Have a Looksy: the Fed Rate.

A head scratcher at the time, but ponder this:

"While there are many policy considerations that arise as a consequence of the rapidly expanding global financial system, the most important is the necessity of maintaining stability in the prices of goods and services and confidence in domestic financial markets," he said. "Failure to do so is apt to exact far greater consequences as a result of cross-border capital movements than those which might have prevailed a generation ago."(1995-Doubts Voiced By Greenspan On a Rate Cut)

While you stare at this (click to enlarge):

See that blip between 1985 and 1990 that's the S&L crisis, which caused 700 of those shops to close. But you can see the point I'm trying to make here, starting in 1995 the slope of the Down Jones industrial average starts accelerating. That is the change between 2 points on that graph is less than the next 2 points, until about 2005, but then the slope starts accelerating again.

That's what a bubble looks like, but how does Greenspan factor in here? First a word about what his job was. The fed controls the federal funds rate which sets the interest rate for funds banks can lend to each other. The fed sets this rate by requiring banks to have a certain amount of cash reserves at the fed in the form of Government securities -- which are basically numbers on a balances sheet that the government says are worth what it says. If, after the closing bell, Bank A doesn't have enough reserves it must find another Bank willing to lend money to it so it can bolster its government securities holdings. By controlling the supply of these securities, the Government effectively controls the target rate of these loans. Keynes dictated that when times are tough and economic activity is low the Fed buys a whole bunch of these securities from banks and the banks can then throw that money around. This raises inflation a bit but also opens the sphincters on Wall Street and releases a flow of trading, which, hopefully busies up the economy. When times are chill the fed is supposed to start selling these securities to banks which raises the fed funds rate.¹

All of which can make you a bit batty to think about: rather than just saying the rate is x and holding banks to it, the Fed pilots the boat by effectively locking the tiller and trying to control the wind. Greenspan and Milton Friedman's Neo-Classical nabobs at the fed in 1995, though, were all like "fucks to that, we care about inflation first and foremost, not controlling growth in a cyclical way," and set the federal funds rate at a stable level. Now, pause for a second, Keynesian economics offers a pretty straightforward way to predict what the rate's going to be at any point in time. If the economy's bad (and inflation's under control) it's safe to say it will be pretty low, and if the economy's alright it's safe to say that the rate will be relatively high. Ideally, in this system the rate is predictable, and banks like predictability, because it gives them a base income, and therefore a base to plan all their other bets around. This is called hedging, and for us nerds gives a root for "Hedging your bets".

If the fed funds rate is stable, however, and there is no way of knowing whether or not it will change, banks will lose their collective shit and start looking for safer bets to bolster their base. And out of Greenspan's backwards diction:

"While there are many policy considerations that arise as a consequence of the rapidly expanding global financial system, the most important is the necessity of maintaining stability in the prices of goods and services and confidence in domestic financial markets"

We start to see what he was thinking. Basically he removed a stable bet and forced banks to invest outside of Government -- on top of it all, the dude absolutely hated economic models and formulae -- by inserting a healthy goddamn dose of randomness and whimsy into a historically predictable vehicle. Here we go:

See 1994 to about 2001? Flat. So where do banks look? What has been, historically a pretty solid bet? What changes rates basically inline with the economy, the way the fed funds rate is supposed to? Ummm:

And, goodbye empire.

---

1. I may be wrong about all this. I received a C+ in economics 101 in college. Not bad for the librul arts! Return.

For more reading about further economic fantods see:

• Cityphilia
• As Credit Crisis Spiraled, Alarm Led to Action
• What's in a Number?

Second Best Woody Allen Movie of the Year

Dailies are looking good, and while Javier’s idea to add a massive Martian invasion scene complete with a thousand costumed extras and elaborate flying saucers is not a very good one, I will shoot it to make him happy and cut it in the editing room.

Vicky Christina Barcelona, as you may have heard, is the second best Woody Allen movie of the year, and that means its excellent. The roar of the armchair critics (read: my friends) is already beginning to creep from the lowlands of Bushwick to the magnificent crags of Clinton Hill, so I'll qualify that a bit: while the characters in VCB are as narcissistic, self involved, and selfish as we all are in real life, something's missing, something, say, the -icide suffix and that most divine of adjectives, visceral.

Cassandra's Dream, all three -icides and both forms included, powerfully throws one's stomach into a never ending sink -- are these people? Are these people I like? Are these people me? Am I a criminal? -- until the only answer left is, yes, yes, I am. I am alone and a maniac. Which is precisely what's missing in VCB.

