Speaking of next phases: it appears the last two years of re-structuring Cyan has paid off, as we’re now profitable.

[And it still definitely beats having a real job.]

For the past few years, Cyan has been working solely behind the scenes – putting together financial structures, building our infrastructure, and generally missing out on all of the fun parts of indie film in favor of more ulcer-inducing fare.

But, now, all that work is finally paying off, as we’re shifting back to actively making and releasing movies.

To kick off the shift, we’re counting down to pre-production on two new films, Keeper of the Pinstripes, and Yelling to the Sky.

In some ways, the two movies couldn’t be more different – the first a big-budget family film built around the New York Yankees, the second a small, gritty, race-complicated indie drama. But, in other ways, they’re quite similar – both coming-of-age stories, both driven by scripts strong enough to have garnered amazing casts.

We’re hoping to add three more films to our 2009 slate, all of which, ideally, we’ll be releasing in theaters throughout 2010. We have a number of strong contenteders for those three slots, but, at this point, we’re also focusing nearly all of our attention on simply surviving these first two.

As they’ll be consuming much of my life for the next couple of months, they’ll likely also be taking up a lot of this site. Stay tuned.

CrossFit NYC’s first location was on the fourth floor of a building in the Garment District. The building was old, with rickety construction, so perhaps it shouldn’t have been surprising when, after months of our jumping around and dropping weights and generally pounding the floor, the ceiling fell down onto our downstairs neighbors.

I don’t mean the entire ceiling, and – fortunately – I don’t mean that we actually knocked a hole through our floor and fell down to the level below. Instead, it was just a piece of the ceiling, a six by ten foot chunk of plaster that had shaken loose as much due to age and poor construction as from reverberation.

Still, from our downstairs neighbors’ perspective, we had knocked down their ceiling, and they weren’t thrilled about it. And they made that pretty clear.

Despite the death threats and the law suits, when we eventually moved out it had more to do with running out of space than with them. Still, we certainly weren’t sad to leave them behind.

Because it wasn’t just the ceiling. These guys came up to yell at us several times a day, saying they could hear every step we took across our thickly rubberized floor, saying we made it impossible for them to hold meetings.

Which I always found to be slightly funny. The guys downstairs were a messenger company. And I could never quite imagine what sort of critical meetings they might be holding, in our shithole of a building, all morning and afternoon long.

CrossFit NYC’s latest location is only ten blocks down from that first home, but it’s a world apart. The space is five times as large, clean, with showers and changing rooms, in a much newer, much nicer building. And, this time, when we moved in to the third floor, the second was still unoccupied. Which meant that whoever moved in below us would have a chance to hear whatever noise we might make beforehand, would know exactly what they were getting themselves into.

And, in this economy, with New York’s commercial real estate market collapsing, we reasoned, we might go neighborless for months or years before the space was filled.

Or not. We were in our new digs for less than a month before we discovered that a company had just leased the second floor.

It turns out, they’re a messenger company. And they’ve already visited us a few times about the noise.

Let’s hope their ceilings are screwed in tight.

Spent most of Cyan’s 2008 drafting legal documents, building Monte Carlo simulations, and writing novels’ worth of white papers and other business materials. Literally thousands and thousands of pages.

All of which, in short, was necessary, but not sufficient. So, now, in 2009, it’s time to actually put all of that to work. As the old saying goes, you can’t plough a field by turning it over in your mind.

Like the proverbial frog boiled slowly to death, the parents unable to see how much their child has grown in the past year having watched that growing day-to-day, I’d similarly totally missed the fact that Cyan’s office has somehow gradually become a complete and total shit-hole.

Granted, it wasn’t great to begin with. Having outgrown our prior office, but with more hiring on the not-too-distant horizon, we needed a temporary space to hole up. Hence our current digs, which are indeed cool (in the Village, with a gated courtyard, and very high ceilings), but completely ill-suited (it was built as a loft apartment, not an office) and already a tight fit when we moved in.

