Archive for category Business
Bringing Subprime Sexy Back
by Andrew Leonard - Mar. 1, 2010 19:11 est
Salon.com
Near the end of “The Big Short,”
“How do you explain to an innocent citizen of the free world the importance of a credit default swap on a double-A tranche of a subprime collateralized debt obligation?” writes Lewis.
I’m betting Lewis was grinning as he wrote that sentence, because if you wanted to summarize “The Big Short” in just one line, it might be: the most lucid explanation yet offered to readers as to the importance of a credit default swap on a double-A tranche of a subprime collateralized debt obligation. Which might not sound like a whole lot of fun, but turns out to be a blast. As someone who has struggled for years to penetrate the obtuse world of structured finance and the role it played in blowing up Wall Street, I must give credit where credit is due. “The Big Short” is superb: Michael Lewis doing what he does best, illuminating the idiocy, madness and greed of modern finance.
Even though I have long been a huge Lewis fan, dating all the way back to “Liar’s Poker,” his hilarious and enlightening account of life as a bond broker in the go-go ’80s, I did not anticipate something this good, something capable of carrying its weight as a bookend to “Liar’s Poker’s” delights. My heart actually sank when the galleys of “The Big Short” arrived in the mail. A library of books exploring the financial crisis has already been published, with many, many more yet to come. My bedside table groans under the weight of their unfinished tomes. What could Lewis have to say that hadn’t already been said a million times over?
But then I made the mistake of glancing at the first chapter and literally could not put “The Big Short” down. Lewis achieves what I previously imagined impossible: He makes subprime sexy all over again.
The secret to Lewis’ success is a mixture of strategy and craft. Most books on the financial crisis find their locus inside the Wall Street firms at the heart of the action. The general theme: Hubristic banksters are oblivious to what they’ve wrought until it is too late. Chaos ensues. Lewis takes a different tack. “The Big Short” tells the stories of an odd collection of brilliant misfits who recognize that Wall Street is wearing no clothes, become convinced a massive calamity is nigh, and seek feverishly to profit off of their understanding. They are, in Wall Street parlance, the “shorts” — speculators who bet that the price of a given stock or bond or commodity or any derivative thereof will fall, rather than rise. Most shorts pick on a single company, or have a dour view of the direction of the price of corn or pork bellies. “The Big Short” is a little more ambitious: It’s a bet on financial sector collapse.
That’s the strategy. Today you can find plenty of people who claim to have seen financial disaster looming, but in “The Big Short” Lewis captures protagonists who put their money on the line. That they did so by employing Wall Street’s latest financial innovations against itself makes the story all the more fascinating. A typical Lewis “short” first figures out which mortgage lenders are making the absolutely crappiest loans, then determines which mortgage bonds (or collateralized debt obligations created out of slices of crappy mortgage bonds) are constructed from those loans, and then buys insurance, via credit default swaps, against the chance of those bonds or CDOs going bust.
In doing so these money managers have to war against their own self-doubt, the trepidation of their investors, the arrogance of Wall Street bankers, and the giddy momentum of financial markets that defy all logic for far longer than makes any rational sense. (There’s also a good question as to whether what they are doing should even be legal — the “shorts” are buying insurance on “properties” that they don’t even own!) But the loner-against-the-crowd mentality delivers a dynamic sense of tension that propels “The Big Short” merrily along. We know, as readers, exactly what will happen at the end, and yet still the ride feels nail-biting.
But what truly sets Michael Lewis apart from other writers is his craft. Watch him describe Steve Eisman, a man whose desire to make money shorting subprime mortgage-backed concoctions is inseparable from his growing sense of rage that Wall Street is getting away with a rigged game.
