Monday, October 15, 2007

What Does a MLEC Look Like?

Lots of friends have been phoning me up asking precisely what does a "Master Liquidity Enhancement Conduit"(MLEC) actually look like in real life? Does it resemble "a bank vault"?, or a trading room? or a perhaps a Wal-Mart checkout counter where needy banks, IBs and potentially hedge funds wheel up with their respective shopping carts of SIVcrap(*) or CDOpoo(*)?

Actually, the correct answer is "none of these things. From confidential sources, I have obtained the first photographs of Secretary Paulson's MLECs, pictured above left and to the right. Let's hope that the MLECs are employing cyanide-based heep-leaching to distill the value from large amount of crap that will ostensibly fill the MLEC!


Francois-Guillaume said...

i just discovered your blog, i find it very interesting. is it possible to know more about you ?
on my side, im a Fixed Income prop trader for a (big) investment bank, and also a private investor in Japanese Real Estate (tokyo mainly)

"Cassandra" said...

Bonjour Francois-Guillaume,

Oh dear...what am I? I wake up somedays and ask myself the same question. Not to be too existential, however, I am a professional "arb" of sorts, running strictly risk-controlled pure-alpha equity strategies. I also enjoy writing and satire, but there is as you undoubtedly know - outside of Macroman and Capital Chronicle, a dearth of the latter along with wit, and irony, in most financial journalism and commentary. One might suppose that's because money is serious and sober business, but that very earnestness in combination with the high bullshit levels (A "MLEC"?!?!?) makes for a dangerous combination to take at face value. Remember BOTH the Russians (at Chernobyl) and the Americans (at 3-Mile Island) said "Don't Worry...Be Happy..."

Why do I stupidly pursue "pure alpha strategies", hedged to negligible exposures across most major factors, in what are considered reasonably efficient markets by more than at least 1 Nobel prize winner?. This too is a question I ask myself all -too-frequently, particularly when real-rates are low, liquidity, momentum & specs run amok, and relative value remains a hypothetical philosophical question rather than a tangible money-making pursuit taht pays the kids school fees.

Well its certainly NOT because I'm smarter than the average bull or bear, for if I were I would be either long OR short, though certainly not both. But there are so many possible answers to this: the thrill of the chase; the Cantillions of Dollars in remuneration; the desire to be a Wolfe-ian Master of The Universe; an inexplicable need to feed my ego; an inveterate gambling addiction...all indeed theoretically possible. But the real reasons (if you promise not to tell anyone) are actually happenstance, and serendipity. Embarassingly unprofound, but isn't so much of life?

Macro Man said...

Hmmm...are these photos of the MLEC (loved the Pee Wee chant allusion, by the way), or of the holes in the sponsoring banks' balance sheets resulting from the over-consumption of structued credit turds? Inquiring minds want to know....

"Cassandra" said...

Thanks. The MLEC-o-MLEC is the natural extension of teh MLEC if one continues the thought experiment.

I wonder whether PeeWee thought he wouldn't be recognized [in the theatre] without the lipstick and bowtie?? Pretty creepy in the Gary Glitter & Phil Spector sense of the word.

"Cassandra" said...

I think the pic is actually of the world's largest Taconite mine somwhere in Russia, a near-perfect resting place for all things unwanted.