Waiting for a Superman.

Zack Smith conducts a post-mortem on the luminous comic book miniseries All-Star Superman, in the form of a 12-part interview with its creator, Grant Morrison. In the process of retelling the classic Superman story, he also works in a lively subtext of magic, love, life in the face of death and Renaissance philosophy.

I see Superman in this series as an Enlightenment figure, a Renaissance idea of the ideal man, perfect in mind, body and intention.

A key text in all of this is Pico’s ‘Oration On The Dignity of Man’ (15c), generally regarded as the ‘manifesto’ of Renaissance thought, in which Giovanni Pico Della Mirandola laid out the fundamentals of what we tend to refer to as ’Humanist’ thinking.

At its most basic, the ‘Oratorio’ is telling us that human beings have the unique ability, even the responsibility, to live up to their ‘ideals’. It would be unusual for a dog to aspire to be a horse, a bird to bark like a dog, or a horse to want to wear a diving suit and explore the Barrier Reef, but people have a particular gift for and inclination towards imitation, mimicry and self-transformation. We fly by watching birds and then making metal carriers that can outdo birds, we travel underwater by imitating fish, we constantly look to role models and behavioral templates for guidance, even when those role models are fictional TV or, comic, novel or movie heroes, just like the soft, quick, shapeshifty little things we are. We can alter the clothes we wear, the temperature around us, and change even our own bodies, in order to colonize or occupy previously hostile environments. We are, in short, a distinctively malleable and adaptable bunch.

So, Pico is saying, if we live by imitation, does it not make sense that we might choose to imitate the angels, the gods, the very highest form of being that we can imagine ? Instead of indulging the most brutish, vicious, greedy and ignorant aspects of the human experience, we can, with a little applied effort, elevate the better part of our natures and work to express those elements through our behavior. To do so would probably make us all feel a whole lot better too. Doing good deeds and making other people happy makes you feel totally brilliant, let’s face it.

So we can choose to the astronaut or the gangster. The superhero or the super villain. The angel or the devil. It’s entirely up to us, particularly in the privileged West, how we choose to imagine ourselves and conduct our lives.

We live in the stories we tell ourselves. It’s really simple.

McCain's Last Chance

Voting machine fraud: it's not just a conspiracy theory.

"When I cast an early vote [Wednesday] at Palo Pinto County Courthouse, my vote was switched from Democrat to Republican right in front of my face - twice!" reported Lona Jones, a Precinct 1 county resident.

Intending to vote straight party on the Democratic ticket, Jones said she was surprised Wednesday when the electronic voting machine "on the left as you face the machines" in the courthouse basement asked her if she wanted to cast her vote for a straight Republican ticket.

Thinking she had pushed the wrong button the first time the machine "came up Republican," Jones said she repeated her intended straight-party vote.

"The second time I was sure to just touch the Democratic button," she said, further reporting that the machine responded to her selection, "'Do you want to change your Republican straight ticket vote to a Democratic vote?' I pressed, 'Yes,' then it came back up and it was a total Republican ticket again."

Kokosing Gap Trail

Knox County has been busy transforming their old railroad right of ways into bike trails, resulting in some really beautiful parkland along the Kokosing River.

Wassup 2008

Rolling Stone on David Foster Wallace

Another clutch of articles on David Foster Wallace, this time from Rolling Stone.

The Lost Years & Last Days of David Foster Wallace

An interview with David Lipsky, who wrote the piece, with ruminations on the writer:

There's no way of knowing what his legacy is but I know he changed prose. And prose gets changed not that often in a century. Hemingway changed prose, so did Salinger and Nabokov. David changed it too. He did an amazing thing. One the things that writing and speech can do is express what we're thinking one thought at a time. But we think a thousand things at a time, and David found a way to get all that across in a way that's incredibly true and incredibly entertaining at the same time...He ended a piece for our magazine with the words "Try to stay awake." That open-eyeness is the giant thing he leaves behind.

Also included are a couple of reprints of his Rolling Stone articles:

The Weasel, Twelve Monkeys and the Shrub: Seven Days in the Life of the Late, Great John McCain from the 2000 campaign.

The View From Mrs. Thompson's, reflections on 9/11 as perceived from a Midwestern living room.

Joe the Plumber, Meet...

Roger the Shrubber

Tales from the Meltdown 2

According to bloomberg.com, Moody's employees said the company "sold our soul to the devil for revenue," in an attempt to become more "issuer friendly".

