Category: Economics

Meeting of the Federal Open Market Committee on September 16, 2008

Well, on September 16, 2008, Lehman was not that big of a deal :

Other than the CDS moves and the equity moves on the other broker-dealers, Goldman Sachs and Morgan Stanley, I don’t think that that is the real specter that’s casting some question over broader financial institutions. I think the Lehman situation, no matter what judgment we made this past weekend about whether or not to provide official-sector money, is not what is driving markets broadly outside of the investment banks. What’s driving the broader uncertainty are questions about institutions like AIG that were rated AAA, that were so strong that counterparties didn’t need collateral, and that were a certain bet to be a guarantor around stable value funds and all sorts of other products. If in a matter of weeks that AAA rating and that security could turn out to be worthless

→ Federal Reserve

University of California : Swapping For A Loss

The bankruptcy automatically terminated the swap. Under the contract, the university was required to pay a $25 million termination fee to the now-bankrupt bank.

But at that point, there was one upside. Interest rates were volatile, but had not yet plunged. The swap was not yet deep underwater. The university was out of a gamble that looked increasingly precarious.

And last but not least,

In a decision that is still not clear, university officials decided to find another bank to provide a swap with the same terms. Deutsche Bank agreed to pay the university $31 million to reissue the swap – which officials now estimate will produce $123 million in losses in coming years.

→ Orange County Register

Why WhatsApp Doesn’t Sell Ads

Back on June 18, 2012, WhatsApp’ founders/PR/younameit wrote this brillant statement about “Why [WhatsApp] [doesn’t] sell ads.”
Today, WhatsApp sold itself to one of the world’s largest advertiser.

Advertising isn’t just the disruption of aesthetics, the insults to your intelligence and the interruption of your train of thought. At every company that sells ads, a significant portion of their engineering team spends their day tuning data mining, writing better code to collect all your personal data, upgrading the servers that hold all the data and making sure it’s all being logged and collated and sliced and packaged and shipped out… And at the end of the day the result of it all is a slightly different advertising banner in your browser or on your mobile screen.

Remember, when advertising is involved you the user are the product.

→ WhatsApp Blog

For the Love of Art, and Money

The latest auctions here demonstrated how buyers have now split into two main groups: Longer-term investors who hold to more traditional notions of collecting and who tend to focus on Impressionist, modern and classic contemporary works; and short-term speculators, known as “flippers,” who busy themselves with cut-and-run deals in the red-hot market for emerging artists.

→ The New York Times