Sunday, August 29, 2010

Gurka Beast

Just smoked a Gurka Beast. And in a way it is indeed a beast - I'm not sure what the ring gauge is, but if it were any fatter I'd would have had to cut it in half lengthwise and smoked it that way. But, it turned out to be a great smooth smoke. The dark oily wrapper turned out to be a little sweet. It was perfectly rolled and burned evenly throughout. Draw was smooth.
Nice smoke.

Saturday, August 28, 2010

10 Downing Street Houston TX

I was in Houston recently, and went to 10 Downing St, which is a first-class cigar bar. The place was hopping! Not too many of those left in the U.S. as the PC police eliminate what they don't approve of (and my last remaining vice - a good cigar). As they say "God Bless Texas".
Excellent drinks and a fine selection of premium cigars - I didn't see a mongrel brand in the humidor.
I enjoyed one of the most famous Arturo Fuente's: the Hemingway Best Seller, a little robusto, with great mild flavor.
Cigar prices are high, but there is clearly a lot of overhead to cover in a place littered with leather club chairs. One proviso, even with industrial air purifiers everywhere, the volume of smokers in there was overwhelming them. There is outdoor seating, which will work some of the year, but certainly not all summer in Houston.
Still, definitely on my keeper and recommended list.
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Sunday, August 22, 2010

Million Dollar Quartet

Pam & I saw Million Dollar Quartet at the Nederlander Theatre last night. It is based on a real event at the legendary Sun Studios in 1956, when Elvis Presley, Carl Pekins, Johnny Cash and Jerry Lee Lewis were all in the studio at the same time.
If you are of a certain age, and remember the early days of Rock n' Roll, you will likely love this show. Since I grew up in Memphis listening to Dewey Phillips' Red Hot and Blue radio show, (Dewey was the first person to play Elvis on the radio), I know the Sam Phillips/Sun story, and I'm familiar with all the music and I had a blast. The cast is incredibly talented, with Levi Kreis' version of Jerry Lee Lewis stealing the show. Christopher Ryan Grant played Johnny Cash, and did an amazing job. He sounds just like the late Mr. Cash, but perhaps a little better. Terrific rendition of Folsom Prison Blues.
I was surprised at how accurately the Southern accents, and Southern dialect, were delivered. Looking through the Playbill, it doesn't seem that there is anyone from TN, LA, MS or AL in the cast. Frequently, in attempts to sound from the South, actors speak slower. If you have the right ear, you'll hear that Southenors speak in bursts, with little longer breaks between. Hunter Foster, who plays Sam Phillips, captured that form flawlessly.
Great show.
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Sunday, August 08, 2010

To Big To Fail by Andrew Ross Sorkin

Here is the companion review to On The Brink by Hank Paulson.

Andrew Ross Sorkin has a huge bestseller in Too Big To Fail. While Hank Paulson's On The Brink gives the Washington Insider view, Sorkin provides the details from inside the banks, and investment banks, as well as some tidbits from inside the various agencies trying to prevent a second Great Depression.
I know there are skeptics about the need for TARP, TALF, etc. If you are a doubter, read this book and see just how close we came to a financial market collapse. If you already understand how close we came, you'll still find this a great read.
The origins of the near-collapse center on Fannie Mae and Freddie Mac, two government -sponsored entities that underwrite and purchase mortgages. Sorkin largely glosses over that as old news from the perspective of this book, choosing instead to give the reader a front-row seat on efforts to save Lehman, rescue Wachovia, stave off the collapse of AIG with its financial tendrils spread throughout the globe, and prevent further 1930's-style runs-on-the-bank, as IndyMac bank, Countrywide, Bear Stearns (and hundreds of small and medium-sized community banks) failed. Government officials, dozens of lawyers and hundreds of staff and executives of investment banks worked around the clock in a valiant, but ultimately doomed effort to save Lehman. After Lehman's collapse, the world's financial system was in real jeopardy. Sorkin captures the intensity play-by-play as Hank Paulson, Tim Geithner, Jamie Dimon, John Mack, Llyod Blankfein Sheila Blair, George Bush, Josh Bolton, Barney Frank, Vikram Pandit and others worked extraordinary hours to save their firms, and the world's markets.
The recounting of the amazing weekend when Paulson and Geithner tried to coordinate a last-chance rescue of Lehman Bros, reads like a action-thriller novel, rather than history. Developments surrounding Richard Fuld, CEO of Lehman, were particularly enthralling. As Sorkin tells it, Fuld lost about $1 billion as his stock in Lehman became worthless. This challenges a lot of wide-spread belief that managers should own sizeable positions in their firms, thereby acting more in the interests of shareholders. Despite having most of his net worth in Lehman shares, Fuld still permitted - and encouraged - the firm to get too leveraged and to assume too much risk.
All financial institutions are built on trust. This trust has been stretched, atomized and digitized. Not only have we accepted fiat paper currency, we accept that a piece of plastic (debit card) is capable of producing and transferring digital rights to that paper currency and that someone will accept all that as payment. When concerns develop about the ability of a financial institution to survive arise, the prudent thing for an individual account holder, much less the manager of a hedge fund, to do is to withdraw their funds. But when all of us do that, a financial panic ensues. In 2008, we saw perhaps the greatest financial panic of all time.
So this book works on multiple levels: even though we know the outcome, it is a page-turner. Because of the seriousness of the issue, it is history. And because there are some idiots out there who think the rescues were unnecessary, it is educational for anyone who'll take the time to read it.
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Saturday, August 07, 2010

