Bailout or Death, or BEARS!

Mark my words. There will be a bailout. I’m calling out your bluff congress!

Don’t get me wrong. I am fully aware of the moral hazard that is the bailout, but now is not the time to be limp-dicked about the situation. The major banks shouldn’t have taken on so much liquidity and interest rate risks in the first place, and the argument goes that if the government bail them out this time, the banks will continue their high risk high reward ways.

But lets say… your best friend ventures into the black forest by himself one night against your advise. He calls you on your mobile, saying, dude! i’m surrounded by fucking bears! help! Now… do you tell him, no fucking way man, if i rescue you now, you’ll just take my advice for granted again and get surrounded by wolves next time? No. you shoot the motherfucking bears, then AFTERWARDS, you beat the shit out of your friend for being a dumb ass.

The current financial crisis is being described as the 100 year storm. It’s like being surrounded by bears. The banks have taken on so much leverage against each other that if another major counterparty fails, all could fail. The right thing to do, in my opinion right now, is to metaphorically kill the bears. The banks need to stay afloat long enough for deflationary pressures to go away. b/c trust me. deflation is a LOT worse than inflation. imagine the great depression. 30% unemployment. Russell Crowe comes to America, becomes a boxer, and kicks your ass.

This current crisis is still a baby, market decline hasn’t reached 1987 levels yet, so maybe we still have time. I’ve seen many comments such as… down with the rich asshole bankers, or, die entitled rich asshole bankers! but, if the banks fail, we will all be affected. No investment funding means no business funding, means no money for businesses to pay employees, means you’re out of a job. Punishing bankers immediately will be a lot easier if we were all disconnected somehow, but the truth is, we’re not. So my point is, kill the bears first, THEN kill the bankers.

Thoughts?

Memory

I’ve always been quite fascinated with memory. I think, had I not pursued a degree in finance, I probably would’ve pursued a degree in psychology. 

Our lives, everything that we know and think we know, are stored as memory. We live in continous moments, but each moment is merely an infinitely small unit of time. Everything else is memory. If I woke up tomorrow with someone else’s memory, I probably would just live that person’s life, not knowing that I had another one previously. I wonder if that’s ever happened before, if my current life is merely an inserted memory, and all of my friends and family and relationships and material goods were merely inserted into my life. Maybe there are secret memory agents that come to you at night, and change your memories, so you don’t remember certains things that can compromise… whatever it is that is compromisable. 

Imagine if the government has this power. What if the red light thingie in Men in Black(I and.. II) is real. Well, I guess shock therapy kind of does the same thing… or lobotomies maybe. But what if memories can be inserted as well? What if you have a permanently depressed person, and then you artificially change that person’s memory so that he thinks he’s had a wonderful life? What if you were really bad at getting girls, and someone gave you the memory of that bald guy (or that guy with the stupid hat and goggles)? what if you needed to learn how to fly a helicopter in 15 seconds and then someone stuck a metal tube into your cerebellum? Whoa, do I know kung fu?

Maybe the things they did in Eternal Sunshine will be possible someday. I bet plenty of people have thoughts in their minds they wish erased, or changed, even temporarily. Perhaps you can live a day knowing that you did get the girl. Or that you did get that promotion. Or that you shot a 62 at Pebble Beach. Or that you come from a long line of sherpas and you live on mount everest. that would be a weird one to wake up to. 

Maybe one day modern science will allow us to enter and leave VRs. where you can experience anything you want to experience. but how can one tell we’re not already in VR? ugh. i think my head is about to explode… time for a drink.

Wish You Were Here

RIP, Rick Wright. You were 65

RIP, Lehman Bros. You were 158.

Presidential Politics #3

It has been a little over a week since my last Presidential Politics post. And surprise surprise, McCain has moved ahead of Obama in the latest Gallup Daily Poll:
 http://www.telegraph.co.uk/news/newstopics/uselection2008/johnmccain/2706901/John-McCain-moves-ahead-of-Barack-Obama-in-US-presidential-election-polls.html

This reminded me of the Clinton Impeachment Trials: any publicity is better than no publicity. (remember how his approval rating went up during that time?) Because Palin is such an unknown yet enimatic character, people are drawn to her, wanting to know more. Even though she has familial issues, many Americans can associate with a mother with bratty teenagers. John McCain, well played, sir.

What Obama needs to focus on is to take the attention back from Sarah Palin. He needs to come out and say, yes, I’m also charismatic, and I’m smarter than McCain and Palin combined. I think it’s time to give an academic a chance to run this country again. GWB, although a graduate from Yale and Harvard, will never be seen as a smart man because he went to those schools based on his family connections. (and also doing poorly along the way) McCain went to the Naval Academy because… his father, AND grandfather were both admirals. Can you guess his class rank? (894/899) So he’s no mister smarty pants either. Sarah Palin… attended 5 different colleges in 6 years… Barack Obama on the other hand, Columbia, top of his class at Harvard Law, President of the Harvard Law Review, constitutional law professor at U of Chicago.

Obama needs MSM back desperately. If he can succeed in doing so, he will be the next president.

Iceland

After Watching Sigur Rós’s documentary, Heima, I’ve convinced myself that if McCain is elected, I will move to Iceland. Reykjavik looks pretty bad ass. And considering the amount of blubber I have on my body, I’ll probaby fit right in with the Inuits.

EDIT: “Traditional dishes include skyr, cured ram scrota, cured shark, singed sheep heads and black pudding.”… maybe not…

Grad School

is going to be half a mile north of here. I’m pretty fucking excited.

photo by Jason Hawkes

I Accidentally The Whole Fleshlight!

http://forums.joerogan.net/showthread.php?t=74612

funny story

i’ve started to sport a sumo topknot recently. it looks pretty ridiculous, but that is my intention. i was at a party last weekend, and this nervous looking guy comes up to me: “hi, my…. my name is andrew”. I said “Ok Andrew, I’m H—, what’s up?” Andrew says “oh… no..nothing… uhmm… do you know… mixed martial arts?”

“No.”

“Oh okay.. you just look like… like you can take care of yourself… that’s all.” 

wow…

The Age Old Value v Growth debate

I give up, and I’m back after only one day away from the internets.

Anyways, onto today’s topic. A couple of days ago, Eugene Fama’s Efficient Market Hypothesis came up somewhere in conversation. Fama thinks that value stocks performed better historically because it’s actually MORE risky, not less, which is the typically held belief of most market participants. I think, however, that most people are too simplistic in evaluating risk. When most people think about risk, they think downside risk only. However, many don’t consider that these boring value stocks typically lack growth opportunities, thus, there is additional risk in that these companies will not improve their topline numbers in the future. 

This makes sense, as taking on additional risk requires additional risk premium in the form of better stock performance. So does this mean we should take as much risk as possible, hedged via diversification? Perhaps create a fund basket of the 100 most hated stocks in america, turned over once every year or two. If Fama is correct, this fund should beat the market over the long run.

Computer Banishment

I’ve decided to banish myself from computer usage for a week, starting monday. Being on a computer 24/7 for the last 13 years of my life probably made me more than a little socially awkward. Time to go outside.