A Passing Thought

So back in July of 2008, when oil was around $147 per barrel, I remember hearing how the main reason for this price increase was the demand from - specifically - India and China.

Now with oil down around $35, and America in a recession, I am just thinking: How much did India and China really impact oil prices? Without trying to ask a rhetorical question, were we being lied to completely while oil companies were raking in over $100 billion dollars per quarter? Who/what should be held reponsible and accountable if these markets were being controlled by the companies and speculators, and not true economic-based supply and demand conditions?

Karl Marx was Right??

According to the Archbishop of Canterbury, Dr. Rowan Williams, Karl Marx had been right in his analysis of the dangers of capitalism.

If he is saying some of Marx's analysis are founded, I can deal with that. If he's saying he agrees with Marx across the board...

A Quick Thought

So just a quick thought about the current financial fiasco that is going on right now...

In the early/mid 1990's, the former Soviet Union was in need of raising money and trying to turn from a centralized planned economy to a capitalistic economy. One way the government raised money was by a program called the shares-for-loans program. What this program did - in a nutshell - was it allowed the government to "trade" shares of its nationalized companies - such as oil, mining, power, and manufacturing companies - for loans that would be made by wealthy Russian citizens - the oligarchs. The stipulation to this program was that if the government defaulted, these investors could recoup their "loans" by taking control of these companies.

The Russian economy crashed in 1998 and the government defaulted on the loans.

Hence, these companies that had been owned by the government were now owned by citizens - much like our corporations and partnerships here in the U.S.

What is going on right now with our economy and with all of these bail-out programs seem eerily similar - except the other way around. These loan packages - bailouts if you prefer - are being sold to a very skeptical population by saying that there will be long term returns...in fact these bailout programs should be looked at more like an investment in these companies, or loans (as are they are being spun to us by the investment into AIG and the auto companies).

So what happens, theoretically, if all of this money gets spent and 1 year from now, things are no better - or even worse - than they are now? Can the government believe it will be able to pass more "bailout" programs - spending more taxpayer money to prop up failing companies and the financial sector? Not likely. So where would that leave it?

Although just my view, it would be forced to do what the Russian oligarchs did back in 1998 - take control of these companies. In one word: Nationalization. On a large scale.

Is it out of the realm of possibilities? I don't think so. But this is just my quick thought on this. I'll write more when I find time.

Guardian of the List

Obama campaign promises broken...

1. Balance the budget
2. Pull out of Iraq starting immediately and have everyone home by 2010 (summer)
3. Bring "change" to Washington - new blood
4. Repeal tax-cuts for the wealthy...
5. Take on Big Oil
6. Didn't take campaign money from oil companies


As of December 8...


UPDATE: 2/3/09: The Obameter

Saves me all the work!

Black and White?

Was going though a book I had read awhile ago and came across something I had marked when I originally read it. Something I think we should think more about each day:

"'We are facing an implacable enemy whose avowed objective is world domination,' the Doolittle Report, a highly classified evaluation of C.I.A covert operations, concluded in 1954. 'There are no rules in such a game. Hitherto acceptable norms of human conduct do not apply.' Eisenhower agreed. 'I have come to the conclusion that some of our traditional ideas of international sportsmanship are scarcely applicable in the morass in which the world now flounders,' he wrote privately in 1955. 'Truth, honor, justice, consideration for others, liberty for all - the problem is how to preserve them...when we are opposed by people who scorn...these values. I believe that we can do it,' and here he underlined his words for emphasis, 'but we must not confuse these values with mere procedures, even though these last may have at one time held almost the status of moral concepts.'
And so the Cold War transformed American leaders into Machiavellians. Confronted with 'so many who are not good,' they resolved 'to learn to be able not to be good' themselves, and to use this skill of not use it, as the great Italian cynic - and patriot - had put it, 'according to necessity'"

The Cold War by John Lewis Gaddis P. 165

I'm sure he was voting for change too...

Quazi-Socialized Medicine - The Genesis Post

Yea, this topic will be evolving a lot over the next 4 years. The non-socialized socialization of insurance and medical expenses.

To be fair, there is definitly a need for at least something to be done for helping people get some kind of medical coverage. Both candidates have expressed this. Second, this is not an issue that there is a "black and white" answer to. There will always be a case of someone that will be an outlier that would cause any solution to healthcare to not be "the best way" to fix it.

But what exactly is the current problem with healthcare? Or more refined, how does Obama's policy solve what he sees as the problem in healthcare?

But before that, what is GOOD in our current healthcare system?

1. The U.S. healthcare service is ranked, worldwide, number 1 for responsiveness.

http://www.who.int/whosis/database/core/core_select_process.cfm?strISO3_select=ALL&strIndicator_select=nha&intYear_select=latest&fixed=indicator&language=english

2. The number of people with health insurance increased to 253.4 million in 2007 (up from 249.8 million in 2006). The number of people covered by private health insurance (202.0 million) in 2007 was not statistically different from 2006, while the number of people covered by government health insurance increased to 83.0 million, up from 80.3 million in 2006. (Thats about 84.7% of Americans that have some form of health insurance)

http://www.census.gov/prod/2008pubs/p60-235.pdf


3. Everyone can have access to emergency care regardless of insurance status and ability to pay through the Emergency Medical Treatment and Labor Act (EMTALA), passed in 1986.

http://www.cms.hhs.gov/EMTALA/


Now let's look at what's BAD in our current healthcare system:

1. Americans without health insurance coverage at some time during 2007 totaled about 15.3% of the population, or 45.7 million people.

http://www.census.gov/prod/2008pubs/p60-235.pdf

2. The World Health Organization ranked, in 2000, the U.S. healthcare service the 37th in overall performance and 72nd by overall level of health.

http://www.who.int/whr/2000/en/annex01_en.pdf

3. Spending on healthcare in 2006 totaled $2.1 trillion, or 16% of GDP. This represented an increase of 6.7% over 2004 spending. Per capita spending was $7,026.

http://www.cms.hhs.gov/NationalHealthExpendData/01_Overview.asp

And what does Obama see as BAD in our healthcare system?

1. On health care reform, the American people are too often offered two extremes - government-run health care with higher taxes or letting the insurance companies operate without rules. Barack Obama and Joe Biden believe both of these extremes are wrong.

http://www.barackobama.com/issues/healthcare/

Doesn't really give much in detail of what the problem is, but if you read he does go more into specifics on health insurance.

This is the overview that I will start with. It's good to start with the framework, then work from there to fill in the details.

Dissent...at last

Well, time to crank up the ole' blog once again...

Politically speaking, this campaign season made me very apathetic towards politics. Both candidates, from my point of view, were lacking the leadership that this country needs now. One has his head up in the clouds in a fantasy and the other has his head buried in the sand, ignoring reality.

But now that the campaigning is over and a new President has been elected - happy for me a Democrat - I can now finally be an open dissident of policies.

You see, my own observations have shown me that if a person of a certain view on politics, a conservative for instance, begins attacking a politician of their own in order to show that they are "open to reason", all they end up doing is cannabalizing themselves and their party. For example, just because Bush may have been one of the worst managers in certain areas, doesn't mean I try to "find the middle ground" with a liberal to look "reasonable" in my politics. If I do, I end up villifying Bush in every policy, when in fact there either was no alternative or that policy was in fact the best option.

Now that there is a Democrat in office, I can now be open in my criticism. From campaign promises that will not be fulfilled, to botched handling of many soon to come policies and problems, I am happy I will be able to vent my frustrations, show the double standards, complain about issues that I don't agree with - and all this while not cannabalizing the party that I most closely assosciate with.

And there are already quite a few things I will be having a field day with...

Ottawa: Day 2

Today was an eventful day. Woke up, got our "continental breakfast" and proceeded back to Parliament. We were told that the changing of the guard occurs around 10 a.m so we got there at around 9:30. We got a good spot and it was a good thing we got there early because that place filled up fast.

The changing of the guard was pretty impressive. They had a full military band with bagpipes, two squads of soldiers, and some pretty crazy hats. I could hear them well before I could see them - as they came from behind and were marching from the street to Parliament. The ceremony lasted around 30 minutes and one of the soldiers dropped his bayonet and it stuck perfectly straight in the ground.

