Twitter Digest: 2011-09-17

  • Tokyo in slow mode, on Vimeo: http://t.co/iElVjOJv ->
  • "Every junkie's like a setting sun." ->
  • “This Is The Greatest Financial Crime In The History Of The World And No One Senior … Has Gone to Jail" http://t.co/ms1fewNj ->
  • I am told on good authority tonight that in Mexico tic-tac-toe is called "el gato". ->
  • Latest issue of the consistently superb prob & statistics newsletter Chance News – http://t.co/56fwBASw ->
  • "[O]n average Bill Gates and I can afford a new Rolls and a winter home in Provence." – Sam Savage, The Flaw of Averages ->
  • There's a nap for that. ->
  • My iPhone just autocorrected "cleantech" to "flea tech". Makes sense. ->
  • Ouch RT @BloombergNews: The Real Cost of Owning a Dog | http://t.co/uipWUOtE (via @BN_Money) ->
  • Nice RT @azeem: Leak: Zappos CEO Gives Employees Free Private Jet Service http://t.co/Whpu7OTk #yam ->

Twitter Digest: 2011-09-16

Bloomberg to Congress: U.S. Riots Ahead

I have forecast that we’ll see economically-driven U.S. riots by 2013. It seems I’ve been joined in that belief by Michael Bloomberg:

New York Mayor Michael Bloomberg warned Congress Friday, saying members should expect riots if the nation’s rate of unemployment remains above 9 percent.

 

“We have a lot of kids graduating college, can’t find jobs,” Mr. Bloomberg said on his weekly radio show. “That’s what happened in Cairo. That’s what happened in Madrid. You don’t want those kinds of riots here.”

via Michael Bloomberg to Congress: Time to expect riots | The State Column.

 

The History of Options

Good paper with historical overview of options:

This chapter discusses the history of option contracts from ancient times until the appearance of Theorie der Prämiengeschäfte by Vincenz Bronzin in 1908.  The history examines the use of contracts with option features prior to the introduction of trade in free standing option contracts on the Antwerp bourse during the 16th century.  Descriptions of the Amsterdam share option market by de la Vega in the 17th century and de Pinto in the 18thcentury are reviewed.  The specific language of a late 17th century English option contract is provided in detail.  The development and practice of option trading in the 18th and 19th centuries, as reflected  in merchant manuals of that period, isexamined.  The article concludes with an overview of late 19th century option trading in securities and commodities.

Full paper here.

Sao Paulo’s Servant Problem

From Intelligent Life:

Still, São Paulo is a great place to be seeing out the global recession. Brazil’s economy is booming, and much of the benefit is being experienced lower down the income scale. My boss, Mike Reid, the editor of The Economist’s Americas section, who lived in São Paulo in the late 1990s, says that better diet and greater self-esteem mean that poor Brazilians stand noticeably taller now. One private-equity dealmaker told me his family’s maid and nanny have both started to sell cosmetics door-to-door in the evenings. He doesn’t think either will still be with him in six months. To hear a Paulistano complaining that you can’t get a good maid these days is to be reminded of Bertie Wooster’s constant fear that one of his friends would poach Jeeves. São Paulo is in the throes of a full-blown Servant Problem, and I feel privileged to witness it.

via BEING THERE: SÃO PAULO | More Intelligent Life.

Twitter Digest: 2011-09-15

  • All that's missing in this 50%-off deal for a campaign dinner with President Obama is the Groupon. http://t.co/qTWJqrRn ->
  • Fixed and retweeted on Obama/Geithner/Citi. My error. ->
  • Allegation in new book: Geithner didn't consider liquidating Citibank in 2009 when asked to by Pres Obama. http://t.co/xsp3pMlE /via @jashsf ->
  • As pointed out by @matthewstoller, Geithner allegedly ignored Obama directive to "consider" liquidating Citbank. I'll fix tweet. ->
  • Lots of troubling tidbits like the preceding from Ron Susskind's new book. http://t.co/xsp3pMlE ->
  • I am supposedly going to New York next week. Still trying to figure out how that happened. ->
  • Programming note: The BBC series "How the Earth Made Us" is wonderful. Too bad there's no way to, you know, link & share. ->

Suskind: Insubordination in Obama Administration

Some troubling revelations in Ron Suskind’s new book about the Obama administration’s handling of the financial crisis:

The book states Geithner and the Treasury Department ignored a March 2009 order to consider dissolving banking giant Citigroup while continuing stress tests on banks, which were burdened with toxic mortgage assets.

In the book, Obama does not deny Suskind’s account, but does not reveal what he told Geithner when he found out. “Agitated may be too strong a word,” Suskind quotes Obama as saying. Obama says later in the book that he was trying to be decisive but “the speed with which the bureaucracy could exercise my decision was slower than I wanted.”

Geithner says in the book that he did not recall that Obama was mad at him about the Citigroup decision and rejected allegations contained in White House documents that his department had been slow to enact the president’s plans.

…”The Citbank incident, and others like it, reflected a more pernicious and personal dilemma emerging from inside the administration: that the young president’s authority was being systematically undermined or hedged by his seasoned advisers,” Suskind writes.

via The Associated Press: Book: Treasury Secretary ignored Obama directive.

 

Netflix Makes Someone’s Year/Decade/Life

Had someone point out Netflix’s $175 September puts today after the company’s drop. Check it: 143x. Not a bad one-day return for a day/week/decade/life.

Nflx 175s

Dalio: ‘Nothing Surprising’ About European Crisis

Ray Dalio at Bloomberg 50 event today:

Taleb: People Kept Telling Me I Was an Idiot

Nassim Taleb at U Penn:

People kept telling me I was an idiot for years [because] I didn’t invest in markets.

I don’t invest in the stock market because I think it’s a sucker’s game. I make my money and I put it in a repository [of value]. Or sometimes I just do these bets for entertainment, nothing else, so I can have a conversation with someone once in a while on a train or on a plane. That’s the only reason. So I stayed in cash, for years, and then realized that the value of my cash became monstrously high after the crisis. The last 12 years, the stock market did nothing, and cash yielded 40, 50, 60 percent.

Cash gives you an option when other people go bust.  That’s what Kennedy did. Joe Kennedy, the father, got rich not from investments but from negative investments. In other words, he had no investment when other people were busted. [Take] the story of the two brothers [one of whom makes $4 per share a year while carrying no insurance against being wiped out, one of whom makes $2 per share with maximal insurance]. If the $2 brother can survive—without being kicked out by the board and replaced with some short-volatility fellow who doesn’t understand anti-fragility—then when the other brother goes bust, he’ll be able more aggressively to buy his inventory—his refrigerator, his car, everything, even his house—for nothing. You see the idea? So you have to think in terms of dynamics of cash: that it’s not a sissy trade.

There’s something called action bias. People think that doing something is necessary. Like in medicine and a lot of places. Like every time I have an MBA—except those from Wharton, because they know what’s going on!—they tell me, “Give me something actionable.” And when I was telling them, “Don’t sell out-of-the-money options,” when I give them negative advice, they don’t think it’s actionable. So they say, “Tell me what to do.” All these guys are bust. They don’t understand: you live long by not dying, you win in chess by not losing—by letting the other person lose. So negative investment is not a sissy strategy. It is an active one.

via Penn Gazette | Gazetteer.

Here’s the full talk: