Monday, February 16, 2009


When the sordid history of our times is finally written, many years from now, the catalogue of explanations for our current plight will be manifold.

* Avarice on the part of lenders, borrowers, banks, brokers, investors, and ratings agencies? Check. It seems as if just about everyone out there thought that they could get something for nothing, whether it be a million-dollar house with no money down, or LIBOR + 100 with no credit risk. What just about everyone seems to have forgotten, however, is one of the oldest rules in the book: if something seems too good to be true, then it probably is.

* Stupidity from many of the same people. As excuses go, "I didn't understand the risks" is a pretty lousy one, particularly combined with a venal attempt to get something for nothing. You may not have understood all the risks in their full mathematical glory, but surely some kind of bullshit detector should have gone off when someone offered you a $999,999 mortgage without either knowing or caring that you made $18,750 per year? And for anyone running a complex financial model, as the ratings agencies did, to say that the model won't work if the price of the primary input starts to fall, as the ratings agencies did...well....Macro Man is left to wonder if the agencies' subprime pricing models were written by Cap'n Crunch.

*...and of course, no tale of financial or economic woe would be complete without a healthy dose of hubris. From Ralph Cioffi to Dick Fuld, Peloton Partners to Fannie Mae, CBR to Peer Steinbrueck, the list of people and instiutions who thought that "that can't happen to me" is legion. Special mention should probably go to Fred "the Shred" Goodwin, who led the charge to consummate what may have been the stupidest, most ineptly-timed takeover in corporate history. What does it say when less than a year after the consortium gained approval to take over ABN, two of its three members were getting bailed out by their governments?

Of all the faults in any financial crisis, hubris is usually the most difficult to forgive. Greed is, to some extent, hard-wired into the human psyche, an inheritance from our ancestors' days as hunter-gatherers. As for stupidity, well, P. T. Barnum supposedly (though apparently, apocryphally) said it best. But hubris, ah hubris! The most popular drama in finance is the morality play in which the ruthless, unscrupulous, and very possibly immoral high-flier finds that bad things can, in fact, happen to him, usually in spectacular fashion.

And yet this morning Macro Man finds himself with a touch more sympathy for those hubristic authors of Icarus-like descents. For on Friday, Macro Man found himself tearing up meter-deep fresh powder off of the black Combe de Caron run in Val Thorens (pictured below, in considerably less snowy conditions.) A few hundred meters above the end of the run, Macro Man's friend suggested that they ski back onto the piste, where turning down the steep slope would now seem easier than ever.

"Why would I want to ski on that," said Macro Man, pointing at the piste with his pole, "when we have this," indicating the deep bank of largely-untouched powder.

Why, indeed. And so they took off, and Macro Man really attacked the powder, going as fast as he ever had off piste, in deeper snow than he can ever recall skiing in. Until his left ski got caught in the snow, Macro Man face planted, and he felt the tell-tale pop in his left knee. Hubris, indeed.

He'd love to share more of his thoughts on hubris with you, but he has to go to the doctor now to get the ball rolling to confirm and treat the initial diagnosis of a torn anterior cruciate ligament. Let's just say, however, that he's learned his lesson...and at €400 for mountainside rescue, €150 for the hospital treatment, and another €300 for crutches, braces, and far it's been a damn sight cheaper than the lessons learned in the financial marketplace.


CV said...

Nice to have you back MM ...

I am sorry indeed to hear that you were injured. Crap! I hope you will feel better very soon. Been there done that by the way, a couple of years ago my hip (errm as') had an encounter with some off piste rocks and I was in bed for about two weeks before I could walk again (with crutches).

Here is to hoping that you will be up and "running" again soon.

best wishes


spagetti said...

best wishes MM .. hope you'll be back on your feet soon

shanghai g said...

shanghai continues to taking a cable car steadily back up. is it the real thing or are investors getting ready to pop their ligaments?

Anonymous said...

Cheaper lesson, but sounds just as, if not more painful. Best of luck with treatment MM, JL

Macro Trading Ideas said...

MM, anterior cruciate ligament is better than posterior, but, trust me, is absolutely not pleasant, in particular due to long-term recovery.
What you need is a magnetic resonance before of all, GOOD Luck!

What about the most important event in rome, the really interesting interview to Nakagawa?? Maybe a strategy to weaken yen?? AHAHHAHA

Anonymous said...

In every accident there is a lesson to be ignored.

Bill said...

I think hubris is hard-wired also. Best of luck on a speedy recovery!

Anonymous said...

Get well Macro Man, and keep your great spirit during your hopefully fast recovery!

steveplace said...

Those last few paragraphs made me curl up in a fetal position. I truly empathize.

Anonymous said...

get well

pej said...

good luck with your knee man!

