Law school can be a fascinating thing. Let me just give you one example.
A tort is, roughly, a wrong committed to another person where there is no preexisting contractual relationship. There, now you know the single fact that most distinguishes lawyers from non-lawyers.
In torts (or "in tort," as I think you are supposed to say), damages are intended to compensate the victim (punitive damages are only for cases where the defendant is particularly nasty), meaning to restore him or her as much as possible to the prior condition. Compensation can be pecuniary (compensation for expenses you incur, like medical costs, lost wages because you were in the hospital, etc.) and nonpecuniary (other compensation for other harm you suffered). Nonpecuniary damages are typically thought of as "pain and suffering."
In McDougald v. Garber, 73 N.Y.2d 246 (New York, 1989) (that all means that it is on page 246 of the 73rd volume of the second series of New York reports, and it was decided by the highest court of New York in 1989 - now you know another thing that distinguishes lawyers from non-lawyers), the plaintiff was comatose - whether she had any conscious awareness was in question. All the judges involved agreed that pain and suffering could only be awarded if the plaintiff had some conscious awareness (because otherwise there is no pain or suffering, as those are subjective by definition). However, they disagreed on the issue of "loss of enjoyment." The idea here is that, for a conscious victim who has no neurological loss, I not only have pain and suffering that I didn't have before, but in addition my quality of life is lower because I can't do things I would otherwise do - play tennis, go skiing, climb mountains, whatever. The question is, should a comatose victim be entitled to damages for loss of enjoyment, even if she has no conscious awareness? Assuming that the "enjoyment" that she lost is worth $1 million, does granting her that $1 million compensate her in any way? Does the fact that the money would almost certainly go to her family or heirs make a difference? (They could potentially bring a separate suit for loss of companionship.)
There, that's law school for you.
Tuesday, October 21, 2008
Saturday, September 27, 2008
Airport Memories
Bulldog Burrito - 0 stars
320 Elm St., New Haven, CT
Cosi - 1 star
338 Elm St., New Haven, CT
Au Bon Pain - 1 star
1 Broadway, New Haven, CT
It's been over a month since I ate in an airport, but that doesn't mean I haven't been able to eat national-chain airport food. Loyal readers will know that one of the most dependable airport staples is the highly Americanized burrito place, and there's one just two blocks from the law school. Bulldog Burrito would fit in quite well in an airport, with its "cilantro lime" (read: white) rice and generally bland fare. Across the street is Cosi, one of my favorite sandwich places back when I lived in New York and a standout of National Airport in DC. Unfortunately, it's not as good when you're a vegetarian; the Greek salad was mostly lettuce, and the lentil soup tasted like it came out of a can (a high-end, organic can like Amy's, but still a can). Finally, the neighborhood also boasts an Au Bon Pain, the cafe I used to go to on Harvard Square when I didn't feel the need to be pretentious and go to Pamplona (I think that's what it was called). Au Bon Pain is my preferred lunch spot in Logan, Pittsburgh, and Philadelphia, because you can get a custom-made sandwich on a decent baguette, and it didn't disappoint here either.
Au Bon Pain is also where I spent Tuesday evening, finalizing the FT op-ed that I mentioned in my previous post. My co-author (and brother-in-law) Simon and I also decided to launch a blog, The Baseline Scenario, dedicated to global economic issues and, for the short term, to the current financial crisis. If you're at all interested in the most profound economic crisis this country has faced since the Great Depression, I encourage you to check it out.
As a result, I may be posting less often to this blog, but I'll try to make it at least once a week. (And I know, I still have to write about Sally's and Pepe's.)
Thursday, September 25, 2008
You Want to Work Where?
Jasmine - 1 star
Church and Grove Streets, New Haven, CT
There is a chill in the air, but it's still warm enough to get out of the law school for lunch, so I went to Jasmine, a Thai pushcart on the streets of New Haven a few blocks away. It's cheap, convenient, and filling. I got "drunken noodles" - rice noodles (I think) with that basil-soy flavor common to Thai food - and a mango curry with vegetables and tofu. The curry was a not as spicy as I would have liked, but overall it was pretty good and definitely worth $5.
I was eating with a 3L whom I met a year and a half ago when I was deciding whether or not to go to law school. Ironically enough, we were meeting because he is thinking of working at McKinsey and wanted my advice. McKinsey is interviewing YLS students this week for summer associate and real associate jobs, and a surprisingly high number of people seem to be interested. I guess I can understand that; I haven't been a corporate lawyer, but between the two working at a big law firm sounds equally dehumanizing, less interesting, and more career-limiting. And I certainly can't criticize anyone for wanting to make some money.
On the subject of money, and at the risk of blowing my what's left of my anonymity, my brother-in-law and I wrote two op-ed articles on the financial crisis this week. One was published in the print edition of the Washington Post on Tuesday, and the other only in the online edition of the Financial Times on Wednesday. Enjoy.
Monday, September 22, 2008
Saturday, September 20, 2008
At What Price?
I'm forgoing the usual restaurant review because there is a pressing question I want to raise about the mother of all bailouts, announced at $800 billion but almost certainly going to cost far more than that: what's the price? It's a question passed over almost entirely by the financial journalists, who are proving that they know no more (and probably a good deal less) about the financial markets than they know about their favorite baseball teams. So far they have repeated breathlessly that Treasury is asking for $800 billion of your and my money to buy mortgage-backed securities from banks, and that this will prevent the financial system from collapsing. But what price will they pay?
In my previous posts, I told the story of how poor lending practices led to mortgage-backed securities which led to major investment banks going bankrupt. The situation today is something like this (the numbers are obviously illustrative, but they reflect the basic facts). Some big bank has $190 in loans and "$200" in assets, which means it has $10 in capital. Of those "$200" in assets, $140 is in "normal" assets that are considered reasonably safe, and "$60" is in mortgage-backed securities. I say "$60" because there is virtually no market for mortgage-backed securities, so the bank is guessing (hoping?) that they are worth $60. Originally those securities were worth $100, but they've already been written down multiple times to $60. However, if the bank absolutely had to sell them on the market today, it would probably only get $20. (In July, Merrill Lynch - remember them? - sold $30 billion of mortgage-backed securities for 22 cents on the dollar.) The problem is that those $190 in loans are coming due, and no one is willing to roll over the loans or lend new money, because no one believes that the assets are really worth $200. And without new loans, the bank will go bankrupt. Since we don't know exactly what is on each bank's balance sheet, we can only assume that many, many big banks are in this situation.
Paulson is asking for $800 billion dollars to create a giant hedge fund, owned by the government, that will buy these illiquid mortgage-backed securities. The idea is that by getting them off the books of the banks, investors and the general public can have confidence that the banks won't go out of business and that the financial system won't collapse. But everything hinges on the price that this hedge fund will pay for those securities, because that's where your $800 billion are going.
We know that the government isn't going to pay market price ($20), because (a) the banks could sell the securities for $20 today without any government intervention, and (b) if they only got $20 they would go bankrupt, because then their assets would be less than their liabilities. In fact, the whole plan only works if the government pays enough to keep these banks solvent. But if the government pays whatever the banks think the securities are worth, then $60 of your money is being exchanged for "$60" worth of mortage-backed securities - which, according to the free market (remember that?) are only worth $20. So we all lose $40, and the bank gains $40; it's a handout, pure and simple.
There is only one scenario under which everything works out. There are some people who believe that, if held to maturity (basically, if you hold onto the security and see how many people actually pay their mortgages), it will turn out to be worth $60; the fact that no (sane) person would pay $60 for it today is just a result of irrational panic. If that is in fact the case, then the banks will get bailed out, and we the taxpayers will not lose money. Of course, this is predicated on the belief that markets are not efficient; if they are (which free market advocates would have us belief), then $20 really is what they are worth.
So of that $800 billion, we will get some fraction back, but most is disappearing into the pockets of the banks. Now, we are told that this is necessary to avert a complete meltdown of the financial system and the economy. But are there ways we could have accomplished this objective without taking $800 billion of our money and handing it to a hedge fund created by a former head of Goldman Sachs and undoubtedly staffed by investment bankers, whose purpose is to overpay banks for their bad investments?
Well, think about this. Even after the government buys those mortgage-backed securities at artificially high prices, the banks that have just gotten bailed out will still be able to foreclose on the homeowners at the beginning of the chain, because that $800 billion is just going to the banks, not to anyone else. And this will create another wave of social costs that the taxpayers will have to pick up. What if, instead, we used the $800 billion to help homeowners pay off their loans instead of defaulting? In addition to helping the homeowners, that would also help the banks, because that $800 billion of cash would increase the number of mortgages that get paid off, thereby increasing the value of all those mortgage-backed securities that all those banks are holding. The difference? In one case all the benefit goes to the banks, in the other it is shared between ordinary homeowners and the banks.
At the end of the day, Paulson's plan could be the largest and most egregious example of self-dealing in the history of the American financial system, under cover of a legitimate emergency - which should come as no surprise from an Administration whose modus operandi has been using the levers of power to enrich the already rich.
In my previous posts, I told the story of how poor lending practices led to mortgage-backed securities which led to major investment banks going bankrupt. The situation today is something like this (the numbers are obviously illustrative, but they reflect the basic facts). Some big bank has $190 in loans and "$200" in assets, which means it has $10 in capital. Of those "$200" in assets, $140 is in "normal" assets that are considered reasonably safe, and "$60" is in mortgage-backed securities. I say "$60" because there is virtually no market for mortgage-backed securities, so the bank is guessing (hoping?) that they are worth $60. Originally those securities were worth $100, but they've already been written down multiple times to $60. However, if the bank absolutely had to sell them on the market today, it would probably only get $20. (In July, Merrill Lynch - remember them? - sold $30 billion of mortgage-backed securities for 22 cents on the dollar.) The problem is that those $190 in loans are coming due, and no one is willing to roll over the loans or lend new money, because no one believes that the assets are really worth $200. And without new loans, the bank will go bankrupt. Since we don't know exactly what is on each bank's balance sheet, we can only assume that many, many big banks are in this situation.
Paulson is asking for $800 billion dollars to create a giant hedge fund, owned by the government, that will buy these illiquid mortgage-backed securities. The idea is that by getting them off the books of the banks, investors and the general public can have confidence that the banks won't go out of business and that the financial system won't collapse. But everything hinges on the price that this hedge fund will pay for those securities, because that's where your $800 billion are going.
We know that the government isn't going to pay market price ($20), because (a) the banks could sell the securities for $20 today without any government intervention, and (b) if they only got $20 they would go bankrupt, because then their assets would be less than their liabilities. In fact, the whole plan only works if the government pays enough to keep these banks solvent. But if the government pays whatever the banks think the securities are worth, then $60 of your money is being exchanged for "$60" worth of mortage-backed securities - which, according to the free market (remember that?) are only worth $20. So we all lose $40, and the bank gains $40; it's a handout, pure and simple.
There is only one scenario under which everything works out. There are some people who believe that, if held to maturity (basically, if you hold onto the security and see how many people actually pay their mortgages), it will turn out to be worth $60; the fact that no (sane) person would pay $60 for it today is just a result of irrational panic. If that is in fact the case, then the banks will get bailed out, and we the taxpayers will not lose money. Of course, this is predicated on the belief that markets are not efficient; if they are (which free market advocates would have us belief), then $20 really is what they are worth.
So of that $800 billion, we will get some fraction back, but most is disappearing into the pockets of the banks. Now, we are told that this is necessary to avert a complete meltdown of the financial system and the economy. But are there ways we could have accomplished this objective without taking $800 billion of our money and handing it to a hedge fund created by a former head of Goldman Sachs and undoubtedly staffed by investment bankers, whose purpose is to overpay banks for their bad investments?
Well, think about this. Even after the government buys those mortgage-backed securities at artificially high prices, the banks that have just gotten bailed out will still be able to foreclose on the homeowners at the beginning of the chain, because that $800 billion is just going to the banks, not to anyone else. And this will create another wave of social costs that the taxpayers will have to pick up. What if, instead, we used the $800 billion to help homeowners pay off their loans instead of defaulting? In addition to helping the homeowners, that would also help the banks, because that $800 billion of cash would increase the number of mortgages that get paid off, thereby increasing the value of all those mortgage-backed securities that all those banks are holding. The difference? In one case all the benefit goes to the banks, in the other it is shared between ordinary homeowners and the banks.
At the end of the day, Paulson's plan could be the largest and most egregious example of self-dealing in the history of the American financial system, under cover of a legitimate emergency - which should come as no surprise from an Administration whose modus operandi has been using the levers of power to enrich the already rich.
Thursday, September 18, 2008
Sub-prime crisis, continued
Indian cart, the U.N. - 1 star
Prospect St., New Haven, CT
New Haven is currently enjoying its beautiful two-week season of early fall, with crystal-clear skies and temperatures in the low 70s. So for lunch today, Kiel, Tommy, and I took a stroll up Prospect St. to the School of Management, Yale's idiosyncratically-named business school. The object of our quest was an array of pushcart vendors outside the SOM. There are a Thai cart, an Indian cart, a Japanese cart, a Mexican cart, a Middle Eastern cart, and probably others I've forgotten. In Berkeley, there's a food court on Durant that my friend Nancy dubbed the U.N., because all of the developing world countries were represented (there was an Afghan place that I particularly liked), so I'm going to call this place the U.N., too.
You can get a rice plate with up to four things on top, for just $4.50 (vegetarian, at least); I had channa masala (chickpeas), which was pretty bland, and a good spicy potato dish, as well as a samosa. Kiel also got Indian, including a big, chewy piece of naan, and Tommy got Thai noodles. We sat on the patio of the SOM and talked about capitalism. Ah, to be young again.
Today in procedure class, while the conflagration in the financial system continued to swirl around all of us, we learned about the distinction between personal jurisdiction and venue. In short, if you are a citizen of Connecticut who was harmed by an operation performed in New York by a doctor who lives in New York, and you sue him in federal court in Connecticut, that court will probably have personal jurisdiction (depending on the extent of that doctor's connections to Connecticut) but will not have venue; but if instead you sue the hospital where you got the operation, you will almost certainly have personal jurisdiction and you will have venue. At the end, the professor said there was no coherent theory that could explain that difference, and we just moved on.
One other person in my small group independently noted that there is a stunning silence at Yale over this week's events, which people will be studying for the next hundred years. I don't have any particuar insights, but I thought I would take a stab at explaining some of the mechanics that are usually glossed over in the newspapers, either because the financial reporters take them for granted, or (more often) because the financial reporters don't understand them.
Last time I wrapped things up by talking about how high leverage can cause banks to have negative capital even if there's only a moderate fall in the value of their assets. That's basically what happened to Lehman Brothers; their assets were over 30 times their capital, meaning just a 3% fall would have wiped them out, and no one believed their assets were properly valued anyway, meaning most people thought they were already underwater. In that situation, no one wanted to do business with them, and if you are an investment bank and no one will loan you money, you are dead. (Lehman had liabilities of over $600 billion to support all those assets; as the loans came due, no one was willing to roll them over or make new loans to Lehman, so they were about to simply run out of cash.)
