Penguin House - Hedge Funds

Last night we are at Lars' book launching party on the Strand, pictured. Recall Lars a retired hedge fund manager who wrote an insider's expose on the industry. Until it all ended, money was easy assuming, of course, one could raise it. Hedge fund economics simple: 20% of the upside over a "high water mark" plus a management fee on assets of 1-2% per annum (hedge funds are different from long-only funds as they can "short" stocks or bet on their decline; this allows them to "hedge" their position). Consider a small fund of say $200 million. Should the thing double, the fees to the manager are $40 million paid immediately (private equity, by contrast, must pay back its investors+a preferred dividend of 7-8% before they can take their "carried interest," also 20%. This period rarely less than five-years and more likely seven or more; one advantage private equity enjoys is a "lock" on capital of ten years while hedge funds must return money immediately if "called"). But sweet liquidity: managers that caught the timing made themselves rich, and stayed rich, even when the financial markets crashed and their investors crushed.

Since '07 things have been tough for hedge funds but the money, inevitably, comes back: investors withdrew $131 billion from the industry in 2009 but strong returns last year boosted overall industry assets to $1.6 trillion, according to MarketWatch. That's almost $260 billion more than the industry trough in the first quarter of 2009 but still $330 billion below the peak of $1.93 trillion set in the second quarter of 2008. Putting this into perspective, we have likely spent as much on Iraq.

Lars is charming in his speech - he keeps his audience by choosing not to read a chapter. He knows the crowd with him this perfect London evening to schmooze and drink and look at the pretty view from the tenth floor of Penguin House. We sure enjoy ourselves.

First Day School

We are back in the thick of it now, oh boy. Kids excited about the prospects of the new term, Year 4 and 5, respectively, which starts this morning. And I, like every parent, am left to wonder: how did they become so .. big. Yes, these little Shakespeares are growing up. Eitan, for his part, has written a football-training schedule for each day of the week, rotating by position. He notifies me that Monday to Wednesday morning I will be required to take him to the pitch for drill-practice which is fine by me as it will force me to exercise (it is all about me, after all). This morning the boy in the backyard, 7AM, practising headers. Not sure what the neighbors think about that but we will find out for sure (our bedroom thankfully on the other side of the house). Madeleine slower to rise, poor kid. She remains our night owl and mornings never fun, especially now, after holiday (we share a teary moment as I wrestle her from bed). Sonnet does the drop-off and reports: "Madeleine found her friends on the schoolyard and she was off. Eitan was in the midst of his group when he arrived, and deigned to come over to say 'hi.'" While sunny, it feels like autumn and I spy the first spider web of the season. Sounds about right.

Full-time education in the UK is compulsory for all children aged between 5 and 16 (inclusive). Students may continue their secondary studies for a further two years (sixth form), leading most typically to an A level qualification, although other qualifications and courses exist, including Business and Technology Education Council (BTEC) qualifications and the International Baccalaureates which have become ever more popular with ex-pats for US colleges. The leaving age for compulsory education was raised to 18 by the Education and Skills Act 2008. The change takes effect in 2013 for 17-year olds and 2015 for 18-year olds. State-provided schools, like ours, are free of charge, and there is also a tradition of independent schooling, but parents may choose to educate their kids by any suitable means. The National education budget for 2008-09 was £62.2 billion with total enrollment 11.7 million, of which 4.4 primary, 3.6 secondary and 3.7 post-secondary. (source: Dept of School, Children & Family; Higher Education Statistics Agency). This equates to about £5,300 per child.

Eitan and Madeleine are in our fabulous state primary school which is a ten minute walk from our house. We anticipate Independent, or private education, from secondary (Year 7) and Eitan will take the "10-plus" exam this year. Gulp. Approximately 7% of English schoolchildren attend privately run independent schools, some of which are called (confusingly for the Americans) "public schools". Education at independent schools is usually chargeable. Such schools, some of which are boarding schools, cover primary and secondary education and charge between £2500 and £30,000 per year (ISC Annual Census). Many offer scholarships for those with particular skills (football? performance?) or aptitudes or bursaries to allow less well-off students to attend which I note, dear reader, includes ours.

