Did you know as the next political election is upon us, that we have over 15,000 different political quotes and sound bites on our site? Barack Obama quotes, John McCain quotes, Sarah Palin quotes, Joe Biden quotes... everything you need to make your decision on Tuesday!

Here are some of my favorite...

Obama on clothes:

Biden on Obama's Spine:

Whomever you feel like voting for, do it! It's shameful that we need to convince people to vote at all... it should be the law.

Sometimes the rest of the world occasionally feels in synch with the way you feel... my company happens to have been mentioned both in Silicon Alley Insider (via Brian Garrity of the NY Post), AND have been featured on the IE Addons Gallery. Cool!

Not Zombie Strippers cool, but still.

Really cool messages

My favorite is Mr. Kafka's assessment of us: "Thanks to the NY Post's Brian Garrity for this one, via something called Entertonement, which seems pretty cool. We hope it survives." We'll do our best!

I don't even think we have a separation between art and life any more. They're just merged together. Thanks to VideoGum and GigaOm for catching this... Michael (Steve Carrell) mentioned he watched Cookie Monster singing Chocolate Rain during Thursday's "The Office" episode, and now someone has gone and created it.

This video is just awesome:

First, you want to pause and let it buffer to 6 or so minutes in where you can start the video (or you can access the podcast here iTunes). The thing that is just amazing about it is this video is (only?) 20 years old, and they are explaining things that we just take for granted today. Things like:

• What a mouse is - "it's an upside-down track ball!"
• What a 3.5 inch disk is and how much it holds
• Pictures on the desktop = icons
• The concept of "Cut", "Copy", "Undo"

Pretty funny stuff.

My very smart friend has written up some answers to my questions, which I will repost here.

1) It did go up proportionally.  It probably was 98% of the bonds worth. (I’m guessing.  I don’t have the data)

2) Not naked but no one ever had the $1B dollars to pay up when the bond defaulted.  It was unregulated so there are no ‘capital reserves’.  People were ‘netted’ on the belief that someone had that $1B.  But no one ever did.  So they are all bankrupt.

1b).  So it didn’t matter if the CDS premium was 98% of the bond.  $1B needs to get paid out on the chain. The guy receiving the 98% premium loses 2%.  But two points.  Someone else is losing the rest of the 98% through the chain of netting.  And 2% is on the total bond value not the capital that guy had.  He’s levered.  He may have lost 20% or 200% and been wiped out.

I'll tell you what I told him, which is it doesn't seem possible that this many smart people could get caught in such a web. His response:

I’m sure most of them were aware.  But when you can be a multi-millionaire in one year isn’t it worth the bet? If I said tomorrow you can be worth $100M or lose your job, how many would take that offer? That’s why derivatives need to be regulated.  Asymmetric returns.

When people in the industry start saying things should be regulated, that's usually a sign that it's reached absolutely critical stage.

Looks like Politico is getting a lot of attention on Memeorandum with their story about GOP voters having issues with the momentum of the campaign.

I heard the clip of someone yelling terrorist ( ) and I guess it's pretty bad but who can really control people at a campaign event, anyway?

I guess they want McCain/Palin to go more in the direction of highlighting the Ayers connection ( ), but I can't believe that's really getting any play. I guess we'll see.

Ok, I sort of get how we got to where we are in the credit markets. But after listening to an absolutely riveting hour of financial discussion on This American Life, I'm left with two questions:

1. One of the failures of the markets was the ability to use CDSs as a financial instrument without owning the underlying asset. For example, Lehman issues a bond for $100 M. MS buys the bond. MS buys a CDS from AIG on the bond for 2% of the bond’s value. Goldman, in a speculation move, also buys a CDS on the bond for 2% of the value. Then Lehman starts looking shaky – six months ago or something. More people start to buy CDSs from AIG. Why didn’t the cost of the CDS go up proportionally with the risk. For example, if it’s 1 week prior to Lehman going bankrupt, and people are freaking out about them, why wouldn’t a CDS on their bond cost 98% of the bond’s worth? The podcast seemed to indicate that it was so many people taking out CDSs on bonds that they didn’t have any relation to, purely as speculation devices. But isn’t the market supposed to handle that?
2. Another thing talked about during the podcast was the idea of netting out to hedge risk. AIG sells a CDS on Lehman’s bond to MS for 2%. Then they buy a CDS on Lehman’s bond from Wacovia for 1.98%. Then Wacovia buys a CDS on Lehman’s bond from the IMF for 2.01%. Then Wacovia goes under. The assets are still there, and the hedges are still there, correct? Meaning, yes, AIG may now take a 0.01% loss rather than a 0.02% gain… but surely they wouldn’t be considered to have a naked position, would they?
   

Anyone want to enlighten me?

D

[Update: Changed CDO to CDS as I was using the wrong acronym.]