| 28 August 2005 Priority Passengers The Big Storm is coming ashore in New Orleans this morning. It looked like it was going to be gigantic, the Chairman of the Board of Gulf storms. But it has weakened a bit, and has had the grace to stay offshore until the light came again. I am a linear creature, and arrange my concerns in sequence. It may be a means by which I fool myself with the notion that I can do something about them. I had been worried about the constitutional problem in Iraq with my son, watching the Sunday morning talk shows. He is a new analyst of world affairs, and concerned by how this policy drama is playing out. It will have an effect on him, and he wonders if there is anything he can do about it. He is uncertain about how to judge the decisions that have been made. To him, they do not appear to based on incisive knowledge of the region. Some of the retired military commentators made eloquent comments on likely courses of action. He is new at this, after all, and does not yet know that things often do not make sense for a reason. I had veered from concern about the war to the storm and to the housing bubble. The last is always with me, since along with a lot of people, it is my big gamble. They say that America is making its money these days selling houses to one another, and borrowing the money to do it from the Chinese. To me, it does not seem like a recipe for long-term economic success, but I rely on the commentary of people like Alan Greenspan, Chairman of the Federal Reserve Board to keep me on track. Things seemed like they were going just fine, but there have been cautionary notes of late. Too late to affect my speculation. I'm stuck. But if there is a bubble, I reason, I just need to know when to get out of the market. So that is the wolf that has been nearing my sled, slavering in the torchlight, eyes gleaming in the darkness, pulling ahead of the slavering pack of dark-eyed young men with their vest bombs. When I went to sleep, it was with the notion that we might be in the process of losing New Orleans , the quaint Garden District, Jackson Square and the perpetual bacchanal of Bourbon Street forever. The Big Easy has been dodging the furies of the last two storm seasons with its usual sly grin, hunkered down in her basin behind the levees and the Lake . Katrina is the name of this storm, and while she is not as strong as she was, she is still hefting the might of a Category Four blockbuster. They say if it breaks the levee, or if the storm surge is as big as they think, it could be months before the basin is pumped out. The last image I recall before sleep was the sad line of people, black and white, filing into the Super Dome, the stadium designed to absorb 200-knot winds. Maybe they will be OK in the stadium. They were too poor to have vehicles to drive out, without the resources to re-locate when it was prudent. There were the idiots, of course, who were resolved to stay as witnesses, and their fate is their own business. The only family I know that lives there scooped up the children and drove to Tennessee . They are safe. But the great force of the storm is bearing down on the city now, and the die is cast for those who remain. And the refineries, which process the precious fuel we burn so profligately. The Big Easy is the fifth largest port in the world, and anything that disrupts operations will have a spreading impact. They say that the beat of a butterfly's wing can have a rippling affect across the world. The impact of a million sledge hammers might have one, too, and we will not know it for a week or more. But I am home, and though the television is on, and tuned to the weather channel, I am just a storm crow safe from the elements. I wish there was something I could do, but it may be that writing a check will have to suffice. It is at times like this that I wish I had a real skill. Perhaps I could drive a truck south, filled with food and water. Or perhaps I could write the check and wait for the rain to come to me, as it will later this week. I had begun to worry about the storm's reorganization in the southern Gulf as the meetings closed out West. Things had gone reasonably well, and traveling on a Saturday is just the cost of doing business. I peered at CNN and the weather channel to see if any of Katrina's tendrils reached up into the stratosphere between Denver and Dulles International. It was too soon for that, and I drove to the airport as serene as normal. It looked like I could hop over the storm and hunker down. Things seemed to be going well, and as I punched the buttons on the ticket kiosk I selected the option for “upgrade,” to see if I might trade a few of the hundreds of thousands of banked mileage for a move out of Economy and up to First Class. The machine was silent, offered two possibilities, and put me on the Wait List, spitting out three tickets. Maybe there would