Quantitative Easing… made easy for at least 1.2 million people!

After watching this cartoon by Omid Malekan, QE2 must be clear – at least conceptually – to the 1.2 million viewers who’ve watched the video on YouTube! If that hasn’t worked for you, try following Felix Salmon on Reuters to see why Quantitative Easing may not quite be the solution to solving America’s ‘burning’ issues/problem/s – job creation, to begin with; the liquidity trap, deflation… Ben Bernanke’s nemesis? Yep, this reference is to QE2 – hot in current news, being touted all around, for more than one reason.

Feel like you’re sailing in uncharted territory aboard the maiden voyage of QE2? Well, breathe easy, you’re not alone! Just twitter about it… no, then how about this? Talking and blogging about a maiden voyage  (hear a lighter note?), here’s some trivia…

Prince Charles was the first “civilian” passenger to board QE2, with her first captain, William Warwick. Now, talking of Bill (no, not from the US Federal Treasury), indeed, Prince William is the first among England’s “royalty” – just engaged – to embark on a life-voyage with Catherine Elizabeth “Kate” Middleton, a “civilian”. 🙂 😉

It appears that QE2 may well be the current hot news… not only around financial round tables, but also in socio-economic circles! 😉

Reasons to reject re-appointment of Mr Bernanke… except for one!

It may be that a Republican has won in Massachusetts. Even so, it may be imperative to reappoint Mr Bernanke as Chairman of the US Fed Reserve because alternative candidates are worse qualified for this position. (This reeks of the old adage, “a known devil is better than an unknown angel”.)

Better stated… ‘Better the devil you know, than the devil you don’t know’! In the context of the current state of the economy we fear that those ‘other’ candidates may actually end up ‘strengthening the hands of the inflation hawks’, causing more damage over the long run.

Financial reform and unemployment are the two prime concerns for the US economy today. If re-appointed, Mr. Bernanke, along with his team, must focus on obliterating mass unemployment; and together, they will need to objectively review their own failed policy decisions of their first term.  Immediate corrective action is imperative, since it will impact American lives for years to follow.

This, in a nutshell, is how Mr Paul Krugman surmised the present situation.

PIN is sin… says Credit Card company… go figure!

Try figuring this out, and you’re caught in a maze.

Indeed, I’m amazed at the lack of transparency that prevails through the entire credit card industry… and we, as consumers, are all caught in the quagmire, getting sucked deeper with no way out… except to carry cash! But, think about it, if you are out to buy a piece of furniture such as a sofa, will you carry $5099 cash in your pocket? After overcoming the dilemma of which sofa you want to buy, there’s a bigger one waiting for you at the cash register (what a misnomer)… as they ring up your item, they ask you ‘debit’ or ‘credit’… momentarily, you’re stumped before you respond. If you said “debit” (unlikely though, unless you’re at the grocery store), you’re never quite sure of  the next step… enter a PIN or do you have to simply sign? If you said “credit”, after you swipe your Visa/MasterCard/AMEX, will they ask you to simply sign, enter your zip code or will they take the card from you, ask for your personal ID, or enter the 3-4 digit code on the card?

Ever thought about the logic behind all of these actions during a single transaction, be it worth $5 or $5000? Everywhere you go… grocery stores, pharmacies, furniture stores, at malls, cinemas, doctors’ offices, hospitals, school admissions, hotels, restaurants… you name it… we simply do what we’re asked to do. But behind it all, someone is raking it in… the banks and the credit card companies… both hand-in-glove. No matter which way you look at it,  the consumers… us, we pay the highest price, because the cost of each transaction is recovered from us by store owners and businesses… directly or indirectly.

Although the article in The New York Times strives to be an eye-opener, readers’ comments to it may help you better figure what actually goes on in our world driven by credit card companies.

The graph in the article indicates that VISA Debit Cards may be the prime beneficiary by 2012 (not that far away), winning in a world that is heading towards No Cash, Card Only! Finally, although PIN debit cards are safer to use, and less expensive, 61% debit card transactions in the US are through use of signature. Feeling lost? What’s the difference? I promised at the outset… it’s a maze!

He wanted to be a “Quant”…

In the late 90s, my close buddy quit his well-paid job of ‘research scientist’ with a leading oil company. He wanted to be a “quant“. Lured, not by the money; that would follow (and plenty of it, although not quite as much as the obscene figures that Wall Street traders take home), but by the sheer mathematical elegance (I recall him using those very words way back then), which this new career would allow him to dabble with.  He spoke of the subject with a passion that sounded more like a woman’s dreams of luxury, silken sheets and Manolo’s!

His previously earned doctorate in hydrodynamics from M.I.T. was a mere starting point. He immersed himself in studying tomes of finance books – disciplined and motivated enough to “self-educate” himself on the subject. When he spoke of ‘vanilla’ or ‘exotic’ it had little to do with flavors of ice cream, or the fjords of Scandinavia. He pondered long over what he considered hot’ topics at the time – derivatives, futures, swaps and options – and seemed lost in a world of numbers!

To be honest, it was with immense difficulty that I had grasped the math entailed in regression analysis, linear programming and autocorrelation, towards earning credits for o-r and econometrics… in fact, I’m still fuzzy whether my present state is a result of “statistical error” or whether it may be deemed as a fitting error“. 😉 Random, or residual – why care! Instead, speaking again of my friend… when he first mentioned ‘modeling’, my brain – then skewed towards advertising, was farthest from ‘mathematical modeling‘. When he spoke of inverse problems my thoughts drifted towards micro-economics, juggling personal finances to fit month-end needs. Not in my wildest imagination could I have considered derivative pricing, or financial engineering.

Well, now as we approach 2010,  I can hardly pretend to have turned into some finance whiz, comprehending the jargon of Wall Street. Call it fate, or destiny, the events in the early years of this decade somehow did not allow my buddy with an opportunity to work as a ‘quant’ on Wall Street… something he had so deeply desired, and for which he toiled and sacrificed much, but which somehow eluded him.

Talking of predictions, futures, recent market volatility, financial debacles and gargantuan tumbles in the world’s financial capital, I am secretly thankful – at a personal level – that a perceived “failure” in finding a suitable position turned out to be a boon in disguise. For the past several years my pal has again immersed himself in science, and research towards what I consider a noble cause, and which, in my opinion, deserves far more genuine respect than what he would have earned through his computational genius on Wall Street.

Good luck to all those who have done well in their selected field, playing a clean, positive role, even in what is today deemed a maligned world, but which will undoubtedly rise again. When money begins to flow freely someday, hopefully sooner rather than later, memories of present times will fade, of that there’s no doubt, I’m afraid.

Ad Agency layoffs

In Spring 2008, when I referred to layoffs at marketing companies and ad agencies, some smart alecks scoffed at my words, merrily mocking me and my writing. Numerous people holding jobs then dropped pearls of wisdom… “Network, get yet another degree (since my MBA does not seem to cut it), or better still, change your profession“. Some even went as far as suggesting I change my personal [‘Look’ and ‘Feel’]… like I was some website that was long overdue for a total makeover!

Of course, last March, Bear Stearns, believed to have been firmly parked at 383 Mad Ave in NYC, was only just beginning to teeter…  we all are now privy to its change of address… they’ve moved permanently to the annals of financial history. At the time of their big move, the formal announcement of a recession that had already been three months in the making since December 2007 was at least three seasons away! It is highly unlikely then that A&M agencies could have been insulated, impending announcements notwithstanding! However, only those who were laid off, and those who never got  hired — despite job postings that continued to appear (to ostensibly lure fresh, “experienced” talent) — would have gotten a whiff of the hard times to follow; obviously, the rest of the world was happily oblivious to the latent harsh effects it was already beginning to experience!

Long before birds herald the onset of spring, you may have heard (and read) twitters about ad agency layoffs. Think back, the frequency may have been rising since mid-December 2008. Now why is that? It’s because that’s when the US government formally announced that the recession had already set in since December 2007! Looking back now, for 12 months this recession had stealthily taken its toll on jobs, home sales, the fate of companies and on families that depended on these organizations – directly, or indirectly; or even on retirees who lived off their fixed incomes! Wow, so now that it was official, it was okay to openly talk or twitter about how much even the ad agencies were hurting.

