Thursday, January 29, 2009

Pictures - Regional Economics


We do not have a national housing market - Alan Greenspan (and others)

...which is true, until there is a national credit crunch?

Here is a map from the WSJ that puts up some data on where the spending and relief may be going, throughout the country. On a per-capita basis, it's spread pretty evenly:

Here is the latest foreclosure map from the NY Fed. Sorta makes the approach look less than perfectly targeted, although maybe foreclosures are not the best metric. Still ...:

Here are the persistent poverty areas, a designation defined in the house bill, HR-1, as of 1990 (yeah, quite old, but...). Notice that almost all the non-metro areas are all ... in red-state, South.

Here is the change in economic activity, as measured by the Philly Fed - direction is most important here (notice the states that have been spared, so far);

Invincible Wall Street

Another for our series, "Invincible Wall Street":

Jan. 27 (Bloomberg) -- American International Group Inc., the insurer saved from collapse by government money after losses on credit-default swaps, offered about $450 million in retention pay to employees of the unit that sold the derivatives, according to two people familiar with the situation.

About 400 workers at the financial products unit may get the money in two installments

It costs that much to manage an existing book of business? Really?

Friday, January 23, 2009

I love the internet

We should find out the size of Thain's severance sometime today or in the next few days, I suspect:

'I'm not sure that McCann and Fleming left just because they may have fallen out with John Thain. The reality is that both these executives would have bagged huge severance packages (triggered by change-of-ownership clauses in their contracts). If they stayed, all they would have had to look forward to compensation-wise was US government restrictions, which would have resulted in $400,000 base salaries and no bonuses for the foreseeable future.

my uneducated, basic view, shared:

I have worked for Citi for 35 years now, joining when it was still called First National City Bank of New York. The rot, in my view, set in after the Travellers deal. We all thought that we'd end up going to Hell in a handcart, and it's now coming to pass.

No Money for BOA?

Disgorge and bankrupt Merrill. Then, try again. That is, wash, rinse, repeat. [I know, it probably can't be done.]

Superbly compiled by Rob Cox: A History Lesson With Merrill Deal (No doubt, this didn't get sent around to BOA's shareholders, as they voted "yes").

Thursday, January 15, 2009

The Beauty Contest Keynes Didn't Write About

Everyone knows Keynes' famous beauty contest analogy, in which the marginal price/prize is what the next person bidding in the beauty contest for an item will pay.

What he seems to have left out (to my memory) is the beauty contest that went on to get Bernie Madoff to manage your money.

Since nothing ever changes, how could the great man have missed this layer of the onion?

Maybe a Keynes maven can enlighten us.

Even if not, you cannot miss the irony of people scrambling for the privilege of loosely regulated money-management, given this headline:

Madoff might not have made any trades

Wednesday, January 14, 2009

Citibank Shrinks


It's the thing to do (for a bank), since they cannot expand in the current environment, much, given their balance sheet.

Meanwhile, people are somehow surprised that Sandy Weill's ... er, vision exceeded his grasp? Naw, really?

"The problem with Citi is the model, the execution, the management," Smith said. "How do you go a decade without integrating?"

Could it be that non-integration suits some people's management style? Who knows, but the idea that there is a high growth or highly profitable, easily managed "sub-business" for Citibank is ... chimera.