After that, we toured the Center Block - or the main building. We got to see the House and Senate chambers and the library - which is the only surviving part of the original building. Then original Center Block burned down during WW 1. The tour was good - lasted about an hour and a half and we went through some serious security - then we hit the gift shop. I got two Canadian Flag pins.

After that, we walked around town and got some food. Found a special at a restraunt that had a 10 ounce streak and fries for $10. After that, we walked to the "Royal Mint".

This mint is not the one that produces the circulation currency. Instead, it makes proof sets, collectible coins, and investment coins. The circulation currency mint is in Saskatchewan I believe. Our tour lasted around 45 minutes and we were not able to take photos, but we saw some cool machines, coins being made, and I got to hold a real gold bar. Pretty cool I would say.

When we left the mint, we just walked around the city some more. Got some ideas for things we are going to do tomorrow, but called it a day for now.

Other news, the battery on the car is dead. Don't know how, but I will worry about that on Sunday when we are going to be leaving. Hopefully I can get a jump from somebody.

One more day in Canada.

Ottawa: Day 1

Well made it into Ottawa today. Very beautiful place. Reminds me a lot of London. Our hotel is located less than a mile from the Canadian Parliament bulidings,. so in easy walking distance.

Today, we left Toronto and made it into Ottawa in about 6 hours. It rained most of the way and we saw two cars getting lifted out of the river - they flew off the interstate and went through the guardrail. But besides that, it was a pretty uneventful ride to Ottawa.

When we got here, we went and got something to eat - and it was the WORST food I've ever had. Never eat at Manchu Wok.

After that, we walked down the main street - Rideau Street - and walked down by the river. Then we were walking towards some old looking buildings and I asked a cop what these buildings were and he told me that these buildings were like our White House and Congress buildings. So we are in the capital of Canada and I didn't even know it! The guard also said to take a tour of the buildings - but do East Block first because they closed first.

So we went and got our free tickets and ended up being the only 2 people to do that tour. It was pretty cool though and we learned some history about Canada and how the government works.

Then we walked around the city more. We just happened to run into the changing of the guard. It was pretty cool. Second time I've seen that - saw it at the Tower of London (I think) back in 1996.

We have a lot planned for the next two days, so hopefully we can do everything we want to.

Toronto, Day 2

So today Zac and I went back to downtown Toronto. We decided to go by and see the water and then head on to the CN Tower.

Now, besides being REALLLY expensive, it is REALLLY cool to do. The CN Tower gives you not only a view of Toronto, but even on a very cloudy day we could easily see 40+ miles in any direction. They even posted signs that said on clear days, you can see Niagara Falls and Rochester, NY. Now that's pretty impressive!

We got the "Total Tour" (or whatever they called them) tickets, so we were able to see everything and do everything. We went to the Observation Deck, Sky Pod, the glass floor view, the movie about the CN Tower and it's construction, and the ride. The ride was random. Not really worth going into detail over.

But the Sky Pod is 147 stories above the city and a total height of 1465 feet. Definitely something you must do if you go to Toronto - even though it is a tourist trap. Go all the way, get the "Total Tour" package, and you'll definitely have something to remember.


After that, we walked around the city and got lunch. One thing I did notice today was that in Canada, they don't have water fountains in malls. Just a fun fact (FF).

When we left the city, we proceeded to get stuck in traffic for nearly 2hrs. 30 minutes. They had closed down the interstate (or whatever it's called here) and we got stuck in it. Not much we could do. But we made it back and all was good.

Tomorrow, we leave Toronto for Ottawa. Toronto is a city that I would recommend to people to come and explore. We only were able to do a few things, but wanted to do more. Unfortunately, the Blue Jays were not in town, hockey and basketball are over for their seasons, and the Soccer All-Star game is tomorrow night. Oh well. Maybe next time.

My Travels: Ocean City - Toronto

So although a bit behind on this, I am going to go back and chronicle my traveling from Ocean City Maryland through Canada.

Ocean City: July 14 - 16

Was a very relaxing time. Made the trip in 8 hours and 15 minutes, not stopping once. Met up with my cousin, Zac - who I am making this Canadian trip with and my Uncle Neil and Aunt Bet while in Ocean City. Went back to my grandmothers and just spent some time with her.

Later, my cousin and uncle came back over and we watched the home run derby. All in all, was a good day and enjoyed spending time with some family.

