Auction-Rate Probe Grows Over Clarity From Brokers (WSJ)
It looks like the feds might've found two more fall guys. Federal Prosecutors are honing in on two Credit Suisse brokers that might have mislead their clients on something or other on something related to auction-rate securities. This line from the WSJ is telling: "At issue is the $330 billion market for "auction rate" securities..." Really? Is that the issue? The $330 billion market? Cause typically in a potentially criminal probe, the issue is whether a crime has been committed. Whether the suspects broke the law, not whether some huge, broader market collapsed. Or perhaps that's just an old fashioned view.
Study Finds Flawed Practices at Ratings Firms (NYT)
All this second guessing of ratings agencies is actually a big snooze. It's not really that big of a deal to us whether the SEC or the Financial Times calls them out on their ratings practices. There are really two facts we want to know. How did their ratings perform (poorly it would seem) and how have their shares performed (again, pretty poorly). Beyond that, it all looks like an attempt to snap a complicated story into a bite-sized history lesson.
'He didn't get carried away with fads' (Globe and Mail)
Nice headline on the death of investor John Templeton. He was 95. The business media will be recanting stories on him all day, and maybe for a couplle more days, no doubt. We'll put him in that category of investors we should know more about. Though in fitting with the headline, we liked the story of Templeton sitting on the beach in the Bahamas and deciding to short the entire internet sector back in 2000. His call wasn't just to short these stocks, but to short them and cover them once they hit $0, or somewhere in that vicinity. Some of that may be apocryphal, though we heard it at the time that way.
Crude Oil Rises as Iran Test-Fires Missile, Dollar Declines (Bloomberg)
Irain tested a missile, so that day "surprising" drop in oil turned around last night. Weak.
Headline of the Day (Bayesian Heresy)
Guess there's some G8 summit going on or something. Marshall Jevons picked out two amusing headlines from it: "World leaders enjoy 18-course banquet as they discuss how to solve global food crisis." Cute, but then, it's also a little obvious, no? The other headline is the real killer: "G8 says committed to fulfilling Africa aid pledge." Zing! Actually, we shouldn't be so skeptical about the role of an organization like this to truly bring relief to Africa. Somehow this movie wound up in our Netflix queue recently, and it basically has the blueprint for success at these meetings. (Hint: the hero is an attractive woman who makes a moving plea).
Drivers or bikers: who sucks more? (Megan McArdle)
Getting into a cars-vs-bikes argument is the surest way to lost friends. It's like arguging about music. As such we're not going to wade into this one -- too controversial for the Opening Bell, and arguably too irrelevant.
Why play poker, especially tournaments? (WSOP Blog)
This isn't really a trivial question. For most people, playing tournament poker, like the WSOP Main Event that's going on right now, is not a worthwhile proposition. It's just a big money loser. So why come to the table at all? Surely the Freakonomists have tried to answer this question. Maybe Tyler Cowen has as well. perhaps self-delusion has something to do with it. "Lucky Scum" the hedge fund guy that writes this blog (he's alive in the tournament still) offers four reasons: Escape, Masochism, Addiction and It's the best game in the world. Even though we're big chess fans, we like this line a lot, in support of the last argument: "Sorry, chess players, but a simple alpha-beta pruning algorithm makes your game computationally equivalent to tic-tac-toe while all but the very simplest poker problems are computationally infeasible even before you throw in the most compelling part of poker: adapting your game to the psychological make-up of the players around you and weaving as much larceny as possible into a plausible narrative that takes into account the recent history of the game."
Alberta to capture CO2 with oil sands revenue (FT)
Alberta has waited and waited and waited all these years for some serious revenue from their oil sands. And now what are they doing with the cash? Well they're allocating at least $3.9bn for C02 emissions abatement. Hope it's worth it.