Maison Fleury

A little shout out to Chantal Yang who, along with Laura Kempke and Sarah Conway, was one my main point people and the "professional" side of PR at JBoss. For a little background, JBoss began a concerted effort at professional PR at the beginning of 2003, with what was a significant monthly retainer for us at the time. These three women worked for us, while at Schwartz Communications, where Laura Kempke has remained. Laura was the head person on our account for the duration of our contract and Sarah and, later, Chantal were our account managers. Chantal stayed with us until the end, even working for a year at RHT post-merger. Sarah and Chantal are now at Page One PR. I could not have worked at JBoss part-time and raised three children during my tenure there, without relying on the help of these three very capable women. In this post , Chantal shares her opinion of what it was like working for us, and some of the factors that made PR a success at JBoss. She doesn't say it ...

Bottom line is "I love this car, but..." I am back in Madrid and left the car in the garage. It gurgles as it charges, it charges from the wall in a bit less than 40 hours. It is obvious that this kind of electric car has a real bright future in front of it. 1/This kind of acceleration will be very very very popular. 2/It cost $1,80 to fill up my tank ( 1c per mile, 180 miles on a tank) 3/ There is ONLY ONE MOVING PART (the rotor) in terms of mechanics Put these together and you start seeing why this, when economically mass produced, this is going to be a formidable car for the masses. Tesla is apparently working with Daimler-Benz on equipping the Smart. They also have announced plans to market a Sedan. I wish they worked with Mercedes to do a limited series 55,the powerful stuff. Or better work with Porsche on a great speed car. Or why not, work with the french, Citroen comes to mind (I drive a Citroen Gran C4 with the family in Madrid) for a great finished interior that i...

Just as I was starting to link Reagan to the great monetary boom of the 80's, a book is coming out with Reagan as the culprit and Eve Smith quotes Boom-and-bust cycles, obscene CEO salaries, blackouts, drug-company scandals, collapsing bridges, plummeting wages for working people, the flight of U.S. manufacturing abroad—these are all products of Reagan's free-market zealotry and his gutting of the public sector. Reagan pioneered the use of wedge issues like race and the war on drugs to distract America while his administration empowered corporations to lay waste to our traditional ways of life. That's right, blame the Cowboy on that one, everyone says. 1/ It is true that deregulation set the stage. The financial markets were not to be meddled with. After years of scorn and disdain, it had become dogma that public intervention or regulation in free functioning markets would always lead to an inferior solution. What a naive view in retrospect. It seems regulation and fre...

and call for 'transparency in the financial system". That's a ballsy call, coming from a bunch of totalitarian communists, to call for transparency. We should be all for it, let them come forth!

From Krugman's column in the WSJ. As you can guess, I don’t share that vision. I don’t think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don’t think the Obama administration can bring securitization back to life, and I don’t believe it should try. The banking sector has always been regulated. In this piece Krugman laments that the banking sector was "boring and staid" but with deregulation and the introduction of securitization could start issuing credit money that eventually created too much debt in the system. He points to the dramatic increase of the contribution of the financing sector to corporate earning as a tell-tale sign. The monetary narrative says that bubbles need to exist (type II Ponzi schemes) so that the money supply keeps growing, so that legitimate growth and asset inflation result. So you bubble jump to bigger and bigger bubbles ...

The Chinese are seen and heard talking and writing about a new world reserve currency to be used as store of value and money for commodity exchange. They hold $1T of USD. It is a bit of a war declaration. They didn't like QE it seems. It hurt them on 1/ the holdings 2/ the exchange rate. It also marks a new assertiveness in economic affair. How practical a new currency is, I have no idea. Europe prepared for it and it can be done. This is an interesting development.

Car arrived this morning. Via Fedex Auto. Seeing the car being delivered was an experience it felt like aliens were landing. The car is "very orange" I love the color. The driving is awesome. The feeling of torque a low speed amazing. It is a super-car. So my father in law is here and we want to take the car for a drive. I have been driving it for a while but the car won't start now. I keep turning the "on key" but no noise comes on and we both think "damn, the car is dead". We call road-side assistance, it is good to know that someone picks up the phone and offer to drive me to the shop. He thinks I live in Silicon Valley. I say I am in ATL he says "hah that would be difficult". I wait with some muzak. I finally realize 'wait, I have no engine, the car is not supposed to make any noise'. Tommy and I go back to car, I press the peddle the car takes off. I feel like a redneck. The silence is weird. Then there are the smiles ...

I will soon write the for-dummies series, I need to noodle on the format and narrative a bit but I will finish with the notes on current thoughts and conclusions. The first funny conclusion I get at is that handling money is impossible for humans. Certainly not the bankers I am reading a good book by Desoto recommended by a reader and he delves into the history of fractional banking since the Romans which was considered theft by the Romans as the legal status of deposits is to be available in kind at ANY moment. Glass Steagal, the 1934 act, was crafted to try and limit the amount of credit money that could exist in the system by limiting the amount of debt banks could hold on their balance sheets with respect to their reserves. Securitization quickly made ashes of this and excesses were back in a jiffy. Not the politicians The politicians cannot deal with the money. It is too hard to restrict growth and too politically rewarding to open the money valves. Why? when you start opening th...

Or how I learned to stop worrying and love Quantitative Easing. This is it, the US pressed the nuclear button, buying its own treasuries in order to flood the market with paper and depress long term rates. Theft on a grand scale, international theft at that. The masses timidly applaud. The dollar tanks, the US markets rally. Why do they rally? QE is effectively delayed "inflation". Inflation means you are poorer but the numbers are up so you feel "richer". Inflation is an unfair tax as it is essentially a flat tax on the poor. More fair would be debt moratorium on fake money issued by banks, how practical that would be I have no idea. In the meantime and from distance, the US continues floating banks with taxpayer money via inflation and QE and no one is the wiser for it. What lack of basic financial education will do to an otherwise healthy democracy... I am not blaming Bernanke either. He is applying the rule book he wrote studying the great depression, let...

Interesting guest post on The Big Picture. It is long but a good read. Basically it is a lot of name calling towards Greenspan who gave a WSJ interview where he basically said that the FED was not to blame because "it had lost control of the monetary supply a long time ago" and what was to blame was "large excess pools of savings". The blame game is going on in earnest and this attempts hits the nail on many issues but goes overboard on some others, let me see if I can put some order. The gist of my argument is that while the FED is to blame for many things, the core of the argument, that the FED lost control of the money supply, is imho solid. There was (and remains) no limit to the repo lines the Fed and Wall Street may create (other than the amount of eligible assets that may be offered as collateral), meaning the Fed largely controls the amount of US dollar-based credit provided to the markets. In short, through the repo market the Fed controls/supplies fundin...

I have been noodling over the role of bad debt in monetary frameworks. Here is where I currently am at. Out of nothing comes debt and cash. A bank starts with zero, lends you 100, you owe 100, the 100 will be destroyed when the debt is repaid. Forget for a moment that banks charge interest out of this phantom money (5%/year) and that this right there is proof positive of the endogenous creation of money. In case the debt is defaulted on (bad debt) then several interesting things happen 1/ money in circulation, keeps in circulation, it is not taken back from the system. You sort of have this build up of monetary gunk in the system. That money has an inflationary contribution 2/ Senior debt to capital. In case of bad debt at a company, creditors are senior to equity holders. So those that provided debt coming out of nothing will be able to raid equity and have seniority on cash flows over equity capital. It is the second bit that I find really really disturbing. Fake money, or credi...

Download file here . This is the Beatles on Drum and Bass. This is one is a technical tour de force and "excercice de style" more than anything. The beatles clock at 85 beats per minute and so mix well with the double rythm of 170 beats per minute. The result is surprising even if a bit difficult to grasp at first. Let it grow on you. Technically this was done on Ableton Live. The sound was difficult to work with due to stereo rendering (the voice is on the right) and very frankly poor sonic quality of the beatles original. The render is in mono so that the voice is centered.

The media and blogosphere are alit with rage at the bonus payout at AIG. I find this outrage misplaced. Executive compensation is a big herring and is outrageous across the board, you don't have to go to AIG to be outraged. In software I have seen some mediocre talent get some pretty outrageous payouts. Executive compensation is out of control in general. No what outrages me is a report that came out this morning, that most of the bailout moneys for AIG went/are going to speculators. It is reported that 2 hedge funds (no names) are making north of 400M (also mentions goldmorganstanley). Anyone want to bet that these were not hedges for real debt assets but naked CDS? So out of bad debt comes more bad debt. Minsky financial instability hypothesis, found proof in naked CDSs in spades. Here is a thought: STOP THE PAYMENTS TO NAKED CDS AND SPECULATORS. Since AIG is effectively nationalized, instead of getting in the hair of the workers there, stop payments to speculators, give them ...

