Archive for the ‘markets’ Category
Last week, Keele University announced plans to shut down its philosophy programme, in the name of ‘efficiency’ savings. It’s beside the point here that the methodology underlying the calculations is flawed and its specific application to philosophy very suspect. The 27-page document presented for consideration by the Senate on 23 March is a fully fledged statement of the post-Brownean credo, apart from the latter’s insistence on student demand as a touchstone of academic worth. Philosophy at Keele doesn’t enrol enough students to make money; but then, it is subject to a cap imposed by the government: there are fewer than 60 places this year. You break somebody’s legs then complain that they can’t keep up.
“You break somebody’s legs then complain that they can’t keep up.” Yes… Just about every internal political and bureaucratic wrangle I’m involved in at the moment follows the selfsame logic. Take what is fit, starve or mangle it for a bit, set it back into the wild, watch it struggle, watch it starve… then deliver with a shrug the aperçu about the wonders of natural selection, the sublimity of nature taking its course, that you had prepared well before the start of the entire process.
Situated as thou art, in the very heart of stirring and living commerce, — amid the fret and fever of speculation — with the Bank, and the `Change, and the India-house about thee, in the hey-day of present prosperity, with their important faces, as it were, insulting thee, their poor neighbour out of business — to the idle and merely contemplative,to such as me, old house! there is a charm in thy quiet — a cessation — a coolness from business — an indolence almost cloistral — which is delightful! With what reverence have I paced thy great bare rooms and courts at eventide! They spoke of the past — the shade of some dead accountant, with visionary pen in ear, would flit by me, stiff as in life. Living accounts and accountants puzzle me. I have no skill in figuring. But thy great dead tomes, which scarce three degenerate clerks of the present day could lift from their enshrining shelves with their old fantastic flourishes, and decorative rubric interlacing their sums in triple columniations, set down with formal superfluity of cyphers with pious sentences at the beginning, without which our religious ancestors never ventured to open a book of business, or bill of lading — the costly vellum covers of some of them almost persuading us that we are got into some better library, are very agreeable and edifying spectacles. I can look upon these defunct dragons with complacency. Thy heavy odd-shaped ivory-handled penknives (our ancestors had every thing on a larger scale than we have hearts for) are as good as any thing from Herculaneum. The pounce-boxes of our days have gone retrograde.
I’m having trouble keeping up, I must admit. It will be easier to finger up the dust when it’s all finally done and dead. More to come…
Ses expansions étaient devenues régulières; il l’embrassait à de certaines heures. C’était une habitude parmi les autres, et comme un dessert prévu d’avance, après la monotonie du dîner.
Futures down 289 after the Rate Cut of Global Unity! Everything that happens makes sense if you’ve read your Flaubert! I should write a business book!
Do you remember the beginning of the end of Bovary? There are a few endings, but do you remember what makes her start the process of killing herself? “Dans vingt-quatre heures pour tout délai.” – Quoi donc? “Payer la somme totale de…” And so on. The bursting of a shock-market bubble, her own personal little credit crisis, it is.
The government is expecting the equity holder and bank management to suffer for conducting business legitimately in a regulated environment. If there is to be a day of reckoning then surely most of the blame should come back to the regulator and the government that removed the responsibility for oversight of the banking industry from the Bank of England to the FSA.
Class action lawsuit time! The banks can get in line right behind all those classics of vulgar apocryphal chitchat – you know, the woman who spilled coffee on herself at McDonalds, and the burglar suing the homeowner after he slipped entering through the back window and broke his ankle, and the guy who was injured while surfing on top of a subway car (but, dude, they could have posted a warning sign or something…..) and takes action against the MTA….
It’s quite a distinctive use of the word “legitimately” in that paragraph, no?
Lots of this stuff boggles the mind, requires very very patient and concentrated searching around for slow explanations. Found a new favorite stumper today: one keeps finding folks advising the masses to “trade the volatility.” Trade the volatility… hmmm…. I know we live in strange days, when the demonic abstractions imagined into life by hedgefund mainframes are strutting across the brick and mortar surface of the world, spewing contagion as they pass. But it is hard, on first thought, to think exactly how one would devise an instrument that would allow you to “trade the volatility” in the markets itself. I can wrap my head around certain levels of abstraction – like trading risk, for instance, I can see how you can do that.
Volatility trading is still in its infancy, and not surprisingly critics abound. Naysayers suggest volatility is, in essence, a description of an asset’s return, not an asset unto itself. Yet most market players adopt the perspective that if it has a price, then it can be traded. (from here)
That seems like a good question from the naysayers in the crowd. And the response of the “market players” is pitch perfect. But there actually are instruments that you can buy (VIX futures contracts and VIX options…) to do this, but what are they, like, made of? Or are they simply pure betting table gambles, made of nothing more than the bet that you’d place at Ladbrokes on Wayne Rooney to score the first goal again Portsmouth this week? If you were doing it on “main street” (ugh) I guess you’d stock up on shotgun shells and can openers as well as oceanfront condos. But I can’t imagine that that’s how it works with these contracts.
