Summary: Citigroup securities are still violating the law of one price. Later this week, Citigroup will finally launch its offer to convert some preferred stock into common stock. That exchange has big implications for the government, which purchased preferred shares through the TARP program; after the exchange, the government will become Citi’s largest shareholder. The [...]
Archive for June, 2009
The Citigroup Anomaly Lives
Posted in Finance, tagged Arbitrage, Banks, Citigroup, Finance, Stock Market, TARP on June 9, 2009 | 25 Comments »
Venture Capital: Follow-Up
Posted in Finance, Internet, tagged Finance, Venture Capital on June 8, 2009 | 3 Comments »
Last week, an article in the Wall Street Journal prompted me to post a short piece on the decline in venture capital. Economist Susan Woodward sent me a helpful note outlining what she sees as the key reasons for this contraction: The 2000 vintage year is going to be the worst year for venture capital [...]
The Exploding Federal Deficit
Posted in Budget, tagged Budget, CBO, Interest Rates, TARP, Taxes on June 8, 2009 | 10 Comments »
Last week, the Congressional Budget Office released it’s latest snapshot on the Federal budget. CBO estimates that the federal budget deficit was $984 billion — just short of a trillion dollars — during the first eight months of the fiscal year (October 2008 through May 2009). During the same period last year, the deficit was “only” $319 billion. Why has the deficit been exploding so rapidly? Lower tax revenues and higher spending (yes, that’s obvious, but keep reading).
Google’s Defense
Posted in Internet, Regulation, tagged Antitrust, Bing, Google, Microsoft, Regulation, Search, Wolfram Alpha on June 7, 2009 | 5 Comments »
Google will likely face close scrutiny from the Obama administration. Indeed, it is already the subject of at least three separate antitrust reviews. Here are three ways Google will try to defend itself.
Venture Capital Declining
Posted in Budget, Finance, Macroeconomics, tagged Budget, Finance, Taxes, Venture Capital on June 5, 2009 | 1 Comment »
An article in this morning’s Wall Street Journal documents a decline in venture capitalists. Both the number of VC firms and their capital under management have declined sharply: A large number of individual VCs are also departing their firms. And, the Journal notes: The actual number of exits might be even higher than the trade [...]
Cloudy Jobs Data
Posted in Macroeconomics, tagged jobs, Macroeconomics, unemployment on June 5, 2009 | 2 Comments »
Markets greeted this morning’s jobs reports with enthusiasm, as the headline measure of job losses in May — 345,000 — came in significantly lower than expected. Under normal circumstances, losing more than 300,000 jobs would be bad news. Of course, these aren’t normal circumstances. The unemployment rate in May was much less welcome, rising to [...]
Growing Government Transfers
Posted in Budget, Macroeconomics, Uncategorized, tagged Budget, Health, Income, Macroeconomics on June 4, 2009 | 6 Comments »
I’ve received several emails today about a story posted last night by USA Today. The story points out that government transfers now make up more than one-sixth of American incomes, the highest ever. Naturally, some observers welcome this development, while others denounce it. I thought it would be useful to side-step that debate and instead [...]
Why is the U.S. Borrowing Less?
Posted in Budget, International, Macroeconomics, tagged Budget, Current Account, GDP, Investment, Macroeconomics, Saving on June 2, 2009 | 4 Comments »
Government deficits have skyrocketed in the past year, yet the U.S. as a whole is borrowing much less from the rest of the world. What’s going on? As shown in the following chart, the answer is simple: Americans are saving more and investing less.
Auction the Warrants: Follow-Up
Posted in Auctions, Finance, tagged Auction, Banks, TARP, Warrants on June 1, 2009 | 9 Comments »
Summary: Readers had some excellent comments on last week’s post about auctioning the TARP warrants. Here are some updated thoughts. Last week I argued that the Treasury should auction off the warrants it received when it made TARP investments in banks. Specifically, when banks are ready to repay the TARP investment, Treasury should auction the [...]
The Politics of Auctions
Posted in Auctions, tagged Auction on June 1, 2009 | 3 Comments »
Over at Economic Principals, David Warsh has a nice post about how political considerations often limit the use of auctions in solving public policy challenges. In principle, auctions are a powerful tool for allocating public assets in an efficient and transparent manner. The FCC has had great success auctioning off portions of the radio spectrum, [...]
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