Gongol.com Archives: May 2012
Brian Gongol

May 17, 2012

Business and Finance "JPMorgan Chase has a big hedge fund inside a commercial bank"
And that's an unnerving situation. According to the New York Times, "[T]he complex position assembled by the bank included a bullish bet on an index of investment-grade corporate debt, later paired with a bearish bet on high-yield securities, achieved by selling insurance contracts known as credit-default swaps. A big move in the interest rate spread between the investment grade securities and risk-free government bonds in recent months hurt the first part of the bet, and was not offset by equally large moves in the price of the insurance on the high yield bonds." Get all that in one take? Of course not. ■ The problem with excessive complexity inside financial markets is that the feedback loop is human-driven and not very easy to feel. Surgery can be complex...flying an airplane can be complex...forecasting the weather can be complex. But in each of these cases, the natural world is a large part of what initiates the complexity -- and we learn every day about how better to manage that complexity. Moreover, we get real and immediate feedback -- an artery bleeds, a rising column of air causes turbulence, or a mesocyclone starts to spin. These things are observable. ■ But financial markets remain the complex results of millions of individuals, many of whom can easily panic at once for no rational reason. We should be apprehensive about making our financial system more susceptible to the herd mentality than is really necessary: It only takes 5% of people going crazy to set an entire group into a panic. ■ If heavily-leveraged, complex, and large financial instruments can be susceptible to the panic of just 5%, then those instruments probably have no real place right next to the deposits that Grandma makes in her passbook savings account. We should give serious thought to reinstating the Glass-Steagall Act.

Computers and the Internet Good idea: Taking lots of pictures and videos of your kid
Bad idea: Putting all of those pictures and videos on the Internet. The advent of digital photography and video make the cost of recording family memories virtually zero. But there's an implicit cost to sharing everything on the Internet: It causes the child's digital identity to become something the parent forms, whether deliberately or inadvertently. If employers are asking for Facebook passwords today, and burglars are targeting the homes of people who post on Facebook that they're away, and all of that is happening today (when the Internet is, after all, still pretty young), then parents really shouldn't be sharing much -- if anything -- about their kids online. ■ Register the child's name as a domain name, yes. That will help them later. But don't pile on the content in the child's name. The kid will need as much of a blank slate as possible by the time they actually need to use the Internet to apply to college or to a job. And parents should really think twice about the security risks involved in sharing pictures and videos of their children on the Internet -- where you simply don't know what kinds of creeps might be looking for them. ■ There are already too many chances for a young person to screw up on his or her own, and to do a virtual face-plant in front of the world via the Internet. Lots of them don't have adequate discretion to be sharing things in front of a global audience without making serious errors of judgment. Parents shouldn't stack the deck against them by also sharing pictures and videos that may someday turn out to be embarrassing. Sure, Jessica's daily affirmation is hilarious and charming, but she and David of the dentist's strong anesthesia are both going to be defined for a lifetime by their childhood YouTube fame, no matter whatever else they do. (Make no mistake: There's still nothing funnier in the universe than the laughing baby. But a lot of parents seem to think it's a good idea to publicly document everything about their children, as though they're auditioning for some life-changing theatrical role. But are we quite sure that growing up in the public eye was the best thing for the Olsen twins?

Business and Finance Berkshire Hathaway becomes an overnight newspaper empire
Warren Buffett's company just paid $142 million for a group of 63 newspapers. It helps pull the selling company out of a serious financial hole, and it adds what Buffett called "keepers" to the company's roster of subsidiaries. What's amusing about this is how minor the acquisition is for Berkshire: The company brought in $3.245 billion in net earnings in the first quarter, or about $35 million a day. So the entire newspaper chain cost about 4 days' worth of profits from elsewhere in the Berkshire empire. What a bizarre sense of scale. (Full disclosure: Written by a Berkshire Hathaway shareholder.)

Iowa 200 buffalo now roam free across northwestern Iowa
They escaped from a ranch near Sibley.

News Debt is relatively on the rise again in Africa
Borrowing by governments is growing faster than the economies of those countries

Humor and Good News Cubs versus White Sox
(Video) Credit is due to whomever put together the New Era Cap ads featuring Nick Offerman and Craig Robinson. "Would you go skinny-dipping in Lake Michigan in December?" "Again?"

The United States of America A milestone in demography
Canada and the United States are both places defined by ideas and ideals, not the color of a person's skin. And that's a good thing.

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