The Dog Ate My Homework

The Financial Times isn't exactly known as a quality source of humour. They don't even have a featured "fluff" article such as that which graces the front of the WSJ on a daily basis. So it was with surprise that Macro Man read a little blurb in today's FT that had him guffawing out loud: evidently, the reason that Moody's mistook CPDO turds for filet mignon was because of a "computer glitch."

As "dog ate my homework" excuses go, that one's pretty rich, and will no doubt be fertile hunting ground for lawyers in the coming years. Moreover, it begs the question of how and why the other ratings agencies managed to designate this crap AAA as well; did the same ghost enter their machines?

Regardless, the avoidance of personal responsibility for one's actions is regrettably pervasive in modern society, and is certainly endemic in the financial sector. Let's peruse some of the other excuses proffered for financial mishaps over the past decade or so:


LTCM blows up: The fund's losses were caused by a correlation breakdown so extreme that according to the fund's Nobel Laureates, it should not have occurred since the Big Bang.

JWM (run by John Merriwether, latterly of LTCM) suffers large losses: Fool you once, shame on me; fool you twice, shame on you!






The Fed slashes interest rates at the slightest hint of financial distress, thereby inflating a series of bubbles: It's a little known fact, but both Alan Greenspan and Ben Bernanke are huge fans of English premiership club West Ham United. When Macro Man used to frequent the Upper East Stand at Upton Park in the late 90's, he was often bemused at the sight of his elderly compatriots singing the West Ham fans' signature song with gusto. For those unfamiliar with the club and its traditions, the song goes like this:



I'm forever blowing bubbles
Pretty bubbles in the air
They fly so high
Nearly reach the sky
Then like my dreams, they fade and die
Fortune's always hiding
I've looked everywhere
I'm forever blowing bubbles
Pretty bubbles in the air!

Clearly, the Fed chiefs take their passion for West Ham to work with them.


The Central Bank of Russia screws currency speculators, just because they can: You might be able to take Communism out of Russia, but can you take Russia out of Communism? The CBR seems to be taking a page out of the book of a certain V.I. Lenin.

Among the quotes attributed to Lenin include the following:

"Until we apply terror to speculators - shooting on the spot - we won’t get anywhere."

".. catch and shoot the...speculators and bribe-takers. These swine have to be dealt [with] so that everyone will remember it for years."

"The best way to destroy the capitalist system is to debauch the currency". In what can only be a coincidence, Russia and China have re-emerged as prolific dollar sellers in the open market over the last couple of weeks.

The Asian financial crisis of 1997-98: This was caused by a mysterious cabal of the Rosicrucians, Pentavirate, and Illuminati- just ask Dr. Mahathir Mohamed. Of course, now the shoe's on the other foot, and Asian central banks are among the prime movers of this illustrious order.

Bear Stearns blows up: This one's easy. As market volatility escalated, Jimmy Cayne took his firmwide risk runs with him to a bridge tournament. Unfortunately, one of the other players (pictured, left) ate the runs, so poor Jimmy couldn't possibly have known the true state of Bear's finances. Woof woof.
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May 21, 2008 at 11:01 AM ×

MM, you know, it has been an hacker paid by S&P, damned!!
What difficult markets for me, have you seen the incredible spike in volume on crude futures??
Integrated oil and all stocks related (tubes, drills, etc.), miners and steel producers seems new "dot-com" stocks. Is it so crazy to buy an integrated oil with 130$ flat curve and p/e below 10, without debt?
At least i'm buying short term debt with good quality at 5%plus fixed yield: what do you think about? how is your cash employed, if any??

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Macro Man
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May 21, 2008 at 11:16 AM ×

My cash is employed by somebody else...I don't get at all involved in the cash management side of the fund.

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serindippity
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May 21, 2008 at 4:28 PM ×

After hearing about Moody's remarkably precious and apparently contagious "computer glitch", I'm starting to wonder:

maybe Jerome really, truly, is telling the truth?

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D
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May 21, 2008 at 6:17 PM ×

Who else is in awe of how the largest commodity in the world has traded over the past 2 weeks?

My P&L has taken a healthy hit...

the drum keeps beating

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Anonymous
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May 21, 2008 at 9:32 PM ×

Speaking of guffaws, that was a money quote:
"Until we apply terror to speculators - shooting on the spot - we won’t get anywhere."
Haha, dolphin hunting indeed.

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Gregor
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May 22, 2008 at 4:57 AM ×

Just a brief post of mine, on a subject that could be essay length, if not book length. In essence, our best and brightest do not understand oil because oil is its own separate study--but--they don't know that.
http://siliconinvestor.advfn.com/readmsg.aspx?msgid=24594674

A version of my dog ate the homework, if you will.

Regards,

Gregor

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D
admin
May 22, 2008 at 5:43 AM ×

$80 oil in 2008

Ice has a cash settlement option (in addition to physical) and prices 65% of the global trading volume on crude...many aren't aware of those two things.

I am hitting the energy companies now and will short the bounce on crude after it breaks down.

Goldman will get short and make sure H.P. gets the memo to Bush to pound the market for a week with 25-50mm barrels out of the SPR. China crude imports also backed off 4% recently. Like every intervention, it will have multiple facets...just throwing out another option.

It's never different this time.

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Anonymous
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May 22, 2008 at 4:42 PM ×

"Catch and shoot the....speculators and bribe takers. These swine have to be dealt [with]so that everyone will remember it for years" - Lenin

"Throughout men's history, money was always seized by looters of one brand or another, whose names changed, but whose method remained the same: to seize wealth by force and to keep the producers bound, demeaned, defamed and deprived of honor" - Francisco's Money Speech in Atlas Shrugged (Ayn Rand)

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