LEARNING HOW TO CHOOSE HOW AND WHAT YOU THINK. After David Foster Wallace’s tragic suicide, the Wall Street Journal reprinted much of his commencement address at Kenyon College in 2005. One of the points that Wallace made was that: “[L]earning how to think really means learning how to exercise some control over how and what you think. It means being conscious and aware enough to choose what you pay attention to and to choose how you construct meaning from experience.” He suggests that a liberal arts education is a good way to deal with boredom because it teaches you to think interesting thoughts. I think his examples indicate that he does not have in mind the kind of languorous ennui that is found in Chekhov. Rather, he seems to be talking about frustration—the kind of frustration that results from being delayed in doing things we really want to do—traffic delays and chores like grocery shopping. He emphasizes that this kind of thing is inevitable—now that we don’t have personal servants—and that we have to prepare to live with it. Wallace also suggests that the value of a college education is that it enables us to empathize with others and thereby avoid frustration. He says that because of a college education: “I can choose to force myself to consider the likelihood that everyone else in the supermarket’s checkout line is just as bored and frustrated as I am, and that some of these people probably have harder, more tedious and painful lives than I do.” It is interesting that for Wallace, developing empathy is difficult and complicated, requiring years of education.
Archive for September, 2008
LEARNING HOW TO CHOOSE HOW AND WHAT YOU THINK.
Tuesday, September 30th, 2008CONGRESS AND MARKET DANGER.
Monday, September 29th, 2008CONGRESS AND MARKET DANGER. Last Thursday, I posted here that because of the dangerous financial situation dramatic action should be taken quickly (over the weekend) because markets can move very quickly. Let me repeat that thought.
TOM WOLFE ON THE NEW YORK STOCK EXCHANGE, BROADWAY AND DISNEYLAND.
Monday, September 29th, 2008TOM WOLFE ON THE NEW YORK STOCK EXCHANGE, BROADWAY AND DISNEYLAND. It’s amazing how prescient Tom Wolfe has been. Radical chic, flak catchers, masters of the universe, the combustion at Duke. Here are his comments on the financial crisis. It also includes his opinion on theater. He says that the New York Stock Exchange, because of the computer, is “an anachronism, like Broadway…..Broadway and the Exchange are like the first thing you see when you enter Disneyland in California. You find yourself in a turn-of-the-last-century town with a trolley and an apothecary and a barber shop. That’s Broadway and Wall Street today.”
THE FINANCIAL CRISIS–TIME TO MAKE COFFEE?
Sunday, September 28th, 2008THE FINANCIAL CRISIS–TIME TO MAKE COFFEE? I expressed disbelief in yesterday’s post that financial institutions could be so oblivious to credit risk, but things are always more obvious in retrospect. I posted here about a whole baseball team not noticing that the ball and strike count was wrong and pointed out that in bridge when there is an illegal play right out in the open from dummy, the remedy is to brew another pot of coffee. It seems to me that almost everything that has happened in the financial crisis happened right out in the open where everybody could see it. Almost nobody called attention to the problems. Warren Buffet commented on the risks from derivatives. There were some efforts to make changes regarding FNMA and Freddie Mac. In December 2006, I posted a warning by Larry Summers that something big and bad might happen and about the unknown consequences of large-scale liquidations. As Dick Weisfelder commented on that post, there were a number of warnings about housing bubbles. And, of course, as I posted several times, Nissam Taleb warned often that a Black Swan is more probable than we think. But at the end of 2006. Summers wrote that “financial markets are pricing in an expectation of tranquillity as far as the eye can see.” And at that time, as I said, the risks were all out in the open.
HOW MUCH DID LEHMAN OWE YOU?
Saturday, September 27th, 2008HOW MUCH DID LEHMAN OWE YOU? An article in yesterday’s Wall Street Journal dramatizes how difficult it is going to be to unwind the complicated financial assets that are so much a part of this crisis. (the link has a summary of the article). The article begins: “Scores of hedge funds are trying to decipher how exposed they are to Lehman Brothers Holdings Inc. and are letting investors know how much they potentially stand to lose, which for some funds represents hundreds of millions of dollars.” Think about that. Lehman Brothers went bankrupt nine business days ago and hedge funds can’t tell how big their direct and indirect exposure is. I don’t know how you can manage a credit risk if you don’t know what it is. Back in the late sixties, a lot of brokerage houses went bankrupt because of “back-office problems.” A lot of what is happening now could be called “back-office problems” if those are defined as not knowing what you own and what you are owed. That is, institutions were engaging in large-scale exposures without any system in place for knowing what their credit risk was.
A NOTE ON FOX HUNTING.
Friday, September 26th, 2008A NOTE ON FOX HUNTING. I have only encountered fox hunting in the movie TOM JONES and, from the point of view of an expert participant, in Trollope’s description of a fox hunt in CAN YOU FORGIVE HER? Fox hunting was recently banned in England and Wales. Last weekend’s Financial Times had an article about a new version of fox hunting in England in which the quarry consists of human athletes. The hounds learn their scent and then they are given a five-minute head start. There is a set course of about eight miles through fields, hedges, ditches and woods. If the hounds catch the quarry, they are “licked to death.”
WHAT WOULD BAGEHOT DO?–REVISITED.
Friday, September 26th, 2008WHAT WOULD BAGEHOT DO?—REVISITED. Kids, in August of last year, I posted on Walter Bagehot’s policy recommendation from 1873 that a central bank should lend freely in the event of a financial crisis (think of a spike in the demand for cash). Over a year later, Bagehot’s analysis still applies. Any of the remedies which involve the federal government buying “bad” credit instruments can be traced back to Bagehot. It is said that a great many of these assets will pay out in the long run, but they are completely illiquid—they cannot be turned into cash now. The thought is that the government is able to sort out these instruments and wait for them to be repaid.
A DANGEROUS WEEKEND?
Thursday, September 25th, 2008A DANGEROUS WEEKEND? There have been several weekends in the last year where dramatic action has been taken to calm the markets. It looks like this will be a weekend where dramatic action has been proposed, but is still being debated. As Hemingway suggested, markets can move quickly. And Tuesday is September 30, the end of a quarter, when a lot of strange things can happen.
HEMINGWAY ON BANK RUNS.
Thursday, September 25th, 2008HEMINGWAY ON BANK RUNS. One of the lessons of the last year is just how fast a run on liquidity can be. I once saw a fire in a ten-story building in New York City. It was surprising how quickly the fire moved. Hemingway in THE SUN ALSO RISES has some famous dialogue: “How did you go bankrupt?” Bill asked. “Two ways,” Mike said. “Gradually and then suddenly.” Bear Stearns, Lehman Brothers, FNMA and Freddie Mac—there was a warning period of several months, and things went very quickly.
WHEN I FIRST WORE SCRUBS.
Wednesday, September 24th, 2008WHEN I FIRST WORE SCRUBS. I am astonished to learn that clean scrubs for hospital workers are not routine. Twenty-four years ago when Annalisa was born, I was provided with scrubs before I went in the delivery room, and it seemed a matter of course. I remember the green smock, clean hat and clean booties because I quickly put the hat on one of my shoes, and then couldn’t make the rest of the outfit come out right.
