Dow To Zero?!?

Dow Jones Falls to Zero in Six Weeks?

I don't know why anyone would make a statement like this except in jest. I read, based on the rest of his blog posting, that there's more to this guy than just this post, but it still seems pretty bad. Especially in that I found it through Steve Rubel, who didn't caveat the statement above with anything more than "unlikely." Twitter is like a giant game of telephone.

BTW, the failure of this logic is assuming that current trends will continue. My son, who is currently 14 months old is 29 inches tall and 24 lbs. If I start at his birth weight, and graph out his growth, he would by nearly a mile tall and 3.5 billion tons by the time he's thirty. This is not unlikely. This will not happen. Period.


Sort of Understand Markets

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?


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

I Hate It When Blogs Go Unattended

It's really irritating to me when blogs go unattended for too long. I'm not sure if the people have died or have moved on or what, but I can tell you what has caused my (many) periods of lack of attention... the (perceived) effort to blog. 

It's not like I've ever thought that I had so much to say, but I did always feel like if I was going to put something out there, it should be semi-meaningful. Unfortunately, this leads to a spiral where the longer it's been, the more I feel like I have to say and the more that I feel like the next post needs to achieve in order for me to put it out. I don't know if I'll ever get past that thought, but I'll do my best.

One thing I've started doing more of is posting to other social networks, in an attempt to make sure the writing juices, so to speak, keep flowing every day. I now have:

And, of course, more private stuff (facebook, linkedin, plaxo, etc etc) which I won't be sharing here ... I'll add more eventually, as more stuff comes up, but I'm doing my best to get it out there. 


Deep Crow

Many people ask me what the heck I've been doing, since this blog seems to have gone a bit fallow, and I've left the company. Well, I've helped start up something new, what I will modestly call the greatest sound platform in history. But this is merely a day time job. My full time, night and day job is none other than to promote the use of the sound of this crow. I love it. I don't know why, but I do. My guess is that this crow, in crow-ese, is actually uttering hypnotic words that has weaved me deep into its warm embrace. Regardless, my mission is clear. If you're not listening to the crow, you're just not living.

Seriously? Take Some Responsibility

Powerline is complaining today about the legacy that Jimmy Carter's presidency left us with respect to the Middle East and/or oil.

Seriously? There have been four presidents since then, and 20 years of Republicans in the White House. Further, the congress has also had significant periods of large majorities in favor of Republicans (certainly not always, but enough to matter). And you still blame a president 30 years out of office? It's like blaming Teddy Roosevelt for a situation related to the Panama canal. Sure he may have been to blame at some time, but it's time to own the problem yourself.


Rating Restaurants

I've had a theory for a long time that the bread you get before a meal is a perfect leading indicator to the quality of the restaurant. I have yet to be proven wrong by it. Sometimes I'm off by a little bit, but it's never been 100% off. I think it's just a great example of what it means when you've got a lot of the system working, but you haven't debugged the system completely.

Anyhow, last night we had dinner at a really nice restaurant: Gerard's. Food was very good, but the bread was TERRIBLE. I realized I'd really like to start writing this stuff down for future reference. Obviously, it's really subjective

Bread Rating: D-. Stale, hard, flavorless. Tasted like I was chewing on paste. Gross.
Food Rating: B+. I thought it was actually pretty good food, I had the filet. The steak was tasty, but not phenomenal. I was really looking for great taste and tender. The sides were mashed yams and were really sweet, almost overly so. There was way too much gravy. The dessert, which was a macaroon with coconut and pistachio was terrible as well... too dry and flavorless.

Net: The rating system holds... even at the nicest restaurant in Maui. Never lose sight of the small stuff, it'll always bring you down.

MST3K reborn!

CinematicTitanic: Mystery Science Theatre 3000 rides again -- sheer hilarity! - Boing Boing

Just awesome! The last MST3K I saw live was about 10 years ago, and though I got some of the DVDs in the interim, I could not be more excited about this rebirth. And talk about a perfect medium for this... extremely passionate audiences willing to pay for content direct from the publisher is a perfect fit for CinematicTitanic (nee MST3K). Unfortunately, the licensing rights for 30 year old movies that are doing the studios exactly zero in business apparently is slowing the flow of this content to the web. You've got to be kidding me. Exactly what do these studios THINK is going to happen... a run on Joe Don Baker movies?