Put your helmet on.

Are we back where we were last autumn?  With a cliff-hanger of a bankruptcy looming for CIT today in the U.S., I know, you are sitting there, thinking, well...the markets are not going to have a flashback. They are experienced, and resilient.  Let's hope.  According to this article in the Independent, it would be the fifth largest bankruptcy in American history, should it happen.  It has been in the news on and off for a while, and, I have put up some insulation between the story and I.  A bit of a hole was punctured in this protective snug when the Independent mentioned that it would affect thousands of Duncan Donut franchise owners.  

Donuts?  They can go.  But it would clearly be disastrous across the board nonetheless.  Hence the insulation.  Put your helmet on.

To end on a better note, the metaphorical structure of the donut is worth a ponder.

Bank trading and derivatives activity

I've a treat for you - here is the U.S. treasury report on bank trading and derivatives activity with highlighted activity from Goldman Sachs, Bank of America, JP Morgan, HSBC, and Citibank.  A splendid array of charts is provided, as well as some read-between-the-lines deadpan analysis.

More Steak...

Missmarketcrash herself will now be able to personally guarantee to you that Bank of America and Citigroup will not be nationalized.  Why?  

From the Marketwatch website comes the following:

"Bernanke refuted notions that the conversion program would lead to nationalization. He said that as long as there were some private shareholders in the biggest banks, any government investments in the banks would not constitute nationalization".

I knew there was a reason I still had those shares...I can now save you all from the N word.

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....

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.

Tis the season...

Everyone has a Christmas memory that floats up with good feeling every year. For Missmarketcrash, that feeling has always been looking forward to doing a bit of charity. Bringing in canned goods, making crafts to sell, all the lovely smells of Christmas are consistently haunted by that smell of the elderly pee in the nursing home...

With all the charitable donations the U.S. government seems to be making - to the cars, to citibank, and, now, to GMAC and so on - the spirit of giving continues.

The Queen has just delivered her annual Christmas speech and seems to be on the same tangent as the American Government. Let's push Missmarketcrash's irony aside for a moment and remember...time, clothing, money, even good cheer -- whatever you've a bit extra of...donate a little for charity -the giving will bring you merriment.

Dark Pools...

Missmarketcrash has a new favorite phrase this evening - Dark Pools. Gosh...almost as good as a Philip K. Dick novel, Missmarketcrash is happy to report that "Turquoise is considering linking dark pools". Or some such thing. I am hoping you have taken that all as poetically as I have, with visions of said "dark pools" located somewhere in the clear Caribbean, and some kind of life force, likely some kind of quant-non-human, is finding the need to network said murky depths.

It is all about liquidity and secrecy but sadly, has nothing to do with the Caribbean. Dark pools are somewhat like dark matter - the presence and size of dark pools can be inferred by effects on visible aspects of the market, but, they remain hidden. Dark matter is known to make up more of the universe than the visible part. And what about dark pools? What equities are in them, and, what are they worth?

Turquoise is an equities trading platform backed by a group of large investment banks. The linking of dark pools is interesting - will such linking provide an understanding of the mass of dark pools out there to a chosen few within the Turquoise universe? Or will it act to keep it a murky mystery to all outside? Or both? Or neither?

Missmarketcrash admits her understanding of Dark Pools and such is clearly twisted by the interference of the rich fictive fantasy element in her head. But they must have been named that for the same reason.

Wake up to Opportunity

Missmarketcrash is honoring the Thanksgiving holiday here in London with some shopping suggestions.  I shall bring you to one of my favorite American shops - the Bankofamericastore.com.  Did you know they are having a sale?  Up to 70% off on many items. Let's head straight to the sales.  How about:

One of my favorites - 

A glass mug engraved with the phrase "Wake up to Opportunity"...on sale for $3.99

or, the comical speedy robber - 

A Bank of America Mug on Wheels is discounted to $2.99

or, for the nostalgic and sentimental - 

A  Bank of America Charm Bracelet is discounted to 24.99

and last but not least, the useful self-explanatory -

100 U.S. Trust cocktail napkins for $5.25

All amazing gifts at very good prices.

Happy Thanksgiving, 

Missmarketcrash

The untidy algorithm...

When the economists start to develop a sense of humor, well, then you know it is pretty much all over.  Economists have a peculiar sense of humor, but, a look at any writings by economists usually is of the dry tedious sort that would make good bedtime reading to children who need to be punished.  Looking forward and looking back are two things economists do to ascertain a sense of reality.  At the moment, neither is a fruitful enterprise as backward is steeped in nostalgia and old-fashioned ways for when banks were, well -- banks, and, markets were markets.  Looking forward is what one an economist does after looking backward and umm...forward.  But, my, how mind-shifting it is to look backward and forward from the perspective of the current  immediate present which one can see as a sort of pair of rose-tinted glasses that have just shattered.  And maybe you just want to cross the street and forward and backward are not helping with that.  Worst of all, looking left and right just places the untidy politics algorithm in the middle of it all.

LeftwardRightward (guessstate, sequenceindex):

if sequenceindex is past the end of the sequence, return 1

if (guessstate, sequenceindex) has been seen before, return saved result

result - 0

for each neighboring state n:

result = result + (transition probability from guessstate to n given observation element at sequenceindex)*LeftwardRightward (n, sequenceIndex + 1)

save result for (guessState, sequenceIndex)

return result

Optimism?

Missmarketcrash has a fan letter this morning.  A friend who is still employed at an Investment bank writes...

"Dear Missmarketcrash;

I want optimism!  Innocent naivete has a lot going for it, dish yourself up a spoonful on me this morning if there is any laying about.  "

Deep Breath....

