Quoting the Crisis

May 17

“We used to rely on the public making dumb investing decisions,” one well-known Manhattan hedge-fund manager told me. “but with the advent of the public leaving the market, it’s just hedge funds trading against hedge funds. At the end of the day, it’s a zero-sum game.” Based on these numbers—too many funds with fewer dollars chasing too few trades—many have predicted a hedge-fund shakeout, and it seems to have started. Over 1,000 funds have closed in the past year and a half.” —

With greater-fools-as-a-service, things start getting interesting.

via slavin

(via brycedotvc)

(via thebusinesspursuit)

“Bankia is a problem for Spain. We must learn that toxic assets need to be cleaned up, not just merged into a bigger problem.” — Robert Tornabell, a finance professor at the ESADE Business School, quoted by Miles Johnson in Bankia’s failure to face reality brings back crisis - FT.com

May 16

“This report concludes that ACTA’s harm greatly exceeds its potential benefits. Given ACTA’s corrosive effect on transparency in international negotiations, the damage to international intellectual property institutions, the exclusion of the majority of the developing world from the ambit of the agreement, the potentially dangerous substantive provisions, and the uncertain benefits in countering counterfeiting, there are ample reasons for the public and politicians to reject the agreement in its current form. In doing so, governments would help restore confidence in the global intellectual property system and open the door to a new round of negotiations premised on transparency, inclusion, and evidence-based policy-making.” — Michael Geist - The Trouble With ACTA: My Analysis of the Anti-Counterfeiting Trade Agreement

Great Articles about Money -

tetw:

A Tetw reading list

The Best of Freakonomics by Stephen J. Dubner and Steven D. Levitt - How to make it, why we steal it , how to bet with it, and how it motivates us. A selection of the best articles from NYT column that became an international sensation.

To Have is To Owe by David Graeber - A lot of people have little understanding of what money really is - if you want to find out, this classic article is the place to start.

Three great articles about the financial crisis by Michael Lewis - The world’s top financial reporter heads to Greece, Iceland and Ireland to find out how the credit crisis changed the world.

Jonathan Lebed’s Extracurricular Activities by Michael Lewis - Another classic Lewis piece about how a 15-year-old became the first ever minor to face prosecution for stock market fraud.

The Great American Bubble Machine by Matt Taibbi - “The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

The $20 Theory of the Universe by Tom Chiarella - A beginner’s guide to bribery. Find out just how far greasing people’s palms with a $20 bill can get you.

Why the Poor Pay More by DeNeen L. Brown - “The poorer you are, the more things cost. More in money, time, hassle, exhaustion, menace. A primer on the economics of poverty.”

Inconspicuous Consumption by Virgina Postrel - What do the things you spend your money on say about you?

Is Free the Future by Malcolm Gladwell - The author asks whether the internet will make paying money for stuff a thing of the past.

(via moneyisnotimportant)

May 15

“How many billions in damages JP Morgan will have to pay out is not yet determined but inside their Mortgage-Backed Securities and Repurchase Litigation note on the 10-Q the bank tells us “There are currently pending and tolled investor and monoline claims involving approximately $120 billion of such securities.” — SEC Tells JP Morgan Enforcement Action Coming over Bear’s Mortgage Backed Securities Violations « TERI BUHL

“Well, Jamie, I know, is a phenomenal banker. So I would acknowledge that if we had to choose…most people would choose him and not me. But, I think fundamentally what he’s saying is ‘the way we did business before, we’re not going to be able to do under the capital and liquidity rules that we have.’ And that’s exactly what the regulator’s trying to get you to do, is change your business model. And no one likes to change their business model. I believe in capitalism and I believe in an economy, what happens when you increase the cost of a good. So do I think 10 years from now JPMorgan will be out of business because of Basel III? No. They’ll figure out another way to make money, but in a way that may be more investing in the economy and less speculating against competitors.” — Toronto-Dominion Bank CEO Edmund Clark, quoted in TD’s Clark: Speculation Puts Banking System at Risk | The Big Picture

May 12

“I think a big part of the answer requires rethinking in a direction quite different from the one that the right is pushing: to considerably narrow the tax-free provisions for mergers, acquisitions and spin-offs; to modify the transfer pricing formula to reject treatment of intellectual property developed in this country as “sold” to a controlled subsidiary; to recognize the need to protect domestic industry from globalization that leaves us too dependent on imports; and to re-invigorate anti-trust and consumer protection laws so that industries can no longer sell products and leave customers without recourse to information or repair because of unintelligible call services in the Philippines and “company policies” that refuse to reimburse a customer for damage done to a printer by a cartridge sold by the printer manufacturer.” — Linda Beale in Summers says taxes must increase | Angry Bear - Financial and Economic Commentary

May 11

“

At the board meeting in January, Lehman management explained that while other Wall Street firms were raising “significant capital” in the “past three months,” for Lehman “aggressive capital raising is not necessary” because the firm “remains strongly capitalized” thanks to capital “generated by earnings.”

Knowing that Lehman would be belly up by the end of September 2008, reading these e-mails and documents is cringe- inducing. Unfortunately, given the lack of leadership we still see on much of Wall Street, they will hardly be the last of their kind.

“One of the major problems facing this country today, and its economy, is the huge gap between the income of a few ultra rich and the rest of us, and the near-poverty level of income for many Americans. Countries with such inequalities generally have poor quality of life indicators on a lot of fronts, and the US is no exception. Teenage birth rates, illiteracy, health care, low-birth weight babies, unemployment—a litany of societal ills accompanies high inequality within a society, and the US suffers from almost all of them.” — Linda Beale in Summers says taxes must increase | Angry Bear - Financial and Economic Commentary

May 10

“How can they make a decision like this behind closed doors, without explaining it to the Japanese people? The restart issue reveals the flaws of Japan’s current system, and how it is beholden to special interests.” — Toru Hashimoto, Osaka’s mayor, quoted by Martin Fackler in Japan’s Leaders Fret as Nuclear Shutdown Nears - NYTimes.com

“Wall Street’s biggest banks have lost almost two dozen of their most-profitable credit traders in the past 13 months as regulators limit the kind of risk-taking that amplified the housing crisis four years ago. As banks slash or defer pay and reduce the amount they’re willing to wager, the traders are seeing better opportunities at hedge funds and investment firms that seek to profit in markets lenders are retreating from.” — Lisa Abramowicz, Christine Harper and Saijel Kishan in Billion-Dollar Traders Quit Wall Street for Hedge Funds - Bloomberg

May 09

“

The actual crisis struck in the three minutes between 2:41 p.m. and 2:44 p.m., when the market fell another 5 percent to 6 percent. Hunsader’s analysis suggests this plunge was caused by high-frequency traders. They typically act as liquidity providers, standing ready to buy and sell at certain price levels. But the day’s volatility prompted them to dump their holdings to avoid losses. In a matter of minutes, they actively sold an accumulated stock of about 2,000 E-mini contracts. It was this selling, not Waddell & Reed’s passive orders, that caused liquidity to disappear.

There is nothing blameworthy about what the high-frequency traders did. Market makers aren’t charities, and their algorithms were only saving their skins amidst extreme market turbulence. Their actions do, however, rather undermine the common argument that high-frequency traders bring wonderful benefits to the market through the liquidity they provide. That liquidity, as many have pointed out, has a rather ghostly quality and tends to vanish when needed most.

“Responsible public finances are a necessary condition but certainly not sufficient for the key objective: sustainable growth that creates employment and is orientated toward social equality. For this reason it is fundamentally important that Europe urgently adopts concrete policies for growth.” — Mario Monti, Italy Prime Minister, quoted by Alan Cowell and Nicholas Kulish in François Hollande’s Victory Sharpens European Austerity Debate - NYTimes.com

May 07

“Now that Tor has dropped DRM – and acquired a valuable halo of virtue among committed ebook readers, who’ll celebrate their bravery – it’s inevitable that the competition will follow. It seems we have reached the beginning of the end of the ebook format wars, which is good news for readers, writers and publishers.” — Cory Doctorow in Why the death of DRM would be good news for readers, writers and publishers | Technology | guardian.co.uk

“Which federal program took in more than it spent last year, added $95 billion to its surplus and lifted 20 million Americans of all ages out of poverty?” — David Cay Johnston (via azspot)

(via azspot)