randomfoolishness.com

This is The End, My Friend

randomfool — Mon, 17 Nov 2008 16:00:02 +0000

So, I’ve been busy lately but I had saved this link to read when I had a few spare minutes which, to my surprise, I had recently. Michael Lews is one of my favorite authors. His book, Liar’s Poker: Rising Through the Wreckage on Wall Street still ranks as one of the best books that I have ever read (and, given the current economic crises, was one of the earliest works to point out the problems that ultimately lead to today’s nightmare). By the way, Lewis wrote two other great books, Moneyball: The Art of Winning an Unfair Game
and The Blind Side: Evolution of a Game if you are into sports! Anyway, Lewis penned a great article, which I assume is just one of many to come in the coming weeks, months and years as we try to sort out what has happened in the financial sector. Check out his article here. It’s becoming clear to me, that as we move deeper and deeper into this financial mess, that we are basically unwinding all of the “value” that we “created” over the last 20 years or so in the financial sector.

The Auto Industry, Thanksgiving, and the Problem of Induction

randomfool — Sun, 16 Nov 2008 20:23:12 +0000

Well, it’s almost Thanksgiving and, as Nassim Nicholas Taleb describes in his book, The Black Swan: The Impact of the Highly Improbable, turkeys all over the world are about to be very surprised. For a thousand or so days, the farmer comes out and feeds them. Life is pretty good and the turkey gets more and more certain that each day will be about the same as the previous thousand. And, then comes the day before Thanksgiving. The turkey’s model does not include the real risk that it faces. Taleb describes this as the problem of induction as originally coined by Betrand Russell.

The year of 2008 has had more than its fair share of turkeys as the models, primarily those dealing with subprime default and loss severity risk, completely missed the real risk. Now comes the auto industry trying to line up for their share of the Federal bailout dollars (which we are borrowing from our friendly communist trading partners and/or cranking out of the presses at the U.S. mint) because, what a surprise, their model does not include the possibility that people might stop buying cars!

Total U.S. car and light-truck sales this year could come in at 13.5 million, 2.6 million fewer than last year. “That’s in nobody’s business plan,” says Kimberly Rodriguez, an automotive specialist with Grant Thornton. “The best planning in the world cannot survive that fluctuation.”(Is General Motors Worth Saving? Time Magazine, November 13, 2008)

So, the turkey can be faulted for not paying attention to what happened to his cage mate last year and adjusting his model that he uses to predict his future. But, he’s a turkey. So, apparently, is the U.S. auto industry.

Retreadapalooza

randomfool — Fri, 14 Nov 2008 05:48:31 +0000

Not that I was terrible delusional to begin with but only a few weeks into this Obama thing and disillusionment has fully set in. Hillary Clinton for Secretary of State!?!? Yuck! So, Clinton didn’t win the primary (thanks in large part to a few key strategic blunders on her part) but the Clinton mafia is clearly taking over the Obama administration and planning to put the chief blunderer in charge of foreign policy where we have had a recent string of blunders. Great.
What’s next? Janet Reno for Defense, Al Gore for Interior, Gennifer Flowers as NSA, Paula Jones for Treasury (Volker gets undersecretary) and Monika Lewinsky reprising her role as White House intern/cigar butler? I thought there was an implicit agreement between the voters an Obama that after he knocked of Clinton and ignored her for VP that he would not let Cousin Oliver come stay at the White House again.
Change? What Change?

Change Even Obama Cannot Accomplish

randomfool — Thu, 13 Nov 2008 08:46:12 +0000

People are selfish and hate each other and such has been the general state of affairs for roughly the last 135,000 years. People kill each other, hurt each other, oppress each other and cause pain and suffering. People do the opposite as well. The election of the Chief Executive Officer of the largest, most corrupt and evil corporation that the world has ever seen is unlikely to change any of this. It’s been a little more than a week and I am already tired of the “transformational figure” nonsense. People who hate other people will not start loving those other people because Obama is the president and any delusions to the contrary serve only to increase the already very high chances that the Obama Administration will fail to meet expectations.