Because we knew we wouldn’t be here permanently, we skimped on setting it up in the first place. And it’s gone downhill since. Our conference table chairs (West Elm) have cracked sufficiently that a giant splinter from one recently tore a hole in the ass of my suit pants. The white walls have slowly scuffed to gray. Piles of files, DVDs, trailers, and posters have sprung up like fungus. And, speaking of fungus, the entire place has started to smell a bit, in a way vaguely reminiscent of a frat house basement.

So, even though we think we’re only here for another half year, tops, I’ve now reached the point where I can’t even stand to look at this for many days more, much less weeks or months.

A painter’s swinging by tomorrow morning to give us a quote, we’re weighing options for replacement chairs and lights, and we’re considering where we might hang the Cyan movie posters we’d long been holding off on framing.

And, even after all of that, it probably still won’t be good. But, at least, it won’t be a painful embarrassment whenever anyone stops by. Which, at the moment, would be a pretty big improvement.

About a week back, I suggested that a smarter approach to a bail-out – rather than buying toxic assets from banks – would be to simply invest directly in those banks themselves.

At the time, I assumed Paulson – due to long-standing investment bank allegiances – was unwisely unlikely to take that smarter route. But, apparently, there’s nothing like a solid week of clusterfuck to put all the options back on the table.

Because, as of yesterday evening, that’s exactly what they’re doing.

Pair that with a recent call from the Deputy Director of New York State’s Office for Motion Pictures and Television, who had read my entry about the film provisions of the bail-out bill and hoped I could answer some questions about them, and it appears this blog really might be, as the intro paragraph has long hyperbolically claimed, one of the best sites on the internet after all.

So, the bail out.

The thing about unregulated markets is, on the one hand, they really are the most efficient economic system. But, on the other hand, that efficiency comes at two kinds of costs: screwing some bottom segment of the population on an ongoing basis (c.f., the percentage uninsured in the US insurance system), and screwing some now outdated segment of the population during any transition (c.f. US auto workers as we increasingly outsourced manufacturing).

Basically, then, US economic policy is a balancing game between two competing desires: we want our system to be efficient, but we also want it to be ‘fair’, by which we mean that we want to somehow protect any of those bottom segments and transitional segments we see getting screwed.

And, last week, it became clear that the segment getting screwed during the current transition was, more or less, all of us. A whole lot of different factors had made the financial system into a total mess, and letting the market work that mess back out (which, indeed, it would, eventually) would have probably led to a massive recession, huge unemployment, and a lot of other similar stuff we’d much prefer to avoid in the process.

So, in essence, who we were bailing out was not just some guys on Wall Street, but ourselves. If we wanted to avoid all that ugly recession / unemployment / etc. stuff, we didn’t have much choice.

Of course, there are better and worse ways to handle things, and I suspect highly that Paulson’s investment banking background and ties led him to a bail-out approach that’s messier than it needs to be, and one that relatively few economists favor.

The bill that just passed gives the government the ability to buy bad assets from banks. As NPR’s Adam Davidson analogized, that would be sort of like giving the government the right to come in and buy the junk from your basement.

The other, and in my opinion smarter, approach, would be a stock injection plan. Instead of letting the government buy the bad assets from banks, it would instead let the government buy a part of the banks themselves. This one, by Davidson’s analogy, like giving the government the right to actually buy part of the house. And then possibly to move in.

In the first case, we face a sticky short-term question – how much is a basement full of junk worth? In the current crisis, if we pay too much for banks’ bad assets, we flush money down the drain; if we pay too little, we don’t save the banks.

In the second case, however, we don’t have to figure out a price for the junk, and we already know the price for pieces of the bank – it’s called the stock price. Further, because of a number of complicated issues (like capital requirements), a single dollar spent in a stock injection probably equals many more – as many as twelve dollars – spent in buying bad assets. And finally, as when we did something similar a few weeks ago with AIG, owning a big chunk of a bank would let us shit-can the CEO and other management, limit executive pay, and generally effect the sort of ‘you get what’s coming’ justice that most Americans think would make a lot of sense.

Though, and here’s the part that bothers me, it probably makes less sense to you if all of those CEOs and execs are your long-time friends and golf-buddies, which is to say if you’re Hank Paulson.

Therefore, our bill mainly provides for that first kind of ‘buy the junk’ bailout.

Though, at the same time, tucked deep inside the actual bill – a much revised 451-page expansion of Paulson’s original three-page draft – are a couple of sections (106, 107 and 113) that would also give the treasury secretary the right to take the second, smarter, better for taxpayers but less good for bank executives, stock-injection plan.

I’m not sure if there’s anything we the people can do to convince Paulson to take that path. And I’m not even sure if electing Obama would mean a new Treasury Secretary, one who might be more likely to err towards that more populist approach.

But, either way, even if we just take the ‘buy the junk’ approach, it’s something we should all be happy about. Because, otherwise, we’re left solely to a market solution, and all of us are totally screwed during the transition.

We’d be to this current financial meltdown as Flint, Michigan is to globalization. Which, if you’ve seen Roger & Me, you know would totally suck.

Given my job, and my dorky financial background, I’ve been following the public market meltdown fairly carefully.

As have Jess, my friends, my colleagues, and my relatives. Yet, when I talk to most of them, they seem to be following only the surface details. They don’t fully grasp what a CDO or CDS really is, much less what the underlying causes of the chaos might be.

Blame for which, I think, falls at the feet of financial journalists. Sure, explaining complicated financial concepts and structures is difficult. But that’s exactly what they’re supposed to be doing: breaking jargon down to plain English, in a way that allows people to actually, fundamentally understand what’s going on.

So, as a bit of public service, let me take a quick stab at a concept several people have asked me about of late: naked shorts. If this works, and if there’s reader interest, I’d also be happy to circle back to explain other concepts that seem similarly confusing.

So, naked shorts.

As most people know, ‘shorting’ or ‘short selling’ a stock essentially means betting against that stock. In other words, when you buy a stock the usual way (called going ‘long’ on that stock), you’re betting that the value of the stock will go up. If you buy the stock for $10, the price goes up and you sell it for $15, you’d make $5.

A short, then, is the exact opposite. If you invest when the stock is at $10, and pull your investment back out when the stock has dropped to $5, you’d similarly make a $5 profit.

Most people, however, are also entirely unclear on how that actually can work. So, to illustrate, let’s talk about your car, rather than a stock.

Imagine that you own a car. Then imagine that, for a small fee, you let me borrow that car from you.

So far so good. Now imagine that I sell your borrowed car for $10,000. A year later, say I want to give you your car back. So, I go on Craig’s List, and I find the same make and model. Only, by now, it’s selling for just $5,000. Which is excellent for me, since I can buy the car and give it back to you for $5,000, then pocket the $5,000 difference between that and the original sales price.

Voila. I just ‘shorted’ your car.

What, then, is a ‘naked’ short? Basically, the exact same thing. Except without borrowing the car first.

Of course, if I do that with cars, instead of ‘naked shorting’, it’s called ‘fraud’. I just sold you something I don’t actually own.

In the financial markets, however, it makes at least a little sense.

If I buy the car from you, you have to actually deliver it to me. And then if I sell it again to somebody else, I have to deliver it to him or her next. With cars, that isn’t a problem, as people tend to own them for a while. But with stocks, it’s entirely possible for the same share to be bought and sold and bought and sold countless times in a single day. So before stock trading went digital, actually delivering all of the stock certificates back and forth any time someone shorted a stock was doubtless a pain in the ass.

In that situation, a naked short made sense. Better to wait a couple of days to see who the ultimate holder of those stock certificates would be before loading up the wheelbarrow and sending them over.

Plus, in ye olde stock market, buyers and sellers were actual people, who traded back and forth with each other every day, and who therefore had ongoing relationships and a basis for interpersonal trust.

In a digital world, that network of trust is largely gone, and the underlying rationale – saving the work of transfering physical stock certicates – no longer makes any sense. Yet the practice persists – or, at least, did so until it was banned last week.

In all honesty, I suspect the actual impact of naked shorts has been oversold, and that they did relatively little to contribute to our current mess. But they do make a great example of, and can serve as a kind of microcosm for, the current crisis.

Because, it turns out, bringing old financial practices into a new, digital world, a world that no longer maintains direct relationships between buyers and sellers or lenders and borrowers, and doing so without carefully re-looking at the new implications of those old practices, is a recipe for all kinds of disaster.