For the record -- the Keating 5 rides again

Here's what Wikipedia says about John McCain's dealings with Charles Keating in the Lincoln Savings and Loan scandal back in the 80s. It would seem from his continued tenure in the Senate and his general popularity that one of the tortures inflicted on him in Vietnam was liberal application of Teflon.

McCain and Keating had become personal friends following their initial contacts in 1981.^[8] Between 1982 and 1987, McCain had received $112,000 in political contributions from Keating and his associates.^[14] In addition, McCain's wife Cindy McCain and her father Jim Hensley had invested $359,100 in a Keating shopping center in April 1986, a year before McCain met with the regulators. McCain, his family, and their baby-sitter had made nine trips at Keating's expense, sometimes aboard Keating's jet. Three of the trips were made during vacations to Keating's opulent Bahamas retreat at Cat Cay. McCain did not pay Keating (in the amount of $13,433) for some of the trips until years after they were taken, when he learned that Keating was in trouble over Lincoln.^[6][15]

Return to City Island, Horn of Plenty

The elephantine amongst you will recall my first sojourn to City Island and my solemn promise to come back with funds and appetite. Today was the day. Armed and determined to wrap my lips around fried clams, I suited up in spandex and headed out along the Boston Post Road, through New Rochelle and Pelham, past the oddly placed New York Athletic Club, and on to the island.

After checking out a couple of menus, I settled at Sammy's Shrimp Box, conveniently placed across the street from Sammy's Fish Box, Sammy's Take-Out and Tropical Bar, and Sammy's something else. While waiting for my meal I was plied with goods which indicated that noone around here had heard of skyrocketing food prices. Just look at that picture. A loaf of bread with a hunk of cheese knifed into it. Cornbread. Olives. Crudities, along with pickled cauliflower, peppers, carrots, and so on. A salad (who cares). When all was said and done, I ate about 1/5th of what they brought me, and was sad I was on a bike and could not haul the rest away.

After lunch I checked out Orchard Beach, built in the sixties in classic Robert Moses fashion by hauling in 1.2 million cubic yards of sand from New Jersey and Long Island. It is now a little derelict, at least on a Friday. Big-assed accordion MTA buses came and went through the big bus staging areas with 0-2 passengers each. A parking lot a good 200 meters across was 1/10th full if that. The big pavillion area was all scaffolded up, and there was lots of standing water.

There was lots of handball and racketball being played, though, by guys who looked as if they might actually be in the employ of one of those Italian groups they like to make movies about.

And there were lots of cops aplenty, well equipped with guns and flashlights and everything. And three SUVs of them hauled off to talk to one guy with long hair and a bike at the end of the beach. Suspiciously close to where a rather hot-looking woman was bathing topless.

And there was a nature walk down at the end which looked rather nice, though -- from the way Hispanic men plunged at high speed into the woods on their mountain bikes without looking around them -- I couldn't help but think that, like the Rambles in Central Park or the area of Riverside Park along the river and above the basketball courts at 105th street, that this was an area where consenting males both consent and act. So maybe we won't bring the kids.

All in all I must say that the overall impression of Orchard Beach can be summed up in two words: "wasting asset." It's a pretty nice facility, and it could be nicer even if the city managed it wisely. Like promote it. I've been coming to the nabe for almost 15 years and it's not even on the radar screen here.

Sneezing

I sneezed a couple of times on the train this morning, and as one expects, the guy across from me said "God bless you" or some variant. It occurred to me that it's very odd that sneezing is the only thing you can do where you absolutely expect any random bystanders to respond to. And they do.

Apparently the traditional reponses in European languages derive from an ancient belief that one's soul is leaving one's body during a sneeze, or somesuch, which is all good and well. But that doesn't really explain why people respond to sneezes so reflexively in the 21st century. It's so automatic that it's utterly emblematic of culture, the things people do because they do them.

Jackhammers on the Street

Damned hard to concentrate with all that racket. And then all the jabbering consultants in the room on top of it. It's enough to make a man break Harold and Maude upside himself, if it weren't for the free coffee and ice too!

Post-Soviet Medal count

Before the Olympics fade too far from view lets pause to take note of something pretty phenomenal. Between all the hullabaloo about how the Chinese count medals and how the US does the same, the nations of the Former Soviet Union collectively kick ass. Looking back at the medal count retrospectively (see below), it's clear that they never really went away, even in the deepest depths of the Yeltsin years.

Ukraine wins 23 medals consistently. Belarus snaps up 15 or so every games.

It's pretty striking. It seems like too many years for the Soviet sporting infrastructure to have held together in an environment of rapidly declining public health and mortality and a minimal culture public participation in sports due to shitty and scarce venues, but there they are, a bunch of medals. Is the state still throwing money at it? Belarus doesn't have hardly any money. Go figure.

2008 Total medals (of 958)
China 100
USA 110
Former Soviet Union 173

2004 Total Medals (of 929)
China 63
USA 102
Former Soviet Union 162

2000 Total Medals
China 59
USA 91
FSU 136

1996 Total Medals (of 842)
China 50
USA 101
FSU 122

Summer's come and gone

At 8 this morning David and I hit the courts at the high school, which were swarmed around by young female athletes: soccer, field hockey, and -- most damningly -- tennis players, the last carrying those bags which hold five rackets or something. I knew it was just a matter of time, and sure enough, a young coach type came out and gave us the kiss of death.

So we hopped on our bikes and rode across town to the university courts. Same story. The women's team occupying one set of courts, the men the other. And there was traffic coming back across campus.

It's over.

Sabre-rattling towards election day

The markets are scratching their heads at the US's recently penned agreement to stick some missile interceptors on Polish soil. This after we send Condee to Georgia for photo ops with Saakashvili and W acted all tough admonishing Putin and the one he calls "Mr. Med-viyedev" (he's gotten closer over the months) for their aggression. Election run-up for a war hero, anyone? Take our minds off the economy? Bush has such a gracious gift for foreign policy adventurism and dramatics, does he not?

No but seriously, why do we want missile interceptors in Poland? Do we really think Putin's Russia poses a serious threat to Western Europe? He may want to recreate Russia and the Soviet Union's glory days within its traditional bounds, but I don't think he's expansionist or aggressive towards anyone who doesn't own a Russian oil company or pipeline.

Putin is loving the attention. Paul Farrell had a piece on Marketwatch last week where he talked about how much Americans secretly love war. Well, the Russians make no secret about it. There are huge war memorials that people revere, and they have a national holiday commemorating victory in WWII, and so on. Afghanistan and Chechnya have dimmed the luster only a touch. War doesn't threaten the Russians, that's when they think they're living life properly.

There is an observed truth that two countries with McDonalds restaurants in them have never fought a war. Lets see how that goes.

All this talk of blood and iron

Some of my rather expansive core readership may have noticed my pathetic attempts in recent weeks to provide pithy market and credit-related commentary, which is, of course, all by way of pandering to Felix Salmon and his Market Movers blog, since he's the only person in the world who feeds me any real traffic. His blog is good, by the way, well worthy of your eyeballs.

But, let me return a second to real life. Graham has, if I haven't said so, had a good summer in the water. Not that he's swimming yet, but at least he's considering it. Not that he will let me wash his hair or put it in the water, but he will let me cut it and he will on occasion let me fill a Zinn/Design-Build hat with water and dump it right on its head. This is progress.

In recent weeks, he has let Mary and me carry him around in the big kids pool at Community Park, even to the deepest 4 3/4 foot deep part, and has recently started basically floating, hanging on to me very little, and kicking. It's as if -- shockingly -- he actually wants to swim, this child who last summer didn't even want to go in the water at all. It makes all of us very happy.

Santa Clawback

As the credit crisis drags on and on and grinds all manner of people worldwide ever downwards and threats of more and bigger bailouts loom on the horizon, direction forward is not clear. Whatever $800 billion the Housing bill may have raised the Federal debt ceiling for dear old Fannie and Freddy, the source of that cash is not quite evident given that tax coffers aren't expected to rise anytime soon and -- hey -- we may just find a third war to get involved in.

The banks don't have the money, that's the problem. The government can just crank up the printing presses, but we know where that leads. The one group we know does have some money is the very rich. CapGemini's 2007 World Wealth survey pegged the total assets of the wealthy at $40.7 trillion dollars. Admittedly, a lot of that's in the same emerging markets who already bought our T-Bills and gave us the liquidity to splurge on granite countertops and temperature-controlled cupholders, but a lot of it is here.

Given that much of the money that has accrued to the top 1% of the population and the top .01% of the population has come there way in the last few years and the last decade, to forestall dramatic changes in the US income tax code, it would behoove the executive and major investor class to just give some of the money they've pulled out of mortgages, structured products and back-dated options back to the government. Wrap it up in a bow and hand it to Paulson and Bernanke. Someone around the Street should take up this cause now, be it a Felix Rohatyn or a Steven Rattner or a Bob Rubin or even Larry and Sergei, somebody with some weight. It can't be done through a Gates Foundation or an Open Society Institute, these dollars need to come home to mama M3, and it's getting close to dinner time.

