Floyd Norris has a go at bankers who want to dilute mark-to-market accounting this morning and he makes some good points.
However, just as an exercise, imagine what it would be like if all homeowners were forced to mark to market the value of their homes, and post cash collateral in cases of negative equity. Read more
Fitch’s downgrade of Berkshire Hathaway from triple-A to double-A plus status has been greeted in a fairly sanguine manner, with Barron’s pointing out that Warren Buffett’s borrowing costs “aren’t exactly going to skyrocket.” But I think it is a bit more serious than that.
Remember what happened to American International Group, after Fitch cut its triple-A rating in March 2005 (to be followed by Moody’s and Standard and Poor’s). This is a description of what subsequently occurred from the Washington Post’s series on AIG: Read more
I spent today at court in lower Manhattan watching Bernie Madoff being jailed. Here is my account of it for the FT:
The end of Bernie Madoff’s liberty came swiftly. “It is my intention to remand Mr Madoff. I do not need to hear from the government,” said Judge Denny Chin briskly, a second after Ira Sorkin, Mr Madoff’s attorney, had ended his hopeless plea for his client to remain on bail. Read more
My FT column this week is about structural reform of financial services: Read more
Perhaps they should re-christen it a Madoff scheme.
To judge by the charges against him, to which his lawyer says he will plead guilty on Thursday in Manhattan, Bernard Madoff not only ran the biggest Ponzi scheme of all time but one of the purest. In some ways, his alleged fraud outdid Charles Ponzi’s own effort. Read more
The US stock market has bounced this morning on Vikram Pandit’s bullishness about how the first two months of the year went at Citi.
Justin Fox notes that it could be an indication of banks getting back to decent profitability in their core lending business, which had been increasingly used as a loss leader for fees (such as those charged for packaging and distributing collateralised debt obligations). Read more
The trial of Helg Sgarbi, the Swiss banker-playboy-blackmailer, is intriguing for all sorts of reasons, including the fact that it produces sentences such as the one quoted in my post below.
The thing that strikes me is the dichotomy between the recklessness of Susanne Klatten, Germany’s richest woman, in an affair of the heart and her insight and restraint in investment matters. Read more
“I’m going to need to learn about merchant banking again and they are going to have to learn to have some old idiot like me who actually asks what they are doing.”
- Johann Rupert, the 58-year-old South African billionaire who has invested in the former Lehman Brothers private equity business. Read more
David Carr’s column this morning recommending that newspapers band together to stop giving away their content on the web will no doubt raise the hackles of Jeff Jarvis, Felix Salmon and those who are viscerally opposed to papers charging online readers.
Be that as it may, I thought the most intriguing point he made was about advertising markets, which sell ad space on behalf of internet publishers, but have been delivering low yields because of the excess of supply over demand: Read more
Vanessa Friedman, the FT’s fashion editor, has an interesting piece this morning about the return of Yves Saint Laurent to profitability after a long, long time.
She notes in the middle that: Read more
My colleague Martin Wolf has written a characteristically magisterial piece today to start the FT’s series on the future of capitalism, which I of course recommend.
I also liked his reference to the Wizard of Oz at the end: Read more
It always feels a bit odd, as a journalist, to have your own words reported although Justin Fox does a fine job of it today in his note on a New York University Stern School panel I sat on this morning.
The panel consisted of Paul Volcker, the former chairman of the Federal Reserve and head of Barack Obama’s Economic Recovery Board, Myron Scholes of Black-Scholes fame, Matthew Richardson, a professor of applied financial economics at NYU, and me. Read more
The case of Andrea Orcel’s bonus is interesting, and not merely to Andrew Cuomo, the New York attorney general who has issued a subpoena to the Merrill Lynch banker in his inquiry into the bonuses that Merrill paid before being swallowed up by Bank of America.
Mr Orcel, who is in charge of international corporate and investment banking for Bank of America, gained a bonus of $33.8m for his work for Merrill in 2008. In 2007, his bonus of $38m included a one-time fee of $12m for working on Royal Bank of Scotland’s disastrous €71bn consortium bid for ABN Amro. Read more
Amazon has just published its anticipated iPhone application for the Kindle, allowing you to read your Kindle e-books (although not your newspapers, magazines or blogs) on an iPhone or iPod Touch.
This gives me a chance to compare the Kindle to the iPhone (actually an iPod in my case) as a reading device. I downloaded the applicaton this morning (very easily, and it is free) and took a look. Read more
My FT column this week is on the on-going battle between Hank Greenberg and AIG: Read more