be real food, and free drinks, and leg room on the way home. A guy can hope, can't he? The agent at the gate was nice enough, but said there was no hope to be had. There were six ahead of me on the request list and only two seats available. I sighed and pulled out a magazine to wait until the appointed minute of boarding came. Priority passengers are first down the jetway, and with an elbow I made my way to the front so that I could find space in the overhead bin for my roller-bag. I hate it when I am late, and all the room is taken by selfish priority passengers. We filed through the door and down the ramp until forward movement stopped abruptly in the beige tunnel. The purser from the airplane was coming back up the line, looking for the first class passengers. There was a problem. Seating assignments had to be changed, sudden, development, very sorry. They passed along the line, and the priority passengers accommodated the changes with a minimum of complaint. The couple behind me said it was because Chairman Greenspan was traveling with us, and his security detail had to be accommodated. I realized that Mr. Greenspan was coming from the summit at Jackson Hole , where the global financial community had honored his 18 year term as Chairman of the Federal Reserve. According to the accounts in the paper outside my door at the hotel, European Central Bank President Jean-Claude Trichet, Bank of England Governor Mervyn King and Bank of Japan Deputy Governor Kazumasa Iwata were among the notables in attendance. Dozens of other central bankers, policy makers and economists had gathered in a Wyoming resort town for the Kansas City Federal Reserve Bank's annual symposium. I wondered why they didn't just meet in Kansas City , which is a perfectly fine city with many modern amenities. But Jackson Hole is a wonderful place, so scenic that land speculation has made it impossible for the ranchers that founded the place to actually live there. Apparently there were plates of roast buffalo washed down with Fat Tire Amber Ale, and an aggressive social agenda that included rafting trips and hikes around the Grand Teton Mountains . The agenda of the symposium has been expanded this year to celebrate the 79-year-old Chairman's great contributions to monetary policy and global stability. Mr Greenspan's steady hand on the helm of the world's finances won praise even from Joe, the Union President who lives next door to me at Big Pink. He thinks he is the best Chairman ever. After all, he has presided over the longest economic expansion in United States history, and if this valedictory was at the public expense, that seemed a small price to pay. I caught a glimpse of the blonde mane of the woman who was with Mr. Greenspan up front. It had to be Andrea Mitchell, the correspondent and media star and Chairman's spouse. I had a question to ask, but there were large men between me and the Chairman, and I had to turn right to economy class, anyway. I wanted to ask about the bubble, and what I might do about it. But I did not get the chance. It was an uneventful flight, and the Chairman reached Washington just a new seconds before I did. His party had checked bags, and even though they had a private mobile lounge waiting for him and his party, I beat him to the curb, and into my truck, and onto the Access Road back to town. The Chairman might have been in one of the black limousines that roared past me in the darkness on the way. I wish I had a chance to chat with him, but I had to wait until I got home to read what the Chairman said that morning. I punched it up on the Fed web site as I listened with half an ear to the reports of Katrina's northward passage to New Orleans . There apparently was a lavish breakfast that morning in Jackson Hole , though that was not on-line, but his keynote address was all there. He said "this vast increase in the market value of asset claims is in part the indirect result of investors accepting lower compensation for risk. Such an increase in market value is too often viewed by market participants as structural and permanent." He went on to say that "history has not dealt kindly with the aftermath of protracted periods of low-risk premiums." I wish he would speak English, but I suppose that would spoil things. I am savvy enough to read the undertone in the soft rhythm of the Chairman's words: “Equity extraction through realized gains creates liquid funds with certain value . . . In contrast, extraction of unrealized gains does not reduce the householders' uncertainty about their net worth or their exposure to market price changes. This suggests that the propensity to spend out of realized gains is likely to be greater than the propensity to spend out of unrealized gains . . .” Shoot, I need those unrealized gains. Why doesn't he just tell us when the bubble is going to burst? Copyright 2005 Vic Socotra www.vicocotra.com |