July 15 went on to the boardwalk at Ocean City. Didn't stay long and was not able to do much, but had a good time anyhow. Afterwards went back to my grandmothers and was able to just sit out on the front porch and talk with her for 2 hours. She told me how to pickle cucumbers and told me about her garden she was working on on the back porch. She is growing peppers and tomatoes and was very upset at the lack of production from the tomatoes.

July 16 left Ocean City around 11 am and heading to Baltimore where Zac lives. Got there in about 2 hrs 30 minutes.

July 17 went to the batting cages and proceeded to strike out often. Hit a few but think they would have been foul.

July 18 took Zac to get some blood work done. Everything came back normal. Was able to finally meet Dr. Chan for the first time. Later, went to an Orioles game. They played the Detroit Tigers and won 7 - 4.

July 19 proceeded to go to D.C. for the day. Zac was getting packed so I went to the city by myself to just walk around. Had a good time. Went to a few Smithsonian's and ate at Potbelly's. Spent about 4 hours down there and enjoyed it very much.

July 20 started the trip to Canada. Our first stop was Cooperstown, NY. Got there in good timing but the tolls were outrageous. If you go the "quickest route" on your GPS, be prepared to spend nearly $20+ on toll roads. Fortunate for us, my aunt has an EZ-Pass and let us use it. So saved me a lot of money. Thanks Aunt Sharon!!

Got into Cooperstown around 3 PM. Headed straight to the Baseball Hall of Fame. Very small, kind of humble museum. Had 3 rooms and the gift shop. The "shire" was the largest room by far and it was definitely something all baseball fans should go see. Also got a AAA discount of 10% :)

Afterwards, walked around the "city" of Cooperstown. All 1 road of it. Went into a lot of baseball card and memorabilia shops and ate at some Cafe (Doubleday Cafe maybe?). While walking around, we came across Doubleday Field. When we got there, we were the only one's in there and it was something.

Got to our hotel and proceeded to realize that they did not have any internet connection. But a single-A baseball team was staying there too, but most of them didn't speak English.



July 21 went back into Cooperstown and sent off some postcards. Having a postcard of a Hall of Fame player and a postmark from Cooperstown, NY is pretty cool I think. Went into a few more shops and then proceeded to Niagara Falls, Ontario.

Was only 3 hrs. 30 minutes but for some reason the ride seemed to go on forever. When I got to the border I got interrogated by the customs lady. But they were questions that I am sure everyone gets asked. But still. Do I look like I'm packing heat?!

We went to our hotel first - The Ritz. Don't let the name fool you. It was a cinder-block room with hard, sticky tile floors and smelled like a tobacco factory. BUT the good side to it was the hotel not even 2 blocks away was charging double AND we were only 5 blocks away from Niagara Falls - so pretty cool I must say.


But once we left the hotel room we proceeded to go eat at a restraunt called The Happy Wanderer. It was a German-Canadian cuisine restraunt and on the outside it had a banner that read "Breakfast $1.99" so I figured that it would be a decent priced (cheap) place to eat.

Well...it was and it wasn't. A "hamburger" costs $12. But this "hamburger" was no ordinary hamburger. It came without a bun, sauteed with onions, came with green beans, beets, fries, salad and bread. And everything tasted amazing. It was well worth the initial "sticker shock" and I would recommend going there. The lady serving us - who was obviously German - said that they had been there for 40 years.

After eating we headed on to Niagara Falls. It was amazing. We started getting "misted" on about 3 blocks from even being near the edge of the water - which was probably a quarter mile away from the falls themselves. Zac and I got wet but got some good pictures and were able to cross another thing off our list of "things to do". Niagara is a nice city and as I later learned has a population of around 80,000.

After that we walked around some of the city and stopped in a few gift shops. We headed back to the hotel for the night.

July 22 went out to Denny's for breakfast. Walked about a mile to get there and noticed an obvious increase in price. But they did take American currency at a 1:1 ratio so I didn't really mind. Headed off and tried to find a post office in Niagara. Talked to an old couple who told me that they didn't even know where one was any longer because, as they put it "they keep moving". They told me a little about the town (hence my knowledge of the population of their city) and said they liked to color of the van. The gent told me he was originally from Ottawa and told me to have fun while I was there.

We then headed off to Toronto.

It took around 1hr 30 minutes to get there. But when we got into Toronto, we knew it. Big sky scrapers, the RN Tower, a huge wind turbine. Tinted blue glass building everywhere. It was everything you expect a big city to be.


We went to our hotel and the person at the desk, after I told him this was the first time I've been here, got real excited, pulled out a map and told me places to go and how to get there. Even though his directions were wrong - and the GPS got confused for a short time - we got to downtown Toronto, paid our $10 to park, and started walking towards the Hockey Hall of Fame.


The Hockey HOF was completely different than the Baseball HOF. It was a much larger building that you had to walk through a mall to get to. My camera died but Zac took lots of pictures. The set up was more of just walking around looking at the people who were in it and their jersey's, sticks, trophies, etc. But the amount of memorabilia, trophies, movies, etc that they had there was simply amazing. And, oh yea, we got to touch The Stanly Cup. Yea, pretty amazing I got to say. It was THE REAL Stanley Cup.


After we left, we walked around the city, staying on Young Street, which I was told was one of the main streets in the city. We stopped at a McDonalds and got a quick bite and continued just walking around the city. As we turned and headed back to the car, we took a detour and walked by the CN Tower and the Rogers Center. We then headed back to the hotel - which is much nicer than the Ritz (Canada's Best Value - and in fact it might just be that) - and then went to a mall which is located just a mile away from the hotel and had dinner at some Mediterranean place.

I will try to keep my traveling updated and maybe expand on the past traveling as well.

Moon Landing

Quote of the Day

Not that I will actually keep up with a Quote of the Day part to this blog...but...

“A corporation is just like any natural person, except that it has no pants to kick or soul to damn, and, by God, it ought to have both!”

Health Care

So what ever happened with health care being an issue for this election? Is it just me or were Hillary and Obama fighting each other over whose health care bill would be more beneficial not even 3 months ago?

I mean, this is a very important issue. There are around 45 million people in America without health insurance. And those who do have health insurance seem to have to fight an uphill battle to get their insurance companies to pay up when the time comes.

So with Obama vs. McCain being what 2008 will be all about, what are their stances on this issue?

Well, you check it out for yourself. Obama McCain

But here is something to think about. This comes from the book Naked Economics: Undressing the Dismal Science

Any insurance question ultimately begs one explosive question: How much information is too much? I guarantee that this will become one of the most nettlesome policy problems in coming years. Here is a simple exercise. Pluck one hair from your head. (If you are totally bald, take a swab of saliva from your cheek.) That sample contains your entire genetic code. In the right hands (or the wrong hands), it can be used to determine if you are predisposed to heart disease, certain kinds of cancer, depression, and – if the science continues at its current blistering pace – all kinds of other diseases. With one strand of your hair, a researcher (or insurance company) may soon be able to determine if you are at risk for Alzheimer’s disease – twenty-five years before the onset of the disease. This creates a dilemma. If genetic information is shared widely with insurance companies, then it will become difficult, if not impossible, for those most prone to illness to get any kind of coverage. In other words, the people who need health insurance most will be the least likely to get it – not just the night before surgery, but ever. Individuals with a family history of Huntington’s disease, a hereditary degenerative brain disorder that causes premature death, are already finding it hard or impossible to get life insurance. On the other hand, if insurance companies are forbidden from gathering such information, they will be crushed by adverse selection. Individuals who know that they are at high risk of getting sick in the future will be the ones who load up on generous insurance policies

A recent editorial in The Economist noted this looming quandary: ‘Governments thus face a choice between banning the use of test results and destroying the industry, or allowing their use and creating an underclass of people who are either uninsurable or cannot afford to insure themselves.’ The Economists, which is hardly a bastion of left-wing thought, suggested that the private health insurance market may eventually find this problem intractable, leaving government with a much larger role to play. The editorial concluded: ‘Indeed, genetic testing may become the most potent argument for state-financed universal health care. pp. 89, 90

Six Principles of Sticky Idea

An excerpt from the book Made to Stick:

“Principle 1: Simplicity…Proverbs are the ideal. We must create ideas that are both simple and profound. The Golden Rule is the ultimate model of simplicity: a one-sentence statement so profound that an individual could spend a lifetime learning to follow it.

