Frêsh Fish

Monday, January 28, 2008

Societe Generale

Everyone I know is now applying for a job at SG.

This is from their website –

“Our ambitious development plans naturally rely on an equally driven personnel policy. Our young, dynamic and international staff enjoy a reputation for brains, drive, performance and innovation. In line with our growth ethic, recent joiners are offered every opportunity to progress, with a wide variety of openings both in terms of business and geographical scope. Many of our senior managers, myself included, have worked their way up through the company over the years, oftenvia varied and rewarding assignments throughout the world.”

Note the lack of spacing in “oftenvia”. If they can’t even proofread their website imagine the potential for a creative trader.

In case you have been living under a rock, Societe Generale, the 2nd largest bank in France is where everyone’s new hero, the rogue trader, Jerome Kerviel, hung out.

Jerome, the 31 year old, junior trader, who in January of this year, 2008, self initiated a $70 billion Euro futures position, and ended up losing $7/$9 billion, has made whatever anyone else does for a living look like triple dukee.

I mention that Jerome lost $7/$9 billion. The press is reporting a $7 billion lose. However, it is being overlooked that Jerome made a $2 billion in “virtual” profits in 2007. So for Societe Generale to actually have lost $7 billion on this position, it has to be acknowledged that the prior $2 billion in “virtual” profits were also decimated by the perhaps premature liquidation of Kerviel’s rogue trade.

Three things should be considered here.

First, Kerviel is stating that he was not trying to abscond with any of Societe Generale’s funds. And so far the information supports this statement. But just image the damage that Kerviel could have inflicted on the bank if he was just a little more motivated. For anyone who could establish a $70 billion futures position undetected, a wire transfer to an offshore bank account would have been a done deal.

Actually, Kerviel is stating that he took abnormal risks in order to be an exceptional trader and generate profits for the bank. It has been reported that by taking a little extra risk he generated over $2 billion profit for Societe Generale in 2007. These profits are being labeled “virtual”. This is like you buying 100 shares of XYZ at $10 a share and now the shares are selling for $20. You have a “virtual”, or paper profit of $1,000, but this profit is not realized until you actually sell the shares.

Kerviel, bless his heart, was pretty excited about his $2 billion effort in 2007, and has stated that Societe Generale had guaranteed him a bonus of $400,000 for 2007. I know that $400,000 sounds like a nice bonus but if you do the math on $2 billion in profits, it works out to a commission of just .02%. The skinny here is that if Kerviel made $2 billion for the bank, one would hope that they would have been a bit more generous.

I think the most interesting question with respect to the Kerviel intrigue is what would Societe Generale have done if the outcome had been different? The market looked strong ending 2007. Kerviel place a big bet, a $70 billion bet, on the market continuing to rise. What would Societe Generale have done if the market continued to rise in January of 2008 and Jerome Kerviel’s position turned out to be a big winner?

1/29/08 6:19 am

After reading this LA times article I sent the following email to the authors Geraldine Baum and Martin Zimmerman.

"Most accounts of the Kerviel saga state that as of the end of 2007, Jerome had amassed "virtual" profits of over $2 billion dollars. In your 1/29 article you state that Kerviel had profits in 2007 of only $2 million. The $2 billion figure is more in keeping with the expected bonus of $400,000.

Note that if Kerviel had virtual or unrealized profits of $2 billion at the end of 2007, that the perhaps premature unwinding of his position in mid January actually cost SG the unrealized gains of $2 billion plus the reported $7.2 billion lose.

I am following this situation with great interest. What I would really be interested in is details of the actually positions held by Kerviel - number of contracts held by Kerviel and their associated costs. $70+ billion is being bantered about as if that was the amount of funds expended to establish the position, but with futures contracts the actual investment is much smaller than the implied value of the position.


© 2008 big box industries

The Most Cigarettes

I am not going to do something supercalifragilisticexpealidous today, like Kepler’s Inverse Square Law or a Crick & Watson's Double Helix, but I am going to have some fun.