You just have to read the compilation of all the twitters (14 pages as I blog just now) to truly gauge the severity of this situation. If that’s too much work, especially considering you may be looking for work, take a look at BNET’s mind-boggling layoff numbers… including ad agency, media and marketing layoffs, ever since the recession started. These will show you why you’re meeting with little success in finding a new job. Or that if you do still have your job while your colleagues have been shown the door, why it’s no time to be smug… the pink slip may likely be well on it’s way to you! Perhaps it’s time to consider another field, go to school and acquire a new skill… and while you’re working on that resume, remember also to go for a makeover on yourself… I’m just sharing those pearls of wisdom I’d received from the mavens on Mad Ave!

The layoff counter keeps ticking.
The layoff counter keeps ticking.
No stopping to this counter's ticking!
No stopping to this counter's ticking!
The Twitter since December is getting louder in Spring '09.
The Twitter since December is getting louder in Spring '09.
When will the Twitters end?
When will these Twitters end?

Laugh, or cry… Yahoo! Finance User Comments… 090309

How you would react to the following, I wouldn’t dare predict, but I just fell off the chair, laughing!

“Cancel your credit card before you die……….(hilarious!) Now some people are really stupid!!!! Be sure and cancel your credit cards before you die. This is so priceless, and so, so easy to see happening, customer service being what it is today. A lady died this past January, and Citibank billed her for February and March for their annual service charges on her credit card, and added late fees and interest on the monthly charge. The balance had been $0.00 when she died, but now somewhere around $60.00. A family member placed a call to Citibank. Here is the exchange : Family Member: ‘I am calling to tell you she died back in January.’ Citibank: ‘The account was never closed and the late fees and charges still apply.’ Family Member: ‘Maybe, you should turn it over to collections.’ Citibank: ‘Since it is two months past due, it already has been.’ Family Member: So, what will they do when they find out she is dead?’ Citibank: ‘Either report her account to frauds division or report her to the credit bureau, maybe both!’ Family Member: ‘Do you think God will be mad at her?’ Citibank: ‘Excuse me?’ Family Member: ‘Did you just get what I was telling you – the part about her being dead?’ Citibank: ‘Sir, you’ll have to speak to my supervisor.’ Supervisor gets on the phone: Family Member: ‘I’m calling to tell you, she died back in January with a $0 balance.’ Citibank: ‘The account was never closed and late fees and charges still apply.’ Family Member: ‘You mean you want to collect from her estate?’ Citibank: (Stammer) ‘Are you her lawyer?’ Family Member: ‘No, I’m her great nephew.’ (Lawyer info was given) Citibank: ‘Could you fax us a certificate of death?’ Family Member: ‘Sure.’ (Fax number was given ) After they get the fax : Citibank: ‘Our system just isn’t setup for death. I don’t know what more I can do to help.’ Family Member: ‘Well, if you figure it out, great! If not, you could just keep billing her. She won’t care.’ Citibank: ‘Well, the late fees and charges will still apply.’ (What is wrong with these people?!?) Family Member: ‘Would you like her new billing address?’ Citibank: ‘That might help…’ Family Member: ‘ Odessa Memorial Cemetery , Highway 129, Plot Number 69.’ Citibank: ‘Sir, that’s a cemetery!’ Family Member: ‘And what do you do with dead people on your planet???’ (Priceless!!) You wondered why Citi is going broke and need the feds to bail them out!!”… Yahoo! Finance User – Monday March 09, 2009 01:11PM EDT

Funny, just four or five days ago, I blogged on the subject saying, “Till death do us part…”

For some strange reason I am reminded of the Bee Gees, and tune in to YouTube right away… to watch Robin Gibb singing I started a joke (1968).

Ex-leaders of lending, once again at the forefront!

Express regret and thou shalt be absolved of blame. So what, you cannot be held responsible for the turmoil, despite ranking high within the nexus of all those who must bear responsibility for the present debacle in the financial world; a  disruption that not only affects past borrowers of home-loans, but also those who hold no jobs (only a bleak future… at least in the immediate run), thanks to the bungle-ups by Countrywide Financial and the likes.

