When the going gets weird, the weird turn pro. - Hunter S. Thompson

30 September 2008

Thought for the day

I loathe populism. But if there ever has been a moment when reasonable men's hands itch for the pitchfork, this must surely be it. No one is blameless. No one is pure. Two decades of crapulence by the political class has been prologue to the era of coprophagy that is now upon us. It is crap sandwiches for as far as the eye can see.
Jonah Goldberg, writing in the Los Angeles Times

Backstory on the Somali pirates

Piracy in Somalia is a highly-organized, lucrative, ransom-driven business. Just this year, pirates have hijacked more than 25 ships, and in many cases, they were paid million dollar ransoms to release them. The juicy payoffs have attracted gunmen from across Somalia and the pirates are thought to now number in the thousands.
The piracy industry started about 10 to 15 years ago, Somali officials said, as a response to illegal fishing. Somalia’s central government imploded in 1991, casting the country into chaos. With no patrols along the shoreline, Somalia’s tuna-rich waters were soon plundered by commercial fishing fleets from around the world.

Somali fishermen armed themselves and turned into vigilantes by confronting illegal fishing boats and demanding that they pay a tax.

“From there, they got greedy” explained Mohamed Osman Aden, a Somali diplomat in Kenya. “They starting attacking everyone.”

By the early 2000s, many of the fishermen had traded in their nets for machine guns and were hijacking any vessel — sailboat, oil tanker, United Nations-chartered food ship — that they could catch.

“It’s true that the pirates started to defend the fishing business,” Mr. Mohamed said. “And illegal fishing is a real problem for us. But this does not justify these boys to now act like guardians. They are criminals. The world must help us crack down on them.”
Somali pirates tell all: They're in it for the money (New York Times)

29 September 2008

Wad some pow'r the giftie gi' us

The most interesting news coverage about the failed bailout bill is, unsurprisingly, in the foreign press.

Quick survey:
House Republicans voted roughly two-to-one against the bail-out, while the Democrats split three-to-two in favour. Congressional leaders took procedural steps that could enable a revote, but analysts said Democrats would be unlikely to try again without the promise of more Republican support.
Financial Times: House rejects US bailout bill

The financial system lurched closer to a catastrophic breakdown last night after the US Congress dramatically rejected a bailout plan designed to restore confidence to paralysed banks.

Wall Street suffered one of its worst days in history. In 24 hours five banks across the West, including Britain’s Bradford & Bingley, had to be rescued to avoid insolvency.

With plans for the biggest rescue of Wall Street since the Great Depression in tatters, the Dow Jones industrial average of shares dived almost 800 points, losing 7 per cent of its value. It was the worst one-day points fall and the worst percentage fall since Black Monday in 1987.

Times of London: Markets carnage after bailout rejected

Australia has joined a global coalition to pressure US legislators to pass a controversial $US700 billion Wall Street bailout package.

Kevin Rudd today confirmed the rare intervention into domestic US politics, revealing he spoke to British Prime Minister Gordon Brown this morning after the US House of Representatives rejected the financial package overnight, sending the Dow Jones into freefall.

The Australian stock market has fallen sharply on opening, down more than four per cent in the first 15 minutes of trading.
The Australian: Global coalition urges US to act

Aux Etats-Unis, la restructuration à marche forcée du secteur s'est poursuivie avec la reprise de la majeure partie des activités de la grande banque régionale Wachovia par Citigroup.
(Barry's menu-French translation: In the United States, restructuring-as-forced-march continued as Citigroup resumed most of the activities of the large regional bank Wachovia.)
Le Monde: Lundi noir pour les Bourses mondiales ("Black Monday for worldwide stock markets") - Google translate

The Appalachian Problem

The southwestern region, rising from the Roanoke Valley up to the Appalachian Plateau, is a place of small farms, coal mines, and chronic economic hard times. It was settled in the eighteenth century by Scots-Irish Calvinists who fled Anglican-dominated Ulster and, eventually, came to that portion of Virginia which the planter aristocracy didn’t want. Their descendants live in small hill towns that are nearer, in mileage and in spirit, to the old factory town of Ironton, Ohio, than to the glass office towers of northern Virginia. Three weeks after the Virginia primary, the mostly white, working-class voters of southern Ohio, a significant portion of them of Scots-Irish descent, helped deliver that state to Hillary Clinton. In the next weeks, their kin did the same in Pennsylvania, West Virginia, Indiana, and Kentucky. It became clear that if Obama hoped to win in November he would probably have to overcome his Appalachia problem.
The Appalachian Problem: Obama goes to rural Virginia (Peter J. Boyer, The New Yorker, October 6 2008 issue)

28 September 2008

Once more, with feeling

Congress on Sunday made public a proposed bill that would enact a far-reaching government rescue of the financial system.

[...]

Among the provisions:

  • The $700 billion would be disbursed in stages, with $250 billion made available immediately for the Treasury's use.
  • Curbs will be placed on the compensation of executives at companies that sell mortgage assets to Treasury. Among them, the bill would limit golden parachutes to executives at companies that participate; they will not be able to deduct the salary they pay to executives above $500,000.
  • An oversight board will be created. The board will include the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director and the Housing and Urban Development secretary.
  • Allow for the Treasury to receive the option to take ownership stakes in participating companies under certain circumstances.
  • Treasury may establish an insurance program - with risk-based premiums paid by the industry - to guarantee companies' troubled assets, including mortgage-backed securities, purchased before March 18, 2008.

Lawmakers' goal is to shore up a deal before financial markets around the world open on Sunday evening.

Congress aims to finalize rescue bill on Sunday (CNNmoney.com)

Capitalism, evolving

It has become fashionable to fret that the current crisis on Wall Street marks the end of American capitalism as we know it. "This massive bailout is not the solution," Sen. Jim Bunning (R-Ky.) warned Tuesday. "It is financial socialism, and it is un-American." It is neither. The near-collapse of the U.S. financial system and Washington's sudden and massive intervention to try to shore it up certainly mark a major turning point, but a bailout would represent a thoroughly American next step for our economic system -- and one that will probably lead to better times.

Americans may assume that the basics of capitalism have been firmly established here since time immemorial, but historical cataclysms such as the Great Depression strongly suggest otherwise. Simply put, capitalism evolves. And we need to understand its trajectory if we are to bring our economic system into greater accord with the other great source of American strength: the best principles of our democracy.
Everybody Calm Down. A Government Hand In the Economy Is as Old as the Republic (Washington Post, 28 September 2008)

A constantly lo-jacked, walking bomb detector for the Man

Obviously, there are some major civil rights issues here, especially if you're legally required to be a constantly lo-jacked, walking bomb detector for the Man.
Everyone will be a walking nuclear weapon detector (Gizmodo)

...referencing "My Blackberry as a bomb-sniffer?" (Newsweek, 27 September 2008)

The Teenage Put (via Marginal Revolution)

Parents are abandoning teenagers at Nebraska hospitals, in a case of a well intentioned law inspiring unintended results.

Over the last two weeks, moms or dads have dropped off seven teens at hospitals in the Cornhusker state, indicating they didn’t want to care for them any more.
Father Leaves Nine Children at Nebraska Hospital (Chicago Tribune's Triage blog), quoted in Not from The Onion: The Teenage Put via Marginal Revolution by Alex Tabarrok on 9/28/08.

Alex comments: "From now on I will will tell my kids, "Behave! or we're moving to Nebraska!"

Oriented, rather than distracted, by shiny objects

You Can Always Tell the Conductors Who Used to Teach Public School

Train conductor on "drunk train" from Penn Station: To your right, you will see a big shiny train. If you are changing to the train to Port Jeff, get off of this train, and get on that shiny train. If you are changing to the train to Montauk, walk through the big shiny train, until you see an even *bigger* shiny train. The train to Montauk will have not one, but two big shiny levels. That is the train to Montauk. So remember: Port Jeff?
Conductor and herd of drunken fools: Shiny train!
Conductor: Montauk?
Drunken fools: Bigger shiny train! Woooo!

--LIRR, Jamaica Station

Overheard by: Sarah

via Overheard in New York, Sep 28, 2008

(The "drunk train" is the last commuter train leaving Manhattan for whatever your destination might be - Long Island, New Jersey, Connecticut, Westchester.)

"I'd like to use one of my lifelines..."

The debate: impressions

Watched it twice now: live, but while exhausted, and replayed from DVR, while rested.

Finally ready to opine. I know you've been breathless with anticipation.

Neither man committed a major error; neither man achieved the kind of breakthrough moment that significantly sways independents and swing voters.

McCain was a little better than I thought he'd be, and Obama a little worse, but there was a basic competent sameness to their responses and approaches. Messages were carefully tuned to shore up the base and reach out to independents.

Watching the debate on CNN HD, viewers were treated to a focus group's responses in realtime at the bottom of the screen, as well as "judge's scorecards"--as if this were a boxing match--on the right and left-hand sides of the screens, as the panel of commentators awarded merits and demerits (also in realtime).

My take: lose the judges' scorecards, keep and expand the real-time focus group responses. As each candidate hit the hot buttons for his particular constituencies, the lines on the graph moved.

It looked like a web page.

Heh.

27 September 2008

26 September 2008

Back in New York

There's one dog too few in the apartment.

But it was wonderful to come home, and is wonderful to sit with wife, chow, and cat in the living room, the extended postdebate spin-o-rama on the cable news channels playing in the background.

25 September 2008

Waiting for 5773

Bill Clinton, explaining to Larry King why he won't be campaigning for Obama until after Rosh Hashana and Yom Kippur have passed:
"Are you kind of feeling Jewish that you're waiting until after the Jewish holidays?" asked King.

"No. But I think it would be — if we're trying to win in Florida, it may be that — you know, they think that because of who I am and where my political base has traditionally been, they may want me to go sort of hustle up what Lawton Chiles used to call the 'cracker vote' there.

"But Senator Obama also has a big stake in doing well in the Jewish community in Florida, where Hillary did very well and where I did very well. And I just think respecting the holidays is a good thing to do," he said.

24 September 2008

In memory of Chow Fun Campbell Weiner (1996-2008)

We lost an old friend this afternoon.

Chow Fun, the sweetest and gentlest Chow Chow you ever met, was euthanized today at about 1:00 PM.

For the last few days, she'd been having trouble getting her breath. I'm working from Raleigh this week, and wasn't there to help Carrie deal with this... but when Carrie took her to the vet this morning, the vet sent her straight to the critical care animal hospital... where, after taking some x-rays and performing some tests, the very kind doctors there diagnosed advanced, diffuse, metastatic cancer.

She went peacefully, and without pain.

Here are some pictures of our lovely yellow dog in happier times:

ChowFun
L'il Chow Fun, 1996

gato getting tired of waiting
Chow Fun and Mister Gato, 2005

Chows Guarding the Entryway July 2008
Chow Fun (foreground) and Chow Bella guarding the doorway, 2008

Chow Fun was a Good Girl, who loved her family, always took her guard duty seriously, and a true chow-hound, too (she took such pleasure in treats, and nothing would make her happier than a bite of leftover scrambled eggs from Sunday breakfast.)

She will be missed, and grieved... not just by Carrie and me, but by Chow Bella and Mister Gato.

Bella and Fun were littermates who have never, until just now, been separated... but the cat also developed a special bond with Chow Fun over the years. I often caught them snuggling quietly when they thought nobody was looking. :-)

I am not the type who goes in for that gooey, treacly Rainbow Bridge stuff (if you are, absolutely no offense is intended.)

But mister, if there aren't dogs in your Heaven, I ain't going.

23 September 2008

The sort of groupthink that can lead an enterprise over a cliff with remarkable efficiency

[The]"old-boy" scenario raises the problem of network redundancy, when everyone in the network has longstanding bonds with everyone else in the network. While this results in a high level of trust, it also is a recipe for the sort of groupthink that can lead an enterprise over a cliff with remarkable efficiency.

Yes, you want a bunch of smart people in the room, but you don't want them to be the same smart people. The best networks--the ones that generate the most innovative thinking, that are able to keep themselves from veering too far in one direction or another--are the ones that link together multiple, overlapping clusters that collectively represent a range of perspectives and resources. The job of the person at the top is to focus the creative tension that results.

Obama seems to intuitively grasp this principle. Abner Mikva, the former Federal judge and Chicago congressman who served as an early Obama mentor recalls that from the beginning Obama would ask, "'Do you know So-and-So?'" and then Mikva would set up a lunch. But Obama went beyond merely expanding his Rolodex. He strategically reached out to people who could connect him with various groups, and then positioned himself as the link between them.

This type of positioning was key to his own meteoric rise--in social network analysis, being the bridge is where the power is: you're the guy who represents access to the other group--but it also happens to result in a framework for the kind of robust information exchange that best advances complex agendas and responds to multifaceted crises.

In the end, we don't just elect people to office. We elect their social networks--and their judgments about using (or not using) those networks to everyone's best advantage.
I was really tempted to "excerpt" the whole article. You really should go read the whole thing; Bradley Bloch is working on a system of social network analysis that has some very intriguing possibilities.

Bradley W. Bloch: All The President's Networks (Huffington Post)

Hank discovers the 419 scam

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury Paulson

Bailout Satire (Christopher Hayes, Capitolism @ The Nation)

Heh.

Hat tip: enrevanche regular wtf.

Related: 419 scams

22 September 2008

"Look on the bright side"

Michael Lewis, on the bright side of economic collapse.

(via Kottke)

Thanks, Bill

In one of his periodic language columns, William Safire explains this blog's name:
Revanche is French for “revenge.” Its first appearance in English came in an 1858 letter from Queen Victoria, but as an ist blossomed as a word meaning “one seeking vengeance or reprisal” after World War II. Revanchist was used in scorn by Soviet propagandists to derogate West German democrats like Konrad Adenauer and NATO commanders who dreamed of unifying Germany and ending Russian domination of Eastern Europe.
William Safire - Revanche Is Sweet (On Language - New York Times, 13 April 2008)

Spotted by: Carrie

Private investment banking in America, dead at 75

Cross another item off Nouriel Roubini's list...

Last night, the Federal Reserve announced that the last two private investment banks left standing, Goldman Sachs and Morgan Stanley, would be converting themselves to a "traditional" bank holding company structure, subjecting them to the oversight of bank examiners and regulatory agencies.

The New York Times runs an obituary for private investment banking in the United States this morning:
The firms requested the change themselves, even as Congress and the Bush administration rushed to pass a $700 billion rescue of financial firms. It was a blunt acknowledgment that their model of finance and investing had become too risky and that they needed the cushion of bank deposits that had kept big commercial banks like Bank of America and JPMorgan Chase relatively safe amid the recent turmoil.

It also is a turning point for the high-rolling culture of Wall Street, with its seven-figure bonuses and lavish perks for even midlevel executives. It effectively returns Wall Street to the way it was structured before Congress passed a law during the Great Depression separating investment banking from commercial banking, known as the Glass-Steagall Act.

By becoming bank holding companies, the firms are agreeing to significantly tighter regulations and much closer supervision by bank examiners from several government agencies rather than only the Securities and Exchange Commission. Now, the firms will look more like commercial banks, with more disclosure, higher capital reserves and less risk-taking.

For decades, firms like Morgan Stanley and Goldman Sachs thrived by taking bold bets with their own money, often using enormous amounts of debt to increase their profits, with little outside oversight.

They were the envy of Wall Street, dominating the industry’s most lucrative businesses, landing headline-grabbing deals and advising companies and governments around the world on mergers, stock offerings and restructurings.

But that brash model was torn apart over the last several weeks as investors lost confidence in the way they made those bets during the recent credit boom, when investment banks expanded with aplomb into esoteric securities, the risks of which were not easily understood.
Radical Shift for Goldman and Morgan (New York Times, 22 September 2008)

Next step: Look for Goldman and Morgan to buy their favorite existing commercial banks under this new structure, rather than the other way around.

The Financial Times and the Wall Street Journal's stories are linked below.

19 September 2008

Achieving work-life balance

BusinessWeek is running a piece on how people have - and haven't - successfully achieved that state of enlightenment known as "work-life balance".
Does this sound familiar? 350 e-mails a day in my inbox. BlackBerry, cell phone, and laptop constantly in tow. Check my Outlook calendar and see that I'm double- or triple-booked in meetings every hour, plus a 7 a.m. global conference call. Being told by management that we cannot hire additional head count because of a hiring freeze, despite the hefty increase in responsibilities for my team. That was me a year ago. The red tape, politics, ridiculous expectations, and meager resources made it nearly impossible to do my job as an advertising and brand manager for a large tech company...

...I quit. So did my husband, who worked in a top advertising agency. In fact, we both quit on the same day: Sept. 11, 2007. We decided that life was too short and we had had enough. What was our worst-case scenario if we quit? Having to sell our home and look for jobs elsewhere? Better than losing our marriage and our sanity.

Our friends and colleagues could not understand it. Rumors were flying that we had come into some family money. Nope. Just several years of saving for a rainy day. And boy, was it pouring. My husband started consulting immediately. I wanted to spend some time with my ill father. The marketing consulting business my husband started took off, and because of our similar backgrounds and experience, it was a natural fit for us to work together.

Ten months after quitting, we have more business than we can handle. My husband named the business reeboot strategy because in explaining our rationale for quitting our big corporate jobs he would say: "We needed to hit Control + Alt + Delete on our lives and start over."
Work-Life Balance: How To Get A Life And Do Your Job (BusinessWeek.com)

Financial Crisis FAQs

They're doing a good job of explaining the basics (and the details) over at the Freaknomics blog.

