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Archive for January 29th, 2021

“Suck It, Wall Street” – Matt Taibbi surveys the scene

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Matt Taibbi writes at TK News on Medium:

In the fall of 2008, America’s wealthiest companies were in a pickle. Short-selling hedge funds, smelling blood as the global economy cratered, loaded up with bets against finance stocks, pouring downward pressure on teetering, hyper-leveraged firms like Morgan Stanley and Citigroup. The free-market purists at the banks begged the government to stop the music, and when the S.E.C. complied with a ban on financial short sales, conventional wisdom let out a cheer.

“This will absolutely make a difference,” economist Peter Cardillo told CNN. “Now, if there is any good news, shorts will have to cover.”

At the time, poor beleaguered banks were victims, while hedge funds betting them down as the economy circled the drain were seen as antisocial monsters. “They are like looters after a hurricane,” seethed Andrew Cuomo, then-Attorney General of New York State, who “promised to intensify investigations into short selling abuses.” Senator John McCain, in the home stretch of his eventual landslide loss to Barack Obama, added that S.E.C. chairman Christopher Cox had “betrayed the public’s trust” by allowing “speculators and hedge funds” to “turn our markets into a casino.”

Fast forward thirteen years. The day-trading followers of a two-million-subscriber Reddit forum called “wallstreetbets” somewhat randomly decide to keep short-sellers from laying waste to a brick-and-mortar retail video game company called GameStop, betting it up in defiance of the Street. Worth just $6 four months ago, the stock went from $18.36 on the afternoon of the Capitol riot, to $43.03 on the 21st two weeks later, to $147.98 this past Tuesday the 26th, to an incredible $347.51 at the close of the next day, January 27th.

The rally sent crushing losses at short-selling hedge funds like Melvin Capital, which was forced to close out its position at a cost of nearly $3 billion. Just like 2008, down-bettors got smashed, only this time, there were no quotes from economists celebrating the “good news” that shorts had to cover. Instead, polite society was united in its horror at the spectacle of amateur gamblers doing to hotshot finance professionals what those market pros routinely do to everyone else. If you’ve ever seen Animal House, you understand the sentiment:

The press conveyed panic and moral disgust. “I didn’t realize it was this cultlike,” said short-seller Andrew Left of Citron Research, without irony denouncing the campaign against firms like his as “just a get rich quick scheme.” Massachusetts Secretary of State Bill Galvin said the Redditor campaign had “no basis in reality,” while Dr. Michael Burry, the hedge funder whose bets against subprime mortgages were lionized in “The Big Short,” called the amateur squeeze “unnatural, insane, and dangerous.”

The episode prompted calls to regulate Reddit and, finally, halt action on the disputed stocks. As I write this, word has come out that platforms like Robinhood and TD Ameritrade are curbing trading in GameStop and several other companies, including Nokia and AMC Entertainment holdings.

Meaning: just like 2008, trading was shut down to save the hides of erstwhile high priests of “creative destruction.” Also just like 2008, there are calls for the government to investigate the people deemed responsible for unapproved market losses.

The acting head of the SEC said the agency was “monitoring” the situation, while the former head of its office of Internet enforcement, John Stark, said, “I can’t imagine there isn’t an open investigation and probably a formal order to find out who’s on these message boards.” Georgetown finance professor James Angel lamented, “it’s going to be hard for the SEC to find blatant manipulation,” but they “owe it to look.” The Washington Post elaborated:

To establish manipulation that runs afoul of securities laws, Angel said regulators would need to prove traders engaged in “an intentional act to push a price away from its fundamental value to seek a profit.” In market parlance, this is typically known as a pump-and-dump scheme…

Even Nancy Pelosi, when asked about “manipulation” and “what’s going on on Wall Street right now,” said “we’ll all be reviewing it,” as if it were the business of Congress to worry about a bunch of day traders cashing in for once.

The only thing “dangerous” about a gang of Reddit investors blowing up hedge funds is that some of us reading about it might die of laughter. That bit about investigating this as a “pump and dump scheme” to push prices away from their “fundamental value” is particularly hilarious. What does the Washington Post think the entire stock market is, in the bailout age?

America’s banks just had maybe their best year ever, raking in $125 billion in underwriting fees at a time when the rest of the country is dealing with record unemployment, thanks entirely to massive Federal Reserve intervention that turned a crash into a boom. Who thinks the “fundamental value” of most stocks would be this high, absent the Fed’s Atlas-like support in the last year?

For context, Goldman, Sachs posted revenues of $44.56 billion in 2020, its best year since 2009, a.k.a. the last year Wall Street cashed in on a bailout. Back then, the shortcut back to giganto-bonuses was underwriting fees for financial companies raising money to purge themselves of TARP debt. This time it’s underwriting fees for bond issues and IPOs. The subtext of both bailouts was that anyone who owned or underwrote financial assets got richer, while everyone else got the proverbial high hat. It’s no accident that income inequality dramatically accelerated after the last bailouts, and that the only people to see net gains in wealth since 2008 have been the richest 20% of Americans, a pattern almost certain to continue.

The constant in the bailout years has been a battery of artificial stimulants sent through the financial sector, from the TARP to years of zero-interest-rate policies (ZIRP) to outright interventions like the multiple trillion-dollar rounds of Quantitative Easing. All that froth allowed finance companies to suck out hundreds of billions in fees, encouraged lunatic risk-taking in every direction and rampages of private equity takeovers, and kept a vast stable of functionally dead companies alive on cheap credit.

