Tuesday, 22 January 2013

Combating Goldman Sachsophobia: Two resources for making Vampire Squid Calamari

In 2010 Rolling Stone's Matt Taibbi infamously referred to Goldman Sachs as a Vampire Squid, a term that has since then become something of an overused meme (even Taibbi has expressed ambivalence about it). He's but one individual who's tapped into disturbing imagery to describe Goldman though: For example, the other day I picked up Money and Power: How Goldman Sachs came to Rule the World by Steven Cohan, repleat with a golden snake on the cover, poised to strike. The sentiment was echoed by Alesio Rastani, the trader who upset everyone by saying Goldman rules the world.

I have no doubt that Goldman is a powerful company, and yes, they've been involved in some corrupt-as-hell deals (check out Senator Carl Levin's scathing report about them), but I sometimes suspect that the public hype around the company merely helps to reinforce it's existing self-image - presented in sanitised form in their graduate recruitment videos - as a repository for society's 'best & brightest' destined for  ubermensch greatness. Let's face it though: The average Goldman employee is statistically more likely to be a meek PhD student than a bad-ass Gordon Gekko, or for that matter, a balls-to-the-wall Richard Branson. When I ask "what kind of person aspires to work for Goldman", I see someone who seeks acceptance by the winning team. Would underdog  rogues like Chuck Norris apply for their graduate recruitment programme? Hell no!

Resource 1: What does Goldman Sachs do? An epic pearltree organisational chart
In the interests of breaking down some of the mystique around the Vampire Squid though, I made the following Pearltree diagram (Click on the title to open in a new tab):

It's not rocket science - I just went through their website and put all the pieces in order. Click on any division to expand it and see what they get up to. Over time I'm going to add more information to this, and do it for other banks too, so I'll keep you posted on that. Their securities division is the most important division in the firm, with their investment banking, investment management and 'investing and lending' (direct investing) divisions coming in tie after that. I'd say the 'investing and lending' section is worth more investigation - it's now reputed to be a source of undercover proprietary trading activities. I've included something called the 'nerve centre', which is all the departments (such as treasury and IT) that normally get overlooked, but that make the whole edifice work. Ping me a message if you think anything else should be on there.

Resource 2: Who's wants to watch Blankfein dance!

For anyone with an hour & a half to spare, I've created a Goldman Sachs video list on Youtube called, Goldman Sachs: A List of Diverse Opinions. It includes the CNBC documentary Power & Peril, which is pretty decent if you're looking for something substantial, but if you're looking for some shorter pieces, I comissioned a music video by a new band called Government Sachs, entitled Me and my Bitches. Of all the theories as to Goldman's success - superhuman talent, witchcraft etc - I think the strongest theory concerns its immense lobbying power, and the accompanying internal culture that encourages their people to seek positions of power later in life. The subtle dynamics of this process are brought out in this exchange between James Altucher and Jim Cramer (starting at around 1:20). Whatever the case, I'm going to join David Attenborough in continuing to observe the actions of the vampire squid (vampyroteuthis). If you have any insights on how to understand it's behaviour, or any other interesting videos, please do comment. Cheers

Sunday, 13 January 2013

What are the 100 Top (Anglo-Saxon) Finance Blogs? A Pseudo-Scientific Study

I know what you're thinking: How on earth would I be able to read, let alone rank, 100 blogs? The answer is simple: I have a METHODOLOGY!... and it's about as scientific as a model used to work out the value of a junk-bond backed CLO. Yes, I've taken something completely subjective and added a spurious quantitative element to it. Given that this is standard practice in the financial industry, there should be no problem.

The Methodology
A category like 'financial blogs' is somewhat loose: I've included blogs that focus on analysis of financial news, blogs that waffle about trading and investment strategies, and more general economics blogs that provide analysis relevant to financial markets. Personal finance sites though, are excluded, so no Mint.com. The methodology is based on 3 voting rounds, during which points are scored. Let me explain...

Voting round 1: The List-Makers
As a starting point, I sought to identify four pre-existing 'best of' lists that appeared to be relatively reputable. There were actually surprisingly few of these, but I settled on the following four: 
Each recommendation from these lists counted as a Round 1 Vote. I got 25 from Time, 6 from MarketWatch, 21 from CNBC (this list actually had 18 main suggestions, but mentions 3 others), and 13 from Downtown Josh Brown (his list has 5 major recommendations, but a series of secondary recommendations too). That gives us 55 initial votes from pundits who were prepared to put their reputation on the line.