It's our watch now

Over at They Rode On, Doc responds to this post with some ruminations on Big Changes.

Excerpt:
We look back on history and we wonder how some of the worst things could have been allowed to happen. Where were the good Germans during the Holocaust? Why didn't someone stand up to Joe McCarthy sooner? How was the massacre in Rwanda allowed to happen? You can find your own example of something, I'm sure, that you just know you'd never have allowed to take place on your watch. Well, it's our watch now. In the coming days, probably years, there will be ample opportunities to show our mettle, or to burrow into a corner in the interest of self-preservation. I had said "cower in the corner," but I'll not cast that stone. For some, saving one life will mean putting other lives for which they're responsible at risk. The firefighter who's a sole breadwinner for a family does that every day. Not everyone faces that dilemma, and not everyone facing it decides for altruism.

We look back on history and wonder. When our children and grandchildren look back on the coming days and wonder, it will fall on us to explain. If we can.

Be kind to one another. Putting one foot in front of the other will carry our bodies through this. Nothing less than kindness will ferry our souls across.
They Rode On: The Coming Crash

Read the whole thing.

18 September 2008

The Great Recession

Dear Forbes.com readers:

This will turn out to be the worst financial crisis since the Great Depression and the worst U.S. recession in decades.

I first said so in August and, since I wrote those words, financial and economic conditions have deteriorated further--and severely. Stock prices are sharply down and there is a risk of a market crack. Interbank and credit spreads are wider than ever since the beginning of this crisis, Lehman Brothers (nyse: LEH - news - people ) and Merrill Lynch (nyse: MER - news - people ) are gone, and soon enough Morgan Stanley (nyse: MS - news - people ) and Goldman Sachs (nyse: GS - news - people ) will need to find a larger partner with deep pockets or they risk getting into severe trouble.

The biggest insurer in the world--American International Group (nyse: AIG - news - people )--is teetering near bankruptcy and has been bailed out by the taxpayer at an astronomical expense. The biggest U.S. savings and loan, Washington Mutual (nyse: WM - news - people ), is effectively insolvent and close to going bust, while dozens of other banks are near bankruptcy.

There is the beginning of a silent bank run as depositors are nervous about their assets. The panic is mounting in the financial markets, and the credit default swap market is frozen because of the Lehman collapse and the state of affairs at AIG, WaMu and other financial institutions. Many hedge funds are now teetering as their losses mount. Investors in fixed income--including preferred stocks--have experienced massive losses and the financial turmoil is becoming global as stock markets all over the world plunge. Worst of all, policymakers are running out of bullets. Think Spaghetti Westerns and a parched desperado in a dry gulch.

The Lehman collapse is leading to the risk of a generalized run on the shadow banking system. The policy reaction is to try to build a new set of levees after the financial perfect storm of the century destroyed the first set. This reaction includes the following steps.

First: The Fed is accepting even more toxic collateral for the Term Securities Lending Facility (TSLF) and Primary Dealer Credit Facility (PDCF), including even equities. So now, after having nationalized the mortgage market via the takeover of Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ), the government is also starting to manipulate the stock market directly. This started with the SEC restrictions on naked short sales of primary dealers, so the process of turning the U.S. market system into a socialist system controlled by the government is now in full swing. By its effective purchase of equities, the Fed takes massive credit and market risks.

Second: The Fed is waiving Section 23A of the Federal Reserve Act, which restricts how much commercial banks can re-lend liquidity to their investment banking affiliates. These restrictions are sensible prudential rules aimed at making it difficult for banks to subsidize their broker-dealer affiliates with insured deposits. Now this prudence is thrown to the wind, so Citigroup (nyse: C - news - people ), JPMorgan Chase (nyse: JPM - news - people ) and Bank of America (nyse: BAC - news - people ) can happily use or raid their FDIC-insured deposit to support bankrupt broker-dealer operations. This is reckless, and is a form of connected lending that eventually caused the Japanese financial and banking crisis.

Third: An attempt to bail-in the private sector and provide private lender-of-last-resort support to the financial system is at work. Ten major global banks will fork out $7 billion each to create a $70 billion fund. Each of these firms could borrow up to a third of such a fund, or $23 billion. But this private lender-of-last-resort (LOLR) facility will not work. If any firm were to access this facility in case of a run on its liabilities, panic will ensue--as the use of it will signal severe trouble--and the run will continue.

The IMF created a similar facility to deal with liquidity runs on sound and solvent but illiquid countries, but no country ever used or signed up for such facility as it would have been associated with "stigma." Also private LOLR facilities need to come with rules on their use ("conditionality"), otherwise an illiquid and insolvent broker-dealer could access the facility with no restrictions and bankrupt the fund and the other members. But the new facility apparently does not come with any conditionality, so it is flawed in its design.

Fourth: Since Lehman has gone bust, the new line of defense was the BofA takeover of Merrill. After taking over the insolvent Countrywide, Ken Lewis is making another reckless gamble by taking over, at a vastly inflated price, another distressed broker-dealer. This is dangerous behavior for BofA. The lesson for Mack of Morgan Stanley and Blankfein of Goldman is that they should find a buyer today. After the collapse of three major broker-dealers in six months, Morgan Stanley and Goldman will be next unless they find a large financial institution with a large commercial bank that provides stable FDIC-insured deposits. As I predicted months ago, no independent broker-dealer will survive.

Fifth: Fed rate cuts will make no difference to the fundamental solvency and credit problems of the economy. The economy does not suffer only from illiquidity. More seriously, it suffers from severe credit and solvency problems that the Fed cannot address in any way.

Therefore, any rally from Fed actions will be short lived. When Bear Stearns was rescued, the financial market rally lasted two months. When the Fannie and Freddie legislation was proposed in July, the rally lasted a few weeks; when the actual nationalization of Fannie and Freddie occurred a week ago, the rally lasted only one day. The ability of policy authorities to prop up financial markets is rapidly eroding as market participants see that policy makers are desperate and running out of options.

