Merrill’s antics are the reductio ad absurdum of bonus culture, and show why it’s so silly for investment banks to pay multi-million-dollar bonuses and reckon that they’re protecting their long-term franchise at the same time. Not everybody was as egregious as this. But the differences between Merrill and other investment banks were only of degree, not of kin
via Bonus culture datapoint of the day | Analysis & Opinion |.
As a result, household balance sheets are probably healthier now than they would have been if a program of cutting household liabilities, including principal reduction on mortgages, had kept investors nervous about the health of the banking system and of the economy as a whole.
The problem with this strategy, of course, is that debts are still high and real, while asset values can go down as easily as they went up. The financial crisis afforded a once-in-a-generation opportunity for an across-the-board deleveraging of the economy: a move away from treacherous debt and towards equity. We flubbed that chance, and systemic tail risk is much higher now as a result. But so are the markets.
via How the government rebuilt household balance sheets | Analysis & Opinion |.
This was a *BIG* deal. The Obama Administration just gave the Trust Fund $112 billion out of general revenues. Why not do that again when the Trust Fund runs dry? No reason at all.
In fact, breaching the wall between the trust fund and general revenues changes the whole debate over Social Security. The current level of benefits can be funded, if we are willing to raise taxes or cut other items. Or, as many conservatives want, we can fund the creation of private retirement accounts. Whee!
via Social Security Funding Problem Solved « Mandel on Innovation and Growth.
Respondents were asked to pick up to three terms on which they are most focused. The leading response, picked by 53 percent, was the GP commitment, followed by management fees (52 percent), how carried interest is divvied up among the senior investment professionals (32 percent), and a cap on fund size (31 percent).
The partners at Voleon Capital Management, a three-year-old firm in Berkeley, California, take this approach. Voleon engages in statistical arbitrage, which involves sifting through enormous pools of data for patterns that can predict subtle movements across a whole class of related stocks.
A slew of analysts initiated coverage of G.M. on Tuesday with strong recommendations.
Citigroup analysts rated the company a buy, saying G.M. was well-positioned to profit as it headed into its 2011-2014 product cycle. “G.M. may be the most compelling 1-3 year auto turnaround story in our universe,” Citigroup said.
via Newly Public G.M. Gets Boost From Analysts – NYTimes.com.
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“In an imbalanced world, the biggest imbalance of all is surely that ‘corporate America’ is a reverse image of mid-America,” Mr. Yarrow said, comparing highly indebted American households to the healthy balance sheets of companies.
To be sure, Yarrow’s Pegasus fund has not had a banner year. The portfolio lost 1.6 percent in November and is off 2.2 percent in 2010. Those returns lag behind Hedge Fund Research’s Western and Pan European fund index, which is up nearly 6 percent this year and was modestly higher in November.
via David Yarrow Predicts Strong Deal-Making in 2011 – NYTimes.com.
Mr. Yarrow, in his letter of Nov. 30, observes that corporate cash levels are at a historical high at a time when cash yields are at a historical low. He noted that cash accounted for 7.4 percent of American companies’ total assets, according to the Federal Reserve — the highest share since 1959.
“In an imbalanced world, the biggest imbalance of all is surely that ‘corporate America’ is a reverse image of mid-America,” Mr. Yarrow said, comparing highly indebted American households to the healthy balance sheets of companies.
via David Yarrow Predicts Strong Deal-Making in 2011 – NYTimes.com.
Cantor Fitzgerald is one of the biggest brokers of United States government securities, considered among the safest places to put one’s money. Cantor Gaming handles some of the riskiest. It runs the sports book at the M Resort, a relatively new casino popular among Las Vegas locals. It has or will soon start handling the sports betting operations at the Vegas Hard Rock Hotel and Casino and at the recently opened Cosmopolitan of Las Vegas and the Tropicana Las Vegas, all on or near the Strip.
And Cantor is banking on the next frontier in gambling: a license that would allow sports betting on mobile devices anywhere in Nevada, as long as the bettor had an account at a casino.
via Cantor Fitzgerald Expands in Las Vegas Sports Book – NYTimes.com.
While Mr. Bernanke remains the dominant voice on which route the Fed takes, the change in voting composition is likely to give the committee a somewhat more hawkish cast. This could amplify anxieties about unforeseen effects of Mr. Bernanke’s policies and potentially contribute to the increasingly politicized atmosphere surrounding the Fed.
via Fed Officials to Assume Voting Roles in New Year – NYTimes.com.