Cab Thoughts 12/27/14

"If you board the wrong train, it is no use running along the corridor in the other direction." - Dietrich Bonhoeffer

Joshua Birnbaum, the ex-Goldman Sachs Group Inc. trader who made bets against subprime mortgages during the financial crisis, now has more than $2 billion in wagers against high-yield bonds at his Tilden Park Capital Management LP hedge-fund firm, according to investor documents. Bonds tied to the energy sector make up about 15% of the high-yield space. If oil prices stay low.......

Carl Hoffman's 2014 book, Savage Harvest, tries to  answer the question that's haunted the Rockefeller legacy since 1961: What happened to eager young Michael Rockefeller, who vanished while collecting indigenous art among the Asmat tribe of what was then Netherlands New Guinea?

Japan’s debt-to-GDP ratio is roughly 250%. If interest rates were to rise by 2%, it would take 80% or more of their tax revenues just to pay the interest. That is not a working business model. Therefore they can’t allow interest rates to rise. The only way they can accomplish that is for the Bank of Japan to become the market for Japanese government bonds (JGBs). And that in fact is what has happened. When the Bank of Japan momentarily withdraws from the ten-year JGB market, nothing trades. The Bank of Japan is the market today.

Carmen Segarra, the former Fed bank examiner, tells of a Goldman Sachs executive saying in a meeting that “once clients were wealthy enough, certain consumer laws didn’t apply to them.” 

Andruw Jones hit 434 home runs in his 17-year major league career and won 10 straight Gold Glove Awards as a center fielder. Didi Gregorius is expected to replace Derek Jeter at short for the Yankees. Both men are from Curaçao, the nation with the most major leaguers per capita in the world last season. Curaçao has one major leaguer for every 21,000 residents or so. For comparison, on opening day last season, there were 83 players from the Dominican Republic, a nation of 10.4 million — roughly one major leaguer per 125,000 inhabitants. For the United States, the ratio was about one to 503,000. An autonomous country that is part of the Kingdom of the Netherlands, Curaçao is an island about 40 miles off the northern coast of Venezuela. At 171 square miles, it is about twice as large as Brooklyn, and with a population of about 150,000, it is a bit larger than Bridgeport, Conn.

"The Heroes of Beslan:" The ugly problem publicized by the peculiar Senate "torture release" deserves some true and honest thought. But there is a growing disconnect between the old world and the new. 126 children were killed in Pakistan in a military attack targeting a school. That is hard to apply the Marquis of Queensbury rules to.

A professor I knew said that the society could tell when it was crossing the line when it began thinking of the enemy as an illness.

In 2006, thousands of college kids in the Midwest became infected with mumps, despite the fact that most had received the vaccine. This phenomenon is called vaccine failure, and scientists divide it into two categories: primary and secondary. Primary vaccine failure occurs when the body doesn't produce antibodies in response to the initial immunization, but this is relatively rare with the mumps vaccine. Secondary failure occurs when the body fails to maintain an adequate level of antibodies, despite having an initially strong response to the immunization. This is what we're seeing in the NHL.

Back in 2006, researchers found that college students who came down with mumps had been immunized more than ten years earlier than roommates who didn't contract the disease. A subsequent study confirmed this, revealing that protective antibodies were much lower in students who'd been vaccinated fifteen years earlier compared to students who'd been vaccinated just five years earlier. The takeaway here is that the mumps vaccine works, we just don't know how long it works. (Matt McCarthy, an assistant professor of medicine at Weill Cornell Medical Center)

A lot of the success of Germany's economy of late is due to the Chinese building frenzy. China embarked on a   infrastructure and real estate build out, in an effort to insulate itself from the contraction forces that the Great Recession created. This created in turn a booming market for German capital goods exports. 

A study back in 1990 by the Progressive Policy Institute showed that, absent single motherhood, there would be no difference in black and white crime rates.

A return to a previous note that has some ongoing pertinence. From a good review of Machiavelli by John Gray in The New Statesman: "...modern law is an artifact of state power. Probably nothing is more important for the protection of freedom than the independence of the judiciary from the executive; but this independence (which can never be complete) is possible only when the state is strong and secure. Western governments blunder around the world gibbering about human rights; but there can be no rights without the rule of law and no rule of law in a fractured or failed state, which is the usual result of western sponsored regime change. In many cases geopolitical calculations may lie behind the decision to intervene; yet it is a fantasy about the nature of rights that is the public rationale, and there is every sign that our leaders take the fantasy for real. The grisly fiasco that has been staged in Afghanistan, Iraq and Libya – a larger and more dangerous version of which seems to be unfolding in Syria – testifies to the hold on western leaders of the delusion that law can supplant politics."

"There can be no rights without the rule of law!" That is a concept worth reflecting on because so often you see rights argued as infringed upon by all law.

Golden oldie:

http://steeleydock.blogspot.com/2013/07/reward-limits.html

One explanation: Up until the mid-1990s, Microsoft had virtually no lobbyist presence in Washington, D.C., and gave almost no money to political campaigns. Then the Clinton Justice Department decided to sue Microsoft for antitrust violations.
By 1998, the company was pouring $3.7 million into lobbying and giving more than $1.4 million to political campaigns. Influencing Washington became part of Microsoft's business strategy only after Washington decided to influence Microsoft's business.

Just in case you were worried about the future of the democracy, be reassured. There has been a savage backlash against Gov. Christy on social media. Why? He's a Dallas Cowboys fan.

Farmers and common sense won big with the new budget. The Clean Water Act will not apply to farm ponds and irrigation trenches, and the Environmental Protection Agency won't be able to count dairy cow and cattle farts and belching as greenhouse gases. The White House wanted to cut dairy industry emissions 25% by 2020.

epicene \EP-uh-seen\, adjective: 1. Having the characteristics of both sexes. 2. Effeminate; unmasculine. 3. Sexless; neuter. Epicene derives from Latin epicoenus, from Greek epikoinos, "common to," from epi-, "upon" + koinos, "common."

Stanley Druckenmiller—former chairman and president of Pittsburgh's Duquesne Capital, former portfolio manager of Soros’s Quantum Fund, and one of the great investors of modern times—has said that IBM was his favorite short  and that it was the poster child for the type of stock market we have nowadays. Why? Because it sells bonds and takes on debt--which in most times would be used  for capital expenditures--and uses it for dividends and stock buybacks.
                 
The new budget has $5.5 billion for Obama's Ebola-care programs, with nearly 90% of the money going to Africa.

AAAAAaaaaaaannnnnddddddd.....a picture of Detroit, returning to the land: