There's a new award in town! We realized this week that some of our commenters are just so gosh-darn helpful in relaying the kind of information that we absolutely need to know to, as they say, move the story forward, that they deserve an award. Herewith, the inaugural Helpful Critters awards. Oh, and while we're at it, we've decided to execute people whose comments this week make them decidedly Unhelpful Critters. Go back from whence you came!
- First up is Bohan, whose comment regarding what's going on behind the scenes of The Hills was enlightening: "If you must know, Spencer has gone postal because MTV refused to promote Heidi's fledgling singing career via scenes he wanted filmed of her in the recording studio making her new single. Basically, Spencer's Heidi money-train is going to hell in a handbasket, and he is pissed, causing the unusual MTV reaction to what should be free publicity." Makes total sense, especially given just how awful we've heard Heidi's first single is.
- Next up is ———, who, right out of the gate, had some delicious nepotism information, the kind we always enjoy: "Another benefit to Larry's employment was that his child was afforded an internship in the Washington bureau of NYT while he negotiated his deal with his soon-to-be-new-employer back in 2003. I believe she was shushed for outing her father's surreptitious move from WSJ to NYT before it was formally announced. I cannot recall what her credentials were that earned her the internship... but that may be thanks to the Times' move to almost exclusively hire the children of existing staffers who went to school at Georgetown at the time. Fortunately, neither her father's influence or money went to waste; said child is now a writer for a tab mag. And diversity thrives at Old Grey!" Indeed.
- Next! WendyCRL, for her arcane knowledge of the seedy underbelly of the publishing industry: "Oh, if only Eric Kampmann was someone no one has ever heard of, instead of someone who financed Beaufort Books in the 1980s by "borrowing" the cash flow from the independent presses represented to the trade by Kampmann's distribution company (conveniently not an accounting acquaintance of Beaufort or Eric's Greenwich, Connecticut accounts. Single-shop publishers lost hundreds of thousands of dollars in his forced bankruptcy (publishers forced him into it...he was robbing Peter to pay Paul for years)... and that was when hey! hundreds of thousands was real money.
Proceeds...profits after expenses in what has been called a "traditional" publishing agreement (Kampmann is supposedly paying the publishing costs) ... going to the Goldmans and even the Browns (10% after the first $4 million)...will be nonexistent."
- On to If_I_Only_Had_A_Heart, who provided us with a little window into the weird world of economics: "dude ... the freakonomics guy is a latterday reinvention of utility theory economics with a blend of behaviorism ... harmless, really
- the flat earth guy — known on the poltix blogs as "the mustache of understanding" is a menace and a plague." So now we understand that no one in economics actually takes any of these guys seriously. Good to know.
- Then there was the thread yesterday in which we tried to understand just what the hell is going on in the stock market. So many people were so helpful that we wanted to give you all awards! But we can't. We liked this comment, from the plain-spoken Law Talkin' Guy, the best. It's long, but worth reading in order to understand how much broker you're going to be very soon:
"All those mortgages given to people who really couldn't afford them (made even less affordable by high interest, i.e. subprime rates) were subsequently sold, after being repackaged into strange derivative instruments, etc.) and bought by hedge funds.
Hedge funds claim these instruments have value, as certfied by credit rating agencies. So they can buy stuff (i.e., stocks) with these loans as something like collateral, or rather as proof that they can pay for stocks when called upon to do so (i.e., margin call on futures, etc.)
Guess what? Those mortgages (and the CDOs etc. that they were repackaged into have NO VALUE, because joe subprime can't make his mortgage payments.
Now the hedge funds are overexposed, they don't really have enough money to a) justifiy all the positions they have in the stock market, and b) pay back all the investors, who are going to come calling now that it's evident the hedge funds are not as solvent as they should be.
So, what do the hedge funds do? They need money, and thhe mortgage-backed securities they hold are worth bupkis. They sell stocks they're holding. Which drives the market down.
This is bad for investment banks, etc. and they are in a tight spot, since their own stock is now plunging in value (no buyers, lots of sellers) and so they try to prop up the market by buying stock themselves, gettting the Federal Reserve Bank to make it easier for investors like them to do so (this is called injecting liquidity), and MOST IMPORTANTLY by trying to convince Joe Investor that now is a GREAT time to buy because EVERYTHING IS UNDERVALUED NOW and what a SUPER DEAL these stocks are, while trying to keep a straight face.
It won't work, because few people are dumb enough to buy, so all the big players are in a tight spot —they want people to buy, but d@mned if they're the ones who will go out on a limb. So they sell, but hope somebody else will buy. Nobody's buying. The market plunges.
So, will the government bail out the market by cutting interest rates, etc.? Time will tell. The problem is that if it does something like this and it isn't enough, the panicing will begin in earnest.
It's going to be a bumpy ride down.
- Finally, our first Unhelpful Critter award. This goes to a commenter who had one comment that caught our eye as being rather unhelpful—we take criticism, but please, specifics!—and then, when we went back and looked at the rest of his comments, we decided he's never been particularly helpful. So, buh-bye, TheDes! Not-nice knowin' ya.