Here’s something that we don’t see very often.
A U.S. city, state capitol, no less, declaring bankruptcy.
That’s almost as unheard of, as say, Athens declaring bankruptcy, except that the buildings in Harrisburg are in a greater date of disrepair.
That decision to do the unthinkable can’t inspire too much confidence in municipal bonds, even though the city comptroller has indicated that they are still current on the General Obligation notes.
The cynic in me believes that the decision to declare bankruptcy isn’t entirely coincidental.
With all of the world’s attention focused on Greece and the EU, we’re starting to feel a bit left out on this side of the pond, and if there’s anything that we need, almost as much as oxygen itself, it’s the spotlight.
I think that Harrisburg is looking toward Florida for its inspiration and wants that Andy Warhol moment in the sun.
Florida, as well as some other states, is challenging New Hampshire’s hold on being the nation’s first Presidential Primary state.
For some reason, it seems important for a state to be the first, probably because that’s where the big campaign money goes, as serious candidates need to get their toehold early or fall into the abyss.
And that spending blitz isn’t just restricted to media campaigns.
Take for example the tremendous boost just given to the New Hampshire hospitality industry as Mitt Romney, in return for an early endorsement, agreed to provide Governor Chrisite with an unlimited supply of McRIb sandwiches when it is re-introduced onto New Hampshire’s McDonalds’ menus.
FIrst out of the box has its benefits in most every competitive arena.
No doubt that Harrisburg didn’t want Greece or Italy going first. You just know that when that first one goes, the rest will just domino.
Harrisburg simply didn’t want to get left in the dust or ash heap that their $300 million trash incinerator bond had them headed.
Sure, those are quasi-nations within the framework of the European Union, but in an “America FIrst” sense of indignation, Harrisburg did what so many other municipalities around the countyr just didn’t have the nerve to do.
No one strives to be #4.
Besides, how else does a relatively sleepy backwater state capitol get its share of attention and maybe eco-tourism, which is not to be confused with eco-tourism. Instead, think “Keynes to the City” as being an eco-tourists most favorite guided tour through bankrupt Harrisburg.
There’s no special formula or way to predict who will demonstrate the nerve to take on the unknown. It obviously takes a crisp understanding of risk and reward ratios.
I’m sure that every X-Games participant goes through an extensively elaborate algorithm to determine the appropriateness of their next humanly implausible action.
Sometimes “nerve” can be a funny thing.
There was a time that I had the kind of nerve that didn’t mind letting it all ride on a single horse race or spin of the roulette wheel. But during that same period of time, I would break out in tremors at the idea of executing a stock trade on my own, much less look at the paper losses.
But then something happened. I don’t have any clue just what it was, but it all changed.
The entire risk-reward perspective had become turned on its head.
These days, I can’t stomach the idea of losing even a quarter in a slot machine, but am not really moved by a six figure paper loss in a single day.
I’ve been functioning like that for quite a while, but today I seemed to take a step backward.
With the market continuing to climb for no real reason, here it was, mid-week, the time that I usually like to grab some remaining pennies on the table. I was still delighting in the fortuitous timing of Alcoa announcing another set of disappointing numbers only to have the disappointment well cushioned by a continuing euphoric market.
Well done, Klaus.
This time, despite the fact that there were a number of opportunities that I would have normally taken, I found myself selling only Goldman Sachs and Time-Warner calls.
I struggled with the decision to sell calls on Sallie Mae and Mosaic.
I mentioned Mosaic yesterday as it was the target of a potential takeover rumor.
Sallie Mae, on the other hand, has just showed some nice strength going into earnings next week.
Yet, I couldn’t find it within me to make the sales..
I’m rarely undecided, but the “FOMO” hit again.
Fear of missing out. I was worried that I might miss a quick upside move in either and leave a lot on the table.
The other day I read a nice piece by Phil Pearlman, the resident staff psychologist at StockTwits.
His blog title, NetFlix is on Tilt, examined the tendency to overcompensate for stock losses, using a poker players’ analogy.
Admittedly, I know knothing about poker, but I liked his take on “Tilt”.
For me, avoiding fear, greed and envy were always primary requirements for keeping your head above water. I always looked at those as raw human emotions, but “Tilt” didn’t quite fit that category, but it was also worth avoiding. When asked, Pearlman confirmed for me that “Tilt” was not an emotion.
Still, I was left with the feeling that some kind of emotion has to be responsible for causing one to enter “tilt mode”
The tendency to do stupid things in order to erase other stupid actions isn’t an emotion, it’s just part of human DNA.
In my case, I had nothing stupid in my near past that needed to be compensated for, but I felt that if I went on with my usual modus operandi and sold the calls, I was going to be left out of the game. There’s nothing worse than watching that big shiny ball roll down the playing surface and not being able to do anything to get back into play.
I understand that kind of “tilt”, but I also get Pearlman’s kind, as well.
Neither is good for long term survival.
By the time the market closed on Wednesday, half of the index gains were gone, and in hindsight, I should have made the sales.
Is “regret” an emotion? It’s also just another one of our traits, but it is related to envy. Envious of what could have been or just regretful for what never was.
In the meantime, word came across that Slovakia pulled it together and its Parliament endorsed its role in the expansion of the rescue fund.
For another few days, Greece is spared from what everyone believes is the inevitable.
But it doesn’t matter.
Thanks to Harrisburg, American pride is restored.
From a grateful nation, thank you for taking on an unnecessary municipal project, passing the blame onto a previous city administration’s cronyism and faulting pressure applied from the State House for making the ill-fated decision.
Can you say “tilt”?
A real leader would have blamed it on the Greeks.
But at times like this, a grateful nation will take any winner as it own.
Here’s to Harrisburg.
First in our defaults and first in our hearts.