Sunday, May 31, 2009
1. Currency swaps. In a currency swap two businesses exchange a portion of their business without trading the actual business itself. The first such swap took place in 1981 when IBM traded surplus Swiss and German currency for dollars held by the World Bank. The two companies, according to the article, "exchanged their obligations to bondholders and their bond earnings without actually exchanging the bonds." The deal "was worth two hundred and ten million dollars over ten years and ushered in a whole new field of finance." In fact, in a little over a decade the total volume of these interest-rate and currency derivatives was more than twelve trillion dollars...ie greater than the entire US economy!
2. Credit default swaps. In 1994 some employees of J.P. Morgan developed the concept of swapping risk. If you could pay someone else to take on the risk of loans you write, you wouldn't need so much capital on hand to cover your risks.
3. Securitization. In old-school banking each loan was evaluated on its own. "What securitization did was bundle together a package of these loans, and then rely on safety in numbers and the law of averages: even if some loans did default, the others wouldn’t."
4. Tranching. ('Tranche' means 'slice' in French.) Someone realized you could slice up the underlying securities into different levels of risk and offer them at different rates, so that the riskier tranches would provide higher yields.
5. Collateralized Debt Obligations (CDO's). Now let's put it all together. By creating mortgage-based securities in which a pool of mortgages is securitized and tranched with the riskier mortgages (the "sub-prime" mortgages) providing higher yields while the risk of default has been swapped out, you can create banking's equivalent of the perpetual motion machine...risk and yield have been magically divorced from one another.
The hidden assumption here is that the value of the real estate which supports this pool of mortgages will always increase, or at least hold steady. Thus the underlying value of the loans will never decline. Because if (or when) it does, the entire CDO system collapses.
And there you have it...
Friday, May 29, 2009
I have been interested in the SpiritLand Bistro's BYOB Wine & Dine program for some time now. It's the last Wednesday of the month, and the deal is you bring your own wine (according to a pre-announced theme) to share with others at the party, and pay $45 for a dinner to go with it. I haven't attended one of these events yet, so I was glad to see that local blogger Marc Liberts wrote a review of the most recent one. Sounds like he enjoyed it!
Thursday, May 28, 2009
In a letter posted yesterday, Board Chair Fife Symington writes: "At our most recent Board meeting, the Trustees voted unanimously to add "at least one trustee" from the ranks of our volunteers by the September Board meeting." You can find the whole letter here.
Another email indicates that the Redwood and the Home Demonstration Garden exhibits will be reopened this weekend.
Let's hope things are coming together up there a little bit...
Tuesday, May 26, 2009
Monday, May 25, 2009
The Santa Barbara Botanic Garden needs a lot of work right now to help it recover from the devastating Jesusita Fire, and the volunteer staff is unsure what their next move should be. No one wants to see the Garden hurt by political posturizing, yet at the same time people don't want to donate their time and money only to see a few overpaid administrators take the lion's share home with them at the end of the month.
The latest "Garden Notes" email informs us that: "Gina Benesh, Vice President of Development reports that the Garden's Jesusita Fire Recovery Campaign has received over $80,000 in contributions. The Garden is very grateful to all who have contributed and sends its most heartfelt thanks to each and everyone of our supporters. Funds will go to the purchase of tools for our horticultural and nursery staff. The Garden lost all horticultural tools and vehicles in the Jesusita Fire when the Gane House burned to the ground. The Gane House, where all tools were stored, has served as the Horticultural Center for many years."
A pithy comment to an Independent story reads: "The Botanic Garden has lost more to inept and careless leadership than it has to the Jesusite fire."
Meanwhile some of the volunteers were able to meet with a few of the Trustees before their regularly scheduled meeting. It was revealed that of the 15 slots on the Board, only nine are filled. Of those nine, only four managed to show up for the first meeting after the Fire. It seems to this observer that bringing new members to the Board of Trustees should be a major priority.
You can find an exchange of letters between Fife Symington, the Chairman of the Board, and the volunteer leadership here. You can also find an account of the volunteers meeting with the Board here.
Sunday, May 24, 2009
Monday, May 18, 2009
Today the Santa Barbara Botanic Garden re-opened after the fire, so I went up and took some photos. The Meadow, the Cactus Garden, the Gift Shop, and most of the facilities on that level are open and relatively undamaged. The houses and the working lath house across Mission Canyon Road are closed, and have clearly suffered a great deal of damage. In addition, the trails down into Mission Canyon are all closed. Looks to me as though most of the plantings will recover -- fire is a regular part of the ecology in this area, and the natives generally survive. It certainly was a terrible time to terminate the Curator...
You can find more photos here (opens in new window).
"Having burned an estimated 8,733 acres, the Jesusita Fire in the Los Padres National Forest north of Santa Barbara, California, was about 95 percent contained on May 15, 2009. This natural-color image from the Advanced Land Imager on NASA’s Earth Observing-1 (EO-1) satellite shows the burned area on May 13, 2009. The marine clouds that hid the city from view during a previous overpass had cleared by this time, and the encroachment of the blaze into the outskirts of the Santa Barbara is obvious."
Saturday, May 16, 2009
Hey-nay, hey-nay, no-wah
Hey-nay, hey-nay, no-wah
Water spirits springin’, springin’ round my head
Makes me feel glad that I’m not dead
Water spirits springin’, springin’ round my head
Makes me feel glad that I’m not dead
-- Jim Pepper
Friday, May 15, 2009
You go to sleep wondering if the fire will move into the city; you wake up and check the internet right away to see where the fire is burning this morning.
And everywhere all day long it's ash and smoke. Many folks are wearing facemasks. The ash accumulates everywhere -- on cars, on the ground, blown into corners by eddies of the wind. Sometimes the ash is white. That's from the brush on the hillside. Sometimes the ash is black. They say that's when houses are burning. A debate rages: can I use a little water to wash the ash away, or will that take away from the pressure the firefighters so desperately need?
You want to help, but other than waving and cheering when fire engines pass by, there's not a lot you can do. When the wind comes up there's not a lot the firefighters can do, either, other than take cover and pray. Mostly you wait for a change in the weather, because the only way the fire will be brought under control is with the help of the weather.
It's a lot like today's economy. The same sense of helplessness and waiting pervades. You have to watch, but you can't find much to do. Even the officials whose job it is to mitigate disaster have little they can do until the weather changes. Half the economy has evacuated, it seems, while the other half is waiting to see how it will affect them. The outcome is very much in doubt, yet somehow we feel we will survive.
Thursday, May 14, 2009
Tuesday, May 12, 2009
Dear Captain Haley,
The Santa Barbara Botanic Garden has sustained extensive damage to our living collections, lost several buildings and currently has limited ability to operate due to power and other utility outages. Staff are working hard to get the Garden back to normal operations and are in need of an immediate infusion of cash primarily to replace gardening equipment and vehicles, all of which were lost in the fire.
To donate, please click on the Jesusita Recovery Campaign link below, or if you would prefer, checks can be sent to SBBG at 1212 Mission Canyon Rd, Santa Barbara, CA 93105.
Since our normal communications are down, you may reply to this email and I will respond as quickly as possible.
Thank you for your support of the Garden,
Vice President of Development
This was my response:
While I do want to support the Garden in its recovery effort, I don't want to make a cash donation only to find it is primarily being used to finance bloated administrative salaries and perks. We need to see an effort being made by the Garden to restructure itself. Things that made sense last week will no longer work in the post-fire environment.
For a bare minimum I'd like to see the productive plant personnel re-hired, the Director's salary at least temporarily reduced to $85,000, and the Vice Presidents for Finance and Marketing reduced to consultant basis with volunteers performing most of their functions. How about it...can we work together on this?
Edit: I received this response from Ms. Benesh:
I am very sorry, these things are entirely out of my hands. Changes of this sort come from the Board of Trustees. I am very sorry there is not more I can do than assure you these donations are going to replace equipment.
...and also this letter from Nancy Johnson, VP for Marketing:
Santa Barbara, CA - The Santa Barbara Botanic Garden's Jesuita Fire losses include all horticultural equipment used to tend the Garden's sixty-five acres of living collections and managed landscapes. Although a full inventory has not yet been completed, Director of Horticulture Andrew Wyatt said that losses include all power and hand tools, trucks, bio-fuel 'gators', and a new tractor.
Sunday, May 10, 2009
Saint Barbara must have been watching over her city, as the marine layer came in and with it a respite from the fire. It's still burning on two fronts, and only 30% contained, but the danger on the ridgeline is past, and crews are getting the upper hand almost everywhere.
Two days ago the City canceled its "First Thursday" event, wherein folks are encouraged to come downtown and stroll past evening art and music events. Last night, in contrast, people just spontaeously came out. Restaurants were full, music was blasting from the patio at SoHo, and best of all the full moon rose silver-hued over the ocean, in contrast to the angry red we had been seeing. Most of the evacuation orders are lifted, and people are going home.
Saturday, May 9, 2009
To go with the meal I poured the best wine I have in the cellar: a 2003 Foxen Pinot Noir Sea Smoke Vineyard. It was smooth as velvet, with lots of red fruit and spice on the palate, and maybe just a touch of cinnamon. Happy Birthday! The hills may be burning, but we still have a few things to celebrate...
Friday, May 8, 2009
The LA Times reports the loss of the Gane House, a Craftsman-style house that has been owned by the Garden for many years. The Garden had hoped to one day restore the house and use it as an administrative center. Tools, books, garden equipment, and office computers were also lost. The main lath house used for propagation was destroyed, and another house occupied by the Garden's Director. The extent to which the plant collection has been damaged is undetermined at this time.
The Garden had been in the midst of great political upheaval. They had terminated eight long-time employees including Carol Bornstein, who is widely regarded as the foremost expert in our local plant culture, and they had asked volunteers to step in to do these people's work. Many of the volunteers had responded by calling for a 30-day moratorium on all work, and for an opportunity to meet with the Board of Directors. The Garden's Board has been remarkably secretive and standoffish through all of this...particularly strange behavior for people running a non-profit that depends on community support. Although they fired eight productive personnel, they kept on three top-level management people including the Director ($214,000 salary plus living quarters) and the two Vice Presidents of Finance and Marketing...the three together ate up nearly 25% of the Garden's entire personnel budget.
Personally I hope that the Garden siezes this moment to change its focus. They should rehire Bornstein and the other plant people in order to concentrate on restoring the plant collection. The top three administrators should either be replaced or agree to accept salary cuts -- in my opinion no non-profit should be paying more than $85,000 to any administrator. If they wanted to ask volunteers to perform some of those peoples' work I would be all for it. I have some background in graphic design and layout and would be glad to take on some of Nancy Johnson's work to help out here.
Fire is a regular part of the local ecology, and we can hope that with proper care the plants will recover. Let's hope the Garden can recover as well.
Edit: The following was posted on EdHat:
The Santa Barbara Botanic Garden announced today that as of 9 am, May 8, 2009, it has sustained further damage to structures and the living collection.
Fire officials accompanied Botanic Garden President Dr. Edward Schneider through the Garden, allowing him to assess the buildings and grounds. "The good news is that the Meadow, Discovery Garden, Teahouse, Desert and most of the Redwood Exhibits are untouched," said Dr. Schneider. "Unfortunately, the historic Campbell Bridge, the beloved Pritchett Path, the popular Redwood Tree Ring Exhibit, Oak Woodland and Porter Path Exhibits were either destroyed or heavily damaged." Further damage was also sustained in the riparian corridor canyon as the fire spread from Tunnel Road down to Mission Creek.
