Moody’s is skeptical about the No Bailout promises of Dodd-Frank. In particular, Moody’s doesn’t buy the FDIC’s claim that it can “resolve” large, complex financial institutions without risking a disorderly disruption in the marketplace. Which means that regulators would likely resort to a bailout when the chips are down. The higher credit ratings make it cheaper for the banks to borrow—which means that the US taxpayer is essentially subsidizing them with an implicit guarantee. This is worth billions to the banks. It also means that the banks are likely less financially sound than their credit costs would make them appear to be—because bond buyers don’t have to be as vigilant about risks. In short, they’re our new Fannie Maes and Freddie Macs.--John CarneyPhoto links here and here.
So what would Q1 GDP have looked like if the government had used the government's own estimate of inflation for Q1 (5.7%), instead of 1.9%? Q1 GDP would have been -1.82%.--Henry Blodget
IPOs are not all alike. In the lingo, they are sometimes “financing events” and they are sometimes “pricing events”. When IPOs are financing events, insiders are selling substantial fractions of their firms, trying to to divest their holdings or raise large sums for corporate purposes. When they are “pricing events” insiders are selling a small fraction of their shares in order to gain various benefits that come with being a public firm. In a “financing event”, when insiders are selling a lot of stock, the money left on the table from an IPO pop might amount to a substantial fraction of total equity value, too much money to be treated as a transaction cost. But in a “pricing event”, the money left on the table in a pop — the “opportunity cost of issuance” — may not be so large.--Steve Randy Waldman
Koreans still dominate the small-grocery business in New York; the Korean Produce Association estimates that they own 70 percent of the city’s stores. But their ranks are thinning as they face the same forces that threaten all sorts of mom-and-pop businesses: rising rents, increased competition from online and corporate rivals, and more scrutiny from city agencies that impose fines.--SAM DOLNICK
150 years ago today Stephen Douglas, the emanate Northern politician, died. ... Douglas was called Little Giant, because although he was short, he was very important in politics. He was one of the most important senators in the 1850s, and was responsible for the passage of several important bills. Even though he was defeated by Lincoln, he later encouraged his supporters to support him. But Douglas died of typhoid today at the age of only 48. If Douglas had defeated Lincoln in the election, history would have taken a different term. The South probably would not have seceded, and if they did, Herschel V. Johnson, a Georgian who would have became president after Douglas's death, probably would have let them. There would have been no Civil War, and America would have been allowed to split in peace.--Joshua Horn