Feast for the small

Away from all the hoopla about the disturbingly oversized facial features of Michael Phelps (evidence of untraceable human growth hormone use, I've heard suggested) these Olympics remain a great platform for small countries to get visibility and grow heros. The Rumanian women's marathoner, the Panamanian long jumper, the Tunisian 1500 meter swimmer, the Ukrainian gold-silver combo in the Heptathlon, rowing medallists from Belarus, Estonia and what have you. It sort of enhances the world's balance of power to see athletes from less-well-heeled machines grimming atop the podium. It would be nice if NBC found the time to interview a few of them.

Hong Un Jong of North Korea took gold in the woman's vault and -- as a reward -- is reported to have had her family's annual food allocation raised an additional five kilos of meat and also ten kilos of flour and sugar for bringing glory to the Fatherland. She humbly offered thanks and praise Dear Leader Kim Jong-Il for his magnanimity and wisdom.

A surprise

Until I saw this recent article in the New Yorker, I had no idea Tavis Smiley was such a big deal in the black community. I always thought of him as the reductive and annoying host of a show on NPR that always made me put in a CD.

But I must give him credit for being critical and demanding of Obama. That takes some guts. I will make a concerted effort to listen to his show, if it happens to be on when I'm in the car.

Works of purest genius

My hat goes off to the brain surgeons who figured out they could send out free return address stickers to solicit contributions to various charities... just in time for email and online bill payment and presentment to basically make individually addressed snail mail a thing of the past. Why didn't they think of that back in the 80s when it would have been useful?

The beat goes on

I was surprised to hear that CDO salespeople are not just being fired but hired, but I did hear that today. Which I guess is good.

To granny's house

This morning I took Natalie to Newark Liberty Freedom and Justice for All Airport and put her on a plane to go down to the old north state to see Granny. She was pretty nervous but trying to act tough like it didn't bother her, but just I was about to let her walk away down the jetway she turned and put her face in my shirt and cried for a minute or so. Then she turned and walked off like it hadn't happened.

She is a big girl. And yet a little one too.

The flight departed on time and arrived early, and to hear her tell the tale she was fine once she crossed the hurdle.

Not what we need

Lebron James had a fine block against Angola today. But the post-block preening and posturing and glowering is not what the US needs right now with the rest of the world a little pissed off at us.

A stone left unturned

They say there are no new ideas out there, but apparently nobody's thought of this one: do a rocking, distortion-heavy cover of the Joni Mitchell song below. Skip Joni talking about Tolkien, fast forward two minutes to get to the song beginning, and tell me that riff doesn't beg for some Marshall Stacks and a pounding back beat. Just gotta figure out the vocal treatment, and I've got a hit on my hands.

Rumblings on the street

I am told that a loan trader at one investment bank is all in cash and has his wife running around opening savings accounts at various banks so that his money will be covered by FDIC insurance. Needless to say, this negativity is not reflected on his firm's website. If he's so apocalyptic what makes him think the FDIC will be adequate able to save him. One would think he would be comforted by the agency's recent action, as reported in the New York Times

At the end of July, the Federal Deposit Insurance Corporation proposed a new rule that would require troubled banks under its regulatory wing to produce, on the agency’s demand, detailed records of swaps and other financial contracts, their current market values, collateral posted by counterparties, the identities of those parties and copies of the agreements.

Golly, that's a fine idea. Why didn't I think of it? Should be helpful.

Onward to Tbilisi

Putin's (yes it's still his) Russia rolled into Georgia in a move providentially timed to coincide with the opening of the Olympics in Beijing, whence the sound of fireworks drowned out that of any minor Caucasian gunplay. President Bush was, as we see at left, concerned with more pressing matters of state.

President Bush did get around to commenting on the situation in Georgia later in the day Saturday: "The United States is working with our European partners to launch international mediation, and with the parties to restart their dialogue. Russia needs to support these efforts so that peace can be restored as quickly as possible." I'll bet Putin finds that very convincing. I'm sure he's looking for meaningful dialogue, just like he always is.

But seriously, this is a tough call. Georgian President Saakashvili is our boy, child of Soros even, and his heart is in the right place for sure. But he's a hothead. Most importantly, Georgia is smack dab in the middle of Russia's historical sphere of influence, and with oil still at $120 heading into hurricane season and American troops overextended elsewhere nobody's in a position to get tough with Putin. He's going to do whatever the hell he wants to and tell Medvedev to tell us he did it. That's the dialogue we can expect.

It all hangs together

Peter Bernstein -- whom I esteem highly, by the way -- had a column in the Times business section this last Sunday in which he noodles on the way various forces have aligned to mess with the US consumer: food, gas, housing. He sees coincidence at work: "At least the moves in oil and food share a common explanation, but what in the world to they have to do with the end of the boom in housing?"

