William Ortel [dot] Com

I've Discovered Something Amazing!

2009-11-17T19:26:59Z

I have struggled with tobacco for most of my post-pubescent life, having experimented with most forms and most brands at one time or another. I'm currently in a smoking phase again, but I've discovered an excellent way to let that phase go: gross cigarettes.

The first piece of advice in the "7 Day to Quit Smoking" manual distributed for free by my college is to change the brand you smoke to a brand you don't enjoy. I did not set out intending to do this, instead going "What's that stuff I used to smoke in high school?" Hoping to further enjoy my tobacco adventures.

This led to my acquisition of a box of Marlboro "Reds," for some thought to be Jesus in cigarette form but for most a pretty good way to remember that cigarettes aren't that much fun. The whole experience is jarring. It begins well: you smell the cigarette. It smells like a cigarette should...tobacco-y. You then light and inhale. Immediately the filter turns a gross yellow color.

In your mouth is the unbridled, untarnished Marlboro flavor. The Marlboro Man was a tough guy because he had to be. This stuff tastes like sin and makes you feel awful. Upon taking my first drag, I felt as if I had at once managed to cheat on my girlfriend, sell nuclear secrets to the Chinese, and watch the Glenn Beck program. (I kid Glenn, I kid).

I have heard of parents punishing their children for smoking by forcing them to smoke an entire pack at once if they get caught smoking. I'm thinking about offering my kids a Marlboro red outright. Any time they want one. These things are the best anti-smoking device in the entire universe, at about 1/10 the cost of the patch.

Brother, Can You Spare A Few Million?

2009-11-16T04:27:22Z

Perhaps one of the world's most ironic beer brands - Pabst Blue Ribbon - is for sale. The asking price is reported by the Chicago Tribune to be close to $300 million. The company's present owner - the Kalmanovitz Charitable Foundation - is apparently being forced to sell the company due to an IRS regulation prohibiting charitable foundations from owning for-profit companies.

Bank of America Merrill Lynch is already on the prowl for a buyer who would pay the asking price, but a pair of ad agencies are attempting to marshall the power of crowds in order to come up with enough money to make an offer themselves. The Ad Store and Forza Migliozzi would actually come reasonably well equipped to to run the business if they managed to get the money together. Pabst has disbanded all brewing activities and instead its thirty employees spend most of their time coming up with ad campaigns for its stable of brands.

On the surface, their attempt to "crowdsource" this is kind of impressive. It would be a real first to have a beer company owned by a diverse "crowd" with differing stakes in the company itself. It would be kind of - or perhaps - exactly like a publicly traded company. Wow, this stuff is revolutionary. What Iconoclasts these guys are!

The thing that is really iconoclastic is that these guys are going to actually try and raise the whole sum of money - in cash - before they make an offer. It would sure be nice if most acquisitions worked the way that these guys seem to think they do.

My favorite part is that upon visiting their website, we are invited to pledge money but given a vague understanding of what those monies will give us. A "certificate of ownership" that is "suitable for framing" will accompany a shipment of beer upon completion of the transaction.

It seems interesting, but at the end of the day it seems like a few ad guys got their heads together and figured out a slick way to beg the country for free money. Why lie, they want some beer!

They Doth Protest Too Much

2009-09-28T21:48:21Z

Hertz is suing research firm Audit Integrity over its inclusion in a list of twenty companies likely to go bankrupt this year. It seems like Audit struck a chord. I don't understand why public companies feel the need to lash out at independent commentators like this. I bet that most serious financial minds view this as akin to a list of the twenty celebrities most likely to go AWOL by the end of this year rather than a prediction from Nostradamus.

In the land of artful PR tactics, what Hertz is doing here is like screeching "I know you are, but what am I?" In response to being called a dumb-head in the sandbox. All they've done is elevate this list to the attention of a wider audience who all of a sudden has a suspicion that Hertz is having trouble.

NEW YORK, Sept 28 (Reuters) - Hertz Global Holdings Inc (HTZ.N) has sued an analyst for defamation over a report it said suggests the world's largest car rental company could go bankrupt.
In a complaint filed Friday with the Bergen County Superior Court in New Jersey, Hertz accused Audit Integrity Inc and its chief executive, Jack Zwingli, of defamation and trade libel over a Sept. 15 report that included Hertz among 20 large companies "most likely to declare bankruptcy" within a year.
Mark Frissora, Hertz's chief executive, in a statement on Monday called the lawsuit "an appropriate response to the publication of false and harmful information" about Hertz.

