly, J. Crew’s management—primarily the founder Arthur Cinader and his daughter Emily Woods—had an uppity reputation that had reportedly already scared off one buyer, Bahrain’s Investcorp.

The original deal was messy. TPG and J. Crew had agreed to a sale price of $560 million, financed with $175 million in senior subordinated notes with a 10 percent yield and $140 million in zero-coupon junk bond notes offered at 54 cents on the dollar. Chase would finance about $30 million in receivables.

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  Tuesday, 23 Nov 2010 | 12:02 PM ET

Dynegy Deal a Dead Man Walking — A Preliminary Postmortem

Posted By: Ash Bennington

It appears Blackstone will not succeed in its buyout attempt of Dynegy, the Houston energy company specializing in power plant operations.

In reference to a meeting discussing the proposed takeover, The Journal writes:

"The meeting was recessed a week ago to give shareholders time to consider a revised offer Blackstone made. Facing intense opposition from Carl Icahn and hedge-fund operator Seneca Capital, Blackstone raised its bid to $5.00, a 50-cent increase over the August merger agreement, in an attempt to sweeten shareholder sentiment. "

But to no avail.

And the opposition of Icahn, as well as Seneca Capital, was indeed the rub.

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  Tuesday, 23 Nov 2010 | 11:00 AM ET

The Bazooka Theory is Backfiring

Posted By: John Carney

Yesterday, we blasted the Bazooka Theory at work in the European Union's bailout of Ireland. Today, the Wall Street Journal provides even more evidence of the stupidity of the theory:

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  Tuesday, 23 Nov 2010 | 10:55 AM ET

The Government's Insane War Against Insider Trading

Posted By: John Carney

Over the weekend, we learned that the federal government has gone into panic mode over insider trading. It is using the kind of tactics developed to fight mobsters, and later, terrorists, to root out and punish the use of non-public information by hedge fund traders. It's the equivalent of TSA Rapiscan body scanners or invasive pat-downs at airports.

Wall Street sign
Paul Giamou | Aurora | Getty Images
Wall Street sign

Does this make sense? Mobsters and terrorists have genuine victims, often easily detectable by their corpses; while the victims of insider trading are far harder to detect. That should be the starting place in any story about government enforcement; who is the victim? When it comes to insider trading, the victim is so hard to detect that it's far easier to suspect that it may not exist. The victim of insider trading is a Snuffleupagus, someone visible only to the Big Birds behind government desks.

A year or so ago, I tore through every argument that purported to show how ordinary investors were victimized by insider trading. My friends over at Business Insider are now re-running it here .

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  Tuesday, 23 Nov 2010 | 10:13 AM ET

Coppola: Consumers Are Beginning to Loosening Up

Posted By: Lori Ann LaRocco

During this time of year, we'll read and hear lots of stories on the pulse of the consumer with interviews from retail CEOs as well as analysts. But another indicator on the overall health of the retail sector is the REITS that acquire, own, develop, redevelop, manage or lease regional and community shopping centers.

The occupancy of these REITs tell you just how robust the industry is performing—is it contracting or expanding? One of companies in this space is The Macerich Company \(MAC\) which owns approximately 73 million square feet of gross leasable space with primarily interests in 71 regional malls throughout the United States. Art Coppola, Chairman and CEO of the company tells me this holiday season could be a very merry one for the retail industry.

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  Tuesday, 23 Nov 2010 | 9:10 AM ET

North and South Korea Fire Artillery in Anger

Posted By: Ash Bennington

World markets are sharply lower this morning. The selloff appears to have been triggered by two principal factors: Worries about a worsening debt crisis in Europe, and North Korean shelling of a South Korean island.

Here are the raw data: (From Yahoo Finance via AP) "In Europe, the FTSE 100 index of leading British shares was down 35.77 points, or 0.6 percent at 5,645.06 while Germany's DAX fell 16.76 points, or 0.3 percent, to 6,805.29. The CAC-40 in France was 30.16 points, or 0.8 percent, lower at 3,788.73."

"Wall Street was also poised to open lower—Dow futures were down 61 points, or 0.6 percent, at 11,104 while the broader Standard & Poor's 500 futures fell 9.2 points, or 0.8 percent, at 1,188.70."

North and South Korea Fire Artillery in Anger

North Korea and South Korea have exchanged artillery fire after the North shelled a South Korean island with artillery rockets near the two countries disputed maritime border. This is an international incident of a serious magnitude, with ramifications for both the regional markets in Asia, as well as for the broader global financial markets.

The New York Times provides a timeline, as well as a context for the hair-trigger potential for escalation on the Korean Peninsula:

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  Monday, 22 Nov 2010 | 5:13 PM ET

Rising Unrest in Ireland Forces PM Cowen to Call for New Elections in January

Posted By: Ash Bennington

Major Raid on Hedge Funds (CNBC's NetNet) "The FBI conducted raids on three hedge funds today in connection with its massive investigation on insider trading on Wall Street"

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About NetNet

  • NetNet is where you'll find the low-down and the high jinks of Wall Street. It's the place for insider stories, trader gossip, and tales of the foibles of the moneyed crowd and the culture of finance.Wall Street news and commentary served fresh all day long.


  • Jeff Cox is finance editor for CNBC.com.

  • Lawrence Develingne

    Lawrence Delevingne is the ‘Big Money’ enterprise reporter for CNBC.com and NetNet.

  • Stephanie Landsman is one of the producers of "Fast Money."

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