spring greening

my friend miguel has a great blog called "interior cathedral", where he writes about his faith and his life. one of the highlights of his blog has been reading about his spring resolution of being outdoors and "throw(ing) open the windows." he's biking, spending time at the park, and gardening.

my penpal, david, lives in canada, on acres and acres of land, which is he turning into a bird and animal sanctuary. he sends me amazing stories of owls, and seeds for planting. when he describes his life, i picture him walking in broad strokes of landscape, with wide horizons and no one but himself and some animals for miles.

most days, i spend 8 hours in a office building in downtown manhattan. i take the subway to and from work and often this can feel like i'm just moving from box to box. however, this spring, with the inspiration of my miguel, and some seeds from david, i'm trying to step outside the normal confines of city life. i've started what looks like a pretty healthy garden (so far!) on my fire escape- growing tomatoes, peppers, lettuce, baby carrots and some flowers and herbs. i'm thinking of biking to work. i want to make a summer out of flying kites, eating watermelon in the park, and bringing picnics to the beach. what are some of you (all 2 of you!) doing for a spring greening?

Hakata Ippudo, or ramen real style

last night i was telling my brother about the ramen at Ippudo and he started laughing. "ramen?" he said incredulously, "like maruchan? you ate that at a restaurant?" that exchange alone is the reason why places like Ippudo are so necessary.

ramen, as known in the majority of the united states, is notoriously maligned as the rock hard brick of dried noodles with the mysterious "flavor" packet. most american kids have had this at one time in their lives (or for my brother and me, many, many times) and forever associate ramen with this semi-edible astronaut-like food. like many other things in life, the real deal ramen is very very different and so much better than the cheap facsimile. (don't get me wrong though, there are times when i crave the fake stuff too.)

real ramen is japanese comfort food, similar to what mac and cheese is to americans, and adobo is to filipinos. it is different in every household, but, like mac and cheese, always has the same basic components: a very flavorful broth, chewy noodles and a smattering of vegetables. there is often also sliced pork. different regions of japan have different specialties, mainly differing on ingredients that make up the broth. in nyc, there a couple great ramen places, but almost all of them match the hole-in-the-wall, night-after-drinking, vibe of the typical ramen places cluttering japan's main metropolises. other than momofuku noodle bar, Ippudo is the only place i know of in NYC where ramen in served in a more upscale setting, hopefully introducing ramen newbies to the deliciousness that is pork broth.

shown here are the two options for ramen at ippudo: the paler broth is the white pork based ramen, Shiromaru, which is smoother and less assertive, while the darker "red" broth, Akamaru, is the bolder, porkier flavor. each bowl came with some heavenly slices of tender, fatty pork. seriously, if you like pork as much as i do, just those slices are worth the visit. i also had an appetizer of larger, cube-like slices of fatty pork, which i will forever fail to describe the deliciousness of. a pork-lover's dream, i'll tell you that much.

apparently, the genuis behind Ippudo is Shigemi Kawahara, also known as the ramen king in japan. he's won numerous prizes for his ramen, and treated with the reverence fit for a king there. and one other tangetial bit of information: the momofuku restaurant chain was named after the inventor of the modern instant ramen, Momofuku Ando.

summer rolls

i may as well come out and say it: i prefer summer. as nice as spring it, with all its flowers and baby animals, it's just too boring and easy for me. summer, with its violent thunderstorms, picnics in the park, late night humidity and trips to the beach, has the turbulent ups and downs of good stories. it's summer that excites me. so, given the choice between the ubiquitous spring roll and the rare summer roll, you know what i'd pick. and you'd be wise to try it out too.

the thing about this recipe is that it's not really a recipe, per se. it's more like a general guideline that you can tweak endlessly to suit your tastes. it's easy, and although requires a good 30 mins. of dedicated labor, yields impressive results. maybe you'll get excited about summer too.

summer rolls

for filling:
chopped into similar sized matchsticks, any of the following:
asparagus(par boiled)
firm tofu
cooked shrimp (can be left whole)
cooked rice vermicelli noodles (i use this brand, follow directions on packaging)

for dipping sauce
3 tablespoons soy sauce
1/4 cup sweet chili sauce, the only brand i've ever used is mae ploy
4 tablespoons chunky peanut butter
water as needed

mix all ingredients together. use water to thin to desired consistency. you can tweak the amounts to suit your tastes.

you will also need rice paper wrappers, i usually get this brand. any asian market would have all of these items.

