| How I found the Blues |
[Nov. 18th, 2009|01:56 am] |
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| | She's nineteen years old - Muddy Waters | ] |
As I walked home tonight, somebody opened a pub door in front of me, out of which came the raw & vital noise that is a group of middle age men on stage playing the blues. The man with the harp was on form and the band was with him, a beautiful if raucous noise unto the creator.
I remember long ago laying on my stomach playing a game on my Commodore 64, trying to avoid the "adults" downstairs. I had a tape deck, the kind with big keys and a single speaker, in it was the "Risky Business" soundtrack which I bought, because I really loved the Tangerine Dream track "love on a real train" there is something both urgent and almost hymnal about it. The album was on in the background. Then two things happened. Somebody entered the room to engage me in fruitless conversation about computers, the track "Lana" ( a very young Rebecca De Mornay) ended, causing my mind to focus on the lack of music while listening to somebody drone on. Then a voice began to sing, there was a guitar lick, then at some unspecified point the drums and the harp kicked in like a shock to the system, the voice contined to sing, while another started whooping and screaming in the background. I switched my attention back to the interlopper and got rid of him as quick as possible, then I had to rewind back to the start and listen to it properly. I did this about twice before I had to hunt for the tape cover to find out what it was I was listening to. It was then I discovered Muddy Waters, only later would I learn that this late recording was not favoured by the faithful, but you only find the blues once.
When next I was in town I went into a music shop and bought the album "Hard Again" and I learned that Muddy was dead, and of Johnny Winter the albino bluesman that had got Muddy back into the recording studio, and the wonders of Walter Cotton and his harmonica, and Pinetop Perkins on the piano. However the thing that really stood my hair on end was the track "She's nineteen years old" from the live album "Muddy Mississippi Waters" and the extensive liner notes that began:
Muddy Waters sits on his stool under the lights and tortures the telecaster in his lap.
It was talking about just that track and having heard it I knew just what he meant. He strings out the same note for a few seconds, but it's piercing and electric, and there is a palpable sense of tension in the crowd that ebbs and flows with his playing.
Years later I was working in a record shop doing the games section upstarirs, and as an indulgence I would buy in one particular album, "Third Degree" by Johnny Winter, I don't think I ever got to listen to it all in the shop, because invariably after I put the record on, by the second or third track somebody would come up to the desk enquire what it was and buy it on the spot. I tried to convince my boss to buy more in, but he having none of it, his loss.
All in all there is a lot to be said for middle aged white men standing up and playing the blues, they're much more earnest about it, "Like a group of Angels who wander into a bar after a hard week of being good" I remember a prized issue of daredevil where he does much the same thing. Compared to that the posturings of angry young men seems a little shallow. |
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| Akeelah and the Bee |
[Oct. 3rd, 2009|03:13 pm] |
I've just watched most of the the movie which was a very good by the numbers, coming of age tale, of an intelligent black girl from an urban background winning a national spelling contest. Gladiator for kids. We had the implacable Korean robot, the funny & impulsive Hispanic & the earnest and likable black girl, as the center of an all star cast. You may think I'm taking shots at it, but truly, I'm not, it was a good film, it had pathos. I cried. I just thought the ending was shit. To let the Korean win, by choice, as his dad was an overbearing monster. That seemed to me to be a good ending. (If not particularly flattering for Koreans) You get to come back the next year and win. But no, they had to wimp out and have both kids win, equal first. Because second is for losers.
Last night I watched a couple of you tube video's that made me laugh so hard I cried until I couldn't see, one was a dog that was sleep walking, got up and ran into a wall then fell over, the other was a woman newsreader who did a loud fart on camera then fainted and the set collapsed on top of her, and it struck me as the credits rolled that the same physical effect serves many different emotions, joy, sadness, pride, shame, etc.
What it touched in me, however was something buried deep. The felling that winning isn't what matters, nor are you a loser if you come second. In fact what really matters, more than anything else, is that you finish. Tell me, which is more impressive, a world class athlete, who runs a marathon in record time, and then goes off to be interviewed and accept the applause of the crowd. Or the bloke with no legs who takes three weeks and does it on crutches. Or even the idiot that choses to run in a stupidly hot cow costume.
"Sometimes you're ahead, sometimes you're behind. The race is long and, in the end, it's only with yourself." [link]
You do not win, get transported to Elysium, and live out your days in glory. Mostly you just have your photo taken, pick up your things and leave.
I am reminded (again) at times like these by a Howard the duck story, "what do you do, and where do you go, the night after you saved the universe?" indeed I often feel that winners should be consoled. especially in non athletic fields of endeavour.
Getting up and doing it every day, turning up, seeing it through, finishing what you started. These are the important things is life.
First is nowhere. |
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| the truth, unvarnished |
[Sep. 14th, 2009|11:22 pm] |
There are times when shouting at the TV just doesn't cut it, when the response of normal people is just sit there stupefied by the sheer duplicity on display. I wouldn't mind but they're avoiding the real conversation. What is that conversation? It's about the state of the economy, what ails it, and what needs to be done in the short to medium term to help, as opposed to hinder, the situation.
There is no recovery, there is stock market rally with government money, where banks are gambling, there is no other word for it, in the hopes of winning back, some of their losses. They are doing this in the full and certain knowledge that the government will not let them fail. It's a one sided bet.
If you want proof of this, look at this bit of research by Barry Eichengreen & Kevin H. O’Rourke. Eichengreen is no fool, he knows his stuff, look at figures 2 & 3, the V shape is the stock market, the other is world trade. The blue line is 1929 in the run up to the depression. Trade is the basis of the global economy, it's still going south, and the blip at the end is restocking, after excess inventory has been sold off.
Were it not for the fact that the government is propping them up, the banks would all be dead with very little exception. For the most part they are still insolvent, this is why they're gambling.
The real deal however is what economists call "aggregate demand" consumer spending. which is evaporating. On the high street/main street, like for like takings are down anywhere between 5 & 20% Jobless people are having trouble paying mortgages and credit card debts. Companies cannot get loans. If people have no money or cannot get credit, then they cannot spend. If they don't spend, there is less demand, less demand means less trade, less trade means fewer jobs. That is what figure 3 is telling you.
The only way to encourage demand is to give people a job, if you just give them money, or tax cuts they'll just save it or pay down debt. At the very least this means sustaining spending. If you cut spending you cut jobs, and thus cut demand & economic activity even further. no demand, no recovery.
The argument of who is going to cut, or cut more is a misnomer in the UK, and politicians of both stripes are desperate to acquire or maintain power, the crap about cuts is just that, crap. Who cares if the ratings agencies cut the UK's rating, they cut Japan's too, it didn't hurt them, and they've a deficit equal to 130% of GDP. If the worst comes to the worst, we can get bailed out by the IMF, better to take the money while it's available IMO.
But you're not hearing this argument, all you're hearing about is cuts, it's stupid, but it's politics, the best we can hope for is that the elections come soon, then people can get real.
Madness. |
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| QFE |
[Jun. 19th, 2009|09:35 am] |
How might Labour escape this trap? One possibility is to campaign against the Treasury’s assumptions. It is certainly possible that Mr Darling is too pessimistic, as his predecessor, Mr Brown, was too optimistic. At this stage, we simply do not know. Yet it would be risky to hope for the best. It would also be embarrassing to reject the forecasts of Labour’s own chancellor.
Another possibility would be to argue for higher taxes. Here the difficulty is that the numbers are so large. Merely to eliminate the reduction in public spending as a share of GDP planned for the three years after 2010-11, receipts must rise by 5 per cent of GDP, or £60bn in current prices, to reach 41 per cent of GDP. This would be equivalent to raising the basic rate of income tax by as much as 12p in the pound.
The great American satirist H.L. Mencken once declared that “nobody ever went broke underestimating the taste of the great American public”. I am more worried by a political version of this cynical view: the idea has grown up among politicians that nobody ever lost an election by underestimating the electorate’s intelligence. But at the heart of the next general election will be hard choices, for whoever wins. A democracy should debate those alternatives openly and honestly.
[link] |
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| Imaginary spaces |
[May. 31st, 2009|01:49 am] |
I've just watched No Maps for These Territories which is an odd documentary film about the science fiction author William Gibson. I've read most of his books, and was strangely disappointed recently to find that he's on twitter. It's nothing to do with ethos so much as it works better if he's this gnome like creature from a bygone era writing stories about places he's never been and things he doesn't understand. It means he's not faking it, and he really is just making it up.