In fact, while this hysteria has dulled the senses of the masses, it is the optimal time to keep your wits sharpened, stay calm so as to “…capitalize on a situation that was a product of (one’s ) own creation”!

For some, like those who faced foreclosures of their homes, they feel secure with these “new-name” lenders who are back in business playing the old game. However, for the rest of us, no matter how straight they would like us to believe they are, their new-found success reeks of profiteering through unsavory wheeling-dealing.

We need to borrow to save our homes… PennyMac, here we come. But pause… will this not lead to further doom… a repeat tale… that of the penny-wise but pound foolish? Stories of unscrupulous lenders abound… is there merit in borrowing at all? Today, although it’s unrelated, somehow I’m reminded of a sign inside of my doctor’s office; it  brought on a smirk every time I noticed it  – “In God we trust; the rest pay cash!” But perhaps there is merit in that, after all… ‘though whether it has a place inside of a doctor’s office, of that I’m still unsure.

Till death do us part…

That is the note on which the marrying couple’s vows end… oh yes, not to forget the kiss that binds both partners. But, when either one of the couple dies, the marriage “contract” ends.

However, I’m now referring to debt after death, which can be akin to the kiss of death… this happy couple’s story takes a different turn. It seems death won’t stop the debt collectors; here’s how… Let us say you (alone) signed a contract with a credit card company. Your contract to honor the terms and conditions laid by the credit card issuer does not end when you die (I won’t say “if” because death is inevitable… at least until science defies it, or someone finds the Holy Grail, either of which eventually lead to eternal living), i.e. not legally speaking.

Surprised or shocked? For me it was indignation at these mercenaries. No matter how well you may have fulfilled your end of the contract – until you were alive, your thus far good record is of little consequence… at least not to the credit card issuer, when you’re dead! Rest assured, they won’t come after you, digging up your grave – that won’t serve their purpose; and naturally, they will not grieve the fact that you’re gone – it means a loss of an account to them. But guess what, they will certainly go after your loved ones (survivors, if you will) who are perhaps grieving your death, or just going about their life, because life must go on. Not to pay their condolences, nor to express sympathies, but to chase you for “collections“, these creditors will call your loved ones! You read it right… either they, or their collection agency, will hound your survivors to pay up the balances which you would have owed them (and paid up) if you were still alive. Now again, if it’s a joint account, the “follow-up calls towards collection efforts” may make sense, but what if you were the sole cardholder with no supplementary or add-on names to your card? Is it your survivors’ responsibility to clear your debt/s (whether or not it is affordable to them)? The credit card issuers are not concerned about your death, but are worried about your debt which you failed to pay off – every last penny – before you died.

Don’t credit card companies build in the cost of such “untimely” deaths causing “bad debts” in their cost of doing business e.g. interest rates, or  late fees, or finance charges… so as to spread it across the board? Just like the insurance companies do something like that in their “pricing of premium/s” (I would guess some kind of averaging is done, based on statistics and such)?

Did this pique your interest? Well, for details on whether or not your survivors are legally bound to pay up, and the psychological mind games credit card companies play, and how they train their call center reps to carry out this nauseating task, read the article along with readers’ comments in The New York Times. It is indeed an eye-opener about what could happen after your eyes shut for the very last time.

It’s ironic that we, the tax-payers, the people, the borrowers must save the financial institutions from dying even after they’ve bungled up while they were alive and kicking… and with their eyes wide open. Although unpalatable, Fed Chairman, Ben S. Bernanke did have a point when he spoke yesterday…

“A.I.G. exploited a huge gap in the regulatory system,” Mr. Bernanke said. “There was no oversight of the financial products division. This was a hedge fund, basically, that was attached to a large and stable insurance company.” And this quasi-hedge fund, Mr. Bernanke went on, to nobody’s surprise, made irresponsible bets and took huge losses.

“We had no choice but to try to stabilize the system because of the implications that the failure would have had for the broad economic system,” he said.

Recent quotes, pleas… from leaders in banking!

Hear this:

Don’t give up on us… give us a chance to execute.“: Vikram Pandit, Citigroup.

We’re Americans first and bankers second.“: John Stumpf, Wells Fargo  & Co.

I feel more like corporal of the universe, not captain of the universe at this moment.“: Ken Lewis, Bank of America.

