Weil on Finance: Money Tops Brains
Have a great Tuesday, View fans. Here is a linkfest to start your morning.
Sometimes dumb money is the best kind
John Hempton of Bronte Capital has an incisive post about the endless battle between shorts and longs on Interoil Corp., which claims to have lots of gas deposits in Papua New Guinea but never seems to do much with them. Now the company says it has a deal of sorts with Total, the French oil company. But it's hard to know what to make of it. Hempton writes that "both longs and shorts look like fools" now and that "the shorts may claim victory -- but they look stupid, too." And he offers this lovely disclosure at the end: "Disclosure: Short. I made a profit but look stupid. Hey, it's not how smart you are that counts."
One of the downsides of bailing ou t AIG
This applies to bank bailouts, too, but the writer of this story, Dean Baker in the Guardian, focused on the insurance company American International Group Inc. So I will, too. And his argument goes something like this: Because taxpayers bailed out AIG, it's grossly unfair that nobody is bailing out pensioners in places like Detroit, which filed for bankruptcy, and Chicago, where Mayor Rahm Emanuel "seems intent on cutting the pensions that its current and retired employees have earned." Which brings us to the problem at hand: By rescuing these huge, insolvent companies, the government made lots of ordinary people feel entitled to a bailout, too. And who can blame them for feeling that way? Trouble is, Chicago and Detroit probably don't have enough money to pay their pensioners, and the federal government isn't intervening. So they're not going to get bailed out, no matter what Baker thinks. Nor should they. But nor should AIG have gotten a bailout, either. Alas, life is full of inequities.
Speaking of bailouts, the Treasury Department sold the last of its shares in General Motors Co. Bloomberg News has a good recap of what's been happened at the company the past five years and its prospects. The New York Times does, too. For what it's worth, the Treasury Department lost about $10 billion on its $49.5 billion investment in GM.
Another blow against the efficient-markets theory
Barnes & Noble Inc.'s shares were trading pretty much unchanged on Friday morning until the news broke that the Securities and Exchange Commission was investigating the company's accounting. That nugget was in the company's quarterly report, filed the night before. But it didn't move markets until some headline writer put it out as news, proving once again that significant bits of information may not automatically get priced into companies' stocks just because they're disclosed in public filings. The website Kid Dynamite has a good riff on this.
Can't dogs and fish just get along?
Yes, they can. Here's a story from the website Life With Dogs about a Dutch Shepherd named Wiebe who "has made a unique friendship with his family's koi carp" and "even enjoys giving the fish kisses." Great photos of the interspecies smooching.
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Jonathan Weil at firstname.lastname@example.org