Saturday, December 20, 2008

(What) a year in review!

I began this blog about a year ago with the sole intent (and hope) of making economics fun, accessible and an integral part of your average cocktail party conversation.

Part of it was selfish—you know, trying to make us economists feel “included” at cocktail parties… But part was also an attempt to demystify the economic jargon, in the hope that, sooner rather than later, non-economists will stop skipping the economics pages and instead become more engaged in the economic policy debate.

As a test of success, I subscribed to the blog my (very smart) younger cousin, a psychologist in her senior year. The goal was that she’d be able to put the words “Ben” and “fat tail” in the same sentence within a few weeks.

The test arguably failed, as the sentence I got was “Ben has a fat tail,” at which point I settled on an intermediate goal: Make Ben Bernanke a household name by year-end. Don’t gasp, shouldn’t be that hard! It's the Fed Chairman we’re talking about! Kind of like Robert de Niro or Britney Spears, only for economics!

To my amazement, within a few months Ben was indeed becoming a household name! Only the reason was not Models & Agents but, rather, the tectonic meltdown of our financial system and his central role in trying to bring it out of its coma.

With my own contribution to the public interest in economics dwarfed by the scale of the financial crisis, I decided to check out whether my blog was of any help at all! So I got a techie friend to help me track what kind of searches stumble upon my blog.

So what do I get?

Top search of the year hitting my blog was “originate to distribute.” Pretty chuffed about that, as I took it as a signal of rising public interest in the origins of the credit crisis and in M&A’s contribution in explaining it.

But M&A's contribution seemed to go way beyond economics! Looking at a few more (admittedly less frequent) searches I realized that I, Chevelle, have the potential of competing with Oprah in providing foresight and direction on some deep existential dilemmas:

What does a few extra pounds mean in online dating?” “Should I bother with online dating?” “Infidelity: What’s the probability it will not happen again?” “Am I or Morgan Stanley too big to fail?”

Regardless of, for me this has been tremendous fun! And if you wish to boost my ego, you know, as a Christmas gift, you can do it by showing off what you’ve learnt… Ten questions below, plus one as bonus. Waiting to hear your scores!

And while I’m at it, my wishes to all of you for health, fulfillment, a happy holiday and a happier new year!


1. Which central bank governor has the most facial hair?

a. Masaaki Shirakawa (Japan)
b. Durmus Yilmaz (Turkey)
c. Ben Bernanke (You tell me!)
d. Jean-Claude Trichet (Eurozone)

2. Your wealth in 2008: How much has the US stock market (S&P 500) moved this year? How about house prices across the US (as measured by the Case-Shiller index)?

a. Minus 38% and minus 17%
b. You are a buy-and-hold investor and didn’t really follow.
c. You suffer from vertigo and couldn’t look.
d. Who cares, the Arctic is melting!

3. Which one of the following instances would you describe as having a “fat tailed” distribution?

a. A state governor seeking prostitution services from a petite brunette
b. A CEO of a major investment bank escaping the wrath of his disgruntled, laid-off employees with a golden parachute.
c. A former NASDAQ Chairman and long-time investment guru defrauding his clients with a multi-billion “Ponzi” scheme
d. All of the above

4. What’s the difference between a government bailout and a government rescue?

a. In a bailout, the government saves somebody else’s ass; in a rescue it saves mine
b. In a bailout, the government saves crooks; in a rescue it saves idiots
c. A bailout is for those with private jets; a rescue is for those with hybrids
d. Rescue is the new bailout

5. What’s the difference between a bazooka and a squirt gun?

a. Bazookas are typically messier.
b. You can hide a squirt gun in your pocket, but you can’t hide a bazooka
c. If people see you have a bazooka, you won’t have to use it. But if they see a squirt gun…
d. No difference, if Hank Paulson is holding them

6. If you were to construct the world’s most exhilarating water slide, what chart would you take as your prototype?

a. The S&P 500 in 2008
b. The price of oil in 2008
c. The share price of Citigroup since end-2006
d. The Zimbabwean dollar’s exchange rate to the US dollar

7. What is the meaning of cojones?

a. A drastic cut in interest rates to near zero and the promise to keep them there for some time.
b. A giant Structured Investment Vehicle set up by the Fed to purchase the bulk of the illiquid junk that is clogging the financial system.
c. It’s an important word in Spanish.
d. What Hank Paulson doesn’t have.

8. Who has come closer so far to predicting the amount of bank write-downs?

a. Nouriel Dr. Doom Roubini (April 2008, $1 trillion for mortgage-related losses, $1.7 trillion for overall losses. Raised the estimate eventually to $3 trillion as the year progressed)

b. The International Monetary Fund (March 2008: $1.170 trillion, of which $945bn on securities like ABS and $225bn on unsecured US loans, including subprime)

c. The Group of 7 advanced economies (Feb 2008: $400 billion, subprime-related)

d. Standard & Poor’s Credit Rating Agency. (March 13, 2008: Global write-downs related to subprime loans estimated at $285 billion, of which $150 billion had already occurred by March 13, 2008. “The end is now in sight, for large financial institutions”, asserted Standard & Poor’s.) Can't help to note here that the "end" was very much in sight: Four days later, Bear Stearns collapsed!

9. How many Starbucks tall mocha frappuccinos could you buy with one Citi share on November 21, 2008?
(Hint: In January 2007, one Citi share could buy 13 mocha frappuccinos)

a. three
b. one, if the guy behind you could spare you some change
c. you’ve switched to instant because of the recession
d. fifteen

10. Who said “Why make trillions, when we can make… Billions?”

a. Dick Fuld
b. Hank Paulson
c. Sarah Palin
d. Dr. Evil

And the bonus question:

11. Where, oh where, am I spending New Year’s eve?

a. This country’s currency has been among the worst performers vs. the US dollar during 2008.
b. The country’s hot! (that’s a BIG hint for those who thought I'm nuts enough to go to Iceland in the middle of winter!)
c. Ben Bernanke has judged the country to be a “fundamentally sound and well-managed economy”
d. Jesus will be watching!

1C; 2A; 3D (not based on any statistical research, but they all happen more often than you think!);
4D; 5D; 6D; 7B; 8A (Nouriel gets the prize for being one of the earliest prophets of a trillion-dollar doom!);
9B; 10D;
11: Olha que coisa mais linda, mais cheia de graça,
é ela menina, que vem que passa
num doce balanço, caminho do mar….
If you don't get it now, I'll tell you when I'm back!


Anonymous said...


I came across your blog recently (from a naked capitalism link). Having read several of your posts, you've made my Favorites list. Hope to see lots of good stuff from you in 2009. Happy Holidays!

Anonymous said...

this is actually quite brilliant! can i guess? rio? i'd love to say cape verde but not sure about the currency! jealous either way!

paolo said...

Good one Chev! Have a happy new year!

Susan said...

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.