in order to assemble these i usually set up a little assembly line of:
1. bowl of rice noodles
2. bowl of mixed veggies + protein
3. pan of warm water
4. large plate with paper towel

you place a couple of the rice paper paper wrappers in the warm water to let them soften a bit. once they are soft, transfer one to your plate, drying it with the paper towel. place rice noodles and mixed veggies on one edge and wrap together. transfer to a large bowl and keep a moist towel on top so that they don't dry out.

a very chocolate chocolate cake

this post is very much delayed; i made this cake in february for the birthday of one of my good friends. he is as much a chocolate lover as i have ever seen, and i wanted to do something chocolate extreme. after bookmarking half a dozen chocolate recipes and polling him practically every day on his preferences, he settled on this one. a good choice.

start with a cup and a half of cocoa powder and some buttermilk for the layers. add the secret ingredient: coffee. i'm told it makes chocolate taste more chocolaty, which it did. (note for you decaf drinkers: i'm sensitive to caffeine and there was enough in this cake to give me a buzz, so don't eat before bedtime) the next day, make the filling, which also doubles as the frosting, from a pound of chocolate. you heard me right. a pound of chocolate. assemble into the moistest, richest, most chocolaty cake you've ever had. i promise i'm not kidding you. if you make one thing i've posted, EVER, this cake is it.

double chocolate layer cake adapted from gourmet, via smitten kitchen

for cake layers
3 ounces fine-quality semisweet chocolate such as Callebaut(it's at the co-op!)
1 1/2 cups hot brewed coffee
3 cups sugar
2 1/2 cups all-purpose flour
1 1/2 cups unsweetened cocoa powder (not dutch process)
2 teaspoons baking soda
3/4 teaspoon baking powder
1 1/4 teaspoons salt
3 large eggs
3/4 cup vegetable oil
1 1/2 cups well-shaken buttermilk
3/4 teaspoon vanilla

for frosting and filling
1 pound fine-quality semisweet chocolate such as Callebaut
1 cup heavy cream
2 tablespoons sugar
2 tablespoons light corn syrup
1/2 stick (1/4 cup) unsalted butter

special equipment: two 10- by 2-inch round cake pans

make cake layers:
preheat oven to 300°F. and grease pans. line bottoms with rounds of wax paper and grease paper.

finely chop chocolate and in a bowl combine with hot coffee. let mixture stand, stirring occasionally, until chocolate is melted and mixture is smooth.

into a large bowl sift together sugar, flour, cocoa powder, baking soda, baking powder, and salt. in another large bowl with an electric mixer beat eggs until thickened slightly and lemon colored (about 3 minutes with a standing mixer or 5 minutes with a hand-held mixer). slowly add oil, buttermilk, vanilla, and melted chocolate mixture to eggs, beating until combined well. add sugar mixture and beat on medium speed until just combined well.

divide batter between pans and bake in middle of oven until a tester inserted in center comes out clean, 1 hour to 1 hour and 10 minutes.

cool layers completely in pans on racks. run a thin knife around edges of pans and invert layers onto racks. carefully remove wax paper and cool layers completely. i made these 1 day ahead and kept them, wrapped well in plastic wrap, at room temperature.

make frosting:
finely chop chocolate. in a 1 1/2- to 2-quart saucepan bring cream, sugar, and corn syrup to a boil over moderately low heat, whisking until sugar is dissolved. remove pan from heat and add chocolate, whisking until chocolate is melted. cut butter into pieces and add to frosting, whisking until smooth.

transfer frosting to a bowl and cool, stirring occasionally, until spreadable (depending on chocolate used, it may be necessary to chill frosting to spreadable consistency).

spread frosting between cake layers and over top and sides. cake keeps, covered and chilled, 3 days. bring cake to room temperature before serving.

i'm going to assume you have eggs, sugar, flour, butter, salt, oil, vanilla and baking powder/soda. if not, the total cost of those ingredients in these amounts is probably less than $10.

chocolate: $9.32 at the co-op
coffee: $1.50
cocoa powder: $1.50
buttermilk: $.66
heavy cream: $2.49
corn syrup: $.17

total: $25.64
there were probably 12 slices to this cake for a total of $2.13 per slice. it was probably a little less actually because i buy all my staples in bulk.

hill country

hill country is justin timberlake's new bbq place in new york city, and that alone is enough to make one duly wary. a celebrity restaurant plus regional food? remember britney's failed NYLA? however, miraculously, hill country has been getting really good reviews on the chowhound boards so my friends and i planned a trip. i think some of us were secretly hoping to see JT too.