Principle 2: Unexpectedness…We need to violate people’s expectations. We need to be counterintuitive…We can use surprise…we must generate interest and curiosity.

Principle 3: Concreteness…We must explain our ideas in terms of human actions, in terms of sensory information…Naturally sticky ideas are full of concrete images.

Principle 4: Credibility…When we’re trying to build a case for something, most of us instinctively grasp for hard numbers. But in many cases this is exactly the wrong approach.

Principle 5: Emotions…make them feel something…research shows that people are more likely to make a charitable gift to a single needy individual than to an entire impoverished region.

Principle 6: Stories…Research shows that mentally rehearsing a situation helps us perform better when we encounter that situation in the physical environment. Similarly, hearing stories acts as a kind of mental flight simulator, preparing us to respond more quickly and effectively.” P. 15 – 18

What Lies Ahead

An interesting passage from the book Adams vs. Jefferson: The Tumultuous Election of 1800

“The earth belongs to the living and no generation should be bound by the decisions of its predecessors, Jefferson told Adams. Stability is crucial and is reinforced by obedience to old laws and charters so that uniformity ‘becomes a national Habit,’ Adams responded.” P. 77

I'm sure I will come back to this in the future. It is something to think about though.

Catch Up

So yeah, Miami is a pretty awesome place. Had a great time there and depressed to be back in Columbia. If you've never been there, this is what it looks like:



If you go, here are a few things to keep in mind:

* There are 20 girls for every straight guy (thanks to Nikki from Guatemala for that info)
* You get tan faster because the location of Miami in regards to the equator (thanks to Chad for that info)
* Mojitos are for ladies only
* Be sure of what building you are walking into. Target is different than Score
* Miami is not a cesspool

Miami

So heading to Miami tomorrow until Monday. Being a long road trip ahead of me, it forced me to purchase an iPod. I think I must be the last person on earth not to own one. In fact, I bought an iPod Classic. Classic? Really?!

But when I get back from Miami, I think I will have some good ideas I'll put up here.

Politically Apathetic

What is a good way to describe George Bush's term in office? I guess it might go something like this: You are leaving the grocery store and you get in a wreck and total your car - but the eggs don't break in the backseat.

I have to say that this whole election that is coming up has really made me totally apathetic towards politics. I have always been interested in politics and think that there are some fascinating things to learn - things like management, accountability and leadership - just by learning about how government works. This upcoming election though has me still scratching my head and asking myself, "Seriously? These are the best leaders that we have in this country?"

The saying goes the grass is always greener on the other side, and yes it is so over-used that it can be called a whored phrase. But are any of these candidates any better that Bush? Although hard to say no, I fear that it is possible they aren't.

Gas Riots

Not a surprise, but in Europe there has begun some rioting due to the high price of fuel. In an excerpt from tomorrow's Wall Street Journal, an article entitled Fuel-Cost Protests Lead to Little Action reads:

With gasoline costing upwards of $9 a gallon in parts of Europe, protests are putting governments under pressure to cut the taxes that make up much of the price of fuel.

Hundreds of truck drivers converged on London Tuesday, jamming a major road and forcing police to divert motorists. In France, fishermen continued to block ports and oil depots, while their counterparts in Spain and Italy signaled they would join the protest.

But don't think this is going to become a major issue. Further reading may be disappointing:

Geoff Dossetter, a spokesman for the Freight Transport Association. "Now there's just this dumb acceptance of the price of fuel."...In Germany, only a few percent of voters see fuel prices as a major political issue, says Manfred Güllner, head of opinion-polling institute Forsa. That is partly because of fatalism, but also because of the big role green issues play in German politics and society, some Germans believe. "The environmental awareness has become so entrenched here that people think it's better to reduce fuel consumption" than to protest, says Asmus Kurig, a schoolteacher from Karlsruhe in southern Germany.

Well, at least the price of tea is still cheap...

Update: It's Called Discipline

Seems a bit of new information to bring to light from a past blog. A quote in a recent edition of The Economist said:

Securitisation...degrades credit quality by weakening lenders' incentives to monitor the quality of the loans they write. If loans were even less likely to come back to their originators, this monitoring problem would only get worse...Many mortgage brokers and originators were concentrating on writing as many loans as possible and passing them on to arrangers who would parcel them into securities.