I mention this because in the film he mentions the day that his dad brought home an early television, only there was no TV at the time, then there was a test card at odd hours, then there were live broadcasts. The eagle had landed.
I remember when there was no internet, hell I remember when there were no computers or computer magazines. I remember going to ad-hoc computer fairs. These were not places to buy stuff, no, these were a motley selection of people who had brought their computers in and had them running odd programs on pasteboard tables. So the public could crowd round and have a look. Only there were never any crowds, just people who thought it was a jumble sale, and the odd proto geek like me, who at least knew what a computer was, and wanted to look at a few in the flesh so to speak. I still have the original copies of Personal Computer World where they did the first reviews of the Sinclair Spectrum and the Apple Lisa, the progenitor of the first Macintosh.
I remember compiling Mosaic from source on a UNIX box and surfing the entirety of the internet, (as it existed back then) in one evening. There used to an email that listed new sites as they became available. There was no google. I remember hearing about Netscape for the first time and switching to it as it allowed you to have background wallpaper. I preferred the terminal lab for internet work before the web existed as it was quieter, and I knew how to access everything from Archie & FTP, to WAIS and gopher, etc. via email.
I recently told somebody that I built my first computer with a soldering iron, and they replied, "and you think that's something to be proud of?"
The world has changed, if you want to know where it goes next look at this, now try to imagine life without gmail.
Like the man is reputed to have said, "the future is already here, it's just not evenly distributed" |
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| news of the screws |
[May. 28th, 2009|08:00 pm] |
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| | work | ] |
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The market sold off while waiting to find out if "foreigners" would continue to buy US Govt debt. They did, so markets rallied.
The news that was ignored was the housing and jobs data:
The U.S. delinquency rate jumped to a seasonally adjusted 9.12 percent from 7.88 percent, the biggest-ever increase, and the share of loans entering foreclosure rose to 1.37 percent, the Mortgage Bankers Association said today. Both figures are the highest in records going back to 1972. Fixed rates rose to 4.91 percent, Freddie Mac said, and an increase in bond yields earlier this week shows rates may continue rising.
The three-year housing decline is proving resistant to efforts by the Federal Reserve and the Obama administration to keep homeowners current on mortgages by allowing them to refinance or sell to buyers enticed by affordable terms. Prime fixed-rate home loans to the most creditworthy borrowers accounted for the biggest share of new foreclosures at 29 percent, MBA said, a sign job losses are hurting homeowners.
“If people don’t have a paycheck they can’t support a mortgage,” Jay Brinkmann, the MBA’s chief economist, said in an interview. “The longer the recession lasts the more people run through their savings reserves, leading to higher delinquencies and higher foreclosures.” [link]
Perhaps now would be a good time to think about how you're going to live, (and what you're going to live on) in the future, you know it makes sense. [HT SMI] |
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| Tired. |
[May. 24th, 2009|02:51 am] |
I remember reading long ago, in the footnotes of Wired magazine, a lament for the departing editor, then the magazine changed. It used to be this amazingly vibrant and offbeat thing. Like somebody had taken lightning and bottled it. I used to buy it in a drab art supplies shop in Lincoln. It was amazing.
“We decided to put the Internet-founding subculture behind us, and be more mainstream with technology. We banned Burning Man and drug culture and the letters TCP/IP,” he said.
Which would account in no small measure for the car & clothes adverts and for why it sucked so hard, the more awards it won. There are high crimes and misdemeanors, the destruction of the old Wired is one of the former, the "relaunch" of Wired UK in the current economic environment is one of the later.
If Wired in it's current form is killed by that which spawned it, it's not a tragedy, just the natural order re-asserting itself. I figure I better stop here lest I say harsh things. |
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| probably |
[May. 22nd, 2009|07:31 am] |
Should I comment on the credit outlook of the UK? Probably. Given the size of the debt overhang of UK PLC, the fact that it was put on negative credit watch was not a surprise. I imagine when it happens to the USA thought, that that will spook a few people. Still pondering entry about Japan's relevance to the US, but the story is still evolving.
