The investigative powerhouse of Fox Business has suddenly discovered that years of government tampering with the Florida insurance market has effectively destroyed the ability of Florida residents to cost effectively mitigate their hurricane, wind and flooding risk. Apparently, a bunch of state legislators were not quite as good at pricing risk as they (or their constituents) imagined.
Long time readers of Going Private and finem respice will have had about 18 months on Fox Business in realizing that the combination of incentive mismatch in the political class, populist pandering and anti-market nonsense has caused quite a bit of damage....continue reading and rate this entry.
He Have Heart Attack And Fell Out Of Window Onto Exploding Bomb And Was Killed In A Shooting Accident
Conveniently for some, Mohammad Asgari, an information technology official inside Iran's Interior Ministry and apparently the source of leaked data purporting to show election fraud, was killed in a "suspicious" car accident. It is difficult not to indulge in conspiracy theorism in such cases. And sometimes conspiracy theorism manages to do quite well. Let's hope this is not one such.
Iran has its work cut out for it. Unfortunately, even daunting protests do not always carry the day against entrenched statist regimes. China has managed to escape almost entirely unscathed almost exactly ten years after Tiananmen while the leaders and middle management of the 1989 movement suffered bitterly thereafter. Like a global economic player, an isolated state already familiar with sanction regimes has very little to lose by brutally repressing its population when they get uppity. Even success might mean little over the long run. Expectations that regime change in Iran will necessarily result in a budding democracy or a free market economy are, to put it mildly, courting disappointment....continue reading and rate this entry.
A finite respite for finem respice as, though delayed for four days, I head now by small plane for the Sierras and then come right to 000 and violate the airspace of the great white north. (Coming back through the ADIZ is worse, you know).
Caution is certainly the better part of valor when dealing with rented aircraft. The damage on the Piper Seneca, patched via duct tape on the interior ceiling covering evidence of foul play, allegedly left by younger flight instructors during an impromptu game of "elevator," is superficial, if not inspiring. No critical instrumentation or systems there in any event. Try to find a decent twin to rent instead. Try to find a decent twin to rent that was never used for makeshift freight. I take what I can get. An old but workhorseish Seneca that has been the butt of flight instructor jokes from time to time will do just fine....continue reading and rate this entry.
It has been the habit of the United States, in its capacity as a nation of investors and consumers with a highly developed sense of entitlement when it comes to returns and little or no tolerance for corrections of any kind, to sate the appetite of the cult of buoyancy by inflating various bubbles. This is particularly so when it appears the national vessel is beginning to sit low in the water. Loyal readers will know that finem respice does not go so far as to call for the abolition of the Federal Reserve, or make bleating noises about fiat currencies, but, without a doubt, it is worth looking at the role of various institutions as we confront the next gas-filled, surface-tension-bound, expanding topography. That sort of reflection, culminating in exactly nothing, is about all we can expect. The tools of the Federal Reserve and the Treasury are a grant of immense power to the executive, and he or she is unlikely to relinquish it without the sort of battle that resembles a protracted land war in Asia. So serial-bubbology will prevail. Junk Bonds to Dot-Com to Real Estate, for instance. Of course, this means we don't exactly have a large sample size with which to draw conclusions (n=3 perhaps) but it stands to reason that the longer we delay correction and manipulate markets with bloody sacrifice to the minions of buoyancy, the worse the wrath of the deleveraging.
Having taken great pains to ignore this lesson, and to obfuscate it completely no matter form with which it attempts to make its presence felt, it is pretty obvious that the present administration intends to bubble its way out of the latest opportunity to reset prices and moderate debt. Moreover, our leaders intend to do so via massive borrowing to pay for about every government program of any size ever conceived going all the way back to that one that crossed the kickback-addled mind of some flaccid congressman while waiting in line at Disney World back in 1972.
Small sample size or not, it is so clear that the next bubble is on the horizon, or, perhaps, already upon us, that a great deal of time and effort is spent speculating as to which asset class will be next. Oil or energy in general is a popular theory. Gold has its advocates. James Simons likely points to high beta stocks when asked. A few clever commentators have suggested Treasuries. This last is closest to the mark.
Of course, the next bubble (and perhaps the last for a while) is government. The state government bubble is beginning to burst even as you read this. The federal government bubble is next. You might want to open your mouth and plug your ears.Entry Rating:
These pages have commanded a great deal of attention (not all of it positive or constructive) for relating the recollections of a lone hedge fund manager alleging acts by the present administration that, to these eyes at least, at least flirt with if not outright cross the line between hard negotiation and coercion or, perhaps, even extortion. As has become somewhat routine, attacks directed at finem respice in this connection tend to include references to the reliability (or lack thereof) of anonymous speech. It takes very little analysis to boil down the complaints of such detractors to a basic and simple premise: anonymous speech is prima facie less reliable than what I will call "credited speech." This is a patently absurd and dangerous premise....continue reading and rate this entry.