As an industry, we clearly made mistakes… I am especially sorry for what has happened to shareholders. “: John Mack, Morgan Stanley.

We’re sorry that our supervision didn’t achieve all it should have done.“: Hector Sants, Financial Services Authority.

It is abundantly clear that we are here amidst broad public anger at our industry.Lloyd Blankfein, Goldman Sachs Group Inc.

Tardy for sure… bereft of pithy?

Once again Vikram Pandit is  the CEO of Citi, but at what cost? Three months ago, this was the tune that Pandit was singing. Again, questions arise regarding the wisdom of the Merrill Lynch takeover by Bank of America. Examples of extravagance among bankers seem to be abound even today. Talk of trust, or banking… be they people in high places, or on age-old beliefs, it’s time to revisit these issues and rebuild one’s convictions.

What shall I write about… New York, or Mumbai?

Not just my fingers, but even the cells in my brain seem numbed by this wintry cold. Yes, the last time I tried to write was on January 1st but, ironically, poodwaddle seems to have stopped ticking for me since then. Could it just be writer’s block? Well… I’ll soon find out.

Today, after almost ten years I read an old column penned by the late Busybee –  It has made me a tiny bit nostalgic… about Bombay. The crossword puzzles in The Afternoon Despatch & Courier were fun – although they were ‘no-brainers’ if compared to those in the mainline daily – The Times of India, they were fun to solve while taking a ‘tea-break’ at work (but actually sipping on an iced lassi) in the comfort of the office and cool a.c.!

“Mumbai”… yes, for centuries, the hoi polloi have always referred to now-also-known-as-Maximum City as [ˈmʊm.bəi] especially when spoken by a Gujarati, Parsi, or a Maharashtrian. The “-bai” should be pronounced to neither sound like “buy” nor to rhyme with “chai“, however warm or inviting that may sound (whenever referred to by the anglicized media – especially news-readers, or by the la-di-da of 21st century India ‘Inc‘, or Bollywood‘)… puh-lease, eeks!

Busybee’s column dated May 20, 1997 was a satire on how to beat Mumbai’s heat on sultry summer days; some of his cool ideas… (#6) have Parsi Dairy Kulfi (now that’s close to my heart and what once was close to home); (#5) Drink Fanta; (#13) Open the refrigerator door and stand in front of it; (#32) Sit in the Taj lobby. Look like you’re waiting for somebody important who is staying at the hotel [Alas, that option must be ruled out since 26/11 (another “yikes”… now, more for the reference to the date – how unoriginal can the media get – because such a nomenclature speaks of their buzzing – rather than for the actual horror of the sad event)]…  some of these are bound to bring at least a hint of a smile on a true Bombayite. Read his column (again), if you like.

But like me, if you’re looking for ideas on how to stay warm – especially with the heating boiler gone kaput since the past few days here, or to save on energy bills, read on… Farzana, if you happen to read this, please pardon me.

1. Go away to Malaysia (Far-East), Argentina (South)

2. Go to India… fly Air-India

3. Do go to work… if it’s no longer at Wall Street, go to Blimpie’s or McDonalds… food joints must always have heating… even if you’re not eating, or can’t afford to

4. Drink hot tea, ginger tea, or green tea… it doesn’t have to be at a Starbucks… forget the big bucks; buy a bag of tea leaves from a desi-grocer at the Indian market, and the ginger at the Asian grocer’s around the corner

5. Eat Dates – lots of them… home-grown in California, or imported from Oman in Muscat (if you can find those)… oh, I meant not their location on the map but in stores

6. Go watch Slumdog Millionnaire at the cinema… stay warm in the heat… so what if Indians have cried out aloud and condemned Boyle for the slur with his reference to a cur for his recent Oscar-winner’s nomenclature

7. Take a ride from South Ferry to Staten Island and back… it’s free… walking around Manhattan looking for work can get rough; don’t be hard on yourself; take heart by taking a break

8. Don’t always wait for the ice to melt… get online, get chatting, and get into Facebook

9. Spring is a month away but you can Twitter… ain’t that tweet?

10. Wall Street is pummeled and indices down at 1997 levels… is the heat up, or do you still feel left out in the cold?