October 2008
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Month October 2008

Entries 7 Total

We need to talk

Oct 11, ’08 3:04 PM

Yes, we. You. You and me. We need to talk.

First, thank you to those kind souls who donated to my donorschoose challenge. I’d still love for you to give if you have the resources to do so. But I really appreciate those who did, and I’m going to match the current donations up to $100.

More importantly, we need to rethink this blog a little. I’m not burnt out of blogging per se, but I need more interaction. As I’ve said elsewhere and in slightly different context, this is due to my tone, my choice of topics, my personality. It’s not you, it’s me. That said, I need to have something happen. I don’t know what. But there’s something weird about shouting into the void with an imaginary audience in mind. Maybe this means giving the site over to someone else for a while or for good, or having some other kind of format that encourages participation, or turning this back into a teaching tool useful for me but not to others, or making it just a professional website. But something.

And so I ask (though I worry about getting 0-1 responses), what would make you participate more? What would turn this from me lecturing into a conversation? What should I do with the site?

Comments (10)

Liveblogging America's Next Top Model

Oct 10, ’08 9:14 PM

9:02: I’ve been wanting to do this for a while. Tonight I’m live-blogging America’s Next Top Model. As Tyra croons through the opening, ‘Wanna be on top?’ You bet I do.

9:04: breakfast with the models, pancakes, tofu with salad, a discussion of how controlling their parents are. Elina’s mom is Russian, and mom never let her do anything. Man, she’sll show her. Lauren Brill is worried about her versatility. Gossip in the sunbathing outdoors, the rest of the girls are dissing AnnaLee, saying she’s pretty but doesn’t look like a model.

The models are off to a photo studio, with little information. They’re really confused. A picture of Tyramail arrives, with the lady in person to follow (dressed in Postal gear). She hits them with a little poetry, and she’s off.

In come the girls to the shoot, where Tyra is now taking pictures in a black top, black leather skirt (Jeez, boobs!). Today is all about the signature pose! Tyra says tne thing I was known for is….this (Pow! Steely stare! I’m feeling fierce here at home just watching). 10 pictures on their own, and then 10 photos after coaching.

Aw shit! AnnaLee is going rebel skater girl!! Now Makine is working the curve of her neck (the ‘boxer’), Sam is goin’ all HANDS and shit! Tyra lets her know, the hands should be an extension of her body – good tip. Lauren Bree is goin’ for a self-professed awkward pose! G’damn! Tyra says she looks a little amputee. Ok, she’s better, going Surfer Girl (but the hands! She’s doing the crab!). Assessment? Pretty but empty (and she knows it – she’s crying about her worries about going home)

ok, break..

9:17
Back and feeling good about the poses. The idea now is for the girls to get a little coaching and then get back in front of the camera for another 10 shots. Things go so fast, it’s hard to keep up.

Ok, forgot that there are still others to go for the first round. Sheena, going for a signature ‘cultural dance.’ Not hootchie (demonstrates Tyra), but more African dance. Josyln is going for posing wide. A little stiff – and Bam! Profile! Aleena is going for ‘top model of the world’, she’s such an editorial girl, not a top model girl. Shapow! Lose control, Aleena!

Marjorie is doin ‘hunchback’. Love it – bells of ND are ringing, but wow she’s looking too hunchy. Tyra tells her she’s made it into a Hunchback of Notre Dame, BUT MODELING! AND SHE WINS THE FIRST ROUND!!! Eveyrone saw the magic that happened, I had my doubts, but Tyra tells me it was clear.

And so Marjorie and her Analeigh are getting to pick out a couple of pieces of jewelry. Bling for the huncher!

Ok, more Tyramail, telling them they need to really bring it. I thought Bring It went out with Kiki Dunst’s cuteness. They’re in the theater, and one of the models just said whatever she does is going to be ‘off the hizzle!’ You know it man. You know it.

Blah blah blah Jay, blah blah, looking for the fiercies. Fierce is what it’s all about, at least today – but really Tyra is always fierce. Conversationista!!

