Cerebrations on the Fringe

Euro Bells

2011-12-22T09:21:00.002-05:00

Euro Bells (by aLV)

Dashing through the debt
In one bearish open sleigh
O'er the contracts we go
Crying all the way
Debt on derivatives ring
Making leverage bright
What fun it is to default and sing
A bearish song tonight

Oh, euro bellls, euro bells
Euro all the way
Oh, what fun it is to ride
In one bearish open sleigh
Euro bells, Euro bells
Euro all the way
Oh, what fun it is to default and sing
In one bearish open sleigh

A day or two ago
I thought I'd take a ride
And soon Timmy Geithner
Was seated by my side
The bull was lean and lank
Misfortune seemed his lot
We got into a defaulted bank
And then we got bailed out

Oh, euro bellls, euro bells
Euro all the way
Oh, what fun it is to ride
In one bearish open sleigh
Euro bells, Euro bells
Euro all the way
Oh, what fun it is to ride
In one bearish open sleigh

Oh, euro bellls, euro bells
Euro all the way
Oh, what fun it is to ride
In one bearish open sleigh
Euro bells, Euro bells
Euro all the way
Oh, what fun it is to ride
In one bearish open sleigh

Reading List 2011

2011-12-18T11:58:00.001-05:00

Dec 18, 2011

Here's another list of books I found very interesting to peruse
through this past year. The list is weighted towards Dogs,
Astrophysics, and Financial Economics. A great many subjects
have piqued my interest over the years, and as I read, I realize
that my level of ignorance about most things reach abysmal levels….

--- DOGS ---

Excel-Erated Learning: Explaining in Plain English How Dogs Learn and How Best to Teach Them
Pamela J. Reid

Dog Insight
Pamela Reid

Dogs
Ray Coppinger

Inside of a Dog: What Dogs See, Smell, and Know
Alexandra Horowitz

Der Schutzhund (The Protection Dog)
Helmut Raiser

The Dogs of War: The Courage, Love, and Loyalty of Military Working Dogs
Lisa Rogak

Schutzhund: Theory and Training Methods (Howell reference books)
Susan Barwig, Stewart Hilliard

Advanced Schutzhund (Howell reference books)
Ivan Balabanov, Karen Duet

Schutzhund Protection Training
Gary Patterson, Linda Jackson

Schutzhund "Top Working Dogs", Training Manual
Dietmar Schellenberg

Decoys and Aggression
Stephen Mackenzie

Natural Nutrition for Dogs and Cats
Kymythy Schultze

51 Puppy Tricks: Step-by-Step Activities to Engage, Challenge, and Bond with Your Puppy
Kyra Sundance, Jadie

Dr. Pitcairn's New Complete Guide to Natural Health for Dogs and Cats
Richard H. Pitcairn, Susan Hubble Pitcairn

Raw and Natural Nutrition for Dogs: The Definitive Guide to Homemade Meals
Lew Olson

--- ASTROPHYSICS ---

How Old Is the Universe?
David A. Weintraub

The Grand Design
Stephen Hawking and Leonard Mlodinow

Galaxy Formation and Evolution
Houjun Mo, Frank van den Bosch and Simon White

Extragalactic Astronomy and Cosmology: An Introduction
P. Schneider

Astrophysics is Easy!: An Introduction for the Amateur Astronomer (Patrick Moore's Practical Astronomy Series)
Mike Inglis

Astrophysics in a Nutshell (In a Nutshell (Princeton))
Dan Maoz

The Early Universe: Facts and Fiction (Astronomy and Astrophysics Library)
G. Börner

An Introduction to Stellar Astrophysics
Francis LeBlanc

Foundations of Astrophysics
Barbara Ryden and Bradley M. Peterson

Galactic Dynamics: (Second Edition) (Princeton Series in Astrophysics)
James Binney and Scott Tremaine

The Elegant Universe: Superstrings, Hidden Dimensions, and the Quest for the Ultimate Theory
Brian Greene

The Black Hole War
Leonard Susskind

The Cosmic Landscape
Leonard Susskind

An Introduction to Modern Cosmology
Andrew R. Liddle

Astrophysical Concepts (Astronomy and Astrophysics Library)
Martin Harwit

Quantum Mechanics and Integrals
Feynman and Hibbs

Quantum Physics
Glimm and Jaffe

Quantum: Einstein, Bohr, and the Great Debate about the Nature of Reality

The Edge of Physics: A Journey to Earth's Extremes to Unlock the Secrets of the Universe

The Strangest Man: The Hidden Life of Paul Dirac, Mystic of the Atom

FiNANCE/ECONOMICS

The 7 Deadly Innocent Frauds of Economic Policy
Warren Mosler

Global Imbalances and the Lessons of Bretton Woods (Cairoli Lectures)
Barry Eichengreen

Lords of Finance: The Bankers Who Broke the World
Liaquat Ahamed

Understanding Modern Money:The Key to Full Employment and Price Stability
L. Randall Wray

Keynes Hayek: The Clash that Defined Modern Economics
Nicholas Wapshott

Free Money: Plan for Prosperity
Rodger Malcolm Mitchell

The Holy Grail of Macroeconomics: Lessons from Japans Great Recession
Richard C. Koo

Stabilizing an Unstable Economy
Hyman Minsky

Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession
Frederick Sheehan

--- OTHER SUBJECTS ---

The Elements of Style: The Original Edition
Jr. William Strunk

Walden
Henry David Thoreau

Introduction to Objectivist Epistemology: Expanded Second Edition

Napalm & Silly Putty

Why American History Is Not What They Say

Voices of a People's History of the United States

About Behaviorism
B.F. Skinner

Escape from Freedom
Erich Fromm

Consilience: The Unity of Knowledge
Edward Osborne Wilson

What Makes You Not a Buddhist
Dzongsar Jamyang Khyentse

Smile at Fear: Awakening the True Heart of Bravery
Chogyam Trungpa

Zen in the Art of Archery
Eugen Herrigel, Daisetz T. Suzuki

Anal Cranial Inversion

2011-11-09T12:28:00.002-05:00

Make sure that all your loved ones know that there is a new debilitating disease called ACI, short for "Anal Cranial Inversion", the singular and telling symptom being that the persons' brain is fully lodged into their own rectum, thereby blocking any and all sense of reality/light.

ACI is more dangerous to the general population than to the person or organization that already has a full blown version of the disease, and it takes a real fiendish stance when entire organizations are infected with it. So, beware and shy away from politicians on both sides of the pond that lie through their a$$es and have nothing but "reelection" on their minds, the US Federal Reserve, US Treasury, FDIC....oh, its a bloody long list.

As expected Italian bond yields are north of 7%. Rather than announcing a planned date where there will be an agreement about an agreement to make a plan that will "vow" to fix things while being woefully short on details, politicians in Europe need to plan for this thing to come off the rails.

All symptoms of ACI : Anal Cranial Inversion, indeed....and ACI might be precisely what is needed (picture this in your own cranium!!) to ignore the mega blow up.

Financial Irony

2011-10-30T15:13:00.001-04:00

"The central irony of financial crisis is that while it is caused by too much

confidence, too much borrowing and lending and too much spending, it

can only be resolved with more confidence, more borrowing and lending,

and more spending."

- Larry Summers

The true and central irony here is that Larry Summers is part of the Economic
Financial landscape, and that the Princeton economics department continues to
exist.

Please join me in a new movement called "Occupy Mordor" - Turbo Timmy, Larry
Summers, Ben Bernanke, along with the majority of the politicians in Washington
DC be locked up in a radiative capsule and their brains re-cooked to tune into the
realities of modern economic systems through the angry heat coming off the
volcanic chutes of Mordor.

And....Greece has essentially defaulted. This is a MUST WATCH video :

http://www.youtube.com/watch?v=5CZr17HLH5U&feature=player_embedded#!

Manifesto for Occupy Wall Street

2011-10-14T12:21:00.004-04:00

Give US back our Country!!

BAN private campaign finance

No more individual or corporate donations, PERIOD. Political candidates can be funded EQUALLY by a publicly funded Election Commission. Government will no longer be in the back pockets of wealthy companies. No more special interest groups!

RESTRICT time spent on political campaigns

Politicians don't have to campaign for a year and a half or more on the taxpayers tab - they need to be working!! The system spent almost $4.5B on the last cycle, and it’s now forecasted to be $6.2B for the next cycle. Restrict it.

REDESIGN the tax code

Companies give politicians money and the politicians pay them back through tax breaks in the tax code. These tax rules are "gifts" to a select group of companies and
people. SCRAP it all! The income tax should be simple, minimal, but progressive (tax rates are higher the more money you make). Personal income from labor and investment should be treated the same. We should have a Value Added Tax (Yes, a consumption tax is regressive but it will serve to re-hash priorities in spending, saving, and investment) - such a tax should have an exemption for basic goods (eg., food and utilities) which would help rebalance our economy, while protecting those in need of basic necessities.

STOP the lying

The top people in the public sector (Fed, FDIC, SEC, Treasury etc.,) and in the private sector (CEOs under whose watch fraud was propagated) who created this
mess should resign. WE CANNOT just "Move On" unless officials are held fully responsible and our system is purged. The revolving doors of employment between government and the private sector has to stop - the watchdogs of Wall Street and corporate America too often become their lapdogs, afraid to upset those who will take care of them generously after they leave government. Make lying perjury.

CLEAN up the mortgage mess

Banks need to recognize their mortgage losses, and deal with the consequences of their bad investment decisions. The federal government needs to get out of the business of guaranteeing mortgages. GOVT HAS TO INSURE BANK DEPOSITS, MAKING BANKS GOVT AGENTS FOR PUBLIC PURPOSE. IF HOME OWNERSHIP SUITS PUBLIC PURPOSE, THE GOVT SHOULD FUND IT AT THE TARGET RATE AND TERMS THAT SERVE PUBLIC PURPOSE.

SHAKE UP the banking system

Transparency everywhere!! Restrict the size of public banks and they won't be "Too Big to Fail". Banks & Brokers that take in public deposits should not be allowed to risk YOUR money to trade. Implement the Volcker rule (bans speculation by banks that does not benefit customers) in strict fashion.

* Ideas from the minds of gainfully employed Wall Street economists and traders.
Write to : avwallstreet@gmail.com

I wonder, I wonder

2011-09-23T21:31:00.001-04:00

New York
Sept 22/23, 2206

So, today has been one hell of a frustrating day. I guess it
takes the special trader that I am to come in short, make
profits on the night session, then give 'em up, make 'em
up again, and then lose out all profits of the past two days.

I got a bunch of emails in response to my missive a few
days ago. So here are a few things (in no particular order)
for your own clarification.

* This Quantitative Easing 2 animal is very misunderstood
by the talking heads at CNBC, politicians on the street, and
even many economists. So here's the true real deal of reserve
bank accounting :

When the Federal Reserve intervened for QE2 they did NOT
alter the economy in any meaningful way. QE2 is simply a
swap of assets and it did not decrease or increase net
financial assets in the economy. The Fed is NOT printing
money (as many politicians and people on CNBC would like
you to believe), the amount of cash in circulation just stays
where it is. What QE2 did do is change the composition of
the balance sheets of banks by having them hold more
reserves with the Fed.

Before QE (Quantitative Easing) at Bank Fido

    Reserves    100
    Loans        +30
    T-Bonds    +50 = 180

    Deposits    100
    Capital    20

After QE (Quantitative Easing) at Bank Fido

    Reserves    150
    Loans        +30
    T-Bonds    +0     = 180

    Deposits    100
    Capital    20

So the bank gave the Federal Reserve the T-Bonds and the Fed
changed a bunch of reserve numbers on some electronic tape
someplace. All that has changed is the composition of the balance
sheet of the bank.

So, there is no new injection of money into the public. So banks
do NOT have "new money" to put to work.

* Recent Fed action in a way showed the world at large that the
Fed cannot save the economy by some magical printing press,
which they don't do in the first place. All that the Fed has continued
to do is to alter psychology of market participants. I say "misguided"
policy because the interactions have tried to create nominal
wealth with a hope of creating real wealth. It won't work because
in the long run it destabilizes things.

* Just finished reading a FANTASTIC book called "The Holy Grail of
Economics - Lessons from Japan's Great Recession" by Richard Koo.
Absolutely great!!

So drawing on that new knowledge and thinking about what's
happening here, we're in the midst of Japan 2.0 -- As a country,
the United States now has similar Employment/Population ratio,
lousy wages, an overburdened entitlement system, and an anemic
economy with the icing being the staggering debt overhang.
FOLKS!!! Deleveraging of debt has not really started here, and
businesses will get a lot more defensive. PLEASE DON'T listen to
the talking heads on CNBC or read mainstream media and believe
that the shape of the yield curve matters now -- it did matter before
but it does not matter now as the Fed is playing around with it.

* Politicians clamoring and blaming "short term", "high-frequency",
or "short side" traders is nothing more than a blatant ignorance of
market dynamics, and especially market microstructure. Banning
short sales or getting rid of short term traders is very similar to
wanting 70 degree weather all year around, regardless of the
place where you reside. Not possible! This is a long lengthy
conversation to be had over several bottles of wine.

* With respect to Campaign Finance Reform, here's a thought….all
candidates use the same amount of money, and a set timeline to go
out and campaign and make their case. Money raising should not be
a factor in getting elected. At the least, it will attenuate the noise of
lobbying groups that always seem to say, "I pat your back now, and
you pat mine later!"

* I'm wondering why nobody from the financial sector has had to go
to prison in the whole mortgage fiasco. Not one! Would it be that
somebody going to prison would open up a Pandora's box where
relationships with the political bodies at large are revealed!?

I wonder…I wonder….

- aLV

Pipe Dreams

2011-09-22T07:52:00.001-04:00

New York

8/22/11 @715 hrs

Since 3am I've been watching and trading these SP Futures and they

consistently keep making new lows. I covered my overnight shorts,

with some good profits and then tried to get on a long trade, gave up

my overnight short profits, and am now flat. This market seems very

weak, and its likely that financial stocks will crater in a few hours.

Some of you wrote and asked me what the Fed did yesterday with their

operation "Twist". I am not a trained economist and don't really understand

the nitty-gritty of modern monetary workings (many trained economists

don't and people in DC certainly don't!), but I observe the following :

* "Twist" the yield curve means, "Sell short term treasuries and Buy

long term treasuries." The Fed wants to boost consumer and corporate

borrowing and spending. They want to ease longer-term debt constraints

for themselves and municipalities, so they "twist" the yield curve selling

short-term debt (Treasuries) to buy longer term debt. This action raises

the cost of borrowing in the short term and reduced the cost of borrowing

for the long term.

* What does this whole "twisting thing" do?? Short term consumer credit

will take a hit. Operating capital for businesses will be harder to come by

(but its less of a factor as rates are very low) as it will be more expensive.

How can this help businesses? I've not a clue.

The problem here is that (once again!!) all these measures will fail to do

anything for the economy. The problem in the US is one with excessive

debt. From my readings and limited understanding of Modern Monetary

Theory, I can tell you that all the experts say that the Fed is not doing

anything novel. They need to attack the problem which is the overhang

of debt.

How about a tax cut? Yes, a tax cut!! It'll help the middle/upper-middle

class in this country. There will be money to service mortgage payments,

and the like.

How about many other things? Smaller government, campaign finance

reform, getting banks and politicians to hold themselves to the same standards

as they hold the public, dessert for everybody….I'm getting carried away….

Tax Cuts! Tax Cuts! Tax Cuts!

2011-08-18T19:19:00.001-04:00

Tax Cuts! Tax Cuts! Tax Cuts!
Aug 18, 2011

My brother Vivin says, "Be grateful to the markets" :

Logic :

US consumes 22 Million Barrels of Oil a day.
Oil was down 7% (or $6.2) today
22 Million Barrels/Day * $6.2 * 365 Days/Year = $52 Billion

And…

That's 0.33% of GDP.
That's the tax cuts that the Jones' got today.
That's the amount gained by the the Jones' at the expense of
jack ass asset managers.

So….

Don't worry about the Federal Reserve.
They cannot do what the markets are doing for you.

//

The times are definitely changing....Jim Cramer....finally...FINALLY made his
first ever astute observation, "There's something going on here that is bigger
than me."

- aLV

EconoFinancio Meanderings

2011-08-14T13:55:00.002-04:00

Here are some observations on financial markets and our current
economic situation :

- Monday is the 40th anniversary of the "Bretton Woods" deal. You
can read about the significance of "Bretton Woods" on Wikipedia.
For me, it was a free and care free license for politicians to escape
accountability.

- People are talking about an "impending recession", "double dip
recession", "slow down" etc., but they don't realize that we never
really left it in the first place. Global growth of below 2% is a
recession, and it certainly feel like one. We are in the midst of one.
Next stop is a long winded Japan like deflationary depression.

