Barrett Sheridan

Stories by Barrett Sheridan

  • Breakfast Buffet, Wednesday, May 27

    Wake Up, Americans!: That's what John Taylor wants to shout from the rooftops, or at least the op-ed page of the Financial Times, in order to get us to pay attention to our soaring national debt. Taylor was an influential economist at the Federal Reserve for many years, and also wrote one of the most widely used macroeconomic textbooks. So when he shouts, we should listen. Unless, of course, he forgets what compound interest is.GM Bondholders Are People Like You and Me: The publicity people for the GM bondholders found the one bondholder who is not a major bank, hedge fund or institutional investor and got him to pen an op-ed in the Wall Street Journal.  Born to Regulate: The Washington Post profiles Brooksley Born, the now-famous lawyer who urged the Clinton Administration to regulate over-the-counter derivatives like credit-default swaps. Board Stiff: Isn't it a little odd that Citigroup and Bank of America shareholders have seen their stock value plunge, but they...
  • Breakfast Buffet, Monday, May 18

    Singh His Praises: India's Congress Party, headed by economist Manmohan Singh, pulled off a major victory over the weekend. Pundits took it as a mandate for economic reforms, and a surprising win for the ruling party in a country that loves to kick its leaders to the curb after one term. Arvind Subramanian of the Peterson Institute interprets the win through an even broader lens, calling it a vindication of india's "Goldilocks globalization" (not too much foreign investment, and not too little; not too much reliance on exports, and not too little). Everyone agrees it's a good sign for investors in India.It's All Washington's Fault!: The New York Times Magazine this weekend was all about money, and it's a great read. Highly recommended: this piece by Niall Ferguson, who says that deregulation and financial innovation have gotten a bad rap, and it's really bad regulation (not lack of regulation) that got us into this mess--something to keep...
  • Stephen Wolfram's Plan to Leapfrog Google

    Silicon Valley is full of imperial visionaries whose mission is to take down Google, which now controls about 64 percent of the search market worldwide. They range from Microsoft to newcomers like Cuil, but all of them have ended up merely battling one another on the outskirts of Google's dominion, fighting for the shrinking number of searches that Google hasn't yet figured out how to conquer.Then there is physicist Stephen Wolfram. When he wrote a blog post in early March announcing the imminent release of a new, highly sophisticated search engine, technology watchers from the Bay Area to Bangalore wondered if this was going to be The One. Wolfram claimed a breakthrough, an engine that does not merely crawl over Web sites seeking to find one that has already posted an answer to the question at hand. Instead, Wolfram|Alpha, as the technology is awkwardly named, has at its disposal 10 trillion (and counting) points of data from fields like chemistry, meteorology, history and...
  • Make It Stop: The Webbys

    Imagine if you took the Oscars, which recognize "excellence in filmmaking," and decided instead to honor "excellence in anything shown on a screen of any kind." Welcome to the Webbys, a boundless and silly salute to the online universe. While other awards cling to their aristocratic exclusivity, the Webbys, like a good kindergarten teacher, hand out a gold star to just about anybody who asks—provided you cough up the $275 entrance fee, leading the tech-gossip site Valleywag to snark that the Webbys "milk the Internet's lust for self-promotion." Indeed, there's actually a category for "self-promotion," as well as one for "e-mail marketing" (a.k.a. "spam"). This year's 645 nominees (!) include Montreal's tourism site and the Shiba Inu Live Puppy Cam. Lucky winners on June 8 get a statuette that looks like a Slinky. Congrats, Grammys: the "worst awards show" category has a new winner.
  • China: A Capitalist's Dream Come True