At this point the perfect financial storm of the century cannot be contained.

Nouriel Roubini, a professor at the Stern Business School at NYU and chairman of Roubini Global Economics, is a weekly columnist for Forbes.com.
The Great Recession (Dr. Nouriel Roubini, writing at Forbes.com, 18 September 2008)

17 September 2008

Six impossible things before breakfast

Lewis Carroll’s White Queen “believed as many as six impossible things before breakfast”. Traders could use that skill. Here are six things we have been asked to believe since markets closed on Tuesday.

First, the US Federal Reserve is lending $85bn to American International Group to stop it from going bust. AIG is an insurer, not covered by the Fed. The action is without precedent. Does it damage the decisive move against moral hazard when Lehman was allowed to fail? Arguably not. AIG was of greater systemic importance. And Wednesday’s market response suggests that it in no way dampened aversion to risk.

Second, a US money market fund has “broken the buck”, or dropped below a nominal value of $1. For decades US savers had thought this impossible.

Third, the yield on the world’s safest investment, three-month Treasury bills, dropped to 0.15 per cent, its lowest since Pearl Harbor. Safety has not been so expensive since the war.

Fourth, the US Treasury had to bolster the balance sheet of the Federal Reserve, the anchor of the world financial system.

Fifth, Wall Street’s last two independent investment banks, Morgan Stanley and Goldman Sachs, will stay independent for days at most, judging by the price of their equity and credit.

And sixth, the risk that the US itself defaults, according to credit markets, has quadrupled in the past six months. Its triple-A rating, according to one rating agency, is “not God-given”.

All six things appear to be true. A seventh, pushed by contrarians, is that it is time to buy. The last rally, in July, started when restrictions on short-sellers were announced; draconian measures against shorts were unveiled on Wednesday. And extreme panics generally precede rallies. But this panic must be resolved first, and it looks different from the panics that have preceded it this year.

The Short View: The cost of safety (John Authers, Financial Times, 17 September 2008)

I virtually never reproduce an entire article when I blog... but, like the Federal Reserve said when they bought AIG without, you know, strictly speaking having legal authority to do so, I claim exigent circumstances in this case.

How many shares of AIG stock do I get when I file my 2008 taxes?

Want to understand the ramifications of the recent market chaos?

The New York Times is running one of the best (and simplest) interactive information graphics I've seen in a long time.

Static snapshots below, which don't begin to do justice to what they've built.

Market cap of 29 selected financial firms in October 2007:

October 2007 market values

...and the 27 surviving firms in September 2008:

September 2008 market values

15 September 2008

Hedge Fund

On a morning where there's nothing but bloodletting in the financial markets, a little comic relief, courtesy of I Can Has Cheezburger?:

cat

14 September 2008

Making GPS irrelevant

[Researchers] used magnetic scanners to explore the brain activity of taxi drivers as they navigated their way through a virtual simulation of London's streets.

Different brain regions were activated as they considered route options, spotted familiar landmarks or thought about their customers.

[...]

Earlier studies had shown that taxi drivers have a larger hippocampus - a region of the brain that plays an important role in navigation.

Their brains even "grow on the job" as they build up detailed information needed to find their way around London's labyrinth of streets - information famously referred to as "The Knowledge".

"We were keen to go beyond brain structure - and see what activity is going on inside the brains of taxi drivers while they are doing their job," said Dr Hugo Spiers from University College London.
[London] Taxi drivers 'have brain satnav' (BBC News, 13 Sept 2008)

If McCain wins in November

...Tina Fey has a regular gig for at least the next four years, if she wants it.

Weathering Ike

The Houston Chronicle's bloggers (and commenters) are covering the aftermath of the storm.

I think there's something in there about him being a Harvard grad, too

On 9/14/08 8:17 AM, XXX wrote:
According to The Book of Revelations:

The Anti-Christ will be a man, in his 40s, of MUSLIM descent, who will deceive the nations with persuasive language and have a MASSIVE Christ-like appeal....the prophecy says that people will flock to him and he will promise false hope and world peace, and when he is in power, he will destroy everything.
Hey, XXX – I hope this note finds you well. We are all okay, but always wish there were a few more hours in the weekend and a few less in the workweek...

I have seen the above repeated in a lot of places lately... Makes it easier for me to believe that old saying about the Bible being one book that everybody has in the house but nobody reads.

Revelation doesn’t describe or even use the term “anti-Christ” (though it is used elsewhere in the Bible); the figures of evil in Revelation are beasts that, when you read about them (see below) don’t really even sound like human beings to me, much less like a 40-year-old Muslim male. (Also: The Muslim faith was not founded until many hundreds of years after the last book of the Christian Bible was written...)

I’m not a big fan of Obama, to be honest. I was a Republican for most of my adult life before switching my registration to Independent a few years back, and I think there are plenty of valid reasons to prefer McCain, Barr, or not voting, over voting for Obama.

Arguing that he is some kind of Secret Muslim Anti-Christ is just silly, though.

- bc
New International Version, Revelation chapter 13:

1 And the dragon[a] stood on the shore of the sea.

The Beast out of the Sea

And I saw a beast coming out of the sea. He had ten horns and seven heads, with ten crowns on his horns, and on each head a blasphemous name.


2The beast I saw resembled a leopard, but had feet like those of a bear and a mouth like that of a lion. The dragon gave the beast his power and his throne and great authority.


3One of the heads of the beast seemed to have had a fatal wound, but the fatal wound had been healed. The whole world was astonished and followed the beast.

4Men worshiped the dragon because he had given authority to the beast, and they also worshiped the beast and asked, "Who is like the beast? Who can make war against him?"

5The beast was given a mouth to utter proud words and blasphemies and to exercise his authority for forty-two months.

6He opened his mouth to blaspheme God, and to slander his name and his dwelling place and those who live in heaven.