"In the UK, state schools exist in a bewildering variety of forms. Over the last hundred years, successive governments have struggled to improve education by reforming its structure, over and over again. What all state schools have in common is that they are entirely free to parents, being funded through taxation."

-- The Good Schools Guide

Great Smog - 1952

I have an engaging sunny afternoon conversation with neigbhor Martin, who has lived in his house all his life or (by my estimate) >75 years (Martin's mother won Wimbledon twice in the 1920s and Martin plays there every Sunday morning like clockwork). Today he tells me all sorts of interesting things like our neighbor, Clive, having emergency open-heart, by-pass surgery while we were away ("But doing all right." Apparently). I also learn that our council will replace the 1960s cement lamp-posts (which I kinda like as a period set-piece) with new, modern, poles. Martin recalls those days when a council-man, dressed in official council-gear, would light the gas lamp-lights on our block every night using a rod. He made haste on his bicycle, usually not needing to dismount for the chore. Our conversation turns to London's terrible fog which, today, is a rarity and maybe a few times a year. In the 1950s, however, the coal-ash particles condensed air moisture and fog (smog) was normal. Martin would bike home from school arriving covered in black.

The Great Smog darkened the streets of London and killed approximately 4,000 people in the short time of four days (a further 10,000 died from its effects in the following weeks and months). Initially a flu epidemic was blamed for the loss of life. A period of cold weather, combined with ananticyclone and windless conditions, collected airborne pollutants mostly from the use of coal to form a thick layer of smog over the city. It lasted from Friday 5 to Tuesday, 9 December, 1952, and then quickly dispersed after a change in the weather. Although it caused major disruption due to the effect on visibility, and even penetrated indoor areas, it was not thought to be a significant event at the time, with London having experienced many smog events in the past, so called "pea soupers". Public transport ground to a halt, apart from the London Underground; and the ambulance service stopped running, forcing the sick to make their own way to hospital.

More recent research suggests that the number of fatalities was considerably higher at around 12,000 with another 100,000 effected. Most of the victims were very young, elderly, or had pre-existing respiratory problems. The deaths were caused by respiratory tract infections from hypoxia and as a result of mechanical obstruction of the air passages by pus arising from lung infections caused by the smog. It is considered the worst air pollution event in the history of the United Kingdom, and the most significant in terms of its impact on environmental research, government regulation, and public awareness of the relationship between air quality and health. It led to several changes in practices and regulations, including the Clean Air Act 1956.

(Source: Stegeman, John J. & Solow, Andrew R. A Look Back at the London Smog of 1952 and the Half Century Since; A Half Century Later: Recollections of the London Fog, 2002).

Photo from the WWW.

Madeleine: "Guess what the best part of my day was?"

Me: "What?"

Madeleine: "Guess."

Me: "What?"

Madeleine: "Guess."

Me: "Buying some yarn?"

Madeleine: "That was going to be the best thing but the store was closed."

Bouncing Back

Madeleine and Eitan burn some energy on the neighbor's trampoline.

We are slowly back in action, me having slept until 1PM yesterday and 11AM today. I feel punch drunk. Eitan insists he he is unaffected by jet-lag: "I am one of those kids who doesn't get it I guess" he informs me yet there he is, 2AM, wandering around our bedroom (and again at 9AM when he puts ear-plugs into his radio to wait patiently at the foot of the bed for Sonnet or I to feed him). Madeleine is over-joyed to see Tommy who has been with Natasha this month - I am over-joyed that Tommy did not get eaten by Alphie. Otherwise it is the usual post-holiday glum: bills, sorting mail, going into the office .. my head is still somewhere in the Sierras .. or the Rockies.

I watch the US Open.

Eitan: "Dad, did you know that Roger Federer is back to his old tricks?"

Me: "Hmm?"

Eitan: "When someone hit it to him, he ran backwards - so watch (Eitan demonstrates) - he ran backwards and hit it through his legs. And that is how he won the match."

