Friday, October 28, 2011

Alfred Hitchcock once said...

I'm not against the police; I'm just afraid of them.

The shooting of an Occupy Oakland protester by the police yesterday and an article from HuffPo last month really got me thinking about the police and freedom. There is a fundamental trade-off between safety and freedom and I'm starting to worry we've gone too far into the safety camp. According to this article 90% of cities over 50,000 people have SWAT teams. Do cities this small ever really need to use force this drastic? There are billions in counter-terrorism funds floating around and no accountability in the DoD - they flat out don't know where the money goes. Apparently what happens is that little rural towns end up with tanks and machine guns. Do we really trust all these towns to keep these weapons secure? Isn't it more of a risk to spread deadly weapons all around the country?

Thursday, October 27, 2011

Time for a new career?

According to physicist Jonathan Carter nearly any model calibrated to real life data will yield awful predictions. Though I'm not sure if he's advocating making predictions based on no data instead?

Also I wonder if anyone has written an article about "why scientific american articles are always wrong." That might give me some comfort.

Tuesday, October 25, 2011

Book of Mormon coming to Chicago

YES! Its sold out forever in NYC, hopefully the bigger theater in Chicago will make tickets easier to get.

Groupon Bubble

Funny how economics works, someone comes up with a great idea makes a lot of money, everyone copies that great idea, all of a sudden the original idea is no longer profitable. There are red flags all over groupon, a constantly shrinking IPO, old investors bailing as new ones come in, questionable accounting practices and big payouts of the executives. This does not sound like a company on firm financial footing. One line from this article in particular stuck out - "[Groupon is part of] an industry that is turning into the digital equivalent of junk mail."

Wednesday, October 19, 2011

SEC settlement with Citi

Today Citi settled with the SEC for nearly $300 million over a structured CDO deal. Seems like every bank is going to face these kinds of lawsuits.

What's interesting about this specific settlement is that it names an individual - Brian Stoker. Most of the settlements are very generic sounding and don't call out anyone. So of course I'm curious and I look him up on linkedin - turns out he's only 3 degrees of separation from me. Looking at his work history he went from VP at Merrill Lynch to Director of Structured Products at Citi and now he's an Analyst at some private equity shop. Ouch. Sounds like that structured products experience is a liability these days.

Friday, October 14, 2011

Maybe it just collapsed on its own?

Imagine if every bank in the US was guaranteed by the local/state government. I certainly wouldn't have my money in any bank from Illinois or California. Thankfully we don't have to worry about where our bank is located, our dollars are equally safe (or unsafe) anywhere. Europe isn't so lucky, a euro in a Greek bank is much less secure than a euro in a German bank. So of course people have been moving their euros out of Greek banks (among others) and into German banks. This forces Greek banks to liquidate assets and transfer the euros to German banks. So the big question on everyone's mind is do the Greek banks have enough in assets to cover all the deposits in their bank? At the rate they're are losing deposits we'll find out very soon just how big the holes in their balance sheet are.

h.t. MR

Paid Detail Unit

Unbelievable. For $37 / hour Wall Street bankers can hire a member of the NYPD, complete with gun, handcuffs and the legal authority to make arrests. I guess I shouldn't be surprised, Wall Street already owns Congress, the Fed, a private army is the next logical step. I worry about the Occupy Wall Street crowd, they may be in over their heads here...

To top it off these hired guns are indemnified by taxpayers. God forbid Wall Street be held responsible for their actions.

h.t. Big Picture

Wednesday, October 12, 2011

Remember Meredith Whitney?

Last year she predicting "hundreds of billions" in municipal bond defaults for 2011. So far she's waaay off, in the first half of the year there were $511 million of muni defaults. However that number is almost going to double today as Harrisburg filed for bankruptcy. Still a far cry from "hundreds of billions" but if it works out well for them maybe other heavily indebted municipalities will follow suit. There are certainly no shortage of those.

Tuesday, October 11, 2011

Slovakia to the rescue

One of the smallest EU members has been in the spotlight recently. Slovakia is the only country that didn't approve expanded powers for the European Stability Fund. The leader of one of their parties explained his position as:

"How am I supposed to explain to people that they are going to have to pay a higher value-added tax (VAT) so that Greeks can get pensions three times as high as the ones in Slovakia?",1518,790577,00.html

I'm glad someone is willing to make the hard choices. Greece has to default. If the problem is too much debt the solution isn't more debt. Of course the Germans and French will get their way somehow, but perhaps this will inspire others.

Thursday, October 6, 2011

RIP Steve Jobs

Only Steve's own words are fitting here. From his 2005 commencement speech at Stanford:

"You can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life."

"Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it. And, like any great relationship, it just gets better and better as the years roll on."

"Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma — which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition."

Tuesday, October 4, 2011

Google - really cool or really scary?

Interesting line from an article I just read about Google:

"We are not Google’s customers, we are its product. We – our fancies, fetishes, predilections and preferences – are what Google sells to advertisers."

Its incredible how much data Google must have on me and everyone really. They know everything I've searched for online, everything I've looked at on my phone, all my email, they have maps of the entire world (with pictures!) and all the location based data they're collecting from my phone. On top of that they're working on getting access to every book in the world, building self driving cars and who knows what else - recording every conversation across the globe? Their business isn't search, its data. Maybe they'll even figure out how to automate the process of analyzing the data... in that case I should look into a new career. I wonder if Google is hiring...

h.t. MR

Sunday, October 2, 2011

So about that income tax hike

The personal income tax in Illinois went up from 3% to 5% this year, the corporate tax went up from 4.8% to 7%. Tough pill to swallow but I guess everyone needs to chip in to keep the state solvent... or so I thought. This one line was just depressing. "Illinois' financial condition continues to worsen, though arguably not as quickly as before." The state is still facing an over $8 billion deficit this year.

But in the grand scheme of things an $8 billion hole in a $117 billion budget isn't too bad. That is of course until you consider all the underfunded pensions and other off the book liabilities. Greece appeared to be in pretty good shape when they had Goldman Sachs cooking their books...

But what really scares me is the city's deficit, $650 million deficit from a $3.2 billion budget - a 20% hole. Can you imagine the city cutting 20% of spending on everything?

Saturday, October 1, 2011

California and collective delusions

Over the past few years Michael Lewis has written some of the best articles out there about the financial crisis. His latest on California is excellent as well:

The overarching theme is that we (the West) have developed into a society that sacrifices the future for the sake of immediate gratification. Until we reverse this attitude this financial crisis won't end, no amount of monetary or fiscal stimulus will help. If the problem is too much debt the solution isn't more debt.

Also this article made me really like Schwarzenegger.