Spero Consulting

Archive for December 4th, 2008

So, a few coaches sent copies of a com­mu­ni­ca­tion that they received from the direc­tor of their bas­ket­ball league. All coaches were simul­ta­ne­ously told that regard­less of the advanced notice, under no cir­cum­stances could games be can­celed or post­poned via e-​mail as e-​mail was inher­ently unreliable. Such notice could only be given over the phone! E-​mail is unreliable!

Do you want the guess the medium of the com­mu­ni­ca­tion? It didn’t involve paper, voice, pic­tures, pan­tomime, car­rier pigeons or smoke signals.

Daniel Hen­ninger has an inter­est­ing col­umn in The Wall Street Jour­nal today. It is enti­tled Amer­ica Needs Its Fron­tier Spirit.

Although we don’t entirely agree with it, we do like his sen­tence: “The great dan­ger now is that a depressed and angry peo­ple will allow the risk-​taking Amer­i­can baby to be thrown out with the toxic-​securities bathwater.”

Per­haps he should get out of New York City a bit more, because we’re not sure that com­mon folk such as our­selves are depressed nor gen­er­ally angry; it’s much more directed and mature than that.

So if we edit his state­ment to our lik­ing, Mr. Hen­ninger is cor­rect to note that “The dan­ger… is that… peo­ple will allow… risk-​taking… to be thrown out…”

He, like we, are con­cerned about reg­u­la­tory over-​reaction, but we think that he misses the point that many of his fel­low cit­i­zens are also angry at the ram­pant, short-​sighted greed in many cor­po­ra­tions and the expe­di­ency and idiocy within those same cor­po­ra­tions and much of the gov­ern­ment: at both the state and fed­eral levels.

That anger makes it much less likely that folks will sub­ju­gate them­selves for a bit of secu­rity, espe­cially if the secu­rity is for, say, Robert Rubin. So, we’re less con­cerned about the sud­den loss of free­dom, and more with the grad­ual, mar­ginal changes in rules, reg­u­la­tions, and laws that imper­cep­ti­bly infan­tilize (or is the “Euro­peanize”) us through time.

For an excel­lent col­umn on that topic, one must turn to Free­dom imper­illed in the “Notes & Com­ments” sec­tion in this month’s The New Cri­te­rion. The empha­sis there is on that grad­ual loss of indi­vid­ual lib­erty and the result­ing bureau­cratic thicket of rules, rules, rules (that then do not jus­tify the ends but become the ends, in and of themselves).

Relat­ing the two columns, we’d note that lib­erty is noth­ing if not the right to bear risks by tak­ing unpop­u­lar or con­trary actions and mak­ing unpop­u­lar or con­trary state­ments – all with the expec­ta­tion that the gov­ern­ment will not inter­fere. (And that lib­erty per­mits many of us to cling to our guns and religion.)

Our site’s sta­tis­tics pro­gram keeps track of the search terms used to arrive at our hum­ble lit­tle venue, and this morn­ing we noticed a hit from the query, “How to trade CMBS?”

That, as they say, struck us kind of funny. 

We thought: given the ongo­ing and (we would guess) accel­er­at­ing prob­lems in com­mer­cial real-​estate such a ques­tion could come from either (1) some­one com­pletely unfa­mil­iar with Com­mer­cial Mortgage-​Backed Secu­ri­ties or (2) some­one com­pletely, deeply, and des­per­ately immersed in the indus­try. (As a last-​ditch effort for mar­ket­ing help.)

In that way, we’d imag­ine that on a daily basis any num­ber of commercial-​loan con­duit man­agers, bankers, struc­tur­ers, traders, and CMBS investors all pon­der the same question: how to trade CMBS? That, after all, is a defin­ing char­ac­ter­is­tic of an illiq­uid or frozen mar­ket. Ouch.

If you’re inter­ested in the nature of CMBS, the top post here is a good place to start.

The Wall Street Jour­nal reports today that Obama Keeps His Dis­tance From Trea­sury on TARP. It seems the Mr. Obama and his rep­re­sen­ta­tives are not pro­vid­ing the Bush admin­is­tra­tion offi­cials with specifics about their mort­gage and liq­uid­ity crises-​related plans.

We say: what’s wrong with that? 

Whether Mr. Obama and his staff are seri­ously delib­er­at­ing and con­tem­plat­ing spe­cific plans or actions or whether they are just pre­tend­ing to do so, either is fine with us. Both are a vast improve­ment over the panic-​speech of Mr. Paul­son and Mr. Bernanke in the last half of September.

It’s our opin­ion that if those two had kept their mouths shut, took deep breaths and attempted to think, then the finan­cial mar­kets, the world’s economies, and the wel­fare of most the cit­i­zens of the United States would be much bet­ter today – not good, but better.

