Laughter is the best medicine...

Try this link from the FT...

CIT and Goldman Sachs

Missmc is still on the Halloween theme. The deadline for the CIT debt exchange is October 29th. If it fails, bankruptcy would be filed in the days following. How fitting. The FT is also obsessing over the CIT thing and two articles appeared over the weekend which discuss the relationship Goldman Sachs has with all this. No doubt, the Goldman conspiracy theorists are chattering again. The FT held back, but, did slide in the adjective "perverse"...in a really polite way.

These articles are apt to cause confusion as there are two issues and two FT articles. Firstly, as stated here, Goldman provided rescue financing last summer with an agreement that they would be paid 1billion if the company goes bankrupt or defaults. The second FT article concerns itself with a second source of profit for Goldman should CIT file bankruptcy. They are indeed a large holder of credit default swaps on CIT. The amount, and who is standing on the other side of these holdings is unspecified. You may read about it on the FT website here.

Dull is the new black

Coming up on the one year anniversary of the Lehman debacle, the financial journalists have gone all New Years Eve-ish in writing.  The reflections on the past year are everywhere.  I expect a few top ten lists to be issued soon.  What is in and what is out.  

At the moment, "the new austerity" seems to be the trend in outlook.  The FT has a new blog entitled "Money Supply".  This article on the Bank of England furthers this outlook this from a forecasting perspective.  

I just went to buy a pair of shoes and the nice mid-high range has been removed from our local shop.  Instead, a cheap mass-manufactured Spanish range is in stock, with a private label insert with the shoe store name on it.  Private-labeling it is supposed to give it cachet, but, the trick does not work.  They are of dull design and the label does not make them any better.  

Where am I going with all this?  Get ready for the dulling down of things.  Dull is the new black.

Link - Bank of China targets UK Borrowers

The English do like a bargain and summer reductions are on.  And the summer tourists are in town.  Putting the two together, it was as busy as Christmas in Selfridges on Saturday.  With the weather as dreadful as it is, that is no surprise.

Back at home, whilst cuddled up with my only-20%-off-and-why-is-that new bedspread, reading the FT, I came to the most unstylish conclusion that the FT is kind of the perfect complementary colour for it.  Don't read that sentence again.  Missmc is clearly dull dull dull.

More interesting to you perhaps than shades of beige-y pink and my less-than-dynamic Saturday evening is what was emblazoned across the front of the FT:

Bank of China targets UK Borrowers

Well done China - I'm impressed.

Heatwave...

London is in the midst of a heatwave.  I had a blissful afternoon swimming in a friend's pool in Dulwich with my son.  The pool is owned by the same people who own two of the local shops.  In their toy shop, paddling pool sales are up up up.  I bought one.  And two gigantic squirt guns.  And a watermelon.  And two new floaty dresses.  My wallet has been slimmed down and the economy will be thankful for all the hot weather.  Surely the FT will have an article on the consumer spending impact of the heatwave this Saturday.

Speaking of the FT, Willem Buiter has written another thoughtful article.  He proposes an "FDA for new financial instruments and institutions".  Read it here...

Regulation by Prescription...

I really like this story on gambling rats from the BBC.  And I like this story from the FT about vending machines in Germany that one can buy gold from.  And I like the tangents both stories are forming in my brain.  Like, why not just make the gold machine a gambling machine?  If you placed it next to a vending machine for cigarettes, you could capitalize on the effects of dopamine and get people to place more and more money in them...

On the science side of human behavior, perhaps the bankers need to be handed some kind of dopamine inhibitor to keep the appetite for risk lower?  Regulation by Prescription?

The Gem of Tanzania Part II

The Gem of Tanzania is featured in today's FT.  More of the story is pieced together and a bit of movie style enhancement is included.  The stone's original owner, Trevor Michael Hart-Jones is quoted saying

"The stone is jinxed"..."It was bad luck and from the moment I bought it everything went wrong".

Did you know Missmarketcrash is a certified Gemologist?  Back in the early 90's during the recession I was unemployed.  I applied week after week for this and that.  Growing despondent, I invented a game to keep motivated whilst looking for a job. Each week, I would pick the job I was most unqualified for, and, re-write my resume and cover letter.  It provided good relief and a few laughs.  Until they called.  The Gemological Institute of America phoned to arrange an interview.  I kept a straight face whilst on the phone, and then, burst into laughter.  

Off I went to the interview on 47th Street, Diamond Row.  A very subtle door led through a labyrinth of security.  I was given a series of tests in a dimly lit room.  One involved a row of 12 diamonds, others involved different coloured pegs.  And there was a psychological exam.  A week later, I was called in for a second interview.  I accepted the job with a straight face though I was still in it for a lark.  Whilst employed I powered through a bunch of courses and became a certified gemologist.  It was a very odd world.  I evaluated stones from Christies and Sotheby's as well as from a host of diamond dealers.  Much of the job was spent in a dark room with a microscope, but, once a week we worked the front office and took gems in from the customers.  The dealers were primarily Hasidic Jews and the most marvelous things would emerge from pockets wrapped up in paper packets.  Once, a dealer lifted up his son's yamulke and plucked an astonishingly large blue star sapphire from underneath and handed it over.

Now.  Value is something that is never assigned by any expert gemologist.  A gemologist is concerned with the quality of gems, never the worth.  An uncut stone may be called a derivative product as its value is dependent on the value of it being something else.  And that something else is a bunch of cut stones.  The uncut stone can be best assessed by a master cutter rather than a gemologist, or an insurer.  At the end of the FT article, the original mine suggests that its value may well be accurate if it were cut unto hundreds of smaller jewels.  So, does the mine know it is not of sufficient quality to yield one amazing gigantic stone?  Well, you'd have to go ask them a bit more.  If it could be one amazing stone and a few little offcuts, it would deserve the title "The Gem of Tanzania".  But, as it is likely to yield hundreds of ordinary rubies of unknown color and clarity and size, it is perhaps not worthy of a title yet.

However, now that "The Gem of Tanzania" has been declared jinxed, it's value can forever remain in dispute. Somewhat like what has happened to credit default swaps.  Clever move, Mr. Trevor Michael Hart-Jones.

Transubstantiation of complex convolutions of random variables...

I wish I could have written that...

See it here...

Chiconomics...

Missmarketcrash wants to rename herself.  A brochure from Heals (the furniture shop) arrived in the post today with a most fantastic name emblazoned across it.

Chiconomics.

Wow.  I want to be that.  When and if this moment of economics and market madness progresses to a more favorable level, I shall have a new nom de plume.  And Chiconomics is an utterly delicious phrase.  

Effortlessly stylish here we come.  And I'll still be allowed to read the FT as Miss Chiconomics...it is pink after all....

David Attenborough channelling Willem Buiter

One of the pleasures of living in London is listening to Sir David Attenborough.  It is his voice, a gentle fog, comfortable as a good friendship.  The steady wisdom of an ideal father has resonance with everyone, and, he has the knack.

Why then, is Missmarketcrash obsessing over David Attenborough this morning?  Well, imagine if the Financial Times had a television feature about the current state of world economics....it would be most wonderous to have David Attenborough channelling Willem Buiter to discuss the state we are in, and, where we might be going.  No matter what he said,  he would place a warm cup of tea in our hands and goodness would descend.  His naturalist perspective would be a fitting sidekick for discussing economics.  

Attenborough's upcoming broadcast beginning 11th of February is entitled "Nature's Great Events".  There are six episodes:

1. The Great Melt

2. The Great Salmon Run

3. The Great Migration

4. The Great Tide

5.  The Great Flood

6. The Great Feast

There is, or could be, a clear parallel here to the goings on in the economic world...a nimble leap of topic is all it would take...

All the better smells of decay and rot

Missmarketcrash is terribly eager for Wednesday to come as child number 2 is being whisked back into his warm nest of private schooling, where four year olds can do things one would not ever imagine in a fantastically bucolic setting.  The school gates will be a hive of hush and brave faces, mums recently stripped of spending power bumping up against a dwindling number who just glide about untouched by it all.  As it is an old-school-london-school, consumerism of tangibles has always been out, and, thrift, cycling, and recycling were all the vogue before it all happened.  So it shouldn't look much different from the outside.  

