Happy April Fool's Day (or poisson d'avril as we say here in the land of wine and cheese), monkeys! Got a great line up for you today, starting with a couple revelations from the Fed data dump mandated by the Supreme Court:
1) European banks big Fed borrowers in 2008 crisis (Fox News) - The fact that the Fed bailed out foreign banks as well as US banks won't come as a surprise to many of you. Counter party risk in a highly globalized market is a very real threat. What might surprise you is who got the money and how much. We've got some pretty third-tier European banks here lining up at the trough. Should the Fed be providing lifelines to outfits like these?
2) Goldman Borrowed From Fed Discount Window at Least Five Times, Data Show (Bloomberg) - Contrary to Gary Cohn's testimony before the Financial Crisis Inquiry Commission, Goldman Sachs accessed the Discount Window five times since September 2008. Cohn testified that the bank had only accessed the emergency lending once at the Fed's request. Granted, the amounts Goldman borrowed were negligible ($50 million was the largest of the five loans), but it sounds like someone's got some 'splaining to do.
3) Should I Pay For Bankers' Mistakes? (Planet Money) - The people of Iceland have a very interesting vote coming up on April 9. They are being asked to vote on whether to repay the European banks who lost their assets when Icelandic bank Landsbanki went under. A "yes" vote means each Icelandic citizen owes $6,000. A "no" vote means Iceland's government debt goes into the toilet. What would you do?
4) EU to ban cars from cities by 2050 (The Telegraph) - Wow. This is taking "green" to the next level. The European Commission just unveiled a plan to ban all conventionally fueled cars in European city centers by 2050. London, Paris, Brussels, all of 'em. They're also working on a plan to make it prohibitively expensive to fly more than 186 miles within the European Community, in an attempt to encourage long distance travel by rail. Is this a good idea, or are they off their collective rockers?
5) How Elite Colleges Still Aren’t Diverse (NY Times) - Just 6.5% of Harvard students are attending on Pell grants. The numbers are largely the same across the Ivies, with Stanford being the only elite school with over 10% of the student body (12.5% in their case) receiving a Pell grant. Concessions are made for racial diversity, but economic diversity doesn't seem to be a priority for the nation's top schools. Do only the wealthy deserve a Harvard education?
6) 42 Goals in 42 Months (Get Rich Slowly) - My boy J.D. Roth is turning 42 this year, and to celebrate he's published 42 goals that he'll accomplish over the next 42 months. It's good for you guys to see this, because it gives you a glimpse of the things you'll probably be thinking about when you're our age. He's got some good stuff there. Incidentally, J.D. and I are both confirmed for the Financial Blogger Conference in Chicago the weekend of October 1-2. Anyone in the Windy City who wants to go drinking while I'm there, get in touch.
7) BP Is Said to Face U.S. Review for Manslaughter Charges (Bloomberg) - Management at BP may be facing manslaughter charges over the Deepwater Horizon disaster. If the Justice Department determines that management was aware of major safety breaches and continued the operation of the rig in spite of them, we could well see them brought up on charges. I'm encouraged by the potential accountability, but I'm not getting my hopes up too high.
8) Tax the Super Rich now or face a revolution (Wall Street Journal) - More red meat for you class warfare animals to devour. Paul Farrell's been beating this drum for awhile. In this piece he warns that revolution is inevitable if the Americans on the Forbes 400 list don't pull their heads out of their asses. Torches and pitchforks, anyone?
9) On financial regulation, it's Warren vs. Dimon (Reuters) - Jamie Dimon and Elizabeth Warren presented opposing views this week at a U.S. Chamber of Commerce event. Dimon largely talked his book, which surprised no one. He slammed the CFTC and threatened that regulating derivatives would "damage America". Take it down a notch, Poindexter.
10) Online Poker’s Big Winner (NY Times Magazine) - I know we have a lot of poker players on WSO, so I thought you guys would appreciate this profile on Daniel Cates, a 21-year old multi-millionaire online poker player. Pretty sick tale.
