Rational Action

As I was driving out of the office parking lot towards a client’s house, my boss drove up from the opposite direction, stopped, and rolled down his window.

“You know the house you’re going to? It’s the same plot of land where the Moxley murder happened. They finally tore down the house a few years ago, but it’s the same place. Anyway, have fun.”

Whoopedydoo. I drove to the house and there met an extremely nice lady with a broken computer. I helped fix it, then returned to the office. No big deal. Just a little murder two decades ago.

But the story doesn’t end there, though. I mean, come on. Would I really post something without mentioning economics or politics? Or, more specifically, just economics? I think the answer is rhetorical, but I’ll make it blindingly clear:

Boss just called me up to give me another interesting tidbit. A guy who used to live at this house was responsible for endangering the economy of many nations, including but not limited to that of the United States. The guy apparently runs (or ran) a hedge fund named Long Term Capital Management. What, you ask, is a hedge fund?

A private investment partnership, owned by wealthy individuals and institutions, which is allowed to use aggressive strategies that are unavailable to mutual funds, including short selling, leverage, program trading, swaps, arbitrage and derivatives. (definition here)

Because hedge funds get their money from the wealthy, the government does require their regulation. They tend to operate in secret, making high risk bets that net them hefty returns.

This fund in particular had made bets adding up to 1.25 trillion dollars. They started with 2.2 billion dollars in capital, using that to buy 125 billion dollars of government securities. With the government securities as backing, they then pulled in 1.25 trillion in — I can’t even figure out what the right term is — financial transactions, says one news article. (Yeah, I called them “bets” earlier in the paragraph. I’m not sure that’s even the proper wording.)

How on earth did they work their magic? A New York Time article (Now for $$$) reveals:

In essence, the fund placed bets that tiny deviations in the traditional relationships between the prices of various securities would eventually return to normal. For example, the interest rate on a medium-quality corporate bond is usually about one percentage point more than the rate on a 30-year Treasury bond, reflecting the greater risk of lending to a company than to the U.S. government. If the gap, called the spread, widened to more than one percentage point, the Meriwether team could bet with confidence that the relationship would ultimately revert to normal. Myron S. Scholes and Robert C. Merton, who shared a Nobel prize in economics, helped program powerful computers to recognize countless similar profit opportunities.

The stategy paid of initially, but then a series of the fund’s bets began to fail. On the verge of collapse, the fund attempted to secure more captial. The failure of the fund would have made major shocks throughout the world markets. When no one came forward with the dough, the U.S. Federal Reserve stepped in and negotiated a buyout. All was well, but the events still spooked analysts of the trading markets and called into question the practices of many hedge funds — and the Fed’s inability to regulate them. (source 1, source 2)

Anway. The woman at the house was very nice. I suppose this Meriweather fellow can no longer show his face in Greenwich, since he nearly fucked over pretty much everything. Which is why I fixed the computer of some nice lady, and not the computer of some rich gambler.

Ah. What a town.

Bury Me With It
Well, I am listening to Modest Mouse, as the most intelligent of you might be able to tell by the title of this post. I’m in one of those moods where little thoughts set me off into odd sad states. A mood that this song, Bury Me With It, captures pretty well in its tone.

I like how Modest Mouse has such a passionate sound to their music. Another band I want to listen to, and as usual I’ve waited until they have become popular. But there are more important topics at hand; god forbid this post turns into standard blogshit!

Bukowski
I watched the Clinton interview tonight with my parents. The man knows how to lie passionately. I want to trust him so much when I hear him speak; he believes strongly about so many topics and what he says must contain a great deal of truth. Yet he posseses the capability to lie at whim to his wife, his family, and the American people.

Why am I rambling about this? Because I want to talk about myself:

The View
In the interview, they showed Clinton a tape in which his mother spoke about how great of a son her child had become. Clinton got choked up and looked sincerely at the interviewer, saying, “I had never seen that tape before. Thank you for showing me that.” I said to my father, “He’s such a good liar. I wonder if he’s seen that that tape before.” My father responded that I was being even more skeptical than he was.

Satin in a Coffin (what a song!)
For my father to think of me as skeptical means a lot to me. He’s a skeptical person and I tend to think that I inherited my skepticism from him. I suppose I pulled it in with amplification, though.

Blame it on the Tetons
I’m not sure what that trait signifies for me as a person. If I end up doing political science or economics, it could come in handy.

Which brings me to my next point: I desperately want to write up a few paragraphs taking a position on some issue and showing some logic behind arriving at that position (normative). I would also like to write up a few paragraphs analyzing some issue without taking any position on it (positive). Would anyone be interested in having some kind of online debate? Or just listening to me talk?

Oh fuck it. I’ll just write about Bush’s foreign policy or something. But given my and my (presumed) readers’ position on that issue I doubt anyone would object my claims. I could argue in favor of Bush’s economic policy, but that’d be a stretch for me. Maybe I will just make a big post full of conjecture that manages to piss off everyone.

Black Cadillacs
Watching the Clinton interview, I got wistful for his policies — as if I were really conscious of them while he was in office. But one thing in particular really got me:

He was talking about the handshake between Yassir Arafat and Yitzhak Rabin. You could tell that he interacted on a personal level with them. As he related some funny conversation he had with the men before their handshake, the program showed a picture of the two leaders in the embrace. I got a little upset, almost teary even, when I saw the picture. Just the idea expressed in that picture seems like such a far away dream right now. It makes me so sad.

I have spent a great deal of time (in combination with Ethan and the Granola team) working on the Granola website. Now we need to make it popular. Here is a link to the site:

Come see the Apple Rug Productions showing of Granola! The Musical!

The idea is to get the page listed on google by having lots of people link to it. So if you have any remote interest in Granola! please put the following text into your blog, livejournal, or webpage:

Come see the <a href="http://www.applerug.com">Apple Rug Productions showing of Granola! The Musical</a>!

Thanks for the help everyone! Please leave comments detailing any problems, funkiness, or dislikes with the site.

From Sunday to Monday we (where we is a large group of guys) went on a hike in the Catskills. After some rushed planning and preparation, we finally set off on Sunday afternoon. The drive was long and tough:

As we approached the campsite, the hunger pangs became too great. We needed to stop and eat. Someone must have seen a food sign as we approached Exit 109 on Route 17. Suddenly we found ourselves in front of the most excellent pizza place on Earth: Pizza the Rock. Ethan rushed to capture this moment forever:

That night we set up camp, built a fire, had a glorious meal, and shivered in our sleeping bags. All in all, it was quite an experience. However, most of the real fun happened the next day.

We decided to take a hike. As you will see in an upcoming diagram, the trail took the form of an oval. It crossed over a mountain, making the first half a constant uphill climb, and the second half mostly downhill relaxation. As we entered the second half, we began looking for shortcuts across the middle of the forest. Finally, we took one.

Getting Lost 2004: An Illustrated Guide

On the map, point 1 represents where we decided to take our shortcut from the trail. We climbed off the cleared path, then practically ran downhill through the forest with little care for moving in the proper direction. After running for some arbitrarily too long period of time, we reached a general consensus that we were lost. We also reached a general consensus that no one had a functioning cell phone nor a functioning compass. Finally, we reached a general consensus that, generally, we should turn around.

The aforementioned general consensuses were all reached at point 2.

The trek back consisted mainly of our climbing back over the areas we had gleefully run down earlier. I never worried that we wouldn’t make it back to the trail, but I knew with near certainty that getting back would take more effort than I wanted to spend. Indeed, this part of the hike was truly challenging. On the other hand, looking back, it was undoubtedly the most exciting part of the trip. After lots o’ intense climbing, we reached a sort of peak. Within a few minutes we had found the trail, and we celebrated like all hell. Celebration occurred at point 3.

Our shoes were wet, our shirts were damp, and our camera batteries were dead. We made our ways, in stages, back to the cars. On the way back, we completed the hiking circle of life by stopping once more at Pizza the Rock. All in all, an amazing trip.

A last word. Sifting through our pictures, we found this one, taken by persons unknown. Here it is, for the audience’s consumption: