Regardless of what one thinks of Thomas Friedman generally, his column today echoes some of my own bleak thoughts recently:
Let's today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall—when Mother Nature and the market both said: "No more."
Or, on the other hand, it can just be one of those once-a-century economic catastrophes that ultimately leaves the second generation following better off, and the third generation following to do it all over again.
Yes, he's shrill, and often offensive, but today I think Mark Morford gets it right:
You are fuming in disbelief. How can I not see it? How can the vast majority of the country not see it? How is it that no one but you and a few manic fringe writers seem to notice that President Obama is either A) a thinly veiled socialist commie instigator hell-bent on destroying America from the inside out, or B) nothing more than a cleverly disguised corporate-loving Bush clone because, oh my God, haven't you seen his policy on H1Bs and faith-based initiatives and his nefarious plan to take over the banks and, um, something else you can't quite remember right now but you're sure is really, really damning?
... Oh, you poor dear. What utter, crushing frustration you must feel. Especially since the other side, the conservative side—maybe it was your side?—had its grand shot at running the show. It ran every sour idea, pushed every extreme right-wing economic scenario, wasted trillions on a failed war, spit on gays and kowtowed to the fundamentalists and shoved the country so far to the right we fell off Ted Haggard's massage table.
... [T]he fact that his extraordinary, nation-altering agenda is right now infuriating the hard right and the hard left, exasperating the Wall Street sycophants and confounding armies of TV pundits and prognosticators, even as he inspires millions of "regular" Americans to get off their butts and do more with their lives, well, this is perhaps the truest sign of all.
Then there's Thomas Friedman today:
Two signs of the times: First, a banker friend remarked to me that you know your bank is in trouble when its share price is less than the cost of taking money out of one of its A.T.M.s.
Second, go to Google and type in these four letters: m-e-r-e. Before you go any further, Google will list the possible things or people you’re searching for, and at the top of that list will be the name "Meredith Whitney."
Finally, a question I have: can we blame the Chinese for successfully cursing us to live in interesting times?
From the New York Times the last few days, three articles worth reading. First, the story of AIG:
When you start asking around about how A.I.G. made money during the housing bubble, you hear the same two phrases again and again: “regulatory arbitrage” and “ratings arbitrage.” The word “arbitrage” usually means taking advantage of a price differential between two securities — a bond and stock of the same company, for instance — that are related in some way. When the word is used to describe A.I.G.’s actions, however, it means something entirely different. It means taking advantage of a loophole in the rules. A less polite but perhaps more accurate term would be “scam.”
Second, "In Letter, Warren Buffet Concedes a Tough Year:"
In language that was by turns blunt and witty, he decried what he called “a series of life-threatening problems within many of the world’s great financial institutions.” An inveterate optimist about the American economy, Mr. Buffett also forecast an eventual recovery, asserting that the country has faced even more severe economic travails in the past.
Finally, a Canadian journalist points out that her country's banking system is fine:
Canadian banks are known to be risk-averse, and this has served them well. While their American counterparts were loading up their books with risky mortgages, Canadian banks maintained their lending requirements, largely avoiding subprime mortgages. The buttoned-down banks in Canada also tended to keep these types of securities on their books, rather than packaging them and selling them to investors. This meant that the exposures they did have to weak mortgages were more visible to the marketplace.
British and French newspapers reported early this week that two of their submarines collided two weeks ago:
The Ministry of Defence was under intense pressure last night to explain how the [HMS] Vanguard, which can carry 48 nuclear warheads on 16 missiles, had managed to crash into Le Triomphant - payload 16 missiles - in an incident which some experts say could have caused a nuclear catastrophe.
The underwater collision happened earlier this month and was at low speed, and no injuries were reported among the total of 240 sailors on the two boats. However some damage was done to both, though officials stressed that none of their nuclear equipment had been damaged.
Three things occurred to me reading about this incident, which the news organizations I consulted don't appear to have grasped:
Ballistic missile submarines patrol at speeds under 4 knots. They're exponentially more detectable at higher speeds. So it follows that the damage they did to each other was very light, because if they'd been moving fast enough to cause more damage, they'd have heard each other.
You can't detonate a nuclear weapon by hitting it, so any environmental risk comes from the reactors powering the boats. However, I think it's important to weigh those risks against (a) the (very small) risk of a nuclear attack on France and the UK that these boats deter, and (b) the routine punishing damage that the merchant fleets of the world do to the oceans every minute. Remember the Exxon Valdez disater, the Amoco Cadiz disaster, and the ongoing disaster of 1.1 million liters of wastewater a typical cruise ship discharges every day.
