I haven't blogged much recently

I have been meaning to blog more recently, but I just don't seem to find all that much time to do it.

Here are a couple of things that I've been meaning to blog about:

1. The forthcoming atheist bus advertisements in London. Due January 2009.

2. The Rudd Government's bank guarantees, and how non-bank lenders and investors are being done over by this. Naturally, I plan to take a balanced and fair view. Yeah right.

3. Hedge funds getting burnt by Porsche's takeover of Volkswagen. Who ever suggested that I'm immune to feelings of schadenfreude was out of their freaking minds.

4. Horse racing and the fact that I hate the Spring Racing Carnival and all the hype that goes along with it only slightly less than how much I hate Seven's Summer of Tennis.

5. My recent installation of Ubuntu-Eee on my Eee PC. It went very well, thank you.

6. My growing dislike of social networking sites. And my increasing reliance on a few of them.

7. The realisation that if something isn't done soon about Melbourne's train system, it'll end up like Sydney's.

8. The Federal Government's plan for an internet makeover, Chinese style. Fight this one with a passion kids.

9. Ubuntu 8.10. Where's the hype?

Anyway, I am getting round to it. Just haven't had time is all. And these are just the tip of the iceberg.

On the subject of Glarbism

I was recently reminded of glarbs on Bronze Dog's blog. I find the Glarbism phenomenon fascinating.

Have you ever met a Glarbist? I haven't, but nonetheless, I still find Glarbism fascinating.

According to Glarbists, glarbs are flarschnikit. I kid you not.

Everything that we know about glarbs is contained in the holy book of the Glarbists. That particular text, titled The Holy Book Of The Glarbists, is apparently a long and largely boring read.

That is, unless you like the parts which just bang on about how great glarbs are. They make up about three quarters of The HBOTG. Personally, I would consider this to be dreadfully boring and self-serving. Mind you, I have to be honest here and say that I don't know of anyone who has ever read it.

So glarbs are flarschnikit. These are possibly the most amazing ultra-beings ever. Put it this way: being flarschnikit means that they would kick the arse of the Judeo/Christian/Islamic god to His Hell and back again.

Can you imagine how cool it would be to be flarschnikit? Certainly makes "omnipotence" and "omniscience" look weak.

Not only that: Deities are their minions!!!

How do the Glarbists know this? The HBOTG says so.

I must admit that just like BD, I'm somewhat doubtful about this one. I'm not even sure that I fully understand flarschnikity terribly well, but I know better not to ask a Glarbist: They won't tell you, because, as I pointed out before, glarbs are flarschnikit.

Glarbist apologists see this as the ultimate proof of glarbs. After all, if glarbs weren't flarschnikit, then glarbists wouldn't clam up on the subject, would they?

If you suggest otherwise to a Glarbist, this is where they get all judgemental about how "you'll end up bluggling in Flornath". Or accuse you of being "gobatastic".

I'm not convinced. Certainly, in glarbism, there are some weird stuff. Take the story about the prophet Humbert The Kidiphiddler. Certainly, I would have thought that he would have ended up in glorious Butnuggarts for this, but instead, Glarbist dogma has him beelittling about in deepest Num-b'Atooz.

Where then does Flornath fit in? How does one "bluggle"?

Ah, but the Glarbist has the answer for you on this: It turns out that glarbs are flarschnikit.

Not only that, but I was scratching my head at this bit in the Book of Chunder where the relatively realistic story of Peter And The Testchoob-b'Aybiz is related. Turns out that it's merely a metaphor and isn't meant to be taken seriously.

But what really gets me is later on in the Book of Chunder during the Coming Of The Whore Of Howwidstern where our metaphorical Peter proclaims the gobatastic virtues of the Whore, and is immediately spifflockated by the glarbs.

Turns out he'd forgotten that glarbs are flarschnikit. This, incidentally, is meant to be taken literally, hence my confusion.

If you wonder how Glarbists know that The HBOTG is accurate, they've got an answer to that, too: As it happens, glarbs are flarschnikit. End of discussion.

BD really went to town on this, and I have to thank him once again for bringing it to my attention. It really was interesting to go back and re-read his take on this.

Glarbism is not for theological beginners.

Ernie/Piranha Club, 19 October 2008

Once again, Piranha Club - still called "Ernie" down my way - comes through with the goods.

Enjoy.

Rock epic of the month: "Glósóli" (Sigur Rós) 2005

Rock epics of the month is a series of posts where I'll look back on classic examples of what I think is the greatest excess of rock and roll - the rock epic.

This month, I'm really stretching the bounds of what can be considered "rock".

Sigur Rós burst out of Iceland in the mid-nineties, and some said at the time that they probably would have been long forgotten if it wasn't for a fascination with Icelandic culture that was brought to the world's attention via the work of former Sugarcubes frontwoman Björk Guðmundsdóttir, an Icelandic singer who probably would be better described as a performance artist. Or even a complete nutcase.

But where Guðmundsdóttir mined a genre all her own, Sigur Rós were probably better described as riding the wave of a peculiar genre known as post-rock.

Post-rock really was lazy journalist-speak for "How the frig do we categorise this?" It included acts like Tortoise, Mogwai and Don Caballero, and has since been used in arrears to describe some of the work by bands such as Public Image Ltd and the later work of Talk Talk.

Things that post-rock bands seem to have in common is a complete disregard for structure, as well as using their instruments in different ways to provide textures that would otherwise not make an appearance in rock music.

Sigur Rós started in Reykjavic and were named after Sigurrós, the sister of singer and guitarist Jón Þór "Jónsi" Birgisson. Completing the band were Georg "Goggi" Hólm on bass and Ágúst Ævar Gunnarsson on drums.

(Fair dinkum, there's a reason why keyboards in the anglosphere don't have accented letters, not to mention Þ (thorn), ð (eth) and Æ (ash). It's because these letters were replaced in old English by different combinations of letters that do the same thing. I am getting so tired of typing these, but I'll struggle on.)

Anyway, not long after their first album, Von, Birgisson, Hólm and Gunnarsson were joined by Kjartan "Kjarri" Sveinsson on keyboards. They soon released Ágætis Byrjun, an album that introduced the world to Birgisson's penchant for playing his guitar with a cello bow.

Gunnarsson left the band soon after to be replaced by Orri Páll Dýrason who joined the band to lend his skills to the outrageously, pretentiously titled ( ). ( ) featured eight untitled tracks guaranteed to send you barmy, and introduced Birgisson's new fascination with singing gibberish which he called, "Hopelandic".

Their previous groundwork could be described as parts that were either truly "cutting edge" or straightforward wank. In 2005, Birgisson, Hólm, Gunnarsson and Sveinsson lay down tracks in the studio for the album where their experiments with sonic textures finally coalesced into something that, while still pretentious, hit the mark musically. That album was called Takk... and was, just like its predecessors, extraordinarily well received by the critics.

Unlike Takk...'s predecessors, though, you got the distinct impression that this time, the effusive praise from the critics was a bit more sincere, rather than, "Oh shit, I better give this one top marks, because I don't know what the hell is going on and I'll look like a philistine if I don't."

The towering "Glósóli" (6:15) was the apotheosis of this album. Featuring a nice rhythmic groove, courtesy of Hólm and Dýrason, this just moseys on down with rather lovely keyboard cascades from Sveinsson.

Over the top, but nicely buried in the mix, is Birgisson's completely weird-arse falsetto, which almost certainly relegates Guðmundsdóttir's to the top of the "normal" heap.

And it builds. Oh my sweet FSM, how it builds.

By the time that this tune finally unleashes a full-blown scary monster, Birgisson has put his voice away and is blasting out klaxons on his guitar, turning all atmospheric on us at just about the right time.

