Latest Stories
- Michael Wolff on Rupert Murdoch (Vanity Fair)
- Broadcom’s Henry Nicholas does the interview thing (Forbes)
- The junk, and treasures, of bank failures (Dealscape)
- World’s largest wind farm opens (E.ON)
- Coffee ‘Bull Bubble’ to Pop on Brazil’s Crop: Chart of the Day (Bloomberg)
- Should We Prepare for the Academic Doping Scandals? (io9)
- San Diego city budget deficit may hit $200m (SOSD)
- Nature and compassion (Lehrer)
- Kitchen and Dining Home Textiles are outperforming (NPD)
- Latest IMF growth forecasts (IMF/AP)
In looking at MergerMarket’s Q1-Q3 2009 data on global M&A activity, I’m wondering if the banking crisis created “peak M&A” in the U.S. I’d be willing to bet this is the last time ever the U.S.-centric percentage of global M&A activity tips over 45%. Last chance to M&A see, so to speak.
The FT has up a rare interview with mathematician Benoit Mandelbrot, a hero of mine. His book The Misbehavior of Markets is a classic, but his ruminations on risk, efficient markets and Louis Bachelier are always worth paying close attention to.
So much for that brief U.S. dalliance with a higher savings rate. The latest BEA release shows that August personal savings rate in the U.S. fell to 3.0%. Here is a Bloomberg chart putting it all in context.
To be somewhat more serious, and as the following figure shows, the trend is still to higher levels, even if there is lots of noise around it – and even if we’re going to get to 9% quickly.
Let’s turn things around: Given peak oil, burbling trade skirmishes, debt immolation, a collapsing dollar, environmental degradation, a decline in U.S. standard of living, ballooning population, etc., … what are some non-trivial reasons to be optimistic about how this moment in economic/human history turns out?
I’m serious. Even if you don’t believe it -- and NY Magazine recently labeled me a “doom enthusiast”, so I admittedly skew bearish -- try to make an optimist’s arguments better than they can.
Here are some examples:
- As the developing world reaches first-world levels of per-capita wealth we will see more wealth creation – and profits -- in the next two decades than in prior hundred years
- The forced transition to a post-carbon economy blows a hole in models of environmental degradation, as well as creating new opportunities
- Capital markets have shed more risk at a faster pace than at any time in recent history, setting them up to fund much more new growth than anyone expects
- Ideas are more fecund than even, with a network-driven accelerated pace of innovation and invention, much of which is focused on today’s most important problems, like energy, the environment, etc.
- Human health and lifespan continues to improve, making people more productive for longer periods than ever.
- Global population will plateau over the next decade and then begin to decline world-wide.
- Even if subprime nearly blew up the world, we have democratized credit, which means many people will be able to invest in and create products/services that they otherwise would not.
A new Frontline
episode looks at China at age 60. Highly worth watching.
Part I of a two-part discussion with Paul Volcker on the Charlie Rose show:
- China in talks to buy one-sixth of Nigeria’s oil reserves (FT)
- The 1.258 trillion-barrel question about oil (Source)
- Can a Lender of Last Resort Stabilize Financial Markets? Lessons from the Founding of the Fed (NBER)
- Interview with Sadad al Husseini - “The Facts Are There” (ASPO)
- Forgotten Yemen slides towards the brink (FT)
- Japan’s Deflation Deepens as Prices Fall Record 2.4% (Bloomberg)
- Manila rainfall in graphical form (NASA)
The Marc Dreier story – hedge fund lawyer turns crook – disappeared from the headlines fast late last year. A few days later some guy named Madoff made the papers, and that was it for Dreier. It is, however, an important, sad, nutty and overlooked story, one deserving of the kind of attention Bryan Burroughs bring it in the current Vanity Fair.
His name is Marc Dreier, he is 59 years old, and his life is over. A smallish, tightly wound man with red, stubbled cheeks and a silvery pompadour, Dreier was once a hotshot New York litigator with multi-millionaire clients. Then he stole $380 million from a bunch of hedge funds, got caught, and was arrested in Toronto under bizarre circumstances, having attempted to impersonate a Canadian pension-fund lawyer as part of a scheme to sell bogus securities to the big American hedge fund Fortress Investment Group. Now, as he wanders into the living room rubbing sleep from his eyes, Dreier is waiting for the judge to tell him just how many years he will spend in prison.
