Month: January 2008

Ackman / Pershing Square Capital Bond Insurance Letter, Data and Model

The Open Source Model is available for download at: https://www.box.com/s/i9apx42tnx70pcpcz9pj (warning, it’s a massive model and requires powerful computer to run).

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Looks Like Failed Rally

Notice the rally on light volume and today’s reversal on high volume. This action came on the Fed’s fifth rate cut in the past 4 1/2 months. Wednesday’s 50bp move, coupled with last week’s emergency 75bp move, marked the first time the Fed cut rates so much and so fast in over 25 years. Can you say failed bond insurers. Cheers.

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Article: Stimulus Gone Bad [Bushenomics]

From the New York Times:

January 25, 2008
Op-Ed Columnist
Stimulus Gone Bad
By PAUL KRUGMAN

House Democrats and the White House have reached an agreement on an economic stimulus plan. Unfortunately, the plan — which essentially consists of nothing but tax cuts and gives most of those tax cuts to people in fairly good financial shape — looks like a lemon.

Specifically, the Democrats appear to have buckled in the face of the Bush administration’s ideological rigidity, dropping demands for provisions that would have helped those most in need. And those happen to be the same provisions that might actually have made the stimulus plan effective.

Those are harsh words, so let me explain what’s going on.

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Article: Nearly There

Fascinating, article from last week’s edition of The Economist.

Artificial life
Nearly There
Jan 24th 2008

The penultimate step towards the creation of artificial life has just been announced

LIKE a striptease artist in front of an eager audience, Craig Venter has been dropping veils over the past few years without ever quite revealing what people are hoping to see: the world’s first artificial organism. He has been discussing making one since 1995, when he worked out the first complete genetic sequence of a natural living organism. And, after a lot of hard graft and blind alleys, he and his team have almost got there. As they report in this week’s Science, they have replicated the genome of Mycoplasma genitalium, the species that was the subject of that original sequencing effort. It is not actual life, but it is surely the tease before the last veil finally falls away.

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Article: The State of the Union

January 29, 2008
New York Times Editorial
The State of the Union
Six years ago, President Bush began his State of the Union address with two powerful sentences: “As we gather tonight, our nation is at war, our economy is in recession, and the civilized world faces unprecedented dangers. Yet the state of our union has never been stronger.”

Monday night, after six years of promises unkept or insincerely made and blunders of historic proportions, the United States is now fighting two wars, the economy is veering toward recession, the civilized world still faces horrifying dangers — and it has far less sympathy and respect for the United States.

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Article: The Minsky Moment

THE MINSKY MOMENT
by John Cassidy
FEBRUARY 4, 2008

Twenty-five years ago, when most economists were extolling the virtues of financial deregulation and innovation, a maverick named Hyman P. Minsky maintained a more negative view of Wall Street; in fact, he noted that bankers, traders, and other financiers periodically played the role of arsonists, setting the entire economy ablaze. Wall Street encouraged businesses and individuals to take on too much risk, he believed, generating ruinous boom-and-bust cycles. The only way to break this pattern was for the government to step in and regulate the moneymen.

Many of Minsky’s colleagues regarded his “financial-instability hypothesis,” which he first developed in the nineteen-sixties, as radical, if not crackpot. Today, with the subprime crisis seemingly on the verge of metamorphosing into a recession, references to it have become commonplace on financial Web sites and in the reports of Wall Street analysts. Minsky’s hypothesis is well worth revisiting. In trying to revive the economy, President Bush and the House have already agreed on the outlines of a “stimulus package,” but the first stage in curing any malady is making a correct diagnosis.

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