Archive for July, 2007|Monthly archive page

Guess Who Else Is Rushing to Cash In

Singer, Jason, Henny Sender, Jason Dean, Marcus Walker. 2007. “Governments Get Bolder in Buying Equity Stakes.” Wall Street Journal (24 July): p. A 1. Continue reading

High Noon for Hollywood

NPR had an interesting feature last Sunday about the theme song for the film, High Noon.

The movie High Noon premiered in New York City on July 24, 1952, with an innovation — a theme song, Do Not Forsake Me. It was a major a surprise hit, selling 2 million records.

The movie industry lost an important revenue stream. United States v. Paramount Pictures, Inc. 334 US 131 (1948)forced the industry to divest its theaters.

The movie industry rush in to take over the recording industry. For the next decade, virtually all films had a theme song. The theme songs helped to market the films, while earning revenues. Besides the new medium of LP records, now needed 12 songs rather than 6.

National Public Radio.2007. Weekend Edition Sunday (22 July).

http://www.npr.org/templates/story/story.php?storyId=12155282

Fools Rush In: Pension Funds Investments in Hedge Funds

Now that the whole private equity scam is hitting the wall, guess who is rushing in to invest in hedge funds. You are. At least you are if you have a public pension.

You see, those responsible for funding pensions can save money be investing in highly profitable ventures. Don’t worry, if those ventures do not turn out to be profitable, the pension system can decrease benefits. Continue reading

Radio Interview with Michael Perelman

Barry Seidman interviewed me on the New York Pacifica station, WBAI, for his program, Equal Time For Free Thought. I thought he did an excellent job conducting the interview.

http://www.archive.org/details/Michael-perelman-interviewWithWbai-29july2007_209

Downsizing Billionaires

This is hilarious. Larry Ellison, who owns the second-largest private yacht in the world, his 454-foot Rising Sun. Now, he wants a smaller one, in part, because he has to dock his monster with the oil tankers rather than in the upscale docks.  Here is the article: Continue reading

Will the Banks Cut their Losses?

 

With a backlog of deals depending on bridge loans that banks are obligated to provide, investors are less willing to buy the junk bonds that are supposed to pay back the banks. As a result, this sort of junk bonds is selling at a discount. The banks will necessarily take a hit.

The Wall Street Journal is suggesting that the banks might do better if they can pay the private equity companies enough to compensate them for a 1% to 3% break up fee if the deal is not consummated. Will the PE companies go along with this?

Here is the article” Continue reading

Blackstone Bursts Workers’ Bubbles

In my earlier post today, I described Blackstone’s success in flipping property from its buyout of Equity Office Properties. This article describes how Blackstone’s takeovers also weigh on workers after the company gets saddled with debt. Credit markets may be putting an end to this sort of extractive takeovers, but the country should not have had to waited for the credit markets to act.  Here is the article: Continue reading

Bouncing Bubbles

Blackstone bought Equity Office Properties Trust for $39 billion in November 2006. 261 buildings, or 48%, of the 543 buildings that EOP held in February have already been sold, fetching more than 70% of the deal’s cost. “Equity Office once held about 102 million square feet of office space in 24 markets; Blackstone has shed at least 62 million square feet of it, including much of the choicest and most expensive properties.”

Forsyth, Jennifer S. 2007. “Blackstone’s Slick Flip.” Wall Street Journal (26 July): p. C 1.

Discussing some of the recent overpriced commercial real estate deals, the article reports: “Some analysts believe the capitalization rate on the buildings — the rental income in the first year of ownership divided by the purchase price — in some of these transactions could be as low as 2.5%. Those prices can only be justified if the buyer can sell the building at a higher price or significantly raise the rents.”

I assume that the owner will have to pay maintenance costs and property taxes from this 2.5%.

Let’s Play Hide the Risk

Jon Hilsenrath has a very insightful column in the Wall Street Journal today, comparing the handling of debt meltdowns when finance was regulated with the prospective meltdown now that finance is unregulated.  I hope that you find it interesting.

Continue reading

Tort Reform: More Chicago Contortions

Cass Sunstein is a moderate by today’s right wing standards.  Here is an example of moderation:  Happiness research show that people tend to adjust to traumatic events.  At first their self-reported happiness declines and then it move back near where it was before the trauma.

I suspect that these surveys do not encounter the homeless Vietnam veterans, but rather people who probably have a good support system.

Sunstein suggests that people who sue for injuries might ask for (and juries decide upon) inordinate amounts, since people get used to their injuries.

The same Chicago school suggests that CEOs need multimillion dollar incomes, even though happiness studies suggest that people might overestimate how much increase income will add to their happiness.

Anyway, here is the abstract of the article: Continue reading

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