![[Digg]](http://www.marketmixup.com/wp-content/plugins/bookmarkify/digg.png)
![[Facebook]](http://www.marketmixup.com/wp-content/plugins/bookmarkify/facebook.png)
![[Google]](http://www.marketmixup.com/wp-content/plugins/bookmarkify/google.png)
![[MySpace]](http://www.marketmixup.com/wp-content/plugins/bookmarkify/myspace.png)
![[Reddit]](http://www.marketmixup.com/wp-content/plugins/bookmarkify/reddit.png)
![[Technorati]](http://www.marketmixup.com/wp-content/plugins/bookmarkify/technorati.png)
![[Twitter]](http://www.marketmixup.com/wp-content/plugins/bookmarkify/twitter.png)
![[Yahoo!]](http://www.marketmixup.com/wp-content/plugins/bookmarkify/yahoo.png)
![[Email]](http://www.marketmixup.com/wp-content/plugins/bookmarkify/email.png)
Great Stocking Gift Stuffer
The Slide
by Tony Pringle - Dec. 19, 2009
Market Mix Up
Looking for a great stocking stuffer for Christmas can sometimes be tough. But here at Market Mix Up, we found the best stocking gift that fits right into the stocking.
The Slide is a unique sunglass holder that fits right on your visor in the car. As common as it is to lose sunglasses, scratch them and even sit on them while getting in the car. Why not get your loved one a gift they’ll use forever, while allowing them to keep their expensive sunglasses shiny and new for a lifetime.
I just purchased the The Slide and I’m in love with it! I use to lose my sunglasses, scratch them and even break them. Now I have one less thing to worry about. The Slide never touches the lenses and secures your glasses gently by the temple bars. It’s the gift that keeps on giving!
For more info and to make an order, visit TheSlide.net.
Market Mix Up is a proud partner of The Slide!
Fool Search: Be GM’s Next CEO!
by David Williamson - Dec. 2, 2009
The Motley Fool
It’s time to update your resume!
Have you ever wanted to run an unprofitable relic in a challenging industry that’s saddled with debt and burdened by a questionable product portfolio? Do you enjoy the thought of having your decisions second-guessed by two separate federal governments, not to mention getting to reap the scorn of millions for taking taxpayer money?
If that sounds like the perfect job, then General Motors has the position for you!
With the sudden, unexpected resignation of CEO Fritz Henderson, GM Chairman Ed Whitacre and the rest of the GM board will begin the search for a new leader. Ideally, they’d like to find their very own Alan Mulally, an industry outsider who turned around rival Ford (NYSE: F) after rising through the ranks at Boeing (NYSE: BA). So, in this case, actual auto experience may be a detriment.
To help out the struggling American icon, we’ve decided to run our own search for GM’s next CEO. If you’re wondering what qualifies us to play headhunter, keep in mind that this isn’t our first rodeo. After Gil Amelio left the CEO job at Apple (Nasdaq: AAPL) but before Steve Jobs stepped in to fill the void, it was the Fool who stepped up with a community contest on how to save the struggling company.
When there was a vacancy at Yahoo! (Nasdaq: YHOO), thanks to Jerry “Microsoft (Nasdaq: MSFT) will never get this” Yang’s departure, we asked readers if they had what it takes to be Yahoo!’s next CEO. And maybe if Planet Hollywood had paid attention to our Save the Planet Contest (or at least not overexpanded in its quixotic quest to dominate the “mediocre food and tacky merchandise” sector), it would have staved off bankruptcy.
This contest is no joke. In the comments box below, tell us why you are the most qualified person to run General Motors and how you would turn its prospects around in 250 words or less. A complete list of contest rules can be found here.
We can’t promise the winner an actual job at GM, but we can give the winner a year’s subscription to Motley Fool Pro (a $1,999 retail value), which gives you access to Jeff Fischer and his incomparable team as they combine stocks, options, and ETFs to build a portfolio that can profit in any market.
But be warned: if you actually do get GM’s top job, company mascot Bob Lutz may sleep at the foot of your bed like the family pet.
Apply today!
Google Gives Publishers More Control Over Content
by Jessica E. Vascellaro & Russell Adams - Dec. 3, 2009
The Wall Street Journal
Google Inc. on Wednesday made it easier for news outlets to remove content from its Google News property but keep it accessible through Google.com, the latest concession the search giant is making to publishers who want more control over their articles.
The move, which will let publishers block their content from Google News automatically by adding code to their Web sites instead of by contacting Google through an online form, comes on the heels of Tuesday’s announcement that Google will allow publishers to set a daily limit on the number of articles users can read for free through its search engine.
