bookofjoe

In the market, risk gravitates to those least able to comprehend it

Above, a paraphrase of an observation by Financial Times columnist John Kay in his piece of August 14, 2007 on the nature of risk in the financial arena.

Kay says more in less space than almost anyone writing.

Another gem from the above-cited column: "People who know a little of what they are doing pass risks to those who know less. Since ignorance is not evenly distributed the result may be to concentrate risk rather than to spread it."

A more eloquent description of the "greater fool" hypothesis I have yet to encounter.

I'm struck by Kay's observation insofar as it has a pleasing resonance with William Gibson's to the effect that "The future is already here — it is just unevenly distributed."

Aristotle Onassis once said, "The secret to success in business is knowing something no one else knows.

I guess that's the obverse of Kay's thesis.

Here's the Financial Times piece.

The same old folly starts a new spiral of risk

The financial economics I once taught treated risk as just another commodity. People bought and sold it in line with their varying preferences. The result, in the Panglossian world of efficient markets, was that risk was widely spread and held by those best able to bear it.

Real life led me to a different view. Risk markets are driven less by different tastes for risk than by differences in information and understanding. People who know a little of what they are doing pass risks to people who know less. Since ignorance is not evenly distributed, the result may be to concentrate risk rather than spread it. The truth began to dawn when I studied what happened at Lloyd's two decades ago.

The "LMX spiral" - whereby Lloyd's syndicates reinsured each other rather than laying off risks elsewhere - brought that venerable insurance market close to collapse. The reinsurance contract is almost as old as insurance itself. The insurer cedes part of the premium in return for an agreement to bear losses in excess of an agreed sum. The modern innovation was to reinsure not just a single contract but a package, or even the total losses of an underwriting syndicate or an investor. These losses might themselves include claims on similar policies. As such structures proliferated, it became increasingly hard to understand the nature of the underlying risk.

Participants found comfort in two ways. A conventional wisdom told them that these sophisticated arrangements spread risks widely across the market. Historical analysis showed that very little had ever been paid out on excess-of-loss policies.



The spiral began to unwind when Piper Alpha, a North Sea oil rig, caught fire in 1988: 167 lives were lost and the rig was destroyed. The initial charge to Lloyd's of about $1bn was one of the largest single insurance claims ever made. The claim triggered excess-of-loss policies, which triggered other policies: the total of claims across the market was about $16bn.

The most avid participants in excess-of-loss syndicates discovered that they had, in effect, insured Piper Alpha over and over and over again. This, and analogous events, meant that a few syndicates incurred horrendous losses. The contributions required put in jeopardy the stately homes of England and the Surrey mansions of the nouveaux riches who had been attracted by the social cachet of being a name at Lloyd's.

Greed mingled with self-delusion, honest incompetence with conscious deception: it was impossible to say which had caused the crisis. Lloyd's was, I came to realise, a microcosm of what was happening in other financial markets. If trading was motivated not by differences in attitudes and preferences but by differences in information and understanding, risk would gravitate not to those best able to bear it but to those least able to comprehend it.

The ever-expanding scale of business was not a measure of market efficiency, but of inefficiency. The volume of incestuous trading within the market itself far outpaced the volume of business with the outside world. The accumulation of fees as the same risk was passed round and round raised costs to levels the business would ultimately be unable and unwilling to support.

Nemesis could be delayed - for a time - by lowering the quality of external business accepted. Nemesis could be delayed — for a time — by expanding the range of investors induced to underwrite. Nemesis could be delayed — for a time - by official reassurances, at least half true, that business fundamentals were sound. But only for a time.

The structured credit markets of the new millennium have reproduced events at Lloyd's. There are only a few basic models of financial folly. Each generation repeats the experience of its predecessors, not in broad outline but in considerable detail. The Ponzi scheme was the basis of speculative excess in the roaring 1920s and the boisterous 1990s. The financial version of the card game Old Maid brought Lloyd's to its knees and is replayed in today's credit markets. The only certainty is that, sooner or later, the party ends. The most costly investment advice of all is the expert assurance that "it's different this time".

