Yesterday, the G-7 issued the following statement:

“We reaffirm our shared interest in a strong and stable international financial system. We are concerned about the recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability. We continue to monitor markets closely, and cooperate as appropriate.”

If you haven’t been paying attention to foreign exchange rates, then you’re probably puzzled at to what’s going on with the yen.  Allow me to update you.

In August, the yen was trading at about 160 to the Euro, and 110 to the dollar.  Since the meltdown, the yen is now trading at 119 to the Euro and 94 to the dollar.  That is a significant, and indeed catastrophic appreciation.  What, you may ask, happened?

The primary answer lies in the infamous currency carry trade.  This is complicated, but I’ll do my best to explain it.

The term carry trade originally dealt with commodities.  It involved a situation where there were different prices in different places for a given commodity.  So I would buy that good where it was cheap and “carry” it to where it was expensive. 

But you can also do a carry trade between different interest rates: let’s say I know a guy who will loan me money at 4% interest, and another guy who wants a loan, and will pay 8% interest.  What do you do?  Well, you borrow money from the 4% guy and loan it to the 8% guy.  You’ve made a 4% interest spread, and you did it on money that wasn’t even yours.  That’s a really simple breakdown of a carry trade on interest rates.

Now let’s look at it on an international level.  Right now, three month yen LIBOR (LIBOR is a rough estimate of current lending rates between banks) is 1.06%.  Three month LIBOR on the British pound is 6.18%.  So a smart trader could borrow yen at 1.06%, convert it into pounds, and then loan it out at 6.18%.  That’s an interest spread of a whopping 5.12%.  Think about this from this perspective:

Let’s say I have 100 million dollars in equity.  The average bank in America is leveraged at about 10:1, so I’ll use that $100,000 to borrow $1,000,000 worth of yen.  I then convert that into pounds, and loan out that $1,000,000 worth of pounds.  I am earning a net interest rate of 5.12% on that million, which is $51,200.  So I’m actually earning $51,200 on $100,000 of equity.  That’s a 51.2% return.  That’s darn good.

But there is significant risk involved in the carry trade.  The primary source of that risk is exchange rate fluctuation.  The example I quoted above assumes that the exchange rate between the British pound and the yen are going to stay the same.  But exchange rates, as we all know, can shift significantly.

So let’s pretend, just to make the math simple, that the yen is trading at 100 yen to one pound.  As long as the rate stays at 100:1, you make 51.2%.  But what if the rate then shifts to 90:1?  Your 51.2% return just became a 53.2% loss, because you have to convert your money back into yen to pay off the loan.  That is one ugly trade.  And that is exactly what’s happening right now.

Due to their commitment to low interest rates, Japan has been a carry-trader’s best friend for a long time, so there are numerous currency carry trades outstanding.  When the markets started collapsing, traders, often under pressure to deleverage, started attempting to unwind their yen carry trades.  So they would close down their loan position, buy yen and sell the other currency.  Supply and demand is simple here: selling one currency and buying yen will cause yen to become more expensive.  But as the yen became more expensive, it gave more carry-traders incentive to end their trades, too.  This created a feedback loop of yen buying, which has caused the yen’s startling appreciation.

Yen appreciation is disastrous news for Japan, which is a major exporter.  For example, if Honda was selling cars for $25,000 in America, that amount went from being worth 2.75 million yen to 2.35 million yen.  In practice, the yen’s appreciation has forced Honda to sell its dollar goods at a 15% discount.  That’s hugely problematic for profitability.  If the exchange rate doesn’t shift, Honda will have to mark up dollar prices (needless to say, a bad idea), or just take a loss.

As we speak, the yen continues to appreciate, and money continues to be lost for yen carry traders.  Watch the yen in the coming weeks, and see if any action is taken to bring it back down to earth.

MOVIES, BRIEFLY CONSIDERED

W.  Oliver Stone is trying to paste together two movies: a considered biopic and a political hit-job.  It succeeds modestly on both levels, but the sum of the two is less than its parts.

Body of Lies.  It’s exciting enough, but it’s also a dumb, ill-considered movie with grand pretensions, tiresome cliches, and terrible, terrible fake accents.  Also, why must I be forced to sit through extended torture scenes in every movie about the Middle East?

BEST QUOTE I’VE HEARD LATELY

Anthony Lane, the New Yorker’s film critic, is for my money the best critic of any sort going.  I recently read his review of Sin City, and one line from the review summed up everything I’ve been attempting to articulate about the move towards ever-greater violence in movies.

“We have, it is clear, reached the lively dead end of a process that was initiated by a fretful Martin Scorsese and inflamed, with less embarrassed glee, by Tarantino: the process of knowing everything about violence and nothing about suffering.”

Which best sums up my thoughts on all super-violent movies, from the Passion of the Christ to Kill Bill.

THE ATLANTIC

This month’s Atlantic Monthly is the best single issue of a magazine I’ve read in a long time.  You simply have to read about Jeffrey Goldberg’s undercover airport smuggling operation:

http://www.theatlantic.com/doc/200811/airport-security

And this article, on transgendered children, is haunting, infuriating, sad, and greatly vexing:

http://www.theatlantic.com/doc/200811/transgender-children

There’s lots more.  Pick up a copy, or just read them all online for free.

KRUGMAN THE ECONOMIST

Paul Krugman recently won the Nobel Prize for Economics, which helps remind us that he is more than just a Bush-bashing op-ed writer.  I’ve recently been reading his writings on Japan’s 90s-era liquidity trap, and it’s great stuff.

http://web.mit.edu/krugman/www/jpage.html

SONG OF THE DAY

“Ghost Under Rocks” Ra Ra Riot

WORD OF THE DAY

resplendent
–adjective shining brilliantly; gleaming; splendid

Reginald felt his heart warm when he noticed the resplendent gleam of the copper pots he bought from his local Williams-Sonoma; “yes,” he thought, “these will be perfect to fight over in a divorce someday.”

How to make a financial crisis, in a few easy steps:

Step One:  The first step is way more complicated than I’m going to be able to explain here (see the FotD post for more info), but it started with knucklehead banks loaning money to knucklehead borrowers who bought houses they couldn’t afford.  Then they took those junk mortgages, packaged a bunch of them together, and then sliced them up into securities of varying risk levels.  The securities would work kind of like bonds; you’d buy them for a certain amount and they would theoretically yield some percentage interest.

Step Two:  Around the middle of last year, many of the subprime securities (including a great many that were considered low risk) stopped yielding anything.  As you can imagine, that caused the prices on them to drop precipitously.  Eventually people just stopped buying those securities at all.  Right now, you simply can’t sell subprime securities at almost any price.  This is a serious problem for banks, because they are required by accounting rules to “mark-to-market”.  This means that things on their balance sheet should be valued at market prices.  But how do you determine a market price if the market has stopped buying?  It’s generally agreed that subprime securities still have some intrinsic value, and many of the lower-risk ones may still yield ample interest for their investors.  But how much is that worth if you can’t sell it?

Step Three:  The banks were stuck with tons of mortgage-backed securities with essentially zero market value.  They kept writing down their books again and again, but they just couldn’t write them down as fast as the market value fell. 

Step Four:  These banks borrow tons (and I mean tons; think hundreds of billions) of dollars, and keep only a small amount of cash reserves on hand in case of an emergency.  Many of these loans are short-term loans with durations of less than 270 days (this is called “commercial paper” in the industry).  At the end of their duration (as short as overnight, or as long as nine months), these loans must either be paid off or renewed.  Most banks just renew them, using them as a revolving line of credit.  But what happens if creditors stop allowing renewals? 

Look for instance at Goldman Sachs, who has $369 billion in short term loans and $99 billion in cash and cash equivalents.  What happens if those short-term lenders decide not to allow Goldman to renew their loans?  They don’t have cash to repay those loans, and all their other money is tied up in assets that would take some time to sell.  This would be like if I had a $15,000 balance on my credit card, and the credit card company called me tomorrow and said they wanted their money.  I may have the money somewhere - in a car, in property, in my 401(k) - but I can’t get the money by tomorrow, so I’d be forced (if I were a corporation) to declare bankruptcy.  This is what happened to Bear Stearns and Lehman Brothers.  Lenders saw them writing down billions of dollars in assets and began to question their credit-worthiness.  When their short-term loans got called in, they didn’t have the cash on hand to keep afloat.

Step Five:  Lehman’s collapse caused everyone to freak out royally.  In retrospect, it looks like the government letting Lehman die was a really bad move, because after that happened, the short-term loan market basically froze.  Right now, many companies are reporting that they cannot get loans for durations longer than overnight.  This means that they’re literally living day to day.   

As the liquidity crisis spreads, the TED spread (a measure of how willing banks are to lend to each other) has come down from its highs, but is still near the highest it has ever been.  The short-term credit markets are almost entirely frozen.  In response, the Fed has quietly been putting a huge amount of money in the short-term lending market (hundreds of billions) to make sure that banks can keep getting the short-term lending that they need to do things like make payroll.

So, why the bailout?

The problem at hand is that the entire US banking system was built on the availability of short-term credit, and that ain’t happening right now.  What needs to happen, pronto, is to restore faith in the banks so they can get credit again.  The best way to restore faith in the creditworthiness of the banking system is to give them money, or in fancy terms that you hear from economists, we need to “recapitalize” the banks. 

In an attempt to kill two birds with one stone, the Paulson plan as proposed was to buy the mortgage-backed securities from the banks (this will give the banks much-needed cash, and get rid of those lousy assets) at a pretty high price.