This week's video is one I came across when searching for boxing stuff for my sons (whom I've begun to teach to box). If this doesn't get you fired up, you might already be dead.
Have a great weekend, guys!
THIS JUST IN:
11) Branson buys Pluto, reinstates as planet (Virgin Travel) - More of Richard Branson's signature sense of humor here, but too good to ignore on April Fool's Day. Turns out the Virgin billionaire has purchased Pluto, plans to have it reinstated as a planet, and to that end has pioneered a spacecraft that will collect space junk to drag into Pluto's orbit giving the tiny planet the required mass to pass muster with the snooty astrophysicist crowd.
Maybe someone asked you and/or you answered this already, but how do you manage to put up a post at 6 o'clock every day? haha
http://www.youtube.com/embed/w6ESR76BHow
Sowell makes the exact argument that's included in the article. You're not diversifying the student body because you have a bunch of rich kids of all different races. Their life experiences are near identical. You won't have a diverse student body until you have a variety of people with diverse life experiences, regardless of their skin color.
Rich black is the same as rich white is the same as rich Indian is the same as rich Asian. Throw some poor kids into the mix and see what happens. UCLA does a great job of this, btw.
@hot1590 Since I'm 6 hours ahead of NY, I use a scheduling function we have on WSO to release my posts at 6:00 am NY time every morning.
I got chills watching the boxing vid.
Sowell is brilliant, and I still have to reply to continue my discussion with econ about black players/Uncle Toms and Duke. This is a huge talking point for me, I believe socioeconomic diversity is and ought to be the real focus rather than ethnic diversity. The two are often extremely correlated, but not always. To me, it's the evolution of the civil rights movement. Help people because they need help, don't judge based on so shallow a factor that's only skin-deep. The people who gave their very lives to advance the cause of racial relations 60 years ago would be so disappointed with us today.
Thanks Edmundo and APAE ... so refreshing to see some unconventional thinking from finance guys. Every time I make the case that a rich black kid is the same as a rich white kid (same education, same values, same expectations about life ...) I get trashed by my liberal friends and their obnoxious racial paternalism.
Good post, A Posse Ad Essee.
Nice stuff as always Eddie. The most ridiculous thing is #7. Manslaughter? Give me a break
Don't rush to judgment on that, Ben. If you get a chance to watch the 60 Minutes special on it, criminal negligence looks pretty cut and dried.
3) Unfortunately for the people of Iceland they will end up paying this one way or another. Either through a passage of the vote via a direct payment or indirectly through higher taxes because the goverment of Iceland will have a very tough time borrowing money in the future.
8) This author is a 'glass half empty' kind of guy. Way too extreme and probably a communist. Also, can someone help me out with this notion that by the Fed bailing out the banking industry they neglected main street? In my opinion, if the banks would have all failed, there wouldn't be much of a main street left and you'd have had a situation similar to what was discussed in the article.
11 rocks - I was one of the people who were not happy when Pluto got demoted. Kudos Mr. Branson.
Let's be clear about what we are saying. I am saying that I do not like it when individuals (such as the author of the article) say that the goverment bailed out Wall Street but left main street out on their own. Practically, if you were in charge of making that call, what better solution would you have came up with? Are you advocating for giving every homeowner that is underwater on their mortgage a handout? Another loan on top of their mortgage? Yes, the Gov't lent money to the banks when they needed it, I agree. (which by the way the goverment has already made a $6B profit and is expected to make as much as a $20B profit when the program is concluded). They lent money because had they not, the economy (and thus main street) had a real chance of collapsing.
So how did Obama get in to Harvard?
Try being someone speaking 'against' your own race. You have no idea the shitstorm you get into if you dare raise voice against the prevalent discourse of 'all bad things in our race stem from white people coming to Africa,' 'the government that refuses to give us more handouts and continue to license our laziness is racist,' and all the other inanity the hyperliberal, mainstream media/racial advocates love to promote.
