Reuters continues its tremendous investigation into natural gas giant Chesapeake Energy and its CEO Aubrey McClendon. Brian Grow and Joshua Schneyer report on yet more Chesapeake emails between it and its competitor Encana:
The emails show the competitors traded information about whether Encana was halting new land leasing in Michigan in 2010, and the information prompted Chesapeake to dramatically change its leasing strategy in subsequent weeks and helped send Michigan land prices tumbling from record highs.
In the days after learning that Encana was paring back, Chesapeake CEO Aubrey McClendon ordered Chesapeake to renegotiate or delay closing on at least 10 deals that his company was negotiating with major land lease holders in Michigan, documents reviewed by Reuters show…
That same day, July 19, McClendon told top deputies and agents in Michigan: “With Encana pulling away we should be able to be very aggressive in extending some extension dates and not risk losing the deals, agree?” By that, he apparently meant Chesapeake would delay lease-signings even further into the future than they already had been pushed. McClendon now had reason to believe that his top competitor for land in Michigan - Encana - wouldn’t swoop in to make the deals in the meantime.
I’d still love to know how Reuters is getting hold of these high-level emails. I’m sure Chesapeake would too.
— You have to wonder what was going through Paul Krugman’s mind on CNBC’s Squawk Box after thirteen minutes of zombie lies moderated by his NYT colleague Andrew Ross Sorkin. My guess:
See 13:04 to 13:09 of the video amidst the end-of-segment prattle:
Here were Krugman’s thoughts a couple of hours later:
Among other things, people getting their news from sources like that are probably getting terrible advice about any kind of investment that depends on macroeconomics. But it’s amazing just how skewed the policy views are too.
Meantime, check out Felix Salmon on Martin Wolf’s appearance on CNBC last month.
— Steve Randy Waldman asks “What is a bank loan?” in a thought-provoking piece at his blog interfluidity.
Suppose I go to my local bank and ask for a loan. The bank says yes, and suddenly there is “money in my account” where there was not before. Am I now a “borrower” and the bank a “creditor”?
No. Not at all. The transaction that has occurred is fully symmetrical. It is as accurate to say that the bank is in my debt as it is is to say that I am in debt to the bank. The most important thing one must understand about banking is that “money in the bank” also known as “deposits” are nothing more or less than bank IOUs. When a bank “makes a loan”, all it does is issue some IOUs to a borrower. The borrower, for her part, issues some IOUs to the bank, a promise to repay the loan. A “bank loan” is simply a liability swap: I promise something to you, you promise something of equal value to me. Neither party is in any meaningful sense a creditor or a borrower when a loan is initiated…
The bank is just a bunch of assholes with spreadsheets, it has nothing real that anyone wants to borrow. The bank’s role is to transform questionable promises into sound promises. It is a kind of adapter of promises, or alternatively, a guarantor.
Go read the whole thing.