Sign Of The Times

2009-09-22T00:13:52Z

After a remarkably sleepless night and a couple of practices punctuated by my bronchial wheezes I decided it might be prudent to buy some pills: some to make me sleep, some to make me healthy.

The medicine isn't the story, but rather the circumstance. Having made my selections and paid for them, I waited in limbo as my ATM card talked to some people and made assurances to the pharmacy that I could indeed pay my way (six dollars, there was a sale.)

It was in this purgatory that I noticed how inexpensive cigarettes were in the great state of Idaho: a mere five dollars for twenty doses of sweet nicotine. For those who have never smoked, this graph gives a pretty good hint of what I perceive cigarettes to taste like right now (recently quit).

So it was with pride that I strolled out of the Rite-Aid - having turned down a steak stuffed with tiramusu for the low price of five dollars - that I notice two local children moving perniciously towards my bicycle.

Neither could have been older than fourteen, but both needed immediate professional attention. The least drastic of the two simply looked like any orthodontist's dream client; save for the fact that she was about to attempt to rip off my bike seat to make some money.

The second looked like a demented Cheshire cat. Her head was lumpy and her body fat was oddly distributed through her diminutive blond frame. Because I am taking an art history class, I can say she was the type of person who Frans Hals might have painted. One of his works is below.

What does one do when he catches 17th century dutch peasants trying to steal his bicycle? I'm obviously not going to press charges on a couple of (extremely) unfortunate looking fourteen year olds, especially because I know they were likely doing little else than trying to get some pocket money.

This struck a particular chord with me though: I sit on a board of students at the college tasked with funding philanthropic projects to counteract precisely these kinds of societal ills. We gave away a fair chunk of change last year, and we hope to do it again ad infinitum.

To me, it seems like a keener need for market research has never existed. These kids must prefer something to attempting to rip off my bike, yet we're not able to do the kind of deep dive that we should to really help out the community. Caldwell is a town with more than its fair share of societal problems. Imagine a city in Idaho (of all places) with a gang violence problem.

These kids - these two in particular but kids from here in general - need help. I'm empowered to toss a pittance their way but I don't know where to even begin.

Like, OMG.

2009-09-18T00:55:20Z

A little bit of my youthful innocence died today. I had long thought that ACORN (the nonprofit that has been used as a punching bag by certain republican talking heads) was probably no big deal...just another way to disparage the Obama administration with half-truths.

In perhaps the scariest turn ever, turns out Limbaugh & Co were understating what was going on. Video has been released of a young man and woman pretending to be prostitute & pimp receiving tax advice at acorn headquarters. Included in the advice was how to use thirteen El Salvadorean girls as a deduction and where best to hide ill-gotten hooker money.

In response to the video, the CEO of ACORN released a statement, which included

An immediate in-service training for all frontline staff has been ordered within 48 hour

It's almost unfair for me to comment on that...so I'll leave the snarking to Jon Stewart.

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If Put To a Referendum, How Could This Not Pass?

2009-09-17T21:31:31Z

I just listened to a fantastic marketplace segment on NPR which featured a discussion of our elected officials buying and selling securities based on insider knowledge gained in the course of performing their duties. Two senators may or may not have sold shares based on insider knowledge during the financial crisis...whether they did or not is largely irrelevant: the scary thing is that it's not illegal.

Rep. Brian Baird has proposed the "Stop Trading on Congressional Knowledge Act," or H.R. 682.

Seems like a good idea to me...though somehow I have a feeling this will stay in committee for a while. The bill's description:

To prohibit securities and commodities trading based on nonpublic information relating to Congress, and to require additional reporting by Members and employees of Congress of securities transaction, and for other purposes.

Arbitrary Linkfest

2009-07-15T03:47:10Z

Jay-Z, The Game, and American Primacy. I love it when people do this kind of stuff.

Dustin Curtis is pretty sure you should follow him on twitter. I agree. Read his article, then follow him here and me here.