I think the car ban is not as crazy as it sounds. Driving a car through London/Paris/Rome can be an absolute nightmare at times and it's pretty hard to know what road transportation will look like 40 years from now. Besides, by then rail transport could be ludicrously fast.
Agree. Also, it would apply only to conventionally powered cars, of which I doubt there will be very many in 40 years.
Eddie, out of curiosity, what are your thoughts on teaching your kids to box given all the stuff that is coming out about CTE recently? I boxed when I was younger, as did my older brother, and my dad, but looking at studies that show 18 year old kids with early-stage CTE is pretty frightening. There's a big difference between a broken nose, and permanent brain damage that leads you to put a shotgun to your chest.
I'm not trying to minimize the very real risk of CTE in boxing, but it's far more prevalent in football (another sport I'd encourage my boys to play if it were available here in France). At their age, they're not getting hit hard enough to cause any damage, and when they get old enough for the punches to leave a mark it will be up to them if they want to continue. I'm more interested in their learning proper technique than I am in their competing.
That said, I enjoyed boxing as an amateur until I stepped away at age 32. I'm even considering a comeback into the senior ranks, though I'm thinking long and hard before making that commitment. I've only ever been knocked unconscious in the ring once and, as far as I can tell, I've suffered no ill effects from the pummeling I've taken over the years.
I'm just at the very early stages of training my boys (ages 6 and 7), and they may very well lose interest next week. The younger one caught a seam that opened up his cheek a little the other day and mom kinda freaked out, so that could put an eventual end to it too. For the time being, I'm concentrating on teaching them how not to get hurt.
On the elite private colleges having few pell grant students: There are a lot of excellent state schools that can get you to the same place as the ivies, for much less money. This is probably why it shows UCLA with 30% pell grant students...it's simply more affordable and darn good school.
If you were from place like California, Virginia, Michigan, Texas, Georgia, North Carolina, Pennsylvania, or even Indiana (Purdue), why spend the money to go to a private school? Top grades from those places can take you wherever you need to go.
Here are the stats for UVA, for example: http://www.virginia.edu/Facts/Glance_Tuition.html
^^^ Completely specious argument. For what the government spent in bailout money to the banks, every sub-prime mortgage in America could have been zeroed out. Problem solved. But then the oligarchs don't get to loot the Treasury.
As a tax payer I would be livid if they wiped out people's balances for their subprime borrowing. That is a debt that had 0% chance of getting repaid. While they are at it, how about they wipe out my student loans?
I'm sorry Eddie, I'm hardly in favour of the bailouts, but your argument is even more specious. For the headline TARP figure, yes, the government could have wiped out all subprime debt. However, for the actual cost of TARP, the government would have hardly made an impact in subprime borrowing, because while TARP was a a loan programme, what you are proposing is a grant programme.
The further issue is moral hazard; if the gov't will wipe out my neighbour's bad debts, why won't it wipe out mine? This is, of course, exactly the issue with TARP, and why it would have been far better to let all the banks go through normal restructuring, and fail if need be.
+1SB for stealing this argumentative point for when I'm at cocktail parties. short and to the point. .....and walk away.
Edmundo, were you able to find a place that does english boxing? Most french gyms teach savate which is a whole different ball game.
Actually, I did find an English trainer here. He's a martial artist (MMA-type), but all of my boxing trainers have been martial artists. I've never had a boxing trainer who was just a boxer.
I know I won't be fighting here in France. If I end up taking a final shot at it, it's going to be through USA Boxing and I'll come back to the States to compete. That's still a long way off, though, and I'm getting older by the minute.
Best of luck in your boxing Eddie. Are you going to try out for the Golden Gloves?
I'm so glad I'm an American in the Midwest. There is nothing like driving a high performance car on the open roads. I love the freedom of going where I want when I want. No schedules. No fees. No pushing. Just absolute freedom. I know there are a lot of conveniences that Europeans have in their public transportation, but they are truly missing out on the feel of a finely tuned machine pounding the open roads.
So I take it you think that Porsche, Ferrari, Lamborghini, Bugatti, Aston Martin, BMW, Audi, Mercedes, Bentley, Maserati, Pagani, Lotus, Koenigsegg, Saab, Ariel, etc, are all American brands that have never sold a car in Europe?
You do realize how incredibly ignorant your statement is? You do realize that there are various countries in Europe that have highways with no speed limits? If you want to push your car to the limit, Europe is much, much better for that.
@drexel I'm not advocating that the government should have bailed out sub-prime borrowers by any means. I'm just saying that doing so would have been a far more equitable approach than handing it all over to a few bankers, who then went on to repay the "loan" with free money from other Fed programs, and pay themselves billions in the process.
@GoodBread Thanks. But it's all very preliminary. If I do decide to do anything, it'll be as a Light Heavyweight, and I've always fought as a heavyweight or super heavyweight. I've dropped 30 pounds and I need to drop another 30 to get into that weight class. As for Golden Gloves, the only reason a guy my age would even consider getting back in the ring would be to take a final shot at the national title. Don't get too excited though. It's probably just a mid-life crisis.
VT 4ever, ever heard of the Autobahn? It's not exactly open road but you can go a lot faster than anywhere stateside.
I believe in you Eddie! cue Theme from Rocky
Number 4 won't need regulation to be brought about. Just wait and watch, 40 years is a long time...
Number 5 is also true; the "diversity" is a sham. I'm Hispanic and most of the Hispanics I met were wealthier than the average student at Penn, lol. Lots of rich kids from South America, not a lot of poor kids from the LA barrio lol.
Umm, I'm not talking about millionaires in their Ferraris. I'm talking about your typical Western Europeans crunched together in their high density cities. Can't even afford the gas to really enjoy your car on a daily basis in Western Europe unless you're a Duke or a Lord. And the Autobahn is in ONE country and is under constant political threat of being "shut down". Let's not pretend that Western Europe is the bastion of road freedom for your typical citizen. North America, particularly west of the Mississippi, has a continent of overpasses and open roads. You can't do 120, but there is plenty of freedom in deciding you want to visit your friend 25 miles away on a Sunday afternoon, jumping in your car and getting there in 22 minutes. I know most of you all are imprisoned in the Northeast United States, but there IS a world outside of New Jersey,
People "trapped" in high-density cities are often minutes away from highways where the speed limit tends to be much higher than in the US. The speed limit on French highways for instance is 90mph. And yes, plenty of people can afford the gas.
Right, because people living in high density cities are likely to have high performance cars that they park for $500/month in their garages where the car goes unused except in the rare occasion when they take their cars out into the countryside and then pay $7/gal for gas. Right, GoodBread. I'm sure that's par for the course for the common Western European. Of course, we're talking common Western Europeans, not investment bankers, not Lords, not politicians. We're talking your typical citizen. Of course.
VT4E,
I've gotta take a picture of my garage for you next time I'm down there. The entire first floor is Lambos, Ferraris, Aston Martins, every high end sports car you can think of. Granted, I live in a fairly well off neighborhood in Paris, but there's a lot more of it than you think.
You'd probably also be surprised by how much vintage Detroit muscle is down there, too. So more than a few of my neighbors aren't sweating gas prices.
VT 4Ever, do you really think exotic car companies (which for the vast majority are European) solely exist for the purpose of exports? Besides, including gas in the equation for people who can afford exotic cars is ridiculous. Being able to afford exotic cars is expensive everywhere, including "west of the Mississippi."
Speaking of boxing...
http://www.youtube.com/embed/gnmJj3pYZtM
Amazing vid.
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