Sunday, November 23, 2014

Municipal Bankruptcy and Artworks

On November 7th, a US bankruptcy court judge, Steven Rhodes, approved Detroit's plan, allowing its exit from bankruptcy court protection.


One of the remarkable subplots in Detroit's bankruptcy-court saga has been the availability of works of art as collateral.


Rhodes' opinion described the Detroit Institute of Art as "an invaluable beacon of culture" and declared that the liquidate its assets, that is, to sell its artworks for the benefit of the creditors of the city, would be "to forfeit Detroit's future."


I'm not sure I believe that. After all, the works themselves would have remained intact, surely? Unless we believe that the high bidder would be someone with a malicious design to destroy what he/she/it was buying. I think the reasonable guess is that the artworks involved would generally have ended up in the hands of other museums, or in a smattering of cases in the hands of wealthy collectors willing and in fact eager to take good care of them.


Not the worst of fates.


Still, Lee Rosenbaum has a good point in the Thursday issue of The Wall Street Journal. After the DIA's close call, other museums which are owned in whole or in part by municipalities should do what they can about making themselves bankruptcy remote. or "what seems inconceivable today may become inescapable tomorrow."



Saturday, November 22, 2014

Chevron in Ecuador

Crude Awakening: Chevron in Ecuador (Kindle Single)

I'm guessing that post headline will serve as click-bait. Welcome, new readers. This is my first mention of the famous/notorious Chevron/Ecuador controversy in this blog.

And I mention it simply to refer to a new book on the subject, Crude Awakening,  Information here,   

The author is Michael Goldhaber, an adjunct professor of law at Fordham University.

Vent your spleen (at either side in the controversy) in the comments section. Thanks.

Friday, November 21, 2014

Tavakoli on the "Unveiled Threat"

Janet Tavakoli has a new book out entitled Unveiled Threat: A Personal Experience of Fundamentalist Islam and the Roots of Terrorism.


Yes, I know. There are hordes of people these days wielding pens (or keyboards) these days to give their view of the world's discontents and the violently discontented. One can't keep up with them, nor should that be an aspiration.


But I know Tavakoli. We aren't close friends but we are work acquaintances -- I have been happy to quote her as a source or to call her for guidance on ongoing stories. None of these ongoing stories has had a lot to do with terrorism. So this drew me up short.


You see, Tavakoli is an expert on  "structured finance." her firm, unsurprisingly called "Tavakoli Structured Finance Inc." offers as her webpage says "independent risk consulting and expert witnesses services ... for derivatives, credit derivatives, synthetic collateralized debt obligations, total return swaps, special purpose entities" and forex derivatives, all of which come under the broad "structured finance" heading.


So: why is she writing about "the roots of terrorism"?

She traces her own interest to her presence in Iran during the period of the fall of the Shah and the rise of the Ayatollahs. She has followed Middle Eastern developments consistently since her harrowing experiences in that time.

Her book seems to credit the regime of the late Shah with some real achievements and a promising façade, but notes that there was always rot beneath. The revolutionaries of course benefitted from that rot. With some sympathy she quotes William Simon, Nixon administration Secretary of the Treasury, who  called the Shah "irresponsible and reckless" and frankly "a nut."

Thursday, November 20, 2014

CBOT/CME Merger: An Arithmetical Subplot

I've been thinking again, for no very compelling reason, about the merger of the two great Chicago exchanges in 2007. In form, it was an acquisition of the Chicago Board of Trade by the Chicago Mercantile Exchange, after the CME won a bidding war with the Intercontinental Exchange (ICE),

I'm looking at Erika Olson's book about the behind-the-scenes maneuvering that ended in that result. One of the many subplots involves ERPs, the "exercise right privileges" possessed by many CBOT members with regard to yet another Chicago institution, the Chicago Board Options Exchange.
This takes some explaining. First, neither the CBOT nor the CBOE is a mere set of initials. Each is a true acronym, "see-bot" and "see-bow" respectively. Second, the CBOE, established in 1973, does what the name implies. It provides a forum for the trade in options. It was initially a spin-off from the CBOT, and they had a close continuing relationship. One part of that: everyone with at least 27,338 shares in the CBOT had the privilege of trading on the CBOE, an ERP.

Once a CME bid was announced, even before ICE became involved, the question arose: what happens to the ERPs?

