Steady Blogging

Simon & Schuster to sell books on Scribd.com

2009-06-15T00:39:00.001-04:00

A friend with experience in the publishing industry forwarded me this article from Friday's NYT Business section:

TECHNOLOGY / INTERNET| June 12, 2009
Simon & Schuster to Sell Digital Books on Scribd.com
By BRAD STONE
The publisher said it would make about 5,000 titles available for
purchase as the book industry sought alternatives to Amazon's Kindle
store.

Recall that I posted this about Scribd back in April, linking to a Publisher's Weekly article that reported that such a deal was in the works. (I also posted this later the same day, so that you can read an entire book by Keynes via Scribd.)

My friend had this to say about this development, since we have been talking over the past year about the merits of the Sony and Amazon e-book readers: "This is big news. You might want to wait a while before buying a Kindle...
if the other major publishers follow suit and join Scribd, which I
think they will, the Kindle format is going to be in trouble (a la Beta
vs. VHS)."

James Suriowiecki on the banking industry: "Monsters, Inc" (New Yorker)

2009-05-06T21:17:00.001-04:00

James Surowiecki, the financial columnist for the New Yorker, has consistently been putting out insightful columns through the course of the financial crisis. His latest is a good one regarding the size of the banking/financial industry, aptly titled "Monsters, Inc."

Surowiecki puts this very timely issue in historical context, addressing the widespread notion that we need to go back to a simpler financial time:

The desire to bring back the boring, small banking industry of the nineteen-fifties is understandable. Unfortunately, the only way to do that would be to bring back the economy of the fifties, too. Banking was boring then because the economy was boring. The financial sector’s most important job is channelling money from investors to businesses that need capital for worthwhile investment. But in the postwar era there wasn’t much need for this. The economy, while remarkably strong, was dominated by huge companies that faced little competition, and could finance investments out of their profits. And entrepreneurship was restrained: there were many fewer start-ups then than in the period after 1980. So the financial sector didn’t have much to do.

Two things changed this. First, in the seventies those huge companies started tottering, while the U.S. economy fell apart. Second, the corporate world was transformed by revolutionary developments in information technology and by the emergence of new industries like cable television, wireless, and biotechnology. This meant that the economy became, and has remained, far more competitive, while corporate performance became far more volatile. In the nineteen-eighties, companies moved in and out of the Fortune 500 twice as fast as they had in the fifties and sixties. Suddenly, there were lots of new companies with big appetites for outside capital, which they needed in order to keep growing. And it was Wall Street that helped them get it. Companies like Turner Broadcasting, M.C.I., and McCaw Cellular used junk bonds to turn themselves into major businesses. Venture-capital investing took off, and so did the I.P.O. market; there were twice as many I.P.O.s between 1980 and 1999 as there were between 1960 and 1979. To be sure, deregulation was also a factor, but Thomas Philippon, an economist at N.Y.U., has shown that most of the increase in the size of the financial sector in this period can be accounted for by companies’ need for new capital.

The history of the junk (i.e., high yield) bond market in the '80s is something I'm interested in reading about. It's a story mostly associated with Drexel Burnham and Michael Milken; I bought a copy of The Predators' Ball: The Inside Story of Drexel Burnham and the Rise of the Junk Bond Raiders a few years ago, but haven't yet gotten around to reading it.

Surowiecki goes back even further into the history (and reveals that he's really just outlining Philippon's paper with this column):

There have been three big banking booms in modern U.S. history. The first began in the late nineteenth century, during the Second Industrial Revolution, when bankers like J. P. Morgan funded the creation of industrial giants like U.S. Steel and International Harvester. The second wave came in the twenties, as electrification transformed manufacturing, and the modern consumer economy took hold. The third wave accompanied the information-technology revolution. Each wave, Philippon shows, was propelled by the need to fund new businesses, and each left finance significantly bigger than before. In all these cases, it wasn’t so much that the bankers had changed; the world had.

The same can’t be said, though, of the boom of the past decade. The housing bubble was unique, and uniquely awful.

Surowiecki goes on to say a few words about the housing bubble, and about how to get at "the harder task of making credit bubbles like the one we just lived through less likely." Oddly he doesn't mention securitization and the alchemy of financial engineering as a central culprit; he just mildly mentions that "many financial innovations also seem to be overrated; it’s not clear that they actually help finance do its core job of channelling capital to businesses."

The brief sketch of the history of modern US banking reminded me of an essay that was on the WSJ Op-Ed page last October, by John Steele Gordon, titled "A Short Banking History of the United States: Why our system is prone to panics", which opens with the lines: "We are now in the midst of a major financial panic. This is not a unique occurrence in American history. Indeed, we've had one roughly every 20 years: in 1819, 1836, 1857, 1873, 1893, 1907, 1929, 1987 and now 2008." But I will leave the rest aside for now, to blog another day...

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"Bankruptcy is Vital to Capitalism" (WSJ column)

2009-04-30T17:50:00.004-04:00

I happened to just now come across this column that appeared in the WSJ on April 2: "Bankrputcy is Vital to Capitalism", by David Wessel (who, I just learned (pdf here), is economics editor of the WSJ and writes this "Capital" column weekly).

Wessel opens the piece as follows:

America is relearning an old lesson: Failure and bankruptcy are essential to capitalism.

Bankruptcy is an orderly way to give an overburdened debtor a fresh start and to decide which creditors get paid back and which don't. As Nobel laureate Joseph Stiglitz teaches: Bankruptcy is a way to cope with those times when markets fail to allocate capital wisely and monitor its use.

(Stiglitz is an econ prof at Columbia, and, as the Wikipedia entry nicely summarizes:

He is a recipient of the John Bates Clark Medal (1979) and the Nobel Memorial Prize in Economic Sciences (2001). He is also the former Senior Vice President and Chief Economist of the World Bank. He is known for his critical view of the management of globalization, free-market economists (whom he calls "free market fundamentalists") and some international institutions like the International Monetary Fund and the World Bank.

He's also got quite a personal website: http://www.josephstiglitz.com. I have been meaning to read his Globalization and its Discontents and/or his followup Making Globalization Work. He has been popping up a lot lately with his thoughts on the financial crisis, e.g. "Stiglitz Says Ties to Wall Street Doom Bank Rescue").

The column continues with some historical context, connecting the railroad industry of the late 19th century to the auto industry of the early 21st century:

At the end of the 19th century, nearly 20% of the railroad track belonged to insolvent railroads, says David Skeel, a University of Pennsylvania law professor who has written a history of bankruptcy. With state governments unable to deal with railroads that stretched beyond their borders, and Congress hamstrung by a narrow interpretation of the Constitution, creditors turned to courts. Judges fashioned an approach to divvy up assets among creditors that was codified in an 1898 law, the spirit of which survives today.

General Motors and Chrysler are 21st century analogs of 19th century railroads. They cannot pay their debts; the only issue now is how, not whether, their creditors take a hit. The only difference between GM today and GM in bankruptcy court is that the president and his appointees are making the decisions, instead of a bankruptcy judge constrained by federal law.

Skeel is a name that seems to come up quite often in discussions about bankruptcy law. Indeed, it seems like he quite literally wrote the book on the topic: "Debt's Dominion: A History of Bankruptcy Law in America" (which I impulsively purchased from Amazon a couple days ago, after reading this WSJ column).

From there Wessel gets into how the Obama Administration has been handling the case of the auto companies. That is where I found it got somewhat confusing:

President Barack Obama's critics say the government has no business picking GM's chief executive and apportioning losses among auto workers, pensioners, suppliers and lenders. They fear "politics" will produce unfair or unwise decisions, such as protecting lenders and workers in the domestic auto industry at taxpayer expense while lenders and workers in less politically salient industries suffer.

But sometimes "politics" is just another word for "democracy." The people are having a hard time understanding why big banks and insurers get bailouts and GM gets bankruptcy. It's hard to convince laid-off auto workers that banks and their credit are the vital circulatory system of the U.S. economy, more important than any one industry, even one as large as domestic auto makers. Mr. Obama knows he almost certainly will need more taxpayer money to resuscitate the nation's banks; that won't be popular. If making a very public effort to avoid bankruptcy fails, he will say: I tried, but it just couldn't be done. That may help him get Congress to approve money for the banks.

I take this to mean that the "politics" the critics decry are a necessary part of the process in this environment. It's democracy at work, in the sense that the whole spectrum of stakeholders--not only equity and bondholders, but also labor, and even the wider community, as represented, say, by Michigan House reps and Senators--have an influence on the outcome, and that the Administration must take into account the political and economic context in approaching restructuring/bankruptcy of the auto companies.

Here are the closing paragraphs, which raise some very interestng points:

What about big financial houses, though? Why can't they go through bankruptcy the way Macy's and Delta Air Lines did? One reason is that a retailer or airline can shed debts and then operate stores and airplanes. Financial institutions have nothing so tangible: They basically have their names, their people and their ability to borrow a lot of money short term. All of that can vanish instantly while a judge ponders the matter. So the U.S. devised a bankruptcy substitute for banks: The Federal Deposit Insurance Corp. does the deed quickly without a judge.

The Treasury and the Federal Reserve want a similar pseudo-bankruptcy process for big financial institutions to avoid the problems of Lehman Brothers (whose bankruptcy coincided with a bad turn in the crisis and some say caused it) and American International Group (which didn't go into bankruptcy, at substantial cost to taxpayers). They want better choices next time, and they don't think conventional bankruptcy is practical.

Not everyone sees it that way. "The usual reaction if one mentions bankruptcy as a mechanism for addressing a financial institution's default is incredulity," Mr. Skeel and Northwestern University's Kenneth Ayotte wrote recently. "Those who favor the rescue of financial institutions...treat bankruptcy as anathema. Everyone seems to argue that nothing good can come from bankruptcy." They disagree, and would tweak bankruptcy laws to deal with the peculiarities of finance so the rules are clear to all -- and the Treasury secretary and Fed chairman have less discretion.

Here is the paper by Skeel and Ayotte cited above: "Bankruptcy or Bailouts? "

It will be interesting to see how the regulatory/legal framework evolves in this direction. As Wessel wrote, the Bankruptcy Act of 1898 was a reaction to the widespread insolvenices of the late 19th century (and was later revamped in the 1978 Bankruptcy Code--Chapters 7 and 11 of which govern, respectively, liquidation and reorganization.

Keynes's "Economic Consequences of the Peace" on Scribd

2009-03-25T15:52:00.004-04:00

"A general bonfire is so great a necessity that unless we can make of it an orderly and good-tempered affair in which no serious injustice is done to anyone, it will, when it comes at last, grow into a conflagration that may destroy much else as well."
--John Maynard Keynes, "The Economic Consequences of the Peace" (1920)

A followup to my previous post, about Scribd: after coming to it via DeLong's blog, I created an account on Scribd, which I just revisited now. I had "favorited" a few documents..one of which is John Maynard Keynes's 1920 book, "The Economic Consequences of the Peace"--all 131 pages of it:

The Economic Consequences of the Peace by John Maynard Keynes The Economic Consequences of the Peace by John Maynard Keynes
In this book Keynes predicts the inflationary economic problems in post-WWI Europe and the rise to power of a tyrant.

Publish at Scribd or explore others: Published Research Business inflation austrian economics

I had favorited it not only because Keynes is obviously in the news a lot these days (see this collection of links I put together a few months ago), but more specifically because Robert Shiller pointedly chose a passage from this particular work of Keynes as the introduction to the book he published last year.

In fact, now that I look at what I wrote in that entry about Keynes in December, I'm seeing I closed with the following:

Yale economist Robert Shiller's latest book "The Subprime Solution" opens with a timely passage from the Keynes's 1919 account of the Versailles Peace Treaty, "The Economic Consequence of the Peace:
A general bonfire is so great a necessity that unless we can make of it an orderly and good-tempered affair in which no serious injustice is done to anyone, it will, when it comes at last, grow into a conflagration that may destroy much else as well.

Consider why Shiller chose that passage (and that was back ~March 2008), and consider how our current economic conflagration has grown since then...

In fact, I was reminded of this after reading David Brooks's quite bitter column from last Saturday's NYT, titled "Perverse Cosmic Myopia"; here are the closing sentences:

Many people used to wonder how the world’s leaders could be so myopic at various points in history — like during the Versailles Treaty or the turmoil of the 1930s. We don’t have to wonder any more. We get to watch the cosmic myopia replay itself in our own times.

Scribd: "the YouTube for print"?

2009-03-25T14:33:00.005-04:00

This started out as an e-mail to a few friends who work in publishing..but then I found that Scribd allows one to embed docs right into webpages (duh), so figured I'd turn it into a blog post:

I was cleaning out the inbox, and scrolled thru a newsletter that I subscribed to many years ago, but haven't actually read in quite a while, called BoldType: http://boldtype.com/current/

I didn't actually read any of their features, but their newswire at the bottom included a link to this Publisher's Weekly article about Scribd:

"Scribd Signs Deals with Major Houses"
http://www.publishersweekly.com/article/CA6644952.html

Scribd, Inc., the “social publishing site” that posts a variety of written documents daily, has signed deals with a number of publishers to post novels, chapters and other content on scribd.com. Among the publishers working with Scribd are the Random House Publishing Group, Simon & Schuster, Workman., Berrett-Koehler, Thomas Nelson and Manning Publications.

According to the company, more than 50,000 new documents are uploaded daily using Scribd’s iPaper reader, which makes it easy to upload, share and embed original writings and documents. Publishers who have signed on say they see using Scribd as a way to give greater exposure to their titles. Links allow users to buy a book.

The link about Scribd caught my eye b/c I'd come across Scribd via some blogs..specifically Brad DeLong's. For example, if you want to see Scribd in action, DeLong's review of Krugman's recent book, The Return of Depression Economics and the Crisis of 2008 is embedded on his blog here.

Actually, the beauty of Scribd is that it's portable--just like YouTube, they give you the html code to embed the content into any web page. Hence, here is DeLong's review of Krugman:

null

Publish at Scribd or explore others: literature carroll

That is pretty wild, I think..you can read DeLong's review w/o visiting his website, the LAT website (which published DeLong's review), or even Scribd itself. And it looks great.

(In fact, I didn't even have to go to Scribd to embed--just click on the "More" menu in the embedded doc above, and then "Embed Codes")

More on Scribed: Publisher's Weekly ran a slightly longer article about it a few weeks ago:

"Publishers, Authors Weigh Merits of Scribd
Document-sharing site raises both visibility and copyright concerns"
http://www.publishersweekly.com/article/CA6640708.html

While it's certainly not the only document-sharing Web site, Scribd.com, with more than 50 million users and more than 50,000 documents uploaded daily, aims to be the YouTube for print...

Scribd's main feature is its iPaper application—a Flash reader that allows creators to upload original writings—which permits both uniform publication display of documents and content to be embedded from the Scribd.com site and easily shared. Documents can be downloaded for free, and iPaper allows users to embed text on their Web sites, blogs and on Twitter. Beyond book publishers, Scribd is working with publications like the New York Times and the Wall Street Journal to embed material in their online stories.

The game keeps on changing...

Hank Greenberg on CBS re AIG: "greatest company in history"

2009-03-20T16:41:00.003-04:00

I'm getting better at posting video, etc..here is one I just heard about on NPR--an interview Hank Greenberg did with CBS this morning about AIG. The quote that caught my ear was the following: "It was the greatest company in history. In the insurance industry, there wasn't anything like it."

(Let me briefly unleash my dormant inner logician. Let p = "It was the greatest company in history" and q = "In the insurance industry, there wasn't anything like it." Clearly the truth values here are p = F and q = T.)

A google search on "hank greenberg AIG greatest company history" led to a news article on the CBS site about the interview:

"Ex-AIG CEO: Don't Blame Me For Bonuses"
http://www.cbsnews.com/stories/2009/03/20/earlyshow/main4878528.shtml

Who is Greenberg?

Greenberg built AIG into the largest insurance company in the world. After nearly 40 years at the helm, he was ousted in 2005 in the midst of an accounting scandal.

Here is the part with the killer quote:

Three CEOs followed Greenberg, but he singles out the current one, Edward Liddy, the government-appointed boss who denied blame this week on Capitol Hill.

Liddy told a congressional hearing, "In reviewing how AIG has been run in prior years, I've also seen evidence of its bad side. Mistakes were made at AIG on a scale few could have ever imagined possible."

Rodriguez: Edward Liddy seemed to imply that a lot of the mistakes at AIG were made when you were CEO."

Greenberg laughed at that.

Rodriguez: Do you accept any responsibility?

Greenberg: Absolutely not. It was the greatest company in history. In the insurance industry, there wasn't anything like it.

Kanye West, "Through the Wire" (video)

2009-03-20T13:59:00.002-04:00

This is something I posted to facebook, which is becoming sort of a parallel blog for me. In fact, what would be handy is an app for exporting facebook posts to Blogger..surely such a thing must exist..and a couple minutes on Google reveals that indeed it does:
http://blogs.pcworld.com/staffblog/archives/006806.html
http://www.typepad.com/features/blogit.html

Anyways, below is something I posted on facebook a couple hours ago, in response to a status update by Brooklyn Bodega..

======

Brooklyn Bodega made a good point: "I wonder if Kanye's young fans even know about the car accident that helped him get off the shelf at the Roc. It is not part of his narrative anymore"

Kanye told the story himself back in '03..lead single off "The College Dropout" (still my favorite of his albums..guess I'm old and crotchety like that): http://en.wikipedia.org/wiki/Through_the_Wire

great track, with that sped up Chaka Khan sample..give it a listen

if you don't know, now you know..

Brooks on "The Commercial Republic", citing Walt Whitman

2009-03-19T14:16:00.003-04:00

Catching up the paper from earlier this week. Once again, I find David Brooks, although a bit smug and high handed, worth posting.

His column in Tuesday's paper was on the US as "the commercial republic":

Over the centuries, the United States has been most conspicuous for one trait: manic energy. Americans work longer hours than any other people. We switch jobs more frequently, move more often, earn more and consume more.
This energy was first aroused by abundance, by the tantalizing sense that dazzling wealth was available just over the next hill. But it has also been sustained by a popular culture that celebrates commercial ambition. From Benjamin Franklin and Alexander Hamilton, through Horatio Alger and Norman Vincent Peale, up until Donald Trump and Jim Cramer, popular figures have always emerged to champion the American gospel of success, encouraging middle-class people to strive, risk and make money.