S&P employees, on the other hand, were passing around text messages like this:

Rahul Dilip Shah: btw: that deal is ridiculous

Shannon Mooney: I know right... model def does not capture half of the risk

Rahul Dilip Shah: we should not be rating it

Shannon Mooney: we rate every deal

Shannon Mooney: it could be structured by cows and we would rate it

(via Calculated Risk)

Tales from the Meltdown

The barracudas on Wall Street are goin' mental:

“Fear and greed, fear and greed, the Street always goes back and forth,” he says. “And we’re as close to fear as we’ve been in the past twenty years.”

He stares at the screens again: An absolute shit show.

“Just look at the Forbes’ list of billionaires—they’re all screwed,” says another partner.

“Lakshmi’s net worth, cut in half. Rupert, cut in half. Cooperman from Goldman—”

“I was surprised Cooperman was on that list,” notes my
friend.

From crisis comes opportunity, but the opportunities right now are heinous. So they’re waiting—waiting for stupid prices, prices where a company’s stock can trade for the cash it has on hand, prices that don’t make sense in any economic environment.

The talking heads of CNBC prattle on in the background, interspersed with video of exhausted senators walking around the halls of the Capitol. “We should take pictures of the politicians who voted against the bailout and stick them on the Internet,” declares a partner. “If they get killed, so what? Work it out.”

He picks up a dainty silver die, with the sides marked buy, sell, and hold, and throws it on the desk. Then he picks it up, gingerly. “We got buy,” he says, putting it down, with a frown.

On the other hand, Andrew Lahde got an attack of sanity after an 837% return he obtained by betting against subprime mortgages. He's leaving the business for happier pursuits, and would also like to recommend that the government legalize hemp and marijuana. Hear, hear.

Yes We Carve

Yes We Carve. You're doing pretty well when your face is showing up on pumpkins. That graphic O was a stroke of design genius.

Three from Bruce Schneier

If Vinod Khosla is my favorite VC of the year, then Bruce Schneier is my favorite security expert. He's done more to separate the truth of security from theater than anyone (with the possible exception of Penn Gilette, who comes at the problem from the theater side). Here are three great links from his blog this past week:

Bruce makes it through airport security with the most rudimentary measures and a reporter from the Atlantic.

“Counter­terrorism in the airport is a show designed to make people feel better,” he said. “Only two things have made flying safer: the reinforcement of cockpit doors, and the fact that passengers know now to resist
hijackers.”

The laundromat that brought down the IRA.

The (ever-growing) maxims of security from the folks at Argonne

The Future Is Now, Vol. LXVIII: Vinod Khosla's Thoughts on Next Steps

Vinod Khosla is one of the best venture capitalists in history because he gets it. He understands the risks that VCs ought to be in, and buys into them big time. He understands the business model: it's about building companies that upset the status quo.

Also, in this PBS interview, he discusses the potential for a boom that extends beyond what people call clean tech or green tech:

they refer to interesting little markets like hybrids and batteries and solar cells and wind farms and corn ethanol and biodiesel, but that's not where the real opportunity is.

Those are nice markets, nice investments, people make money at it, but the real big opportunities are changing the infrastructure of society. We are talking about things like the $200 billion engines market for automobiles and trucks, things like lighting, billions of dollars spent on lighting. We can completely change that. Cement. Huge multi-hundred billion dollar market that needs to change. Glass. Then there's replacing all of the oil in the world. Hundreds of billions if not trillions of dollars worth of fuel that needs to be replaced. And there's gasoline, there's diesel, there's jet
fuel.

And then there's electric power generation. Not the kind you get from a PV cell, that's a good market, but the stuff you can actually store and ship and the utilities meet it at the prices at which utilities can buy power.

Creepy Clowns Back, In Chicago

Back when I was a kid, the kidnapping-clown-in-a-van story was in heavy competition with the razor-blade-in-an apple for Halloween stories that actually scared trick-or-treaters and their parents. There were a whole rash of sightings back in the eighties, and apparently at least one of these clowns is back and operating in the Chicago area.

Spooky, for real.

The "Jesus Bowl"

A 1st century AD scrying bowl has been found at an underwater site near Alexandria. The inscription on the bowl reads "by Christ, the magician," and may refer to Jesus; if so, this is the earliest historical reference to Jesus currently known.

Bank Nationalization Plan

Krugman's looking like some kind of freaking Nobel Prize winner at this point...oh, wait.

