Tag Archives: money

American views on the economy

As the American stimulus plan progresses whilst we encourage the former bank chiefs to self flagellate in public[1. Anyone else find it amusing that they were apologising in the Thatcher Room? There’s one woman who will surely never apologise for helping us down the road to where we are now.], I figured I might as well point you all to a few American media pieces I’ve read or heard in the past year that have really helped me make sense of what’s going on.

By far the most accessible and most important are two programmes from This American Life, a weekly radio show made by PRI which has an outstanding ability to delve into topics in depth in a way that often puts some British radio to shame.

First up we have The Giant Pool Of Money, which has tracks down some interesting voices caught in the middle of the crisis as it was by May of last year, and is particularly good at explaining the issues with how much money was flying around:

Ceyla Pazarbasioglu: This number [of all the money in the world] doubled since 2000. In 2000 this was about 36 trillion dollars.
Adam Davidson: So, it took several hundred years for the world to get to 36 trillion. Then, in six years, to get another 36 trillion.
Ceyla Pazarbasioglu: Yeah. There has been a very sharp increase.

This was then followed up by Another Frightening Show About The Economy which was a particularly fascinating show as it came just after the last bailout bill and explained a lot about what was happening in the Credit Default Swap market:

Alex Blumberg: Like many parts of the financial system these days, credit default swaps are so complicated, simple bankers couldn’t have created them. They were invented by people like this guy, Gregg Berman:
Gregg Berman: Actually my formal training is in physics. So I studied experimental physics and nuclear physics before joining finance in 1993.

These two particular episodes helped give birth to a fantastic little show called Planet Money which has a great podcast. Incidentally, another great episode of This American Life available on the PRI website is Ground Game which dissected the efforts of the Obama and McCain campaigns in Pennsylvania. In essence what I’m also saying is make a space in your podcast feeds for This American Life, it’s good, and if you really like it, donate, as unlike the UK, American public radio depends on sponsors.

However, I’m not all about the radio shows. The New York Times has had a series of rather lengthy and worthwhile stories. My particular favourites include an article explaining Value At Risk, a risk modelling technique that underpinned a lot of the growth in leverage:

Risk managers use VaR to quantify their firm’s risk positions to their board. In the late 1990s, as the use of derivatives was exploding, the Securities and Exchange Commission ruled that firms had to include a quantitative disclosure of market risks in their financial statements for the convenience of investors, and VaR became the main tool for doing so.

Given the calamity that has since occurred, there has been a great deal of talk, even in quant circles, that this widespread institutional reliance on VaR was a terrible mistake. At the very least, the risks that VaR measured did not include the biggest risk of all: the possibility of a financial meltdown.

Also, there was another great article in the New York Times at the end of last year on Washington Mutual, a lender that got in far too deep in the mortgage market thanks to being the bank that liked to say yes.

At WaMu, getting the job done meant lending money to nearly anyone who asked for it — the force behind the bank’s meteoric rise and its precipitous collapse this year in the biggest bank failure in American history.

The road from here is naturally complex. I’m no Brown fan, but I’m even less of a fan of Cameron, and I think if all we have left to place in capitalism is faith (wither poor hope and charity) then we might as well pack up the economy and go home to the caves.

Lastly, a touch more audio courtesy of Hugh McGuire’s handy pointer on twitter, Robert Reich, one of Obama’s advisors on his expectations for the economy of 2009, a fascinating and wide ranging talk, courtesy of the Commonwealth Club. The point I took most from it is that there is still plenty of demand in the economy but the issue is wealth distribution and that we must be willing to finally confront redistribution of wealth to get the economy fixed. [2. Though as it’s so long since I listened to it there’s always the risk that that is not in fact what he said…]

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We return to our regular…

So, it’s been a while since I last posted, sorry about that.

London has amazing time sapping powers, though I have seen Hero (oh my, so good, but not as good as Shaolin Soccer, which remains my ultimate fu foo film (for want of a better term). I suppose that indifferent Chan flick with him using his fu skill to win car races ranks alongside in many ways, but falls short of the Shaolin Soccer genius.

Other than all that, I’ve been reading (big shock) a fair number of titles, most notably Osamu Tezuka‘s Phoenix series, which has an alternating setting of Japan’s early years and the far far future (all the way to infinity). Certainly an equal of Buddha and Adolf, but retaining the essential comic touch (oh, the pun) that really makes his more “literary” works come to life.

Oh, and spending the equivalent of half a day commuting to and from work each week is only just starting to get a bit annoying. I can get up OK, and I get the chance to read and listen to music (courtesy of the Rio Karma) all the way, but it’s a lot of time and money to spend just getting to work.

And so, the flat hunt has begun at long last. First I looked at a bizarre renovated council flat in Wandsworth (remember the end of Trainspotting?), which was not impressive but seemed cheap at £350 a month. I’ve now found that there actually are affordable (well, 400 quid a month plus bills and tax) places in Chiswick within walking distance of work and that might get me back my ten minute cycle commute time! I’ve viewed one which I’ll hear back about soon, and the other I’m seeing next week. I should be able to find somewhere before Christmas at the current rate.

Meanwhile for a short period it seemed as though my hands were hating London, and they peeled like something rotten for the first few weeks, then I stopped using my shower gel (well, OK I slept in a bit two days in a row and skipped a shower) and my hands got better. It would seem I’m allergic to the Original Source mint stuff I like so much, and the shaving cream of a similar form I have been using may explain the unevenness of my beard that I had been putting down to my lack of a skilful hand. Still, E45 is lovely stuff…

Work is still a joy, it does feel a lot like trying to paint a masterpiece in biro right now, but I’m getting there. Overall, even though my boss has been ill this week I got the work done in the main, and the branches seem happy. It’s quite scary to realise how big a task I’ve taken on (especially when you sit on the tube and are surrounded by the black and gold bags and various bookmarks look eerily familiar) but I’m taking a real pride in making improvements and suggestions already.

All I need now is to get a flat close to work, get cycling more often, find some kind of a rhythm to my social life again and I’ll be fine. It’s been over four weeks since I left Edinburgh and for all I do miss it, this great hulking lump of a city does feel like a kind of home.

Over and out(in a KLF sample with an echo at the end of the song kind of way)