“It’s hard to know how much of [bank profits from prop trading] will be affected by the various new rules. But suppose trading revenue at Morgan Stanley could fall by 30 percent from existing levels. All else being equal, a third of the company’s business would still come from trading, more than from any other single business line.”

Here’s the problem with this paragraph from a post this morning on Reuters Breakingview that is otherwise pretty good: It’s plainly impossible at this point to come close to predicting, with any expectation of accuracy, the losses prop desks at investment banks could see.

Financial reform was just signed into law earlier this month. That’s the legislative part of it all. The regulation – the specific ways that legislation will be deployed onto the markets – has hardly been explored in any meaningful way, let alone made. It’s still all a very new thing to virtually everyone connected to the markets.

Plenty of news outlets make the ridiculous assumption that because legislation has been passed, the regulation associated with it is already reliably predictable – and it’s all well and good to fling around these kinds of estimates like a frisbee when it fits into a post. I just wish the Reuters writer would have quoted a source on the 30 percent estimate. That would’ve made the number seem like less of a guess and put a name behind the prediction just in case something ridiculous happens, like prop-trading profits remaining steady despite the new regulations.

A brief yet compelling letter from a hedge fund manager that lays out a case against climate-change skeptics was uncovered today, and I too thought at first blush that it would be a case of cats and dogs living together.

It’s not. It’s more or less perfect, actually. Written by Jeremy Grantham, chief investment strategist in Boston at hedge fund manager GMO LLC, the letter is accessible, objective, balanced, and (in my estimation) exactly right.

The climate-change analysis starts on page 7 of this document (.pdf).

(Link via Treehugger.)

Last week I linked to Ezra Klein’s post that called for journalists to start publishing transcripts of their important interviews online. It’s a request I’m still entirely on-board with.

Later that day, I left this comment on his blog:

I work in the PR/media field and frequently act as an intermediary between reporter and source, making sure everyone has the appropriate background information before a formal interview to ensure nobody’s time ends up being wasted.

I like having information fully transparent, and anyone who feels the same way can probably get on board with the notion that important interviews ought to be fully transcribed somewhere online and public. In fact, I frequently urge clients — corporate executives, law firm partners, etc. — to establish their own blogs so they can do just that. Reporters, understandably, have deadlines and many other pressures to grapple with, but transcribing and posting an important interview between one of my clients and a Times reporter, for instance, would probably be a decent use of *my* time, and if it can benefit other writers or bloggers, then all the better.

I’m not so sure, though, that most journalists would like it if the subjects of their interviews began to do that. Any thoughts?

I’m still on the fence about the matter. How would journalists react if their sources began recording interviews and publishing the full transcripts on their own blog, or on their company’s blog?

When I’m committing public relations, I want to help journalists get what they need as quickly as possible, whether it’s a quote, statistic, or an interview with someone. I also want to give clients the capability to fully articulate their positions, and oftentimes news articles don’t offer the space for fully nuanced opinions. But at the same time, I don’t want to overstep that delicate journalist-source boundary, which is, it seems, quite variable, depending on the professional tastes of both parties.

I’d love to hear from other media-types on the question. Journalists and PR people, chime in if you want to.

I’m torn on the news that GM has agree to acquire a sub-prime auto lender, ostensibly with taxpayer funds it received in last year’s bailout.

On one hand, the cash the government injected into the company was meant to keep it out of bankruptcy and employing workers, not to finance its deals. That’s pretty straightforward. But, on the other hand, subprime lending is harmful to consumers – the same consumers that, as taxpayers, own a good amount of GM.

One way or another, lenders are going to continue to be in the business of peddling exploitative loans to unwitting people, so I guess the average taxpayer might as well have a small stake in a company that’s trying to bilk him and his neighbors out of their money.

But in all seriousness, and in the interest of balance, perhaps the acquisition will make the company more valuable and prop up its forthcoming IPO, both of which are in taxpayers’ best interest. And perhaps it’s unfair to categorize all sub-prime lending as exploitative – soon, there will be a strong consumer protection watchdog to help society grapple with the sub-prime lending industry.

(Update: Felix Salmon has some commentary on the deal. He’s skeptical, too.)

Either way, there’s no visible reason to suspect the deal won’t close later this year, and expect it to generate a good amount of controversy, not because of the material impact of the deal itself but rather because of the politics behind it.

GM’s chief financial officer gave an interview to explain the deal, and since Bloomberg’s stingy web site won’t let me embed it here, you’ll have to click through to watch it.

For a whole lot of different reasons – some simple, and others not – banks still aren’t lending money to borrowers often enough and corporations are hoarding unprecedented amounts of cash. These conditions have conspired to create enormous investment opportunities for one specific type of organization: organized crime syndicates.

Bloomberg reports:

The mafia has cranked up money laundering activities in Italy after the credit crunch prompted banks to stop lending, leaving a funding gap that criminal capital has filled, according to the Bank of Italy.

“The crisis has given organized crime room to thrive because access to credit has become more difficult,” said Anna Maria Tarantola, the central bank’s deputy general director, in a July 12 interview in her Rome office. “Whoever holds large amounts of cash, like crime groups, can make investments that aren’t possible for others. They can now invest in fully legal businesses.”