And here they are...the new portfolio companies in the sovereign wealth fund of the United States:

There's no arguing with the fact that these are the best, strongest banks in the country. One curious thing to note: they're all the strongest banks on the corporate services side. Some of the big consumer super-regional players (e.g.,US Bancorp, PNC) aren't listed here. That may have the effect of reactivating the commercial paper and C&I markets preferentially over the consumer and small business segments.

I wonder if that's going to be the case? If so, is that going to be a good thing?

Whatever the case, I hope the investment came with some head-knocking and the statement, "you guys are going to lend to the other banks, or else." Also, some thanks to the American people would be appropriate, along with a promise to Never Screw Up Again.

Pascal's Wager Rebalanced

Justin Smith:

Pascal had supposed that the persuasiveness of his argument to any rational thinker would result in submission to the long-standing authority of the Catholic church. But the problem is that the argument is no more, and no less, compelling coming from a 17th-century Catholic philosopher defending traditional faith than coming from a couple of rough and unwashed rednecks in Louisiana in defense of a strain of enthusiastic neo-Protestantism that Pascal himself would have deemed diabolical.

The Yoke-Up version of the wager brings to light something that Pascal's does not. To accept the wager, to go for it 'just in case', is not, or not only, to submit to God's will. It is also to submit to the will of the person who presents to you the wager, and not just as concerns God's existence, but also as concerns all sorts of tangential cultural matters that God, if he exists, would have to find perfectly irrelevant.

The only way to adequately convince the illiterate truckdriver and his angry 'ex-gay' spouse that one has accepted their message would be, one supposes, not just to declare, "Yes, I believe!", but also to come to care about things like engine repair, to understand certain sports metaphors, to inhabit a world of small and local concerns that can only make sense if one is already a certain kind of working-class white American. In this particular case, one would likely also have to show signs of the ravages of life prior to being born again, perhaps some tribal or Celtic tattoos hidden under the undershirt, teeth worn down to stubs by meth, a threadbare collection of garments announcing that one has 'no fear'.

As Pascal might have said, these are attributes of a Christian that do not depend on will, or even intellect.

The Perfect Fall Day

Clear skies and multicolored foliage highlight a bike ride along the Scioto river.

Krugman Wins

Paul Krugman wins the Nobel Memorial Prize for Economics for his work on connecting international trade to economies of scale.

Two Short Neil Gaiman Links

Things I originally forgot to post about when they first appeared:

1. In which one can see Mr. Gaiman's house, writing cottage, pumpkin patch and blackberry bramble. It is an absolutely satisfying environment for a writer of strange fiction, as if fed by the compost of imagination and old stories.


2. In which he discusses the impact of the strange onto everyday life:

GR: So many of your books walk the boundary between the real and the supernatural. Have you ever had a supernatural experience?

NG: You don't get explanations in real life. You just get moments that are absolutely, utterly, inexplicably odd. Like everybody in the world, I've had moments that are absolutely, utterly, inexplicably odd. I actually wrote about one of them in my latest book, Fragile Things. There's a true-life ghost story about running into a gypsy woman dressed as if she was from a previous century outside my front door. And maybe she was. There's a wonderful author named Robert Aickman who wrote what he described as "strange stories." They were more or less ghost stories, but they always lacked explanation.

Sequoia Puts the Fear of God into their Portfolio Companies

The message: conserve capital over gaining market share, move your sales force compensation from base to variable, and do whatever is necessary to get to cash flow positive state. Everyone post-seed stage is in trouble and many will get cut from VC portfolios over the next year. Tech will be seeing lots of layoffs. The change in the economic picture may last for next 15-17 years. Deliver sales or die.

Hold on to your hats. The next wave is going to be a big one. I don't believe that this is the best message for the portfolio companies from a strategic standpoint (extreme cost cutting will wreck the long-term value of a lot of these companies). Instead, this is a strongly worded warning that the VCs are going to cut the portfolios themselves, and demand a clear path to positive cash flow.

The other impact of the credit freeze: the theta for the VCs just got a whole lot shorter, and with the decline of the LBO, the exits are closed for the time being.

The Glass Delusion

"Many people came to believe that they were made of glass 'and therefore likely to shatter into pieces'." As the result of a no longer extant delusion that existed during the middle ages. A woman who believed herself a potsherd & a man cured of it by a thrashing about the buttocks & other diverse prodigies of early psychiatry.

