non-sex diversions

Something's Gotta Be Wrong With This Picture: A Better Way to Bailout AIG?

Sat, 2008-11-15 12:56

Mathematician, and developer of the BitTorrent algorithms, and diagnosed genius Bram Cohen of Bram Cohen’s Journal asked one of those so-simple-only-a-genius-asks-them question about the current financial meltdown/bailout business.

the credit default swap market is many times the size of the actual mortgage market. How’d that happen? Well, overzealous investors ran out of actual mortgages to invest in, so they simply started placing side bets on how the mortgage market would do, totally many times how big the actual market underneath is. AIG is in a position of being the biggest insurer of the garbage. These two facts put together make for an interesting possible scenario. Since the amount of money on the line is greater than the actual size of the underlying market, AIG could potentially agree to cover every mortgage company’s loss in any short sale (a short sale is where the mortgage company agrees to forgive part of a loan to make a sale happen, as a way of avoiding forecloser). That would immediately result in the number of foreclosures being near zero, and AIG would magically have made it so it didn’t have to pay out on any of its side bets.

Read the context leading to his question here.

Given the division of ideas between whether bailouts should benefit a) financial markets or b) end users of mortgage credit, and given that the meltdown really does have more to do with the side bets described in Cohen’s introduction to the question, Michael Lewis’s analysis in Portfolio last week, and Matt Yglesias’s similar explanation today it does seem like an interesting way to kill at least two birds with one (um?) fire-extinguisher.

Yeah, this post isn’t even remotely related to sex, relationships, or gender**... except maybe in the sense that if the meltdown continues we’re all screwed. But Cohen’s question has been nagging at me enough that I figured I might as well get it out of my system. And it’s not like he blogs about financial markets all that much either.

[** Of course money problems are actually a huge stressor in most relationships. —fl]

Conspiracy Theories As Folk Art: Senator Clinton Edition

Sat, 2008-03-22 13:43

[I’m just a bit under the (spring-like) weather, decompressing from a dynamic winter quarter, and catching up with my family. And under those circumstances I thought I’d indulge one of my non-sexual interests: inventing witless, substance-free, but internally consistent conspiracy theories. Warning: This post is almost exclusively about current American Politics and couched in the formal language of American-style conspiracy theorizing. That said… —fl]

The completely sensible, level-headed Kevin Drum of the wonderful The Washington Monthly creates a great opportunity by complaining about a curmudgenly post by Matthew Yglesias...

Hillary’s chances are slim and maybe it’s time to withdraw. But how do we hop from there to an out-of-the-blue factual assertion that Hillary would just as soon see Obama lose in November? That’s crazy. There’s just no evidence that anyone in the Clinton campaign actually thinks this way. It’s like the 90s all over again and it’s driving me nuts.

Drum said it here.

Amateurs I tell ya! If someone really just wanted to enjoy a nice fat conspiracy theory they’d knit together a nice scenario where Senator Clinton, seeing the writing on the wall, continues to undercut Senator Obama on issues, especially, of foreign policy inexperience, skin color, class, and religion right up till… Senator McCain nominates her to be his running mate in a “maverick” twist on last cycle’s Kerry -> McCain “unity” story. [**]

Such a move would thrill: journalists, disappointed Bloomberg “centerist party” backers, embarrassed-to-admit-it racists, neo-conservatives of the Joe Lieberman stripe, paleo-feminists, immigration-reform folks, the Clintons, and, of course, the Clinton’s pollster Mark Penn.

- Currently marginalized “Centerists” would get their dream ticket.

- Uncomfortable “Bradley-effect” Democratics would be relieved to have a reason not to vote for a person of color.

- Joe Leiberman / Jamie Kirchick types would obviously prefer someone who lacks foreign-policy self-confidence and therefore acts excessively hawkish in a position of influence instead of someone confident enough to… eww!... consider diplomacy.

- Ferarro-style paleo-feminists (though not younger, politically progressive feminists) would prefer another chance at a-woman-any-woman in the #2 spot over no chance at all.

- A number of immigration reform folks evidently hope (as Mickey Kaus and other opponents fear) that a combination of McCain and Democrats in the House and Senate probably offers the best policy outcome.

- The Clintons would be thrilled, of course since not only could they have almost free, Cheney-style reign in the power vacuum left by McCain’s clueless indifference to domestic policy, but in actuarial terms chances would be very good that she’d ascend to the Oval Office sometime before 2012.

- Oh yeah, and finally Mark Penn would be thrilled because his billing and employee oversight would be streamlined. So see? Plenty of ammunition for conspiracists!

That’s not to say Clinton is up to any such thing but it is to say that if Yglesias is just spinning conspiracies for the fun of it he’s not putting very much effort into it.

[** Nevermind that votes gained from the proposed new coalition probably wouldn’t offset those lost by the hard-core Reds. Why hold this conspiracy to any higher standards than any other? —fl]

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