no JT, but the food was good. the beef and pork ribs were moist and falling-off-the-bone tender. the brisket came in two varieties: moist and lean, both of which were moist and flavorful. the lean variety didn't have the ribbons of fat though. the bbq sauce, which i learned later on was taboo, was a good balance of tomato sweetness and vinegar. the sides were good too, but not as good as the meat. the baked beans were just okay, but the mac and cheese was rightfully rich and gooey.

i think we all agreed we'd go back if it weren't for the high prices. the ordering process is complicated; you order your items from different stations and they put a sticker on your card. at the end, you show your card to tally up the bill. i inadvertently spent $31 dollars on dinner, partially because it was hard to tell how much things were going to cost before they were weighed and stickered. next time, i will be more cautious about asking the price beforehand. everyone can still learn how to manage their money better...!

momofuku ko

food blogging is back in full force- i know you were tired of all that money stuffs. i've been cooking up a storm lately as well as doing my part to revitalize the economy by eating out.

despite the fact that it's only april, i already know my dinner at momofuku ko will go down as the dinner of the year. it might even take the cake for best dinner ever, at least until someone takes me to per se. (any takers?)

if you haven't already read tina's whole review, read it here. she has amazing pictures, and grace didn't get some shots of my favorite dishes, like the fluke sashimi and the prettier, more sophisticated twin of mcdonalds' apple pie, accented by red miso paste.

after reading how hard it was to get reservations at momofuku ko, i consider myself to be unduly blessed at being able to dash off a quick email to tina in response to her chowhound post in order to secure a seat. poor frank bruni.

in our party of 4, there were varying permutations of agreement on favorites. i loved the deep fried braised short ribs, but tina didn't. grace adored the pineapple sorbet and i thought it was just okay. but i think we all agreed on this dish.

coddled egg with soubise onions, sweet potato vinegar, hackleback caviar, potato chips, chervil

i know it sounds complicated, and possibly incongruous, but it was lovely. the golden savory yolk, salty caviar and crispy potato chips all worked together, none overpowering the other.

we had 11 courses in all; each of them memorable. it was a surprise of an evening and as i walked out of the restaurant feeling stuffed and content, i was reminded of the immense luck that went into getting this reservation. a great reason to be browsing the internets while at work...

what i am (links)

grace took this picture in LA. why don't we have wildflowers like this in NY?


housekeeping by marilynne robinson
a small, quiet story about two sisters and their damaged and eccentric aunt. the plot is slow, but the studies of subtly shifting emotional ties and the ways light can infuse an old house or orchard are rich and heartbreaking. it's like a slow sad summer day.

anna karenina by leo tolstoy
okay don't start beating me with the pretentious stick. i'm late to the game and have never read it, and i thought i'd give it a shot. i figured that i'd get through 3 pages, get bored and move on to the sisterhood of the traveling pants. if you can believe it, it is not boring. in fact, it is kind of fun. and funny. and there are great descriptions of food. and the story is basically your typical soap opera. i'm not done, so i can't tell you if it gets literary at the end, but so far, it seems like all this time i'd been scared of nothing.


the flight of the red balloon
an homage (i know, i hate that word too, but that's what they call it) to that french children's movie "the red balloon", this movie is a pitch perfect depiction of life in paris. from the street scenes to the smallest moments, every shot feels well-worn and true. i was still thinking about it a week later, which is rare for me. maybe one of my favorite movies?

the red balloon/the white mare
so of course we rented the original movie to re-watch, and netflix packages it with "the white mare." each is about 35 mins long and shot so elegantly you'll forget you're watching a brutal end-of-childhood tragedy. and since the symbolism is laid on so thick, you might actually be able to ignore it and instead focus on the scenery and the superlative child actors. but i warn you, i cried and cried.

take care of my cat
there is a underlying "coming of age" theme here, i just realized. must be the start of spring. this one is set on the outskirts of Seoul, though, and is about a group of friends trying to understand themselves and each other. it's very touching and the cat is very, very cute.


hooligan from cato corner farm
the greemmarket is back in full force and this weekend we dropped by to pick up a few things. along with a handful of peach blossoms and some bread, i decided to try a new cheese from cato corner farm. i usually get the womanchego (the name is intolerable, but the cheese is great), but this time i tried the smelly washed rind hooligan. i've had it for dinner two nights in a row. it is wonderful. for more hooligan worship, see here.

