The Donut-shaped Recession

The markets have begun the October plunge as anticipated by some.  Missmc has sat through the rally with the cash-on-the-side bunch.  It is the looking at the wizard behind the curtain phase of things and, well, really, he is not so bad, just a bit of a charlatan.  Not an evil kind of charlatan, but, rather like the parent that turned out less glorious through adult eyes.  You know, the one you still yearn to see as you did as a child.

The financial markets may bump down slowly with a half-grin and run the course as long as we do not experience something ummm...like a CIT bankruptcy.  As noted in the Financial Times, the bankruptcy likely hinges on the CDS levels on CIT and who holds them. There is at least 52billion worth of CDS out there on CIT.  My thoughts?  Havoc and the straw that...?  Quite possibly, if coupled with other economic variables.  If you've read yesterday's post we can perhaps begin to call this whole affair the beginning of the Donut-shaped Recession.   More on that here on the BBC with the news that "Dunkin Donuts President quits"... 

I know, I know.  you are visualizing that.  There is a hole.  As for going round and round upon itself, well, that is a shape that would be impossible to graph, but, entirely understandable as an abstract...;)

Better, lower, or worse than expected...

Stand in front of the mirror, pretend you are a deadpan Bill Murray type, and read these titles from the BBC...

Because, it is as it is...

What an exuberant market day yesterday was.  Irrational?  We shall see.  In the meantime, Missmc has been flicking through Alain Badiou's Logics of Worlds, Being and Event II looking for some kind of correlative track of thought.  Hands down, this is the hardest book to read that I've ever ever encountered.  I do think a mathematically inclined brain would fare better.  I've wrestled with the the first thirty pages, glanced at the handy dictionary of symbols, and wandered through "notes, commentary and digressions".  And I can't get in there.  This book is less the famously socialist Badiou and focuses more on the concept of logic.  So far, I am thinking he has a bit of Russell's mathematical acrobatics crossed with Wittgenstein's Tractatus, but I could be far far off the mark. 

In a recent interview with Badiou on Hardtalk (BBC), the focus was on the political in relation to the economic crisis.  His theoretical abstractions were bashed about a bit by the interviewer whose mandate seemed to be to reveal Badiou as a raging communist.  When Badiou was asked about reactions to the economic crisis and whether he thought the French were "angry enough" (daft) he responded thoughtfully, dismissing the idea of anger in itself as enough.

To paraphrase, he said, "You must have some ideas, some great ideas"..."ideas of the possibility of something else"...

Here is the interview. Parts two and three add nothing and are worth skipping so I've not posted them...

But you should not miss the best quote from part 2 --

"As a philosopher, I never accept the world as it is, because, it is as it is..." "chuckle chuckle".

Gloomy British Airways...

Gloomy BA says "No signs of recovery..."

Maybe they should try some ironic viral marketing...

Artworks That Ideas Can Buy

"Artworks that ideas can buy" is the title of an exhibition by Cesare Pietroiusti in the project room at Wilkinson Gallery.  Works by Jeremy Deller, Dara Birnbaum and notable others will be for sale in exchange for visitors' ideas.  Interested?  The exhibition opens on the 29th of May.

Questioning the value of contemporary art and its exchange mechanisms is a thread that has been alive and well, coming high above the surface with conceptual art in the 70's.  It is a subversion of the question "what is art" raised by Duchamp with his "fountain".

The value of art is undergoing quite a bit of analysis these days.  Alongside the value of money and the value of British politicians.  But I digress.  Major collections of contemporary art have historically had the generous support of the financial world.  The Frieze Art fair is sponsored by Deutsche Bank.  UBS has been a generous partner of the Tate Modern.  Fingers crossed for this to continue.

On the exit side, several prominent collections are up for sale as noted in the FT here and here.  It's fairly easy to guess which Spanish bank is in process of raising cash by selling off its collection.

So back to "Artworks that ideas can buy".  What other cultural goods can be "had" by the exchange of ideas?  It is self-referential.  Ideas of course.  And that is art with a capital A, no matter what its form.