....................

Buy one of Kay's books (pictured above and below) — he probably doesn't need the money but it'll make him feel good.

Full disclosure: I have never met John Kay. I have never spoken to John Kay. I have, however, exchanged emails with him a couple times, years ago.

Dog Door Stop

From the website:

Dog Door Stops

This is the Pylones dog door stop.

He's just waiting to hold the door open for his people.

Let him!

He is as cute as a button, and he is one of Pylones' newest masterpieces.

.....................

$12.

sermo.com — 'Like Facebook for doctors'

That's how Shawn Lea — chief of my widely acclaimed crack research team — described it in a heads-up to me this morning.

When Shawn Lea talks, I — unlike the losers who don't realize there's a prophet[ess?] in their midst — listen.

But I digress.

sermo is the brainchild of Dr. Daniel Palestrant (above).

Me, I would never join a club that would have me so I guess I'll just watch from a distance through heavy lenses.

Note to Dr. Palestrant: One of the first things a new website needs to do these days to get noticed amongst the ever expanding crowd is to get video up on YouTube.

A video featuring Dr. Palestrant can be viewed here, via a link on sermo.com's website.

Much, much better to have it up on YouTube, which it's not, as best my widely acclaimed crack research team could determine by searching "sermo", "sermo.com", and "Daniel Palestrant".

Because then I could've led this post with the video instead of a screen grab from it, far more likely to result in good things happening than mentioning it down here where only the desperate and bored — sorry, but sometimes the truth hurts — are still reading.

And another thing: His credibility would improve if he wore a tie.

Maybe, joe, you should stick to passing gas.

Alright, alright — I'm outa here.

But before I go, let me note Jessica E. Vascellaro's article about sermo in today's Wall Street Journal, which offers another view of this company and its prospects.

Note to Rupert Murdoch: You better up her salary significantly — real soon now — before she's snatched away by a competitor; though relatively young (Harvard class of 2005) she's already one of the Journal's stars.

MP3 Player Pen

From the website:

MP Player Pen

Here's a clever device for music lovers on the go.

It's an MP3 player in the form of a ballpoint pen!

It features 7 hours of playback time, 256MB of memory and a high-speed USB 2.0 port for fast file transfers.

Plus, it supports MP3, WMA music files and more, and it functions as a voice recorder and a USB storage device.

Includes ear bud headphones and software.

....................

I'm waiting for Version 2.0 with Bluetooth.

$39.99.

Blelvis — The King Lives

Monica Hesse, in a great August 14, 2007 Washington Post Style section front page story, introduced me to Andrew Wooten (above) — better known as Blelvis.

Long story short: Elvis recorded 1,112 songs — and Wooten knows them all.

But wait, there's more: He knows the dialogue to every movie, too.

Here's the article.

King Blelvis

An Elvis Obsession Has His Life All Shook Up

Elvis recorded 1,112 songs.

Blelvis tells you this. He knows the words to them all.

Pick a song, any song, the more obscure the better. Pick a song that starts with Q — there's only one — "Queenie Wahine's Papaya," recorded in 1965, released on "Paradise, Hawaiian Style."

Please pick her papaya, put Queenie
Wahine
In perfect perpetual —

Don't like that one? Pick another. Blelvis will sidewalk-serenade you with any Elvis song you can think of, and all the ones you can't. He says he knows the dialogue to every movie, too.

Now. Let Blelvis, the Black Elvis, tell you what he is not doing. He is not begging, and he is not homeless. But Blelvis would never dream of denying you the opportunity to donate to his favorite charity, which, incidentally, is named Blelvis. So he'll just turn around, nice and discreet, while you see what you can spare. The best nation in the world is a do nation, and that's the truth.

Ladies and gentlemen, thank you. Thanyavurramuch.