Please Make John Edwards Go Away!

randomfool — Tue, 11 Nov 2008 22:09:03 +0000

Apparently John Edwards is plotting a comeback.

Among other problems that the Obama Administration will have to deal with, it should find a way to remove John Edwards from whatever debate we have about whatever issues we feel are important. Seldom are there public figures who are more dislikable to me than John Edwards (well, not so seldom, but you get my drift). One of the lowest life forms to begin with (a trial lawyer), he now has the distinction of also being a verifiably bad person.

Go away, John Edwards, please, please, please just go away.

The Real Problem: The Federal Budget

randomfool — Mon, 10 Nov 2008 05:51:44 +0000

I hope that Obama is successful, but I would not bet that he will be. Why? Because the real problem is that our Federal government is essentially the biggest subprime borrower in the world! Entitlement spending will consume 100% of tax revenues in the not-too-distant future and neither Obama nor McCain really were talking about the problem. If we default on our national debt (which will happen if we don’t raise taxes or cut entitlement spending or both by politically suicidal levels), the crisis that will follow will make the current economic crisis look like child’s play.

And, don’t take my word for it…take it from the Federal Government. They wrote it down in plain English. If you want to scare yourself, read it for yourself.

The Impact of the War on the Election

randomfool — Fri, 07 Nov 2008 18:22:00 +0000

Looking back, it really was all about the War. Even though Iraq and Afghanistan have been, for the most part, pushed from the front-page by the economic crises and the election, when you look back at Obama’s rise, the real difference between him and everyone else was his early opposition to the war. But for his opposition to the war, he was just a rising star and probably would not have been able to grab the support of so many despite his oratorical skills. He was very organized and ran a very good campaign but let’s remember where he was before the Oprah tour last summer. Had he voted to authorize the war, there would not have been enough to distinguish him from the others early on and I think that Hillary would have won.

Hillary Must be Kicking Herself

randomfool — Fri, 07 Nov 2008 18:17:14 +0000

John McCain is probably pretty bummed about the outcome of the election. He didn’t run the greatest campaign but I am not sure that there is a whole lot that he could have done to win. The wars, the economy, general dislike (hatred?) for George W. Bush among the electorate (who, still, elected him twice!) just were too many obstacles to overcome. The person, though, that must be the most bummed is Hillary Clinton. But for one basic strategic blunder (assuming an early win and not competing in the caucus states), I believe she would have been the nominee and would have had essentially the same kind of victory that Obama won. Now, trust me, I would MUCH RATHER have Obama than HRC, but she must really be sitting back and thinking about opportunities lost.

It Only Took Three Days: Obama is the Next Kennedy

randomfool — Fri, 07 Nov 2008 14:55:04 +0000

As annoying as all of the high expectations are about the Obama presidency, I was wondering the other day (not out loud, unfortunately) how long it would take before there would be comparisons to Kenney. Three days is the answer:

http://seattletimes.nwsource.com/html/politics/2008362039_family07.html

Do Clinton Retreads Tell a Common First Term Story for Obama?

randomfool — Wed, 05 Nov 2008 21:59:31 +0000

So, on Day One, we get Rahm Emmanuel (the Clinton ass-kicker) as the Chief of Staff. Not a good sign but we’ll see what the cabinet looks like. I personally think that if the cabinet ends up looking like the Clinton Cabinet coming out of retirement, there is not like to be much real change (not that I am expecting it anyway).

What are the chances of a successful first term? Pretty bad.

The history of presidential freshmen years though offers Obama some guidance for success: taking risks on policies that will broaden his electoral coalition, finding and sticking to key themes that will hold his coalition together, and carefully selecting a handful of issues that are dramatic enough to solidify his support without triggering a destructive backlash. If he puts these pieces together, he can start moving toward a second term. http://www.cnn.com/2008/POLITICS/11/04/zelizer.new.president/index.html

Let’s see if our young, smart, arrogant new President can buck the trend.