Brooks, after a handful of paragraphs of historical context, goes on to say:

In short, the United States will never be Europe. It was born as a commercial republic. It's addicted to the pace of commercial enterprise. After periodic pauses, the country inevitably returns to its elemental nature.
The U.S. is in one of those pauses today. It has been odd, over the past six months, not to have the gospel of success as part of the normal background music of life...That part of American culture that stokes ambition and encourages risk has gone silent.
We are now in an astonishingly noncommercial moment. Risk is out of favor. The financial world is abashed. Enterprise is suspended. The public culture is dominated by one downbeat story after another as members of the educated class explore and enjoy the humiliation of the capitalist vulgarians.

It was the closing paragraph that caught my attention:

Walt Whitman got America right in his essay, "Democratic Vistas." He acknowledged the vulgarity of the American success drive. He toted up its moral failings. But in the end, he accepted his country's "extreme business energy," its "almost maniacal appetite for wealth." He knew that the country's dreams were all built upon that energy and drive, and eventually the spirit of commercial optimism would always prevail.

I got to seek out this Whitman essay. In fact, I should get a collection of his writing..sad to say, I don't recall ever reading anything by him! That esp inexcusable now that we are residents of the borough of Brookyln...

I'm curious if/how Whitman believes the creative and democratic elements of society can thrive in what is, as Brooks has written, a decidedly commercial republic. I'd like to find out if Whitman was in fact as sanguine about that maniacal appetite for wealth as Brooks makes him out to have been..

In fact, a google search on "whitman democratic vistas" comes up with a link to what looks to be the full text of "Democratic Vistas" as well as the Amazon page for a collection titled "Democratic Vistas and Other Papers"; interestingly, the "product description" on the Amazon page (quite commercial, that) seems to directly contradict Brooks:

Walt Whitman (1819-1892) contributed to the greatest prose of American letters with Democratic Vistas, now considered a classic discussion of the theory of democracy and its possibilities. In this essay he protests the unrestrained materialism, greed, corruption and spiritual failure of what, two years later, Mark Twain would label "The Gilded Age." Whitman criticizes America for its "mighty, many-threaded wealth and industry" that mask an underlying "dry and flat Sahara" of soul. He calls for a new kind of literature to revive the American population: "Not the book needs so much to be the complete thing, but the reader of the book does."

This is indicative of what bothers me about Brooks: he'll come with an erudite, reasonable-sounding essay, but then put in a subtle, disingenuous twist to make the conservative viewpoint seem more reasonable than it deserves to be..

Video clips: at the market in south Kolkata

2009-03-16T13:50:00.002-04:00

I still haven't uploaded all our photos from our trip to India last month..but I did upload a few of the numerous video clips I took. Here are two of them, both taken on the morning we walked with my aunt to the local market:

1) The chicken butcher; I snapped a few photos of these guys, after which they wanted to pose for me, which is when I shot this clip:

2) One of the many fishmongerers; same here, actually--this guy did a special pose for me when he saw I was taking photos. Not sure what type of fish he was dealing..I'll have to ask my parents if they can tell:

NYT on "forced entrepreneurship"

2009-03-14T09:38:00.002-04:00

Lead story on nytimes.com this morning, and also on A1 of today's print edition (just below the fold): "Weary of Looking for Work, Some Create Their Own", about the growing phenomenon of "forced entrepreneurship."

This is encouraging in some ways; seems clear that this is what it will take for the economy to turn around. Indeed, as the article refers to via a quote, it's the process of "creative destruction" of capitalism at work:

Mark V. Cannice, executive director of the entrepreneurship program at the
University of San Francisco, calls the phenomenon “forced entrepreneurship.”

“If there is a silver lining, the large-scale downsizing from major
companies will release a lot of new entrepreneurial talent and ideas —
scientists, engineers, business folks now looking to do other things,” Mr.
Cannice said. “It’s a Darwinian unleashing of talent into the entrepreneurial
ecosystem.”

Certainly there is a lot of financial and quantitative talent that's been released from Wall Street over the past year. Indeed, it's probably a good thing for our society that a smaller percentage of the most ambitious and accomplished college graduates aim to be something other than an analyst at an i-bank, and that fewer of our math, physics, and engineering PhDs end up working as something other than quants on Wall St.

Back to this grassroots entrepreneurship: I imagine/hope that this is what the GOP would like to support, instead of governemnt spending. But I haven't heard any concrete policy proposals for how they would do so; what I have heard is the mantra of more and more tax cuts--what they've been repeating for 30 years (the Age of Reagan, now seemingly coming to an end).

For starters, how about universal health care, so individuals can pursue entrepreneurial ventures w/o worrying about finding a job that includes decent health insurance for themselves and their dependents?

Galbraith on financial bubbles and busts

2009-03-14T00:10:00.003-04:00

Me quoting Mark Thoma quoting the WSJ quoting John Kenneth Galbraith..words of wisdom:

In 1999, John Kenneth Galbraith explained how to spot speculative excess:
Notable and Quotable, WSJ: From an address given by John Kenneth Galbraith at the London School of Economics in June 1999 called "The Unfinished Business of the Century":
We have far more people selling derivatives, index funds and mutual funds (as we call them) than there is intelligence for the task. I am cautious about prediction; I discovered years ago that my correct predictions are forgotten, the others meticulously remembered. But some things are definite; when you hear it being said that we have entered a new economy of permanent prosperity with prices of financial instruments reflecting that happy fact, you should take cover. This has been the standard justification of speculative excess for several centuries -- for a good part of the millennium. My one-time Harvard colleague Joseph Schumpeter thought inevitable and even beneficial what he called "creative destruction" -- the cyclical process by which the system eliminates the people and institutions which are mentally too vulnerable for useful economic service. Unfortunately the process has larger and less benign effects, including the possibility of painful recession or depression.

LSE has a full transcript of the 1999 lecture here (pdf). In fact, now that I'm skimming it, I think it's worth quoting what Galbraith said prior to the passage above:

The most serious [problem within economies] is the ancient and unsolved problem
of instability – of the enduring sequence of boom and bust. The history goes
back for centuries to the Tulipmania in Holland in 1637 and perhaps before, to
the early eighteenth century promise in Paris of gold in Louisianna – gold not
yet discovered – and here to the South Sea Bubble. (In later years there was a
wonderful prospect for draining the Red Sea to recover the treasure left behind
at the crossing of the Isrelites.) In the century, in the United States, about
every 30 years there was a sequence of boom and bust, including the Great Crash
of 1929. The speculative crash, now called a correction, has been a basic
feature of the system. In the United States we are now having another exercise
in speculative optimism following the partial reversal last year.

And also what Galbraith said immediately after noting that the "possibility of painful recession or depression":

Let us not assume that the age of slump, recession, depression is past. Let us
have both the needed warnings against speculative excess and awareness that the
ensuing slump can be painful. And there will then be need for specific remedial
action by the government. Keynes, one regularly reads, is out of fashion; his is
a cyclical legacy that fades in good times, returns with recession.

Kolkata/Chennai: quick recap

2009-02-06T05:17:00.001-05:00

Won't write much, since I'm in a cyber(/copy)shop in Chenai, paying Rs 240/hour for internet access. Here's a quick recap of the past week:

Arrived in Mumbai late Sat night (local time), after the 14 hr flight from JFK. Uncomfortable 6 hour layover in the domestic lounge before flying to Kolkata on Indian Airlines. Went straight to Garia, luchi and aloo for lunch. Afternoon in Ballygunge, then back to Garia for the evening.

Monday: finally made up to Pishi's place (just north of Gariahat) early afternoon, spent all afternoon there, into the evening. Bought a cell phone at a Nokia shop in Gariahat, cab back to Garia. Up way too late, sipping Glenfiddich while kaku lectured/reminsced.

Tuesday: went to bajar (macch, fruit & vegetables) with kaki, then back out with kaku for a couple errands on the main road. Soma came over for lunch (incl elish macch), then took a car to their flat in Bhowanipore. Met mamas and mamimas, watched end of the 3rd India-SL OID, late dinner there.

Wednesday: finally made it out ~noon, first to a jewelry shop, then Metro from Rabindra Sadan to Esplanade. Some shopping on Chowringhee (memorably, at a curio shop which has been there since 1953--I asked the owner, turned out his father moved to Kolkata from Sindh during Partition and opened the shop). Bought a couple books on Park St from a sidewalk seller ("Enchantress of Florence" & "White Tiger"), then lunch at Peter Kat. Dropped off some stuff back at the flat, then took a cab all the way out to the bypass, to look at the shops at Swabhumi. Unfort most shops were closed, so cabbed back to the Forum mall--bought some chappals, some CDs ("Slumdog" soundtrack (for Rs 150!), 4 disc set of mp3s), and a DVD ("Ghare Baire"). Nice espresso drinks at "CCD" (Cafe Coffee Day).

Thursday: back out to the bypass, but on to the airport. Boarded Jet flight to Chennai..straight from the airport to the banquet hall for lunch, checked in to the hotel (just up the road..Aditya Hotel!), then back for a ceremony and dinner. A handful of Madras coffees from the 24 hr coffee service setup.

Friday: up early for the wedding ceremony, preceded by dosa/iddli/sambar breakfast in the dining hall, followed by lunch. Afternoon off..walked back to the hotel (better & faster than driving), and then back out to find internet access..

..which is where I'm at now, in the Rahaat Plaza. Should prob head back to the hotel..though tempted to see if I can get a beer at the Ponnusamy Hotel/AC Restaurant, just upstairs in the plaza here.

More next week, from Kerala (Cochin, Wyanaad), Bangalore, and/or Delhi..

Next stop: Mumbai

2009-01-30T21:24:00.001-05:00

We just boarded an Air India flight, non-stop JFK to Mumbai. The next ~15 hours will be: Indian food, Hindi movies, hopefully some sleep, and working thru some of the reading material we brought: a pile of this week's newspapers (one of my favorite parts of flying..going thru and discarding a stack of paper) and starting the mere 2 books we packed..

Remarkable that we brought only 2 books: one fiction: "Inheritance of Loss" by K Desai; and one non-fiction, "The Argumentative Indian" by A Sen. The prior we picked up a last summer, at that bookstore across from Magnolia in the W Village (before a session with the Cornell guys @ Whitehorse); the latter Ina gave me as a birthday present a few years ago. This seemed like a good trip to finally read them.

Remarkable because I considered a whole shelf of books at various pts for this journey: Nehru's "Discovery of India", Niall Ferguson's "Empire" (see my previous post re Ferguson), "India: A Million Mutinues Now" by Naipaul, Gurcharan Das's "India Unbound", another more recent one about modern India by some guy named Luce.

Remarkable also that my reading interests have shifted so much to non-fiction. The only novels that I considered were "Midnight's Children" and "White Tiger"..til Anj suggested "Inheritance of Loss."

Lots of Indians on this flight..prob 95%. Actually, lots of South Asians in the terminal: in addition to the hundreds of Indians checking in for our flight, there were hundreds of add'l S Asians checking in at the Kuwait and Emirates Air counters (I say S Asian since my guess is that many were Bangladeshi..perhaps connecting to Dhaka? I certainly heard more than one person in the terminal speaking some very heavily East Bengal-accented Bengali!)

That reminds me of something else I'd planned to blog this week--previous trips to India (because in '95 we took Gulf Air via somewhere in the UAE, connected to Dhaka, and then Biman to Calcutta). I think this is my 8th or 9th trip to India: def '77, '84, '88, '95, '96, '01, and '02..and maybe one more prior to '77, but I'm not sure about that..will have to check with my parents.

But this is the first time I'll be visiting my extended family in Calcutta without my parents around..should be interesting. And also the very first time Anj and I will travel, just for a bit, on our own..

Should be interesting..
Sent via BlackBerry from T-Mobile

Morning's Top Stories (Jan 26 '09)

2009-01-26T08:05:00.000-05:00

This is something I may try to make a regular (dare I say daily?) feature: a few links regarding top/interesting news stories. Here's what I see as today's top stories, based on my own interests and media sources:

The Senate votes later today on Pres Obama's nominess for Treasury Secretary, Tim Geither. He appeared before the Senate Finance Committee last Wednesday, with the committee voting 18-5 recommending confirmation. If you're very interested in this story, here is a blog post about part of Geithner's 102 (!) pages of written responses to the Finance Committee. More briefly, here are the first few paragraphs of a CNN Money summary from yesterday:

The Senate is set to meet Monday evening to vote on Tim Geithner's nomination as the next Treasury Secretary. Senate Majority Leader Harry Reid of Nevada has said he expects to hold a vote at 6 p.m. ET.

Geithner is expected to easily win confirmation from the Democratic-controlled Senate. Democrats on Capitol Hill have spoken of the need to quickly confirm Geithner, who will spearhead President Obama's response to the financial crisis that threatens to unravel economic growth around the globe.

Reid warned Friday that Republicans "would not be very wise politically" to try to hold up the nomination, which last week won the support of all the Democrats and half the Republicans on the Senate Finance Committee. He added that Democrats could block any attempt to filibuster.
On Thursday, the committee recommended in an 18-5 vote that the full Senate confirm the appointment of Geithner, who is currently president of the Federal Reserve Bank of New York, to succeed Henry Paulson.
Much has been written about Geithner since Obama somewhat surprised by nominating him back in November. I've saved a bunch of what's been written about him--I'll get around to posting sometime over the next few weeks, since, assuming the confirmation goes through today, we'll be hearing a lot from and about Geithner over the next couple years.

The situation with the banking system continues to be very dicey; the latest debate is over outright nationalization. This debate has been raging among economists and other commentators in the blogopshere, occasionally bubbling up into the mainstream media. There is a News Analysis piece on the front page of this morning's NYT:

Nationalization Gets a New, Serious Look
DAVID E. SANGER
NYT, January 25, 2009
http://www.nytimes.com/2009/01/26/business/economy/26banks.html

Go here for excerpts from and summary of the above, and here for a list of about 20 links to blog posts from the last few weeks about bank nationalization.

Finally, the big news on the business pages is a good old traditional M&A: Pfizer is going to acquire Wyeth. This is quite a big deal, both in the literal sense--Pfizer is paying ~$68bn for Wyeth; and in a figurative sense--some $22bn of that purchase price is being provided as credit by a consortium of five banks. This story also made the front page of the NYT, but for the sake of variety, here is this morning's WSJ article:

Pfizer to Pay $68 Billion for Wyeth
WSJ, January 26, 2009
http://online.wsj.com/article/SB123297107149615079.html

Niall Ferguson on Fareed Zakaria GPS / "The Ascent of Money"

2009-01-25T23:52:00.003-05:00

Historian Niall Ferguson was interviewed by Fareed Zakaria for Zakaria's GPS show on CNN..I believe it was for the Jan 18 episode. The clip is below, pulled from the CNN website for GPS; it's only 8 1/2 mins, so give it a viewing:

Ferguson discusses the current financial crisis (the clip is titled "Is it bad"? on the GPS website), and segues into a discussion of his recently published book, The Ascent of Money: A Financial History of the World, by arguing that we need to put the current crisis into historical contect--that leads into a a discussion of the Great Depression and Japan in the 1990s. Ferguson identifies the prior as a worst-case scenario, the key difference being that governments and central banks are using very different monetary and fiscal policies to "repress" a depression scenario (and hence coins a nice phrase: "the Great Repression"). More interestingly, Ferguson points to the latter, Japan's "lost decade" of essentially zero economic growth, as not only a distinct possibility, but as a relativey good scenario! "We'd be getting off lightly if we can get by with a decade of 1% per annum growth," say Ferguson.

He continues: "At the moment, I'm really quite apprehensive that the process of deleveraging has far from run its course; there's no floor in sight in the real estate market. And these things have a self-perpetuating quality--one of the lessons of history is that depressions tend to feed on themselves. There is after all a pychological dimension to this: once people get really spooked, it's very hard for the market to find its bottom. And remember, stocks sold off between '29 and '33 by nearly 87%. So you have to have a sense of orders of magnitude here. Financial crises happen infrequently on this kind of scale, and that's why we need to have historical knowledge, to have an understanding of their dynamics."

(Ferguson touches on a lot of interesting topics here: the great deleveraging, still not completed after 18 months (I posted this re deleveraging in October, after hearing Sanford Grossman speak on the crisis); the pyschological dimensions of depressions, i.e., the busts that follow bubbles, and how markets can go into a freefall in such situations; the need for "a sense of orders of magnitude"--I take that to mean that the current crisis is not on the same order of magnitude as the Great Depression--stocks have sold off merely 40-45% from their peak. That peak occurred in Oct 2007, by the way; with a remarkably large portion of the drop occurring in the first half of October 2008.)

The clip ends with Ferguson's response to Zakaria's question about how people will look back on this period in history: "I think they will look back and say, you know what, there was actually one country at the heart of the global economy in the early 21st century, and it was called Chinamerica: China plus America, and these two economies were symbiotically linked, they were intertwined with one other. China did the saving, America did the spending. China made its funds available through currency interventions, and the United States took the money and piled on the debt. This worked pretty well for nearly a decade. It took us from the Asian crisis in '97-'98, right up to the American crisis that began in 2007. The question that historians will grapple with--and this is the thing that fascinates me now--is whether or not Chinamerica was able to survive this crisis. If China and America continue to interact economically, then it seems to me we're in with quite a good chance of avoiding another Great Depression."

I could continue transcribing, because it's quite fascinating--Ferguson sees two possibilities: China continues to support its export-based economy by continuing to buy "10-year Treasuries and other dollar-denominated securities" (i.e., those aforementioned currency interventions), and thus propping up the globabl market for those exports--by enabling further borrowing (bailouts) by the American government and consumer . Or, and this is what's truly fascinating, Ferguson says that China could turn inwards; China could say "we're going to focus on our own resources, our own consumption, we're going to say goodbye to the world market, and revert to being an introverted Middle Kingdom." This, Ferguson says, is the end of globalization, and is the scenario which Ferguson believes could take us back to the '30-style Depression: he argues that it was a breakdown of global trade which led to the protracted depth of the Great Depression.

For background on Ferguson, see his personal website and/or Wikipedia. His personal page is a much more extensive (and flashier) version of his faculty page at Harvard (where he has appointments in both History and the Business School).

I'd come across a few of his books on the history of empires, perhaps just while surfing through Amazon:

I bought a copy of the latter last year, as a gift for my father-in-law, since the British Empire is one of his favorite conversation topics. I just borrowed it back from him, with the intention of reading it soon..

