The Ticker >> Quick commentary on economics, politics & the world from Bloomberg View
Goldman, Citigroup CDOs Were Tip of Iceberg: The Ticker
The complex mortgage instruments at the center of the 2008 financial crisis went so spectacularly wrong that many observers have said they were designed to fail. A new paper by Oliver Faltin-Traeger of the investment firm Blackrock and Christopher Mayer of Columbia Business School lends a lot of credence to that assertion.
Faltin-Traeger and Mayer -- who are scheduled to present their preliminary results Saturday at the annual meeting of the American Economic Association -- focus on collateralized debt obligations tied to asset-backed securities, or ABS CDOs. For the most part, these were mortgages that had been pooled into bonds, which in turn were repackaged into CDOs.
The Economics of Celebrity Chef Grant Achatz: The Ticker
Over the next few days, throngs of economists will sample Chicago's restaurants as they gather in the Windy City for the annual meeting of the American Economic Association. One establishment that should pique their interest: Next, the latest creation of celebrity chef Grant Achatz.
It's not so much the intricate menu, which shifts every three months to new themes with names such as Childhood and elBulli. It's the reservation system, which requires prospective patrons to buy tickets -- the restaurant was selling them in very small lots on its Facebook page this week at $100 apiece -- as if they were attending a concert or a sporting event. For those who miss out on buying directly from the restaurant, there's a secondary market, where ticket holders sell their seats at a markup.
Jobs Report Still Not Pretty: The Ticker
The U.S. economy beat expectations last month, adding 200,000 jobs in December. That means the jobs picture is slightly less grim this month. Slightly.
Here's the Hamilton Project's assessment of prospects for the unemployed:
The Sushi Auction That Cheered Japan: The Ticker
The fish went for $730,000, and that's not a typographical error.
That's what Kiyomura K.K. paid for the most expensive fish ever sold at Tokyo’s Tsukiji market. Make that overpaid. The Japanese sushi chain will be selling $74 pieces of tuna for $5 apiece -- a roughly $600,000 loss.
Romney, McCain and the Immigration Fix: The Ticker
NBC's First Read blog interviewed Arizona Senator John McCain yesterday after his endorsement of Mitt Romney. Here's what the blog reported:
Toward the end of the interview, we asked McCain this question: Is Arizona in play in the general election? And his reaction was especially telling. He paused for a few moments and replied, “I think that if not this election cycle, the demographics are that Arizona, Colorado, New Mexico, even Texas will all be in play.” McCain, who was once a principal architect of comprehensive immigration reform but who no longer supports it until the border is secured, added: “We have to fix our problems with the Hispanics.”
JAL's Huge IPO May Face Bumpy Skies: The Ticker
In the annals of contrarian thinking, the folks at Japan Airlines Co. may deserve a prominent mention.
Europe is crashing, China's bubbles are deflating, America is walking in place and Japanese growth is slowing anew. Undaunted, the carrier that exited bankruptcy last year plans an initial public offering of as much as $13 billion as early as September, Takahiko Hyuga of Bloomberg News in Tokyo reported.
A Tea Party at Sea: The Ticker
Outside Michele Bachmann's gloomy caucus party last night at the West Des Moines Marriott, a lone sentinel dressed in Revolutionary War garb -- the Tea Party equivalent of gang tats -- stood watch over the disaster. Bachmann's campaign, which mustered only 5 percent of Iowa caucus votes, will not be crossing the Delaware anytime soon. It is currently navigating the River Styx.
Texas Governor Rick Perry, another Tea Party favorite, invested heavily in Iowa and finished with a dismal 10 percent. Newt Gingrich, who channeled Tea Partyers' contempt even as he gave them whiplash on their core issues, emerged with an unlucky 13 percent. Gingrich has enough money (perhaps) and venom (surely) to cause some modest trouble for Mitt Romney, whom he called a "liar" the other day, but not enough to defeat him.
Japanese Don't Want a Nuclear Future: The Ticker
There's nothing like an earthquake to ring in the New Year. That thought crossed the minds of many Tokyoites on Jan. 1 as a magnitude 7.0 trembler shook us out of our holiday slumber.
Really, if there's any developed nation that was glad to see 2011 end, it was Japan. The radiation crisis caused by the March earthquake and tsunami was but the biggest news in a year that included deepening deflation, credit downgrades, the resignation of a fifth prime minister in as many years and an Olympus Corp. scandal that spooked investors the world over.
The Taliban Opens Shop in Qatar: The Ticker
News that the Taliban plans to open a political office in the Persian Gulf emirate of Qatar has inspired some optimism that a peace deal might be achievable in advance of the U.S. pullout in 2014. Let's not put the jirga in front of the loya, folks.
First, everybody knows that "secret talks" between Taliban and U.S. emissaries have been going on sporadically for some time, and last May American officials met with Tayeb Agha, a senior aide to Mullah Muhammed Omar. Second, the Taliban's main concern right now seems to be negotiating the freedom of five of their number now held at Guantanamo Bay, Cuba -- a deal President Barack Obama is unlikely to pursue at a time when the Republican presidential candidates are looking to paint him as soft on terrorism. Third, if the Taliban is really taking up a pied-a-terre in Qatar, it had best have many rooms, because there are various "Talibans," each with its own hierarchy and interests (not to mention the somewhat-distinct Haqqani network operating in northwestern Pakistan). It's even unclear if Zabiullah Mujahid, the spokesman who announced the political office plan, is directly affiliated with Mullah Omar.
Iowa Makes a Profit on Politics: The Ticker
I flew into Iowa late last night and immediately did my part for the local economy -- a $47 cab ride to my hotel in West Des Moines. (The crush of visiting journalists had already taken up all the rooms in Des Moines proper.) With a surprisingly expensive hotel room bill, and a breakfast and lunch already under my belt, I'm beginning to think there may be more to Iowans' zealous embrace of their caucuses than civic duty.
Not so, says David Swenson, an economist at Iowa State University. Or at least not so much. Swenson published a paper in 2008 in which he said that the Democratic and Republican candidates combined had spent a paltry $15.5 million in Iowa in the last two quarters before the January 2008 caucuses. The economic impact of presidential politics on Iowa's roughly $150 billion gross domestic product is negligible.