Tanta RIP

Tanta died.

I read Calculated Risk only to read Tanta. That woman could write. The mortgage is, from one side of things, the most boring of texts. It is mindnumbing numbers, and as it scrapes away your skin, it sings you songs of amortization that put your frontal lobe to sleep. On the other side of things, though, it is as shot through with the agony and the ecstasy as any romance novel. Or, as in the past decade, as any O Henry story – all of them were tending to that O Henry end. It is not the great literature a nation should wallow in, but under the Great Fly, it so became.

It had a poet though, and her name was Tanta.

CR and the Times both quote her Let slip the dogs of hell post in 2006. That post might have been the most powerful thing ever unleashed by the Blogosphere into the real world. It kills. Tanta’s patiently unfolds the acid logic of the Street until one sees it for what it is: a monster trying to profit from aborting itself. She analyzed an unspeakable Citi “analysis” of the mortgage market to show that it was complete gobbledygook – and worse, that it honestly described Citi’s strategy. Along with the other banks (many of them now defunct). If Robert Rubin were ever to face trial for criminal negligence for his role in Citi’s meltdown, the prosecutor could just contrast this post and Rubin’s infamous interview, last week, with WSJ. This is Tanta taking on Citi’s notion that the mortgage market was going to “rationalize” – that is, the big dogs, as she puts it, were going to eat the small dogs:

“I bring all this up not just to stick it to Citicorp, but because we’ve all been asking the question lately of who will be the bagholder when the exotic/subprime mortgage problem finds a home. We have noted in our discussions that credit risk can move in two directions: the wholesaler takes it off the originator and the bond investor takes it off the wholesaler/issuer with the helpful assistance of protection sellers in the hedge fund credit-swap market, but when the “DETOUR” signs pop up, the bond investor can work really hard on forcing it back to the wholesaler/issuer, who can try to put it back to the originator, who gets to try to recover something in a foreclosure sale. If the originator has any financial strength left to buy loans back with, that is; see the sad stories of Ownit, Option One, Fremont, New Century, etc. The “disintermediation” of the mortgage origination side keeps the Big Dogs “flexible,” meaning able to withstand cyclical downturns in the business, but the burning desire on the Street for “vertical integration” seems to mean an endless appetite for erasing that flexibility by buying up the originators of junk, so that they will have paid what one assumes is real money for the privilege of buying back their own loans right at the time they get the “flexibility” of not buying any more of them from the “intermediaries.” If you thought the only thing that would stop the circle jerk of risk was putting some credit and pricing discipline into the game, I guess you’re just a weenie like me. Anyone who can make sense of this is free to set me straight. And if the answer has “sorting socks” in it, don’t bother. I’ve tried that.”

Jesus that is beautiful.

ps - Calculated Risk has now put up a compendium of Tanta's posts. They are here. If you are at all interested in what happened during the zona, you should bookmark that link.

On Ludwig Hohl

This is a story from Ludwig Hohl’s Notices – I don’t know if this has been translated. Hohl has his supporters in English – George Steiner calls him the secret master of German 20th century prose.

“Story

Three men had a fearful fight, each struggling against each. The fight raged over the question of what kind of parts a house is divided into.

The first said: “a house falls into: the cellar, the ground floor, the second floor, the third, etc.”
The second cried: “out of wood, stone, mortar, metals – this is what constitutes a house!”
The third, raging against the first true and treating them as liars and scoundrels, as they collaborated between them and against him, observed that a house falls into lines, and referred to an outline and a profile, on which the length and thickness of every wall, the breadth, length and height of the rooms were giving. Everything else was nonsense, only such projections show the exact parts.
Is it necessary to add that the three men fought to the death, because none would concede that the other was right? One died after the other – as an idiot and hero.”

Hohl spent twenty years laboring over his “Notices, or of the reconciliation that takes some time”, in a cellar in a working quarter of Geneva, to which he had returned after living in self imposed exile in Paris and then in Holland. In Paris, according to Peter Hodina, this is what he did:

“In Paris – at that time he was a very young man – nightly he walked around the borderlines between the arrondisements, eventually getting to all twenty. A singular, and eventually provincial method of getting to know a world city”

. Hodina also makes the remark that Hohl was one of those great writers who, like Valery, never wrote a great work. Rather, he sketched out the structure of one. And began to realize that this is what he was doing: "Everything, whether I underline a passage in a writer or copy it out or send a letter, note something, think something, take a position … everything is work.”