- When the Federal Reserve says that they are inclined to keep rates
low for the next two years, they are essentially admitting that all
their machinations to prop up asset prices have failed and, that there
will be no growth in the economy. The 5 year bond yield is below
that of the prior move down in financial markets, the 2 year yield is
basically like that of a treasury bill, and the XLF (Index of financials)
is below that when TARP went into effect. What does all this mean?
Well, the bond market is telling us that there will be no growth of any
significance for the next two years. We are in the midst of, or headed
towards a deflationary depression.

- In prior blogs, I've written about the way private sector debt (financials
that were "rescued") turned into public sector debt (through tax payer
funded purchase programs). Even though SP500 companies are sitting
on gobs of cash, why would they want to spend it on hiring people if
they have nobody to sell to?

- Don't buy into these idiot wall street analyst types telling you that
SP500 valuation are great. There is a huge variance and huge errors in
the "Earnings" prognostication. P/E (Price/Earnings) ratios may look
great until the "Earnings" come down hard. There will be no earnings
growth!!!

- On a blog entry dated Oct 29th, 2008. I wrote :

"Credit excesses have not been wrung out of the system. All we've done
by the machinations of the TAF, PDCF, TSLF, CPFF, MMIFF,
ABCPMMMFLF....er, Yes, I mean the "TAF, PDCF, TSLF, CPFF, MMIFF,
ABCPMMMFLF" is to shift the problems onto the public balance sheets.
by risking taxpayer money. These stunts will sooner or later lead to a revolt
in the fixed income markets and will likely lead to a currency devaluation.
We will be a banana republic."

Make no mistake : Our idiot politicians have allowed this to happen all
these years and the public blindly chooses to vote against itself. Its illogical.
This is the result of us not being honest with what assets and liabilities we
have.

I also opined :

"As crazy as it may seem, the passing of the modification of the Mark to
Market rules is not coherent with the Geithner Plan (Public Private
Partnership)!! The Financial Accounting Standards (Rule 157e) will allow
banks to use their own models to value their assets and will allow them to
push the assets onto their Level 3 boxes. The Geithner "Public Partnership"
plan calls for "price discovery" and the FAS157e plan circumvents this
in a way. Go Figure!"

Now…COGITATE!

- aLV
Aug 14, 2011

CUT CAP BALANCE

2011-08-10T01:08:00.000-04:00

Its been a while since I've had some interest or feel for financial markets.
More often than not, I like to play when volatility is high and have a
good feeling that the odds are in my favor for rapid trading - the last three-four
weeks have been one of those times. Here is a considered viewpoint
by my brother, Vivin....

CUT, CAP & BALANCE

1) CUT the crap

2) CAP the housing market losses

3) BALANCE the demand

CUT

THIS MESS IS A FAILURE OF POLICY - no matter how different or special we think we are,
America has shown itself to be susceptible to the same kind of policy mistakes as others.

a. Irresponsible fiscal policy during boom times (Republicans);
b. Overly EASY monetary policy (since 1996); and
c. A populace addicted to low interest rates and high borrowing spurred
on by policies pushing over consumption (both parties).

IN OTHER WORDS, this is NOT some hurricane that has descended from Mars or a partisan problem created by Obama in the last 2.5 years.

Policy mistakes that need to be rectified take BIG SACRIFICES like what East Asia did. Japan pretended and is paying the price. We pretend we can stimulate out of it (liberals and Krugman) or print our way out (Republicans and Fed).

NOTHING HAS WORKED SO FAR.
ADMIT THAT THERE HAVE BEEN POLICY MISTAKES.
FIRE BERNANKE AND GEITHNER NOW.

Put Dr. Hoenig or John Taylor at the Fed.

CAP

1) The government BUYS ALL FORECLOSURES and ALL HOUSES DELINQUENT FOR > 1 Year away from the banks at a price which leaves the banks on the brink of solvency. One time shot only. No one will be allowed to not pay and and get into the program in the future. S***W the banks and their balance sheets. The tax payer is not liable any more.
Rates are ZERO. They will sort it out.

2) All those extra houses are then put on a fire sale under an RTC style entity. Have investors come in and buy them (no government loans or guarantees provided). Blow out the price and the inventory. Everyone else is on their own after this.

BALANCE

1) Don’t balance the budget, balance the trade deficit. We over consumed by borrowing. It is time to balance
our demand. The Fed and the stimulus measures are hindering a return to sustainable demand.

2) AND NO, THIS IS NOT DOABLE BY DEVALUING THE DOLLAR
TO ZERO. You need demand to go down a 2-4 percentage points - that
will do it.

3) No one will starve. Provide unemployment insurance tied to retraining.

4) REFORM taxation. Go to 2-3 slab low income tax and a heavy VAT (15-20%).

5) Get rid of ALL special interest loopholes.

6) Get rid of ALL consumption subsidy programs of the government.

7) Get rid of the debt ceiling.

2009 Reading...

2009-12-26T19:08:00.000-05:00

Often, I'm queried about what I've read or am reading. Then I get asked for
a list. Here's an incomplete list.

RELIGION/PHILOSOPHY

- Wake Up by Jack Kerouac
- The God Virus: How Religion Infects Our Lives and Culture by Darrel Ray
- Answers from the Heart by Thich Nhat Hanh
- Ethics for the New Millennium by Dalai Lama
- The Diamond That Cuts Through Illusion by Thich Nhat Hanh
- The Dhammapada (The Buddha's Path of Truth) by The Buddha
- Desiderata by Max Ehrmann
- Open Heart, Clear Mind by Thubten Chodron
- Nagarjuna's Seventy Stanzas by David Ross Komito
- Zen Flesh Zen Bones by Paul Reps/Nyogen Senzaki
- I Am That : Talks with Nisargadatta Maharaj by Maurice Frydman
- What makes you not a buddhist by Jamyang Khyentse
- Graceful Exits : How great beings die by Sushila Blackman
- Commit to Sit by Joan Duncan Oliver
- Buddha by Deepak Chopra
- The Dhammapada by Eknath Easwaran
- Zen Mind, Beginner's Mind by Shunryu Suzuki
- Sand and Foam by Kahlil Gibran

NATURE/NATURAL WORLD/SCIENCE

- The Fabric of the Cosmos: Space, Time, and the Texture of Reality by Brian Greene
- Quantum Field Theory Demystified by David McMahon
- Polar Obsession by Paul Nicklen
- K2: Life and Death on the World's Most Dangerous Mountain by David Roberts, Ed Viestur
- No Shortcuts to the Top by David Roberts, Ed Viesturs
- Tuna: A Love Story by Richard Ellis
- On Thin Ice by Richard Ellis
- String Theory Demystified by David McMahon
- Inside of a Dog: What Dogs See, Smell, and Know by Alexandra Horowitz
- Isaac Newton by James Gleick
- The Quantum and the Lotus by Trinh Xuan Thuan
- Shark Life: True Stories About Sharks & the Sea by Peter Benchley
- The Einstein Theory of Relativity by H.A. Lorentz, Albert Einstein
- A Short History of Nearly Everything by Bill Bryson

MOTOR RACING

- Race Car Vehicle Dynamics by William F. Milliken
- Race Car Aerodynamics: Designing for Speed by Joseph Katz
- What if I had never tried it : Autobiography by Valentino Rossi
- Go Like Hell : Ford, Ferrari, and their battle for speed & glory at LeMans by A.J Baime
- Technique of Motor Racing by Piero Taruffi
- Drive to Win: The Essential Guide to Race Driving by Carroll Smith
- The Racing Driver by Denis Jenkinson
- The Racing & High-Performance Tire by Paul Haney
- Art of Racing in the Rain by Garth Stein
- Speed Secrets (1-6) by Ross Bentley

FINANCE & ECONOMICS

- Trading in the Zone by Mark Douglas
- The Conscience of a Liberal by Paul Krugman
- The Greatest Trade Ever by Gregory Zuckerman
- Blood on the Street by Charles Gasparino
- Frequently Asked Questions in Quantitative Finance by Paul Wilmott
- Against the Gods, Peter Bernstein
- The Sellout by Charles Gasparino
- Too Big to Fail by Andrew Ross Sorkin
- SuperFreakonomics by Steven D. Levitt & Stephen J. Dubner
- The Ascent of Money by Niall Ferguson
- The Panic of 1907 by Robert F. Bruner, Sean D. Carr
- THE GREAT UNRAVELING by Paul Krugman
- The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb

SOCIOLOGY

- Disturbing the Peace, Vaclav Havel
- Encyclopedia of Pasta by Oretta Zanini De Vita, Maureen Fant
- Losing Moses on the Freeway: The 10 Commandments in America by Chris Hedges
- The Image : A Guide to pseudo-events in America by Daniel Boorstin
- Empire of Illusion : The end of literacy and the triumph of spectacle by Chris Hodges
- Idiot America: How Stupidity Became a Virtue in the Land of the Free by Charles Pierce
- American Fascists: The Christian Right and the War On America by Chris Hedge
- What Every Person Should Know About War by Chris Hedges
- The Americans: The Democratic Experience by Daniel Boorstin
- Wealth of Nations by Adam Smith
- Outliers by Malcolm Gladwell
- Blink by Malcolm Gladwell

MISC

- Sin and Syntax: How to Craft Wickedly Effective Prose by Constance Hale
- Hot Shoe Diaries : Big Light from Small Flashes by Joe McNally
- Metamorphosis and The Trial by Franz Kafka
- The Little Prince, Antoine De Saint-Exupery
- The God of Small Things: A Novel by Arundhati Roy
- The Bedside Baccalaureate by David Rubel
- Essential PG Wodehouse Collection, PG Wodehouse
- Complete works of William Shakespeare
- The Iliad and The Odyssey by Homer
- The Devil's Dictionary by AMBROSE BIERCE

Speaking Tree (Times of India)

2009-11-20T09:31:00.002-05:00

What is said here can be said in other words and in more words, but all that
is to be said will be what is said here.

01. Elements make all.
02. Particles make elements.
03. Energy makes particles.
04. The content of the world is matter-energy.
05. Electro-magnetism makes energy.
06. Matter-Energy happens in the Time-Space continuum.
07. Electro-Magnetism and Gravitation make the three
dimensions that make space.
08. Electro-Magnetism constitutes the Cosmic "Length"
and "Breadth", and gravitation the cosmic "height" : Space
is the lay of Electro-Magneto-Gravitation".
09. The interplay of the three metric dimensions of Space,
Electro-Magnetism and Gravitation, makes matter-energy.
10. The order of events makes time, the fourth dimension.
11. Consciousness and Space are not different from each other,
just as Matter-Energy and Space-Time are not different from
each other. Consciousness and Space are respectively the
interior and exterior of the same substance.
12. Consciousness-Space, by the interaction of its metric
properties creates the Universe.
13. Consciousness-Space is a continuum without borders, without
an outside, and as it is, the entire spectrum of being falls
within the Consciousness-Space continuum as it has not and
cannot have an outside.
14. Since all things that fall within space are its products,
by the interaction of its metric properties, and they are
sustained and re-absorbed by the same space, a God is not
and cannot be.
15. If there is and can be a God, it is and can only be the
Consciousness-Space continuum which makes, keeps and takes
back all.
16. The four-dimensional Space-Time-Consciousness continuum
is God or Nature.
17. No second God is or can be.
18. The God of a religion is the First Father or Primogenitor
of his original race/nation.
19. A religion is just the catharsis of its original race/nation.
Gods, scriptures, prophets and places of worship are adjuncts
of racial identity.
20. Revelation doesn't and can't filter except through a medium,
and when it filters through a medium it shapes to the mould of
the medium. Revelation descends only
as crafted and qualified by the medium, never in its original
purity.
21. Pure Revelation is met only on the other side of the medium
of senses and mind, and at maximum entropy.
22. The separation of the Electro-Mageneto-Gravitational fields
that make the metric dimensions of space is temporary. They were
one basic primordial field in the beginning, and they will be
that in the end at maximum entropy.
23. Maximum entropy is the terminus ad quem and terminus a quo
of the Universe: the zero degree of being.
24. The being or state at maximum entropy, at Zero Degree Being,
is Reality, and its evolution and revolution from Zero Degree
Being to Zero Degree Being is Appearance.
25. The four-dimensional Space-Time-Consciousness continuum is
Appearance, Phenomenon.
26. The Unified Field of the Electro-Magneto-Gravitational fields,
the Zero Degree Being, is Reality, Noumenon.
27. The fourth dimensional Space-Time-Consciousness-Continuum
is metric, 3-D; the Unified Field is the Sub-metric, Zero-D.
28. The Unified Field is the Supreme Being. The Ultimate God. The
bsolute Idea.
29. The four dimensional space-time-consciousness-continuum is
the Executive God and the Unified Field the Absolute God.
30. Phenomenal being is the geometry of the four dimensional
space-time-consciousness-continuum.
31. The four dimensional space-time-consciousness-continuum
geometry is the ultimate superior spirit, the most radiant beauty,
Cosmic intelligence, Providence,
the Almighty, and all. This metricdom dissolves in the sub-metric
at maximum Entropy.
32. Life is the metrication of the Submetric by means of the
three metric dimensions.
33. Mind is the electrification of brain. When the brain is
electrified the fired Neurons form into modules which are
'pictures'. Magnetism and Gravitation join electricity to
make brain's pictography 3-D.
34. Electricity, Magnetism and Gravitation produce the super ego,
ego, and id in humans and thus make the individual self of the
Cosmic self.
35. When the Electro-Magneto-Gravitational fields come together
into the Unified field at maximum Entropy, all beings attain salvation.
36. Individual beings can attain salvation prior to maximum
Entropy by working up the Unified Field in the brain by way of
arresting the constantly shifting modulations.

Go LIke Hell

2009-07-05T09:23:00.000-04:00

"He was cruising at 185mph in fourth gear at 5700 rpm. A slight
inclining right bend led him under the Dunlop Bridge. He eased
up on the gas, then accelerated again, shooting down a slope
at 183 mph into the Esses. He downshifted to third, then
second, in perfect fluid motion. Easy on the downshifts; no
stress on the gear teeth or clutch plate. Hill left the Esses
in second gear at 5800 rpm - 82 mph. A hard brake down to 65
mph, a tight right turn into Mulsanna Straight, and he hammered
the throttle. Third, Fourth. The g-forces pinned him against
his seat. A glance at the tach: 6100 rpm. Two hundred mph
summoned with his toe."

- Go Like Hell - Ford, Ferrari, and their battle for Speed
and Glory at Le Mans by A. J Baime

***** Very Highly Recommended Reading *****

...and 2010 Le Mans, I'm definitely going to watch!!!

Monticello Motor Club

2009-07-05T08:22:00.003-04:00

I became a founding member about a year ago.
Love the place. Here's a video of me driving
the 2009 Radical SR3-RS on the full course
earlier this year.

Natural Light, Markets and Mark to Market Shenanigans

2009-04-03T09:47:00.002-04:00

Friday, April 3rd
Various Times

U can see past posts on my blog : www.alvinjamur.blogspot.com
U can see some of my pictures : www.alvinjamur.com

Okie, plug done. Its been a while so I will be very desultory
here.

- My brother Vivin pinged me an observation of yesterday's
market action right after the close. As u may know, the whole
modification of Mark To Market rules were passed yesterday. The
banks performed as follows :

NWSB +9%
ZION +9%
STI +7%
WFC +7%
PNC +6%
USB +5%
C +3%
BAC +3%
KEY +2%
ISBC +1%
JPM +1%
MS -2%
NTRS -5%

Turns out that the best performers were amongst the
unhealthiest banks while the worst were the banks that
(at least to public knowledge) are the strongest.
There's Capitalism 2.0 for you. We reward the worst
perfomers.

- As crazy as it may seem, the passing of the modification
of the Mark to Market rules is not coherent with the
Geithner Plan (Public Private Partnership)!! The Financial
Accounting Standards (Rule 157e) will allow banks to use
their own models to value their assets and will allow them
to push the assets onto their Level 3 boxes. The Geithner
"Public Partnership" plan calls for "price discovery" and
the FAS157e plan circumvents this in a way. Go Figure!

- The market has rallied a LOT since my last post. Yours
truly was not able to take advantage of the rally and
stepped aside and watched. I've spent some time re-tooling
my head to be open to all possibilities and not get into
being a tunnel visioned bear. Its a constant work in
progress!

- You should spend some time staring at the chart below.
Speaks volumes about the rallies we get in bear markets :

http://www.dshort.com/charts/mega-bear-comparisons.html?mega-bear-quartet

- About a week ago, i got word that the greatest living natural
light photographer in the world (Jay Maisel) wrote a little blurb
about me on Scott Kelby's site :

http://www.scottkelby.com/blog/2009/archives/3814#more-3814

I took Jay's course about two years at the insistence of my good
friend, Seth Resnick (a Cannon Explorer of Light). Photography has
not been the same for me after taking Jay's course. I tend to delete
most of my pictures and don't even bother shooting if the light is
not good. Jay has been a great influence on me and is one of a
kind. You won't find many like him in this day and age.

- I'm away from April 12th-19th on a Tiger Shark Trip with my friend,
Jim Abernethy. So will write after I return and will send you some
pictures, too!!

That's all I have to say...

