Maison Fleury

In what is the most ridiculous move yet in this ongoing saga, the CFO of AIG is resigning over pay. That dumb thing thinks she is not paid enough? For presiding over the GS fiasco? For being the turkey of the industry? the laughing stock of a generation? It is a national embarrassment to begin with. These people have no shame. I think she, and most of the AIG staff, should be trialled and sentenced to reimburse their W2 gains. What arrogance and incompetence. She should be tarred, feathered up and leave town without making noise. She is a poster boy (or girl as it were) for the mediocrity that makes up a lot of corporate america today. Weak, stupid, despicable, aberrant and somehow feeling entitled to the good life. Good riddance, I can't wait for the whole lot of them to leave.

There is a good Christmas piece over at the NYT . It goes into the role Goldman had in creating these opaque securities, designing them knowing they would blow up and then shorting them, for fun and gain, making a killing when the markets tanked. One of the problems was that the damage got multiplied. The article mentions a 6x on these instruments (naked to non?) Synthetic CDO's Regular CDO's are a just a way to package debt securities and market them in tranches. The senior tranches will carry a AAA rating, by design. Synthetic CDO's are CDO made of exotic "assets". Such asset can be the BBB tranche left from a previous CDO deal or a naked CDS. A CDS is an insurance against default, it will pay a yearly premium to the holder of the contract and oblige him to pay out the notional value of the bond on default. A naked CDS is when you buy the protection without owning the underlying asset, effectively speculating on its default. By packaging these contracts ...

What does a guy like me, with way too much time on his hands do for fun? Well those that follow the production on this blog know I have a passion for mixing electronic music. Getting familiar with the tool Live by Ableton, has been a ton of fun over the past 2 years. Yello Bostich -- Strange Creatures Remix by marc fleury Recently Beatport (one of the biggest DJ download sites) has been running an open Yello contest to remix Bostich and Oh Yeah! (Oh Yeah was their biggest cross-over hit in the 80's). I have picked up Bostich because it was typical Yello for me, crazy fast music with moments of lyrical/chorus genius. I try to key on those elements and stretch them out, replay them in a different order. Besides the drum beat, that I had to redo, everything else is from the original with just sound work. Interesting how the resulting sound is techno. KNOWLEDGEABLE FEEDBACK APPRECIATED ON SOUNDCLOUD ENTRY.

I have been reading this working paper by Trond Andresen. ABSTRACT: A Basel-type bank regulation regime has the side effect of endogenous money growth. The growth rate turns out to be inversely proportional to the required minimum capital/asset ratio. This money growth contributes to avoiding debt crises, as opposed to non-bank lending which increases debt but not money stock, and is therefore dangerous in the long run. Banks often prefer to sell loans onwards. It is shown that this doesn't only decrease the bank's risk, it may also imply faster asset growth for the selling bank by allowing an increase in the flow of new extended loans. I will try and present the equations of the first part, offer a generalization of the framework, and briefly discuss the results. The papers look at the balance sheet of an idealized bank, it has assets, and liabilities. Double entry accounting states: Assets + Cash = Debt + Equity. (0) Which can be read as all assets and cash need to be com...

An English woman asked me this simple enough question today. Thanksgiving is the biggest American family holiday. It takes place on the last Thursday of November and is also the biggest air travel date in the US. As a family holiday, it is associated with all the things people usually conjure up when they think of family obligations, and people they only see once a year, with whom they may or may not get on well. My favorite movie about Thanksgiving and the modern American family is Home for the Holidays starring Holly Hunter. In grade school, American children dress up as Pilgrims and Indians and are taught how the Pilgrims escaped religious persecution in England and gave thanks for their very first successful harvest in the New World, with a celebratory feast to which they invited their new friends, the Indians. Of course some of these escapees of religious persecution didn’t turn out to be the most tolerant people themselves. Then perhaps the Indians weren’t thankful when we late...

I picked this up as an impulse buy at the book store, and I'm glad I did. Like most Americans, I associated Monticello with Thomas Jefferson. Although I hadn’t read any Jefferson biographies, what I had read about him lead me to admire him as a Great Man of the Enlightenment—humanist, writer, builder of nations, universities, and of course, his own very lovely neoclassical house on a hill—Monticello—Italian for little mountain. I wasn’t ignorant of the contradictions of the writer of “We hold these truths to be self-evident: that all men are created equal; that they are endowed by their Creator with certain unalienable rights; that among these are life, liberty, and the pursuit of happiness…” being a slave-owner, who had a long-term relationship and fathered multiple children with one of his slaves. I just didn’t see the interest of commenting on the obvious contradictions or indulging in historical “what if” fantasies. Thankfully, neither does Annette Gordon-Reed. Her book is not...

Geithner was pewned like a noob . Yves Smith of naked capitalism wants Geithner lynched for how he handled the AIG situation . This was covered in another entry called "don't send a boy to do a man's job" namely that Geithner, could have negotiated a better deal than paying PAR on CDS. It gets a bit technical but bear with me. One first important fact is that in the CDS bucket AIG was holding there was a 4:1 naked to covered ratio. Why is this important? SocGen and reportedly Calyon and DB all held the CDOs. So these guys were taking serious REAL losses on subprime. But for each one taking a loss, there were 4 just SPECULATING, mostly worldwide Hedge Funds through primary dealers IB. A first real shame, imho, is that these speculating HF clients would have taken NO LOSS on a default of the payments but the premium they paid, the notional was never put in play by these guys. NAKED CDS IS THE FIRST SPECULATING ABSURDITY. G-boy could have in principle said "you...