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...;)

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.

Jacko and the stock market...

I love this non-story posted on clusterstock - 

"Jacko funeral wreaks havoc on the stock market"

heh.

Whither thou goest...

Whither goest thou America, in thy shiny car in the night?

Last night MissMarketcrash had a kind of Jack Kerouac dream - perhaps you know the type - vivid colors, a bit of a sweat, the works.  And, the dream took the form of a stageplay. The play featured a girl named Val who was sitting in a car, sunglasses on, mute.  The driver was a man who kept talking and talking whilst Val's face would suffer very imperceptible tremors, though she remained silent.  Her mouth was slightly open and, at times, her lip quivered.  Her silence was an all-knowing despair type of silence, and, the man was going on and on about life in a really interesting philosophical fashion with pauses in places so we could study Val's deadpan face and her silent answers.  As viewers, we knew he had it all wrong and we were all placed inside the head of Val, keeping a brave face, perhaps wearing the glasses to conceal a tear or two.  And they were not headed anywhere in particular and did not ever arrive anywhere, or, at least they were still driving when I woke up. There then.  We've got an endless destination, we've got cars, and we've got a Missmarketcrash type all wrapped up in a vivid theatre-based dream which was no doubt inspired by the trip to the theatre with the children yesterday twisted with a bit of the-happy-news-that-surrounds-us.

So - who is that man in the dream?  Is it the financial advisor of MissMarketcrash?  Is it her husband?  Is it her alter-ego?  Or maybe Obama?  Gordon Brown? In the play this mystery man driver represented "General Mankind of the Herd" that is, someone who thought like everybody and spoke entirely in cliches.  

The theatre yesterday was located near the London School of Economics.  My children, post-theatre, wandered  up to a penguin statue and an elephant statue at the school and played.  I stared in the window at the books on remainder sale at the economics bookshop with a kind of analytical irony.  Now, I cannot recall any copies of "On the Road" in that window to wrap this all up in a neat and tidy packet, but, I do remember the books were all of the pop-light economics sort.  And no one wanted them.

From Fairtrade to Sharetrade...

I was avoiding the topic of the American car companies as, well, it all seemed just too daft to me.  However, an article in a Canadian newspaper, The Windsor Star, has snagged Missmarketplace into the conversation.  A Ford dealership up in Canada has run a promotion giving away 100 shares of Ford with every Ford car.  The dealership admitted getting the idea from a Texas GM dealer who ran a similar promotion.  Now...this Consumer Marxism is one of those absurdities my dear father would have loved.  You buy it, you own it, and some.  Well, Missmarketplace has not ever worked for Apple, but, has worked on an Apple Mac and, indeed, has owned some Apple stocks in the past.  However, Jack, my financial advisor scolded me for wearing my heart on my sleeve and advised me that one should be cold and disconnected from one's investments...

I think Consumer Marxism would prove very popular to the youthful and optimistic people still roaming the world, sheltered from the turmoil in universities or perhaps those still living in the family home -- people without worries and disposable income.  I think this is an idea that ought to be fast snapped up by marketeers and rendered useless, but, holistic. "Keep our company and values alive"...(and, in the spirit of the Citicorp bailout, why not just make up a share value which is ideologically-based rather than market value based?)

But really.  How could one attract a following to one of the car companies via the values marketing angle?  Come join us for everything good and American, hugely wasteful on all fronts monetarily and environmentally, full of tradition and immune to change? That is certainly not a winner, and, it will be good for America to come to terms with it all shortly.

In the past, selling a product by offering a charitable spin has been successful in the past - pre-Fairtrade, there was plain old corporate charity --  Ben and Jerry's Ice Cream & Paul Newman products were the predecessors of Fairtrade, but, Fairtrade somehow seems like, well, less like marketing somehow.  Or maybe I am just gullible.

Now, could we possibly morph from Fairtrade to Sharetrade?  Not with those cars, but, perhaps with something else...

All in the head....