coconut macaroons
in my family, my father was the only one who liked coconut. whenever we'd get one of those boxes of chocolates, i'd always be worried i'd bite into the dreaded coconut. but somehow, in the last 2 months, my tastes have changed. partially due to the most amazing experience i had with my friend hope's macaroons. hope, if you are reading this, please don't worry about ever getting me a birthday present again. just those macaroons were enough. i don't know what recipe she used, but if she ever wants to give it to me, i will post it and the whole world will be consumed with same sort of coconut love i now have.


fire escape garden
my dear penpal, david, sent me some seeds that i've planted in large planters on my fire escape. i've had to keep the tomatoes indoors until the end of the month, which only means my cats are having fun playing with the dirt while i'm at work. i also bought some additional seeds at the co-op and am hoping to see lettuce, tomatoes, baby carrots, peppers and dahlias in a month or so. last year i managed not to kill some herbs, but this is a huge project and i'm hope at least one of the many seeds i've planted will live long enough to bear some food/flowers.

anyone want to split a goldee?

we're re-doing part of our apartment and i'm busy daydreaming about wall coverings. i love everything from this design studio, especially the pitching ship in teal and black. it would look great in a white room. maybe...


get ready for this: ny inspa world. okay, it looks totally crazy- a 5,000 square foot spa theme park. what is even more insane is that it is in queens. QUEENS. grace and i went and it was just as insane as the pictures show. ny friends, watch out. i am tempted to have my b-day party here.

cat on a mat

okay, it's not really a mat- it's a kitchen towel. but it's definitely hilarious after you see the rest of floor space he so diligently avoided in order to sit on this very small square of fabric.

a smarty pig

i know i already posted a picture of this smart pig, but it's actually PERFECT for this post. read to the end to see why.

it’s all over the news right now; ben bernanke just spoke at at news conference on the release of a survey by the Jump$tart Coalition about financial literacy in high school students. as the AP reports, he said:

in light of the problems that have arisen in the subprime mortgage market, we are reminded of how critically important it is for individuals to become financially literate at an early age so that they are better prepared to make decisions and navigate an increasingly complex financial marketplace.

yes. yes. YES! financial literacy for all ages is critical and wholly necessary. but did we need this financial crisis to remind us? and did we need the abysmal results of the survey to worry us? apparently, high school seniors scored lower on this survey than they had in the previous six surveys, only answering 48 percent of questions on personal finance and economics correctly. college seniors scored a little better, answering 62 of the questions correctly.

because of this, a bunch of organizations are declaring april "financial literacy month." get rich slowly has a fantastic list of resources for those wanting to dip a toe in the pool of personal finance. as happy as i am to see something i’m so personally passionate about getting a proliferation of press (how’s that for a tongue-twister?!), i’m a little worried that this all might be forgotten about come may. i’m reminded of the letter from the editor from this month’s ReadyMade, a magazine about environmentalism entitled, “what happens when what you’ve always believed in becomes a fad?” i don’t want to be debbie downer, but i firmly hope this won’t just be a fad and we can move financial literacy from something that receives attention one month a year to a nationwide mainstream education program. the economist has a great article about people who are trying to do this.these people are my heroes.

financial literacy is something we need to be teaching in elementary school, high school and college, and talking about with our friends and families. when i try to talk to people about money, their eyes glaze over and they try to change the subject, but would this be the case if money language was demystified in elementary school?

on that note, i'm taking my first reader poll. all you lurkers, please come out of the woodwork for this. i'm considering starting a financial literacy workshop for young twenty-somethings who work in the public sector or art. if this is you, would you be interested in taking this class? more importantly, if you have any ideas (ANY AT ALL!) about how to get the word about financial literacy out to the masses you know, please please please leave a comment. i feel like this is really ripe time to disseminate financial information, because people are scared about the economy, but i don't know the best way to do it. help!

if you read this far, here's your reward: Smarty Pig

smarty pig is a dedicated online high yield savings account (remember those?) that your family and friends can also contribute to. so if you're saving up for a new computer, you can open a smarty pig account and let your family and friends know. then, you, as well as your family and friends, can contribute to the account. when you have reached your goal, you receive a gift card with the amount plus interest. an added bonus is that smarty pig has relationships with major retailers, like amazon, best buy and bloomingdales and you can often get an additional 5% off your purchase. smarty pig is the best savings tool i've seen in a long time- use it!!

new york city ice-cream round-up

thanks jessie for the pic from sundaes and cones

it's daffodil time now, which is a sure sign that summer is around the corner. i'm looking forward to the hot summer days, when eating ice-cream at all hours is socially acceptable again. i'm not looking forward to getting fat, but hey, i'll walk around a lot, right? here's my round-up of ice-cream places in new york city, plus a little fun for my buddies in the bay.

1. brooklyn ice cream factory
a tourist destination since brooklyn became a new hot spot, it's still worth braving the bus loads of people for fluffy, creamy, ice cream in homey seasonal flavors. the peach is studded with real peaches and the blueberry is rightfully a light blue. the waterfront view of lower manhattan and the brooklyn bridge, plus walt whitman's words inscribed in the railing of the promenade (it's from "crossing brooklyn ferry" and always makes me teary eyed) makes it a must-visit on a warm summer night. you'll be glad you live in new york and the other's are just visiting.
brooklyn ice cream factory
1 Water Street
Brooklyn, NY 11201

2. sundaes and cones
if you, like me, are a fan of banana ice cream, this is the place to go. while the more traditional flavors are good, it's the unique flavors that make this stand out as a worthwhile ice-cream destination. the lychee is superb- bright yet creamy, as is the banana. and i can't wait to try the black sesame, wasabi and corn. also a favorite is the fun purple taro flavor, which is almost mousse-like in its texture and a great balance of sweet and starchy that is hard to come by in taro-flavored foods. (taro is a purple yam, also called ube, and is similar to a sweet potato in taste)
sundaes and cones
95 East 10th Street, between 3rd and 4th
New York, NY 10003

3. uncle louie g
if you grew up on long island, you're probably well-acquainted with the uncannily creamy uncle louie g's ice. ice's aren't popular on the west coast, so for those of you confused: ice's are similar to sorbets, but can be made to resemble almost any ice-cream flavor in a low-fat way, peanut butter chocolate is one of their best. i had a chance to speak to the owner (who isn't louie g, btw, but who had an uncle named louie g) about his success and he expressed the most pride over how similar his ice's were to regular ice cream. i also asked him what his favorite flavor of ice cream (uncle louie g's also serves regular ice cream) is and he responded with chocolate fudge brownie, which i promptly ordered. if you're looking for a "takes me back to childhood" treat, complete with the sticky hands and messy mouth, this is it.
uncle louie g
various locations

4. il laboratorio del gelato
ciao bella's gelatos and sorbets are all over grocery store shelves now, but the original founder (who sold ciao bella when he was 19!) decided he was unhappy with the quality and opened his second ice-cream endeavor, called il laboratorio del gelato in 2002. they are open very odd hours (basically business hours) and operate out of a very small storefront, so it is challenging to actually try the ice cream. but with flavors like lemon basil sorbet and honey lavender gelato, it is worth the effort. extra bonus for the tenement museum around the corner, which i highly recommended.
il laboratorio del gelato
95 Orchard Street, b/t Broome and Delancey
New York, NY 10002

6. shake shack
not a typical ice-cream only destination, danny meyer's ridiculously popular burger stand in madison square park also serves up some of the best frozen treats in the city. the concretes, which are a take-off on DQ's blizzard, give you the option of adding in valrhona chocolate chunks, a definite departure from the DQ options. in addition to the everyday frozen custard options (just like soft serve ice-cream) there is also a cast of various rotating flavors through the summer months. this april, passion fruit pineapple, salted caramel, and lemon verbena are among the offerings.
shake shack
Madison Sq. Park and 23rd Street
New York, NY

for my friends by the bay, check out these ice-cream parlors, which i frequented when living/visiting there.

1. mitchell's ice cream
a long line outside a tiny storefront almost always means good things inside, and the long, long, long lines outside mitchell's are no exception. but flavors like buko (young coconut), passion fruit, and mango are rare, and standard flavors, like chocolate caramel crackle, are done right. a fun adventure for a lazy afternoon.
mitchell's ice cream
688 San Jose Avenue (right after it changes from Guerrero) and 29th Street
San Fransisco, CA

2. fenton's creamery
my brother took me here for a christmas present and one look at the old-fashioned seats, the homemade ice-cream and the over-sized toppings bar, told me my brother knows me very well and loves me very much. we split a banana split half the size of my body and i have photographic evidence to prove that we indeed finished the entire thing. i hope to make fenton's a yearly tradition, although maybe we need to order more manageable portions?
fenton's creamery
4226 Piedmont Ave.
Oakland, CA 94611

explaining the federal reserve system

since the option at this point was for someone to buy out the failing firm, the only question was who? it was still unclear at this point how much debt bear sterns was in, so many of the big wall street firms were wary of taking on this risk. this is where the federal reserve bank of ny stepped in. (here's where it gets a little like a economics class, but don't worry, it's really easy!)

the federal reserve system is the central banking system in the united states. it's primary purpose is to formulate monetary policy and it is run by a board of 7 federally appointed governors (of which Ben Bernanke is the chairman) and regional reserve bank presidents. there are 12 reserve banks districts scattered throughout the country.

the federal reserve system has a couple tools with which to "formulate monetary policy": reserve requirements, open market operations, and the discount rate. let's start with the first one.

reserve requirements
this one is easy; the federal reserve's board of governors mandates that banks cannot dip below a certain percent of their total debt in assets. this usually hovers around 10% for the size of the banks we're talking about. this just means that a bank has to have reserves of at least 10% of what they owe, and if they don't, need to borrow money to get to the 10% mark. so if you owe $100, you always need to have at least $10 in reserves.

open market operations
all open market operations are governed by the federal open market committee (the FMOC has been in the news a lot lately- "the fed cut interest rates"- that's who they are talking about), which is made up of the board of governors, the president of the federal reserve bank of new york (proving once again that NYC is the center of the world!) and a rotating cast of 5 of the other 11 reserve bank presidents. the FMOC governs open market operations by setting a price at which banks can lend to each other to maintain those reserves. for example, if one bank needs to make a loan to a client (let's say a mortgage for example) they will dip into their reserves for the cash for the loan. in order to maintain the federally mandated level of money in reserves, they need to borrow from another bank. the nominal* interest rate for that transaction is what the FMOC can determine and it is called "the federal funds rate" and what they mean when they say "the fed cut the interest rate" in the news. what does decreasing or increasing this interest rate do, and why such a big fuss about it?

first of all, when you decrease an interest rate, you make it easier for people to borrow money from one another (think about how much more willing people are to get student loans, with 7% interest rates, verses credit cards, with 20% interest rates), thereby increasing liquidity in the market (liquidity is basically a complicated word for cash, or access to cash). therefore, when the FMOC loosens these rates it is signaling to banks that they should be more willing to lend money to clients (giving small business loans, mortgages, etc) and spend money because it will be cheaper to borrow what you just lent/spent. when they tighten the interest rate, they are trying to curb access to liquidity and tighten up the market. you could write many, many papers (and i'm sure they have been written) about the fed funds rate and it's correlation to various market factors. but that's the basic gist: rate goes up, the fed is tightening the market and it will be harder for everyone to access cash, rate goes down, fed is encouraging lending/spending and liquidity is pumped into the market.

discount rate
the discount rate (sometimes also talked about as the discount window) is the interest rate at which banks can borrow directly from the federal reserve bank. it is very rare for the bank to borrow directly from the federal reserve, primarily because this rate is usually a bit higher that the fed funds rate and means that no one else is willing to lend to this bank. it is mostly used in short-term liquidity emergencies.the board of governors determines the discount rate and unlike my confusing caveat below, can actually set a real rate because banks borrow directly from the system.

in the case of bear stearns, no one bank wanted to take on all of bear's still unknown debts, so the federal reserve bank of new york stepped in an made the deal safer for JP Morgan.

*because the FMOC can't actually regulate interest rates between banks, the actual interest rates banks pay to one another will fluctuate. the nominal rate is the target interest rate and the actual "effective" interest rates are the weighted average of all the transactions between banks. okay, that was super confusing, but just basically remember that finance is all about perception, and this interest rate stuff is just about signaling a direction the FMOC wants the economy to go in.

what could have happened to bear stearns?

sorry for the uncharacteristic rant yesterday; back to business. here's a picture of a smart pig. imagine he's the one writing this; it'll be much more fun.

besides the aforementioned conclusion to this story, there were a couple other options being talked about that weekend of March 14th.

filing bankruptcy

as the stock was plummeting, bear stearns asset base was declining (stock value is a reflection of the company’s value), and it became clear that they were moving toward becoming insolvent. Insolvency is the business term for when what you own is worth less than what you owe (assets less than liabilities, for the savvy of you) and most often precipitates filing for bankruptcy. if bear stearns had filed for bankruptcy, it would have had to liquidate all its assets, which means publicly exposing all the counterparties who were also exposed to the same sort of sub-prime risk. Letting the general public know how badly the investment industry had managed its own investments would have certainly created a run on the entire market, and as many other commentators have said, would have made the bear stearns decline look like just the tip of the iceberg. No one on wall street wanted bear stearns to file bankruptcy for this reason, but it is scary to think about how much consumer perceptions matter, and about what we will never know about other big firms.

raising capital

when you have debts, and you don’t have any money to pay them, you probably should consider making more money before you consider anything else. These are some options other banks have utilized when taking big write-downs. (I know I was wondering why the other banks who took big write-downs didn't share the same fate as Bear Sterns.)

splitting up and selling

Yesterday, UBS, another large banking institution, announced it was talking a $19 billion dollar write-down for its exposure in the sub-prime market. Strategically, they announced at the same time they had been able to secure $15 billion dollars of new capital, meaning they were able to borrow some money to cover their debts. This is important for two reasons: first being the obvious one that they will not have to worry about insolvency, and the second having to do with my point that financial markets are all about perception: if someone is willing to lend to them, how bad off can they be? Despite this, there was rumbling amongst the shareholders to sell certain arms of the company to raise even more capital. I don’t think this will happen, but I wouldn’t be surprised if it did happen to some bank before this is all said and done.

sovereign funds

How did UBS raise the $15 billion in additional capital? We don’t know exactly, and they don’t really have to tell us. The point is that someone was willing to take a risk because they believed the exposure was not crippling, and because they knew the return on their investment would be lucrative. Who are these mysterious investors? Almost always it is foreign companies or governments, with the occasional very very rich foreign individual thrown in. Those sovereign funds we’ve been hearing about that bailed out Citigroup and Merrill Lynch for over $19 billion dollars? Those are basically just excess cash from a cash-rich government, which right now is primarily east asia and the middle east (think the UAE, China and Singapore). In an ironic twist, our lack of restraint and subsequent failure to reach the American dream of homeownership will help fund their own burgeoning economies and the dreams of their citizens- whether they be in american interest or not. (There is a lot of politics surrounding these funds, which I don't really want to get into.)

So why didn’t Bear Stearns do any of this? No one was willing to lend them the money. (FYI word to the wise, this is what happens to if you have a bad credit score). And if no one is willing to lend to you, you are basically dead to the financial world. Your only option is to hope to be bought out.

ps. sorry for the weird capitalization issues in this post. MS Word is annoying about capitals.

ING letter + gen y and money

wow. i know things are bad, but for ING to send everyone this letter assuring us that they're not threatened by the sub-prime loan crisis means that the average joe is deeply worried. which is something i have not yet experienced in my lifetime.

if you're like me, and a child of the 80's, this is the biggest financial crisis we have ever seen. it is scary time, mostly because it is hard to understand what is happening and how it affects our most personal interactions with money, both right now, and in the future. we want advice as to what to do with our money, how to take advantage of the market right now, how to ensure we will be able to afford our dreams in the future. ironically, that advice has been out there all along, and we didn't listen, because we always assumed that things would stay the same.

the trouble i think is that we grew up at a time when the economy was riding high and most of our money habits were probably formed in the 90's, when the idea of being financially prudent didn't occur to even the most risk-averse (uh, bear stearns?). consequently, the older, "conservative" ideas of cutting back, learning to save and watching your expenses, are both novel and terrifying. but they worked for our parents parents, and they'll work again for us, we just have to learn how to do them. as for now, that's the only advice i'd believe in.

i just revised my own financial tracking system, which i do in excel, to take into account some recent life changes. it looks pretty complicated, but does a whiz of a job allowing me to see my whole financial picture in one snapshot, and keeps track of savings and spending together. if you want a copy to start yourself, email me and i'll send it over.

what to eat at disneyland

in case any of you dear readers decide to visit disneyland soon, be assured that the food is not universally awful, like i first thought. since most of my associations with disney food are about those candy buttons you peel off paper, i was worried about being able to eat well while at disneyland. i consulted with Chowhound and found list after list of suggestions for what to eat at disney theme parks, which i promptly printed out and stuffed in my luggage. upon arrival at disneyland, i was proud to pull out my list (my entire family thought i was insane) and point us in the direction of the best food in the park.