He wrote the Notices in the thirties and forties, giving up the idea of a narrative and breaking up his work into fragments, stories, phrases. The Noticess, when first published, fell still born from the press, and the publisher did not want to experience that with any more notices – thus refusing to publish Hohl’s second part. But reputation is a shadow that moves through a crowd and finds the right sensitive – this is the mythic side of Herder’s dispersed public, the literary and the wrongfoooted, who eventually find themselves drawn even to men in cellars – and in the sixties the young Swiss writers and others – Handke, for instance – referenced him. His intransigence, his alcoholism, his cellar.

I think of Pessoa, of Thomas Bernhard, of Robert Walser, of Roberto Bolano. And they die one after the other, idiots and heros.

ALL YOU NEED IS LOVE...

Love is the end of ends of world history, the amen of the universe – Novalis

The first time I went to Mexico, it was with my roommate, H. I was 27. H. was a militant in a Trotskyist party in Monterrey, product of a middle class household, ironist, rock climber, and drinker. He was learning English by watching Red Dawn, Rambo II, and, in particular, Blue Velvet, over and over again. There was nothing he enjoyed more than repeating Dennis Hopper’s immortal words, Heinecken! Fuck that shit! Pabst blue ribbon! And of course saluting the tv with a can of Pabst Blue Ribbon. Irony was a lot cheaper back in those distant days.



So we were talking about this and that on the drive down to Mexico. We stopped to take photos of wild blue bonnets. And at one point, he told me, quite seriously, that he thought the most important thing in life was love.

This, for some reason, astonished me – which is why I can even remember it to this day. I think H. might have been the first male ever to express this sentiment to me. Well, except for Jesus, but it was hard to tell what Jesus was talking about when I was a tot and by this time I was past the point of going to churches.

Looking back on H.’s remark today, I can’t say I disagree so much about the love part as about the ‘most important’ part – my perpetual inner émigré has a hard time believing that lives happen in such a way that there is a most important part to them. This might be either the wisdom of the Dhammapada, or cheap nihilism, or a little of both.

Still, H.’s idea has been a pretty powerful one – it has provided the single biggest rival to the modernist cult of happiness. The idea that love is the foundation of the truly human community is perhaps central to the counter-traditions I’ve pointed out before – the three alienations, so to speak: the liberal, reactionary and radical. And the critical viewpoint on happiness is drawn back to love by the force of historical things. Of course, from the liberal point of view, there is a strong critique of the notion that love is the foundation of community. The word for that is totalitarianism. It is, perhaps, no coincidence that Hannah Arendt went from doing dissertation work on love to writing her massive opus, The Origins of Totalitarianism. When Calasso speaks of how the ancien regime sweetness of life turned sour – how Wormwood fell to earth and turned the waters bitter – he is touching on the fact that what volupte loaned the incipient happiness culture – a more and more simple tie between pleasure and happiness – produced, as it were, a cultural vacuum which the literature of sentiments, that quasi-institutionalisation of romantic love, filled. A dangerous void.

So, now that we’ve discovered the carte d’amour among the demographic statistics, it is time to talk about Romanticism and we’ll begin with the chapter in Ricarda Huch’s book, the Blooming of Romanticism, on romantic love.

Brit

“You say I’m crazy/
I got your crazy”


So, the Britney issue of Rolling Stone is out, just before her birthday, December 2. Britney is in official return mode. What is she returning from? What everyone agrees is an off the charts craziness. For instance, she got drunk a few times. She might have walked around naked in front of her children, infants at the time. She shaved her hair off. The cops came around, she was making a disturbance.

For this, she received the following punishments: the court took her boys away. The court gave her father control of all her money. The court gave her father control of all her possessions. Apparently even her phone calls are supervised.