I think this — mobsters having attractive investment opportunities in legitimate businesses, thereby making money-laundering activities much, much easier to execute — is what economists call an externality.

Well thanks, news cycle.

In the middle of writing up a post about speculation on one of several potential deals that would send assets from BP to Apache, the two companies announced they’d in fact agreed to a transaction this afternoon.

DealBook, earlier today, outlined some roadblocks in a speculative post about an agreement between the two companies:

For a company in BP’s situation, selling assets is anything but simple. Because of both continuing concerns that BP might at some point seek bankruptcy protection, and because BP’s creditors could later — even years later — seek to unwind an out-of-court asset sale as a “fraudulent conveyance,” any sale would come under heightened scrutiny, said Peter S. Kaufman, president and head of restructuring and distressed mergers and acquisitions at the Gordian Group, a New York investment bank.

The DealBook post is on-point; the deal does seem riddled with complexities unique to BP’s current situation.

This morning I read several other outlets cover the potential deal, and they all mentioned these potential complications in one way or another. But here’s the observation that fueled the post I was writing up: None of the coverage I read offered any input from actual bankruptcy attorneys on these unique complexities.

I’m not quite sure if this was just incomplete reporting or if, for one reason or another, news outlets couldn’t find a single attorney to go on record with remarks about the matter. I understand that law firms routinely remain silent on these issues, lest an attorney poison a potential relationship between the firm and BP with some off-the-wall, on-the-record remark. But deciding which breaking-news matters to talk about and which ones to stay away from is a balancing act, not a steadfast rule — and certainly not every single firm is staying away from public remarks about BP’s business.

I write this as someone who, in the recent past, worked as a press contact for a half-dozen law firms, including AmLaw 50 firms. It just doesn’t seem realistic that every single working corporate bankruptcy attorney with a newsworthy profile is mum on a corporate bankruptcy matter that, from what I can see, is more or less unprecedented.

I’m entering lazyblog mode to affirm this journalist’s position on a breaking-news matter while adding no insight of my own. But I will pick up today’s Washington Post at the newsstand.

Neal Ungerleider wrote:

This is why enterprise journalism needs to exist

The link above goes to a massive Washington Post story about government waste in top-secret intelligence projects that has been in the works for two years. It details how the US government farmed out endless amounts of intelligence work to private contractors… and received A TON of false information, redundant information and likely corruption on the part of both contractors and government agencies in return.

I’m not going to provide commentary on the story. Too many pressing deadlines for that. However, I will say that someone will need to keep sponsoring this kind of quality journalism. Even if noone ends up reading dead-tree newspapers anymore, institutions such as the NYT, WaPo and their ilk will have to keep on fighting the good fight. Please buy a dead-tree paper and help them do that.

Since I’ve not yet had all my coffee, it’s hard to digest what exactly this means, but when the market is treating entire banks as distressed assets, the market for mergers and acquisitions is probably a lot more interesting than it first might appear. Bloomberg reported:

North American is one of two groups backed by private investors that have purchased failed banks through the FDIC’s resolution process this year. Through June, the FDIC had awarded only three of 86 failed banks to private investors. All three were purchased by Premier American Bank, backed by Bond Street Holdings LLC.

(via DealBook)

I don’t need to join the most-recent Palin pile-on — she’s apparently once again used a word without knowing what it means, and in this case the thing she wrote isn’t even a word — but her gaffe does draw further attention to something becoming increasingly obvious: It’s profoundly easy for the press to catch newsworthy people using Twitter in confusing, non-press-friendly ways.

Palin’s deleted-but-not-erased post, which Mediaite has diligently screen-grabbed:

(Update: Language Log weighs in with more background on the gaffe.)

Since Twitter messages will further integrate with news reporting, it’s important for any newsworthy figure who’s using Twitter to treat the platform as a legitimate form of written communications. Remember, Twitter is a microblog, emphasis on blog; how many newsworthy figures would write in OMG LOL KTHXBAI on their blog when media outlets take that content as firm positions on issues?

This means the following things, presented without commentary because there isn’t a great need for any:

To avoid looking foolish, it isn’t any more complicated than that. No, really, it isn’t.

As a writer and press contact news peddler, I’m not qualified to argue with the doomsday analysis pushed forth on Calculated Risk during the past few days. But years of listening to executives at financial services companies and funds give interviews to reporters ensures I can come pretty close to understanding it.

Today’s installment continued the series’ focus on the potential for sovereign debt. Specifically, it covers the likelihood of massive, debilitating, catastrophic sovereign debt default:

So, out of the multitude of potential scenarios, I have settled upon one which is really bad, but doesn’t involve asteroids, mass extinctions, or apes taking over. It is consistent with prior bad episodes of sovereign debt default.

Here is the Really Bad scenario. It’s not a worst possible scenario. It is more like the Long Depression or the Great Depression reoccurring under 2010 conditions.

In the Really Bad scenario, 45% of the countries with large outstanding sovereign debts are in default within a 2-3 year period.

As the author points out, the models that led to these conclusions center on economic conditions very similar to ones that actually existed in the recent past. So this isn’t exactly fear-mongering; it’s … well, it’s something else I can’t quite put a label to.

Regardless, the entire series, written by a Calculated Risk reader, is worth reading. (Sidebar: Inviting readers to write posts is an awesome way to maintain a blog.)

The series: