Friday, October 31, 2008

Good Will Hunting - Afleck's job interview

Watching Gasparino's 'I don't have what I got' interview reminded me of my favourite absurd scene from Good Will Hunting:

The script:

Three well dressed TRI-TECH EXECUTIVES sit around a conference
table, which is littered with promotional brochures. The
executives exchange a confused look. One of them speaks.

Well, Will, I'm not exactly sure what
you mean, we've already offered you a

Cut to reveal: Chuckie sitting across from the executives,
hair combed down, wearing his Sunday best.

Since this is obviously not my first
time in such altercations, let me say

Chuckie rubs the tips of his fingers together, indicating
"cash." The executives are baffled.

CHUCKIE (cont'd)
Look, we can do this the easy way or
the hard way.

The executives are completely blank.

CHUCKIE (cont'd)
At the current time I am looking at a
number of different fields from which
to disseminate which offer is most
pursuant aid to my benefit.
(a beat)
What do you want? What do I want?
What does anybody want? Leniency.

I'm not sure--

--These circumstances are mitigated.
Right now. They're mitigated.

Chuckie puts his hands up, as if getting a vibe from the room.


Chuckie points to the third executive.

He knows what I'm talking about.

The third executive is baffled.

CHUCKIE (cont'd)
A retainer. Nobody in this town works
without a retainer. You think you can
find someone who does, you have my
blessin'. But I think we all know
that person isn't going to represent
you as well as I can.

Will, our offer starts you at eighty-
four thousand a year, plus benefits.


You want us to give you cash right

Allegedly, what I am saying is your
situation will be concurrently improved
if I had two hundred sheets in my pocket
right now.

The executives exchange looks and go for their wallets.

I don't think I...Larry?

I have about seventy-three...

Will you take a check?

Come now...what do you think I am, a
juvinile? You don't got any money on
you right now. You think I'm gonna
take a check?
It's fine, John, I can cover the rest.

That's right, you know.
(turns to #1)
He knows.

Chuckie stands up and takes the money.

CHUCKIE (cont'd)
(to exec #1)
You're suspect.
I don't know what your reputation is,
but after the shit you tried to pull
today, you can bet I'll be looking
into it. Any conversations you want
to have with me heretofore, you can
have with my aforementioned attourney. Gentlemen,
keep your ears to the grindstone.

CNBC's Gasparino loses the ball big time

'I don't have what I got'

CNBC reporter Charlie Gasparino is far, far away in this clip. There is some talk of Gasparino being wasted on legal or illegal substances but I think it's just proof that if you immerse yourself in the madness of these markets, it's only a matter of time before the madness manifests itself in you.

Just found the transcript:

Lee: I was thinking that we were going to go to Charlie Gasparino.

Ratigan: We'll go to charlie first. What have you got?

Gasparino: What do I got? What do you want? What do you want?

Ratigan: I want your best stuff, Charles. I only want the good stuff.

Gasparino: "What do you got?" Now that is such a... that is almost zen-like. What do I got?

Ratigan: That's where we are...

Gasparino: I have many things...

Ratigan: I know...

Gasparino: I have many things...I have many things in my arsenal. But what I got is not what I have. I don't have what I got.

Ratigan: All right. What have you got?

Gasparino: I don't have what I got. I don't have what I got.

Lee: Oh gosh (laughs)

Ratigan: Are we done?

Gasparino: We're done. I don't have what I got.

Ratigan: All right

Lee: Let's talk Merrill Lynch, Charles. What do you have on Merrill Lynch.

Gasparino: The Merril Lynch...oh, just on Merrill Lynch? Or the Merrill Lynch-Bank of America merger?

Ratigan (and Gasparino talking over eachother): Charles, I got a short amount of time and a capitalist system doing a lot of stuff. You can use the airtime to tell me some information or I'm moving on brother...You got two choices: information or I'm leaving.

Gasparino: No. You know what you got. That's right.. you have... you have... You have one choice: shoot to the capitalist system. 'Cause that's what you've got.

Ratigan: Do what?

Gasparino: No. That's what you got. That's what you got.

Lee: Okay.

Ratigan: Shoot the capitalist system?

Gasparino: Shoot to the capitalist system. That's what you got.

Lee: Okay. Thanks Charles.

Ratigan: All right. Thank you Charles. I'm not quite sure what just happened, quite honestly.

Lee: (laughs) Me neither.