Perhaps one day we'll see Javier Bardem add ETicide to the list in Barcelona. I only hope Allen is at the wheel.

Whew! What a Week.

We're gunna have a new president, it's going to be great!

In other news, I'm tired and I think this song changed my life:

2222

Reason 2222 why Brazil is a place I want to move to: Gilberto Gil has a whole chunk of his music online. For the uninitiated, start with Tropicália ou Panis et Circensis (give batmakumba a whirl), and move to Aquele abraço. Once you have just try and tell me your life isn't any better.

Devourer of Worlds

Sweet. It looks like we all have 8 days to live.

Spoilers TK

Spoiled.

It's about damn time that someone bucked the trend, one of the worst on the internet in my opinion, of being careful about spoilers: Movie Review: 'The Happening' (side note: we should have more genius headlines like this where I work).

For the longest time now, I've been wary of movie/book reviews where the author intentionally resists spoiling the work for his readers. This practice not only capitulates to the audience -- as an editor of Time once said, "Keep the dog food where the dog is" -- it also presupposes the plot summary found in the worst examples of criticism. In both outcomes the critic is failing to do his job: the point of criticism is not to convey the plot or action in a work but rather to discuss the importance of the themes and messages in the work itself. The best criticism goes a step further and connects the art with it's context. Take for example this Manohla Dargis review of Children of Men:

Based in broad outline on the 1992 dystopian novel by P. D. James about a world suffering from global infertility — and written with a nod to Orwell by Mr. Cuarón and his writing partner Timothy J. Sexton along with David Arata, Mark Fergus and Hawk Ostby — “Children of Men” pictures a world that looks a lot like our own, but darker, grimmer and more frighteningly, violently precarious. It imagines a world drained of hope and defined by terror in which bombs regularly explode in cafes crowded with men and women on their way to work. It imagines the unthinkable: What if instead of containing Iraq, the world has become Iraq, a universal battleground of military control, security zones, refugee camps and warring tribal identities?

Do you see what's happening there? There's no plot discussion, just themes and connections. Two of the best modern examples of these practices are Ed Rothstein's "Connections" columns and William Safire's "On Language" but both of those are hardly pure criticism. Perhaps more germane -- and older -- is Sam Johnson's Rambler series. However, my favorite example of good criticism comes from James Agee, in a review of that bender of a movie "The Lost Weekend":

I understand that liquor interish: innerish: intereshtsh are rather worried about this film. Thash tough.

I suppose this unfortunate trend against spoiling the ending of a movie arises out of the class who writes these reviews: journalists. The very nature of the journalistic pathos hinges on the practice of reporting the truth, and summaries are nothing but truthful. In addition, the hesitancy to refrain from discussing the ending and thus the movie, arises out of a kind of narcissism, and most likely stems from the increased voice readers have on the web. I didn't think I'd end on that note when I started, but the review of 'The Happening', while not among the ones I'll count great, is at least a step in the right direction. (I also have no desire to see 'The Happening'. Though I'm no fan of Mr. Night, due to masochistic urges I've seen all of his previous films, probably because I thought it was funny, but after Lady in the Water I don't have enough time left in my life to see another.)

Newer Noise?

I'm back after a bit of a hiatus. I'm hoping to put up something a bit more substantial soonish, but for now just a few uncontrolled thoughts on the state of music:

I just came back from a show featuring these guys: Wild Birds and Peace Drums, and I couldn't help but think what a sorry state popular music is in. See, Wild Birds and their ilk have forgotten that a fundamental part of music is experimentation, and pushing limits. It's not enough to grab a drummer and a mbira, and go to town. What we need, what we're crying for, is a newport festival, and the revolution of the plugged in guitar, we need two turntables and mile-high speakers, we need angular chords and blaring saxaphones. We need enthusiasm!

Stay tuned. We'll get back on track here soon. Back to more a bit more measured commentary, but with enthusiasm!

Keith Gessen Gives Up the Ghost.

In the newest edition of Titlepage.tv -- the always awkward new project from Daniel Menaker -- Keith Gessen describes his current book All the Sad Young Literary Men. Ever since I picked it up at a book grab at work, I've suspected that it's only the writings of a cowardly narcissist wondering why girls just can't understand him. In an act against the trend of literary memoirs, Gessen hid in his shallow and one-dimensional characters rather than collecting a list of personal essays. Maybe he thought fictionalizing himself and the cadre of n+1 editors would put a little gravitas in his gut, but a slip on Titlepage.tv, above, proves his Fall Out Boy listening inner self is as shallow as expected. Grow a pair, son, and we'll talk in the future.