There are a bunch of other little provisions in the Paulson plan that are small and uninteresting (executive pay, and a really stupid insurance idea that the GOP came up with), but the biggest part of the plan is to buy the junk assets from the bank for $700 billion.

Now this plan doesn’t exactly cost $700 billion of taxpayer money; that’s a bit misleading.  We are buying assets, and those assets are almost certainly undervalued, so I think there’s a good chance that we might make our money back, or even come out ahead in the long-term.  So while this is a huge outlay now, it could be a boon, not a cost, to the taxpayer.  Either way, these assets have some value, so it definitely won’t cost the full $700 billion.

But that all refers to the bailout plan as written.  Since the bill passed, Paulson has essentially changed his mind on the form and substance of the bailout.  He still plans to buy the mortgage-backed securities, but he now claims that the bill gives him the authority to recapitalize the banks directly.  This means that he called up the nine biggest banks around, had them over for sandwiches and Coke, and essentially told them that he was going to hand them $250 billion, in exchange for preferred shares in their companies.  For practical purposes, preferred shares function like loans.  In this case, the preferred shares will receive a 5% rate of interest for five years, and a 9% rate after that.  The banks are free to repay the loan at any point, and the Treasury will receive warrants that can be converted into stock worth up to 15% of the value of the preferred shares.

The banks weren’t given a choice about participating in the recapitalization, because the Fed didn’t want participation or nonparticipation to be seen as a sign of weakness on Wall Street, and the banks were generally happy to comply, as the 5% is a way better deal than Warren Buffett was offering (9% plus stock).

So post-recapitalization, what’s next?  Here are a few thoughts.

1)  Watch the markets for commercial paper.  There is some indication that short-term lending is unfreezing.  While the vast majority of all lending is still overnight, some one week lending is restarting.  Many lenders are waiting for October 27, when the Fed will be conducting a massive auction of short-term loans.

2)  There will be deflationary pressure as financial institutions deleverage.  Lots of fancy words in that sentence.  Let me explain.  Before the crisis, banks and other financial institutions had debt-to-equity ratios in the twenties, thirties, and even sixties (I’m looking at you, Deutsche Bank).  Those sort of ratios are no longer sustainable, so assets must be sold to pay off some loans.  As these assets sell, prices will most likely fall.

3)  Watch for continued weakness in the commodity markets.  Oil is currently hovering around $70 a barrel, which is less than half of the price just a few weeks ago.  Other commodities have followed suit.  This, I believe, will contribute to the deflationary pressure from the banks’ selling of assets to repay debt.

4)  Short-term lending difficulties will trickle down to the consumer.  In the last week alone, 30 year mortgage rates have climbed a full percentage point, from 6% to 7%.  This is up from 5.25% just four weeks ago.

5)  Foreclosure rates are bad and will get worse; this will cause home prices to fall as low as 40-50% from their peaks.  Historically, mortgage default rates linger in the 1-2% range.  Currently, default rates on the highest quality mortgages are in the high single digits.  Default rates on the worst quality mortgages are nearing 50%.  The foreclosed homes will be dumped onto the market, putting further downward pressure on the housing market.

6)  Consumer spending will continue to drop.  The financial crisis will eventually hit peoples’ salaries, and that will cause people to stop spending quite as much.  This will almost certainly put the US economy into a recession.

COMPARISON

This whole crisis looks less and less like the Great Depression and more and more like Japan in the 1990s.  This isn’t necessarily good news.

http://en.wikipedia.org/wiki/Japanese_asset_price_bubble
http://en.wikipedia.org/wiki/Economic_history_of_Japan#Deflation_from_the_1990s_to_present

FINANCIAL CRISIS GLOSSARY

Basis Point.  A basis point is .01%.  So 5% is 500 basis points.

Commercial Paper (CP).  Loans to companies with a duration of less than 270 days.  CP is usually unsecured, which means that it is not backed by collateral.

Credit Default Swap (CDS).  This is an insurance policy to guarantee that a company will pay off its debt.  CDS rates give a rough estimate of how likely a company is to fail.  For instance, a CDS on $10 million of Morgan Stanley’s debt costs $480,000 a year for five years.  This reflects a fairly high probability of failure.

LIBOR.  London Interbank Offered Rate.  LIBOR is the rate that banks are lending short-term money to each other.  There are serious methodological problems in the calculation of LIBOR that are addressed here: http://www.lrb.co.uk/v30/n18/mack01_.html

Mark-to-market.  In accordance with FASB (Financial Accounting Standards Board) rule 157, assets should be put on a company’s balance sheet at market prices.  This rule has been suspended for items that trade in low volume markets ,like mortgage-backed securities.

Preferred Shares.  Non-voting shares in a company that usually yield interest.  If a company goes into bankruptcy, preferred shares get paid off before any other debt, including senior debt (see below for a definition of senior debt).

Recapitalization.  A fancy word for giving money to banks.

Senior Debt.  When Paulson recapitalized the banks, he included as part of the agreement a guarantee of all the banks’ senior debt.  Senior debt is the debt that is first in line at bankruptcy court.  If a company fails, the senior debt gets first dibs on the company’s assets (besides, of course, preferred shares).

Spread.  A spread is just a difference between two interest rates.  So the spread between 2% and 4% is 2%, or 200 basis points.

TED Spread.  The TED Spread is the difference in interest rate between three-month treasury bills (T-bills) and three-month LIBOR.  T-bills are generally thought to be zero-risk investments, and LIBOR tracks the bank-to-bank lending rate.  The difference between these two shows how much more interest they will demand from banks than from a zero-risk investment.  This roughly indicates the perception of risk on bank-to-bank loans.

PRIMARY SOURCES

For more information on the financial crisis, here are a few websites to keep up with.

http://www.clusterstock.com/

A great financial analysis site that is witty, accessible, and smart.  Henry Blodget, the editor at Clusterstock, was one of the best-regarded analysts on the Street until he was hit with a wee fraud charge.  He emerged wiser.

http://ftalphaville.ft.com/blog/

The Financial Times’s Alphaville blog does a great job staying on top of recent financial news.

http://krugman.blogs.nytimes.com/

I know, I know, he’s super-obnoxious, and his book that states that the entire Republican party is a racist boondoggle is the stupidest thing written by a very smart person in recent memory.  But he does have a Nobel in economics, and he knows his stuff.

http://meganmcardle.theatlantic.com/

McArdle is an MBA who blogs mostly on economic issues, and she has some nice insights and a healthy sense of skepticism.

http://acrossthecurve.com/

I hesitate to recommend this, because it’s super technical, but you pick up the jargon fast.  Across the Curve is the blog of a veteran bond trader.  If you can put up with the occasional post like this - “The IBM 10 year which priced last week at T+ 3 7/8 percent over the 10 year note is making its holders happy as it is 360/355″ - you will quickly find it indispensable.

ARGH.

Last night McCain presented the Great Mortgage Crisis of 2008 (trademark pending) as a crime perpetrated by Wall Street against the “innocent” American people.  As much as I love the idea of fast-talking MBAs in Briony suits swindling helpless American rubes, allow me to disagree. 

I think that much of the blame for this mess falls squarely at the feet of the people who got mortgages they couldn’t afford.  It isn’t brain surgery to realize that you can’t make a payment, and bad financial discipline is still a character flaw.  Keep that in mind when McCain - or Obama, for that matter - launches into their sillly populist rhetoric.

PROGNOSTICATION

This is a stupid exercise, and most likely will later embarrass me, but I feel like some crystal ball gazing.

1)  The US auto industry will require more than one bailout in the next three years.  American car companies had been limping by on SUV and truck sales, which will no longer be feasible, considering (a) people will tighten up their belts post-recession, and (b) both candidates intend to do something to limit carbon emissions that will make those vehicles more expensive to drive.

2)   The US deficit will be at least $1 trillion for this year, and possibly as high as $1.5 trillion for next year.

3)  The crisis will lead to a great currency rebalancing.  Swinging exchange rates will bring central bankers together to implement something similar to Bretton Woods.

4)  Hank Paulson will come out of this looking like a genius.  He will then become consumed by hubris and do something stupid.  In other words, his career arc will proceed along the lines of Alan Greenspan.  Genius, hubris, stupid.

5)  The US savings rate will move as high as 4-5% in the next three years.  Mortgages will once again require 20% down payments.

6)  New York City, without the benefit of income tax revenue from huge investment banking bonuses, will require a federal bailout.  (This isn’t the first time, incidentally.)

7)  The United States will handle the recession better than Asia or Europe.  In a weirdly perverse way, US mortgage defaults will re-establish US economic dominance.

8)  Iceland won’t be the last country to go.

9)  Everyone currently thinks Sheila Bair, the head of the FDIC, is the world’s smartest human.  That will be proved true in a game show format.

10)  The fabled liquidity trap will occur.  I will win the Nobel Prize in economics for predicting it.  Then I will get a column on the Times op-ed page, in which I will expound my raving political theories about how the world is flat, Republicans are racist, or I’ll just dye my hair red and make up semi-witty columns rife with proprietary nicknames and one-sentence paragraphs.  For my efforts, I will receive a Pulitzer.  (If you get the various jokes I just made, you need to get out of the house more.)

SONG OF THE DAY

To cheer you up after checking your 401(k):

“Walkin’ on Sunshine” Katrina and the Waves

WORD OF THE DAY

recession, noun

According to National Bureau of Economic Research, a recession is “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”

“Oh crap!  It’s a recession!”