The Lost Kings of America

After the Revolutionary War, a group of people proposed that George Washington become the king of the new nation. He wisely declined, but Megan Smolenyak at Ancestry.com traced his lineal descendants to determine who would have inherited the hypothetical crown. Depending on the rules used, one of three people would be king (or queen) in the present day. Newsweek suggests that the best claim is held by Paul Emory Washington of Texas. In the intervening years:

She concluded that leadership would have passed not to men named Abraham or Teddy but to those named Lee, Felix or Frank. "We would have had a King named Spot, how cool is that?" Smolenyak muses of the son who would've fallen between King Bushrod, the first, and Bushrod II. And term limits? Not so much: King Larry would have been in power from 1935 to 1997, she says.

King Spot I. I like the ring of that.

Semi-Nationalization Slips Closer

(And It's a Good Thing)

This morning, Secretary Paulson edged closer to direct investment in the troubled banks. This semi-nationalization idea just got introduced over in the UK, and seems to have worked elsewhere (e.g., Sweden) as a cure for banking crises.

Brad DeLong has the score on the Paulson Plan (buy distressed assets at market value--OK), the Elmendorf-Brown plan (recap/semi-nationalization--better) and the McCain plan (buy bad stuff at face value--weird and counterproductive).

Laffoley on Architecture

That One

(via Jon Taplin)

Margin Call

As others have pointed out, the primary cause of the meltdown is the excessive leverage in the system, coupled with the normal fluctuations of the capital markets.

To give an extended example, a homeowner could borrow up to 95% (~20:1 leverage) of the value of the home, using a stack of two mortgages. These mortgages were then packed up into a CDO (a stack of bonds with hundreds of mortgages as collateral), with the debt portion of the structure standing on top of a 3% "equity" slice (~33:1 leverage). To get the highest value out of the bonds, the originator "wrapped" some of the bonds with an insurance policy or credit default swap, provided by counterparties who collateralized their end of the swap with as little as 3% of the notional value of the swap (33:1 leverage again). The largest investment banks who held a lot of these securities were leveraged at anything up to about 33:1.

Now, imagine that one of two things happen: 1) interest rates on floating rate mortgages increase by 200bp (say from 4 to 6%) within a year, because times are good and demand increases or 2) the value of the homes decreases by >5%, because times are bad and demand is slack. Your equity in a 95% leveraged house is now negative. As a result, some percentage of you have just defaulted; if that percentage is >3%, the CDO is underwater. The string of credit is jerked back, magnified at each step, until you arrive at the current credit freeze.

As a practical matter, what's a reasonably safe amount of leverage? My guess is it's somewhere in the range of 5:1 or 10:1. Using fancy mathematical models, you will get answers like the 33:1 structures of the paragraph above; these models need to go in the garbage at this point. This economy is going to continue to delever over the next 19 months, and it's going to hurt.

What to Tell Your Friends Who Work as Traders

Do what their psychiatrists do: go out there and make some money. A disastrous market is no time to lose your nerve.

For my part, I've been thinking about the meltdown a lot in the dark of the night. What I've figured out is that change always represents an opportunity for someone to do something entrepreneurial. Big change equals big opportunity; therefore, someone is going to make a lot of money despite (or because of) the turmoil. Warren Buffett sure as hell will, Jamie Dimon and JP Morgan Chase will. Whoever's buying corporate paper at 5-7% from the Fortune 500 or lending to the UK banks at current LIBOR+ rates is doing well (so money market funds are a good bet right now, especially with the new insurance provisions). Longer term, there are big opportunities going down in renewable energy and energy technology (ET). Somebody's going to have to finance houses with nice, boring 30 year whole loans.

There is blood in the streets; it's time to buy.

Updated: Link to the Daily Beast story removed on request.

Sarah Palin Debate Flowchart

Well, her head didn't fall off, so I guess that's good. Biden had a very good performance, I thought.

Biden vs. Palin

For what must be the the first time in American history, I heard the Vice Presidential debate referred to as "must-see" and "hysterical" by a caller on the Entertainment Tonight segment of Headline News this morning.

In addition, Grover Norquist has some advice for the candidates:

Biden should place a photo of some vaguely swarthy looking old guy on the table and let Palin sweat over the idea that this is some obscure head of state and she will be called upon to name this fellow.

Palin should place a rather large firearm on the table and from time to time when Biden is annoying, frown and gently place her fingertips on the weapon.