An aside: congrats to Menaker for having none of it, and looking over his glasses at this shell of a man.

All You Have to Do Is Throw Money, Throw Money.

The end times.

Bear Sterns finally decided to offer the hat to the highest bidder after homeowners called their bluff. As always, the CJR posted the best roundup of the fall of the suspenders-and-cigars firm's newspaper coverage:

As far as government bailouts go, this one could be worse. We’re glad to see the government did not bailout Bear Stearns shareholders, who are already issuing “howls of protests,” the WSJ reports. The paper quotes one employee (Bear Stearns’ employees own one-third of the firm’s shares) who doesn’t get it:

“I’ve got to think we can get more in a liquidation, I’m not selling my shares, this price is dramatically less than the book value Alan Schwartz told us the company is worth,” said a midlevel Bear Stearns executive. “The building is worth $8 a share.”

The building may be worth $8 a share but the rest of the company is worth negative dollars a share, dude.

Turns out they were to busy playing bridge while their firm went to the poor house. Which brings us to the levity of the situation, the red portion in the chart above shows the difference in Bear Stern's stock price from last friday to this morning, and really drives home how dire the situation is. Basically, Bear Sterns went looking for buyers, found one in the historically philanthropic J.P. Morgan and sold for mere pennies (or $2 a share). Its scarier than this everyday story, though, because the fed threw $30 Billion at the merger to leverage debt effectively in the process nationalizing the risk. J.P. Morgan will win big in this deal because the risk is placed on the taxpayers -- the Fed's loan will most likely never be paid -- and it gets at the least a very prime piece of commercial real estate. And as we dig deeper we see a Fed bailout broadcasting a message of laziness about inflation, a message arguing for a company asleep at the wheel, and one too big to fail. Worst of all, the already stretched taxpayer, facing increased threat of foreclosure, just saved the fuckers who financed their debt in the first place.

Movie Tuesday.

Stylish long hair.

Over the weekend I saw two surprisingly great movies, and since I loved them so much I feel we should start a tradition you and I. We'll call it "Movie Tuesday". When I see a good one, I'll jot a few notes about it, and you, good reader, will use the comments section to dissect my purple prose. Sound fun? Here goes:

The first and most spectacular movie I saw this weekend was Gus Van Sandt's skateboard epic Paranoid Park. I won't try to review the whole movie here, just the most breathtaking bit. Needless to say, the story follows a young skateboarder who has committed the most heinous of crimes. Shortly after the act, in an effort to clean himself of the filth -- and guilt -- of the trainyards, he steps into a shower with his head hung in order to hide. As the water flows through his long hair, it collects the individual strands into streams of water running into separate shifting rivers of weight. The soundtrack, at this point, paints an audio collage of natural sounds of birds chirping and wind rushing through leaves. Slowly Van Sandt stops down the camera, the image darkens, and we hear more industrial and more unsettling sounds. At this point the rivulets become something sinister, a viper coat weighing down our young skateboarder. Near the end of the scene he has become a monster quite ephemeral and clearly unnatural, and at least a bit of our sympathy disappears and is quickly replaced by a feeling of revulsion, a sense of shock and awe at the terrifying apparition on screen.

Skateboarding culture as a whole exists in a state of constant exploration and gives its practitioners a sense of ultimate freedom. These urban reclaimers champion the hidden spaces of our devolving urban decay. In past years and centuries, explorers discovered unknown regions of the globe, now these modern day Aguirres find places where people have already been and constructed, but enjoy those most will never see. The very next scene repeats the themes of the shower scene and shows these youngsters gliding up and down a concrete drain tube in a state of bliss, but the camera reverses the shot and we see that the tube is enclosed in on both sides. Effectively, these men underground are less than explorers or heroes: they are trapped by the very freedom they champion. They have a complete inability to flee and escape from civilization's sewers. Spectacular.

The second of the two, Be Kind, Rewind wasn't so much a movie as it was an argument for movies. It follows two mentally challenged video store clerks -- actually everyone in the movie seems a little dim -- and, after one erases the store's entire library after a tragic accident with a power transformer, their attempts at abridging and remaking the movies we know and love. Chock full of references from 2001 to Ernest Goes to Jail, its a heartfelt appeal for the importance of movies, and since I'm such a sucker for shots of an audience lit solely by the flickering shutter of a projector, it had me in sentimental silly tears over the beauty of pretty much any series of moving pictures. Sappy, funny, silly and with a shred of a storyline, Be Kind, Rewind reminds us how completely awesome movies can be, especially ones made on a sunny summer afternoon.