We’ve argued that the “Volcker Rule,” which would limit “proprietary trading” by banks, is in theory a very good idea, but the proposal put forward by Volcker/Team Obama goes wide of the mark by defining any customer trade as not being part of proprietary trading. That’s a spurious distinction; large-scale position-taking well beyond what was […]
Read more...True to form, the White House set forth a sketchy program to limit the proprietary trading activities of banks, and it is a vote for the status quo which is being tarted up as something else. I’m amazed that someone of Volcker’s stature is allowing himself to serve as the branding for ideas that are […]
Read more...Bloomberg reports that Obama will announce provisions to limit the proprietary trading activities of banks. This all sounds well and good, in fact, I’ve advocated prohibiting prop trading (you’d need pretty active monitoring of overnight positions to make sure it has not simply been moved back to order flow desks). It is not a socially […]
Read more...By Arthur Doyle, a former managing director of Lehman Brothers who now manages a hedge fund. I didn’t come to Joseph Tibman’s The Murder of Lehman Brothers expecting a blow-by-blow insider’s account of the financial meltdown of 2008. That ground has been covered adequately by, among others, Andrew Ross Sorkin in Too Big To Fail. […]
Read more...Ambrose Evans-Pritchard is nothing if not decisive in his views, and has a undisguised fondness for the bearish perspective. But he was correct on the 2008 inflation/commodities headfake, saying repeatedly that deflationary forces would prevail when that was decidedly a minority view. He is also a Euro-skeptic, and I’m less comfortable with that position. The […]
Read more...The UK is providing a lesson the US badly needs to learn, that push comes to shove, regulators hold the whip, and have to be willing to use it when necessary. Given how intransigent the financial services industry has become, the time for discipline has come. Maybe some of them even want it secretly…. In […]
Read more...Tall Paul is my hero. I would go further than he did in a speech in Sussex. The case can made that financial innovation of the OTC derivatives variety, which has mushroomed from 1992 onward, has been at best a wealth transfer device from the real economy to the financial economy, and has probably exacted […]
Read more...By Augustus Melmotte, who lives and works in Hedgistan. The administration is examining strategies for encouraging the ownership of fluffy kittens. “I think we can all agree,” the president said, “that in troubled times stroking a fluffy kitten can really help a struggling family to stay on course.” The non-partisan Congressional Budget Office has calculated […]
Read more...Submitted by Edward Harrison of Credit Writedowns John Meriwether, the 62-year old former Salomon bond trader and LTCM wizard is back for, what is this, his fourth go round. For those of you who don’t remember the 1980s, John Meriwether was the biggest of the ‘big swinging dicks’ on Wall Street, leading Salomon Brothers to […]
Read more...Note that while this Bloomberg story discusses that some major hedge funds are skeptical of the theory that the recovery is on, for the most part, it is silent on how they are implementing that view. Recall that even if a trader does make a correct fundamental call, investing successfully on it is another matter. […]
Read more...Ooh, so there is gambling in Casablanca! I’m shocked, shocked! An excellent bit of sleuthing comes at the Wall Street Journal, on how Goldman has for the last two years has had “trading huddles” that lead to ideas being presented to clients before analysts changed their grades on a stock. Proprietary traders also attend the […]
Read more...Reader Peter A pointed out this New York Post article on Tyler Durden today. The Post has broken some hedge fund stories, like losses at particular well known hedge funds during rough trading periods, so it does have good connections in Hedgistan. I would rather not get into this fray, but Tyler Durden has guest […]
Read more...I am sorry to make Roger Ehrenberg an object lesson as far as this post is concerned, because I am a fan of his work. He is articulate and insightful. I have often featured his posts in Links as opposed to in posts and felt a bit bad about it, in that I wanted to […]
Read more...I recall in the mid 1980s when people who should have known better (McKinsey consultants and analysts covering the banking industry) were adamant that banks would never cut their fees or interest rate charges (19.8%) on credit cards. I remember thinking of the confidence over credit card pricing every time experts insisted that hedge funds […]
Read more...As readers may know, secured lenders make loans against which specific assets are pledged. For consumers, mortgages and car loans are examples. If you default, the lender can seize the asset and sell it to try to recoup. In bankruptcy, secured lenders are normally the top of the food chain, but in the Chrysler bankruptcy, […]
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