A “Minority Opinion” has been posted over at the LBC Blog by the Co-op members who were not fans of the first LBC pick – Case Histories by Kate Atkinson. Some good discussion is already brewing in the comments. As for me, I fall somewhere in between the Minority Opinion and the LBC members who wholeheartedly endorse the book. To me, Case Histories is a worthwhile read, but perhaps not up to par with the big things that many seem to be expecting from the LBC. The most vocal commenters seem to pulling for the Co-op to choose a book that is of impeccable quality, yet has been ignored by big publishing houses and major reviewers. If such a book exists, I hope we can find it for our readers. “Read This” picks aside, I think the LBC may also prove valuable in determining whether or not the Great American (or British, or Chinese, etc.) Novel is in any danger of being ignored or underappreciated.
The Dissent
Quality over Quantity
Here in Iowa City, the only town in America whose economy is fueled entirely by football, alcohol and literature, we get more than our share of readings to attend. While I don’t make it to all of them, I did manage to hear Marilynne Robinson read a few weeks ago. Ms. Robinson is an enchanting reader, and her new book Gilead was atop many “best of” lists for 2004. As anyone who has read a review of Gilead knows, it is Robinson’s first novel since Housekeeping was published 24 years ago, and the way many in the media talk about it, it might as well have been 224 years ago. While Robinson has written two non-fiction books about such varied topics as John Calvin and Great Britain’s nuclear policy, Gilead is indeed her first new work of fiction in many years. But so what? I for one would like to see more authors take their time between novels. One of my favorite writers, J.F. Powers, wrote only two novels and wrote them nearly 30 years apart. They’re both nearly perfect, and I don’t find myself wishing he wrote more. In fact, the scarcity makes it that much more likely that I’ll actually read one of his books a second or third time, something I rarely do. I don’t think I’ll find myself diving into Kingsley Amis’ very fine Old Devils as I’ve been poisoned by the vast sea of mediocrity that separates that book from his masterpiece Lucky Jim. So hats off to the Marilynne Robinsons, the J.F. Powers, and the Donna Tarts of the world. I sometimes wish we had a few more of them and a few less mediocre novels.
New Books and a New Award
Some new books that are getting lots of praise, and some excerpts from those books:Natasha and Other Stories by David Bezmozgis — review, excerptLittle Black Book of Stories by A.S. Byatt — review, excerptYou Remind Me of Me by Dan Chaon — review, excerptCrossing California by Adam Langer — reviewAlso of note: the creation of the Man Booker International Prize has been announced. From the press release, “Worth £60,000 to the winner, the prize will be awarded once every two years to a living author who has published fiction either originally in English or whose work is generally available in translation in the English language. The first winner will be announced in mid 2005.” Now Americans will finally be able to get their hands on a Booker.
A Real Time Saver
Too many books, no easy way to read them all? A remarkable device was once conceived to solve this vexing problem. (via)
A Brief Interruption
Probably won’t be able to post for the next day or two since I’ll be in New York at the Kingsland Tavern celebrating the Realistic Records release of the Recoys album. Have I mentioned this? Should be a blast. But don’t worry, I’ll be back with many more books to talk about, and hopefully some added features for this little blog of mine. Bye for now.
A Rare Treat for Murakami Fans: Pinball, 1973
If you need to get your Murakami fix, but can’t stomach the idea of picking up After Dark, here’s your solution.Written in 1980, Pinball, 1973 was Murakmai’s second novel. It was published by Kodansha and has been out of print for several years, although it’s available at Amazon for a whopping $225.The book is part of the “Trilogy of the Rat” (actually four books), which begins with Murakami’s first book, Hear the Wind Sing and includes A Wild Sheep Chase and Dance Dance Dance (probably my favorite of his books). Apparently, Murakami refuses to allow either Hear the Wind Sing or Pinball, 1973 to be published outside of Japan, which is ironic, considering both of them are, in my opinion, far superior to either Sputnik Sweetheart or After Dark. This translation, linked below, along with Hear the Wind Sing, was done by Alfred Birnbaum for Japanese readers trying to learn English.The story is classic Murakami, before that became a bad thing. A rootless man who loves Dostoevsky spends his days looking for a hard to find part for a classic pinball machine. Mysterious twins move into his apartment. There’s a well and a cat. While it’s no masterpiece, it’s a good read for Murakami fans and those looking for a place to get started with his oeuvre.Here’s a link to a PDF of Birnbaum’s translation of Murakami’s Pinball, 1973.Bonus link: Some fan-translated short stories I stumbled on while researching this.Update 9/17: The link to the PDF has been fixed.Update 3/8/09: The link to the PDF has been fixed again!
Back on Track
Following up on Monday’s post, as it turns out, that missing issue of the New Yorker turned up (bearing a paper jacket reminding me to renew and sporting a torn cover) a day after this week’s issue landed in the mailbox. So it appears as though I won’t be skipping an issue after all. Luckily for me, I’m going on vacation for a few days, and I’m hoping this will afford me some time to catch up. (Incidentally, you can expect The Millions to go dark through Sunday while we take a break.)
Turnips, Quarterbacks, and Strawberry Pickers: Credit Default Swaps Made Simple
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.