Author Archives: requiem

Status Update

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A quick lunchtime update, since I have a few posts marinating in draft form. My reading list has ballooned; I’m trying to finish The Omnivore’s Dilemma whilst simultaneously working my way through the last of the Honor Harrington books and starting on Robert Greene’s works.

This rally in the markets has been running for almost two months now; I’ve been staying mostly clear of it, but did dip my toes in at a few points before being stopped out. For the S&P 500, I’m looking for it to spend a little time above the 200 MA and for the RSI to match the highs of last October.  It feels almost played out, and if that’s the case, the turn should be in the next few weeks.

The fundamentals continue to deteriorate. It was only last week I saw a Financial Times article suggesting the ECB is starting to suspect banks are using them as a dumping ground for toxic securities.  The Fed (in concert with the ECB and the Swiss) is now accepting auto loans and credit card debt as collateral.  This buys only three or four more months before the Fed runs out of balance sheet.

My Mandarin classes finished up earlier this month, and that frees up some time for reading and other projects.  I haven’t seen much in the way of summer classes (in any field) that appealed to me, so I’ll likely find something to study on my own.  Travel also remains likely.

Trust Issues

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Markets run on trust. Trust that contracts will be honored, trust that a company’s financials are reasonably accurate, and trust that the government will maintain accountability and a level playing field. Take that trust away and the lifeblood of the economy will drain out in an instant. I will not invest in such a climate; I’ll take cold hard cash and short the market all the way down.

It didn’t have to be this way.

Quite frankly, if more investors and politicians had listened to Gary Shilling’s pronouncements on the housing industry, Nouriel Roubini’s dire analysis of the world’s credit system, Pershing Square’s William Ackman’s comprehensive admonition of the monoline insurers or, even back in time, Kynikos’ Jim Chanos’ keen analysis of the shady accounting at Enron, billions of dollars in losses could have been avoided, and public policy solutions to systemic problems would have been encouraged before it was too late.

– Doug Kass, 2008.02.15

Six months late, it’s 60 Minutes

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I have been asked why I disdain the traditional media. My answer is usually some variation on themes of inaccuracy and obsolescence. A perfect example of the latter is today’s coverage by 60 Minutes of the ongoing housing troubles; an exposé they could have done six months ago about a crisis obvious a few years ago. Fret not, I cite this coverage for an altogether different reason.

60 Minutes is an investigative news-zine that will be 40 years old this autumn. Their audience is the salt of the earth, the older generations that vote regularly and know what a savings bond is. In House of Cards, the ideas presented are thus:

  • People otherwise able to pay their mortgages will not, simply because their house is not what it was. Defaulting as a business tactic was heretofore limited to the likes of businesses and Donald Trump, now it’s for everyone.
  • The scale of the problem; the proper unit to use is “trillion with a t” and the presence of now worthless securities lurking in banks and pension funds.

As a commenter on Calculated Risk put it,

“60 Minutes” is at best middle-of-the-road investigative reporting. It’s not Uncle Walter. But it does have a certain credibility with Middle America. If “60 Minutes” carries the story — well, could be something of an Uncle Walter moment. A tipping point, at least in the mindset of a good portion of Middle America that wasn’t paying attention.

– Bob Dobbs, on Calculated Risk

(And if you don’t know who Uncle Walter is, ask your parents!)

Sentence Structure

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This weekend I was introduced to an essay by Edgar Allen Poe, titled The Philosophy of Composition. The essay itself is mildly interesting; the comparatively less well-written Wikipedia entry conjectures the essay may have been intended as satire and in the alternative quotes a biographer of Poe describing it as “a rather highly ingenious exercise in the art of rationalization than literary criticism”. Content aside, the writing itself is worthy of note both for stylistic as well as historical reasons.

Most of the text I encounter can be easily skimmed, assimilated, and comprehended with a pittance of effort. The sentences are short, the words mundane. In Composition Poe has constructed, like an ancient cathedral-builder, clauses that build one upon the other, mortared with m-dash and comma alike. To place it beside modern literature is to expose current authorship as little more than a rudimentary scraping of foundations, topped in the best of cases by a mean mud hut.