2009-03-20T21:37:00.002-04:00

Friday, March 20th, 2009
2115 hrs

On October 29th, 2008, I opined the following and I will
simply just repeat what I wrote.

"Credit excesses have not been wrung out of the system.
All we've done by the machinations of the TAF, PDCF, TSLF,
CPFF, MMIFF, ABCPMMMFLF....er, Yes, I mean the "TAF, PDCF,
TSLF, CPFF,MMIFF, ABCPMMMFLF" is to shift the problems
onto the public balance sheets by risking taxpayer money.
These stunts will sooner or later lead to a revolt in the
fixed income markets and will likely lead to a currency
devaluation. We will be a banana republic."

This past week has been a rather interesting one. The
talking heads have declared and called the SP 666 number
a bottom. Then on Thursday, we all got word that the Federal
Reserve will now start outright purchases of longer term
debt to help out credit markets. The US dollar collapsed,
commodities rallied but NOT in other currencies. The Federal
Reserve has essentially devalued the dollar!!

YES, THE FEDERAL RESERVE HAS ESSENTIALLY DEVALUED THE US
DOLLAR.

My brother, Vivin Oberoi wrote me the following the very
evening :

"It is an unfortunate fact of our lives that B-52 Ben
controls the value of our money. I am not going to mince
any words. When one sees everything (and I mean everything)
BUT your savings account go up in price, there is only ONE
conclusion. The value of the dollar is plummeting. This is
NOT a bottom has been reached and recovery is around the
corner move. Gold is rocketing up. Commodities are but NOT
in other currencies. The Fed and the government are now
going to finance their “fight debt with more debt” economic
policy with our savings accounts.

Make no mistake about it, we have now joined ranks with the
likes of Argentina where government spending is financed by
printing money. The Fed is going to print money, buy newly
printed government bonds, transfer trillions into the treasury
which will then be spent. This is the form of looting that
marks the culmination of debt induced crises that are then
mishandled. The savers are now being shot. I am extremely
depressed about the prospect of losing my hard earned
savings. That is all I have to say."

That is all I have to say....

- aLV

Market Bottoms & Economic Lifeblood

2009-03-09T22:36:00.001-04:00

Monday, March 9th, 2009
2155 hrs

In mathematics, maxima and minima, known collectively as extrema,
are the largest value (maximum) or smallest value (minimum), that
a function takes in a point either within a given neighbourhood
(local extremum) or on the function domain in its entirety (global
extremum).

I copied the above definition from Wikipedia to remind you that
the favorite questions/articles/opinions these days in financial
media happens to be "Where is the bottom?". The truth is that
NOBODY knows from which price the markets might rally again and
for how long that rally might sustain itself. Whether we trade
bonds or stocks or options or any of the vanilla flavored financial
instruments, technically the bottom is at ZERO. All one can do
when trading is to be extremely self serving and trade in such a
way that the probability of gains are in one's favor.

--

Here's a very very interesting link to those of you that watch
CNBC and listen diligently to the talking heads :

http://www.youtube.com/watch?v=yJObWmN-x9I#

Funny!? Indeed and I hope your opinion has now changed!

--

Forget U shaped recoveries and/or L shaped recoveries and the
like. This administration is now following the failed Japanese
model - bailing out everybody in sight. Every decent american
taxpayer should be angry at the way they're being robbed. The
money is going as bailouts to banks, who are then giving it
out the back door to funds etc., Bailouts will never work.
Japanese markets are down by slightly over 80% from where
they were 19 years ago!! Since "Depressions" are not
economically defined, I'd bet that we are probably at the
threshold of one.

--

Congress, the talking heads on TV and others in the media
believe that we need to get the credit cycle running again.
Hah! They state that Credit is the lifeblood of the economy.
Hah!

PEOPLE!!! THE LIFEBLOOD OF AN ECONOMY LIES
PRODUCTIVITY. IT HAS NOT, DOES NOT, AND WILL
NEVER LIE IN CREDIT (ie., DEBT) IF IT IS NOT BACKED
BY REAL INVESTMENT & THUS SAVINGS.

The idiots in Washington DC are once again asleep at the wheel.
We need to fire the Fed and the Treasury and appoint people
that are not afraid to feed the financial system bitter
medicine. And a part of that bitter medicine is to simply
force truth out ie., lock up/fire people that have lied along
the chain in our economy and/or who have abetted all this
to happen. Starting with some at AIG...which is pure
outright insurance fraud.

My Left Foot Little Toe Nail

2009-03-09T17:36:00.002-04:00

March 3, 2009
1700 - 2100 hrs

Though the general trend of this market has been down,
know that there will be some major rallies in between.
Bear markets tend to take out Bulls and Bears. The
best traders are typically the ones that do well in
Bear markets because they trade with a very open mind.
I do know that wearing Rose Colored glasses, whether
Bull or Bear is fraught with danger.

---

"No Congress of the United States ever assembled, on
surveying the state of the Union, has met with a more
pleasing prospect than that which appears at the present
time...."

- Calvin Coolidge, Dec 4th 1928

“Profit and earning ratios are starting to get to
the point where buying stocks is a potentially good
deal...if you've got a long term perspective on it.”

- Barack Obama, March 3rd, 2009

We are going to spend $4 Trillion dollars this year.
The estimated deficit will be around $2 Trillion. And
the tax numbers are based on some absolutely ridiculous
assumptions with regard to GDP growth, employment etc.,
All this while the administration keeps concocting plans
for some grand spending. Last I heard was that its
impossible to spend one's way out of a problem, when
the problem was/is reckless spending in the first place.

As said before, when Japan had issues in the 90s, US
lawmakers advised that it would be good if there was a
recapitilization of banks. And now, we are doing what
Japan essentially did - piecemeal capital infusions
without the political will to put some into receivorship.
Yes, I do realize that the world is a much more complex
place now and there is a pronounced cascade effect
because of counter party exposure etc., But what we're
doing now is pulling off a bandage very very slowly.
What would happen if counter party risk was isolated
to geographical exposure and then countries got
together in some sort of joint receivorship deal?

There's a whole plan on the Public-Private Partnership
that's apparently in the works and that will revive the
markets. Fact is that private money is likely loath to
come here and partner up as its has gotten burned by
Corporate America's profligate ways, American consumerism,
and now an ever changing and ill-concocted plan about
plans for financial market resucitation by the Government.

America does not need new Cars, new Homes, new gadgets,
whiter teeth, or Silicon replacement parts for certain
natural parts of the human body. As long as we believe
that we can simply spend our way out of the problem,
hazard is near and replete.

--

My Economist/Macro PM friend, VO sent me a link to the
paper below :

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=227273

Note the third author of the paper is Larry Summers.

Now, there is going to be a transactions tax on traders
like myself that trade quickly. This paper is the
birthplace of that ruling. It is assinine because the
final point of the abstract pointedly states a belief
that making assets illiquid (by discouraging continuous
transacting) will no longer subject them to the whims
of the market (and micro supply/demand) and is similar
to taking a firm private -- to enhance value.

MY LEFT FOOT LITTLE TOE NAIL! I really do believe
that this is a similar foray like the one where they
abolished the "short sale" for certain companies. It is
misguided and it will blow up a whole industry.

Hyper Myopic.

How to BE HAPPY

2009-03-03T10:13:00.003-05:00

Sunday, March 1st, 2009
0028 hrs

In the last several days/weeks/months, I have been witness to much
in the lives and times of people. In these times that are
characterized by deceit, lies, and changing fortunes I asked myself
what the essence of happiness was. And therefore, perhaps to soothe
you, I would like to take this opportunity to present what was
presented to me by a progressive Buddhist Monk when I was 22 years
old.

Please read every sentence s-l-o-w-l-y and imbibe, Its one of the
most logical pieces of emotional prose I have ever read and I have
been reading it for a long time. I hope I have imbibed a little
and have made a positive difference in my dealings with others.

--
The Desiderata of Love, Max Ehrmann, 1927

"Go placidly amid the noise and haste, and remember what peace
there may be in silence.

As far as possible, without surrender, be on good terms with all
persons. Speak your truth quietly and clearly; and listen to
others, even to the dull and the ignorant, they too have their
story. Avoid loud and aggressive persons, they are vexations
to the spirit.

If you compare yourself with others, you may become vain and
bitter; for always there will be greater and lesser persons than
yourself. Enjoy your achievements as well as your plans. Keep
interested in your own career, however humble; it is a real
possession in the changing fortunes of time.

Exercise caution in your business affairs, for the world is
full of trickery. But let this not blind you to what virtue
there is; many persons strive for high ideals, and everywhere
life is full of heroism. Be yourself. Especially, do not feign
affection. Neither be cynical about love, for in the face of
all aridity and disenchantment it is perennial as the grass.

Take kindly to the counsel of the years, gracefully surrendering
the things of youth. Nurture strength of spirit to shield you
in sudden misfortune. But do not distress yourself with
imaginings. Many fears are born of fatigue and loneliness.

Beyond a wholesome discipline, be gentle with yourself. You
are a child of the universe, no less than the trees and the
stars; you have a right to be here. And whether or not it is
clear to you, no doubt the universe is unfolding as it
should.

Therefore be at peace with God, whatever you conceive Him to
be, and whatever your labors and aspirations, in the noisy
confusion of life, keep peace in your soul.

With all its sham, drudgery and broken dreams, it is still a
beautiful world.

Be cheerful. Strive to be happy."

Good Credit by Good Faith!?

2009-02-26T22:20:00.000-05:00

Thursday, February 26th
2215 hrs...

I've gotten quite a few emails (some of you whom I know
and some who I don't) blaming me for excessively ranting.
Once again, I'm trying to wake up people to the reality
that is. Ignoring it (just like some people ignore their
credit card bills) and not worrying about it or raising
voices against it is the reason why we are in this miss.
Here's a site you should visit :

www.right.org/welcome

All things considered, academically, I would not pass
for a rookie economist, and in that sense, have no real
proscenium to stand upon and talk Economics. All this is
simply a wake up call to many that might not get a chance
to fully realize the gravity of our current situation.

---

Creating a budget whether for a home, commmunity organization,
city, state nation is a complicated thing. The more complex
the internal interactions, the greater the variation. You
couple that with the slew of higher numbers of assumptions
you need to make and things can start to get out of hand
very quickly.

Here are some things about the new Federal budget:

- In 2009, GDP will grow by 1.2%
- Unemployment rate will be 8.1%
- Will end subsidies to people lending for student loans

Deficit of 1.75 Trillion is around 12% of GDP. That's about
an increase of 20% in National Debt. Here's a question for
our collective national fiscal conscience : How have we,
as a nation, become so presumptious to assume that we can
actually borrow more? How do we know that foreigners will
keep on with our profligate ways instead of worrying about
their own economies?

We've shown a pattern here : deficit spending, spending on
houses thanks to a slew of fraudulent practices along the
entire line, leveraging the spending on homes through
equity lines of credit..the damn truth is that it runs
right through to the Federal Government. Hell, Hillary
Clinton went to China and told them to keep buying our
paper!!

Have you ever sat back and wondered why it may be the
case that many US corporations are in the bail out lines?
Have you thought about why US corporate bond sales are
not going well?

The Fed gave low interest rates. Low interest rates gave
us cheap loans. Cheap loans made people lie abut their
income. Income that was real was hidden by Liar Loans.
Liar loans were repackaged and sold with good Credit
ratings. Credit rating agencies were in cahoots with
banks that repackaged the loans made possible by the
laxity of regulators. The regulators now sit in Washington
DC and blame the banks etc,. while promoting their own
grandstanding. The grandstanding play now is shown
all over the world as the resolution of Washington to
fix things. Things like this are not easily fixed...

Private capital is the real life-blood this economy
and it has now fled from our capital markets. The deceit
and corruption that went on while our regulators slept
has been recognized. Our government cannot fix the
economy by releasing another variant of the alphabet
soup, plans about plans, backstopping banks by
converting preferred debt into common stocks so that
they can pass the so-called "stress test".

I'm of the opinion that there is a greater probability
now that we are entering into a depression that will
be far worse than the one that the world witnessed
in the 1930s. I HOPE I AM WRONG!

Here's a scary scenario (50K feet) : Foreign investors
are wary of a lot of US domiciled debt so its very
likely that much of corporate debt will have to have
riders attached to them about being backed by the
"good faith" of the US government. The government
will start to run greater deficits (because of some
assinine assumption - look above!) and very soon
the yields required to sell debt of all varieties
will sky rocket. Higher yields required to sell
bonds combined with deteriorating quality in the
economy will act as a noose around companies that are
leveraged. At least 15% of the companies in the
SP500 will go bust. There will be widespread job
losses, unemployment goes hard through the 10-12%
number....

.....bleak picture.

Bottom!?

2009-02-24T09:30:00.005-05:00

The Value Trap

“How low can the stock market go? It has fallen
so much, right.” I am tired of hearing how it
has gone down SO much and how it is SO CHEAP.
People are talking about single digit multiples.

What truly is the multiple on S&P?

Our friends at Standards and Poors that compile
the statistics tell us that 4Q 20008 yielded the
following numbers (with 93% reporting):

Operating Earnings: 5.00 dollars per S&P share
(Yes that is FIVE DOLLARS). At this rate, S&P makes
20 dollars in the year. What is the PE of S&P500
with Earnings = 20?

At the current 750 on the index, P/E ratio is
37.5. You read that right! No Typo. P/E is 37.5

And operating earnings are what we get after making
up numbers with all the accounting tricks.

Now, Actual Earnings: $-11.97.

Yes. This is correct as well. Open your eyes people!!

S&P500 is LOSING money as an aggregate and this has
not happened post 1950. I do not have the data before
then. And PLEASE do not think this is some outlandish
numerical aberration.

The Nikkei 225 earnings were negative for multiple
(read >10) quarters in the 90s. We are in the same
situation. According to actual earnings, the PE
is INFINITE!!

Related to this hope, is also a prevalent belief that
we are going to get ONE FINAL CATHARTIC PLUNGE to
put in a bottom. These people are

a) looking at historical patterns that do not
hold OR

b) still thinking this is a problem of liquidity.

THIS IS A PROBLEM OF SOLVENCY. And the company that
is on the brink of insolvency (witness the negative
earnings of S&P500) is AMERICA INC.,

Now, if I hear once more about how cheap the
market is…...

- vo

Nouveau Finance

2009-02-23T22:06:00.001-05:00

Monday, February 23rd, 2009
2151 hrs

My brother send me these numbers for Citigroup :

Shares Outstanding : 5.45b
Price : $2.14
Market Cap : $11.66b

Now...if the US government buys a 40% stake (bandied
about today!) :

Theoretical New Market Cap : $19.44b
Market Cap that is now owned by Govt : $7.78b
Thus, US government gets this fraction for their $45b : 0.17

Umm....the US government buys at this price : $12.39
Ummm...and the stock is trading at $2.14
Ummmmm....and you, dear taxpayer, just gifted away $79.66 b.

Bid you farewell with that pure singular primordial numerical thought.

Goodnight!

- vo/aLV

Too Big to Save, Too Big to Fail

2009-02-23T10:24:00.001-05:00

A fiat currency is one that is controlled by a government. In
the US, its the Federal Reserve that controls the supply of
money by printing or sticking a bunch of zeros and ones on
some magnetic tape someplace. Like the Greenback, there are
other fiat currencies -- the Yen, Euro, Rupee, Zloty, Forint
etc., If History be any indication, fiat currencies that
have existed have been destroyed by the very government that
gave it spawn. In verity, Clan Chiefs, Kings, Emperors and
Governments have always had two simple choices

a) Say it like it is and level with their clansmen/citizens
and constituents that there really is no free lunch;
b) Borrow to spend (by printing) without raising taxes and
make the deficit by printing more of the instrument that is
the backbone of commerce and exchange;

The US is the biggest debtor nation and the expansion we
have seen is due to the lending by foreign nations. They
finance our trade deficit by taking dollars when we pay for
Building materials, BMWs, Chateau Latour, Bang & Olufsens,
La Perlas....etc., by buying bonds and other domestic
financial assets. Now, you keep doing that for a while,
move jobs elsewhere, create icing by mathematical
wizardry....and, as u can imagine the numbers in terms of
exposure and the situation start to creep into dangerous
territory.

While the action with respect to the US dollar has been
gradual and is long drawn, perhaps because its a reserve
currency - a good illustration of what will eventually
transpire is evident when we see what is being played out
in Europe :

Borrowing by Eastern European banks amounts to about $1.7
Trillion, much of it from Western European banks. Much of
the East is bordering on Depression and there is heightened
risk of a sovereign default. In the US, we might have the
"Too Big to Fail" syndrome but in Europe we definitely
have the "Too Big to Save" syndrome, which is a very virulent
and deadly economic form that arises from ungodly amounts
of leverage in the credit system.

The virulent effects of this leverage has been felt in the
very recent past by way of very negative currency action in
the Zloty, Forint, Suisse and the Euro. So what, you ask?
Well, its the start of a what I call a global trade
cluster-f**k! If European currencies go down, their goods
become more competitive and if Asian exporters want to
remain competitive they might have to either manipulate
their currencies or even devalue. We might start to see a
whole basket of protectionist actions around the world and
that would essentially put big time brakes on
recovery....blah-blah. U fill in the rest.