It was only after the books above sparked my interest in Ferguson that I discovered he is also an expert in the history of finance: prior to his new "The Ascent of Money" book, he published a 2-volume history of the Rothschilds and also a book titled "The Cash Nexus":

So he's written enough to keep a student of history and finance busy for years. Apparently he's quite a teacher too. A friend took an intro undergrad course with him at Harvard; if I recall correctly, he said it was the best course he took at Harvard.

If you want to view more of Ferguson and get a better sense of the contents of his new book, turns out he did a documentary for PBS, also titled "Acsent of Money." It seems that it aired on most PBS stations just a couple weeks ago..but it also seems you can stream the whole thing through the PBS website.

It doesn't seem that I can embed the video from the PBS site; you'll have to go to the PBS site, which you can do by clicking thru on the following photo of lower Manhattan, which is what the documentary begins by showing:

Attempting to live-blog Obama's speech

2009-01-08T11:49:00.002-05:00

My plan this morning was to get out of the house early, head to one of the branches of the Brooklyn Public Library where I've got books to pick up. But around 10am I discovered that the branch I'd planned to hit today, Carroll Gardens, does not open til 1pm on Thursdays. And at just that moment, Brian Lehrer came on WNYC...

I've become addicted to Brian Lehrer's show--it's on 10am-12pm weekdays, and he deals with a wide range of current events, from the local to the international--and often the intersection of the two. For example, today's show which I had been hearing about all week, was an interview with Elliot Sander, the head of the MTA--the Metropolitan Transit Authority, which all of us who live in the NYC metropolitan area depend on for public transit.

Over the past couple months, since I've started using Twitter, I have occasionally been posting "tweets" (still don't like that term) about what Lehrer has got on the show. Today I took it a steo further and essentially used Twitter to take notes on Lehrer's interview.

To see them, you could go here and scroll back to find the relevant posts (it's recently been occurring to me that Twitter could the archiving and searchability a lot better, if in fact people are using this as a form of micro-blogging, as I am here).

The Brian Lehrer show led right into Obama's big speech this morning, on the proposed stimulus/infrastructure plan. So I decided to go with the flow and try live-blogging the speech via Twitter. Again, go to the SteadyBlogging Twitter feed I set up (for the ever-expanding SteadyBlogging empire!), and find the posts between 11-11:30am this morning (Jan 8, 2009).

The next step is to take these notes and use them to compose some actual thoughts. Look for that to appear here later this afternoon...after I get back from Carroll Gardens!

Hope and dreams in '09 (according to Dilbert)

2009-01-05T14:39:00.004-05:00

Here is a quick one, to welcome you back to your desk on what is, for many, the first working day of the year...

A Dilbert cartoon that I swiped from Greg Mankiw's blog, in a post he titled "Get Ready for a Tough Year":

(Go here for the full-size image.)

NYT Real Estate: "Someone Still Has Money"

2009-01-03T16:48:00.002-05:00

We went out to dinner last night with some old-school UofC friends, and somehow the NYT came up. One of our friends mentioned that the Real Estate section is the first part of the Sunday paper she reads. I read it too, but usually later in the week..

One of their features is "Big Deal", on p2: it's usually 3 short item on big residential transactions--sort of NY real estate porn, for the 99% of the population that can't afford such real estate. The lead in tomorrow's Big Deal is truly a big (large) deal (a handful of the Sunday paper section actually get delivered on Saturday--the sections which aren't news-dependent), appropriately headline "Someone Still Has Money":

Despite faltering sales, it appears to be far too soon to declare the luxury market dead, especially now that we can raise a glass to what may be the most expensive condominium ever sold in the city, per square foot: a three-bedroom apartment on the 38th floor of 15 Central Park West, which changed hands for $27 million. The price works out to $9,480 per square foot, not counting the 22-foot-wide terrace facing Central Park.

Even so, that sale, filed with the New York City Department of Finance last week, reflects some of the new realities of the luxury market, now that the boom years are over. Deals are still being done, the records show, but often far below the asking price, and bankers and hedge-fund types, who once drove prices ever higher, are a fleeting presence.

It takes a detour into the type of non-hedge fund types who are still buying::

In deals that came together over the last month or so, the buyers included Bruce Nauman and his wife, Susan Rothenberg, who are both artists; an Italian fashion designer who sold his business just before the retail slowdown; some lawyers; and a wealthy writer who is a small-magazine publisher.

Or as David Javerbaum, the executive producer of “The Daily Show With Jon Stewart,” observed in an interview, “Having a comedy-writing job these days is steadier income than having a job on Wall Street.”

But the more interesting part is at the end, about the apartment in 15 CPW--a building which was just built over the last couple years, in a rare instance of new construction overlooking Central Park (click on that link for an example of the views!). I happened to read an architecture review in the New Yorker (from Aug 2007) and have been noticing items about transactions in the building..the list of owners reads like a who's who of NY high finance; from the New Yorker review:

Among the buyers have been celebrities like Denzel Washington, Sting, Norman Lear, and Bob Costas, but, in truth, the more spectacular units went for prices that would make even a movie star blanch. The most expensive of all—a forty-five-million-dollar penthouse bought by the hedge-fund manager Daniel Loeb—was for a while the most expensive apartment ever sold in the city. A plurality of the buyers come from the world of finance, including Sanford Weill, the former head of Citibank, and Lloyd Blankfein, the C.E.O. of Goldman Sachs.

There was also a Market Movers blog post about that aspect of the building, titled "The Attraction of 15 CPW" (Market Movers is a great finance blog, btw.)

I'd walked by this building a few times--if you live in NYC, no doubt you have too: it's on CPW @ 61st/62nd, just north of Columbus Circle. (Click here) for a Google Map.) But it's not remarkable from the outside..but apparently quite fancy inside. (Google turned up

Back to today's NYT piece, which mentions Weill's apartment, and also the details of the recent sale:

The record-setting apartment on the 38th floor of 15 Central Park West at 62nd Street has 2,848 square feet, a lot by Manhattan standards (and a bit more than Mr. Javerbaum’s new apartment). But it lacks the spaciousness of some other apartments in the building.

It is small, for example, compared with the 6,744-square-foot penthouse bought in 2007 by Sanford I. Weill, the former chairman of Citigroup, for $42 million, or $6,287 a square foot.

Still, the apartment has 14-foot ceilings and huge windows with views on three sides. The master bedroom faces Central Park, the two other bedrooms face the Hudson River, and the living room looks south over the city.
The seller was Richard T. Fields, a developer of casino resorts, who recently bought the Trump Marina hotel and casino in Atlantic City for $316 million.

Mr. Fields signed a contract to buy the apartment for $13.35 million in March 2006, while the building was under construction. But when he closed on it at the end of June 2008, he immediately put it on the market for $35 million.

Many people were amazed at the asking price. Mr. Fields was forced to reduce the price by 23 percent, but the property still set a record. The identity of the buyer was not disclosed in the city filing.

I'm not someone who's envious of the lifestyle of the very rich (and may or may not be famous..how many of have heard of Daniel Loeb, or Ashok Varadhan, for that matter?). But I'm interested in real estate and architecture--esp in NYC, these days. And having been immersed in Wall St for a year or so, it's interested in see how that part of the city interacts with and affects other spheres of the city...and it will be interesting to see how all that changes, now that we've hit an inflection point (or rather, perhaps, a global maximum?) in the history of the city.

closing thoughts on 2008: our bipolar world--the best of times/worst of times

2009-01-02T13:27:00.005-05:00

Here we are, at the beginning of 2009. Try as we might to live in the present moment, the habits of looking back (and forward) are not shed easily. I sat down this morning to write out some quick thoughts on 2008, but this ended up going in a different direction. Let me know what you think..

So, 2008: the famous, paradoxical, insistently inconsistent Dickens lines ring true: it was the best of times, it was the worst of times.

(A google search on that phrase reveals that I'm not the only one to think in such cliches w/rt 2008--3rd hit is ABC News' 2008 Year in Review piece:
http://abcnews.go.com/2020/YearInReview/story?id=6489021&page=1

But the first hit, reassuringly (Google knows all), gave me what I was looking for--the whole opening passage, on quotationspage.com. Which is worth quoting in full:

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way - in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.
Charles Dickens, A Tale of Two Cities
English novelist (1812 - 1870)

A lot of that rings true...is it winter in America? Or morning in America? It all sounds very much like the present period indeed (though can someone unpack that last segment for me? "the superlative degree of comparison only"?? I lost him there..)

The most obvious examples of the two sides of 2008's metaphorical coin were the US presidential election and the financial/economic crisis. The bipolarity of it all was enhanced here in NYC--living at the epicenter of the latter, but also within the capital of blue America. The best thing I read on this was Kurt Andersen's piece in New York Magazine this fall, titled, appropriately, "Whiplash City", with the subhead "In this terrifying, giddy fall, our days are numbered like never before. And somewhere between the polls and the Dow lies destiny" and the following cover:

Andersen's virtuosic opening paragraphs:

So seldom do we motley millions all think and talk about the same thing at the same time—let alone two great big things, let alone intensely and continually for weeks at a time.

Welcome to the extraordinary fall of 2008. As the imploded financial industry is nationalized, and we prepare to elect—can it really be?—an African-American intellectual the next president, New Yorkers are in a kind of breathless, Twittery mind meld about matters of huge historic consequence. Because Wall Street is (excuse the expression) ground zero for the present cataclysm, we are probably experiencing financial vertigo more acutely than most of our fellow Americans. And yet at the same time, because something approaching nine out of ten New York voters will pull the lever for Barack Obama two weeks from now, we are at the same time brimming with uncanny, yes, hopefulness about the imminent change in national leadership and policy. Every day, crazily fibrillating numbers (the Dow down 777 points, the Dow up 936 points) make us feel sick, while another set of equally amazing numbers (Obama well ahead in every national poll, and tied or better in three southern states) puts a song in our hearts. This data-driven combination of sky-is-falling dread and OMG giddiness—meth-laced Ecstasy, anyone?—is bizarre, unprecedented.

Oddly, I didn't follow the numbers as closely as many this fall. I didn't watch the markets on a daily basis, and I wasn't obsessively checking fivethirtyeight.com in the lead up to Nov 4. That is odd, since (a) my thinking has become increasingly quantitative and data-driven; primarily due to the fact that (b) I worked on as a sort of "quant" on said Wall St; up until (c) my employment was swept up and away in said cataclysm; and finally, since leaving the Street, (d) I've become increasingly interesting in matters of politics, economics and policy.

Andersen's essay is worth reading in full; and also worth revisiting in, say, 7 years. (When we'll be on the cusp of 2015 going into 2016...just wanted to see what those digits looked like in type. They may seem so far in the future, but that's how far we are from 2001, which does not seem like that long ago: the lazy days of Bush vacationing carefree in Crawford in the first 8 months of his presidency; the remnants of the bursting dot-com bubble, with the housing bubble was not even a gleam in investors' (or Alan Greenspan's) eyes; the planes hitting and the two towers going down, and all that ensued...)

Andersen's next paragraph:

Exactly seven years ago, we had already become accustomed to the cliché that the previous month’s terrorist attacks had “changed everything.” As we know now, they did and they didn’t. (Irony, for instance, did not die.) Seven years from now, I’m betting, we’ll look back and reckon that this fall changed everything at least as much as the fall of 2001 did, and maybe more.

One of the fascinating aspects of living in NYC has been talking to people who lived and worked here in the city in Sept 2001--many of them, in fact, worked downtown at the time. Here is more from Andersen:

...as we discovered in the weeks and months after 9/11, there is some solace in the collective experience of disaster. Misery shared is preferable to misery alone, and an ebbing tide lowers all boats. It’s not just one overleveraged bank or brokerage in trouble, as it seemed at the start, but nearly all of them. Everyone who owns stock is watching their wealth shrink at more or less the same rate. And those of us who’ve fretted, passingly, about the growing extremes of economic inequality in America? That problem has been, um, addressed, by the free market: In just two months, the investor class has had its wealth reduced by $2 trillion or more. Thanks to the stock market, the rich got much richer, and now, thanks to the stock market, the rich are getting much poorer faster, in relative terms, than actually poor people.

A certain leveling is taking place. On the stoops and sidewalks of my Brooklyn neighborhood, there are lots of middle-aged men lounging all day long, comfortably pensioned-off former longshoremen and sanitation workers; I’m thinking that before long, the Upper East Side and Greenwich will acquire their analogous populations of robust, not-old guys without anything urgent to do every day.

I haven't quite noticed that in our Brooklyn neighborhood--but last time I took the bus out to Bread Stuy (way back in late Sept?), the proprietor (a wise, kind, and funny man) told me he'd definitely seen an uptick in non-rush hour business, plenty of new faces spending days in the cafe (a good counter-cyclical investment? a comfy, welcoming cafe in an slightly gentrified neighborhood, with reliable wifi and relatively affordable eats and drinks..)

Andersen nails it--I'm one of those (relatively) robust, not-old guys, lounging around with anything urgent to do. So going into '09, the question is, what to do if nothing is that urgent?

I'll close with Andersen's closing paragraphs, which circles back around to our data- and web-driven bipolarity:

...like so many people these last few weeks deeply invested in both equities and Obama, I’ve been toggling like a madman, compulsively and constantly, between Web-browser tabs: from the fever chart of the DJIA on Google Finance over to the national polling page on Real Clear Politics, then back to the Dow, then to FiveThirtyEight for analysis of the new tranche of polling data, back to the Dow, then the electoral-vote map at Pollster, back to the Dow, Real Clear Politics again for the latest state polls, and so on, dozens of times a day. The psychological result, of course, has been a high-frequency bipolarity—thrilled, depressed, thrilled, depressed—powered by Google.

The steadiness of Obama’s momentum has reflected (not coincidentally, I think) the soothing, absolutely even-keeled steadiness of his public manner since the crisis began. He’s come across like the person in the stuck elevator or subway car to whom all the freaked-out passengers instinctively grant authority. And for those of us obsessing over every tick in the financial and political metrics, it’s additionally reassuring to watch at least one of the graph lines moving in a continuously positive direction.

This is something that was remarked upon a lot through this remarkable campaign--Obama's temperament, his even keel; how he himself says that he doesn't let himself get too high over the highs, nor too low due to the lows. A middle way...

Andersen continues, with some anecdotes that echo Thomas Friedman's morning-after column (or rather, if anything, it's Friedman echoing Andersen), which I also posted some thoughts about (here), and that also refer to South Carolina, which coincidentally also came up recently (see here):

I do leave the computer screen sometimes and get out of the house. Back on the first of the month (the Dow still up almost at 11,000, Obama already five points ahead of McCain), I had dinner in the Village with a friend of mine who lives in the South. He’s middle-aged, wears a suit and tie, and probably voted in the past for a Republican presidential candidate or two. He told me, amazement in his voice, that two different South Carolina pals of his—well-to-do Republican white men his age—had confessed to him they were planning to vote for Obama: one because Palin was a deal breaker, the other because he thought that electing a black guy president would once and for all absolve white America of its historical racial crimes. And so when the conservative pundits started mutinying—Kathleen Parker, who has implied she’ll vote for Obama because of Palin, and William F. Buckley’s son Chris, who endorsed Obama last week—it didn’t shock me.

And, finally, Andersen's penultimate paragraph::

I’ve been saying for years and years that the eighties never really ended culturally and politically—not the way the fifties and sixties and seventies did. But 2008 will surely turn out to be the conclusion of an era. Reaganism—the utter devotion to deregulation and hypercapitalism, the unbending antipathy to the federal government, American power as nothing but cheerful bullying—is over. We all enjoyed playing cowboy until too many of us fell off our horses or got shot. The most fundamental form of American exceptionalism—that is, among all developed countries, our peculiar predisposition to magical thinking about human perfectibility and business schemes and supernatural salvation—won’t disappear overnight. But in our economics and politics sane people understand that we’ve reached that Wile E. Coyote running-in-midair moment where reality kicks in and he falls to the bottom of the cliff. Gravity (like evolution, and man-made climate change) exists.

Here Andersen reiterates an idea that's been in the air since the morning of Nov 5--that we have finally, belatedly, arrived at the end of the Age of Reagan. It's an idea I first came across in Leonhardt's long Aug '08 NYT Mag survey of "Obamanomics" (which I'm still planning on posting an annotated summary of!). Leonhardt attributes the idea to Princeton historian Sean Wilentz (see here), but then it popped up, unattributed, in George Packer's similarly themed essay "The New Liberalism", which appeared post-election in the New Yorker. And if Andersen has in fact been saying that for years and years..well, it goes to show we need to pay more attention to what he's been saying (you could start with this and this, both also from NY Mag and from this fall, both about this moment in time, about Obama and NYC (resp)).

Also in the paragraph above is the idea of the end of American exceptionalism, of moving into a post-American world--those are both titles of books, the first by Andrew Bacevich, the latter by Fareed Zakaria, that I've added to the ever-expanding to-read list for the new year.

And the ultimate paragraph, which also encapsulates a theme that's been on my mind: who is to blame for this mess we're in? To quote Mos Def (listen here, at about 1:20 in): me, you, everybody. We all got into this together, and we'll have have to get together to get ourselves back on solid ground:

We are, maybe, becoming a more reality-based nation again. We can no longer get by on tautological self-love, believing we’re smart simply because we’re New Yorkers, or virtuous because we’re Americans. The debacle caused by our reckless, party-hearty overleveraging of the economy should make us realize that we have met the enemy, and he is us. And then, if we’re lucky, we’ll redeem ourselves by fixing the huge messes we’ve made, and thereby discovering that we really are the ones we’ve been waiting for.

Omar at MoMA! (+ other "The Wire"-NYC connections)

2008-12-31T08:52:00.001-05:00

Following up on my previous post about MoMA, here is the 5th of 6 holiday e-mails the museum is sending out..with Omar from "The Wire"! What better way to get in the holiday spirit.

I'd seen on their schedule that they are screening these 3 episodes of "The Wire", as part of a MoMA film exhibition about Polish director Agnieszka Holland.

Also on "The Wire" tip..I was walking down Flatbush Ave here in Brooklyn Monday afternoon, and passed by Chad Coleman--the actor who portrayed Cutty. In retrospect, it wasn't so surprising to see him there--I'd seen this NYT mini-profile of Coleman, back at the beginning of '08, which mentioned that he lives in Flatbush--and does a volunteer shift at the Park Slope Coop!

Moreover, this associated City Room blog post detailed "The Wire"'s NYC connections (with some good links):

Michael K. Williams and Jamie Hector, who play the nemeses Omar Little and Marlo Stanfield, are both from central Brooklyn — the former from East Flatbush and the latter from Flatbush and Crown Heights.

