Friday, October 23, 2009

Sunday, October 18, 2009

The smarter they are the dumber they are: Harvard edition

BLOOMBERG:
Oct. 17 (Bloomberg) -- Harvard University’s failed bet that interest rates would rise cost the world’s richest school at least $500 million in payments to escape derivatives that backfired.

Harvard paid $497.6 million to investment banks during the fiscal year ended June 30 to get out of $1.1 billion of interest-rate swaps intended to hedge variable-rate debt for capital projects, the school’s annual report said. The university in Cambridge, Massachusetts, said it also agreed to pay $425 million over 30 to 40 years to offset an additional $764 million in swaps.

The transactions began losing value last year as central banks slashed benchmark lending rates, forcing the university to post collateral with lenders, said Daniel Shore, Harvard’s chief financial officer. Some agreements require that the parties post collateral if there are significant changes in interest rates.

“When we went into the fall, we had some serious liquidity management issues we were dealing with and the collateral postings on the swaps was one,” Shore said in an interview yesterday. “In evaluating our liquidity position, we wanted to get some stability and some safety.”

Harvard sold $2.5 billion in bonds in the fiscal year, in part to pay for the swap exit, even as the school’s endowment recorded its biggest loss in 40 years, the report released yesterday said. This is the first time the university has detailed the cost of exiting its swaps.
What is it about Harvard alumni, you can always tell one but you can't tell him much. Blowback on know-it-alls.

Saturday, October 17, 2009

Nobel Laureate Oliver Williamson's Econ 224 class

Nobel Laureate Oliver Williamson isn't exactly an economic formalist and we could probably use fewer of them these days. The course outline from his course in "The Economics of Institutions," is here. 

Hat tip: Organizations and Markets.

Saturday, October 10, 2009

More hate crimes against Christopher Columbus

Out of the plumbers bags of tricks. When will this be considered harrassment?
DENVER—A Denver parade in honor of Christopher Columbus is on—despite a phony e-mail that circulated Thursday saying the downtown celebration was canceled for lack of funds.

The Sons of Italy's Columbus Day Parade Committee in Denver was shocked to learn of the e-mail sent to the media, which was signed by Sons of Italy President Richard SaBell. The fake e-mail said protesters had "ruined" the event and tarnished the legacy of an Italian hero.

SaBell rushed to assure people the e-mail was a hoax after local media and The Associated Press started reporting Saturday's parade was off. He said he reported the phony e-mail to Denver police.

"I feel violated," said SaBell, adding he didn't know who was behind the hoax. "This whole thing is bogus. The parade was never off."

Denver police said its computer crimes unit is investigating.

Colorado has observed Columbus Day since 1907 and is credited with being first to make the day a state holiday. Columbus Day has since become a federal holiday.

Sunday, October 04, 2009

Autumnal joy at the Garlic Festival in Orange, MA

The North Quabbin Garlic Festival -- "the festival that stinks" -- takes place each year in Orange, MA. It's one of our favorite harvest-time events with enough to keep the kids busy for an entire afternoon.

The festival is also a great opportunity for artists from Central Massachusetts and beyond to plug their work. One of the most arresting sets of work belonged to sculptor James Kitchen, who works superbly with industrial junk.

We need to hear more from Marc Bonilla

Marc Bonilla's soaring intrepretation of Procol Harem's Whiter Shade of Pale