An Open Letter to George W. Bush, Ben Bernanke, Christopher Dodd, Pope Benedict XVI, Kang, and Kodos

Dear Mr. President, Mr. Chairman, Mr. Senator, Your Eminence, and future rulers of the Earth:



Greetings! I hope this letter finds you well.

Gentlemen, I was very pleased indeed to read this morning that the US government will announce plans today to deliver us (and by "us", I refer to the entire universe) from the evils caused by subprime mortgage borrowing (which is, after all, the center of the universe these days) and the concomitant loss of money.

After all, the broadest, most accurate measure of house prices in the United States, the OFHEO price index, registered a mere 0.1% gain in the second quarter of the year. As this is below the 0.8% quarterly gain guaranteed by the Constitution, it is pleasing to see such a rapid response from key policymakers. Mr. Chairman, I look forward to your Jackson Hole speech today, and am especially pleased that you have decided to deliver it while taking a helicopter ride over the mountains.

Your courageous rescue of a national treasure like Bill Gross will not be forgotten, and I humbly submit that you will go down in history as a true American hero.

But life does not begin and end with flippers of condos, liars of income, or indeed holders of mortgage-backed securities. No, I now wish to draw your attention to another disenfranchised class, a sector of the population that has lost tens of billions of dollars around the globe for many, many years. This is a group that almost always loses money despite being promised the chance of untold riches.

I refer, of course, to the purchasers and holders of lottery tickets.

Now, I feel as if I am in a privileged position to draw this crisis to your attention. I suspect that I am the most successful lottery player in recorded history; every day, I receive e-mail notification that I've won at least a dozen lotteries that I never even entered! So believe me, no one is a bigger believer in the "lottery ticket model" than your humble correspondent.

But I beg you: think of the millions and millions of people who have a dream and purchase a ticket, only to see their hopes shattered by the unlucky bounce of a ping-pong ball or two. How many children have gone hungry because the Powerball was 19 rather than 6? How many Ferraris have been left to rust, unpurchased on dealer lots, because the numbers came up with the wrong offspring's birthday? And worst of all, how many $10 payouts have been left unclaimed because of the cruel, cruel hand of fate, which forced a hapless winner to leave his ticket in his trouser pocket before it went into the wash?

It is a fact, and I invite anyone in the known universe to dispute this, that purchasers of lottery tickets lose money on a consistent and systemic basis. As you well know, this is in violation of the second Kellogg-Briand Pact, signed under the auspices of the United Nations last year, which has outlawed the loss of money in financial transactions.

Gentlemen, it seems clear that you are doing your duty with respect to mortgages, but I beg you: Do not forget the disenfranchised holders of losing lottery tickets!

A grateful nation, world, and universe awaits your response.

Your pal,

Macro Man
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17 comments

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tmcgee
admin
August 31, 2007 at 10:49 AM ×

why was this not inevitable? and why wasn't i smart enough to take out a subprime mortgage i could be bailed out of? i can't wait to read jim grant's indignation. obnoxious in it's own way, but still amusing.

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Macro Man
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August 31, 2007 at 11:21 AM ×

What's particularly galling is that AL Greenspan, who created this with both his deds and words, continues to collect fat fees to share his 'wisdom.'

I wouldn't be surprised if those fees are stowed in an offshore vehicle, so that Easy Al doesn't even have to contribute to the very mess he helped create.

To be clear, I have no interest or desire to see people chucked out of their homes; by the same token, I have no desire to see flippers and fraudsters avoid the consequences of their actions, and I certainly have no desire to see Mr. Gross rewarded for buying mortgaged-backs on the 'cheap' and then pimping his view.

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Anonymous
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August 31, 2007 at 11:40 AM ×

Whatever happened to the idea of free markets.....

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Macro Man
admin
August 31, 2007 at 12:49 PM ×

The idea of free markets has been replaced by the market of free lunches...

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avinash goldfish
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August 31, 2007 at 2:15 PM ×

Is "Greetings!" the formal version of "Cheers!"?

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Macro Man
admin
August 31, 2007 at 2:24 PM ×

In cartoons, one often hears aliens say "Greetings! Take me to your leader!"

Given that the final two addressees are aliens (the drooling space creatures from The Simpsons), I thought that that manner of salutation was appropriate....

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tmcgee
admin
August 31, 2007 at 2:34 PM ×

Mr. Gross has been pimping his view for a looong time, malhereusement...

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Macro Man
admin
August 31, 2007 at 2:38 PM ×

Eggggggzactly....hence my disappointment that his latest effort looks like it will pay off...

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Anonymous
admin
August 31, 2007 at 2:38 PM ×

if there is any expansionary move in fiscal policy ie. mortgage bailout or any other "injection" - tough luck on fed cuts view.

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Bill
admin
August 31, 2007 at 2:53 PM ×

Free markets have always been only an idea, except, of course, for the underground economy, which is more of a concern for Main Street than for Wall Street. Alas, there never has been a free market for broad scale financial speculation, and one must ask oneself if a "limited liability corporation" and a "stock market" or "forex market" would exist in a truly free society. We should never pretend, even to ourselves, that the market is free.

In U.S. terms, don't hate the playas, hate the game.

That said, I am glad that Macro Man is a member of the small chorus of those who feel the S&P C-S 10-city and 20-city indices of home prices are inaccurate and overrated compared to the OFHEO HPI data.

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OldVet the curmudgeon
admin
August 31, 2007 at 3:59 PM ×

You're too charitable. Now we'll be subsidizing the liars and condo flipper offspring who would rather borrow than earn their way thru life. We'll make sure those darlings don't wind up renting one of those awful "apartments" which are all rumored to have liquid shit up to your waist in them.

Instead, we'll subsidize them, and leave the deranged and hopeless veterans of Iraq and Viet Nam cluttering up the streets and alleys of this grateful nation. Why bother with children eating out of garbage dumpsters when you can protect a 30-something in tennis shorts from the horrors of eviction from their McMansions?

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Macro Man
admin
August 31, 2007 at 4:09 PM ×

Have you seen the legs on those people in tennis shorts? I think it's best for all considered if they are kept indoors!

Seriously though, the healthcare issue in the US is so much more important than this subprime nonsense, and yet has been allowed to fester for years and years.

I suppose most of those sans health insurance have a lower voting turnout and certainly don't contribute to political campaigns though, so no need to address their needs...

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Anonymous
admin
August 31, 2007 at 4:29 PM ×

Interesting blog. I'm a vanilla and exotics-trader in index and fx -- primarily touch and lookback markets. Good luck next week.

BCS

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Macro Man
admin
August 31, 2007 at 4:36 PM ×

Cheers. If you have some of the short vol gamma positions that I am hearing about in USD/JPY, perhaps it's me that should be wishing you good luck! ;)

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Bill
admin
August 31, 2007 at 5:06 PM ×

It's true that most of those without health insurance have low voting turnout and don't contribute to political campaigns, but the reason why is less obvious – many (not all, but a sizeable portion) of them are young, healthy, childless, and haven't even started their careers yet! This segment doesn't need health insurance, often opts to go without even when it's available, and seems to be forgotten in the debates. The focus is always on the middle-aged unmarried baby factories without insurance, who, whilst they do exist, are a smaller portion of the uninsured.

"Fester" is a very punny turn of phrase. Intentional?

Granted there are many, perhaps countless, more important issues in the U.S. than subprime mortgages. Broad foreign policy concerns, not limited to the war necessarily, such as "our" permanent military installations in over 130 countries; budget deficits; a tax burden that the founding fathers would have long ago revolted over; an abandonment of the Constitution; subsidization of the rich and corporations through tariffs, agricultural policies, "safety regulation," and other measures; regulation of healthcare that manages to subsidize large corporations while driving up costs for everyman and making it less effective; etc. It's going to heck in a handbasket! Of course, it's been doing that for decades, and I expect it'll limp on long after I'm gone.

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Anonymous
admin
August 31, 2007 at 9:32 PM ×

what is voldemort doing in all of this????
Is it also a part of the game to prop the subprime ass.... ( "assets"with pun intended) ... as it needs its trillions to move onto to gazillions to hold the farce..then were the conspiracy theroirst that wrong ??...i.e. as on the supposed statement by Mayer Amschel Rothschild..."Let me issue and control a nation's money and I care not who writes the laws"....are the commies and the capitalists that far apart..and by the way who is controlling the game...and can I work for them???

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Anonymous
admin
September 3, 2007 at 10:33 PM ×

Mr. macro man does make exceedingly good jokes...

With regard to lottery tickets the discount window stands open to provide liquidity at the rate of 5.75% on collateral subject to an appropriate haircut.

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