Friday, April 11, 2008

Dancing Bears

Here's a fun little video I cut together. I saw the same footage set to some other music while surfing the internet the other day ... and it got me thinking. So I looked around on the internet and found the raw footage on the USGS website. Couldn't resist ... they ARE dancing bears ...

The soundtrack is "The Music Never Stopped" from The Grateful Dead live at Red Rocks in Colorado on July 7th, 1978.


Thanks to J.Stetz and A.Macleod of the Northern Divide Bear Project at the USGS' Northern Rocky Mountain Science Center Glacier National Park, MT for the video footage of the bears doing their thing.

"USGS Northern Rocky Mountain Science Center has posted images recorded with remote cameras of grizzly bears and black bears in Glacier National Park. The video and photographs are part of a study conducted by USGS Research Biologist Kate Kendall to determine the size and distribution of bear populations in northwestern Montana. Bears are identified and counted through genetic analysis of hair samples collected from barbed wire hair traps and bear rub trees. Remote photography is used to learn more about bears use of naturally-occurring bear rubs and how they respond to baited hair traps. Information from this work will be used to improve sampling methods and understand bear behavior."

My friend and former colleague Dan McKinley (who works for etsy) requested I say something about the "credit crisis" ... Allow me to do so now while I wait for blogger to chew on my video footage.

Over the last 15-20 years, there has been a seismic shift in the way private enterprise is financed in the United States and to a lesser extent the rest of the world. In the past, commercial depository banks sat at the center of the commercial business cycle. They directly provided capital to industry for investment and working capital and provided traditional banking and other services like payroll and employee banking. They were also highly regulated after the crash of '29 and numerous bank failures in the Great Depression prompted a whole slew of federal and state regulations.

The Glass Steagall Act of 1933 had separated commercial banking (taking deposits and making loans) and investment banking (creating, selling and trading securities) into two different businesses as it was perceived that conflicts of interest made such combinations anti-competitive.

In 1999, Glass Steagall was repealed. It had already been substantially weakened in 1990 when the Federal Reserve and other regulators re-interpreted portions of the act to allow commercial banks to get involved in investment banking while investment banks got into lending and other banking activities.

By the dawn of the 21st century, banks were old-fashioned wholesale distributors and warehousers of cash. "Investors" supplied the world with its needed capital through securitized structured products that literally allowed cash to move around the globe ... the sovereign surplus of Abu Dhabi could extend credit to a young couple in Des Moines looking to buy their first home. Global savers (i.e. the rest of the world and US pension funds) funnelled cash almost directly to borrowers (i.e. the US Consumer, Corporate America & the US Federal Goverment).

We went on a massive borrowing binge. We created a huge amount of debt, much of which is sitting on the balance sheets of the biggest financial institutions in the world that sit at the nexis of the "new" financial order. Some of this stuff is incredibly hard to value ... all we know is that it isn't worth what everyone thought it was worth. We know that the Federal Reserve has been effectively buying many of these hard to value assets by allowing investment houses to use them as collateral for loans. We know Bear Stearns asserted strongly that their net worth was $80/share just two days before being forced to accept $2 and then later getting that up to $10.

What comes next? I hope we are through with bad and unexpected news. I think we are stretched to the max across the board. We have very little fiscal flexibility in the US thanks to the double whammy of large tax cuts and a massive war effort. While I remain extremely optimistic about the long-term prospects of the US economy, I think we are in for good long rough patch while the financial system works out the excesses of the past. I'm hopeful that the current difficult environment does not extend past 2008, but that's just hope.


Dgold said...

frickin hilarious vid, well done, is this a video response to the My Little Pony, "I Know You Rider"?

Jeremy Payne said...

Hadn't seen the ponies, but just did ... pretty funny.