Oh, and the video is absolutely perfect too.

Be blown away by this. It is frightfully good stuff.

Go Placidly Amid The Noise and Wait

Given the carnage on the markets over the last week or so, it was only a matter of time before the we got some irresponsible media reports.

So far, I give a qualified single thumb up to the media for restraining themselves from the kind of sensationalist and hysterical spectacle we saw during the tech wreck. At no stage have we seen the media, en masse anyway, hinting that everyone should sell up before (paper) losses get too great. At least, in Australia, anyway.

The reasons for this are twofold:

1. The tech wreck ended up as, by and large, a bit of a non-event in this country. We're not a hi-tech country. We weren't subject to mass IPOs of dubious quality floating on the market in the same way that countries like the USA were. Needless to say, those in the media who got a little crazy after the events of 2001 looked like geese, and probably felt a little sheepish afterwards as well.

Enough with the animal insults.

2. The Australian economy is in great shape. Our banks are totally not in need of "guaranteeing" in the same way as what is going on in Europe and North America at the moment. Never mind that, though. Our Federal Government guaranteed them today.

OK. Up until quite recently, we did have a bit of an inflation problem. On top of that, we did have a real estate bubble that, thankfully, appears to have sprung a slow leak thanks to our (still relatively) high interest rates. But in the overall scheme of things, we're doing OK.

We don't have a property price crisis like over in the States, though. Yet.

It did make me wonder though, during the week, when I turned on the news to see that some commentators are now starting to consider the distinct possibility that a housing price slump could hit Australia. I would personally welcome this, however, it could cause some grave havoc.

Consider this: In the 1980's, the median house price was set at around about three times gross household income, based on figures I saw during the week. Now, it appears to be about seven and a half times. In real terms, this is simply too much for most householders to afford, and should ring alarm bells anywhere, in the same way that the USA's foreign debt at around 350% of US GDP is at the moment.

By the end of the week, the massive spin doctoring machine that is the Real Estate guilds in each state had reversed this talk, and were even talking up their industry, with headlines like "Housing Prices Bottoming Out", amongst others.

You have to hand it to the RE guilds. The media is totally in their thrall. Media Watch, a couple of weeks ago focused on the attention that Sydney newspapers paid the sheer spin and dishonest figures that the Real Estate Institute of New South Wales like to put out to support their arguments. Figures that, when compared to those churned out by the Australian Bureau of Statistics, seem totally incredulous. The Daily Telegraph even held up the REINSW as being the "peak body" when it came to these figures.

I'm at the point that when I see a property story on the news, I simply don't believe a word of it if there is even only a one-word quote from anyone associated with these bodies. The fact is, the RE guilds represent real estate agents. They do not present fair figures honestly, and how the media don't see through the rubbish that they put out every week is one of life's little mysteries that we'll never see solved.

But on the whole, the media has been relatively controlled on the stampede for the exits that we're seeing in equity markets at the moment.

I did, this week, see something that made me wince.

Marcus Padley, a stockbroker, and regular columnist for The Age usually writes some insightful articles on finance.

Padley, for those who don't know, possesses a sharp mind and one of the silliest egos in finance this side of the late Rene Rivkin. He writes a tip sheet, which is relatively highly regarded, called "Marcus Today". Obviously, Padley was oblivious to the groans that went on around his office when he decided on that one.

Padley wrote an article in The Age which in my honest opinion, is the stupidest and most irresponsible op-ed piece during a financial crisis that I have ever seen. It was titled, "Take your money and run - it's worthless advice".

Cop a geek at this. Padley writes the following choice quotes:

"If I was still holding stocks, yes I'd still sell them... But I come at it not with an opinion about the direction about the sharemarket, but from a human perspective."

Padley has essentially held out a red rag to the bears and said, "Go on. Sell up. You know that you want to."