Me: "Cool."

Eitan: "He has done that before. It is famous."

Me: "Good to know."

Firewood

We arrive at Heathrow following a month's journey to the USA which has taken us from Giant Burgers to tacos with a number of Dairy Queens in between. Berkeley to Bear Valley then Denver, La Veta, Taos and Santa Fe, New Mexico. We are blessed to have family and friends in these parts of the country. As this chapter concludes we consider autumn's schedule: new school terms; Division 1 football (Eitan); swim team (both kids) performance class (Madeleine); 10-plus exam (Eitan); V&A, following a five-month work-leave (Sonnet); unfinished assignments (me). Wherever it may go, we have great memories from our endless summer. Stay tuned.

Cowgal

Martine, Sonnet's Aunt, in front of her horse-trailer in La Veta. The road to the Minnis ranch unpaved, heading straight for the Spanish Mountains - I cannot imagine a more stunning vista to return to every day. At some point it must become who you are, which certainly seems the case with Martine. Her love is her animals and around the house are several cats (dog Guinnes passed a year ago) and, of course, the horses which she cares for single handedly when Bill in Denver where they have their second home (the ranch is closed during the winter and the horses "boarded" at nearby stables). This means moving 100lb barrels of hey and removing equally heavy manure, exercising the animals and putting them to pasture every day. They are healthy beasts as, Martine points out, "they fart all the time." This being a good sign. Martine used to teach at Boston then Denver public schools up to the second grade; she did a sabbatical year in Oxford where she taught and took some classes (there are photos of the Royal Family throughout the house). Martine a grandmother of one and soon to be two as Maire announces her pregnancy over the phone during dinner (Martine and Bill knew before of course). She went to Vassar (see: T-shirt) while her stories as interesting as her life. We enjoy her. She sure looks after Eitan and Madeleine.

Madeleine: "Tell the story about Auntie Katie eating liver."

Me: "Which one is that?"

Madeleine: "The one where she refused to eat it. During the Jewish holiday."

Me: "I think you mean cow's tongue following Passover. Grace cooked it in a milk cream."

Madeleine: "And it looked like a tongue!"

Me: "Yep."

Moonrise

I catch this photograph around 10AM on the way into town. No need to get out of the car - sometimes it just works like that. La Veta's High Street offers several jewels: local bakery operated by lesbians (open four days a week); a bona-fide gym for $5 a go, and the "Book Nook," a used bookshop whose proceeds go to the local library. Of course Charlie's for ice cream. Sonnet and I look at the real estate offerings and day-dream about property. There has been limited development and, as Martine aptly notes: "there's nothing to do here." A couple hundred grand could get you a pretty nice place in the outback. I see sadly that the La Veta Inn is for sale at just under $600k - down from a million earlier this year. Recession blues, no doubt.

As for the locals - cheerful and chatty as ever. Sitting on a bench more often than not results in a discussion about something. The La Veta Redskins HS football team, for instance, has a large front line which fills the town with hope ("Hell those boys can't do any worse than last year" the gas station mechanic tells me). The local 18-hole golf course is looking to expand with condos and more green land despite drought; his efforts rejected so .. he closes the golf course. Classy move, dude (Wallsenberg has a 9-hole course but 18 miles by car). Tomorrow's battle is wind farms: three projects, particularly one near scenic La Veta Pass, have galvanized grassroots opposition and posed a challenge for county planning officials. Let us hope for progress, indeed, but not too much of it.

Route 159 #8

Vista Rockies

Sunkist

We were last here, at the Chamayo shrine, in 2008 - nothing has changed including Leona's shack serving tamales and tacos. We are otherwise surrounded by dry mountains, tall leafy trees and a brook which cuts in front of the shrine. The plaza does, indeed, feel peaceful and even spiritual -I wonder if the spot unique because of the Santuario de Chimayo or if the church built here because of the wonderful vibe. Madeleine discovers the 'gift shop' which remains, consistently, her main favorite focus of any place we visit - from Big Trees to the Denver; the Tate to Tate or wherever. Here, at Chamoyo, she wants to buy the Cross of Jesus but I refuse to lend her the money on principal ("neither a borrower or a lender be," I chime). As to the religious symbolism, well, that is more than I wish to explain.