I am the Leon Bloy among Britneyologists, I think. In the introduction to the Exegesis of Common Places, Bloy writes (as though presciently seeing, one hundred year ago, the sin the press commits daily in writing of Ms. Spears):

“The true bourgeois, that is to say, in a modern sense and in the most general of possible senses, the man who makes no use of the faculty of thought, and who lives, or appears to live without having ever been solicited, a single day, by the need to understand anything whatsoever, the authentic and indiscussible bourgeois is necessarily limited in his language to a very small number of formulas.

The repertory of patrimonial locutions that suffices for him is extremely cramped and never goes beyond a few hundred. Ah! If only one were holy enough to rob him of this humble treasure, what a paradise of silence would fall immediately upon our consoled globe!

When a manager or a clothing factory owner hazards the observation, for example: that you can’t remake yourself; that one can’t have everything; that business is business; that the doctor is a priest; that Paris wasn’t built in a day; that babies did not ask to come into the world, etc. etc., etc. , what would happen if one proved to him instantly that one or another of these hoary clichés corresponds to some divine reality having to power to make worlds tremble and to unchain catastrophes without mercy?”

And so it is with Spear’s ‘madness’, which is, of course, not madness at all, but the projection of a social madness, the madness of Autrui, so deepseated that Bloy would, of course, suspect a Luciferean origin. So when I read this part of the Spears story, I did feel an empathetic spear going through my side – or perhaps the one that went through her side, as she was nailed to an image that and put through a grinder to make money for someone, day after fucking day, ending up, as the journalist says, with as much control over her life as she had as a seventeen year old Mouseketeer:


"I feel like an old person now," she says one afternoon, as a manicurist applies rhinestones and girly pink lacquer to her chewed-up nails. "I do! I go to bed at, like, 9:30 every night, and I don't go out or anything, you know what I mean? I just feel like an old fart."
And this:

“Of all the things Britney has lost in the past year, it's the custody of her sons, Sean Preston, 3, and Jayden, 2, that has shaken her hardest. "Every time they come to visit me, I think about how they're such special people," says Spears, who currently sees the boys three days a week, with one overnight stay. "Like, they're going to preschool now! I went there to pick them up on Friday, and seeing them in their little classroom and seeing Jayden being bad or not listening? It's like, those are mine, and it's just crazy, you know what I mean? And the things that are coming out of their mouths right now — they're learning so much, and it's new, and you never know what they're going to say, and they're so smart yet so innocent. They're obsessed with monsters, and every night we look outside, and we have to show them that there's no monsters out there. It's dark outside, but there's nothin' out there, you know?"

Ever since she was a little girl growing up in Kentwood, Louisiana, Spears dreamed of having her own children. She considered the experience "the closest thing to God," she said in 2004 in a note on her fan site. "To be a really good mom, I feel your child needs to be your full-time job. I want to raise my kids and share all of those precious moments with them."

But things haven't turned out like she imagined. "I didn't think my husband was gonna leave me," she says, deadpan. She laughs to break the tension. "Otherwise, I'd be with my babies 24/7. But since they're almost like twins, they both take care of each other. I think they look like me," she says, going from affectionate to bitter as she gets distracted by thoughts of Federline, whom she sees only when one of them is picking up the boys. "They don't look like their father at all," she continues. "And it's weird 'cause they're starting to learn words like 'stupid,' and Preston says the f-word now sometimes. He doesn't get it from us. He must get it from his daddy. I say it, but not around my kids."

One has to remember that Spears lives in a city in which the D.A.’s office prides itself on taking frivolous cases against celebrities and running with them, all the way through a cycle of daytime talk shows and nighttime entertainment shows and perhaps into their own consultant spot. The lights is green, time to come out and feed another odorless, colorless victim who develops odor and color – the malignant disease of the non photogenic occasion, the gotcha photo op. But of course, the trolls lie in wait for good time girls all over America: the judge who dismisses a rape here or there in Northern Louisiana, the police chief who spends a perfunctory day tracking down killer unknown after discovering some dissected corpse of a whore in Houston, the whole sad sack of shit you can expect one you bump up against the thing that has been there since long before Judges 19:25.

All I want to know is: when is Britney going to get back her kids?