There’s money in comic book movies, and Hollywood has taken notice.  Ever since Tim Burton’s Batman raked in $411 billion, a steady stream of comic book superheroes have zipped, flashed, and kapowed through theaters.  Filmgoers have been happy to oblige: in an increasingly shaky film industry, comic book flicks have provided a cash cow that seemingly cannot be milked dry.  The latest cash-grab is called Iron Man.

For the uninitiated, Iron Man is the story of a wealthy war profiteer named Tony Stark (Robert Downey, Jr.).  To demonstrate his latest explosive to the military, Stark flies to Afghanistan.  As he cruises around in a Hummer, he gets kidnapped by a group of terrorists of mysterious origin.  (They appear to be Afghani warlords, but one of them speaks Hungarian.)  To keep Stark from escaping, the terrorists have installed a soup can with an electromagnet into his sternum.  The electromagnet must stay plugged into a power source, or Stark dies.  (I don’t understand, either.)  The terrorists hold him captive and force Stark to build them a missile.  Stark, however, graduated from MIT at 16, so you can bet he’s got something up his sleeve.  Instead of building a missile, he builds a suit of armor.  The intervening scenes consist of Stark showing off his skills in blacksmithing (apparently it’s an elective at MIT) and playing backgammon with his fellow captive.  Interspersed are scenes of the terrorists watching Stark on a surveillance camera, confused by what exactly he’s doing.  If only they were a little more hands-on, they might have noticed that something was amiss.  Missiles generally consist of a tube, some fins, and explosives, but there is Stark, hammering out a mask.  Oh, well.

Unsurprisingly, the terrorists pay for their lack of proper oversight, as Stark emerges from the Afghani cave with a giant, lumbering metal suit.  He kills everyone, flies home, abruptly grows a conscience, and shuts down the weapons division of Stark Industries.  We should slow down here, because it’s instructive to analyze the arc of his thinking: although he used to believe that more weapons kept everyone safe, his mind has been changed.  The world doesn’t need more weapons, he thinks.  It needs a wealthy man in a really awesome flying metal suit.

So he sets out to work on his suit, with the help of his trusty assistant, Pepper Potts, played by a red-headed Gwyneth Paltrow.  (Somewhere Patti Mayonnaise is surrendering her title for worse fictional name ever.)  Meanwhile, the board of his company, led by the unctuous Obadiah Stane (a bald Jeff Bridges), is trying to seize control of the company from Stark.  Stark stays in his garage the whole time and works on his suit.  This is the best part of the movie, because it gives Downey room to breathe.  Robert Downey, Jr is, and has always been, an excellent actor, and the construction scenes get at the heart of his misanthropic appeal.  The movie’s first act, where Downey plays Stark as a billionaire playboy, are less convincing (it’s hard to imagine a woman swooning for Robert Downey, Jr.), but as the dissipated inventor, he’s irresistible.

You know the story from here.  Obadiah Stane becomes power-mad, makes his own suit, and Stark has to stop him.  An epic battle ensues, followed by a half-hearted military cover-up. 

At this point, the crowd in the theater seemed sated, and the credits blared along.  I was less dazzled, and was instead playing count-the-women-in-the-credits.  For the record, there are three named female characters in the acting credits to this movie.  We have Pepper Potts, Stark’s personal assistant, who falls in love with him; Christine Everhart (played by Leslie Bibb), a Vanity Fair reporter who sleeps with Stark; and Zorianna Kit, who plays herself in an Entertainment Tonight-style news report.

This strikes me as alarmingly retrograde.  In the movie, we have a number of scientists who work for Stark industries and a team of federal agents, but not one of them is a woman.  Gwyneth Paltrow turns in a fine performance as Pepper Potts, but her character is so poorly drawn it doesn’t matter.  In one scene she is so overcome by thirty seconds of slow-dancing with Stark that she has to step outside for air.  Likewise, Everhart is attempting to do a story on Stark, but she cannot resist his come-ons.  A sample:

 Stark:  “Let me guess…Berkeley?”
 Everhart:  “Brown.”

Within one minute of movie time, Stark has Everhart in bed.  But she isn’t even doing it to be opportunistic, or to get an inside angle on the story, she is simply overcome by Stark’s sheer power.

It’s backwards, but there’s something larger at play than simple misogynism.  The anti-feminism is a symptom of a serious problem, and one that is endemic to the comic book genre.  At its heart, these movies elevate their superheroes to Olympus, and ask us all to gaze up at their thrones in awe.  But what makes superheroes interesting in the long run isn’t their assorted superpowers, it’s their humanity.  Iron Man, at its worst, seems more interested in the übermensch than the mensch, and that’s its biggest fault.  The titular character is, after all, a man (although he keeps the soup can-electromagnet contraption), and men are, as Shakespeare said, “a piece of work”.  A fascination with superpowers leaves us forgetting that man is interesting as-is.  A metal suit makes for great CGI action sequences, but it doesn’t explain to me what makes Tony Stark tick.

This incuriosity about humanity leaves a number of characters without discernable motives for their actions.  Why, for instance, does Jeff Bridges go on a rampage through the city?  “Nothing will stand in my way!” he shouts, but I don’t quite know what his next step would be.  We’re asked to accept that an otherwise stable person suddenly acquired a thirst for violence, but where is the self-interest?  Likewise, we are asked to believe that Stark’s fellow captive sacrifices himself for Stark, but why?  And why, for heaven’s sake, would Everhart jeopardize her career by sleeping with Stark?

It isn’t quite nonsense, and it isn’t even bad moviemaking necessarily (plenty of good movies have characters that don’t think like humans), but the disdain for ordinary humanity - especially women - in these movies leaves me somewhat confused.  It amounts to a superhero exceptionalism.  But why judge them differently?  A man doesn’t become a miracle when he learns to fly, he already is one.  Returning to Shakespeare:

“How noble in reason,
how infinite in faculties, in form and moving how express and
admirable, in action how like an angel, in apprehension how like
a god! the beauty of the world, the paragon of animals—and yet,
to me, what is this quintessence of dust?”

That last question hangs in the air, and it’s left entirely unanswered by Iron Man.  What is this Tony Stark?  I could only scratch my head and shuffle out of the theater.

WHAT I’VE BEEN UP TO

Obviously I haven’t sent out a FotD in about two months.  I think I owe you an explanation.  First of all, let me say that I have been writing Facts; I merely haven’t been sending them out.  For instance, just the other day I wrote a long discourse explaining how the standard atheistic response to the “First Causes” argument ignores the concept of aseity.  I doubt you need to ask why I kept that one under my hat.

But that’s not all.  I also wrote a preview of a movie that hasn’t been released yet (based on an interview with the screenwriter), an essay that describes Jeremiah Wright as being “Sylvia Plath head-in-the-oven crazy”, and a review of a series of restaurant reviews from the Times (seriously).  Think of the hours of your life you would have wasted reading these second-rate FotDs.

So in the interest of self-editing, I have been keeping much of my writing to myself lately.  But no worries, because the FotD is back.

The Editor

WHAT I’M READING

Beyond a Boundary, C.L.R. James.  Generally thought to be one of the great pieces of sportswriting, James’s book is an exploration of what it means to be black growing up in the British colonies, disguised as a book on cricket.

Poems and Prose, Gerard Manley Hopkins.  There have only been a few moments in literary history where a bolt came out of nowhere.  For instance, I think of Joyce’s Ulysses, Blake’s Songs of Innocence, and the 1918 publishing of Hopkins’s poems.  They sound like nothing else.

The Hauerwas Reader, Stanley Hauerwas, and the Moral Vision of the New Testament, Richard B. Hayes.  The touchdown twins of Duke Divinity School, Hauerwas and Hayes articulate a challenging, church-based view of ethics that I find compelling.  They’ve also just about convinced me to be a pacifist.

Nobody’s Perfect, Anthony Lane.  Anthony Lane is the film critic for the New Yorker.  He also happens to be one of the finest writers anywhere.  This collection of his past criticism and essays is charming, erudite, and laugh-out-loud hilarious.

SAMUEL L. JACKSON

After Iron Man, I was told I should stick around after the credits to see an additional scene.  I had to sit through the entire five minutes of credits, only to see Samuel L. Jackson with an eyepatch, blathering some sequel-mongering foolishness.

This raises an important question: why am I expected to stand up and clap every time Mr. Jackson appears on screen?  It seems that since Pulp Fiction he has been handed the status of a film star emeritus who achieves standing ovations at the slightest cameo.  I can support this phenomenon no longer.  An entire movie was devoted to it - Snakes on a Plane - so I think he’s had enough.

SONG OF THE DAY

“Oo La La” the Faces

WORD OF THE DAY

moil
noun:
1. Toil; hard work; drudgery.
2. Confusion; turmoil.

Chester look back on those days with a shudder, thinking over the seemingly endless moil of manipulating levers, button, and machines that was his life in the Cheetos factory.

Robert F. Parker, Jr. graduated from University of Maryland-College Park, and he earned a J.D. at the University of Maryland-Baltimore.  In 1973 he became a lawyer for the Farm Credit Banks of Baltimore.  These are humble beginnings for a man who has changed the wine market - and especially the French wine market - more than almost anyone else this century.

As his law career puttered along, Parker noticed that many wine critics were too cozy with the industry, so he began writing his own reviews.  In the 1980s he compiled these reviews into a bimonthly newsletter, the Wine Advocate.  Parker’s reviews were drastically different from prior wine criticism; he used a 100-point scale, scoring wine like a chemistry test.

Parker’s little newsletter gained tremendous influence, and a Parker score in the 90s could guarantee a sold-out vintage.  (For an example, follow the story of the recent vintages of Mollydooker shiraz.)  Wine stores began tagging bottles with Robert Parker’s ratings, and customers started barging into wine stores, demanding nothing below a 90.  On the other hand, a low score could severely hurt sales.  One infamous wine earned a 50 - Parker’s lowest score - and it was immediately relegated to the bargain bin.

Parker is a man of specific tastes.  He likes big, fruity wines with high alcohol, spunky oak, and low acidity.  He referred to the 1999 Craneford Barossa Shiraz as a “hedonistic, glycerin-imbued fruit bomb”, and he apparently meant that as a compliment.

The wine industry had already begun moving toward fruitier wines, mostly because of the influence of a oenologist (wine scientist) by the name of Émile Peynaud.  Peynaud was an innovator, and he was the best thing to happen to wine in the twentieth century.  Before Peynaud, winemakers would pull grapes off the vine as soon as they became ripe, and they would harvest all of the grapes on the vine, including ones that were rotten or not ripe.  Peynaud encouraged winemakers to keep the grapes on the vine until they had reached full ripeness, and only to use the best grapes for wine.  This was a sea change in the industry.  Vineyards began producing less wine, but the quality of that wine increased dramatically.

But it wasn’t just the quality of the wine that was changing: leaving the fruit on the vine longer was also giving the wine a more fruity flavor.  Once Robert Parker stamped his imprimatur on these fruit-forward wines, producers began working to make their wines exceptionally fruity (or, in the parlance, Parkerized).  One problem: not everyone likes hedonistic fruit bombs.  Especially the French.

France is home to many of the world’s great wine-growing regions, especially Bordeaux and Burgundy.  Bordeaux in particular has been hit hard by the Parker epidemic.  Previously, Bordeaux winemakers prided themselves on their wines’ subtlety and demure response to aging.  Once Parker came along, however, a group of tiny Bordeaux vineyards began growing Parker-friendly, fruity wines.  These small growers would use new oak barrels and leave the fruit on the vine until it was almost too ripe.  These ne’er-do-wells were known as the garagistes (their wines were called “vins de garage” - garage wines), and they became the hipster lords of Bordeaux.  True to form, Parker swooned over the garagistes, and much of Bordeaux followed their lead, dropping subtlety in favor of boldness.

Like everything else American, Robert Parker tends to tick the French off.  French winegrowers think that their wines should reflect the region where they are grown (the terroir, as they say); Parker’s influence was causing wines everywhere to become homogenized.  Moreover, the French trust the American palate about as far as they can throw it.  They maintain that Americans have had their tastebuds singed off by Coke before age seven, and this explains the American predilection for wines that have lots of flavor.

None of this to say that Parkerized wines are bad.  For my part, I like the occasional thermonuclear grape bomb.  But I also like something a little more reserved, too.  The fear is that Parker’s influence will marginalize the latter.  I recently had a bottle of Chablis, a white from Burgundy known for its flinty austerity, and it was downright fruity.  I silently scowled and blamed Robert Parker (although I’ve found that Chablis-like whites can still be found in Burgundy in the Mâcon and Pouilly-Fuissé appellations).

The good news is that the Parker backlash is well underway.  My Welch’s Chablis northwithstanding, Burgundy has mostly ignored Parker’s recommendations.  In fact he recently handed over coverage of the region to an assistant.  For the moment, the vast majority of Burgundies are subtle and understated,and a few other regions are refusing to capitulate to Parker’s tastebuds.  Hopefully, wine buyers will soon start to wonder if a 100-point scale is the best way to choose a bottle of wine.

FOLLOW UP

For more on Parker, check out this London Review of Books article:

http://www.lrb.co.uk/v27/n03/shap01_.html

REPORT ON VARIOUS THINGS

Hunger, by Knut Hamsun.  My second foray into the rockin’ back-catalog of Knut, Hunger is really, really weird.  It’s about a writer who gradually goes insane as he starves to death.  He does some really, really weird stuff.  Whether or not you’ll like Hunger depends on how much you enjoy getting inside the head a crazy person.

Mara’s Homemade.  I went to this Cajun restaurant in Manhattan of all places, and I must commend Mara (who was our waitress) on her finger-lickin’ good down-home favorites.  I had crawfish, shrimp creole, fried okra, and sweet tea.

The Bourne Ultimatum.  Is it just me, or is this the best action movie of the decade?  As a paranoid spy-thriller film, it stands among the classic works in the genre, and may very well be the best ever.

Electric Feel / Kids, MGMT.  These two consecutive tracks on MGMT’s newest album (Oracular Spectacular) are the best one-two punch in a long time.  Danceable and delightful.

Bringing Beaujolais to dinner.  If you’re going to a dinner party, and you don’t know what’s being served, Beaujolais is a safe bet.  It pairs with just about anything, and you can get a good bottle for an affordable price.  Just don’t confuse the real stuff with Beaujolais nouveau, which usually comes in a bright, multicolored bottle to tempt easily-fooled wine purchasers.

SONG OF THE DAY

“Jungle Boogie” Kool & the Gang

WORD OF THE DAY

fris·son  
a sudden, passing sensation of excitement; a shudder of emotion; thrill

I guess the first time that I realized I was different, that I didn’t really work the same ways as the other boys and girls, was when I expected an unexpected, intense frisson when my 4th grade class looked up words in the 26 volume Oxford English Dictionary.

In the last year or so, American moviegoers have been issued an unrelenting stream of movies either directly or indirectly about the Iraq War.  A short list would include Lions for Lambs, Redacted, Rendition, Stop-Loss, In the Valley of Elah, and a few others whose names I have already forgotten.  These movies have been massive busts, both criticially and at the box-office.  It is a wonder, indeed, that despite the leftward bent of film reviewers, few have managed to suggest that these are good movies.  The few positive reviews are notable mostly for their self-delusion.  For instance, David Denby’s review of Stop-Loss assures us that it is “not a great movie”, but then states outright that Stop-Loss “may become the central coming-home-from-the-war story of this period, just as ‘The Best Years of Our Lives,’ made in 1946, became central to the period after the Second World War.”  More serious in his self-deception, however, is David Edelstein (NY Magazine), whose review of In the Valley of Elah will surely go down in film criticism history as a fine example of unconditional love.  Try this on for size:

“Paul Haggis’s In the Valley of Elah is vital in spite of its mustiness. As a narrative, it’s clunky. As a whodunit, it’s third-rate. As the drama of a closed-off man’s awakening, it’s predictable. But Haggis has got hold of a fiercely urgent subject: the moral devastation of American soldiers serving in (and coming home from) Iraq. At its heart are deeper mysteries—and a tragedy that reaches far beyond anything onscreen.”

To say that the quality of a movie “reaches beyond anything onscreen” is to say that a movie is better than it actually is.

The public (and myself) have rightly stayed away from these films.  Hollywood’s political passion is commendable, I guess, but Hollywood’s not the best when it comes to nuance.  For instance, in Redacted, Brian de Palma’s risible contribution to the genre, American soldiers rape and murder an Iraqi girl, and then they burn her body.  I can just imagine de Palma reading the script, thinking “How you like the Iraq War now, America?”

Then there’s Lions for Lambs.  In an attempt to convey its terribleness, critic John Podhoretz merely summarized the plot, and this is what he came up with:

“After Cruise gets a phone call informing him that the new strategy is already a failure because Redford’s two students are bleeding on the mountain, he turns to her and speaks the truth. He is tired of America being humiliated, he says. She leaves his office, begins to hyperventilate, and tells her boss that Cruise is going to become the next president and use nuclear weapons on unsuspecting Muslims. Her boss tells her to write up the news without mentioning the whole nuclear-weapons thing. She says she will not be a vehicle for warmongering propaganda the way the entire news media were the last time. He says she’d better, or Streep’s sick mother will no longer be able to receive 24-hour care.”

I picture script readings where Tom Cruise is overcome by hysterical weeping.

All of this reminds me of a point that Lionel Trilling, the literary critic, once made: authenticity and sincerity are not the same thing.  You can feel something deeply, truly, in your heart of hearts, but that doesn’t mean that what will come out is in the least bit authentic.  I would take Trilling’s point further, however, and say that sincerity sometimes clouds authenticity.  The trouble with these movies is that they are so deeply felt, but so shockingly un-thought.

That is why most of the great war movies were made some time after the wars they depict were over, after feelings had had time to coalesce.  The Deer Hunter, which is really the great coming-home-from-the-war story, was made in 1978.  Platoon was made in 1986, and Schindler’s List was made a half-century after the Holocaust.  This distance is critical.

With the exception of documentaries, movies represent something that is not real, and they use that un-reality to convey something true about the human condition.  All of the great war movies depict wars that are, at their core, unreal.  Platoon wasn’t an actual depiction of combat in Vietnam.  It was a frenzied opera, and the swelling music and outsized performances (especially from Willem Dafoe) made that clear.  But it did convey something serious about the scars that the war left on its soldiers, and the moral minefield that soldiers were presented with.  Likewise, the best movies about the Holocaust are the ones that don’t pummel the audience with realism (Schindler’s List, for instance, was shot in a dreamy black-and-white); instead, these movies let the singular atrocity of the Holocaust stand on its own, outside or beyond the medium of film.

