Ethel the Blog

The Canuck pries himself away from bearish polar matters long enough to remind us that the second wave of the latest tulip bubble is hitting the shores.  As usual, it’s eroding the bejesus out of Prole Island and piling the fertile soil up nice and high over on the Caymans.  Here’s a Joanna Slater article from the Feb. 8 “Globe and Mail”:

It’s a deal so big – and so bad – that one observer mused it was the
city’s worst property transaction since a group of Native Americans
were swindled out of the island of Manhattan by Dutch settlers.

Struck at the height of the real-estate boom, the $5.4-billion (U.S.)
purchase of two storied New York apartment complexes finally crashed
to earth in late January when the owner walked away, turning over the
keys to a group of creditors.

The deal’s failure is a harbinger of trouble ahead in the U.S.
commercial real estate market, where prices have tumbled but many say
the woes have just begun.

Much like overstretched homeowners, developers borrowed heavily to buy
office buildings, shopping malls, hotels, and apartments across the
U.S.

Now the bill is coming due. The number of such property loans going
bad is set to climb for at least another year, experts say, provoking
a new round of bank failures that will weigh on the economy for years
after that.

Sifting through the debris of the deal for the two New York apartment
complexes – Stuyvesant Town and Peter Cooper Village – shows how
complicated the process can be. Whoever controls the property will
face scores of investors manoeuvring to recover billions in losses,
not to mention thousands of worried tenants.

“We are a little bit in uncharted territory here,” says Sam Chandan,
chief economist at Real Capital Analytics, a property research firm in
New York. “It’s the scale, the scope, the number of participants to
the transaction.”

The most likely candidate to take over: CWCapital, an arm of the
Caisse de dépôt et placement du Québec, which is representing a group
of lenders with the top claim to the property.

CWCapital is one of a handful of firms with a specialty that’s in
increasingly high demand: attempting to recover value from soured
loans.

Compared to the housing market, commercial real estate runs on a
slower metabolism, meaning it takes longer for the business to react
to changes in the broader economy. The sector “was the last to get
into the recession and will be the last to come out,” says Aaron
Bryson, an analyst at Barclays Capital in New York.

The bad news is that once the slow-burning fuse is lit, it will take
years to be extinguished. After the last recession ended in 2001,
office vacancy rates didn’t top out for another two years, and an
actual improvement in the market didn’t happen until early 2006, Mr.
Chandan said.

The proportion of commercial real estate mortgages going bad won’t
peak until next year, predicts Thomas Fink, senior managing director
of Trepp, a mortgage data firm. Sorting out the detritus of imploded
deals – either by restructuring or liquidating them – will continue
into 2015, he says.

Shouldering much of the losses will be scores of regional and local
banks across the U.S., which are far more vulnerable to the sector
than their larger counterparts. These banks stand to lose up to
$300-billion on commercial real estate in the coming years, a recent
Deutsche Bank report estimated. Hundreds of them are likely to fail as
a direct consequence of such investments, it predicted.

While such failures likely won’t rattle the financial system as a
whole, they will echo through their communities, making an impact on
local businesses and homeowners who depend on these banks for access
to credit.

The U.S. Federal Reserve was so worried at the prospect of trouble
ahead that in January it launched a nationwide training program for
all of its bank examiners on how to assess banks that are struggling
with bad commercial real-estate loans.

Sorting out the mess will take years – as shown by the tangled path
ahead for New York’s Stuyvesant Town and Peter Cooper Village.

Built in the 1940s by insurer Metlife to house veterans returning from
the Second World War, the two complexes occupy a swath of lower
Manhattan bordering the East River and encompass over 11,000
apartments.

In the ensuing decades, their brick facades and winding paths became
an oasis for middle-class New Yorkers, who flocked to the
rent-regulated apartments as market rents in the city soared.

Enter Tishman Speyer, one of New York’s most high-profile developers,
and BlackRock, one of the world’s largest asset managers. Persuaded
that they would be able to spruce up the apartments and jack up rents,
the pair paid $5.4-billion for the complexes in 2006, the most
expensive price ever for a residential property in the U.S. They also
raised an additional $900-million to cover future expenses like
interest payments and renovations.

All but $1.9-billion of the funds were borrowed, mainly in the form of
commercial mortgages, which were then repackaged and sold in
interest-bearing slices to hundreds of investors around the world.

None of the buyers’ exuberant expectations materialized. Rents and
property values in New York fell as the recession deepened. The plan
to raise rents ran into fierce opposition from tenants and later from
the State of New York’s top court, which ruled last year that Tishman
had improperly increased rents on 4,400 apartments, opening the door
to more than $200-million in rebates.

By last month, the complexes were worth an estimated $1.9-billion,
about a third of the purchase price. That means the investors who put
up the original equity – among them two California pension funds and
the Church of England – have seen their investments wiped out. Those
who provided money for the mortgages, depending on the level of risk,
will also take heavy, and in some cases total, losses. The owners
defaulted on their loans, and at the end of January, said they would
hand over the property to creditors rather than file for bankruptcy.

Now CWCapital, which represents the holders of the senior mortgages,
must find a new manager to run the properties. Then it will need to
figure out how much the property is worth and how much tenants are
owed. And all the while, different types of creditors will be
jockeying to protect their interests ahead of a potential
renegotiation of the loans or a sale to a buyer. It’s a process that
could take years.

CWCapital is owned by Otéra Capital, one of the Caisse’s real estate
arms. The Caisse suffered massive losses on its real-estate portfolio
last year, which pushed it to write down $5.7-billion (Canadian) in
investments in the first half of 2009.

An Otéra spokesperson declined to comment on events in the U.S.
CWCapital also wouldn’t comment. The firm holds some of the repackaged
slices of the property’s mortgages, according to a person familiar
with the transaction, which is why they were tapped to represent
lenders.

In exchange for those services, CWCapital will likely earn fees
according to the industry standard, which include 0.25 per cent
annually of the total loan value.

The size of the mess at Stuyvesant Town prompted Willy Staley, writing
on the website of Next American City, a quarterly magazine, to compare
it to the purchase of the island of Manhattan by Dutchman Peter Minuit
in 1626 (which, according to legend, took place in exchange for 60
guilders worth of trinkets).

Separated by 380 years, the two transactions “are completely unrelated,” he wrote, “aside from the fact that they may go down in
history together as the worst real estate deals to ever happen, ever.”

The short version, in case you missed the first 500 acts of this play:  The assclowns who paid the gazillion dollars for the swampland will not only avoid losing any of their own money, they’ll become famous and do the same thing again and again and again. You will pay for it in higher interest rates and taxes.

Bridges are as good a proxy for the general history of technology as you can find, at least up until the age of electronics.  As such, Henry Tyrrell’s Bridge Engineering:  A Brief History of This Constructive Art from the Earliest Times to the Present Day (1911, 479 pp.) is a fascinating overview of how homo sapiens sapiens has bridged various obstacles over the centuries.     The several hundred illustrations amply demonstrate that there was more than a little art mixed in with the science.  One wonders if the sequel to this written in 2111 will feature the bridges over the Bering and Gibraltar Straits.

Dr. Doran’s The History of Court Fools (1858) is a corking good read.  To provide a bit of context, it should be noted that the fools were not foolish in the modern sense of the term, but rather wits kept near and well recompensed by kings and their ilk.  They provided their patrons with entertainment, distraction and, perhaps, enough humility to keep them from capriciously offing too many heads out of boredom. They were basically the professional comedians of their time.

The kings of religion also liked their entertainment, for example Pope Leo X, who enjoyed scenes that wouldn’t be out of place in “Jackass”:

Among the Popes, there was none who so liberally patronized jesters as Leo X. It has been said of this prelate that a witty fool had always a much better chance of obtaining an audience of him than a grave philosopher. Jovius and Guicciardini agree in the fact of the papal predilection for fellows who could afford him mirth, not merely by their light learning, but by their gross and heavy appetites. The same writers especially allude to the favour which Leo extended to buffoons, and to those so-called arch-poets who played the fool and miserably degraded themselves for the sake of a half-gnawed bone and a handful of ducats. The most famous, yet not the grossest of these mirthmakers, was Querno, a Neapolitan by birth, with a diminutive figure, a huge appetite, and an unquenchable thirst. The mock ovation of this arch-poet, his march to the Capitol, crowned with a wreath of vine,carrot, and cabbage-leaves, and mounted on an elephant, is a well-known incident, as is also his bandying of indifferent Latin verses, improvised for the nonce, with Leo himself. This buffoon, although by no means devoid of mental endowments, was content to stand by at papal banquets, and amuse the godly company by the greedy avidity with which he swallowed the fragments and half-consumed dishes despatched to him from the pontiff’s table. If Querno was a buffoon, he was at least that sort of fool to perform whose part efficiently requires a certain sort of wit. But Leo had other jesters who had no merit but the sorry one of being disagreeable fools. Of these we may judge by what is said of two of them, a greedy, insatiable fellow named Martinus, and a mendicant brother called Marianus. They certainly were wonderful buffoons in their way, for one could take a pigeon, roasted or stewed, compress it into a species of gigantic bolus, and swallow it whole, at one gulp. The other made uo difficulty of devouring forty eggs at a meal, and indeed on high festive days, wondering and applauding guests saw him deliberately devour a score of capons!

And there’s Benedict XIV, who had the sense of humor lacking in a certain present namesake whose concept of a really fun time probably involves bastinado along with, of course, the usual Opus Dei self-flagellation jollies.

Both these pontiffs differed from Benedict XIV., who was Pope from 1740 to 1758. Benedict loved a joke, but he loved to make it himself, and he might therefore be set down among those potentates who have been their own fools. When he was yet but Consistorial Advocate—a sufficiently grave and responsible dignitary—the spirit of fun so strongly influenced him, that at carnival-time he would issue into the thronged streets in the burlesqued costume of a doctor of divinity, and, mounting on a stool, would hold forth to the other gay masquers, denouncing their sins so pleasantly that their only regret was, that they were not fathoms deeper in iniquity, that they might laugh the more at the comic recapitulation of their offences. When Benedict became Pope, he endeavoured to suppress the carnival orgies; but the popular voice expressed itself so menacingly that he was content to leave others to enjoy what he could no longer participate in himself. He then confined himself to playing tricks on the Cardinals. His chief butt was Cardinal Passionei, a patient, orthodox man, who equally hated heresy and the Jesuits. The papal jokes were practical; as when the Pope, hearing that his Eminence had ordered a chest of books to be sent to him, contrived that a chest should reach him full of the most famous heretical and condemned volumes. The papal enjoyment here consisted in beholding the horror of the Cardinal on opening the case, and in seeing the delicate disgust with which he seized each work with a pair of tongs, and tossed it into the fire.

After reading this, I suspect that Messrs. Curtis and Elton probably aren’t unfamiliar with this book.

Today’s tome is a 767 page beastie from 1825 entitled The Laughing Philosopher Being the Entire Works of Momus, Jester of Olympus; Democritus, the Merry Philosopher of Greece, and Their Illustrious Disciples, Ben Jonson, Butler, Swift, Gay, Joseph Miller, Esq, Churchill, Voltaire, Foote, Steevens, Wolcot, Sheridan, Curran, Colman, and Others.  The Churchillian wit obviously preceded Winnie’s rapier-like dialogues with Lady Astor.  The paragraph-or-so entries range from thought-provoking tidbits applicable to recent events:

In 1740, Frederick of Prussia set out for Silesia with 30,000 men. It was proposed to adorn his standard with the motto Pro Deo et Patria — “For God and my Country.” Frederick erased the name of God, observing. “That it was improper to introduce the name of the Deity in the quarrels of men, and that he was going to war for a Province and not for Religion.”

to Swiftian drolleries:

Dean Swift one day observed a great rabble assembled before his deanery door, and upon inquiring the cause, was told it was to see an eclipse. He immediately sent to the beadle, and gave him instructions what to do. Away ran the crier for his bell, and after ringing it some time in the crowd, bawled out, “Oh yes, oh yes, all manner of persons concerned, are desired to take notice, that it is the Dean of St. Patrick’s will and pleasure, that the eclipse be put off til this hour tomorrow.  So God save the Kind and his  reverence the Dean.”

to the ethnic jokes of those times that would get you in trouble in these times:

A Frenchman once asked what difference there was between M. de Rothschild, the loan broker, and Herod.  “It is,” he was told, “that Herod was the King of the Jews, and Rothschild the Jew of the Kings.”

to a tasty bit of Bacon that forebodes a problem with the present-day CEO selection process:

James I, King of England, asking Lord Bacon what he thought of the French ambassador; he answered; that he was a tall, proper man.  “Ay,” replied the King, “what think you of his headpiece?  Is he a proper man for an ambassador?”  “Sir,” said Bacon, “tall men are like high houses, wherein commonly the uppermost rooms are worst furnished.”

to a summary of the great clubs of London in the year 1745 starting on page  504.   Edward Ward’s 1709 “The Secret History of Clubs” - from which this extract was obtained - is unfortunately as yet unavailable via Google Books, although the later and larger Clubs and Club Life in London (1908, 544 pp.) by John Timbs can be had. Both Timbs and Ward were prolific scribblers in their days, with most of their output interesting.