It was a magnificent pie-in-the-sky all-sun-shining day yesterday for the European markets.  Up around 9/10% in most spots.  Across the glistening waters on American shores of freshly cut grass, the markets swooned upward and forward in a happy-go-lucky fashion.  Speaking of happy-go-lucky --  have you seen that Mike Leigh film?  It gave a bad name to innocent naivete - the character was so daft and kept falling into dangerous situations without realizing it.  Insert your thoughts here - but do extrapolate a bit and go beyond yourself....

It is a difficult thing to have innocent naivete and a bit of intelligence at the same time.  But, that is precisely what the world is demanding of us at this fast-forwarding moment. That might just help see us through.  Perhaps we need something along the lines of a Japanese anime girl character with fluttery eyelashes to sit in the spot on the television where the deaf interpreter is usually featured.  She could have magic powers from catching falling cartoon dollars which she could on occasion, giddily throw up in the air, and then shyly wink at you with a nice innocent flirt...

Opportunities ahead...

Ah...the Prime Minister's speech...I've always a weakness for a Scotsman - I married a man-of-the-kilt born not far from where Mr. Brown was born.  But - they could not be more different from one another.  Mr. Brown is really good at these fiscal things, whereas my husband does not really do much regarding fiscal things, save read the Economist.  So what did Mr. Brown say?  Lots of things about extraordinary measures and extraordinary times...and that creativity and entrepreneurship will help lead the U.K. into opportunities ahead in the new Global economy.  Creativity is certainly needed to understand the situation.  Does anyone understand yet the extent of the damage to the entire global financial system?  Thankfully not.  Let's keep it that way.  Let's sing and dance and top-of-the-pops our way out of it and entertain the world when the world could use some entertainment.

I've had a phrase stuck in my head for about a month now.  "The Silver Lining".  Indeed.  The impoverished town of Glasgow where Mr. Brown was born has always been a hive of creativity and is home to successful artists known worldwide - 

The Silver Lining could be just that.  More artists, writers, musicians and less bankers. But will that work?  I think we'll have to keep a few bankers along for the ride into the beautiful global future.  But could someone please tell America that they haven't given Citibank enough cash? Leading economists in the world see a massive amount of folly in the amount of aid offered. (See http://baselinescenario.com).  Leading economists would probably suggest the bankers will need another handout in the future...one of violins and guitars and other instruments to busk with in the tube and subway stations around the world...

The Best Bank

Through the post with a resounding thud this morning comes a Special Admissions Ticket to an event held at the rather glamourous sounding Palmetto Ballroom.  But, alas, it is not a glamorous ticket but rather a ticket to attend a meeting for the proposed merger of Bank of America and Merrill Lynch.  Still looking for a glamourous angle I look up the location online.  If I were to spend my last pennies on attending I would be able to do a bit of shopping at the important sounding International Trade Center where the Palmetto Ballroom is located.  I could go to "Belle Ville" and buy some "Chic European womenswear".  I know I should not say it, but, I do wonder what North Carolina's idea of "Chic European" is.  Or - oh - I could go to the Bank of America Store and buy hats, keychains, mugs branded with the BoA logo.  Feeling giddy with it all, I press the link for the BoA store.  Amazing.  They have an online merchandising shop - www.bankofamericastore.com.  It is an interesting array of toys for what presumably would be the children of American bankers.  Tumbling Towers wooden blocks game, a travel-sized naval battle game, a disfunctional looking yo-yo, and best of all, a piggy bank...

I've spent weeks researching banks and here is the best one found before my very eyes.  It has a cork in its nose to keep the money from falling out...

6.66

It is that time of the evening in London where the obsessive MissMarketCrash is watching the U.S. markets close, wine glass in hand of course.  And out of the corner of my eye, I read that Citigroup shares are involved in their largest one day drop. Curious, well, not just curious but with ummm...concern -  I see that the share price is 6.66.  Oh dear. 

And with my other eye as I have taken to multiple screens which give the illusion of knowing and being in control of it all I read of the largest U.S. consumer price drop and predictions from another U.S. government acronym about the length of the "slump" being well over a year...

And to watch the close of the U.S. markets tonight is going to require more wine I think.  I'd ordered 120 bottles of cheap (but luscious) bergerac a week or so ago from a friend of a friend to see us through these difficult times and insure we'd still have drink when the markets crashed completely...well - they've done that, but really truly most sincerely crashed is what I mean...

It must be time to chase down that order and make sure it is in the cellar promptly...but from the looks of things this evening, it might be too late...

Because he sounds like Jack Nicholson...

Because my Financial Advisor sounds like Jack Nicholson is not the reason I am with him.  Sure - he has several things in common with Jack besides that voice which I love to hear on the other end of the phone - he lives in L.A., he is married to a sexy actress and like Jack, he took a good long while to settle down.  A number of weeks ago I had a chat with Jack.  Jack was playing one of his more neurotic menacing characters and our conversation was not unlike the chicken sandwich scene from the movie Five Easy Pieces.  Except - role reversal - I was Jack, and Jack was the stroppy waitress who loathed me.  In the end, I got what I wanted and did not even have to tell him to stick the chicken between his knees.

That would be terribly rude.  My youngest child had show-and-tell last friday and chose to bring in his book on table manners.  Terribly funny from a boy who has a hard time sitting at the table.  I asked him why he wanted to bring in his little book and he said in a perfectly deadpan-kind-of-way "because I like table manners".  Almost the way Jack would have said it.

But - I digress.  I do have the toast.  The toast is going to be changed into sterling and I thought it worth a bit more of a wait.  But - the toast is burning!  And I do not mean California which is also on fire as we speak.  Actually, it is not the toast, but, rather the toaster which is looking alarmingly wrong...it has looked wrong for a good long time but is really rather really wrong according to rumors....