Sites for Sore Eyes
Aug. 28th, 2007 11:55 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
peterbirksI played a couple of hundred hands on Stars yesterday morning, since the $1-$2 games on the IP network don't really get going before 11am.
One thing that struck me was that the blinds are far more willing to check-raise on a variety of flops, if you have raised first in from either the cut-off or the button. It happened to me three times out of a possible six, I think. Two of the flops were raggish and one of them was Ace-rag-rag. All three were rainbow flops.
It's quite likely that at least one of these check-raises, and quite possibly two of them, were with air. Unfortunately, since I had missed my flops on all three occasions, I had to lay all three hands down (I could have bluffed a repop, but I suspect that needs saving for the $400 buy-in games). This wasn't much of a problem, since this aggression on the part of my OOP opponents transferred itself to other places and I ended the shortish session comfortably in front.
But it's interesting how the style varies from site to site, and I'll have a little think about my likely counterplays.
I had a chat with Matt a few posts ago about repopping with KK pre-flop. A similar (but different) situation arose yesterday on the IP Network.
Sitting in MP2 holding KK I raised an MP1 limper to 5xBB. All passed round to the BB who, somewhat to my surprise, mini-three-bet it to $20. Limper folded. I repopped him another $35 (I think he was sitting on about $170) and he folded.
So, I win $23, which is definitely better than the average I would expect from KK, but is it necessarily the maximum EV from this hand?
I really don't know the answer to this, but I do have the feeling that a flat-call here (i.e., a kind of slow-play) might win more money on average. It all depends on oppponent's range and how he will play that range preflop once you repop (and how well he plays post-flop).
However, it did lead me down one interesting line of thought, where KK can be better than AA. That line is, while KK might well stack off AA if a K flops, AA is not going to stack off KK if an A flops. So, if in this scenario opponent has AA, he is in a bit of a tough spot. I would guess that he has to reraise all-in, and I have to fold. But if the stacks were significantly deeper, does he still reraise all-in?
More interestingly, suppose I flat call rather than four-bet him. Do I get stacked off on a rag flop (if he holds AA).
Probably. Depends how opponent plays it.
Do I get stacked off if a high pair (Qs or Js) appears? Probably not.
Do I get stacked off if an Ace appears? No.
Does he get stacked off if a King appears? Quite possibly. Probably, even.
Other scenarios include opponent holding JJ, TT or AQ(s/o) where he may fold to the repop preflop. Most of the time I have his hand in big trouble on the flop, and he is OOP. The one hand where the reraise is probably right is AQ, but there are 16 combinations of that, while there are only 12 of JJ or TT. However, even if he has AQ, I'm winning the pot most of the time.
I'm not saying that the repop is wrong, and in my heart of hearts I quite like it because it reduces volatility. But against certain players I wonder if flat-calling the check-raise might not be better EV.
+++++++++++++++
The Financial Times on Saturday referred to "Bahrein", an interesting, if non-existent, country. (It's Bahrain, guys.). This came a while after The Guardian referred to that well-known English city of Sailsbury.
Does no-one employ sub-editors any more? In fact, does no-one even run a spell-checker? Typos in blogs are one thing, but newspaper articles and illustrations, that's something else.
++++++++++++++++
One of the interesting fall-outs of the subprime crisis has been that, at last, we are beginning to see the inner workings of where the risk actually went, and what the financial institutions were doing with their money. Barclays, for instance, turns out to have provided back-up financing to one of its structured investment vehicles. There are four of these SIVs that were set up by Barclays Capital. Was this public knowledge? Not really. Perhaps you could have found a passing reference to it. Edward Cahill, who has left Barclays Capital to find further success elsewhere, thought up the marvellous SIV-lite, a structure that reminds one irresistibly of LTCM. I think that the SIV-lites worked on gearings in the high double-digits. This is a fantastically efficient use of capital when things work well. It's also a recipe for disaster when they don't. Some more seasoned observers would call this "gambling".
