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Felix Salmon: The unwilling risk-takers:

“Comment of the day comes from Chris:

The person most willing to take on risk is the one unaware he is doing so. He charges no risk premium…

The resulting market equilibrium is that the guy who is unaware of the risk ends up loaded with it. Then the music stops.”

“An elevator opening onto the mysterious 17th floor of the Lipstick Building, in Manhattan, where a small staff helped to manage Bernard Madoff’s exclusive investment fund.”

Mark Seal in Vanity Fair, Madoff’s World:

“Shortly after Madoff’s arrest, Rabbi Moshe Scheiner advised his congregation at the Palm Beach Synagogue to look beyond money, beyond financial losses, to matters of deeper importance. In New York, Rabbi Marc Gellman wrote in an open letter to Madoff in Newsweek about the pain he had inflicted on the Jewish community: “There must be some new word invented to describe the way you have redefined betrayal.” Rabbi Mark Borovitz, a reformed scamster and alcoholic himself, whose Los Angeles foundation lost between $200,000 and $300,000 to Madoff, called Madoff’s crooked style “affinity theft,” in which the con man preys on the idea that you can trust your own people. “Whether it’s Latino or black or Jewish or Christian, everybody wants to trust their own. Bernie Madoff took our trust and raped it,” said Borovitz. “He took advantage of every vulnerability, because he knew our vulnerable spots.”

When asked to describe Madoff’s personality, most of the people I interviewed in Palm Beach could come up with very little. “Pleasant, charming, but reclusive,” said one. “I go out nine nights out of seven, and I never saw him out once,” said another. “We’d never heard of him before December 11,” said Jeff Ostrowski, of The Palm Beach Post. Madoff’s barber, who had cut his hair and given him manicures and pedicures at least once a month for 17 years, couldn’t recall Madoff saying anything other than greetings and small talk.”

“Demonstrators in front of Iceland’s parliament building, in Reykjavík’s Austurvollur Square, on January 31.”

Michael Lewis in Vanity Fair, Wall Street on the Tundra:

““Yes,” he says with a smile, “there’s been a lot of Range Rovers catching fire lately.” Then he explains. For the past few years, some large number of Icelanders engaged in the same disastrous speculation. With local interest rates at 15.5 percent and the krona rising, they decided the smart thing to do, when they wanted to buy something they couldn’t afford, was to borrow not kronur but yen and Swiss francs. They paid 3 percent interest on the yen and in the bargain made a bundle on the currency trade, as the krona kept rising. “The fishing guys pretty much discovered the trade and made it huge,” says Magnus. “But they made so much money on it that the financial stuff eventually overwhelmed the fish.” They made so much money on it that the trade spread from the fishing guys to their friends. It must have seemed like a no-brainer: buy these ever more valuable houses and cars with money you are, in effect, paid to borrow. But, in October, after the krona collapsed, the yen and Swiss francs they must repay are many times more expensive. Now many Icelanders—especially young Icelanders—own $500,000 houses with $1.5 million mortgages, and $35,000 Range Rovers with $100,000 in loans against them. To the Range Rover problem there are two immediate solutions. One is to put it on a boat, ship it to Europe, and try to sell it for a currency that still has value. The other is set it on fire and collect the insurance: Boom!”

Richard Florida in The Atlantic, How the Crash Will Reshape America:

“Every phase or epoch of capitalism has its own distinct geography, or what economic geographers call the “spatial fix” for the era. The physical character of the economy—the way land is used, the location of homes and businesses, the physical infrastructure that ties everything together—shapes consumption, production, and innovation. As the economy grows and evolves, so too must the landscape.

To a surprising degree, the causes of this crash are geographic in nature, and they point out a whole system of economic organization and growth that has reached its limit. Positioning the economy to grow strongly in the coming decades will require not just fiscal stimulus or industrial reform; it will require a new kind of geography as well, a new spatial fix for the next chapter of American economic history.”

Zie ook: The Great Reset: Urban theorist Richard Florida explains why recession is the mother of invention.