Wednesday, May 6, 2009
At about 4 pm today the sundowner winds came up strong. Immediately the fire, which had been quiescent all day, started to move. The sky turned an ominous shade of orange, the smoke covered the whole sky, and ash began to rain down all over the city. This photo was taken at about 4:30 from Hilda Rae Park, on the Mesa. Most of downtown is under an evacuation warning, and we hear that two strike units -- each consisting of four engines plus crew -- have been assigned to protect the Mission.
Edit: 6:30 pm...County fire officials say, "We are in an extreme state of emergency."
Floatopia is a UCSB variation on the Beach Party. 2009 is the third (or perhaps fifth) year that Floatopia has been held, but it's the first year that it became big enough for outsiders to notice. Participants at Floatopia are encouraged to bring boats, rafts, surfboards, or anything that will float, and party all day just outside the surfline at the Isla Vista beach. Others just party on the beach. This year the attendance at Floatopia was estimated to be 12,000. (By way of contrast, last year's party attracted about 4000, and the year before a mere 300.) The Independent reported it like this: "On Saturday afternoon, April 4, nearly 12,000 partygoers convened on Isla Vista’s narrow coastline to partake in this quintessential beach bash. From Devereux Beach to Campus Point, masses of college students swarmed for a spot on the half-mile stretch of sand to drink, dance, and float among the waves. Homemade rafts and store-bought inner tubes, filled to the brim with beer-toting celebrants, spilled across the sea side-by-side like bowls of cereal floating in a milky ocean. Hundreds watched from their balconies on Del Playa’s cliffs as deejays set up camp every quarter-mile, setting the tone for the thousands of beachgoers."
There were a few injuries: twelve people taken to the hospital, a couple fell off the cliff, and a number of people cut their feet on broken bottles. Sixty-nine were cited for various violations (mostly minor in possession of alcohol). Lots of trash was left on the beach. Some was picked up over the next few days during cleanups organized by A.S., but much of it was washed out to sea. Authorities were quick to label the event an "environmental disaster." (How much urine do 12,000 beer-drinkers produce in the course of a day?)
Students (and some alumni) painted a more positive picture. Fresman biology major Farley Connelly told the Nexus that the event was positive because it brought together two fine activities: drinking and floating. “It’s one of those things you can only do at UCSB,” Connelly said. “I don’t think at any other school you could drink beer all day and float on rafts. Floatopia takes floating and drinking to a whole different level.”
One of the interesting things about Floatopia is that because it is publicized almost exclusively on Facebook, there basically are no organizers. In this respect it's more like a flashmob than a regular event. All this drives authorities (in this case, the County Board of Supervisors and the County Sheriff) crazy. People have the right to peaceably assemble, and they also have the right to access and enjoy the beach.
Already Floatopia II is being announced on Facebook for this coming weekend, and the Board of Supervisors unanimously passed an emergency ordinance banning alcohol on IV beaches. There was a lot of talk about how many young people were in danger of drowning at Floatopia I, although in fact there were no drowning incidents at all. But the Supervisors felt a need to protect those fragile young people from themselves. In reality, sanitary facilities and beach cleanup are what are needed, but the Supervisors don't feel a need to provide those...
The proponents of Floatopia might want to take a look at what some other large, anarchistic, and unsanctioned parties do as regards organization. The Rainbow Gathering has been going on for several decades now, and their people have gotten really good at sanitation and cleanup. Burning Man is another example. There are serious issues that must be addressed whenever large groups gather together. I for one hope the students can make this party work without being subjected to draconian regulation from officials whose main goal in life is control.
Tuesday, May 5, 2009
Sunday, May 3, 2009
Due to concerns about Swine Flu, the Princess Cruise Line is re-routing ships to Santa Barbara in lieu of Mexican ports. I understand they are also visiting Santa Catalina. Here is the Star Princess, in the fog on Sunday morning, and later the same day as the fog cleared away.
We're happy to have them -- our tourist business could use a boost. The passengers...? Most of them probably have been to Santa Barbara before.
Friday, May 1, 2009
Then comes the Santa Barbara Wine Festival at the Natural History Museum, Saturday June 27th. This tasting is always pleasant...great wines in a lovely setting...and always sells out.