What are we to make of the Times cover story that over 1,000 UK girls, aged 11 or 12, are on the pill? Well, firstly, the suggestion that these girls are sexually active is tosh: many pre-adolescents are prescribed hormonal contraceptives for heavy periods, acne and endometriosis which is a lot less eye-catching interesting than "11 year-olds on the pill." Secondly, the report relies heavily on the Christian Medical Association (enough said). Here are the facts, according to The Lancet, 2001, study: "We recruited 11161 men and women to the survey (4762 men, 6399 women). The proportion of those aged 16—19 years at interview reporting first heterosexual intercourse at younger than 16 years was 30% for men and 26% for women; median age was 16 years. The proportion of women reporting first intercourse before 16 years increased up to, but not after, the mid-1990s. There has been a sustained increase in condom use and a decline in the proportion of men and women reporting no contraceptive use at first intercourse with decreasing age at interview. Among 16—24 year olds, non-use of contraception increased with declining age at first intercourse; reported by 18% of men and 22% of women aged 13—14 years at occurrence. Early age at first intercourse was significantly associated with pregnancy under 18 years, but not with occurrence of STIs. Low educational attainment was associated with motherhood before 18 years, but not abortion."

The kids get their first sex education in Year 3 - around age-8 - where they learn the differences in the sexes. It accelerates from there. Back then, I attended a teacher-parent meeting to understand what to expect since sexual education is compulsory in the UK (England and Wales have 65 conceptions per thousand women aged 15-19, the highest in Western Europe according to The Office of National Statistics). Labour's 2000 pledge to halve teen pregnancy by 2010 has failed completely. The main reasons for our high rate: We don't give children enough information; we give them mixed messages about sex and relationships; social deprivation means girls more likely to get pregnant; and girls of teen mothers likely to do the same.

Sonnet and I have been discussing sex with the Shakespeares well before Year 3. I think they have the general idea but Eitan is so pained by such things that I sometimes wonder what actually sinks in. It seems the world is stacked against these youngsters from drug addiction to environmental calamity, war, cost and access to education, unemployment and recession and rising cost of education (and this, the Western World) that I put teen-pregnancy pretty low on my list of concerns. Talk to me in four or five years.

Chimayo Shrine

We visit the Potrero plaza of Chimayo which is known for its Catholic chapel: the Santuario de Nuestro Senor de Esquipulas or o for short (pictured). The church, built by one fervant believer (and probably a bunch of Mexicans), was completed in 1816 so locals could worship Jesus as depicted as Esquipulas; preservationists later bought it and handed it over to the Archdiocese of Santa Fe in 1929. Today, the chapel managed by the Archdiocese as a Chatholic church. For its reputation as a healing site (believers claim that dirt from a back room of the church can heal physical and spiritual ailments), it has become known as the "Lourdes of America," and attracts 300,000 visitors a year, including over 30,000 during Holy Week (the week before Easter). The most moving experience, I find, are artifacts of remembrance for soldiers in Iraq and Afghanistan including dog tags and bullets or badges. According to William Wroth, New Mexico Office of the State Historian), "No doubt (Chimayo is) the most important Catholic pilgrimage center in the United States." The sanctuary designated a National Historic Landmark in 1970.

Chimayo is located in a valley within the Sangre de Cristo Mountains 24 miles north of Santa Fe; it is approximately 6,074 feet above sea level.