Andre Royo, who plays the heroin-addicted police informer Bubbles, grew up in the Bronx. And as everybody knows, Method Man, the Wu-Tang Clan member who plays a drug dealer named Cheese, is a proud Staten Islander.

Besides them, Wood Harris, a Chicago resident who studied at New York University, was involved with the city's underground poetry scene while he lived in Brooklyn before going on to play drug lord Avon Barksdale. Clarke Peters, who plays Detective

Lester Freamon, was born in New York and has said he gets recognized whenever he comes back.

And finally, Gbenga Akinnagbe, who plays the assassin Chris Partlow, grew up in Montgomery County, Maryland, but you might recognize him from the 2003 Shakespeare in the Park production of Henry V.

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Brad Delong - Berkeley economist, "Grasping Reality"

2008-12-30T15:32:00.004-05:00

A friend had noticed that I was posting stuff from a number of economists on facebook, and asked what sorts of ideological views they have. He posted that as a comment to an item I'd posted from Brad DeLong's blog, which is titled "Grasping Reality" (and which is subtitled "The Semi-Daily Journal of Economist Brad DeLong: A Fair, Balanced, Reality-Based, and More than Two-Handed Look at the World" :)

DeLong is a macroeconomist at the University of California (Berkeley). The item I'd posted on facebook was his "Talking Points for Asia Trip" which is literally a list of bullet points--looks like something Delong typed up in about 10 minutes (typos and all), while sitting in his office in Evans Hall (great location, not-so-great building, imho).

It's worth quoting in full, for those of you too lazy to click thru; plus, for a tiny bit of "value add" (on top of merely pointing this out to you), I've inserted a couple thoughts/comments of my own:

Governance:

America has only one president at a time.
The genius of the British Empire was that Britain used its time as the world's hyperpower to make a world in which Britain could live comfortably after other superpowers had arisen.
Richard Cheney and George W. Bush are not geniuses.
Barack H. Obama and Joe Biden ate not fools.

[I had never heard that take on the genius of the British Empire. I just started reading Niall Ferguson's "Empire"; I'm curious to find out if Ferguson concludes similarly.]

International Trade:

In the United States we--that is, my faction within the Democratic Party--have lost the argument over whether trade is good for America's middle class.
This is very frustrating: trade is good for America's middle class.
But the era of increasing globalization has also been an era of rapidly-increasing income inequality--and people think that there is a connection.
So for the next decade free trade will have to be sold within the U.S. as part of broader foreign policy--free trade as a soft-power tool for security and global environmental goals.
Nevertheless, the Obama-Biden administration is certain to be better on free trade than the Cheney-Bush administration.

[DeLong's faction within the Democratic Party is, as you can see, the free trade faction. My understanding is that this is the "Rubinomics"/Summers faction of the party, as opposed to the protectionist faction(s)--labor unions, and perhaps the economic faction that's identified with Robert Reich; but that's a breakdown I need to verify.

Interesting that he says Obama/Biden will be better on free trade on Cheney-Bush; I don't understand the reasoning behind that.]

Financial Crisis:

Since 1844 and the Westminstet debate over the renewal of the Bank of England charter, it has been accepted doctrine that avoiding deep depression requires that central banks keep financial assets from collapsing.
At least one price is too important to be left to the market.
Delicate issues of moral hazard: seek also to minimize "Greenspan puts."
Kindleberger: the lender-of-last-resort must always arrive, but its arrival must never be relied on in advance; this is a tricky business.
Usually central banks can manage asset prices in a crisis sufficiently by managing the price of duration--buying safe but longer-term assets in exchange for cash that served as reserves and means of payment.
Sometimes not: default, risk, information. What then?
Keynes:
Government spending.
Tax cuts.
Danger: debt accumulation can crack government's status as provider of safe assets...
Bernanke--and Trichet, and King
Making it up as they go.

[This is where it gets heavier. I had never heard of 1844 or the Westminster debate; here is a book that seems to cover it.)

I'm not sure what the "too important" price is; the short-term price of money? (That is to say, the short-term interest rate = the fed funds rate in our banking system.)

The Kindleberger insight is great; makes the case even stronger for getting a copy of his classic book asap.

Wish DeLong had fleshed out his latter points more. The "default, risk, information" topic is perhaps covered (in wonkier detail) in this recent essay of DeLong's:
http://www.cato-unbound.org/2008/12/08/j-bradford-delong/liquidity-default-risk/

It does certainly seem that the central bankers of the world--Bernanke, and Trichet (ECB), and King (BoE)--are making it up as they go along.]

[Finally, DeLong closes with some sobering points:]

Global Imbalances:

All the issues of global imbalances we used to worry about remain.
As do all the long-run global warming issues.
As do all the long-run global aging issues.

This is why the web is brilliant--we can have nearly instantaneous access to the thinking of our best intellectuals.

I was reminded to post this b/c I saw one of my Berkely MFE buddies is going to attend a reception this Sunday for DeLong, hosted by the Berkely Club of Singapore..and thought this would be good prep for him going into the reception!

Economist of the Year: John Maynard Keynes?

2008-12-30T14:39:00.006-05:00

With all the end-of-the-year/best of 2008 lists coming out this week, and with an economic crisis upon us, the question naturally arises: who is the economist of the year?

It seems like a lot of our most prominent economists think it's John Maybard Keynes. Which may seem at first somewhat surprising, given that Keynes did his work in the 1920s, '30s, and '40s; but when you think about the global economic situation in those decades, which is precisely what Keynes concerned himself with, it starts to make more sense..

http://en.wikipedia.org/wiki/John_Maynard_Keynes

(Here is one line from the wikipedia bio that jumped out at me, given that I used to be something of a logician:

Bertrand Russell named Keynes the most intelligent person he had ever known, commenting, "Every time I argued with Keynes, I felt that I took my life in my hands and I seldom emerged without feeling something of a fool."

For more on biographical details, see this 1985 NYT review of a biography of Keynes.)

Below are some things to read by and about Keynes, if you're so inclined:

A short piece that ran in the Financial Times in October: "Man in the News: John Maynard Keynes"
A blog post from last week by Princeton economist, NYT columnist, and 2008 Nobel Prize winner Paul Krugman, titled "Keynes's Difficult Idea", which is about a essay by FT columnist Martin Wolf: "Keynes offers us the best way to think about the financial crisis"
This post was largely inspired by a blog post by Berkeley economist Brad DeLong, titled "Things to Read by Keynes", which consists of an extensive and partially hyperlinked reading list of, well, things to read by Keynes. Included are two letters Keynes wrote to FDR, in 1932 and 1938 (the latter DeLong discusses briefly here). DeLong's post was in turn inspired by the following:
George Mason economist Tyler Cowen's "New MR book club - Keynes's General Theory", which he initiated about a month ago; Cowen has already posted on chapters one and two, three, five, and six (didn't see one for ch four). Cowen is taking a break between semesters, but will start back up again in January. I just ordered a copy of the book off Amazon, and hope to catch up to him! (For a taste of the General Theory, DeLong posts an excerpt here)
Cowen mentions that the book club selection was inspired by this column by Harvard economist Greg Mankiw: "What Would Keynes Have Done?" Krugman blogs Mankiw's column, under the title "The Keynsian Moment?" (That Mankiw and Cowen are both looking to Keynes is telling, since both fall to the right of the ideological spectrum, whereas Keynes is considered to fall on the left--as are Krugman and DeLong.)
Bruce Bartlett (as a member of the Reagan Adminstration, an architect of supply-side "Reaganomics") also published an essay (in Forbes) titled "What Would Keynes Do?" (which DeLong posts and discusses here)

That is more than enough to get us started. I haven't read through most of the links above in detail--one motivation for this post was simply to collect them all in one place.

One last Keynsian quote. Yale economist Robert Shiller's latest book "The Subprime Solution" opens with a timely passage from the Keynes's 1919 account of the Versailles Peace Treaty, "The Economic Consequence of the Peace":

A general bonfire is so great a necessity that unless we can make of it an orderly and good-tempered affair in which no serious injustice is done to anyone, it will, when it comes at last, grow into a conflagration that may destroy much else as well.

Much more on Shiller to come, as I finally finished "The Subprime Solution" last weekend, and hope/plan to post some summaries of Shiller's points.

Fw: Holidays at MoMA: Four of Six Highlights

2008-12-29T10:33:00.001-05:00

I'd decided I wouldn't do these cheap posts where I simply forward an e-mail from my inbox..but this one seemed like it's worth posting. The 4th of 6 "holiday highlights" e-mails that MoMA has sent.

We sprung for a membership to MoMA in November, which might be the best $125 we've spent since coming to NYC. I feel like we've already got our money's worth, with about 4 visits to the museum, plus a couple movies (both of which included the filmmaker speaking: Nina Paley taking questions after "Sita Sings the Blues"; and the man, the myth, the legend Melvin van Peebles introducing his very first feature film, The Story of Three Day Pass!)

We walked through the Miro exhibit featured below in November. Actually, I walked through twice, once with Anj and then again with a friend who was in town visiting from SF--and who is an artist and counts Miro among his influences, so it was informative and eye-opening to walk through with him..

More on MoMA in the future--I had been thinking it would be fun to write up my own idiosyncratic guide to visiting MoMA..

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Above: Joan Miró. Rope and People, I (detail). 1935. Oil on cardboard mounted on wood, with coil of rope. MoMA. Gift of the Pierre Matisse Gallery. © 2008 Successió Miró/Artists Rights Society (ARS), New York/ADAGP, Paris

WSJ: "How Iceland Rattled the World"

2008-12-27T15:10:00.003-05:00

Yesterday, at the tail end of a post about Ukraine, I wrote that I still didn't fully understand what happened in Iceland. Well, speak of the devil: today, the WSJ ran a long article (starting on A1, stretching across two pages inside) which broke it down pretty well:

DECEMBER 27, 2008
The Isle That Rattled the World:Tiny Iceland Created a Vast Bubble, Leaving Wreckage Everywhere When It Popped
http://online.wsj.com/article/SB123032660060735767.html

I'll post some key excerpts later..but the short story is:

massive growth in the banking sector via leverage--via debt and deposits--but a lot of those liabilities were denominated in foreign currencies (e.g., loans from German banks, deposits from English individuals)
once the global deleveraging started over the summer, and banks around the world pulled back their credit, the Icelandic banks were unable to roll over their funding, esp as those sources of funding lost confidence in the Icelandic currency
this then led to a crisis of confidence among their deposit base...

What I'm Reading: Robert Caro, Jane Jacobs, James Grant, Robert Shiller, Paul Krugman, Niall Ferguson, Dostoyevsky

2008-12-26T17:58:00.001-05:00

1) The Power Broker: started this over the summer, and was making good progress for a couple months. But I've been picking it up only intermittently since Sept--still a few hundred pages to go. I'm only getting to the post-war period now. Amazing stuff--esp to be reading it while in NYC.

2) Death & Life of Great American Cities: figured it would be a good companion piece to (1). But similar story: been picking it only intermittently. Last time was Oct in Philly--when I had a good day walking to Franklin, Washington, and Rittenhouse Squares while re-reading that section of the book.

3) The Trouble With Prosperity: this one I also started over the summer..slowly been absorbing it, as Grant requires a couple read-throughs to really absorb.

4) The Subprime Solution: got this one in Oct, and finally almost finished with it. Essential.

5) The Age of Diminishing Expectations: this one I picked at from the public library, after reading all the buzz about his new one (an updated version of The Return of Depression Economics). A great intro to the central issues of economics.

6) Empire: this one I just started yesterday. I bought it as a gift for my father-in-law--borrowing that copy back to read it myself. I've been meaning to read Ferguson for a while..

The odd thing is that I used to read much more fiction than non-fiction. The only fiction I've got going now is:

7) The Brothers Karamazov: been bogged down in this since Sept..thanks to Krops!

thought/links about the financial crisis in Ukraine

2008-12-26T02:50:00.002-05:00

A couple blog posts about the economic situation in Ukraine popped up recently. They naturally caught my eye, since I have a connection to the place. My sister is there now with her husband, visiting his family..and I visited there (Kyiv and Odessa) a few years ago.

A couple days ago, there was this on Dealbreaker, titled, with tongue firmly in cheek, "It's Better in Ukraine", which was really just a quote of an AP story from Kyiv:

One thing that we would really like to see more of here in the United States is protests over economic and market conditions. We aren't quite sure why Wall Street types don't take to well... Wall Street after a 400 point drop in the Dow and start blowing their horns in unison.

For our money, the Ukraine has got it figured out:

Thousands of car drivers in the Ukrainian capital angrily blew their horns for several minutes Monday, protesting what they call incompetent and corrupt government policies that led to a devastating financial crisis.

The Ukrainian currency has lost some 40 percent of its value since September as a fall in the export of steel, the heart of the economy, led to a shortage of foreign currency. That was coupled with a loss of confidence in the hryvna and the banking system.

"We've had enough of the authorities," said one protester, Ihor Ratushny.

Damn authorities.

More sobering was this post from Krugman's blog, titled "The Second Great Depression Has Arrived..", which posts a graph of recent Ukrainian monthly industrial output, and compares it with an index of US industrial production--from 1928 to 1933. Take a look:
http://krugman.blogs.nytimes.com/2008/12/25/the-second-great-depression-has-arrived/

What has happened in Ukraine? I'm ashamed to say that I still don't really know/understand in detail; what I do know is that the country's fiscal sitation has been battered by the financial crisis, with the currency collapsing and the government seeking an IMF loan to stabilize the financial system. Somehow this is tied to the global deleveraging we're going through--but again, I don't know the details. The Dealbreaker item included above cites a drop in steel exports as the primary cause..but seems to me that the story is more complex than just that.

Here is a WP article from Oct headlined "Ukrain Seeks IMF Help to Weather Financial Crisis"...
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/17/AR2008101702051.html

..but like it gives less ofe an explanation. It lists some of the problems--a crash in the Ukrainian stock markets, a fall in the value of the currency, a run on the banks, and mentions the steel thing--but doesn't explain how the global financial crisis came to Ukraine.

For that matter, I don't fully understand Iceland either...

Paul Krugman interview from "Big Think" (video)

2008-12-24T02:16:00.003-05:00

I've started following The Big Picture (Barry Ritholtz's blog), which posted this on Monday--the 1st of 10 short video segments of Paul Krugman speaking about the financial crisis and "the return of depression economics" (which is the title of a recently updated book of his:
http://www.amazon.com/Return-Depression-Economics-Crisis-2008/dp/0393071014).

(from http://www.ritholtz.com/blog/2008/12/paul-krugman-on-the-return-of-depression-economics/)

Most of this 3min segment is about Japan in the 1990s--what Krugman says is the closest parallel to the United States today.

But at the end of the segment, as part of his response to "Why do you hope people read this book?", Krugman says:

I think it's a fascinating story, just aside from everything else. I'm horrified, I'm scared, but I'm also just professionally awed and fascinated by what's going on. Every macroeconomist, which is what I am--well, half of me is a macroeconomist--every macroeconomist sort of has a lingering desire to live through the early stages of the Great Depression, to know what it was like..and here we are."

Web 2.0 101: Using Twitter

2008-12-24T01:57:00.001-05:00

I've been toying with the idea of a set of "101" series: hence the Stats 101 post I did previously (here; although it was more esoteric and less expository that I'd planned such 101 posts to be). Also was thinking about: Math 101, Finance/Economics 101, maybe NYC 101.

And also Web 2.0 101. So here's one on Twitter:

So what the hell is Twitter? If you're on Facebook, think of it as status updates w/o the hassle of the rest of Facebook. You still have "friends" of a sort (i.e., there is a social network framework), but on Twitter you "follow" others, and others can follow you*.

Beyond that, it works pretty much like FB status updates: you fill in a short message (famously, less that 140 characters), and that gets broadcast to your contacts (your followers, i.e., people who are following your Twitter feed)--it shows up on their Twitter home page (and also can get texted to their mobile device, if they're set up for that).

To get started: Go to https://twitter.com/signup and create an account. Then post something. And look around for people to follow (vlick on "Follow" for any of the Twitter acconts listed below to follow them yourself..it's easy enough to undo later if you decide you don't want to follow them anymore.)

One advantage of stripping away all the other stuff that Facebook includes--the photos, personal details, etc--is that you can follow people you have no social relationship with..in fact, it may not be a person per se. For example, I'm following the following:

http://twitter.com/astorwines (a wine store in Manhattan)
http://twitter.com/BrianLehrer (a local NPR talk show host)
http://twitter.com/freakonomics (a NYT blog)
http://twitter.com/CityRoom (ditto)
http://twitter.com/BarackObama (you know who that is)
http://twitter.com/upperplayground (an apparel store/art gallery in SF)

In addition, I am following about 20 or so actual individuals. Most are friend "IRL" (in real life), but a couple are random twitter feeds I saw references to somewhere and added. See my whole list of "following" here:
http://twitter.com/suman_ganguli/friends

And in the other direction, I currently have 24 followers:
http://twitter.com/suman_ganguli/followers

Finally, you can view my 106 updates ("tweets") here..about 100 of those since ~Nov 6, when I decided to give it a try:
http://twitter.com/suman_ganguli

I update from 3 sources:
1) from http://twitter.com
2) from my phone, via SMS (you set up your account with your mobile device #, then simply text the Twitter number, 40404)
3) my new new thing: when I want to post a link, I've started using http://bit.ly/ , a very web2.0-ish url shortener: bit.ly provides a shorted url, and I have my bit.ly account set up so that post the link and a message to my Twitter account right from there

Finally, I've installed the Twitter application on Facebook, so that any Twitter update I post also updates my Facebook status.

Seems Twitter is finding a lot of interesting applications--its affecting politics, media, marketing. But all that will have to wait for a 2nd Twitter 101 (Twitter 102?) blog post.

*Regarding followers from being followed: to get a bit technical, you could say that the network relationship on Twitter is non-commutative, or is directional: just because I follow you, it does not mean that you're following me. This is unlike friend relation in Facebook, where if you and I are friends, you get my status updates and I get yours.

Statistics 101: ARCH/GARCH

2008-12-23T15:25:00.001-05:00

I had planned to finally post at least a part of the Obamanomics "annotated summary" (see here), but once again got caught up doing some other stuff.

