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Wall Street

Question: Why are some of its insiders bashing The Street?

 

Andrew Ross Sorkin: Ken Griffin is a fascinating guy because he started a firm called Citadel, which has become one of the largest hedge funds in the country. And he recently has become pretty outspoken about how he feels about Wall Street. And what I think made what he said in that column so interesting and just to explain what he was saying. I think he was saying that Wall Street really does bear the brunt of the criticism, that they need to take more responsibility and more important, they needed to be more careful with the leverage that they are putting on things and really trying to understand risk. Risk is sort of a weird word, because it's sort of amorphous and what does it really mean?

And when you think about what was going on, on Wall Street, people were trading so many different types of derivatives and credit swaps and that may mean nothing to you. But these are instruments if you will, that are attached and have values to certain things. But if you trade enough of them to each other, you've supposedly spread the risk out. But at the same time, you created systemic risk across the board. And so if one domino falls, everybody else can too. And I'm not sure people appreciated how far that risk had gone. And when you think-- another way to think about it is, that if you and I decided we were going to bet on the basketball game tonight, you know, that might be great and I might feel confident in betting with you, because I think that you can pay me back. But what I might not have realized, is that actually offset that bet with 20 other bets.

And it's unclear whether one of those other 20 might fall and how much of it you've offset on him and then how many other people offset it on him and maybe I even offset my bet with him too. So there's sort of this kind of cast of characters and if one falls, maybe everybody does. That was actually the problem with Bear Stearns. And I think for what Ken was trying to say was, there was just too much risk and people didn’t really appreciate that and they really need to put in controls, into place. One of the other things that Ken said though, that was really interesting is, that there wasn’t enough perspective on Wall Street, actually, that people were too young, that Wall Street is really run by a bunch of young Turks [ph?] who were running around the trading floors making deals, but they don't really see you know, the trees for the forest or in this case, the forest for the trees.

And I think, you know, it's ironic coming from Ken, only because Ken started trading you know, when he was in his dorm at Harvard and really started as a young Turk himself. But I think you know, gaining that perspective that he's gotten over the years, he's starting to say to himself, maybe we've got to put the brakes on.

 

Question: Will we see change that stems from the credit crisis?

 

Andrew Ross Sorkin: Well listen. Wall Street has a very short memory. But in fact, right this very moment you are seeing the pendulum swing the opposite way saying, nobody will loan anybody money. The idea of leverage, we talked about these buyouts, you can't do a buyout today. Frankly, it's hard to get a mortgage. So clearly, everybody has pulled the reigns in and said, we can't do what we were doing. But also, that's bad business because it doesn’t really actually make them any money in the long term. So we will slowly get back to where we were and a couple years from now, we will repeat the entire exercise.

 

Recorded on: June 3, 2008

 

Wall Street has a short memory.

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  • Maybe it's still there, but much less luminous and/or covered by dust.

A "very massive star" in the Kinman Dwarf galaxy caught the attention of astronomers in the early years of the 2000s: It seemed to be reaching a late-ish chapter in its life story and offered a rare chance to observe the death of a large star in a region low in metallicity. However, by the time scientists had the chance to turn the European Southern Observatory's (ESO) Very Large Telescope (VLT) in Paranal, Chile back around to it in 2019 — it's not a slow-turner, just an in-demand device — it was utterly gone without a trace. But how?

The two leading theories about what happened are that either it's still there, still erupting its way through its death throes, with less luminosity and perhaps obscured by dust, or it just up and collapsed into a black hole without going through a supernova stage. "If true, this would be the first direct detection of such a monster star ending its life in this manner," says Andrew Allan of Trinity College Dublin, Ireland, leader of the observation team whose study is published in Monthly Notices of the Royal Astronomical Society.

So, em...

Between astronomers' last look in 2011 and 2019 is a large enough interval of time for something to happen. Not that 2001 (when it was first observed) or 2019 have much meaning, since we're always watching the past out there and the Kinman Dwarf Galaxy is 75 million light years away. We often think of cosmic events as slow-moving phenomena because so often their follow-on effects are massive and unfold to us over time. But things happen just as fast big as small. The number of things that happened in the first 10 millionth of a trillionth of a trillionth of a trillionth of a second after the Big Bang, for example, is insane.

In any event, the Kinsman Dwarf Galaxy, or PHL 293B, is far way, too far for astronomers to directly observe its stars. Their presence can be inferred from spectroscopic signatures — specifically, PHL 293B between 2001 and 2011 consistently featured strong signatures of hydrogen that indicated the presence of a massive "luminous blue variable" (LBV) star about 2.5 times more brilliant than our Sun. Astronomers suspect that some very large stars may spend their final years as LBVs.

Though LBVs are known to experience radical shifts in spectra and brightness, they reliably leave specific traces that help confirm their ongoing presence. In 2019 the hydrogen signatures, and such traces, were gone. Allan says, "It would be highly unusual for such a massive star to disappear without producing a bright supernova explosion."

The Kinsman Dwarf Galaxy, or PHL 293B, is one of the most metal-poor galaxies known. Explosive, massive, Wolf-Rayet stars are seldom seen in such environments — NASA refers to such stars as those that "live fast, die hard." Red supergiants are also rare to low Z environments. The now-missing star was looked to as a rare opportunity to observe a massive star's late stages in such an environment.

Celestial sleuthing

In August 2019, the team pointed the four eight-meter telescopes of ESO's ESPRESSO array simultaneously toward the LBV's former location: nothing. They also gave the VLT's X-shooter instrument a shot a few months later: also nothing.

Still pursuing the missing star, the scientists acquired access to older data for comparison to what they already felt they knew. "The ESO Science Archive Facility enabled us to find and use data of the same object obtained in 2002 and 2009," says Andrea Mehner, an ESO staff member who worked on the study. "The comparison of the 2002 high-resolution UVES spectra with our observations obtained in 2019 with ESO's newest high-resolution spectrograph ESPRESSO was especially revealing, from both an astronomical and an instrumentation point of view."

Examination of this data suggested that the LBV may have indeed been winding up to a grand final sometime after 2011.

Team member Jose Groh, also of Trinity College, says "We may have detected one of the most massive stars of the local Universe going gently into the night. Our discovery would not have been made without using the powerful ESO 8-meter telescopes, their unique instrumentation, and the prompt access to those capabilities following the recent agreement of Ireland to join ESO."

Combining the 2019 data with contemporaneous Hubble Space Telescope (HST) imagery leaves the authors of the reports with the sense that "the LBV was in an eruptive state at least between 2001 and 2011, which then ended, and may have been followed by a collapse into a massive BH without the production of an SN. This scenario is consistent with the available HST and ground-based photometry."

Or...

A star collapsing into a black hole without a supernova would be a rare event, and that argues against the idea. The paper also notes that we may simply have missed the star's supernova during the eight-year observation gap.

LBVs are known to be highly unstable, so the star dropping to a state of less luminosity or producing a dust cover would be much more in the realm of expected behavior.

Says the paper: "A combination of a slightly reduced luminosity and a thick dusty shell could result in the star being obscured. While the lack of variability between the 2009 and 2019 near-infrared continuum from our X-shooter spectra eliminates the possibility of formation of hot dust (⪆1500 K), mid-infrared observations are necessary to rule out a slowly expanding cooler dust shell."

The authors of the report are pretty confident the star experienced a dramatic eruption after 2011. Beyond that, though:

"Based on our observations and models, we suggest that PHL 293B hosted an LBV with an eruption that ended sometime after 2011. This could have been followed by
(1) a surviving star or
(2) a collapse of the LBV to a BH [black hole] without the production of a bright SN, but possibly with a weak transient."

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