Self-Aggrandizement: Joshua Bryce Newman

Now with 137% more unabashed egotism!

Doubtless one of the best sites on the internet, Self-Aggrandizement is the story of Joshua Bryce Newman, a 29-year old film mogul, entrepreneurial wunderkind, and general smart-ass, living in New York City. Learn more about Joshua (according to Forbes, "sharp and supremely confident, a veritable Doogie Howser"), or simply follow his mis-adventures as they unfold below.

Go Shorty
Filed Monday, October 6.

Whenever she sings "Happy Birthday", Jess belts it in a deep, operatic baritone, replete with furrowed brow and sweeping hand gestures.

It's just one of her many distinctive singing styles, which range from quiet improvised lyrics about how she's feeling ("Jessie is hungry and needs more sleep...") hummed under her breath while typing emails, to an approach that could probably best be described as 'bellowing', and which tends to occur either in the shower or very close to my ear (the latter invariably sending her into fits of nearly tearful laughter).

Jess frequently accuses me of being obsessed with her, which is pretty much true. Since we've started dating, I've become perhaps the world's premier Jessmologist, and I'd be happy to pen out daily, extended, painfully earnest blog entries about her and her singing and how wonderful she is.

I will, however, spare you. Instead, I'll only share that the morning I really fell in love with Jess, after we'd been dating for a couple of months, was when she turned to me and said, "it's nice to have a friend."

And she was totally right. So, to Jess, my best friend and singing instructor, happy birthday wishes and all my love.

xxx

Bail
Filed Sunday, October 5.

So, the bail out.

The thing about unregulated markets is, on the one hand, they really are the most efficient economic system. But, on the other hand, that efficiency comes at two kinds of costs: screwing some bottom segment of the population on an ongoing basis (c.f., the percentage uninsured in the US insurance system), and screwing some now outdated segment of the population during any transition (c.f. US auto workers as we increasingly outsourced manufacturing).

Basically, then, US economic policy is a balancing game between two competing desires: we want our system to be efficient, but we also want it to be 'fair', by which we mean that we want to somehow protect any of those bottom segments and transitional segments we see getting screwed.

And, last week, it became clear that the segment getting screwed during the current transition was, more or less, all of us. A whole lot of different factors had made the financial system into a total mess, and letting the market work that mess back out (which, indeed, it would, eventually) would have probably led to a massive recession, huge unemployment, and a lot of other similar stuff we'd much prefer to avoid in the process.

So, in essence, who we were bailing out was not just some guys on Wall Street, but ourselves. If we wanted to avoid all that ugly recession / unemployment / etc. stuff, we didn't have much choice.

Of course, there are better and worse ways to handle things, and I suspect highly that Paulson's investment banking background and ties led him to a bail-out approach that's messier than it needs to be, and one that relatively few economists favor.

The bill that just passed gives the government the ability to buy bad assets from banks. As NPR's Adam Davidson analogized, that would be sort of like giving the government the right to come in and buy the junk from your basement.

The other, and in my opinion smarter, approach, would be a stock injection plan. Instead of letting the government buy the bad assets from banks, it would instead let the government buy a part of the banks themselves. This one, by Davidson's analogy, like giving the government the right to actually buy part of the house. And then possibly to move in.

In the first case, we face a sticky short-term question - how much is a basement full of junk worth? In the current crisis, if we pay too much for banks' bad assets, we flush money down the drain; if we pay too little, we don't save the banks.

In the second case, however, we don't have to figure out a price for the junk, and we already know the price for pieces of the bank - it's called the stock price. Further, because of a number of complicated issues (like capital requirements), a single dollar spent in a stock injection probably equals many more - as many as twelve dollars - spent in buying bad assets. And finally, as when we did something similar a few weeks ago with AIG, owning a big chunk of a bank would let us shit-can the CEO and other management, limit executive pay, and generally effect the sort of 'you get what's coming' justice that most Americans think would make a lot of sense.

Though, and here's the part that bothers me, it probably makes less sense to you if all of those CEOs and execs are your long-time friends and golf-buddies, which is to say if you're Hank Paulson.

Therefore, our bill mainly provides for that first kind of 'buy the junk' bailout.

Though, at the same time, tucked deep inside the actual bill - a much revised 451-page expansion of Paulson's original three-page draft - are a couple of sections (106, 107 and 113) that would also give the treasury secretary the right to take the second, smarter, better for taxpayers but less good for bank executives, stock-injection plan.

I'm not sure if there's anything we the people can do to convince Paulson to take that path. And I'm not even sure if electing Obama would mean a new Treasury Secretary, one who might be more likely to err towards that more populist approach.

But, either way, even if we just take the 'buy the junk' approach, it's something we should all be happy about. Because, otherwise, we're left solely to a market solution, and all of us are totally screwed during the transition.

We'd be to this current financial meltdown as Flint, Michigan is to globalization. Which, if you've seen Roger & Me, you know would totally suck.

New Crisis, Old Wisdom
Filed Thursday, October 2.

"It is an old maxim and a very sound one, that he that dances should always pay the fiddler. Now, sir, in the present case, if any gentlemen, whose money is a burden to them, choose to lead off a dance, I am decidedly opposed to the people's money being used to pay the fiddler...all this to settle a question in which the people have no interest, and about which they care nothing. These capitalists generally act harmoniously, and in concert, to fleece the people, and now, that they have got into a quarrel with themselves, we are called upon to appropriate the people's money to settle the quarrel."

- Abraham Lincoln, 1837

Happy Jew Year
Filed Monday, September 29.

L'shana tova u'metuka!

Today's Quote
Filed Thursday, September 25.

"If you would not be forgotten, as soon as you are dead and rotten, either write things worth reading, or do things worth the writing."
- Benjamin Franklin

Get Naked
Filed Thursday, September 25.

Given my job, and my dorky financial background, I've been following the public market meltdown fairly carefully.

As have Jess, my friends, my colleagues, and my relatives. Yet, when I talk to most of them, they seem to be following only the surface details. They don't fully grasp what a CDO or CDS really is, much less what the underlying causes of the chaos might be.

Blame for which, I think, falls at the feet of financial journalists. Sure, explaining complicated financial concepts and structures is difficult. But that's exactly what they're supposed to be doing: breaking jargon down to plain English, in a way that allows people to actually, fundamentally understand what's going on.

So, as a bit of public service, let me take a quick stab at a concept several people have asked me about of late: naked shorts. If this works, and if there's reader interest, I'd also be happy to circle back to explain other concepts that seem similarly confusing.

So, naked shorts.

As most people know, 'shorting' or 'short selling' a stock essentially means betting against that stock. In other words, when you buy a stock the usual way (called going 'long' on that stock), you're betting that the value of the stock will go up. If you buy the stock for $10, the price goes up and you sell it for $15, you'd make $5.

A short, then, is the exact opposite. If you invest when the stock is at $10, and pull your investment back out when the stock has dropped to $5, you'd similarly make a $5 profit.

Most people, however, are also entirely unclear on how that actually can work. So, to illustrate, let's talk about your car, rather than a stock.

Imagine that you own a car. Then imagine that, for a small fee, you let me borrow that car from you.

So far so good. Now imagine that I sell your borrowed car for $10,000. A year later, say I want to give you your car back. So, I go on Craig's List, and I find the same make and model. Only, by now, it's selling for just $5,000. Which is excellent for me, since I can buy the car and give it back to you for $5,000, then pocket the $5,000 difference between that and the original sales price.

Voila. I just 'shorted' your car.

What, then, is a 'naked' short? Basically, the exact same thing. Except without borrowing the car first.

Of course, if I do that with cars, instead of 'naked shorting', it's called 'fraud'. I just sold you something I don't actually own.

In the financial markets, however, it makes at least a little sense.

If I buy the car from you, you have to actually deliver it to me. And then if I sell it again to somebody else, I have to deliver it to him or her next. With cars, that isn't a problem, as people tend to own them for a while. But with stocks, it's entirely possible for the same share to be bought and sold and bought and sold countless times in a single day. So before stock trading went digital, actually delivering all of the stock certificates back and forth any time someone shorted a stock was doubtless a pain in the ass.

In that situation, a naked short made sense. Better to wait a couple of days to see who the ultimate holder of those stock certificates would be before loading up the wheelbarrow and sending them over.

Plus, in ye olde stock market, buyers and sellers were actual people, who traded back and forth with each other every day, and who therefore had ongoing relationships and a basis for interpersonal trust.

In a digital world, that network of trust is largely gone, and the underlying rationale - saving the work of transfering physical stock certicates - no longer makes any sense. Yet the practice persists - or, at least, did so until it was banned last week.

In all honesty, I suspect the actual impact of naked shorts has been oversold, and that they did relatively little to contribute to our current mess. But they do make a great example of, and can serve as a kind of microcosm for, the current crisis.

Because, it turns out, bringing old financial practices into a new, digital world, a world that no longer maintains direct relationships between buyers and sellers or lenders and borrowers, and doing so without carefully re-looking at the new implications of those old practices, is a recipe for all kinds of disaster.

Avast
Filed Friday, September 19.

Ahoy! It be International Talk Like A Pirate Day! Shiver me timbers!

And what better time be than this to recall the greatest pirate of all time, and the patron saint of all entrepreneurs, Blackbeard.

Ay, Blackbeard. And if ye don't believe he was true an entrepeneur, observe the only records recovered from the Adventure, his fine yet sunken craft:

Such a day, rum all out- Our company somewhat sober- A damned confusion amongst us !- Rogues a-plotting - Great talk of separation- so I looked sharp for a prize- Such a day found one with a great deal of liquor on board, so kept the company hot, damned hot, then things went well again.

Arrr, that be running a startup indeed! Yo ho, yo ho, a pirate's life for me...

Square
Filed Thursday, September 18.

Until recently, I'd never worn a pocket square, assuming they inevitably took a suit or blazer to the far side of that fine line between 'fashionable' and 'foppish'.

But, a few months back, for reasons I no longer exactly recall, I picked one up. And, wearing it, I started started getting compliments. Not on the pocket square itself, but on the suit. And not just from friends and colleagues, but from cashiers, doormen, waitresses and security guards.

So, feeling adventurous, I picked up two more. A different check, and an emboidered white. I tried them in the breast pockets of other suits and jackets, and the results were the same. People liked my clothing better. Not just the pocket sqares, but the whole outfits.

I'm still not sure exactly why this happens. Perhaps it's an Emperor's New Clothes effect - an assumption that anyone with a pocket square must take fashion seriously, and, consquently, that whatever they're wearing must be fashionable.

Or perhaps it's just that a pocket square is slightly unusual enough to catch people's attention, to cause them to look at something - a suit - they'd otherwise largely ignore.

Whatever the reason, though, it works. By now, a jacket looks almost naked to me without a handkerchief in the front pocket.

But don't take my word for it. In the last month, I've spotted pics of Tom Brady, Jay-Z, Daniel Craig, and Nicholas Sarkozy all sporting poking pocket squares. Not a bad crowd with whom to keep company.

Wetting Myself with Excitement
Filed Tuesday, September 16.

First, an admission:

I pee in swimming pools.

I blame this on my early surfing days, around Santa Cruz and Half Moon Bay. The water there is freezing, fifty degrees at the height of summer freezing, so people surf wearing wetsuits.

And even so, they get cold. Really cold. Cold enough that peeing in a wetsuit, something that initially sounds utterly and ridiculously repulsive, starts to seem like a perfectly reasonable idea, an efficient and convenient way to warm up.

Which is to say, like pretty much all Northern California surfers, I have frequently peed in my wetsuit. And, frankly, it's only a small, small step from that to just peeing in pools in general.

Of course, I don't do it without a sense of guilt. Or, more to the point, without a sense of fear. Fear of the chemical that turns pool-pee red.

I don't know when or where I first heard of this stuff, but it was clearly early in childhood, as it's stuck with me as a vividly imagined threat ever since. If I pee in a pool, I let out just the tiniest bit, then wait to make sure there's no color change.

Or, at least, I did. Until this afternoon. When, after a conversation with my brother David about that chemical, I Googled it up to find out more about how it worked.

At which point, I was stunned by the, in retrospect totally obvious, discovery that the red-turning pee-triggered pool chemical doesn't exist at all! It's just something lifeguards tell kids to keep them from the exact same sort of pool-peeing in which I've been engaging.

I'm thrilled by this revelation. And will also now totally understand if you don't invite me to your next pool party.

Carded
Filed Monday, September 15.

Two weeks ago, with the initial frenzy dying out, and lines at the Apple Store once again down to reasonable lengths, I picked up a 3G iPhone.

Then, a few days ago, I left it in a cab on my way home from the gym.

At which point I discovered that, as I'd bought the phone with my American Express Platinum card, it was completely covered by their Purchase Protection Plan. A five minute conversation, a quick fax of the receipt, and they had credited the full cost of the phone back to my account.

Set aside the access to airport lounges, the free companion tickets on domestic flights, and the excellent, excellent concierge service (which, on my bachelor party trip to New Orleans, got us tables for seven at two restaurants - Chez Paul and Luke - that had claimed to be totally booked); the iPhone refund alone made using that card and that card alone totally worthwhile.

Don't leave home without it, indeed.

Craving further genius?

Check out the archives.

Now with 137% more unabashed egotism!

Go Shorty Filed Monday, October 6.

Bail Filed Sunday, October 5.

New Crisis, Old Wisdom Filed Thursday, October 2.

Happy Jew Year Filed Monday, September 29.

Today's Quote Filed Thursday, September 25.

Get Naked Filed Thursday, September 25.

Avast Filed Friday, September 19.

Square Filed Thursday, September 18.

Wetting Myself with Excitement Filed Tuesday, September 16.

Carded Filed Monday, September 15.