National Geographic, The Real Price of Gold:

“Like many of his Inca ancestors, Juan Apaza is possessed by gold. Descending into an icy tunnel 17,000 feet up in the Peruvian Andes, the 44-year-old miner stuffs a wad of coca leaves into his mouth to brace himself for the inevitable hunger and fatigue. For 30 days each month Apaza toils, without pay, deep inside this mine dug down under a glacier above the world’s highest town, La Rinconada. For 30 days he faces the dangers that have killed many of his fellow miners—explosives, toxic gases, tunnel collapses—to extract the gold that the world demands. Apaza does all this, without pay, so that he can make it to today, the 31st day, when he and his fellow miners are given a single shift, four hours or maybe a little more, to haul out and keep as much rock as their weary shoulders can bear. Under the ancient lottery system that still prevails in the high Andes, known as the cachorreo, this is what passes for a paycheck: a sack of rocks that may contain a small fortune in gold or, far more often, very little at all.”

Kristof Magnusson, “Inflation will pay!”:

“How did it come to this? The proverbial buck has already been passed round the ministerial departments and political parties – to varying degrees of amusement or dismay among the Icelandic population. But if you look deeper into Icelandic culture and history for reasons behind the current misery, you will find something that is familiar to all Europeans: the desire to be modern, to be one of the winners in the globalised world – paired with the inability to shed traditional behavioural patterns.”

(via)

September 25, 2008: Protests in front of the New York Stock Exchange.

CNNMoney, Wall Street Journal, Financial Times, Bloomberg, Financieele Dagblad, De Tijd, Handelsblatt.

FT Alphaville, Marginal Revolution, Peston’s Picks, Crisis on Wall Street, Marketbeat.

BBC, The Box takes off on global journey:

“The Box is an ambitious and unique year-long project for BBC News to tell the story of international trade and globalisation by tracking a standard shipping container around the world.

It is a project which plans to deliver content for television, radio and online audiences – telling the individual stories behind what makes the global economy tick.”

The Box: Current location. (via)

‘Satomi Kobayashi and Mikako Ichikawa nosh down on fresh lobster in Naoko Ogigami’s new film, “Glasses.”‘

The Moment, The Post-Materialist | Japanese Food Porn:

“(…) eating and sleeping are their reason for living. If sex is curiously absent, it’s because the eating is sex.”

The Independent, YAWN: The new yuppies: They’re back – and this time they’re green. (more):

“They brag about their wind turbines rather than their wads, and they’re more likely to wear recycled trainers than red braces. But be in no doubt – they’re still loaded.”

IHT, Voluntary simplicity movement re-emerges:

“Modern “downshifters” are chasing a utopian vision of a self-sustaining life as partisans of a movement some call voluntary simplicity.”

Horecaprofiel stadsdelen in Amsterdam en het gemiddeld besteedbaar inkomen per inwoner per jaar. (Amsterdamse horeca: opmars restaurants – O+S)

Alan Krueger, What Makes a Terrorist:

“Why is an economist studying terrorism? I have two answers. First, participation in terrorism is just a special application of the economics of occupational choice. Some peo ple choose to become doctors or lawyers, and others pursue careers in terrorism. Economics can help us understand why.

The second answer is that, together with Jörn-Steffen Pischke, now at the London School of Economics, I studied the outbreak of hate crimes against foreigners in Germany in the early 1990s. Through this work, I concluded that poor economic conditions do not seem to motivate people to par ticipate in hate crimes.”

Mark Pilgrim: If wishes were iPhones, then beggars would call

“I don’t understand this continuing obsession with buying things that you need to break before they do what you want. (…) My current theory is that it’s some twisted form of wish fulfillment.”

Harvard Magazine: Debtor Nation. The rising risks of the American Dream, on a borrowed dime

“Japanese housewives have ditched their traditional subservient image for the world of currency trading – influencing both international markets and Japan’s economy.”

Times: The kimono traders (via)

Naomi Klein: “Israel’s economy isn’t booming despite the political chaos that devours the headlines but because of it.”

Joel Kotkin: “(…) Yet these triumphs obscure the longer-term developments that continue to reshape metropolitan America. Economic and demographic trends suggest that the future of American urbanism lies not in the elite cities but in younger, more affordable and less self-regarding places.”