Make room for a new storm of conceptualism in the contemporary art world.  The economics are ripe for it.  I can already picture the UBS sponsored Salon of Ideas in the Turbine Hall. 

Transitional spaces

Transitional spaces in architecture are a distinct sub-genre.  Hallways, waiting rooms, elevators, awnings, and even those little chutes that deposit us onto the plane are spaces you likely never think about, but, architects do.  Transitioning the senses from point a to point b is not only a visual and physical concern, but thermal and auditory issues are also considered.

We are in a transitional space of sorts with regard to the economy.  In the in-between zone of function and disfunction.  In architecture, when you are in the no-where land, you still have a fairly certain idea of where you will be next.  And you visualize it.  As well as think of where you were before.  The past/future spatial thinking keeps you from being in that dimly lit hallway.  Unless of course some architect has made it a "feature".  Then, you feel the sunlight on your shoulder and look out the window at the pretty fountain.

Back to the economy.  In the transitional space.  It glimmers as Goldman Sachs says buy Bank of America.  And simultaneously becomes dark and overcast as data casts horrid shadows on the wall.  Even the transitional space is ever shape-shifting, a hall of mirrors, not Versailles.

Well then.  So much for the economy, transitional spaces, and insights.  You'll have to make it up yourself.  With that, Missmarketcrash thinks Tyler Cowen's  upcoming new book is so very neatly timely...

Create Your Own Economy: The Path to Prosperity in a Disordered World (Dutton)

Either buy that, or, fly somewhere tropical and check out the airport.

Howard Hughes meets Henry David Thoreau

The little microcosm that is my back garden is thriving.  This morning, a new birds nest was under construction in the ivy wall.  Across the way, in a large hedge, the faint peeps of baby birds twittered as the mother flicked in and out of the foliage with worms.  The lacy heads of purple carrots have emerged.  Wild bluebells have spread to spectacular effect.  A giant allium is just beginning its tall catwalk in partial bloom.  New baby grass beckons.

Pandemics and economics have left this little patch of paradise untouched.  There is nothing more delightful than eating breakfast whilst watching a starling build its nest.  If you could cross Howard Hughes with Henry David Thoreau, that is where I am at this morning.  Panic and denial have both seized the wheel.  Isn't there another choice of driver available?

Sad.

On the dreary side, from the BBC...

Sturm und Drang

Sturm und Drang.  After playing Haydn's Symphony no 47 in G (not ING) backward, forward and in various orders last evening, I found the insight necessary to digest yesterday's rather large stock market rise.  And it was a simple revelation.  The complexity and opaqueness of the current crisis is so far removed from the understanding of the majority of the world from an intellectual perspective. So it is off to the world of Sturm und Drang for a proper analysis.  Despite the unabashed emotional nature of Haydn's symphony, there is a peculiar complexity at work within the piece.  Within it, the music repeats itself, and then, like a palindrome, does the same thing backward twice.  This bit is sandwiched between the emotionally evocative lively marching in the beginning and some sort of crazed gypsy ending.  

Missmarketcrash is most usually cool and analytical, but, the past few weeks have seen her seep toward a state of Sturm und Drang.  Emotions seem to rule the global state of affairs these days, and, Missmc has tuned into this.  And Haydn's symphony brings it all to clarity.  Marching, marching, marching has been done.  The palindrome is a bit messier as the structure of forward forward, backward backward is still underway in the crisis and it just might shift to forward backward, backward forward before it is all played out.  But, there is that mad gypsy music at the end, a kind of free anarchy that makes one dance too fast to come afterward.  And that will be the interesting part.

Google Street View

Missmarketcrash has frittered a good part of the morning away looking at the just-launched London version of  Google Street View.  Here is Missmarketcrash's local high street and the line outside the local butcher shop.  A bit dull compared to the image of the puking man and his friend with reindeer antlers that has been making the rounds.  Most of Dulwich has been re-classified as Camberwell by Google street view.  I can hear the locals fainting.  Maybe it is just a reflection of where property prices are headed. 

I ought to be chatting about AIG, bonuses and retroactive taxes, but, it is a philosophical tangle on many levels.  I will say that anger is a weird thing.  If we are collectively in some kind of emotional process in digesting the current economic crisis, anger is one of those things to move forward and beyond.  Missmc has a bit of a plexiglass screen up on the emotional side and is trying to address things purely on an intellectual level.  With that, the examination of human reaction in the media is a topic I am willing to tackle.  After watching Obama on Jay Leno last night, I can say that what works well on the emotional side for people is good comedic timing.

With that, here is the puking man and his reindeer friend.

Problem Solved.

Missmarketcrash is quite impressed by a new solution to solving the economic crisis. The Financial Accounting Standards Board has come up with a twistedly marvelous solution. I admit I did try and read the original text issued by the FASB and my eyes swam straight to the back of my head and made a slight popping noise. With that, I will just say that I am pleased the whole mess might just be solved by a little accounting derring-do. The Calculated Risk website does a very good job of explaining all here...

What's coming next and how to get through it...

Which economist would you like to see in one of these shiny suits?

(when viewing, stick through the odd intro - it is worth it...)

Zombie Snails and the Media

Missmarketcrash is back.  Perusing the missed topics of the week, one that seems to have garnered a great deal of attention from both the popular media and some fairly thoughtful websites is that of CNBC vs The Daily Show.  As a non-television watching person, I dismissed the topic and moved on.  But it keeps popping up.

The Daily Show is the showcase for a relative of Missmarketcrash, the comedian Lewis Black.  Lewis and I shared a Brooklyn apartment for a short while long ago when he was in the infancy of career development.  I know a lot about Lewis but far less about television.  Having shared a living space with Lew, I can say that the person on television is different from the person in person.

That's entertainment.  Most of us know that, but, the power of media personalities in shaping human opinion is not a dismissable force.  If there were to be an equivalent to CNBC broadcast in Britain it would not be the popular entertainment vehicle that it is.  It would likely be dry and erudite and feature mini-documentaries on financial topics rather than real-time live banter about the markets.  I can see a show before my very eyes comparing the parasites which invade the zombie snail to the current crisis.

And it would likely have a very small audience.  Back in America, most serious investors dismiss CNBC thought they might keep it on in the corner, muted and watch the quotes fly by.  It is in most trading rooms and a useful thing for listening to speeches on economic policy or to keep up with quick news bulletins.  There is a reasonably large portion of the American population that does tune in to garner information and make financial decisions based on watching the show.  I've been in a New York City Taxi before when the driver was keeping up to date through CNBC and he discussed his investments with me.  The taxi driver took the television show quite seriously and watched it "to know what is going on".   The point is, most people are passive watchers who take information as fact.  I'd say that viewers have a responsiblity to be intelligent viewers.  To know is not enough.

But that requires a very generous utopian view of human intelligence.  And by the way, that zombie snail link is worth clicking.  The things that can invade a brain and shape destiny can take far more gruesome forms than Jim Cramer.

Heckling...

A long history of banter and barbed criticism between the political parties in Britain is the accepted norm, to the amusement of most. Missmarketcrash is not amused. I must admit I do like a bit of the theatrical heckle that Parliament provides. But, this is group theatre. Solo performances with criticism directed at others strike Missmarketcrash as terribly egotistical and unnecessary. For much of the financial crisis, David Cameron has kept up his side of the sport with major barbs directed at Gordon Brown.  Today, Cameron has "admitted he got it wrong" with regard to economic matters. Missmarketcrash eagerly clicked on this BBC article. Expecting a bit of humanity.  Alas, he is still heckling.

I am clearly in the minority and most do take this as good sport.  I am trying.  Perhaps a bit of a costume, some kind of cape, mask, or giant comedic grimace would be of assistance...

