馬庭正's Journal

2:11pm: I should just have checked Wikipedia for that Canadian federal election question.
A few days ago I posted a question as to where the Canadian federal election projection sites were. Well, I should just have looked at Wikipedia. If you're interested, here are the sites they mention:

http://www.nodice.ca/elections/canada/projections.php
http://paulitics.wordpress.com/2008-election-seat-projection/
http://pollingreport.ca/
http://www.electionprediction.org/2007_fed/index.php
http://predictor.hillandknowlton.ca/
http://www.wlu.ca/lispop/fedblog/?p=99
http://www.trendlines.ca/electcanada.htm

(from http://en.wikipedia.org/wiki/Opinion_polling_in_the_Canadian_federal_election,_2008)

There also this list of marginal seats.

Things look close. I'm reading a lot of contradictory news stories as to whether the Tories are going to win a majority (155).

We'll see late Tuesday night, after the polls close in BC and the Yukon.

3:53am: Quote from Friday.
From http://londonbanker.blogspot.com/2008/10/turbulence-and-trends.html:

My fear is that the failure to address the systemic issues as a whole will be a vulnerability exploited by US banks and authorities as they try to undermine London as a financial centre, gaming the fragile global markets.

There is still a touching confidence among many in the City [of London] that the US authorities will provide the “leadership” to reinforce collapsing markets. As John Plender of the Financial Times quipped, “Gaul votes for Rome to take the strain.” This seems to me to display a total incomprehension of the way US authorities operate to externalise pain and loss to the greatest extent possible in times of crisis. Gaul, after all, was an occupied state that was militarily and economically exploited to Rome’s advantage for centuries before Rome’s collapse. Saving Gaul was never a high priority once Rome was threatened.

I have little idea how accurate either the Roman history or the policy analysis is--although both certainly seem plausible--but I'm pleased by the reference.

3:31am: Not quote LOLTRADRZ, but still funny.
http://sadguysontradingfloors.tumblr.com/

11:24pm: Societies do not function without trust.

What is happening now in the markets is what happens when trust--between banks, between companies, between people--disappears.

Nearly fourteen months ago, I posted about fear and suspicion being bad for markets. What I said is just as true now as it was then.

But when trust is gone, how do you get it back?

8:19am: "There is one form of panic, however, which I believe the Federal Reserve system will relegate to its proper place, the museum of antiquities, and that is the panic generated by distrust in our banking system leading to a struggle for self-preservation between bank and bank and individual and individual and ultimate hoarding by the people. I say ultimate hoarding by the people, for to my mind such hoarding usually follows hoarding by the banks and does not precede it. It is safe to say that if hoarding by banks should cease, hoarding by individuals would never occur, and both, I believe, will be relegated to obscurity under the Federal Reserve system.

"No hoarding can be imagined more injurious than the hoarding of banks when they have engaged in this operation in the past. Each bank retreats into its own citadel at the sound of danger and at a time when it should be drawing upon its reserves to help the business man of the community, it stays aloof, piling up reserves upon reserves like Pelion upon Ossa, and the business men have to care for themselves as best they can."

--Charles S. Hamlin, Governor of the Federal Reserve Board, in the New York Times, Friday, December 4, 1914.

(From http://query.nytimes.com/mem/archive-free/pdf?res=9E02E6DF1438E633A25757C0A9649D946596D6CF,
pointer via http://paul.kedrosky.com/archives/2008/10/09/financial_panic_1.html)

9:02pm: Canadian Political Geeking question.
I've been following polling results for the American Presidential election on sites like pollster.com. Are there similar polling aggregation sites following the general election in Canada?

Thanks in advance!

5:38pm: The folks at This American Life have done it again.
Some weeks ago, I posted about their story on The Giant Pool of Money, covering the origins of this crisis in the mortgage-backed securities markets.

Now that the story has moved on to credit-default swaps, and the freeze-up of the financial markets, they've done another story, rather bluntly called "Another Frightening Show About the Economy". It's pretty good, too.

As with the previous show, it's only available for free download for a limited time.

(Thanks to belfrynotes for the pointer!)

4:53pm: For those of you who are getting tired of all these finance posts...
...I could be posting about the rumors of Jamie Lynn Spears' second pregnancy instead.

