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Cassandra, the SEC and Mr. Madoff

Andy Spero | December 18, 2008 | 0 Comment(s) |

We very much like the ancient Greek story of Cassandra, and one could well imagine that for almost ten years, Harry Markopolos felt like a modern-day Cassandra.

We don’t know enough about Mr. Markopolos to know whether he wrote letters to the SEC about hundreds of other fund managers claiming that they also ran Ponzi schemes or were part of the conspiracy to assassinate President Kennedy, were adducted by UFOs, or provided FDR with advanced knowledge of the bombing of Pearl Harbor or some combination of the four.  If so, then it is quite… Read the rest

Should Citi Be Nationalized as a Warning to Others?

Andy Spero | November 21, 2008 | 0 Comment(s) |

Note: We’ll likely expand and edit this post in the morning, but wanted to circulate the idea before bedtime.

We’re rather diligent–but not obsessed– about keeping up with financial new.1  We’ve heard many financial firms announce lay-offs and have read how at a few, like Goldman, senior managers have decided to forgo bonuses.

As we recall, most banks have announced withdrawals from subprime mortgage origination and loans, which seems like a wise move, but given the magnitude of their errors and mistakes, we’re very surprised that we haven’t read… Read the rest

OMG, Mr. Paulson Agreed with Us Twice in One Week!

Andy Spero | November 19, 2008 | 0 Comment(s) |

Update (01-20-09): now that Mr. Paulson’s term as Treasury Secretary has ended, we must admit that the small bit of optimism we exhibited in this post was sadly and unfortunately misplaced.  It was out-of-character for us, but we’re a hopeful pesimist.  He quickly reverted to his behavior of September and October, and for that, the markets, the nation, and the world have and will continue to suffer.

We hope that his earlier actions haven’t caused irreparable damage, but we’re doubtful.

This is a longish post that covers several aspects of the… Read the rest

Global Warming and the Mortgage Crisis

Andy Spero | November 12, 2008 | 0 Comment(s) |

Regular readers will know that we often criticize the stupid application of mathematical models, especially ones related to finance and economics; ergo, our firm’s motto, “Thought Before Calculation.”

In that light, we note that in last Friday’s The Wall Street Journal (November 7) the editors excerpted a speech that Michael Crichton gave at Cal Tech in 2003, entitled ‘Aliens Cause Global Warming.’  (For those who don’t know, Mr. Crichton passed away early last week.)

In the speech, Mr. Crichton discussed the Drake equation which attempts to illustrate the winnowing-down process of all the planets in… Read the rest

Gossamery Arguments for Transparency and Our Reply

Andy Spero | November 12, 2008 | 0 Comment(s) |

Recently, we’ve seen many op-ed essays calling for more transparency in financial statements, particularly with respect to mortgage-related securities.  Many of these essays have been written by famous and esteemed individuals or their staffs.

In our own idiosyncratic, round-about way, we’ll explain the empty silliness of such arguments, and we begin by criticizing the notion that “more is always better.”

Too Much Information: Unfortunately, we’ve not read a single essay that contained an intelligent, concrete argument for why more transparency is better than less–as if transparency, in and of itself, is a good… Read the rest