Last week made me thirsty...

After a week of wobbly banks and dreadful data Missmarketcrash had an evening out last night with the Number Ones.  Missnumberone works for a management consulting firm and specializes in debt.  She is a exuberantly beautiful sharp-witted gal.  Mrnumberone works at the same spot and is in the most-fun-friends-to-drink-with Hall of Fame.  So, you can imagine how missmc felt this morning when she undertook the promised exploding make-a-model-volcano project with the children and two of their perky best pals.  All I can say is it worked and the children were delighted.  My kitchen now smells like a gigantic vinegar fart.

But my head.  All the youthful drinking of last night brings Missmc back to the past when she actually was young.  After university, a young Missmc found herself living in New York City.  On credit.  Missmc's roommate and best pal was a complete lush.  We spent most of our time in the Yale club signing our name to this dinner and that drink as we had no money.  We ran up quite a tab.  Eventually we dug ourselves out, and paid it.  

And then, I moved on.  The next second-home bar was in Tribeca.  Artists, neer-do-wells, investment bankers, illegal aliens, and company heads all shared wit on a regular basis. Volumes could be written about it, and, a dear writer friend of mine is doing just that so I will leave that to her and fill you in when the book comes out.  But, a few evenings ago, a long-lost pal from said bar (who is a distressed debt investment banker - is there no escape to this topic???), sent me news that the beloved Liquor Store has become a J. Crew.  Good that they left the bar and taps in place - no doubt more profit could be made in these times with that...

Drinking friends are never a dime a dozen for Missmarketcrash.  They are dear and rare things and need to be able to leap about nimbly through the worlds topics with a sense of humor.  And, in these times, I am sure glad to have a few right next door.

Reframing the Probability Dimension

So, we are effectively in between presidents, the banks are toppling again, and a miraculous plane lands safely in the Hudson river to divert attention from the bank topic.  Thank goodness for excellent pilots, random events, and geese.  Miracles do happen.

Yesterday Missmarketcrash read "Global Risks 2009", a report issued by the World Economic Forum.  It did not contain much outside of Missmc's knowledge or expectations, but, it did have some rather nice charts with a kind of 1950's design flair.  The part I really enjoyed was the bit on presenting statistics, or, as they put it, "reframing the probability dimension" -

"Rather than specifying the chance of a disaster occurring next year is great than 1 in 100, experts could indicate that the chances of a disaster occurring in the next 25 years exceeds 1 in 5."

Missmc loves reframing the probability dimension with regard to The Bank Thing.  But in relation to the bank thing, everyone is under some kind of agreement that this is the month things are falling to bits.  The Obama uncertainty variable adds into this as we anticipate his inaugural ride into the presidency in his specially designed high-security limousine made by none other than General Motors.  Reframing the probability dimension on the bank thing pretty much gives the outcome that failure of banks is a certain thing.

Unless what?  Well - unless one can reframe the political dimension it seems certain.  The idea that has been floated about in Britain is of creating one Bad Bank.  That absolves the government in a certain way by taking the enormous pile of hard-to-value-and-hard-to-liquidate assets and putting it in another entity which gives  the illusion of being separate from the government.  

And I would just so enjoy designing the letterhead for the Bad Bank.  We could even get a public works project out of it and build a Bad Bank Building.  Gosh...it could almost become something fun....

Not Walden Pond...

Yesterday both children were finally back in school after a long holiday and the sounds of silence transported Missmarketcrash back to Walden Pond.  Except it was not silent.  The sounds of widespread panic began to shriek from the computer with all the banks lining up naked to be fed or shot.  And more data on this and that began dripping red down the screen.  

So Missmarketcrash did what she could to ignore making decisions on finances in a panicked fashion (though this fast blog may give you an idea that I surely am panicking today) and started planning a party.

Burns Night is January 25th and a good excuse to drink whiskey.  Which is what Missmc drank when she chopped a bit of her finger off the other day with the new christmas kitchen cutting gadget.  This morning Missmarketcrash sent the Scotsman out to spend the rest of our meager holdings on whiskey and chocolate for the upcoming fete.  And she told him not to worry about money, just to spend freely, because it won't be there tomorrow.