Anonymous said...

Get better MM, until then the macro world will not be as safe without you!

Anonymous said...

You may have underestimated Captain Crunch. More your side of the pond than mine but didn't the whistles that he gave away in cereal packets give rise to phone phreaking which then forced the move away from side band signalling on the PSTN?


pupkinus said...

I wish you a speedy recovery

dblwyo said...

Hey, let's not pick on the Cap'n ! One of the world's greatest hackers

But as you classicists would know better, "whom the gods wouldst humble...they make prideful"

More seriously will anyone re-learn the value of the old, fundamental tried and true principles ?
1) He who always looks to get the best of it gets taken - Lazarus Long
2) If you look 'round the table and can't tell who the turkey is, it's you - Warren

Anonymous said...

Sorry to hear of your mishap, MM. Perhaps your loss is our gain in that we'll get a larger volume of posts from you as you recuperate.

petrified bull said...

eastern europe breaking badly. can't belong until dax goes.

Anonymous said...

Glad you're back, MM. Hope you heal quickly and painlessly.

jonathan said...

The rehab is a challenge, believe me, but you will learn things about yourself that will better color the experience.

Macro Man said...

Thanks to all for your kind thoughts. Per Jonathan's comment above, I suspect very little about the recovery will be either quick or painless. However, given that one of the reasons that I got the injury to begin with was a constant desire to push and challenge myself, I have to regard the road to recovery as yet another the market, the gym, or indeed skiing.

shtove said...

Ouch. Get well.

Guess you'll have even more time sitting in front of screens.

Rick from Austin, TX said...

Welcome back MM, missed you! Hope your recuperation is speedy! Look forward to more posts!

t said...

I am surprised nobody mentioned that it was the 13th on Friday... *ducks*

Get better soon Mr Macro.

serindippity said...

It's said that George Soros makes his best trade exits when he follows his aching back.

Let's hope your gimped knee rings a bell for you at the top.

jdr said...

Get well soon! Just in time, I might add, for the fireworks in Asia / USD this morning. Any thoughts?

Anonymous said...

sorry to hear about your mishap on the slopes and wish you a speedy recovery!

a very enjoyable piece.

if you want to challenge yourself off piste you need specific skis and preferably a guide so you don't kill yourself the next time.

otherwise you run deep, tumble and do what you did

Anonymous said...

MM, my best wishes for you. Take care.


Anonymous said...

Ah yes the joys of skiing. In my youth I stupidly raced on my college team along with some then Olympic hopefuls. Of our seven man team thew two would be Olympians siffered compund spiral fractures and I managed to blow out an ACL under similar conditions transitioning from packed to loose powder running downhill in their cases and mine going off course in GS.

Now at 67 I have had five knee surgeries, three invasive earlier on and two recent arthro procedures to clean out arthritic deposits andassociated "garbage" contained within the joints.

Not a tale of woe but rather and hope you avoid a similar fate.

Best wishes for a full, swift recuperation.

Miguel said...

Glad you're alive and it's good to have you back as well. So sorry to hear you busted the knee but take heart, I've had three ACL reconstructions and am still plowing forward. It's all about the rehab! Hope you have a speedy recovery.

Best regards,

GermanTrader said...

Unfortunatly I forgot to tell you the fate of Dieter Althaus before. This German State Premier left a piste earlier this year and ruined the lifes of many: a mother of four was killed, his father died in sorrow and he himself faces a criminal conviction and the end of his career. Media vita in morte sumus.

Anonymous said...

In december this year, I have been on the same off piste, it is appealing, no doubts. One of those lightly snow covered rocks hit me well, helmet saved me. No helmet for RBS, altough they behaved like going trough Val Thorens backward, eyes shut.

Enjoying reading your posts, keep up the good work.

Take care,

Stefan, Serbia

Anonymous said...


This is what happens when those above 35 play sports at level beyond the bunny slopes, esp. those that sit on the butts watching the screen all day and at most pushing a pencil and tapping a keyboard.

That's why its called Popped-knee-ing, not ski-ing.

That's why its called twisted-ankle-ball, not basket-ball,

Welcome to middle-age!

Wow, it cost less than Euro1000!
If you were in the USA, and had no
insurance, your total cost would have been more than that triple that. X-ray first, then an MRI, that alone is about $1500. Then you
get the emergency doctor, the specialist, hopefully the $1500 covers the radiologist but don't be surprised if you get another separate bill from him , $1000 for the doctors. The hospital emergency room, $500 at least.
I have no idea what a rescue here in the USA would cost, but since there are no doctors involved, its probably much cheaper than the medical system, so call it even w/ Europe at $500.

The actual crutch $20 from Walgreens and another $20 for various braces.

Financially raped if you are hurt in the USA.