Marjorie is now being asked to do hunchback but on the toilet!! No, seriously. She’s supposed to be taking a shit in a party dress. And now she’s getting high-fives.

Cuecard reading for Sam, getting dissed somewhat by Jay. But she’s really getting flustered. Sam isn’t looking good. Alina by contrast is doing ‘overemotional crying actress.’ She’s a natural at this. C’mon woman! Lose control!!!! But seriously, if she can’t do ‘pouty actress’ better than Marjorie can do hunching shitter, she deserves to be sent home.

Ok, another break…for some reason I though ANTM was 30 minutes, not an hour, but I’m going to try to power through. Hells yes I am. I’m feeling empowered by the DonorsChoose donations, yes I am.

9:32
Back and a few more models to go for the second round. Apparently the task is to be embarrassing while also being model-y, I kinda missed that. Explains the weird bathroom woman. BTW, there’s a new show about being an ELLE intern, and it looks horrifyinglicious – Stylista!

Elina is back and ready to do her overemotional woman. Let go Elina, tell us when you feel not good enough! Jay, draw out the insecurity! Make her feel worse! Worse! WOW, SHE IS SO FIERCE!! I’m going to let go just like her, I wonder if it will work for me?

Lauren Brie is worried about the difficulty level – she’s supposed to be tripping on stairs. Don’t feel posed, she should really trip on the stairs. Arch her back now, looks a lot better (cute butt too). But dag if she’s being criticized for being too posed.

McKeyis doing ‘believes she should win but is about to lose the award’. And now she’s got Shina doing who knows what. And the final two women are doing ‘SNAP! We’re both wearing the same dress!’ Analeigh is still worrying about her signature pose, but she just needs to bring it. BRING IT! (apparently, she does bitchy very well – awesome).

Woot! More Tyramail. Only 7 can continue on, one needs to go home. A relaxing night at the house, and a little Rubiks’ cube action from one of the models (oh yeah, brains and beauty). Oh wait, someone just mucked up adding to 14. Oh well, the lord giveth with one hand and taketh with the other.

Break. And then we’ll see who is still in the running for….AMERICA’S NEXT TOP MODEL!!

9:41 During the commercial break I saw a Bank of America commercial, and it reminded me that the financial world is going to shit. Must return to models!

9:42 Back and now Tyra’s in a hoodie! A Hoodie!!!!! And yet, boobs!

Judges, blah blah blah, wow Paulina Porizkova, I used to have a poster of her when I was 15. Yep. First up judging, from the Fiercy awards.

McKee – beautiful, looks like she’s falling apart, but they’re liking it. E thinks she looks plastic, and I disagree, she looks less real than even plastic.

Shina, she looks possessed, all whites of eyes and shit! Uh-oh, Paulina says the body is good but not mind-blowingly good.

Blondie (missed her, AnaLeigh?) blah blah

Sam – looks like she’s sneezing, not modeling. Yeah, she’s going down.

Jocelyn – they are loving her!

ok, this judging kind of sucks. But wait!!! Jocelyn is crying! I take it back, loving the drama!

Marjorie, the hunching shitter, a comment from one of the judges: ‘you get yourself into the most extraordinary positions, but you look incredible!!’

Lauren Bree is on her way out. The judges frickin hated her.

The camera loves Alina, and now she’s crying again. So real, so good, so long baby. OMG!!! Tyra is suggesting that Alina model Halle Berry from her Oscar Award! Can you believe that shit! Seriously, do you remember that? Do you? DO YOU!!

Break, and then we’ll see whose ass is Audi.

9:52
Back and results. Blah blah judging. While we wait, our Chinese food has arrived, and I’m really looking forward to my egg drop soup. You know, Paulina looks kind of like a normal person nowadays. Ooh, and I think there’s shrimp and broccoli.

Ok, back to results. I’m still loving Tyra’s hoodie, she’s only got 7 photos, but there are 8 girls! Names called, best girl first (displayed in house as digital art):
Marjorie (hunchie-shitter)
Annaleigh
McKey
Samantha
Alina (not just feeling it, having other feel it too!)
Jocelyn

leaving Lauren Bree and Shina…I can see some crying coming. I think it’ll be Lauren Bree eliminated..c’mon Tyra don’t tease me…Shina has personality, but not great looks, Lauren has looks but no personality…and it’s SHINA!!!!!! Lauren Bree is fucking out of her.

No tears (not yet). Oh, wait, there are the tears, and she’s now rambling. I just noticed that Tyra has half-gloves on. Damn, she just got eliminated because Tyra says she has no personality. Brutal, but that’s fashion, one day you’re in and the next day you’re..oh wait. E wants to know where the ‘I’ll get you my pretties! I’ll be famous someday and you haven’t seen the last of me!!’ Nope, just slinking off into the curtain.

Welp. It’s been an eventful hour, a real joy. Have a good weekend!

Comments (1)

A little perspective

Oct 7, ’08 5:09 PM

(As an aside to this post, I’m more than a little annoyed that not one dollar has been donated to donorschoose.org on my behalf, which I wrote about here. And this is likely the last post until something happens on that front, which may mean that I’m done blogging altogether.)

I was too young in 1987 to be paying much attention, but let’s just recall that on Black Monday the DJIA fell 22.6% in one day. And now, the S&P 500 has fallen 17% in two weeks. I’m not saying that this is good, or that worse things won’t follow. But this is not unprecedented, and I don’t mean the Great Depression. In 1997, Thailand’s stock market dropped 75% – Hong Kong’s dropped 25% in four days. Also, recall that it was less than 20 years ago when experts assumed that the natural rate of unemployment was around 7% (it is currently still under or around 5%).

Arguably, there is something new here. Globalization, combined with securitization of capital and loans, combined with housing crash, combined with a baseline mentality set to 1992, all mean that this is the 100-year flood.

And we’ll see something special when New York City comes to the realization that the two-tiered economy which it has accommodated itself to – with finance salaries supported an incredibly posh infrastructure of high-end real estate, retail, and service – is no longer viable.

But what is happening now is a panic.

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Rethinking donations

Oct 5, ’08 2:52 PM

I am running a ‘challenge’ at Donors Choose, which is a non-profit devoted to providing public school teachers with resources.

My challenge is here. I’m asking people to donate $5, $10, more, whatever you can manage; and I’ve chosen projects that are about markets, art, and finance – well, to the extent that it’s possible for elementary school kids to do so…

I know most of the people who read this blog are lurkers, and I appreciate the attention and conversation from both active and passive readers – sometimes I receive emails instead of comments. I would really appreciate it if you could give any amount at all. Non-profits are facing a really challenging environment. And one of the casualties of the melt-down is almost inevitably going to be public schools.

So take a look. The organization is Donors Choose. And my ‘challenge’ is for Rethinking Markets.

Please consider making a small, in-between, or large donation. If not to my challenge, then to some project that sings to you.

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Is there an underlying sociology to current financial markets?

Oct 3, ’08 11:00 AM

There was a time when capital, financial, housing markets were distinct-but-related. Housing prices changed with changes in interest rates; the dot-com boom and bust created and lost jobs; the stock and bond markets moved in conjunction with these changes. But while related, they were pretty much distinct kinds of markets. This was true for a few reasons.

First, different people traded different markets. Equity desks (stocks) and futures traders (fixed income) were different people, with different skill sets necessary to actually trade these markets. Mergers and acquisitions departments were deal-makers; private wealth desks were relationship managers; futures traders were cowboys; municipal bond traders were plodders.

Second, different technologies of trading made these markets comparable via performance (that is, returns on investment) but not otherwise comparable. In other words, we could look at stocks, bonds, and real estate, and we could measure their Returns on Investment (ROI) over time. But the question of how much a real estate investment was worth relative to an investment in corporate bonds, relative to fixed income derivatives, all while capital is being applied to them? This question is a notoriously difficult one to answer.

