Friday, October 26, 2012

Daddy Issues

FLG has a long-standing theory that ambitious men are, with few exceptions, the offspring of abusive or absent fathers.    While this is true of men in a variety of fields (athletics, business, etc), FLG maintains that is particularly true of political leaders going back even to Alexander.  Julius Caesar's father died when he was 15.  George Washington's father died when he was 11.  Thomas Jefferson's father died when he was in his teens.   Churchill longed for a relationship with his absent father.  Joe Kennedy was no picnic. Stalin's father was abusive.  Ditto for Mao's.  The list goes on...

Anyway, the other day FLG came across this article, which delves into the paternal relationships of recent presidents.  FLG is half tempted to really sit down and write a book about this theory.


Tuesday, October 23, 2012

2012 Election

FLG hasn't been writing much about the election, but here's the deal.  He's recently swung from the Neither column to the Romney column.  Given that FLG has voted for the winning candidate in every presidential election he's ever participated in, this bodes well for Mr. Romney's chances.

In fact, after the debates, FLG puts the probability of a Romney win at about 55% (if you really pressed him he might even say 60%), which means he's seriously considering putting some money in those prediction markets.   They are way overconfident about an Obama win.  Last time he looked, they've got Obama at 55 and Romney at 45.

Monday, October 22, 2012

Jack-O-Lanterns

Last year, the FLGs did Dora and Swiper.  This year, Miss FLG Maior insisted on Disney characters:


Thursday, October 18, 2012

A Conversation

FLG's Boss (to a coworker):  I'm going need you to go over there again.  There was some misunderstanding.

FLG's Coworker:  Ugh.  I spent so much time in that meeting.

FLG's Boss:  Sorry, it has to be done.

FLG:  Henry V, Act III would've sounded so much better.

FLG's Boss:  What?

FLG:  Once more unto the breach, dear friends, once more.  I'm not picking up even a flicker of recognition.

FLG's Boss:  I gotta say, that's almost as pretentious as when you said I was the loser from that war from Ancient Rome or something.

FLG:  Not Ancient Rome.  It was the Titanomachy.  And at that time I said it was too soon to tell if you were Zeus or Cronus.

FLG's Boss:  Too soon then, but what would you say now.

FLG:  Oh, definitely Cronus.

FLG's  Boss:  He lost, right?

FLG:  Yes.  Yes, he did.

Obsession

FLG just learned Darren Aronofsky is making a movie about Noah.  Yeah, the guy who built the Ark.  Fits perfectly into FLG's analysis of the underlying theme that runs throughout Aronofsky's films.

A bit of aside here, but FLG has never been able to isolate and lucidly articulate what theme runs through Kubrick's movies.  There's definitely one there, but FLG isn't sure what it is.  Something about human weakness, but that's too broad. 

Monday, October 15, 2012

Quote of the day

Buttonwood:
if zero interest rates and unlimited deficits were the answer to our economic problems, you think we would have worked it out before now.

Friday, October 12, 2012

Volker Rule Still Not Making Any Sense To FLG

Felix Salmon has a post up about an IMF paper that argues banks shouldn't be allowed to trade in financial markets.

Look, FLG fully comprehends the concept that banks shouldn't be able to make risky trades for their own profit with funds that are ultimately backstopped by a government guarantee.  Moreover, he gets the logic that, "look, trading is risky and we don't want our banks to be risky."  The trouble FLG has with this is, well, reality.  Saying the Volker rule is a good idea is a lot like saying a gun that only shoots bad guys is a good idea.

We want banks to be market makers, which is to say that if you want to buy or sell a stock, bond, or other security and can't find anybody else to trade with, then you call up a big money center bank and it will buy or sell that security from/to you.  Okay, you might say.  Fine, banks can buy and sell, but only when other parties call them first.  Then we don't have the proprietary trading issue.

 Ah, but imagine that a bunch of people call up to sell some stock all at the same time.   That bank then becomes exposed to huge amount of risk related to that specific stock that they've just bought.  Prudence dictates that they ought to manage the risk of that exposure by either selling some themselves or hedging using derivatives.  And so you have a perfectly legitimate reason for the bank to initiate a trade in the market.  Salmon seems to have an issue with that because, as FLG has argued again and again, where you stand on what is hedging versus what is speculation depends on where you sit.

According to Gongloff, the IMF paper says that banks “should be allowed to hedge their bets” with “small trading positions”. But hedging is trading — as we saw, most clearly, at JP Morgan’s Chief Investment Office. And trading is just as dangerous when it’s done for hedging purposes as it is when it’s done for absolute-return purposes.

In an ideal world, then, banks simply wouldn’t be allowed to trade at all. What’s more, in that world the banks would quite possibly make more money than they’re making right now. But you’d need globally-coordinated regulation to get there, and it’s simply not going to happen. Which is why trading blow-ups are here to stay — and regulators are always going to be on the back foot when it comes to trying to prevent them.
 The issue, as FLG sees it, isn't about some sort of zealous stance that banks ought to be barred from trading in the financial market.  In fact, the idea sounds completely ludicrous to FLG as he types it.  Rather, the issue is, as FLG has been arguing for years and years, to limit the amount of leverage to contain the damage of inevitable trading blow-ups. 

Nothing in life is risk free, it's about managing that risk.   Banks argued that they were in a better position to manage their risk.  An argument that made sense, but ultimately proved false.  Rather than getting into nitty-gritty details about whether banks can make this trade or that trade, better just to acknowledge regulators can't ever keep up, don't necessarily need to keep up, and that they just need to proscribe the size of the sandbox the banks can play in.   Systematic risk is the name of the game, not the internal risk of any particular bank.

A bank blows up its sandbox, then, well, it blew up its sandbox.  Maybe the other banks will need to lend them some sand or maybe that sandbox gets demolished, but the other banks are still playing just fine in their own sandboxes.  No need to have a bunch of near-sighted lawyers standing around with clipboards asking each bank about why it's digging in that corner or using that shovel.

Thursday, October 11, 2012

Dear Andrew Stevens:

Thanks for the link to the Dora video.  Hilarious.  Thought you'd enjoy this

Sincerely,
FLG


Presidential Haberdashery

FLG isn't sure he's posted this before, but he probably has.  Doesn't matter.  Still slays him every time.


Friday, October 5, 2012

Cheering Up FLG

FLG so wants to see this.  FYI though, it's entirely not safe for work.


Monday, October 1, 2012

Never Occurred to FLG

FLG has consumed alcohol in a lot of ways that he isn't all that proud of today -- shotgunning, beer bongs, keg stands --but thankfully the idea of an alcohol enema never occurred to him.
 
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