So it could be worse, right? :)

8:35am: And in other financial news...
...the world's central banks finally signaled that they've bought a clue and are making a coordinated emergency cut in interest rates.

The US Federal Reserve, the European Central Bank, the Bank of England, the Bank of Canada, and Sweden's Riksbank have all cut rates by 50 basis points, or 1/2 percent. The Swiss National Bank cut its interest rates by 25 basis points, and the People's Bank of China cut rates by 27 basis points. The Reserve Bank of Australia had already cut rates yesterday by a full percentage point, while the Bank of Japan's rate is so low already, at a half percent, that they could only "express their strong support" for the action.

In the short term this move is mostly symbolic, as it takes months for rate cuts to affect the economy, but the concerted action is meant to reassure markets that the central banks really do understand that something bad is happening. For some of these banks, that understanding's been a long time coming.

Edit: The Hong Kong Monetary Authority also cut its lending rate by a full percent.

Re-Edit: The Bank of Korea and the Central Bank of the Republic of China (Taiwan) each cut by 25 basis points the next day, along with Hong Kong.

8:09am: In the previous stage of the financial crisis, companies went bust.
In this stage, countries are on the edge of going broke.

Today, it's Iceland. They've just sent officials to Russia to beg for a €4 billion loan. At first, they'd claimed they'd gotten one, but then the Russians said they hadn't formally been asked and hadn't made any decisions. Finally, Icelandic officials admitted they had "overstated" the agreement and that talks were still "ongoing".

One of their smaller problems? Their banks had been taking lots of deposits from abroad:

From http://www.portfolio.com/views/blogs/market-movers/2008/10/07/the-iceland-dow-connection?tid=true:

There's a British angle, of course: Icelandic banks have been taking Brits' deposits. This is not exactly reassuring:

Times readers reported yesterday morning that they could not withdraw their money from Icesave accounts over the internet. But a spokesman for the bank said that Icesave was now operating normally and depositors could withdraw money. He added that the Icelandic Government had ample foreign reserves to cover the £4bn of British deposits in the event of any collapse.

Er, no, it doesn't. The Icelandic government has 374 billion kronur of foreign exchange reserves; if you convert that at 188 kronur to the pound (as plausible an exchange rate as anything else, and the one I get from Yahoo), that works out at less than £2 billion. Even with an extra €4 billion from Russia (Russia!), Iceland's foreign-exchange reserves aren't enough to last a day, if the locals sensibly decide they'd really rather be in any currency but kronur.

In actual fact, Icesave depositors are being stiffed by the Icelandic government, which took over the bank. In response, Britain's Prime Minister Brown says the UK will sue Iceland over the 300,000 accounts belonging to UK account holders.

"The Icelandic government, believe it or not, have told me yesterday they have no intention of honoring their obligations here,'' [British Chancellor of the Exchequer Alastair] Darling told the British Broadcasting Corporation.

"The first call would be on the Icelandic compensation scheme which, as far as I can see, hasn't got any money in it," he added.

Of course, Iceland's a tiny country. But when this all started, the banks that went bust were tiny ones no one had ever heard of...

10:04pm: And, whoa, where did all those yesterdays go
When you still believed love could really be like a Broadway show
You were the star
When did it close?
(1977)

3:25pm: There's a saying about being right (i.e., correct) in the wrong (i.e., socially unacceptable) way being much more dangerous than being wrong in the right way which I'd like to find as it's currently got a bit of resonance in my life.

Anyone know what saying I'm talking about, and where I might find it?

1:46pm: Why Red? Why Blue?
Ross Douthat and Daniel Larison bring up something that I found odd, too.

From http://rossdouthat.theatlantic.com/archives/2008/10/blue_america.php:

The fact that conservative America has been saddled - thanks to the vagaries of network-news color schemes and the closeness of the '00 election - with a hue long associated with international Communism and its enablers, while American liberalism gets to claim the color of the sea, the sky, and Frank Sinatra's eyes, is a small but obnoxious outrage, and as the Right prepares to enter the political wilderness I'm proud to do my part to at least reclaim our rightful color.