okay, it's obviously not the healthiest food in the world, but it's tasty and it's in a theme park, which makes it extraordinary.

at the far end of main street, right near the statue of walt and mickey there is a bright red wagon that only sells corn dogs. they are hand dipped and they are delicious. honestly it may be one of the best corn dogs i've ever had in my life(sorry castilleja camp!).

directly across the walkway from the jungle cruise is an outpost hut called bengal barbecue that has these great spicy or sweet beef skewers, plus an all veggie version that is probably best all-around eating for vegetarians in the park. they also have bacon wrapped asparagus, which i was dumb enough not to get. my brother's girlfriend got them though (i love her already!) and let me share.

right outside the tiki room (my favorite attraction as a child) is dole's pineapple stand, which serves creamy pineapple frozen yogurt. you can get it as a float too, but you'll save a couple bucks, and get more food, if you get the yogurt and juice separately.

i'm embarrassed to say this, but i also ate an entire fried chicken dinner from Market Square right outside the Pirates of the Caribbean ride. it was actually pretty good, partially because i took a chowhounder's advice and asked for it "well-done", so they'd have to make me a new plate instead of giving me what was under the heatlamp.

fyi for the frugal: none of this food was cheap, or even inexpensive. it was very overpriced and for that reason, i also ate some pulled pork sandwiches we brought from home. so if you're not comfortable spending so much money for food whose primary redemption is that it is convenient and not totally awful, then just bring food with you.

what happened to bear stearns?

picture of bird friend and the oc suburban sprawl

alright, so back to those “undiscovered gems” aka mortgage-backed securities.

fast forward to 2007, when housing prices fell due to increased supply and lower demand, especially in places like nevada. this, coupled with the fact that many of the adjustable rate mortgages given the early 00’s had just adjusted their rates, led to the foreclosure rates hitting a disastrous high. fyi, foreclosure is the process in which the bank repossesses your house after you fail to pay your mortgage. in nevada, the foreclosure rate was up 224% from 2007, which is completely insane when you think about it.

and all those mortgages that went bad meant that all those mortgage-backed securities were worthless, and all the banks that bought them up had to take huge losses in the form of write-downs, which meant *publicly* devaluing the assets they were holding. without going into all the ins and outs of investment banking, let’s just remember that two of the most important “assets” any investment bank can have are consumer confidence and credit strength, which go hand in hand. If you hear that your bank doesn’t have as much money as you thought it did, then you might take your money out, because you're worried about insolvency. which means it WILL have less money, and someone else might follow in your lead. this cycle of declining confidence leading to declining capital and vice versa is called a “bank run” and is disaster for an individual bank and a very bad omen for the rest of the industry. the federal reserve system is set up partially to address these types of banking panics.

in retrospect, we see that bear stearns was particularly vulnerable to a bank run because it was one of the smaller investment banks and it had built up most of its core assets by manipulating the mortgage-derivatives market, so it was not as diversified as many of its peers. the week of March 10th, rumors were floating around rival firms that bear stearns was out of cash and could not even cover day-to-day expenses, which prompted shares to plummet (in this way, finance is like fashion, all about perceptions). the week before, its stock was trading at $70 per share. as these rumors spread, the value dropped to $45 per share and a bank run was imminent, if not already beginning.

as we know now , jp morgan and the federal reserve bank of ny swooped in and brokered a deal to bail out bear stearns. but there were a few other options for how things could have gone.

ps. obviously this issue is infinitely more complex than my basic outline here, but if you want a list of articles to read for deeper analysis, i've saved my own list of research. email me and i'll send it to you.

unexpected hiatus

i didn't mean to leave you hanging like that, i promise. i could give you all these excuses about how i got this awful bug that's going around, had to get on a plane, have been swamped with studying for my gmats, but the real truth is this:

i was hanging out with goofy and minnie mouse (that's my cousin adrienne on the right). despite being horribly congested the whole time, i had a wonderful time in LA on vacation with my family. it was nice to feel the sun on my face, and to see my toes again.

in other news:

--the debriefs on the current financial crises will continue, looks like bernanke's in it for the long haul too, so i'll try to keep y'all up to date.

--fortuitously i got to eat out at the most sought-after reservation with a fellow food blogger two weeks ago. her post is here: "elation at momofuku ko." i'll post my own pictures soon, but hers are much better and she was much more through in her review. i was too busy shoving food in my mouth to do anything more than nod and smile, let alone take notes.

--uh, i cut my hair and donated it? yup.
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