Maison Fleury

My children asked me what Memorial Day commemorates. Like many Americans of my generation I never gave Memorial Day much thought beyond associating it with a day off work, barbecues and the beginning of summer. While I had a feeling it had something to do with honoring Americans who had died in wars, I didn’t know the exact answer so I looked it up in Wikipedia, where I learned that it was « First enacted to honor Union soldiers of the American Civil War – it is celebrated near the day of reunification after the Civil War – it was extended after World War I to honor Americans who have died in all wars. » The Civil War origin is interesting because, for Americans, this was the most devastating war we have ever fought in terms of American casualties ; the only war since American Independence to have been fought on our own soil and the only war to have significantly impacted American civilians. I was touched to see many of my American friends on Facebook post pictures of tombstones of the...

It could be you! As a frequent offender in this category, and parent of a 'tween child and all the drama that entails, I was telling my husband how schools, or preferably parents, ought to introduce their children to the finer points of "How Not to be a Cad on the Internet". My husband said: That makes me think of something. I used to have 405 Facebook friends two days ago and today I only have 403. Maybe they really weren't your "friends" in the first place. Yeah, but to get unfriend-ed by two people in the space of two days? Well, didn't you accidentally befriend that person who mortally betrayed us in business because you used the Facebook Email Addresses Ap (and you had forgotten they were still there)? They agreed to friend you and then you "unfriended" them within a space of minutes. That was pretty cold. (Distracted) I'm still wondering what I might have done recently. Maybe you're one of "those" people. What people? ...

So the inevitable happened, Trichet punched the nuclear option and went all QE on the problem of Greece. For those of you who have real jobs and want the "here is what you missed last week", Greece has been living high off the hog for a long time, their tax bases evades, and they are about to default on their sovereign debt, because the cost of rolling over is too high. You can either default, adopt a fiscal solution (raises taxes spend less) or go for a monetary stimulus. Fiscal solutions are tough politically. On one hand you have germany and my wife who state that it is their own damn fault because they are pigs. And on the other other you have the grownups, like france and myself, that think that losing the euro over 2 bit wishy-washy philosophy show a remarkable lack of understanding of how modern money works. Meanwhile the cameras focus on the burnt cars, the rioting in the streets of greece, the banks on fire to the shout of "thieves", the dead. The monetar...

I have an (almost) eleven-year old girl and three boys, twins aged 7 and a 3-yr old. Honestly, most the time, I feel like Lynette from Desperate Housewives . Hearing my 3-yr old son sing “I love my mudder” at breakfast in the morning or the evening cuddle and prayers with the children—the one moment of the day when they resemble anything close to angelic--are all too brief. Mostly my day is like this: Go onto the Internet to see if the crusty raised bumps in a circle on Twin A’s arm are ringworm. Educate myself on what ringworm is and how do you get rid of this. It turns out ringworm is a fungus and an over-the-counter antifungal cream at the pharmacy will take care of this. Of course you have to remember to put it on every morning and night for about 2 weeks to get results, in the meantime, he’s developed a new “ringworm” on his leg. Crap! More weeks of remembering to put the ringworm cream on Twin A, especially now that we are in later Spring, and I have to remember to put sunscre...

One of the fallouts I expect from the ongoing GS vs the rest of the world saga, is a huge inquiry in the mechanisms of modern debt creation and a revival of modern monetary theory. Naked CDS or the collapse of the quantum wave In theory you can price a CDS by knowing the probability distribution of the underlying security. It can be a bell curve or standard distribution or it can be anything. The point is that we have historical data to generate a distribution, however sparse, and in retrospect incorrect. One of the academic criticisms to the current pricing techniques is that they assumed distribution curves that did not account for fat tails. A spot price accounts for the future rate of defaults, your premium has got to cover that and your profit. But essentially you are still speculating about the future by assigning probabilities to differents "states". Paulson knew that the weight assigned to "meltdown" was too low, he could see it coming. The discount...

It is of course all over the news. The US has decided to sue Goldman over the Abacus deals. I had predicted that one for a long time. The Abacus series was a bunch of naked CDS, they are finally attracting the spotlight as the nefarious instruments they are. A primer on naked CDS and CDS A CDS is an insurance contract on debt. If you have emitted debt (you are a bank or a particular lending by buying bonds) you can protect against the default of the payer by buying a CDS. If default occurs then your counterparty owes you the amount of the debt, usually to be settled in cash. The Credit Default Swap or CDS is used everywhere in the economy. It is used as a way for companies to manage their operations. Risk transfer through CDS is a valid and useful economic tool. It has it's uses in everyday economic activity. It transfers risk. That is a good thing. So in the case of housing and sub-prime this reads that a banks can protect, dollar for dollar, its capital exposure to sub-p...

I haven’t been following the recent health care debate very closely, but I’m glad that Health Care Reform has passed. I’m surprised to hear so many staunch Republicans complaining about “the way it was passed” considering their tactics, since the Clinton years, of filibustering everything; and then complaining about how this was not done with more consensus… Living abroad, I am often treated to people’s uninformed opinions about the way “they”—we Americans--all are—overweight, ignorant, gun-toting, polluting, violators of other countries’ national sovereignty--extremists. What is most amusing, or distressing is the way people have of saying these things in front of you, as if you weren’t one of Them and might be insulted or disagree with your interlocutors. It’s not that there isn’t any truth in any of these assertions, it’s that such statements often reflect uninformed (or minimally informed) truth, issued from a very smug outsider perspective. Let’s take the least polarizing and most...