In other news, I'm this week's star letter in Micro Mart, now that did surprise me.
Happy birthday LJ! |
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| On the cards |
[May. 14th, 2009|06:34 pm] |
Frankly amazing article about customer profiling by credit card companies at the NYT. Like this bit:
But giving credit cards to riskier customers posed a problem: How do you know which cardholders will pay something each month, providing fat profits, and which will simply run up a huge tab and then disappear?
The Ph.D.’s arrived at two solutions. The first was to create thousands of new kinds of cards with their own credit limits, terms and interest rates. Such a strategy theoretically protected companies by limiting how much a cardholder could buy and by charging sufficiently high interest rates to ensure that if a few cardholders walked away, the companies still made plenty of money.
The other solution was learning to predict how different types of customers would behave. Card companies began running tens of thousands of experiments each year, testing the emotions elicited by various card colors and the appeal of different envelope sizes, for instance, or whether new immigrants were more responsible than cardholders born in this country. By understanding customers’ psyches, the companies hoped, they could tell who was a bad risk and either deny their application or, for those who were already cardholders, start shrinking their available credit and increasing minimum payments to squeeze out as much cash as possible before they defaulted.
There are some real gems in the article, long but definitely worth it, go read. [HT Radar]
This article however, is complete tosh, if LLL is such a savvy user why is he not following basic computer security, you know, anti-virus, anti-spyware & firewall? The tag line for the article:
In short, alongside the ethical considerations surrounding casual piracy, there are also very good technical reasons why people should not try this at home
Is IMO a bit of blatant scare mongering propaganda, courtesy of FAST. If you read as many computer magazines as I do, you get used to the industry line. But it's never OTT. Things must be getting desperate if they're fostering such pseudo technical tosh onto otherwise respectable newspapers. |
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| economics is a harsh mistress |
[May. 9th, 2009|02:47 pm] |
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| | home | ] |
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| | resigned | ] |
It's not until you wander around amongst normal people that you realise how strangely, not to say savagely, that economics and it's associated disciplines, warps your world view.
Economics is like a glowing ball of pure energy, (to use an in-joke as metaphor) ideas & knowledge in their pure form. The rush you feel when you first plug-in is electrifying, and, it must be said invigorating. It renders what to others is a never ending stream of bad news, as a simple series of data points, value neutral. Stepping stones on your way to understanding.
What it doesn't say up front is that as the scales fall from your eyes, you cannot go back. What is learned, cannot be unlearned, and where once was simple shades of grey they is now vivid living colour. The lives and cares or ordinary folk seem very far away, and even if you do unplug, you can never regain the naivete.
Be careful what you wish for, because like the man said, when you look into the abyss, the abyss looks also into you. |
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| The Road |
[May. 4th, 2009|01:10 pm] |
I learned this lesson a long time ago, when playing an old computer game called Populous. In retrospect it taught me a great deal. I used to enjoy playing the game, until the computer got "stupid" It appeared to get stuck, and truth to tell, damn near wiped me out, It volcanoed me until the mountains hit the roof, but the game didn't end since I still had one hut. Surrounded by boulders I was hemmed in, (he couldn't attack) so I set the behaviour of the hut to "accumulate" so that there was one man pacing about outside, and as a new one spawned very minute or so it just merged with the pacer. This went on for hours. The computer, following it's only directive kept up with the volcanoes. I was however, determined I was not going to lose. At some point in what was probably a glitch, my pacing man, was jumped by the force of a volcano onto the rocks, "with one bound Jimmy was free."
Thus it was the man walked down from the mountain, and singlehandedly went to every computer owned building in turn and took it over. I nominated the pacing man the leader and set all buildings to accumulate. He walked around personally and even though the computer got somewhat desperate towards the end, sending in knights, en mass, my man was implacable. I never played the game the same way again. Humans I noticed play populous in a very specific way. You could only build on flat ground, so the game was one of making flat ground then building on it.
