"... including to invest for his own account, to make tens of millions of dollars of political contributions, and to cover billions of dollars in expenses and debts of Alameda Research, a cryptocurrency hedge fund also founded by the defendant."
"Bankman-Fried told the Financial Times the $8bn related to funds 'accidentally' extended to his trading firm, Alameda, but declined to comment further. Earlier this week, he tweeted that FTX international had $4bn in easily tradeable assets when it faced Sunday’s $5bn surge of withdrawals. 'There were many things I wish I could do differently than I did, but the largest are represented by these two things: the poorly labeled internal bank-related acount [sic], and the size of customer withdrawals during a run on the bank,' the spreadsheet adds.... Healthy companies typically have assets that match or exceed their liabilities. The spreadsheet says FTX Trading had a total of $9.6bn of assets, but it is unclear how much of that value could be realised...."
From "FTX held less than $1bn in liquid assets against $9bn in liabilities/Vast gap highlights the dire state of Sam Bankman-Fried’s exchange before it collapsed into bankruptcy" (Financial Times).
I don't normally blog about finance. It's kind of my least favorite topic, but I was intrigued by "'There were many things I wish I could do differently than I did....' the spreadsheet adds."
I didn't know spreadsheets experienced regret.
The "I" is, presumably, Bankman-Fried. Here's a BBC article about him, "The fall of the FTX ‘King of Crypto’ Sam Bankman-Fried":
Said Elon Musk to Twitter employees, quoted in "Two Weeks of Chaos: Inside Elon Musk’s Takeover of Twitter/Mr. Musk ordered immediate layoffs, fired executives by email, laid down product deadlines and has transformed the company" (NYT).
The executives warned their new boss that his plan could violate employment laws and breach contracts with workers, leading to employee lawsuits.... But Mr. Musk’s team said he was used to going to court and paying penalties, and was not worried about the risks.... Two days later, Mr. Musk learned exactly how costly those potential fines and lawsuits could be....
The 51-year-old barreled in with ideas about how the social media service should operate, but with no comprehensive plan to execute them....
"The 51-year-old" is a funny example of the "second mention" issue, previously blogged here. You know, the effortful and unnecessary avoidance of repeating a person's name. It's a writing foible.
Here's another new NYT article on the same subject — for those who are wondering about my visualization of Musk as one of 2 crashing, burning Hindenburg's — "'Economic Picture Ahead Is Dire,' Elon Musk Tells Twitter Employees/In his first communications with Twitter’s staff, the company’s new owner painted a bleak picture as more executives resigned."
Writes a commenter at WaPo, reacting to "Hong Kong’s landmark Jumbo floating restaurant sinks at sea": "Even before the pandemic, the restaurant, which served Cantonese fare, was accumulating debt. But Hong Kong’s early move to ban tourists hit Jumbo Kingdom and other attractions hard."
ADDED: I was curious about the origin of the term "under water" (or "underwater") to refer to negative equity, and I surprised to see that the earliest example in the OED is from Madison, Wisconsin's own Capital Times (and as recent at 1975):
Every foreclosure of an underwater real estate mortgage..is greeted with cheers. Evidence that the economy is doing less to help itself is taken as a guarantee that the Fed will do more.
I couldn't find an explanation of why this figurative use became standard, but perhaps water metaphors are common in discussions of money. We speak of sinking or staying afloat. There's "liquidity."
Is "solvent" a water image? I see that "solvent," meaning "Able to pay all one's debts or liabilities," goes back to the 1600s:
1653 H. Cogan tr. F. M. Pinto Voy. & Adventures lxxviii. 315 Certain Chineses, who were not men solvent, but became bankrupts.
1664 Addit. to Life Mede in Mede Wks. (1672) p. xxxvi Mr. Mede began..to refuse.., and objected, How shall I be able to be solvent in convenient time?
"Solvent" is the present participle of the Latin word "solvĕre," which means to explain or clear up or answer. But "solvent" has also meant "Dissolving; causing solution" or a substance that turns other substances to liquid. This is the same entry, so it's the same word.
Interestingly, "solvent" itself has a figurative use. For example, Ralph Waldo Emerson wrote: "Silence is a solvent that destroys personality" (1841).
AND: Here's Emerson's essay, "Intellect":
men what's stopping y'all from dressing like this pic.twitter.com/ZsXaQXqK0M
— roxy (@sherloffee) July 6, 2020
Bankruptcy lawyers say the issue of the value of such cultural assets goes beyond philosophical or moral arguments. For a bankruptcy judge, the questions could include whether the sale of a city’s artworks would have long-term economic implications — depressing tourism, harming real-estate values and the value of other cultural institutions, for example — in a way that sets a city up for financial failure again down the road.The museum's director says: "If you could sell off Detroit’s hospitals and its universities, would you do that, too? If you do things like this, you’re basically spelling the end of the city as an ongoing entity."
But when she talks about "the millionaires and billionaires" who supposedly "wrecked our economy" and "still strut around Congress, no shame, demanding favors, and acting like we should thank them"—as she put it at the Charlotte convention—perhaps she ought to recall her own legal strutting.
By the way, Harvard requires its professors to report any extracurricular consulting activities, but Ms. Warren is refusing to disclose this list so voters can decide for themselves if she's really a handmaid to the plutocrats disguised as Robin Hood through November 6. It would be instructive to learn what other corporations, and maybe even a billionaire, have had her on their payrolls.
[Carol] Todd, who received her high school general equivalency diploma during the late 1980s, at the age of 39, began attending law school in 1992 but did not finish, according to the opinion. She went on to obtain a master's degree from Towson University and a Ph.D. from an unaccredited online school in 2007. She filed for Chapter 7 bankruptcy in 2009. At the time of her trial, she was 63 and owed $339,361 to three student loan creditors....It's extremely unusual for student loans to be discharged in bankruptcy. This is one individual's case, but it makes me wonder about the many people with mental disabilities who take on education debt. Does the judge mean to send them the message that they are dreaming an impossible dream?
"[T]o expect Ms. Todd to ever break the grip of Autism and meaningfully channel her energies toward tasks that are not in some way either dictated, or circumscribed, by the demands of her disorder would be to dream the impossible dream," [wrote U.S. Bankruptcy Judge Robert Gordon.
No, but it sends the banks a message that they risk losing their money if they don't discriminate against people with mental illness.
Where is everyone? It's about 5:30 p.m. here at Borders, and I feel as though I've stayed until after closing time. I used to like to go here to browse alongside myriad strangers and to run into people I knew. Now, there's zero "town square" ambiance.
Here's a title that made me feel good about the way my reading about current politics has, in the past few years, migrated nearly completely on-line:
"What Obama Means." Spare me. Whatever is in that book can — I will bet you — be skimmed and understood in less than one minute.
"But halfway through, I noticed she was paying attention," he says. "I realized she was going to let me go on, and I went for broke."...
But this battle is likely to be his last. He says that despite his success, his experience has left him disillusioned.
"The thrill is gone," he says. "It's such a big game, [individuals] just can't compete. I'm picking up freelance Web work again."
1) How is the government going to "get its money back" if the money has been spent and the firms are bankrupt? Only by liquidation, it would seem. So does the bailout deal eliminate the option of restructuring (as an ongoing enterprise) under the aegis of the bankruptcy court? Either the firms are saved under the "czar," or they are liquidated, apparently. 2) The big "stick" is to kill the firms, then. Isn't that too big a stick? Like a nuclear weapon is too big a stick? Come April 29th, if the choice is to approve a half-assed "restructuring" plan that has maybe a 35% chance of succeeding, or to kill General Motors, there's going to be an awful lot of pressure not to kill General Motors, no? The threat is so big it pressures the auto czar, not the executives, investors and union members. What's needed is an intermediate threat that's more credible. How about empowering the auto czar to declare the companies' labor contracts null and void? And to indefinitely delay payment of all executive salaries and bonuses? That would get the "stakeholders" attention, maybe. 3) Shouldn't there be a different "czar" for each firm? Having a single czar for the whole industry muffles what might be salutary competitive pressures. Maybe Chrysler's workers are so desperate they'll give up more in terms of pay and work rules than Ford's workers. Shouldn't that sort of choice be encouraged? Dueling "czars" would encourage this viability-enhancing reverse solidarity. ...Good questions! As to #3, can someone explain why 3 car companies with 1 head isn't an antitrust problem?
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