One of the greatest lines on LTCM was the observation was that it didn't matter if LTCM (and remember, the first two words of that initialism stand for "long-term") was right at the end of the term of its investments. because its gearing got to such a high level that it had to be right at the end of every day. It had started out making money via a system that worked well when it was a small player. It failed to realize that, as it got more and more money, it ceased to be an observer and started to be an influencer. It further failed to spot that the opposition doesn't stand still. Other players see what you are doing. Some of them start doing it too. The opportunities disappear.
Well, LTCM did notice this, actually. But, instead of saying "there ya go lads .. it was a good system, but the plots blown now", it said "fuck, we've got all this money, where shall we put it now?"
In the US subprime crisis, the financial institutions lent the money. Then they packaged it up and sold it on. The investors said "this is great! Give us some more!" And so the lenders went after more and more risky and riskier loans. The market got to big for the borrowers available. So, they sought out new borrowers.
++++++++++++
There was another interesting snippet this morning, about the growth in credit card defaults in the US. In itself, this isn't sensationally intersting. It may or may not be linked to the subprime crisis, but my hunch is that it is not -- it's a fall-out from the excessive growth in credit in the past few years. But the interesting comment (from the US journalist) was that some borrowers "may choose to default on a mortgage before losing their credit cards".
Huh? At first glance, this looks insane. Conventional wisdom dictates that borrowers will always default on unsecuritized loans before they default on a securitized loan. Hell, that's why lenders ask for security in the first place.
But, as the journalist points out, this is not so Alice-Through-The-Looking-Glass as it seems. First, these might be highly leveraged (for which, read "100%") borrowers on their homes. Although "handing in the keys" has serious long-term effects (as borrowers in the UK discovered after the growth in defaults of the early 1990s), it had less of a long-term effect on the average consumer these days than does defaulting on credit cards.
Indeed, you need credit cards these days, just to do ordinary stuff. So, far from being an unsecuritized loan, the credit card companies have you by the balls, because their "security" is that you can't function in the real world without a credit card. If you walk away from your mortgaged home, you will still be able to rent an apartment (although you will probably need your credit card), but if you default on your credit cards and keep your home? Well, just try ordering something from Amazon and offering to pay cash, or try hiring a car, or paying for a plane ticket. In the lands of terrorism fear and money-laundering mania, cash just does't cut it any more.
_______________
One thing that struck me was that the blinds are far more willing to check-raise on a variety of flops, if you have raised first in from either the cut-off or the button. It happened to me three times out of a possible six, I think. Two of the flops were raggish and one of them was Ace-rag-rag. All three were rainbow flops.
It's quite likely that at least one of these check-raises, and quite possibly two of them, were with air. Unfortunately, since I had missed my flops on all three occasions, I had to lay all three hands down (I could have bluffed a repop, but I suspect that needs saving for the $400 buy-in games). This wasn't much of a problem, since this aggression on the part of my OOP opponents transferred itself to other places and I ended the shortish session comfortably in front.
But it's interesting how the style varies from site to site, and I'll have a little think about my likely counterplays.
I had a chat with Matt a few posts ago about repopping with KK pre-flop. A similar (but different) situation arose yesterday on the IP Network.
Sitting in MP2 holding KK I raised an MP1 limper to 5xBB. All passed round to the BB who, somewhat to my surprise, mini-three-bet it to $20. Limper folded. I repopped him another $35 (I think he was sitting on about $170) and he folded.
So, I win $23, which is definitely better than the average I would expect from KK, but is it necessarily the maximum EV from this hand?
I really don't know the answer to this, but I do have the feeling that a flat-call here (i.e., a kind of slow-play) might win more money on average. It all depends on oppponent's range and how he will play that range preflop once you repop (and how well he plays post-flop).
However, it did lead me down one interesting line of thought, where KK can be better than AA. That line is, while KK might well stack off AA if a K flops, AA is not going to stack off KK if an A flops. So, if in this scenario opponent has AA, he is in a bit of a tough spot. I would guess that he has to reraise all-in, and I have to fold. But if the stacks were significantly deeper, does he still reraise all-in?
More interestingly, suppose I flat call rather than four-bet him. Do I get stacked off on a rag flop (if he holds AA).
Probably. Depends how opponent plays it.
Do I get stacked off if a high pair (Qs or Js) appears? Probably not.
Do I get stacked off if an Ace appears? No.
Does he get stacked off if a King appears? Quite possibly. Probably, even.
Other scenarios include opponent holding JJ, TT or AQ(s/o) where he may fold to the repop preflop. Most of the time I have his hand in big trouble on the flop, and he is OOP. The one hand where the reraise is probably right is AQ, but there are 16 combinations of that, while there are only 12 of JJ or TT. However, even if he has AQ, I'm winning the pot most of the time.
I'm not saying that the repop is wrong, and in my heart of hearts I quite like it because it reduces volatility. But against certain players I wonder if flat-calling the check-raise might not be better EV.
+++++++++++++++
The Financial Times on Saturday referred to "Bahrein", an interesting, if non-existent, country. (It's Bahrain, guys.). This came a while after The Guardian referred to that well-known English city of Sailsbury.
Does no-one employ sub-editors any more? In fact, does no-one even run a spell-checker? Typos in blogs are one thing, but newspaper articles and illustrations, that's something else.
++++++++++++++++
One of the interesting fall-outs of the subprime crisis has been that, at last, we are beginning to see the inner workings of where the risk actually went, and what the financial institutions were doing with their money. Barclays, for instance, turns out to have provided back-up financing to one of its structured investment vehicles. There are four of these SIVs that were set up by Barclays Capital. Was this public knowledge? Not really. Perhaps you could have found a passing reference to it. Edward Cahill, who has left Barclays Capital to find further success elsewhere, thought up the marvellous SIV-lite, a structure that reminds one irresistibly of LTCM. I think that the SIV-lites worked on gearings in the high double-digits. This is a fantastically efficient use of capital when things work well. It's also a recipe for disaster when they don't. Some more seasoned observers would call this "gambling".
One of the greatest lines on LTCM was the observation was that it didn't matter if LTCM (and remember, the first two words of that initialism stand for "long-term") was right at the end of the term of its investments. because its gearing got to such a high level that it had to be right at the end of every day. It had started out making money via a system that worked well when it was a small player. It failed to realize that, as it got more and more money, it ceased to be an observer and started to be an influencer. It further failed to spot that the opposition doesn't stand still. Other players see what you are doing. Some of them start doing it too. The opportunities disappear.
Well, LTCM did notice this, actually. But, instead of saying "there ya go lads .. it was a good system, but the plots blown now", it said "fuck, we've got all this money, where shall we put it now?"
In the US subprime crisis, the financial institutions lent the money. Then they packaged it up and sold it on. The investors said "this is great! Give us some more!" And so the lenders went after more and more risky and riskier loans. The market got to big for the borrowers available. So, they sought out new borrowers.
++++++++++++
There was another interesting snippet this morning, about the growth in credit card defaults in the US. In itself, this isn't sensationally intersting. It may or may not be linked to the subprime crisis, but my hunch is that it is not -- it's a fall-out from the excessive growth in credit in the past few years. But the interesting comment (from the US journalist) was that some borrowers "may choose to default on a mortgage before losing their credit cards".
Huh? At first glance, this looks insane. Conventional wisdom dictates that borrowers will always default on unsecuritized loans before they default on a securitized loan. Hell, that's why lenders ask for security in the first place.
But, as the journalist points out, this is not so Alice-Through-The-Looking-Glass as it seems. First, these might be highly leveraged (for which, read "100%") borrowers on their homes. Although "handing in the keys" has serious long-term effects (as borrowers in the UK discovered after the growth in defaults of the early 1990s), it had less of a long-term effect on the average consumer these days than does defaulting on credit cards.
