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Risk sharing & incentives in nuclear plant construction
Who should bear the risks of cost overruns in the construction of new nuclear power plants: electric ratepayers, the electric utility sponsoring the project, equipment vendors, contractors or others?...
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Markets for Power & the Efficient Operation of Nuclear Reactors
Lucas Davis and Catherine Wolfram at UC Berkeley’s Energy Institute at Haas have an excellent new working paper analyzing the impact of the deregulation of wholesale electricity markets on the...
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Lesson from UBS on trader compensation
The case of the $2.3 billion trading loss at UBS holds many lessons for any company that trades derivatives. Remember, UBS wants to claim its trader was a rogue that victimized the company. There was a...
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The Volcker Rule & Trader Compensation
A Bloomberg article details how a draft of the Volcker Rule uses the structure of trader compensation to distinguish between proprietary trading and market making. Exactly right!
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The lesson from MF Global for the management of a prop trading unit.
Much has been said about MF Global, the US brokerage and clearing group that filed for bankruptcy in late October. In March 2010, when Jon Corzine was brought in as the CEO, MF Global’s franchise in...
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Duality and Uncertainty: Lessons from the carbon market
The Great Recession has hit the European carbon market hard. With output down, the demand for allowances is down, and so is the price. As recently as the start of this year, emissions allowances were...
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Credit Suisse note is not a solution to bonus culture
Credit Suisse (CS) has announced it will pay a portion of its bankers’ bonuses with a structured note instead of cash. The note pays a fixed coupon of around 6% per year, and is backed by a package of...
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Games with Risk Controls
FT Alphaville has been running a series of blog posts digging in to items raised in the investigation of the fiasco at JP Morgan’s Chief Investment Office. The series is called The Belly of the Whale....
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Regret in the here and now, joy in a parallel universe
Steven Davidoff, the New York Times’ Deal Professor, thinks that management and shareholders at the Morgans Hotel Group got suckered back in October 2009 when they sold their souls a PIPE for cash....
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Risk manager of the Year: Bob “Kid Rock” Ritchie
When Rap-metal-rocker “Kid Rock” launched his album Devil Without a Cause fifteen years ago, he became an instant success, after years of toiling in obscurity. Now, the man is shooting to superstardom...
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