A Daring Trade Has Wall Street Seething – WSJ.com

Extraordinary. Long-ish story short is:

Some big banks pay 90% of this face value for credit-default-swaps (insurance) on a mortgage-backed-security they think is going to default (but they don’t own). Their counterparty (insurer) pays off the loans in the MBS and doesn’t have to pay the swap. Pockets the premiums (which were big) minus the cost of paying off the loans.

The real-life analogue to this? Your house is on fire. Your neighbors all buy fire insurance on your house from a friendly agent, promising to pay if the house on your lot is destroyed. The agent walks over to the burning hulk of your house, puts out the fire, repairs the damage, and tells your neighbors “the house isn’t destroyed” so he doesn’t have to pay out. The cost of fixing the house is less than the premiums your neighbors paid.

Before going and buying this sure thing, wouldn’t you ask yourself why in the world anyone would write insurance on a burning house/sure-t0-default MBS? Or what incentives there were if the agent wrote insurance for more than the house was worth?

via A Daring Trade Has Wall Street Seething – WSJ.com.

Parents Pulling the Plugs on Williamsburg Trust-Funders – NYTimes.com

Yet another one for the insufferable NYT lifestyle story file. At least we’re in recession mode on the lifestyle stories. Am I feeling schadenfreude or stupid-freude?

Famed for its concentration of heavily subsidized 20-something residents — also nicknamed trust-funders or trustafarians — Williamsburg is showing signs of trouble. Parents whose money helped fuel one of the city’s most radical gentrifications in recent years have stopped buying their children new luxury condos, subsidizing rents and providing cash to spend at Bedford Avenue’s boutiques and coffee houses.

via Parents Pulling the Plugs on Williamsburg Trust-Funders – NYTimes.com.

Quote of the day

From Geoffrey Miller. Don’t know if there’s any sense in his argument, but this paragraph got me…

“Compared with their easygoing clannish ways, our frenetic status seeking and product hunting would look bewildering indeed. Our society would seem noisy, perplexing and maybe psychotic … All you have to do is sit in classrooms every day for 16 years to learn counterintuitive skills, and then work and commute 50 hours a week for 40 years in tedious jobs for amoral corporations, far away from relatives and friends, without any decent child care, sense of community, political empowerment or contact with nature. Oh, and you’ll have to take special medicines to avoid suicidal despair, and to avoid having more than two children. It’s not so bad, really. The shoe swooshes are pretty cool.”

via Sex Sells. Here’s Why We Buy – TIME.

A world of $40 plug-sized computers… warning: geekery

NY Times poses an interesting question of the day:

What would you do with a $40 Linux computer the size of a three-prong plug adapter?

The article goes on to imagine what would happen if you had an array of little computers everywhere because they were so cheap. Some ideas: file servers, e-mail filtering/processing gateways, in your TV, DVD, your digital photo frame, etc.

This misses the point. My problem isn’t that I don’t have enough computing power. I have a couple of laptops, a little NAS file server, a couple of media players (Roku Netflix box and Soundbridge), as well as the more special-purpose things in my DVD, Wii, etc.

My problem is that I have inconsistent and incoherent input/output devices. I have more remotes than I know what to do with, plus keyboards and mice, and I have screens everywhere – TV, computer monitors, that little fluorescent screen on the Roku Soundbridge – plus audio output in various speakers in various places. And I don’t even have that complex a setup (no home theater, no DVR). Mix in the storage issue (local hard drives, cloud storage, NAS storage, optical drives) and life sucks even a bit more.

A couple of observations. First is that many of the input devices are tied to a single device – the very nice 8 (9?) Netflix player remote, or the less nice credit-card sized DVD remote with 40 or so equally sized buttons). A lot of devices have single dedicated outputs as well – goes to the TV screen, or its own monitor. Efforts to make better remotes (ones with LCD screens, for instance) are heroic multi-node integration projects in the absence of standards (or are proprietary themselves).

My fantasy is a world in which input devices,  output devices, storage and computing power are all networked, but decoupled from one another. What is a computer, anyway? it’s computing power plus input device + screen + storage. Wouldn’t it be nice to “assemble” a computer dynamically in your home. Take your TV screen + a thumbwheel remote + some computing power and storage, put them together and surf the web. Oh, I want to blog on that? Put the keyboard in the mix. Now you’re watching a youtube, but need to go to the other room? Send the video to a different display & carry the remote with you, and keep on working. The video decoding is taking place in one of those $40 computers somewhere.

From the ads, at least, it sounds like the DVR world is getting there with multiroom playback, but this misses a much larger universe. I don’t want another computer. I just want screens & input devices that tap computing power somewhere.

Plugging In $40 Computers – Bits Blog – NYTimes.com.

Does OnStar really know where you are?

onstaryellowstoneOK, why should I be obsessed this morning with something this silly? There’s a full-page ad running on the back of the Wall Street Journal this morning for OnStar. It has a pretty picture of a road winding its way through nice green, leafed-out trees. It says “Can you find the crashed Chevy in this ad?” There’s no car in the ad, but the copy continues “We can. (It’s an ’09 Malibu, in the ravine past the sign. Lat: 44.360. Long: -110.300. And yes, help is on the way.)