Barclays gets bailed out, by the Arabs

Reading about the terms of Barclays' £7.3 bn financing deal with Abu Dhabi and Qatar makes me wish such tasty investment opportunities came the way of the general public:

'The £3bn of so-called reserve capital instruments it's selling to Abu Dhabi and Qatar pay an interest rate of 14% before tax and 10% after tax - only a bit cheaper, after tax, than the preference shares being bought by the British Treasury from other British banks.

But when you include the warrants attached to these reserve capital instruments, it's not obvious that this money is better value than what was on offer from the Treasury.

In some ways it looks pricier - because Abu Dhabi and Qatar have been given the right to buy 18.1% of Barclays shares at any time in the next five years at the current bombed-out share price or £3bn in total.

And £2.8bn of mandatorily convertible notes give the two buyers a dividend of 9.75%, and the ability to buy a further 33.5% stake in Barclays next June at a discount of a fifth to Barclays' share price over the past couple of days.

So Qatar and Abu Dhabi could together control just under a third of the entire bank.'
I thought this was a very bad deal for existing shareholders and was surprised to see Barclays share price up 10% first thing in the morning. I've just checked the price again and it's down 9%. That's better. Logic prevails. If I had money, I'd be looking to start buying some shares in these guys, but as it stands I'm happy to sit back and enjoy things as a spectator.

The new investors must be celebrating with glee. Not only are they buying into Barclays at rock bottom prices, but they'll be saving a further 20% on the exchange rate relative to a few months ago. It's nice if you can get it.

Thursday, October 30, 2008

Books I've read and reviewed

I've just moved my record of book reviews on-line. This is an on-going, personal reference project, although readers may find it useful for recommendations. I found anything that scored above four stars highly worth reading.


A quote from the New York Times article, 'Calories Do Count':

'The number of calories in food shocked most New Yorkers, according to a September survey by the health department. A Starbucks blueberry scone delivers 480 calories. A Quiznos regular tuna melt is 1,270 calories. Wraps, the refuge for low-carb sandwich lovers, can top 800 calories. Bagels pack more calories than doughnuts.'
To put this in perspective, an average person should consume around 2000 calories a day, so after that tuna melt there really isn't much more room left. And the Starbuck's blueburry scone, well that has as many calories as six regular slices of toast, albeit without butter.

Wednesday, October 29, 2008

Commodity prices are tumbling

Just pulled this informative chart from a research note I was reading. If you looked at the individual charts they would show commodity prices truly falling of a cliff edge. It's very bad for the producers who were betting on the good times lasting forever, especially those who were poorly hedged, but it's good news for your average Joseph who has had enough with being squeezed with higher prices every which way.

Note that quite a few people expected gold to rise during the credit crisis due to its safe haven status. Turns out, it just hasn't fallen as fast as the rest of 'em.

Tuesday, October 28, 2008

What is this?

answer: the first snowfall this winter

Risky speculations

Let it be known: I think the equity markets are close to bottoming out and believe it is a good time to start buying for the long-term. I would buy 1/3 Nikkei, 1/3 S&P, and 1/3 FTSE and not check the prices for several years.

Let is also be known that I know very little about very little.

Short the CSI bubble

I just read an article about on Slate about how the popular crime series C.S.I. may be nearing exhaustion. The latest season premiere of CSI New York lost some 4m viewers and featured a bored looking Gary Sinese. It is still a very popular franchise but I felt the CSIs started to lose their fizz last season and they have all dropped from my currently empty 'must-see-tv' schedule. Also, I remember reading that Gil Grissom (played by William Peterson), the driving force behind the original CSI, is leaving the franchise. This could be pivotal for the series' future if his replacement, Laurence Fishburne, fails to live up to the high benchmark.

Out of interest, I thought I'd take a look at what's happened to the housing markets in the CSI locations (Las Vegas, Miami, and New York) over the past year:

Las Vegas: down 30.6%
Miami: down down 28.1%
New York: down 6.9%

(Source: Case Shiller price index)

Ouch. International investors can at least find balm in the fact that the USD has appreciated quite a bit recently.

Quick thought on forecasting and the economic crisis

In a normal economic environment, economists are next to useless when it comes to making predictions.* In the current economic crisis, economists are all over the news with views on where the economy is headed, and prescriptions and ideas on what policy makers should be doing next. Their contribution to policy is not a total waste as we can learn from our previous errors in policy making, but when it comes to telling us where the economy is headed we should remember that economists are no better that they were before this all started (i.e., pretty useless).

* All economists all know this, even the ones who are paid by financial and other institutions for the very act of generating forecasts.