At least today it was "productive" stuff: spent a bit of time looking at models of "heteroskedasitcity", i.e., time-varying volatility:

http://en.wikipedia.org/wiki/Heteroscedasticity

http://www.investopedia.com/terms/h/heteroskedasticity.asp

The standard models for heteroskedasticity are ARCH & GARCH, which are imposing acronyms:

ARCH = AutoRegressive Conditional Heteroskedasticy
GARCH = Generalized AutoRegressive Conditional Heteroskedasticy

Here is the wikipedia entry, though I don't think it's particularly good (heavy on the most general equations, light on intuition):

http://en.wikipedia.org/wiki/Autoregressive_conditional_heteroskedasticity

More useful for me was reading through Jorion's brief overview in

http://www.amazon.com/Value-Risk-3rd-Ed-Benchmark/dp/0071464956

Ch 9 of the 3rd Edition (Ch 8 in the 2nd Edition which I have) is titled "Forecasting Risks and Correlations", with a subsection on "Modeling Time-Varying Risk", which has sub-subsections on "Moving Averages", "GARCH Estimation", Long-Horizon Forecasts with GARCH", and "The RiskMetrics Approach."

The latter refers to the firm RiskMetrics; the approach the Jorion generously attributes to them is an exponential weighted moving average (EWMA) method:

http://en.wikipedia.org/wiki/Moving_average#Exponential_moving_average

Here is a paper I found by searching for "GARCH" on the RiskMetrics website:

Exploring alternative 1-month volatility forecasting techniques

I should really be more familar with this stuff that I am, given that I took a course on financial econometrics. I need to dig out those lecture notes..and the associated Matlab code. We didn't have a good text for the course; ostensibly it was the infamous Campbel, Lo & MacKinlay:

http://web.mit.edu/alo/www/Books/efm_desc.html

http://www.amazon.com/Econometrics-Financial-Markets-John-Campbell/dp/0691043019

Slumping South Carolina

2008-12-22T15:23:00.001-05:00

Odd coincidence: over the weekend, I was on the Center for American Progress website (liberal/Democratic think tank, run by John Podesta--former chief of staff for Bill Clinton, and now helping run Obama's transition):

http://www.americanprogress.org/aboutus

I had visited at least once before, when I was searching for intro material on carbon emission cap-and-trade. Conveniently, they'd put together a Cap-and-Trade 101 document:

http://www.americanprogress.org/issues/2008/01/capandtrade101.html

Looking through their econ stuff, I came across this interactive map showing unemployment rates state-by-state:

http://www.americanprogress.org/issues/2008/12/state_unemployment.html

Not surprising that Michigan is top at 9.6%; somewhat surprising is that the next three were California, South Carolina (both at 8.4%) and Oregon (8.1%).

And then today, Krugman had a blog post today titled "Southern Discomfort", linking to a NYT article from today's paper about Columbia, SC. Writes Krugman (http://krugman.blogs.nytimes.com/2008/12/22/southern-discomfort/):

Heartrending story in the Times about the woes of South Carolina. In fact, unemployment rates in the Southeast have risen more than in the United States as a whole; there's a sort of Slump Belt extending from the industrial Midwest down to the Carolinas.

Why is this happening? The Slump Belt does sort of look like the "auto corridor"; maybe what we're seeing is the geographical location of cyclically sensitive manufacturing industries. Anyway, it's striking that the worst of the crisis is hitting states that largely didn't experience a housing bubble.

Nocera (NYT): "How India Avoided a Crisis"

2008-12-21T13:05:00.002-05:00

Nocera is almost always worth reading, and now he's writing from Mumbai. My father-in-law pointed this one out--yesterday's column: on how India largely avoided the subprime/credit crisis.

How India Avoided a Crisis
In India, banks usually don't lend money to people who lack the means to pay it back. Any lessons to be learned, class?
December 20, 2008

Some of the factors Nocera describes are cultural, but the bulk of the essay (the 2nd more substantive half) is all about India's central bank/er:

"India had a bank regulator who was the anti-Greenspan. His name was Dr. V. Y. Reddy, and he was the governor of the Reserve Bank of India...in the irascible Mr. Reddy, who took office in 2003 and stepped down this past September, it had exactly the right man in the right job at the right time."

and at the end:

"Our regulators, unlike theirs, just stood by and let it happen. The next time we're moving into bubble territory, perhaps we can take a page from Mr. Reddy's book — sometimes it's better to apply the brakes too early than too late. Or, as was the case with Mr. Greenspan, not at all.

•

None of this is to say that the global credit crisis hasn't affected India. It certainly has. I'll be back after the holidays with more columns from India, including how Sept. 15 — the day Lehman Brothers defaulted — changed everything, even here, on the other side of the world."

Certainly looking forward to that..

NYT: "Wonderful? Sorry, George, It’s a Pitiful, Dreadful Life"

2008-12-20T16:40:00.001-05:00

Something to read if you're going to be doing a holiday season viewing of "It's a Wonderful Life", or if you just happen to come across it while flipping channels..

Wonderful? Sorry, George, It's a Pitiful, Dreadful Life
By WENDELL JAMIESONPublished: December 18, 2008
"It's a Wonderful Life" is a terrifying, asphyxiating story about growing up and relinquishing your dreams. Was this what adulthood promised?
http://www.nytimes.com/2008/12/19/movies/19wond.html

I started reading it as I was going thru this week's pile of newspapers: it's featured prominently on the front page of yesterday's Weekend Arts section, taking up the entirety of page C1 above the fold. That's an impression you don't get via the online version; OTOH, you get the info that people are reading it, and feeling it: it's currently #3 on the most e-mailed list for all of nytimes.com

If you're in NYC, the article notes that IFC in the Village (on 6th Ave, right next to the 4th St subway stop) shows it annually, so you can see it on the big screen. It's there thru Xmas Day:
http://www.ifccenter.com/film?filmid=3836

Cell phones/text messaging for development

2008-12-11T15:53:00.001-05:00

I'm looking at some links/info on this topic b/c a friend is involved with an organization called the Flip Flop Foundation, and is interested in if/how they can use cell phones in Zambia as part of their mission:
http://www.flipflopfoundation.com/

I remembered seeing this article in the NYT earlier this year, about how a Reuters employee named saw an application for mobile phones and text msg'ing in providing market data to rural farmers in India; Reuters is currently testing the program, called "Reuters Market Light":

"Market Data, Far From the Market"
http://www.nytimes.com/2008/06/29/business/29essay.html

A Google search led to a number of news piece about how text msgs are being used in S Africa in a public health context. This 2003 BBC piece describes how individuals who suffer from TB and/or HIV are reminded to take their medication:

"Text messages prove a life-saver"
http://news.bbc.co.uk/2/hi/technology/2698533.stm

A related initiative in S Africa is using the extra space left in "PCM" ("Please call me") text msg's to ask people to get tested and treated for HIV; both these articles from the past few months describe this "Project M" (M is Masiluleke, which apparently means "wise council" in Zulu):

"Texts used to tackle South Africa HIV crisis"
http://www.cnn.com/2008/HEALTH/12/01/hiv.text.messages/index.html

"The Transformative 120: Text Messages Prove a South African HIV Lifeline"
http://www.worldchanging.com/archives/009090.html

Here is the link to the Project M's homepage:
http://www.poptech.org/project_m_the_challenge/

Google also led me to this interview with a guy named Ken Banks, who has been working on applying mobile technologies to development--in particular in Africa--for a number of years:

"Cell phones, text-messaging revolutionalize conservation approaches: An interview with IT conservation expert Ken Banks"
http://news.mongabay.com/2007/0415-banks_interview.html

That page in turn led me to the website for Kiwanja.net, which Banks founded:
http://www.kiwanja.net

Finally, to bring this back around, both Banks and the Reuters employee who developed Reuters Market Light did so through the Reuters Digital Vision Program at Stanford:
http://www.rdvp.org/
http://rdvp.org/archives/2006/08/18/mans-olof-ors-05-and-project-market-light-in-timesonline/
http://rdvp.org/fellows/2006-2007/ken-banks/

"The Day John Lennon Died"

2008-12-08T14:30:00.001-05:00

I am loving Google Reader. Just added subscriptions for two NYT blogs: City Room and Freakonomics (http://cityroom.blogs.nytimes.com/ & http://freakonomics.blogs.nytimes.com/)

Which led me to spot the City Room roundup included below (which I e-mailed to myself from within Google Reader, and then forwarded to the blog here..click on the title below (or above) to get to the CityRoom post)..

Which made me realize that John Lennon was shot 28 years ago today, here in NYC. Which led me to the Wikipedia entry, http://en.wikipedia.org/wiki/The_death_of_John_Lennon, which says that Lennon was shot in the entrance to the Dakota, which is on 72nd St @ Central Park West. The Wikipedia entry has two photos of the building..as well as the police artist's drawing of the murder.

Which in turn led me to Google Maps, to try to figure out how I could share the exact location of the Dakota. I discovered one can create a map and share it..this could be another time sink for me:

http://preview.tinyurl.com/5slm56

Anj and I were in that neighborhood just over a week ago. On the Sunday morning following Thanksgiving, we took the D to Columbus Circle and walked up CPW to 71st St, in order to visit http://www.vedanta-newyork.org/index.htm, which I think we'll be revisiting periodically on Sunday mornings..

PS: you can use the link below to "Get Started using Google Reader"--which I strongly recommend if you read blogs at all..

Sent to you by Suman via Google Reader:

The Day John Lennon Died

via City Room by By Emily S. Rueb on 12/8/08

Blogtalk: An anniversary; Obama and Caroline; Saigon Grill's popularity; slumming Bill Murray; and more New York links.

Things you can do from here:

Subscribe to City Room using Google Reader
Get started using Google Reader to easily keep up with all your favorite sites

DiMaggio from NorCal

2008-12-07T16:38:00.000-05:00

Following up on an exchange that came up at brunch w Arun, that arose out of the SF Seals T-shirt I'm wearing today, I claimed that the DiMaggio brothers came out of SF and came up playing for the Seals.

Turns out I was almost right; according to the current version of the Wikipedia entry (http://en.wikipedia.org/wiki/Joe_DiMaggio), Joltin' Joe
DiMaggio was born in Martinez, CA, which is in the SF Bay Area (specifically, "Martinez is located on the south side of the Carquinez Strait in the San Francisco Bay Area, directly facing the city of Benicia" http://en.wikipedia.org/wiki/Martinez,_California)

The first few paragraphs of the Wikipedia entry for Joe Dimaggio are included below:

DiMaggio was the eighth of nine children born to immigrants Giuseppe (1872–1949) and Rosalia (Mercurio) DiMaggio (1878–1951), delivered by a midwife identified on his birth certificate as Mrs. J. Pico. He was named after his father; "Paolo" was in honor of Giuseppe's favorite saint, Saint Paul. The family moved to San Francisco, California when Joe was one year old.
Giuseppe was a fisherman, as were generations of DiMaggios before him. Joe's brother, Tom, told Joe's biographer Maury Allen that Rosalia's father, also a fisherman, wrote to her that Giuseppe could earn a better living in California than in their native Isola delle Femmine, an islet off the coast of Sicily. After being processed on Ellis Island, he worked his way across the country, eventually settling near Rosalia's father in Pittsburgh, California. After four years, he was able to earn enough money to send for her and their daughter, whom was born after he had left for the United States.
It was Giuseppe's hope that his five sons would become fisherman. Joe recalled that he would do anything to get out of cleaning his father's boat, as the smell of dead fish made him nauseous. Giuseppe called him "lazy" and "good for nothing." told Giuseppe's opposition was due to not understanding how baseball could help Joe "get away from the poverty" and make something of himself.
Joe was playing semi-pro ball when Vince, playing for the San Francisco Seals, talked his manager into letting Joe fill in at shortstop; he made his professional debut on October 1, 1932. From May 27 – July 25, 1933, he got at least one hit in a PCL-record 61 consecutive games: "Baseball didn't really get into my blood until I knocked off that hitting streak. Getting a daily hit became more important to me than eating, drinking or sleeping."

Sent via BlackBerry from T-Mobile

Chase Manhattan Plaza - 40 Wall St

2008-12-03T20:22:00.001-05:00

Chase Manhattan Plaza - 40 Wall St
Originally uploaded by shooGu

I haven't blogged a photo in a while..here is a shot of 40 Wall St from the backside, taken from Chase Manhattan Plaza: 40 Wall is the bldg on the right.

More on 40 Wall in the future..a whole chapter of Grant's "The Trouble With Prosperity" is centered around the history of this bldg.

My most popular-interesting Flickr bits

2008-12-01T10:13:00.001-05:00

"This is a view of your 200 most popular bits, ordered by interestingness."

	#1: bob marley - haight @ central • 702 views / 3 people count this as a favorite / 4 comments
	#2: We Deliver - 19 July '05 • 300 views / 1 person counts this as a favorite / 1 comment
	#3: Tookie Taken by my friend Pete in LA, shortly after the execution. • 301 views / 1 person counts this as a favorite / 1 comment
	#4: Mad Society Kings - 2 • 195 views / 3 people count this as a favorite / 0 comments
	#5: haight @ central - 1 • 287 views / 4 people count this as a favorite / 4 comments
	#6: 565 SVN - 19 July '05 • 243 views / Nobody counts 565 SVN - 19 July '05 as a favorite / 1 comment
	#7: 18th @ SVN - straight up • 253 views / Nobody counts 18th @ SVN - straight up as a favorite / 0 comments
	#8: 20th @ Bryant - 14 July '05 • 264 views / 2 people count this as a favorite / 1 comment
	#9: union HQ - 18th & Shotwell • 231 views / Nobody counts union HQ - 18th & Shotwell as a favorite / 1 comment
	#10: MSK - Duboce freeway • 352 views / 1 person counts this as a favorite / 0 comments

Google Reader + "Rubin's Teflon Finally Wears Off"

2008-12-01T02:01:00.001-05:00

Two birds with one stone, so to speak:

(1) I set up Google Reader over the weekend. This is Google's "RSS reader." What does that mean? Practically speaking, it means it can collect posts from blogs all across the web into one place, allowing you to scan and read right there (namely, at http://www.google.com/reader) instead of at a bunch of different blog sites.

Google's is certainly not the only or first RSS reader. They've been around a number of years--I have an account at Rojo.com that I was using for a second (http://en.wikipedia.org/wiki/Rojo.com). Though just now I find that that url gets redirected to Blogs.com..I hadn't used it in a couple years.

(What is RSS? Read http://en.wikipedia.org/wiki/RSS_(file_format) ... basically every blog creates an "RSS feed" which RSS aggregators can read and pull in. In fact, not just blogs..from the wikipedia entry: "RSS is a family of Web feed formats used to publish frequently updated works—such as blog entries, news headlines, audio, and video"..hence newspapers, photo-sharing sites like Flickr, YouTube, etc--all of them have RSS feeds which you can pull into an RSS reader)

As a friend put it, Google's isn't necessarily the best RSS aggregator, but it is (or will be) the most widely used, for a couple reasons: it's Google, so if you've got a Google (gmail) account, you can start right away, just by hitting "Reader" at the top of any Google page. Plus it knows about your Gmail contacts, which leads to a powerful feature of Google Reader: it's easy to share any item (a blog post, a headline, etc) with any of your contacts.

For example, I e-mailed myself the following Portfolio.com blog post just now. It's from Felix Salmon's "Market Movers" blog--something I started reading about a year ago, but haven't been keeping up with over the past few months. Now that I've got Google Reader set up, I think I'll be able to keep up (other blog feeds I subscribed to: The Big Picture, Minyanville, Krugman's blog, Mankiw's blog, Brad Delong's blog..as you may be able to infer, mostly finance/econ so far.)

Probably it's not 100% kosher to republish Felix Salmon's blog post in its entirety, so I manually cut it off below after a few paragraphs. Click on the title links to go to his blog and read the rest of the post, if you're interested.

(2) I thought this post about Rubin was interesting, and wanted to post it anyways..

----- Forwarded Message ----
From: My gmail address
To: Me
Sent: Monday, December 1, 2008 1:42:16 AM
Subject: Rubin's Teflon Finally Wears Off

Sent to you by Me via Google Reader:

Rubin's Teflon Finally Wears Off

via Portfolio.com: Market Movers by Felix Salmon on 11/29/08

In one of the most ill-advised pieces of PR I can remember, Bob Rubin has given an on-the-record interview to the WSJ, in which he takes no blame or responsibility for anything which has gone wrong at Citigroup. The reaction in the blogosphere has been, predictably, swift and brutal, helped along by the fact that Rubin's famous charm clearly hasn't worked on his interviewers, Ken Brown and David Enrich. Here's their lede:

Under fire for his role in the near-collapse of Citigroup Inc., Robert Rubin said its problems were due to the buckling financial system, not its own mistakes, and that his role was peripheral to the bank's main operations even though he was one of its highest-paid officials.

It just gets worse from there: by refusing to admit to any mistakes at all, Rubin has garnered himself zero sympathy. Rubin has been surprisingly bulletproof until now: while he's had many critics, his reputation has largely remained intact. But with this interview, it's disappeared at a stroke: no one can read it and think of him as anything other than a pompous and out-of-touch plutocrat, puffed up with much more self-regard than common sense.

For instance, he's quick to the not-my-bailiwick defense:

Mr. Rubin said it is a company's risk-management executives who are responsible for avoiding problems like the ones Citigroup faces. "The board can't run the risk book of a company," he said. "The board as a whole is not going to have a granular knowledge" of operations.

But board members don't get paid $115 million. If he wasn't playing a central role when it came to Citi's risk book, what was he doing for the money? It's not clear, but his comments don't help much:

Mr. Rubin said his pay was justified and that there were higher-paying opportunities available to him. "I bet there's not a single year where I couldn't have gone somewhere else and made more," he said.

Justified? What does that possibly mean? And as for making more money elsewhere, I suspect that many Citigroup shareholders wish that he'd done precisely that. But not only was Rubin incredibly well-paid, he also had to all intents and purposes tenure at Citigroup: as a member of the board, he was an employer of the CEO rather than an employee, so there was really no one who could fire him.

The most astonishing instance of Rubin failing to justify his salary, however, comes later:

Mr. Rubin was deeply involved in a decision in late 2004 and early 2005 to take on more risk to boost flagging profit growth, according to people familiar with the discussions. They say he would comment that Citigroup's competitors were taking more risks, leading to higher profits. Colleagues deferred to him, as the only board member with experience as a trader or risk manager...
At the time, Mr. Rubin was saying in speeches that most assets were overvalued. He would quote a noted investor he knew as saying that "the only undervalued asset class in the world is risk."
But it wouldn't have been right for the board to act on his concerns, Mr. Rubin said in the interview: "I wouldn't run a financial institution based on someone's view about what markets would do."