OK, cute idea. But then I got to thinkin’.  Where is that latitude/longitude? Seems awfully far north. And I remember that the 100th meridian is the thumbnail boundary between eastern and western North America, so this would be in the northern part of the west. What are these deciduous trees doing there?

Luckily Google Maps makes it easy to find the answer without pulling out my trusty atlas. It’s in freakin’ Yellowstone National Park! So the trees are all wrong, for sure. But that’s the least of the problem. This location is in the middle of the peninsula/promontory between the Yellowstone Lake’s two arms. There are no roads, no cars there – you can’t even take a motorboat down there. I think  it might even be an official Wilderness Area, if such a thing still exists any more.

So, if I run off a ravine in what looks like Maryland or Pennsylvania, does that mean OnStar will send someone to the middle of a wilderness in Wyoming? It is amazing that they did not check where the latitude and longitude they made up actually was. But I did?


In the Post (NY, not Washington) recently:

Reader Gary Cicio, NYC podiatrist, did the research, and asks us to choose one of the two options to see a Mariners-Yankees game this season, and from the very best seats:

Option 1: Two tickets to Tuesday night, June 30, Mariners at Yanks, cost for just the tickets, $5,000.

Option 2: Two round-trip airline tickets to Seattle, Friday, Aug. 14, return Sunday the 16th, rental car for three days, two-night double occupancy stay in four-star hotel, two top tickets to both the Saturday and Sunday Yanks-Mariners games, two best-restaurant-in-town dinners for two. Total cost, $2,800. Plus-frequent flyer miles.

He left out the most important plus: Fewer annoying Yankees fans.


Disney Parks Stop Scans for Topless Riders – TIME

Stop the presses!

Disney says it will no longer scan riders on Splash Mountain and three other rides for guests who feel the need to flash their breasts for souvenir photos.

The article goes on to quote a spokeswoman who informs us (are we disappointed?) that “actual inappropriate behaviors by guests are rare.”

Now tell me, why exactly would this be publicized? And I love that expression, “…feel the need…” in this context. ” I was going down the flume ride and – I don’t know what came over me – I had to lift my top!

via Disney Parks Stop Scans for Topless Riders – TIME.

Air France jet diverts after being told to stay clear of US airspace | Gadling.com


An Air France flight from Paris to Mexico had to make an unscheduled stop in Martinique when US air traffic controllers notified the jet that it would not be receiving permission to fly over US airspace.

Why, you ask? Get this: A journalist on the US no-fly list was a passenger. 38,000 feet up is just too dangerous.

via Air France jet diverts after being told to stay clear of US airspace | Gadling.com.

Also see the journalist’s first-person account.

David Kessler: Fat, Salt and Sugar Alter Brain Chemistry, Make Us Eat Junk Food – washingtonpost.com

So David Kessler dumpster-dives at Chili’s. Probably better than the food on the tables.

The high-octane career path of David A. Kessler, the Harvard-trained doctor, lawyer, medical school dean and former commissioner of the Food and Drug Administration had come to this: nocturnal dumpster diving. Sometimes, he would just reach in. Other times, he would climb in.

It’s good to see an ex-administrator (both at the FDA and as Dean at UCSF) turn back into a real scientist who studies stuff. On the other hand, he’s turned his back on french fries, which is a world I don’t want to live in.

via David Kessler: Fat, Salt and Sugar Alter Brain Chemistry, Make Us Eat Junk Food – washingtonpost.com.

Money for Nothing

Paul Krugman comments on reports that banking pay has returned to 2007 levels – noting (1) that what they did in 2007 (that earned them their huge payouts) is exactly what got us into this economic crisis, and (2) that now they’re playing with our (public) money and shouldn’t go overboard. He concludes:

In 2008, overpaid bankers taking big risks with other people’s money brought the world economy to its knees. The last thing we need is to give them a chance to do it all over again.

Two further thoughts:

First, I wonder whether we actually want so many smart people on Wall Street.  Shouldn’t bankers be Babbitt-boring?

Second, it seems to me that if you pay enormous, even extravagant amounts of money, you’ll get more people whose primary motivation is money. I’ll accept that most people are moved in some fashion by financial incentives. Should any company structure compensation to attract employees/executives for whom money is the first motivation?

On this score, see the (otherwise teeth-grindingly annoying) New York magazine article on this topic, which winds up with this interchange between the reporter & an ex-Goldman banker:

I asked him what will happen if Congress succeeds in regulating compensation. “These guys will not work on Wall Street,” he says flatly. “People go to Wall Street out of greed. When I was interviewing for jobs, frequently some form of the question came up: How much do you want to make money? If my answer was something like—and it wasn’t—but if my answer was, ‘I’m here for intellectual betterment,’ their response might have been, ‘University is a great place for you.’ They want people who think ‘I’m greedy, I want to be a billionaire.’ That was viewed as a really good thing.”

You get what you pay for, I guess.

via Op-Ed Columnist – Money for Nothing – NYTimes.com, and Cutting back is hard | Free exchange | Economist.com.