Mock Turtle

Often Canadians like making it onto lists — best quality of life, most expensive cities, kindest and gentlest societies, that kind of thing.

But then there are lists Canada is on but would prefer to be left off, like the Al-Qaeda target lists, or this one — super-bear economist Nouriel Roubini’s list of countries likely to experience a hard landing. That’s right, we made the big time, along with the U.S., the U.K., helium-housed Ireland and Spain, and, um, the Baltics. Poor old Japan, which has only recently recovered from its “lost decade”, is also part of the exclusive club.

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I’ve just finished a very funny book on how Wall Street works, published in 1940 and written by someone who worked in the markets through the crash of 1929. Where Are The Customers’ Yachts was reissued as a paperback a few years ago, and almost every page is relevant to today — perhaps even more relevant satire than it would have been in the calm pre-credit crunch world.

Compare this recent Onion headline: Recession-Plagued Nation Demands New Bubble to Invest In to this passage from Yachts:

In our moments of sober thought we all realize that booms are bad things, not good. But nearly all of us have a hankering for another one. “Another little orgy wouldn’t do us any harm,” is the feeling that persists both downtown and up. This is quite human, because in the last boom we acted so silly. If we are old enough, we probably acted silly in the last three. We either got in too late, or out too late, or both. But now that we are experienced, just give us one more shot at a good reliable runaway boom!

Or there’s the chapter “The Short Seller — He of the Black Heart.” As the author notes, indignation about the short seller “only exists during and after panics — during prosperous times he receives as much attention as do people who practice barratry.” From a posting about new Merrill Lynch writedowns on financial blog The Big Picture today, a sarcastic comment referring to the currently pervasive “it’s all the shorts’ fault” meme:

There is no doubt as to who foisted these losses on Merrill: Rumor-mongers, Short-sellers, and al-Qaeda. Management obviously had nothing to do with this. Hence, the SEC should be spending most of its budget, manpower, and time investigating those issues.

Or this headline from today’s CBS Marketwatch: The blame game: It’s fashionable, but probably wrong, to blame the short sellers

Yachts author Fred Schwed Jr. (could that possibly be his real name?) himself foreshadowed the future in his pages on the folly of chartists, aka technical analysts:

When the student peers, however closely, at a graph of Dow-Jones averages, for example, all he sees for certain is a history of past performances clearly and conveniently depicted. That one can, by examining the line already drawn, make a useful guess at the line not yet drawn, must be predicated on the hypothesis that “history repeats itself.” History does in a vague way repeat itself, but it does it slowly and ponderously, and with an infinite number of surprising variations.

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As one among the 29% of Canadians who, really, couldn’t care less about the increase in prices at the pump, I read the Canwest story “Pent-up anger unites nation” feeling like I imagine separatists do when Canadian nationalists bemoan the possibly imminent departure of Quebec:

According to a new poll by Ipsos Reid, carried out for Canwest News Service and Global Television, 71 per cent of Canadians are “really angry or upset” about gas prices.

In my experience, many drivers feel really angry about gas prices no matter what the prices are. They also complain a lot about paying for parking. And then, when they can’t take it any more and move to public transit, they complain about poor service and “sardine-like” conditions. (Apparently there is some special Canadian packaging for sardines that I’ve yet to see that has a few fish almost touching at either end of the package, with an inexplicable unused space of about 12 centimetres in between. Sounds interesting — I’ll have to keep my eye out for it.)

If that were all that Canadians felt mad about, it’s certainly not news. But apparently, the dark northern rage is more serious than that:

Of the 1,022 people surveyed in the poll, 62 per cent say they’re angry about inaction on environmental issues, 53 per cent are angry about taxes, 51 per cent are upset about neighbourhood crime and 47 per cent are upset by Canada’s mission in Afghanistan.

Does anyone else find the anger about environmental issues somewhat at odds with the fury about gas prices? Just me? And given that fewer and fewer Canadians are actually experiencing neighbourhood crime, the anger they feel about it seems… well… misdirected?

20% of the respondents overall were angry and committed to acting upon their anger, while another 35% of respondents were mad, but, I guess, can take it indefinitely, because they don’t think there’s anything they can do. Ipsos-Reid vice-president John Wright thinks that’s “deeply concerning”: “It’s like having natural gas in the air, and if there’s a spark of some kind, it can explode.”

Oooh, explode. That sounds alarming. What happens when dull-edged Canadian survey participants explode, I wonder? Maybe something like this, from an anecdote further on in the story:

In 2004, when gas prices were still under $1 per litre but rising fast, [Terry] Blake decided to make a statement.

He drove to a nearby station, pumped $25 worth of fuel and gave the attendant only $20 — saying that’s what the gas was really worth.

The woman said to me, ‘Don’t do this.’ I said, ‘I’m doing it. You’ll probably call the police, but give me 10 or 15 minutes to get away. If they want to come and get me, that’s fine.’ ”

The Ontario Provincial Police said he’d be arrested if he didn’t hand over the remaining $5, which he later did. But Blake had made his point, and soon he was being interviewed on television and radio stations as far away as California.

Scary stuff indeed.

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..neatly summarized in one paragraph of the Star’s story on the shootings in the Annex:

Marc Biginelli, 21, watched events unfold from Bloor St. He said a tall young black man wearing a black T-shirt and baggy jeans came at the group from behind, gun in hand, and that he was “very tense, very aggressive.” Ryan Wilson, a bouncer at the Brunswick House, described the shooter as a white man in his early 20s.

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I’m with Barry Hertz of the National Post — time for Toronto to calm the fuck down when it comes to heat alerts. He tracked the panic , visiting several cooling centres yesterday — as he puts it, “one of those perfect summer days we could only dream of last winter.”

Some highlights of his heat-crazed day:

3:00 CP24 anchor Teresa Kruze says “it is dangerously hot out there.” The temperature displayed in the weather box to her immediate right says it is 28C….

4:51 Inside Metro Hall, there is a sign directing visitors to the “emergency cooling centre,” with letters in an appropriately frost-tipped font. Get ready for some sweet, sweet cooling action. I get a paper cup filled with room-temperature water. Besides two people ready to hand out water, I am the only person at the three tables at the cooling centre.

Besides the fact that panicking over 25-degree weather is ludicrous, there’s the unfortunate corollary of overusage of power, as people who move from house to car to office have no idea whether they actually feel hot or cold nor any intention of dressing for the weather, but rather take their advice from CP24 and crank up the air conditioning unquestioningly, leading to:

Media Advisory – Ontario’s Electricity Demand Rises by 20 Per Cent in Three Days
TORONTO, July 17 /CNW/ – As Ontarians turn on their air conditioners to
deal with the heat and humidity, electricity use in the province increases
significantly. Electricity demand is almost 4,000 MW or 20 per cent higher
today than on Monday July 14. This increase in electricity use is equivalent
to adding the needs of a city twice the size of Mississauga to the provincial
power system.

… with home power prices, of course, capped to encourage as much usage as possible (at the expense of well, everyone, including the poor saps who conserve).

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Last summer I drew your attention to the CBOE Volatility (VIX) index, which at the time was, like the Baltic Dry Index, a relatively low-profile stock market metric that had started to look very odd. (My own familiarity with the VIX index is the legacy of two years of early morning meetings with a a cranky trader/analyst who I long assumed lived in another part of the country because he always dialled in to the meeting rather than walking the one flight of stairs down to the boardroom.)

These days, everyone’s a VIX voyeur. And yesterday, it finally shot up over 30, confirming (for anyone with remaining doubts) that things are pretty choppy out there. This is a big deal, because apparently some were convinced that if the VIX wasn’t shooting up everything was really OK.

There is a volatility index for the Canadian markets as well. As far as I can tell, the Montreal implied volatility index has only been around for a few years and is at an all-time high — not surprising, given today’s exciting buffeting of the TSX.

Ride’em, cowboy! (Isn’t the Stampede on?)

In the US, volatility is most visible as it spills out onto the streets. So far here it’s just sparked the revival of the same old story:

CIBC woes may spark mergers, analyst says

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Come October, the Toronto Real Estate Board will have a new bogeyman to blame for sliding sales: the federal government. The government is reining in mortgages, at least the insured ones it guarantees, scrapping the 40-year amortization period in favour of a maximum of 35 years, requiring a minimum credit score and downpayment and imposing a debt-to-income ratio of 45% to borrowers.

It’s estimated that 40-year mortgages now account for 45% of new mortgage originations. The 40-year product, introduced at the end of 2006, certainly played some part in keeping housing prices on their upward march until the last few months — so its demise should precipitate their slide.

The Finance department release states that “Today’s announcement marks a responsible and measured approach by the government to ensure Canada’s housing market remains strong, and to reduce the risk of a U.S.-style housing bubble developing in Canada.” As with most announcements from Jim Flaherty’s Finance, the timing of the announcement is comically off. Sales across the country are down by double digits and inventories are up — whatever bubble there was is deflating all on its own already. Better late than never.

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From today’s majors:

Gary Lynch, 45, of Toronto, is charged with:

1) Prowling by Night, (prowling on the property of another person near a dwelling-house)
2) Attempt Break and Enter,
3) Mischief under $5,000.

Prowling by Night! What a most excellent charge. I do still regret the lack of Grand Mischief as a charge, however.

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Q. What’s the worst age to be?

A. Mine, which in one week sees me both condescended to by a friend’s boyfriend’s late-40s/early-50s friends:

“Nancy Pelosi — oh, she’s the…” “I know who Nancy Pelosi is, thanks.”

“Senior advisor? What do [could] you [possibly] give advice on?”

“Back when I went to McGill — a long time ago, you weren’t even born.” “Actually, I was in grade 6.”

…and complimented by a shoe store sales clerk on my choice of shoes:

“They’re very comfortable. My mother has exactly the same pair and she loves them.”

“Are you telling me I’m buying shoes your mother would wear?” Young clerk giggles, looks my not-so-trendy, not-so-tiny person up and down:

“My mother’s really young.”

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