If in doubt, blame capitalism

You know that things are getting tough when the capitalists start moaning about capitalism. There were a couple of examples of this today.

Well, not really. Because most of the morons who occupy my profession seem to want to lick Warren Buffett's cock at every opportunity. This morning I actually saw the headline "Buffett offers lifeline to bond insurers".

This "lifeline" is on a par with thhat offered by the mafia, where they promise not to burn down your restaurant for six months in return for 50% of the equity, or someone comes in and says "I'll pay your mortgage for six months if you'll give me the freehold".

Fortunately as the day went on there were a few who spotted this "Buffett's offer is good, for Buffett" said one commentator who had actually taken the time to read the small print.

But Buffett is doing what Buffetts do. He has bucketloads of cash. He's spotted a mispricing (uninsured municipal bonds were costing more than insured municipal bonds) and he wanted to take advantage. Meanwhile, he wanted nothing to do with the toxic drudgepile of subprime CDOs also carried by the likes of Ambac and FGIC.

Ambac took little time in telling Buffett to go fuck himself.

The second announcement was a cause for serious chuckledom. Tomorrow MBIA (bond insurer in a hole) will urge legislators to stop "the unscrupulous and dangerous market manipulation activities of short sellers".

You will note that the only time a company starts to have moral qualms about short-selling is when their own shares are being sold short. And, indeed, there can be some interesting short-selling situations, such as one that arose in the UK a couple of years ago when more shares had been sold than the company had in issue. This caused the short-sellers some difficulty.

When you sell a stock short, you actually have to borrow it to sell it. This is a nice little earner for Barclays Stockbrokers and the like. They hold your shares, charge you for the privilege of looking after them, and then lend them out to short sellers for a fee.

The other purpose it serves is providing liquidity in a market. Like finite reinsurance, it's a perfectly reasonable financial instrument so long as it isn't abused. But banning short-selling in order to stop market manipulation is a bit like banning cars to stop drunken driving.

But MBIA doesn't care. There's nothing more humorous than hearing a company that has exploited a hole in capitalism (providing a "fake" triple A status to a bond issue by guaranteeing that bond with your own triple A rating -- which promptly vanishes when it really starts to rain) moaning about another quirk of capitalism.

Then again, anti-capitalism is a running theme in the US that sits uncomfortably with its theoretical belief in a free market. The problem with the US is that its idea of a "free market" is stuck on chapter two of Samuelson's Economics. Perfect competition, etc. But real life isn't like that, and single companies often gain large areas of a market that means the free market that isn't so free. This happened in the US in oil and in telecommunications.

The result is a bit like fucking for virginity. The government interferes to make competition more "free".

This is a common populist approach in the US. Capitalism is good, but big business (the result of unfettered capitalism) is bad. It's a paradox that the likes of Huckabee can never quite come to terms with. Are they free marketeers? Yes, they say. Do they believe in protecting jobs for US workers? Absolutely, they say.

Hmmm.

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I've noticed an interesting thing about this blog. When I post "theoretical" points about poker, I get zilch response. I can post particular hands and get comments on the play, but when I ask a theoretical question (there have been two in the past week), the silence is deafening. Mr Young has, I believed, noticed something similar in the past.

I suspect that many poker players, being mainly male, are uncomfortable with abstract concepts. They like physicality, examples. They build up a "theory" of play from examples, rather than starting with a theory and then testing it to see if it works.

As I've said in the past, I think that a potential flaw in this "examples up" method is that it can generate functioning concepts that are theoretically flawed. Perhaps the best example of this from the old days was when the best player in Boulder, Colorado (or wherever) went to Vegas and very shortly after found himself broke. He had a system that worked in Boulder, because no-one there knew the counter-plays to the system. But in Vegas, people did know the counterplays. Initially, our guy from Boulder thinks he has been unlucky. In fact, perhaps he goes broke thinking he has been unlucky.

Now, suppose he had applied a theoretical analysis? Rather than saying "this works; it must be the right way to play", he said "this works; but is it flawed in some way?"

I have a feeling that many of the "popular" theories about tournaments have holes such as this -- the "Winning Poker" book certainly seems to depend on opponents playing in a particular manner. Most of the guys I see slowly losing at $100 buy-in are not nutters. They are people who have a system that works at $50 buy-in and they cannot understand why it does not work at the higher level. This, I believe, is because they are not good at thinking in an abstract fashion.

Eventually (if they do not go broke first) they see enough concrete examples to spot ways that they can improve their play. They construct an adapted theory through experience.

It's a system, but I don\'t think it's the most efficient one. But I'm glad that most poker players think that way. I think it's an exploitable flaw.