Wednesday, June 28, 2017

The Global Finance Meltdown Visits Lower Harbor

The 2008 global financial crisis is an enduring fascination to me.

It took a chain of the less admirable elements of human nature working independently, but also in concert to pull it off. Clinton signed the repeal of Glass-Steagall. Coked up and commission-incentivized mortgage brokers sold exploding adjustable mortgages to individuals and families who had no idea what they were getting into. Upward pressure on real estate prices ensued. Mortgages were batched together by the thousands and used as collateral for investment bonds. Bond rating agencies carefully examine the bond issues from 47,000 feet and pronounce them A-OK.

Then it gets a little fucked up. Financial geniuses figure out how to buy and sell the risk of default, meaning a company gets paid for assuming the risk of bond failures and the opposing party in the deal gets a payout if there is a default, creating a reward for a bond issue tanking.

Then it gets very, very fucked up. Investors start entering into these transactions multiple times over for the same underlying real estate equity, which is something like taking out 6 insurance policies on the same house and hoping for a sextuple payout when it goes up in flames.

Then it gets very extremely fucked up. In one corner of the swamp, and by way of example, one large investment bank and a savvy deep pocketed short seller actually see that loading bond issues with the worst mortgages will generate the largest payout. A bond ratings agency say "A-OK, good buddies." Said festering stinkpile of bonds is marketed to a German bank which comes to regret it. If I sound like Elizabeth Warren, google Abacus, John Paulson and Goldman Sachs.

The bigger tsunami took down Bear Stearns, Lehman Brothers, launched the Great Recession, and came barreling into Matinicus Harbor one beautiful September day in 2008.

For a short while in 2008, our lobster dealer tied the Jacob Pike in lower harbor, bought our lobsters and dispensed fuel and salted herring. As John and I left the harbor that morning, aboard Natalie Irene, the boat price for lobster was $3.40 or so, not great, but enough to make it worthwhile. It would be half that by afternoon.

Sometime while we were out on the water, Glitnir, an Icelandic bank, failed. Icelandic bank failures were not on my mental list of concerns that morning. As we moved from string to string, I was probably stewing about having enough firewood, or some family strife, or trying to write a song in my head. Lobsters came up. Traps splashed back into the cold, rich water. Wrists got sore. Bait bags got refilled. I tried to keep up. The day went along as expected.

Some time further along, New Brunswick lobster processors, to which most of our catch was sold found that Glitnir, being out of business, could no longer issue them letters of credit for operating funds. Letters of credit issued to New Brunswick lobster processors were also not high on my anxiety inventory.

When we sidled up to the Jacob Pike, we were advised of two things. First, the boat price was now $1.70, if I'm remembering the figure correctly. Second, as a bonus to getting our pay cut in half, we were advised that the dealer would not be buying any more lobsters this week. There was no market for most of our lobsters.

That was just the beginning. Fortunately, even though the housing crash triggered an employment crash, homelessness and large swaths of suffering, we can take some comfort that the good folks at AIG, Goldman Sachs, JP Morgan Chase and others didn't take too much of a hit on the bonuses issued in recognition of their achievements.

Wednesday, June 14, 2017

The Cat Door and Abrupt Climate Change

Cats as they say always seem to be on the wrong side of the door wanting in or out depending on which they are not at present.

 I've felt a little the same way during the always nerve jangling May/June transition back away from full time office work and onto the water. I felt as though the good weather only happened when I needed to be inshore for business and once I finally got to the island, some urgent business inevitably popped up on the mainland.

I also maintained an umblemished record of only showing up on Matinicus when it was unusually cold and damp. April was cold gray windy and sour and lasted until the second week in June.

When the weather finally snapped, we went from putting on 4 or 5 layers before even thinking about going out on the boat and needing a fire every night to panting in the heat on the water at 7 a.m.. There was no transition during which to acclimate- somewhat like getting helicoptered into base camp and wondering if there just isn't very much air this far up.

Loading and trucking five pickup loads of traps, rope and buoys to the wharf and I was dehydrated like jerky. Then the gear gets stacked on the boat. Then it's time to actually go to work.

It's been a dismal slow start to the lobster season, so being behind schedule is in hindsight not such a problem

Back to the cat. Seamus does not care for traveling. He does not enjoy being menaced by other cats out here either. Last year, it was "Crazy Eyes," so named by Megan loosely after an Orange is the New Black Character. Crazy Eyes is a siamese with divergent or overly convergent visual fields for each eye, and who was found sleeping on our bed one day, and on another occasion chased our cat through our house, hissing and slashing. My super soaker eventually connected enough times to get the hint across. This year a large orange cat and a fluffy black one are intruding on our peaceful enjoyment of the manor.

In the old days, during which I would've lasted about five minutes here, I expect a menacing cat's owner might get one conversational attempt at settlement before the animal would be stapled to the owner's shed door. Seamus and I, both being fairly timid souls, haven't figured this out beyond keeping the supersoaker- as is our sacred 2nd Amendment right- loaded with the safety off next to the door.

The next idea is a cat door where he can let himself in, and where I hope other cats do not invite themselves in. This way, he can stay here on his own when we have to be inshore and can come and go as he likes. Without thinking it through too much, I picked such a door up at the hardware store and opened the package to discover that it was designed to be embedded in a people door, not installed in a wall. The hardware, specifically screws, were not going to make it work where I wanted it to.

After a little Matinicus problem solving with surprisingly little profanity and drilling my own holes in the pet door frame and screwing each piece onto either side of the wall, it was time to introduce Seamus to his new portal of independence. I put a dish of his favorite treat on the outside and showed him. He walked right through and paid no attention to the dish.

Hearing strange noises upstairs a half hour later, I encountered Big Orange coming down the stairs and hurrying out, having already memorized the location of the cat door which was not intended for his benefit. Now what?