AIG was a bit more complicated. Like Lehman, AIG was highly leveraged and owned big piles of securities that were plummeting in value. In addition to mortgage-backed securities, AIG in particular was engaged in perhaps hundreds of billions of dollars worth of credit-default swaps; under the terms of these swaps, AIG was essentially insuring payment on bonds, including mortgage-backed securities. So as those mortgage-backed securities became more and more risky (see the earlier post), the chances that AIG would have to pay out on insurance claims went up, and the value of their swap holdings plummeted. So they were stuck with real debts on the one hand, and on the other hand they had a pile of assets that were falling in value and that no one wanted to buy, and it looked like they were going to run out of cash this week, because no one wanted to lend them money. In particular, as they looked more and more risky, the ratings agencies lowered their ratings for AIG; and the way loans to big companies are often structured, if the ratings fall past a certain point, the company has to "put up more collateral," which means they have to pledge more cash or assets to the lenders. (It's as if, as the price of your house falls, your bank says that you need to pledge another house to secure your mortgage ... but you don't have another house.) In this case, ratings downgrades on Monday forced AIG to come up with over $13 billion in cash or collateral, and they just didn't have it.
On Friday AIG was asking for a $20 billion loan, but by Sunday it was $40 billion, by Monday it was $75 billion, and by Tuesday the eventual federal bailout was $85 billion. This is a very worrying sign; it probably means that according to AIG's books they needed $20 billion, but when the other investment bankers looked at the actual securities holdings and swap positions they decided they were worth a lot less than AIG had assumed they were worth, and hence the need for more cash. The problem is that many people are now assuming that every bank has similarly optimistic assumptions about its assets, and if that's true then we are in big trouble.
There is some talk that the government will get its $85 billion back, at 12% interest, and this is certainly possible. But it rests on the assumption that AIG's assets are somehow worth more than the investment bankers think they are, and that once the market settles down they will be able to sell those assets at a better price. If they could get that price now, they would just sell them and they wouldn't need a loan. So the government is betting that prices of these assets, colloquially known as "toxic waste," will go up. After the last twelve months, I wouldn't bet on it.
Prospect St., New Haven, CT
New Haven is currently enjoying its beautiful two-week season of early fall, with crystal-clear skies and temperatures in the low 70s. So for lunch today, Kiel, Tommy, and I took a stroll up Prospect St. to the School of Management, Yale's idiosyncratically-named business school. The object of our quest was an array of pushcart vendors outside the SOM. There are a Thai cart, an Indian cart, a Japanese cart, a Mexican cart, a Middle Eastern cart, and probably others I've forgotten. In Berkeley, there's a food court on Durant that my friend Nancy dubbed the U.N., because all of the developing world countries were represented (there was an Afghan place that I particularly liked), so I'm going to call this place the U.N., too.
You can get a rice plate with up to four things on top, for just $4.50 (vegetarian, at least); I had channa masala (chickpeas), which was pretty bland, and a good spicy potato dish, as well as a samosa. Kiel also got Indian, including a big, chewy piece of naan, and Tommy got Thai noodles. We sat on the patio of the SOM and talked about capitalism. Ah, to be young again.
Today in procedure class, while the conflagration in the financial system continued to swirl around all of us, we learned about the distinction between personal jurisdiction and venue. In short, if you are a citizen of Connecticut who was harmed by an operation performed in New York by a doctor who lives in New York, and you sue him in federal court in Connecticut, that court will probably have personal jurisdiction (depending on the extent of that doctor's connections to Connecticut) but will not have venue; but if instead you sue the hospital where you got the operation, you will almost certainly have personal jurisdiction and you will have venue. At the end, the professor said there was no coherent theory that could explain that difference, and we just moved on.
One other person in my small group independently noted that there is a stunning silence at Yale over this week's events, which people will be studying for the next hundred years. I don't have any particuar insights, but I thought I would take a stab at explaining some of the mechanics that are usually glossed over in the newspapers, either because the financial reporters take them for granted, or (more often) because the financial reporters don't understand them.
Last time I wrapped things up by talking about how high leverage can cause banks to have negative capital even if there's only a moderate fall in the value of their assets. That's basically what happened to Lehman Brothers; their assets were over 30 times their capital, meaning just a 3% fall would have wiped them out, and no one believed their assets were properly valued anyway, meaning most people thought they were already underwater. In that situation, no one wanted to do business with them, and if you are an investment bank and no one will loan you money, you are dead. (Lehman had liabilities of over $600 billion to support all those assets; as the loans came due, no one was willing to roll them over or make new loans to Lehman, so they were about to simply run out of cash.)
AIG was a bit more complicated. Like Lehman, AIG was highly leveraged and owned big piles of securities that were plummeting in value. In addition to mortgage-backed securities, AIG in particular was engaged in perhaps hundreds of billions of dollars worth of credit-default swaps; under the terms of these swaps, AIG was essentially insuring payment on bonds, including mortgage-backed securities. So as those mortgage-backed securities became more and more risky (see the earlier post), the chances that AIG would have to pay out on insurance claims went up, and the value of their swap holdings plummeted. So they were stuck with real debts on the one hand, and on the other hand they had a pile of assets that were falling in value and that no one wanted to buy, and it looked like they were going to run out of cash this week, because no one wanted to lend them money. In particular, as they looked more and more risky, the ratings agencies lowered their ratings for AIG; and the way loans to big companies are often structured, if the ratings fall past a certain point, the company has to "put up more collateral," which means they have to pledge more cash or assets to the lenders. (It's as if, as the price of your house falls, your bank says that you need to pledge another house to secure your mortgage ... but you don't have another house.) In this case, ratings downgrades on Monday forced AIG to come up with over $13 billion in cash or collateral, and they just didn't have it.
On Friday AIG was asking for a $20 billion loan, but by Sunday it was $40 billion, by Monday it was $75 billion, and by Tuesday the eventual federal bailout was $85 billion. This is a very worrying sign; it probably means that according to AIG's books they needed $20 billion, but when the other investment bankers looked at the actual securities holdings and swap positions they decided they were worth a lot less than AIG had assumed they were worth, and hence the need for more cash. The problem is that many people are now assuming that every bank has similarly optimistic assumptions about its assets, and if that's true then we are in big trouble.
There is some talk that the government will get its $85 billion back, at 12% interest, and this is certainly possible. But it rests on the assumption that AIG's assets are somehow worth more than the investment bankers think they are, and that once the market settles down they will be able to sell those assets at a better price. If they could get that price now, they would just sell them and they wouldn't need a loan. So the government is betting that prices of these assets, colloquially known as "toxic waste," will go up. After the last twelve months, I wouldn't bet on it.
Tuesday, September 16, 2008
Yale Law School of Pizza
Est Est Est - 1 star
1176 Chapel St., New Haven, CT
Bella Haven - 0 stars
240 College St., New Haven, CT
Typical YLS organization meeting - 0 stars
New Haven is justly known for having some of the world's best pizza; of all the places I've been, including Boston, New York, and California, I would say that only Naples has generally better pizza. And when you go to Yale Law School, you end up eating a lot of pizza.
However, after three weeks, I have yet to go to Sally's or Pepe's, the two most famous New Haven pizzerias (although I've been to both in the past - I think Sally's is slightly better, but Pepe's is much more convenient in many ways). YLS is known for providing lots of free food to students, and most of that free food comes in the form of meetings held by organizations, student groups, reading groups, and so on, and they all provide pizza as an incentive to attend. For example, yesterday the Schell Center for Human Rights had a meeting, this evening there is a student organization fair and then a meeting of all of the journals, tomorrow I'm sure there's pizza but I'm going home to see my family, and Thursday there is a training session for the Temporary Restraining Order project that I may attend.
Unfortunately, and undoubtedly for cost reasons, the pizza at these events is not that good. Although it would probably get one star elsewhere in the country just for getting the basic formula right - a crust that is slightly blackened, flexible enough to fold, yet strong enough to hold the toppings; fruity, bright red tomato sauce; a reasonably high sauce-to-cheese ratio; and mozzarella cheese (believe it or not, in California some ordinary pizzerias have streaks of yellow cheddar cheese on their pizzas) - by New Haven standards YLS pizza counts as marginally passable. The downtown pizza-by-the-slice places not that much better. I tried Bella Haven because it has the unique advantage of being across the street from my apartment, but it seemed like I might have been anywhere in the Northeast; Est Est Est would probably count as one of the better pizza places in almost anywhere in the country, but is nothing special for these parts.
All the free pizza contributes to another feature of Yale Law School: the isolation. As a 1L, you spend basically your whole day shuttling around a single small building with largely the same people, going to 18 hours of classes per week and several hours more of lectures and meetings. In many ways it's a wonderful thing, and a huge advantage of going to a small school. At other times, it's easy to forget that the outside world exists. Yesterday, in perhaps the most tumultuous day in our financial system since 1929 (the markets fell more in 1987 and 2001, but neither time was there the structural turmoil we had yesterday), I didn't hear a single word about what was going on, except one professor's oblique reference to Merrill Lynch that half the class probably missed. Today, the markets just opened 2% down, the world's largest insurance company is about to go bankrupt unless it gets a $75 billion loan in the next few hours from a banking sector that has no capacity left to make loans (according to my torts professor, "insurance makes the world go round," which I also believe), and not a tremor troubles the calm of the Yale Law School.
1176 Chapel St., New Haven, CT
Bella Haven - 0 stars
240 College St., New Haven, CT
Typical YLS organization meeting - 0 stars
New Haven is justly known for having some of the world's best pizza; of all the places I've been, including Boston, New York, and California, I would say that only Naples has generally better pizza. And when you go to Yale Law School, you end up eating a lot of pizza.
However, after three weeks, I have yet to go to Sally's or Pepe's, the two most famous New Haven pizzerias (although I've been to both in the past - I think Sally's is slightly better, but Pepe's is much more convenient in many ways). YLS is known for providing lots of free food to students, and most of that free food comes in the form of meetings held by organizations, student groups, reading groups, and so on, and they all provide pizza as an incentive to attend. For example, yesterday the Schell Center for Human Rights had a meeting, this evening there is a student organization fair and then a meeting of all of the journals, tomorrow I'm sure there's pizza but I'm going home to see my family, and Thursday there is a training session for the Temporary Restraining Order project that I may attend.
Unfortunately, and undoubtedly for cost reasons, the pizza at these events is not that good. Although it would probably get one star elsewhere in the country just for getting the basic formula right - a crust that is slightly blackened, flexible enough to fold, yet strong enough to hold the toppings; fruity, bright red tomato sauce; a reasonably high sauce-to-cheese ratio; and mozzarella cheese (believe it or not, in California some ordinary pizzerias have streaks of yellow cheddar cheese on their pizzas) - by New Haven standards YLS pizza counts as marginally passable. The downtown pizza-by-the-slice places not that much better. I tried Bella Haven because it has the unique advantage of being across the street from my apartment, but it seemed like I might have been anywhere in the Northeast; Est Est Est would probably count as one of the better pizza places in almost anywhere in the country, but is nothing special for these parts.
All the free pizza contributes to another feature of Yale Law School: the isolation. As a 1L, you spend basically your whole day shuttling around a single small building with largely the same people, going to 18 hours of classes per week and several hours more of lectures and meetings. In many ways it's a wonderful thing, and a huge advantage of going to a small school. At other times, it's easy to forget that the outside world exists. Yesterday, in perhaps the most tumultuous day in our financial system since 1929 (the markets fell more in 1987 and 2001, but neither time was there the structural turmoil we had yesterday), I didn't hear a single word about what was going on, except one professor's oblique reference to Merrill Lynch that half the class probably missed. Today, the markets just opened 2% down, the world's largest insurance company is about to go bankrupt unless it gets a $75 billion loan in the next few hours from a banking sector that has no capacity left to make loans (according to my torts professor, "insurance makes the world go round," which I also believe), and not a tremor troubles the calm of the Yale Law School.
Thursday, September 11, 2008
Another September 11th
Thali Too - 2 stars
65 Broadway, New Haven, CT
One of the best things about Yale Law School (one shared, I'm sure, with many other law schools) is small group. (This is not the best thing about Yale; the best thing is that there are no grades for required classes, and everyone passes. But I digress.) In the first semester, you take one of your classes in a group of about 14 people (mine has 14), and all of your other classes (which have 40-60 people) include those same people. This being a touchy-feely school, this becomes an exercise in mutual support and admiration.
Today, my small group went out for lunch to celebrate completing our first week of law school. We went to Thali Too, which has the advantages of being close to the law school and being entirely vegetarian (my small group has at least four vegetarians, at least five if you count people who don't eat land animals, and at least one ex-vegetarian). It is a slightly Americanized pan-Indian restaurant, meaning that it has both northern Indian food (the kind you've probably had) and southern Indian food (the kind you probably haven't had). I had a veggie utthapam, which is something I had previously only found at one southern Indian restaurant in California, a kind of soft pancake with assorted sauces, and hot masala fries. They also make all the vegetarian Indian standards, plus lots of things I would love to try. I'm not sure the food deserves 2 stars, but it was fun and we got to try a lot of different things.
Most of the people in my small group are, well, young, but, this being Yale Law School, they can be shockingly accomplished. After lunch, Valarie went down to New York to attend a screening of her documentary film, Divided We Fall, which she began shooting as a college student after the first September 11th. The film, which documents hate violence in the aftermath of 9/11, has won piles of awards around the world, is being shown in 70 different cities around the country this month, and will be released on DVD later this year. And last night, before her big day, Valarie was preparing ... by staying up past 1 am (I know this because she sent out an email) doing her reading for contracts ... and she got cold-called in class this morning, where she acquitted herself gracefully. (The case had to do with whether a verbal agreement by a husband to pay his wife 30 pounds a month was intended to have legal consequences and was, therefore, an enforceable contract.) Not bad for a day's work.
65 Broadway, New Haven, CT
One of the best things about Yale Law School (one shared, I'm sure, with many other law schools) is small group. (This is not the best thing about Yale; the best thing is that there are no grades for required classes, and everyone passes. But I digress.) In the first semester, you take one of your classes in a group of about 14 people (mine has 14), and all of your other classes (which have 40-60 people) include those same people. This being a touchy-feely school, this becomes an exercise in mutual support and admiration.
Today, my small group went out for lunch to celebrate completing our first week of law school. We went to Thali Too, which has the advantages of being close to the law school and being entirely vegetarian (my small group has at least four vegetarians, at least five if you count people who don't eat land animals, and at least one ex-vegetarian). It is a slightly Americanized pan-Indian restaurant, meaning that it has both northern Indian food (the kind you've probably had) and southern Indian food (the kind you probably haven't had). I had a veggie utthapam, which is something I had previously only found at one southern Indian restaurant in California, a kind of soft pancake with assorted sauces, and hot masala fries. They also make all the vegetarian Indian standards, plus lots of things I would love to try. I'm not sure the food deserves 2 stars, but it was fun and we got to try a lot of different things.
Most of the people in my small group are, well, young, but, this being Yale Law School, they can be shockingly accomplished. After lunch, Valarie went down to New York to attend a screening of her documentary film, Divided We Fall, which she began shooting as a college student after the first September 11th. The film, which documents hate violence in the aftermath of 9/11, has won piles of awards around the world, is being shown in 70 different cities around the country this month, and will be released on DVD later this year. And last night, before her big day, Valarie was preparing ... by staying up past 1 am (I know this because she sent out an email) doing her reading for contracts ... and she got cold-called in class this morning, where she acquitted herself gracefully. (The case had to do with whether a verbal agreement by a husband to pay his wife 30 pounds a month was intended to have legal consequences and was, therefore, an enforceable contract.) Not bad for a day's work.
Wednesday, September 10, 2008
Back in the Ivory Tower
Copper Kitchen - 2 stars
1008 Chapel St., New Haven, CT
In the mid-1990s, my girlfriend (not the woman I ended up marrying) went to art school at Yale. (Little-known fact: Yale has one of the best art schools, and perhaps the most prestigious one, in the country. Its music school is pretty good, too.) She is known in some circles for having painted an obscene painting about a Yale art school professor - while she was still a student. I don't remember much about those years - and I only spent about 6 weeks in New Haven, anyway - but one of our favorite places to eat was the Copper Kitchen, which is an old-school diner. It is old-school in two ways: first, it doesn't have fake-50s decor, like most diners in most parts of the country; and second, it doesn't have a 20-page menu with every dish you could possibly imagine. Back then, you could get two eggs, home fries, toast, and coffee for $2.85; today, it costs $4.00, making it still one of the best bargains anywhere. It's also right around the corner from my apartment, so I ate lunch there one of my first days here for school. I had an egg and cheese sandwich with fried onions on a hard roll (something I grew up with, but that I haven't seen outside the Northeast), which was perfect, and a Greek salad, which was passable (like virtually all Greek salads you see, it was at least 50% lettuce, which is a bit anomalous).
I came to Yale because it seemed like the friendliest, nicest law school around (OK, given my geographic location, the only one I was comparing it to was Harvard), and so far it hasn't disappointed. We had four days of orientation, the lessons of which can be summed up as follows:
- Be nice to each other
- Remember why you came to law school
- Help each other
- It's more important to do something you believe in than to make money
- All your first-term classes are pass/fail, and everyone passes, so don't worry about it
- Find out who you are as a person and what you stand for
- Love each other
In the words of the great philosopher Anna Kournikova, "Why are people afraid of getting older? You feel wiser. You feel more mature. You feel like you know yourself better. You would trade that for softer skin? Not me!" What that quotation has to do with the rest of this post is left as an exercise for the reader.
This is the view from my New Haven apartment. Nice, no?
Saturday, August 16, 2008
Generations
Rendezvous Bistro - 3 stars
380 South Broadway, Jackson, WY
I was walking up from the Yellowstone River to the Tower Falls overlook, and there was a portion of the path that traversed a steep incline, with slippery sand underfoot. A man was helping his children across. Then I went across and held out my hand to make sure my father didn't slip. You reach a point in your life where you take care of your children, and you reach a point when you take care of your parents as well.
Actually, my father can take care of himself very well for a 77-year-old man. He's in good health and relatively fit. But I planned this whole trip to Yellowstone for him, because I know he wanted to go there, and I spent the whole time trying to make sure he was having a good time. At the same time, since he is my father, he was also trying to make sure that I was having a good time. Which led to some frustrating moments, when each one of us was trying to tease out what the other person wanted to do. I would float one idea, he would suggest another, then fifteen minutes later he would suggest my idea, and I would suggest his. It's much simpler with my daughter: she's the star of the show, and we both know it.
Luckily he told me to pick dinner our last night in Jackson, and after a week in Yellowstone I was ready for a good restaurant. I doubted we could get into the Snake Creek Grill, so we went to the Rendezvous Bistro on the edge of town, where all the tables were taken by 6.30 but we could eat at the bar. I had a sidecar that was too sweet, but everything else was excellent. The redundantly named "panzanella bread salad" was a tantalizing blend of tomatoes, bread, arugula, and fresh mozzarella cheese; the risotto cake was covered with perfectly grilled carrots, asparagus, and portobello mushrooms (and I never like portobello mushrooms); the warm chocolate bread pudding was scrumptious.
If I'm lucky, 36 years or so from now I'll be on vacation with my daughter, and we'll be having the same issues. Things could be worse.
380 South Broadway, Jackson, WY
I was walking up from the Yellowstone River to the Tower Falls overlook, and there was a portion of the path that traversed a steep incline, with slippery sand underfoot. A man was helping his children across. Then I went across and held out my hand to make sure my father didn't slip. You reach a point in your life where you take care of your children, and you reach a point when you take care of your parents as well.
Actually, my father can take care of himself very well for a 77-year-old man. He's in good health and relatively fit. But I planned this whole trip to Yellowstone for him, because I know he wanted to go there, and I spent the whole time trying to make sure he was having a good time. At the same time, since he is my father, he was also trying to make sure that I was having a good time. Which led to some frustrating moments, when each one of us was trying to tease out what the other person wanted to do. I would float one idea, he would suggest another, then fifteen minutes later he would suggest my idea, and I would suggest his. It's much simpler with my daughter: she's the star of the show, and we both know it.
Luckily he told me to pick dinner our last night in Jackson, and after a week in Yellowstone I was ready for a good restaurant. I doubted we could get into the Snake Creek Grill, so we went to the Rendezvous Bistro on the edge of town, where all the tables were taken by 6.30 but we could eat at the bar. I had a sidecar that was too sweet, but everything else was excellent. The redundantly named "panzanella bread salad" was a tantalizing blend of tomatoes, bread, arugula, and fresh mozzarella cheese; the risotto cake was covered with perfectly grilled carrots, asparagus, and portobello mushrooms (and I never like portobello mushrooms); the warm chocolate bread pudding was scrumptious.
If I'm lucky, 36 years or so from now I'll be on vacation with my daughter, and we'll be having the same issues. Things could be worse.
Friday, August 08, 2008
The Subprime Crisis, Explained
Cactus Cantina - 1 star
3300 Wisconsin Ave NW, Washington, DC
I was in Washington to visit my sister's family (after seeing my wife's whole family). We ordered takeout from Spices, a passable pan-Asian restaurant in Cleveland Park, and the next day we all went to Cactus Cantina, supposedly George W. Bush's favorite restaurant in Washington. I guess that fits: it's Tex-Mex, boisterous, friendly, and relatively uninteresting - not too surprising for a "Texan" who grew up in Connecticut and Maine. But they do rush the kid's dishes to the table, and they have one of those big tortilla makers that pumps out hot, fresh flour tortillas (not that you'll see many flour tortillas in Mexico, but this is Tex-Mex, remember?). The vegetable fajitas are just about the only vegetarian option, and the vegetable selection is healthier than fajitas have any right to be. The mojitos were also too sweet, but overall it was a fun place to be.
During the visit we drove past the headquarters of Fannie Mae, also on Wisconsin Ave, several times. Fannie Mae and Freddie Mac, as you probably now, are currently the epicenter of the financial crisis that could very well push the country into the worst economic slowdown since the Great Depression (matching the Depression is pretty unlikely). Despite the importance of the crisis to all of us, I think that ordinary, intelligent, well-educated people find it difficult to understand what is going on - at least judging by some of my friends and relatives. One problem is that even general news accounts presuppose an understanding of terms like "securitization," "CDO," and writedown." So I thought I would provide my own translation.
Historically local banks took deposits from savings account customers and lent money to homebuyers. They paid 1% for the savings accounts and collected 6% on the mortgages, and the spread (5 percentage points in this case) was more than enough to compensate for any homebuyers who couldn't pay their mortgages.
Then, as any explanation of the subprime crisis says, banks started reselling and securitizing mortgages. But what does it mean to resell (let alone securitize) a mortgage?
To understand this, you have to look at it from the bank's point of view. To them, a mortgage is a product. This product gives them a monthly stream of payments - about $1,000 per month for a 30-year, fixed-rate mortgage on a loan amount of $150,000 (numbers are very approximate), but that stream is not guaranteed; the homebuyer might not be able to pay (in which case they might have to renegotiate or foreclose, both of which are costly), or might pay the whole thing early. The price they pay for this product (this stream of payments) is just the loan amount; from their perspective, they are giving you the loan amount to "buy" the stream of payments. The lower the interest rate you get, the higher the price they are paying for your payments.
If Bank A resells a mortgage to Bank B, Bank B buys your payment stream from Bank A in exchange for a lump sum of money. Under stable market conditions, the lump sum that B gives A will be about the same as the lump sum you received from A (in which case A only makes money from various fees). You can also think of this as Bank B loaning you the money for your house, with Bank A acting as an intermediary.
Now, in practice, Bank B (or C, or D, ...) is often an investment bank. And Bank B often securitizes your mortgage. This means they take your mortgage and combine it with many (thousands of) similar mortgages. If the mortgages are similar according to certain objective criteria - creditworthiness of borrowers, loan-to-value ratios, etc. - they can be treated as homogeneous. (Something similar happened with corn in the 19th century; certain standards were established for different grades of corn, and from that point bushels of corn from different farms didn't have to be separately shipped and inspected by buyers, but could be poured together into huge vats.) Now you have a pool of, say, 10,000 mortgages, with about $10 million in payments coming in from borrowers every month. That pool as a whole has a price - the amount someone would pay to get all of those payment streams of that riskiness. In a securitization, the investment bank divides the pool up into many small slices - say 1,000 in this case. Each slice can be bought and sold separately, and each slice entitles the buyer to 1/1,000th of the payments streaming into that pool.
The price of these slices is based on current assumptions about the riskiness of those payments - the riskier those payments are perceived to be, the lower the price anyone will pay for a slice of them. The problem, as every overview says, is that at the time those mortgages were securitized, the buyers assumed that housing prices could only go up, and therefore the payments were not very risky; when housing prices began to fall, many more borrowers became delinquent than had been expected. As a result, if you own a slice of that pool, you still own 1/1,000th of the payments coming in, but your expectations of how many payments will come in are much lower than they were when you bought the slice. (There were some very sophisticated ways of dividing up those pools, but that is an advanced topic.)
This brings us to writedowns and, eventually, to the subject of banking capital. Let's say you are a hedge fund and you paid $1 million for a slice of a securities offering (a pool). You put that on your books as an asset (in the world of finance, a stream of payments coming to you is an asset) valued at $1 million. However, a year later, that slice is only worth $200,000 (you know this because other people selling similar slices of similar pools are only getting 20 cents on the dollar). You generally have to mark your holding to market (account for its current market value), which means now that asset is valued at $200,000 on your balance sheet. This is an $800,000 writedown, and it counts as a loss on your income (profit and loss) statement. And that is what has been going on over the last year, to the tune of over $100 billion at publicly traded banks alone.
The next problem is that, over the last two decades, most of our banks have become giant proprietary trading rooms, meaning that they buy and sell securities for profit. Let's say you start a bank with $1 million of your own money. That's your "capital." You go out and borrow $9 million from other people, typically by selling bonds, which are promises to pay back the money at some interest rate. Then you take the $10 million and buy some stuff (like slices of mortgage pools), which pays a higher interest rate (the expected stream of payments, divided by the amount you paid for it). Suddenly you are making money hand over fist. But then let's say that housing prices start falling, securitized subprime mortgages start plummeting in value, and your $10 million in assets are now only worth $8 million. Since the value of your debt ($9 million) hasn't changed, you are technically insolvent at this point, because your losses exceed your capital; put another way, the money coming in from your slices of mortgage pools isn't enough to pay your bondholders. And this is where Fannie and Freddie were until they were bailed out by the U.S. government (meaning you and me, and our children); by certain accounting rules, they had negative capital. Basically they borrowed huge amounts of money at low cost (because everyone assumed their debts were backed by the U.S. government) and used the money to buy mortgages (and slices of mortgages of mortgage pools), making them vastly profitable and earning their CEOs tens of millions of dollars in just a few years. Now their assets are plummeting in value and they need to be bailed out. That's American capitalism for you.
Well, there it is. Hopefully that will help you make sense out of your newspaper's business section - which, despite my retirement from the business world, remains my favorite section of the (virtual) paper. What lessons can we draw from all of this? There was a lot of greed, corruption, and incompetence all around, but most fundamentally I think that homeownership is overrated, both individually and as a societal goal. It warrants a separate post, but in summary buying a house is an incredibly risky thing to do with your money, makes absolutely no sense as an investment (it only works out for most people because home prices do usually go up a little bit, and the massive leverage created by a mortgage turns that into a good return), and is hardly the thing our government should be encouraging people to do (via the mortgage interest tax deduction most notably, which perversely subsidizes people in proportion to the size of their houses and the size of their incomes).
3300 Wisconsin Ave NW, Washington, DC
I was in Washington to visit my sister's family (after seeing my wife's whole family). We ordered takeout from Spices, a passable pan-Asian restaurant in Cleveland Park, and the next day we all went to Cactus Cantina, supposedly George W. Bush's favorite restaurant in Washington. I guess that fits: it's Tex-Mex, boisterous, friendly, and relatively uninteresting - not too surprising for a "Texan" who grew up in Connecticut and Maine. But they do rush the kid's dishes to the table, and they have one of those big tortilla makers that pumps out hot, fresh flour tortillas (not that you'll see many flour tortillas in Mexico, but this is Tex-Mex, remember?). The vegetable fajitas are just about the only vegetarian option, and the vegetable selection is healthier than fajitas have any right to be. The mojitos were also too sweet, but overall it was a fun place to be.
During the visit we drove past the headquarters of Fannie Mae, also on Wisconsin Ave, several times. Fannie Mae and Freddie Mac, as you probably now, are currently the epicenter of the financial crisis that could very well push the country into the worst economic slowdown since the Great Depression (matching the Depression is pretty unlikely). Despite the importance of the crisis to all of us, I think that ordinary, intelligent, well-educated people find it difficult to understand what is going on - at least judging by some of my friends and relatives. One problem is that even general news accounts presuppose an understanding of terms like "securitization," "CDO," and writedown." So I thought I would provide my own translation.
Historically local banks took deposits from savings account customers and lent money to homebuyers. They paid 1% for the savings accounts and collected 6% on the mortgages, and the spread (5 percentage points in this case) was more than enough to compensate for any homebuyers who couldn't pay their mortgages.
Then, as any explanation of the subprime crisis says, banks started reselling and securitizing mortgages. But what does it mean to resell (let alone securitize) a mortgage?
To understand this, you have to look at it from the bank's point of view. To them, a mortgage is a product. This product gives them a monthly stream of payments - about $1,000 per month for a 30-year, fixed-rate mortgage on a loan amount of $150,000 (numbers are very approximate), but that stream is not guaranteed; the homebuyer might not be able to pay (in which case they might have to renegotiate or foreclose, both of which are costly), or might pay the whole thing early. The price they pay for this product (this stream of payments) is just the loan amount; from their perspective, they are giving you the loan amount to "buy" the stream of payments. The lower the interest rate you get, the higher the price they are paying for your payments.