Monday, October 27, 2008

Book review - Balzac and the Little Chinese Seamstress by Dai Sijie

Balzac and the Little Chinese Seamstress is a beautifully told, expertly crafted story. It is set during the Chinese Cultural Revolution and tells the tale of two friends - a son of dentist and a son of a doctor - who are sent to a mountain village for 're-education'. There they meet the 'Little Seamstress' and together their lives are forever changed when they get hold of a suitcase filled with famous Western literature.

I highly recommend this book but am holding back from giving it the full five stars because while I found it spell-binding and surprisingly humorous, the darker and more serious content seemed a touch unevenly distributed.

**** 1/4

Quote from Balzac and the Little Chinese Seamstress:

'What you are about to hear, comrade, is a Mozart sonata.' Luo announced, as coolly as before.
I was dumbfounded. Had he gone mad? All music by Mozart of indeed by any other Western composer had been banned years ago. ...
At that instant the glint of the vigilant Communist reappeared in the headman's eyes, and his voice turned hostile.
'What's the name of this song of yours?'...
'Mozart...,' I muttered.
'Mozart what?
''Mozart is Thinking of Chairman Mao,' Luo broke in.

Magoo cat

Some pictures of a neighbourhood cat that visits us everyday:

A handful of interesting market developments

> This worrying graphic is from Bloomberg. It shows how the Baltic Dry Index, a measure of international freight costs that had risen to stratospheric levels, has plummeted 90%. International trade operates on a system of credit notes and guarantees and things can get a bit difficult if you don't have confidence in your counterparty. The silver lining is that when things get going again shipping costs will be nice and low, but for now the take-away message is that the wheels of international trade seem to be screeching to a halt.

> From Aussie newspaper, TheAge:

"Kuwaiti traders staged another walkout on Sunday and protested outside the stock market as shares in the oil-rich Gulf region plunged amid growing expectations of a global recession.

The traders, who deserted the stock market on Thursday, the business week's final day, left the trading chamber again after the index dived more than 300 points a few minutes after the opening.

About 30 of the traders marched to the nearby council of ministers building where the cabinet was holding an emergency session to discuss a bill to guarantee bank deposits.

"We want the government to intervene to rescue the bourse and traders.

"We want the government to buy stocks. This month, I have already lost half of my investments in the bourse," one of the protesters, Hussein Tubayekh, told AFP."
> Bespoke Investment Group provide this stunning graphic that shows the dollar difference between platinum and gold. Gold may be losing it's shine but if platinum continues to fall at this rate it will soon be competing on price with coal.

From Bespoke: 'Men everywhere holding out to buy that platinum engagement ring can rejoice in the fact that the metal has declined from a high of $2,276/ounce in March to just $793/ounce today. But what's really crazy is how close platinum is trading to gold. Even though platinum is 30x rarer than gold, it is currently trading at just an 11% premium. Earlier in the year, there was a $1,300/ounce price difference between the two metals, but that difference is now just $83.'

Sunday, October 26, 2008

Saturday, October 25, 2008

Apologies to subscribers for any funny business

I'm playing around with the format of the site so you may get a few strange blog posts coming your way.

The Gun Kata in Equilibrium (2002)

Equilibrium (2002) is one of those films that were heavily panned by critics (Rotten Tomatoes 36%, Metacritic 33) but appreciated by the masses. The film gets an average rating of 8.6 from 122 Metacritic users and scores 7.8 from over 63.2 thousand IMDB voters. I'm with the masses.

After Ijaz's comment about the fight scenes in the film, I found an excellent compilation on Youtube (see below). The fighting style created for the film is called the 'Gun Kata' and is described as follows:

"Through analysis of thousands of recorded gunfights, the Cleric has determined that the geometric distribution of antagonists in any gun battle is a statistically-predictable element. The Gun Kata treats the gun as a total weapon, each fluid position representing a maximum kill zone, inflicting maximum damage on the maximum number of opponents, while keeping the defender clear of the statistically-traditional trajectories of return fire. By the rote mastery of this art, your firing efficiency will rise by no less than 120%. The difference of a 63% increased lethal proficiency makes the master of the Gun Katas an adversary not to be taken lightly."
Check out the video below to see the ballet of death in all its glory:

Thursday, October 23, 2008

Random photos

Taken from my mobile phone in recent months:

Every Breath Bernanke Takes

An RM in the City sends this music video. If you know your Greenspans from your Bernankes, you're going to like this:

Wednesday, October 22, 2008

Not again

Last night, I had another dream of the stock market taking a nose dive. The FTSE is currently down around 3%, far off the 12.5% in my dream, but it's still rather disconcerting. Trust this to happen when I am no longer trading.