So in playing the game against other humans I would find out where it was they were flattening land, and then earthquake it. A low power drain miracle, do three of those on the trot, and it would really mess up the land. Humans would then retaliate. Unlike them, if they earthquaked me, (though often they'd escalate and volcano if they could) I would ignore the disruption and go elsewhere, and set what remained of my huts on that patch to accumulate. To be honest with you, harassing people was the most fun, because you were playing back to back, (pre-internet) you see the emotion on their faces. Once I had a man that was "big enough" and I had enough power, I'd do the modern day equivalent of cluster bombing, only with volcanoes, right in the middle of their green and flat population center; you only needed five or six in a checker pattern to really screw up a map. Then I'd send in a few knights, on random attack, and steer my Goliath around personally, knowing I had plenty of time as they were busy flattening land I'd just volcanoed.
Truth to tell, that in playing like the computer I was able to sweep all before me, as people were expecting to play against another human, not a smart computer, but it also took all the joy out of playing other humans, even after I explained how I did it, it became about winning and not about playing.
Why this sudden reminiscence? Because after that I stopped playing against humans and came up with a slogan "attitude beats technique" Which is mirrored in this rather discursive article by Malcolm Gladwell, in the New Yorker, entitled: Why David beats Goliath. Who knew that Basketball could be so interesting :)
HT Paul Kredosky |
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| dark passage |
[Apr. 26th, 2009|10:17 pm] |
| [ | Tags | | | life | ] |
| [ | Current Location |
| | OSX | ] |
| [ | mood |
| | saddened | ] |
For those of you not living under a rock, (or not living in the UK) it would have been hard to miss the sharp intake of breath, not to mention astonished gasps, and gnashing of teeth that followed the UK's 2009 budget which was the usual political theater, which I had to explain to her in advance. For the record I'd have to say that I agree with Prof. Buiter on this one, who posted the following to his FT blog:
Alistair Darling is a good chancellor of the exchequer. He has presented a Budget that does essentially nothing - a good budget, given the dreadful economic circumstances.
[...]
Mr Darling is doing his best to clean up the mess left by his predecessor, Gordon Brown. The fiscal profligacy of Mr Brown, now prime minister, after New Labour’s first term and his leadership since 1997 in the global financial regulatory race to the bottom have left the UK suffering from multiple imbalances. It is in its worst fiscal shape ever in peacetime - in the G8, only the US and Italy come close. It has a bloated financial sector, including a banking sector that is too large to save unless state support is restricted to the UK high street banking bits of UK-based global banking groups. It has a distorted and moribund housing sector and excessively indebted households. [link]
Shock and awe, but for all the wrong reasons. As Paul Mason (Newsnight's economics editor) says: "Til now no pain. Now shock + anger"
The economist went with a frontal assault, with a leader article, which does a fine hatchet job on Gordon Brown, openly calling him dishonest and comparing him to none other than Richard Nixon. Which I have to say I thought was a little OTT, in light of editor of the FT's missive about the flawed first draft of history Especially when you consider the overly rosy prognosis from the Economist Intelligence Unit, in the catchily titled headed for the rocks, we can all point the finger.
They did redeem themselves a little however with a second leader, entitled a glimmer of hope if only for the picture that went with it. Gallows humour where you need it most :)
I suppose I may have been willing to grasp the hatchet more thoroughly, had I not read this rather long article by Michael Pettis, especially this bit:
What does this grab-bag of stories add up to? The point I want to make is that if the purpose of the stimulus package is temporarily to slow the rate of contraction, it will probably succeed. This may be an important result. On Tuesday when I as being interviewed on CCTV 9’s Dialogue, I suspect host Tian Wei was a little exasperated by my unrelenting pessimism about economic prospects and asked “So should the government do nothing? Doesn’t it have to do something?” (I am paraphrasing).
Of course it does, and I am not criticizing it for making stupid moves. As I argued on the program, the government is faced with a tough choice between measures that boost employment and spending in the short term but may exacerbate China’s difficulties over the longer term and measures that speed up the pace and quality of China’s transition but may result in unacceptably high unemployment in the short term.
They seem to be doing the former, and I cannot complain or criticize since this is a political decision and not an economic one. The point, however, is that the paths facing China are not one leading to economic contraction versus another leading to economic recovery. The paths as I see it lead either to a very deep, short-term contraction followed by a healthy and balanced recovery, or to a slow contraction that may take many years and may result in much slower productivity growth over the next decade or so – perhaps we could call it a US-style crisis versus a Japanese-style crisis.
