Millions contributor and ardent Canadian, Andrew Saikali, dropped me a line to let me know that Ryszard Kapuscinski, the Polish journalist and one of my favorite writers will be on the CBC Radio program Writers and Company this Sunday, June 5th. If you’re interested, you can listen live by clicking through from here. (Check that page to see when it will air in your time zone.) It appears as though the show will also be available here for download for a week after it airs on Sunday.
Ms. Millions and myself are expecting a number of house guests for Thanksgiving, so there probably won’t be much posting on the old blog for a few days. Luckily for you guys, though, I’ve brewed up a post chock-full of fascinating info for all of you. First off, Time Magazine columnist, Andrew Arnold put together a list of 25 best graphic novels of all time as part 2 of a series commemorating the 25th anniversary of the birth of the graphic novel, which, according to him (and many others), was the publication of Will Eisner’s A Contract With God: And Other Testament Stories. I haven’t read it but it’s supposed to be incredible. At any rate, Arnold has put together a great list that includes a couple of my favorite books of all time. Here are the ones from the list that I have read.From Hell by Alan Moore was lent to me, forced on me really, by a friend of mine who is really into comic books. I was skeptical, but this one turned out to be pretty riveting. The art, especially, is magnificent: noirish fields of black create an ominous mood that permeates the story.Jimmy Corrigan: The Smartest Kid on Earth by Chris Ware: This is one that really transcends the genre. When I read this, it made me wonder why people aren’t making graphic novels out of everything all the time. There are so many stories out there that can be made fascinating by the artists’ pen. Everyone should read this book.Maus Vols. 1 & 2 by Art Spiegelman: It’s hard to put into words how incredible these books are. If anyone requires proof that the graphic novel medium, when wielded expertly, can bring more to the table than the plain old written word, then these books provide it. Reading Maus is an emotional experience, and I think a lot of that emotion comes from reading a tragic story rendered in a format that seems so innocent. Everyone should read these two books, too.Understanding Comics by Scott McCloud: I’ve talked about this book before. There is something about comics, about the format of comics, that makes them enchanting and that makes them peculiarly well-suited for telling stories. I had always just accepted this as fact, but McCloud decided to find out why, and the result is a phenomenal book — itself a comic — that is both illuminating and entertaining. I should also thank Scott for pointing me in the direction of this list via his blog.More Mutis ManiaThis is good. This is really good. I open my email today to find this email from friend and fellow Alvaro Mutis & Maqroll the Gaviero obssesive, Brian:Man, oh, man, do I have some info for you! I was just casually glancing through a copy of Video Store magazine, when you wouldn’t believe what movie I came across…. “Ilona Arrives with the Rain.” Yep, apparently, it’s a Columbian film from 1996 that’s billed as “A dangerous romance full of international intrigue…. Based on the novel by award-winning Columbian author Alvaro Mutis.” Not sure if its really any good, but am still very curious to see it. A DVD is being released by Facets, and Amazon has a release date of December 16. Here’s the link: Ilona Arrives With the RainI’ll definitely be checking that one out.MoreMy friend Edan, who loves cookbooks, wants everyone to know that Home Baking: The Artful Mix of Flour and Tradition Around the World is a great new book by globe-trotting husband and wife team Jeffrey Alford and Naomi Duguid. And since we’re talking about cooking, here’s a quote from the book I’m reading right now: “‘Restaurants make lousy hobbies. You have to be obsessed and driven and completely out of your mind to own one.”But you had–”Two, yes. But Alice,’ Pete said almost tenderly, ‘I’ve been totally nuts my entire fucking life.'”
Last week, Max directed our attention to a major new piece of reporting on the financial crisis: a Portfolio article by Millions favorite Michael Lewis. The author of Liar’s Poker, among other books, Lewis is a gifted explainer of an industry badly in need of explanations. In the Portfolio piece, for example, he immerses us in the world of short-sellers who saw the subprime meltdown coming. However, the key paragraph – wherein trader Steve Eisman has an epiphany about how investment banks are leveraging subprime bonds – resorts to a sports metaphor, and thus fails to demystify an elusive instrument at the center of the financial crisis: the credit default swap (CDS).”When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats,” Lewis writes.But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. ‘They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,’ Eisman says. ‘They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans.’I’ve heard financial insiders inveigh against peons who “don’t know a credit-default swap from a turnip,” but how are we to wise up, if explanations only come in the form of metaphors (athletic or agricultural)? Grabbing a fig leaf from the N+1 playbook, as it were, I decided to ask a friend in finance to explain the Peyton Manning analogy, as simply as possible. Here’s what he had to say (wait for “the rub”):Assume the following: Eisman buys a crappy mortgage security (say, a $1,000 bond from a mortgage given to a strawberry picker who makes $14,000 dollars per year). Say the mortgage rate the strawberry picker pays is 15%. This means he’s agreed to pay $150 a year to Eisman. But Eisman is worried that the strawberry picker will default because the guy’s house value has collapsed and his income is drying up. Thus, Eisman wants to buy insurance on the $1,000 he’s loaned. The way he does this is via a credit default swap.A CDS is essentially an insurance policy on a loan, and here’s how it works. Eisman finds a counterparty willing to sell him insurance on his loan (a big investment bank like Lehman Brothers). Eisman agrees to pay the bank a fixed rate every year for protection of the mortgage security he owns (the crappier the loan, the higher the rate). Let’s say for the $1,000 loan to the strawberry picker, his rate will be 10%. The bank pays him nothing on a regular basis, BUT, if the borrower defaults, they pay him the full $1,000.So: if times are good and everyone makes payments on time, the payments are structured as follows: The strawberry picker pays $150 per year to Eisman; Eisman pays $100 per year to Lehman (which then uses some of the cash to provision for losses, and uses the rest to make more loans). The strawberry picker gets to keep his house, Eisman keeps $50 per year (loan payment from strawberry picker minus the insurance premium he pays to Lehman), and Lehman gets $100.Got the structure? Now here’s the rub.Imagine Eisman never actually had exposure to the loan in the first place. Being the brilliant skeptic he is, Eisman would never lend $1,000 to a strawberry picker with little income. He thinks that strawberry man is doomed to default on that loan, and he actually wants to bet AGAINST him. So instead of giving the loan and buying insurance, he just buys the insurance (hence the often used and rarely understood term “side bet”). To do this, Eisman still has to pay the “premium” for the insurance he’s bought, and since it’s a risky loan, the rate is high (e.g. $100 per year in the example above). [Though he stands to win $1,000 if the loan defaults.] In effect, Eisman is paying a “subprime-like” interest rate to Lehman every year! That’s what Lewis was getting at.I would have used a different metaphor. I would have said it’s like a New Yorker buying a bunch of home insurance policies in New Orleans because you are expecting that there will be a massive hurricane coming to wreck them. Now lets say that the insurance company took the money you were giving it, didn’t provision for the coming doom, and instead, used that money to lend to more people building and buying houses in New Orleans.That’s leverage upon leverage upon leverage. And that’s the mess that is unraveling before us.
In December, we noticed the slimness of the New Yorker’s year-end Fiction Issue, and more recently Gawker has been on the case. Now, the Anniversary Issue hitting newsstands last week, though chock-full of goodies, also felt much lighter than normal. As it turns out, at 122 pages, it was 38 pages lighter than a year ago.While I have been taking advantage of the freed up reading schedule that a shorter New Yorker affords, I do hope that this is as short as it gets.(Hopefully Not) Related: Culture and Vigilance: Look for the Whimper, Not the Bang