"But [don't hold on to your stocks] if you can't afford any more losses and are in pain. The definition of "can't afford" in my book is this, if I had to go home to my wife and tell her our expectations are going to have to be lowered."

(My emphasis)

OK. We're all going to have reduced expectations as a result of this. In Padley's opinion, everyone must sell everything, lock, stock and barrel.

"Who wants to play in a casino? The volatility has reduced the market to a casino. In a casino, no opinion has any value."

Your average investor might just as well give up at this point and shoot craps, because this is what Padley is suggesting that the market is no better than.

This is despite the fact that we know a great deal of market behaviour over the long term, which tilts the odds firmly back in the direction of an investor. Unlike our craps table at the casino, which is rigged against you from the start.

This is just the first third of an article which Padley manages to break every rule in responsible journalism. By essentially saying, "everyone should sell, without question," Padley has crossed the line into Personal Financial Advice territory, and should have the book thrown at him by ASIC.

Elsewhere Padley offers these little gems, which I have paraphrased:

• Avoid losses. Therefore, avoid the market as well. It doesn't matter if you are in it for the long term or not.
• I agree that the herd mentality is good. Stick with it and you can't go wrong.
• Optimism is just that. Even if it backed up by the sheer force of history that suggests that investing for the long term requires a buy and hold approach.

Honestly, the whole thing almost reads like a parody. If this is Padley's idea of a joke, it's not funny, and he should be hauled over the coals as soon as the moment arises.

On top of this, Padley is a stockbroker. This means that whenever another sale is done, he collects a commission from it. Ka-ching!

Out of 5 stars, I give this disgraceful effort a bitch slap. Padley needs to wake up to himself.

Standard but necessary disclaimer: Only a complete idiot would think that any of this plausibly constituted advice. It's not even vaguely reasonable to consider this to be advice. If you are in any doubt as to the content of this, see a good, independent financial adviser immediately. They do exist.

Sam Kekovich Goes Berzerk - Grand Final 27 September 2008

Former North Melbourne great Sam Kekovich apparently had this to say at a speech he made at Centre Square on Grand Final day.

For those of you who are unaware, Centre Square is the name of a corporate function at nearby Punt Road Oval. Attendees go there to get liquored up before moving over to the MCG where they move into their corporate boxes to watch the match.

This is the text of the speech:

My fellow Australians.

I've been invited here to talk to Centre Square, in these big marquees on Punt Road Oval. And speaking of Punt Road Oval, let me tell you something for nothing - Jack Dyer would be spinning in his grave if he could see the place right now. Full of a bunch of Collins Street corporate criminals, Chapel Street designer cats and Toorak poodle rooters who have about as much interest in football as Paris Hilton has an interest in astrophysics.

Captain Blood didn't break every bone in his body and commit multiple acts of on-field heroism and homicide so he could see his beloved home ground turned into an over-priced pre-match party for chardonnay-swilling spivs and their assorted hangers-on attending their one footy match of the year, whilst tens of thousands of hard-working honest battlers who love the game and love their team are denied the chance to attend the greatest game in the world.

I've had a gutful. Whilst this bunch of Armani-wearing, Audi-driving, Prada-carrying try-hards monopolise priceless vantage points in the MCG, millions of genuine footy fans who have followed their team through thick and thin have to make do by watching the game at home or down at the local pub, whilst the Melbourne spivocracy get to sit on their fat posteriors in a marquee and wouldn't even know the way to the MCG without a tour guide.

Since most of you haven't attended a single match this year and know nothing about football, let me give you a few tips - Geelong wears blue, Hawthorn wears brown, and in case you were wondering, there'll be no fashions on the field at half-time, and no, the Lexus Centre across the road is not a prestige car dealership.

Centre Square is not only unfair. Centre Square is not only inequitable. Centre Square is downright un-Australian! And so are all of you! In fact, I bet you're all so un-Australian that you all hate the Anzacs, you booed Cathy Freeman, and you want to cull cute cuddly koalas because one of them once jumped out in front of your Range Rover on the way to Mount Hotham.