If Bank A resells a mortgage to Bank B, Bank B buys your payment stream from Bank A in exchange for a lump sum of money. Under stable market conditions, the lump sum that B gives A will be about the same as the lump sum you received from A (in which case A only makes money from various fees). You can also think of this as Bank B loaning you the money for your house, with Bank A acting as an intermediary.
Now, in practice, Bank B (or C, or D, ...) is often an investment bank. And Bank B often securitizes your mortgage. This means they take your mortgage and combine it with many (thousands of) similar mortgages. If the mortgages are similar according to certain objective criteria - creditworthiness of borrowers, loan-to-value ratios, etc. - they can be treated as homogeneous. (Something similar happened with corn in the 19th century; certain standards were established for different grades of corn, and from that point bushels of corn from different farms didn't have to be separately shipped and inspected by buyers, but could be poured together into huge vats.) Now you have a pool of, say, 10,000 mortgages, with about $10 million in payments coming in from borrowers every month. That pool as a whole has a price - the amount someone would pay to get all of those payment streams of that riskiness. In a securitization, the investment bank divides the pool up into many small slices - say 1,000 in this case. Each slice can be bought and sold separately, and each slice entitles the buyer to 1/1,000th of the payments streaming into that pool.
The price of these slices is based on current assumptions about the riskiness of those payments - the riskier those payments are perceived to be, the lower the price anyone will pay for a slice of them. The problem, as every overview says, is that at the time those mortgages were securitized, the buyers assumed that housing prices could only go up, and therefore the payments were not very risky; when housing prices began to fall, many more borrowers became delinquent than had been expected. As a result, if you own a slice of that pool, you still own 1/1,000th of the payments coming in, but your expectations of how many payments will come in are much lower than they were when you bought the slice. (There were some very sophisticated ways of dividing up those pools, but that is an advanced topic.)
This brings us to writedowns and, eventually, to the subject of banking capital. Let's say you are a hedge fund and you paid $1 million for a slice of a securities offering (a pool). You put that on your books as an asset (in the world of finance, a stream of payments coming to you is an asset) valued at $1 million. However, a year later, that slice is only worth $200,000 (you know this because other people selling similar slices of similar pools are only getting 20 cents on the dollar). You generally have to mark your holding to market (account for its current market value), which means now that asset is valued at $200,000 on your balance sheet. This is an $800,000 writedown, and it counts as a loss on your income (profit and loss) statement. And that is what has been going on over the last year, to the tune of over $100 billion at publicly traded banks alone.
The next problem is that, over the last two decades, most of our banks have become giant proprietary trading rooms, meaning that they buy and sell securities for profit. Let's say you start a bank with $1 million of your own money. That's your "capital." You go out and borrow $9 million from other people, typically by selling bonds, which are promises to pay back the money at some interest rate. Then you take the $10 million and buy some stuff (like slices of mortgage pools), which pays a higher interest rate (the expected stream of payments, divided by the amount you paid for it). Suddenly you are making money hand over fist. But then let's say that housing prices start falling, securitized subprime mortgages start plummeting in value, and your $10 million in assets are now only worth $8 million. Since the value of your debt ($9 million) hasn't changed, you are technically insolvent at this point, because your losses exceed your capital; put another way, the money coming in from your slices of mortgage pools isn't enough to pay your bondholders. And this is where Fannie and Freddie were until they were bailed out by the U.S. government (meaning you and me, and our children); by certain accounting rules, they had negative capital. Basically they borrowed huge amounts of money at low cost (because everyone assumed their debts were backed by the U.S. government) and used the money to buy mortgages (and slices of mortgages of mortgage pools), making them vastly profitable and earning their CEOs tens of millions of dollars in just a few years. Now their assets are plummeting in value and they need to be bailed out. That's American capitalism for you.
Well, there it is. Hopefully that will help you make sense out of your newspaper's business section - which, despite my retirement from the business world, remains my favorite section of the (virtual) paper. What lessons can we draw from all of this? There was a lot of greed, corruption, and incompetence all around, but most fundamentally I think that homeownership is overrated, both individually and as a societal goal. It warrants a separate post, but in summary buying a house is an incredibly risky thing to do with your money, makes absolutely no sense as an investment (it only works out for most people because home prices do usually go up a little bit, and the massive leverage created by a mortgage turns that into a good return), and is hardly the thing our government should be encouraging people to do (via the mortgage interest tax deduction most notably, which perversely subsidizes people in proportion to the size of their houses and the size of their incomes).
Thursday, August 07, 2008
The Worst Place To Be a Vegetarian
Rising Tide Restaurant - 1 star
96 King St., Scarborough, Maine
Portland Lobster Company - 1 star
180 Commercial St., Portland, Maine
Omaha, Nebraska? Paris, France? No, it's the Maine coast in the summertime, when the only thing anyone wants to sell you is lobster. I was at Higgins Beach with my family and my nephew, who was visiting us for a few weeks. Higgins Beach is relatively undeveloped, which is good and bad - good because there is no congestion and the beach itself is beautiful, bad because there are few hotels or restaurants in the immediate vicinity. We stayed at the Higgins Beach Inn, which is basically a dump - tiny rooms, soft beds, showers that don't work properly, not enough beach towels, few electrical outlets, etc.; there was one other hotel near the beach, and it was full.
But we did eat at two restaurants that I think were good, at least according to the animal eaters. The first was Rising Tide, a seafood place with the ambiance of a shack, behind a fisherman's cooperative and right on the docks. I had a salad and onion rings (which came out of the freezer), but apparently the lobster roll was good. That night we ate at the Portland Lobster Company, on the docks in Portland, at a bright red picnic table under a large tent in the midst of a driving rainstorm. They at least had a couple of vegetarian options - I had an avocado and cheese wrap, which was heavy on the lettuce but otherwise good, and a Greek salad with too much dressing - and I hear the lobster roll was even better (the fried haddock sandwich was also said to be good). What's more, I drank local draught beer in a plastic cup, perhaps for the first time since college, and it was not bad at all.
96 King St., Scarborough, Maine
Portland Lobster Company - 1 star
180 Commercial St., Portland, Maine
Omaha, Nebraska? Paris, France? No, it's the Maine coast in the summertime, when the only thing anyone wants to sell you is lobster. I was at Higgins Beach with my family and my nephew, who was visiting us for a few weeks. Higgins Beach is relatively undeveloped, which is good and bad - good because there is no congestion and the beach itself is beautiful, bad because there are few hotels or restaurants in the immediate vicinity. We stayed at the Higgins Beach Inn, which is basically a dump - tiny rooms, soft beds, showers that don't work properly, not enough beach towels, few electrical outlets, etc.; there was one other hotel near the beach, and it was full.
But we did eat at two restaurants that I think were good, at least according to the animal eaters. The first was Rising Tide, a seafood place with the ambiance of a shack, behind a fisherman's cooperative and right on the docks. I had a salad and onion rings (which came out of the freezer), but apparently the lobster roll was good. That night we ate at the Portland Lobster Company, on the docks in Portland, at a bright red picnic table under a large tent in the midst of a driving rainstorm. They at least had a couple of vegetarian options - I had an avocado and cheese wrap, which was heavy on the lettuce but otherwise good, and a Greek salad with too much dressing - and I hear the lobster roll was even better (the fried haddock sandwich was also said to be good). What's more, I drank local draught beer in a plastic cup, perhaps for the first time since college, and it was not bad at all.
Saturday, July 26, 2008
The Last Time
Qdoba - 1 star
PIT
Au Bon Pain - 1 star
PIT
Andale - 2 stars
SFO
French Meadow Cafe - 2 stars
MSP
This week I took my last business trip. Which was nice, because otherwise my last trip to my company's headquarters would have happened back in May, and I would not have realized it at the time.
As usual, I bought the cheapest ticket I could find, which involved taking the US Airways 6.45 am flight to Charlotte. But the night before I got an automated phone call telling me that flight had been cancelled, so I switched to the 6.15 flight to Pittsburgh - the one I took so many times back in 2003 and 2004 when traveling to Michigan for our first customer.
Although I've never been to Pittsburgh itself, I've been to the airport dozens of times, and I think it is actually quite underrated. It is reasonably compact and has enough power outlets, decent shopping (I once bought a pair of shoes at the Johnston & Murphy because I forgot to pack dress shoes for a meeting), and one of the better food courts around (including a Ben and Jerry's). For breakfast, I had a breakfast burrito of scrambled eggs, potatoes, cheese, "ranchera" (tomato) sauce, and salsa, which is one of my fake-Mexican favorites. Then I got a sandwich for the plane from Au Bon Pain, which has occupied a special place in my heart ever since college. Before cafés were commonplace in this country, there was a large Au Bon Pain right on Harvard Square, and in the summer before my senior year I read most of Being and Nothingness there (my senior thesis was about French intellectuals, including Jean-Paul Sartre, and the Algerian War). I've always thought their bread was pretty good, and the fact that you can order a sandwich with whatever you want is always welcome in an airport. I had Swiss cheese, cucumbers, tomato, red onions, and aioli on a baguette, and it tasted very good somewhere over Nebraska.
On the way home I ate at two of my favorite airport restaurants, Andalé in SFO (the best airport Mexican restaurant and the best airport breakfast I have ever had) and French Meadow in MSP (although this time I had a green tea vodka martini that can only be described as bad), which must be one of the nicest airports in the United States (in case you don't know, there is a second floor above the central shopping area with comfy chairs, electrical outlets, and peace and quiet). I've reviewed both of them before, so I won't repeat myself more than I already have.
Sitting on the two planes, I also tried to reflect on the last seven years, since we founded my company in California just one week before I moved to Massachusetts (what was I thinking?), and, indeed, the last eleven years, since I flew from California to New York to start my first job, as a McKinsey consultant, with a training session at Williams College. I tried to remember the person I used to be and, not surprisingly, failed. What are you supposed to feel when you quietly close the door on a chapter in your life? Of course things didn't work out exactly like I expected - actually, I had no expectations at the time - and I probably wasn't as good at the whole business thing as I thought I would be. But I enjoyed myself more than I expected, I learned a lot about myself, I worked with people I feel lucky to have known, and I'm extremely proud of everything we accomplished together. I couldn't have asked for anything more.
PIT
Au Bon Pain - 1 star
PIT
Andale - 2 stars
SFO
French Meadow Cafe - 2 stars
MSP
This week I took my last business trip. Which was nice, because otherwise my last trip to my company's headquarters would have happened back in May, and I would not have realized it at the time.
As usual, I bought the cheapest ticket I could find, which involved taking the US Airways 6.45 am flight to Charlotte. But the night before I got an automated phone call telling me that flight had been cancelled, so I switched to the 6.15 flight to Pittsburgh - the one I took so many times back in 2003 and 2004 when traveling to Michigan for our first customer.
Although I've never been to Pittsburgh itself, I've been to the airport dozens of times, and I think it is actually quite underrated. It is reasonably compact and has enough power outlets, decent shopping (I once bought a pair of shoes at the Johnston & Murphy because I forgot to pack dress shoes for a meeting), and one of the better food courts around (including a Ben and Jerry's). For breakfast, I had a breakfast burrito of scrambled eggs, potatoes, cheese, "ranchera" (tomato) sauce, and salsa, which is one of my fake-Mexican favorites. Then I got a sandwich for the plane from Au Bon Pain, which has occupied a special place in my heart ever since college. Before cafés were commonplace in this country, there was a large Au Bon Pain right on Harvard Square, and in the summer before my senior year I read most of Being and Nothingness there (my senior thesis was about French intellectuals, including Jean-Paul Sartre, and the Algerian War). I've always thought their bread was pretty good, and the fact that you can order a sandwich with whatever you want is always welcome in an airport. I had Swiss cheese, cucumbers, tomato, red onions, and aioli on a baguette, and it tasted very good somewhere over Nebraska.
On the way home I ate at two of my favorite airport restaurants, Andalé in SFO (the best airport Mexican restaurant and the best airport breakfast I have ever had) and French Meadow in MSP (although this time I had a green tea vodka martini that can only be described as bad), which must be one of the nicest airports in the United States (in case you don't know, there is a second floor above the central shopping area with comfy chairs, electrical outlets, and peace and quiet). I've reviewed both of them before, so I won't repeat myself more than I already have.
Sitting on the two planes, I also tried to reflect on the last seven years, since we founded my company in California just one week before I moved to Massachusetts (what was I thinking?), and, indeed, the last eleven years, since I flew from California to New York to start my first job, as a McKinsey consultant, with a training session at Williams College. I tried to remember the person I used to be and, not surprisingly, failed. What are you supposed to feel when you quietly close the door on a chapter in your life? Of course things didn't work out exactly like I expected - actually, I had no expectations at the time - and I probably wasn't as good at the whole business thing as I thought I would be. But I enjoyed myself more than I expected, I learned a lot about myself, I worked with people I feel lucky to have known, and I'm extremely proud of everything we accomplished together. I couldn't have asked for anything more.
Friday, July 25, 2008
Right Back Where We Started from
China Best - 0 stars
883 Hamilton Ave., Menlo Park, CA
I'm taking one last trip to the office in California before starting law school in September. Since I'm a sucker for nostalgia, I took a drive down to Menlo Park to take a look at our first office, where we started the company back in September 2001.
Our first meeting there was on September 17, six days after you-know-what. We were renting a few cubicles from Autodaq, a company founded by three of Ken's business school friends. I don't think I had been back since we moved in with our VCs in the middle of 2002. We've moved twice since then, and our new offices are in a big glass building that used to house one of Silicon Valley's most prominent companies.
Back then we used to eat either at one of the local taquerias where most of the other customers were Mexicans (and the jukeboxes were full of Mexican music) or in a mini-strip mall off of Willow Ave. I was hoping to go to the Vietnamese place, but it's no longer there, so instead I went to the Chinese place. It was never very good, and if anything it got worse; the broccoli with garlic sauce tasted both undercooked and stale, and even the rice was weirdly oversized (long grain?) and dry.
I doubt I'll be going back to that particular strip mall. But it was one more place I wanted to say good bye to.
(The title of this post, of course, is a reference to the theme song of a TV show that I liked - at least for the first seasson.)
883 Hamilton Ave., Menlo Park, CA
I'm taking one last trip to the office in California before starting law school in September. Since I'm a sucker for nostalgia, I took a drive down to Menlo Park to take a look at our first office, where we started the company back in September 2001.
Our first meeting there was on September 17, six days after you-know-what. We were renting a few cubicles from Autodaq, a company founded by three of Ken's business school friends. I don't think I had been back since we moved in with our VCs in the middle of 2002. We've moved twice since then, and our new offices are in a big glass building that used to house one of Silicon Valley's most prominent companies.
Back then we used to eat either at one of the local taquerias where most of the other customers were Mexicans (and the jukeboxes were full of Mexican music) or in a mini-strip mall off of Willow Ave. I was hoping to go to the Vietnamese place, but it's no longer there, so instead I went to the Chinese place. It was never very good, and if anything it got worse; the broccoli with garlic sauce tasted both undercooked and stale, and even the rice was weirdly oversized (long grain?) and dry.
I doubt I'll be going back to that particular strip mall. But it was one more place I wanted to say good bye to.
(The title of this post, of course, is a reference to the theme song of a TV show that I liked - at least for the first seasson.)
Tuesday, July 22, 2008
Down on the Farm
Riverland Farm - 2 stars
Sunderland, Massachusetts
I've been doing more cooking than usual, first because I'm not traveling much these days for child care reasons, and second because of our farm share. Each week we visit our farm to pick up our fresh, organic vegetables, some of which we have to pick ourselves out in the fields (brilliant idea, making your customers do your work for you). We usually split the share with my wife's parents, but with them out of town we've been eating it all ourselves, which takes a lot of dedication and planning.
This was this week's haul. Roughly from left, there are five ears of corn, two heads of lettuce, a small bag of cilantro, a large bag filled half-and-half with bok choy and an Asian green whose name I forget, two large zucchini, three cucumbers, a large bag of green, purple, and yellow beans, two eggplant, two onions, a small bag of sugar snap peas, a large bag of lemon basil (for pesto), a small bag of purple basil, and a large bag of kale, arugula, and mizuno.
So, the menus have gone something like this:
Community-supported agriculture is a growing movement across the country. The selection you get any particular week may not be exactly what you want (for example, there are no tomatoes up here in Massachusetts yet), and it can be a lot of work, but it's good for the environment and it gets you eating fruits and vegetables. To find a CSA near you, go to http://www.localharvest.org/csa/.
Sunderland, Massachusetts
I've been doing more cooking than usual, first because I'm not traveling much these days for child care reasons, and second because of our farm share. Each week we visit our farm to pick up our fresh, organic vegetables, some of which we have to pick ourselves out in the fields (brilliant idea, making your customers do your work for you). We usually split the share with my wife's parents, but with them out of town we've been eating it all ourselves, which takes a lot of dedication and planning.
This was this week's haul. Roughly from left, there are five ears of corn, two heads of lettuce, a small bag of cilantro, a large bag filled half-and-half with bok choy and an Asian green whose name I forget, two large zucchini, three cucumbers, a large bag of green, purple, and yellow beans, two eggplant, two onions, a small bag of sugar snap peas, a large bag of lemon basil (for pesto), a small bag of purple basil, and a large bag of kale, arugula, and mizuno.
So, the menus have gone something like this:
- Thursday dinner: corn, sugar snap peas with sesame oil, stir-fried beans (green, purple, yellow), rice, salad
- Friday lunch: pasta with pesto
- Friday dinner: fried rice with leftover vegetables, stir-fried bok choy, greens with Korean seasoning
- Saturday dinner: pasta with pesto, sautéed kale
- Sunday dinner: pasta with pesto, sautéed arugula, salad
- Monday dinner: ratatouille with eggplant, zucchini, and onions (and red peppers from the store); rice pilaf
- Tuesday dinner: quick cucumber salad, green beans with vinaigrette, and pizza from Bertucci's
Community-supported agriculture is a growing movement across the country. The selection you get any particular week may not be exactly what you want (for example, there are no tomatoes up here in Massachusetts yet), and it can be a lot of work, but it's good for the environment and it gets you eating fruits and vegetables. To find a CSA near you, go to http://www.localharvest.org/csa/.
Monday, July 21, 2008
A Little Piece of Italy
Caffè dello Sport - 1 star
Hanover St., Boston
Yesterday we took Thomas to the North End in Boston to see some of the historic sites, like Old North Church (of "two if by sea" fame) and Paul Revere's house. The North End, of course, is Boston's Italian neighborhood, a maze of old red-brick buildings dotted with cafes, pastry shops, and gelaterie. Like many such neighborhoods across the country, it is rapidly becoming gentrified, and boasts more than its share of expensive, nouveau Italian restaurants.
Fortunately, though, Caffè dello Sport is as authentic Italian-American as they come ("sport" is an Italian word, by the way). It has an absolute minimum of decor, the tables covered with clear plastic tablecloths and the walls dotted with random pictures of obscure Italian soccer stars, which makes it the same as every small-town cafe in southern Italy. On the middle of a Sunday afternoon, the large-screen TV was playing not baseball nor NASCAR, but a group-stage soccer match between the under-19 teams of Italy and the Czech Republic (Italy won, 4-3). The panini were mediocre - ordinary fillings on a thick and uninteresting baguette - and they weren't toasted; only after ordering did I remember that panino is just the Italian word for sandwich, and only outside of Italy is "a panini" flatted and toasted in a George Foreman-like grill. But it was the first place in the U.S. I've seen where you can order a latte macchiato - milk stained (macchiato) with espresso - the breakfast drink that my friend Giulia taught me to order for breakfast back in 1996. And any place that can make a decent, fresh cannoli - filled with pastry cream on the spot - deserves a star, even if they weren't quite as good as the ones we get in Northampton.
Friday, July 18, 2008
Invest Your 401(k) Wisely
My company just switched to a new 401(k) administrator in the U.S., so a lot of people will be thinking about their portfolio allocations around now. I decided to put my advice on this blog (rather than the internal blog) because a lot of my friends tend to ask me for investment advice periodically.
A 401(k) is a tax-advantaged retirement savings account. Put another way, it is a government subsidy; the more money you put into your account, the bigger the subsidy. (As an aside, it is another one of those subsidies that helps the rich more than the poor. Rich people can afford to put the maximum into their accounts, and they have higher tax rates, both of which increase their subsidies; poor people can't save much for retirement, and they have lower tax rates, both of which decrease their subsidies. People who think government subsidies go only to the poor and minorities - generally Republicans - are dead wrong for hundreds of similar reasons.)
401(k) plans are taking over from traditional pension plans (where your retirement benefit is an annual percentage of your final salary, or something like that) for one simple reason: they are better for employers. They are cheaper (essentially free if the company doesn't provide a match, like mine) and less risky (because your costs are completely predictable). There is a strong case to be made that our country would be better off with the old pension system (see this Fresh Air episode), but that's what most of us are stuck with.
401(k)s place the responsibility on the employee to, first, make the choice to participate and, second, manage his or her money by deciding which mutual fund(s) to put that it in. On the first point, you should save absolutely as much as you possibly can. Remember, the more money you save, the more money the government is giving you for free. End of story.
On the second point, which is the one I usually get questions about, there are only two concepts you need to understand: indexing and asset allocation.
An index fund is designed to give you the same returns as some market index, most often the S&P 500, which follows some large segment of the market as a whole. In its opposite, an actively managed fund, a fund manager tries to guess at which stocks or other securities will perform better than the market as a whole and buy those. You should never invest in an actively managed fund.
There are mountains of evidence that index funds are better than actively managed funds. First, in any given year, a large majority of actively managed funds do worse than the appropriate indices. But then people think that they should find the fund managers who do well and entrust them with their money. But the fund managers who do well are just lucky - they are the equivalent of people throwing darts at the stock pages of the Wall Street Journal and buying the stocks they hit. Of course some of them will beat the index by luck, but you have no reason to believe they will beat it next time.
But, people say, what about fund XYZ that has beaten the index 10 years in a row? Well, out of 1,024 funds, each with a 50% chance of beating the index each year, 1 of them will beat it 10 years in a row. And there are many more than 1,024 funds out there, and the relevant sample is far larger than that, because fund companies tend to shut down the funds that don't do well in their initial years. In fact, statistical analysis demonstrates that virtually all apparent ability to beat the market can be written off as pure random variation.
Many people refuse to believe this. To them, stock picking should be like any other endeavor - some people are good and some are bad - so the whole argument makes no sense. But there is a reason why the statistics show what they do, and that is the theory of efficient markets. Stock picking is trading on information - you buy a stock because you have information that makes you think the price will go up. In an efficient market where information flows freely, however, all public information is already reflected in the stock price. That is, by the time you find out that some pharmaceutical company had its drug approved by the FDA, thousands of other people already know, and they have already bid the stock price up to fairly reflect the value of that approval. So when you buy the stock, you have no advantage, and it could go down just as easily as it could go up.
The stock market was not always efficient, which is why stock picking used to work for some people. And there are markets that are not efficient, like the market for timber forests. But all the markets that all the mutual funds in your 401(k) invest in are efficient, because there are thousands of investment banks and hedge funds with very large computers trading instantaneously whenever new information becomes available. There is a lot of math that makes the same argument, but this is why stock picking doesn't work. It just creates transaction costs (every time anyone buys or sells a stock he loses a small amount of money) and increases taxes, and you also have to pay the salary of the stock picker, which is why most mutual funds do worse than indices.
(Yes, there are still ways to beat indices. You can take on more risk, which is basically what hedge funds and investment banks did for the last 10 years, but that's not something you should do. You can also trade on insider information, because it isn't priced into the stock price yet, but that's illegal.)
So all your money should go into index funds. In fact, I think it's negligent that any company - including mine - even offers any other kind of fund in its 401(k) plan, but that's beyond my control.
Asset allocation is a more complex topic. Different asset classes (US stocks, international stocks, US corporate bonds, US Treasury bonds, commodities, etc.) have different risk/return profiles; in general, the higher the expected return, the higher the risk (the variance around that expected return). Unlike with indexing, there is no mathematical proof that one allocation is better than another. The important thing is to pick one and stick with it, because otherwise you could fall into the trap of buying more of your funds that are doing well (otherwise known as buying high) and selling your funds that are doing poorly (otherwise known as selling low). A common recommendation is 70% stocks and 30% bonds, or maybe 50% US stocks, 20% international stocks, and 30% bonds, and that's probably a good enough recommendation for these purposes. (Mine is 38% US stocks, 25% international stocks, 11% real estate investment trusts (a kind of stock fund), 13% traditional US bonds, and 13% US inflation-indexed bonds, not counting cash.) But just pick one and stick with it, meaning every six months or so you should trade a little bit of money between your funds to get back to your original allocation. (As things appreciate or depreciate at different rates, your allocation will change slightly.)
And finally, do not withdraw money from your 401(k) and pay a penalty if you can possibly avoid it. That's like giving your entire subsidy back to the government, and then giving them an additional 10% of your money on top.
For people at my company, the only funds you should even consider putting money in are:
A 401(k) is a tax-advantaged retirement savings account. Put another way, it is a government subsidy; the more money you put into your account, the bigger the subsidy. (As an aside, it is another one of those subsidies that helps the rich more than the poor. Rich people can afford to put the maximum into their accounts, and they have higher tax rates, both of which increase their subsidies; poor people can't save much for retirement, and they have lower tax rates, both of which decrease their subsidies. People who think government subsidies go only to the poor and minorities - generally Republicans - are dead wrong for hundreds of similar reasons.)
401(k) plans are taking over from traditional pension plans (where your retirement benefit is an annual percentage of your final salary, or something like that) for one simple reason: they are better for employers. They are cheaper (essentially free if the company doesn't provide a match, like mine) and less risky (because your costs are completely predictable). There is a strong case to be made that our country would be better off with the old pension system (see this Fresh Air episode), but that's what most of us are stuck with.
401(k)s place the responsibility on the employee to, first, make the choice to participate and, second, manage his or her money by deciding which mutual fund(s) to put that it in. On the first point, you should save absolutely as much as you possibly can. Remember, the more money you save, the more money the government is giving you for free. End of story.
On the second point, which is the one I usually get questions about, there are only two concepts you need to understand: indexing and asset allocation.
An index fund is designed to give you the same returns as some market index, most often the S&P 500, which follows some large segment of the market as a whole. In its opposite, an actively managed fund, a fund manager tries to guess at which stocks or other securities will perform better than the market as a whole and buy those. You should never invest in an actively managed fund.
There are mountains of evidence that index funds are better than actively managed funds. First, in any given year, a large majority of actively managed funds do worse than the appropriate indices. But then people think that they should find the fund managers who do well and entrust them with their money. But the fund managers who do well are just lucky - they are the equivalent of people throwing darts at the stock pages of the Wall Street Journal and buying the stocks they hit. Of course some of them will beat the index by luck, but you have no reason to believe they will beat it next time.
But, people say, what about fund XYZ that has beaten the index 10 years in a row? Well, out of 1,024 funds, each with a 50% chance of beating the index each year, 1 of them will beat it 10 years in a row. And there are many more than 1,024 funds out there, and the relevant sample is far larger than that, because fund companies tend to shut down the funds that don't do well in their initial years. In fact, statistical analysis demonstrates that virtually all apparent ability to beat the market can be written off as pure random variation.
Many people refuse to believe this. To them, stock picking should be like any other endeavor - some people are good and some are bad - so the whole argument makes no sense. But there is a reason why the statistics show what they do, and that is the theory of efficient markets. Stock picking is trading on information - you buy a stock because you have information that makes you think the price will go up. In an efficient market where information flows freely, however, all public information is already reflected in the stock price. That is, by the time you find out that some pharmaceutical company had its drug approved by the FDA, thousands of other people already know, and they have already bid the stock price up to fairly reflect the value of that approval. So when you buy the stock, you have no advantage, and it could go down just as easily as it could go up.
The stock market was not always efficient, which is why stock picking used to work for some people. And there are markets that are not efficient, like the market for timber forests. But all the markets that all the mutual funds in your 401(k) invest in are efficient, because there are thousands of investment banks and hedge funds with very large computers trading instantaneously whenever new information becomes available. There is a lot of math that makes the same argument, but this is why stock picking doesn't work. It just creates transaction costs (every time anyone buys or sells a stock he loses a small amount of money) and increases taxes, and you also have to pay the salary of the stock picker, which is why most mutual funds do worse than indices.
(Yes, there are still ways to beat indices. You can take on more risk, which is basically what hedge funds and investment banks did for the last 10 years, but that's not something you should do. You can also trade on insider information, because it isn't priced into the stock price yet, but that's illegal.)
So all your money should go into index funds. In fact, I think it's negligent that any company - including mine - even offers any other kind of fund in its 401(k) plan, but that's beyond my control.
Asset allocation is a more complex topic. Different asset classes (US stocks, international stocks, US corporate bonds, US Treasury bonds, commodities, etc.) have different risk/return profiles; in general, the higher the expected return, the higher the risk (the variance around that expected return). Unlike with indexing, there is no mathematical proof that one allocation is better than another. The important thing is to pick one and stick with it, because otherwise you could fall into the trap of buying more of your funds that are doing well (otherwise known as buying high) and selling your funds that are doing poorly (otherwise known as selling low). A common recommendation is 70% stocks and 30% bonds, or maybe 50% US stocks, 20% international stocks, and 30% bonds, and that's probably a good enough recommendation for these purposes. (Mine is 38% US stocks, 25% international stocks, 11% real estate investment trusts (a kind of stock fund), 13% traditional US bonds, and 13% US inflation-indexed bonds, not counting cash.) But just pick one and stick with it, meaning every six months or so you should trade a little bit of money between your funds to get back to your original allocation. (As things appreciate or depreciate at different rates, your allocation will change slightly.)
And finally, do not withdraw money from your 401(k) and pay a penalty if you can possibly avoid it. That's like giving your entire subsidy back to the government, and then giving them an additional 10% of your money on top.
For people at my company, the only funds you should even consider putting money in are:
- Spartan U.S. Equity Index Fund (tracks S&P 500 Index)
- Spartan Extended Market Index Fund (tracks Wilshire 4500, essentially all US stocks other than the S&P 500)
- Spartan International Index Fund (tracks MSCI EAFE Index, essentially most stocks outside North America)
- Fidelity U.S. Bond Index Fund (tracks Lehman Brothers Aggregate Bond Index)
Wednesday, July 16, 2008
What Am I Eating?
Hei La Moon - 1 star
88 Beach St., Boston
We went into Boston on Sunday to pick up my nephew Thomas, who is visiting for a few weeks. Thomas is a pretty adventurous eater, especially for a 14-year-old from Southern Virginia, so we went to Chinatown for dim sum (Sunday, remember?). We went to Hei La Moon, one of the more popular places in Boston, which is the classic Chinatown Sunday dim sum experience: huge (probably seating 300 people at once), packed with mainly Chinese families, devoid of decor, loud, and bustling.
Dim sum is a wonderful idea - people circulating through the room with rolling steam tables of all sorts of yummy stuff, so there's no deferral of gratification. And having lived in New York, Cambridge, and Berkeley, and having eaten dim sum dozens of times, you would think I would be an expert. But this was my first time since becoming a vegetarian, and the old strategy of just pointing at things and eating all of them didn't work so well. The strategy of asking what's in them doesn't work either, since most of the waiters barely spoke English.
But they had all the staples, and I found enough things to eat, although most of the dishes had some combination of pork, chicken, and shrimp. In the end I don't think there's such a wide quality range when it comes to dim sum. But someday someone will open a dim sum-style restaurant where they serve Spanish-style tapas, and the circulating waiters also have bottles of wine to pour by the glass, and and make a killing.
88 Beach St., Boston
We went into Boston on Sunday to pick up my nephew Thomas, who is visiting for a few weeks. Thomas is a pretty adventurous eater, especially for a 14-year-old from Southern Virginia, so we went to Chinatown for dim sum (Sunday, remember?). We went to Hei La Moon, one of the more popular places in Boston, which is the classic Chinatown Sunday dim sum experience: huge (probably seating 300 people at once), packed with mainly Chinese families, devoid of decor, loud, and bustling.
Dim sum is a wonderful idea - people circulating through the room with rolling steam tables of all sorts of yummy stuff, so there's no deferral of gratification. And having lived in New York, Cambridge, and Berkeley, and having eaten dim sum dozens of times, you would think I would be an expert. But this was my first time since becoming a vegetarian, and the old strategy of just pointing at things and eating all of them didn't work so well. The strategy of asking what's in them doesn't work either, since most of the waiters barely spoke English.
But they had all the staples, and I found enough things to eat, although most of the dishes had some combination of pork, chicken, and shrimp. In the end I don't think there's such a wide quality range when it comes to dim sum. But someday someone will open a dim sum-style restaurant where they serve Spanish-style tapas, and the circulating waiters also have bottles of wine to pour by the glass, and and make a killing.
Telecom Hell
Most non-bloggers don't realize how much work it is. Every week or so you have to come up with something that you care about and that other people might find interesting enough to write about. When short of inspiration, though, you can always call a telecom company.
One of my projects for the summer is to rationalize my telecom situation. Right now I pay about $45/month for fixed line, $125/month for mobile (4 lines), $46/month for cable Internet, and $54/month for standard cable TV. So I'm switching to digital cable for $30/month for the first year, and I decided to try out DSL.
So I went to Verizon's web site and added DSL, which should have been $25/month without contract and with a free modem and router. Disturbingly, the confirmation had no indication of what I had actually bought. First they sent me an installation package without a modem, so I called (that in itself took about 5 phone calls - first I talked to tech support and they said I should go to a "Verizon store" and buy a modem) and they said they would ship me one. When I got the modem and set it up, I logged into my account and saw that I was signed up for a 1-year contract at $38/month. So I called billing, where a very helpful person said I had an $8/month discount, so my net price was $30/month, and I had a $0 early termination fee, so it was like having no contract, and I had a 30-day money back guarantee anyway. $30, $25, whatever. But when I asked about the impact on my fixed line discount, she said that she couldn't see my fixed line bill. (She also said that she had no way of seeing what offers were available on the web site - so not only are orders not correctly transferred from the web to the back office, but the back office has no idea what thoses orders might have been.) So Verizon, which is trying to tell all the analysts that it has these great synergies between all its products, doesn't even have call center people who can see information about multiple products at once.
But this comedy pales in comparison to Verizon's tech support. I got DSL working with my laptop plugged directly into the modem, but I wanted to put my wireless router in the middle. With Comcast, you just plug the router into the cable modem and everything works. With Verizon DSL, it doesn't. I did some searching on their support pages and found out that I needed to program the router to use PPPoE with a username and password. It still didn't work, so I decided to call tech support. After about 6 minutes navigating the phone tree, I got an error message saying the number I wanted was not in service. I called again and the same thing happened. This is the phone company, remember.
So I did some more searching online, and discovered I needed to put the modem into bridge mode. I could find the instructions for how to do this on the Westell 2200, but not on the 6100F, which is what I have. I found instructions for the 6100, but the first page of instructions had no Next button. Through more searching I found page 7 of the instructions, from which I was able to navigate to the page I wanted, but the page was out of date because Verizon had changed the user interface for the modem configuration (which I discovered after guessing the default password for the modem, since nowhere had they given it to me). I found other instructions in non-Verizon-affiliated forums, but they also did not account for the new UI. Finally through enough clicking around I discovered how to configure the modem properly and got it to work with the router.
So now it works. I am probably going to cancel on principle because of Verizon's inability to connect me to a tech support person (who probably would have been useless). If not, I need to decide if $16/month in savings are enough to compensate for the 2001-era speed of Verizon DSL (1.5Mb down, 400Kb up - I get over 15Mb down with Comcast).
One of my projects for the summer is to rationalize my telecom situation. Right now I pay about $45/month for fixed line, $125/month for mobile (4 lines), $46/month for cable Internet, and $54/month for standard cable TV. So I'm switching to digital cable for $30/month for the first year, and I decided to try out DSL.
So I went to Verizon's web site and added DSL, which should have been $25/month without contract and with a free modem and router. Disturbingly, the confirmation had no indication of what I had actually bought. First they sent me an installation package without a modem, so I called (that in itself took about 5 phone calls - first I talked to tech support and they said I should go to a "Verizon store" and buy a modem) and they said they would ship me one. When I got the modem and set it up, I logged into my account and saw that I was signed up for a 1-year contract at $38/month. So I called billing, where a very helpful person said I had an $8/month discount, so my net price was $30/month, and I had a $0 early termination fee, so it was like having no contract, and I had a 30-day money back guarantee anyway. $30, $25, whatever. But when I asked about the impact on my fixed line discount, she said that she couldn't see my fixed line bill. (She also said that she had no way of seeing what offers were available on the web site - so not only are orders not correctly transferred from the web to the back office, but the back office has no idea what thoses orders might have been.) So Verizon, which is trying to tell all the analysts that it has these great synergies between all its products, doesn't even have call center people who can see information about multiple products at once.
But this comedy pales in comparison to Verizon's tech support. I got DSL working with my laptop plugged directly into the modem, but I wanted to put my wireless router in the middle. With Comcast, you just plug the router into the cable modem and everything works. With Verizon DSL, it doesn't. I did some searching on their support pages and found out that I needed to program the router to use PPPoE with a username and password. It still didn't work, so I decided to call tech support. After about 6 minutes navigating the phone tree, I got an error message saying the number I wanted was not in service. I called again and the same thing happened. This is the phone company, remember.
So I did some more searching online, and discovered I needed to put the modem into bridge mode. I could find the instructions for how to do this on the Westell 2200, but not on the 6100F, which is what I have. I found instructions for the 6100, but the first page of instructions had no Next button. Through more searching I found page 7 of the instructions, from which I was able to navigate to the page I wanted, but the page was out of date because Verizon had changed the user interface for the modem configuration (which I discovered after guessing the default password for the modem, since nowhere had they given it to me). I found other instructions in non-Verizon-affiliated forums, but they also did not account for the new UI. Finally through enough clicking around I discovered how to configure the modem properly and got it to work with the router.
So now it works. I am probably going to cancel on principle because of Verizon's inability to connect me to a tech support person (who probably would have been useless). If not, I need to decide if $16/month in savings are enough to compensate for the 2001-era speed of Verizon DSL (1.5Mb down, 400Kb up - I get over 15Mb down with Comcast).
Monday, June 30, 2008
Quitting
This year has seen a number of endings. Bill Gates is retiring from his day job at Microsoft to focus on his foundation. Justine Hénin, the best woman tennis player in the world, retired at the age of 25 while still ranked #1 to focus on the rest of her life. Euromad is moving back to the U.S. after two years in Europe and slowly winding down his blog. And, after eleven years, three jobs, and several hundred plane flights, I am retiring from the business world.
I have been planning to retire for a long time, but didn't want to discuss it here until the announcement to my company, which happened two weeks ago. I will be going to Yale Law School starting in September, with the eventual goal of becoming a public interest lawyer - probably working as a public defender, in legal aid, or for a civil rights organization. I've wanted to make this change for several years now, ever since listening to an episode of This American Life entitled "Perfect Evidence," about four teenagers who were framed by the police for a rape and murder and spent fourteen years in prison before being exonerated by DNA evidence. It's an old cliché, but I want to help people. Of course, there are many ways to help people, many of them more obvious than spending $130,000 in tuition and three years of your life to go to law school, in order to become a member of one of the most despised professions in this country. But my hope - or fantasy - is that as a lawyer you can help people in a very concrete way, one person at a time, when they need help the most. In any case, we shall see.
Of course, the hard part of opening one door is closing the other one behind you. One problem is that we grow up expecting our lives to be a linear progression onward and upward in which we monotonically accumulate skills, work experience, titles, money, and prestige. On paper, I should be staying at my company until we go public, or I should become a vice president at a bigger company, or I should start another company, or I should use my glittering resume to get a job in venture capital or private equity, or, if I have a philanthropic bent, I should get into the burgeoning field of social entrepreneurship.
But there's an opposite perspective, which I heard best summarized in an episode of This American Life called "Quitting." (Yes, I think that virtually every significant life experience can be illustrated by one or more episodes of TAL.) In one segment, a woman who wrote a zine about quitting (this was the mid-'90s - today it would no doubt be a blog funded by AdWords) talks about the central importance of "the quit" to ... well, to everything. Before you can ever do anything new, you have to quit whatever you were doing before. This is most obvious in the case of jobs, but it applies to many other things. Before you can have a child, you have to quit that simpler, easier state of not having children. Before you can be a vegetarian, you have to quit eating animals (and yes, I like eating animals - especially In-N-Out hamburgers, and New York City hot dogs, and roast chicken, and on and on). In many cases, in order to do something new that is good, you have to give up something that is also good. Quitting is empowering. Quitting is door-opening. Without it, your life would be the same thing, over and over.
And so I'm quitting career #3 (business) to start career #4 (law). When I was younger I regretted careers 1 and 2 because they seemed in retrospect like a waste of time and energy. In college I wanted to be come a professional musician, and auditioned for the conducting program at the Curtis Institute of Music (at the time, I was the music director of one of my college's orchestras). I was going to conduct Mozart Symphony #40 at the audition, but when I stepped up to the podium the parts weren't on the musicians' stands, so my slot was delayed until they could get the music. However, my friend Ben was also auditioning that day, conducting Mozart Symphony #39, and I knew that equally well because my orchestra was performing both of them that same night. One of my few regrets about my life is not volunteering to do #39 instead on the spot. But in any case I didn't get into Curtis, and after a couple more years of indecision I gave that up. Instead I got a Ph.D. in history at Berkeley, but by the time I finished I had neither the scholarly track record necessary to get a good job, nor the real interest in and dedication to the field necessary to stick with it. So I became a management consultant at McKinsey, for no particularly good reason other than that they gave me a job, and it was prestigious and well paid. I had no ambition to make a lot of money or start a company or anything, really.
Now, though, I look back and I feel lucky to have spent my college years playing cello and conducting, and I feel lucky to have spent most of my twenties learning about history and living in Berkeley and traveling around Europe. And while I have very mixed feelings about the business world, I feel extraordinarily lucky to have spent seven years at a company that I founded with five friends and that has provided a great working environment to hundreds of people and great products to thousands.
As a result, for the first time that I can remember, I'm back at home with absolutely no business trips planned and, besides a trip to Yellowstone with my father in August, no plane trips of any kind scheduled or even anticipated. I already earned elite status on United and Delta this year, but that will expire in February 2010 and then I'll have to wait in the long line with everyone else - a trade-off I'm more than happy to make. I won't have to get a new passport because there is no room left to stamp mine, like the cool kids. My last international trip was the three-day trip to, appropriately enough, Paris in mid-April, cut short because I wanted to get back to Yale for an admitted student program, and my last business trip of any sort, although I didn't know it at the time, was to our headquarters in late May for my last management team meeting.
I will miss the travel a little, and I will miss my company and my friends there a lot, but that's the price you have to pay to open a new chapter. And I'm grateful that the last chapter was one I will look back on fondly.
I have been planning to retire for a long time, but didn't want to discuss it here until the announcement to my company, which happened two weeks ago. I will be going to Yale Law School starting in September, with the eventual goal of becoming a public interest lawyer - probably working as a public defender, in legal aid, or for a civil rights organization. I've wanted to make this change for several years now, ever since listening to an episode of This American Life entitled "Perfect Evidence," about four teenagers who were framed by the police for a rape and murder and spent fourteen years in prison before being exonerated by DNA evidence. It's an old cliché, but I want to help people. Of course, there are many ways to help people, many of them more obvious than spending $130,000 in tuition and three years of your life to go to law school, in order to become a member of one of the most despised professions in this country. But my hope - or fantasy - is that as a lawyer you can help people in a very concrete way, one person at a time, when they need help the most. In any case, we shall see.
Of course, the hard part of opening one door is closing the other one behind you. One problem is that we grow up expecting our lives to be a linear progression onward and upward in which we monotonically accumulate skills, work experience, titles, money, and prestige. On paper, I should be staying at my company until we go public, or I should become a vice president at a bigger company, or I should start another company, or I should use my glittering resume to get a job in venture capital or private equity, or, if I have a philanthropic bent, I should get into the burgeoning field of social entrepreneurship.
But there's an opposite perspective, which I heard best summarized in an episode of This American Life called "Quitting." (Yes, I think that virtually every significant life experience can be illustrated by one or more episodes of TAL.) In one segment, a woman who wrote a zine about quitting (this was the mid-'90s - today it would no doubt be a blog funded by AdWords) talks about the central importance of "the quit" to ... well, to everything. Before you can ever do anything new, you have to quit whatever you were doing before. This is most obvious in the case of jobs, but it applies to many other things. Before you can have a child, you have to quit that simpler, easier state of not having children. Before you can be a vegetarian, you have to quit eating animals (and yes, I like eating animals - especially In-N-Out hamburgers, and New York City hot dogs, and roast chicken, and on and on). In many cases, in order to do something new that is good, you have to give up something that is also good. Quitting is empowering. Quitting is door-opening. Without it, your life would be the same thing, over and over.