7He was given power to make war against the saints and to conquer them. And he was given authority over every tribe, people, language and nation.

8All inhabitants of the earth will worship the beast—all whose names have not been written in the book of life belonging to the Lamb that was slain from the creation of the world.[b]

9He who has an ear, let him hear.

10If anyone is to go into captivity,
into captivity he will go.
If anyone is to be killed[c] with the sword,
with the sword he will be killed. This calls for patient endurance and faithfulness on the part of the saints.

The Beast out of the Earth

11Then I saw another beast, coming out of the earth. He had two horns like a lamb, but he spoke like a dragon.

12He exercised all the authority of the first beast on his behalf, and made the earth and its inhabitants worship the first beast, whose fatal wound had been healed.

13And he performed great and miraculous signs, even causing fire to come down from heaven to earth in full view of men.

14Because of the signs he was given power to do on behalf of the first beast, he deceived the inhabitants of the earth. He ordered them to set up an image in honor of the beast who was wounded by the sword and yet lived.

15He was given power to give breath to the image of the first beast, so that it could speak and cause all who refused to worship the image to be killed.

16He also forced everyone, small and great, rich and poor, free and slave, to receive a mark on his right hand or on his forehead,

17so that no one could buy or sell unless he had the mark, which is the name of the beast or the number of his name.

18This calls for wisdom. If anyone has insight, let him calculate the number of the beast, for it is man's number. His number is 666.

11 September 2008

Clean laundry makes him happy

Gato on Laundry

Me, too.

Where do the neurotics live? New York. Duh.

Psychologists have shown that human personalities can be classified along five key dimensions: agreeableness, conscientiousness, extroversion, neuroticism, and openness to experience. And each of these dimensions has been found to affect key life outcomes from life expectancy and divorce to political ideology, job choices and performance, and innovation and creativity.

What's more, it turns out these personality types are not spread evenly across the country. They cluster. And how they cluster tells us much: What city someone might want to move to, the broader character of regions, and even the creative and economic futures of broad swaths of the nation.

Drawing on a database of hundreds of thousands of individual personality surveys compiled by psychologists Jason Rentfrow, Sam Gosling, and Jeff Porter, my team and I were able to map the distribution of personality types across the United States. The result is a fascinating new way of looking at the country's terrain.

Interestingly, America's psychogeography lines up reasonably well with its economic geography. Greater Chicago is a center for extroverts and also a leading center for sales professionals. The Midwest, long a center for the manufacturing industry, has a prevalence of conscientious types who work well in a structured, rule-driven environment. The South, and particularly the I-75 corridor, where so much Japanese and German car manufacturing is located, is dominated by agreeable and conscientious types who are both dutiful and work well in teams.

The Northeast corridor, including Greater Boston, as well as San Francisco, Los Angeles, Seattle, and Austin, are home to concentrations of open-to-experience types who are drawn to creative endeavor, innovation, and entrepreneurial start-up companies. While it is hard to identify which came first - was it an initial concentration of personality types that drew industry, or the industry which attracted the personalities? - the overlay is clear.
Where do all the neurotics live? (Boston Globe)



Update, 8:15 PM:

In the comments, Phil points us to an online version of the inventory:
Want to take an inventory?

http://www.personal.psu.edu/~j5j.../ ipipneo120.htm
I've posted my results (the survey declared me to be only an average neurotic, while in actuality I lost my amateur status years ago, so I do worry about the integrity of the method.)

If you feel inclined to overshare the deep secrets of your psyche in the comments, please do so.

10 September 2008

Jobs swims the Yangtze

Apple's big event today in San Francisco left many people wondering: What the heck was that was that all about? Normally, the great Steve Jobs uses his time on the podium to delight and surprise the masses. But today he gave little more than a preview of the new holiday line of iPods, and the TV ads that will accompany them.

You don't have to be as cynical as me to understand the real reason this event was staged: It was so the world could watch Jobs swim the Yangtze River.

Surely you remember that bit of masterful 20th-century propaganda? In 1966, Mao Zedong, the communist leader who united China and brought it back from the brink of ruin, famously swam the Yangtze. This stunt confounded the China hands and others who had believed that Mao was either dead — done in by his rivals — or dying of some illness, as had been rumored. (He was 73 after all.) But, no, the Leader was alive and astoundingly healthy: On a day in July, the Chairman appeared in his bathrobe on the riverbanks in Wuhan, accompanied by 5,000 young people. He was photographed smiling and waving; the Party-controlled press reported that he swam nearly nine miles downstream, in a little over an hour — which is doubtful.

But it's certainly true that he lived for another decade.

When Jobs, who battled pancreatic cancer four years ago and has been the subject of whispers of ill health since he appeared looking gaunt at the Macworld conference in June, took the stage today, it was in front of a giant slide that said, "The reports of my death are greatly exaggerated."

Steve Jobs: Not Dead Yet (Time.com)

I suppose some things are so obvious as to not need saying, but making the Jobs/Mao analogy without continuing to connect the dots to the concept of personality cults is a strange omission.

09 September 2008

The laughable redneck notions that made the United States what it is

If only the Democrats could contain their sense of entitlement to govern in a rational world, and their consequent distaste for wide swathes of the US electorate, they might gain the unshakeable grip on power they feel they deserve. Winning elections would certainly be easier – and Republicans would have to address themselves more seriously to economic insecurity. But the fathomless cultural complacency of the metropolitan liberal rules this out.

The attitude that expressed itself in response to the Palin nomination is the best weapon in the Republican armoury. Rely on the Democrats to keep it primed. You just have to laugh.

The Palin nomination could still misfire for Mr McCain, but the liberal reaction has made it a huge success so far. To avoid endlessly repeating this mistake, Democrats need to learn some respect.

It will be hard. They will have to develop some regard for the values that the middle of the country expresses when it votes Republican. Religion. Unembarrassed flag-waving patriotism. Freedom to succeed or fail through one’s own efforts. Refusal to be pitied, bossed around or talked down to. And all those other laughable redneck notions that made the United States what it is.
Democrats must learn some respect (Clive Crook, writing in The Financial Times, 7 September 2008)

Oh my gravy!