But it's not just you who are at fault. I also blame the AFL - those out-of-touch, opera-loving elitists at AFL headquarters who are responsible for this unconscionable abomination need to take a good hard look in the mirror. That is if they can handle the sight of moral and spiritual bankruptcy staring back at them.

I also blame the government. Our new Prime Minister has clearly failed his first test of leadership if he thinks it's acceptable to allow an event like this to go ahead without a pre-emptive strike by the SAS. The PM is doing nothing to ease the squeeze on working families on the bottom rung of the ladder of opportunity who just want to see their team in the Granny. But he'd better get his act together and do something about it, or millions of angry footy fans will do it for him. Revolutions have been started and governments have been overthrown for lesser outrages than this. And people ask why we need capital punishment.

So cut off your silver tails, tear up your fur coats and get fair dinkum. Our great Australian game is the greatest game in the world – the game of the people. Not some once-a-year marquee piss-up for an overpaid, over-dressed pack of passionless corporate cretins who only turn up for the free chardonnay and then spend the actual game looking about as interested and excited as a line of Easter Island statues.

So don't bother coming across to the MCG this afternoon, because you're not welcome. The next train out of Melbourne leaves Richmond station in 10 minutes - so make sure you're on it. Or, better still, under it.

So don't be un-Australian - everyone here in Centre Square can get stuffed! You know it makes sense. I'm Sam Kekovich.

If this is true, I give him five stars.

If not, I still give it five stars.

Something I noticed recently

Once upon a time, it was the thing that if you wanted to describe something as "gay" meaning lame, stupid or ludicrously ridiculous, you could. Provided that you added the phrase afterwards, sotto voce, "...in the primary school meaning of the word."

If you didn't remember to do this, you were labelled an obnoxious homophobe, and pilloried for it.

I came across something on YouTube the other day (I don't have the link and I'm not looking for it) where someone - presumably not heterosexual - was complaining about people who are prone to describing things as "gay" under this definition.

It was about at this point that I noticed that the primary school definition disclaimer seems to have all but disappeared. I worked, up to last week, in an office where a couple of the team routinely described things as "gay" without the disclaimer, and no one seemed to bat an eyelid.

In fact, so entrenched was this practice that it never occurred to me to see what the reaction might have been from a particular member of the team. A member for whom, as it happens, the disclaimer was invented in order to avoid causing offence.

This got me thinking: Is the meaning of the word "gay" changing yet again? Or has it already done so?

After all, no one really bats an eyelid at someone's sexual orientation anymore. Just look at the fuss that Lindsay Lohan's coming out caused: That's right, folks. No one could give a rat's arse.

What's caused all this then? Is it the rise of Generation Y? After all, this is the generation for whom, if you believe our media stereotypes, still behave as if they were in primary school. It really goes without say that they might have brought a few words of primary school slang with them, if that was the case.

Discuss.

Blackmail And The Catholic Church

YAAAAAAAAAAAAH! Oh, this makes me sick.

The catholic church, possibly drunk on power after World Youth Day, have signalled that they will close their obstetrics wards if the abortion bill passes through state parliament.

Not content with this, they have effectively told their doctors to consider breaking the law if it is passed.

I sent this complaint to Catholic Health Australia, and have crossposted it to the complaints blog:

Dear sir/madam,

I write to you with more than just a small degree of disgust over the blackmail stunt that you pulled today. I wish to complain about this as it is clear that you are behaving with an infantile level of dignity, decency and decorum.

Your board member Bishop Joseph Oudeman's threat to close your obstetrics wards in your Victorian member hospitals if the abortion bill successfully proceeds through state parliament is a national disgrace. Possibly even an international one. I cannot believe that you, in good conscience, would even consider resorting to blackmail to try to get this law stopped.