Indeed, you need credit cards these days, just to do ordinary stuff. So, far from being an unsecuritized loan, the credit card companies have you by the balls, because their "security" is that you can't function in the real world without a credit card. If you walk away from your mortgaged home, you will still be able to rent an apartment (although you will probably need your credit card), but if you default on your credit cards and keep your home? Well, just try ordering something from Amazon and offering to pay cash, or try hiring a car, or paying for a plane ticket. In the lands of terrorism fear and money-laundering mania, cash just does't cut it any more.
_______________
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Credit cards rool
Date: 2007-08-28 11:48 am (UTC)He also says there is no difference between prime and subprime in terms of default risk.
Re: AA vs KK, I'll take the all-in stacking potential vs the implied odd of getting the set myself.
Re: Credit cards rool
Date: 2007-08-28 11:52 am (UTC)Re: Credit cards rool
Date: 2007-08-28 12:38 pm (UTC)Citibank sent me their biannual letter about me not using my Mastercard, so I used it, once. It can't be too long before the annual charges for these things are introduced. Perhaps they feel that we are not yet at the "can't do without" stage, or perhaps it's an unwillingness to be the first. I would assume that they will accompany the introduction with "benefits", and that these would slowly be phased out. Remember cashback, anyone?
PJ
Re: Credit cards rool
Date: 2007-08-28 09:43 pm (UTC)I'm guessing that they don't want the first mover penalty, and are terrified of being accused of behaving like a cartel.
I'd expect Barclaycard to be the first mover, myself. They have substantial US sub-prime exposure, and are moving to improve the credit quality at Barclaycard. Their customers should be predominately the people caught by the Mr. Bean ads in the 80s and early 90s. As such, they'll have the market power to weather the bad publicity.
The other path might be following wide-spread banking losses, after which the bank CEOs would discuss in public the merits of re-introducing CC and current account charges.
Re: Credit cards rool
Date: 2007-08-28 09:45 pm (UTC)I think it will be interesting to see what happens to consumer debt, once the central banks take a breather and say "Thank God! Not another 1929, after all."
Well, no, it wouldn't be another 1929. Financial rescue packages now are rather more advanced. However, I'm not sure that there isn't a kick-back from huge US consumer indebtedness waiting to kick the market in the balls. And I'm not sure that it isn't going to happen very soon, possibly in the next three months or so. And I'm not sure that it isn't going to happen because the default position of the US consumer is "Well, we've run off the limit on all six credit cards, and all we've got is refinancing the mortgage." Bear in mind that this isn't sub-prime. This is just default American behaviour.
All that the sub-prime collapse has done, from my point of view, is to expose a rather larger number of highly-leveraged and possibly desperate individuals.
Things are going to get nastier, and quicker, than anyone is currently envisioning.
Re: Credit cards rool
Date: 2007-08-28 10:56 pm (UTC)I have 4 debit cards and 6 credit cards, simply because I collect them from time to time. I've got to be in the 90th + percentile in terms of access to personal credit.
Now, the guys blowing up are going to be below average in terms of the number of credit cards. If the average family is at 5-6, then I'd bet the average bankrupt family are at 3-4 or lower.
Re: collapse, the funniest thing I've seen is the anti-arbitrage margin squeeze (or whatever I should call it) pushing the price of gold down. We're not in Kansas any more, Toto. We're in a different place, where rich men like Jim Cramer have nervous breakdowns live on TV, and there are suicide rumours about rock-star British bankers.
I can envisage an Economist article 3 years hence talking about the rationalisation of the Landesbanken forced on Germany by the credit crunch of 2007.
Re: Credit cards rool
Date: 2007-09-01 12:02 am (UTC)You collect credit cards?