And now, I must go and address the unavoidable and see if I can rescue more funds before they are held hostage.

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...

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.

Val, sunglasses on, kept looking...

"Multi-paradigm viewpoints are blossoming" thought Val as she sat in the car, looking out the window.  He turned toward her but kept his eyes on the road.  He wouldn't understand anyway. There was a certain way of looking at things that seemed safe to him.  Reliable.  Right.

A light blinked ahead.  It made Val squint.  It ran in streams down the window in droplets.  A big blinking blur.  She drifted.  He drove.  Two hands, ten and two into the darkness.

Coffee.  Val really wanted a coffee.  She slowly tried moving her lips to ask him to stop, but she could not.  A small tremor is all she could muster.  With no sound.  

She wondered if he wondered what she was thinking.  They were driving through a place they had not been before.  It was hard to see through the rain and darkness, but, Val, sunglasses on, kept looking.

Then, dear readers, Missmarketcrash woke up.  She checked the news, forgot her dream, and instantly developed a big big crush on a man named Gilo Cardozo.  For a little of that magic we used to feel about cars, you must look at this story here...

Not just the Things...

Great Expectations...Americans have always had Great Expectations.  And now...whither thou goest is the question.  America is waiting with baited breath for Obama.  

"Well, God has arrived.  I met him on the 5:15 train" said John Maynard Keynes in 1929 as Wittgenstein arrived in Cambridge.  In the years before that, Wittgenstein had been sitting about sulking, feeling misunderstood for the Tractatus, and was immersed in the readings of Rabindranath Tagore.

Who Missmarketcrash had never read.  Until last night, when all of Wittenstein's later thoughts had some interesting influences revealed that were previously unknown to Missmc.  Reading on, much of the world began to look a bit shape-shifty as well.  Mystics can do that, though Missmarketcrash is usually immune to such things.

Here is a gem of an excerpt from "Creative Unity"...

"The name Shudra symbolises a man who has no margin around his bare utility.  The word denotes a classification which includes all naked machines which have lost their completeness of humanity, be their work manual or intellectual.  They are like walking stomachs or brains, and we feel, in pity, urged to call on God and cry, "Cover them up for mercy's sake with some veil of beauty and life!""

Ok...so perhaps one does not need to call on God or drift that way with the above paragraph though feel free if that is your thing.  I think he was more focused on the idea that the creativity of humankind is a reality shaper, one with a force to make life more.

This more part is what needs mending for Americans.  The American Dream has been demolished as of late, and, there is a spot for something else.  These empty spots can be dangerous if filled incorrectly.

Obama should not be expected to fill the shoes of Philosopher-King.   The task is to mend not just the things, but, more importantly, the relationship between things and how they are perceived.  That is really up to everyone as an individual.  With a little help from the media.

"It"

A name.  It now really truly most sincerely needs a name.  I've been calling It "The Situation" and "The-Situation-At-Hand" as of late.  We'll want to google this era in the future, and, what will we google?  Credit Crunch, sub-prime, economic crisis....none of these seem to have sticking power as the game evolves and more things happen.

The Great Depression sounds rather foreboding, and, it was.  The problem with naming It is that no one wants to invest It with more gravity than it deserves.  

Yesterday I caught a glimpse of the new U.S. payroll loss numbers a bit ahead of schedule and some estimates were hovering close to 700,000 for December.   Today the figures were released -- 524,000 which is better, but, one must add in the other 154,000 they backtracked and added onto previous October and November figures.  And think of what will be tacked on in January to December's numbers.  That probably brings us back close to the 700,000 figure.  January is surely going to be worse.

Great Depression as a phrase is so terribly grave, it would be helpful to eliminate the depressing part of it. Did you know Roget invented the thesaurus to combat the severe depression he suffered throughout his life?  Indeed, list-making was his therapy.  

Get your pens and paper out and make a list of potential names for "It".  You might feel better.

Secret Agent

Missmarketcrash has just the thing for you this morning!  An Estate Agent from sunny California  is keeping himself nice and busy with tours of foreclosed homes.  As he has few buyers to show homes to, he has taken to walking about with a camera and talking to himself....

Thanks due to Calculated Risk!

Things that move, transform, twist, and disappear...

The spectacle of the stage, with things that move, transform, twist, and disappear under bright lights was a real treat for son number one last night.  We went to see an amazing performance of Edward Scissorhands - the Ballet version by Matthew Bourne.  After the performance, we drove home through London, past Woolworths, Marks & Spencer, through the City...

The drive was just as surreal as the stage we had left -- the final curtain was down on so many of these businesses we drove by - these things would soon be gone.  Son number 1 asked for some cheerful music on the radio - he said the music from the ballet had made him sad at the end.  All I could find were the Ting Tings singing "That's not my Name"....

Waterford/Wedgewood is one of those Names that has been taken down this week by the Situation.  Wedgewood had almost disappeared before,  a few years ago.  I think it is a name that means more to Americans than the British, but, I could be wrong.  None-the-less, Wedgewood is one of those things that will more than likely be reincarnated.  I can think of a number of designers that could work wonders for updating the Wedgewood name.  No doubt, someone will.

The performance we saw last night was a remake of a modern classic.  It worked incredibly well.  Some more of that will slowly but surely be happening later with resurrecting the things-that-used-to-surround-us.  In fact, I can see a cornucopia of ideas for my next post tumbling before my very eyes....

The road not taken...

After a full day with my children and a peek at the news, the theme of the day appears to be behavior prediction and its associated theories and models.  Whether mathematical, scientific, sociologic or with some other base, the methodology of behavior prediction is only questioned when one disagrees and has enough knowledge of the topic to dissent.

Generally, that leaves The-Man-In-The-Street with an article in the newspaper or a magazine which he reads as The Truth as it was ascertained by some important sounding technique, be it an analysis of market performance by assessing the long tails and short noses of a PanGaussian analysis, or, Gina Ford's monotone approach to understimulated child-rearing.  In short, we are assured by the opinions of experts.

So, when there is an Issue where one would like to predict or influence an outcome, whether it the markets, world economies, Gaza, my children -- most would rush to well-worn models, theories and and experts - rushing the past through the brains of todays experts. America is very very good at doing that --  "The Past" is a more important concept to a young nation and so it is held in high esteem.  More astute critical thinkers sit around doing the same, but, challenging the foundations of these theories, methodologies and, well, perhaps coming up with something new. And that innovation will more than likely dissent from the norm.

The situations currently under the worlds ponderances are very much off the norm.  Things may look familiar, but, that is the mistake - seeing markets, world economies, Gaza, anything really -  through the lense of the familiar puts a bit of a blinder on perceptions.  And so, to follow, look closely.  What is happening now with regard to economics and everything that swirls around that is a completely new situation that we have never experienced before.

So, drawing those two points together - looking closely, and, challenging the foundations-of-things-that-are-used-to-explain-things is not a terribly mind-shattering thing to say, but to listen and think off the norm might well be the helpful way - and as to behavior prediction with regard to humans, this kind of thinking requires bravery and is generally the road not taken.

A Week With the Children, Day One

Missmarketcrash is looking forward to tomorrow, when child number 1 begins the new term at the State school.  Child number 2 has another week of holiday before he is back to his Private school.  We pay a fortune for those extra holidays.  As the au pair is no longer here, Missmarketcrash is taking a week off to look after him which adds a bit more into the equation.  

Today we are painting a giant mural together for child number 1's bedroom.  We are also going to cut up and make a nice picture out of all our old christmas cards.  We've got a chicken to roast and bread to bake.  And there are a few dots of snow outside we might get our hands on before it melts.

Then there are 4 more days with the small one to fill up....which means, dear reader, my head will be away from falling markets and failing businesses and empty banks and imploding hedge funds and whatever else might happen.

I should be a mother more often.

Optimism Is Not The Only Way Out...