The cognitive disconnect here is simply staggering. Rubin's going around saying that institutions are taking on too much risk, but he's also telling the Citi board that it should take on even more risk. He had no problem with the board following his lead when he said he wanted Citi to take extra risks, but he says that he would have had a problem with the board listening to his concerns about doing so. For this he thinks his $115 million is justifiable?

[go to Market Movers for the rest]

Related Links
Trouble Sticks to Teflon Bob
Pandit Named Citi Chief
Shake-Up, then Break-Up?

Things you can do from here:

Subscribe to Portfolio.com: Market Movers using Google Reader
Get started using Google Reader to easily keep up with all your favorite sites

Coming soon: Steadyblogging's 1st annotated summary--"(Advanced) Obamanomics"

2008-11-30T20:00:00.000-05:00

I've only done ~10 blog posts over the past two months, and pretty haphazardly at that. One goal for the summer/fall was to do some more focused and substantive writing. Now it's a goal for the winter..

But at least I think I've settled on a format and topic. Coming up with original content is (a) difficult, and (b) almost pointless, given how much content is already out there. Indeed, one reason I haven't sat down and wrote (generated content) is that I spend way too much time reading (consuming content).

As a result, many of my blog posts have been just compilations of links (or even lazier, interesting stuff that lands in my inbox, which I just forwarded to the blog!). Often they're longer and pretty substantive news or magazine articles (typical sources are: NYT, WSJ, New Yorker, The Atlantic; i.e., what we're subscribed to and get delivered as hard copies--I've found I don't read newspapers and magazines online, esp now that I'm not tied to a desktop computer 10 (or 12, or more) hours per day.

But people have told me that they usually don't have the time to follow those links..and hence they're not getting to the interesting content that I'm trying to direct them to.

Meanwhile, I'm reading thru this stuff..and people who know me know I like to chime in. Hence, what I've decided I'll start doing is post "annotated summaries" of some of these longer and interesting articles.

I've got the first one almost done, at least in draft form (version 1.0)--a walk thru this longish piece that was the cover story of the NYT Magazine in August, titled "(Advanced) Obanomics." I found it very informative and stimulating when I finally read it (at the beginning of November--I'd saved that issue of the magazine for all those months, to ensure I would eventually get to it!):

How Obama Reconciles Dueling Views on Economy
By DAVID LEONHARDT

Barack Obama is both more left-wing and more right-wing than many people realize. A 15-year debate among economics experts in the Democratic Party helps explain why.

So, I should have a summary of this up by Tuesday. I also have a growing list of articles I'd like to tackle in a similar manner. I'm interested in getting some feedback about which of the following would be of interest to people. Make a comment, or e-mail me directly..

The New Liberalism
How the economic crisis can help Obama redefine the Democrats.
by George Packer
The New Yorker
November 17, 2008
http://www.newyorker.com/reporting/2008/11/17/081117fa_fact_packer

Anatomy of a Meltdown
Ben Bernanke and the financial crisis.
by John Cassidy
The New Yorker
December 1, 2008
http://www.newyorker.com/reporting/2008/12/01/081201fa_fact_cassidy?yrail

The Confidence Game
by James Grant
WSJ
October 18, 2008
http://sbk.online.wsj.com/article/SB122428355436946301.html

Economics: Which Way for Obama?
By John Cassidy
NY Review of Books
June 12, 2008
http://www.nybooks.com/articles/21491

After Musharraf: What the future holds for Pakistan—and for America
by Joshua Hammer
The Atlantic
October 2007
http://www.theatlantic.com/doc/200710/musharraf

Behind the Indian Embassy Bombing
by Robert D. Kaplan
The Atlantic Unbound
August 1, 2008
http://www.theatlantic.com/doc/200808u/kaplan-pakistan

Behind Mumbai
by Robert D. Kaplan
The Atlantic Unbound
November 2008
Robert D. Kaplan offers insight into the Hindu-Muslim tensions festering within India.
http://www.theatlantic.com/doc/200811u/mumbai

The Lawless Frontier
by Robert D. Kaplan
The Atlantic
September 2000
The tribal lands of the Afghanistan-Pakistan border reveal the future of conflict in the Subcontinent, along with the dark side of globalization.
http://www.theatlantic.com/doc/200009/kaplan-border

Where Europe Vanishes
by Robert D. Kaplan
The Atlantic
November 2000
http://www.theatlantic.com/doc/200011/kaplan-georgia

Mumbai: "Slumdog Millionaire" + live SAJA webcast

2008-11-28T22:59:00.001-05:00

Just got home, after a full day in the city--centered around a viewing of "Slumdog Millionaire." More on that later..but just checked my e-mail to see that there is a live webcast about the events in Mumbai, so listening to that now.

This is already the 6th such webcast that SAJA has hosted. Looks like they will be doing these every 12 hrs. Here is their archive of webcasts and their posts on the Mumbai events:
http://www.blogtalkradio.com/saja
http://www.sajaforum.org/mumbai-attacks

For good measure, here is SAJA's post from a couple weeks ago about "Slumdog":
http://www.sajaforum.org/2008/11/film-slumdog-millionaire.html

Hope/plan to write more on "Slumdog" and Mumbai soon..

----- Forwarded Message ----
From: Sree Sreenivasan <ss221@columbia.edu>
To: saja@columbia.edu
Sent: Friday, November 28, 2008 8:46:45 PM
Subject: MUMBAI & phonecast: Webcast #6 - novelists + business implications

[PLEASE SUPPORT SAJA: Help us meet our new $15,000 challenge grant:
http://saja.org/articles/saja-group-receives-prestigious-challenge-grant

Download the new SAJA application on your iPhone or iPod Touch (search "SAJA" in the App Store) or on your BlackBerry - FREE! - http://saja.polarmobile.com ]

SAJA is hosting live discussions with journalists and experts in
Mumbai and the U.S. about the terrorist attacks.

See our webcasts below. Every 12 hours!
Webcast #6: Friday, 10 pm-midnight (8:30-10:30 am India time Saturday)

Webcast #7: Saturday, 10-11:30 am (8:30-pm 10 pm India time Saturday)
(a discussion focused on terrorism)

===> Join us for Webcast #6
Friday 10 pm-midnight (8:30-10:30 am India time Thursday)
Listen via computer:
http://www.blogtalkradio.com/saja/2008/11/29/Terrorist-attacks-in-Mumbai-6
or via phone: +1-347-324-5991 or via the live chatroom

We are doing two back-to-back themed shows.

* First hour: Writers and novelists with Mumbai connections talk about the city they love.

- Vikram Chandra, author of two landmark Mumbai books, "Sacred Games" and "Love and Longing in Bombay" - calling from Mumbai (more at http://www.vikramchandra.com)

- Thrity Umrigar, author of "Bombay Time" and "The Space Between Us" - calling from Cleveland (more at http://www.umrigar.com)

preceded by a news update

* Second hour: The Business Implications for India, the US and Beyond

- Anuj Puri, chairman and CEO of Jones Lang LaSalle Meghraj, the Indian arm of international real estate services firm Jones Lang LaSalle.

- Betty Wong, global managing editor, Reuters

preceded by a news update

Hosts: Arun Venugopal, SAJAforum editor and WNYC Radio reporter; Aseem Chhabra, freelancer and SAJA-NY coordinator; Sree Sreenivasan, professor, Columbia Journalism School and WNBC-TV tech reporter

See the full archive of webcasts at http://www.blogtalkradio.com/saja

If you want to subscribe to the SAJA webcast as a podcast via iTunes,
go to "Advanced" within iTunes, then select "Subscribe to podcast"
and type http://www.blogtalkradio.com/saja/feed and hit OK.

Download the new SAJA application on your iPhone or iPod Touch (search "SAJA" in the App Store) or on your BlackBerry - FREE! - http://saja.polarmobile.com

Follow us on Twitter: http://twitter.com/sajahq

See all our posts below in the MUMBAI ATTACKS category -
http://www.sajaforum.org/mumbai-attacks

* Critiquing the media
* Breaking news coverage and commentary
* Sources available
* Statements from US orgs

Signup for our mailing lists: http://saja.org/resources/emaillists

Here are two ways you can support SAJA's work:

1. donate money to the $15,000 challenge grant - no amount too small
and it will be matched:
http://saja.org/articles/saja-group-receives-prestigious-challenge-grant

2. become a paid member or renew as a member:
$10 for students
$20 for journos
$40 for non-journos
$250 for lifetime, journos; $400 for lifetime, non-journos
you don't have to be south asian to be a member.

http://www.saja.org/membership

Thanks, as always, for your support of SAJA...

Thomas Friedman: "Finshing Our Work" (5 Nov 2008), New Yorker profile

2008-11-17T10:20:00.001-05:00

I'm still going through the piles of newspaper that have accumulated on our dining table over the past 10 days. Just today I finally got to Thomas Friedman's morning-after column:
http://www.nytimes.com/2008/11/05/opinion/05friedman.html

The title, "Finishing Our Work", refers to the American Civil War. The opening two paragraphs:

And so it came to pass that on Nov. 4, 2008, shortly after 11 p.m. Eastern time, the American Civil War ended, as a black man — Barack Hussein Obama — won enough electoral votes to become president of the United States.

A civil war that, in many ways, began at Bull Run, Virginia, on July 21, 1861, ended 147 years later via a ballot box in the very same state. For nothing more symbolically illustrated the final chapter of America's Civil War than the fact that the Commonwealth of Virginia — the state that once exalted slavery and whose secession from the Union in 1861 gave the Confederacy both strategic weight and its commanding general — voted Democratic, thus assuring that Barack Obama would become the 44th president of the United States.

Unfortunately, the bulk of the column does not expand on this theme, since I am interested in reading/thinking more about it. Instead, Friedman offers some ideas on how Obama won the election, and quotes at length a Harvard political philosopher, Michael Sandel. Some excerpts I found interesting:

There may have been something of a "Buffett effect" that countered the supposed "Bradley effect" — white voters telling pollsters they'd vote for Obama but then voting for the white guy. The Buffett effect was just the opposite. It was white conservatives telling the guys in the men's grill at the country club that they were voting for John McCain, but then quietly going into the booth and voting for Obama, even though they knew it would mean higher taxes.

[...]

Why? Some did it because they sensed how inspired and hopeful their kids were about an Obama presidency, and they not only didn't want to dash those hopes, they secretly wanted to share them. Others intuitively embraced Warren Buffett's view that if you are rich and successful today, it is first and foremost because you were lucky enough to be born in America at this time — and never forget that. So, we need to get back to fixing our country — we need a president who can unify us for nation-building at home.

And somewhere they also knew that after the abysmal performance of the Bush team, there had to be consequences for the Republican Party. Electing McCain now would have, in some way, meant rewarding incompetence. It would have made a mockery of accountability in government and unleashed a wave of cynicism in America that would have been deeply corrosive.

And later, towards the end of the column:

Bush & Co. did not believe that government could be an instrument of the common good. They neutered their cabinet secretaries and appointed hacks to big jobs. For them, pursuit of the common good was all about pursuit of individual self-interest. Voters rebelled against that. But there was also a rebellion against a traditional Democratic version of the common good — that it is simply the sum of all interest groups clamoring for their share.

"In this election, the American public rejected these narrow notions of the common good," argued Sandel. "Most people now accept that unfettered markets don't serve the public good. Markets generate abundance, but they can also breed excessive insecurity and risk. Even before the financial meltdown, we've seen a massive shift of risk from corporations to the individual. Obama will have to reinvent government as an instrument of the common good — to regulate markets, to protect citizens against the risks of unemployment and ill health, to invest in energy independence."

This does seem to be Obama's mandate--a post-partisan, post-ideological reconception & reinvention of government as an instrument of common good. Perhaps the central problem that the Republican party has is that, over the past couple decades, it abandoned the idea that government has any capacity to contribute to the common good, as Friedman describes.

On the other hand, it will be a challenge for Barack to say no to the traditional Democratic agenda; case in point, the first issue and political battle that's come to the fore in the two weeks since his election--a potential bailout of the Detroit auto companies, which congressional Democrats and, of course, the big labor unions, are pushing for strongly. It's worth noting that the labor unions helped elect Barack--but also worth noting that they were up in arms when Barack named Jason Furman his main economic policy guy (see this news article from June: http://www.nytimes.com/2008/06/12/business/12econ.html ; and also http://www.nytimes.com/2008/11/07/us/politics/06furman.html)

(A couple links on Michael Sandel, the prof who's quoted by Friedman:

http://www.gov.harvard.edu/faculty/msandel/

http://en.wikipedia.org/wiki/Michael_Sandel

It's not clear to me if Friedman's quotes are from an interview or some recent writing.)

Finally, here is a length profile of Thomas Friedman that ran in the New Yorker a couple weeks ago, and also Friedman's own website:

http://www.newyorker.com/reporting/2008/11/10/081110fa_fact_parker

http://www.thomaslfriedman.com/

Fw: Barack Obama is now following you on Twitter!

2008-11-16T15:27:00.001-05:00

I thought this was pretty cool..

----- Forwarded Message ----
From: Twitter
To: Me
Sent: Friday, November 7, 2008 12:55:23 PM
Subject: Barack Obama is now following you on Twitter!

Hi, suman_ganguli.

Barack Obama (BarackObama) is now following your updates on Twitter.

Check out Barack Obama's profile here:

http://twitter.com/BarackObama

Best,
Twitter

--
Turn off these emails at: http://twitter.com/account/notifications

Fw: UChicago News for Alumni and Friends

2008-11-12T14:39:00.001-05:00

Lots of interesting news out of the UofC: David Booth, Studs Terkel, Nate Silver, Raghuram Rajan, and of course Barack. Just uncovered the Sept/Oct issue of the Chicago magazine, which has a photo of Barack, with the headline: "How UofC is Barack Obama?":

http://magazine.uchicago.edu/0810/features/obama.shtml

Chicago in the News

New York Times: Finding fame with a prescient call for Obama. Math whiz Nate Silver, AB'02, of FiveThirtyEight.com, ran the numbers months ago (November 9, 2008)
Wall Street Journal: Learning for everyone. The WSJ reviews Boston Globe columnist Alex Beam's new book on Chicago's Great Books movement.
The Times of India: GSB Professor Raghuram Rajan to advise prime minister. Ex-chief economist of IMF appointed economic adviser to prime minister of India (November 3, 2008)
New York Times: Studs Terkel, PhB'32, JD'34, listener to America, dies at 96 (October 31, 2008)

From the Editors

We invite members of the University of Chicago community to share your thoughts about former Law School lecturer Barack Obama's election as the 44th president of the United States, whether stories of your election-day experiences or thoughts about the election's impact, locally and globally.

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Wednesday, Nov. 19

Harper Lecture

Christine Stansell and Deborah Nelson
No Hard Feelings: Legacies of Feminism & the Role of Emotion in American Public Life

6 p.m.
San Francisco

Wednesday, Dec. 3

Business Forecast 2009

In the first of an eight-city series, Chicago business faculty and alumni offer insights on the economic year ahead

11:30 a.m.
Chicago

View all events >" width="5" height="6" border="0">

PERSPECTIVE

In His Own Words

During Alumni Weekend 2004, legendary Chicago journalist Studs Terkel, PhB'32, JD'34, held forth in a conversation with WFMT's critic-at-large Andrew Patner, X'81.

Listen in >" width="5" height="6" border="0">
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Email Uchicago-magazine@uchicago.edu with any questions or comments.

draft: Thaler & Sunstein WSJ Op-Ed, "Disclosure Is the Best Kind Of Credit Regulation"

2008-11-11T11:44:00.001-05:00

OPINION | AUGUST 13, 2008

Disclosure Is the Best Kind Of Credit Regulation

By RICHARD H. THALER and CASS R. SUNSTEIN

http://online.wsj.com/article/SB121858695060335079.html

This appeared in the WSJ Op-Ed section three months ago (mid Aug). The authors are Richard Thaler and Cass

Sunstein. Both are very highly regarded academic researchers, and both have ties to Barack Obama's economic thinking and policy.

Thaler, an econ prof at the Univ of Chicago, is one of the founders of the field of behavioral economics, and is sometimes mentioned as a possible Nobel Prize winner (http://en.wikipedia.org/wiki/Richard_Thaler). Sunstein was for many years a law prof at the UofC--and hence a colleague (in fact a mentor to) Obama during Barack's tenure as a lecturer in the UofC law school. Thaler and Sunstein recently published a semi-popular exposition of their work ("Nudge: Improving Decisions about Health, Wealth, and Happiness"). Unfort for the UofC, Sunstein recently moved to Harvard (http://en.wikipedia.org/wiki/Cass_R._Sunstein).

Both Thaler and Sunstein have advised and influenced Obama on economics, thanks to Obama's time at the UofC, and even more so since Obama's primary economics advisor is Austan Goolsbee--an econ prof at the UofC who works with both Thaler and Sustein. (http://en.wikipedia.org/wiki/Austan_Goolsbee)

An excerpt from the op-ed:

The Federal Reserve Board recently issued proposed amendments to
Regulation Z, which governs Truth in Lending. According to the Fed,
the amendments "are intended to improve the effectiveness of the
disclosures consumers receive in connection with credit card accounts
and other revolving credit plans by ensuring that information is
provided in a timely manner and in a form that is readily
understandable."

The Fed's interest in this problem should be applauded, especially in
light of the consumer credit crisis. Improved transparency, rather
than draconian regulation, is the best response to the current
situation. However, the Fed can substantially improve its proposal by
requiring credit issuers to disclose relevant information
electronically in a standardized, machine-readable format. In one
simple stroke, new disclosure requirements would dramatically improve
the current situation.

Fw: Michael Lewis book on financial crisis

2008-11-10T17:12:00.000-05:00

Got this in an e-mail today...

This book deal was announced on Friday:
******
NON-FICTION: BUSINESS/INVESTING/FINANCE
MONEYBALL and THE BLIND SIDE author Michael Lewis's untitled behind-the-scenes story of a few men and women who foresaw the current economic disaster, tried to prevent it, but were overruled by the financial institutions with whom they worked, to Star Lawrence at Norton, in a major deal, by Al Zuckerman at Writers House (NA).

No doubt this will be a big book--esp since, instead of focusing on the villains, Lewis is going to look for heroes in all this mess. Smart.

Obama's Sec of Treasury & "Transition Economic Advisory Board"

2008-11-07T11:41:00.001-05:00

I've been spending some time the last couple days trying to catch up on what Obama's economic thinking is, and trying to get a better sense of what his administration's economic policies will be.