The CEO of CBOT, Bernie Dan, was all in favor of the deal with CME. At one critical meeting, he explained to the members that every share of their equity in the exchange was going to be worth .3006 shares (that is, a little less than one third of a share) of the new entity, called The CME Group. So: how many shares of The CME Group would one need to qualify for an ERP? That is a straightforward mathematical question, what is .3006 of 27,338?

Well, straightforward in that one can easily enter it into a calculator. Personally I wouldn't want to try to do that in my head: !

Apparently, at the meeting when Dan announced the .3006-to-1 ratio, one of the members/traders did try to do it in his head.

As Olson writes, he "attempted to figure the numbers out loud and got it totally wrong." She gives the impression that she's doing him a solid by not naming him and subjecting him to innumeracy-shaming. "I heard other traders grumble in disapproval of the colleague's inability ... 'This is fucking embarrassing."

Really? Whoever he is, he need fear no disapproval from me. I admire anyone who would TRY to do that off the cuff sans calculator.

The answer, by the way, is that 8,217.8028 shares of CME stock were necessary to keep an ERP in the CBOE.

But I bet my bright readers have already figured that out.

Sunday, November 16, 2014

Classic Jamesian text






"In one sense at least the personal [side of] religion will prove itself more fundamental than either theology or ecclesiasticism. Churches, when once established, live at second-hand upon tradition; but the founders of every church owed their power originally to the fact of their direct personal communion with the divine. Not only the superhuman founders, the Christ, the Buddha, Mahomet, but all the originators of Christian sects have been in this case; -- so personal religion should still seem the primordial thing, even to those who continue to esteem it incomplete."






VARIETIES OF RELIGIOUS EXPERIENCE

Saturday, November 15, 2014

Stefan-Boltzmann Law, Part II

In contrast to my usual practice, this time I'm putting the blog entry's image at the bottom of the page. Pretty wild and crazy of me, eh?
Resuming discussion of the same law we discussed yesterday. As a historical observation, it has its name because Jozef Stefan inferred it from experimental evidence in 1879, five years before Ludwig Boltzmann derived it in theoretical fashion.


The law is of considerable importance to certain contemporary issues, because the Earth itself, including its atmosphere, can be considered for purposes of prediction as a "gray box" of the sort I discussed in the last post. If we know how much radiation the earth is receiving from the sun, and we know how much of that energy is reflected away, vis-à-vis how much is absorbed, we should be able to say something about the heat of this box, this planetary system, as a whole.


The International Panel on Climate Change says that 30% of the sun's energy is reflected away, the remainder is absorbed. It makes intuitive sense to suppose that the content of the atmosphere changes that percentage. Given certain atmospheric changes, the earth will absorb more of the radiation and absorb it.


Until a couple of years ago this sort of thing was known as the "greenhouse effect." But people who believe that most of us are inadequately alarmed about such matters recently stopped using the term, because they figure a "greenhouse" sounds like a nice comfortable and beautiful place to live, so the term frames the discussion in a skewed way.
Don't look for some sweeping conclusion here. I've already made my views on global warning known on this blog and elsewhere. 
I simply wanted to clarify for myself what this Stefan-Boltzmann reference was all about, in case that impressive term swims within my ken again.





Friday, November 14, 2014

Stefan-Boltzmann Law Part I


This came up in the climate-change discussion group I've mentioned before.

One participant in a heated exchange, seeking to boost his own scientific cred, challenged the other to explain the Stefan-Boltzmann Law. The second fellow refused to participate in that discussion, saying, "I suspect you copied the question from elsewhere, and would be unable to actually converse on the topic ... are you real or are you Memorex?"

That last reference tells me something about his age, at least.

Anyway, now I'm curious, so I do a little research. The S-B Law describes the radiation from a black body as directly proportional to the fourth power of that black body's thermodynamic temperature. Huh?

A "black body" is an ideal state, somewhat akin to those "frictionless surfaces" you encounter in "Intro to Physics" courses. But you don't get to this ideal state until you get to "Intro to Thermodynamics."

A black body is one that absorbs all incident radiation. A white body, on the other hand, reflects all incident rays. Most actual bodies are thermodynamically gray. For many gray bodies the S-B law works as a good approximation.

So, the law basically says that radiation does the job if reflection fails. That is: if a body doesn't reflect energy away, then it becomes hotter over time, and as it becomes hotter, it radiates energy outward, creating the constant mathematical relationship with which we began.

Curiosity sated? Well ... just a bit.

But what does all this have to do with global warming? Or was it just an arbitrary quiz that one internet blowhard was trying to administer to another?