furiouslol

It would have been more convincing if everything is in CAPS.

I thought the points made by the author are valid. The reason why Adwords work so well is because the ads match our intention at exactly the right time.

If I'm planning a trip to Barcelona next week, a Barcelona hotel ad would appeal to me now but not last month. Timing matters.

Just because Facebook knows a lot about me does not mean their ads appeal to me. If I like Japanese food, do I need to be bombarded by Japanese food ads every day?

Google's ads, on the other hand, will only show the Japanese food ads, when I am explicitly looking for Japanese food.

You can say that again. A few banks have carbon credit trading arms doing hundred of millions of revenue doing similar stuff (Replacing non-ecological friendly pots in Africa with greener pots)

Precisely. There are plenty of private buyers for those papers at 0.08-0.10 on the dollar but the banks are no budging since doing so will render them insolvent.

So Paulson will use the taxpayers' money to buy the papers at above market price, ensuring survivability of the banks, while the taxpayers hold the risk of further depreciation of the papers.

Shock Doctrine.

As noted in the article, there are plenty of private buyers for these toxic assets. The problem is that the buyers want to buy them at $0.10 on the dollar while the banks want to sell them at far above market value ($0.60 on the dollar).

While the current bagholders have much motivation to get rid of them, they won't sell them at market value because doing so would render many of them insolvent. (Many of them are marking these assets at $0.60 on the dollar on their balance sheets).

So the Treasury is planning to help out the banks by giving these banks what they want - ability to sell the assets at above market price. (which results in a transfer of losses from the banks to the taxpayers)

What I'm curious about is how Nik managed to get the marque angels to invest in him, when he's new to the Valley. And how did he end up in the Valley in the first place.

You can use this library to calculate call option price in Variance Gamma model

http://www.fftw.org/

are there fundamental data on ftp.sec.gov? All I can find is sec filings by the listed companies.

But if what those big mouths like Einhorn/Eckman say is true (which it is), wouldn' that be to the benefit of the shareholders? These big mouths have alerted the shareholders of the innate problems in MBI and Lehman months before they capitulate.

Those crashes you've seen lately, I would argue, are the works of an efficient market. Isn't it prescient that the market drove down the price of AIG to near the fair value after the bailout ($2-5), well before it was actually bailed out?

Here's a nice picture on how effective banning short selling is in curbing the market slide, courtesy of our friends from Pakistan.

http://i33.tinypic.com/xlzfjo.jpg

One alternative to short selling as a hedge is a structured note linked to inverse performance of a stock. But how scalable is this option? If anything, we are moving backwards with this solution as there would be less transparency in this "unregulated market". Who knows what kind of risk these counterparties will take?

Box.net and Dropbox weren't the first in a crowded market but they flourish nevertheless.

So keep going.

It's too much of a coincidence that this move is effected a few days after McCain publicly chastised SEC Chairman Chris Cox and said he would fire him if he were president.

I don't get it. What does that got to do with short selling? If they effect a blanket short sell ban, you're going to see quite a number of business going bust. The ETF business will be derailed. So will the options business. Companies shut down. People get laid off.

If they really want to stop the carnage inflicted on the financials, the should just ban short sells on the financial sector alone.

I would argue that this was a political driven decision rather than an economical one.

Ok. You'll not only be killing the hedge funds but you'll also be killing the ETF issuers who needs to short sell in order to keep the ETF price in line with the underlying basket of stocks (Some ETF issuers use OTC swaps but at the end of the rope, some party still need to short the stocks to keep the price efficient)

I'm totally serious. You can ask anyone who knows about the market and get their candid opinions.

I don't know how long they're going to effect this ban but to give you a preview of what banning short sell can do, just take a look at the China stock market. The chart is like the Eiffel tower.

The shorts make the market effective as they provide a floor at a bottom where no one else may be willing to buy.

I'm all for a permanent ban on naked short sells but to have an outright ban of all short sells is plain stupid.

Oh yes, if the hedge funds are forced to cover, this could conceivably lead to some blowups, putting even more pressure on the banks that finance them. Wonderful.

This is the biggest WTF moment. Ever.

Without the ability to short sell, the market can't even function effectively.

Convertible/Risk arbitrage people cannot do their job wihout short selling. The risk-free spread is there for the taking, but you can't take it.

Options market makers cannot hedge their PUT writes without short selling.

This is what I envision:

We'll see a massive short covering rally caused by a dry up in volumes by next week.

Option traders will stop trading as they cannot properly hedge their postions, as will all risk arbitrage, debenture, derivative and ETF traders. Traders of all financial products will not trade if they cannot hedge their positions.

Liquidity will dry up and volatility will increase drastically, which is exactly what the SEC wants to avoid.

The USA has decided to follow their Russian and Pakistani comrades in artificially controlling the market.

It's over fellas.

We've killed the banks. Now we'll kill the hedge funds and the options houses.

Sounds like what Zopa is doing with peer to peer lending.

As long as there is a central clearing organization that guarantees the payoff and assuming this p2p model results in better rates, I don't see why it wouldn't take off.

The execution would be a major hurdle though.

Why is it that laymen don't mind writing commands like @john message?

I thought people would prefer it if Twitter just add a To: textfield.

The taxpayers suffer. You have to eat the loss.

If you want an explanation on why GS and MS are in free fall, look at the money markets. After the Reserve Fund broke the buck yesterday, money market funds are increasingly wary of lending to investment banks in the short term repo markets. The TED spread has also spiked up to record levels (The TED spread indicates how willing banks are in lending money to one another)

This is like the 1907 money market panic. GS and MS could be solvent but cannot stay in business if it can't access funds easily in the overnight markets since they don't have a stable deposit base like commercial banks do and they are almost entirely dependent on the repo markets for funding.

Should we be expecting another bailout from the government soon?

I would think that most of the bloggers got it all wrong.

If Google have bought Valve, it would not be for the Android app store.

The most obvious reason why Google would buy Valve is that Microsoft is moving aggressively into in-game advertising and by buying Valve, Google just got themselves a massive platform to distribute their future in-game advertising solutions.

I don't wish to make light of the situation but Paulson has moved the US Treasury from nowhere to the top of the M&A league table in just 1 year,

AIG is getting badly punished for this.

They are getting the loan at LIBOR + 8.5%. That's downright punitive.

LIBOR + 8.5% is not a rate at which a company with AIG's business model could survive at. AIG lends to people at around LIBOR + 4% for mortgages or LIBOR + a lower % to insure BBB to AA rated borrowers.

They'll probably have to sell off their assets in a hurry at below fair value. The longer they wait, the more pain the high interest inflict on them.

Here are more complete articles:

http://www.nytimes.com/2008/09/17/business/17insure.html?_r=...

http://online.wsj.com/article/SB122156561931242905.html

I wouuld say you would be more productive with private offices but the culture and the camaraderie within the office would probably be better with an open concept.