Links 11/20/08

Sparrow numbers ‘plummet by 68%’ BBC

Researchers getting the lead out of electronics Network World

Don’t Throw Me In That Briar Patch! Hilzoy

Is Obama really “Change we can believe in?” Ed Harrison

Record Options Trading Slows as Hedge Funds Fold, Prices Surge Bloomberg

The Dollar Trap Part II: Mutually Assured Financial Destruction Jesse’s Cafe Americain

Why Can’t We Admit That... Roger Ehrenberg

At WaMu, a Lack of Oversight Housing Wire

The Progress of the Financial Crisis in One Picture: Mortgages, Flight to Safety, Credit Lock Menzie Chinn, Econbrowser

Hurt by Losses, Pension Funds Criticize Rules New York Times. Funny how everyone gets to retrade their deal….except honeowners.

Panic of 1873 Redux? Stormy, Angry Bear

New Hope for Financial Economics: Interview with Bill Janeway Institutional Risk Analytics. If you are interested in the role of economics and finance theory in our current mess, this is a must read.

Antidote du jour (hat tip reader Rolfe):

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  1. Richard Kline

    Obama isn’t even change, let alone change one can believe in. New picture; same box; same cereal in the box. Until and unless he demonstrates different, because he has said no different, and _done_ no different. OJT may force change upon him, but he won’t go there willingly. He’s not stupid, though, and that is the first best place to start from.

  2. Richard Kline

    That discussion with Bill Janeway at Institutional Risk Analytics is plain _awesome_. Too many well-framed points to even begin quoting; just read it, it’s a keeper. I agreed with every point I’d come across elsewhere, and learned a bunch of background I didn’t know beforehand.

    I love listening to knowledgable folks talk shop on issues they love and follow closely.

  3. Anonymous

    That picture is supposed to be an “antidote”? It’s more like a metaphor for the past few months. I’m the one on the right.

  4. Anonymous

    I agree with Anon at 8:35. Should we subtitle this government vs the people (Start a revolution! Ron Paul!). Or maybe just Paulson attacks the people. Or the market vs the people. Or the brights vs the people. Or the banks vs the people.

  5. lineup32

    Richard: the Janeway interview is one of the best reads, can’t help but post a couple bits:

    ” He once said that giving liquidity to bankers is like giving a barrel of beer to a drunk. You know exactly what is going to happen. You just don’t know which wall he is going to choose.”

    Janeway: There are two indictments of modern finance theory that define the hole we are in now. The first is the distinction between illiquidity and insolvency. When I was a kid growing up in this business in the 1970s, we thought of illiquidity and insolvency as two fundamentally different conditions. You were illiquid if the expected net present value of the cash inflows that I am entitled to by contract exceed the expected present value of the net outflows. All I have is a timing problem. You can tide me over. You are insolvent if the reverse applies. I’m bust. In this world, when you mark to market, liquidity drives insolvency.

    The IRA: Correct. This is the point we try gently to get our friends in the accounting world to accept, namely that the snapshot of price at a point in time is not value. It reminds us of Heisenberg’s Principle in physics. We kind of sort of understand the rate of movement and approximate positions of objects in space, but we have no idea of the precise location at any point in time. At least the great men of science admit when they don’t know.

  6. doc holiday

    Is this a memory test, this pix was up a few weeks back, but time does fly, so maybe this is an example of time flying which is related to the issue or debate that time is money? Nonetheless, this re-post speaks to the fact of turning the clock back and re-testing and confirming reality which is being done with valuation these days, i.e, what is the value of money, what are cars worth, stocks, bonds, dogs, cats, etc? These questions could on, but one then must ask why that would be so, and what it has to do with this re-posted pix, and thus, I’m afraid there probably is not a reason for writing this or reading this and maybe that is the metaphor of this trap today, i.e, to provide a visual metaphor for a liquidity trap. The nasty dog is cash burn and the little dog has no where to go.

  7. doc holiday

    Going back to that old re-posted photo made me want to come back here twice and relay some stuff that seems to be going down out there.

    This here story may or may not be related to The Large Whatever They Call That in Switzerland (where I should be partying with snowbunnies at my toasty chateau, drinking champaign and tasting earthly delights).

    Discovered: Cosmic Rays from a Mysterious, Nearby Object

    n international team of researchers has discovered a puzzling surplus of high-energy electrons bombarding Earth from space. The source of these cosmic rays is unknown, but it must be close to the solar system and it could be made of dark matter.

    The least exotic possibilities include, e.g., a nearby pulsar, a 'microquasar' or a stellar-mass black hole—all are capable of accelerating electrons to these energies. It is possible that such a source lurks undetected not far away.

    There is a class of physical theories called "Kaluza-Klein theories" which seek to reconcile gravity with other fundamental forces by positing extra dimensions. In addition to the familiar 3D of human experience, there could be as many as eight more dimensions woven into the space around us.

    >> I just thought I would share this, because it is possible that we are in a black hole already …

  8. Anonymous

    If DJI dips below 7700 headlines will go from ‘5 year lows’ to ‘ten year lows’….7850 currently. So much for buy and hold.

  9. Anonymous

    Just over heard talking head on TV say market reset will occur at 6000. My worst case was 6500 and the tenancy to go soft on bad news does not bode well.


  10. Independent Accountant

    I read the Janeway interview. When I saw the name, I wondered if he was Eliot’s kid. Sure enough. I read “Struggle for Survival” and “The Economics of Chaos” decades ago. Eliot Janeway’s great quote, “War is bearish on money”. I’ve said many of the same things I found in the Bill Janeway interview. The interviewer goes back to McNamara’s “Whiz Kids”! I remember they “won” Vietnam. Sure. He attacks the confused physicists who work in finance. I would end the trading or creation of CDSs, but accept having the Nevada Gaming Commission regulate them as a second best alternative. The only thing is disagreed with was mark-to-market accounting. I favor it. A comforting read for me. At least Eliot Janeway’s kid (mostly) agrees with me.

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