What the Iraq movies refuse to accept is that they are creating fictional depictions of events, and that these depictions must deal, firstly, with the made-up characters at hand.  In Stop-Loss, David Denby notes that Ryan Phillipe is “stuck playing an exemplar who has to carry on his shoulders the weight of all the contradictions facing an American soldier today. He never says anything idiosyncratic or strange; he says only what you’d expect him to.”  The characters in these movies aren’t characters per se, they are allegorical figures.  In the end this results in a paint-by-numbers critique of the war.  At its worst this can slip into the classic Ayn Rand trick of making everyone with whom you disagree really, really bad; this certainly seems to be the case with Lions and Lambs and Redacted.

Perhaps another, larger problem with these movies is that they are trying to use fictional stories as agitprop.  It’s easy to criticize a war in which soldiers routinely rape, murder, and immolate a young girl, but that doesn’t describe the Iraq War (besides, that sort of violence is better associated with the Shia militias and the al-Qaeda terrorists).  Likewise, it’s easy to dislike Cruise’s unctuous senator, but that doesn’t lead me to a catharsis about the actual United States senate.  Nor does Meryl Streep’s character have anything to do with actual journalists.  That would all be forgiveable, but the movie is trying to make a point about actual journalists and senators today.  In the fictional form, this endeavor cannot help but fail.

There are two types of true things about war that can be documented in film.  First, there are facts, although these are best conveyed through documentaries.  (Not coincidentally, a number of excellent documentaries have come out in recent months, like Taxi to the Dark Side.)  The other type of truth that is available for film is the swirl of emotions, motivations, and situations that the war causes.  In a properly executed war film, the war becomes a background for a group of characters.  This is hard for Hollywood to stomach, because they want to bring the war and its attendant realities into the foreground.  They want to say something about, for instance, the policy of stop-loss, and how it’s a terrible policy (I agree), so they sketch out a few characters, and those characters are burdened with making the director’s point.  But what is often left by the wayside is any reason to care about those characters.  Oversimplified characters easily contort into straw men.

The trouble with straw men isn’t just that they rig the debate.  The bigger issue is that they aren’t any fun to watch.  I can imagine nothing I would less enjoy doing than going to see Redacted, merely because the movie uses half-drawn characters in a manipulative and fatuous way.

So have there been any good Iraq War movies?  I can only think of one, but it’s only somewhat related to the war, and it’s merely good - not great.  That movie is Syriana, and I enjoy it because, although it is as deeply felt as any of the others, it doesn’t propose easy solutions, it doesn’t come packaged with action points, and it leaves us with characters who we are forced to take seriously.  The movie ends in a tangle, and we are left to work out the moral calculus on our own.  That complication captures the way I feel about Iraq most perfectly.  Syriana isn’t a story of saints and sinners or lions and lambs.  Likewise, the Iraq war is a moral whirlpool, and the line between right and wrong is perilously thin.

ON BLACK-TIE CONCERTS

This week Commentary put out a great article on classical music performance and why it has gone to the dogs.

CORKY

For those of you who didn’t see the Braves game last night, I just want to say, in print, that Corky Miller is the worst player in the history of Major League Baseball.  Worse even than my all-time least favorite player, Jorge Fabregas.  He is terrible.  Atrocious.

LOG IN

How’s this for an opening to an article:

“The leader of a Russian doomsday sect has attempted to kill himself as his followers continue to emerge from a cave where they have been waiting for the end of the world.  Pyotr Kuznetsov was in hospital yesterday after he was discovered hitting himself over the head with a log.”

DUMBER THAN THOU

We’re getting stupider!

THE STATE OF MOVIES

By the way, it would be hard to write a long article on movies without saying this: are there no decent movies out right now?  I just checked the theaters near me, and things are grim.  I’m actually considering seeing 21, or trucking all the way into New York to see I’m Not There (which is apparently still out in a theater or two).  Anyway, if you’ve seen anything that wouldn’t make me want to jab my eyes out half-way through, let me know about it.

THIS WEEKEND

It’s sure to be a busy weekend for me.  I’m going to Takashi Murakami’s opening at the Brooklyn Museum tonight.

So that ought to be interesting.  I’m really banking on Kanye being there.

Then Saturday I’ll be up in the bleachers as the Yanks take on the Tampa Bay (erstwhile Devil) Rays.  This could be an adventure.

If anything exciting happens at either one, it’ll certainly be included in Monday’s FotD.

SONG OF THE DAY

“Beat on the Brat” the Ramones

WORD OF THE DAY

del·i·quesce
 –verb
1.to become liquid by absorbing moisture from the air, as certain salts.
2.to melt away.
3.Botany. to form many small divisions or branches.

Frosty the Snowman was a jolly happy soul, except on those occasions where the midday sun caused him to deliquesce.  Then he got a bit crotchety.

On March 31st, Robert Fagles, translator of acclaimed editions of the Iliad, the Odyssey, and the Aeneid, died aged 74 in his home at Princeton.  Translation is a thankless task, and great translators never become as famous as they deserve.  The husband-wife team of Richard Pevear and Larissa Volokhonsky, for instance, have been quietly at work translating the major works of Russian literature, and those translations are nothing less than remarkable.  But you probably have no idea who they are.  Likewise, unless you were a classics major, you probably had no idea who Fagles is.

What I always liked about Fagles is his adroitness at preserving the feel of the original language, while still creating a narrative that flows, even takes flight.  Take for instance, the first few lines of the Aeneid:

“Wars and a man I sing—an exile driven on by Fate,
he was the first to flee the coast of Troy,
destined to reach Lavinian shores and Italian soil,
yet many blows he took on land and sea from the gods above—
thanks to cruel Juno’s relentless rage—and many losses
he bore in battle too, before he could found a city,
bring his gods to Latium, source of the Latin race,
the Alban lords and the high walls of Rome.”

Or, if you please:

“Arma virumque cano, Troiae qui primus ab oris
Italiam, fato profugus, Laviniaque venit
litora, multum ille et terris iactatus et alto
vi superum saevae memorem Iunonis ob iram;
multa quoque et bello passus, dum conderet urbem,
inferretque deos Latio, genus unde Latinum,
Albanique patres, atque altae moenia Romae.”

The first thing that startles me about these lines is their sheer pace.  In Fagles’s translation the lines zip along with an epic drumbeat (note especially “he was the first to flee the coast of Troy”).  But Fagles doesn’t gain his rhythm at the sacrifice of fidelity to the text.  This is in sharp contrast to previous translators, who were either accurate and limp, or florid and overly innovative.   Most ancient translators of the classic epics tended toward the heroic couplet, which is a series of thumping iambs with a formal, and at times strained, rhyme.  Take, for instance, Dryden’s famous translation of the Aeneid’s first stanza:

“Arms, and the man I sing, who, forc’d by fate,
And haughty Juno’s unrelenting hate,
Expell’d and exil’d, left the Trojan shore.
Long labors, both by sea and land, he bore,
And in the doubtful war, before he won
The Latian realm, and built the destin’d town;
His banish’d gods restor’d to rites divine,
And settled sure succession in his line,
From whence the race of Alban fathers come,
And the long glories of majestic Rome.”

These lines are a long way from the Latin original, and if anything, they’re notable for just how Anglo-Saxon they are.  It ought not to surprise us, then, that Dryden’s heroic couplets were the standard form for English poetry for many years after his death.  But it often seems that Dryden is inventing something entirely different, rather than just translating.  He’s telling the same story, but it’s miles from the Latin.  In Dryden, “Juno’s unrelenting hate” shows up in line two, but in the Latin it does not arrive until the end of line four.  And then there’s that nasty comma after the first word in Dryden’s translation, which effectively blunts the force of the famous beginning.  Fagles’s translation maintains the feel of the original, at only a small sacrifice of proper English usage (”Wars and a man I sing”).  When Dryden punts, Fagles plows ahead.

This brash commitment to the original also comes out in Fagles’s translation of the Iliad:

“Rage — Goddess, sing the rage of Peleus’ son Achilles,
murderous, doomed, that cost the Achaeans countless losses,
hurling down to the House of Death so many sturdy souls,
great fighters’ souls, but made their bodies carrion
feasts for the dogs and birds,
and the will of Zeus was moving toward its end.
Begin, Muse, when the two first broke and clashed,
Agamemnon lord of men and brilliant Achilles.”

Or, if you prefer (transliteration my own):

“Menin aeide thea peliadeo Achilleos
Oulomenen he myria Achaiois alge etheke
Pollas d’ iphthimous psychas aidi proiapsen eron
Autous de eloria teuche kynesin oionoisi te pasi
Dios de eteleieto boule
Ex ou de ta prota diasteten episante
Atreides te anax anoron kai dios Achilleus.”

In the Greek, the word “rage” (menin) is put at the front; Fagles follows Homer’s choice, and even sets it apart with a dash.  As Dylan Thomas knew, the word “rage” may be the strongest English word to start a line of poetry (”Rage, rage against the dying of the light”).  Fagles’s placement is much, much stronger than, for instance, Alexander Pope’s translation, which buries menin underneath a possessive:

“Achilles’ wrath, to Greece the direful spring
Of woes unnumber’d, heavenly goddess, sing!
That wrath which hurl’d to Pluto’s gloomy reign
The souls of might chiefs untimely slain;
Whose limbs unburied on the naked shore,
Devouring dogs and hungry vultures tore:
Since great Achilles and Atrides strove,
Such was the sovereign doom, and such the will of Jove!”

Placed side by side, Fagles’s is more visceral, more effervescent, and more alive than Pope’s couplets.  But Fagles manages to do it while taking fewer liberties with the translation than Pope.  What Fagles understands better than Pope is that Homer is a genius whose work stands fine on its own.  Making rage the first word is a stroke of brilliance, and Fagles is smart enough not to fool around with it.