Hipster kids form a clumpy line outside the Black Cat on 14th Street NW. Blelvis, in jeans and a baseball cap, works small groups of two and three; when the King lives inside you, you don't need the leather suit. He's got huge feet and slumpy shoulders, which makes him lope rather than strut; when the King lives inside you, you don't need to walk the part. Aside from sprawling sideburns and a snarling upper lip, he doesn't try to resemble Elvis at all. He prefers the title of "Elvisologist" to Elvis impersonator, anyhow.

He sounds like the King, though. That Elvisian tremble in his voice? He's had it since he sang in the choir at Roosevelt High up on 13th Street. And he shares the King's birthday, 31 years apart. Blelvis will be 42 Jan. 8.

Blelvis spots his next audience: a trio of two men and a woman.

"Hi," he says. "I'm Blel— "

"Omigod, it's Blelvis!" says the woman to her husband. "Honey, this is the guy I met seven years ago. Blelvis, I talk about you all the time."

"Are you sure you're not confusing me with Bliberace?" he says. "Or I've got a sister named Bladonna."

"I swear. Honey, don't I talk about him all the time?"

The Black Cat husband-wife-friend trio barely knows any Elvis songs, they say. Only the big ones, and everyone knows those. Blelvis asks them to just pick a word, any word, don't think Elvis, just think words. The woman says, "Bread."

"Bread, okay. I'm going to associate bread with 'sandwich.' Is that okay?" Acceptable substitution, sidewalk judges? The woman nods. "All right, this is from a song that Elvis did called 'Girls! Girls! Girls!' "

And when I pick up a sandwich to munch . . .

I never ever get to finish my lunch

Because there's always bound to be a bunch

Of girls in tight sweaters.

Blelvis throws in pelvic gyrations and a lip curl, and finishes the song by sinking to the sidewalk, improbably suspending his knees inches from the ground while balancing on his inner ankles. He keeps his weight down for maneuvers like this.

The trio claps. Blelvis bows.

"That's from the movie 'Girls! Girls! Girls!,' starring Elvis Presley and Stella Stevens."

This is the magic of Blelvis. It is what prompts frat boys to buy him beers, what causes tourists to invite him up to hotel rooms for nightcaps. His love for the King is so pure, his obsession so harmless, his insta-buddy voice so genuine.

He is, in other words, exactly what his audience needs him to be. He is novelty, yes, but he is safe novelty. A harmless indigent. A winsome bum. Street life with manners and clean clothes and a soapy smell. You don't just toss a coin in Blelvis's cup. You hang with Blelvis. You tell your friends you hang with Blelvis. Your association with Blelvis makes you comfortable with your discomfort around the scruffier panhandlers. He is smooth-baritoned balm to middle-class guilt.

* * *

In the cast of characters that inhabits the streets of Washington, Blelvis has achieved fame. He was the subject of two City Paper features, in 1987 and 1998 — the press always comes around near the anniversaries of Presley's 1977 death — and he appeared in one of cult director Jeff Krulik's films. In the late 1980s, he sold out shows at d.c. space, crooning with a mike and a band. There was talk of a performance on Letterman. When that didn't materialize, Blelvis took his shtick to the streets.

Today, d.c. space is a Starbucks. The City Paper journalists have moved on. Krulik's film has been relegated to a shelf in Video Americain. But Blelvis still prowls Adams Morgan and Mount Pleasant with his Presleypedic knowledge, his delicious obsession with dates, his bendy legs and swiveling hips. "I don't want to sound braggadocious or anything," he says, "but I'm sort of a D.C. institution."

Rondy Andrew Wooten was born at Georgetown University Hospital in 1966, the son of a National Institutes of Health employee and his homemaker wife. The four Wooten children were discouraged from listening to Elvis; he was racist, parents Johnnie and Helen said.

But on the night that Presley died, every radio station played the King. After 15 minutes of flipping, Andrew landed on "Treat Me Nice," the flip side of "Jailhouse Rock." He liked it. He also liked "Baby, I Don't Care," the song that came on afterward. The next day, Andrew purchased his first Elvis album, then another a week after that. His parents thought it was a phase. His siblings thought it was crazy. Why couldn't he do James Brown? they asked. A black man imitating a white man who used black men's moves? What exactly was he trying to pull?

His obsession grew.

He eschewed the barber shop his brother and dad visited in favor of a bona fide salon that could tame his hair into a pompadour. He married Cathy Grooms just out of high school and she became pregnant almost immediately. He named his first child Andrew Elvison and his second Elvisa.

His obsession grew.

He realized, somewhere along the way, that he'd absorbed Elvis into his blood — that he knew not only every lyric but also every trill, monologue and movie title. He can't say why. It's just in him.

He hooked up with Joe Lee, owner of Joe's Record Paradise, who helped him get some gigs. He made the family's three-bedroom Montgomery County apartment (paid for with a $32,000-a-year job driving trucks for NIH) into an Elvis shrine. His older brother Ricky, a lineman for Pepco, was both amused and horrified.

"He had everything in there, from Elvis paintings to Elvis sweat suits. I didn't know they made Elvis toilet seats, but they do and he had one," Ricky Wooten said. "I think he loves Elvis more than he loves himself."

* * *

What is the nature of obsession? Can it be appeased this way, or will it eventually laugh at your petty offerings? In the end, can you ever feed the beast, or does the beast always devour you?

Cathy Grooms divorced Wooten in 1996; she had refused to give their last two children Elvis-inspired names. Wooten lost his job. His siblings no longer speak to him; his sisters refuse to even speak about him. "If he took all the energy he put into Elvis and put it into something else," says Ricky Wooten, "he could have been a millionaire by now." Instead, his brother lives off Blelvis donations and bunks with a friend who lives in the Petworth neighborhood.

Elvis is not his only addiction. He won a battle with drugs in the late '90s — "some people smoke crack, crack smoked me" — only to replace the vice with booze. One night in a crowded bar, fueled by Elvis bravado and a couple of 40s, he gigglingly shows off how he likes to cup women's butts on the sly as he brushes past them.

Elvis, a man of enormous charisma and destructive appetites, is complicating life for Blelvis again. Make no mistake, he says, he'd be doing Elvis even if he were Donald Trump. He didn't go into medicine or business because, quite simply, they didn't grab his attention. Elvis is what grabbed him, and he wanted to go whole hog or nothing at all. "But sometimes I wonder if Elvis had to be the only thing that interested me," he says. "Sometimes I think I could have done Blelvis, but I could have done more, too."

When he phones one afternoon to confirm a weekend meeting time, he seems vaguely embarrassed. "Are we still on to go do the, uh, the Blelvis thing?" he asks, as if realizing that the Blelvis thing is an absurd thing for a 41-year-old man to do on a Saturday night.

Andrew's son Andrew Elvison, now 21, remains unwaveringly loyal to his father. "My dad is a good man," he says firmly, after admitting that he hasn't heard from him in months. "A very good man." And then, "But if you see him again, do you think you could pass on my cellphone number? He must not have it, or he would have called."

It's hard to back away from something that makes you feel worshiped, from something you know you can do. And he can do it. He can do it for up to $50 an hour on good nights. His game isn't quite what it used to be — his cigarette-spoiled voice is throatier, his pompadour long gone — and at times he seems less like Blelvis doing Elvis and more like Blelvis doing Blelvis, struggling to latch onto the routine that once came so easily. But he can still draw cheers from the fans who remember him, and he can still coax crowds into song, and why would he give that up for a desk job and some security?

When Jeff Krulik is asked whether Blelvis has been good or bad for Andrew, there is a long pause. "Write down that the question was met with stony silence," he says finally. "Because I've wondered that myself and I honestly don't know." He thinks some more. "But you know what I think? I think that as rampant development is turning this city into Anywhere, USA, people like Blelvis give D.C. the flair and color that it needs. I'm so glad he's out there. I still want him to become a nationwide sensation. I believe in Blelvis."

