Archive for March 5th, 2009

Cruising under the Bay Bridge

Originally uploaded by kaiyen

I don’t think I’ve ever blogged this photo. This was on the 2nd day I had my Nikon D300, which I still consider to be best non-FX digital SLR ever made. I honestly don’t know what they’d do in a D400, for instance, to make it better.

I was photographing a wedding that was taking place on a boat, cruising off of Alameda island. The sky was…stunning, the bridge was perfectly hiding the sun so it wasn’t going to flare and, with just a touch of correction to make the towers straight, this is what I got.

It was a beautiful day, I had the right tools in my hand, and this is one of my most favorite photos. It’s the wallpaper on the laptop I am using to type this, and on my blackberry. I opted for one of Morro Bay for my desktop machine at home. Had to mix it up a bit.

Fed assets total $1.89 trillion in latest week – MarketWatch .

This is kind of cool, because it really reveals some interesting stuff about the economic crisis and how the Fed has been trying to deal with it.  

Traditionally, the Federal Reserve Bank controls money supply in the market.  It does this by “targeting” interest rates and literally putting money in or taking money out of the market by buying or selling bonds.  When it raises interest rates, people save more and spend less, prices drop and inflation goes down.  When it lowers rates, people spend more and inflation goes up.  Throw in some changes in the supply of money and the GDP moves around in desirable ways.  

For…a very long time, what is called the “monetary base” of the Fed – the money which it controls and regulates, which it utilizes to fuel the economy – has been relatively stable.  However, because even a target 0% interest rate (it’s literally set to 0-.25% right now) has had almost no effect on spending (some thoughts on this later…) and therefore GDP won’t budge, the Fed has had to change the way it has gone about business.

First, it started bailing out AIG, Fannie Mae, Freddie Mac, etc.  This meant that they basically started owning these institutions, and now the monetary base went up.  They then started a process of injecting money into other institutions through TARP and other tools and the base got even bigger.

And, as one can see right at the beginning of the article, what was $870 billion in December 2007 is now $1.89 TRILLION.  That’s how much the Fed has in assets.  

Bernanke, the Fed Chairman, has some good stuff…somewhere, about how this dollar amount will shrink naturally as certain items fall off the balance sheet, but the monetary base for the Fed will be higher moving forward.

When I’m interacting with classmates in my MBA program, especially when I’m meeting someone new, I am often asked “what is your concentration?”  Many people answer that they are pursuing the finance track, or economics, or perhaps operations.  I say that I am pursuing the management and leadership concentrations (they are two separate ones).

I have to admit that I always feel a bit like an underachiever when I answer that way.  Like back in my undergrad days when I said I was majoring in History.  There was always this dangling question of “oh, and what is your “real” major?”  Now it’s as if learning about management is some kind of fall-back or perhaps even illegitimate field of study for someone getting an MBA.

Part of this is because I am in fact not very good at finance or economics, though I’m deeply interested in both.  I would love to be able to gauge beta and risk and how to create arbitrage scenarios while managing a hedge fund, or spend my day (seriously – my entire day) looking at how macro-economic policies shift our currency trends and overall national conditions.  

But, those aren’t my strengths.  I’m not sure I’m a great leader or manager so maybe my strengths aren’t there, either, but “running things” is something I’ve generally been good at since I was in high school.  Allocating resources, creative problem-solving, working with others – that’s just breathing to me, most of the time.  In the end, it may turn out I’m a management asthmatic, but for now I feel it’s what I’m good at, and it’s what I am pursuing. 

But it is kind of weird to say that I’m studying how to be better at management.  Too broad or something.

Exxon Raises Spending 11% Even as Rivals Reduce Costs – WSJ.com.

You have to be a WSJ subscriber to get the whole article, but believe it or not, I’m happy about something Exxon is doing.  

At the very least, I think it’s somewhat safe to say that Exxon is recognizing that there is a lot of catching-up to do with small, agile companies in terms of green energy (I think that’s way too broad of a term, by the way) and technologies and is going to utilize all of those record-setting profits of the last few years (you know, when gases were at an all-time high?) to do some research.  

$29 billion has to get a company somewhere…