    Every good businessperson has a favored statistic about China. I remember meeting the son of a vineyard owner in Napa Valley, who was helping his parents take their modest business global. "Think about it," he told me. "If we sold a bottle of wine to every Chinese millionaire, we'd run out of wine before we ran out of millionaires!"I haven't kept in touch with the oenophile, so I don't know how his well-laid plans played out, but Dan Gross has been keeping tabs on how some major American brands have been doing in China. His take? "Thanks to macroeconomic upheaval in the U.S. and China, the promise of the China market finally seems to be within reach." In his column this week, he walks you through the three premier exhibits--Citigroup, General Motors, and fast-food-owner YUM Brands--and explains that, even though these companies are now (or are close to) making more money in China than at home, there's still plenty of room for growth...
  • Breakfast Buffet, Thursday, May 14

    The Dollar Loses Its Groove in China: An op-ed by Nouriel Roubini the New York Times says the dollar may not lose its reserve currency status overnight, but "we can no longer take it for granted," and the renminbi may take its place. Victor Zhikai Gao agrees that the dollar is losing the hearts and minds war in China.High-Latitude Schadenfreude: Norway is doing just fine in this economy, thank you very much, with a budget surplus, continued growth, and a healthy slush fund to buy up depressed stocks around the world. A Failure of Markets?: Not so fast, says Poland's former central banker.The New Yorker Treatment: Nick Paumgarten writes a psalm for Wall Street.  
  • Breakfast Buffet, Wednesday, May 13

    Where Are Argentina's Coins?: This is for sure the strangest story of the week. Argentina is facing a mysterious coin shortage. Some small convenience stores would rather turn down business than give out change. Buying coins can require as much as a seven percent premium over face value, and markets owned by Chinese immigrants have banded together to issue their own currency.America's AAA Rating Is At Risk: The U.S. has had the rating since 1917, but now Moody's is threatening to cut it. (How un-American.) I wonder, though, if anyone would care? Everyone knows the U.S. is the most financially reckless borrower in the world at the moment, but other countries still give us money hand-over-fist.Are the Saudis Recession-Proof?: Perhaps not so much as we think. Big Ships, Little Business: File it under fascinating: Near Singapore, "one of the largest fleets of ships ever gathered idles just...
  • Breakfast Buffet, Tuesday, May 12

    Welcome to Shangkong: A year or two ago, New York and London battled each other to be crowned seat of global finance. But, writing in the Financial Times, Yale professor (and regular Newsweek International contributor) Jeffrey Garten argues that, "once the global recovery begins, New York and London might...
  • Financial Economics, 'Saturday Night Live'-style

    Everybody is talking about last weekend's Saturday Night Live skit with Justin Timberlake and Andy Samberg singing "Motherlover," but for you econophiles out there, you might want to skip the pop-comic songfest in favor of the "Geithner Cold Open." "Initially, my department had planned to give each bank a numerical grade of one to 100. But then we decided that might unfairly stigmatize banks who scored low on the test because they followed reckless lending practices or were otherwise not good at banking. So we changed to a simple pass/fail system...Eventually, at the banks' suggestion, we went with a pass/pass system."
  • Breakfast Buffet, Friday, May 8

    Stress-Free Friday: A stress test wrap-up from the NYT. On Your Marx...: Venezuela's Hugo Chavez responds to the recession by nationalizing the docks and boats owned by oil-services companies like Halliburton and Schlumberger.Gold Bugs Beware: All the bears are screaming "Buy gold!" to hedge against inflation, but check this interactive graphic on the history of gold prices first. It is, as the FT says, an "unstable metal," highly susceptible to political events.Auto Anarchy: Why is there so much drama in the auto business these days? As Der Spiegel reports, Porsche tried and failed to take over Volkswagen, a company 15 times its size. The two will merge instead. Money TV: The strange, trader-friendly journalism of CNBC: "In February, Power Lunch, the midday show, booked two of the canniest thinkers to emerge in the crisis, Nassim Nicholas Taleb, the options trader and Black Swan...
  • A Modest Proposal: Ban Debt!