Luckily, I'd saved the August 24 issue of the NYT Magazine, b/c the cover story was David Leonhardt's essay on "Obamanomics":

http://www.nytimes.com/2008/08/24/magazine/24Obamanomics-t.html

(Interestingly, it's currently the first Google hit for "obamnomics", with 2nd hit being the Amazon page for this book:

http://www.amazon.com/Obamanomics-Bottom-Up-Prosperity-Trickle-Down-Economics/dp/1583228659)

I'm still working through Leonhardt's essay. My plan is to write up and post a short summary within the next week.

In the meantime, I've also been following the beginnings of the transition. Esp interesting, given the everything that's happened over the past year, and a fortiori over the past 2 months, is the speculation about who will be Obama's Secretary of Treasury. Here are the names I've heard floated since Wednesday morning, in rough order of likelihood:

Larry Summers: Harvard economist, Sec Treasury under Clinton from 1999 to 2001 (he succeeded Robert Rubin, who he worked under while Rubin was Sec Treas from '95 to '99). If and when he gets the job, I'll have to go into some details on his fascinating bio: http://en.wikipedia.org/wiki/Lawrence_H._Summers
Tim Geithner: currently head of the NY Fed; interestingly, has spent his entire career in public service--including a stint under Summers and Rubin '99-'01. From what I've read the past few years, he is well-respected on Wall Street, and he had been trying to draw the potential problems that derivatives (and specifically credit derivatives) could pose to the stability of the financial system--exactly what's playing out these days. http://en.wikipedia.org/wiki/Timothy_F._Geithner
Paul Volcker: most famously chairman of the Fed from 1979 to 1987. Something of a legend: "Volcker's Fed is widely credited with ending the United States' stagflation crisis of the 1970s by limiting the growth of the money supply, abandoning the previous policy of targeting interest rates. Inflation, which peaked at 13.5% in 1981, was successfully lowered to 3.2% by 1983." http://en.wikipedia.org/wiki/Paul_Volcker

There are two other names I also heard (Jon Corzine and Larry Fink), but those seem unlikely.

We very well could get an annoucement from Barack within the next few days..or even this afternoon. Obama is in a meeting with his economic advisory team this morning, and then will have a press conference this afternoon (all in Chicago, which is interesting in and of itself..the world has been pretty much focused on Chicago since approximately 11pm EST Tuesday night..until Mr Obama goes to Washington, tomorrow I believe).

I was looking, unsuccessfully, for a list of who would be in that meeting this morning. Another example of the power of social networks--I posted that to my facebook status, and got a reply within minutes:

http://www.huffingtonpost.com/2008/11/07/obamas-friday-schedule-me_n_142059.html

Take a look at the list of who's on the "Transition Economic Advisory Board." My initial thoughts:

a pretty damn accomplished, affluent and economically astute collection of people
some serious finance people: certainly Rubin, Volcker, Ferguson, Summers, Buffett; prob more who I am not that familiar with (like Daley and Donaldson)
quite a few Clinton era folk: Reich, Rubin and Summers of course, and also Tyson (I got to meet her briefly when she returned to Berkeley a couple years ago..I got the sense she'd returned to the US from London in part to get back on the political scene)
good to see Rubin and Reich are both on there: the internal Clinton Administration/Democratic debate of the '90s, which Obama seeks to synthesize (not something I was really aware of until reading Leonhardt's article)
more CEOs than I realized go onto something like this..
also didn't realize politicians get included; find those choices somewhat odd--Bonior, Granholm, Villaraigosa? With the first two, seems like the auto industry will have a couple voices at the table..

Grand New Party? David Brooks on Ross Douthat and Reihan Salam

2008-11-06T17:49:00.001-05:00

So what does the Republican party do now? David Brooks has been calling this for months (years?)--the implosion of the (his?) party. I heard him discussing this on the radio yesterday. He compared what he sees now with Britain's Conservative Party post-Thatcher--an ongoing reconstruction that has taken 15 years.

(I don't know the history well--looks like the Conservatives held on to power til 1997 (Thatcher was PM til 1990, John Major '90-'97), when they were defeated by Labor in a landslide. Labor continues to rule, with Gordon Brown having succeeded Tony Blair.)

Brooks published a column in June titled "The Sam's Club Agenda" (http://www.nytimes.com/2008/06/27/opinion/27brooks.html), presciently focused on this topic, and specifically on two young conservative writers: Ross Douthat and Reihan Salam. Since then, their names keep popping up--I suppose b/c I use the "blue" sort media outlets that feature Brooks--the NYT, the Atlantic, NPR.

Here is what Brooks had to say about Douthat and Salam:

"This pair has just come out with a book called 'Grand New Party: How Republicans Can Win the Working Class and Save the American Dream.'

There have been other outstanding books on how the G.O.P. can rediscover its soul (like 'Comeback' by David Frum), but if I could put one book on the desk of every Republican officeholder, 'Grand New Party' would be it. You can discount my praise because of my friendship with the authors, but this is the best single roadmap of where the party should and is likely to head.

Several years ago, Tim Pawlenty, the Minnesota governor, said the Republicans should be the party of Sam's Club, not the country club. This line is the animating spirit of 'Grand New Party.' Douthat and Salam argue that the Republicans rode to the majority because of support from the Reagan Democrats, and if the party has a future, it will be because it understands the dreams and tribulations of working-class Americans."

My understanding is that they recommend a greater attention to the economic plight of America's working class, with much much less attention on the conservative cultural agenda. E.g., I just heard Salam on NPR arguing for a federalist ("local democracy") approach to abortion.

A random thought: this tack could be interpreted as taking seriously Thomas Frank's "What's the Matter with Kansas?" and the thinking behind Barack's one gaffe of the the campaign (the "they cling" comment in SF).

Here is the Amazon page of their book:

http://www.amazon.com/Grand-New-Party-Republicans-American/dp/0385519435

These guys have been writing a lot lately:

http://rossdouthat.theatlantic.com/

http://theamericanscene.com/archive/?author=Reihan+Salam

Q&A: What is LIBOR anyways?

2008-10-22T09:14:00.000-04:00

If you've been reading the papers over the past month, you have most likely read about LIBOR--and probably even seen a graph of it year-to-date. That's because it's the indicator that "credit markets are frozen"--you've probably read or heard that phrase more often that you thought you ever would. (See for instance this article from

So what in the heck does all this mean?

I could just redirect you to the wikipedia article (http://en.wikipedia.org/wiki/LIBOR), which begins as follow:

"The London Interbank Offered Rate (or LIBOR, pronounced /ˈlaɪbɔr/) is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market (or interbank market)."

But let's break it down. First off, note that LIBOR is an acronym--London InterBank Offered Rate. Let's break that down letter by letter:

R for Rate: LIBOR is an interest rate, just like a mortgage rate or an interest rate on a CD you've got with a bank. With a mortgage rate, you've borrowed money, and you're paying that interest rate on the principal to whoever holds the mortgage (as we've learned over the past few months, that could in fact be holders of mortgage-backed securities all over the world, but let's not get into that now). With a CD, you've actually loaned your money to the bank, and they're paying you the interest rate on the amount you've invested (lent).

So who are the borrowers and lenders when it comes to LIBOR? It's an InterBank rate--it's an interest rate for interbank lending, i.e., for loans between banks. Why do banks lend to each other? Let's not get into that right now either.

What do we have left? An L and an O: L for London is something of an historical artifact--that the rate is set by the London wholesale money markets, i.e., the interbank lending market in London, b/c the British Banker's Association took the initiative to do so in 1984, and it subsequently became the benchmark rate for all kinds of finance-related stuff all over the world.

O for Offered means, as the wikipedia quote says, a measure of the rate at which banks *offer* to lend to the other banks. There is also LIBID, which is a bid rate instead of an offer rate--a measure of the rate at which banks are accepting deposits from other banks.

Why is it so important? LIBOR is a measure of banks' "cost of capital"--how much it costs them to raise funds to do business, or conversely how much they can earn on their excess cash. And it's also a measure of how much they trust that their fellow banks (their counterparties) will be able to repay these loans--when LIBOR spikes, as it has over the past month, it means that banks are very reluctant to lend to each other. It's clear why that is these days--banks are worried that any given bank that they lend to may not be around to repay the loan when it comes due (cf. Lehman, Bear, etc.)

That raises another point--how long are these loans for (more precisely, what is their maturity). There are actually multiple LIBOR rates--the most common ones are overnight, 1 month, 3 month, 6 month and 1 year. Currently bank are very reluctant to lend beyond the overnight maturity--they're worried about what could happen in the next month, the next 3 months, etc.

I'll close with one more reason why LIBOR is important, which is a bit more wonky. A striking feature of the Black-Scholes option pricing formula (that's for another day--see http://en.wikipedia.org/wiki/Black-Scholes) is that the interest rate that appears in it is the "risk-free rate," which is the rate at which the market participant can borrow and lend with no risk (of default). Sometimes this is assumed to be the US Treasury rate, but often banks who trade in derivatives markets use LIBOR as a proxy for the risk-free rate (see for example Section 4.1 of Hull, http://www.amazon.com/Options-Futures-Other-Derivatives-5th/dp/0130090565).

Hence, with LIBOR so crazy and volatile, trading desks have difficulty pricing and hedging their derivatives books..

Finally, here is the BBA's website, which has much more on LIBOR, including historical data: http://www.bba.org.uk/public/libor/

A couple newspaper notes: NYT/WSJ

2008-10-17T12:29:00.001-04:00

I've saved a large number of newspaper articles over the past few months with the intention of blogging them, but very few have made it up. Esp with the finance-related ones, by the time I get around to going through the pile(s) of pulled-out pages I've stashed here and there around the apartment, the articles are too dated.

That said, I do still have a handful that I will get up..e.g., the good number references to Robert Moses that I've seen in the NYT over the past few months.

But for now wanted to do a short note with a couple observations about reading the paper (which is consuming a large proportion of my time these days, both in an absolute and relative sense (relative in the sense that it's "crowding out" book-reading..hence why I still have hundreds of pages left in "The Power Broker" and in "Death & Life of Great American Cities", even though I started both of them back at the beginning of the summer of Sam).

The two observations:

1) I am truly lamenting the demise of the stand-alone Metro and Sports sections in the print NYT. We had a system: Anj would take the front page, maybe Arts, maybe Business, which I'd catch up with in the following day. I'd start my day with the Sports and Metro--short and relatively non-heavy reading. And to tell the truth, I was spending more time with Metro over the past few months that Sports. A couple of the story lines that caught my attention over the summer:

(a) Brooklyn crime reports (e.g., the elevator assault in Crown Heights, the cabbie shot in the eye in Clinton Hill, the 9-year old shot and killed in the Weeksville Houses:
http://www.nytimes.com/2008/08/11/nyregion/11taxi.html
http://www.nytimes.com/2008/08/07/nyregion/07arrest.html
http://www.nytimes.com/2008/08/19/nyregion/19assaults.html )

(b) Transit-related coverage, ranging from newsy stuff like the proposed MTA fare hike, to features like the one on the Franklin Avenue shuttle, to stuff in between, like the article about "In Decade of Unlimited Rides, MetroCard Has Transformed How City Travels"--which included a distribution!
http://www.nytimes.com/2008/07/24/nyregion/24shuttle.html
http://cityroom.blogs.nytimes.com/2008/02/29/all-about-the-mta-fare-increase/
http://www.nytimes.com/2008/07/16/nyregion/16metrocard.html

As of Oct 6, the Times folded Metro into the A section (and renamed it New York), and Sports into Business. So although the Metro stories are there, they're buried deep within the A section, and I don't get my hands on them til the following day...

2) Over the past couple weeks we're once again getting not only the print NYT delivered, but also the print WSJ. We were barely keeping up with the NYT (esp since I have a hard time recycling w/o at least flipping through)..now we've got a veritable avalanche of paper. I doubt we'll keep the WSJ beyond a short trial period, but it has been useful, as I've sorted out what, for me, is worth reading out of the Journal: choose one or two relevant articles out of Money & Investing; skip most of the front page section, but take a look at the op-ed pages; see if anything interesting in the Personal Journal; I skip Marketplace altogether.

Ironically I've found the op-ed pages to be what I spend the most time on, and even though it's often not stuff I agree with, they've often got stuff worth reading. E.g., right now I've got a healthy pile of pulled pages containing: "A Short Banking History of the US"; Gary Becker saying "We're Not Headed for a Depression"; a couple by their write Crovitz, one on VAR ("The 1% Panic") and one on JP Morgan ("He was more effective than Bernanke and Paulson combined"); a conservative economist writing on "Krugman Helped Us Understand Trade"; just yesterday, Karl Rove claiming "Obama Hasn't Closed the Sale", and their writer Daniel Henninger on "McCain's Katrina"; and today, William Poole on "Treasury Has No Authority to Coerce the Banks":

http://online.wsj.com/article/SB122360636585322023.html
http://online.wsj.com/article/SB122333679431409639.html

http://online.wsj.com/article/SB122385689217827341.html
http://online.wsj.com/article/SB122264844037784117.html
http://online.wsj.com/article/SB122394373157731081.html
http://online.wsj.com/article/SB122411909182439021.html
http://online.wsj.com/article/SB122411036847938241.html
http://online.wsj.com/article/SB122420321632343101.html

As you can see..way too much to keep up with..

Finally, one joint WSJ/NYT note: one reason I used to like getting the print WSJ was to read breakingviews on a daily basis, which used to get carried on the back page of the Money & Investing. But the WSJ dropped them in favor of their in-house "heard on the street", which is decent; but I still prefer breakingviews--which got picked up by the NYT, page 2 of Business!

Grossman followup: S&P in 1970s

2008-10-07T17:59:00.001-04:00

One more note regarding Grossman's talk: he closed by saying it's embarrassing to hear commentators say that what's happening in the markets is unprecedented. As a case in point, he referred to the drop in the S&P in the mid-70s. He could find the exact numbers during his talk, but seems like he may have been referring to the period from Jan 1973 to Oct 1974, when the S&P dropped from a peak ~120 to a trough of 62: a drop of nearly 50%. Another remarkable fact: it didn't reach 120 again til July 1980. That was near the start of an unprecedented nearly 3-decade bull market in US equities.

Play around with http://finance.google.com/finance?q=INDEXSP:.INX ; but instead of looking at 1d or 1w, take a longer historical view.

Sanford Grossman / Deleveraging society

2008-10-07T17:47:00.001-04:00

Last night got to listen to Sanford Grossman (http://en.wikipedia.org/wiki/Sanford_J._Grossman)
speak on the current financial/economic situation. It wasn't anything
groundbreaking, if you've been reading the paper over the last 12
months, but nevertheless, it was good to hear it distilled into a
couple main themes. Namely, his distillation is that what's happening
is (1) deleveraging everywhere, and (2) the return of risk premia.

His concluding thought was that while deleveraging
is happening at the level of financial institutions and individuals,
"the last shoe to drop" is the leveraged US economy itself--we've been
relying on foreign investors buying our debt, in order to finance our
current account deficit (trade deficit + fiscal deficit)..I googled
"current account deficit deleveraging" for a writeup--first hit was
this article from last week which summarizes it pretty well:
http://www.huffingtonpost.com/david-paul/deleveraging-society_b_130628.html

(Incidentally, 2nd hit was this "naked capitalism" post from late July,
which I think I'd actually skimmed at the time (maybe Krops pointed it
out to me?)...the rather worrisome title there is "Has deleveraging
even begun?"..I'm not sure whether he was trying to make the same point
as Grossman, but seems of a piece: http://www.nakedcapitalism.com/2008/07/has-deleveraging-even-begun-not-for.html )

Grossman's point: while the Fed/Treasury can bailout overleveraged
financial institutions or homeowners, as they get squeezed in this
"systematic deleveraging" (a phrase I saw in another article this
morning), it can't grow the economy, which is what's necessary to
deleverage our whole society. That will take a real readjustment of
our savings & consumptions patters, reallocations of capital and
labor--the sign of the latter being high unemployment.

Alec Baldwin & "30 Rock"

2008-09-17T12:04:00.000-04:00

Read this profile of Alec Baldwin in a recent New Yorker, which led me to this--it's brilliant:

Fw: Review-a-Day: Infinite Jest (96 Edition)

2008-09-17T08:15:00.001-04:00

Amid all the chaos in the world of finance this week, I've still found myself thinking about David Foster Wallace quite a bit this week. I posted some links a couple days ago, which hopefully I'll incorporate into more of a post. In the meantime, this just landed in my inbox. It's not actually a review of "Infinite Jest", but rather a short account of DFW's literary career:

----- Forwarded Message ----
From: Powells.com Review-a-Day <reviews@email.powells.com>
To: Me
Sent: Wednesday, September 17, 2008 2:05:41 AM
Subject: Review-a-Day: Infinite Jest (96 Edition)

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Wednesday, September 17, 2008

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by David Foster Wallace

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Infinite Jest (96 Edition)
by David Foster Wallace

David Foster Wallace: Idealistic skeptic
A Review by David L. Ulin

Post a comment about this review on the Powells.com blog

I didn't know David Foster Wallace all that well. We met a couple of times, and once, I interviewed him onstage at the Writers Guild Theater in Beverly Hills. I asked him on a few occasions if he'd review for the paper, but he said he'd had a bad experience and had sworn off reviewing for good. We shared a literary agent.

In the lead-up to the 2004 presidential election, we spent an hour or so on the phone one afternoon discussing politics, which he followed with the rabid fascination of someone who, despite all better judgment, believed the process mattered, that somehow, somewhere, there was a candidate who might see us through.

I never got a chance to discuss the current presidential race with Wallace; no one did. That's our loss, for Wallace, who reportedly hanged himself Friday night at age 46, was an astute observer, sharp and clear-eyed, idealistic and skeptical all at once.

His 2000 Rolling Stone profile of John McCain -- reissued in June as the slim, stand-alone volume McCain's Promise: Aboard the Straight Talk Express With John McCain and a Whole Bunch of Actual Reporters, Thinking About Hope -- offers a vivid example of this perspective. Wallace sees the campaign mechanism for what it is while still recognizing something fundamentally different, real even, about the candidate, who eight years ago was in some sense the Barack Obama of his time. Here we have a hallmark of Wallace's writing, his unwillingness to take anything at face value, the penetrating focus of his thought.

An auspicious debut

Wallace emerged out of nowhere with the publication of his first novel, The Broom of the System, in 1987. He was 25, a graduate of Amherst and the master of fine arts program at the University of Arizona, and along with a handful of other then-emerging writers (William T. Vollmann, Jonathan Franzen), he helped transform American fiction in a fundamental way.