* * *

12:30 a.m., at the Wonderland on 11th Street NW.

After an hour of working the crowd on the Wonderland's patio, Blelvis has decided to accept the offer of a free Pabst Blue Ribbon from a newfound fan. Suddenly, from across the bar, a hoot: "Blelvis!"

Blelvis scans the crowd, searching for the voice. It belongs to a 21-year-old rockabilly with a two-inch pompadour and a T-shirt with rolled sleeves. Blelvis spots him: "Elvis!"

The two men meet in a bear hug in the middle of the bar, Blelvis and Elvis, thumping each other on the back. Elvis is Elvis McGovern, a 21-year-old student who was raised on the street serenades of Blelvis, and who credits the man for instilling in him a love of music. Blelvis was, he says, the best thing about growing up in Mount Pleasant.

His arm still slung around Blelvis's shoulder, he puffs his chest out, as if there is a story he has been waiting his whole life to tell.

"One time, Blelvis and me, we fought a fire — did he tell you about that? We ran into each other at a bar and decided to go back to my house and shoot the breeze. So we get back home, and there's a fire in the alley, and we leap out of the car, and I grab a board and he grabs a garden hose, and we just start beating on that fire. And the fire department finally comes, and Blelvis being Blelvis, he just splits."

Blelvis nods. Elvis grins. He believes in Blelvis: the man, the demigod, the keeper of Elvisology and the patron saint of Washington nights.

"Man, when I was growing up, this guy was my hero. You should have seen him. Man, you really should have. I mean, he's still got something, but back in the day, he had it all. Back in the day."

Audio Ruler

Say what?

Crayola Total Tools Audio Ruler — Measures Out Loud!

This talking tool measures in quarter inch increments up to one foot with a thin line of disappearing ink.

The ink helps to ensure that the measurement is what you wanted.

Choose to hear the accurate measurement or a silly nonsensical measurement just for fun!

$7.99.

Meditation on Apple's new Bluetooth keyboard as a bridge to a tablet computer

Looking at the gorgeous piece of kit (above and below), which I ordered this morning immediately upon entering Steve Jobs's reality distortion field before coming to my senses and realizing it won't work with my Mac running OSX 10.3.9 (it requires 10.4.10 and up), it occurred to me that it would be awfully nice if it synced with the iPhone (present or future versions).

But what if Apple offered a simple 12" screen, like that of the late, lamented PowerBook G4 series, with current iMac all-in-one technology built in such that you could use it as a stand-alone tablet via touchscreen, like the iPhone, or as a laptop display, connecting the screen via a built-in dock to the new keyboard.

I'd buy one in a yoctosecond.

Flowbee Precision Haircutting System

Look at the photo above.

What do you see?

It's a guy giving himself a haircut, according to the website on which it appears, that of the Flowbee Precision Haircutting System.

Not 18 minutes had elapsed after this past Sunday's Hair Cutting Comb appeared here than I heard from my Left Coast correspondent, Russ Thomson of Los Angeles, with this nifty alternative to the lower-priced version I'd just featured.

The choice is yours.

$59.95.

Or $4.98.

Although I must say that after reading on the Flowbee website that "The system is so simple and precise, you can give yourself a perfect cut even with your eyes closed!" I'm tempted to abandon all restraint and order a Flowbee.

Bonus: "The Flowbee may be used on pets with a pet attachment. Your pet should be shampooed and all mats brushed out before you Flowbee your pet. Please note when cutting your pet's coat down to 1/2" inch it is essential to use the pet attachment. This will keep the pet's skin in place. Do not try to cut more than 1/2" inch of hair off at a time."

"This will keep the pet's skin in place" — Yoiks!

Better abre los ojos before you tackle Fido.