From http://www.amconmag.com/larison/2008/10/07/raise-the-black-banner/:

What is strangest about the partisan color schemes that have prevailed for the last decade is that they are not only the reverse of the colors that used to be loosely associated with the parties in the twentieth century (a curious detail that seems to have largely been expunged from memory), but they are entirely the opposite of the normal modern association of the color blue with relatively more conservative and nationalist parties and the association of the color red with left-leaning and social democratic parties. My Brownson-inspired cracks about Red Republicans aside, the Republicans today are much more like the political Blues of 20th century European politics. It has been remarkable to see how a completely arbitrary change of colors used by television stations in reporting the Electoral College results in 2000 has caught on and become the basis for widely accepted symbolism for both parties.

To me it's just another example of how, in America, television trumps history.

5:29pm: Something very interesting is going on with Treasuries and the dollar.
There was some worry that, with all the money the Federal government is throwing at banks to keep them afloat a) this mass issuance of debt would flood the markets with Treasury securities, which would force up interest rates because there wouldn't be enough buyers for it and b) that the budget-busting this represents would cause people to flee the dollar for other currencies, driving down its value.

Neither of these things is happening. In fact, quite the opposite.

It's true that there's been a lot of new Federal debt, but such is the scramble for low-risk assets like Treasuries that their prices are now soaring, which drives yields down. At this point, the interest rate on Treasury securities is so low, buying them amounts to a deal where you give money to the Treasury and they promise to give it back, plus a minimal amount of interest. Then again, considering the other possibilities on offer which might not pay you back, that's a pretty good deal right now.

In order to buy Treasury securities, you have to have dollars, so demand for dollars has been strong. And however bad things look here, chaos overseas means that things don't look any better elsewhere. All of this has meant that the dollar is gaining lots of ground on the euro. The euro dropped below $1.35 during the day today, down from around $1.60 in mid-July.

How long will this go on? Who knows? It wasn't really expected to go this way to start with.

4:50pm: Jim Cramer just threw in the towel.
It might be time to buy. :)

From http://gawker.com/5059535/jim-cramer-begs-america-to-abandon-hope:

Whoa, Jim Cramer has fully turned around as much as a man can possibly turn around! The shouty CNBC (poor) stock picker—who as recently as last November was trumpeting "10 Reasons to Be Bullish" ("1. The stock market is cheap")—went on the Today show this morning to virtually beg Americans to pull all the money they might need in the next five years out of the stock market, no matter what the cost. He looks like he's about to cry. This will be one of the defining moments in the media narrative of our nation's impending financial doom.

10:45am: Not just "an American problem".
Last week in the German parliament, finance minister Peer Steinbrück declared, "The financial crisis is above all an American problem."

Guess not.

Over the weekend, he was scrambling to organize a €50 billion rescue package to save Hypo Real Estate Holding AG, one of Germany's biggest housing lenders. To try to stop a bank panic, the German government also had to match the Greek and Irish governments and announce a national guarantee on all consumer bank deposits.

Maybe he should have waited a bit before indulging in schadenfreude.

10:25am: Flip-flops on a 45 degree morning?
Isn't it a bit cold for that?

1:38pm: From http://www.amconmag.com/blog/2008/10/03/euromillions-to-the-rescue/:

I was very impressed by the reasoning of a witty young American, of the on-the-street type, who was being interviewed about the world financial situation in one of those inane swoops that modern newscasters feel that they have to do to find out what the people think. He argued that since so many trillion dollars were needed to bail out the banks and since there were so may hundred million Americans, why not instead give a million to each and every American. What a party that would be! Sub prime mortgages would all get paid off, everyone would have cash in their pockets to buy, buy, buy and would it be any worse than giving it to just a few men in suits. Most probably not, though if I am anything to go by I don’t suppose the money would last long, but what the heck it would be fun while it lasted. The only problem is that the American government does not actually possess trillions, nor do its people. It owes trillions, and its bail out of the banks will just be more of the same: notional credits chasing notional debts.

11:30am: The Governator just asked the Treasury for a $7 billion loan.
From http://www.latimes.com/news/local/politics/cal/la-fi-calif3-2008oct03,0,6959549.story:

California Gov. Arnold Schwarzenegger, alarmed by the ongoing national financial crisis, warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal government within weeks.

The warning comes as California is close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans that it typically relies on to remain solvent.