The moment I read that it resonated. Why is China getting some slack when Brown & Darling do not? Well you may ask.
That said I was fairly impressed this week by a BNP Paribas credit analysts report. It was truly scathing:
Output gap is huge and deflationary and capacity utilisation continues to drop
With the output gaps in the US and Eurozone (Charts 3 and 4) as large as they have become on the back of the collapse in global demand, it has led to an unprecedented collapse in capacity utilisation (Chart 5). To believe that demand will spring back vigorously over a short period is simply indulging in fantasy.
The graphs were not pretty, but the analysis was right on the mark IMO.
However, having watched passively for a week without engaging in the stories behind the events, I have to say that I have come away with a new sense of the worth of my own beliefs, and large slug of contempt for the peddlers of "good news" as regards the future of the economy and the equities markets.
I understand why they're saying it and even sympathise with their plight. I just think that as we transition from the bit of the roller coaster ride that softens you up, into the part that really begins to terrify you. That our elected leaders and the people we turn to for news, should actually 'fess up to the public and tell them what to expect. We've been through two world wars and a depression in the past hundred years, without much in the way of internecine strife or open revolt. FDR didn't shirk responsibility in his inaugural address, nor did Churchill in his bulletins. They told it like it was. I think somebody in power needs to do the same. I'm all for Prof Buiter's call for a UK Government of national unity, but I think that means owning up to the fact that the situation is too dire to be handled alone, and that we need all hands to the pumps. A large portion of Crow has to be eaten, but while the Government thinks it may win the next election that isn't going to happen.
If the Tories get in, then I think the safety interlocks on the coaster get switched off, and the ride gets that much harder and more "real" people need time to prepare for that, and it just isn't happening.
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| The once and future king |
[Apr. 25th, 2009|10:34 pm] |
A productive day of sorts. Finally got OSX installed on the new system, including network, audio and most importantly, my graphics card, all working. The odd twinge here and there but I'm sure I can smooth that out given time. She who must be snuggled had a fit when I brought back a retail copy a while back. But if you're going to use it, it's the reasonable thing to do. Looking forward to Snow Leopard to be honest. Looks like they're working on some really slick technology under the hood. as well as being a 64 bit release.
Now I just need anti-virus and decent outgoing firewall and I may be able to move in. Will need a new mouse though, since the Pro Mouse I have was misbehaving. Keyboard's OK though, if a little spongy. Need to get used to where the keys are, (US layout) keep hitting \ when I go for the delete key. May have to see if I can't find a UK keyboard. Speech marks are a bit awkward.
Minor problem with the screen since I've reached the limits of how far I can expand the image, and it's still has black bars. Will have to look into that. But overall fairly pleased. |
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| Damn Right! |
[Apr. 3rd, 2009|09:22 pm] |
We've a temporary technician at work, and his phone went off in the office today, playing the unmistakable first few seconds of this which manages to be ludicrous & fabulous at the same time.
It caused me to grin and remember when the mighty Gofwah played it in the house and I was forced to take off my shoes, and take a run up, to slide into the room arms open to duet the immortal line:
"But no one understands him but his woman"
It's totally un-PC, and so fabulously funky than I doubt you could get away with it today, perhaps the 1970's weren't so bad after all... |
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| The walk among us |
[Apr. 3rd, 2009|08:52 am] |
Or should that be, they shuffle? Which is a cracking new article from the new UK Journalist of the year, the one, the only, Gillian Tett. who writes stuff like this:
I have no idea whether such rumours are true (and unless you are a CLO investor it is almost impossible to check, and pretty hard even if you are.) But what is crystal clear is that the problem will not die away soon.
After all, the pressure on the CLOs and corporate world alike is mounting, as Europe’s economy worsens. Yet, as long as the incentive structure remains this perverse, the players have motives to keep propping things up. It all feels – dare I say it – terribly Japanese.
If that doesn't make any sense to you, then I'm sure, just like subprime & CDO's before them, the general media will eventually understand too late what a CLO is and inform you. For those of us that read greek/geek it's "the real thing" :)
As for japan, the economist has an interesting article up under the catchy title, "The incredible shrinking economy" pondering Japan's second lost decade.