Jewelry

I’ve been meaning to link to this for some time. Thanksgiving marks the start of the shopping-time, although as we all know, the charge it spirit is a little weak this year. Anyway, my friend Kiyoko, a jeweler in NYC, has started her own biz. I like her jewelry, I like her eye for minutia, I like her energy, I like her sense of what hangs and sparkles and needs to have an eye cocked at it – I like her intuition of the inner human Bird. Check out her site at Bookat NYC if you - oh fashion mavening reader – feel like buying jewelry. I should figure out how to put a picture on my sidebar for her. I should know how to do these things!

ALL THE MONEY IN THE WORLD: THE CONTINUING AND EXCITING SERIES!

"Whence is that knocking?
How is't with me, when every noise appals me?
What hands are here? Ha, they pluck out mine eyes!
Will all great Neptune's ocean wash this blood
Clean from my hand? No, this my hand will rather
The multitudinous seas incarnadine,
Making the green one red."

As I said and will continue to say, since there is nothing sweeter than a word grown so bitter in your mouth that it makes your tongue cancerous - that is, to a certain degree of madman, such as LI - the bailout is perhaps the most foolish project ever mounted by a state since Darius decided to whip the sea. The figures are mounting, sweetly sweetly up into complete fantasy. Readers are urged to go see how 7.6 trillion dollars have been pledged by our lovesick Treasury and Fed - come back, SIVs of 2007! We want to light the cigars with the hundred dollar bills again!

PS – LI is thinking that there is some virus that went around the liberal blogs after the Obama victory. Instead of seizing the moment, these bloggers seem intent, suddenly, on defending the indefensible. Kevin Drum, at MOJO, posted today on the bailout, and this is what he had to say:

“Can we please stop this? Calling this a "$326 billion" bailout is crazy. It's a $20 billion capital injection plus a bunch of asset guarantees with a maximum cost of $250 billion and a probable cost in the low billions. (Possibly zero, in fact.) The capital will probably be repaid eventually, but even if it isn't it's highly unlikely that Uncle Sam is on the hook for more than $30-40 billion.

This stuff has gotten completely out of hand, with "estimates" of the bailout these days ranging from $3 trillion to $7 trillion even though the vast bulk of this sum comes in the form of loan guarantees, lending facilities, and capital injections. The government will almost certainly end up spending a lot of money rescuing the financial system (I wouldn't be surprised if the final tab comes to $1 trillion over five years, maybe $2 trillion at the outside), but it's not $7 trillion or anything close to it.”

You will notice that the figures in the second paragraph were ground out not by some devilishly clever calculation, but by the simply bloggy expedient of deciding one needs a figure that sounds reasonable, not too high and not too low. The error rate of the quick calculation is - it could be x or twice x. Wow, there's a calculation for you. And after all, a trillion is now our number of choice.

In fact, Drum’s post does bring up the question of how one figures out the payback. And that brings up the larger question: if, in fact, the financial sector shrinks 15-30 percent or more over the next few years – and that is the conservative estimate of Rogoff, Willem Buiter believes it will be more, how in the world are they going to be viable facing 7 trillion dollars in obligations? The short answer is: they won’t. Either the U.S. eats this debt or the financial sector – whoever is left standing – eats it. But this isn’t, I think, edible. In fact, this is the kind of debt that sticks in the windpipe and causes suffocation, thrashing and death.
We could, of course, have simply capitalized a national bank and used it to keep the usual channels of finance open. Hell, such a bank would be ideal for handling the non-bankruptcy/bankruptcy of GM. But that is not going to happen now. What is happening is this: we are investing 7 trillion dollars in future obligations in the hopes that the financial sector will remain the same size, or grow, in the future. Rather like investing in blacksmithing just around the time Ford came out with the Model T.

Financial Cryptozoology

Because History is a poet, the idea of resurrected the financial sector of 2007 is rubbing elbows, in the press, with the idea that scientists are now able to genetically recreate the Wooly Mammoth. And there is a certain resonance between the big American banks and the Mammoths:

“Preserved frozen remains of woolly mammoths have been found in the northern parts of Siberia. This is a rare occurrence, essentially requiring the animal to have been buried rapidly in liquid or semi-solids such as silt, mud and icy water which then froze.