First off, to my eternal shame I am a poor speller. The chances of me expeaing correctly were given Vegas odds of 2.71828183 to 1. I Gooed and just let it rip, putting whatever my fingers came up with in the search field. Surprisingly, at least for moi, I didn’t pea correctly but I wasn’t off by like another planet or something.

While on the Gooed search page for supercalifragilisticexpealidous I came across - How to obtain a single search result on google. Of some interest is that the post was dated 09/28/2004, with two comments for 09/2004 and then the last being another three years from the first two - 11/03/2007. I also tried to leave a comment on this site but it doesn't appear that it took.

Another entry that I found interesting was Board Noir. Bet these guys kill ass when it comes to The Jumble.

I’ve got this thing about circles and π. The skinny here is that since π is an irrational number the area of a circle is always undefined. Johannes Kepler (12/27/1571 – 11/15/1630) was also a circle jerk, he had problems with circles too. As it turns out it wasn’t the whole, it was the lips. – “After Kepler, astronomers shifted their attention from orbs to orbits — paths that could be represented mathematically as an ellipse.”

Long words and search engines and worlds not perfect but with holes, how did this all come about? As it turns out one is not enough. When it comes to Watson & Crick I always forget who was the young guy and who was the older? All dewy and fresh, it seems that James Dewey Watson was the younger.

Obiter dictum - The Double Helix is a recommended read.

And so what if any of the above had been different? Even with long words to wonder and wander the mysteries remain the same. Why things are exactly as they are and how to determine a prior how complexity emerges from simplicity.

For the quaint and curious I offer this sub rosa.

© 2008 big box industries

Thursday, January 17, 2008

The Snow Queen

She came down last night and blessed us all with wintery white and wonder.

I make this harder than it has to be because I give each snap and alt/title tag and also a title.

A Daughter of The Snow Queen

“How they tinkle, tinkle, tinkle,
In the icy air of night!
While the stars that oversprinkle
All the Heavens, seem to twinkle
With a crystalline delight;”

First the leaves and now the snow.

Angels in the Snow

It snowed last night (1/16/08) in Cumming, GA. We get snow here about once every other year. Usually it is a very polite snow that comes in the darkness and then slowly leaves with the coming of the light.

Not sure why the snow flakes look so big.

Red, Blue, & White

Last night's snow was perfect. Flakes fell for about two hours and covered everything in a fuzzy blanket. And then with just enough magic so she wouldn’t be accused of being a tease the snow stopped.

Should have taken the umbrella in by now but I am such a slacker.

Snowing in the Backyard

This morning, even before the sun came up, the flakes had started to fade. Although a quick glance out of any window would confirm that yes it did snow last night, much of what had been dewy and fresh has now taking on the aspect of something in decline.

Refer to the recent hawk blog for when I first put out the Frosty Flag.

Frosty Flag

© 2008 big box industries

Monday, January 07, 2008

Been Doing

One is either doing or being done and all the magic is in the doing.

Actually I have been doing a little reading. I was out of the game for awhile but I am now back in. I have some speed and above average reading stamina so I can put away a few in a relatively short period of time.

My first conquest was actually my second. My mother had gotten me John le Carre’s last published work, “The Mission Song“ (2006), in paperback for one of my Christmas presents.

(Obiter Dictum – Out of habit while writing the first sentence of this paragraph I took a peak/peek/pique at the front of The Song to find out when it had been written. I was taken by surprise when I discerned that the name of the individual copyrighted was David Cornwell. At first I thought that perhaps le Carre had passed away, and I being so memento had forgotten. I quickly went to my copy of le Carre’s Our Game and again the name David Cornwell appeared in the copyright. Next I Googed “david cornwell john lecarre” and via Wikipedia obtained the following : “John le Carré is the pseudonym of David John Moore Cornwell”. Reflection suggests that in the vaguest of ways I knew that le Carre was Cornwell but for awhile had forgotten and now have rerememberd.)