Those so-called “zombie companies” make up roughly 30% of all corporations in America now, and they racked up over a trillion dollars in new debt since the pandemic alone. While policymakers may have stabilized the economy with the bailouts, they may also “inadvertently be directing the flow of capital to unproductive firms,” as Bloomberg euphemistically put it back in November.

In other words, . . .

Continue reading.

Written by LeisureGuy

29 January 2021 at 12:48 pm

A cedar shave with a new soap and the able assistance of the iKon Shavecraft 101

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Prompted by the Sharpologist article on best soaps of 2021, I decided to check out the Grooming Dept. and got a tub of Cedarwood shaving soap, which uses their Nai formula, “the ultimate vegan shaving soap!” (their exclamation point). This soap is in their Astute Collection:

Soaps that are part of this collection are either Nai or Kairos formula soaps. They’re usually scented using 100% essential oils and natural resins.

I always check ingredients, so I imagine you do as well. Interestingly, Grooming Dept. lists fragrance ingredients separately:

Scent Ingredients: Orange EO, Grapefruit EO, Ginger Lily EO, Ginger EO, Pink Pepper EO, Geranium Absolute, Rose Absolute, Howood EO, Siam Wood EO, Benzoin Resin, Carrot Seed EO, Alaska Cedarwood EO, Hiba (Japanese Cedarwood) EO, Port Orford Cedarwood EO, Styrax, Muhuhu EO, Himalayan Cedarwood EO, Virginia Cedarwood EO. Texas Hill Country Cedarwood EO, Atlas Cedarwood Absolute. Vetiver Absolute, Patchouli EO, Vanilla Co2 extract, Tonka Bean Absolute.

The result is a fairly complex fragrance that I found appealing. (I’m sure the Tonka Bean helped: I’m a sucker for vanilla.)

The soap’s ingredients are also listed:

Aloe Vera Juice, Stearic Acid, Potassium Hydroxide, Coconut Milk, Castor Oil, Cupuacu Butter, Mango Butter, Camelina Oil, Marshmallow Extract, Glycerine, Rice Bran Wax, Beta Sitosterol, Sunflower Lecithin, Jojoba Oil, Apricot Kernel Oil Oil, Kuki nut Oil, Larch Arabinogalactan, Tara Gum, Erythritol, Glucomannan (Konjac root), Sodium Lauroyl Lactylate, Propanediol, Sodium Lactate, Sodium Hydroxide, Squalane, Lauryl Laurate, Olive Oil Unsaponifiables, Betaine, Isostearic Acid, Sasha Inchi Oil, Meadofoam Oil, Allantoin, Argan Oil, Tucuma Butter, Ucuuba Butter, Sodium Lauroyl Oat Amino Acids, Oleic Acid, Linoleic Acid, Fragrance, Colloidal Oatmeal, Sucrose Cocoate, Sodium Gluconate, Calendula Extract, Ceramide 3, C12-15 alkyl benzoate, Liquorice Root Extract, Beta Glucan, Broccoli Seed Oil, Tamanu Oil, Hyaluronic Acid, Grape Seed Extract, Chamomile Extract, Sea Kelp Extract, Green Tea Extract, Alpha Bisabolol, Inositol, Histidine, Lysine, Arginine, Sodium PCA, Sodium Alginate, Aspen Bark Extract, Ginkgo Biloba Leaf extract, Phospholipids, Resveratrol, Caprylyl Glycol, Ethylhexylglycerin, Lonicera Caprifolium (Honeysuckle) flower extract and Lonicera Japonica (Honeysuckle) flower extract, Tetrasodium Glutamate Diacetate, Tocopherols.

“Marshmallow” in that list refers not to the confection but to the variety of mallow (a flowering plant) most commonly found in wet, swampy environs such as marshes. That mallow — the marsh mallow — has been used for various purposes for centuries, and one use was a candy made from the roots.

When I loaded the brush (in this case my Plisson HMW 12), I noticed that I had to add a little water, so I bet that the ingrredients would include clay. I lost, but luckily I am familiar with that, since I occasionally buy a lottery ticket. (“Luckily” is perhaps the wrong word in this context.) I wonder whether the soap’s thirst perhaps stemmed from the colloidal oatmeal.

The lather was really excellent — not only a very nice fragrance but also (and even more important) abundant, thick, creamy, and contributing superb slickness and glide. It’s really a first-rate soap.

I will note also that the tub is labeled the right way: the name of the soap is shown on both lid and side, so that whether the tub is stacked or not, you can see at a glance the soap’s identity. Too many of the tubs I have are labeled only on the top of the lid, so when the soap is stacked, the identity is hidden. I am hoping President Biden will push for legislation that will required any shaving soap sold in interstate commerce to be labeled on top and and side.

With the excellent prep, the shave was easy, especially since I was using one of the best razors of 2021 (curiously omitted from the Sharpologist article), the iKon Shavecraft 101. (I notice that it seems to be generally out of stock, so perhaps that’s why it’s not included.)

Three passes to a perfectly smooth face, and my skin feels fantastically good (see ingredients list above). A splash of Anthony Gold’s Red Cedar aftershave to continue the theme, and here we are at Friday again, feeling good.

Written by LeisureGuy

29 January 2021 at 10:02 am

Posted in Shaving

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