Showing posts from July, 2011

Magnetar and J.P. Morgan's Squared CDO

Note: Black Box Casino is to be published September 30 by Praeger. In writing this account of the financial crisis, the author found that ultimately some of what he had written had to be cut from the book. Below is an excerpt that was written too late to make it into Chapter 7: "Fast Money and High Stakes."

By Robert Stowe England
July 20, 2011

The Evanston, Illinois hedge fund Magnetar Capital LLC stated in April 2010 that it engaged in trading activities that its senior management claimed were neutral towards the housing market.

That is, Magnetar claimed that they were making simultaneous shorts and longs on various pieces of collateralized debt obligations, which were backed by mostly subprime mortgage-backed securities.

The point being made with the claim of neutrality was they were not betting against the housing market and bad subprime loans and securities.

After a number of news stories surfaced in 2010 about the $50 billion or more in losses from CDOs deals in which Magn…

Elizabeth Warren Going Back to Massachusetts

Cue the Bee Gees who sang the mega hit "Massachusetts" back in 1970s. Having missed out on the nomination to be the head of the Consumer Finance Protection Bureau -- an agency that was her brainchild -- Warren will be packing up and going back to her home state.

She declined to say if she was planning to run for the Senate and lauded the new agency. She dodged a question about JP Morgan Chase's Chairman and CEO Jamie Dimon's criticism of heavy regulation coming from the Dodd-Frank Act, which Dimon said last month was impeding the progress of the recovery.

Although Warren was believed to be the Obama Administration's favorite to head the agency, she was hugely unpopular in Congress and faced fierce opposition.

Fight of the Century: Keynes vs. Hayek Round Two

This is the second hip-hop music video by John Papola and Russ Roberts at In this one, Hayek knocks down Keynes after several rounds of debates interspersed with simulated boxing, but the chairman of the Congressional panel hearing the debate -- who suddenly transforms into the fight referee -- declares Keynes the winner.

You can view the first video which came out last year at this link

Charles Calomiris Tells How to Avoid Another Banking Crisis

Charles Calomiris, a professor at Columbia Business School, talked July 7 about the U.S. financial industry and housing market. He spoke with Tom Keene on Bloomberg Television's "Surveillance Midday." See video of interview here. (Source: Bloomberg)

New Book on Financial Crisis, Black Box Casino, To Be Released in September

Robert Stowe England's new book on the financial crisis -- Black Box Casino -- will be published in September by Praeger, an ABC-CLIO imprint.

The publication date has been moved up two months from the prior release date of November 30.

A press statement announcing the future debut of the book was released today by NA Associates, a New York public relations company. See statement at the end of the story.

NA Communications also released the reviews that will appear on the dust jacket of the book, which also follow below.

The book can be pre-ordered at Praeger at this link, and at at this link:

To request a review copy, write to Mr. England at

The dust-jacket cover reviews follow:

"Mr. England writes about the financial crisis with harrowing precision."

-- Daniel Henninger, Wall Street Journal

"First Reckless Endangerment and now it is Black Box Casino's turn to shine a bright light on the root causes of the mortgage meltdown. England, relying …

Keynes vs. Hayek Rap: Fear the Boom and the Bust

John Papola and Russ Roberts have produced an entertaining and educational rap debate video between British economist John Maynard Keynes and Austrian economist F. A. Hayek. A modern reincarnation of the two economic theorists argue the importance of stimulating demand to lift an economy out of a bust (Keynes) versus saving and investing in free markets and skepticism about booms (Hayek). The video is from

The Angst of Phil Angelides

Investors Business Daily in an op-ed writes June 30:

Subprime Scandal: Democrats thought they'd dammed up the truth about government's role in the financial crisis. But the levies are breaking, thanks to a spate of rogue new books on the subject.

The latest, "Reckless Endangerment," shreds the narrative carefully constructed by Democrats and the liberal media that Fannie Mae and Freddie Mac were only bit players in the crisis and followed Wall Street into subprime lending.

It details how the federally chartered mortgage giants in fact led the way in relaxing underwriting standards for the entire industry — thanks to relentless pressure from Democrats, who used them as off-budget piggy banks to fund their social crusade to boost minority homeownership (and shore up their voting base).

Read more.