I can't even comprehend how you would even find blackmail to be appropriate.

All the bill requires is for doctors with a conscientious objection to abortion to refer women to doctors who do not. And yet, this isn't good enough for you: You have to enforce your concept of "life" on to the rest of us. Whether we're religious, specifically Roman catholic christians, or not.

How could you possibly do this?

All over the state, there are women who are going to need to give birth. According to stats on The Age's website, your hospitals deliver one third of them. Are you going to deny them assistance in a hissy fit over the laws, if they even become that? Law, that is?

And I read that your CEO, Martin Laverty, has stated that you will not require your doctors to comply with the law on this. This is a disgrace, and is completely irresponsible.

I can only conclude that you have the mental capacity of an eight year old who is threatening to take the bat and ball and go home if by chance he is given out. Please confirm when Mr Laverty and your board will be resigning over this matter.

Should you carry out your threat, I wish to advise that my wife and will have no alternative but to use condoms and birth control pills.


Yours sincerely,

Dikkii.

Catholic Health Australia may be contacted here: secretariat@cha.org.au

Brutal carnage!

We've seen a lot of action on the markets in the last few weeks, and I suppose that some of my regular readers are probably wondering, "Hey Dikkii. You've been awfully quiet on this."

And I suppose that I have. The thing is, I'm neither greatly spooked, nor am I greatly interested. I've had more important fish to fry at this point in time, but I have been following at a distance.

So I thought that I'd get my thoughts down on paper and attempt to try to put together some thoughts on the week that we've just had, because it has been a doozy. I'm not about to go the way of the financial media and suggest that the global market slide that we saw represents the death of capitalism, though. This has been some disgraceful irresponsibility coupled with a complete lack of knowledge about what capitalism really is. However it is interesting to note that where chickens have been coming home to roost, this blogger did see some of it coming.

1. The "Death of Capitalism"

This is just plain lazy reporting.

Capitalism is just the interplay between those two non-physical forces, Supply and Demand. Nothing more, and nothing less.

Supply and Demand, in turn represent the twin human emotions of greed and laziness.

Note that I haven't mentioned fear. Fear certainly impacts on Supply and Demand, but it is not an emotion on what they're built. Allow me to demonstrate:

Imagine that you are a buyer of something that we'll call "doo-hickeys". Greed and laziness suggest that you'll be more willing to buy more doo-hickeys when prices are low, rather than when they're high. Or to put it another way, you are susceptible to a good bargain, and you're turned off high prices. This, folks, is how the force of Demand works.

Let's now switch roles, and suggest that you are the manufacturer of the aforementioned doo-hickeys. It's via greed and laziness that you are willing to pump up production when prices are high, rather than when they're low. Essentially, you're paying in doo-hickeys for money, and when you can get more money per doo-hickey, you want to make the most of it. Which really makes Supply a sort of inverse Demand priced in commodities rather than money.

So how does fear impact this?

Essentially, fear attacks in waves. Usually, fear inhabits a small corner of one's mind, and is not sufficient in its own right to interrupt the greed and laziness emotions.

However, every now and then, the amount of fear that is there reaches a critical mass in an individual, and this will override the greed and laziness to the point where they fail to register. This is called panic.

So for a buyer of doo-hickeys who's financially fearful, they're going to not be so keen on buying those doo-hickeys, because the fact that they're parting with actual cash to get those doo-hickeys becomes worrying. They'll be worrying about the re-sale value of those doo-hickeys. They'll be worrying about whether the doo-hickeys are any good. In short, they'll be worrying. Or fearful, if you like.

Fear affects suppliers of those doo-hickeys as well, but in a different way. Remember how I said that Supply is a kind of inverse Demand? Well, imagine that you're seeing less and less dollars per doo-hickey sold. You may eventually start fearing that doo-hickeys will eventually be worth nothing. You might choose to dump your entire stockpile on to the market, as you fear that to delay might result in this stockpile eventually becoming worthless.