Monday
Feb 23rd, 1015hrs

OK, I was short SP last night, covered as soon as the Citibank
news hit the DJNewswires as a headline and then flipped and
went long. I put in a bunch of trailing stops and went to
sleep. This morning, I sold out a few minutes ago and now
I'm just watching it. It seems like this market does not have
legs and just wants to head down. I will have to wait for a
better opportunity to sell short.

I still do think that we have a BIG impending move coming to
us sometime this week. The market's health is very tenuous at
best. If we do rally from these levels (772 on ES), and break
through some serious overhead resistance area around 780-784,
I suspect we head up to about the 795-798 level and then fail.

I am still looking for the ES to be in the 650-660 range.

- aLV

Be Prepared for everything. Expect Nothing.

2009-02-19T23:51:00.001-05:00

Wednesday, February 19th, 2009
2344 hrs EST

The past few days have been a very interesting lesson for anyone that is a
student of financial and economic markets. The world has been waiting to
hear about all the grand recovery plans coming from Washington. The
response of financial markets to Geithners testimony, the stimulus
package, Japanese GDP numbers, the housing rescue package, and
Obama's speeches laden with promises have a lot to tell us and might give
us clues as to how things might unfold.

They have unfolded thus : in the last two weeks, a third of the equity values
of banks in the United States have gone by way of the reaper. The BKX has
lost that much, yes!
---
Before the crash of 1987 (I have the data and have been through it so many
times!) the markets had been drifting downward for a couple of weeks prior.
Option Expiration was on the 16th of October, with the Dow closing down
about a 100 points (the index was around 2250-2300, if I remember correctly).
The next market day (Black Monday) it would close down a whopping 500
points. I was 17 at the time and did not trade it but I have read all the papers
and have spoken to so many that were there. A few conversations a few hours
ago and the same people told me that the feeling in in the air is similar.

My bringing up the crash is not meant to alarm you. Market microstructure has
changed a lot since then. There are now all sorts of circuit breakers that will
kick until some semblance of sanity is again seen.
---
Bathed in monitor glow here's what I'm seeing :

Australia -1.24%
Shanghai +0.58%
Hong Kong -2.33%
Jakarta -0.77%
Nikkei -1.73%
New Zealand -1.54%
Straits -1.56%
Seoul -3.66%

and I keep looking up at an ES futures short position that I've been trading
since 3:30am this morning!

It helps to sketch out a SCARY SCENARIO for you :

Expiration happens normally tomorrow with some banks having a little rebound
during the day to give it up by the end. The market has a three digit decline. Over
the weekend, the government decides to take over the balance sheets of BAC
and C. The G7 comes out with a statement saying that they will coordinate to
protect deposits and backstop direct holdings of bank debt as long as its held
within the pension fund system (else there would be anarchy). People FREAK!!
They rush to banks to banks to get the cash they have. A bloodbath ensues in
financial markets over the globe.

There is a HUGE flow into US dollars+fixed income and Yen+JGB. Gold goes
through $1050. Several Eastern European currencies (Poland, Hungary, Latvia,
Belarus...) get clocked...the DOW goes to 6500 and the SP goes to 650....u
get the picture.

But...the above is only a scenario...I'm tired...

BE PREPARED FOR EVERYTHING. EXPECT NOTHING.

- aLV

OBAMA-NO!-MICS (How NOT to fix it)

2009-02-16T16:46:00.006-05:00

Sunday, February 15th, 2009
2022 hrs

I've received a few emails telling me that my economic/political
rants typically bring down the "Happiness Quotient" of the reader.
Its not my intention to bring down moods but it is my intention
to bring readers a reality check because much of public perception
is controlled by the media. There are not many us that are willing
to spend the time looking at data and then seeing that the truth
is far from what popular media perceives it to be.

For instance, many commentators on financial TV need to go back
and read up on some Economics 101. They casually ask a market
expert (supposedly) when the recession will end while also
pointing out that a recession is defined as two consecutive
quarters of negative GDP. BING BING BING - WRONG!!! Its based
on the timing of the peaks in retails sales, employment, industrial
production, capacity utilization and growth of personal income...
--
Japan's economy contracted by 12.7% on an annualized basis
(Oct-Dec) period. Inventory rose, demand declined....so
industrial output will be adjusted in the future. Realize that
the economy is very dependent on exports, with the biggest
partners being China and the US. That's a black hole!
--
I read with great interest (www.nakedcapitalism.com) about the
increasing potential for a financial meltdown originating from
Europe. Remember what happened to Iceland last year? There are
countries in Europe today where the banking systems are in a very
precarious state, and looking into a very deep abyss. Austria has
lent approximately 240 Bllion Euros to the Eastern bloc. That amount
is about 70 percent of the country's GDP!!!!! In fact, a little
further research reveals that a large portion of debt by the East
blocs are owed to Western European banks - Austria, Sweden,
Greece, Italy, Belgium.....
--
Now "Level 3" accounting gives banks in the United States the
ability to value assets as they well please. As you can imagine,
there is a lot of junk on the balance sheets of banks that they
just do not want to tell you about. That hope is given to them by
their want of a huge bailout by the Feds. There is a fundamental
disconnect between prices (Ask - Bid Price) because sellers are
convinced that prices will recover (due to government intervention)
and the buyers are convinced that the market is right and that
prices will come down - its pure deception and this is exactly
what happened in Japan.

As long as there is government intervention to prop up prices
(that is artificial) a proper enduring price will not be found.
Markets find their prices because of an exchange between a
buyer and a seller. Government action is like us trying to mess
with weather systems because we want 65 degree weather in New
York City 365 days of the year - losing proposition.
--
What should be done :

1) There are two basic imbalances that need to be resolved. One
is the overconsumption by the US financed by the overproduction
in Asia. Second is the inflated asset prices in real estate and
related securities. Any attempts to continue the "good times"
by giving incentives to consumers and produce more are bound
to fail. Secondly, any measures that try to prop up prices of
inflated assets can only make the problem worse.

2) Governments can bail out certain individuals or entities. THEY
CANNOT BAIL OUT ENTIRE MARKETS. That has never worked and it
will never work in the future. Let us forget about how they
determine what the "correct price" of the housing stock here is.
How much money does the government in the US need to prop up US
house prices (a priority these days)? This is a 45 trillion dollar
market. Obama/democrats have pencilled in 50-100 billion dollars
to help the US housing mkt. 100 billion to prop up a 45 trillion
dollar market? Are these people mad?

3) Let the US household consumption come down to 60-62% of GDP.
That will put us in a more sustainable production-consumption
trajectory. Of course, people should not be starving. But that
was never the problem. East Asia, on the other hand needs to spur
consumption rather than exports. Stupid attempts to alter this via
taxes is going to be futile. Exchange rate realignments are a
necessary part of this adjustment process.

4) The BAD DEBT in the system needs to be written down/written
off. Paying down the debt is not a plausible scenario. We need to
recognize the debts (cries for suspending Mark to market should
be ignored). Placing problematic banks in government receivership
might be the only good and fair way to accomplish this in a clean
manner.

5) Not more regulation but wiser regulation - Along with letting
household debt be written off in bankruptcy court, perverse
distortionary incentives to home ownership should be eliminated.
And I am pointing toward favorable tax treatment of interest
payments on houses, tax free capital gains, subsidized interest
rates for housing via Fannie, Freddie, CRA etc. All these
distortions along with super low interest rates contributed to
the inflation of housing prices above their fundamentals would
justify. Similar approach should be applied to other assets. Does
anyone remember that after the Depression, the Fed was given the
power to set margin requirements in order to curb irrational
speculation in stocks. They conveniently forgot about that in
the 90s. In the 2000s, they forgot about the down payment rules
for housing. These are all examples of regulation that were
ignored and contributed heavily to speculation and bad debts
backed by shitty over priced assets. We are now paying the price.

- VO/aLV

Gold, Equities and Alphabet Soup

2009-02-13T02:50:00.005-05:00

February 13th, 2009
0238 hrs

GOLD & THE CREDIT CRISIS

The Bretton Woods system of monetary management
established the rules for commercial and
financial relationships among the world's industrial
states in the mid 20th century. In 1971, President
Nixon unilaterally cancelled the Bretton Woods
system, thereby stopping the direct convertibility
of the US dollar into gold.

In 1929, Roosevelt illegally confiscated gold and also
devalued the US dollar. This led to a strengthening of
gold prices.

Of late, Gold has been rallying alongwith the US dollar.
It is a surefire sign of a serious credit dislocation ie,.
the world's banking system is insolvent.

DO NOT BE FOOLED into what global upside ramifications
may come forth by the stunts that the people in Washington
DC are pulling on you. The price action of gold and the
US dollar is telling all of us that a HUGE credit event
is going to be upon us. It will not be constrained to the US
but in the Eurozone area and the far east as well.

In the note dated Jan 6th (www.alvinjamur.blogspot.com),
my friend Vivin Oberoi noted that a broad based failure of
commodity markets to rally was a sign that all is not OK.
Vivin also noted that a combination of de-leveraging, carry
trade unwinding and imploding growth would keep the Yen/USD
on an uptrend. There is ample evidence here that this is
indeed happening to the T.

EQUITY MARKETS & FALSE HOPES

When I was back in school, I was told by other traders I
knew that it was imperative to pay attention to what the
market did between 2:45pm and 4:15pm. At around 3:15pm
yesterday afternoon, the DOW started to rally and converted
a 200 point deficit to a deficit of just 6 points all
because of talk of a "Mortgage Alteration" plan that was
apparently being constructed.

I am as humanistic as anybody else but I resent having to
pay for people that have not been careful about going over
their heads in spending. The last credit card bill that I
paid late was over 15 years ago. I've been a responsible
consumer and now the US government is penalizing millions
like me - for being responsible with credit and living
within means. It is actions like these that start the demise
of nations.

PLAN, WHAT PLAN?

The Congressional Budget Office (CBO) predicts that over the
next three years there will be a gap of $2.9 Trillion between
what the economy could produce and what it will actually
produce. The $800 odd Billion that the administration plans
to use to stimulate will simply not be enough.

What on earth is a "Private-Public" partnership anyway? Perhaps,
once the details do become known we'll all realize that its
another fancy term concocted to mean that the public will bail
out the private.

Every economist I've spoken to keeps harping that the current
approach (continued from the previous administration with more
urgency) is very reminiscent of what transpired in Japan in the
90s. To rejog memories - the Japanese government came up with
fiscal expansion that was not enough to kick start a recovery,
promoted and buttressed banks so that they could be reluctant
to fess up their losses (talk of abandoning Mark to Market is
just one such action being bandied about in DC).

CREDIT EXCESSES HAVE NOT BEEN WRUNG OUT

On October 29th, 2008, I opined the following and I will simply
just repeat what I wrote.

"Credit excesses have not been wrung out of the system. All we've
done by the machinations of the TAF, PDCF, TSLF, CPFF, MMIFF,
ABCPMMMFLF....er, Yes, I mean the "TAF, PDCF, TSLF, CPFF,
MMIFF, ABCPMMMFLF" is to shift the problems onto the public
balance sheets by risking taxpayer money. These stunts will sooner
or later lead to a revolt in the fixed income markets and will
likely lead to a currency devaluation. We will be a banana republic."

Amen.

- aLV

Translating Geithner

2009-02-10T17:08:00.001-05:00

Feb 10th, 2009
1645 hrs

The Feds are no fun. They can't even come up with financial rescue plans
that have meaningful names.

I think we should call it TURD. Yes, "Taxpayers Underwriting Risky Debt".

What we essentially have today is a mega version of the plan that was
unveiled a few months ago. There is a little change in nomenclature so
I figured I'd help you traverse the minefields of verbiage....a quick
translation of some of what the Treasury secretary said :

Geithner : "We are willing to take all measures."
Translation : We will throw the kitchen sink at the problem as we have been doing.

Geithner : "Committed to use at least $50B to stem the housing crisis..."
Translation : We will use $50B first and then come back to ask you for more.

Geithner : "Will ask for more funds if there is a case to expand the plan."
Translation : We will ask you for more. PERIOD.

Geithner : "Will be very careful to protect taxpayers."
Translation : They're essentially screwed but we'll let the pain unfold slowly.

Geithner : "Government did not come up with comprehensive plan soon enough."
Translation : Abandon Ship. We're incompetent.

Geithner : "Need to create conditions to attract private investors."
Translation : We can't find private, profit oriented investors wanting to buy junk.

Geithner : "Private capital is holding back...we need to create a mix of financing..."
Translation : Private investors will buy junk only if taxpayers underwrite losses.

Geithner : "Financial system is working against a recovery."
Translation : Sagacious investors are wary of the bull shit running about.

Geithner : "We've seen a deep loss of faith in the financial system."
Translation : The rest of the world has caught up to America's BS.

Geithner : "Actions as large as problems we face."
Translation : We'll make plans as we go along.

Geithner : "Can't fix financial system without fixing the housing problem."
Translation : Its the chicken and egg. Dunno which came first and what will fix what.

- aLV

Precipice....

2009-02-01T21:39:00.004-05:00

Sunday, Feb 1st, 2009
2110 hrs

Some random thoughts in here. I'm more desultory than
usual....

- For the past few days, I have been reading some texts
on various neoclassical economic theories. A lot of the
people in power fall into this group of practioners,
including Dr. Bernanke. Doubling the monetary base should
spur an increase in inflation because it brings an increase
in credit. However, this has not been the case in the recent
past. What happens when good borrowers do not want to take
out additional loans and when unworthy borrowers are not
able to borrow?? The debt in the system cannot expand
because the economy has reached the thresholds of carrying
capacity. Unless there is a decrease in the total leverage
in the system there is NOTHING that can be done to halt
demand destruction and thus economic contraction. The
government has been trying to transfer leverage from the
private sector to itself [government]. Tch...tch.

- Its becoming clear that some of the big banks cannot
survive this malaise without getting money in Ts (Trillions!).
U read that correct, Trillions! And we go about it by
rewarding the bad guys rather than giving money to the
good guys (there are many solvent banks in this nation).

- We've had some rather crazy moves in the fixed income
markets last few weeks. That's what happens when treasury
bonds are being rained upon the public, thus depressing
price. This supply will make stocks and bonds crater!!
"Satyamev Jayate" means "Truth Wins" in Sanskrit, an
ancient language. Truth is that prices react to Supply
and Demand. Politicians in DC could have promised
people a lot of changes and money etc., but the fact is
that as long as we are printing government backed paper
there will be supply and bonds will fall with the only
thing stopping it are higher yields (higher rates).

- Wall Street was never made so people on Main Street
could make money. Wall Street was made so that Wall Street
could make money. I trade and another traders' best
interest is not in my best interest. Wall Street took
$70 Billion of taxpayer money and paid themselves
around $20 Billion in bonuses. I've hinted at this in
several past comments on my blog. Check out
www.alvinjamur.com then goto the blog section.

- This "Bad Bank" plan from Washington DC is plain and
simple : BAD! There is not enough transparency between
financial market participants to know the details of the
assets being held. We've just seen this drama play out
between Merrill Lynch and Bank of America. There will
be plenty more of this unless and until we have FULL
transparency....and that includes the Federal Reserve
and the various other games several administrations have
played.

- A long term SH*T show has just started. I do not know
how it might end. If things progress as they have been
in the recent past, and if equity market participants
come to their senses like their brethren in the fixed
income markets have, we will likely see the SP trading
around 550-600 and the DOW at around 5500.

...truly, we stand here at 8000, and at the precipices
of a very deep abyss.

- aLV

Happy New Year! Really!?!?

2009-01-06T17:37:00.003-05:00

This piece below is not my handiwork - it was completely
conceived/written by my friend, Vivin Oberoi who is an
economist by training and is now a Portfolio Manager.
It's a long and cerebral read, so I suggest you print
it, sit down and read it...then ruminate and see why it
makes sense.

- aLV

=== CUT HERE ===

1/1/09 Outlook 1H 2009: Happy New Year or is it?

1) The United States is in the midst of the worst economic
recession in decades (the ROW is in a recession as well):
The economy fell off the cliff in Q4 08. This is reflected
in economic stats such as survey data in G7+Australia (worst
readings since inception of data in a lot of cases). The
speed of deterioration of activity in retail and durable
goods and falling employment is ample support for the survey
data. Our baseline is for the economy to trough at the end of
2009. Moreover, the recovery is likely to arrive in fits and
starts (induced by multiple fiscal stimulus packages) and
NOT in the usual private sector debt financed spending.

2) The banking system has gone bankrupt in a number of countries
but has been recapitalized by the government. Good news is that
the authorities will do whatever is necessary to keep the banks
capitalized.

3) Stock markets have lost ~ 40%. This, however, does not make
them a screaming value.

4) Fixed income yields have plummeted. Yields on the short end
are zero in US, Japan, Switzerland and HK. They are close to
getting there in Canada and followed by UK.