Notice how neither France nor the UK will say where or exactly when the collision occurred? If they won't even tell each other where their subs patrol, of course they won't tell anyone else. My question: what are they targeting? Typically you put submarines just a few hundred kilometers from their targets. Right now, for example, I would bet money that there are U.S. subs inside the Sea of Japan and Russian subs closer to Los Angeles than L.A. is to Fresno. Everyone knows who the U.S. and Russia are pointing missiles at. Who's France pointing at? Britain? (Read that either "At Britain?" or "And Britain?", your choice.)
Curious. Very curious.
Why? Why? Why?
The only thing that makes sense to me: someone wants to start a war. I hope to all humanity India and Pakistan keep their senses over the next few days. So do the Indians and Pakistanis, I expect.
Today (in North America; tomorrow worldwide) is the 17th Annual Buy Nothing Day, "sponsored" by Adbusters:
Suddenly, we ran out of money and, to avoid collapse, we quickly pumped liquidity back into the system. But behind our financial crisis a much more ominous crisis looms: we are running out of nature… fish, forests, fresh water, minerals, soil. What are we going to do when supplies of these vital resources run low?
There’s only one way to avoid the collapse of this human experiment of ours on Planet Earth: we have to consume less.
It will take a massive mindshift. You can start the ball rolling by buying nothing on November 28th. Then celebrate Christmas differently this year, and make a New Year’s resolution to change your lifestyle in 2009.
It’s now or never!
I just read a fascinating story in The Economist that would have probably gotten more attention in the U.S. but for our recent distractions. It seems Porsche made possibly €12 billion on the Deutsche Bourse by cornering the market in Volkswagen shares:
Porsche’s gambit was as old as finance itself. For about three years it had been steadily increasing its stake in VW, a much larger yet less profitable carmaker with which it shares a little production. Its buying had driven up the price of VW’s shares to above the level at which it would make any economic sense for Porsche to buy VW. Seeing this, hedge funds sold shares in VW that they did not own. One strategy was a bet that VW’s share price would fall. Some also bought shares in Porsche, in a wager that shares of both would converge.
[O]n October 26th it executed a handbrake turn, saying that it owned nearly 43% of VW’s shares outright and had derivative contracts on nearly 32% more. That meant it had tied up almost all of the freely available shares (the rest are held by the state government and index funds). Hedge funds quickly did the maths, concluding that they could be caught in an “infinite squeeze” in which they were forced to buy shares at any price.
Huh. Sucks to own a hedge fund right now.
Take out the trash day? Or just an ordinary Friday during these interesting times? Since lunch yesterday:
- Despite all the McCain Campaign's efforts to keep it under wraps for just three more weeks, an Alaskan legislative investigation released a report alleging Gov. Palin abused her power by trying to get her brother-in-law fired from a state job.
- Chrysler and GM are in merger talks.
- The administration (101 days, 4 hours left) took North Korea off the list of state sponsors of terrorism, leaving only one country in what can't really anymore be called the "axis of evil."
- Oil dropped to $78, its lowest price since last September, on fears of a global slowdown.
Finally, a wonderful quote whose attribution I can't find: "President Bush isn't so much a lame duck at this point as a wooden decoy."
San Francisco's Mark Morford also noticed the Economist's "if the world could vote" tool:
But come on, it can't be that much of a global landslide, right? Surely there must be some stiff, stoic nations out there who'd want a grumpy, tempestuous military man to lead the U.S., if only to have someone to play with in the grand sandbox of war and intolerance and oily greed?
Is there really no military junta, no dictator, no incensed bomb-gathering nation that really wants McCain, if only for the joy of mutual saber-rattling and for refreezing the Cold War? Putin fanatics? Tories? Papal knaves? Anyone?
McCain gets Georgia (of course). And maybe Macedonia. Slovakia is relatively close, but leaning Obama. And, well, that's about it. At last tally, of the 9,875 available global electoral votes (195 participating nations, including the U.S.), Obama has 8,482.
McCain has 16.
Yeah. And those 16 include those in the U.S.
26 days, 16 hours until polls open.
At this writing, The Economist's readers prefer Obama 8,146 to 3.
No, that's not a typo, it really is a ratio of 2700:1.
I should point out, The Economist is a conservative newspaper.
Of course, as McCain's supporters would be quick to point out, their readership is almost exclusively highly-educated, well-read, and wealthy, not the sorts of people you'd want to hunt moose with. Good thing they're not running the world or anything.