But inside - what is wrong - what is wrong what is wrong?  The stiff upper lip of the BBC uttered the phrase "Frightening Decline" on its website this morning.  The FT said "Be Afraid" on its front page.  It is earning week and lo, that is mucking things up in a big way.  There is also something going on with Citigroup again beyond the reported things.

I read a few of Jen Hadfield's poems to escape the gloom and doom this morning.  She just won the T.S. Elliot prize and has transported Missmarketcrash to an isolated Highland island this week with all the better smells of decay and rot.    Missmarketcrash went to live on the Isle of Skye for a bit after experiencing September 11th in New York.  And gosh, this week it does seem time to leave those school gates behind, and, go back.

But that would not change things.

Here in Glasgow...

"Complex, tightly wound and generally impressive" began the review of a champagne in the FT this weekend. I ought to know better than to try to read or write whilst sitting under the daughter-in-law spotlight. I am certain that the above description of drink would be how my mother-in-law would describe me. I've been on a cornocopia of champagne since arrival as really, my mother-in-law would really like me to fall down drunk and proclaim the answer to her most curious question - "just how much have you lost Missmarketcrash?"

Glasgow is not the place to feel sorry for yourself financially. The grit and hardship hits you in the face upon arrival and hovers around like an awkward family member. I think it is one of the bleakest places in the universe sometimes.

Some of the more notable economists are focusing a lot of analysis of this financial crisis, and past ones, on psychology. Consumer sentiment does have a card to play in a consumer-driven economy. Glasgow reflects that contribution in a nutshell, with vast tracts of bombed out housing estates dressed up in christmas bling, flashing away, with hope, and, fear.

Hope, fear, hope, fear, blinking on and off.

Can someone let the lighting designer in charge of the current crisis know that a bit more sparkle might go a long way?

Hollywood Futures...

Missmarketcrash had a flash of inspiration this weekend to go shopping at Canary Wharf.  Canary Wharf is aptly named these days - it is indeed full of canaries and somewhat like a coal mine. There is a great vast mall buried beneath the towering offices currently home to most of the financial companies in London.  One enters said mall by whizzing around an underground roundabout that really does look like the Saddest-Place-On-Earth featuring little tunnels that spoke off of it.  It is pretty unclear where all these little paths lead, and most do appear to lead to nowhere.  After taking a full spin around and surveying the non-options, I entered the one that seemed to lead to a parking garage.  Where I was greeted by a security guard.  The security guard grinned and took one of those little bomb sniffing handheld devices out and ran it over my steering wheel and car door handles before waving me on.  A small flashback to my Sept. 11th moments in NYC drifted by and then hung overhead.  With my two small boys in tow I entered the mall which was a confusing array of paths leading nowhere just like the roundabout.  But Joy.  Canary Wharf was doing all kinds of nice activities for the children to draw in the shoppers and had some great things on offer.  We started by decorating some eco-shopper cloth bags with paint and lovely sparkly things.  Whilst we were doing this, two nice security men with a bomb sniffing dog circled around us so the boys could pet the dog.   The cloud overhead started to throb.  We dutifully carried on and did some shopping.  I quelled the claustrophobic underground thing enough to have a pretty jolly time with all the elves who ran up to the boys and passed out sweets and biscuits and kind banter.  Almost fun.

When we returned home (alive thank goodness), our neighbor who had just fired 80 people and works at Canary Wharf was standing outside.  He hopped on top of my inky cloud and I carried him (metaphorically - he is enormous) inside with my shopping.  I shoved the days experience into a dark corner where it mulled around a bit like a failed hollywood movie.  And then I opened the FT.  "All eyes on Hollywood futures" was the headline under a picture of some shocked looking cartoon animals.  I felt faint and blinked.  But the headline remained and the cartoon animals stared back at me.  Film Derivatives???

Can I write the movie about it first?