Puzzling article this morning in the FT by John Gapper. The gist of it is to focus on the rumors of a restructuring of the banking sector. It is characterized as Glass Steagal lite. Glass Steagal, the 1933 depression era legislation did 2 things 1/ separate ibanks from banks 2/ LIMIT THE AMOUNT OF DEBT BANKS COULD EMIT (at 12x capital) the second point is, imho, orders of magnitude more important than 1. It is also not touched upon in this discussion. While I agree with 1, I am very frustrated by obvious conflicts of interest in my advisory relation with goldman, it is imho not as important. The amount of endogenous credit money in the system is the basis for dynamical explanations of breakdown in monetary analysis of debt deflation crisis in the Fisher, Minsky senses. The invisible hand MUST NOT BE ALLOWED TO CONTROL MONEY LEVELS, EVER. IT HAS BEEN PROVEN OVER AND OVER. Securitization essentially enabled banks to bypass these levels, by distributing the debt and clearing it off the...

My husband has a known tendency to voice his opinions, without consideration for tact, preferably when this will incur negative reprisals, but this time he outdid himself. Marc had a run in with the Guardia Civil--Spain's federal paramilitary police. Although there's no US equivalent, Marc's experience would be familiar to any American who has driven through a rural county (as a non-local) and come upon the local state trooper welcoming committee. The incident was banal enough. Marc got stopped for driving without his headlights on in the fog. Only, instead of taking down his name and address and sending him the bill, which is the normal procedure. The Guardia demanded cash, offering him a discount for “on the spot payment.” Since Marc was in the middle of nowhere, this entailed a drive to the nearest ATM machine in a village some kilometers away. The machine did not, however, dispense the exact change for the 105 euro fine. When he came back with the money, the Guardia tol...

It is all over the news this morning. Amid positive data that China's stimulus package is working somewhat and creating infrastructure and durable goods an absolute shocker came in: export dropped 25%. That is good news, bad news and dreadful news 1/ Good news: global imbalances are being wiped out, this was the source of too much debt offering. 2/ Bad news: Demand in plunging from the US. 3/ Bad news: Protectionism is the new black, not as result of policy, but global trade is falling off a cliff as consumers are retrenching. This is never good whether due to bad policy in the 20's or by natural cause here. 4/ Horrible news: if the Chinese have no dollars to re-invest, they are not going to buy US treasuries. The debt-deflation continues in earnest. Walk through this with me without vomiting if you would. To counter the debt deflation, the FED is emitting its own debt in guarantees, stimulus and what not, and a glut of offering is coming down the pike. Supply up. But if th...

Laughed my ass off this morning. From FT. UBS told investors on Tuesday to increase the weight of gold in their portfolios, warning that bullion prices could soar because the prospects of either deflation or inflation were “becoming more extreme” One extreme or the other, basically what they are saying is "stuff is so off the charts and we have no fucking clue where it is going to end up". And they put up a press release about it saying "buy gold!" and according to the article no one listened!!! Keynes had a more dignified way of saying this, without sounding pompous: "we simply do not know". What a sorry state of affairs, next!

are settling in. From Bloomberg . March 9 (Bloomberg) -- The U.S. economy’s vital signs may not confirm a diagnosis of depression. The symptoms increasingly point to one. As in the Great Depression, world trade is collapsing, wealth is evaporating and the banking system is broken. Deflation is a growing threat as companies slash production, pay and prices. And leaders worldwide are having difficulty making headway in halting the self-perpetuating decline. “We are tracking 1929-1930,” says Barry Eichengreen, a professor of economics and political science at the University of California, Berkeley. The result: This contraction may leave a lasting imprint on the economy and society, just as the Depression did. In the wake of the devastation of the 1930s, Americans swore off stocks, husbanded their own resources and looked to the government for help. Now, another generation might draw some of the same lessons from the deepest economic collapse of their lifetime. “This is going to scar the c...

Yay! my EV, Tesla is READY and is being shipped, by truck, TOMORROW to ATL. It will arrive sometime next week. I have paid my last 50k and I the car is mine. Elvira, my oldest, selected the "very orange" color from the palette. So very orange it is, you won't miss me driving through ATL!!! I suspect Tesla the company will die a horrible death soon, but at least I have got the car. Another part of me hopes they will survive, somehow... (200 cars at 100k is 20M, most of which has been spent, they say they produce 20 cars a week that is 2M a week or 100M a year... that would be a real company). But wait, ah yes.. I live in Madrid :) I am planning a trip to Atlanta around the 20th just to try the car. Interestingly enough, tickets cost $2400 in coach and $600 if you stay a Saturday. I guess I will be staying a Saturday. Yay! Reviews forthcoming.

$150B later and AIG is still dead but we are still throwing good money after bad. The biggest scam on earth is taking place under our very noses. It bests madoff and it is legit because we haven't outlawed it yet. AIG is dead because it underwrote (or at least re-insured) the insurance on naked CDS and when it blew up there is no budget that can cover such a DEMULTIPLIED BAD DEBT. The taxpayers are funding hedge fund jackals to the tune of $150Bn and have NOTHING TO SHOW FOR IT. NAKED CDS MUST BE BANNED YESTERDAY. Even the guys who were speculating with it think so (find the conde nast article on "the death of wall street"). AIG must FAIL TODAY to STOP THE PAYMENTS TO THESE HIGHWAY ROBBERS. $150 fucking Billions to clowns like me, how many schools, how many hospitals, how many barrels of oil and you call this "innovation"?. This is the kind of BULLSHIT that lead to outrage and the invention of communism in the late 19th. And to those of you that don't s...

I am always wary of conventional wisdom when it comes pre-packaged in wisecrack sentences and is repeated ad-nauseam. One of my all time favorites was always "stocks-for-the-long-run-and-other-bollocks". The one that is in vogue these days is "it-is-always-darkest-before-the-dawn". I heard that sentence, again, today in a conf call set up by GS's credit market team. At some point the boss of a trading desk said "as a trader, I think the market goes down, as an investor, I think it goes up" meaning that short term he is short, long term he is long. My gut reaction was to yelp "bollocks" in the middle of the street in Madrid as I was listening to the call on my headset while skating with my boys. If the traders thinks it goes down, then investors should wait. Of course another GS employee quickly warned the investors that timing was impossible and they should stage in now, one in a hundred year opportunity and that "it is always darkes...

Third article that made me noodle on the ski slopes while reading my iphone on the chairlifts was a Bill Gross interview where he claims that equities are dead. Of course he could be talking up his book as Gross is a founder of PIMCO one of the biggest bond investors on the planet but I do think he has a point. Equities is a small part of capital structures. Banks for example had 40x debt to equity ratios. Debt is usually big and senior. If assets get so impaired, typically in a deflationary environment, then the company is bankrupt and will be liquidated by debt holder. Equity goes to zero. If dividends go to zero (which is happening left and right) and cash only barely services debt then discounted cash flow analysis says the company is worth zero. Financial services accounted for 40% of the SP500 profits. For equities to be worth something they have to return more than risk free securities. The 'over the long run' mentality has evaporated. Over the long run, data says tha...

Another article that caught my eye while skiing and reading my iphone on the chairlifts. Taleb penned a scathing critique in the FT of the "free option" bankers have. There are several themes in the article (that I remember, sorry no link it was last week :)). First, the existence of a free option. That is good old "privatize gains, socialize losses" culture. Then Taleb rehashes his notion of a black swan by pointing out that yearly incentive schemes create perverse incentive. You load up on back risk as a money manager, say you know you blow up every 10 years but make 10% every year and charge 2/20% of profit or 4% a year. That means that in 10 years your investor blows up but you walk away with 40% accumulated over time. Get it? I have blogged about this theme in the context of private equity. In PE, the payout is AT EXIT. Taleb then calls for nationalization. Saying that there is no way to solve these problems. Regarding 2/ I do believe that being paid at exit s...

I haven't blogged in a while as we went skiing with the family. That didn't prevent me from reading my iphone on the slopes and it gave me something to do on the way up. The first article that caught my eye was of course the Obama/Bernanke optimistic announcements. What was interesting to me was the change in tone. It wasn't technical, it was just ... hopeful. A part of me wonders if Bernanke's pronouncement is backed by the knowledge that he has ran the printing presses so much, that inflation is inevitable so he confidently forecasts "recovery", meaning inflation of asset prices and thus fake GDP increases in Q2 09. The other part of me just freaks out, they sound confident because there is nothing else to say to prop confidence. And really there is nothing else the boys can do. At a moment where estimate of losses in the banking system run in the $5T, a paltry $1T in spending is just spin doctoring.