Hmmm. Let me think. Would the answer be "China" (and other emerging economies), by any chance? Lets see, the world gets richer, needs more food and gas. Land is taken out of food production to grow a proxy for gas. Lets go back a step. How was the world getting richer? China and others were making stuff, selling it to us through WalMart and other big boxes. We stopped making stuff. Emerging markets developed large surpluses but lacked investment acumen, and so bought T-bills, holding interest rates, including mortgage rates down, pumping up house prices. That's all pretty linear.

A side step. After the dotcom bust recession of 2001, investors got risk averse and started hunting for yield in places like mortgage-backed securities. But inflows from emerging market treasuries held yield down. How to get it? Go for more risk. Securitize any cashflow that walks.

In 2003, Fannie and Freddy got slapped in accounting scandals and were forced to put more capital aside to account for bad loans. From 2004 forward, therefore, their hands were tied and investment banks stepped in and began to fund more of the secondary mortgage market. Giddy on cheap money and full of all the hubris that quantitative finance can provide, they created "sophisticated" new products...

But back to my main point: movements in oil, food, and housing are connected, and they are connected via the emergence of a changed world economy, which we haven't quite figured out. The United States new economy started making fewer things and more ideas. This worked as long as the ideas were good. The recent generation of financial innovation has not proven to be that. We can't really go back to making things. But then again, we have a reasonable shot at figuring this whole world economy thing out, if we can survive that long.

Moving on further

Lunch today was tremendous, a Fish Tikka Naan sandwich from Indus Express on 46th Street. A phenomenal dish, sweet and spicy with peppers and onions on naan that the guy made right then. Washed down with a Limca soda in a glass bottle. That's an Indian Coca-Cola lemon-lime product with hints of ginger.

After that the day petered downhill. I'll be going back there.

Scenes from the (re) movable feast

• On Hogan Place at Centre St, in front of some imposing Gothic municipal structure, a line of gaunt older Asian people lined up, plastic bags in hand, to receive some sort of food handout being distributed by civil servants and groovers at a leisurely pace out of the back of an unmarked white van.
• At a Vietnamese place (New Pasteur Restaurant) on Baxter, the waiter convinces us to order some south Asian greens with a name like "Sum Choy." It is OK, though soft-shell crabs are somehow tastier. The lemongrass squid "rice dish" costed only 5 bucks.
• At the Klatch on Maiden Lane this morning, the blondes who act like you should be honored to be served by somehow haven't figured out that when you toast a muffin, you should cut it in half before putting it in the toaster oven. That would really put them out.

Sovereign weal

The Economist this week (or was it last, catching up on back reading coming back from vacation) has an article about the atrocious returns the Japanese general pension fund is getting on its $1.4 trillion dollars in assets (compare $1.9 trln for Barclay's, $12 trln for Fannie and Freddy together). There are movements afoot to carve off a piece of it and establish a sovereign wealth fund to diversify away from moribund Japanese treasuries, and there is resistance.

At first I think, for sure they should diversify and let better investment minds generate better returns, and then I recall: what better minds? Wall Street fucked up big time, the world around.
This best and brightest model really hasn't been panning out for some time, so where should people and institutions be putting their money? It's a tough one.

Frenetic

Should be the title of a Polanski movie, but instead describes my abrupt re-entry into civilization today:

• Take Graham to camp
• Drop off Subaru at garage for "Check Engine" light
  
• Catch up on meetings blown off while on vacation
• Discuss new assignment in vague terms
  
• Accept shipment of roofing materials for new roof to be put on tomorrow. Guy driving forklift does minor damage to hedge (Mary OK with it, praise lord)
  
• Pay annual fee on unused HELOC (if credit is scarce keep what you got)
• Look for checkbook for HELOC to use to pay roofer (just for FICO purposes). Must have thrown out. Oh well, use other account.
• Schedule Thursday meeting with securities lending guru down from beantown (tweak powerpoint overview of firm and send)
• Schedule other crap
  
• Talk to kid with Ethics degree from a Divinity School about transitioning into consulting
• Flip compost
  
• Mow yard
• Read Graham stories. Offer extra story if he'll let me cut his hair (he will!)
• Read with Natalie in her bed.
• Clean out spam folder
• Blog, dammit.
  

the bad with the good

Today Natalie treaded (trod?) water for 6 minutes. She only needs to do it for 3 to pass the swim test at the quarry Monday. Also some point to point swimming, which she seems up for. This is huge.

However, in a separate incident, she spat on me totally out of the blue, earning herself an immediate time out.