"Absent a clear resolution to this financial crisis," Schwarzenegger wrote in a letter Thursday evening e-mailed to Paulson, "California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the federal treasury for short-term financing."

The cash needs to be in the state's bank account by Oct. 28 to be available to fund a scheduled $3-billion payment to more than 1,000 school districts.

5:10am: Meanwhile, European countries disagree on what action to take.
From http://business.timesonline.co.uk/tol/business/markets/article4865672.ece:

Spain today joined the call for an increase in the guarantee limit on bank deposits across Europe, piling further pressure on UK Prime Minister Gordon Brown to support an ambitious plan for a €300 billion (£237 billion) bailout fund to rescue crippled banks.

UK banks are pushing Mr Brown to act after Ireland's shock decision to guarantee domestic debt and deposits threatened to trigger a wave of Britons transferring their savings to Irish lenders.

French President Nicolas Sarkozy, whose country holds the European presidency, is seeking Mr Brown’s support before an emergency summit, scheduled tentatively for Saturday, with Silvio Berlusconi, the Italian Prime Minister, and Angela Merkel, the German Chancellor.

His proposal was greeted with scepticism in Britain and outright hostility in Germany. It appears to involve the creation of a Europe-wide emergency fund that would be used to prop up banks when national governments are unable to intervene.

Ms Merkel said that Germany could not and would not issue a blank cheque for all banks, “regardless of whether they behave in a responsible manner or not”.

Amid the confusion and bickering between governments, France denied at first that it had put forward a proposal for a fund at all and then, after admitting that it had done so, denied that it would cost €300 billion.

Paris said that the figure had come from the Dutch Government. Officials in The Hague said that they had no idea what the French were talking about.

The Financial Times posted this screenshot labeled "Cost of insuring French government debt from default" under the heading Le Bailout:

5:10am: The Irish government has decided to guarantee all retail deposits and loans in six big Irish banks.
"[T]he Irish action adds a EUR400bn contingent liability (being the deposit and wholesale funding base of the banks it has guaranteed) to a EUR38bn national debt of a country with a EUR180bn GDP. However you cut it, those are scary figures; this is like a hedge fund embarking on a lemon strategy and rolling the dice."

This is causing money to flow into those banks from other countries, particularly Britain.

Sky News decided to see how difficult it would be to move money to an Irish bank (from the UK).

The European Commission is investigating whether this guarantee breaks EU law, says the Independent.

The Guardian reports the move was taken because the government was afraid one of the banks was going to collapse on Tuesday morning.

3:11am: That 30 secret question meme.
As it turns out, there are at least a couple of versions of that meme going on.

http://vakkotaur.insanejournal.com/228904.html has details:

A few days ago I posted a link to a list of questions used in that "30 Questions" thing that's been going around LJ (and, I assume, other places) for a while. Last night someone pointed out another link to the questions. The interesting thing is a comment on that posting, pointing out that some questions had changed.

Did you get this one, which seems fairly innocuous:

05. Someone who seems easy to talk to.
21. Someone who you are grateful to.
22. Someone who makes you laugh.

Or this one, which implies different, not necessarily pleasant, things:

05. Someone who seems like a chatterbox.
21. Someone S-type.
22. Someone M-type.

That's at least two versions of the list. How many versions are there?

Since it's trivially easy to just copy and paste, this isn't just a transmission-reception or mis-hearing-mis-remembering-mis-speaking error as happens in the Telephone Game. This was deliberate. Someone decided to make things more revealing, perhaps more dramatic. And as long as the general secrecy was maintained, there was no way to verify that the set of questions or descriptors you had was identical to the list someone else had worked from.

Me, I'm just thinking, "Jaguars?", "MGs?" or even "asteroids?" :)

11:17pm: Bailout won't pass? Throw in more pork.
As it turns out, one of the ways Congress has come up with to get the MOAB (Mother of All Bailouts) to pass is the time-honored way of adding more pork to it. Mmmm...pork.

From http://tbm.thebigmoney.com/articles/juicy-bits/2008/10/01/bailout-baloney:

Save the world economy! Save the wooden arrows for children! The Senate is doing both tonight. The 451-page Emergency Economic Stabilization Act of 2008 includes a number of tax relief measures added in presumably to garner votes; certainly few seem to respond to an emergency, or do anything particularly stabilizing. Here are the juicy bits from the bill that help some special interests or regions.