Sometimes I wish I’d spent just a wee bit of time in the industry (where all of the lovely men I went to high school with are, er, or perhaps were) so I could understand this stuff. But that’s foolish isn’t it – they don’t know what these things are either. Silicon nightmares, terminator wisdom so far restricted to screens.
Does anyone know? Care to take a guess? OK, seriously, to work with me. Right now….
In the movie, as in the book, every character but one — an ophthalmologist’s wife played by Julianne Moore — comes down with the title affliction, which is, bafflingly, contagious. (And which, just as mysteriously, manifests itself not as darkness but as total, blank-page whiteness.) “In most films everything is based on the eyes,” Mr. Meirelles said. “You cut to show where the character is looking, that’s how you tell stories. It’s all about point of view, and I wasn’t going to do this film showing only Julianne’s character’s point of view. So how do you get people involved with the characters when you can’t put them in the same position visually?”
His solution, he said, was to “put the audience in this blind world, to try to deconstruct the image, if I can say that.” (Just this once, but don’t let it happen again.) “Sometimes the image is washed out, sometimes it’s out of focus, sometimes the framing is totally wrong, deliberately,” he continued, “and toward the end of the film I even tried separating the sound from the image — showing a character with his mouth shut, but you’re hearing his voice.”
“It was all very experimental,” he said. “Very scary.”
We live in interesting times. One spends their weekend moving around as one is accustomed to moving around on weekends. Let’s see… Saturday went over to Highgate to spend time in a park, noticed that Andrew Marvell used to live where this park is now, ate lunch, returned to same establishment to drink a bit more once the kiddo was asleep in her stroller, watched the US debate on tv. Sunday: walked from Archway past Highgate Cemetery and through Parliament Hill to Hampstead where I ate a crêpe avec jambon et frômage from that cart there, saw Russell Brand eating lunch (didn’t realize he was anything other than a Guardian sports columnist till, like, yesterday – I’m still new to the UK), and almost bought Mary Beard’s new book on Pompeii. While doing all this, found time to purchase snacks and groceries and beer, watched Arsenal lose, watched the Mets lose, made headway on the novel that I’m reading and enjoying, and read some but not all of the newspapers I’d purchased.
So very bourgieboho and parental, no? Everyday life as it’s been lived in the age of the rising tides, the rising boats. It was a sunny weekend in London, so the parks were full, the outdoor spots at the eateries were packed.
But of course all this normalcy is playing out against the backdrop of some very very dire analysis that I don’t need to link to – I’m sure you’ve read it all already. Let’s not even talk about the bailout – even its authors don’t seem at all convinced that it will be effective in any palpable way. And really, it’s been clear from the start that that’s not the point. But the general consensus seems to have turned toward the inevitability of something very depression like, and perhaps deeper even than the depression with which we’re all familiar. So… the destruction of the last vestiges of the better bits of the state, soaring unemployment, insane inflation, the end of consumer credit, the evisceration of retirement accounts, mass repossessions of homes, bank failures beyond the means of the authorities to insure, and did I mention soaring unemployment? It was, apparently, ten minutes to midnight seven minutes ago – this is the takeaway from the papers and internet today.
Ordinary weekend days in London. I’ll go to work tomorrow and put the finishing touches on my lectures for the week. Reports of the imminent collapse of the world financial order. Collapse. Rubble. I’ll try to make it to the shop on campus, for once, before they sell out of the sandwiches I like. I’ll order that Beard book from Amazon; I’ll check CNBC.com thirty or forty times especially once the US markets open.
Listen: not everyone has the luxury of this disjunction. I know that very very well, and it’s true a hundred times over. Titannic numbers worldwide never got lifted on the upswing, or were directly punished by it. More locally, lots have already lots their shirts. I know this. I know it very very well.
But that said, this disjunction is something else. I suspect just about everyone who is in a position to is feeling it by now. And there are a bunch of things to say about it. The temptation is simply to keep detailing the uncanniness of the whole affair, where life goes on as an LCD mushroom cloud rises over the affluent corners of the earth. It is so easy to aesthetize it, to keep typing it out – especially since it feels like we’ve been in training to paint in just the tones we have on hand now for a decade or more.
