Friday, June 13, 2008

Counting oops

David Wessel, of the WSJ, writes in Fannie, Freddie's Risks Exposed about the balance needed between privatization and nationalization. These two are examples of the abstractions that we love so much. If you would, these are 'dreams' that are problematic for realization, not like those things in engineering where actual production is possible.

So, what happened in the past decade is that a very much ideal approach to supporting home ownership was opened (but, not as a level playing field) to those who could not keep themselves from profiteering (which is related to Minsky's ponzi-ness). Along with this, another thing of beauty was besmirched, namely good old Sallie Mae. Several students who took loans found themselves wrapped by the python let loose by the privateers. These things are partly apropos in that Barack's vetting chief was one of those who interloped upon that space.

But, back to Wessel's comments, which are usually resonant with themes of 7oops7. The recent looks at Fannie and Freddie have resulted in recognition of their usefulness and in some appreciation for what might be done to control the Minsky inevitables.

So, how many oops are there to count in this regard? Well, those related to the program of initial interest pale by comparison.

Another example involves the Auction-Rate Security (ARS, see Wikipedia) which has trapped a few people. Again, from the WSJ (Holders of Auction-Rate Debt Have Choices, but Few Solutions), we can see some specific cases. One person asked where to part $375K for a few months in order to sort things out. Well, this investment idiot (UBS? you would think better of them) spouted that the ARS (was there some notion about the ARS being a cash equivalent?) was the place; essentially, the person has lost half the value. Naturally, claims for some type of damages are forthcoming. The article has a few other examples.

A lot of these things are understandable as many made oodles of money with problematic instruments for awhile and got lured in. It is very much true that proper accounting was not done; meaning, of course, accounting that would have shown the losers over this time (near zero-sum, folks - oh, that would be a God-eye's view? you might ask).

Gosh, the rating agencies adding junk on junk and getting something that didn't smell (or so they thought) just shows that mathematics has been mis-applied and reason pirated.

In this case, short-term CDs, even with the diminished rate due to Ben (thank you, guy), would have been preferred. But, various traditions of finance and mottled thinking says not.


11/04/2010 -- Big Ben is still putting us at risk and trashing the savers.

10/11/2009 -- Discussion has gone over to FED-aerated. Note the 10/11/2009 Remarks about the Business Week article on India's progress' inhibitors. 'Near zero' recognizes that some always suffer more than others, especially in win-win situations, as the whole notion of characterization minimizes visceral reactions by diminishing the real in favor of the abstracted (ah, the modern world, you say?).

03/30/2009 -- Near-zero will be looked at more closely.

01/27/2009 -- Lessons to be learned (as opposed to learnt), including, by necessity, Ponzi.

Modified: 11/04/2010

No comments: