FIRST THINGS FIRST

I was going to comment on the 60 billion dollar misunderstanding in the Gulf but I though I would clean up a few things first and save that piece of lunacy for another day.

Wonderful leading article in the Wall Street Journal today highlighting a rather unfortunate piece of scholarship written in 2002 by the newly minted Nobel laureate joe Stiglitz (who is reported to be even more arrogant that Larry "double down for Harvard" Summers if that is possible) and the Orszag brothers in re the risk of Fanny and Freddie. It was spectacularly wrong of course but to cast judgement with the benefit of hindsight is not a good nor gentlemanly thing to do. The article points out that the writers acknowledged that "the extremely rare events located in the tail of a distribution are often quite difficult to analyze accurately." Might I point out (as I have previously) that another Nobel laureate was also spectacularly wrong in 1997 in the LTCM debacle and there too, the tail of distribution proved difficult to analyze accurately. What is most remarkable to me is that these three chuckle-heads didn't learn a damn thing from the chuckle-heads who went before them, wouldn't recognize systemic risk if it bit them in the ass and are now all in favor of a moronic plan to let a mob of politically appointed hacks figure it out for the rest of us. As events have proven, it is not easy to identify risk even if you have been doing it all of your professional life; it is impossible if you are new to the game. I've been saying this for months now; thank you WSJ for agreeing.

Skip a paragraph and the final article in today's Journal concerns the agreement by the management of AIG to bury the hatchet in regard to Hank Greenberg and, in fact, choose to use Mr. Greenberg as a resource in trying to put Humpty Dumpty together again. Hopefully, this is the end of the sad tale begun by the odious Eliot Spitzer and followed by the only slightly less so Andrew Cuomo. As loyal reader Paul points out in his comment to last week's post, AIG probably never represented a systemic risk except for the fact that the handling of that mess by the FED & Co.--in one of their rare missteps--made it such. I suspect that a hugh pile of excrement can be pilled up outside The Suit's door for this one but of course we can never be sure. Now Mr. Greenberg isn't a miracle worker but he's a hell of a smart guy and just mean enough that I suspect he will WILL himself to stay around long enough to fix his creation. Best of luck to him and the good Lord willing, the political thug Cuomo will keep the hell out of it. Thanks again for agreeing---well, that may be a bit of an overstatement--WSJ.

Finally,...I simply can't resist. WHAT THE HELL ARE YOU THINKING ABOUT, TIGER WOODS?!!!!

We will deal with the Gulf tomorrow.