Thai Prime Minister Samak Sundaravej has been ordered to resign after being found guilty of violating the constitution over a TV cookery show.

[...]

Thailand has had its fair share of crises recently, says the BBC's Jonathan Head in Bangkok, but this is one that even the Thais are baffled by.

[...]

Mr Samak, a self-proclaimed foodie, hosted a popular television cooking show, Tasting and Grumbling, for seven years before becoming prime minister.

He continued to present the programme for two months after becoming prime minister, but said that any money he received was only used to cover his expenses.

Protesters accuse Mr Samak of being a proxy for former PM Thaksin Shinawatra, who was ousted in an army coup in 2006 amid accusations of corruption and abuse of power.
Court says Thai PM "must resign" (BBC News)

(1) "Tasting and Grumbling" is a terrific name for a TV cooking show.

(2) In addition to being a foodie, I have something else in common with the Thai Prime Minister: Any money that I receive from my employment goes to cover my expenses, as well.

That's right, friends, money means nothing to me; I tend to give it away in exchange for goods and services.

(3) I wonder if Rachael Ray has ever considered a political career? She has, famously, declared: "I have no formal [training in] anything... I'm completely unqualified for every job I've ever had."

07 September 2008

Mustard-based sauce is still an abomination

Jason Perlow posts a lovely photo-essay and appreciation of North and South Carolina barbecue.

Over the summer months in 2008, I’ve spent a lot of time in the Carolinas, in particular, the Raleigh-Durham-Chapel Hill area (The Triangle) and also the Columbia, South Carolina area. Two cities which are as different as can be from a cultural and socio-economic perspective, but which do share something in common — Barbecue.

Even if you are trying to shed the pounds like I am, when you travel, maintaining discipline can be extremely difficult, especially when you are surrounded by co-workers who want to go out and have a good time. And when you’re in the South with a bunch of out-of-town males, particularly in the Carolinas, evening entertainment can usually be classified into two distinct areas — ones which involve Pork and ones which do not. I’m not going to get into the details of the ones which do not, because that could get me in trouble with the wife.

Here are all my Carolina Barbecue sins exposed, some of which I am proud of and would repeat again, and some of which I would not.

Off the Broiler: The Finger-Lickin' Ginormous Carolina Q Post

Hexayurt

"Take 12 sheets of standard industrial board material, cut six in half, tape or screw them together, and move in," Gupta said. "Boom, there’s your global housing revolution."
Hexayurt/CitiesGoGreen

Related: The Bucky/Gandhi Design Institution

06 September 2008

Mike Huckabee's Parable of the Desk, explained

It's amazing how many layers of meaning you can pack into a little sermon if you know what you're doing. I know: sermons are my stock in trade. And they're also the primary arsenal for aw-shucks just-plain-folks evangelical Republican Mike Huckabee, who stumped for John McCain at the Republican National Convention with a speech that made my jaw drop.

Let me explain why. Excerpts of Huckabee's homily follow, in fine sermon style; toward the end of his speech, he pulled out a seemingly-unrelated story, then called forth a moral and a theme, and then wove that theme back into his prior subject matter, the imperative to vote for the McCain-Palin ticket. The first parts of his oration are basically irrelevant boilerplate about how Barack Obama hugs terrorists and blushingly gives them boxes of candy. And then he gets into the oft-told tale of McCain's capture and torture, following with remarks about McCain's efforts to lift his arms and how he gave for us, so we should all be grateful. That's when Huckabee slides smoothly into Sermontown:

Allow me to tell you about someone who understands this type of sacrifice better than anyone.
McCain? No, not yet: a schoolteacher who is in no way a stand-in for Sarah Palin, a young woman who overcomes doubt and skepticism to teach people about how we ought to be more grateful to veterans like a certain J.M.
Taking Steps: Did someone whistle? I couldn't hear it.

(via)

My time in right field

It will astonish my wife and most of my friends to learn this, but for a single season, in junior high school, I played on the baseball team. I don't talk about it much. :-)

My wife, the pro baseball fan, who has to explain the intricacies and rules and fine points to me whenever we watch a game (she's very patient and kind about this) must be absolutely flabbergasted at this point: how could someone with such a weak theoretical grasp of the game ever have played?

Well, it goes like this.

I was a student in a small parochial school that wanted to field a baseball team. There weren't enough actually interested players, and a few kids got shanghaied (dragooned?) into service.

They found some ex-jock-gone-to-seed to coach the team as a part-time gig; I think he might have also been qualified to teach something like Driver's Education (that was a popular combo down South for a long time.) He was certainly qualified to chew tobacco and take regular pulls on the bottle of Four Roses that he kept in the glovebox of his car, and for all I know he actually might have known something about baseball.

We had baseball practice three times a week, which was utter confusion for me, because I really had no well-formed idea of how the game was played (I got the "you hit the ball and run around the bases" part, but the subtleties were lost on me) and everyone else clearly already understood everything they wanted to know about baseball by then.

They put me at the bottom of the batting order - and on defense, I was out in right field.

I mentioned, I think, that it was a parochial school. By this I mean that it was formally affiliated with the Episcopal Church, not that it was provincial in its point of view, although an argument can certainly be made.

We prayed at chapel service every schoolday, but I had never prayed as fervently about anything in my young life, up to that point, as the prayer I said, over and over, on every game day, as I trotted out to right field with an antique baseball glove that used to belong to my dad:

Lord, I hope the percentage of left-handed hitters on their team is low
And that our pitching is good and their hitting is weak
And I would really prefer it if no baseballs came my way today.
If perchance someone should hit the ball in my direction, it would be really decent of You to help me give a good accounting of myself.
Thanks. Amen.

I don't think I hit the ball in an actual game all season long.