DIVISION C-TAX EXTENDERS AND ALTERNATIVE MINIMUM TAX RELIEF

SEC. 308. INCREASE IN LIMIT ON COVER OVER OF RUM EXCISE TAX TO PUERTO RICO AND THE VIRGIN ISLANDS.

SEC. 309. EXTENSION OF ECONOMIC DEVELOPMENT CREDIT FOR AMERICAN SAMOA.

SEC. 317. SEVEN-YEAR COST RECOVERY PERIOD FOR MOTORSPORTS RACING TRACK FACILITY.

SEC. 325. EXTENSION AND MODIFICATION OF DUTY SUSPENSION ON WOOL PRODUCTS; WOOL RESEARCH FUND; WOOL DUTY REFUNDS.

SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED FOR USE BY CHILDREN.

Perhaps modifications like this will help get them the votes they need in the House.

Edit: According to Forbes, the additional provisions add $110 billion to the cost of the bailout, which makes it an $810 billion package.

5:21pm: The Steamy Way to Dinner
From http://www.nytimes.com/2008/10/01/dining/01rice.html:

SHIRLEY CHAN, a Chinese-American Web site designer, was born in Hong Kong, lives in Brooklyn, and has never cooked a pot of rice in her life. “One billion Chinese people cannot be wrong about rice,” she said: virtually every household has at least a basic rice cooker. As a child, it was her chore before each meal to wash the rice, measure it into the machine, and press the button. “It always, always comes out perfect,” she said. “Until I came here, I never even knew rice could burn.”

How does the machine know when the rice is done? A built-in thermostat tracks the temperature of the bubbling mixture of rice and water. When the water boils and turns to steam, the temperature in the pot begins to rise, which signals the cooker to switch to warm.

But it’s easy to override the machine’s small brain. Press the “cook” button, melt butter in the bowl, and sweat a finely diced shallot in it until soft — then add rice, broth and saffron strands, and start the machine again to make a daffodil-yellow pilaf. Cook some short-grain rice, then drizzle in some sesame oil and switch back to “cook,” mix in some kimchi and break eggs on top for a simple bibimbap, the Korean-American staple of rice “and whatever is in the refrigerator,” Mr. Park said.

Make grits, risotto or any grain cooked by the absorption method simply by adding extra liquid and stirring often. The machine has plenty of built-in cushions for the cook: the temperature never gets very high, the surface is nonstick, and everything happens in a kind of slow-motion.

The new-model rice cookers, with digital menus and “fuzzy logic” operation, are actually less flexible than their one-button ancestors. The machines have their own ideas about brown rice, porridge, sushi rice and sometimes more.

It's true. My rice cooker is an old-fashioned one, and I really prefer its versatility.

5:09pm: This winter may be a good time to buy a new car.
Winter is usually a slow time for car dealers, so it's often a good time for a buyer to drive a hard bargain. This winter looks like it'll be even better than usual, because those dealers are lean and hungry.

From http://bigpicture.typepad.com/comments/2008/10/auto-sales-tank.html:

Auto sales, which were weak over the past 11 months, simply went into freefall in September:

• Ford Motor posted a 34% drop. Their truck and van sales fell 39%, SUV sales plummeted 57% and F-series truck sales dropped 42%.


• Honda reported a 24% decline in sales;


• Toyota U.S. Sept. sales drop 32.3%, light truck sales dropped 38%


• Lexus sales -- Toyota's luxury nameplate -- fell 37.7%;


• Chrysler U.S. September sales fall 33%


• Volvo sales slumped 51.8%;


• Porsche tumbled 45%;


• General Motors sales down 15.6% (better than the expectations of -26%)

According to the Detroit Free Press, the seasonally adjusted annual SAAR for the past decade has ranged between 14 million and 17 million vehicles. Since December, the SAAR has been in a free-fall, and September now looks like its going to hit 13 million annualized sales. Edmonds.com noted that the last time fewer than 1 million new vehicles were sold in a month was February 1993.

In a related Reuters story, a new study says that nearly 1 in 5 car dealerships could fail.