Saturday, September 28, 2013

Flu Shot

I got my annual flu shot last Saturday.  They have started offering a version with a shorter needle.  I tried it last year but it didn't seem any less painful, if anything it was more painful.  So this year I reverted to the standard shot which was fine.

Friday, September 27, 2013

Tax update

As noted earlier I filed an amended New Jersey state income tax return last month claiming an additional refund.  The check arrived Friday.  So it only took New Jersey about a month to process the amended return as opposed to over 3 months for the original return.  Hopefully I am now done with my 2012 taxes.

Tuesday, September 17, 2013

A Colossal Failure of Common Sense

I recently read "A Colossal Failure of Common Sense - The Inside Story of the Collapse of Lehman Brothers" by Lawrence G. McDonald (with Patrick Robinson).  Lawrence McDonald had a mid level job at Lehman Brothers for four years ending in 2008 (he was fired a few months before Lehman went bankrupt).  This 2009 book gives his view of the place near the end.  McDonald shares the copyright with professional writer, Patrick Robinson (who I know nothing about), but the writing is not polished.

This book is seriously flawed but it held my interest for a while (I found it dragging a bit near the end).  What value the book has is that of chronicling one person's experience and perspective, it is not good for an overall big picture view of the financial crisis or even of Lehman's collapse.  For this reason I think the complaint in the WSJ journal review that the book devotes too much space to McDonald's earlier career and background is wrongheaded.  I think it is useful to know that his parent's divorce led to a period of (at least relative) economic deprivation, that he had to make an extraordinary effort (taking a job selling pork chops just to establish that he could sell and then studying for and passing the securities exam on his own) just to get an opportunity for a Wall Street career and that he resented the rich private school kids who appeared to have an easier path.  I found McDonald's personal story of some interest and some of his anecdotes illuminating although perhaps not always in the way the author intended.  For example McDonald tells the story of a gambling trip in which one of his co-workers goes down $160,000 playing blackjack.  When McDonald sensibly suggested that perhaps it wasn't his night the co-worker gave him a "quitters never win" lecture and continued playing.  In this case his luck did turn and according to McDonald he ended up $475,000.  McDonald appears to feel this depiction of his co-worker is highly favorable but I would draw different conclusions.

The book does have numerous problems.  It is not very well written.  The explanation of some of the complex financial products Lehman dealt with is muddled at best (perhaps in part I suspect because McDonald didn't really understand them himself).  McDonald isn't very revealing about his personal finances.  At an earlier point in his career he and a friend founded a website devoted to convertible bonds which (by his account) was quite successful leading to its purchase by Morgan Stanley.  But McDonald doesn't tell us the sales price or his cut.  At Lehman he receives a bonus he is happy about but then is disappointed by his bonus the following year.  But again he does not reveal the actual amounts (perhaps he suspects many readers will be unsympathetic to complaints about a $700,000 (or whatever) bonus).  The details of his bonus are important because a large portion was in the form of Lehman stock which he was not allowed to sell for several years.  This means his opinion that the government should have bailed Lehman out is not disinterested.  In general McDonald appears to have a number of biases which I suspect color his account.  Also McDonald was not high ranking enough to have personal knowledge of top level internal conflicts and in addition he left Lehman some months before the end.  So the book's version of the key events in Lehman's collapse is third hand, poorly sourced and probably not completely reliable.  And in my view the book doesn't have much of interest to say about the larger context, the financial crisis that precipitated Lehman's collapse.

So in summary while I found this book interesting in places for the view it gives of an aspect of Wall Street I can't really recommend it.

Wednesday, September 11, 2013

Completely worthless

As I expected,  my Eastman Kodak stock became completely worthless last week when the company emerged from bankruptcy and the old stock was cancelled.  So I will be able to write off my loss on my 2013 taxes.

It is perhaps of some interest that although every informed person knew the stock was about to become worthless, trading continued (valuing the stock at a few cents a share) right up to the  end.  So the stock market is not perfectly efficient.

I contributed to this inefficiency in a small way by not selling my shares last year.  This was a result of my natural sloth and the fact that the proceeds would have been small relative to the hassle involved (given that I was holding paper certificates).  As it turned out this worked out well as the recent raise in the federal capital gains tax rate means the write off will be worth more to me in 2013 (although this is just luck, I wasn't considering it at the time).

Monday, September 2, 2013


President Obama has asked Congress (and by extension the American people) for authority to order military strikes against Syria.  In my view this request should be rejected.

I think American policy should embody a presumption against war.  We should undertake military actions only when they are clearly in the national interest.  The connection to the national interest in this case is extremely tenuous.  Syria poses no direct threat to the US.  There is a claim that Syria has violated an international norm.  Be that as it may I believe a more important international norm is that nations shouldn't attack other nations absent an immediate and direct threat which isn't present here. 

It is also very unclear what any American strikes are expected to accomplish.  There appears to be a significant danger of mission creep.  If our first strikes don't appear to accomplish much other than killing a bunch of people are we going to get more and more involved in an attempt to justify our earlier involvement?

In short I don't see a compelling case for military action so I would refrain.