This may have occurred in a number of ways. Mammoths may have been trapped in bogs or quicksands and either died of starvation or exposure, or drowning if they sank under the surface. They may have fallen through frozen ice into small ponds or potholes, entombing them. Many are certainly known to have been killed in rivers, perhaps through being swept away by river floods; in one location, by the Berelekh River in Yakutia in Siberia, more than 9,000 bones from at least 156 individual mammoths have been found in a single spot, apparently having been swept there by the current.

To date, thirty-nine preserved bodies have been found, but only four of them are complete. In most cases the flesh shows signs of decay before its freezing and later desiccation. Stories abound about frozen mammoth corpses that were still edible once defrosted, but the original sources (e.g. William R. Farrand's article in Science 133 [March 17, 1961]:729-735) indicate that the corpses were in fact terribly decayed, and the stench so unbearable that only the dogs accompanying the finders showed any interest in the flesh.”

Buried rapidly in liquid or semi-solids – a few changes and that would fit for Bear Stearns. You do remember Bear, don’t you? Used to be a bank.

Well, since this weekend the U.S. committed to Citi with a sorta startling generosity – equal to two years of the Iraq war, which is a pretty good party for a weekend even for Uncle Sam, you must admit – it is interesting to read about what the financial sector was up to, so that, when we clone our new species of mammoth bank, we aren’t surprised by its behavior in the wild.

So I went to this site , via Felix Salmon. This is how Alan Kohler describes them:

“Here’s how it works: a bank will set up a shelf company in Cayman Islands or somewhere with $2 of capital and shareholders other than the bank itself. They are usually charities that could use a little cash, and when some nice banker in a suit shows up and offers them money to sign some documents, they do.

That allows the so-called special purpose vehicle (SPV) to have “deniability”, as in “it’s nothing to do with us” – an idea the banks would have picked up from the Godfather movies.

The bank then creates a CDS between itself and the SPV. Usually credit default swaps reference a single third party, but for the purpose of the synthetic CDOs, they reference at least 100 companies.

The CDS contracts between the SPV can be $US500 million to $US1 billion, or sometimes more. They have a variety of twists and turns, but it usually goes something like this: if seven of the 100 reference entities default, the SPV has to pay the bank a third of the money; if eight default, it’s two-thirds; and if nine default, the whole amount is repayable.

For this, the bank agrees to pay the SPV 1 or 2 per cent per annum of the contracted sum.

Finally the SPV is taken along to Moody’s, Standard and Poor’s and Fitch’s and the ratings agencies sprinkle AAA magic dust upon it, and transform it from a pumpkin into a splendid coach.”

Kohler points out that the tipping point is coming, since the reference entities were a list of things like, oh, General Motors, Lehman Bank, etc. Now it might seem that’s no big deal, these 2 dollar SIVs will just collapse – but the genius of the system was to send salesmen around to get investors to put money into those clonish entitites. Oh, the joy! Pension funds. City governments looking for an exciting yield. Mutual funds. The whole wondrous world. And so they grew and grew, like mighty mammoths. Now, if they collapse, the banks will be all saved! By sucking enormous amounts of money from the rest of the system. Or, as Kohler puts it:
“It is a truly great irony that the world’s banks could end up being saved not by governments, but by the synthetic CDO time bomb that they set ticking with their own questionable practices during the credit boom.”

I have to give the establishment a lot of credit. They successfully made the guys on assembly lines making GM cars and trucks villains in the classic mode of that type dear to Reagan, the leaching, fraudulent, probably black welfare mother. One of Reagan’s most popular creations. Meanwhile, admitting the poor leadership of the banks, and the fact that they didn’t understand the risks they were running, they have, shall we say, omitted the sausage making part of the sausage – what were the instruments of that risk all about? You can see that innovations like this are the vehicle that allowed the ownership society to take greater risks – and don’t we all love risks? You might not be able to see that it did any social good at all. But then, if you are looking for social good, you haven’t been reading your Rand. So you definitely don’t understand D.C.

The O. Henry part of this little fairy tale is that, fucking over the auto industry might just be the trigger for the CDS cascade. whosoever diggeth a pit/shall fall in it...