Stylized Facts

Despite clear views of the High Line, not one unit at +aRt, a condominium in Chelsea at 540 West 28th Street referred to as "Plus Art," sold in the fall of 2008, said Stephen Kliegerman, the director of development marketing for Halstead Property. By November of that year, 90 unsold condos ranging from $850,000 to $1.4 million were taken off the market.

After marketing resumed in May, brokers at a grand reopening gala suggested that prices remained too high. Mr. Kliegerman and others involved with the project agreed to keep some units at 2008 levels while reducing prices by 10 percent for a second group of units. Mr. Kliegerman said several units had since gone into contract. "We really wanted the market to speak to us," he said. "In retrospect, if we had a crystal ball and we were able to jump back in time, we probably wouldn't have done anything differently because you never know until you get to the marketplace where those prices are going to be."

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The real test of risk management is provided by the financial Darwinism of the markets. By reading market signals about products--pricing of assets, pricing of insurance on those prices--banks develop models that can inform them about risk. By reading market signals about their own financial health--their cost of capital, their borrowing cost, the cost to insure their debt, the willingness of customers to enter into trades--risk managers get a view about the risks of their own portfolios and the strength of the business model.

-- John Carney.

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Mr. Summers, who taught economics and public policy at Harvard while advising Shaw, also met with investors in the United States, as well as in the cash-rich Middle East and Asia. He spoke at industry conferences, mixing with officials from public pension funds, endowments and other large institutions with many billions of dollars to invest.

While at D. E. Shaw, Larry Summers also peered into the inner workings of the $2 trillion hedge fund industry, which the Obama administration is now relying on to buy billions of dollars of worrisome assets from the nation's beleaguered banks.

Some of his critics worry that such ties raise questions about whether the government's ever-changing effort to bolster the financial industry will benefit Wall Street in general, and hedge funds in particular, at the expense of taxpayers.

"This is what might be called contamination," said Andrew Sabl, an associate professor of public policy at the University of California, Los Angeles. "Did Summers spend so much time with the hedge fund, or its investors, sovereign wealth funds and so on, that he started to think like them?"

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"I love the irony," Mario declared. "This is a virtual representation of a real-world financial system that is itself based on virtual money backed only by the faith and credit of the government. The goal of the game is to become so big and corrupt that the government has to bail you out. That's so twisted, it's brilliant."

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With my torture film
Drive a gto
Wear a uniform
All on a government loan.
I'm worth a million in prizes

-- Iggy Pop and David Bowie, 1977, as prophets.

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Shed no tears for the Masters of the Universe, however, not that your correspondent actually thought you might. Most of the young Masters already have their own personal nut free and clear. "Nut" is the term for the amount of money you need salted away in weather-proof investments in order to generate enough interest to live comfortably in Greenwich on Round Hill Road, Pecksland Road or Field Point Road in a house built before the First World War in an enchanting European style, preferably made of stone featuring the odd turret, with a minimum of five acres around it and big enough to be called a manor. Every Master of the Universe knows the number.

-- Tom Wolfe.

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Investors will be able to better estimate the size of their losses once
it becomes clear how far prices will fall.

Insight from the NYT Business section.

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Diversification means investing in something uncorrelated,
not inversely correlated.

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