Shidoni

Shidoni, a bronze art foundry, sculpture garden and gallery, is found along the Rio Tesuque on a former apple orchard. To the kids grief: We visit. Punters can watch 2000-degree molten bronze poured into ceramic shell molds, see glass blowers perfecting their craft and stroll around the sculpture garden (pictured) or visit the gallery which shows >100 different sculptors from around the US. We are tackled by Jan, a 50-ish woman wearing white cowboy boots and turquoise - she smells a sale when I note we are visiting from London and trying to replace a open space following the sad collapse of our 200 year-old tree. Jan suggests something Big. I like many of the objets but they do not come cheap: from $8,000 for smaller pieces to over 50-grand; most are between $12-18K excluding shipping which adds another $5,000 or so (Jan ads helpfully: "we will design your own shipping unit."). Madeleine will only consider something practical: "can I play on it?" I get a dangerous bolt of adrenaline which whispers ... why not? but it is best to see the backyard damage first and, more importantly, see how my year-end cashflows pan out.

“Shidoni” is a Navajo word used as a greeting to a friend.

Family Trail

Galisteo Basin Preserve

Following the success of our 10-mile day hike to Nambe Lake off the Winsor Trail and two-miles from the Pecos Wilderness boundary (we are rewarded with spectacular lunch spot and water too cold to swim in) we take a different trail across desert terrain - pictured. The Galisteo Basin Preserve is a land conservation and community development project located in Santa Fe County’s Galisteo Basin—a high-desert area of fragile land and water resources "celebrated for its scenic, cultural, and wildlife values." The preserve designed to conserve and restore 13,000 acres of open space and promote "thoughtful, stewardship-oriented community development." Our flat walk interrupted by the occasional adobe house with visible development for more -- still, the lots are minimum 26-acres and houses separated by a band of no less than three-acres. There are plots of 600 acres or more. If managed properly I think it could work though I would not recommend the trail for unspoiled beauty.

Santa Fe Square - Chill

It is a lazy afternoon and these gals barely move. I think felines. Behind me several natty, tatoo'd dudes with piercings sit Indian-style observing the "no-skateboarding" sign. Bummer. They mooch cigarettes from each other. This scene quite different from the week-end when the Santa Fe Indian Market in full swing. The market an annual two-day occurrence since 1922 and draws 100,000 people. Vendors must verify their native-American origin while their work has to meet strict quality and authentic materials standards or they do not get a stall. For sale: jewelery, turquoise, belts, paintings, drums, bleached bones, rugs, trinkets and so on and so forth. Many revellers, including Sonnet, arrive very early in the morning and it is not unusual to find artists selling out within a few hours. Me, I find these things work best if there is a focus of some sort like buying a necklace or a tamale. Having no such needs this year I find a bench, sit with my strong coffee and read the NY Sunday Times. Bliss, baby.

New Mexico Museum Of Art

I photograph this beautiful sculpture, "Ford Orange, 2007" by Jeremy Thomas in the O'Shaugnessey Sculpture Garden of the Museum Of Art. It is forged mild steel with a 'powder coat' and measures 52 x 36 x 26 inches; the museum purchased the item in 2007 with funds from the Boeckman Acquisition Fund. The courtyard is otherwise pretty small as is the museum. What it lacks in size, the building makes up for in design: the 'Pueblo Revival' design inaugurated "Santa Fe Style" or tanned adobe with supporting, oiled, timber. In truth, there is not too much to see here - the mandatory Georgia O'Keefes, some local Indian paintings... the main exhibition is Sole Mates:Cowboy Boot and Art which "celebrates images of the West and views cowboy boots as important symbols of western life." The exhibition presents more than 130 examples of contemporary and historic art, including paintings, drawings, postcards, advertisements, sculptures, video imagery, and .. cowboy boots. "These images investigate changing aspects of the West by addressing freedom, loneliness, gender, fashion, allure and youth culture. " The kids are bored (Madeleine buys some post cards at the gift shop).

I like the idea of cowboy boots but have always thought they don't match up for dudes who wear glasses. In any case, I could never get away with them in London. Katie, during a college visit, convinced me to buy a pair of brown, soft-leather boots which I still think of today: they went perfectly with ripped blue jeans and cost me a fortune - $150. I could afford them thanks to my summer job demonstrating, even then, metro .. sexu.. al. Too bad the Providence winters killed them.

"There's man all over for you, blaming on his boots the fault of his feet."
--Samuel Beckett

Madeleine El Ray

Silver In Silver

El Ray Hotel

Santa Fe, NM