Vince Cable for prime minister

I'm not big on politics, perhaps because my political leanings are very much a mixed bag, changing by the day, sometimes through the day. Also, I find most politicians distasteful to a degree that separates them from normal man. Qualities which we would abhor as individuals are to readily present among these creatures, from the widespread lack of earnestness to the complete absence of willingness to accept responsibility for personal and party failings. When politicians are faced with tough questions they often respond by answering another question altogether, a question they have just created in their mind. This is great con that the public has been forced to accept over the years but it is a punch in the face of public accountability. Try such a tactic in an exam and see where it gets you. I could go on, forever, but I shall stop with the rant and get to the point, which is that I see a light on the political landscape. The light is Liberal Democrat Shadow Chancellor Vincent Cable. This man exudes honesty and level headedness. He is low on spin and high on good sense, and I believe the nation would do well to have Cable at the helm.

The Liberal Democrat's principles, taken from their web-site, also resonate quite well with my own beliefs:

'The Liberal Democrats exist to build and safeguard a fair, free and open society, in which we seek to balance the fundamental values of liberty, equality and community, and in which no-one shall be enslaved by poverty, ignorance or conformity. We champion the freedom, dignity and well-being of individuals, we acknowledge and respect their right to freedom of conscience and their right to develop their talents to the full. We aim to disperse power, to foster diversity and to nurture creativity. We believe that the role of the state is to enable all citizens to attain these ideals, to contribute fully to their communities and to take part in the decisions which affect their lives.'
While I know very little about the rest of the LD party leadership, I guess I'm a Liberal Democrat at heart, for the rest of the evening at least.

Tuesday, October 21, 2008

Book review - Anthem by Ayn Rand

It was with a degree of intrepidation that I picked up Ayn Rand's Anthem from the library. Because Rand is such an important figure in the libertarian movement, I was unsure whether political polemic would overshadow the storytelling - it doesn't.

By now, everyone is familiar with the dystopian vision set fourth in the book. In this world, people are not allowed to think for themselves in the individual sense but only as a part of the wider collective. The state dictates all and every action is always for the greater, common good. This is not a world suited to the protagonist, Equality 7-2521, whose natural inquisitiveness and discoveries bring him into direct conflict with the system. Yes, we've been here before but we have to remember that Anthem was written back in 1938. What is more, while the theme may no longer be ground breaking in the way it once was, Anthem succeeds as a rallying cry for the individual and, most importantly, as a good story.

Because it is a short work of around a hundred pages, Anthem is a good test bed to see if you like Ayn Rand's work, although I recommend persevering through the first twenty pages or so to get comfortable to the protagonist's use of the word 'we' instead of 'I'.



Quoted from Anthem:

"This (light) box is useless," said Alliance 6-7349.

"Should it be what they claim of it," said Harmony 9-2642, "then it would bring ruin to the Department of Candles. The Candle is a great boon to mankind, as approved by all men. Therefore it cannot be destroyed by the whim of one."

"This would wreck the Plans of the World Council," said Unanimity 2-9913, "and without the Plans of the World Council the sun cannot rise. It took fifty years to secure the approval of all the Councils for the Candle, and to decide upon the number needed, and to re-fit the Plans so as to make candles instead of torches. This touched upon thousands and thousands of men working in scores of States. We cannot alter the Plans again so soon."

"And if this should lighten the toil of men," said Similarity 5-0306, "then it is a great evil, for men have no cause to exist save in toiling for other men."

Then Collective 0-0009 rose and pointed at our box.

"This thing," they said, "must be destroyed."

And all the others cried as one:

"It must be destroyed!"

One of my favourite films that develops this theme and supplements it with superb ninja-type action scenes, is the criminally overlooked 'Equilibrium' featuring Christian Bale. Here are some quotes from the film:
DuPont: In the first years of the 21st century, a third World War broke out. Those of us who survived knew mankind could never survive a fourth; that our own volatile natures could simply no longer be risked. So we have created a new arm of the law: The Grammaton Cleric, whose sole task it is to seek out and eradicate the true source of man's inhumanity to man - his ability to feel.

Father: Prozium - The great nepenthe. Opiate of our masses. Glue of our great society. Salve and salvation, it has delivered us from pathos, from sorrow, the deepest chasms of melancholy and hate. With it, we anesthetize grief, annihilate jealousy, obliterate rage. Those sister impulses towards joy, love, and elation are anesthetized in stride, we accept as fair sacrifice. For we embrace Prozium in its unifying fullness and all that it has done to make us great.

Mary: Let me ask you something.
Mary: Why are you alive?
John Preston: I'm alive... I live... to safeguard the continuity of this great society. To serve Libria.
Mary: It's circular. You exist to continue your existence. What's the point?
John Preston: What's the point of your existence?
Mary: To feel. 'Cause you've never done it, you can never know it. But it's as vital as breath. And without it, without love, without anger, without sorrow, breath is just a clock... ticking.

Stephen Fry's new blog and web-site

I've been reading Stephen Fry's blog and listening to his rambling podcasts for a while now and feel duty bound to promote his beautiful new web-site.

Fry 2.0 is beautifully put together and the site is quickly becoming sufficiently content rich to keep fans glued for long periods. Fry's use of the site to make the goings-ons in his life accessible to all is quite something to behold. In addition to writing blog entries, the Fry-meister is posting short videos to the site, as well as providing status updates in the Twitter/Facebook style.

In an effort to get the site to pay it's own way, Fry has decided to charge for some content. My reflex response was 'it probably won't work', but then I read that Fry will be presenting a selection of Oscar Wilde stories on his site and thought back to Ricky Gervais's great success with his podcasts . This is the kind of thing many people will pay for, and rightly so. I'm confident this project will be a great success, benefiting fans and Fry alike.

Saturday, October 18, 2008

Have you seen this man?

The AA 7.21% bond is no more

On October 5th, I noted a discrepancy between long-term and short-term interest rates:

'If you are willing to lock your money away for a year, the AA of all organisations is offering a whopping interest rate of 7.21 % AER. I've never seen such a wide gap between the expected policy rate and the 1 year saving rate. I don't know how long these great rates will be on offer but as it stands this is a brilliant time to be a saver.'
A few days later the world central banks enacted a coordinated interest rate cut, with the Bank of England slashing interest rates by 0.5%. Providers of super-high interest rate saving products immediately cut rates, some even pulled products off the shelves altogether. Fortunately, I took some of the families money and managed to shove it into the AA account a day before they cut the saving rate to 6.30%.

Widespread opinion is that rates are going to fall further, so if you have spare funds aside you can still score north of 6% on a 1-year bond. Also, given the extent of the impending economic doom, we can't rule out super low interest rates and the possibility of deflation over the course of the year, which would give such fixed rate savings even more purchasing power a year hence.

My current thinking is somewhat opposite to that of the financial community right now. Instead of going long accessible cash (liquidity) during this time of crisis, I see more opportunity in putting one's risky capital in equities with a long investment horizon (north of 10 years) and locking up a large bulk of one's conservative capital in fixed rate bonds.

ps - Despite being a man with neither employment nor any savings worthy of mention, I remain perversely interested in the monetary and economic world.

Friday, October 17, 2008

Sad times

Things are moving too fast and I haven't fully developed my thoughts on the fundamental political-economic-philosophical shift that is taking place around us. As it stands, the sense of relief is dominated by a sense of sorrow, loss and foreboding. However, my long-term outlook remains resolutely optimistic.

From 'Capitalism at bay', the leading article in the Economist:

'Capitalism’s defenders need to deal with two sorts of criticism. One has much more substance than the other.

The weaker, populist argument is that Anglo-Saxon capitalism has failed. Critics claim that the “Washington consensus” of deregulation and privatisation, preached condescendingly by America and Britain to benighted governments around the world, has actually brought the world economy to the brink of disaster. If this notion continues to gain ground, politicians from Beijing to Berlin will feel justified in resisting moves to free up the movement of goods and services within and between their economies. Arguments for market solutions in, for instance, health and education will be made with less conviction, and dismissed with a reference to Wall Street’s fate.

In fact, far from failing, the overall lowering of “barriers to intercourse” over the past 25 years has delivered wealth and freedom on a dramatic scale. Hundreds of millions of people have been dragged out of absolute poverty. Even allowing for the credit crunch, this decade may well see the fastest growth in global income per person in history. The free movement of non-financial goods and services should not be dragged into the argument—as they were, to disastrous effect, in the 1930s.

A second group of critics focuses on deregulation in finance, rather than the economy as a whole. This case has much more merit. Finance needs regulation. It has always been prone to panics, crashes and bubbles (in Victorian times this newspaper was moaning about railway stocks, not house prices). Because the rest of the economy cannot work without it, governments have always been heavily involved.'

