December 2008
15 posts
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The Real Credit Crisis
The US is at a “strategic inflection point,” with the opportunity to re-assume global leadership on both diplomatic and economic fronts or to become mired in its own problems, losing influence, power and pride both at home and abroad. Andy Grove, the former CEO of Intel and author of the seminal business text Only The Paranoid Survive, provided us with this useful prism through which to view the...
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A Happy 2009 to All
Friends, old and new and readers of all stripes, thanks for making 2008 an interesting, provocative and challenging year at Information Arbitrage. While my blogging ebbed and flowed, and at times I needed to check out to regain my inspiration, you were always there. Thanks for the emails of encouragement, suggestions, questions and deals, and most of all for participating in what has become a...
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Recovering Our Sense of Accountability and Shared...
Honor. Integrity. Trust. Pride. Hard work. All elements of a job well-done. Why did people do this? Because they cared. Because they wanted to provide for themselves and their family. Because it was simply the right thing to do. It didn’t require a lot of explanation. People just did it. You worked hard for your employer and they took care of you. This applied to positions in both the public...
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The Market Treads Water While Short-Termism...
The Fed push rates towards zero. The White House stretches the intent of TARP in order to bail out the automakers. Bernie Madoff dominates the headlines. What do all three things have in common? Brutally short-term thinking. Fed policy: This last leg down in Fed policy is only sure to do one thing: lay the foundations of another credit bubble and hyper-inflation when consumption resumes. The...
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Citi to Integrate Corporate and Investment Banking...
Citigroup is creating a unified global banking group? This is almost a joke - talk about anti-climactic and too little/too late. I wrote about this very issue two years ago when I did a compare/contrast of Citigroup and Deutsche Bank, my two former employers. One of the most destructive features of the Citicorp/Travelers merger was that nobody in power wanted to make a hard decision, especially as...
Stocktwits Closes its Series A a/k/a Building a...
I, @infoarbitrage, am pleased to announce that we just closed a Series A round for Stocktwits, providing the resources to get to break-even while preserving the small, tightly-knit, scrappy company culture that has served us so well. Soren (@sorenmacbeth) and the team have gotten us pretty far along on very little money; the time has come to give them some more resources to continue building the...
The Madoff Saga: Perils of Fraudulent Conveyance
Say you were an investor in Madoff’s funds. A few years back you decided to diversify. You asked Madoff for your money back and you got it. You then invested the proceeds in an array of other assets. Madoff then goes bust in a massive fraud. One day you get a letter from a bankruptcy trustee. The letter says that you need to repay a large chunk of your original investment in order to satisfy...
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The Real Take-away from the Madoff Scandal
Shocked? Yes. Surprised? No. This “stuff” (scandals so shocking that they practically take your breath away) can and does happen for a variety of reasons. The Madoff scandal is so interesting not for the classic reasons - abhorrent due diligence practices by fiduciaries, basing enormous financial decisions on the word of friends, wanting to be part of an “exclusive” club,...
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We, The People, Deserve Better
Since the beginning of the financial crisis, the US Government has established policy on a case-by-base basis. Bear, Stearns was forced into the arms of JP Morgan Chase. AIG was bailed out not once, but twice. Lehman Brothers was allowed to fail, while Citigroup has been backstopped using the Treasury’s balance sheet. Worse yet, those providing the funds to implement the Treasury’s policy...
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A Few Sunday Thoughts: Common Sense, Disruption...
Mark-to-Market Accounting Likely to Remain Had the SEC repudiated mark-to-market accounting, it could have set the recovery of our financial sector back a generation. From today’s Wall Street Journal story:Mark-to-market accounting requires companies to value financial assets at their fair value — the price they can fetch in the market. That has led companies to take big write-downs on...
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Agency Problems and Policy-making
Congress has immense power. Why? Because we, as voters, have given it to them. They are our agents in Washington. This means that they have a fiduciary duty to represent our best interests, the reason we elected them into office. The difficult thing is, however, is that they have a dual allegiance: to their constituents and to their country. This could put certain Congresspeople in a difficult...
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Argument #1 for SOC: Bailing out Cerberus and the...
While I am early in forming the details of how the Stabilization Oversight Council (SOC) would operate, its principles are clear: The best ideas from the best thinkers, operating in an independent, de-politicized structure, with The discipline to make decisions that are objective, rational and without political bias, that incorporate The best interests of its investor - the US taxpayer - while...
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Fresh Voices Needed: Fixing the Financial System
I truly enjoy writing this blog: it has afforded me an outlet for my thoughts and ideas and provided the basis for a smart, sharp and engaged community. That said, I am increasingly frustrated that in this time of crisis, my views appear to be nothing more than a voice in the wind. Times are too difficult and the threats to our society too great to be content with the current state of affairs. To...
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Thoughts for the Day: AIG, Private Equity and...
AIG: Maurice Greenberg’s piece in today’s Wall Street Journal nearly provoked an attack of apoplexy. I’m not sure if I’ve read such a slanted, self-serving editorial in a long, long time. I’m pretty shocked that the WSJ would publish such pandering drivel. Be that as it may, we all know that the Big Mo controls gobs of AIG shares both directly and through his...
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An Ounce of Prevention...
Over the holiday I spent some time with a close friend of mine, an amazing pediatrician, exploring the trouble with the U.S. health care system. He is a huge advocate of prevention, investing in wellness, education concerning diet and exercise and non-traditional (e.g., Eastern herbal remedies, resulting in fewer drugs, fewer procedures) protocols. We then discussed how little money is going into...