Tuesday, February 23, 2010

Links: Goldman Sachs, Reality, and Cantor

-Cantor continues it's push to bring wall street to main street, with a proposed platform to trade movie futures.

"Cantor Fitzgerald said on Monday it expects to launch an electronic futures exchange next month that would allow investors to bet on box office returns for movies."

"People love movies, and this is a way for them to profit from what they know," said Melanie Gordon-Felsman, a Cantor spokeswoman. "Let's say you love 'Avatar,' and you loved 'Titanic,' and (director) James Cameron's coming out with his next movie -- so you want to get in the game."

The contracts are valued at one-millionth of a share of the film's expected box office in the first four weeks playing, Gordon-Felsman said. If the film earns more than it was calculated to earn, you're in the money; if not, you're out -- unless of course you shorted the contract."

If you recall, Cantor also brought us the real-time in-game sports betting device I saw at the Venetian on my most recent Vegas trip.

-Goldman Sachs wrote a response to the furor over the Greek interest rate swaps:

"In December 2000 and in June 2001, Greece entered into new cross currency swaps and restructured its cross currency swap portfolio with Goldman Sachs at a historical implied foreign exchange rate. These transactions reduced Greece’s foreign denominated debt in Euro terms by €2.367bn and, in turn, decreased Greece's debt as a percentage of GDP by just 1.6%, from 105.3% to 103.7%.

The Greek government has stated (and we agree) that these transactions were consistent with the Eurostat principles governing their use and application at the time."

"The fact is that €2.367 billion is a rather large amount of money — both in absolute terms and in terms of a percentage of GDP. Your adjectives just make you look out-of-touch, both in your official press release, where you describe the sum as “just 1.6%” of Greece’s GDP, and in your statement to the UK parliament that it was “a rather small but nevertheless not insignificant reduction” in official debt figures.

Translating into American, remember, 1.6% of GDP is about $227 billion — more than the cost of bailing out AIG, Bear Stearns, GM, and Chrysler combined. And depending on how you account for them, you might even be able to throw Fannie and Freddie in there as well. There’s no such thing as “just” 1.6% of GDP — especially when you’re magically making those billions disappear through clever manipulation of currency swaps."

-Michael Panzner: "Dream World vs Ugly Reality"

"Once again, they highlight the extraordinary disconnect between the dream world that economists live in and the ugly reality that a great many Americans are forced to wade through on a regular basis."


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