Voting round 2: The winners of Round 1
I decided that if a blog received two votes or more from Round 1, that blogger was then eligible to vote too. How would they do that? Simple - I used their blogroll as a proxy: A blogroll is a list of blogs recommended by a blogger, an implicit vote of confidence if ever there was one.

The top blogs emerging from Round 1 were Business Insider (Joe Weisenthal), Calculated Risk (Bill McBride), Dealbreaker (Bess Levin), The Big Picture (Barry Ritholz), Pragmatic Capitalism (Cullen Roche), Felix Salmon, Zero Hedge, Abnormal Returns (Tadas Viskanta), FT Alphaville, Naked Capitalism (Yves Smith), Reformed Broker (Josh Brown), and Dealbook. Not all had blogrolls though, but I managed to find 282 blogroll votes from Naked Capitalism, Calculated Risk, The Big Picture, Zero Hedge and FT Alphaville.

Voting round 3: Up-and-comers from Round 2
I used a similar process for Round 3. This time, if a blog had received three or more votes of approval from Round 2 and and Round 1, their blogrolls were eligible to be drawn into the vote pool too. The Up-and-Comers included Brad DeLong, Paul Krugman, Econbrowser, Mish's Global Economic Analysis, Credit Writedowns, The Epicurean Dealmaker, Infectious Greed, The Aleph Blog, Minyanville, MarketBeat, Angry Bear, China Financial Markets, Jesse's CafĂ© AmĂ©ricain, Oil Price, The Economic Populist, Cassandra does Tokyo, Economist's View, Interfluidity, and Financial Armageddon. I rounded up the blogrolls of those that had them, and harvested another 1074 votes.

Weighting the Votes
To compile the final list, I weighted the votes. The votes from Round 1 were worth 4 points - because they were from explicit 'best of' lists that had been actively created. The votes from Round 2 were worth 2.5 points, because they were from more passive blogrolls, and the votes from Round 3 were worth 1.5 points. These points are somewhat arbitrary, but the results remain roughly similar even when I use slightly different point weightings. Besides, it's my list. So, here it is, split into four quartiles (please note that only the first quartile is ranked in exact order - thus, while Naked Capitalism is No.2, a blog in quartile 3 is somewhere between 50-75. I don't feel the need for spurious accuracy).

THE F-100


Top24 Q2 Q3 Q4
Calculated Risk Cassandra does Tokyo TheMoneyIllusion Daneric's Elliott Waves
Naked Capitalism Financial Armageddon The Research Puzzle Dr. Housing Bubble
The Big Picture Jesse's Cafe Americain Macro-Man Global Econ Matters
FT Alphaville Oil Price Macro Market Musings Greg Mankiw
Felix Salmon Minyanville PeakProsperity Liberty Str. Economics
Business Insider WSJ MarketBeat Streetwise Professor Macroblog
Dealbreaker Economix The Burning Platform Max Keiser
Abnormal Returns Marginal Revolution Tim Iacono Modeled Behavior
Zero Hedge Real Time Economics The Oil Drum Next New Deal
Econbrowser Rortybomb Megan McArdle Psy-Fi Blog
Paul Krugman Von Mises Institute World Beta re: The Auditors
Economist's View The Economic Populist Alea The Market Ticker
Credit Writedowns The Aleph Blog A Dash of Insight WSJ Deal Journal
Reformed Broker Epicurean Dealmaker Bespoke Investment Distressed Debt Invest
Angry Bear Credit Slips Eschaton Brazilian Bubble
Mish’s GlobalEcon VoxEU iMFdirect Macrobusiness
Interfluidity Falkenblog Marc to Market Money is the way
Brad DeLong Ezra Klein Market Montage Automatic Earth
Dealbook Freakonomics Testosterone Pit DollarCollapse
The Baseline Scenario Beat the Press AllAboutAlpha Environmental Econ
China Financial Markets Bronte Capital Bonddad Blog Pension Pulse
Infectious Greed Roubini GlobalEcon Boom Bust Blog Q-Finance
Pragmatic Capitalism Free Exchange Capital Gains & Games Robert Reich
Of Two Minds Footnoted Capital Spectator Worthwhile Canadian
Jeff Matthews Coyote Blog No.100: Your Choice!
Market Folly