For several years, Google has allowed publishers to make individual articles that are behind a pay wall free through Google, through a service called “First Click Free.” Previously, users could access an unlimited number of stories this way. Now, it will allow publishers to impose a cap of five free stories a day while continuing to allow them to grant access to more.
Dean Singleton, vice chairman and chief executive of MediaNews Group Inc., one of the largest newspaper companies in the U.S. in terms of circulation, called Tuesday’s announcement “a good faith move.”
“It’s a signal that they’re willing to work with the industry,” said Mr. Singleton, whose company operates 54 daily newspapers in 11 states. “It may or may not be a shallow signal, but I take it as a positive move on their part,”
Nevertheless, the actions seem unlikely to quell the escalating fight between Google and news organizations that are considering removing content from Google because they believe the search giant is unfairly profiting off their material. Recently, news organizations, including News Corp. and the Associated Press, have talked to the major search engines about deals that could give one search partner, such as Microsoft Corp., preferential access to articles from those news organizations in exchange for payment.
On Wednesday, Satya Nadella, senior vice president for online services at Microsoft, said the company has “no real intent” to pay publishers to remove content from Google’s news-search service.
News Corp., which owns The Wall Street Journal, declined to comment. The Associated Press also declined to comment.
Randy Bennett, senior vice president of business development for the Newspaper Association of America, said Google’s moves were a “step in the right direction” but didn’t address the bigger issue of whether Google and other aggregators plan to compensate newspapers that offer their content for free, a pressing issue for an industry battered by the recession and consumers’ shift to online.
In an interview Wednesday, Josh Cohen, senior business-product manager for Google News, said the new Google features weren’t a response to publishers’ growing complaints about Google but were part of ongoing efforts to give publishers more control.
But publishers say they want revenue and not just control. Google, which has long argued that it helps publishers’ businesses by bringing more eyeballs to the content, is exploring ways to help them earn more money directly. It recently launched a service, called Fast Flip, that shows screen shots of an article’s Web page and offers publishers like the Washington Post Co. and New York Times Co. a share of revenue from ads sold alongside that longer content.
Mr. Cohen said Google has further plans in that area. “You’re going to see continuation of exploration in other areas,” he said, adding that Google has been talking to publishers about technology and tools that could help them charge for content.
— Scott Morrison contributed to this article.
Vivendi, GE Agree on NBC Price, Paving Way for Deal
By Rachel Layne & Andy Fixmer
Dec. 1 (Bloomberg) — General Electric Co. and Vivendi SA agreed on a $5.8 billion valuation for the French telecommunications company’s 20 percent stake in NBC Universal, according to two people with knowledge of the discussions.
A deal with Vivendi would clear the way for GE, NBC Universal’s 80 percent owner, to create an entertainment joint venture controlled by Comcast Corp., the largest U.S. cable company. Final agreements on both transactions may be announced as soon as this week, said one of the people, who declined to be named because the discussions are private.
The agreement on price was reached after GE Chief Executive Officer Jeffrey Immelt and Vivendi Chief Jean-Bernard Levy met in France last week. The sides had been less than $500 million apart and were discussing how payments would be structured, two people said on Nov. 25. Vivendi extracted more money than analysts expected and concessions that protect the Paris-based company against the risk regulators will scuttle the deal.
“From Vivendi’s point of view, the good news is that this effectively leaves them to go back to their investors and say they were able to monetize a minority stake at a good level,” Claudio Aspesi, an analyst at Sanford Bernstein in London, said by phone. “That’s the best management can be expected to do.”
Selling Comcast control of NBC would let Immelt use proceeds to concentrate on GE’s financial, health-care and industrial businesses, which include the world’s biggest maker of jet engines, locomotives and medical imaging machines. GE would initially have a minority stake in the NBC Universal entity, selling the rest over a number of years.
Concessions
Vivendi rose as much as 3.3 percent in Paris, advancing 61 cents, or 3.2 percent to 19.80 euros at 1:22 p.m. GE rose 8 cents to $16.02 yesterday in New York Stock Exchange composite trading. Philadelphia-based Comcast lost 22 cents to $14.66 on the Nasdaq Stock Market.
GE agreed to make a payment of as much as $2 billion to Vivendi if the separate GE-Comcast transaction doesn’t close by the end of 2010, said one of the people.
Antoine Lefort, a Vivendi spokesman, declined to comment as did Anne Eisele, a spokeswoman for GE, and D’Arcy Rudnay, a Comcast spokeswoman.
“It worked out a little higher than what I had anticipated,” said Tuna Amobi, a New York-based analyst at Standard & Poor’s who covers the entertainment industry. “Vivendi was able to squeeze out an additional $250 million.”
Owners see success with mortgage modifications
Posted by admin in Business, Housing Market on November 30th, 2009
by Russ Wiles - Nov. 29, 2009 06:56 PM
The Arizona Republic
It took a while for mortgage-modification programs to gain any lift. For the first several months, they resembled those early flying contraptions that would bounce along the ground before crashing in a tangle of wood, metal and canvas.
But lately, some loans have gotten reworked, helping certain cash-strapped owners stay in their homes and convincing others to try again.
For example, the government’s Making Home Affordable program seems to be gaining traction, with 650,000 modifications in the works, including more than 34,000 in Arizona, the third-busiest state, according to the Treasury Department. Plus, some homeowners are getting mortgage help in other ways, without resorting to the federal program.
Mortgage counselors still caution that most troubled homeowners won’t qualify for a better loan deal, either because their finances aren’t solid enough or their lender isn’t willing to deal. But enough success stories are emerging to provide glimmers of hope.
Janet Davis of Mesa is one, having received a principal deferral on her main loan that she doesn’t have to pay until she moves or the home is sold. Davis said she also was able to settle a second mortgage on the property for 10.5 cents on the dollar.
“My payments are down to what they were on the original first mortgage, and I now have no second at all,” said Davis, who works in sales support for an electronics-infrastructure firm.
Cindy Frugé is another success story. With the help of a mortgage counselor, she obtained a reduction in the interest rate on her mortgage to a new rate of 3 1/8 percent.
“He contacted my mortgage company and negotiated a decrease in the rate by half,” said Frugé, a school teacher who lives in Coolidge.
Neither woman went through the Making Home Affordable program, but both got assistance from Take Charge America, a not-for-profit Phoenix credit-counseling entity that traditionally has focused on helping consumers with credit-card debts. The firm recently added a mortgage-modification unit after obtaining certification from HUD, the Department of Housing and Urban Development.
“Quite a few of our clients are going through the (government) program,” said Matt Harvey, a mortgage-counseling supervisor at the firm, which is hosting a free open house at its Phoenix offices on Saturday to explain the loan-modification process.
Insured but not covered
by David Lazarus - Nov. 29, 2009
Los Angeles Times - Business
Every driver in California is supposed to have uninsured-motorist coverage. But if you’re in an accident and the other driver flees, you could be left holding the bag.
As if the lousy economy hasn’t done enough damage, here’s another thing to worry about: more people driving without automobile insurance.
State insurance officials say the number of drivers without legally required coverage rises in tandem with unemployment, which is now more than 12% in California.
About 18% of drivers didn’t have insurance in 2007, the most recent year for which data are available. Back then, the unemployment rate was just 5.4%.
“We’ve seen in the past that higher unemployment tracks with a higher rate of people being uninsured,” said Darrel Ng, a spokesman for the department. “So we suspect that the number of people without coverage has gone up.”
What happens if you get hit by an uninsured driver? Worse, what if that driver flees the scene rather than face the music for lacking coverage?
Pacific Palisades resident Jill Smith, 53, believes this is what happened to her after her Volvo got rear-ended this month while she was exiting the 101 Freeway in Agoura Hills. The driver of the other vehicle took off at top speed.
And because she was unable to get the vehicle’s license plate number, Smith is now stuck with the bill for $650 in repairs to her car.
“It seems so unfair,” she told me. “I’m the one with insurance. I’m the one who obeyed the law. And now I’m the one who has to pay for all the damage.”
What happened to Smith could happen to anyone. She said that she stopped at a red light at the bottom of the freeway offramp.
Read the rest of this entry »
