Tag Archives: wall street

Marc Andreesen Finally Calls The Tech Bubble

Posted on January 5, 2012 | Leave a comment

After months of saying, contrary to all evidence, (like this, this and this) that there was not a tech bubble going on, super-VC Marc Andreesen has finally publicly pulled back from investing because valuations are too high. Duh.

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Posted in Business, Technology

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On Wall Street and Self-Regulation

Posted on May 15, 2011 | Leave a comment

Matt Taibbi has a new piece in Rolling Stone, using Senator Levin’s report on the financial meltdown to show that Goldman Sachs broke the law repeatedly. You have to take Taibbi with a grain of salt, especially when it comes to Goldman (here is the NY Times on the same report), but here is a stunning fact pattern on how prosecutions of financial crimes have gone steeply downhill in the past 20 years:

William Black was senior deputy chief counsel at the Office of Thrift Supervision in 1991 and 1992…. Black describes the regulatory MO back then. “Every year,” he says, “you had thousands of criminal referrals, maybe 500 enforcement actions, 150 civil suits and hundreds of convictions.”

But beginning in the mid-Nineties, when former Goldman co-chairman Bob Rubin served as Bill Clinton’s senior economic-policy adviser, the government began moving toward a regulatory system that relied almost exclusively on voluntary compliance by the banks. Old-school criminal referrals disappeared down the chute of history along with floppy disks and scripted television entertainment. In 1995, according to an independent study, banking regulators filed 1,837 referrals. During the height of the financial crisis, between 2007 and 2010, they averaged just 72 a year.

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Posted in Business, Politics

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Ditto

Posted on April 15, 2011 | Leave a comment

See yesterday’s post, and repeat. Names change, facts remain the same.

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Posted in Business, Politics, Trends

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Fed Lends Millions to Well-Connected Wives

Posted on April 14, 2011 | Leave a comment

This story is by Matt Taibbi, so you should expect some hyperbole, but the basic facts are that two well-connected Wall Street wives, with no financial experience, managed to get $220 million in low interest loans from the Fed. They then invested the money in higher yielding securities, essentially minting money on the spread. And they still haven’t paid back $150 million of their loan.

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Joe Stiglitz on Income Inequality

Posted on April 6, 2011 | 1 Comment

He’s a Nobel Prize winner, so he must be smart.

Read his article here.

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Posted in Business, Politics

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Links to Great Articles

Posted on January 14, 2011 | 2 Comments

Yves Smith on the macro effects of oversized Wall Street pay.

I normally don’t love Paul Krugman, despite his Nobel Prize, since he is too strident and preachy and predictable, but this take on what really separates Right from Left in America is pretty interesting.

John Mearsheimer on American foreign policy and realpolitik.

John Cassidy on whether Wall Street adds value to society. Hint: it doesn’t. This is from the New Yorker, so it won’t be available online forever.

Law professor David Beatty compares American constitutional jurisprudence to how they do it in other countries. I’m no expert, but I found it fascinating.

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Posted in Business, Politics, Pop culture, Trends

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Income Inequality; Rise of Wacky Politicians

Posted on September 24, 2010 | Leave a comment

Here are links to two long and thoughtful articles worth reading.

The first is Timothy Noah’s ten-part (yes, 10!) piece in Slate on income inequality in America. He explores all the possible causes, in a non-ideological way, and then discusses why it all matters. Among the factors at play: taxes, overseas manufacturing, lobbyists and Wall Street. Check out this graph below to see how the share of the top 10% has grown over the last 40 years.

The second article is Matt Bai’s piece in the NY Times about Linda McMahon’s campaign for senator of  Connecticut. Bai explores how a staid, preppy state like Connecticut could possibly elect a cartoonish figure like McMahon, who based on her public statements seems utterly unqualified to be senator. He discusses the long-term trends, including white flight and the loss of industry, which lead to young adults leaving the state and public sector unions gaining power, which leads to a weakening of the traditional political system, which leads to wrestling impresarios running for senate. It’s a long article, but nuanced and thoughtful and well worth reading.

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Posted in Politics, Trends

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The Myth of the Sophisticated Investor

Posted on May 13, 2010 | Leave a comment

This article in The Big Money discusses how Goldman Sachs’ defense in the Abacus CDO case – that the buyers were sophisticated investors – isn’t entirely accurate, since those sophisticated investors (banks and pension funds) get a significant amount of money from regular folks like you and me. This is true, but it only gets at half the story. In the context of Wall Street, banks and pension funds are not considered the most sophisticated players.

The reality is that Wall Street has a hierarchy, and it’s measured by compensation. Generally speaking, the smartest people go to where they can make the most money. So if you are really sharp, you’re not likely to end up managing a pension fund’s investments and being a civil servant making $200k per year. You might settle for being a bond portfolio manger at a bank, making $500k. But if you are really smart and aggressive – in other words, a sophisticated player – you are going to end up at an investment bank putting together deals that can pay you several million dollars per year.

So Goldman’s “these were big boys” defense has two flaws. One, as The Big Money points out, the big boys got their money from the little guys. But two, the buyers may have been big boys, but the Goldman bankers pushing the CDOs were men. Speaking metaphorically, of course.

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Posted in Business, Politics, Uncategorized

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Wall Street Is A Casino

Posted on April 29, 2010 | Leave a comment

Two articles came out in the past week comparing Wall Street to a casino, pointing out that much of the activities of the big investment banks – like the synthetic CDO at the heart of the Goldman fraud case – provide no real value to society and are simply ways to bet on the direction of an event. In this case, the event was housing prices, but the articles ask how that bet is really any different than betting on the outcome of a baseball game or a roulette wheel.

What is particularly interesting is the source of these articles. One was an op-ed in the hyper-conservative Wall Street Journal, co-written by Niall Ferguson, a Harvard professor who is generally quite conservative, and Ted Forstmann, an equally conservative private equity financier. The other article was written by Andrew Ross Sorkin in his NY Times Dealbook. The Times is, of course, quite liberal, but Sorkin makes his living (quite lucrative, according to reports) by having great sources on Wall Street, and generally speaking you don’t keep those sources by insulting them in print.

For conservatives to publish against their leanings, and for ambitious journalists to publish against their career prospects, is a pretty big deal. They must have felt very strongly about the casino aspect of Wall Street to write those articles.

Just in! Here is Eliot Spitzer’s take on Wall Street as casino. You may discount him due to his hooker addiction, but he hits the nail on the head (so to speak) here.

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Posted in Business, Politics, Uncategorized

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NY Times Copies Me. Again.

Posted on March 21, 2010 | Leave a comment

This time on the theme that much of Wall Street innovation does not actually benefit society. I’ve written about that here, here and here. And in today’s Times Magazine, they note that the current Wall Street trading mentality more closely resembles a casino than the capital allocation function that Wall Street was founded to perform. I commented on the Times’ prior copying of me here.

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