A tally of articles containing the idea that Optimism is going to play a large part in getting us through the current crisis reveals that it is indeed a growing point of view.  Missmarketcrash was immersed in optimism as a child by her mother who read her The Little Engine That Could an excessive amount of times..."I think I can, I think I can"...

Missmarketcrash still does think she can, but, not in a delusional way.  Anything requiring Faith or Magical Realism is out out out for Missmc.  That throws much of Hollywood's annual output out the window and leaves Missmarketcrash sitting alone, reading.  Can one call oneself a Skeptical Optimist?  Not without causing people to shirk away in droves.  No.  People like emotions and optimism and feel-good sunny day people.  Religion even.  And Corporate Culture likes it too.

Corporate Culture likes optimism with regard to organizational motivation philosophies and executive training programs.   This philosophy has been adopted by child number one's private school - Missmarketcrash read a whole book provided by the school explaining the positive parenting and teaching philosophy.  Never be critical, and, if you must be, turn it around to a positive.  "I'm so very pleased you've dressed yourself and you have shown good innovation with wearing your trousers backward"... The hammer has hit the nail on the head here. Missmarketcrash remembers churning out forecasts and things where the numbers simply carried the bad things along to the month ahead where they were smothered by good optimistic projections and buried. 

Ok.  So I am not going to run back to the corporate world and repent by forecasting in a detached rigorous fashion.  And no one would hire me to do that anyway.  In corporate culture, the realists and skeptics with good analytical skills and horrid interpersonal skills tend to be hiding out in the computer rooms - why not bring one or two of them forth to look at things from a fresh perspective and let them hold monthly chats with the CEO?  And then they could respectively consult their pocket editions of Derrida and deconstruct "The Little Engine That Could" from their own corporate perspective together...

Tadpoles, frogs and libertarians...

Competing realities and perceptual filters abound in the New Year.  It all boils down to just how much debt will remain in the system, and where.  I've not heard an economist peep about such things, but, I'd sure be interested in some kind of analysis on good debt locations and amounts versus bad ones and the links between.  In a hypothetical systemic utopian fashion that is.  The economists are all fretting about the New Power of the State as they ought to be. Libertarians are being born every second, transformed from every other category of political leaning like tadpoles to frogs.  Or something like that, according to your viewpoint on tadpoles, frogs and libertarians...

If the emperor's new clothes were not just not there, but, in hock to a pawn shop in California or Illinois (California because it inspires an idea of sunshine and Illinois because it is a poetic name with a pleasurably odd spelling) or anywhere really, you'd probably be looking at a metaphor for private equity firms.  We'll see which stay, which go, and what comes down with them.

Missmarketcrash's financial advisor must live in a bubble of his own, alongside other financial managers.  His perspective is so market-focused, the giant web that surrounds him must be invisible to him.  Nonetheless, Missmarketcrash has left a tiny dot of funds with hopes that some kind of odd spark will eventually rekindle, or, on the flipside, like a lingering terminally-ill patient, perhaps it will all feel better when all is gone.    But, along with the Champagne bubbles, Missmarketcrash has made a dive out of bonds for fear of more little popping things.

In the Blue Painted Blue...

The last course of a gigantic wheel of stilton rolled off the table and the television and radio went on at a few minutes before midnight. Fireworks, Volare, Gaza on the radio, a clink of glasses and it was 2009.  Oh - and a fat Elton John.  There was a flashback to New Year's past -- always in New York City in a friend's restaurant that year after year after year featured the song Volare just past midnight.  The restaurant was named The West Bank which twisted Missmarketcrash's head in a neat little circle as Missmarketcrash was at that very moment standing in the house of a journalist who was away on assignment in Israel.  Who started to speak to us in his living room via the radio just past midnight. Missmarketcrash's head drifted inside itself to her own internal ipod to escape the radio presenting the world's reality.  For her private entertainment inside her head the Volare lyrics grew louder and louder...Nel blu di pinto di blu (in the blue painted blue)...and at that very moment, all was most fantastically well in the world.

Try it - here is Volare with Dalida.  Or, if you are really really hungover, avoid Dalida and try the most optimistic girls in the world, Vanilla Mood....Guaranteed Happiness.