• The Credit Crisis Subtext of the Spitzer Story
    Posted by on March 10th, 2008 at 6:01 pm

    I think this might be ironic, and not the Alanis kind either:

    The members decided that even though Client 9 had a credit of $400 to $500 with the ring, they wouldn’t let him keep the appointment until his latest deposit arrived. Client 9 made the calls himself.
    On Feb. 13, according to the affidavit, Client 9 made a hotel reservation in D.C. under his name and left a key for a woman named “Kristen.”
    Client 9 was eventually told his deposit had arrived and “Kristen” was on her way from New York. Client 9 responded, “Great, OK, wonderful.”
    Client 9 discussed with the prostitution ring a way for him to have credit stored up so that he wouldn’t have to worry about sending in a deposit in the future.
    Then they discussed a way for “Kristen” to get his hotel room key once she arrived.
    “Kristen” was sent to room 871, which Client 9 was leaving ajar; Client 9 wanted to be reminded of what she looked like and was told “American, petite, very pretty brunette, five feet five inches, and 105 pounds.”

    Was Spitzer done in by tougher credit standards? If only some banks were as prudent as whorehouses.
    Check out their rates (conveniently listed in pounds, dollars and euros). You can pay with cash, credit card, wire transfer or money order. I wonder if the rates count as core or non-core inflation.

  • L’Affaire Spitzer
    Posted by on March 10th, 2008 at 3:58 pm

    I don’t have much to add about today’s big story, but I’ll simply say that I’ve never been a big fan of Eliot Spitzer. He’s a nasty guy and he ruthlessly pursued a baseless case against Dick Grasso. According to Charlie Gasparino’s book, “King of the Club,” Spitzer’s aides told reporters that Grasso had an affair with his secretary. Charming.

  • Little Tycoons
    Posted by on March 10th, 2008 at 2:46 pm

    At the Ariel Community Academy in Chicago, each incoming first-grade class gets $20,000. The children are eventually put in charge of managing it and picking the stocks.

    The concept is simple: Ariel’s experts manage a $20,000 portfolio for each class until sixth grade, briefing them regularly along the way, and then begin turning over the decisions to the children. Upon graduation from eighth grade, each class returns the initial investment amount to the school for another first-grade class and donates, invests or pockets the profits.
    After giving half the gains to community charity programs or school initiatives, each student can then take the rest in cash or invest it in a Section 529 college savings plan, in which case they are given an additional $1,000. Last year, 80 percent of graduates invested their $150 shares in a 529.

    Given the success of stocks like Crocs, Apple and Hansen Natural, I think it might be worth listening to what kids have to say.
    Here’s how Wrigley’s (WWY) has performed over the long haul:
    WWY.gif

  • TIPS to Bernanke: Drop Dead
    Posted by on March 10th, 2008 at 2:17 pm

    The yield on Treasury Inflation-Protected Securities due in July 2012 is now negative. This means that investors are willing to take a negative real return in exchange for the (ahem) security of owning dollars.
    This means that liquidity has dried up all over the world to such an extent that investors are willing to pay a huge “liquidity premium” (meaning, they can dump their TIPS almost whenever they want) that’s greater than the real return of the bond.
    image632.png

  • Your Oil Datapoint of the Day
    Posted by on March 10th, 2008 at 1:54 pm

    Chevron (CHV), Exxon Mobil (XOM) and ConocoPhillips (COP) collectively made $10 million last quarter.
    An hour.
    (But that includes parking….)

  • Nicholas Financial Trading Well Below Book Value
    Posted by on March 10th, 2008 at 11:18 am

    Shares of Nicholas Financial (NICK) have dropped to $6.78, that’s about 12% below book value.

  • Anatomy of a hedge fund collapse
    Posted by on March 10th, 2008 at 10:46 am

    Fortune has an interesting article on the collapse of the Tequesta Mortgage fund. What’s interesting is that the fund steered clear of the risky investments that others were taking. The reason is fell was due to the credit markets drying up.

    In one case, Citigroup seized collateral from Tequesta and put it up for sale in a bid-list auction. According to a trader at another firm, however, Citigroup’s mortgage trading desk offered to sell Tequesta’s bonds to regional brokerage firms at prices even lower than listed prices. In another instance, Tequesta’s portfolio managers were told by Citigroup rivals that its seized bonds had been offered to other hedge funds for more than $25 below where they had been trading in the previous days.
    Under that kind of pressure, Tequesta decided by early March that they’d have to shut the mortgage fund down. Tequesta, according to a firm executive, still has several portfolios open. Ross declined comment to Fortune.com on his future plans. But as long as the credit markets remain in their current miserable state, there are going to be more stories like Tequesta’s.

    There’s a saying that if you can’t sell what you want, sell what you can.

  • An Emergency Rate Cut?
    Posted by on March 10th, 2008 at 10:00 am

    Is an emergency Fed rate cut on the way? Goldman says we can’t rule it out:

    An emergency interest rate cut from the Federal Reserve is possible ahead of its March 18th policy meeting, according to a Goldman Sachs research note on Monday.
    Goldman said its view on Fed policy changed on Friday.
    The government reported on Friday that a second straight month of job losses and the Fed announced new steps to inject liquidity into the financial system as credit availability remains tight.
    Goldman said the Fed would drop the benchmark federal funds target rate to 2 percent by late April, most likely in two 50 basis-point steps at the next two meetings.
    “We cannot rule out an intermeeting rate cut today,” the Monday note said.

  • Highlights of the Congressional Hearings
    Posted by on March 10th, 2008 at 7:08 am

    There seems to be a disturbing trend:

    “Punishing individual corporate executives with public floggings like this may be a politically satisfying ritual — like an island tribe sacrificing a virgin to a grumbling volcano,” Rep. Tom Davis of Virginia said.

    And later:

    An investor advocate who also testified, Nell Minow of Corporate Library, appeared amused by Davis’ comparison of the hearing to a tribal sacrifice.
    “These are not scapegoats and they are certainly not virgins,” she said.

    Ouch.

  • When It Rains, It Pours
    Posted by on March 10th, 2008 at 7:00 am

    The FBI is investigating Countrywide.