One of the problems with using Kafka to point out how surreal things have become in the United States is the fact that channeling Kafka in this way has become so commonplace as to make the analogy trite. For outsiders, this presents many opportunities for light entertainment and amusement as laughter is repeatedly triggered not just from the "just desserts" discomfiture the United States, champion of free markets, is subjected to during a financial crisis of its own making, but also from the absurdist screenplay that passes for political discourse in such times. Insiders and quasi-insiders have only two choices when living through Kafkaesque times- the inexorable slow downward spiral of post-empire decline finally punctuated by the mob's assault on "the rich,"1 or flight to join the outsider class.
- 1. This, of course, is the classic harbinger of empire-death historically.
Secrets have their place, no doubt. So do anonymous sources. Both need mechanisms to promote and preserve them. Fortunately, technology has many answers in this respect. One of which, cryptography, is an ages old equalizer, threatening primarily to a state that is threatened by citizen secrets. I cannot think of a more apt time for its use. So, by request, please find attached below, finem respice's public PGP key, permitting readers to submit secrets secretly to finem twenty four hours a day, seven days a week....continue reading and rate this entry.
In the wake of the Napoleonic Wars, and after the conclusion of the Treaty of Chaumont by the Quadruple Alliance1 the Congress of Vienna sought to reorganize Europe in the face of Napoleonic consolidation. Depending on where your sentiments lie, Tsar Alexander I was either an enlightened sovereign of these times, or an expansionist opportunist. Our contemporary understanding of the Polish-Saxon Crisis- a Russian-Prussian grab for large parts of Poland for Russia and effectively all of Saxony for Prussia- suggests that the latter interpretation is closer to the mark.
Charles Maurice de Talleyrand-Périgord, the First Sovereign Prince of Beneventum and noted French diplomat of the times, managed to persuade the Austrians, British and the French to conclude a secret treaty vowing war if necessary to frustrate the Russo-Prussian plans. In the interim, attempting to lend authority to the Russian and Prussian claims, Tsar Alexander I is remembered to have implied Saxony's sovereign, King Frederick Augustus, a traitor to the cause of Europe for having rejoined Napoleon in the middle of 1813. Talleyrand, doubtless referring to the fact that Frederick William II of Prussia, Francis I Emperor of Austria, and even Alexander himself via the Treaty of Tilsit, would likely have failed the same standard, is said to have commented, "That, Sire, is a question of dates." While this exact quote is almost obviously apocryphal, what is certain is that Talleyrand, often referred to as the "Six Headed Diplomat," was well-known for his ability to play all sides, even France itself, against the middle. Standing in a room with the man is said to have been a lesson in multifaceted reflection and refraction. It is not entirely impossible, for instance, that he played a personal role the kidnapping and execution of the Duke of Enghien in 1804, but it is nearly certain that he was a shameless womanizer and the attribution for his more cynical quip "La parole nous a été donnée pour déguiser notre pensée,"2 is above reproach. He stands as a reminder that nothing is as it appears when powers clash. Reflecting on this, sage readers of finem respice might find a return to old treatments somewhat useful.
In this connection one might see that it has been easy to spend a lot of time focusing on Chrysler's Non-TARP lenders. This, I think, unduly takes the focus away from those wards of the Executive Branch, Chrysler's TARP lenders. In particular, JP Morgan as the lead secured creditor. A careful look at the timeline of Chrysler's
BataanU.S. Bankruptcy Court for the Southern District of New York Deathmarch over the last 48 hours has brought up some interesting questions likely to see treatment in several entries in the days to come. Initially, however, it is interesting to step back a little bit and recognize exactly how well the likes of JP Morgan made out in this process.
- 1. Britain, Russia, Austria, and Prussia's 1813 pact opposing France in the final phase of the Napoleonic Wars.
- 2. "We were given speech to hide our thoughts."
It should be obvious to most observers that, recent allegations of strong-arm tactics in negotiations with Chrysler creditors notwithstanding, given the current situation the White House shouldn't need to resort to anything so openly thuggish as naked threats issued by the likes of Steven Rattner. Assuming for a moment, and for the purposes of conversation, that the allegations are substantially true (and I believe they are), the fact that a bit of Chicago-style thuggery seems to have been required- and seems to have failed- says a lot about this White House. It also says quite a bit about the wild overconfidence intrinsic in the administration and how entirely unused to being denied their will are the senior members thereof. A more deft executive need not have pushed so hard, or rattled the saber of class warfare so loudly, but then a more deft executive would not have expected so much....continue reading and rate this entry.