“Le grand seducteur” strikes again

Sarkozy dismay as Dominique Strauss-Kahn, French head of IMF, in sex scandal

http://www.timesonline.co.uk/tol/news/world/europe/article4972855.ece

“Mr Sarkozy and Paris insiders knew that the IMF was looking into allegations against Mr Strauss-Kahn, a senior Socialist party figure who has shone since he won the IMF post last year. The President was furious that DSK, who is married to Anne Sinclair, a television news star, had risked blowing a golden chance to restart his career and help France internationally by living up to his old name as ‘un grand seducteur.‘”

First Wolfowitz, now DSK? Washington’s swamps must exude some kind of old-guy pheromone.

Citi and the Repeal of the Glass-Steagall Act: To blame?

75 years ago, when my grandmother was 14, the United States Congress lumped together a variety of banking reforms and called it the Glass-Steagall Act, after the two southern gentlemen who co-sponsored the bill.

Among other things, the defined the difference between a commercial bank (i.e. deposits, etc.) and an investment bank (product structuring/securitization, etc.), and made it so that financial institutions had to keep the two separate, to prevent the conflicts of interest seen during the banking crash of 1933.

In 1980, it was repealed. The Senate vote ran 54-44 (R-D), and was pushed by heavy lobbying by any measurable financial player at the time (Citigroup mainly).

So, that sounds bad, sure — but what did the repeal directly lead to? The creation of MBS’s, CDO’s, along with their being lumped into SIV’s — and by now we all know how well those worked out.

Am I saying that the current financial crisis was caused by the repeal of the act? No, but the legislating time and billions of dollars being spent on smoothing out the collapse of credit markets is something which could have been accomplished by simply allowing the bill to stand as a safeguard against the imbalance between expert securitizers and dough-eyed investment funds.

A Quick Word About the Bailout

Honestly, I think the government bailing out financial firms with unmovably bad debt is a terrible idea. Of course maintaining the health of financial markets (most especially credit) markets is of utmost importance, but I think this is a clear reflection of how powerful lobbying efforts by specific industries can be. Actually this is probably not the best example, since financial firms and Paulson/Bernanke are kind of the part of the same hive mind.

Below is a short speech by Representative Marcy Kaptur (Ohio Democrat) on what she thinks is a better solution. She is a bit crazy and sensationalist, but her ideas make sense:

I have some qualms with Kaptur’s ideas, mostly they’re too simple and don’t specifically address what to do with all of these securitized bad mortgages that are worth nothing. Given my lack of expertise, I can’t really come up with another solution for this problem apart from letting he market sort itself out, allowing the country to go into a heavy recession until all the firms who can’t afford to service their debt ar restructured (i.e. acquired by companies that can) or go bankrupt, and then start over. How can anyone be considering a plan in which the government plans to a) buy any debt which the financial markets, experts in valuation, deem unpurchaseable, and b) sell it in the future for a profit.

That’s bullshit. If Congress does pass this bill, then the American people need to write off the US$800+ billion as a loss and move on. Just pretend there was another war in Iraq, it cost about the same.

Kaptur also mentions a “new Glass-Steagall act” — more on that in the next post though.

Cliff Asness — Stream of Consciousness

Ever since a few friends started to work at AQR, I’ve noticed that Cliff Asness loves to talk about how much of a libertarian he is, how everything should be seen and told as it is, how nothing should be censored or filtered. Well at least as far his writing style goes,  he is consistent with his own philosophy. Asness spells out some great criticisms regarding the government having blamed all short-selling for the current crisis. It doesn’t make sense to me either, and his summary is informative, even if it is padded with a lot of self-descriptive “-isms.” 

I guess this is the benefit of sitting atop of an empire which is run by automated black-box trading programs, tweaked by analysts once a week. You can say whatever you want and your investors couldn’t care less. 

The best part of this whole thing is the legal disclosure which Asness attaches to all of his releases, it’s even crazier than his op-eds: http://graphics8.nytimes.com/packages/pdf/business/22nocera-blog.pdf

And here is the article:

http://executivesuite.blogs.nytimes.com/2008/09/21/cliff-asness-is-mad-as-hell/

On a lighter/heavier note, it’s interesting that soon we will be able to open checking accounts at Morgan Stanley and GS. I’m sure the brand dilution is worth it, given how much capital (i.e. deposits) they’ll have and how cheap it will be to borrow. 

(Also, as far as we’re talking about short-selling, I would short the dollar if I could. But I can’t, given my 3 digit bank account balance.)

First Impressions

So, I’ve been in Brazil for a week. I wanted to take some time to organize my thoughts, since things have been pretty busy so far. I expected my first week to be slow and sedentary, peppered with a few failed attempts at reintegrating myself into society and instead spending my time lamenting my unfortunate exile and counting the number of people I know who have better lives than me. Not that I didn’t feel that way for a while, but it only lasted a few hours. Then I got moving.

The best way to describe Sao Paulo is to say that it will be one of the first cities in the world to reach sci-fi levels of scale and structure.  Like Blade Runner’s LA, or maybe an underfunded Coruscant.  In 30 years people who see this place for the first time will immediately hope they had Philip K. Dick or William Gibson as their real estate agent. Some neighborhoods are very run down, especially near downtown (which, as in any South American city, is invariably referred to as the “Center”). The buildings are Iberian-Colonial , of the kind that looks especially derelict combined with the absence of a recent coat of paint. Picture Buenos Aires or Madrid, and multiply the number of people by 3 and the number of motorcycles by 350. Having said this, there are neighborhoods which are extremely modern. Morumbi is an amalgam of mansions and luxury apartment buildings, and Berrini has so many modern corporate highrise developments that you can almost forget you’re in a city surrounded by drug-fueled shantytowns.

Since I was born abroad and have never acquired the proper documentation which every Brazilian has, my goal for last week was to get all of my papers in order. There are basically four different documents you need to do anything in Brazil. Literally anything – banks and federal/state governments will always ask for three out of four if not all of these for even the simplest of transactions. These are your:

1. CPF (Physical Person Registration)
2. RG (General Registration)
3. Voter’s Registration
4. Birth Certificate

The first two are obviously redundant. The official story is that one is state-issued and the other is a federal document, but how does that justify anything? You could have infinite reductions of identity management until every county and township is issuing ID numbers. Anyway, it takes a lot of time to get these from scratch, but time is all I have.

Over the past four years I had forgotten how much can be done in a day if there’s no one around with the power to tell you what to do.  Every day found me at a new government office for at least four or five hours. You would think this would leave a lot of time to make some headway into Lord Jim or the newspaper but the truth is that so I’ve had very little down time when waiting for bureaucracy. Generally you’re assigned a number and don’t have to stand in any kind of physical line. While many people choose to sit around and wait for their number to come up, the smart thing to do is to just calculate the average speed that the numbers are moving at, multiply that by the difference between your number and the current number, and then go for a walk for that amount of minutes. This method was worked perfectly when I went to the “Poupa Tempo” (literally “Time Saver” – this is the official name of a government office, kind of an aggregated service center for all of your bureaucratic needs). Too bad that when I finally sat down in front of my very own Hermes Conrad, the entire network crashed and they told me to come back the next day.

Google Chrome Review

To me a big part of moving or travelling is the technology I bring with me. In anticipation of my move to Brazil, I’ve made a series of strategic purchases and downloads which I hope will help soften the blow of walking into the unknown. Some of these have been expensive, like my Blackberry Curve which I probably won’t be able to activate down there for a while, since the endless bureaucracy of Brazilian mobile phone companies ask for a “proof of residence” (a phone or gas bill) before you can sign up for a monthly plan. Others have been cheaper, like Mass Effect, a game which I plan to slot into my schedule during hours usually reserved for spending time with other people.

And some have been free. This is the case with Google Chrome, released by Google today as its entry platform into the web browser market — one currently dominated by IE, which holds 72% of market share, and Firefox, which has 20%.

There are a few things you notice about Google Chrome in the first few minutes of use. Installation was extremely streamlined and spared me useless questions about priority and location, and it seems to understand that if I want any extra features I can go back think about them later. Also, Chrome seems to have a pretty low RAM footprint — it has been hovering at a solid 40mb, even with Gmail and several tabs open.

Visually, it looks like a skinned Firefox, which isn’t surprising. Google says it’s set out to create “a modern platform for web pages and applications”, telling us that for most people the browser isn’t really what is central about how you spend time on the internet — it’s a tool to help you access what you actually want to see. Google really seems to have lived up to this idea, given that most features are either accessed contextually or through two discrete buttons to the right of the “Omni Bar”.

Chrome really seems to understand the nature of the internet today. In an overly-cute introductory comic (worth a look, it’s by Scott McCloud). At least for me, most of my time spent online is not reading webpages or scrolling through unformatted text, but interacting with applications, applets, etc, some which might only exist to help me read websites, but which play an important role nonetheless. If you were to rank the websites I visit in terms of pageviews, 80% of visits would fall within pages that are partial or full web applications — most of Google’s apps, Digg, StumbleUpon, none of which behave like the regular pages of 5 years ago. This is something Google understands, moreso than Firefox. by allowing us to add application shortcuts to your shortcuts and folders. I’ve added a bunch to my RocketDock, and now getting to my favorite apps takes much less time. Chrome creates icons based on the browser icons by expanding them to desktop size, which looks hideous, but that’s a minor problem. 

Another feature which really made me happy was Incognito Mode (already nicknamed “Porn Mode” by a few), which allows you to open a new window which doesn’t save your browsing history, cookies or temporary files. It’s all gone once you end your session. Not that I spend too much time engaging in secretive activities, but sometimes there are PG websites I visit which I would like to keep out of my history without deleting the whole thing — for example, one time I kept food diary online which became a running joke for like 3 weeks once my friends found it. Incognito Mode would also be very useful if you installed Chrome at work; the NA could check your logs but you wouldn’t have to worry about anything being saved.

In summary, it’s a great application. There are tons of small other features which really make a difference, like instant bookmarking, etc. The rest are mostly features which can be added to Firefox through add-ons/greasemonkey/etc, but there’s a lot to be said about what a product ships with and how it reflects the developers design philosophies, which is what will ultimately drive the direction of post-beta releases.

The Beginning

Hi, welcome to my blog. For now you can click the About page to know more about me, or go to my resume if you want to pay me to do something. The picture to the left is me in Peru, at about 15,000 ft, holding my favorite hat and walking stick.

I started this blog because, even though I don’t really see it, a lot of people have told me that this part of my life is interesting. At least by recording it, I can write about the things I do and somehow try to understand the challenges thrown at me more productive environment.

This weekend I am going to San Diego, and my goals for this blog are to have a modest, but solid, beginning. I want to achieve this by outlining what I am going to do for the next post on this blog, even if it seems so simple that it doesn’t need outlining.

1. I’m going to chronicle my trip using my digital camera, which I bought in London 2 years ago for hundreds of pounds when my other one got stolen by fellow Brazilians.
2. I will then post the best pictures on here and comment on them. These comments might be factual or contemplative, probably a mix of both.
3. I will write down the lessons I learned from my first post, both in creating it and the events that it chronicles. This will be a part of the same post.

Alright, let’s see what happens.

As far the moving to Brazil, which is a central theme in this blog, I haven’t really done anything on that front this week apart from buying my ticket. I guess that’s the most important part, at least logistically.