    Levantine doomsayer Nassim Nicholas Taleb, author of "The Black Swan," has been everywhere lately, appearing on a Planet Money podcast last week and then this morning at the New Yorker Summit. (He also co-authored a new research paper.) The upshot of his latest message is extreme: ban debt.Taleb claims that debt is a risk-enabler. Remember how your financially savvy mother always warned you that bonds are safer than stocks? Well, to Taleb, that's a problem. If I buy a bond, I act as if I'm certain to get that money back, and might continue loaning money elsewhere. When one of those bets (shocker!) fails on me, I have to call in my other loans, and thus trigger a system-wide panic. Equities (a.k.a. stocks) are, on the other hand, inherently risky; they entitle you to a piece of the profits, but also expose you to business downturns. As Taleb sees it, equity-holders are a lot more cautious about where they put their money.His proof? The dotcom boom-and-bust was...
  • Monetary Policy, Garth Brooks-style

    In a new song, Merle Hazard and his singing partner Bretton Wood ask: Inflation or deflation?Tell me, if you canWill we become Zimbabwe?Or will we be Japan? Watch the whole thing:(Hat tip: Calculated Risk)
  • A Dastardly Tax Proposal to Damage U.S. Growth

    Obama declared war on corporate tax evaders today, unveiling a plan that will make it harder for companies to hide money offshore indefinitely and, in so doing, raise an extra $103.1 billion over 10 years (according to the Administration's math, at least). (For background, check here.)The response from corporate America was predictable. The chief economist at the U.S. Chamber of Commerce summed up the sentiment: By raising taxes on Big Business, “you limit the ability of U.S. companies to compete, you impede growth...
  • Breakfast Buffet, Monday, May 4

    The Oracle Speaks: The annual Berkshire Hathaway shareholder meeting featured lots of words of wisdom from the Sage of Omaha. Buffett said financiers' greed and stupidity contributed to the crisis and he criticized the bank stress tests. Newspapers face "unending losses," he said, while his partner, Charlie Munger, praised Google's "moat." Both spent a lot of time defending their company's dismal year.A European Supergroup That's Not ABBA: According to the Financial Times, Fiat is planning to combine its own automotive division with Chrysler and GM to form a new publicly traded European company. If the plan, which is expected to be announced today, is successful, it will "create a company with about €80bn ($106bn) of revenues and sales of 6m-7m vehicles a year – second to Toyota, more than Renault/Nissan or Ford Motor, or GM itself, and roughly as many as Volkswagen."Should Starbucks Become a Bank?: John Gapper thinks the idea makes...
  • Breakfast Buffet, Friday, May 1

    Another One Bites the Dust: The federal government put Chrysler into bankruptcy protection yesterday, and the New York Times argues that "if the process is prolonged, the costs and complexity would likely...
  • Quote of the Day

    From Megan McArdle, on BofA's Ken Lewis: I don't find it hard to believe that Ken Lewis genuinely believed that he was singlehandedly saving the US financial system [by absorbing Merrill Lynch]...But that doesn't really matter.  If my husband sacrificed our child to save thousands of people, I might recognize, at some abstract level, that he had done the right thing. But we wouldn't stay married.Ouch. That's a vaguely Biblical analogy. But if Ken Lewis is Abraham and Bank of America the sacrificial Isaac, then who's God?
  • Breakfast Buffet, Thursday, April 30

    Stripped: During a shareholder meeting that at times seemed more like a circus, investors voted to strip Ken Lewis of his chairmanship of the board. The embattled financier will remain CEO of the company -- for now, at least."You Sneeze, You Go Home": That's the rule at Mexico City brokerages, where stock traders slip on face masks in between client phone calls. Look On the Bright Side: Hidden amongst yesterday's dismal GDP report were some promising figures. Consumer spending was up, for instance, and the price index rose enough to dispel fears of deflation. Can the SEC Do Anything Right?: Apparently not, according to the Wall Street Journal. The regulator has started hiring specialists to investigate particular types of financial wrongdoing, moving away from a generalist model. This threatens to creat a "'silo' system in which different groups benefit from not sharing information with each other."Hedge-Clipping: A new proposal to regulate...
  • How Much Money is $100 Million?