5) Credit (like equities) “looks cheap.” The Federal Reserve
and the treasury are inducing the private sector to buy
credit – by buying themselves. Markets that the Fed/Treas are
buying are rallying. Other types of risky assets are not.

6) However, the outlook for the economy now built into the
markets is really bad. More so in treasuries than in stocks.

7) Is the worst over? Markets are showing signs of reacting
positively to any statistics that come in above the already
lowered expectations. For example, US/UK consumer confidence
and a couple of regional manufacturing surveys in the US. Take
these for what they are – temporary rebounds in expectations
of the massive stimulus working. We would like to offer
anecdotal evidence of what we are saying – the Univ of Mich
consumer confidence rebounded and the markets cheered.
Econometric evidence points toward falling gas prices and
a stock market that has stopped falling as a cause. The
more reliable conference board measure of shows that
consumer confidence is still falling as a result of rapidly
deteriorating employment. What is likely to be the dominant
factor, we ask ourselves, falling gas prices or rising
unemployment. Hence, temporary bounces in economic statistics
should be scrutinized with care. There are numerous sources
of noise, both technical and economic, overlaid on the trend
of deteriorating economy. Another example is the
misinterpretation of smaller falls in house prices (Case
Shiller index) over the summer – it was merely seasonal.
It is now becoming clear that the housing market is still
in free fall and the credit squeeze is making it a lot worse.
We could (and should) get short term rallies in credit and
equities (second half of Dec). The failure of commodities
to confirm is a sign that underlying fundamentals are not
improving.

8) Deflation vs. ZIRP

Demand destruction vs. Bailouts:

Our best guess for the short term is that economic activity
is unlikely to free fall as it did in Q4. In other words,
the speed of descent will slow down. However, that does
not mean it is about to turn around. Deflation and demand
destruction are likely to remain with us for a good while
longer. The debt that has been accumulated over decades is
not about to disappear. As we outlined in our Oct outlook,
the first stop on the way to economic rebalancing is for
the US consumer to cut back consumption to the point where
our borrowing needs are manageable. Let us put some numbers
on the problem. The US was borrowing about 6% of GDP. The
private sector consumption is likely to contract by 10% or
about 6-7% of GDP. In previous cases of crises of this
nature, the borrowing goes down to zero as the tap of lending
is shut off. In the case of US, that is likely to be true as
well for the private consumption. The public sector will
offset the pain of the sudden rebalancing where the need is
most acute. In our opinion, the government should provide
support where the patient needs life support. Unemployment
benefits should be extended and states helped on that front.
On the other hand, the support for GM to provide 0% 72 month
financing to subprime borrowers for new cars is an example
of perpetuating the kind of consumption that has gotten us
in the first place.

9) We are going to play a hard game of cat and mouse in the
markets which will rally on “News that is awful but expected”
and sell off on “News that clarifies the real value in risky
assets.” In other words, earnings reports, bankruptcies.
Overlaid on top will be fiscal stimulus and bail outs.

10) The housing market will not find a bottom anytime soon. The
summer stabilization in house prices has fizzled out. The house
prices in the US need to fall by 35-45% peak to trough. This
has largely been accomplished in areas such as California etc.
The clear sign of price adjustment having taken place is that
housing market volumes are picking up. However, regions like
the North East are still in fantasy land. As a clear sign of
things to come, real estate rental rates are falling fast in
New York City. However, the price of real estate has not
fallen much. In other words, the earnings produced by the asset
are falling without the value having fallen much. As a result,
the PE of real estate is rising while the industry insiders
proclaim the paltry sub 10% fall from peak as having already
produced the necessary adjustment. Further adjustment in real
estate prices will hit the banks further as prime mortgages
falter as a result of falling employment. Financial shocks
such as these will combine with corporate bankruptcies and
worse than expected earnings news to produce down legs in
the equity markets.

11) In fixed income markets (govies), the target rate is 0%+
in US, Japan, Switzerland and HK. It will get there fast in
UK and Canada. ECB and Australia will resist going to ZIRP
(mostly because they do not see the benefits of zirp).

ZIRP countries:

a. 2yr rates ~ 0.5% in ZIRP countries as it can’t get too far
away. Very hard to short the short end. Gains will be limited
as we are almost there. Sell offs should be bought. We are
going to be in ZIRP land for a long time.

b. Yield Curve: 100bps ≤ 2-10Yr ≤ 200bps IMPLIES 1.5% ≤ 10Y ≤ 3%
NON ZIRP countries:

c. 1% ≤ 2Yr ≤ 2%

d. 2% ≤ 10Y ≤ 4%

Non-ZIRP countries will outperform in the govies.

12) In the FX Markets, the combination of de leveraging, carry
trade unwinding and imploding growth will keep Yen/USD (and
CHF to a lesser extent) on an uptrend. Commodity currencies
will suffer the most as will deficit emerging markets. Reflation
rallies may reverse the above action temporarily. In terms of
levels, EUR/USD should trend toward 1.05 to 1.15.

13) Equity markets could easily fall another 20% as earnings
expectations are ratcheted down. However, we look for this to
happen in a much more orderly fashion than in Q4. Surely, there
are bound to be some Walmarts and McDonalds in the world that
will benefit from a sliding economy. However, they will not
be able to prevent corporate bankruptcies from hitting the
wider market.

14) We said it in October- watch the dollar. The dollar and
the commodity price action in July and August were early
indications of falling economic growth. We will continue to
watch for clues and confirmation in these markets of changes
in our baseline for economic growth.

Policy Framework:

Trading in the 4Q has confirmed how “in tune” with policy
changes one needs to be in order to negotiate these markets.
We wanted to put down on paper what the markets will be looking
for in policies going forward.

1) ZIRP works by building expectations of prolonged timer
period of low and stable rates. Any buildup of expectations
the central bank may hike will lead banks and private lenders
to scale back estimates of future profits and not lend in
difficult times. For eg, in 2000, the BOJ action to end ZIRP
and hike hit the economy. The Fed in the US has already
taken the correct steps of making it clear their policy of
keeping rates very low for an extended period of time and
possibly buying longer dated government paper. The credit
markets have benefited. Forward rates will come down further
as expectations of no hikes build and inflation expectations
go down further. There has been good progress on this front
in the US and the same is happening in UK etc.

2) Transparency and consistency are vital for private sector
to start lending. If agents believe firms could go bankrupt,
they will not lend. Associated is the need to convince
private agents that banks and firms are not hiding losses
and therefore will likely stay solvent. Any likelihood of
further losses or potential bankruptcies will prevent lending
from happening. This was the biggest problem in Japan and is
happening now in the US and other countries. Banks have
been backstopped. If more losses pile up in real estate,
credit cards, car loans, commercial loans, etc, the govt.
will put in more capital into banks. Another problem in Japan
was inconsistency. Japan suffered a lot due to erratic and
ever changing plans (much like here in the US with the
Bear/Lehman/AIG trifecta). The case of non financial firms
needs to be solved. The auto bailout will set the precedent
in this regard. This is the next frontier in policy action.

3) Central banks the lenders of last resort - intervention
will only work if the price is right. Buying risky assets
will not work if the price is too high. The govt. can not prop
up markets. Key question is whether markets have fallen
enough? Will future price falls in houses etc lead to more
than expected bankruptcies? For example, in prime mortgages.
The evidence is not convincing on this front. The non-prime
mortgage securities “seem to have fallen enough.” The prime
housing market, commercial real estate and other securitized
credit markets may have further to fall.

4) Fiscal policy – the spenders of last resort - Life support
for the economy – The new administration will take care of
this in the US. It is less clear whether Europe needs more
stimulus and if it will get it fast enough. Another is that
emerging markets experience hard landings and are unable to
stimulate due to already burgeoning fiscal deficits (India)
or unable to sustain foreign lending (eastern Europe)
necessitating IMF/World Bank action.

Best Driving Roads in the World

2009-01-04T12:10:00.004-05:00

In October 2008, I started two simultaneous threads
on www.ferrarichat.com and www.m3post.com querying
people to list the best driving roads in the world.
The thread saw thousands of lookups, with people
contributing their individual thoughts on what
public roads offered the best driving. Here's the
list (as of Jan 4th, 2009). Enjoy!

- aLV

==== CUT HERE ===

-- Europe --

1) Davos - Stelvio (Stelvio Pass)
2) Nürburgring Nordschleife (55 miles SW of Cologne)
3) "Route des Vins from Molsheim-Colmar-Freiburg-
Offenburg-Strasbourg
4) Apennines (Close to Modena)
5) Ireland around the Dingle peninsula (Heck, almost
anywhere in Ireland not in Dublin or Galway)
6) Cap de Creus in Catalonia (Spain). Close to the
French border, bordering the Mediterranean (in
general, the overall Costa Brava is wonderful. Remember
the Rally Costa Brava in the World Championship
for Rallyes), and a much better climate than in France.
7) The romantic road in Germany from Frankfurt to Munich.
8) France Route Napoleon from Grasse to Dignes Les Bains.
9) St. Moritz, Switzerland to Lake Como, Italy (45-60 minutes)
10) Forli, Italy to Florence, Italy on "SS67"
11) Sicily, Italy - the old Targa Florio route: Cerda -
Caltavuturo - Collesano - Campofelice di Roccella - Cerda
12) France, Mont Ventoux: Bédoin - Sainte Colombe - Le
Chalet Reynard - Mont Ventoux (1912m) - Malaucène – Bédoin
13) Italy the arrival by the highway to Genova (from
Milano / Alessandria)
14) France "La Gineste" between Marseilles & Cassis, all
the way an incredible view on the sea
15) Spain, the Sierra Nevada mountain road: Granada – Pico
Veleta (3,392m) 16) Andorra: Pas de la Casa - Port d'Envalira
(2,408m), Soldeu, Encamp, and Andorra La Veilla

-- USA --

California:

1) Death Valley National Park
2) Highway 1 (California Coast)
3) Angeles Crest Highway (California Route 2)
La Canada Flintridge to Wrightwood
4) Glendora Mtn Road
5) PCH
6) Mullhuland Drive
7) Mulholland Hwy
8) Hwy 74 Temascal Canyon
9) Angeles Crest HWY 2
10) Hwy 280 north of San Jose
11) Rim Of The World Scenic Byway
12) hwy 46 (James Deans last ride)
13) Interstate 5 near Bakersfiled with no
traffic (165 mph)
14) Hwy 101 LA to SF
15) 110 freeway PAsadena to LA (also first LA freeway)
early sunday morning is best.
16) Portuguese Bend (runs through the Palos Verdes
penninsula)

OTHER USA :

1) Deals Gap (US 129, NC and TN)
2) Million Dollar Highway (US 550 between Durango
and Ouray, CO)
3) Death Valley National Park
3) Great Smokey Mountains (Highway 129), Tennessee
4) Blue Ridge Parkway
5) Glenn Highway/SR1 south of Anchorage
6) Connecticut Rt 7 from Kent to Lime Rock
7) New York Rt 22 from Rt 684 to Millerton
8) Vermont Rt 100 from Stowe to Londonderry
9) New York Rt 44 from Amenia to Millbrook
10) New York Old Montauk Highway
11) Connecticut/New York North St Greenwich into Bedford
12) Utah HWY 12 Between Rubys Inn and Loa/Torrey
13) N. Carolina dragons tail = cant believe you guys
forgot this one!! AMAZING road

-- Canada --

1) old #1 highway between Lake Louise and Banff very
tight and scenic
2) New #1 highway between Takaka Falls and Golden B.C
3) Forks of The Credit Road, hairpin turn
4) Sea to Sky Hwy between Vancouver and Whistler (a
scenic section of Highway 99 starting just north of
Horseshoe Bay with mountains on one side and ocean on
the other) undergoing major improvements at the moment
for the 2010 Winter Olympics.
5) The Icefields Parkway stretches 230km (142 miles)
between Lake Louise and Jasper - easy access to the
"most spectacular mountain landscape on Earth" - right
through the Canadian Rockies. The drive has its own
website - www.icefieldsparkway.ca

-- Africa --

1) Atlas Mountains (North - South)
2) Chapman's Peak Drive, Cape Town Southern
Peninsula, South Africa

-- Asia --

1) The Silk road
2) Kathmandu to Lahsa
3)

-- Australia --

1) Great Ocean Road, Victoria
2) Black Spur, Victoria
3) Anywhere in rural Tasmania

Rates Cut, So What!?

2008-10-29T17:02:00.001-04:00

October 29th, 2008
1300 - 1700 hrs

In less than 75 minutes, the US Federal Reserve is likely to cut
rates by 50-75 basis points, perhaps more. Its not going to make a
difference. I'm just not trading these days because I find it almost
impossible to make money consistently....in fact, I've found new and
novel ways to lose money so I've once again moved back into cash
after getting slapped around.

- This upcoming Fed rate cut - its not going to make a difference
because we are hiding the truth and not forcing it out into the open
for everyone to see. What the United States is now doing is sort of
similar to what the Bank of Japan did in the 90s. The Nikkei was
40,000 in 1990 and hence has never been above 20,000 and is
currently around 10,000. Thank the Japanese government in hiding
excessive credit in Japan during the roaring 80s. The BOJ (Bank
of Japan) has never been able to create any meaningful inflationary
measures and are still stuck in a deflationary monetary environment.

- Credit excesses have not been wrung out of the system. All we've
done by the machinations of the TAF, PDCF, TSLF, CPFF, MMIFF,
ABCPMMMFLF....er, Yes, I mean the "TAF, PDCF, TSLF, CPFF,
MMIFF, ABCPMMMFLF" is to shift the problems onto the public
balance sheets by risking taxpayer money. These stunts will sooner or
later lead to a revolt in the fixed income markets and will likely lead
to a currency devaluation. We will be a banana republic.

- If you listen to the talking heads on CNBC that call bottoms and
such realize that there is a linkage between the stock market and
the real economy and we are just beginning to see the deterioration
in the real economy. If you think we have already hit bottom (whatever
people mean by that) then you have to believe that this economy will
rebound by great leaps and bounds by June-August of next year.
Think about that happening.

- In 2000-2003, the US equity markets was accompanied only by a
recession on the corporate side. At no time was there a decline in
consumer spending. This time IT IS different and ALL consumer led
recessions had been protracted ones.

- Today and Yesterday saw some absolutely ridiculous moves in the
Foreign Exchange markets. The Yen has never had such a big move
since 1985. Perhaps, there was massive intervention? Yesterday also
saw a huge rise in the US equity markets. Perhaps, trying to mark up
books into the end of the quarter or a big common rebalance of
portfolios?

- As expected, banks have taken in money and are not lending. You
and I will pay for all this. Dearly. Welcome to the S**T SHOW!

- aLV

IMHO...the Feds can't use it!!!

2008-10-21T20:25:00.003-04:00

October 21st
1950 EST

Soon, the combined machinations of the Federal Reserve and
Treasury will see the depletion of useable Acronyms. This
morning the Fed created the MMIFF (Money Market Investor
Funding Facility) to take care of the hurtin' people in
money market land. I've moved back to 100% cash and
am determined to sit on the sidelines all day watching
the market see-saw. I'm not afraid of the swings but I'm
really afraid of how the government keeps changing the
game. Amidst all this, its rather interesting to see
how the folks on CNBC keep saying that things are improving
by citing the reduction in Libor.

Though the Fed and Treasury have injected money directly
into banks, given guarantees and loans, tax breaks, created
corporate weddings, and danced and pranced about with the
bankers the reality is that we're still stuck.

What we should have done is to follow the Swedish model
closely - we should have helped the banks that were hurting
a little, liquidated the worst, re-capitalized the ones that
were sort of strong enough to pull through. We should have
collected all the bad assets and thrown them all into a
Resolution trust type of vehicle whose sole aim would be
liquidation.

The problem we still have is one of FAITH and not of LIQUIDITY.
If you were a banker, and see that the section of society that
needs the most amount of lending is hurting why on earth
would you want to lend if you are convinced that there is a
greater chance of default? Would you not want to just hoard
the money the Treasury just gave you and thereby improve your
capital ratios??

What people will now start to focus on is the real economy. There
are a lot of people and organization that are shell shocked
realizing that leverage is indeed, a two sided sharp relentless
sword. There will be massive de-leveraging across the economic
landscape that will hurt company earnings. The consumer will
re-trench and hopefully start to save that'll likely make the
recession a real biter. House prices will probably fall another
10-15%, the employment situation may make it worse....and, the
banks won't lend until there is some evidence that the economy
has turned.

The future will be worse before it gets better. Please DO NOT
be fooled by just watching what the stock market does -- its
just a sideshow. The pure equity people don't get it and they
never will.

All this IMHO...er...In My Humble Opinion - the Feds cannot use
this one!

- aLV

Amen!

2008-10-14T21:19:00.002-04:00

October 14th, 2008
2045 hrs

After riding the market up from Friday, I'm now sitting on
100% cash as it helps me to get my trading head cleared.

American Capitalism is dead. We are Fascists now.