…It happened one day when he found himself staring at a palatial beachfront home. His own house was inland. He had always wanted one right on the beach. It was at that moment, Dreier says, that he came to two conclusions. He would buy himself a big house on the beach. And he would get the money by dramatically expanding his firm, now renamed Dreier L.L.P. Dreier knows how ridiculous this sounds, that his criminal behavior can be traced to his yearning for a better beach house.
“I wanted to just, well, appease myself,” he says. “Well, not appease myself. Gratify myself … I was very, very caught up in seeing the criteria of success in terms of professional and financial achievement, which I think was a big part of the problem. But I thought it would make me happy. And I wanted to be happy again.”
Read on, and be sure to hang for the part late in the story where Dreier, in an attempt to avoid being caught for his fraud, impersonates a Canadian lawyer in front of said lawyer in Toronto. Really.
Thought-provoking stuff – and great quotes – in a new Satyajit Das piece on the regulation of derivatives:
The industry will argue for self-regulation, which bears the same relationship to regulation that self importance does to importance.
And another on Wall Street’s blood-sucking soullessness with respect to derivatives:
The sheer importance and size of derivative profits means that it will continue to attract the best and the brightest who will continue to play these time honoured games [of making them more opaque and complex].
Warren Buffet once described bankers in the following terms: “Wall Street never voluntarily abandons a highly profitable field. Years ago… a fellow down on Wall Street…was talking about the evils of drugs…he ranted on for 15 or 20 minutes to a small crowd…then…he said: “Do you have any questions?” One bright investment banking type said to him: “yeah, who makes the needles?
Lots more here, all of which is punchy and worth reading.
- The last days of the polymath (MI)
- Rational irrationality and crash-prone capitalism (New Yorker)
- Advice for America as it faces the end of empire (McSweeney’s)
- Meet the Hazzards (The Nation)
- Argentine Corn Crop May Be Smallest in Two Decades (Bloomberg)
- Pimco’s Clarida Says U.S. Savings Rate May Exceed 8% (Bloomberg)
- Four degrees and beyond (Met Office)
With natural gas storage in the U.S. having just surpassed the record levels of 2007, and with every available pipeline, tank, crevice and rock now being forced to hold the stuff, I have visions of that scene in the movie Brazil when Jonathan Pryce turns the mail tube around and sends mail back into the system. That didn’t turn out well, did it.
Here is Bloomberg:
The steepest rally in natural gas prices since 2006 is coming to an end as the 400 salt caverns, depleted oil fields and aquifers used to store the fuel in the U.S. reach capacity for the first time.
Stockpiles may surpass the record of 3.545 trillion cubic feet by as much as 350 billion cubic feet this fall, Energy Department estimates show. Gulf South Pipeline Co. says its fields in Louisiana and Mississippi are so full that customers will have to pay penalties for exceeding their limits. With no place to go, producers will be forced to dump excess fuel on the market.
…“I don’t know where all of this gas is going to go,” said Schork, a former natural gas trader on the New York Mercantile Exchange, who in June forecast inventories would reach near 3.8 trillion cubic feet. “We’re a month away from significant heating demand. Something’s got to give.”
Check natural gas price (as proxied by UNG) and supply over the last couple of years in the following chart:
More here.
Bloomberg ran a story this morning about how West Virginia leads the U.S. in deer roadkill per licensed vehicle. It has apparently now held this dubious record for three straight years. I couldn’t resist mapping the data, so here it is. (Note that actual numbers below are just a relative index, not the number of deaths per vehicle.) You can quickly see why deer would do well to exit West Virginia and move, say, to Hawaii.
You can find the original data here.
Here is a thought-provoking look at China in gridded population cartogram form, via Worldmapper. You get such a good sense of the relative population emptiness to the west:
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