Bernie is gonna get capped in prison. Hey, a guy can dream right?

The recession is over. Does this mean I have to stop saying "Great Recession?"

Maybe if the actual Craigslist dating section was like this, more people would connect on it.

Oh market ticker, don't you know, the government will fix all of your silly little problems.

This guy seriously has something wrong with him - oh wait, it's a parody.

So This Is Where We Are Now...

2009-07-13T11:29:12Z

I'm not saying anyone is being disingenuous, but I'm a little scared that bailouts are now something people apply for in the court of public opinion. Seeing news reports, like the one below (via Bloomberg) makes me prickle a little bit, especially because CIT's 505 Fifth Ave. headquarters has the appearance of a nightclub I probably couldn't gain admission to.

July 13 (Bloomberg) -- CIT Group Inc., the century-old lender that hasn't been able to persuade the government to back its debt sales, says its demise would put 760 manufacturing clients at risk of failure and "precipitate a crisis" for as many as 300,000 retailers.
A collapse would ripple across the "small and medium-sized businesses who rely on CIT to operate -- to pay their vendors, ship goods to their customers and make their payroll," the New York-based lender said in internal documents obtained by Bloomberg News that make the case for its importance to the U.S. economy. CIT spokesman Curt Ritter declined to comment on the documents.

The full story is here, but the real question is not whether CIT gets bailed out or not. The question to me is what happens as access to bailout money begins to become a function of a company's ability to effectively appeal to regulators and the masses for federal dollars.

What happens when people without organized political savvy really need bailing out? To use a metaphor appropriated from Minyanville, how many bullets are left in their depression-fighting gun?

A Visit To A Real Dive Bar

2009-07-06T06:13:59Z

Well, I decided to have an adventure. I went to a place called "Trinity Bar & Restaurant" near my apartment, and made the relatively simple mistake of eating while I enjoyed one of India's most popular beers: Kingfisher Strong.

The decision to nosh came in a moment of weakness, or "hunger" as it's generally called in this context. The atmosphere should have informed my thought...you walk in off of the street into a a small, exceptionally dirty room. There are what appear to be wild cats hanging out in a corner. It's impossible to discern what color the walls were originally painted because of a combination of soot and strange lighting.

I saw the soot and said "So what...Chinese restaurants sometimes have the tiles in their ceilings turn brown over time because of cooking grease. It's probably not a big deal." My stomach would punish me for my adventuresome nature.

I stood for a second at the entryway when I walked in, staring at the cats, the walls, and the various people eating. I turned to my left and spoke to a small man who stood (behind an iron cage) surrounded by sky-high stacks of liquor bottles. He was surprised to see me there. Apparently, they don't get many Americans.

I said "Bar?" he goes "Upstairs". I think to myself "The upstairs will probably be nicer." I round the corner to the stares of a group of locals. When I am three paces down the hall, the conversation returns to a normal cadence. If I understood Hindi or Kannada or whatever language they were speaking, I'm sure I would have heard "is he lost?"

I walk through an Innocuous corridor and towards a mysterious open room. It's either the bathroom or where they keep extra beer. I'm not sure and I doubt drunks looking for the bathroom would be either. Next to that is a more official-looking bathroom, except it's got a small layer of indescribable filth on the bottom of it. It smells like I feel after smoking a pack of cigarettes and going running.

Ah. The staircase. It's a twisty metal deal, complete with banister. Once painted blue, it's now blue-ish. I walk up the small stairs to a room full of Indians watching music videos in silence. I sit down at a table and no-one talks to me. Turning over my shoulder, I ask the man next to me "Beer?"

He taps somebody on the shoulder and that guy comes over to me. Brimming with curiosity, I tried to see If I could pay for my drinks with a visa. They haven't quite set that functionality up yet. I managed to get my brew and upon receipt, I started looking around the room. Garbage literally painted the floor's black and white floor tiles a rainbow of filth. A cat was stalking in the back corner away from all of the men.

The room is the same color as downstairs. There are about fourteen tables, some of which have chairs and most of which invite you to sit on what looks like stolen park benches. I look across the table at a sudden glimmer of motion. A cockroach has climbed to the top of the bench directly opposite me. In a room that is full of people, with the lights on.

He stands on the top of the bench and wiggles his antennae around. I move my body to see if he's scared of me. He stays there. For probably a minute, I am treated to cockroach semaphore before one of the guys who works there comes over. He asks me If I need anything. I point to the cockroach. He smiles and flicks it onto the ground.

The cockroach adventure was after I had eaten, by the way.

The Rise of Vulgar English

2009-06-17T03:52:35Z

After having been in Bangalore now for a period of a few days, the first true "deep" observation I have had is that I and those who speak English like me do not necessarily speak the most widely used form of English.

Bruce Willis joked in the movie "The Fifth Element" that he only spoke two languages: English and Bad English. First-World educated people worldwide are likely to see much of the English spoken by those not like us as the latter.

I don't think it's as simple as American/Non-American however. There is a growing divide, based not simply on the way people are being educated but also in the way that they communicate. It seems like (and I have no data to prove this) those who speak bad English communicate with themselves very easily. People naturally customize things to the tasks that they seek to accomplish with them.

Language is no different. With that in mind, I would argue that the version of "bad english" that a taxi driver in Bangalore might speak is no less vital to his existence as the version that I speak is to mine. In fact, I often find that my version is ill suited to gathering information here, since my inflection is vastly different from the local norm. The differences in communication ability that I have noted are no different here than they might be if I wandered into one of many American towns where people speak differently than me.

I wonder if we're not at a time, similar in some respects to the rise of romance languages in Europe, where a common language is beginning to adapt itself into the dialects of many regions. Once adapted, it fuses with the existing lexicon to create new versions of the pervasive tongue.

This is one seed that might potentially sow the rise of peasantdom 2.0. For the moment, The version of English in which many informational texts are written is still in the "English" that is as one's primary school teachers taught. What happens when things begin to be published in the "vulgar" tongues?

After all, one of the great things about English is its universality. The informational content and quality of thought in a manuscript prepared for an Indian audience written in Indian English is likely to be vastly different than one written in world english for a world audience.

I wonder if it's something that either can or should be stopped.

So I Guess It's Not News...

2009-06-11T15:16:37Z

I learned, via cryptogon, of a recent attempt by two Japanese nationals to creep into Switzerland via Italy. This wouldn't have been that strange, except they were carrying $134 billion (with a b) in possibly counterfeit US Government securities.

It gets even crazier. The securities are in denominations that are not available to ordinary human beings in the private market. Some of these bonds are available only to states and carry billion-dollar denominations.

So, if they're real, this is a pretty big deal. Italy gets a finder's fee and the private market becomes aware that the Japanese government or some other nation-state actor (the only people who could get these things) want to do something with their US government debt holdings.

If they're fake, it's even more interesting. Though it's of course fascinating to surmise that foreign governments are dumping US Treasuries, what about the supposition that there might be in circulation a quantity at least as large as $134 Billion in fake Treasury obligations? Obligations so realistic as to be indistinguishable for 7 days to Italian authorities? This story came out there in a press release dated June 4.

An Open Data Source for Risk Analysis

2009-06-10T15:22:25Z

I was delighted to learn somebody is trying to create a new, open-source model for producing opinions on creditworthiness. Any attempt to replace broken credit rating agencies as decision makers for who receives capital should be greeted as a wholly welcome step.

Freerisk is not yet - and does not seem to hope to be - a replacement for rating agencies in their entirety. It is instead a way to lever individual analysts by allowing them to query across a wide range of SEC filings at once using a relatively simple language called SPARQL. In addition, it provides a framework for people to share insights from these statements with each other. In time, the creators hope to move to a more user-friendly way of getting data from their database (which is wonderful).

The creators are toying with the ability to include comments and insights from footnotes into standard query data in hopes of creating a fuller picture from a standard query.

A great potential "value add" for this comes in the example of highlighting an interesting footnote. Having read company filings, I can attest that a great deal of their footnotes are pretty boring. There are occasional gems contained therein which make the process worthwhile, but wouldn't it be nice if there was a way to get quickly to the interesting ones?

The difficulty that Freerisk and other projects like it will face in replacing credit rating agencies is that consumers have come accustomed to regarding credit simply: as a letter. There will always be a market for the distillation of knowledge that can be gathered off of a platform like Freerisk into a format that allows for simple, "thumbs up/thumbs down" evaluation.