... 'Capitalism is at bay, but those who believe in it must fight for it. For all its flaws, it is the best economic system man has invented yet.'

Houses in Detroit - a warning

I just read a post on Felix Salmon's blog about super cheap houses in Detroit. He asks someone to look into the median house price (it's below $10,000) to make sure he hasn't reported on a misprint. He hasn't:

'There are about 180 homes on alone that are for sale for at or below $1,000 (that's not a misprint), with some for a few hundred. The common theme is that these homes either need serious work... The huge wave of foreclosures in Detroit has left banks owning loads of properties that they want to get off their balance sheets, at any price.'
Here are some houses you can buy in Detroit:

The above house is priced at $10,000

This one is a mere $1000

Just $500

Given that an unoccupied is a liability, it can't be too long before they start giving some of these properties away for free.

Thursday, October 16, 2008

The Harder A Wife Works the Cuter She Looks, and a couple of 'improving films' for women

First the film jokes from Harry Enfield and chums.

At the dinner table


Now for some real adverts along the same lines, taken from a new book called 'The Harder A Wife Works the Cuter She Looks':

The times, they have a changed. Before I get lambasted, despite the title of the blog I am glad for the change ... largely!

Our money in Iceland

Concerning UK public money at risk in Iceland, the Independent reports 'More than 120 public bodies across the UK are owed £1bn by three banks – Kaupthing, Glitnir and Landesbank.' A council spokesman is quoted saying 'Rather than having the money sitting around, we thought, like any other saver or private organisation, to put it in banks to earn interest,'.

My question is 'were these investments held in sterling or in Icelandic krona, and if it was the latter, were they fully hedged for currency risk?'

It would be interesting to see the investment mandates of the councils, as I take the view that their is absolutely no excuse not to hedge currency risk when dealing with taxpayers money. The reports make no mention of FX hedging and I imagine a portion of these flows were left unhedged in order to exploit the higher interest rates on offer in Iceland. Not only would this be pure speculation but history provides endless examples of people who have tried to do this have been severely burned by changes in exchange rates. And yes, Iceland's exchange rate has plummeted. Just see the chart below.

PS - The other side of the coin is that if Icelanders borrowed heavily from abroad to try and get financing at lower international interest rates, then the interest burden will probably be significantly higher in local currency terms. I truly hope they can find a way out of this.

Wednesday, October 15, 2008

Iceland is in shock

In the UK, Europe and the US, there is a feeling of us versus them as the taxpayer is forced to stump up unprecedented billions to support the bankers. In Iceland, it is a very different situation, one of a collective, deeply damaging loss from which there is no easy way out. The currency has collapsed, the government is virtually bankrupt, the stock market fell 75% in a single day and the major banks are no more. Many have had their wealth decimated, seemingly the consequence of years of recklessness by a relatively small group of people. Yet the feeling doesn't seem to be one of 'let's find out who did this and give them public executions.' Here are some on-the-ground reports from Icelanders:

Via Boing Boing:

"It feels surreal to drive the streets of downtown Reykjavik. The banks are lit up and people are working there. The logos are still outside the houses. The ads are still running saying how wonderful and trustworthy the banks are. Range Rovers and BMWs are still filling the streets and the parking lots. Bankers in their suit walk the streets with heavy eye brows. There’s a strange silence.

It’s like we know the system is broken, we know it’s gone, but we can’t see it. We can’t tell what’s real, what’s still there, and what are just the ghosts of yesterday, when Iceland was one of the richest countries in the world. A pale reflection of the golden age in Icelandic economy which is now going up in flames. Where’s the smoke?"
From the Wall Street Journal:

"Now, all our biggest banks are bankrupt, our currency is basically dead, it may be difficult to buy food, oil and other necessities from abroad, and we even fear that we might lose our country, just like happened to Newfoundland. Hundreds of people are losing their jobs, many more might be losing their homes, and people’s life savings are either lost or drastically reduced. People are scared for the future, that our state may actually go bankrupt.

Everybody is very tired — watching your country suffer like this is almost like watching someone you love become ill, it’s like suffering from a broken heart. Most of our tycoons seem to have left the country, and the government is under police protection — a first — but it doesn’t seem like people are angry or aggressive. We are stunned, very surprised, that this expansion adventure that made a few people very rich but didn’t really affect the general public, has turned out this disastrous. Yes, people here bought expensive cars, and allowed themselves an annual trip to Copenhagen or to a Spanish beach, but most of us kept working 10 hours a day and kept on as we have always done.

There is also a sense of hope and unity, even a sense of humor — people seem determined to go on with their lives, even if it will be a bit harsh for a while. You can hear people all around say things like: we survived the terrible volcanic eruptions of the 18th century, we survived the frost winter of 1918, we survived famines, Black Death, earthquakes, we’ll survive this. Families and friends are coming together for dinners and chats, at night there are candles burning in the windows in most houses here, and inside people are sitting together, talking, talking, talking. Most of us are hoping something positive will come out of this, that our greed, arrogance and materialism will be replaced by care and gratitude for the more important things in life."

Tuesday, October 14, 2008

A review of my financial market dreams

I risk being looked upon as a loopy fruitcake, but here goes. I reported on my first credit crunch dream on October 5th:

'...our phones start to ring. It's the traders. They are in a state of shock and ask us to come back to the office as quickly as possible. The pound is getting absolutely destroyed.'
Take a look at the chart of GBP/USD over last week. Okay, maybe 'absolutely destroyed' is a bit harsh, but it did fall like a stone. GBP/USD started the week at around 1.77 and closed the week at around 1.70.

'Mere coincidence!', I hear you say. Well, the following night I had another dream featuring cratering financial markets. I added the following comments to the first post:
'I had my second credit crunch dream last night: The markets open on Monday morning and the FTSE takes a really heavy whacking as the market prices in tougher times ahead. A little shiver went through my body when I checked the markets this morning and saw the FTSE down 6%.'
The FTSE lost a fifth of it's value last week.

These dreams strike me as strange for a few reasons. First, they seemed to come true. I'll put this down to coincidence. Second, I very rarely dream about stuff I that I am consciously thinking about when I go to sleep, and I had deeply immersed myself in analysing everything that was happening in the financial crisis, with a focus on the pros and cons of the U.S. bailout package. I guess it was going to manifest itself in my subconscious sooner or later. And third, my negative equity market dreams continued every day, from Monday through to Friday, and they must have been the last dreams I had each night because I couldn't remember any others. The dreams stopped at the weekend, on either Saturday or Sunday. I didn't dream of the massive market rally on Monday but on Sunday I did develop the strongest sense of conviction that the market was due for a bounce that I have ever experienced. I e-mailed a few friend and posted an optimistic note to the Daily Speculations site. Alas, regular readers will know that I effectively gave up trading a week prior, so all this talk was just that, talk. I took a few small positions and made a few hundred pounds, but that is all. Still, what a strange episode. I am posting this entry here simply to remember a series of strange occurrences that took place and I do not believe I possess any special powers. That said, perhaps I should pay just a little more attention to my dreams in future.

A few bits of writing from Mark Twain

From Answer's to Correspondents:

"MORAL STATISTICIAN."--I don't want any of your statistics; I took your whole batch and lit my pipe with it. I hate your kind of people. You are always ciphering out how much a man's health is injured, and how much his intellect is impaired, and how many pitiful dollars and cents he wastes in the course of ninety-two years' indulgence in the fatal practice of smoking; and in the equally fatal practice of drinking coffee; and in playing billiards occasionally; and in taking a glass of wine at dinner, etc., etc., etc. And you are always figuring out how many women have been burned to death because of the dangerous fashion of wearing expansive hoops, etc., etc., etc. You never see more than one side of the question. You are blind to the fact that most old men in America smoke and drink coffee, although, according to your theory, they ought to have died young; and that hearty old Englishmen drink wine and survive it, and portly old Dutchmen both drink and smoke freely, and yet grow older and fatter all the time. And you never by to find out how much solid comfort, relaxation, and enjoyment a man derives from smoking in the course of a lifetime (which is worth ten times the money he would save by letting it alone), nor the appalling aggregate of happiness lost in a lifetime your kind of people from not smoking. Of course you can save money by denying yourself all the little vicious enjoyments for fifty years; but then what can you do with it? What use can you put it to? Money can't save your infinitesimal soul. All the use that money can be put to is to purchase comfort and enjoyment in this life; therefore, as you are an enemy to comfort and enjoyment, where is the use of accumulating cash? It won't do for you say that you can use it to better purpose in furnishing a good table, and in charities, and in supporting tract societies, because you know yourself that you people who have no petty vices are never known to give away a cent, and that you stint yourselves so in the matter of food that you are always feeble and hungry. And you never dare to laugh in the daytime for fear some poor wretch, seeing you in a good humor, will try to borrow a dollar of you; and in church you are always down on your knees, with your eyes buried in the cushion, when the contribution-box comes around; and you never give the revenue officer: full statement of your income. Now you know these things yourself, don't you?'