The 1980s, after all, was the era of "Dirty Realism," of small-bore, naturalistic stories in the style of Raymond Carver and Richard Ford. For such writers, literature was essentially domestic, but Wallace blew that approach away. Exuberant, picaresque, cynical but also heartfelt, The Broom of the System hit the literary circulation system like a 450-page burst of amphetamine.

It wasn't a perfect book; like much of Wallace's early fiction, it wore its inspirations -- especially that of Thomas Pynchon -- on its sleeve.

But what The Broom of the System did was to offer up a set of possibilities, to remind us that the novel could be expansive, that it was possible to push the boundaries, to create a larger social landscape in fiction, that it wasn't wrong to be ambitious, to use literature to get at the unknowable heart of the world.

This was a promise Wallace would bring to fruition with the 1996 novel Infinite Jest, which at 1,079 pages, including 100 pages of footnotes, was a clear bid to create that mythical monster, the Great American Novel, albeit entirely on his own terms. That he may or may not have believed in such a monster only added to the achievement; this was a writer who clearly saw through the elusiveness, the futility, of his own striving and yet continued to strive all the same.

In the wake of Infinite Jest, the book's gimmicks -- the footnotes and acronyms, the arch tone and irony -- drew the most attention, not least because they were quickly popularized by writers such as Dave Eggers and Steve Almond, who adopted them as an aesthetic stance.

But in fact, it was Wallace's odd sense of double vision that most defined his sensibility. He was a humanist who could not help but see both sides of the story, who imagined himself into the gray middle areas of his writing.

This is the key to his McCain piece, or, for that matter, his best-known work of nonfiction, the novella-length A Supposedly Fun Thing I'll Never Do Again, originally published in Harper's as "Shipping Out. "

Here, Wallace spent a week on a cruise ship, critiquing the infantilization of the journey, the way that, on board, every wish or demand was instantly fulfilled. Yet even as he pinpointed every idiotic detail, he found himself drawn in.

The power of the piece lies in its explication of that process, although that has less to do with Wallace lowering his defenses than amping up his empathy. However contrived or phony the experience, he felt the longing of his fellow passengers, their need to step outside their own complacency, the complacency of daily life.

The irony, of course, is that the cruise was all about complacency, but for Wallace, irony was not enough. His 1993 essay "E Unibus Pluram" makes that idea explicit, taking on the irony-izing effect of television on American culture, while rejecting irony as a literary force.

That's an idea to which he would return in his writing, piercing the absurdities of contemporary culture yet also seeking something deeper, the core connection to which literature aspires. This is the ambiguity, the complexity, that transfigures his best writing, although clearly, these were issues he could not resolve.

Thoughtful advice

In 2005, Wallace gave a commencement address at Kenyon College in Ohio that has been widely circulated in classrooms and on the Internet. In that speech, he told the graduating seniors: "[I]t is extremely difficult to stay alert and attentive, instead of getting hypnotized by the constant monologue inside your own head." Up until this week, I would have said that those were words to live by, but in Wallace's case, perhaps, the opposite was true.

Rather than a repudiation, this just makes his work seem all the more urgent, especially the promise that "learning how to think really means learning how to exercise some control over how and what you think. It means being conscious and aware enough to choose what you pay attention to and to choose how you construct meaning from experience. Because if you cannot exercise this kind of choice in adult life, you will be totally hosed. "

David L. Ulin is book editor of The Times.

David Foster Wallace - links

2008-09-16T00:55:00.000-04:00

I'll have to compose a proper essay of some sort..but for now, some links that will go into that:

(if you don't know why:
http://www.nytimes.com/2008/09/14/books/14wallace.html)

his book on infinity:
http://www.amazon.com/Everything-More-Compact-Infinity-Discoveries/dp/0393326292

his book on hip hop:
http://www.amazon.com/McCains-Promise-Straight-Reporters-Thinking/dp/0316040533/

his book about McCain:
http://www.amazon.com/McCains-Promise-Straight-Reporters-Thinking/dp/0316040533/

An essay about him that includes the passage from "Infinite Jest" that has stuck w/ me for more than a decade:
http://everything2.com/title/David%2520Foster%2520Wallace

"It now lately sometimes seemed like a kind of black miracle to me that people could actually care deeply about a subject or pursuit, and could go on caring this way for years on end. Could dedicate their entire lives to it. It seemed admirable and at the same time pathetic. We are all dying to give our lives away to something, maybe. God or Satan, politics or grammar, topology or philately - the object seemed incidental to this will to give on self away, utterly. To games or needles, to some other person. Something pathetic about it. A flight-from in the form of a plunging-into. Flight from exactly what?"

On Wall St

2008-09-15T14:14:00.000-04:00

That is where I am right now, sitting on the steps at the corner of Wall and Nassau, across from the imposing NYSE.

Glad that lunch got scheduled for today down here, as it got me to come through here today, on this singular day in the history of Wall St.

Though (and this too reminds me of Grant's "Trouble with Prosperity"), the epicenter of today's events aren't literally on Wall St, but across in WFC and in midtown.

Overheard a guy sitting next to me on the steps, remark to his friend, no doubt in the context of a conversation about current events, that things have changed--case in point, that there are many more tourists here on the actual Street than there are workers.

But this is why New York. To be here, where its happening, as its happening. Or where it happened. Last Thursday, seeing the two towers of light from our rooftop, and spontaneously taking the 4-5 into lower Manhattan, to walk around the WTC site, to walk underneath those towers of light.

At the tip of the island at the center of the world. Or at least it was, for the 20th century.

Now that I belatedly have mobile email, look for some mobile blogging such ad this. I think being away from a full desktop & browser might be good for actually writing.
Sent via BlackBerry from T-Mobile

new Lauryn Hill?

2008-09-04T01:06:00.000-04:00

Up late, watching the US Open (Nadal v Mardy Fish, men's quarters) and on the web.

At some point while in SF, I came across the "group blog" Pop+Politics. And now that I look at the site, I vaguely remember how--I must have read or heard something about the founder.

I hadn't visited the website in a while, but have been still getting their e-mail newsletter/updates..and today happened to scroll through it and saw this reference to a new Lauryn track. It's one of those YouTube non-videos:

A few NYT articles about Velib

2008-09-01T20:32:00.000-04:00

Following up on my previous post about Velib, here are a few NYT articles that I've saved with the intention to post:

(1) An Travel section article from Oct '07, soon after the system's debut:

TRAVEL | October 14, 2007
Journeys | Paris: Finding Liberte on Two Wheels
By ERIC RAYMAN
Paris’s self-service bicycle docking stations make it easy even for fresh-off-the-plane Americans to explore the city in a way that you can’t by foot, by Métro or by taxi.

(2) A news article that ran this summer, about the success of the first year of Velib:

INTERNATIONAL / EUROPE | July 13, 2008
A New Fashion Catches On in Paris: Cheap Bicycle Rentals
By STEVEN ERLANGER
A year after the introduction of the sturdy gray bicycles known as Vélib’s, other major cities, including American ones, are exploring similar projects.

(3) Another one that also ran in July, about how Paris is considering a similar program w/ electric cars!

INTERNATIONAL / EUROPE | July 29, 2008
After Bike-Sharing Success, Paris Considers Electric Cars
By THE ASSOCIATED PRESS
The new car-sharing program, expected to begin in late 2009 or early 2010, would bring a fleet of 4,000 electric cars and would be run by the city of Paris.

I will have to write up an account of our own (overwhelmingly positive) experience with Velib...perhaps I'll put it off until I finally upload our photos from that trip, since we've got a good number of Velib photos among those.

Fw: T.A. StreetBeat: "NYC Considers Paris Style Bike-Sharing"

2008-09-01T18:19:00.001-04:00

About a year ago I joined NYC "Transportation Alternatives" (T.A.)--a group that promotes exactly that. We got a nice T-shirt and the very useful NYC bike map out of the deal, and I also get their e-mail newsletter.

I've been planning a post about Paris's Velib bike-rental system, which we sampled during our trip there in late May, and about how NYC and SF could use such systems (we did see a station of the DC system in Dupont Circle when we were there a few weeks ago).

I'll eventually draft such a post; in the meantime, here's an entry from a recent T.A. newsletter with some encouraging news on that front:

NYC Considers Paris Style Bike-Sharing

In Paris, Vélib and other public transportation options connect seamlessly to expand and improve the city's larger transit network

On July 9th, the NYC DOT issued a Request for Expressions of Interest (RFEI) to bring a bike share program to New York City. The announcement came days before the one-year anniversary of Paris' Vélib bike share program, and amidst a bike-share craze spreading through cities as far reaching as Washington D.C., Chicago, Montreal and Barcelona. What all of these urban centers have in common is the realization that public-use bicycles can help municipalities reduce auto-use and switch many trips to more efficient modes.

When implemented correctly, bike share holds enormous potential to add a low-cost, sustainable and healthy transportation option, expand the reach and flexibility of the existing public transportation system, discourage the use of single occupancy vehicles, free up space on overcrowded subways and buses and enable a network of bicycle transit in a dense urban environment, all of which go hand-in-glove with Mayor Bloomberg's PlaNYC.

In fact, New York City is perfect for bike share because it has a rapidly expanding on-street bike network, the density and mixed land use necessary to generate sufficient ridership and relatively flat terrain. As the City collects expressions of interest from bike share operators around the world, Transportation Alternatives, along with the newly formed NYC Bike Share Coalition, will be working hard to advocate for bike share characteristics that have best predicted success in cities around the world:

1 bike per 200-400 residents
A dense network of stations (1 every 1000 feet or a 5-10 minute walk)
Connectivity to where people need to go
Connectivity to other modes of public transportation
Strong anti-theft technology
Strong Mayoral leadership and inter-agency cooperation in planning and implementation

Please contact bike@transalt.org if you are interested in supporting T.A.'s advocacy efforts to bring a world-class bike share to NYC. And check out the Streetfilm about Vélib, arguably the world's most successful bike share program to date.

Two from the Sunday NYT Business section

2008-08-31T12:28:00.000-04:00

Two articles from last Sunday's Business section which are worth reading:

First:

BUSINESS / YOUR MONEY | August 24, 2008
Economic View: Finding the Mess Behind the Mess
By TYLER COWEN
The fundamental problem in the American economy is that, for years, people treated rising asset prices as a substitute for personal savings.

This one repeats a lot of themes you may already be tired of reading about, regarding the current economic/financial mess we find ourselves in. But it brings to the fore an underlying reason for this mess--the tagline above, about how Americans have used rising asset prices (stocks and then houses) as a substitute for savings. In fact, let me quote the first part of this article at length:

A BURSTING real estate bubble set off the Japanese recession of the 1990s, which deepened as ailing banks languished. It took Japan’s economy more than a decade to resume steady, noticeable growth.

Will this happen to the United States? Probably not, but we may face a protracted process of recovery, stretching longer than the two or so years usually required to climb out of recession.

Behind every financial crisis there is usually a crisis in the real economy, based in some underlying structural deficiency. Even if the financial crisis is bottoming out, sooner or later the real crisis must be faced.

The fundamental problem in the American economy is that, for years, people treated rising asset prices as a substitute for personal savings. The thinking went something like this: As long as your home’s value rose every year, you didn’t have to set aside so much from your paycheck. If your stocks went up, too, so much the better; don’t forget that the Dow Jones industrial average stood in the 800 range in 1982 and seemed to rise almost nonstop for many years.

Of course, asset prices haven’t been rising much lately, so many people will need more savings for their retirement or for possible emergencies.

The need to save more sharpens a number of interrelated secondary problems. First, America is aging. More people than ever are entering the years when they stop saving and start spending their nest eggs. That means the transition to higher-than-expected savings may be drawn out and painful.

The second problem is that the American economy is enduring a credit crisis, with many banks trying to raise more capital and make fewer loans. Savings are good for the economy when they lead to investment, but there is no guarantee that financial institutions will be allocating capital efficiently.

The third problem is that lower consumer spending will require the American economy to make some shifts. That may mean fewer Starbucks and fewer new homes but more tractor production for export to foreign markets. In the long run, shifting some consumption to investment is probably beneficial to the economy; in the short run it means job losses and costly readjustments.

In addition, there are still excess homes on the market, and housing prices need to fall further. Of course, such price declines can make banks less solvent and thus worsen the credit crisis. And politicians would like to moderate this fall in prices, again prolonging the adjustment process.

And also a paragraph near the end:

Emerging from the current slowdown isn’t just a matter of political will or smart central banking. If the recipe for success requires smooth adjustment into new growth sectors, more savings from disposable income, cleaning up the housing mess, well-functioning energy markets, and more effective financial intermediation — all in the right combinations and in the right sequences — neither the government nor the Federal Reserve can control this process. The Fed can add regulatory and monetary clarity, but there isn’t any magic bullet. Beware of anyone who tells you there is.

The Japanese failed to break out of their recession quickly because they didn’t promptly close down or clean up their problem banks. So far, the Fed and other regulators show no signs of making this mistake; they have been vigilant in resolving crises as they occur. But that’s not enough to guarantee a successful transition. The American economy will be tested for its deftness — and the test will be difficult precisely because there isn’t a single enemy on which to focus.

Note that the essay begins with allusions to Japan's experience in the 1990s: a long, protracted recession which followed a real estate bubble. That is a comparison that a lot of people are making these days. It's unlikely that the US will also go through a "lost decade" of economic stagnation..but it's not impossible.

In fact, the second article I wanted to point out indicates we've got a ways to go, by looking at Merced, CA as a sort of "canary in the coal mine" for the rest of the nation's housing market:

BUSINESS | August 24, 2008
In the Central Valley, the Ruins of the Housing Bust
By DAVID STREITFELD
The experience of Merced, Calif., suggests that recovery from the national real estate debacle will be painful and protracted.

If you don't have the time, patience, or inclination to read that lengthy article, take a look at least at the accompanying graphics.

"Bird's Nest, in the Style of Cubism"

2008-08-30T13:01:00.001-04:00

The title pretty much describes the painting, by an artist named Zhang Hongtu. It was featured in this WSJ article from last week. Take a look. Also, here is the artist's website (which, the article notes, is blocked in China): MoMAO (Museum of My Art Only!). The article notes that the Hongtu lives and works, oddly enough, in Woodside (Queens).

I'd saved that page of the WSJ not only for that article, but also for a short piece Nat Hentoff wrote, titled "These Little Kids Thing Coltrane is Cool"--a nice piece to read it you're a listener of jazz and/or an educator.

Amazing that Hentoff is still writing, but somewhat odd it's for the pages of the WSJ. But the latter has some decent culture coverage..I've seen insightful articles over the past couple weeks about the passings of Isaac Hayes and Jerry Wexler, as well as a review of a new James Brown concert documentary. May post those eventually..

Steady Blogging

Simon & Schuster to sell books on Scribd.com

James Suriowiecki on the banking industry: "Monsters, Inc" (New Yorker)

"Bankruptcy is Vital to Capitalism" (WSJ column)

Keynes's "Economic Consequences of the Peace" on Scribd

Scribd: "the YouTube for print"?

Hank Greenberg on CBS re AIG: "greatest company in history"

Kanye West, "Through the Wire" (video)

if you don't know, now you know..

Brooks on "The Commercial Republic", citing Walt Whitman

Video clips: at the market in south Kolkata

NYT on "forced entrepreneurship"

Galbraith on financial bubbles and busts

Kolkata/Chennai: quick recap

Next stop: Mumbai

Morning's Top Stories (Jan 26 '09)

Niall Ferguson on Fareed Zakaria GPS / "The Ascent of Money"

Attempting to live-blog Obama's speech

Hope and dreams in '09 (according to Dilbert)

NYT Real Estate: "Someone Still Has Money"

closing thoughts on 2008: our bipolar world--the best of times/worst of times

Omar at MoMA! (+ other "The Wire"-NYC connections)

Brad Delong - Berkeley economist, "Grasping Reality"

Economist of the Year: John Maynard Keynes?

Fw: Holidays at MoMA: Four of Six Highlights

WSJ: "How Iceland Rattled the World"

What I'm Reading: Robert Caro, Jane Jacobs, James Grant, Robert Shiller, Paul Krugman, Niall Ferguson, Dostoyevsky

thought/links about the financial crisis in Ukraine

Paul Krugman interview from "Big Think" (video)

Web 2.0 101: Using Twitter

Statistics 101: ARCH/GARCH

Slumping South Carolina

Nocera (NYT): "How India Avoided a Crisis"

NYT: "Wonderful? Sorry, George, It’s a Pitiful, Dreadful Life"

Cell phones/text messaging for development

"The Day John Lennon Died"

Sent to you by Suman via Google Reader:

Things you can do from here:

DiMaggio from NorCal

Chase Manhattan Plaza - 40 Wall St

My most popular-interesting Flickr bits

#1: bob marley - haight @ central

#2: We Deliver - 19 July '05

#3: Tookie

#4: Mad Society Kings - 2

#5: haight @ central - 1

#6: 565 SVN - 19 July '05

#7: 18th @ SVN - straight up

#8: 20th @ Bryant - 14 July '05

#9: union HQ - 18th & Shotwell

#10: MSK - Duboce freeway

Google Reader + "Rubin's Teflon Finally Wears Off"

Sent to you by Me via Google Reader:

Things you can do from here:

Coming soon: Steadyblogging's 1st annotated summary--"(Advanced) Obamanomics"

Mumbai: "Slumdog Millionaire" + live SAJA webcast

Thomas Friedman: "Finshing Our Work" (5 Nov 2008), New Yorker profile

Fw: Barack Obama is now following you on Twitter!

Fw: UChicago News for Alumni and Friends

Top Stories

Chicago in the News

From the Editors

CONNECT

Wednesday, Nov. 19

Wednesday, Dec. 3

PERSPECTIVE

draft: Thaler & Sunstein WSJ Op-Ed, "Disclosure Is the Best Kind Of Credit Regulation"

Fw: Michael Lewis book on financial crisis

Obama's Sec of Treasury & "Transition Economic Advisory Board"

Grand New Party? David Brooks on Ross Douthat and Reihan Salam

Q&A: What is LIBOR anyways?

A couple newspaper notes: NYT/WSJ

Grossman followup: S&P in 1970s

Sanford Grossman / Deleveraging society

Alec Baldwin & "30 Rock"

Fw: Review-a-Day: Infinite Jest (96 Edition)

David Foster Wallace - links

On Wall St

new Lauryn Hill?

A few NYT articles about Velib