So This Is What It Comes To...

Yesterday, I flew Continental from IAH to PHL. In a middle seat. On a 100% full flight. The kid behind me must have either kicked my seat back, or open and closed her tray table, oh, seven or eight thousand times.
Continental served lunch, which is exceptionally rare, so I probably shouln't whine about it. But it was a turkey dog in a blanket.
But the weirdest part was my trip to the lav. I was delayed while two flight attendants scrubbed-up like surgeons. What had they seen or touched? I'm still wondering...
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On The Brink by Hank Paulson

Just completed Henry "Hank" Paulson's On The Brink, his account of the financial crisis, the origins of the recession, and his actions as Treasury Secretary. There are two popular books on this topic,: this one and Andrew Ross Sorkin's Too Big To Fail. In this review I'll concentrate on Paulson's. When I write the review on Sorkin's, I'll make some comparisons.
While I followed the financial crisis closely and had strong opinions of what the appropriate government responses were, this book clearly illuminated much more. In both the popular media and the blogosphere, one can find many criticisms of the various programs undertaken by the government to attempt to stem the tide of financial failure that was sweeping through the market. I would speculate that the majority of that criticism comes from conservatives, which is unfortunate. The information seems overwhelming to me that the country barely escaped a second depression. Find any account of the bank failures in the 1930's as they grew from a trickle to a wealth-destroying roaring river, and the parallels are clear. in the thirties, the savings of farmers, individuals, and millionaires alike were destroyed as bank after bank succumbed to "runs". The same thing was well underway in 2007 and 2008, as hundreds of local banks failed, along with much larger IndyMac Bank, Countrywide, and then Bear Stearns and Lehman. We can speculate on which institution would have been next (Morgan Stanley, Wachovia and Merrill Lynch were likely candidates) but action prevented it.
Paulson tells all this in a straightforward style. He provides the inside the beltway view that would be difficult for others, as he recounts discussions with President Bush, who found the required actions completely opposite to his conservative beliefs, with Congressional Committee Chairmen and senior members, and with the various other Executive Branch and Fed officials.
He provides some personal background as well, and as I read the book, I'll admit to being pleasantly surprised to learn how many multi-millionaire investment bankers, like Paulson, grew up in modest circumstances.
There were surprises in those stories. Barney Frank comes off as a total stand-up guy, willing to take the heat. George Bush too, prepared to take on members of his own party who wanted a free-market outcome. Nancy Pelosi shows up as smart, political, and politically savvy. Barrack Obama is smart, informed, helpful until election day, and then unwilling to aid until sworn in. Chris Dodd flip-flops, and John McCain is made out to be a grandstander, who never understood how bad a crisis the country faced. In the private sector, Jamie Dimon of JP Morgan Chase, when push came to shove, was always prepared to do the right thing for the country.
In turn the explanation of the development of TARP, TALF, the monitoring of the markets as each day brought forth more calamity (The signal for me was when the Reserve Fund - one of the oldest, largest and most successful "broke the buck". If money funds devalued, the country would have faced another wave of value destruction the size of the equity elimination of residential real estate. Here again, Paulson recounts what was required to get politicians on board, to face the crisis, and take action. I've long felt that few of our elected officials have any understanding of the economy and market system; this book is and unhappy confirmation of that.
By itself, the play-by-play account of the weekend where Treasury and The Fed tried to come up with a way to save Lehman and prevent deepening crisis is worth the purchase price of the book.
Whether the government did the right thing or not will be the subject of analysis and argument for decades. For those of you who believe TARP, TALF, etc, were huge mistakes, before I cal l you an idiot, I urge you to read this book. If you still think that after reading it, you ARE an idiot.
At the end, Paulson gives his view of what kind of reform is required to regulate giant, multinational financial institutions. I guess in a few years we'll know how close the just past "FINREG" act comes to that.
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