And even though prices are falling, you may even choose to ramp up production in the hope that prices fall even further, allowing you to buy some back later on to sell when prices stabilise, allowing you to realise a small profit for them.

You can see, just from these examples, that Supply and Demand morph into almost entirely new animals as a result of the introduction of fear, however at no point do they go away. Fear just causes greed and laziness to take on lesser importance in the whole system.

Fear also seems to throw rational thought out the window.

And so it is with assets as opposed to the commodity that we've called doo-hickeys. Supply and Demand work in almost entirely the exact same way. Except when fear comes along, and then it's panic stations.

Supply and Demand will not go away. They'll just take on a different shape for a while. The same can be said about capitalism - after all, it's really the same thing.

2. Complex financial instruments

A little while back, I bemoaned complex financial instruments, and how they appear to exist only to generate fees for the issuers of them.

Since then, we saw one capital guaranteed product issued by Macquarie Bank hit the wall and announce that under the rules that it operated under, investors would get their money back. In 2013. But no additional returns would be paid.

No returns at all until 2013 is a frightfully long time for your money to be going nowhere.

Elsewhere, outside these complicated little instruments that are designed to prey on investor fear, we have lovely little terms permeating the financial department stores, and catching investing novices and veterans out alike.

Frankly, people should fucking well go to gaol for Collateralised Debt Obligations, because these little bastards were designed to mislead. How the fuckety fuck can one bundle up a bunch of bad loans as an AAA-rated security I'll never know.

In Australia, we had all these capital guaranteed funds out there that were marketed a bit like this:

You could earn as much as 20%* (*based on market performance). What's more, we'll capital guarantee them, so if they haven't performed in ten years, you'll get your money back.

Investors now are pretty much locked into things that will now look only as good as what they paid for them in the first place. Which makes only the capital guarantee worth something - the representations on returns were something that should have never appeared in print to begin with.

Contracts For Difference - oh these are going to be fun. I'll come back to these a little further on, but I suspect that we're going to hear a lot about these in the months to come.

Look. The upshot of all this is this: If you can't get your head around how a particular financial product works, then for heaven's sake stay away from it.

3. Derivatives, Sub-Prime Loans and the US Housing Price Crisis

In March 2007, I made a throwaway comment in answer to a comment left by Einzige at this blog that we were yet to see the effects of the US housing price crisis.

I was not looking into a crystal ball, people. I was reading newspapers and watching TV, and if people were talking about it back then, then we knew that there was a problem.

Fast forward to September 2008 and we know now where this has lead. Sub-prime loans have basically now brought down nearly the entire US financial system thanks to an oversupply of housing and a sudden rise in interest rates. Is Alan Greenspan to blame?

Hardly, at least in the first instance. What is to blame is a banking sector that assumed that property prices never go down.

Property prices, just like shares, derivatives and commodities go down sometimes. Can you believe that?

Warren Buffett made the bold assertion back in 2002 that the sudden explosion in derivatives was playing with fire. Why, oh why, can't anyone see that if Buffett, the closest we have to evidence of minor deities, is critical of something then it must be bad?

I mean really. Did Orange County, California file for bankruptcy for nothing?

Hmm. Contracts For Difference. Why did that thought just pop into my head again?

4. Freddie, Fannie, Lehman and AIG.

This month has seen bailouts on an unprecedented scale.

Companies should not be being bailed out. Companies should not be so big that they need to be bailed out by governments.

If there is near total domination of a market by a particular company, this is bad. Back in the early part of this century, Standard Oil was broken up. It was too big to allow the market to operate effectively.

We haven't learnt anything from that. In financial planning, a lot is made of diversifying your investments in order to spread your risk. And granted, Standard wasn't about to go down, but no one benefits from this degree of market dominance.

Economies should also learn from this. How the hell could the US mortgage sector be dominated (I nearly wrote "denominated") by just two companies? Just like investors, economies need to spread their risk.