Note: Further investigations have revealed that the similar and wonderfully entitled A Mess of Messes, or, Salmagundi Outwitted, for the Laughing Philosophers, Consisting of the Most Admired Anecdotes, and Song of Songs, Compiled by Smellfungus and Mundungus, Descendants of the Risible Deities from 1817 is also unavailable via Google.

An intriguing concoction is found in the pickling and preserving chapter of Mrs. Frazer’s The Practice of Cookery, Pastry, Pickling, Preserving, &c. (1791).  To make barley sugar:

Boil a pound of single-refined sugar, to what is called crackling height, which is a higher degree than blowing.  The way to know it is to dip a small bit of stick in cold water; then dip the stick in the boiling sugar, and try it with your teeth; if is sticks to them like glue it is not enough, but when it cracks in your teeth, take it off, and pour it on your stone, (remembering always to have the stone rubbed over with a little fine oil, or sweet butter); then as quick as you can, double it up, and cut it with a pair of big scissars; give it a roll or a twist, as you choose.  In boiling sugar to this height it is apt to fly very furiously, therefore to prevent the loss of your sugar, put into it the smallest bit of fresh butter, which will at once give it a check.

If you wish to have it of the permacetti kind, take a quarter of an ounce of permacetti to the pound of sugar, and give it a beat; then put the half of it among your sugar, and strew the other half of it upon that part of the stone you mean to pour your sugar on, and smooth it down with a hot iron.  In this case you have no occasion to use either oil or butter, as the permacetti prevents both the sugar from flying over the pan, and at the same time will make it come easily off the stone.

Again, if you choose to have your barley sugar of the lemon kind, grate a large lemon, or two small ones, to each pound of sugar; dry the grate in an oven, or before the fire, and when you have poured it out upon the stone, strew it over it; then fold it double, and finish it as above directed.

The optional use of permacetti turns this into a quasi-puzzler, as a search for “permacetti” turns up not much more than hits to this book, while a “parmacetti” quest informs us that the word is used twice in “Moby Dick”  and that:

It’s a very old word for spermaceti, a fluid contained in the head of the sperm whale. It was extracted from the whales and used as an additive in candles and perfumes.

and also:

A pearly white, waxy, translucent solid, obtained from the oil in the head of the sperm whale: used chiefly in cosmetics and candles, and as an emollient.

Such were the ingredients of cooking in 1791, although it’s probably about the same degree of strange as the use of agar agar by Farran Adria and others as a substitute for gelatine to make things that stay jello-like when they’re warm.  While searching for agar agar, I noticed that Adria’s closing El Bulli for a couple of years, apparently exhausted from the trials and tribulations of molecular cuisine. Having just read the chapter about Grant Achatz and Alinea - his Chicago restaurant that also specializes in the foams and jellies of molecular cuisine - in Michael Ruhlman’s Reach of a Chef, I’ll note that when Ruhlman asked Achatz if there was any downside to his culinary explorations, the latter replied that it was very hard to do even with experience.

Strolling around amongst the delicacies in Amazon and Google Books has yielded the following:

• The Revolt of the Angels - Anatole France (1914)
• Futility: A Novel on Russian Themes - William Gerhardie (1922)
• The Three Imposters: or, the Transmutations - Arthur Machen (1895)

There are significant further quantities of France and Machen to be had on Google Books, but the copyright daemons have thus far limited the availability of Gerhardie.

Not all novels written before “Ulysses” were hundreds of pages worth of upper class twits literally - tastefully in the background, of course - and figuratively screwing each other, nor are all modern novels significantly more vulgar versions thereof.  If your brain is also wired to prefer the novel of ideas over the novel of character, then you might find something of interest in the above list.

For years I’ve heard good things - mostly from Bobby DeNiro - about Waverly Root’s Food: An Authoritative and Visual History and Dictionary of the Foods of the World, but for some reason I haven’t snagged a copy until now.  Okay, the reason is that it didn’t show up in the Half Price Books bargain section until now. But it indeed finally did, and my propitious timing allowed me to snag it for slightly less than a wheelbarrow full of Continentals, albeit significantly more than a dumptruck full of Enron preferred.  During my post-prandial rumination session, I opened it at random to find the entry on coriander:

“Coriander,” an unidentified phrase-maker once wrote, “is essentially a cultivated weed,” a formula which has been repeated by almost everybody who has written about this spice since, though if you stop to think about it, you will realize that all our food plants are cultivated weeds, except those which we harvest wild, which are uncultivated weeds.  Perhaps coriander was singled out for this accusation because of its basic cantankerousness, which is expressed by differing perversely with its own group of plants, and even with itself.  “It is a plant full of contrasts,” wrote Louis Lagriffe, “double and ooppsoed in its odor as in its action.”

The reference book of anyone who uses both “cantankerous” and “perverse” in the first paragraph when writing about a spice is going to end up in my hands a hell of a lot more often than books - reference or otherwise - penned by lesser hands. This is a keeper, and snarky remarks about “What the hell isn’t a keeper with you?” will be summarily ignored and/or deleted.

Matt Taibbi provides some numbers and perspective on the current elitist financial shenanigans:

We could have paid off every subprime mortgage in America for about $1.4 trillion and instead shelled out at least ten times that to Wall Street, primarily to pay off derivative bets made by bankers on those assets.
…

The bailouts have been a massive boon to Wall Street, not so much to the rest of us (again, see Nomi’s report on that). Most of the bailouts came in the form of very cheap money lent out to the same banks that caused the crisis, who then took that money and lent it out at market rates, pocketing the difference.

That’s where all these billions in bonuses for the major banks are coming from this year. It’s almost impossible to not make mountains of money when your cost of capital is next to nothing because you’re borrowing your money from the government basically for free. Moreover we issued government guarantees for all the least responsible banks in the country — so while you and I have to keep our same old shitty credit scores, all the people who leveraged themselves to the hilt and bet the farm on subprime mortgages that we ended up bailing out now get squeaky clean, brand-new AAA credit ratings to borrow from. The cost of credit for them plummeted thanks to these guarantees, while we’re paying the same old rates to borrow our money.

I’ve got lots of tar, so we’ll be needing feathers and pitchforks.

It’s almost comical - and certainly predictable - how real health care reform is vanishing right before our eyes.  The corporate oligarchy has the money and has purchased exactly what they wanted.  The latest reform that’s rapidly vanishing is the one where insurance companies would not be allowed to deny coverage because of pre-existing conditions.  In a couple of items, we learn that this will probably only apply if you’re under 19 and, even if you’re under 19, the companies will be allowed to adjust your premiums and deductibles such that you’re really not better off than before all the “reform.”  The health care mafia will get to claim that they’re making great sacrifices for the proles while they’re doing nothing other than increasing their profit margins, with the usual whorescribes telling you how much better off you’re going to be.  They’ll also keep propagating the bullshit about how the non-reform reform constitutes some sort of evil, commie nationalization of health care so the Party of Lincoln can get right back into power and save us from having to sing The Internationale every morning at school in our Mao jackets. And once Lincoln’s spiritual heirs return to power, they’ll “repeal” the “reform” with a counter-reform that will - unsurprisingly enough - ratchet up the health care mafia’s profit margins another notch.  They’ll also not be able to resist starting another war as well as inflating and bursting another economic bubble, which will bring Roosevelt’s boys back into office to institute some real reforms.  The Head and Shoulders bottle sums it up best.

Having gotten lost - I took a left instead of a right in Albuquerque - on the way back from the filtered water joint, I suddenly found myself in the parking lot of Barnes Ignoble.  Since the vicissitudes of fate had taken me there, I figured I wouldn’t spit in their faces by not going in - it’s not wise to piss off the fates.  I wandered through the usual bargain sections, but nothing really jumped off the shelves at me.  I happened to glance to the left just before I entered the exit portal and saw a section of 75% off tables.  “Hot puppies!!” I said to myself as I quickly veered in that direction.  The final take was four books for slightly over ten bucks, with the prize find being Alexander Roob’s Alchemy and Mysticism, a marvelous 570 page Taschen compendium of the art and illustration associated with alchemy through the ages.  It’s good stuff and, being a 5″ by 7″ by 3″ slab of heavy Taschen book engineering, can double as a blunt weapon if the need arises.