Compare also “the will of Zeus was moving towards its end” in Fagles with the throwaway “such the will of Jove” in Pope.  Both lines provide a certain level of menace, but Fagles preserves the creeping feel of the original Greek.  The verb eteleito is the same verb that Christ utters on the cross (”It is finished”) in a different tense.  Inherent in the word is the idea of the telos, the end, and Fagles’s translation preserves this creepy sense of finality.  Meanwhile, Pope denudes the sentence into something else entirely.  Rather than being a statement of inevitability, Pope turns it into the raised eyebrow of theodicy.  It’s as if Pope’s Christian background forces him to gape in horror at the Greek gods; Fagles, on the other hand, treats their cruelty casually, perhaps as an Ancient Greek would have handled it.  The Greek contains no element of surprise at unjust gods, just resignment and dread.

In his seventy-four years, Robert Fagles left behind these three great gifts - new translations of the Iliad, the Odyssey, and the Aeneid - and maybe in response it’s best to sing of the work and the man.  Or perhaps just to be silent.

I’M OLDER THAN YOU ARE

If you haven’t read Michael Kinsley’s recent New Yorker piece on aging, it’s too good to be ignored.  I found it intelligent, searching, and fantastically moving.

HONEST TO BLOG

Check out WotD Editor Mark Parker’s blog, which is sheer graphical genius.

SONG OF THE DAY

“After Hours” the Velvet Underground

If you close (C) the door (A7), the night (Dm) could last (G) forever.
Leave the sun (C)-shine out (A7), and say hello (Dm) to never (G).

All the people are dancing (C) and they’re having such fun (C7)
I wish (F) it could happen to me (Fm)

And so on…

WORD OF THE DAY

aubade
noun:
A song or poem greeting the dawn; also, a composition suggestive of morning.

Arianne and I thought it was nice to have a songbird in the house, to wake gently each morning to its sweet aubade.

About a month ago, Harper’s published an article that detailed the rise and fall of bubbles in the American economy, including the dot-com bubble and the recent (and still somewhat inflated) housing bubble.  The article went on to speculate about what the next bubble will be.  The author of the article concluded that the next bubble will be in the green power field.  I think he’s partially right, but mostly wrong.  Let me explain why.

First, a general theory of bubbles.  I believe there are five conditions that create bubbles:

1)  More than one year of very successful long bets (gains of greater than 10-15%).  For a bubble to be a bubble, you have to have a rapid run-up in the market.  This one’s pretty obvious.

2)  New investors swooping in with loads of capital.  After (1) occurs, it’s only a short period of time before oodles of new capital get poured into the markets.  The main players in this capital influx are those people that I call the daft investors.  Daft investors scamper to the newest investment fad with hopes of making their fortune, and slink away at the first sight of trouble.  The daft investors were day-trading in the late 90s, condo-flipping in 2000s, and buying and selling tulips in the 1630s.

3)  A startling lack of bears in the market.  When everyone - and I mean everyone - is convinced that the markets are going to go up, you ought to be concerned.  My memory of the dot-com era is laced with CNBC interviews with analysts (Henry Blodget, Mary Meeker, et al) in which those analysts gave every stock a “buy” recommendation.  Bubbles burst when every possible buyer has bought, and bear markets bottom out when every seller has sold.  When you can’t find anyone recommending that you sell, it’s time to flee.

4)  A complete disregard for history.  I recall an article from Kiplinger’s magazine in 1999 or 2000, when the dot-com bubble was at its largest, where a prominent investor explained why price/earnings (P/E) ratios of 100 were not unreasonable.  At that point, P/Es of 100 had never happened (historically, they linger somewhere between five and thirty), not in over a century of market activity, but here was this otherwise intelligent man, trying to convince us that something that never made sense before makes sense now.  Likewise, this disregard of history can be seen in Alan Greenspan’s now-infamous speech on the subprime housing market, given in April 2005, which is worth quoting.

“Innovation has brought about a multitude of new products, such as subprime loans … Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending; indeed, today subprime mortgages account for roughly 10 percent of the number of all mortgages outstanding, up from just 1 or 2 percent in the early 1990s.”

(The speech, by the way, is worth reading in its entirety, if only as a reminder of the complete blindness of Greenspan to the Pandora’s Box he helped unleash.)

People never thought that subprime mortgages were good idea until the 2000s, but Alan Greenspan spoke as if history had been nullified.

5)  Disregard or distortion of underlying market fundamentals.  The dot-com boom happened because internet companies were suppose to make scads of money.  One problem: they never made any money.  As making money is a sine qua non of having a stratospheric stock price, the dot-com stocks were bound to collapse eventually.  Likewise the housing mortgage market saw people making $50,000 a year buying half-million dollar homes.  You can talk to me about mortgage-backed securities, tranches, securitization, and their effects on risk until you’re blue in the face.  If someone can’t afford the home, they can’t afford it, and no amount of risk management is going to buy your way out of that jam.

So that’s the general theory of bubbles.  What’s my prediction for the next one?  It’s oil, and I think it’s already in progress.  Let’s check the conditions.

1)  Long bets on oil have paid off for almost a half-decade.  Not only that, they have paid off handsomely.  If you have made almost any sort of a long bet on oil in the last few years, you made money.  Daft investors will assuredly start to think that it’s a sure thing.

2)  In 2000 $9 billion was invested in oil futures.  In 2008 that number has risen to $250 billion.  That means that $241 billion of capital has been poured into oil futures alone.  I can hear the pitter-patter of daft investors, marching toward oil.

3)  I challenge you to find anyone - and I mean anyone - who thinks that oil prices will decline significantly in the next few years.  Next time you’re out to dinner with your Wall Street friends, propose a $50 two-year price target for oil, and see what reactions you get.  They’ll probably look at you as if you had just suggested eating the tablecloth.

4)  A few weeks ago, Goldman Sachs set a $200/barrel price target on oil.  That would put it more than double what inflation-adjusted prices were during the embargo, and that was a time when there was actually a shortage.  Saying that prices will double from historic highs is a bold call in any climate, but in a situation where the supply-demand situation is favorable, it seems nigh impossible.  At the very least, it is completely unprecedented in the history of oil prices, yet Goldman, the highest bank in the land, feels comfortable predicting a shocking rise.

5)  As George W. Bush said a few weeks ago, “It should be obvious to you all that [gasoline] demand is outstripping supply, which causes prices to go up.”  This is basic economics, but it just isn’t true.  Oil demand worldwide is projected to grow 2% over the next quarter, while oil supply is expected to grow 2.5%.  US oil usage has declined year-over-year in every month since July, and US oil inventories have grown every week.  In fact, the only week in which oil inventories didn’t grow was when the Houston Ship Channel was fogged in, and oil couldn’t make it to port.

One of the problems with an oil bubble is that is has created secondary bubbles, which are at least as harmful to the economy.  For instance, a boom in oil prices has created the looney ethanol industry, which has driven up corn prices to all-time highs.  If you have bought milk or eggs lately, you know what effects high corn prices have.  Likewise, the bubble that Harper’s predicted, in the green power field, seems likely as long as oil prices stay astronomical.  The after-shocks of the oil bubble will be far-reaching.

AN OPEN LETTER TO THE UNIVERSITY OF WISCONSIN MEN’S BASKETBALL TEAM

Dear Badger men’s basketball players:

First of all, let me commend you on a season filled with victories.  Although you did eventually lose in the tournament, you played solid basketball throughout, and I must commend your hustle.

But lest I be too lavish in my praise, let me make one thing perfectly clear: you’re killing basketball.  For the last few years, I’ve put up with your dull perimeter passing, your harsh defense, and your general whiteness because I thought of you as a charming throwback to the glory days, like George Clooney. 

I was sadly, woefully wrong.  You are a tumor on basketball’s soul, sucking all creativity, fun, joy, happiness, hope, love, and cheerfulness out of the game.  What is left is a steaming pile of bounce passes and scrappy defense, and I cannot take it anymore.

I understand that you’re winning, and as they say, you cannot argue with success, but success at what cost?  At the cost of jettisoning all that is likeable about the game?  Remember those happy days of your youth: did you spend your time fantasizing about suffocating defense and pivoting?  No.  You spent it imagining yourself dunking from half-court, draining threes, and alley-ooping.

Don’t let the dream die!  You can still do it.

Sincerely,
A Concerned American

THE CONTEST

FotD Copyboy Mike Burns won the FotD quiz, and he chose as his prize the special edition DVD of the Running Man, starring Arnold Schwarzenegger.  I’m not sure if this choice is ridiculous or awesome.

THE WEBSITE

You may have noticed that FotD Technical Director Houston Slatton has upgraded the website, making many changes, including the addition of a decidedly un-masculine floral note to the top-bar.  Overall, it’s a vast improvement.

www.thefotd.com

Also, the subscription link is now on the website.  You can click it on the sidebar.  Tell yo’ friends.

SONG OF THE DAY

“Glosoli” Sigur Ros

WORD OF THE DAY

churl·ish
–adjective
1.like a churl; boorish; rude
2.of a churl; peasantlike.
3.mean.
4.difficult to work or deal with, as soil.

“Well Bernard, the group has voted and we think you should stop attending.  It is simply churlish behavior for you to continue to show up at the Hair Club for Men meetings wearing a silver Andy Warhol wig.”