There's talk that some of the lawmakers were cajoled into
signing the bailout bill with talk of the potential for
martial law :

http://www.youtube.com/watch?v=p6KRXnYgu5I&feature=related
http://www.youtube.com/watch?v=55lOhYw8Lxk&feature=related

I HATE this. Its similar to the whole fear mongering routine
that got us into the Iraq mess. Another gag pulled on the
public. In the present case, half of the money approved by
the bill has basically gone from your pocket to Wall Street
thorough the purchase of perpetual preferred stock.

There has been no public disclosure of balance sheet assets
and no firing of executives under whose watch all this
transpired. The purchase of perpetual preferred stock does
not dilute any of the current equity holders or bond holders
ie., does not let the capital structure of the firm absorb
the losses. Adding insult to the injury of your deeply
dented trading or investment account is the fact that you
are paying to save players in the game that helped cause the
problem!

There will no new jobs created by virtue of this bill, there
will be no stop to the erosion of housing values, there will
be nothing to stem the foreclosure situation. Several states
here in the US will cut back on their services by blaming
poor tax receipts while also increasing taxes. You are being
gouged in broad daylight and it will get worse as everybody's
borrowing costs will increase.

What this bill will do and is doing is letting the government
use your money to help out Wall Street by backstopping inter
bank lending. And the way the money will be raised is by issuing
US government bonds and by printing dollars. This will make
the value of your assets decline.

If I were you, I'd use any rally in markets to raise cash. The
markets, albeit not in a straight line, is likely to head
lower...much lower.

RIP.
Amen!

- aLV

Its only money....

2008-10-12T17:54:00.001-04:00

Sunday, Oct 12th
1700 hrs

The more I learn about this whole financial mess, the
more revulsion I feel. I'm looking at all this with
true wonder.

- Now the government is going to buy stakes in a whole
slew of financial institutions. Great. Of course, the
banks warned that the Treasury should not squeeze out
current shareholders and also should not place restrictions
on executive pay. Fine! Mr. Paulson, of course, heeds those
please and comes up with idea that the Treasury will buy
"non voting" shares in the companies. Go figure!

- Coordinated capital injection or not, this crisis will get
worse before it gets better. Many a state in the US will
whittle down services that cannot be maintained in the face
of collapsing property values and taxes. There is now the
start of a rapid collapsing in private sector wealth and
its only a matter of time before it will be felt in the real
economy.

- Don't be fooled by a rebound (if we have one) in the equity
markets. We are in full on deflation mode. True, it may be
hard to make an apples-to-apples comparison of the two economies
but I do believe we are in "Japan mode" and things that will
transpire now will transpire...a lot quicker.

- I remember reading on some website time that here in in New
York, we've run out of room on the National Debt clock. Bush's
tax cut during a time of War is perhaps the only time in economic
history where such a thing has transpired. Now, I don't want to
make this a political forum but I've been spending some time
learning about Sarah Palin - its very very scary that we could
even consider this lady to become VP of this place. Here's someone
that looks upto Cheney and thinks Reaganomics is very cool. Our
debt is $10 Trillion, the cost to service it is $300 Billion a
year.

After all, its only money! Pop the Champagne!! Yes, Rose' only.

Econ Brew

2008-10-12T03:30:00.003-04:00

October 11th
1035 - 1815

Over the past 72 hours, I've had over 300 or so messages
asking me so many questions and expressing much concern
about the health of portfolios. While I cannot and will
not tell u what to do specifically (I'm not a Registered
Financial Advisor) about your portfolio I can point out
some things for you to think about.

Since these are complex times, I consulted with my brother
that's an economic fiend. This message echoes his thoughts
more than mine, with mine interspersed with his. In
spirit, this is all his. After all, I'm a simple minded
trader. My personal truth vacillating somewhere between
"Last Trade" and "Bid Price"....

- The crisis has gone from housing to the financial system.
The linkage between them expressed through the deflation
and the mass exodus of risk. Nobody know how long this will
take. Liquidation en-masse does not necessarily mean that the
trading volumes are high. They could also be characterized
by spreads that are wide and a sustained move downwards.
One other fingerprint is reversal of markets during the last
few minutes of trading.

- Liquidation patterns can be seen easily - the best performing
sectors on Friday were the banks, real estate and financials
in general. The worst were healthcare and utilities (supposedly
recession proof). My futures trading fiend of a brother points
out that "everything" was on sale esppecially longer dated
government bonds of all varieties. Only thing that was going
up was short dated government bills.

- Money is coming back home if you are American or Japanese.
Japan and the USA are the biggest investors in risky assets.
Asia (ex Japan) are typically holders of safer assets. Sales
of risky assets outlined above is leading to money being
repatriated back home. Basically, the Yen is equivalent to
Gold. Japan is the biggest saver in the world and is generally
the biggest creditor.

- We are witnessing the biggest deflation of asset values in
decades. The dollar is still the reserve currency and the Fed
is the MOST important player. We (courtesy Past Fed) caused
the asset bubbles of the past and we will pay for it, too. The
current deflation of assets is causing a liquidity squeeze
(shortage) in dollars. The Fed will fight the deflation in
asset prices by creating policy that is inflationary in nature.
Interest rates in the United States will go to ZERO. Yes, ZERO!
Welcome, Helicopter Ben!!!

- Every banking crisis has found a solution through monetary
and fiscal policy. The recovery won't happen quickly but will
with remarkable speed. In the USA it will be expressed through
the economy on "LIFE SUPPORT" and in "ICU" through massive
fiscal spending over the next few years. Perhaps, this will
what Obama will do with the "New Deal 2.0". We'd rather not
talk about the alternative in McCain+Palin. If that happens,
I'm giving up my passport and moving elsewhere.

- Here are some things that are important :

1) Injections of capital into banks is a necessary but not
sufficient condition for recovery. We have to prevent any runs
on banks to guarantee the savings of depositors.

2) The Weak players in the financial industry are being weeded
out either by the destruction of equity or by mergers. This
is a healthy process. As with public companies, some players
in the hedge fund complex will be the next to go.

3) The guarantee of bank balance sheets and inter bank lending
is fraught with danger. It created moral hazard.

- This correction of asset prices is destroying money on
a scale that is truly gargantuan. Equity market wealth
in the world has gone from 54 Trillion dollars to 28
Trillion dollars as of the end of day on Thursday.
Real estate losses amount to probably 10-12 Trillion
in the US and another 20 across the world.

- The pre-conditions for consolidation and recovery are
here OR are in the process of being put into place.
Previous recoveries were "V shaped", thanks to engineered
actions of Greenspan & Co. This recovery will resemble
Japan but will likely be much shorter in time. There
will be a war between demand destruction (by private
sector) and demand expansion (government led). Broad
market action will be dictated by ebbs and flows in
these two wars.

- Economic growth in the US will take a BIG BIG hit.
This is necessary to correct the imbalances. I think
US retailers still have a way to go down.

- Volatility is running at 5-7 times its normal rate
so size your bets correctly. For those of you that bet
big, realize that 10 units of risk when volatility is
at X is similar to 5 units of risk when volatility is
at 2X when the world is linear in nature. BUT the
world is not linear. With the multitude of shocks to
the system happening right now, you might have to go
down to 2 units of risk on your books. ie., if you
cannot stand the swings in your portfolio cut down risk
on rallies. The markets will always be there and you
can always trade and invest.

- What might the future hold? Will the US look like
Japan or will it look like Sweden/South Korea after their
respective crisis? Korea and Sweden were smaller economies
that benefited from devaluations and the economic pull
from cross border growth. In the case of the USA, it is
not possible. Contrary to what the IDIOTS on CNBC say we
cannot export out way out of this slowdown. Any export
growth has been in low value added commodity exports and
will disappear with plummeting commodity prices and
falling global demand. Hence we'll end up more like Japan.

- THE CRISIS is characterized by the symptoms we see all
around us. The end is marked by violent selloffs we are
now witnessing. Every risky asset is being sold.

- THE RECOVERY is characterized by policies being put in
place, regulatory reform etc., Financials and other problem
sectors outperforming the markets, imbalances being
corrected in a violent manner ie., long term personal
consumption in the US will be the first to go. A 5-8%
fall in GDP will bring US deficit down. The unhealthy US
consumption being paid for by Asian investment in US
fixed income will change. The US dollar will go down as
a re-inflation of the system is necessary. The Fed will
accomplish this by massive liquidity measures. Watch
the dollar start to fall as a sign of health.

THOSE WHO THINK THAT THE DOLLAR IS GOING UP BECAUSE WE
ARE SO MUCH BETTER SHAPE THAN THE REST OFF THE WORLD
ARE DEAD WRONG. WE HAVE CROSSED THAT STAGE. THIS IS A
DEFLATIONARY DOLLAR RALLY. THE US IS THE LIQUIDITY
PROVIDER TO THE REST OF THE WORLD. THE FED WILL RESUME
THAT ROLE.

- Changes in US policy will cause seismic shifts off
shore. We are already witness to this (Europe). As
there is demand adjustment in the US, Asia will have
to play ball, too. China will chart a new course in its
development as the US dollar will depreciate alongwith
lack of demand in goods. Europe will cut rates and the
Euro will come under pressure as fiscal expansion is
less flexible in Europe than the US. Likely major
interest rates cut in UK and less in Europe.

- Asia is the big unknown. What will China do when the
biggest consumer of their goods is going downhill and
FAST?

- VO and aLV

Endgame??

2008-10-10T01:03:00.001-04:00

0015hrs
Oct 10, 2008

I've gotten a whole bunch of emails about what I think
of all this "stuff" that is transpiring, and how I'm
trading it. In no particular order, here are some
observations, starting with what I think is important
to watch for over the next 24-72 hours.

- My own trading is based on a personal belief and ongoing
practice that the market is a probabilistic voting machine
ie., there are not bad markets and there are no good
markets. This attitude forces me not to put labels such
as "scary" or "good" on the outcome of financial markets.
It allows me to be open to all possibilities. I've lost
money on four of the last five days as I did not control
risk on a few trades. So, now I move onto the new trades
that will beckon tomorrow. As long as I don't have hope,
show fear, or feel happy or sad about various outcomes in
trading....my trading will be without emotion whether I
make or lose money.

- Tomorrow (Fri), the true effect of the demise of Lehman
will be felt. Since Lehman's bonds are trading around 10-15%
on recovery, the counterparties to the trade may have to
pay up about 70-80 cents on the dollar. What is important
is how many of these counterparty contracts net out. If
things hold, then we'll likely be on our way to some sort
of stability.

- Its getting harder for the US treasury to sell its bonds
ie., the government has to pay the buyers more of an interest
rate to buy our bonds. If this trend continues it's VERY
bad for the housing market. And Yes, things can and will
likely get worse.

- The equity markets are not responding to these stabilization
plans because the plans are plain dumb. For instance, the
repealment of "mark to market" requirements is absolutely
stupid. I can wear a T-shirt, build my own model to price it,
come up with $5000 bucks. Will you buy it? Assets need to be
priced out in the open. We have to let the idiots that took
on undue risk, fail. Plain and simple. There has to be blood
letting.

- The idiots in Washington and the Presidential incumbents
keep talking of "Wall Street Greed". That's complete BS! It
takes two people to make a baby and this whole messy financial
orgy has many different players - Joe Shmoe that could not
really buy a house and lied about creditworthiness, mortgage
company that accomodated that lie by creating "liar loans",
the creditors wanting yield, the homebuilder wanting to sell
the house, and the Wall Street people that packaged the debt in
clever ways and the "Regulators" that did not create regulation
to stop the practice. We are all to blame. Realize that.

- The banning of the "short sale" rule, time and analysis will
show, was the dumbest things the idiots in Washington perpetrated
on US financial markets. Why? Shorts provide liquidity (when
buying back their shorts) to markets during severe downturns.
You remove the ability to short and you remove that liquidity.
I'm sure this dumb ruling exacerbated the sell off.

- If the Fed and Treasury keep doling out a different pill
every week rather than letting the markets find their own price,
this problem will be protracted. Imagine a doctor giving you a
different pill every week for the same symptom.

- aLV

Paying other people's debts...

2008-04-04T22:24:00.003-04:00

Friday, April 4th
2158 hrs

I thought I should read up a lot+ruminate on what
is transpiring before my departure to Botswana :

The National Association of Home Builders cut
off all political funding (around $20m, 65% to
Republicans and the rest to Dems) in February
after a tax refund clause failed to make it into
an economic stimulus package passed back in
January. Just yesterday, the US Senate agreed to
a bill that lets the same homebuilders to "carry
back" recent losses to earlier years of profit!!
Now, the Congeressional Budget Office (CBO) figures
that the taxpayer will end up paying the homebuilders
approximately $6b, a very large percentage of which
will end up in the coffers of the very same
homebuilders that are partially responsible (along
with end American greed!) for the mess that we
are in right now. Some scoundrels ("All politicians
are scoundrels", GB Shaw)up in Washington tout
this as a measure to avoid distressed prices and
prevent layoffs.

Bull Shit!

The last credit card bill that I paid late was
when I was back in school (1993-94). I, as a
taxpayer am being penalized for paying my cards
on time, paying up my mortgages on time and in
general, for being circumspect about my fiscal
responsibilities. I am being forced to pay to
rescue companies and individuals that did not
have a sense of fiscal responsibility and just
pandered to their own whims and greed.

This country is going to the dogs -- as long
as idiot politicians who are in the back pockets
of corporate america are around and as long as
special interest groups are around, this country
will never learn what it means to be fiscally
responsible. After all, fiscal responsibility
has to start from a grass roots level and that
means you, I and the rest of the people that
inhabit this country. This malaise thrives up
every orifice - we are a huge debtor nation.

Let the homebuilders and mindless people that
accumulated debt fail. That's the only way true
capitalism will work because that is being
responsible for the actions we take.

I've never been able to trade T-bond futures
profitably. I would be a lot richer if I could
just get my losses on those things paid back
to my by the US government. Now, why would you
not want to pay for that one?

I detest/hate/resent/loathe what is happening.
We are all thieves as we are stealing from
future generations by not letting the people
that need to take pain, take it.

Very soon you will read that the National
Association of Homebuilders has re-instated
its political contributions, or even doubled it.
Here we call them "lobby groups" but we point
to other countries and call it "bribery".

- aLV

PS: FYI, the best performing group amongst stocks
has been the homebuilders. The best performing
company this year amongst the SP500 has been
Pulte Homes.

RANT - at myself!

2008-04-01T19:58:00.002-04:00

April 1st, 2008
2000 hrs

I'm really really annoyed at my lack of discipline. I had wound up
my entire book yesterday in preparation for my travel to Botswana
early next week (headed there on a Safari until April 22nd) and
was pre-occupied with other stuff and should have concentrated on
what I had to do.

Instead, I woke up, got the customary cereal and coffe to my trade
desk at home....then decide to trade the SPs without being really
prepared for it and without a plan. Aaaaarrgh!

I got paid back for lack of preparation and for follow through
discipline in spades - I got my face ripped!

I think I might have to enroll in some sort of 12 Step program.
I'm truly addicted to trading the SP futures.

Forex Positioning

2008-03-30T21:19:00.002-04:00

March 30th, 2008
2050 hrs

Okie. I was asked what I might trade top-down
on currencies. Here is what I'm thinking
specifically, along with exposures...and my
own form of voodoo economics (hahahaha) :

Long

EUR/USD Now at 1.57797 +1 EUR, -1 USD
EUR/GBP Now at 0.78978 +1 EUR, -1 GBP
USD/JPY Now at 99.781 +1 USD, -1 JPY
AUD/USD Now at 0.91462 +1 AUD, -1 USD
AUD/JPY Now at 91.438 +1 AUD, -1 JPY

Short

USD/CHF Now at 0.99690 -1 USD, +2 CHF
USD/CAD Now at 1.02327 -2 USD, +1 CAD

GBP/CHF Now at 1.98803 -2 GBP, +1 CHF
GBP/USD Now at 1.99408 -2 GBP, +1 USD

Yes, I think it is absolutely nuts that
the GBP is trading where it is. The problems
on these shores will hit the pound more than
it will hit the rest of the Eurozone....it's
a matter of time.

- aLV

Blatant Insouciance

2008-03-29T19:42:00.001-04:00

March 29th, 2008
1920 hrs

The meme of blatant insouciance is being kept alive
by CNBC and its many commentators, the predominant
hackneyed query being, "Do you think we have hit
bottom?". Almost like a trader hoping for his losing
XYZ stock that he/she wants to hold on to by asking
someone else what they think of it. I don't quite
understand how the knowledge that we're in a
recession or not, hit bottom or not, helps one to
make money or trade better. Deeply perplexed.

Now, one more random fact spewed by many people, and
used as a buttress to an answer in the affirmative
to the question above is the fact that sentiment
surveys are mostly negative. Ever wonder if such
a thing as a sentiment survey might pretty much be
useless in the face of a deluge of news that serves
to increase the cardinality of the set of bad news
if you are a bull?

Wall Street analysts are smart as they know the
general landscape of a particular industry well and
there is much information that can be garnered
from them. It blows my mind that stocks like Lehman
and Goldman rally, taking the whole market with it
in the face of earnings that was more than 50%
below last year. And the smart people attribute
it post action : all because we were over sold
and numbers were better than forecast. Now since when
did we just change course and give analysts' number
any credence? I'm beginning to really believe a quote
about the markets : "There is nothing intellectual
about the market. It's as intellectual as a boxing
match - you just jab and run."

And, of course, the main act on the glittering, but
fickle financial proscenium is the US Federal
Reserve. In short order, they will own the biggdest
SIV on the planet. It'll be a repository of choice
for all the bad paper that is backed by assets that
continue to decline in value. Sure, it has value!
Pigs also fly.

Earlier in the week, I was sent two papers - one by
T2 Partners about the housing mess and another by
the Economists at Goldman Sachs that talked about the
amount of leveraged losses we might see. Rest
assured, they were both fascinating reads as they
seemed to be bounded in gloomy reality (a novel
concept these days).

How things might play out, I don't know and I don't
really care. You can't lose money buying all kinds
of financial stocks - there won't be a liquidity-driven
meltdown as its now being backstopped by the Federal
Reserve. Hell, the only bad thing that might transpire
here is that if you ever take a jaunt to Europe again
you'll pay more for Pastis. Between gulps you might
realize that the Euro is way past 1.60 and is heading
higher. Of course you can take comfort in statements
made by the current president that our economy has
weakened slightly a'la "Mission Accomplished" and
order yourself another Pastis! The Fed will just
keep printing money so you can drink more to remain
in a state of inebriety...by paying more.

It's a perfect world!

Tch...tch..tch.

I'm headed off on a Safari to Botswana next week and
will miss all the action. Sigh!

Policy Alternatives at ZERO bound

2008-03-19T18:11:00.001-04:00

If there's one piece of my diary (RANT) you might want to read till the end and think
about, PLEASE let it be this one :

March 18, 2008
2245 hrs

Acknowledging that I've no real economic training and exhibiting ignorance and
wonder, "No sarcasm here, you've got to hand it to Ben Bernanke. I'm floored by
all the novel things his Fed is trying to do to revive things. Uncle Ben's Fed is
truly creative in the way it uses tools.", I said. An economist friend retorted,
"Anon! You've to read this paper by Ben Bernanke - 'Monetary Policy Alternatives at the Zero Bound : An Empirical Investigation'". Wow! To learn more, I also found another paper by Gordon Sellon (also enclosed) and spent quite a bit of time reading both of them. Nice way to spend an afternoon while glancing at the tape....

The papers are a very very good read and gives you a nice blueprint of the various
tools and means the Federal Reserve could take in dealing with economic
issues when typical monetary policy measures don't work.

Okie! In typical situations banks can deposit collateral with certain qualities and
walk out with dollars. Now, banks can deposit crappy paper (getting worth less by
the day) and then walk out with dollars (fast dwindling) that are worth less by the day!

Under usual conditions, the FED only bought safe US government bonds and lent
money to banks. Now, they've created a Term Securities Auction Facility (TSAF)
which takes in all manner of crappy paper. With the backstopping of Bear
Stearns via JP Morgan, the US Federal Reserve has essentially averted what
could have potentially been a cluster f**k in global financial markets. They've
saved the financial system by becoming the pawn shop of last resort. The Fed has
essentially risked half (400 Billion) of its balance sheet on using RMBS
(Residential Mortgage Back Securities) as collateral ie., its a government agency
that now owns paper (bonds) backed by home prices for an initial rolling period of
28 days...and now onto 90 day rolling periods!!

This move is unprecedented. No central bank in economic history has ever
exposed itself to the vagaries of instruments backed by assets - in our case,
homes that are dwindling in value. The Fed is essentially bailing out banks and
in the end if the idiots in Washington have their way (they always do) its going
to be you and I that are going to pay for all this.

I trade for a living and I absolutely hate this move of convenience but at the
same time I do realize that this has to be done, else the system as we know it
might not exist in the years to come. Regardless, I don't think the machinations
here by the Fed alone will work. Washington will get involved, conveniently
forgetting that its their own policy of taxation combined with capital market
structure (another conversation!) that was the seed that created this mess ie.,
think of George Bush's rate cut during a time of war - that was definitely a new
one for the economic history books!!

"Anarchy" party - consistent in that we absolutely hate absolutely everything that is
political! Yes, self referential.

DIE, Laissez-faire! DIE!

2008-03-19T18:10:00.000-04:00

Amalgamating conversations with several people and thinking out loud :

The next time you come into JFK, you'll see a sign that reads, "Welcome to
the United Socialist States of America".

You're a wall street bank in trouble. You trade fixed income - as a dealer you are
long leverage through MBS (mortgage backed securities) and other paper,
and short treasuries. You're getting killed on both (on the MBS side, you are stuck
with falling asset prices and defaults on debt, with hedging through the Markit
indices costing you more. On your short treasury position, you are getting killed
because there is a flight to quality.

Your friendly national pawn broker of choice (ie., the FED) steps in with what they
call a TSLF (Term Securities Lending Facility) - using this 28 day window, you're
able to give the national pawn shop your bad paper and they give you back US
treasuries. This is BIG - in one swell swoop the Fed has eased your pain by trying
to prop the decline in the MBS market by buying your bad debt and also helps you
out by giving you treasuries - this helps you shore your balance sheet as well as
mitigate losses from your positions gone awry.

Now, this action is NOT, I repeat, IS NOT turning on the money spigot. Nothing
has changed - its just an exchange of bad securities for good. The Fed will
essentially keep rolling over the money lent after each 28 day period and/or even
increase capital in this facility until there is some stabilization of the mortgage
markets.

Welcome to the United Socialist America! We can never let our companies fail.
Our regulations and tax codes for home-ownership and the sold dream of
houses with white picket fences are the cause. And now with the government
meddling and bailing out banks with leverage will be the seed that causes a
bigger bubble in the future. A clean and clear-cut moral hazard in play.

These actions are band-aid moments! Nothing has changed ie., consumers
seem tapped out, defaults are growing, leverage is still on the higher side, job
markets are rough and the dollar continues to be a disappearing asset.

Now, next week we'll likely see another 75 bps cut in FED funds rate, a change in
discount rate, and probably an increase in the size of the borrowing window. A
series of Brokers report lousy numbers next week. US markets resume their sell
off. Ok, the dollar first erodes. The threat of deflation becomes foremost, commodities start to roll over. Europe plays ball and reduces rates. There is a
violent counter trend rally in the US dollar, the US markets are partially
revived...all is happy again for the optimists....for a little while.

You can get away with financial murder! Nothing bad will happen - we'll always be
bailed out. DIE, Laissez-faire! DIE!

- aLV

Fed PawnShop 800-FED-SELL

2008-03-19T18:08:00.000-04:00

In an unprecedented move, cross-border central banks announced a new
term auction window for US consumers. Specifically, the US Federal Reserve
announced the opening of a 30 and 45 day auction window for all crappy stuff
owned by the end US consumer.

"This move is aimed at the real and pervasive problem in this country - the
consumer that is rich with thingmajigs they don't really need. You can pretty much
take your old stinking socks, underclothes, and even gadgets you bought from
SharperImage that you've never really used and take it to the Federal Reserve
Pawn Window. They've basically told you that they intend to be the pawn shop of
choice. You walk in with crap and they give you US dollars in return.", said Al Vinjamur, independent trader.

Noted technical analyst who did not want to be named also said that this was
a triple-top for useless things owned by the consumer. Several experts noted
on CNBC that the economy is likely ti grow at a lower pace for the next two
quarters, after which they see a sudden and vicious upturn.

Consumers who want to get rid of things they don't need can call the 24
hour line setup by the Federal Reserve, 1800-FED-SELL.

Recession - Deflation - Happy Nation?

2008-02-10T00:53:00.000-05:00

Sunday, Feb 10th
0002 hrs

I don't have a background in Economics but I've to keep record of these
50000 feet thoughts/musings as I find that it helps me in my trading -
does not let me get stuck in the well that is full of short term ebbs
and flows ie., financial markets during the day.

I spent a few hours doing some re-reading up on what happened in Japan
in the 1990s and also devovored some other literature on money supply
and the like. Here is some information that I will first regurgitate
for a background and then come up with some kind of logical conclusion
as to how things might play out. What I will do if things turn out one
way or the other, I won't say in terms of trading advice because I am
not a financial advisor and don't ever intend to be one. I see ticks,
I trade, I trader!

An asset price bubble burst in Japan in the early 90s which caused a
huge dent in their banking system. Japanese banks financed the asset
price bubble (real estate). Their debtors could not pay up as collateral
values went south. Properties were turned back over with values less
than the amount of the loans. With decline in the capital ratios of
the banks there was a seizing up of credit. The Bank of Japan cut rates
drastically.

A toxic brew of an asset price bubble, high levels of consumer debt,
over leverage and their interaction with the help of securitization along
the banking chain is being witnessed as I write this. The Fed has cut rates,
Congress will pass a sort of Neo-Keynesian tax rebate bill with the hope
that these stimulative effects will be passed on to the private economy.
However, in the past couple of days there has been talk of tighter lending
and even increases in rates of credit cards and the like. With the looming
possibility of a downgrade of mortgage insurers, banks will once again have
stresses on their balance sheets in terms of capital ratios etc., A further
drop in real estate and the spreading of the decline to other classes of
real estate (sub-prime to credit cards to commercial etc.,) the banking system
will sustain unprecedented losses like what happened in Japan. The Fed cutting
rates would have little effect on economic activity. Crippled banking and their
plumbing mechanisms does bring on deflation.

Here are my scenarios. From worst to best :

Scenario 1 : Housing recession turns to a depression. Insurer rescue measures
fail. SP/Moody cuts ratings of bonds that have been insured and in the process
banks get badly hurt, with their capital ratios under pressure. Fed steepens
the yield curve even further and cuts rates. Dollar falls. A few key Dollar
pegs are abandoned as some foreign states have to fight run-away inflation. Our
lenders decide to price debt and commodities in either a basket of currencies
or some other reserve because they don't want their purchasing power eroded.
There is a huge and massive run on the US Dollar. The Fed consequently has to
jack up rates to protect it, and because there is huge leverage in the US economy,
several banks fail. We fall into a sort of comatose state for several years just
like what happened in Japan. Outright Deflation.

Scenario 2 : Housing recession remains a housing recession. Insurers are rescued
partially on their Municipal bond portion (currently being talked about) and the
counter-parties take on blended tranches of risk and share pain. Fed cuts rates to
steepen yield curve to help out banks. Dollar falls. There is a general slow-down in the US economy and international commodity prices decline as growth in India and
China decline, too. We muddle through it all with several quarters of negative
growth.

Scenario 3 : Bond insurers are rescued by a combination of banks and an
international consortium of financiers, sovereign wealth funds etc., Housing
undergoes an orderly correction and damage is largely contained. A flush of money
flows into US financial assets (depressed prices relative to other countries) - similar to what Japan did here a long long time ago. US Dollar pretty much bottoms
out and changes its longer term direction to UP.

Ummmmm. Scenario 3 is a fairy tale. I think 2 or 1 is more likely.

- aLV

Repricing Assets in Baskets

2008-02-09T13:32:00.000-05:00

I got several response to the idea others (and I) bandied about the potential for
commodities etc., to be re-priced/denominated in an asset other than the dollar
over the last several weeks. Strangely enough, on Feb 8th, the OPEC Secretary
General was quoted in the Middle-East Economic Digest, "maybe we can price
in Euros".

That's the first time someone with power has even hinted of it being a possibility.
Granted there are niceties, political issues, relationships etc., but the simplistic
argument (I am a simpleton) I make and believe in is based on economics :

Say I'm a ruler of an oil rich state and have my currency pegged to the dollar,
which is a declining asset because the country does not have its fiscal ducks
in a row. If I'm lending to the US, and selling Oil denominated in dollars,
I'm basically eroding my own purchasing power, especially at a time when I have
inflationary pressures in my own backyard!

- How can I keep the peg, cut rates AND deal with inflationary pressures that
are several times the rates I have to import by keeping the peg?

- How can I afford to keep the peg intact AND price my natural resources in
an asset that is eroding my purchasing power over time?

Being politically and economically savvy, I would perhaps choose to move to a
pricing scheme that is a basket of international currencies. Strangely enough, me
doing this, in a way reduces my currency risk, no? And over time, I would choose
to re-weight the currencies in the basket I've chosen to re-price my black gold.

Funny thing is that this whole idea of basket weighting of commodities/currencies
and debt brings with it a more tight coupling of economies. People that have
bandied about the whole "decoupling" theory are talking through their hats, and
they probably don't even wear one! I don't believe in the "de-coupling"
argument - it's a fairy tale from my current vantage point.

Lots of things would change if such a thing were to happen - we can only speculate.
Perhaps, the whole idea and mechanics of the typical carry trade would change. For
certain, the ramifications if there is such a movement is HUGE for this (USA) country,
especially given our current state of affairs.

Now....back to my charts.

Baltic Dry Index and Such

2008-02-03T13:49:00.000-05:00

Sunday, Feb 3rd, 2008
1400 hrs

I truly know that I don't really know but it does help in trading if I'm at least
near the complex neighborhood of what is transpiring. The markets will speak the
rest and hopefully complete thoughts with grace. I could not care less if every
one of my thoughts derived by an amalgam-analysis of the ideas/opinion of several traders, economists, analysts etc.,) and further research are wrong. As traders,
let's realize that intellectualism and prognostication lies in the way of reading
what the markets are telling us. Let our decisions be data driven. All you should
care about is making money. If you're wrong, get out gracefully. That said, here's
what I'm thinking now :

The most the Fed can do is prevent a hard landing. Like it or not, we're going to
have to muddle through it. We will see the Fed fund rates around 2% in the next six
months. Mortgage equity withdrawals (borrowing against the appraisal of your home) that kept alive consumer spending in the recent past will no longer work as home values have plummetted. The debt crisis will spread out to other kinds of debt instruments. The US dollar will continue to decline. The counter trend rallies that
have taken place in markets of the past (without exception) have always been led by
the very groups that lead broad markets to down territory ie., financials and retail
in our case now. Bear markets have always had vicious rallies - we are in the midst
of one now. So how do we play it?

A hedge fund friend of mine turned me on to a single trade idea in the shipping
business. I then spent several hours yesterday talking to a few friends, including
a Shipping analyst and then several more hours of research to construct a potential
trade for myself. Before I get into the trade, let's start with the Baltic Dry Index
(6134, +1.35%). Wikipedia says this of the index :

The Baltic dry index is an index covering dry bulk shipping rates. It aims to
provide assessment of the price of moving the major raw materials by sea. Taking
in 40 shipping routes measured on a timecharter and voyage basis, the index covers
supramax, panamax and capesize dry bulk carriers carrying a range of commodities
including coal, iron ore and grain. These indices are based on professional
assessments made by a panel of international shipbroking companies.

In other words, its a good indicator of global trade. Right now it looks pretty beat
up with a nice counter trend rally in the past two weeks. Share prices are not in
lockstep with the index. Chinese Steel companies have stopped buying, waiting for
negotiations and companies in Brazil are now going back to production. Weather in
China recently has also played a part. Its not easy to short the index as a bank has
to write you a swap. The index itself is made of companies that quote prices. So
doing some rough snooping on the index itself I came up with a BUY list and a SHORT
list (as a hedge) for myself :

BUY : SSW, DAC, PRGN, OCNF, DSX, HRZ
SHORT : DRYS, TBSI, EXM, GNK

Common characteristics for the names on the long side : Yields in range of 8-12%,
12x Price to Net Asset Value, Predictable revenues two years out. Some of these will
act more like a bond than a stock. The names on the short side is a sort of weak
proxy for shorting the Baltic Dry Index. Will my trade work? I don't know for
certain. Nobody does! I'll probably find out if I do put on the trade...

In 1992, my home was the Rochester Institute of Technology, specifically the
Wallace Memorial Library - I spent the better portion of a whole year
concomitantly devovoring McConnell Economics, very old Wall Street Journals,
abstruse economic works by Karl Popper, Ludwig von Mises, John Kenneth Galbraith
and the ever persistent John Maynard Keynes. Alongwith notes from various economic
texts, charts of financial markets from different genres were marked up with what
you'd call chicken scratches.

When Rochester was bid adieu, I left my book (with an azure blue cover) on the third
floor of the library. Perhaps, some student picked it up after I left and looked at
it in bewilderment - my odd idea of an inspired prank. What I write in the next
paragraph is the result of much re-jogging of memory as well as research on
Wikipedia and other sources to make sure I have my memory correct.

In his foreword to the book "Extraordinary Popular Delusions and the Madness of
Crowds" by Charles Mackay, Andrew Tobias makes note, in eloquent verse, some of
the following facts - the stock market crash began in 1929 with speculation driving
the Dow Jones to the high 300s on the wings of greed. Three years later the
epitome of fear was represented by the level of the Dow Jones at 41. In the 60s,
stock prices once again began to rally with people brandishing what astute
management could make happen. Some stocks in the era went from the mid single
digits to over $135 a share in just two years! And then, very soon sold for
lesser than where it started...

Now wish me luck : This week, I hope I fail on all grounds in the jury selection
process. I'm going to put on the Alfred E. Neumann attitude : "What, me think!?"

- aLV

PS: The strict quantitative way of figuring out individual ratios involves finding
out what stock price movements constitute movements in the index. There are
several well known public domain methods of doing this. Read up on Eigenvalues
and Eigenvectors. You can write simple native Mathematica commands to do this.

Pepto?

2008-01-31T00:58:00.000-05:00

Wed, Jan 30th, 2007
2335 hrs

A well known past linear response to rate cuts was a rise in markets, led by
groups like the retails, financials etc. Fed cuts. Money is cheaper. Markets
rally. So, there! Don't fight the Fed. Old market wisdom. Easy!

No doubt money is cheaper now than it was this morning but as markets interlink
more intricately with each other through effects brought on by various financial
instruments, behavior to responses becomes very non linear, and sometimes
magnified ie., The distance between 1 and 2 may not equal 1 in all complex
systems, one such being the current global financial system. I'm sure the
"cognoscenti" that inhabit blogspace as well as financial media have pointed
out that the market declined today because of the ratings cut of a monoline
insurer. I'm confident that several years down the road, when we look back
at the events that have just transpired, a simple explanation like the one
above, or most others we can come up with at the current time will sound
positively ludicrous.

Capital can metamorphize into many forms - a collection of fine wines, watches,
cars, a glut of housing, consumer durables etc., The main point here is that when
you have a capital induced glut (regardless of its form) in the first place it
brings with it problems that may not necessarily be solved by economic impetus
that is intended to act in a manner to provide a buttress for further capital
spending - the malaise becomes interest rate insensitive. We've come down 1.25
percent within an eight day period and the yield curve has gotten a lot steeper
in a big hurry, helping banks in the process. The reduction in rates helps but
there are limits to how much the Fed can ease rates - there are concerns of
inflation, currency stability (dollar collapsed after the reduction) and the
iggest risk of all being that the foreign investor in hope of a return for
their money pulls the plug on external financing of the ongoing rise of the
US current account deficit. This Fed easing, at most, will put a sort of
temporary floor on the depth of this recession.

I speculate that we are now in the throes of the first real global crisis
created by the modern day creative financial securitization of assets. It is
likely that financial losses will spread from the sub-prime area, to prime
and onto all kinds of real estate, and then onto credit cards, leveraged
loans, corporate debt and the sort.

The poison pill here is that the pricing of exotic instruments created by
brilliant quants will have to be priced to common market. Remember the CMO
market in 1994? Here we have instruments of a sort, grouped into another of
a sort, and another of a sort, with each of the tranches having exotic
non-common market pricing systems. While the liquidity injection of the Fed
will help, the prevailing liquidity profiles of financial institutions will
play a pivotal role in the amount of counter party risk that is assumed.
Nobody really knows the sizes of the losses or where the losses might lie.

Economic slowdown will be more severe than is expected with the principal
trading partners of the US taking it on the chin....you get the drift!?

I am not formally trained in economic theory but what I did do when I was back
in school was spend a year with old microfiched Wall Street Journals going
back to the early 1900s and mapping out how things integrated into a whole. I
also read a whole lot of different economic texts. I don't understand what is
transpiring but I am very intrigued by what is. My safe way to navigate
through this is to trade in a manner consistent with past bear markets - sharp
rallies are to be sold and sharp sell offs are to be bought.

Where? Now, that's a different story. ;-)

You wanna Pepto?

- aLV

PS : All you had to do today was to listen to what Bill Gross (aka Bond GOD)
had to say after the rate cut. Closely!

My new career - Politics

2008-01-08T19:51:00.000-05:00

I have a 10-pointed systematic, integrated plan of action that
will get me into the Oval office and get some real work done. If you
love your country, believe this 10-point plan. If you want to be of
my vision, keep this 10-point close to your heart :

10. This war is upto no good. It's costing us a crap load of bucks.
God Bless our soldiers. Gotta bring 'em back home. Home is where the
good live.

09. Bucks we save on the war should be used to develop domestic
programs such as "Say No to Candy and Obesity", education, grass-roots
infrastructure development and enhancement (includes all forms of
beautification!).

09. Eradicate the whole concept of bi-partisan government. Work with
the opposition to get things finally done. When things don't get done,
blame the opposition for being sloth and not clearing the bill.

08. Spirituality is important. Respect for all faiths is important.
I am spiritual and practice faith in my own personal way. Just ask
any of my Mistresses!

07. Corporate involvement in government has to be eradicated. In fact,
we need to just corporatize the new government!

06. Change the healthcare system so that everyone has cheap access
to it. Your doctor has to decide what you need NOT the insurance company!
I will do this by setting up a new government funded corporate enclave
that'll blur the lines between doctors and insurance companies.

05. The government is bloated and my smaller government will work more
efficiently. We will work for four days a week and have a three day
weekend binge!

04. When elected, my government will deliver opportunities so that
everyone again believes in our country. I am for kick ass (oops, sorry!)
economic growth which is a very novel idea we need to believe in!

03. The belief that spreads to a nation has to be strong and inculcated
at an early age. Good education is not be misunderestimated - its the
good educated thing to do!

02. We are a sovereign country sharing a common home that is in great
peril. We need to push forward plans locally that will have a positive
effect globally. Government will only work four days a week - this will
save a lot of power and promote family values since we'll be home longer.

01. We have to change government in Washington. My government is about
positive change. I can provide the change the american people need and
it'll be a lot more predictable than environmental change.

Jonathan Haidt + Society

2007-10-08T13:16:00.000-04:00

I was sitting at home and for pure kicks, was thinking about how
the behavioral fabric of society plays out and created my own
general pseudo model about the way different strata/groups of
society interact with each other basing it with a cause-effect
focus. I also thought about how that percolates up into the way
bigger groups interact. Upon more research I came across the work
of sociologist, Jonathan Haidt who's 5 pointed model explains all
in a succinct and logical manner :

Purity and Sanctity of purpose binds people - this is how
Clubs/Organizations/Companies/Countries are born. Core group (the
leadership to be) defines purpose.

Respect for Authority - Holds above groups together. Implicit in
this is respect for ranks that are above, in exchange for protection
for those below.

No Physical Harm - Respect is earned by protecting those that are
vulnerable and below you.

Do Unto Others - This is a moral foundation endorsed by religions.
It serves as the mortar that binds whilst keeping sight of the
sanctity of purpose.

Loyalty to Group - The groups formed are vigilant to punish
slackers/traitors etc., that in some shape or form undermine the
cohesiveness of the group. Keeps the groups knit.

The stuff above is a greatly simplified version of Haidt's model.
THINK hard about the model - it does a great job at explaining
a lot about what goes on today around us. The points put forward
is applicable in so many ways to every kind of dynamic you see
that plays out in society.

My model!? Too many squiggly lines in the picture I drew. Not
worth talking about, especially after I read and researched Haidt.
Perhaps, spending 5 hours are so and learning something new is
"geeky" but methinks its fun....

Hunting

2007-10-05T00:58:00.000-04:00

My good friend and renowned bear guide, Brad Josephs got a chance to guide
a TV crew to record the annual bear hunt in Katmai, Alaska. He is a nature
lover and was very disturbed at what he saw. I was sad and angry at the same
time.

What right do we have to hunt anything for "fun"? What right do we have to
hunt something so that its head could adorn the miserable walls in our homes?
The hunters here are cowards - you can watch one shmuck give the other a
"high five" because he shot the bear.

I have a great idea - how about if we just gathered all these gun brandishing,
cowardly imbeciles and put them in a big pen and they just got their kicks
shooting each other till Kingdom come? I would buy front row seats to the
spectacle. It might be the new hit TV show, "The Ultimate Gunning Championship".

Enclosed is a link to Brad's recording of the day's events. There are some
parts in this movie link that are graphic but it does make you think whether
we have domain over animals that are going about their own way.

http://stream.qtv.apple.com/qtv/SeeMoreDZ/katmai_bear_hunt_videos_ref.mov

This thing makes me seethe....

Medium Format Shutter Speeds

2007-10-04T10:14:00.001-04:00

There is no "right" way to shoot but here's my general 0.2c worth on how
I setup shutter speeds while shooting with high resolution medium format
cameras :

For 35mm shooting, the generally recommended shutter speeds for hand held
shooting is 1/Focal Length of the lens being used at the base ISO of 100. In other words, if you use, say a 200mm lens, you should be shooting at 1/200 sec if you are at ISO 100.

Now, I also use a Hasselblad H3d2 with a Hasselblad HD39-2 back (a 39 Megapixel digital back) which boasts of the highest resolution in the world
at the current time. With this system, shake is very very evident if you use
the rule for 35mm hand held shooting. I tend to use the rule 1/(2xFocal Length). That is, if I'm shooting with a 300mm lens at ISO 100, I would use a minimum shutter speed of 1/600th sec to guarantee sharp pictures.

Now, there are pros out there (like my buddy, Andy Biggs) who use 500mm
lenses at much slower shutter speeds using 35mm formats and get away with
it. Remember, that people like Andy shoot on beanbags and are experienced enough with these long lenses. Their neural nets are developed enough that they can set up shutter speeds depending on multiple factors. I prefer the
simple and sure-fire route since I don't shoot as much as some people like
Andy with these long lenses.

Schneider Apo Digitar 5.6/24mm XL

2007-10-04T10:07:00.000-04:00

I recently acquired a new Schneider Apo-Digitar 5.6/24mm XL lens for use
with the Alpa and the Hasselblad 39 megapixel digi back. I am truly blown
away by the quality of this lens. In short order, I will post a few pictures
of the Notre Dame Basilica in Old Montreal that I took using the above
mentioned setup. I am convinced that this mating of Alpa body, Hasselblad
back, and Schneider lens is the absolute nirvana for medium format photography. I am a BIG fan and am now part of a chromatic orgy with the
above mentioned players!

Long Lens Workflow/Technique

2007-08-31T23:22:00.000-04:00

Since so many have asked, I thought I should re-gurgitate
my technique/workflow/decision process while using long
camera lenses ie., telephoto/fixed focal length lenses
that are greater than 300mm or so:

Since I shoot manually all the time, my most important
decision is the minimal shutter speed that'll get me a
tack sharp picture. For long lenses, I use the formula
1/(1.5 x Focal Length of Lens used) for a shutter speed.
I then dial in an Exposure, and then go to the minimal ISO
possible that will give me proper exposure. If I use a
teleconvertor to extend the reach of the lens, I factor
the effective focal length and re-apply the formula.

I also use the focus buttons on the lens (if provided) to
focus instead of the on-camera focus button as it forces me
to reach my arm out to focus. This also helps stabilize the
lens as lens hoods often act as sails in the wind.

While using Shutter Priority (Time Value Priority), I set up
the shutter speed as described above and then pick the ISO
accordingly. The camera picks the F-stop in this case. I
usually never shoot Time Value Priority with long lenses
as I'm looking to shoot between F8-F11 with long lenses.

Theory of Everything

2007-08-28T23:40:00.001-04:00

The following is from a book called, "The Best of Speaking Tree",
a column from the Times of India. The following article is one
of the best distillates I've ever read that clearly puts forth
the idea of a Grand Unified Theory, God, Self in a rather clever,
fun way. If you must know, know what is below. Forget the rest.
This is unequivocally endorsed.

--------
What is said here can be said in other words and in more words, but all that
is to be said will be what is said here.

01. Elements make all.
02. Particles make elements.
03. Energy makes particles.
04. The content of the world is matter-energy.
05. Electro-magnetism makes energy.
06. Matter-Energy happens in the Time-Space continuum.
07. Electro-Magnetism and Gravitation make the three dimensions that make space.
08. Electro-Magnetism constitutes the Cosmic "Length" and "Breadth", and gravitation the cosmic "height" : Space is the lay of Electro-Magneto-Gravitation".
09. The interplay of the three metric dimensions of Space, Electro-Magnetism and Gravitation, makes matter-energy.
10. The order of events makes time, the fourth dimension.
11. Consciousness and Space are not different from each other, just as Matter-Energy and Space-Time are not different from each other. Consciousness and Space are respectively the interior and exterior of the same substance.
12. Consciousness-Space, by the interaction of its metric properties creates the Universe.
13. Consciousness-Space is a continuum without borders, without an outside, and as it is, the entire spectrum of being falls within the Consciousness-Space continuum as it has not and cannot have an outside.
14. Since all things that fall within space are its products, by the interaction of its metric properties, and they are sustained and re-absorbed by the same space, a God is not and cannot be.
15. If there is and can be a God, it is and can only be the Consciousness-Space continuum which makes, keeps and takes back all.
16. The four-dimensional Space-Time-Consciousness continuum is God or Nature.
17. No second God is or can be.
18. The God of a religion is the First Father or Primogenitor of his original race/nation.
19. A religion is just the catharsis of its original race/nation. Gods, scriptures, prophets and places of worship are adjuncts of racial identity.
20. Revelation doesn't and can't filter except through a medium, and when it filters through a medium it shapes to the mould of the medium. Revelation descends only as crafted and qualified by the medium, never in its original purity.
21. Pure Revelation is met only on the other side of the medium of senses and mind, and at maximum entropy.
22. The separation of the Electro-Mageneto-Gravitational fields that make the metric dimensions of space is temporary. They were one basic primordial field in the beginning, and they will be that in the end at maximum entropy.
23. Maximum entropy is the terminus ad quem and terminus a quo of the Universe: the zero degree of being.
24. The being or state at maximum entropy, at Zero Degree Being, is Reality, and its evolution and revolution from Zero Degree Being to Zero Degree Being is Appearance.
25. The four-dimensional Space-Time-Consciousness continuum is Appearance, Phenomenon.
26. The Unified Field of the Electro-Magneto-Gravitational fields, the Zero Degree Being, is Reality, Noumenon.
27. The fourth dimensional Space-Time-Consciousness-Continuum is metric, 3-D; the Unified Field is the Sub-metric, Zero-D.
28. The Unified Field is the Supreme Being. The Ultimate God. The Absolute Idea.
29. The four dimensional space-time-consciousness-continuum is the Executive God and the Unified Field the Absolute God.
30. Phenomenal being is the geometry of the four dimensional space-time-consciousness-continuum.
31. The four dimensional space-time-consciousness-continuum geometry is the ultimate superior spirit, the most radiant beauty, Cosmic intelligence, Providence, the Almighty, and all. This metricdom dissolves in the sub-metric at maximum Entropy.
32. Life is the metrication of the Submetric by means of the three metric dimensions.
33. Mind is the electrification of brain. When the brain is electrified the fired Neurons form into modules which are 'pictures'. Magnetism and Gravitation join electricity to make brain's pictography 3-D.
34. Electricity, Magnetism and Gravitation produce the super ego, ego, and id in humans and thus make the individual self of the Cosmic self.
35. When the Electro-Magneto-Gravitational fields come together into the Unified field at maximum Entropy, all beings attain salvation.
36. Individual beings can attain salvation prior to maximum Entropy by working up the Unified Field in the brain by way of arresting the constantly shifting modulations.

Forms

2007-08-24T21:20:00.000-04:00

Forms

The forms around us - they are transient and in a state of
perpetual flux. Behold Causation! - it rules. All this perception
is through the body and mind. Consistent with the Kantian
view, this is all a correlate of the human subject and it's the
axiomatic principle of knowing and our way of knowing. Time,
Space and Causality are not 'objective' or external to us but
are just mental categories. Now, the mind changes as the
seasons in extreme fast forward. Memories brings forth
events to the present but our entire field of perception (if u
can call it that!) of now and our memories only happens in
the 'Now'. That is the only reality we will ever know. Leave
the mis-identification with the body as identity and be
conscious of consciousness - emptiness. Duality has to then
shatter...

No Consciousness, No World!

2007-08-24T20:04:00.000-04:00

No Consciousness, No World!

The only way 'you', 'that', 'this', or 'me' can manifest
itself is through duality, or the start of the string of
consciousness. There is a split into the Cognizer and
the Cognized, or Subject and Object. Since the
Noumenon (pure subjectivity) is the absolute subject,
the whole superstructure of our own making ie.,
subject-object has to necessarily collapse as every
kind of phenomenon that our senses perceive and
mind interprets happens only in our consciousness.
The Cognizer and the Cognized are both objects in
consciousness! Even the process of phenonmenal
conceptualization has to take place in space-time.
The objects need to have volume and the volume
has to be stretched in time for our sense organs to
perceive them through a process where the event
is split into a psuedo-subject and the perceived
object....Identification of the absolute that we are
with the separateness in duality that we appear
to be is bondage. Disindentification thus cannot
be liberation since the entity is a concept arising
out of the identification with an apparent object
appearing in consciousness!

Thus bondage and liberation are themselves
illusions - there is no entity! It thus follows that...the
belief of leading a volitional life is only a concept
- its the greatest joke!