Fre­quently over the past few months, we’ve posted are own pre­scrip­tions for the two crises and they involve tax incen­tives to mit­i­gate the mort­gage cri­sis, and force­ful expropriation/​nationalization of the very worse large banks to mit­i­gate the con­fi­dence and liq­uid­ity cri­sis that con­tin­ues to loom over the nation and the world. Nation­al­ize not because the gov­ern­ment will oper­ate the finan­cial insti­tu­tion more effi­ciently, but do it because the gov­ern­ment and the peo­ple it rep­re­sents are already the resid­ual claimants. Nation­al­ize to penal­ized the failed boards and man­age­ments of the worst offend­ers, and set exam­ples to moti­vate health­ier firms to act. (Inter­ested par­ties can search our archives for many, many related posts.)

Any­way, had the Bush admin­is­tra­tion and appointees been more delib­er­ate there would still be a mort­gage prob­lem and a liq­uid­ity cri­sis, but the extent and effects of the liq­uid­ity cri­sis would have been muted. Many of their plans would still have been counter-​productive, but those mis­takes would not have been ampli­fied by the panic-​speech and vice versa, and we doubt that we would have seen the stock declines and record volatil­ity that we’ve observed.

So, we cheer for Mr. Obama’s laconic style and hope that his aides con­tinue to emu­late that aspect of his per­son­al­ity dur­ing the tran­si­tion and while in office. That almost seems conservative.

Some­times, less is more, and silence is golden; so, we’ll end here.

Deer hunt­ing sea­son started in Penn­syl­va­nia on Mon­day. At one time, over one mil­lion hunters would enter the woods and fields on the first day of buck sea­son giv­ing Penn­syl­va­nia some­thing like the world’s third– or fourth-​largest stand­ing army for a day or two.

Like many neigh­bor­hoods in exur­bia, ours is over­run with deer. Not really over-​run, but they are everywhere, especially near a cou­ple of close-​by ponds and in a val­ley lead­ing to the sub­di­vi­sion. (We’ve spent hun­dreds on deer scram and that’s the biggest cost we’ve borne, but spread­ing it always seems worth it. It’s quite amus­ing to see how the mix­ture of dried blood and herbs dri­ves the Basen­jis absolutely crazy. That’s when we real­ize that despite their desire for lux­ury, Basen­jis are on just this side of the line that sep­a­rates tame dogs from wild dogs.)

While we like to shoot, we don’t hunt because we don’t care for the taste of wild game. We appre­ci­ate the fact that other peo­ple thin the herd and make the roads safer. In fact, we think of it almost every time that we drive at night. It is on those dark, windy roads that we most appre­ci­ate the steel frame and all 6,600 pounds of the Sub­ur­ban. From expe­ri­ence, we can tell you that a 120-​pound deer is no match for the hulking Suburban.

Any­way, on one of our walk­ing routes, we became famil­iar with a big buck, and from con­ver­sa­tions, it seems that many of the neigh­bors knew him, too. When we saw him this fall, he didn’t seem to have a care in the world. (How times change.) In fact, he hung-​out in the woods about 100 feet from the road, and for the trained eye wasn’t too hard to spot: in gen­eral, look for hor­i­zon­tals, not ver­ti­cals to see deer in the woods.

He would lie (lay?) in the woods curled in a ball – just like a dog. (We much pre­fer walk­ing past him to walk­ing past home­less peo­ple in the city as he never asked for money.) If you didn’t know that he was there, you would think that his fat butt was one of the many gray stumps that lit­ter the hillsides.

He had a large, wide rack with thick antlers, and the neigh­bors insist that he was ancient because he walked slowly and acted like he owned the place. We’re not sure. He could have just been lazy and surly; we can relate.

Late this after­noon, we turned onto the main road, which is not more than a few tenths of a mile from his hol­low. The chair­man asked why a car was parked in a tight, awk­ward spot on the left side of the nar­row, twisty, two-​lane road. Because the car was parked on the high side and there was no sign of activ­ity above it, we looked low to the right, and saw two ATVs dri­ven by men in flu­o­res­cent orange com­ing up a gravel dri­ve­way. (It’s quite rugged ter­rain.) In the bed of one of the ATVs was a large, bloody, and quite dead deer, with a huge rack: thick and wide pointed straight towards the road.

We hoped it isn’t our big buck, and it may not have been, but it sad­dened us to think we won’t likely see him loung­ing in the woods. However, we must say that we much pre­fer that he and his rack become someone’s tro­phy the hon­est, legal way and not the other way indi­cated along the road­sides and high­ways of the region.

That sec­ond way is igno­ble and dis­hon­est, and results in the pathetic sight of decap­i­tated road-​kill. 

Pre­sum­ably, no one actu­ally col­lides with a deer to get its antlers, but it seems that at least a few folks must drive our roads with saws in their cars look­ing for recently-​decreased tro­phies along the side of the road. Given the num­ber of head­less corpses, we’re guess­ing that in their shame­less­ness, they’re will­ing to hack a head off and take it home and have it mounted. Either that or aliens are abduct­ing deer and study­ing their brains return­ing only their tor­sos and legs. We’re not sure which hypoth­e­sis is scarier or more absurd.

We’ll update the post if we see him when the sea­son ends and there is snow on the ground.