Seems to be that these loans are now beginning to come back to their originators. In tomorrow's Wall Street Journal, and article entitled Investors Press Lenders on Bad Loans speaks a bit about what is going on - although in more of an overview.

Unhappy buyers of subprime mortgages, home-equity loans and other real-estate loans are trying to force banks and mortgage companies to repurchase a growing pile of troubled loans. The pressure is the result of provisions in many loan sales that require lenders to take back loans that default unusually fast or contained mistakes or fraud.

Companies under litigation include Countrywide and WMC Mortgage Corp. (which was General Electrics sub-prime mortgage unit).

Reading into Things

So I have finished one book only to begin into another one. I started on John Adams yesterday and find it to be (not a surprise though) a great read. David McCullough knows how to write good books (1776 being another favorite of mine).

Ran across a good quote, which I butchered horribly earlier today when trying to recall it.

[John Adams'] ambitioi[on] to excel - to make himself known - he had nonetheless recognized at an early stage that happiness came not from fame and fortune, "and all such things," but from "an habitual contempt of them," as he wrote. (p. 19)

I find that to be a very deep understanding of emotional passion. Being a college student - a business student at that - I see scores of friends, acquaintances and strangers attempting for nothing short of fame and fortune.

But is the desire to be rich, the desire to be famous or well known bad? I find another workable observation of Adams:

He drew inspiration from his Roman heroes. "The first way for a young man to set himself on the road towards glorious reputation," he read in Cicero, "is to win renown." "Reputation," wrote Adams, "ought to be the perpetual subject of my thoughts, and aim of my behavior." (p. 46)

The reputation that you live with - and die with - will ultimately be your history. Each person obviously decides what makes them happy and what keeps them going. But after reading a bit about the Enron scandal in Conspiracy of Fools and reading about the greed of a certain Andy Fastow, I find that not having a contempt for greed can have very real and serious consequences. More examples need to even to be cited, for everyone has a good understanding of what greed and power can do to people.

But trying to win friends by calculated actions - trying to appear humble or willing to be 3rd chair - isn't where I interpret this to mean either. Motives that aren't true are easy to be seen as counterfeit and will win you no true supporters. But combine these two excerpted quotes and it reads more like a proverb:

The first way for a young man to set himself on the road towards glorious reputation, is to win renown and to have an habitual contempt for fame and fortune.

Maybe I have created a perversion of two isolated and independent quotes. But from my perspective, it seems to be sound advice.

Day Off

Got to say, I have had a good weekend and day off. Mostly been in the sun either fishing, eating outside, going to a bluegrass festival, or reading. Overall its been a good weekend.

Started on another book. A bit out of my expertise, but I have always been interested in early American history. Adams vs. Jefferson: The Tumultuous Election of 1800 has been a good read. A lot of history compacted into this short book (215 pages). Will definitely be doing some follow-up reading on Adams, Jefferson, and Hamilton. But this book is giving me some depth in understanding the differences between the early Republican and Federalist parties.

I have had a crack at The Federalist Papers and when I was trying to read them I had a few problems:

1. I didn't have a good understanding of why they were written
2. I wasn't really interested in reading them in depth - more of wanted to just skim them over so I had an idea of what they were about.

It looks like I might be doing some additional reading on early American history on top of my business reading this summer.

Fun...

Guitar Hero!!!

Shamelessly stolen from Chad and Anji's blog

It's Called Discipline

In this weeks edition of The Economist (May 17 -23, 2008) the "Special Report" section talks about the future of banking. But the first two articles deal a lot with the history of banking - especially the past 8 years.

The recent "Subprime crisis" seemed to pretty much pop up overnight. One day shows like "Flip This House" (and its knock-off cousin shows) were all the rage, making people think that all you needed to do in order to make $80,000 was a short-term bank loan, 4 friends, and 3 months to fix up a house.

Then reality hit.

But did it really just pop up overnight? Were there some signs that were pointing towards this?

In the opening article in the Special Report section (Paradise Lost) the chief risk officer at Credit Suisse, Wilson Ervin, apparently saw the "signs of the gathering subprime storm in America...in late 2006." But what brought about these warning signs?