But there’s something more profitable to do than painting for painting’s sake at the moment. Something is showing itself through the very failure of lived experience and financial news to line up properly. It is, perhaps, a promising pedagogical situation – or even a perfect political entry point. It goes something like this: the difficulty that we have reconciling our day to day lives with the problems in the market, the trouble that we might have actually believing that everything might be about to change, and change for the worse, and change as if overnight, is an appropriate difficulty to have. The fact that our lives are running along as they are, but might be ruined in a blink of an eye by a spreading virus of speculatory paper gone bad, is irrational, insane. I work, I am paid by my employer, I spend my money on the things that I need and sometimes just want – what should that have to do with credit default options or short sold stocks or baroquely structured derivatives?
It actually doesn’t make sense, not any sense at all. Our blindness before this thing, our inability to see (or see and then believe) what is about to happen, makes all the sense in the world. We are the realists; the world has conspired against realism.
If there is a “we,” we would do well to make much of the mysteries of abstraction, the violence that it has but should not be permitted to bring down upon ordinary life. We should cast this as a problem of a simplicity whose rights are being infringed upon by an unnecessary and illicit complexity. We should encourage those who would to wonder about the reasons why the normal circuits of life are being interrupted by factors that can’t even be understood by their administrators, their authors. For there is no reason why this must be – there is no reason that whatever these people in the financial districts of the world get up to, legally or illegally, normal life need be interrupted in any way. It will be, it is almost sure to be, but this is the tragedy. This is not, whatever the metaphors distributed by the news media and politicians, a meteorological event, an unforeseen occurrence. This, we should say, is not at all the case. It is not a sudden storm, a “black swan” – the difficulty of seeing this is part and parcel of the problem at hand…
This is the state of our great republic: We’ve nationalized the financial system, taking control from Wall Street bankers we no longer trust. We’re about to quasi-nationalize the Detroit auto companies via massive loans because they’re a source of American pride, and too many jobs — and votes — are at stake. Our Social Security system is going broke as we head for a future where too many retirees will be supported by too few workers. How long before we have national healthcare? Put it all together, and the America that emerges is a cartoonish version of the country most despised by red-meat red-state patriots: France. Only with worse food.
They keep writing that piece, over and over and over. It’s attributable to the stupidity of the people who write for the respectable papers and magazines, their pavlovian ass-covering refusal to think for even a few seconds. That said, despite it’s actual origins, it has the look of a perfect last ditch PR campaign concocted in the dark recesses of one of the Madison Avenue imaginariums, doesn’t it. They starve the beast, reward their cronies, and the American public walks around thinking “Jesus, this is what France is like? This is socialism?”
One really does wonder also about economists. I’m not going to name names – because it’s potentially libelous – but I’m pretty sure one very prominent econoblogger (used to work in the Clinton admin, now teaches) who has been consistently wrong about this whole thing has actually pulled posts from early last week and from the week before. It shouldn’t come as such a surprising relief finally to see Krugman (not the one I’m talking about) come forward against what is happening.
The Paulson plan calls for the federal government to buy up $700 billion worth of troubled assets, mainly mortgage-backed securities. How does this resolve the crisis?
Well, it might — might — break the vicious circle of deleveraging […] Even that isn’t clear: the prices of many assets, not just those the Treasury proposes to buy, are under pressure. And even if the vicious circle is limited, the financial system will still be crippled by inadequate capital.
Or rather, it will be crippled by inadequate capital unless the federal government hugely overpays for the assets it buys, giving financial firms — and their stockholders and executives — a giant windfall at taxpayer expense. Did I mention that I’m not happy with this plan?
The logic of the crisis seems to call for an intervention, not at step 4, but at step 2: the financial system needs more capital. And if the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place.
But Mr. Paulson insists that he wants a “clean” plan. “Clean,” in this context, means a taxpayer-financed bailout with no strings attached — no quid pro quo on the part of those being bailed out. Why is that a good thing? Add to this the fact that Mr. Paulson is also demanding dictatorial authority, plus immunity from review “by any court of law or any administrative agency,” and this adds up to an unacceptable proposal.
I’m aware that Congress is under enormous pressure to agree to the Paulson plan in the next few days, with at most a few modifications that make it slightly less bad. Basically, after having spent a year and a half telling everyone that things were under control, the Bush administration says that the sky is falling, and that to save the world we have to do exactly what it says now now now.
But I’d urge Congress to pause for a minute, take a deep breath, and try to seriously rework the structure of the plan, making it a plan that addresses the real problem. Don’t let yourself be railroaded — if this plan goes through in anything like its current form, we’ll all be very sorry in the not-too-distant future.
Really doesn’t seem all that difficult to see this for what it is… except, apparently, for anyone in a position to say something about it. Thankfully PK’s getting there, but too little and too slow and too late, I’m sure.