The Order

1)  Kelly Johnson, second base.  I used to play second base, which is to say that it’s a good spot to stash mediocrity (see Lemke, Mark).  This makes second an ideal home for Kelly Johnson, whose above-average-ness looks like greatness when tucked between shortstop and first base.  To his credit, his bat has some pop, and he draws more walks than a charicaturist of perambulators.  As he only moved to second base last year, his glove still needs work, but so far he has been a credible second baseman.

2)  Yunel Escobar, shortstop.  If the Braves are Sense and Sensibility, Yunel Escobar is Mr. Willoughby, the charming young fop who sweeps in and steals everyone’s hearts.  What remains to be seen is if Escobar will follow Willoughby’s same path, jilting the Braves for a well-born heiress, or if he turns into the handsome and reliable Col. Christopher Brandon, steadily grinding out double plays and slap-singles.

3)  Chipper Jones, third base.  Chipper Jones is a real-life Mr. Darcy (we’ll ignore the dalliances with Hooters waitresses), who has spent his entire career with the Braves and has even taken less money to stay with the team that drafted him.  At this point, he’s a worthy Hall of Fame candidate and one of the great third-basemen of all time.  Furthermore, he turned in one of his best seasons last year, so it doesn’t look like his 35 years have aged him.  The one major question mark is whether he can turn in a full, healthy season.  Nagging injuries limited him to 134 games last year, and he played 110, 109, and 137 the three years before that.

4)  Mark Teixeira, first base.  The Braves scored a trade deadline coup last year, saving Mark Teixeira’s career from the baseball quagmire that is Arlington, Texas in exchange for a good young catcher and roughly seventy-four minor-leaguers whose own parents couldn’t identify them.  Teixeira’s return to Atlanta (he went to Georgia Tech) was a joyous affair, full of home runs, RBIs, and mirth.  Braves fans are hoping that mirth train keeps rolling right through the end of the year, when Teixeira’s contract is up.

5)  Brian McCann, catcher.  It’s hard not to like Brian McCann, mostly because he looks like the Jungian archetype of the kid brother.  But that soft, tickle-able exterior belies one of the best young catchers in the National League.  He batted .333 in 2006, then took a step backward due to injury last year, hitting .270.  The smart money says that he’ll be hitting around .300 this year, as he is healthy and in shape.

6)  Jeff Francoeur, right field.  My co-hometowner (he also hails from Lilburn, Georgia) is poised for another strong season, as he gets better with each passing year.  His cannon arm will continue to dominate baserunners, and his bracing good looks and devil-may-care attitude will continue to charm women (and, I wager, a few men) in the lower decks.  His much-reviled plate discipline has improved markedly, and he has learned that sometimes an infield single is better than a mad, flailing strikeout.  With any luck, he’s well on his way to becoming a legitimate franchise player.

7)  Matt Diaz, left field.  Call it the Ben Affleck hypothesis.  When I just saw a little of Mr. Affleck (Dazed and Confused, Good Will Hunting), I liked him.  But then I saw more.  And then Gigli happened (and Jersey Girl, Forces of Nature, Surviving Christmas, etc.).  Likewise Matt Diaz has played a mere 309 games in his career, and he only had 358 at-bats last year.  But those at-bats were dazzling: he finished the season with a .338 batting average.  Nobody seems convinced, however, because at any moment Diaz could have a Gigli season.  The guy still draws fewer walks than a, er, charicaturist of statuary, and his career was dead in the water until age 28.  This does not inspire confidence as he steps into the role of starting left-fielder. 

8)  Mark Kotsay, center field.  He’s old, he’s oft-injured, and he wasn’t really that great to begin with.  The Braves know all this, but they needed an outfielder on the cheap until their top prospect Jordan Schaefer can buy beer for himself.  That being said, Schaefer’s winged chariot is hurrying near, so one good ankle-turn and Kotsay might be displaced by the youngster.  In the mean time, the most the Braves can hope for is some healthy outings with solid offensive production (Kotsay’s a career .282 hitter).

The Rotation

1)  Tim Hudson.  Tim Hudson came into Atlanta as one of the best pitchers in baseball, and after a few years in the sinker-throwing hinterland, he has re-emerged as a top pitcher.  If he stays on the up-and-up, he could be a legitimate Cy Young contender this year.  He’s also known for his love of prankery, so beware any tomfoolery from young Mr. Hudson.

2)  Tom Glavine.  Glavine is an enigma, wrapped in a conundrum, broiled on high with a sprig of mystery in a water-bath of vagueries.  He is a man who left his beloved Atlanta Braves (his autobiography is entitled “None but the Braves”) for a few extra shillings with the Mets.  Last year, when the Mets offered him another year of his contract ($12 million), he said that he isn’t “worth that anymore” and bolted for the Braves for barely half as much.  He’s also probably the best pitcher with exceptionally boring pitches in the Majors.  He throws a fastball that zooms by at approximately 12 mph, and I sometimes wonder if his change-up will ever make it to home plate.  Regardless, he has managed to turn in good performances, with the obvious exception of last year’s final game meltdown.  Hopefully, he can shake that off and turn in another solid season.

3)  John Smoltz.  The Baseball-reference.com page for John Smoltz is sponsored by Stratmoor Hill United Methodist Church, which advertises itself as, “a Cheers church, where everybody knows your name,” which is creepy and suggests serious mismanagement of personal data.  This advertisement is appropriate because everybody John Smoltz’s name, especially around Turner Field.  He made his debut in 1988 at age 21, and besides a brief case of elbow-knack, he has not failed to impress, thanks to his rugged beard and precipitous splitter.  But it was a rocky spring for Smoltz, whose body surely can’t hold out forever.

4)  Jair Jurrjens.  Jurrjens is, er, [editor ruffles papers, makes hasty google searches] right-handed.  He was acquired by trade from the [scans Wikipedia, pauses to vandalize Jurrjens’s article] Tigers for Edgar Renteria.  He apparently has a fastball, and probably other pitches, as well.

5)  Mike Hampton.  Hampton hasn’t pitched since 2005, thanks to torn muscles, strained ligaments, tennis elbow, turf toe, and leprosy.  At the moment, he is healthy, and he had a solid spring.  But if I were him, I’d be hiding in a giant padded bubble.

The Bullpen

The bullpen has been a problem with the Braves since the glory days of Mark Wohlers.  This year it has plenty of arms, but that’s like saying that an Ed Wood movie is well-cast.  There’s been something in the Gatorade at the Braves bullpen recently, and that something has stricken pitchers with a dreadful malaise.  Simply mentioning the name Dan Kolb will send most Braves fans into depressive weeping, and Chris Reitsma might as well be Voldemoort.  These were good pitchers, darn good pitchers, who imploded under the bright lights of Turner Field.  This year Rafael Soriano will take a stab at closer, and hopefully he won’t be spat out as a digested, lumpen bolus some time after the All-Star Break.

Everyone else

Brayan Pena returns for another year as the worst offensive player in baseball history, while newcomer Corky Miller should bring little more than wacky antics to the table.    Martin Prado is a top-notch utility infielder, i.e. he’s lousy.

Prediction:  The Atlanta Braves will win the NL East.  Biased?  Guilty.

TALES FROM THE STREET

On Friday, I was walking down 6th Avenue in New York, when what to my wondering eyes should appear, but Glen Hansard, star of the movie Once, chattering with some young lady in his Irish brogue.  I immediately started elbowing FotD California Correspondent Amy Atkinson, but she seemed puzzled.  I muttered who he was over and over, while vigorously elbowing.  Then, mercifully, he passed and I told Amy who it was.

Moral:  Standing beside me when I see a moderately famous person is a dangerous business.

FACT OF THE DAY QUIZ

I’m pretty sure FotD Copyboy Mike Burns won the FotD Quiz, but I have yet to actually score it.  More impressive than Mr. Burns, however, was FotD Mexico/Left-Wing Politics Correspondent Pilar Timpane, who turned out a -20.  Dazzling.

SONG OF THE DAY

“A-Punk” Vampire Weekend

WORD OF THE DAY

a·plomb
–noun
1.imperturbable self-possession, poise, or assurance.
2.the perpendicular, or vertical, position.

It was with great aplomb that Harvey lead his lemming friends over the edge of the cliff.  Come to think of it, though, they wouldn’t have been so trusting if it wasn’t for his rodent charisma.

UNANSWERABLE

I hereby lay the gauntlet for this FotD contest.  The person who does the best on this quiz wins (no googling, wikipedia, or research of any kind allowed).  Each list question is worth a point for each correct answer and minus one for wrong answers, while all other questions get three points each, with no penalties for wrong answers.  (As a general rule, there is no penalty for spelling errors.)

1)  William Faulkner wrote the screenplay for a film adaption of one of Hemingway’s novels.  Which one was it?

2)  List the original six “noble grapes” of the Bordeaux region.

3)  Eugene Debs ran for president five times on the socialist ticket.  List the years in which he ran.

4)  Which two bills has George W. Bush vetoed twice?  (a description of the bill or the name of the bill is acceptable, three points each)

5)  Hillary Clinton passed the bar in Arkansas, but failed the bar exam somewhere else.  Where was it?

6)  Complete the following set.  Joe Morgan (1865), Ted Williams (2021), Babe Ruth (2062), Rickey Henderson (2558), ________.  The number is not necessary.

7)  List the women that Scott Baio has dated (up to five points).

8)  Within one month, what is the gestation period of a walrus?

9)  List the cast members of season five of the Surreal Life (up to four points).

10)  List the four countries that border Kosovo.

11)  List the seven largest ethnic minorities in China. (feel free to be phonetic, up to five points)

12)  Name all four sides of the Wesleyan Quadrilateral.  (You must get all four correct; this is worth four points or none)

13)  Where did Ronald Reagan go to college?

14)  As of March 20, 2008, how old is the current world’s oldest person?

15)  The two basic elements of matter are quarks and ________.

16)  List as many Belgian cheeses as possible (up to five points).

17)  The Commodity Futures Modernization Act of 2000 contains a loophole nicknamed after which American corporation?

18)  Name the two US Senators from New Mexico (three points each, no penalty for guessing).

19)  Fill in the blanks.  A.M., _______, Summerteeth, Yankee Hotel Foxtrot, _________, _________, Sky Blue Sky.  (One point each, order matters)

20)  What are the first four words of James Joyce’s Ulysses?

21)  List the first four imams as recognized by Shia Muslims.  (one name is sufficient, three point bonus if you complete the set with no errors)

22)  Which performance artist once crucified himself to a car?  What was the make and model of the car?  (last name sufficient, three points for the name, three for both the make and model)

23)  In 1997 Barry Sanders averaged 6.1 yards per carry.  This is not, however, the NFL single-season YPC record.  Who set it, and what was the number within three-tenths of a yard?  (three points each)

24)  Debussy had a habit of dating women prone to recreational suicide attempts.  Two of his girlfriends/ex-girlfriends tried and failed to kill themselves.  By what means did they attempt suicide? (the answer is the same for both, so just three points)

25)  Diego Maradona is considered by many to be the greatest soccer player ever.  How tall was he?  (no meters please)

26)  State Fermat’s Last Theorem.  (up to four points, reduced points for close answers)

27)  In Jane Austen’s Pride and Prejudice there are five Bennet sisters.  List their first names. (one point each)

Tiebreaker:  At halftime, how many points did Texas Western have in their 1966 game versus Kentucky? 

SONG OF THE DAY

“Pale Blue Eyes” Velvet Underground

WORD OF THE DAY

No response from Mark, so it’s up to me.

Maundy

\Maun”dy\, n. [See Maundy Thursday.]

1. The sacrament of the Lord’s Supper. [Obsolete]
2. The ceremony of washing the feet of the poor on Maundy Thursday.
3. The alms distributed in connection with this ceremony or on Maundy Thursday.

[Note: In England, the foot washing is obsolete, but the “royal maundy” is distributed annually on behalf of the sovereign. Since 1890 this distribution has been made from Westminster Abbey.]

“When I noticed the crowd of mendicants swarming around the prince’s chateau, I could only conclude one thing: it’s maundy time!”

Q:  How did Bear Stearns lose that much money?  They have been making oodles of money for years.

A:  While it’s true that Bear Stearns got thoroughly pummeled in the subprime mortgage boondoggle (mortgages were their big business), it’s important to note that they didn’t simply go broke; that is, they weren’t much more broke last week than they were two months ago, or six months ago.  Bear wasn’t running out of money per se, it was running out of liquidity, which loosely defined is the ability to get money, either through selling assets or taking out loans.

Bear, like all other investment banks, had huge amounts of money in overnight loans.  This type of loan has to be rolled over every twenty-four hours (thus the “overnight”).  Every day they would have to go back to their creditors and ask for the loans again.  This wasn’t a problem before, but suddenly their creditors demanded more collateral.  Since Bear couldn’t provide it, they couldn’t get enough credit.  If JP Morgan (with the assistance of American taxpayers) didn’t bail them out, Bear would have had to file for bankruptcy.

Q:  So wait a second, did Bear borrow more money than they had assets?  Banks are usually sticklers about that.

A:  This answer is tricky.  Most investment banks borrow about as much as they have assets.  Goldman Sachs, known for being rock-solid, has 1.12 trillion in assets and 1.08 trillion in liabilities.  This means that they have a “liquidity cushion” of about $40 billion.  The trick is, Bear Stearns, Goldman Sachs, and every other investment bank have a number of assets whose value is hard to ascertain.  The much-discussed writedowns of mortgage-backed securities happened because someone had greatly overestimated their value. 

So what if tomorrow somebody at Goldman realizes that he fat-fingered his calculator when he was determining the cost of all those complicated financial instruments, and their assets are worth a mere $1.07 trillion.  Suddenly Goldman has less assets than liabilities.  Imagine, then, that their creditors call in the $446 billion of short-term loans (mostly overnight loans) that they’ve issued Goldman.  Goldman’s balance sheet says they only have $132 billion in cash or cash equivalents to pay off those loans, and the rest of their capital is mostly tied up in things that are tricky to sell in a short time-span (we call this illiquid), so they would probably be unable to pay off their loans and would most likely fail.  Just like Bear Stearns.

Q:  So was the collapse directly related to the underlying problems at Bear Stears?

A:  Yes and no.  What caused Bear Stearns to crumple was not what was actually going on at Bear, but what creditors perceived to be happening.  Once creditors decided that things at Bear might be falling apart, they stopped issuing lines of credit and effectively caused Bear to fall apart.  In that sense, this was an old-fashioned panic.

Q:  Who paid for the Bear bail-out?

A:  This question’s a dandy.  When Bear couldn’t get ample funding in the overnight loan market, the Fed teamed up with JP Morgan to make up the difference between what Bear needed and what the credit markets were willing to provide.  Essentially, the Fed loaned money to JP Morgan, who loaned it to Bear Stearns.  This loan, however, was a “non-recourse” loan, meaning that, if Bear failed, the Fed would foot the bill.  So to answer the question, the taxpayers.

Q:  So why involve JP Morgan?  Why would the Fed not offer Bear a loan directly?

A:  The Fed has no legal method to loan money to investment banks; they only have the so-called “discount window”, which is only available to commercial banks.  Bear wasn’t a commercial bank, so they had to run the loan through a commercial bank (JP Morgan) to make the loan legal.

Q:  That sounds fishy.

A:  It does, doesn’t it?  It’s legal in the strict sense of the word, but it is certainly a broad expansion of the Fed’s powers.  The Fed under Bernanke has been very, very active in dealing with the current crisis in the markets; it’s impossible to imagine, say, Alan Greenspan, getting half as involved as Bernanke has.

Q:  Who loses and who wins here?

A:  Pretty much everyone associated with Bear Stearns loses, besides JP Morgan.  Bear’s stockholders woke up on Monday to find their stock certicates were only useful as stationary.  Employees of Bear Stearns owned one-third of the company, so they were hit particularly hard.  As for JP Morgan, they got something for just about nothing.  They paid about about $267 million for Bear, which is about one-quarter the value of Bear’s office building in Manhattan.  In other words, this was a slam-dunk.  Another loser is the Fed, who agreed to guarantee the most dubious of Bear’s securities.  So if all those mortgage-backed securities (which are already nearly worthless) fail, the Fed picks up the tab.

Q:  Bear’s CEO came on TV last Monday and said, “Bear Stearns’ balance sheet, liquidity and capital remain strong.”  Was he lying?

A:  We don’t quite know yet, but my suspicion is that the answer is complicated.  Like I said, what happened wasn’t directly related to their balance sheet, and I for one don’t think that Bear was quite as bad off as the worst detractors suspected.  I believe (and it’s just a hunch for now) that Bear was actually in decent shape last Monday.  After that denial, the market responded in Queen Gertrude style (”the lady doth protest too much, methinks”), and became suspicious.  Blanket denials always make people skittish, especially investors.  Skittish investors cause banks to collapse.

Q:  What does this mean for Bear Stearns’ employees?

A:  First of all, saying that you work for Bear Stearns will probably no longer score you dates in Manhattan bars.  Also, layoffs are on the horizon.

Q:  Who else is at risk of failure?

A:  The markets seemed pretty nervous about Lehman Brothers, but excellent earnings reports on Tuesday mostly allayed those fears.  The next few months should be a nerve-wracking guessing game, and I suspect that at least one more big investment bank will tank before the smoke clears.

FROM THE ARCHIVES

Thank heavens for the Atlantic opening up their archives.  This article, in particular, is fascinating, chilling, and incredibly sad.

http://www.theatlantic.com/doc/200705/group-suicide

And this is a humdinger on the complex relationship between China and Tibet, focusing on Han immigrants in Tibet.

http://www.theatlantic.com/doc/199902/tibet-china

READ-ICK

Apparently, erstwhile Duke whinger J.J. Redick wrote poetry, which he foolishly posted on SI.com (http://sportsillustrated.cnn.com/2005/basketball/ncaa/02/16/redick.poems/) back in 2004.  One of his poems contains what I believe to be the worst line of poetry ever written.  I’m serious.  Here it is:

“These words describe the soundtrack to my life’s song
My mind and body united like the Colors of Benneton”

PITTSNOGLE

In honor of the impending NCAA tournament, let us hearken back to Kevin Pittsnogle, West Virginia’s finest power forward/three-point shooter/ladies’ man.  He was briefly my friend on Facebook until he de-friended me for posting overamorous messages on his wall.

But what’s important today is that we take joy in his embrace of white tuxedos.

http://www.bevosports.com/2006/03/23/kevin-pittsnogle-is-a-snazzy-dresser/

SONG OF THE DAY

“Two-Headed Boy” Neutral Milk Hotel

WORD OF THE DAY

moun·te·bank     
–noun
1.a person who sells quack medicines, as from a platform in public places, attracting and influencing an audience by tricks, storytelling, etc.
2.any charlatan or quack.

My first experience with disappointment came as child.  I was at Herbert Fiddlesticks’ birthday party, when I discovered that the magician was simply a mountebank with a deck full of aces.