I'd be more than happy to design something...

Island Tameness

Insuring the survival of the things we are most afraid of flies in the face of human reason.  The introduction of credit default swaps to our world economy may have a parallel in the ecological world, in the theories which abound on the topic of ecological naivete.  The "animals without predators have no fear" problem.  But can animals learn fear?  Studies show that they can.  But not fast enough.  So, what prevents a Dodo event?  Either isolating these species onto their own island, or, eradicating the predator.  

So.  The isolated island thing would be loosely in keeping with the bad bank proposals when it comes to credit default swaps.  Or, can they be killed off?  It is a faulty analogy (and reversed) because credit default swaps do have predators.  But, the predators are human.  Or algorithms. Or, it is all vice-versa.  So then, what to do with a naive predator whose prey is also the predator?  Now we are on an island of tangled snakes eating their own tails as the logic circles and entwines.  Apologies.

Perhaps the CDS market can evolve so it stops engineering its own demise.  Fast evolution is something that can be done to financial products faster than evolution in the scientific world. World events have just shown this to be true.

Intelligent Civilizations...

"Intelligent life forms are out there and there could be thousands of them" said the BBC yesterday.  Well then.  Where are they?  Do you think they know how to fix a broken economy?  

Rockets ahoy - we are talking about alien life forms again.  According to research published in the International Journal of Astrobiology paraphrased by the BBC, "there are at least 361 intelligent civilizations in our Galaxy" and the possibility of many many more.

Intelligent Civilizations?  Did the scientists say that, or, the BBC?  Because if they really truly mean civilizations in the finest sense of the world, I'd like to migrate.  Missmarketcrash is a fan of intelligent civilization as a concept and thinks it ought not to be a utopian one.  Here on earth we are challenging the term "Intelligent Civilization" with our world economic crisis.  Perhaps just "civilization" would suffice as a description at the moment.

The word "civilization" carries a kind of intelligence within itself.  The old school latin meaning of the word implies a delineated area where people dwell governed by laws.  As in a town.  To be "civilized" may carry a cultural connotation of proper manners and/or love of the arts.

So, then, what about the phrase "Intelligent Civilization"?  Perhaps this is a science term employed by alienologists and I am missing the point completely here.  Indeed, it seems to be. A quick google reveals it to be nothing more than a classic case of transference - not unlike humanizing animals in childrens storybooks. 

Pity.  I could use a new place to live.

Capitalism

After watching a bit of Davos-goings-on this morning, Missmarketcrash was pondering the shifting nature of glittering concepts.  With that, Missmarketcrash thinks a bit of nostalgia from the U.S.A is in order...

Zugzwang...

Zugzwang...the Germans are certainly good at coming up with amazingly appropriate words for any situation.  In combinational game theory, the meaning of zugzwang is simply when a player is in a position to make a move in a game, and, any move taken will lead to defeat.  In chess, the meaning is expanded to cover situations where a move by a player will make that players situation worse.

Games of strategy like chess or checkers are enticing because we can see all the moves and implications as they progress.  In sum, the game is public in nature.  Combinational game theory concentrates on the combination of two things and forecasting the outcome.

Game theory in an economic or market focused sense gets a bit more complex as one might deduce.  There are obviously more variables and much of the information is not "public".

Now comes the slow drift downward of the markets.  The banks are releasing data of losses and the mathematical magic show is going public.  A slow evening and morning was spent reading the Counterparty Risk Management Policy Group's most interesting but tedious essay entitled "Containing Systemic Risk: The Road to Reform".  It was written in the beginning of August of last year and, by now, ought to be on the best seller list.  Perhaps the banks who wrote it ought to think about a career in publishing. I do have to admit I did drift more than a bit while trying to read it.  If they could spice it up, it might make the banks a little cash on the side - something they seem to really need.  Why not take all this captivating but dead tedious information and put it on a nicer plate - I envision a Vanity Fair style essay with the behind the scenes personality profiles and caricatures...