And so, the world looked something like this:

Distinct markets, distinct participants, distinct technologies

Distinct markets, distinct participants, distinct technologies

This changes with two things: risk models, and technology

  • The application of risk models to financial instruments. It is not just that Black-Scholes-Merton formula allows us to price options. It allowed sophisticated analyses of returns, captured by risk and volatility. Risk is the magic commensuration mechanism. Commensuration here means a metric (often, but not necessarily quantitative) that allows us to compare two otherwise qualitatively distinct objects. Understanding returns as a function of risk and volatility (assumptions and measures about transaction costs, liquidity, and the like can be incorporated as well) means that real estate, bonds, stocks, derivatives, collateralized debt obligations, fine art, even your Uncle Earl’s gold coin collection can all be translated into a common metric: how much risk, how much volatility, equals how much return?

    Risk becomes something that can itself be traded. When portfolio managers argue that a portfolio ‘needs more vol’, for example, it means that it needs more ‘risk’. Risk is being commoditized.

  • Changes in technology. Ian Domowitz, then a finance professor at Northwestern University, noted in the early 1990s that one of the main effects of automated trading would be to provide a degree of standardization across a number of financial exchanges. This standardization would lead to mergers (implicit) across exchanges. These exchanges had, for the better part of the last century, been not only distinct but direct rivals. Their rivalry was resolved less by poaching contracts from one another, and more by specialization. So oil and OJ was traded in New York, currencies at the Mercantile Exchange, soybeans and Treasury futures at the Chicago Board of Trade. The ability to now trade across exchanges, or better, to have a technology that allows you to have different “back end” trading systems and a single “front end” platform. Think about it like a web browser. The back-end servers may run Unix, windows, OSX, Ubuntu, or whatever. The front-end web browser makes them all work for any user. Likewise, front-end electronic systems allow traders to actually make trades across a wide variety of financial (and non-financial) products.

So now the world looks less like a set of distinct silos and more like this:

The world looks like silos, but it is all just Risk

The world looks like silos, but it is all just Risk

As a result of this fact – this fact of the contemporary world of risk management and globalized finance – a number of assumptions that we had previously held to be true no longer are. For example, arguably commercial banks, insurance companies, and investment banks are indeed all doing the same thing: they are all trading in risk. The ways they do this continue to differ, but the underlying ways that they can calculate their worlds have moved closer. This means, per someone like Robert C. Merton (and people who believe in him in the Treasury Department and in Congress), that we should allow the institutional barriers between these kinds of firms fall to follow their functions. Or, it means that the old regulations that separated these entities institutionally need to be revised to provide protections in a world where they are all doing the same thing. This is obviously now an open question.

A second assumption, that financial ‘safety’ comes in offsetting risks across a number of uncorrelated markets – diversification – no longer means what it used to mean. If the silos no longer hold, the problem is that ‘uncorrelated’ risks become correlated in the very act of tying them back into a risk portfolio. What we see instead is not ‘uncorrelated’ risk – barriers across different kinds of markets – but rather conduit of risk across these markets. Diversification becomes contagion. Why does the stock market drop 700 points when people are worried about credit markets? In no small part because hedge funds are bracing for mass extractions of capital. And so they are dumping their most liquid investments to have cash on hand. Credit and equities are supposed to be distinct – and now they are moving together. Risk becomes the conduit through which markets become linked.

We’re bracing for a new world, and it is unclear to me that the institutional changes that have been brewing over the past three decades are well-understood. New approaches would be mighty useful right now, and more so going forward.

Comments (3)

getting the love

Oct 2, ’08 9:55 PM

I’m watching the vp debate, and damn if we jews aren’t getting the bipartisan love.

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OK, Freese…

Oct 2, ’08 9:03 PM

…which one are you?

Comments (2)