Yesterday was quite a news day. BP capped the well. Congress passed what AP headline writers termed a “stiff financial reform bill.” And the SEC announced a $550 million settlement with Goldman Sachs. The coincidence of those second and third items is quite remarkable, don’t you think?
The SEC made its announcement within hours of the bill passing, while the stock market was still open. Generally, 
news like that is kept under a tight lid while the stocks concerned trade, ideally until early the next morning. But then the bill and the settlement would have been in different news cycles.
I must say, as an aside, that I am saddened by the settlement. The SEC’s case was largely imaginary and I am particularly irked by the $250 million going to a pair of European banks, apparently to compensate them for being idiots. I am sure that had Goldman gone to court it would have, eventually, won. But truth and justice are sometimes subordinate to good business. $550M is about two weeks of profit for Goldman, and if the deal comes with a gentleman’s agreement to be left alone for a few years then it was money well spent. Goldman’s market cap is up more than $5 billion on the news.
Read more »
I am always amused by things that started as a mocking joke but then, through repetition, slowly became 
unfunny enough that they were taken seriously. The word “software,” once used derisively by engineers who built actual electronics to refer to the work of their programmer counterparts, is a good example. Daylight savings time, first proposed in a satirical essay by Ben Franklin in 1784 is another.
To this list of the absurd becoming ordinary we can now add the idea that richer Americans should arrange to die in 2010 to save on estate taxes.
In May 2008 the Wall Street Journal ran an article with the eye-catching title of Death by Taxes: Seniors May Plan Their Demises to Maximize Their Bequests. But the author made clear his humorous intent in the opening paragraph.
Read more »
Regular readers of BMA, and I know there are dozens of you out there, know that there is nothing I like more than science. Particularly science extrapolated from a single experimental result and recounted in blogs.
For example, just last week the NYT’s Economix blog asked Do Hungry People Take Bigger Financial Risks? According to some scientists in the UK, hungry people, or at least 19 guys in their mid-20’s who hadn’t eaten lately, tend to take more risks. What’s more, the blog post describes an experiment different than the one in the paper that it links to, which tells me that there must be two scientific studies out there supporting this exciting new finding.
It is exciting because it confirms a previously held belief of mine, that the problem we have in this country is too much food and not enough risk taking.
Read more »
In March I wrote a post explaining how and why the US Postal Service had
begun to slowly circle the drain. It had the impact on policy makers that my more clever posts usually do, which is to say none at all. So here I am trying again.
The USPS is a business (term used loosely) with high fixed costs and a variable income. That means that what it costs to run the operation is not particularly tied to the amount of business being done. It is a setup that is typical of transportation companies, not just postal services but also, for example, airlines. (And telecoms and media companies, BTW.)
When revenues are growing, all is well. Incremental income is mostly profit, since the overhead has been paid for. But when the trend is in the other direction, an irreversible death spiral often results.
Read more »
By 2pm on May 6, 2010, it was clear that the stock market was having a bad day. The Greek Crisis was going through one of its spasms of fear and uncertainty. It was also the day of the UK general election, and by mid-
afternoon in New York it was becoming clear that the result would be some flavor of a hung parliament. The S&P 500 was down –2.9%, a decline that only a few years ago would have been considered headline news but is now mundanely bad.
Then over the next 46 minutes, the decline accelerated to the point where it became severe, then horrendous, and finally absurd. At about 2:46 the S&P was down about –8.6%. I say “about” because at that point the basic fabric of the marketplace was breaking down and exactly what the S&P was trading at, and when, is not clear even months later.
And then, as if the market fairy who had caused this twitched her wand in the other direction, the market staged its best ten minute rally in history. By 2:55 the S&P was down only -3.9% on the day. It would close down –3.2%.
Read more »
news like that is kept under a tight lid while the stocks concerned trade, ideally until early the next morning. But then the bill and the settlement would have been in different news cycles.
Government | Frank Curmudgeon | 
July 16, 2010 11:59 am | 
Comments (157) 
Subscribe