HT Alphaville for the links. |
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| The main event |
[Apr. 2nd, 2009|08:45 pm] |
Well having read it I would have to give it a Meh, overall. They have stumped up some more cash, ($1.1tn) probably enough to allow the IMF to bail out eastern Europe, etc. Without actually having to do it mano-a-mano, so to speak. There was also a little in there about regulating hedge funds, and doing something about tax havens, (provided they're not "Chinese") not to mention staking, (think Dracula) the "shadow" banking system. So broadly you could say it was a win for the Europeans (France/Germany) over the Anglo Saxons, (UK/US) and that the Anglo Saxon model of a low regulation "free for all" is dead.
But what there wasn't was any added stimulus, or any talk about co-ordinating a response on a global level. Just some talk about getting the WTO involved to police protectionism, and not damage emerging economies, etc. Oh, and "build an inclusive, green, and sustainable recovery." The usual platitudes, prepared in advance.
This image:
Is a true classic IMO, national statesmen hard at work, mugging it up for the camera.
The markets are up around 4% (US & UK) with oil doing well, and gold doing badly, which suits me just fine. But it's early days yet. In many ways we have only just begun, what is the shape of things to come? I'm guessing that is something to worry about another day. The politicians have their speeches and photo opportunities to attend too after all, job done.
So, some good, not a great disappointment, but nothing that's going to set the world to rights, (or speed recovery) either. Ah well... |
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| Darkness on the edge of town. |
[Mar. 25th, 2009|02:19 pm] |
| [ | Tags | | | life | ] |
| [ | Current Location |
| | work | ] |
| [ | mood |
| | Hmmm | ] |
Mr Wolf on the Geithner plan:
I think of this as the “vulture fund relief scheme”. But will it work? That depends on what one means by “work”. [link]
So no equivocation there then.
The conclusion, alas, is depressing. Nobody can be confident that the US yet has a workable solution to its banking disaster. On the contrary, with the public enraged, Congress on the war-path, the president timid and a policy that depends on the government’s ability to pour public money into undercapitalised institutions, the US is at an impasse.
It is up to Barack Obama to find a way through. When he meets his group of 20 counterparts in London next week, he will be unable to state he has already done so. If this is not frightening, I do not know what is.
Where's Dylan when you need him? [link]
Come senators, congressmen
Please heed the call
Don't stand in the doorway
Don't block up the hall
For he that gets hurt
Will be he who has stalled
There's a battle outside
And it is ragin'.
It'll soon shake your windows
And rattle your walls
For the times they are a-changin'.
- Bob Dylan, The Times They Are A-Changin' |
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| The Geithner call |
[Mar. 23rd, 2009|10:14 pm] |
We've had the Greenspan put (and Bernanke too) but today we got the Geithner call which is to say that what the US treasury secretary unveiled today, though again light on detail, is a "heads I win, tails you lose" deal for those with the $10bn or so needed to take part. The Government maths, work like this:
Sample Investment Under the Legacy Loans Program
Step 1: If a bank has a pool of residential mortgages with $100 face value that it is seeking to divest, the bank would approach the FDIC.
Step 2: The FDIC would determine, according to the above process, that they would be willing to leverage the pool at a 6-to-1 debt-to-equity ratio.
Step 3: The pool would then be auctioned by the FDIC, with several private sector bidders submitting bids. The highest bid from the private sector – in this example, $84 – would be the winner and would form a Public-Private Investment Fund to purchase the pool of mortgages.
Step 4: Of this $84 purchase price, the FDIC would provide guarantees for $72 of financing, leaving $12 of equity.
Step 5: The Treasury would then provide 50% of the equity funding required on a side-by-side basis with the investor. In this example, Treasury would invest approximately $6, with the private investor contributing $6.
Step 6: The private investor would then manage the servicing of the asset pool and the timing of its disposition on an ongoing basis – using asset managers approved and subject to oversight by the FDIC. [link]
If you run the numbers, (HT Felix) you're looking at an 85% government subsidy or thereabouts, for minimal skin in the game. The amount of skin in the game is important IMO. Nobody offers such a sweetheart deal unless they're really desperate. If you're desperate then on some level you're going to get gamed. If the hedge funds, etc. That will be asked to pony up the cash were to asked to put up real money, then I doubt they'd bite, since they'd have to do proper due diligence, and actually worry about losing real money. But needs must...
So the USA is looking to put up a nominal one trillion dollars. Which I suspect is the next arbitrarily large number, after a billion dollars stopped having much meaning. Nominally $850bn or so will be lost by the FDIC, inquiring minds might like to know where they're getting the money, (other than the US tax payer) but this is just one of the many details.
So what did Tim Geithner get for his largesse? A 500 point rise on the Dow, broadly 7%, it broke the 50 day moving average and cemented the largest two week rally in 70 years, (not since 1938 has such a large pop been seen) I hope it works, I really do.
But I have to admit to a large dose of scepticism. In which I'm in fairly good company; Krugman is suffering Financial Policy Despair while Macro Man has a sense of deja vu. There are others, you won't have to look to far to find them. The FT, has a good bit of reportage for those that want it. But for me the issue at hand is the breadth and the speed of this thing. It's got away from them, and they're throwing everything they have at it. Keep in mind here that this was started by subprime, from there to general financial panic, consumers stop spending & start saving, the real economy goes into the toilet, then the real fun began.
Allegedly the public subsidy offered today will return trust to the banking system, it will clean it up, etc. The toxic assets currently polluting bank balance sheets will be made a ward of the state, with the FDIC carrying the can. Most of all it buys some time. Hopefully for a plan B. Because they are going to need one. How can I be so certain about this? The answer dear reader is in this chart from the IMF, from 2007. It shows in clear detail the subprime reset spike of 2008, as well as the Alt-A and option-Arm recast spike due in 2011.
Think about that for a while.
Sub-prime were small loans, (to the poor in marginal employment) in comparison to Alt-A and Jumbo loans, (to the middle classes in salaried positions) then ponder that the USA is currently losing 600,000 jobs per month. It's unemployment rate sits above 8% at present, in past crises of this magnitude across hundreds of years of human history the average unemployment rate peaks at around 12% Many of these jobs will be working/middle class people who will be incentivised to mail back the keys and move in with mom. Then neighbourhood blight will drag down the prices of other homes, etc. Even prime defaults grow the higher the percentage of unemployed people gets. This is why the IMF is telling governments to plan for stimulus packages in 2011.
The big risk here is not that it doesn't work, it's that it doesn't last. The US stimulus does most of it's business in 2010. If in 18 months the economy begins to sag again in the USA as it surely will elsewhere, they they're back at square one. Having spent trillions of dollars, only to have to do it all again, spend more money, and nationalise the banks to deal with Alt-A.
So what is to be done you ask? What would your earnest scribbler do?
I'd take the trillion dollars, and buy every single bank in the USA, (it would cost a lot less than one trillion, even at retail) then I do what Roosevelt and later, the Scandinavians, did. Namely, examine the banks, then do triage to separate the good banks from the bad, isolate the bad assets & replace the management of the companies that are capable of surviving. Then I'd "resolve" the bad banks, and aim to re-privatise the survivors, who now have clean balance sheets, (and demonstrably so) in due course. During their period of government ownership you could direct them as needed to lend, and pick and chose which companies were going to survive, since who better to understand their balance sheets than their banker?
To my mind it more honest, not to mention quicker, and it's got the benefit of having worked before, and of course being easier on the tax payers wallet. Not that anyone listens to me :)
So yeah, let's hope it works, and keeps on working, because failure is an option. |
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| When 1% is a big deal... |
[Mar. 18th, 2009|08:39 pm] |
| [ | Tags | | | life, wow | ] |
| [ | Current Location |
| | work | ] |
| [ | mood |
| | heck! | ] |
Imagine this:
10y bond 2.45% -0.53 (-17.79%)
Looks like the Fed has opted for QE too.
I also found this quite amusing, HT survivingthecrash
Step forward, ICBM Bernanke your 15 minutes begins now. |
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| Fix CNBC |
[Mar. 17th, 2009|07:04 pm] |
If you happen to be of the American persuasion then the good people over at fixCNBC could use your signature on their petition. |
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