"DISCARDED LOVER."--"I loved, and still love, the beautiful Edwitha Howard, and intended to marry her. Yet, during my temporary absence at Benicia, last week, alas! she married Jones. Is my happiness to be thus blasted for life? Have I no redress?"

Of course you have. All the law, written and unwritten, is on your side. The intention and not the act constitutes crime--in other words, constitutes the deed. If you call your bosom friend a fool, and intend it for an insult, it is an insult; but if you do it playfully, and meaning no insult, it is not an insult. If you discharge a pistol accidentally, and kill a man, you can go free, for you have done no murder; but if you try to kill a man, and manifestly intend to kill him, but fail utterly to do it, the law still holds that the intention constituted the crime, and you are guilty of murder. Ergo, if you had married Edwitha accidentally, and without really intending to do it, you would not actually be married to her at all, because the act of marriage could not be complete without the intention. And ergo, in the strict spirit of the law, since you deliberately intended to marry Edwitha, and didn't do it, you are married to her all the same--because, as I said before, the intention constitutes the crime. It is as clear as day that Edwitha is your wife, and your redress lies in taking a club and mutilating Jones with it as much as you can. Any man has a right to protect his own wife from the advances of other men. But you have another alternative--you were married to Edwitha first, because of your deliberate intention, and now you can prosecute her for bigamy, in subsequently marrying Jones. But there is another phase in this complicated case: You intended to marry Edwitha, and consequently, according to law, she is your wife--there is no getting around that; but she didn't marry you, and if she never intended to marry you, you are not her husband, of course. Ergo, in marrying Jones, she was guilty of bigamy, because she was the wife of another man at the time; which is all very well as far as it goes--but then, don't you see, she had no other husband when she married Jones, and consequently she was not guilty of bigamy. Now, according to this view of the case, Jones married a spinster, who was a widow at the same time and another man's wife at the same time, and yet who had no husband and never had one, and never had any intention of getting married, and therefore, of course, never had been married; and by the same reasoning you are a bachelor, because you have never been any one's husband; and a married man, because you have a wife living; and to all intents and purposes a widower, because you have been deprived of that wife; and a consummate ass for going off to Benicia in the first place, while things were so mixed. And by this time I have got myself so tangled up in the intricacies of this extraordinary case that I shall have to give up any further attempt to advise you--I might get confused and fail to make myself understood. I think I could take up the argument where I left off, and by following it closely awhile, perhaps I could prove to your satisfaction, either that you never existed at all, or that you are dead now, and consequently don't need the faithless Edwitha--I think I could do that, if it would afford you any comfort.

Book review - Cannibalism in the Cars: The Best of Mark Twain's Humorous Sketches

'Cannibalism in the Cars: The Best of Mark Twain's Humorous Sketches' is my first foray in to the world of Mark Twain, the famous American author best known for Huckleberry Fin.

The works in this book were written in the late 1800s, but worry not, they most definitely stand the test of the time. As is the case with most short story collections, a portion of the stories failed to hit the right notes. However, by my reckoning of the thirty-four short stories at least fifteen are works of brilliance. And while Twain's humour may not be to everyone's taste, I found it a perfect blend of the absurd and the morbid.

Here is a list of my favourites:

  • Aurelia's Unfortunate Young Man
  • The Story of the Bad Little Boy
  • Answers to Correspondents
  • Concerning Chambermaids
  • Cannibalism in the Cars
  • The Story of the Good Little Boy
  • Political Economy
  • Science vs. Luck
  • My Watch
  • Running for Governor
  • The Great Land-slide Case
  • Experience of the McWilliamses with Mebraneous Croup
  • Mrs McWilliams and the Lightning
  • The McWilliamses and the Burglar Alarm
  • Extracts from Adam's Diary
Because his writing is well out of copyright, you can find these stories scattered over the net. I recommend testing your appetite with Twain's 'My Watch'.

Now for the bad bit: The book does suffer from a serious flaw, but this is nothing to do with the masterful Twain. It is the handiwork of a certain Roy Blount Jr, who I guess is a literary critic. The publishers commissioned Blount to write a totally unnecessary literary introduction to the book, and while his introduction is not quite as ruinous as Harold Bloom's introduction to Don Quixote (Edith Bloom's translation), I believe it has no place here.

****(*). I give the book four stars in total, with the above stories getting the full five.