Saturday, May 29, 2010

ZzzzzzzZzzzzzzZ

Last night I dreamt of all the failures of my life. Needless to say, it wasn't a catnap.

Wednesday, May 19, 2010

Blind and Deaf, but Unfortunately, NOT Mute

We all know the neocons despised “Old Europe.” So it’s no surprise they’re toasting the EU's collapse and (rightly) ridiculing the fantasy of getting divergent cultures with long, bloody histories of infighting to gel.

Yet they believe we can piece together Afghanistan…

Sunday, May 16, 2010

Fly the Smarmy Skies

I’m afraid of flying. It’s the worst fear to have, because it’s the one fear no one respects. You make the mistake of telling someone, and you're rewarded with a carnival of crass number crunching (with The Cruncher prattling on like he’s the first one ever to say it): “You know statistically, you’re safer in the air than you are on the ground!”

Everyone is an actuary all of a sudden.

Yessssss, I knowwwwww, plane crashes are improbable. So is encountering a dangerous spider. But an arachnophobe suffers no barbs for going public with his fear. No one says, “’Fraid of spiders?! DU-DE, you’re safer around a spider than you are around your wife! Don’t you read Zoobooks?”

It isn’t the odds of a plane crash that scare me. It’s what happens if the odds go against me. A bell curve-shaped parachute ain’t gonna magically open when I’m spiraling into the ground.

“Let’s see, Gaussian analysis of the flight’s risk profile should mean--SPLAT. Oh right, still dead. Uh, what are the odds on resurrection?”

Saturday, May 15, 2010

The Entropy Over Energy

You've probably heard many of our wise men, particularly those of the neocon/world is flat persuasion, baying from the rooftops about America's need for the unequivocal "free trade" of all goods and services, everywhere and always. Except for oil. Apparently with oil, America requires "energy independence."

Many of these wise men are also climate change skeptics, always saying we need more data before committing to such drastic changes in our energy infrastructure. Fair enough. Yet in the name of "energy independence," these supposedly critical thinkers will recite the most ridiculous proclamations about biofuels, solar, wind, and other potential "energy saviours." It's different with oil. It just is.

Something tells me we'll soon be staring down the barrel of a Huckabee or Palin ticket, complete with a 5-year plan for achieving "algae independence." And these scamps won't be able to resist reminding voters that algae comes in red, white, and blue.

Monday, May 3, 2010

Section 106 Means Section 8

If you enjoy simpleminded discussions of complex transactions, you’re probably digging the recent financial reform scuffle. From The Economist:

The most controversial bit is Section 106, which would prohibit entities with access to the Fed’s discount window—ie, banks—from trading swaps or using them to hedge their own exposures.

The rules could drive derivatives to offshore markets, over which they have less control. The Fed would not be thrilled at the prospect of having to rely more on non-American banks as dollar intermediaries in the foreign-exchange-swap market. Pushing swaps into new entities may simply create a new class of firms that are too big to fail.


Yes, Section 106 would nudge these transactions abroad, creating non-American institutions deemed too big to fail. But worry not; helpless U.S. taxpayers will still be used as “emergency lenders,” because the kind of financial concentration these policies would induce will likely mean “systemically important” behemoths even larger than those Americans have already been forced to rescue. What, you thought American money couldn’t be used for international frivolity? Just think back to the ’94 peso crisis. If Section 106 goes into effect, it won’t be long before Americans become sugar daddies for insolvent foreign financiers. Flat world? I’m lovin’ it!

Sunday, May 2, 2010

Aging Tigers Continued...

As I said, Greece was Chapter 1. The PIIG problem has become like an inverse of the Asian Crisis. Part of the “rich” world is collapsing, so investors are fleeing to “safety” in emerging markets. Difference is, unlike the Asian Crisis, this one isn’t contained. Neither was subprime.

Consider the balance sheets of many of these so-called rich countries; impossible social welfare promises and impossible debt levels against a backdrop of malignant demographics and political regimes with little hope of healing these infirmities. Does this sound like true wealth and power to you? Who would make a loan to such enterprises? The “deficits don’t matter” clan stupidly egged many of these developed nations to keep kicking the can down the road. Well those countries have now run out of road, and lack the moolah to do more paving.

What might we see? The more open emerging markets becoming (at least) temporary safe havens, both their bonds and perhaps especially their currencies. Some of these countries will probably move to block these inflows, triggering even more volatility.

Going forward, I think we’ll see more pointed and widespread questioning of all this illusory wealth. Emerging markets may not exactly be the answer, but their youth, relative lack of debt, and room for growth are going to force some serious reassessments. Investors are bound to conclude it’s wiser to invest in a bratty “emerging” nation than risk losing your shirt respecting an elder “developed” one.