In Australia, banking is dominated by four companies. Five if you count St George Bank, but it's about to be consumed by Westpac, so really, it only is just four.

Once again, this lot are bleating about being allowed to merge further. This certainly shouldn't be allowed. "But it allows us to build scale in order to become globally competitive," they say.

"Go out and build scale in the rest of the world," I say, "You'll have to eventually."

A free market might be about letting companies build this kind of dominance over time. "Free market economics" also suggests that companies genuinely want to pay tax voluntarily, rather than being made to do so. I think you know where I'm going with this.

5. Stock borrowing and short selling

It's been argued that eventually, short-selling en masse will cause even respectable firms to be completely frozen out.

I applaud the efforts of some countries this week in banning the practice.

In Australia, naked shorts were banned. Rather than something out of Benny Hill, this now means that you cannot sell shares that you don't have. In other words, you will now have to borrow them or, gasp, buy them first.

I'm not actually sure how much naked shorting was going on. It must have been quite a bit because on Friday, the market reacted as though share prices had had a bomb fuse lit underneath them. In any event, I'm not sure that hedge funds are solely to blame.

Let's talk Contracts For Difference. Or CFDs, if you like.

In the early noughties, these were introduced on to the market as a mechanism for "spread betting" on the market. You could go long or short, and in later versions, you can now trade them on the market, rather then selling them back to an intermediary and you can get paid dividends on CFDs that you own if a dividend gets paid on the underlying security.

How do the intermediaries who underwrite the CFDs do it? Well, one would expect that they dabble in the market themselves.

And if there are suddenly a lot of their clientele shorting BNB, doesn't the underwriting institution have to short BNB as well?

What I'd really like to know is this: How many short positions on close of business Friday hadn't been closed out when the ban on naked shorts went through? And how are brokers, in the short term, anyway, going to police the ban?

Folks, we are going to see more carnage hit the markets in a big, ugly and undignified way. And even though we consider ourselves immune in Australia, we're certainly not.

I plan to be getting in and cleaning up on the mess that's left behind. But I don't mean fixing it.

Disclosure: This blogger owns shares in Macquarie Group Limited.

Standard but necessary disclaimer: This is not advice. Only a complete idiot would think that any of this constituted advice. It's not even vaguely reasonable to consider this to be advice. If you are in any doubt as to the content of this, see a good, independent financial adviser immediately. They do exist.

Vale Rick Wright

The world lost another great rock icon this week with the passing of Rick Wright.

Wright was a founding member, and keyboardest of Pink Floyd, along with Roger Waters, the late Syd Barrett and Nick Mason. In the early days, he was the "other" songwriter, after Barrett. About the time that Barrett left the band (OK. Was booted out) he started to take more of a back role in the day to day songwriting, although he's probably best remembered for a piece off The Dark Side Of The Moon called "The Great Gig In The Sky".

Wright sang lead vocals on a few Pink Floyd tracks, "Astronomy Domine" being one, "Time" being another. He had, if not the best voice in Pink Floyd, the nicest one. But in later years, Wright's contributions became less and less as bassplayer Waters and guitarist Dave Gilmour fought it out for creative control of the band.

It's often been argued that Wright was the first casualty of this battle, when he became the second member of Pink Floyd to be sacked, after the recording of The Wall. In reality, Wright and Waters were not the best of friends at this point, and Wright's escalating cocaine problem just gave Waters the excuse to get rid of him.
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Maybe because of this, Gilmour chose to re-hire him again during the recording of A Momentary Lapse Of Reason - Waters was by now suing Gilmour and Mason for ownership of the name Pink Floyd, and the message that Wright was back in the band could only be interpreted as perfect spiteful timing.

Now clean, Wright returned to songwriting on The Division Bell, Pink Floyd's last studio album.

He also played with Waters again at their one-off reunion gig last year.

He will be missed. RIP.