And so I'm quitting career #3 (business) to start career #4 (law). When I was younger I regretted careers 1 and 2 because they seemed in retrospect like a waste of time and energy. In college I wanted to be come a professional musician, and auditioned for the conducting program at the Curtis Institute of Music (at the time, I was the music director of one of my college's orchestras). I was going to conduct Mozart Symphony #40 at the audition, but when I stepped up to the podium the parts weren't on the musicians' stands, so my slot was delayed until they could get the music. However, my friend Ben was also auditioning that day, conducting Mozart Symphony #39, and I knew that equally well because my orchestra was performing both of them that same night. One of my few regrets about my life is not volunteering to do #39 instead on the spot. But in any case I didn't get into Curtis, and after a couple more years of indecision I gave that up. Instead I got a Ph.D. in history at Berkeley, but by the time I finished I had neither the scholarly track record necessary to get a good job, nor the real interest in and dedication to the field necessary to stick with it. So I became a management consultant at McKinsey, for no particularly good reason other than that they gave me a job, and it was prestigious and well paid. I had no ambition to make a lot of money or start a company or anything, really.
Now, though, I look back and I feel lucky to have spent my college years playing cello and conducting, and I feel lucky to have spent most of my twenties learning about history and living in Berkeley and traveling around Europe. And while I have very mixed feelings about the business world, I feel extraordinarily lucky to have spent seven years at a company that I founded with five friends and that has provided a great working environment to hundreds of people and great products to thousands.
As a result, for the first time that I can remember, I'm back at home with absolutely no business trips planned and, besides a trip to Yellowstone with my father in August, no plane trips of any kind scheduled or even anticipated. I already earned elite status on United and Delta this year, but that will expire in February 2010 and then I'll have to wait in the long line with everyone else - a trade-off I'm more than happy to make. I won't have to get a new passport because there is no room left to stamp mine, like the cool kids. My last international trip was the three-day trip to, appropriately enough, Paris in mid-April, cut short because I wanted to get back to Yale for an admitted student program, and my last business trip of any sort, although I didn't know it at the time, was to our headquarters in late May for my last management team meeting.
I will miss the travel a little, and I will miss my company and my friends there a lot, but that's the price you have to pay to open a new chapter. And I'm grateful that the last chapter was one I will look back on fondly.
Tuesday, June 24, 2008
Traveling with Children
California Tortilla - 0 stars
IAD
La Cascada Taqueria - 1 star
2164 Center St., Berkeley, CA
Loco Pops - 2 stars
431 W. Franklin St., Chapel Hill, NC
I've decided to leave the business world - about which more later. One consequence, though, is that I will no longer be traveling "on business," as we say, which was in fact the original motivation for this blog. One of my colleagues - in fact, the one I was with when I ate the lunch in Columbus, Ohio that led to my first blog post over three years ago - said that she realized I would no longer have the "elite" status of frequent fliers on major airlines (although since I've qualified on United and Delta this year, I'm covered on five out of six legacy carriers through February 2010). To which, I said, I will be more than happy not to have frequent flier status.
Instead, most of my travel will be of the type I'm doing this week, with my family. My wife had two conferences in a week, at Berkeley and at Duke, and since she and my daughter Willow are inseparable, and someone needed to take care of Willow while she was working, all three of us flew first to San Francisco for three nights and then to Raleigh-Durham for three nights, where we find ourselves now. Over the last few years I have gotten quite good at separating myself from my work world, and this time not only did I leave my computer at home, but I didn't even bring a pen.
The week has had its rough spots, like Sunday, when I had Willow from 8 am to 9.30 pm and she threw up three times, which meant not only hand-washing three outfits but also washing the car seat cover and cleaning the stroller, all while keeping an eye on her, or Monday, when she boarded the plane happily, sat down and proceeded to cry inconsolably for 25 minutes straight until the plane took off, when she immediately quieted down. But there's still nothing I'd rather do than take a vacation and spend time with my daughter, even if it's just holding her in my lap as she slept in the plane.
Eating while traveling with a one-year-old is an exercise in finding the most casual option possible, so there were few highlights worthy of this blog. I had the old Dulles standby, a vegetarian burrito at California Tortilla (near gate C22), for perhaps the last time. I stopped at La Farine to get the morning buns, but Willow threw up on the sidewalk so we didn't go in. I did have a pretty good vegetarian burrito at La Cascada, where the rice and beans had a nice smoky flavor and the salsa was rich and spicy without being too hot. But the highlight so far has been Loco Pops, a tiny storefront with nothing but a freezer full of popsicles and a white board with the menu. There are about ten water-based popsicles and ten cream-based ones, ranging from classics like chocolate brownie and strawberries and cream (which Willow loved) to daring combinations like chocolate sesame wasabi (what I had - good, but perhaps wasabi wasn't meant for chocolate-based desserts) or mango chili. All the popsicles are $2, for every eight you buy you get one free, and the service is friendly. Some people order one, eat it in the store, and then order another one, which I would heartily recommend.
As for traveling with kids, I have two pieces of advice. One from my friend David: buy lots of small toys and bring them out slowly over the course of the plane flight. And one from me: don't expect to do or accomplish anything other than spending time with your family. Which is plenty.
IAD
La Cascada Taqueria - 1 star
2164 Center St., Berkeley, CA
Loco Pops - 2 stars
431 W. Franklin St., Chapel Hill, NC
I've decided to leave the business world - about which more later. One consequence, though, is that I will no longer be traveling "on business," as we say, which was in fact the original motivation for this blog. One of my colleagues - in fact, the one I was with when I ate the lunch in Columbus, Ohio that led to my first blog post over three years ago - said that she realized I would no longer have the "elite" status of frequent fliers on major airlines (although since I've qualified on United and Delta this year, I'm covered on five out of six legacy carriers through February 2010). To which, I said, I will be more than happy not to have frequent flier status.
Instead, most of my travel will be of the type I'm doing this week, with my family. My wife had two conferences in a week, at Berkeley and at Duke, and since she and my daughter Willow are inseparable, and someone needed to take care of Willow while she was working, all three of us flew first to San Francisco for three nights and then to Raleigh-Durham for three nights, where we find ourselves now. Over the last few years I have gotten quite good at separating myself from my work world, and this time not only did I leave my computer at home, but I didn't even bring a pen.
The week has had its rough spots, like Sunday, when I had Willow from 8 am to 9.30 pm and she threw up three times, which meant not only hand-washing three outfits but also washing the car seat cover and cleaning the stroller, all while keeping an eye on her, or Monday, when she boarded the plane happily, sat down and proceeded to cry inconsolably for 25 minutes straight until the plane took off, when she immediately quieted down. But there's still nothing I'd rather do than take a vacation and spend time with my daughter, even if it's just holding her in my lap as she slept in the plane.
Eating while traveling with a one-year-old is an exercise in finding the most casual option possible, so there were few highlights worthy of this blog. I had the old Dulles standby, a vegetarian burrito at California Tortilla (near gate C22), for perhaps the last time. I stopped at La Farine to get the morning buns, but Willow threw up on the sidewalk so we didn't go in. I did have a pretty good vegetarian burrito at La Cascada, where the rice and beans had a nice smoky flavor and the salsa was rich and spicy without being too hot. But the highlight so far has been Loco Pops, a tiny storefront with nothing but a freezer full of popsicles and a white board with the menu. There are about ten water-based popsicles and ten cream-based ones, ranging from classics like chocolate brownie and strawberries and cream (which Willow loved) to daring combinations like chocolate sesame wasabi (what I had - good, but perhaps wasabi wasn't meant for chocolate-based desserts) or mango chili. All the popsicles are $2, for every eight you buy you get one free, and the service is friendly. Some people order one, eat it in the store, and then order another one, which I would heartily recommend.
As for traveling with kids, I have two pieces of advice. One from my friend David: buy lots of small toys and bring them out slowly over the course of the plane flight. And one from me: don't expect to do or accomplish anything other than spending time with your family. Which is plenty.
Tuesday, June 17, 2008
And So It Ends ...
Euro 2008 for France, that is. Although few of my readers will care (or recognize the names below), French soccer is part of the heritage I have gained from my travels around the world, and so the catastrophe of the last nine days deserves a mention. Today France lost 2-0 to Italy, in a match that was not as close as the score indicates (and 2-0 is a rout in soccer, as opposed to baseball) and was eliminated from the quadrennial European championship after tying Romania 0-0 and being obliterated by the Netherlands 4-1.
And like many real French people around the world today, I blame the manager, Raymond Domenech, he of the abstract philosophizing, empty gestures, exaggerated sense of self-worth, and questionable loyalties. He stuck with Lilian Thuram (a great player and a great man, but now 36 years old) at center back although he languished on the bench at his club team, Barcelona, until the disaster against the Netherlands showed to the world why Barcelona left him on the bench; when he finally decided to blame Thuram for the loss and replace him against Italy, he had no one to turn to (having used Thuram in that position in every important match for the last four years) and inserted Eric Abidal, who plays left back for Barcelona, where he is not an automatic starter either, and who played left back against Romania and was replaced for the Netherlands because of his poor performance in that first match. Not surprisingly, Abidal committed an enormous blunder that Luca Toni should have converted into a goal, then committed another enormous blunder against Toni and fouled him so obviously in the penalty area that we had the unheard-of: a penalty that no one could argue against, which gave Italy a 1-0 lead. Abidal was sent off (which was a bit debatable, but is according to the regulations), and Domenech responded by taking off a midfielder for a central defender, leaving France in a 4-3-2 formation that gave Italy complete control of the midfield for most of the rest of the first half, until he finally realized the problem and moved Karim Benzema, probably France's best center forward, back to left wing. (I would have taken off Thierry Henry, who is one of my favorite players of all time, but now flits around the penalty area like a ballet dancer and refuses to play defense, and left Benzema up front - like Arrigo Sacchi, the Italian coach in the 1994 World Cup , did against Ireland when, after his goalie was sent off early, he removed Roberto Baggio, the most talented player on his team but not, in his words, a "fighter" - and Italy won that game, 1-0.) When Italy scored their second on a lucky deflection, the game was over - France needed a win, which meant three goals, to stay alive in the tournament - but Domenech then replaced a winger with Nicolas Anelka, another center forward who doesn't even start for his club team (which is, admittedly, Chelsea), leaving France four defenders, two defensive midfielders, and three center forwards, two of them playing out of position.
Of course, there are many other questions to ask Domenech: why Thuram and Abidal were playing in the first place; why he included Patrick Vieira (great player, great man, but injured most of the year and recently injured again, making him unable to play in any matches) instead of Mathieu Flamini, who had a great season for the 3rd-best team in Europe's best league; why he started Willy Sagnol and Francois Clerc at right back instead of Bacary Sagna (voted best right back in Europe's best league) or Lassana Diarra, who did an excellent job during qualifications; why he played a 4-4-2 in which both central midfielders were defensively minded (although Toulalan had a good game today); why he started Henry, who had a lousy season and a mild injury; and on and on. Perhaps the 2006 World Cup made him feel infallible, although France only had two good matches in that tournament (the only team they beat in the group stage was Togo, and after beating Spain and Brazil they were outplayed by Portugal and drawn by Italy), but overall his record over four years is one of startling mediocrity given the incredible talent at his disposition.
The silver lining is that in all likelihood, France will now look for a new manager, who will start over with a younger team. And although few people expect it now, look for France to be a powerful force in 2010 when the younger generation finally takes over.
And like many real French people around the world today, I blame the manager, Raymond Domenech, he of the abstract philosophizing, empty gestures, exaggerated sense of self-worth, and questionable loyalties. He stuck with Lilian Thuram (a great player and a great man, but now 36 years old) at center back although he languished on the bench at his club team, Barcelona, until the disaster against the Netherlands showed to the world why Barcelona left him on the bench; when he finally decided to blame Thuram for the loss and replace him against Italy, he had no one to turn to (having used Thuram in that position in every important match for the last four years) and inserted Eric Abidal, who plays left back for Barcelona, where he is not an automatic starter either, and who played left back against Romania and was replaced for the Netherlands because of his poor performance in that first match. Not surprisingly, Abidal committed an enormous blunder that Luca Toni should have converted into a goal, then committed another enormous blunder against Toni and fouled him so obviously in the penalty area that we had the unheard-of: a penalty that no one could argue against, which gave Italy a 1-0 lead. Abidal was sent off (which was a bit debatable, but is according to the regulations), and Domenech responded by taking off a midfielder for a central defender, leaving France in a 4-3-2 formation that gave Italy complete control of the midfield for most of the rest of the first half, until he finally realized the problem and moved Karim Benzema, probably France's best center forward, back to left wing. (I would have taken off Thierry Henry, who is one of my favorite players of all time, but now flits around the penalty area like a ballet dancer and refuses to play defense, and left Benzema up front - like Arrigo Sacchi, the Italian coach in the 1994 World Cup , did against Ireland when, after his goalie was sent off early, he removed Roberto Baggio, the most talented player on his team but not, in his words, a "fighter" - and Italy won that game, 1-0.) When Italy scored their second on a lucky deflection, the game was over - France needed a win, which meant three goals, to stay alive in the tournament - but Domenech then replaced a winger with Nicolas Anelka, another center forward who doesn't even start for his club team (which is, admittedly, Chelsea), leaving France four defenders, two defensive midfielders, and three center forwards, two of them playing out of position.
Of course, there are many other questions to ask Domenech: why Thuram and Abidal were playing in the first place; why he included Patrick Vieira (great player, great man, but injured most of the year and recently injured again, making him unable to play in any matches) instead of Mathieu Flamini, who had a great season for the 3rd-best team in Europe's best league; why he started Willy Sagnol and Francois Clerc at right back instead of Bacary Sagna (voted best right back in Europe's best league) or Lassana Diarra, who did an excellent job during qualifications; why he played a 4-4-2 in which both central midfielders were defensively minded (although Toulalan had a good game today); why he started Henry, who had a lousy season and a mild injury; and on and on. Perhaps the 2006 World Cup made him feel infallible, although France only had two good matches in that tournament (the only team they beat in the group stage was Togo, and after beating Spain and Brazil they were outplayed by Portugal and drawn by Italy), but overall his record over four years is one of startling mediocrity given the incredible talent at his disposition.
The silver lining is that in all likelihood, France will now look for a new manager, who will start over with a younger team. And although few people expect it now, look for France to be a powerful force in 2010 when the younger generation finally takes over.
Thursday, June 12, 2008
Another Country
Claude Postel - 2 stars
75, rue Notre Dame Ouest, Montreal
I've always thought Montreal would be a nice place to visit - I could indulge my francophilia and maybe eat some good desserts, without having to fly across the Atlantic. But when I visited last weekend with my wife, our daughter, and my wife's parents, I quickly gave up most attempts to speak French. Not that I couldn't understand Québécois (the accent is a little different from Parisian, but no more so than some of the French regional accents, and a few of the words are different, but nothing you can't figure out), or that they couldn't understand me - it was just that everyone there speaks English so well it seemed pointless. I hear as you get away from the center of Montreal this is less true, but it's an astonishingly bilingual place.