I was touched that my mother had remembered that le Carre was one of my favorite authors and was also excited about reading something new by John. It only slowly occurred to me that I had already read The Mission Song.

The skinny on The Mission Song is if you haven’t read it or have forgotten you have, give it a go. It’s about how things really are in Africa. I had a much better appreciation of the recent turmoil caused by the flawed elections in Kenya having recently been tutored by le Carre.

My second jaunt was Isaac Newton – The Last Sorcerer by Michael White (1997). For more than 30 years I have been interested in the life of Sir Isaac Newton. I had first become aware of Newton’s “occult” dabblings via an essay writing by John Maynard Keynes in which he alluded to a box of occult writings left by Newton at Cambridge. Many years later I came across references to The Last Sorcerer and was tempted now and again, but did not act on this desire, to obtain and read White’s offering. Much to my surprise last week I came across The Last Sorcerer while rummaging about the local library.

For those interested in the life of The Newt, The Last Sorcerer contains a wealth of information on the life, habits and attitude of this great man. However, White fails in his stated objective of providing strong linkage between Newton’s occult studies and his more widely acknowledged scientific work. Nowhere is evidence given that would suggest that while contemplating The Philosopher’s Stone, Newton suddenly had a vision in which F=ma. The mental process by which Newton achieved his greatest would seem to still forever remain a mystery.

The movie No Country for Old Men is getting a lot of buzz. It had been suggested to me that I read the novel by Cormac McCarthy on which the movie is based before viewing the movie. This was the reason I was at my local library last week.

Unfortunately, their was no Old Men at my local library. But I was able to pick up another novel by Cormac, The Road. What a disappointment. What follows is my review.

- I just started reading The Road by Cormac McCarthy and if I didn't know better I would say that it was written by a 10th grader who has done too much glue.

The second sentence of the book threw me - "Nights dark beyond darkness and the days more gray each one than what had gone before." I guess it is a sentence but certainly not a good one.

The third sentence of the book was yuck - "Like the onset of some cold glaucoma dimming away the world."

After several more pages of continuous tripe and linguistic debauchery I googed the reviews for "The Road". I was dumbfounded to discern that McCarthy is the winner of a myriad of Writer Awards and is considered by some to be one of America’s best authors with some even comparing him to Melville.

Perhaps I would have enjoyed "The Road" more if it was written in some language that I am not familiar with.

My challenge to anyone who considers "The Road" anything other than the worse example of literature ever is to quote some passage that they deem of merit.

I agree 1000% with the comment made by another reviewer - "'The Road' is like one of those abstract paintings that some people see as incredibly brilliant while the rest of us think it looks like a five-year-old got loose with mom's oil paints."

The Road is like a sack of shit in a perfume factory. It is certainly unique but not appreciated.-

My last endeavor was the sporadic perusal of Daniel J. Boorstin’s – The Creators – A History of Heroes of the Imagination. This is a small print, 750+ page, achievement. I have yet to read it in its entirety. I hope it will suffice to say that Durant and Boorstin are kindred.

I usually don’t like to quote verbatim from text but I was much taken but what follows and thought I would record it here as a means of helping me reremember something I found well done should I be so lucky as to come across it again. Me with the curse and blessing of being so memento.

“From the valleys of the Indus and the Nile to the Orkney Isles, the coasts of Brittany and the jungles of Yucatan, time offers its own verdict on man’s creations. Everywhere men have protested and resisted. Upended fifty-ton stones, alone or in rows or in circles, bear witness to man’s effort to outlive his life and make something that would endure forever. These first grand megalith creations long outlasted their creators. But with their message comes the mystery of their creation, reminding us that men never know the powers of what they have created.” p. 74.

“This sense of time, the awareness that countless others have come before and that others will follow in endless generations, distinguishes man from other animals.” p. 76.

Just yesterday I ordered 3 new books via Amazon. Two are by Umberto Eco and the last, something really new for me, Cryptonomicon by Neal Stephenson.

© 2008 big box industries