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Five Things You Need to Know: What's the Score?


The Score for this the age in which we live, the universal invoice, our modern measure of full accounting, is something to nothing.


1. The Score for Our Age: Something to Nothing

Even if you've never been to the Old Town Bar, you've been to the Old Town Bar. Walking in off 18th Street near Park Avenue, the first thing you'll see is the hard corner edge of a 55-foot-long mahogany and marble bar that somehow seems familiar. The 16-foot tin ceiling will draw you up, make you stand a bit straighter, just enough to catch your reflection above the rows of liquor bottles standing in front of a bevel-edged plate mirror running the length of the bar, or in one of the smaller mirrors just above the booths on your right. It's a soft, faded reflection, maybe even a slightly weary one -- the bar's been around since 1892 -- almost as if the mirror has seen enough of the likes of you, a casual judgment passed with cold indifference. After a drink you'll look better. Then the mirror will warm up a bit and become your friend.

It's Tuesday night and I'm sitting at the Old Town Bar in New York City watching the NY Mets manhandle the Philadelphia Phillies. The Mets game is being shown on the bar's lone television, an old set probably from the mid '90s, and for reasons that aren't quite clear, it's actually comforting to watch Major League Baseball on something other than a hi-def flatscreen that makes everything seem like just another high-end video game where some mercenary soldier hits a home run, kills an alien, hijacks a car, and then rescues a prostitute before turning into a wizard. It just feels right. Except I can't tell what the damn score is. It's something to nothing, that I know. The 0 for the Phillies is apparent, but the Mets have... what? What is that? I keep squinting at the screen, but it's high up in the corner of the bar and the number for the Mets is all fuzzy, like a black ink splotch. A smudge.

"Hey, what's the score?" I ask a young lawyer type sitting next to me. He looks up at the screen. "Wow. Looks like... what is that? Something to nothing. Go Mets."

Right. Something to nothing. Go Mets. That's the score alright, and if I'd thought about it for just a moment without blurting out the question I would have recognized this fact in all its savage beauty; The Score for this the age in which we live, the universal invoice, our modern measure of full accounting. Something to nothing.

2. Check the Tally

You don't believe me, I know. I can tell. Well, let's take a look:

  • Tuesday night: NY Mets something, Philadelphia Phillies nothing.

  • Wednesday night: NY Mets something, Philadelphia Phillies nothing (again).

  • US Banks something, or possibly nothing. Actually, we just can't tell. Or rather, we can, but we just don't want to say it. Nothing to something back to nothing again.

  • European banks. Were worth something at one point... now, nothing.

  • Credit default swaps on any of the above. Worth something.... for now. But probably nothing once the crisis progresses to the point where they have to be canceled and, thus, become worth nothing. Something to nothing.

  • Gold and silver something; currencies, eventually, nothing.

  • Bonds very much something... right now. But we all know that that something is going to nothing, we just don't know exactly when. And everyone thinks they're smart enough to get out right before they do inevitably go to nothing.

The answer to all of the above coming from policymakers on both sides of the Atlantic is either complex artifice or, in some cases, outright fabrication; pretend it and they will believe. Something like that. Inflation, for example, the policymakers artful dodge to stave off deflation. Take the recent news this morning that the OECD, the Organization for Economic Cooperation and Development, predicted a 1.2% Gross Domestic Product for the eurozone in 2010. It even recommended that the Bank of England hike interest rates to prevent a sharp rise in inflation. Artifice.

So what we're left with are markets trying desperately to achieve price discovery, interrupted periodically by horrifying discoveries that something a moment ago has actually become nothing; the terrible consequences of government interventions, disinformation, and subterfuge.

3. Money Supply Plunges

"The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history," writes Ambrose Evans-Pritchard in the Telegraph. "The plunge in M3 has no precedent since the Great Depression," he adds.

Indeed. Why? It's the vicious toggle between something and nothing, of course. The banking system, after having enjoyed a rather successful period where virtually nothing did indeed count for something, regulators today have reversed course, pressing banks to raise capital asset ratios and to shrink their risk assets. The task of turning nothing into something, however, is a rather difficult one, as we're now seeing.

4. Warren Buffett, the Outsider?

Writing about Warren Buffett's reputation as an outsider, New York Magazine notes that, "While the soon-to-be octogenarian still cracks a corny joke or two while running Berkshire Hathaway (BRK-A) out of far-off, unsullied Omaha, he's a citizen of Wall Street at heart." Indeed. After all, Buffett's $5 billion investment in Goldman Sachs (GS) in September 2008 was The Act of an ultimate insider.

"Look beyond Buffett's old-timey outsider shtick, the circus of an annual meeting, the notion that all he does is drink Cherry Coke and play online bridge with Bill Gates, and he's just another Wall Streeter," the magazine observes.

5. Gold Giddiness Takes a New Turn interesting piece from the New York Times takes a look face cream manufactured from gold. (Gold Face Cream: A Costly Leap of Faith):

"Golden Collagen facial mask is a visual and tactile delight: gelatinous, face-shaped and thoroughly golden, it arrives in a sheer plastic enclosure that invites you to squish it the way that bubble wrap begs you to pop it."

Gold has become a go-to ingredient in skin-care products, the newspaper says. "It has been flaked, liquefied and otherwise suffused in moisturizers and sunscreens, eye creams and lip balms. Spas advertise 24-karat gold facials, a splurge typically costing north of $100. Fancy brands like La Prairie and Guerlain sell golden wares at high-end stores like Nordstrom."

From a socionomic standpoint, the love affair with gold outside of financial markets mirrors the love affair with gold occurring within them. Just yesterday we learned that the Gold ETF (GLD) inhaled 30 tonnes of bullion on Tuesday to send its holdings to a new all-time high.

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