If anything, I think Freerisk is simply an excellent substitute for certain functions of a Bloomberg terminal for people willing to learn a Query language (not many). It's nice to see so much data opening up for public consumption, especially with the ability to share relevant insights on a public forum.

Education: Where's the Radical Change?

2009-05-25T01:53:37Z

Greg Mankiw had an Op-Ed in the New York Times recently about the changes that he will be implementing in his freshman economics course as a result of the recent "great recession."

It's interesting that even though there is a frenzied discussion about what economic educators have been doing wrong in the past few years, there is little discussion about what they have been doing wrong for the past hundred. To this observer, there is a need for a genuine re-imagining of the educational process.

It can be argued that there isn't much wrong with the traditional "Tell 'em what you're gonna tell em, tell 'em, then tell 'em what you told 'em" method of teaching, but there wasn't much wrong with swords until europeans found out about gunpowder.

I'm not saying that there is no value in the traditional system, and I say that not just because some of my professors might stumble across this website. Arnold Kling blogged a few weeks ago that for an autodidact, the presence of the Internet makes for a golden age of learning.

It's cheap to harp on the transformative power of the internet, but I wonder why there isn't more of a societal method to acknowledge autodidactic learning of the sort that can take place over the internet.

The exercise of blogging (when done regularly, sorry for sparse updates) is after all much like writing a spate of reaction essays to topics as they are presented by cobloggers and the news cycle. Isn't there grist somewhere in there for an educational process to replace the quiz-and-lecture format?

There's nothing wrong with kickin' it old school, but a new school needs to emerge.

Warren Buffett: Human?

2009-05-19T20:55:00Z

Since I am still a young buck, I am often surprised to read past works of financial commentators who I respect very much and find that their commentary reflects present trends. I was directed by the excellent Felix Salmon to an article that Michael Lewis wrote in 1992 about Mr. Buffet's rescue of the troubled Salomon Brothers.

His windfall came out of the shareholders' pockets, since his cheap option dilutes the value of the existing shares. Although a few of them sued, the deal never met the popular resistance it deserved, mainly because it involved Buffett. Public feeling was that if it was wrong, Buffett would never have done it; therefore it must have been right.

In effect the moralist had sold his reputation, without pausing to measure the man willing to pay such a price for it. Perhaps heartened by the critical success of the first foray, Buffett quickly made the business of saving CEOs from corporate predators a rule rather than an exception in his portfolio. He cut about $1.2 billion more of similar sweet, off-market deals with the chief executives of U.S. Air, Champion, and Gillette.

Curious to this observer is the similarity that this pattern of investments has to his more recent investments in Goldman Sachs and GE. In his more recent review of a 960 page biography of Buffett, Lewis happily points out further deviations from the folksy style of investment that Berkshire Hathaway trumpets in its annual newsletters, and notes the similarity of the recent Berkshire investment in Goldman Sachs to Buffett's investment in Salomon.

He stops short of acknowledging that in another customer of Buffett's positive image rental service has been General Electric - an institution that he mentions only as an entity which used to have a AAA rating that is "in the process of collapsing."

At the conclusion of the interview, he notes that this biography will be valuable to a reader in twenty years because it paints the most renowned investor in history with a human brush. This only leads me to wonder: why must we wait so long to see him thusly?

America's AAA Rating at Risk

2009-05-19T02:19:58Z

I remember reading that America's storied AAA rating was at risk years ago, but it seemed to have been ignored by most talking heads at the time.

Now we have an op-ed in the FT from a former Comptroller General of the United States about it. It's worth a read.

An excerpt:

For too long, the US has delayed making the tough but necessary choices needed to reverse its deteriorating financial condition. One could even argue that our government does not deserve a triple A credit rating based on our current financial condition, structural fiscal imbalances and political stalemate. The credit rating agencies have been wildly wrong before, not least with mortgage-backed securities.
How can one justify bestowing a triple A rating on an entity with an accumulated negative net worth of more than $11,000bn (€8,000bn, £7,000bn) and additional off-balance sheet obligations of $45,000bn? An entity that is set to run a $1,800bn-plus deficit for the current year and trillion dollar-plus deficits for years to come?