22 September 2008


After posting Son Volt's "Windfall" videos last week, I poured through related records like Wilco's Being There and Uncle Tupelo's first two albums. And that excursion begat more musical rummaging through all sorts of alt-country, country, and bluegrass.

So many of the musical portions of upcoming posts will be of a twangy variety. You've been warned.

Now, if you have occasional misgivings about Southern cultural offerings, my country-ish music preferences seem to come from places like Illinois, Missouri, and Ontario.

To start things off, there's nothing more apropos for this porcine blog than Robbie Fulks playing the Scrapple Song:

On the financial side of things, here are some more scraps from the weekend.

Joe Nocera has a worthwhile column in Saturday's Times. Of his many solid points, he rightly feels blaming the shorts is misplaced:

KILL THE SHORT SELLERS It's understandable why people get upset at short sellers in tough times. As President Bush put it Friday, short sellers are "intentionally driving down particular stocks for their own personal gain." But that perception is more myth than fact, and in any case, it's not the dynamic here. Stocks are falling because companies made huge mistakes that have caused them a heap of trouble. Indeed, in July and August, short interest in financial stocks declined by 20 percent. Why did the stocks continue to go down? Because there were too many sellers and not enough buyers: it's that confidence thing again. Blaming the shorts is classic blame-the-messenger behavior.

The S.E.C. jihad against short sellers, which includes the banning of short selling on 799 stocks and forcing disclosure of large short positions, is nothing more than playing to the crowd. It is simply appalling that as one firm after another vaporizes — firms, let's remember, that the S.E.C. was supposed to be regulating — the only thing the agency can think to do is flog the shorts.

There were so many better moves it could have made. After Bear Stearns fell, it could have sent SWAT teams into all the other financial firms to assess their mortgage-backed paper. It could have then announced to the world the health of each firm, which would have helped the market regain some confidence. It could have forced firms to disclose their mortgage-backed holdings so that counterparties could evaluate them. It did none of these things.

Then again, maybe the S.E.C. is trying to cover up its own culpability in this crisis. Four years ago, the agency pushed through a rule that allowed the big investment banks to take on a great deal more debt. As a result, debt ratios rose from about 12 to 1 to more like 30 to 1. Guess what Lehman's debt ratio was when it went bust? Yep: 30 to 1.

Barry Ritholtz says the market's recovery is just another bear market rally. I agree with that assessment (click on charts to enlarge and read my comments):

Now, you may have noticed that I call my non-financial portion of my blogroll over on the left, "Scrapple". During the trading day, I read plenty of pertinent stuff from the Pig Pen, but often I need to read something else to clear the brain, whether it's about music, my neighborhood, real estate in my neighborhood, or whatever. I can recommend nearly every link to the left, if you happen to share exactly the same interests that I do.

After noshing on some nourishing pork detritus culled from the Pig Pen and Scrapple blogrolls, I'll be ready to tackle another week's worth of market mayhem. Or at least whatever Monday brings.

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