John At The Center

[via Moody's]

via Let Them Eat Bonds.

[via Moody's]

James says the times when investors accepted fund terms without questioning are over. He recalls how, about a year ago, after the peak of the financial crisis, he and his partners sat down at the company’s New York headquarters and agreed that each of them would start calling investors regularly to check in. “We as an industry were lazy,” James says. “We were unresponsive to our investors. That world is gone.”

via Private Equity Finds the Easy Money Gone – BusinessWeek.

Fund-raising “was like a lottery in which every ticket was a winner. That was too good to be true”

via Private Equity Finds the Easy Money Gone – BusinessWeek.

Here’s a chart that to me sums up the past decade.  This was supposed to be the Information Revolution…but what we mostly did was build homes.

via Why We Struggle: Too Much Housing, Too Little Information Technology « Mandel on Innovation and Growth.

To retain investors, hedge funds have had to shed their cloak of secrecy. Some managers have started to meet their investors regularly and provide them with more frequent reports about performance. Other firms give investors greater access, via their websites, to up-to-date information about returns, leverage and liquidity. “We are so much more transparent than we used to be, and more transparent to our investors than a lot of public institutions”, says Simon Lorne of Millennium Partners.

via Hedge funds: Bigger, safer but duller | The Economist.

As of late July, the price of a Big Mac in Japan, at Y320 ($3.78 under Wednesday’s exchange rate), represented an exchange rate of Y85.7 in implied purchasing power parity of the dollar. The actual yen/dollar exchange rate then was Y87.2 – meaning the Japanese Big Mac was 2 per cent under-valued against the dollar, according to the index.

But here’s a beautiful twist: earlier in August, McDonalds cut the price of a Big Mac in Japan to just Y200 as part of a summer campaign. At what amounts to a 30 per cent discount, that would bring PPP down to Y52 to the dollar.

via FT Alphaville » The ‘burgernomics’ of yen appreciation.

Old consensus: we need Freddie and Fannie in order to make housing “affordable.”

New consensus: we need them in order to “prevent further house price delclines,” in other words, to make housing less affordable.

via Marginal Revolution: Arnold Kling, on a roll.

Brokers who may have had a role in May’s devastating “flash crash” could face fines from the Financial Industry Regulatory Authority, said the industry group on Monday.

Finra spokeswoman Nancy Condon confirmed that brokers who gave high-frequency traders access to the markets without properly vetting them could face fines.

via Finra considering fines for ‘flash crash’ brokers – Aug. 23, 2010.

Since the risks are fewer, smaller changes are more easily adopted and can become viral. Exemptions to material adverse change clauses are a prominent example. The lore is that material adverse change clauses were first used in railroad indentures for British bonds back in the 19th century. The typical clause until the turn of this millennium was a bare statement to the effect that no material adverse effect had occurred. After 2000, however, exceptions otherwise known as carve-outs to M.A.C. clauses began to creep in. These carve-outs specified circumstances, like a change to the industry in which the target operated generally, that were excluded from being an M.A.C. The reasons that these clauses began to be included are still unknown but the IBP v. Tyson case no doubt hastened it. (I discussed this in a previous post.)

via How Innovations Spread in Deal-Making – DealBook Blog – NYTimes.com.

Small investors are “losing their appetite for risk,” a Credit Suisse analyst, Doug Cliggott, said in a report to investors on Friday.One of the phenomena of the last several decades has been the rise of the individual investor. As Americans have become more responsible for their own retirement, they have poured money into stocks with such faith that half of the country’s households now own shares directly or through mutual funds, which are by far the most popular way Americans invest in stocks. So the turnabout is striking.

via Small Investors Flee Stock Market Even as Companies Recover – NYTimes.com.