Personally, I collect bottled blondes in California who don't want to have sex with me. (I have a fifty per cent success rate so far.) This seems a more rational aim, although I can't claim to be carrying the trophy plastic. (No silicone jokes here, please.)
Nevertheless, a highly entertaining post, and it got me thinking a bit. I'm sure the Economist will indeed be doing something like that in three years' time, although that's what twat Friedmanite lickspittles do, isn't it? Wait until hindsight is the accepted apology for a fuck-up that distorts their view of the world, and then hire a hack to justify it.
Come to think of it, that's what Stalin did about the Ukraine in the 1930s. Plus ca change. I can't translate that into Russian, but neither can I manage that infuriating French cedilla. C5a marche.
You're right, the early guys blowing up are going to be at the low end of credit card ownership. If only because indulging insanity is a short-term activity (believe me. I have personal knowledge), and accumulating credit cards takes rather longer than that.
The thing to look for, which I think was the basis of my original objection to Birks' position, is when it spreads to the June and Ward Cleaver. These are the mid-western and points texanwise types who own five or six credit cards and a couple of store "loyalty" cards (read: two more credit cards) on top.
This is where the crunch will happen. I think. But what do I know? The Cleavers are idealised characters on fictional TV from long, long ago. And hardly representative of the sort of mature, real-world judgements that today's average American family makes.
Re: Credit cards rool
Date: 2007-08-28 12:34 pm (UTC)Cramer's reference to there being "no difference" in default risk is typical Cramerism. A number of those who bought subprime would have qualified for at least Alt-A, but the rates are more onerous. This alone makes default more likely. The level of equity in the home is probably lower, which makes default more likely. So, even if the borrowers were exactly the same in terms of credit risk, the subprime group would be more likely to default.
In fact, a fair proportion of the bad subprime borrowings were fraudulent from the word go -- a conspiracy between agents, borrowers, and naive lenders who didn't give a shit because they planned to sell the loans on to a German operation backed by an English bank, or whetever. Cramer's stats are wrong.
But it's nice to know he's sussed the credit card necessity out.
PJ
Re: Credit cards rool
Date: 2007-08-28 10:29 pm (UTC)Not sure about your reference to 22 > KK. Are you saying that you can get away more easily? KK vs AA has higher equity and 22 vs AA.
And how easy would it be to fold a set, KKK or 222? I'd certainly struggle.
Re: p(AAA vs KKK).
There are 4 X 44 = 176 flops with precisely one A and one K, assuming that we KNOW foe has AA. That's pretty close to 1/100 flops.
Headsup, P(foe has AA | we have KK) =~ 1/204
so p(AAA vs KKK | we have KK) = 1/204 * 1/100 = 1/20000
Given more opponents, I would assume that you can multiply by the number of opponents.
Re: Cramer, he was probably approximating to "all these bonds are junk".
Re: fraud. I keep waiting for someone to prosecute for fraud when someone goes behind. I've heard the phrase "Lie to buy" enough that I believe that a bunch of people have been economical with the actualité.
Will that happen in the US? They have enough straight-arrows that might prosecute, but elected DAs are going to reduce the likelihood.
In the UK, quiet dishonesty is accepted so often. However, I could imagine collapsing BTL empires getting unwanted attention.
Re: Credit cards rool
Date: 2007-09-01 12:20 am (UTC)In the US, fraud prosecution will only happen where the DA has an electorate with a direct and long-lasting interest in what are really rather arcane and technical matters. Moreover, the court system would also have to be set up to deal with such issues, and, perhaps more to the point, the local newspapers (city local, like London Lite) would need an interest in headlining it.
This leaves out California, where most DAs are ex-prosecutors who are looking for political office (90% per cent plus), went to night-school, didn't specialise in financial crimes, don't care, and would swap sides if the other lot would let them sell their grandmother down the river.
By definition, Missouri won't do it.
By definition, New York very probably would. Can you say Spitzer? They elect DAs differently there.