I do remember making at least one good catch, and thank God there was nobody on base at the time, so I didn't have to work out all the permutations of where I should be throwing the damn ball.

Experiences like this are what led me into a life of process wonkery. I am the kind of person who really prefers to understand the theoretical underpinnings of what I'm doing.

Making sure you can get five bars in Hell

Denis O'Brien professes not to understand why Wall Streeters think his telecom business is risky. He says this while sitting in an office in Papua New Guinea that is protected by razor wire and a half-dozen guards carrying shotguns and pistols. O'Brien's Jamaica-headquartered company, Digicel Group, began offering cheap cell phone service recently in this Pacific hellhole. The murder rate in PNG is one of the highest in the world, corruption is rife, and the government recently threatened to seize 130 cell towers that O'Brien had erected at a cost of $120 million.

Is there anyplace as inhospitable to capital as PNG? Haiti would qualify. O'Brien has put money in there, too--several hundred million dollars. Five of his workers in Haiti have been kidnapped so far. In East Timor O'Brien is pursuing a license despite a rebel uprising this year that left the country's president with a bullet in his chest. And then there's Fiji, where he had to abandon cell towers for a time after a coup.

He concedes a bit to the worrywarts by noting that his experience in Fiji was a "nightmare." But he's not about to stop putting capital in dangerous places. "If you just focus on risk, you can't do a thing," he says. A swashbuckling entrepreneur of 50 who swears often in his Irish brogue, O'Brien has built a $2.2 billion personal fortune by dominating the mobile business in a dozen poverty-stricken countries (in all, he's in 27 countries and territories). Combining shrewd political instincts, a relentless drive to cut costs and a little Irish charm, he's put phones into the hands of 7 million people in seven years.
Babble Rouser (Forbes.com - from Forbes magazine, 11 August 2008)

(via)

04 September 2008

You can pay Uncle Sam with the overtime

For many American professionals, the Labor Day holiday yesterday probably wasn’t as relaxing as they had hoped. They didn’t go into the office, but they were still working. As much as they may truly have wanted to focus on time with their children, their spouses or their friends, they were unable to turn off their BlackBerrys, their laptops and their work-oriented brains.

Americans working on holidays is not a new phenomenon: we have long been an industrious folk. A hundred years ago the German sociologist Max Weber described what he called the Protestant ethic. This was a religious imperative to work hard, spend little and find a calling in order to achieve spiritual assurance that one is among the saved.

Weber claimed that this ethic could be found in its most highly evolved form in the United States, where it was embodied by aphorisms like Ben Franklin’s “Industry gives comfort and plenty and respect.” The Protestant ethic is so deeply engrained in our culture you don’t need to be Protestant to embody it. You don’t even need to be religious.

But what’s different from Weber’s era is that it is now the rich who are the most stressed out and the most likely to be working the most. Perhaps for the first time since we’ve kept track of such things, higher-income folks work more hours than lower-wage earners do. Since 1980, the number of men in the bottom fifth of the income ladder who work long hours (over 49 hours per week) has dropped by half, according to a study by the economists Peter Kuhn and Fernando Lozano. But among the top fifth of earners, long weeks have increased by 80 percent.
Rich Man's Burden (New York Times, 2 September 2008)

02 September 2008

Google Chrome

Windows-only at this point, so I'm running Google Chrome under VMware Fusion.

Light, fast.  I like it.

Google Chrome

01 September 2008

Large Hadron Rap

"I have to confess that I was skeptical when Katie said she wanted to do this, but when I saw her previous science rapping and the lyrics, I was convinced," Gillies said. "I think you'll find pretty close to unanimity among physicists that it's great."

- CERN spokesman James Gillies, on the Large Hadron Rap

Central Park Labor Day 2008


Central Park Labor Day 2008
Originally uploaded by enrevanche.
Carrie and I packed a bag (and an old blue-striped bedsheet to use as a groundcloth) and hung out in Central Park for a few hours today.

Green is such a soothing color to the human eye, and there's precious little of it in the City. Hanging out in the the park is restorative for a lot of reasons.

We found a place to sit in the shade of a big old tree, about 200 meters behind a jazz combo that was playing next to the 72nd St Traverse. The music, and the peoplewatching, were both prime.

I had brought along the newspaper, along with some magazines neither one of us had a chance to read yet. We each got a hot dog from a park vendor, and then, after circumnavigating the Great Lawn and making our way out of the park and back downtown...

Ww had a (very) early supper at the neighborhood diner, which sometimes fancies itself a sophisticated sidewalk cafe. :-)

(The cheeseburgers are still good.)

Thank God it's not basketball season yet

To truly understand the UNC-Duke rivalry, you have to understand how close together (geographically) the two schools are.

How close are they?
Someone dropped in unexpectedly at the Duke game on Saturday.
About an hour before kickoff against James Madison, two parachutists landed at the 35-yard line at Wallace Wade Stadium with a game ball, according to a story in the Raleigh News & Observer.

The Blue Devils hadn't scheduled the event, however. The jumpers were supposed to land eight miles down the road in Chapel Hill, N.C., before the North Carolina game.

"All we know is, they must have missed their jump site,'' a Duke team official said, according to the newspaper.

UNC assistant athletics director for promotions Michael Beale told the Observer that the plane had decided to cancel the jump into Kenan Stadium due to bad weather. A break in the clouds, however, revealed a stadium and the jumpers made their leap after all. They didn't realize that they were over the wrong stadium until it was too late.

When informed of the gaffe, UNC associate athletics director Rick Steinbacher called Duke to apologize.

"In about five years, maybe this will be funny,'' Steinbacher said, according to the newspaper. "Right now, I'm just glad no one was hurt."
ESPN - Parachutists land at Duke by mistake

Related: Aerial Delivery Goes Awry (News and Observer.com)

Also related: Google Maps driving directions from Wallace Wade Stadium, Durham, NC, to Kenan Stadium, Chapel Hill, NC (showing both stadiums on a labelled aerial view.)