This week Missmarketcrash has been mired in derivatives and trying to channel her inner Bertrand Russell.  All a failure of course as Missmarketcrash is not terribly mathematically inclined, but, the exotic sounding iTraxx Crossover index is making the news this week as it is going through a bit of a hysterical spell and Missmarketcrash can sympathize.  Hysterical spells have been Missmarketcrash's speciality for the past few months - with tears a go-go bursting out at the smallest things.  Mostly these moments have been directed at the process of switching child number one to state school, rather than keeping him wrapped up in the cozy comforts of the private one which taught him violin, how to hold a fork and to look someone in the eye whilst shaking hands.  Alas, Missmarketcrash thinks child number one still will have a chance at understanding the iTraxx Crossover index should he choose to when he grows up.  Stick with that incomprehensible leap for a moment.  Both Bertrand Russell and J.S. Mill were home-educated which is essentially the way one must plow forward if your child is in the state system in inner city London.  Last night we read Samuel Beckett  together --to my delight, child number one (who is 7) enjoyed the story of the stone sucker and the mathematics involved with trying to suck 16 stones and switching them amongst four pockets and one mouth....I chose Beckett for our reading as child number one was writing a story about being bored and the futility of existence which he thought was hilariously funny.  So, Beckett made sense.  Which brings me back to this iTraxx Crossover index.  I still do not understand it completely, but, I understand it enough to spare you an explanation lest you wander off and never come back.  So, to put it simply, the iTraxx Crossover index is channelling its inner Beckett and reflecting the futility, the hopelessness and the loss of faith in anything restoring things back to where they were.  Now...we must all climb inside the head of a seven year old and try to find this all hilariously funny.

Flippers or wings or something please...

Miss Marketcrash is confused.  Why is the market going up as we are going down?  Or is the big black cloud of news facts and figures only over the head of Miss Marketcrash?  Does anyone else read?  What are they reading?  Is Miss Marketcrash reading the wrong things???

Clearly.

I mean really.  Did everyone just decide bad news was good news?  Ok.  I must be mistaken. The market pulled itself together somewhat last week and sauntered along, humming a happy little song.  Birds twittered.  Markets all in all ended up even though they are down.  The Dow made its biggest 5 day percentage gain since 1932.  Oh dear.  1932.  

Miss Marketcrash thinks of it all as a big evolving system.  In the midst of a big species change. Miss Marketcrash clearly remembers falling asleep last night after the drinks party only to be interrupted by a loud thunderous voice reverberating around the inside of her head.  Darwin was booming  "Evolve yourself quickly, lest you get left in the dark gloamy swamp".  

Ah...yes...we clearly and most sincerely need...a new Special Edition Great Depression Version of the Sims right now.

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...

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...

Strictly come spending...

After the U.S. markets closed yesterday I turned the BBC Live News on to see what they had to say about it all.  Well...they were much like my dear friends on the matter - they were on the glass half-full side and discussing "Strictly Come Dancing" and John Sergeant's departure.  In that moment, I decided I do love the BBC.  The truth of the matter is, if they had put economists on to discuss the markets it would likely have been just as meaningless as the SCD debate (Yes - acronyms seem necessary when dealing with an economics blog).  MissMarketCrash loves economists, but, truly, what they say today makes little difference when we are on a high speed trip down the whirlpool and things are changing by the second. But, non-the-less, I'd rather see a sexy economist than talk about Strictly Come Dancing.  Oh dear -- do not run away dear readers....read on, I am indeed capable of escapism...

Now that there is not much left in the way of a reliable reality, I look at my children as if they could be Charlie, from Charlie and the Chocolate Factory.  Not to win a golden ticket, but, more importantly, to be sheltered from the gloom and doom surrounding us.  I remember most clearly the message of the movie was about being able to shape your own version of reality - that how the world was was to a large degree shaped by how you perceived it.  Now that is heavy philosophy 101 stuff but it was more or less a light-hearted song about candy which conveyed it to me at a young age: 

"If you want to view paradise

Simply look around and view it.

Anything you want to do, do it.

Want to change the world?

There's nothing to it."

After I got over a very lengthy childhood crush on Jean Wilder I grew up and umm...that little song was embedded in me.  It was no doubt an American thing which has been post-modernly translated into Nike's "Just do it" ad campaign.

Now how to keep the next generation on the sunny-side can-do side of the street?  The economists should curb talking to the government and go straight to Hollywood for some reality-shaping.  But I think that is what Hitler did.