tired fools

the thing i used to like about SF short stories was the leap in imagination that the writer takes, like Robert Silverberg’s robot pope from “Good news from the Vatican”:

“If he’s elected,” says Rabbi Mueller, “he plans an immediate time-sharing agreement with the Dalai Lama and a reciprocal plug-in with the head programmer of the Greek Orthodox church, just for starters…”

“What does he look like?” Miss Harshaw asks.

Rabbi Mueller removes his sunglasses… “I can tell you that his Eminency is tall and distinguished, with a fine voice and a gentle smile…”

“But he’s mounted on wheels, isn’t he?” Kenneth persists.

“On treads,” replies the rabbi, giving Kenneth a fiery, devastating look. “Treads, like a tractor has. But I don’t think treads are spiritually inferior to feet, or, for that matter, to wheels…”

Isaac Asimov had a story about a presidential election, “election day 2084″. Just one person, chosen by machine as a representative of the voting public, gets to decide who gets elected. Everyone remembers the guys name, as in the “Brown election”, being Mr Brown who got to decide, rather than Brown being the President. One ordinary Joe with a huge weight on his shoulders. But not even Asimov, not even by 2084, could have imagined that someone such as Sarah Palin could ever get elected to anything outside of a PTA. Reality TV has paved the way for the Browns of this world not just to decide an election, but to be elected. we don’t care that she knows nothing, has no experience. we warm to her, she’s doing her best after all.

the real problem, of course, is that it isn’t any computer that’s chosen Palin, but Karl Rove, or someone like him. Choosing her was a stroke of near genius. and who’s to say it won’t work, or that she might make a good VP or even President. Thatcher always said that running a country was like running a home. maybe a hockey-mom isn’t inferior to a real politician, or for that matter . . .

now that a bail-out has been agreed we would expect that the market would take an upturn tomorrow. maybe it will carry on for a few days. but that should be it. at some point it has got to hit home that all that has been focused on lately is the credit crisis, but actually the fundamentals are fucked. i would anticipate a downward movement that will gather apace. so next week is a good time to bet against the market. an exchange traded fund (etf) shorting the FTSE is a nice way of doing this.

i saw today that the total CDS market (credit default swaps) is estimated at between $62 trillion and $90 trillion. Yes, that’s right, trillion. Credit default swaps hedge against default risk, but have been used to speculate on the ability of companies to repay debt. Interestingly the “price” of a CDS on the US government is now at 26 basis points, meaning that a CDS on $10m government debt costs $26k. There is even talk of rating agencies downgrading the US government itself.

what does all this mean? well it’s anyone’s guess. the GDP of the largest economy in the world, the US, is less than $14 trillion, so $90 trillion is a pretty big number. it’s like we’ve had the earthquake, suffered its effects, just about come to terms with it; but are about to be hit by the resulting tsunami. After it hits (i give it weeks rather than months), we’ll breath again, only to be hit by the returning wave. it’s not going to be pretty.

just a quick question, which i’m sure there is a good answer to - why doesn’t the fed buy the stock, rather than the debt, of the troubled banks? i’m thinking that the banks should issue fresh stock, a rights issue, but instead of an investment bank we have the government underwrite it. that way the banks shore up their capital base, the fed gets something back for the cash, and the banks get to jettison their dodgy debt in a manner of their own choosing over time. the fed can insist on other stuff, like halting dividends for two years, caps of bonuses and salary etc, if they so wish. it seems to me this is much simpler, and easier to measure in terms of value and commitment.

what am i missing?

the British regulatory authority, the FSA, has banned short selling of financial stocks. This is also banned in the US, where there are current investigations into possible improper short selling. Optimism is high that this could be the beginning of the end of the crisis. Except that it won’t be. Perhaps it’s the end of the beginning. If memory serves me correctly the US banned short-selling of financial stocks in 1928. Interestingly it also let a bank go to the wall a la Bear Sterns, only then it was the Bank of the United States. Auger well?

short selling is not responsible for the crash. in Britain the late difficulties with HBOS, now rescued by a merger with Lloyds TSB, saw under 3% of it’s stock shorted. A small fraction of the massive selling. This is just another example of a scapegoat, like CEO bonuses and flashy cars.

Banks are still tumbling. A coupe of days ago I heard rumours about Morgan Stanley and Allianz. The first is in negotiations for a merger, no stories about the latter. Even Macquarie in Australia is off 30% on the day. And this is just the financial sector. The credit issues haven’t yet hit home to ordinary consumers. When it does expect the rest of the index to get its share of a hammering. Sell, sell, sell.

i’ve been telling people for the last few months that i expected the FTSE to fall to 4000 by the end of the year. frankly i was laughed at by some. i don’t think anyone agreed. One senior banker just said “if that happens then you’d just have to thank god you had a job”. At the same time a colleague took out some investment bond that was predicated on the FTSE remaining over 6000 on 31st December.

well, the FTSE has dipped below 5000 and it’s only September.

we haven’t seen enough blood on the carpet yet. looks like there is about to be some more with lehman bros going down. expect some others. who knows how much lehmans owed to what banks. the knock-on effects could be pretty big. watch the banking sector tank tomorrow.

David Foster Wallace is dead.

From 2005:

Because here’s something else that’s weird but true: in the day-to day trenches of adult life, there is actually no such thing as atheism. There is no such thing as not worshipping. Everybody worships. The only choice we get is what to worship. And the compelling reason for maybe choosing some sort of god or spiritual-type thing to worship — be it JC or Allah, bet it YHWH or the Wiccan Mother Goddess, or the Four Noble Truths, or some inviolable set of ethical principles — is that pretty much anything else you worship will eat you alive. If you worship money and things, if they are where you tap real meaning in life, then you will never have enough, never feel you have enough. It’s the truth. Worship your body and beauty and sexual allure and you will always feel ugly. And when time and age start showing, you will die a million deaths before they finally grieve you. On one level, we all know this stuff already. It’s been codified as myths, proverbs, clichés, epigrams, parables; the skeleton of every great story. The whole trick is keeping the truth up front in daily consciousness.

Worship power, you will end up feeling weak and afraid, and you will need ever more power over others to numb you to your own fear. Worship your intellect, being seen as smart, you will end up feeling stupid, a fraud, always on the verge of being found out. But the insidious thing about these forms of worship is not that they’re evil or sinful, it’s that they’re unconscious. They are default settings.

They’re the kind of worship you just gradually slip into, day after day, getting more and more selective about what you see and how you measure value without ever being fully aware that that’s what you’re doing.

i’m trying to put together a deal. there are two contenders, a large firm and a small firm. the large firm moves around its personnel, or they leave, such that you rarely meet the same people twice. the small firm organizes lunch, a nice lunch, same people, nice wine. it’s easy to fall for the large company, the procedural assurance angle, after all they’re BIG. but instinctively the smaller contactable-at-any-time firm seems more attractive, and the food’s better.

In Shropshire, England park officials have instigated a policy of questioning lone males:

David Ottley, Telford & Wrekin’s sports and recreation manager, said in a letter to them: “Our Town Park staff approach adults that are not associated with any children in the Town Park and request the reason for them being there.”

This is, of course, to ferret out paedophiles. Presumably they just say it’s a fair cop i was ogling them kids, and offer up their hands for cuffing. Incredible. So advice to all those guys that just want to go for a walk, or cut through the park on the way to the station, or whatever, abduct a kid before you enter to accompany you, then there’ll be no questions asked.