So, who is No. 100?
That's for you to decide. The list needs to be taken with a pinch of salt, because I've derived it from pre-existing opinions from respected, but comparatively mainstream commentators and their blogrolls. Not only have I assumed that their opinion is valid, but I've also assumed that there is no group-think or systematic bias from well-known bloggers reinforcing each other's positions with reciprocal links. Perhaps we should call the list the "Top 100 mainstream anglo-saxon finance bloggers who have already been discovered". It doesn't include all the cool smaller blogs that don't post as regularly, or who have weirder things to say. That said, I'm very pleased that the deranged rantings of Michael Fowke from Money is the Way got on - his blog is so surreal that many people don't get it, but it really captures something of the absurd hubris of financial institutions. I'd really like to see Ian Fraser's blog on there, and Tim Johnson's Magic, Maths & Money: Both of them got votes in Round 3, but not enough to get on the main list. I'll have to start work on another list of more marginal (and perhaps more subversive) bloggers - please send me any suggestions!

By the way, if you want some more good lists of financial blogs, check this huge list here, this one here, and this useful site here.

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Sunday, 6 January 2013

Culture-Jamming with the Lords of Finance: Jamie & Bob

I have many artists in my family - for example, my mother creates psychedelic textile art, and my uncle  Stidy is a political cartoonist - but I feel over the last few years that I've been giving too little attention to the dark arts of art. So, welcome to my first exhibition.

It all started when I was messing around with one of those demotivational poster generators. I was reflecting on the sad greatness of the now departed Bear Stearns, and Shakespeare came to mind with the speech of Mark Antony, when he says "Friends, Romans, Countrymen, lend me your ears, so that I can sell them to an investment bank that wants to securitise them". One thing led to another, and I created my first masterwork. I called it simply, Bear Stears, but it is now known amongst collectors as 'ear 'ear.

When I first put it out for auction on Ebay, the piece wasn't well understood, it's meaning opaque like a Cayman Islands SPV. But, there was one man whose heart it captured, and he offered me $10 a share for it. He was my first patron, JP Morgan CEO Jamie Dimon.

I do dedications
I was inspired by Jamie's bold leadership of JP Morgan, and also wanted to keep him sweet so that he'd buy more of my art, so, in honour of him, I made a special edition print called The Dirty Work. It was a simple portrait against the backdrop of his respected asset management division, showing his understated elegance. I pinged him an email with a JPG copy, but his personal assistant replied saying "Jamie says you've hurt his feelings and should go screw yourself". I'm still confused by this response, but I think he's a bit sensitive because his company is being sued for Bear Stearns 'Shit Breather' mortgage bonds.


I do commissions
You learn to deal with the rejection in the art world though. As it happens, there was a silver lining, because Bob Diamond saw The Dirty Work at a distressed asset auction. He was impressed, and called me up on Skype, saying he was nostalgic for Barclays and that he wanted a piece reflecting on his tenure at the bank that he was thrown out of. I was sensitive to his wishes. I created a work called Libortarian Dreams, featuring dreamy blue imagery from his past. Bob, unlike Jamie, was very happy with it.



I do deep social commentary
It's all too easy for an artist to become slaves to their patrons and to lose touch with the everyday person. This is why I do special edition print runs of more down-to-earth creatures, like Morland, the Merrill Lynch Bull. Morland has always felt objectified on Merrill's logo (they even incorrectly refer to him as 'Dollar') and wanted to use his position to draw attention to the plight of less fortunate cattle in the factory farming industry. He helped me design, and posed for, a touching piece called Bully Beef.


Morland was kind enough to pose for me in another print too, featuring my brother reflecting on a nuclear explosion that I made on PaintShop. Both of these prints go for the meagre sums of £450, payable also in Bitcoin.


So, what do you do? Become an artist
Pablo Picasso once said "What do you think an artist is? An imbecile who has only his eyes if he is a painter, or his ears if he is a musician?... On the contrary, he is at the same time a political being, constantly on the alert to the heart-rending, burning, or happy events in the world, molding himself in their likeness." He also said "there ought to be an absolute dictatorship of painters", so go out, ye dictators and be merry, paint Canary Wharf in bright canary yellow, Wall Street in emerald green and Hong Kong in neon lava orange. Send me your images, and I'll put them up.