Asset Valuation

[mallorys_camera]

Extraordinarily good article by Niall Ferguson in the December ’08 Vanity Fair on the history of the current financial crisis. I will have to reread it two or three times in order to fully comprehend it, but it seems to be saying that once money became species i.e. unbacked by any real standard, assets could be arbitrarily accounted, debt could be an asset – hence the world of money includes not just present tense value but speculated future value against which people borrow in the present tense.

What a pity Ron Paul is pro-life – otherwise I would vote for him in a heartbeat.

Ferguson has written a book called The Ascent of Money which I’m going to have to track down in the near future. I’ve always been mystified how value has become so separated from labor in our culture. Seems like appalling hubris to me.

In other news, as my life wasn’t, er, interesting enough (as in that old Chinese proverb, may you live in interesting times), the water pump on the van broke yesterday. Of course we very much needed to use it today to clear all the stuff out of the vacant-commercial-real-estate-formerly-known-as-the-Little-Store. I had one or two moments of real despair there. The local UHaul rental places closes at 4pm on Saturdays. Fortunately Dale came through with a truck – thank you, Dale.

Yesterday was the last day. One longtime customer actually broke down in tears. “I’ve been coming here since you opened. I have to say this store is the reason I come to Monterey.”

Awwwww. Nice to hear even if she was exaggerating.

At some point in the last few days B had a long conversation with D_____, D__ S__’s manager – the sweet man who set up a tea shop in the Genealogy store’s old spot in the 700 Building wants out in the worst possible way – “I know we could make money there,” B said. “The rent’s only $800 a month, right? Our regulars alone would sustain us –“

“No, Ben. Absolutely not.”

“I’m sure we could make money there –“

“I can’t believe you’re bringing this up. You’re leaving in two weeks. And I am over this, I never want to do anything remotely similar again.”

“But you love your customers –“

“I do. But I’m done. Finito. Caput. In retrospect I wish I had taken all the money I put into the store and bought cocaine and diamonds with it. Maybe a few trips to Thailand.”

“I think you had more fun with the store,” Ben said.

I sighed. “You’re right. I did.”

Comments

[sulphuroxide.livejournal.com]

it's the disconnect that makes it post modern capitalism and therefore padded and difficult to transform. the break between the material dialectics of capital money commodoty that makes it so hard to transform the system. communists and other political idealists tend to focus only on the labor/capital side. making it hard to move anything -- since laborers then go home and be consumers keeping the system moving along because it's one unit.

[mallorys-camera.livejournal.com]

See, you can articulate it. I can't. And I'm definitely in favor of capitalism -- it provides the right incentives for work. Just seems "capitalism" as practiced on Wall Street is so arcane, it's like Alice through the looking glass.

[sulphuroxide.livejournal.com]

i think what happens is that money and stock, -- well the quote above is right -- present speculation about the future also affects present value. that percieved notion really destroys the continued connection between labor and commodity; because money begins to fluctuate. ni a way, money is a specialized money, and everything becomes money in a po-mo system. take for example, stock options. percieved value on top of speculated value. you make 1 stock look like 10 because 3 other people have options on it to 3 other people each. everyone's portfolio is huge. and market makers attempt to screw with the pricing to get the stock undervalued that they previously promised someone else. (if you didnt know, charles schwab does this.)

and then you get bubble on bubble because the people who buy and sell are separated from actual production. you get bubbles in currency trading, everywhere... a guy who takes out a loan to start a business making wine ends up selling his wine for cheap because everyone else did the same. like robert mondavi decided to unload that year in ancitipation of whatever...; so the new guy runs his business at a loss because it's more expensive for him to close completely... and his wine gets sold at a 99 cent store even if it took 4 dollars to make... the system ate his credit loss, and that gets shuffled in with a bundle of bad and good loans and sold as a package on the market as a bond. fiat makes everything run faster but the desire once the system is so big no one can see the end of it, is to shuffle more and more shit in until it implodes. hm, im tempted to share a story about stock reconcillation now.

[hoyvenmayven.livejournal.com]

Oh no, you closed the store!? (Sorry, I haven't been keeping up like I should). I'm so sad to read that. I always meant to get down there, too. Damn. I'm really really sorry. Whatever your next project is, I hope it's fulfilling and awesome.

[mallorys-camera.livejournal.com]

Thanks! Yeah, poor Little Store could not survive the financial meltdown.

[katestine.livejournal.com]

Not sure if Ascent of Money will be what you're looking for - it has a chapter each on the history of various asset classes, rather than being policy prescriptions. I read the first two before it was due back at the library and thoroughly enjoyed it, from a historical perspective. He's a great writer and a smart guy.

[mallorys-camera.livejournal.com]

the history of various asset classes

...in good descriptive prose, no less! I think that's exactly what I'm looking for. Thanks!