75, rue Notre Dame Ouest, Montreal
I've always thought Montreal would be a nice place to visit - I could indulge my francophilia and maybe eat some good desserts, without having to fly across the Atlantic. But when I visited last weekend with my wife, our daughter, and my wife's parents, I quickly gave up most attempts to speak French. Not that I couldn't understand Québécois (the accent is a little different from Parisian, but no more so than some of the French regional accents, and a few of the words are different, but nothing you can't figure out), or that they couldn't understand me - it was just that everyone there speaks English so well it seemed pointless. I hear as you get away from the center of Montreal this is less true, but it's an astonishingly bilingual place.
With a toddler in tow we were somewhat limited in our restaurant choices, but we did have some very good French-style desserts at Claude Postel in Old Montreal, near the Notre Dame Basilica. For lunch you can get custom-made sandwiches, a selection of panini, salads, pastas, soup, and so on; I had a tomato soup that was almost certainly made on the spot (I could tell by the tiny bits of tomato peel and the little fragment of bay leaf that you wouldn't find in a processed product) and a fresh Greek salad. We had a raspberry tart, a pear-frangipane tart, and a chocolate cheesecake, and the raspberry tart was the best.
Unfortunately it was the same weekend as the Grand Prix of Montreal (a Formula One race), so the downtown hotels were wildly expensive, and we stayed in Laval, which in French must mean, as my wife pointed out, "the land of great shopping malls." As an American I'm used to having the biggest of everything, but I have never seen an expanse of strip malls like this, just planted in the middle of an enormous field around the intersection of two highways. But luckily, to prevent us from getting too homesick, Ronald McDonald was in town for a convention.
My daughter and I visited the enclosed mall one afternoon so my wife could rest, and when she started to melt down I bought her a soft-serve ice cream, and she sat down on the floor to eat it, just like at home.
The main event was our friends' wedding in a little town called Oka, northwest of Montreal, out in the middle of an apple orchard. The bride and groom were both bilingual, so the English-speaking officiant read the vows in English and the groom repeated them in French, and the French-speaking officiant read the vows in French and the bride repeated them in English - translating on the fly, I might add. It was a hot but beautiful day in an isolated, quiet place, just like the day and the place that my wife and I were married, nine years ago.
Wednesday, June 11, 2008
Baiji, R.I.P.
I was reading my news feed and saw this article saying that the Caribbean monk seal, last seen in 1952, has been formally declared extinct. The article also pointed me to a story I had missed back in December 2006: the baiji, or Yangtze River Dolphin, last sighted in 2004, can no longer be found and is effectively extinct. Robert Pitman, a scientist who participated in a search for the baiji, wrote:
"We came to say goodbye to baiji, but after its being in the river for 20 million years, we apparently missed it by two years. Sorry if I got a little emotional here, but the disappearance of an entire family of mammals is an inestimable loss for China and for the world. I think this is a big deal and possibly a turning point for the history of our planet. We are bulldozing the Garden of Eden, and the first large animal has fallen."
His full letter is here.
I am very sad.
Tuesday, June 10, 2008
Where's Your Bumper Sticker?
Well, the Democratic primary is finally over, and in commemoration I replaced the John Edwards sticker on my car (although I will continue to drink my tea out of my John Edwards mug and wear my John Edwards T-shirt).
More significantly, I finally maxed out my primary election contribution to Obama, although I haven't yet decided whether or not to give him money for the general election campaign; at this point, he's competing with MoveOn and the national congressional and senatorial campaigns for my wallet.
Loyal readers will know that I am not the most fervent Obama supporter. Oh, I think he would make a wonderful president, but I think Hillary Clinton would have been just fine, and my preference was for John Edwards anyway. I just think he's a weak candidate in an election we have to win (Stevens - 88; Ginsburg - 75; Souter - 68). He has the oratorical skill and the tremendous charisma, but he has trouble connecting with "ordinary" Americans (read: speak zero foreign languages, don't eat arugula, watch NASCAR, ... what does it mean that people like me aren't considered ordinary Americans?). He has the issue-that-shall-not-be-named. Most tellingly, he was unable to close out Hillary Clinton, who actually won the last three months of the campaign, which is simply not supposed to happen. Once there is a front-runner, everyone is supposed to jump on the bandwagon; they even jumped on John Kerry's bandwagon simply because he won Iowa, and there was a losing cause if I ever saw one. Instead, on Tuesday after Tuesday, the Obama campaign managed to snatch prolonged agony from the jaws of victory.
Now of course there is the drama of whether or not to make Hillary Clinton the vice-presidential nominee. On which I come down on the side of ... I don't know. Most people I know are emphatically against the idea, saying he needs a nice white man, preferably a governor, preferably with military experience, preferably from the South or the Midwest or the West, preferably with foreign policy credentials ... But there is a case to be made that this year, given the massive Democratic advantage handed to us by President Bush, Iraq, and the recession, all we need to do is to shore up our base and get out the vote, and choosing Clinton would come close to guaranteeing that every natural Democratic voter will vote Democratic.
In the end, it probably doesn't matter. While the Republicans cleverly managed to avoid nominating a nasty, paranoid megalomaniac who separated from his wife by press conference, a pathological flip-flopper who ran as a liberal in Massachusetts and an arch-conservative everywhere else, a lazy second-rate actor, and a man who claims to believe the earth is six thousand years old, they were left with a man with no charisma and no ability to raise money and not even the ability to deliver a joke line, and they are now forcing him to kowtow to the lunatic fringe of their own party, having decisively squandered a three-month advantage in the nominating process. So my prediction is a race that is unprecedented in its mindless inanity, ending with a 52-48 Obama victory.
But just in case, MoveOn is giving away free bumper stickers. So get yours now.
More significantly, I finally maxed out my primary election contribution to Obama, although I haven't yet decided whether or not to give him money for the general election campaign; at this point, he's competing with MoveOn and the national congressional and senatorial campaigns for my wallet.
Loyal readers will know that I am not the most fervent Obama supporter. Oh, I think he would make a wonderful president, but I think Hillary Clinton would have been just fine, and my preference was for John Edwards anyway. I just think he's a weak candidate in an election we have to win (Stevens - 88; Ginsburg - 75; Souter - 68). He has the oratorical skill and the tremendous charisma, but he has trouble connecting with "ordinary" Americans (read: speak zero foreign languages, don't eat arugula, watch NASCAR, ... what does it mean that people like me aren't considered ordinary Americans?). He has the issue-that-shall-not-be-named. Most tellingly, he was unable to close out Hillary Clinton, who actually won the last three months of the campaign, which is simply not supposed to happen. Once there is a front-runner, everyone is supposed to jump on the bandwagon; they even jumped on John Kerry's bandwagon simply because he won Iowa, and there was a losing cause if I ever saw one. Instead, on Tuesday after Tuesday, the Obama campaign managed to snatch prolonged agony from the jaws of victory.
Now of course there is the drama of whether or not to make Hillary Clinton the vice-presidential nominee. On which I come down on the side of ... I don't know. Most people I know are emphatically against the idea, saying he needs a nice white man, preferably a governor, preferably with military experience, preferably from the South or the Midwest or the West, preferably with foreign policy credentials ... But there is a case to be made that this year, given the massive Democratic advantage handed to us by President Bush, Iraq, and the recession, all we need to do is to shore up our base and get out the vote, and choosing Clinton would come close to guaranteeing that every natural Democratic voter will vote Democratic.
In the end, it probably doesn't matter. While the Republicans cleverly managed to avoid nominating a nasty, paranoid megalomaniac who separated from his wife by press conference, a pathological flip-flopper who ran as a liberal in Massachusetts and an arch-conservative everywhere else, a lazy second-rate actor, and a man who claims to believe the earth is six thousand years old, they were left with a man with no charisma and no ability to raise money and not even the ability to deliver a joke line, and they are now forcing him to kowtow to the lunatic fringe of their own party, having decisively squandered a three-month advantage in the nominating process. So my prediction is a race that is unprecedented in its mindless inanity, ending with a 52-48 Obama victory.
But just in case, MoveOn is giving away free bumper stickers. So get yours now.
Monday, June 09, 2008
If It's June in an Even Year ...
I'm just back from a weekend in Montreal, on which more later, but while in the hotel I managed to steal a few minutes watching bits of some early matches of Euro 2008 (Switzerland-Czech Republic, Germany-Poland, and Croatia-Austria) - the quadrennial championship of European national soccer teams. The European Championship always falls halfway between two World Cups, and so every even year there is world-class soccer (or an approximation thereof, given how tired all the players are, following a nine-month competitive season with another month in the heat of the summer) to watch in June. Although I am one of those people who prefer club soccer to international soccer - I think Man United or Chelsea could beat any national all-star team, and for that matter the Celtics or Lakers could beat any basketball all-star team, including the American one - the latter draws more television coverage, and hence is more accessible in the U.S.
Since I began following soccer in 1994 when I lived in France, I adopted that country's soccer team along with its food and its language. France was not actually in the 1994 World Cup, having failed to qualify by somehow managing to lose to both Israel and Bulgaria at home in its final two qualifying matches, the latter in the final minutes0. But during the 1996 European Championship I was touring Southern Italy as a writer for The Berkeley Guides, watching matches in bars packed with Italian fans (Arrigo Sacchi, then coach of the Italian team, played with "very tight lines," one man explained to me), as an ultra-defensive French team made it to the semifinals. Then, of course, there was 1998, when the World Cup was played in France, and I spent the whole time in London working on a consulting project so brutal that I missed virtually every game. But I made it back to my hotel room for the last half hour of the France-Croatia semifinal, when Lilian Thuram scored the only two goals of his entire international career (over 100 matches and counting) to salvage a 2-1 win, and that weekend in McKinsey's Toronto office we photocopied the final binders and I headed straight to a bar to watch most of the final, when France stunned Brazil 3-0. In 2000 I was in California, nine hours behind Europe and working all the time (this was Ariba at the peak of the boom), and I don't think I had any TV coverage anyway, so I missed watching France come from behind to beat Italy 2-1 in the finals. Then there were the embarrassments of 2002, when I stayed up late to watch France fail to score a goal in the first round (against Senegal, Uruguay, and Denmark, if my memory serves me), and of 2004, when an aging, tired team got booted out in the quarters by Greece. By 2006, I had a DVR, so I watched most of the World Cup, suffering through the painful final against Italy and the media's maddening obsession with Zinedine Zidane, who was at best the fifth-best player on the team, after both central defenders and both defensive midfielders - all of whom were black, by the way, but one shouldn't hold that against Zidane, who is an admirable person who has spoken out against racism on many occasions, and did not cost France the final - that was David Trezeguet, who is a great player, but who missed his penalty kick. But I digress.
As always, France enters this year's European Championship as one of the favorites, which means that all of her fans are expecting her to self-destruct, either early or late. And to be aided in the process by the current coach, Raymond Domenech, who has always seemed out of his depth and has compensated by being not only illogical but vague and inscrutable. He is best known for reaching the finals of the 2006 World Cup, but under his direction France barely qualified for that event (squeaking by Ireland, Switzerland, Israel thanks to a tremendous goal by Thierry Henry in Ireland), needed to beat Togo just to get out of the group stage, and only qualified for Euro 2008 thanks to Georgia defeating Scotland in one of the last matches. On top of that, Domenech insists on starting players who have served him well in the past but are no longer good enough even to start for their club teams, for example playing Willy Sagnol at right-back despite his missing virtually the whole season due to injury and not even including Bacary Sagna in the team, even though he was voted the best right-back in the English league. Most shockingly, Domenech left off the team David Trezeguet, the second-highest scorer in the Italian league and one of the deadliest strikers in the world (and the focus of Adidas's promotional campaign), in favor of two players who don't even start for their club teams (Henry at Barcelona and Nicolas Anelka at Chelsea).
Which is a long way of getting to the point, that today France drew 0-0 with Romania, the weakest team in their group, and no one knows where the offense is going to come from. So it could be a long few weeks.
Since I began following soccer in 1994 when I lived in France, I adopted that country's soccer team along with its food and its language. France was not actually in the 1994 World Cup, having failed to qualify by somehow managing to lose to both Israel and Bulgaria at home in its final two qualifying matches, the latter in the final minutes0. But during the 1996 European Championship I was touring Southern Italy as a writer for The Berkeley Guides, watching matches in bars packed with Italian fans (Arrigo Sacchi, then coach of the Italian team, played with "very tight lines," one man explained to me), as an ultra-defensive French team made it to the semifinals. Then, of course, there was 1998, when the World Cup was played in France, and I spent the whole time in London working on a consulting project so brutal that I missed virtually every game. But I made it back to my hotel room for the last half hour of the France-Croatia semifinal, when Lilian Thuram scored the only two goals of his entire international career (over 100 matches and counting) to salvage a 2-1 win, and that weekend in McKinsey's Toronto office we photocopied the final binders and I headed straight to a bar to watch most of the final, when France stunned Brazil 3-0. In 2000 I was in California, nine hours behind Europe and working all the time (this was Ariba at the peak of the boom), and I don't think I had any TV coverage anyway, so I missed watching France come from behind to beat Italy 2-1 in the finals. Then there were the embarrassments of 2002, when I stayed up late to watch France fail to score a goal in the first round (against Senegal, Uruguay, and Denmark, if my memory serves me), and of 2004, when an aging, tired team got booted out in the quarters by Greece. By 2006, I had a DVR, so I watched most of the World Cup, suffering through the painful final against Italy and the media's maddening obsession with Zinedine Zidane, who was at best the fifth-best player on the team, after both central defenders and both defensive midfielders - all of whom were black, by the way, but one shouldn't hold that against Zidane, who is an admirable person who has spoken out against racism on many occasions, and did not cost France the final - that was David Trezeguet, who is a great player, but who missed his penalty kick. But I digress.
As always, France enters this year's European Championship as one of the favorites, which means that all of her fans are expecting her to self-destruct, either early or late. And to be aided in the process by the current coach, Raymond Domenech, who has always seemed out of his depth and has compensated by being not only illogical but vague and inscrutable. He is best known for reaching the finals of the 2006 World Cup, but under his direction France barely qualified for that event (squeaking by Ireland, Switzerland, Israel thanks to a tremendous goal by Thierry Henry in Ireland), needed to beat Togo just to get out of the group stage, and only qualified for Euro 2008 thanks to Georgia defeating Scotland in one of the last matches. On top of that, Domenech insists on starting players who have served him well in the past but are no longer good enough even to start for their club teams, for example playing Willy Sagnol at right-back despite his missing virtually the whole season due to injury and not even including Bacary Sagna in the team, even though he was voted the best right-back in the English league. Most shockingly, Domenech left off the team David Trezeguet, the second-highest scorer in the Italian league and one of the deadliest strikers in the world (and the focus of Adidas's promotional campaign), in favor of two players who don't even start for their club teams (Henry at Barcelona and Nicolas Anelka at Chelsea).
Which is a long way of getting to the point, that today France drew 0-0 with Romania, the weakest team in their group, and no one knows where the offense is going to come from. So it could be a long few weeks.
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