It's also possible that Massachusetts would, but my money would be on Chicago. There are an awful lot of exchange markets forming the backbone of the Chicago economy, and they're mostly old money, and they're probably going to be hugely pissed off very soon. The only issue for the average Chicago DA is how to square it with the local Democratic machine.
Which shouldn't be a problem whilst waltzing into the 2008 Presidential election and the subsequent 2010 mid-terms. Look for Cook County. You might be surprised.
no subject
Date: 2007-08-28 02:39 pm (UTC)A hand from the Stars $500+30 on Sunday: Blinds 100/200, I have ~9500, Villain has ~9000.
I open for 600 with KK from middle position, and get re-popped to 2000 from the villain in the small blind. I flat-call. Flop comes 4 T T. He checks. I fire 3000 into the 4200 pot and am not that surprised that he min-raises me another 3000 leaving himself 1000. Hoping to see QQ/JJ rather than AA I shove and he has to call and reveal his AK.
Of course he's picked the wrong guy to check-raise bluff here as having put in most of my chips with an overpair to the flop I'm not folding whatever he does. So the flat-call has worked brilliantly and I'm in great shape. Of course the turn was an Ace and I'm effectively dead getting 45 mins entertainment for my $530. Perhaps I should take up crack cocaine and hookers and save some cash.
matt
Bzzz! Wrong! But thanks for playing
Date: 2007-08-28 09:51 pm (UTC)Bless you son, for you have not had to go through hell, but it is possible. It involves a hideous amount of loan-shark work, a certain amount of pissing around by blagging, a degree of "proving who you are" by borrowing somebody else's credit card and then paying by cash, and a day-to-day nightmare. Would I rather lose my credit card than lose my house?
Are you insane?
Re: Bzzz! Wrong! But thanks for playing
Date: 2007-08-28 10:35 pm (UTC)A lot of the people that are being talked about started with zero equity and now have above market loan rates. A significant proportion of them defaulted on their FIRST mortgage payment.
If you had the choice between a credit card and trying to keep up payments on a house you have negative equity in, what would you do?
Re: Bzzz! Wrong! But thanks for playing
Date: 2007-08-29 05:07 am (UTC)Then again, in the US there is more of a "forgive and forget" attitude to that. so perhaps these people will find it easy to borrow again to buy a house in a decade's time, and won't be chased by the lenders for the defaulted loan on the old mortgage.
PJ
Re: Bzzz! Wrong! But thanks for playing
Date: 2007-08-31 11:43 pm (UTC)It wasn't my decision in the first place. I had equity in a (cheap) house in France owing to their peculiar laws of inheritance (you don't choose; the rows of beans are inherited on some weird binary basis to do with the various generations).
Not equity I could use. Not even as collateral. My mother (50% equity) would have killed me.
Luckily, I killed my mother first, thus having 50% equity in a Birmingham house which, given the insane valuations prevalent even at this minute, is worth three times the -- equivalent -- French house.
And I still can't use it as fucking collateral. Not even to get a decent overdraft of £2000 or so at Lloyds Bank, who are well aware of the circumstances, because the local branch is where my mother banked, is in charge of the estate's account, knows all the details, and is kept up to date by the executors. (One of whom is my brother.)
I do believe that the concept of allowing people to raise equity on heavily-mortgaged property (read: 110%, with no ability to make even the first payment, as you slightly exaggerate) has moved into La-La land.
Which is one of the places that I guess is going to be in trouble. Not as fast as the trailer-park scum, but I know my California, and I know LA.
-- Pete
PS And with house prices in quite normal parts of Britain (ie not London and eg Wales, for God's sake) rating at 5-6X average household -- two healthy, employed, not encumbered by new rug-rat -- incomes, I would be very afraid. Very. Afraid.
Keep practising the blagging. I don't like doing it, but I'm naturally frightening and charming at the same time, so it seems to work.