• Headline of the Day
    Posted by on October 9th, 2008 at 10:40 am

    From the Register:

    Oracle shareholders choke on Ellison’s package

    Size an issue

  • Great Moments In Government
    Posted by on October 8th, 2008 at 9:16 pm

    September 19, 2008:

    S.E.C. Temporarily Blocks Short Sales of Financial Stocks
    Financial Select Sector SPDR (XLF) closes at $22.38

    October 1, 2008

    S.E.C. Extends Ban on Short-Selling
    Financial Select Sector SPDR (XLF) closes at $20.67

    October 8, 2008

    A Debate as a Ban on Short-Selling Ends: Did It Make Any Difference?
    Financial Select Sector SPDR (XLF) closes at $15.28

  • Chart of the Day
    Posted by on October 8th, 2008 at 3:34 pm

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  • Sad Guys on Trading Floors
    Posted by on October 8th, 2008 at 2:56 pm

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    The latest blog, nothing but pictures of sad guys on trading floors.
    (Via: Ritholtz)

  • The British Bank Bailout
    Posted by on October 8th, 2008 at 2:48 pm

    I just got back from being on Britain’s SkyNews where I mentioned that Britain’s policy today is better than the Paulson plan, at least in the eyes of taxpayers.
    British policy, until now, has been far too reactive and unimaginative. The key difference is that under today’s plan, British taxpayers get a stake in the banks through preferred stock in exchange for loaning banks money. What banks needs is an injection of capital. I think it will be interesting to see how many banks that have hitherto claimed perfect health will start crawling towards the government’s money line.
    The key advantage in our takeover of Fannie and Freddie is that we fire management. Some CEOs in Britain deserve the same fate. I should add that I’m not one who’s terribly worried about the issue of CEO compensation. When the conversation involves trillions, we can worry about millions latter.

  • Americans’ Satisfaction at All-Time Low of 9%
    Posted by on October 8th, 2008 at 12:24 pm

    Yikes! According to Gallup, just 9% of Americans are satisfied with the way things are going in the U.S. right now.

    The previous low point for Gallup’s measure of satisfaction had been 12%, recorded back in 1979, in the midst of rising prices and gas shortages when Jimmy Carter was president. Gallup has recorded a 14% satisfaction level at several points — once in the senior Bush’s administration in 1992, and several times earlier this year.
    The reason for Americans’ extraordinarily low level of satisfaction is straightforward: the economy. Asked in the weekend Gallup Poll to name the most important problem facing the country today, almost 7 in 10 Americans mentioned some aspect of the economy, far ahead of any other problem mentioned.

    I always thought with polling you could get 15%-20% to agree with any statement. I mean, how many people think Elvis is alive?

  • China to the Rescue
    Posted by on October 8th, 2008 at 11:33 am

    Ken Rogoff suggests a plan:

    The Chinese government could offer to lend up to $500bn (from its current stock of $1,800bn) to the US government for the rescue of its financial sector. Its previous assistance – buying US bonds – was indirect and unconditional. Not so in this case.
    China’s loan offer would be direct to the US government to be spent in the current financial crisis. More important, it would come with strings attached. Tied aid, the preferred mode of operation of western donors since the postwar period, would now be embraced by China.
    What would be the nature of the strings – or “conditionality” as the US Treasury, a longtime practitioner of this art, has called it? Conditionality as imposed by the World Bank and International Monetary Fund was underpinned by an ideology that favoured markets and globalisation. But there was also an assumption that either borrowing third world governments did not understand their benefits or the reformers there needed a “spoonful of sugar” to help overcome any internal opposition.
    China would impose two conditions. First, it would declare that the offer of money was conditional on the US government’s adopting a particular approach to rescuing the banks, namely to favour in the next round the use of government money to recapitalise the banks. Europe has been using this approach and evidence suggests it is the most effective way of dealing with large-scale financial crises.
    The US government – like third world governments in the past – has been unable to adopt the most efficient course of action. This stems from an ideological obsession against “socialising” banks or because inducement is necessary to overcome any domestic opposition to it.
    The second condition would relate to “social safety nets”, which had become standard embellishments to World Bank/IMF adjustment programmes. China would stipulate that monies be devoted to cushioning the impact on vulnerable homeowners, so that they would not be forced into forgoing the American dream of home ownership. Chinese conditionality on this front would achieve an outcome that several economists on the left and right have argued for on grounds of fairness, and also to address the fundamental problem in the housing market.
    For China, this offer of help would have three virtues. First, it would be riding to the rescue of a situation partly created by its own policies of undervalued exchange rates, which led to lax global liquidity conditions. Second, its economic interest would be served because successful US efforts at rescuing its financial sector could help avert an economic downturn, protecting China’s exports, its growth engine.
    Perhaps most important, it would seal China’s status as a responsible superpower willing to deploy its economic resources for the sake of protecting the world economy. And if the means for achieving that are by providing the current hegemon with the largest aid package the world has ever seen with a healthy dose of sensible conditionality, well, what could be more statesmanlike than that?

  • The S&P 500 Broke 1,000
    Posted by on October 7th, 2008 at 4:00 pm

    For the first time in five years, the S&P 500 closed in three-digit territory. The index closed today at 996.23.

  • Phases of the Moon and the Stock Market
    Posted by on October 7th, 2008 at 11:26 am


    Some people think it’s merely a coincidence. Those people would include me.

  • The Worst Decade Since the Thirties
    Posted by on October 7th, 2008 at 11:11 am

    Bespoke points out that this decade has been one of the worst in history for stock returns:

    Unless we get a major rally to close out the year (15%+), this will only be the third time since 1900 that the Dow Jones posted negative returns in the first nine years of a decade (excluding dividends).

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