• Hedge-Fund Investors Hire Private Investigators
    Posted by on March 23rd, 2009 at 12:36 pm

    Bloomberg finds an interesting story; investors in hedge funds are hiring private investigators to look into the funds:

    Background checks can take from two to six weeks, and may cost about $1,000 for each individual or company investigated, according to the firms.
    “Basically you don’t want managers to have distractions that will impact their decision making,” said Michael Dubin, president of New York-based The LongChamp Group Inc., which allocates client money to hedge funds.
    Background searches helped Cole Partners Asset Management LLC stay away from managers that were later found to have had run-ins with regulators, said Rian Akey, chief operating officer of the Chicago-based firm, which channels money into hedge funds.
    Akey said a check done three years ago on a New York-based hedge fund found that in 1999 the managers had paid fines amounting to $500,000 for violating trading rules. “That was enough to put us off,” he said, declining to name the fund.

  • AIG Renames Itself
    Posted by on March 23rd, 2009 at 11:41 am

    AIU.
    At least the good parts will be called that. It really doesn’t seem like much of a change.

  • Application to Be in the Treasury’s Bank Plan
    Posted by on March 23rd, 2009 at 8:43 am

    Curious about how to be a private investor in Timmy’s bank plan? Well, let’s just say you are.
    Here’s the application. The requirements are:

    Fund Managers will be pre-qualified based upon criteria that are anticipated to include:
    • Demonstrated capacity to raise at least $500 million of private capital.
    • Demonstrated experience investing in Eligible Assets, including through performance
    track records.
    • A minimum of $10 billion (market value) of Eligible Assets currently under management.
    • Demonstrated operational capacity to manage the Funds in a manner consistent with
    Treasury’s stated Investment Objective while also protecting taxpayers.
    • Headquarters in the United States.
    All Applications must be submitted no later than 5:00 p.m. ET on April 10, 2009.

  • The Swedish Model
    Posted by on March 23rd, 2009 at 8:06 am

    I’ve reluctantly come to the conclusion that we ought to nationalize our failing banks. Interestingly, my support for this position comes from looking at Sweden’s experience during its banking crisis in 1992.
    The Swedish government wound up spending about 4% of its GDP on their banks. But here’s the secret. The government owned the banks and made a killing. In fact, the nationalization may really have been self-financing.
    I mention Sweden because the country isn’t socialist by reflex. It looks like the government is perfectly willing to let Saab go down the drain.

  • The Timmy Plan
    Posted by on March 23rd, 2009 at 7:53 am

    The Treasury Department has announced its bank plan:

    The federal government will use up to $100 billion in funds from the Troubled Asset Relief Program, or TARP, and capital from private investors in order to generate $500 billion in purchasing power to buy legacy assets, Treasury said in documents provided early Monday. The department noted that the program could potentially expand to $1 trillion over time.
    The program has two parts. It will address both the legacy loans and the legacy securities clogging the balance sheets of financial firms.
    Under the legacy loan program, banks will identify the assets they wish to sell. The FDIC will conduct an analysis to determine the amount of funding it is willing to guarantee. Leverage will not exceed a 6-to-1 debt-to-equity ratio. Eligible assets will be determined by banks, regulators, the FDIC and the Treasury Department.

    Here’s the statement from Treasury.
    Paul Krugman has described this as basically a rehash of the Paulson plan: “if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt. So this isn’t really about letting markets work. It’s just an indirect, disguised way to subsidize purchases of bad assets.”
    The only thing I would add is that TARP has been such a failure that it may force banks to play ball since it will get Treasury off their back.

  • The Sweet Sixteen
    Posted by on March 22nd, 2009 at 6:38 pm

    The selection committee did a pretty good job this year. The sweet sixteen consists of four #1s, four #2s, four #3s, two #4s, a #5 and a #12. The first weekend was almost not needed.

  • Lehman Stress Balls, Paperweights, Bags Coughed Up by Barclays
    Posted by on March 22nd, 2009 at 10:07 am

    Not sure what to make of this:

    Lehman Brothers Holdings Inc. has negotiated the return of thousands of Lehman-logoed knickknacks that were mistakenly transferred to Barclays Plc through the sale of the bankrupt securities firm’s brokerage unit.
    Tote bags, umbrellas, stress balls, Tiffany paperweights and other items now stored in closets and warehouses from New York to Chicago will be returned to Lehman and sold to pay creditors, according to a court filing on March 19. Lehman filed the largest bankruptcy in U.S. history in September and has about $200 billion in unsecured liabilities left to pay, Chief Executive Officer Bryan Marsal said Jan. 28.

  • Weekend Poll
    Posted by on March 20th, 2009 at 5:09 pm

  • Gold Against Stocks
    Posted by on March 20th, 2009 at 2:27 pm

    Gold has had a pretty good run over the past few years. But over the past few decades, gold has badly trailed stocks. Here’s a look at gold divided by the Wilshire 5000 Total Return Index.
    image786.png

  • Prices Are Still Down
    Posted by on March 20th, 2009 at 1:49 pm

    I thought this was in interesting chart.
    image785.png
    Prices are still down, though energy prices have made a large impact.