    We humans get confused by large numbers. So how large is $100 million in the context of the U.S. budget? One blogger shows us using stacks of pennies:Related: Here's one person's effort to visualize what $1 trillion looks like. (Hat tip: Megan McArdle)
  • Act Now! While Supplies Last!

    Spotted on 57th St. in New York. Do you think a "Business Crisis Sale" offers better discounts than a "Recession Special"?
  • The GDP Numbers Are Bad, But Might Be Getting Better

    Wow, the GDP figures released today are abysmal: the economy shrank at an annualized rate of 6.1 percent last quarter. "GDP has now dropped for three straight quarters for the first time since 1974-1975," according to Reuters.This is much worse than what economists expected (a 4.9 percent drop), but pretty close to Goldman Sachs' prediction of a seven-percent decline. But there is hope in sight: Goldman expects "only" a three percent drop this quarter. So if their predictions are as good this time as they were last quarter, then the economic gloom may start to lift a little.
  • Bring Silicon Valley to Wall Street

    Rahm Emanuel famously said what everyone was thinking when he noted earlier this year that "a crisis is a terrible thing to waste." The financial industry has been bruised and battered. There's a golden opportunity to refashion a fairer and more stable system, one less susceptible to "the reemergence of an American financial oligarchy," as Simon Johnson so memorably put it in a recent article in The Atlantic.  What we need in order to accomplish this -- aside from better government oversight -- is a new generation of financial innovators to fix today's broken system. This is what happened in the energy sector when, as oil prices climbed to $150/barrel and climate-change worries crescendoed, venture capitalists sensed a once-in-a-lifetime opportunity and poured money into clean technology. Although oil prices have since collapsed, that money is still at work, and might yet produce the Google or Microsoft of the cleantech world.The same should happen in...
  • Breakfast Buffet, Wednesday, April 29

    Stressful Days: Bloomberg reports that six of the country's 19 largest banks will be told to find more capital when the results of the stress quiz, er, test are revealed next week. Know Thyself: after the Great Crash of 1929, Congress set up the Pecora Commission to investigate the shady financial activities that took place in the 1920s. An op-ed columnist in the WSJ doesn't see anything similar happening this time around because it would force Congress to investigate itself. How the Sausage Gets Made: The New Yorker has a long profile of Peter Orszag, Obama's budget director. The article is light on economics and heavy on insight into the political process, but we do learn why Obama couldn't make a dent against farm subsidies. (Hint: Rich farmers!)Another Day, Another Madoff: The SEC has arrested California financier Danny Pang, who allegedly defrauded investors of hundreds of millions. Twelve Reasons to be Optimistic: Including this gem, #11: "Condé Nast...
  • Q: How Much Have the Bailouts Cost Us? A: All of the Above.

    It's a sign of exactly how complicated our current situation is that even as straightforward a task as tallying how much money the U.S. government has spent so far on bailouts is nearly impossible. Last week, Paul Kiel over at ProPublica's very good Eye on the Bailout blog surveyed three of the latest estimates of the total bailout "cost" thus far. I put "cost" in quotes because, as the various analyses make clear, the true cost ranges anywhere from $3.2 trillion to $12.8 trillion--leaving a gap of $9.6 trillion.Part of that gap is easily explained away. Some studies look at just how much the U.S. has actually spent so far, others include funding promises and loan guarantees in the total, which results in a much higher figure. Here's a summary of the three recent analyses:The equity research division of financial firm Keefe, Bruyette & Wood estimates that the U.S. has spent $3.2 trillion and allocated $10.8 trillion. This includes bailouts...
  • Investment Drops Sharply In Clean Technologies

    As oil shot up to $150 a barrel last year, venture capitalists (VCs) poured money into clean technologies like NASA-caliber fuel cells, on the belief that their costly, sci-fi-inspired advances would remain competitive even if oil fell to $50 a barrel. Now that it has, closing at $52 last week, VCs are showing just how committed they are to the green revolution: not very. While VC investments were down 47 percent overall last quarter, investments in clean tech fell by 84 percent —the sharpest drop for any sector. Last year, clean tech attracted a record $4.1 billion; this year, it's projected to be just $600 million. It's gone from being the second most popular sector to invest in (after software) to the second most reviled (after media/entertainment). Obama is trying to reinflate clean tech with $83 billion in his stimulus plan. But VCs may have moved on to new prey: financial services was the only industry to see an uptick in investment last quarter.
  • Breakfast Buffet, Friday, April 24

    Sinking...Like a Rock: The auto industry's woes continue. Chrysler will likely file for bankruptcy next week. Meanwhile, Ford lost $1.4 billion last quarter, on top of a $14.6 billion loss in 2008, but says it still won't need a government bailout.What's His Motivation?: A Madoff movie is already in the works. Elsewhere, the Daily Beast has a photo gallery of its dream cast, with Dustin Hoffman in the lead role.All That Glitters: China revealed that its gold reserves have risen by 75 percent in the last few months, another sign that the country is starting to diversify away from the dollar. Why Innovate When You Can Shop?: The Economist is troubled that in 2008 the U.S. granted more patents to foreigners than to its own citizens.Echoes of Dickens: Bad times in the UK mean boom times for vermin, "with shuttered shops and half-built...
  • Why Is Jeff Bezos Smiling?

     Because this quarter, in the midst of -- say it with me now -- the worst global recession in 70 years, profit at Amazon.com grew by 24 percent, to $177 million. You read that right. Amazon's financials didn't stagnate, hold steady, or even increase slightly -- they flew off into the stratosphere. Sales also grew by a whopping 25 percent, ignoring currency fluctuations, according to the quarterly results announced today.Although these particular numbers come as a shock, it's no surprise that e-commerce is benefiting from the downturn. Anemic consumer spending is choking off the weakest brick-and-mortar retailers. Circuit City, Linens 'n Things,  The Sharper Image, CompUSA and other major chains have joined the extinction list in the last year and a half, and online vendors like Amazon are wooing their former customers.However, I do wonder how much of this stunning performance is due to a one-time Kindle Effect. Amazon released the second generation of its...
  • The Wondrous Life of Hu Jintao

    You've got to hand it to Jim Owens, the CEO of Caterpillar -- he knows how to craft a provocative sentence. Like this one, for instance: "I'd rather be President Hu than President Obama." That's what he told a gathering of the Council on Foreign Relations in Washington, DC today. (Hat tip to Real Time Economics.)The reason he'd prefer a seat of power in Beijing over Washington right now is that the task for China's leaders is to encourage consumer spending, telling their citizens, in effect, to "Enjoy a little more." Obama, of course, has the opposite task, and "is going to have to encourage Americans to save more." Selling swimming pools is a lot more fun than selling mutual funds.Obviously Owens is exaggerating somewhat. I, for one, would probably take Obama's spot over Hu's. China has plenty of problems other than a too-high savings rate. Around a third of the country's 1.3 billion people live on less than the...
  • "Don't Mark Our Love to Market"

    Merle Hazard is the self-proclaimed "first and only country singer to write about mortgage-backed securities, derivatives, and leveraged buyouts." His latest ditty is "Mark to Market," dedicated to "the courageous men and women of the Financial Accounting Standards Board." Hat tip to our illustrious photo editor Kathy Jones.
  • Just Charge It

    Today in encouraging news: Obama has called credit card CEOs to the White House. They'll meet on Thursday and, according to McClatchy, Obama will "stress the need for greater clarity in the way that credit cards are marketed and administered."This of course is a preliminary step in reining in shoddy lending practices, which extended not just to mortgages but credit cards and other consumer loans. And it's a good sign that the Administration is willing to expend some political capital on reforming sectors not quite as toxic as subprime mortgages. Of course, the bears and pessimists might view this as evidence that credit card debt is about to explode and take down a bank or two, and the Administration is starting triage. As I wrote a couple of months ago, I think this is a red herring. Banks have already taken writedowns on their credit card debt holdings (although in the credit card biz they're called chargeoffs). And the credit card sector is less than one...