zenstockman

Credit Card Interchange Fee Datapoint of the Day

Wal-Mart had $401.2 billion in revenue in their most recent fiscal year.

“That is way too much! They must be gouging the consumer.”

That is an incredibly uninformed statement. To target interchange fees or revenues without mention of the cost of providing those services is ridiculous. By accepting electronic form of payments, retailers benefit more than they are harmed. If that weren’t the case, they wouldn’t take them. An example of this is checks. The costs associated with bad checks and the technology to insure that checks are good, overwhelm the lost profits from not taking checks.

If you think interchange fees aren’t built into store prices, you are naïve. I would argue that those whom are still paying in cash are over-paying.

How Good are RiskMetrics' Tools?

When I saw your title, "How Good are RiskMetric's Tools?" I assumed you were actually a user of those tools or had some statistical data to back up your evaluation. My assumptions were wrong, as could be your assumptions that RMG’s tools are somehow flawed or poor models for predicting risk.

In almost any statistical model the long-tail, which seems unheard of to investment professionals in smooth-sailing markets, is always a possibility. What is clear is that the more esoteric derivatives will always be a step ahead of those hoping to evaluate their pricing. I think this is part of an investment banker’s mantra (i.e. “Liar’s Poker” by Michael Lewis).

Please keep this “on one’s watch list” and let us know when you have something concrete. Thanks.