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    The $2.3 Trillion Garage Sale

    Having waged a battle against financial mayhem for the last two years, the Federal Reserve is tentatively declaring victory. As it guaranteed debt and swapped cash for all sorts of assets, the Fed's balance sheet grew—from about $850 billion in assets before the crisis to about $2.3 trillion this spring. The binge included the purchase of $1.25 trillion of mortgage-backed securities issued by Fannie Mae and Freddie Mac. But in testimony to Congress in March, Federal Reserve Chairman Ben Bernanke said the purchases were coming to a close and that the Fed was now seeking to lessen its burden. The Fed is now discussing how to sell off these new assets.
  • Monopoly Comes to the App Store (and We're Not Talking About a Board Game)

    Apple’s next “magical” and “revolutionary” product? An iLegalDefenseTeam. According to the New York Post, the Department of Justice and Federal Trade Commission are negotiating over which of the two agencies will launch an antitrust inquiry against the company, now the third-largest in America (by market capitalization). A decision could be made within days, but at this point, it’s just a rumor—neither the government nor Apple is confirming or denying anything. And even if true, an inquiry won’t necessarily result in legal action—it's just a preliminary investigation to determine whether any laws have been broken.Still, it’s bad news for Apple. The reputation of the tight-lipped Cupertino firm has done a 180 in the last couple of years, going from snazzy, innovative upstart to tech bully. Its public badmouthing of Adobe and its Gestapo-like tactics against the finders of a next-generation iPhone are only the latest black marks on the company’s record. App developers, music...
  • Goldman: It's About What's Legal

    The problem for Tourre—and for Wall Street more broadly—is that they’re so intent on proving that what they did was legal that they can’t see that what they did was wrong. These are men (and they usually are men) of the market, and they played by the market’s rules. And the market’s rules are these: you make as much money as you can without actually going to jail.
  • A Cop on the Beat

    As part of financial-regulation reform, congress is pushing for derivatives—the complex financial instruments behind many of the recent debacles—to be traded on centralized exchanges, where data and activity could more readily be seen by investors. Predictably, Wall Street opposes calls for change. JPMorgan Chase CEO Jamie Dimon told analysts that such proposals could cost his bank from "$700 million to a couple billion dollars," and industry players warn that investors would suffer if trading becomes more transparent. But history has shown that banks often don't know what's good for them. ...
  • Did Hewlett-Packard Pay Too Much, Too Little, or Just the Right Amount for Palm?

    Is $1.2 billion a lot or a little for Hewlett-Packard to pay for Palm? With the acquisition, HP gains an instant foothold in the mobile Internet market—but it ain't much of one. Palm's webOS devices aren't exactly where it's at in the mobile space. The Pre and Pixi have been well reviewed, but they've failed to catch on in the marketplace. They haven't captured consumers' hearts like the iPhone; they haven't become an indispensable business tool like the BlackBerry; and they haven't gotten anywhere in the great big middle of the market, like Android handsets have. The Pre simply hasn't been the resurrection Palm hoped for. Only 408,000 of the company's phones were sold last quarter.That's poor performance, until it's compared with HP's position, which was . . . none at all. The company that has pioneered ...
  • Why You Should Invest Like It's 1976

    A year into the stock-market recovery, there's a lot of uncertainty about how long the boom will last. We may be able to learn something from the market's performance during the mid-1970s, as the similarities so far are striking. After peaking in January 1973, the Dow Jones industrial average fell 50 percent, to 570, by late 1974. Over the next 15 months, however, the market gained back nearly 75 percent of its value. The Dow's latest crash, from its October 2007 high of 14,000 to a low of 6,500 in March 2009, marked a similar loss over a similar period of time. The recovery is also strangely similar: in the 13 months since March 2009, the Dow has risen about 70 percent. If the 1970s model holds, the Dow could hit 11,500 sometime early this summer. Then comes decision time.By 1976, deficit spending and inflation (remember the energy crisis?) created headwinds that pushed the Dow down 30 percent over the next two years, where it hovered until the bull market took off in 1982. Some...