The second article (Ruptured Credit) sheds a little more light on this question:

The value of subprime mortgages originated in America shot up from $190 billion in 2001 to $600 billion in 2006.

That is an over 300% increase in 5 years. But this begs another question: Why would banks and financial institutions underwrite these loans to begin with?

Let's start with an understanding of how banking has worked for a long time, in regards to mortgages. In a nutshell, a person would come to a bank in order to get a loan to buy a house. The banks would check the credit history of the applicants, and if they met a certain criteria (credit score) the bank would see them as a fit to give a loan. If they did not meet the criteria, they wouldn't give them a loan. The reason? The bank would hold onto these loans on their balance sheets, and if the person defaulted on the loan, the bank's only way to get back the money that they lent was to repo the house and either sell it or auction it off.

But a good idea started to crop up with the bankers: why not bundle the loans into something similar to bonds - in short, make loans tradeable on the secondary market as securities. Securitization is the process of turning the cashflows from a pool of underlying assets (such as a mortgage) into bonds. Simpler still, it lets the bank take that loan off the balance sheet and record cash inflows on their statements of cash flows.

Now comes the interesting part. What was meant to be a good thing - put more liquidity into banks and lending institutes in order to make borrowing easier for people needing a loan- was corrupted by greed and careless risk-management.

Securitisation...degrades credit quality by weakening lenders' incentives to monitor the quality of the loans they write. If loans were even less likely to come back to their originators, this monitoring problem would only get worse...Many mortgage brokers and originators were concentrating on writing as many loans as possible and passing them on to arrangers who would parcel them into securities.

But it gets worse:

Higher volumes went hand-in-hand with lower standards...Standards weakened most where the risks were highest...A series of academic papers has shown that lending standards slipped farthest when loans were securitised.

So this crisis, that seems to have blindsided a lot of banks and lending institutions (Northern Rock, UBS, Bear Stearns, Citigroup to name a few) should have been very obvious - in hindsight. There seems to always be parts to every story that makes things seem a bit more gray.

Many blame the central banks: tougher monetary policy would have encouraged investors to steer towards more liquid products. Others blame the investors themselves, many of whom relied on AAA ratings without questioning why they were delivering such high yields.

One thing to keep in mind is that, in credit ratings, the higher the rating the lower the return on investment. So a AAA-rated bond (which are suppose to be the safest investments you can make) should have a lower return than a AA-rated bond - and so forth down the list. So why were these highly-rated mortgage-back security bonds delivering such high returns?

Loans in a securitised pool of mortgages are divided into bands based on their credit risk. The safest, "senior" ones at the top have first claim on the cashflows from the underlying assets; the riskier, "subordinated" ones below are next in line. Buying senior tranches offers protection against losses up to a certain level, which was fine until losses exceeded expectations. Investment-grade credit ratings for the senior tranches suggested they were safe even when the underlying collateral was all subprime.

Well, there seems to be the problem.

With large players, such as Merrill Lynch, UBS, Bear Stearnes and others wanting in on these super-safe (remember, A - AAA-rated securities), high yield investments, greed took the place of common sense.

Deals were being placed within three weeks of being announced, sometimes giving credit committees as little as two days to make a decision, at a time when there were lots of other offerings to review as well. "Some investors did their homework, sending pages and pages of questions in writing," says the head of securitisation at one bank. "Others just asked for the price."

Therein lies the reason why many of these banks and financial institutions have now become shells of their former selves. They invested billions - if not trillions of dollars - into pools of mortgage backed securities without ever doing any of their homework.

Securitisation may have given this boom and bust its own distinctive flavour, but the core ingredients are drearily familiar: over-eager lending, careless investing and a widespread failure of risk management.

No-Hitter

Congrats to Jon Lester of the Boston Red Sox for throwing a no-hitter. It was, in fact, the first no-hitter thrown by a left-handed Rex Sox pitcher since 1956.

Not bad for a guy who had to battle for his life against lymphoma. Lymphomas account for about five percent of all cases of cancer in the United States, and Hodgkin's lymphoma in particular accounts for less than one percent of all cases of cancer in the United States.

My own dad has had both non-Hodgkins and Hodgkins lymphoma, so I can kind of appreciate what this guy has had to go through to get back to where he is today - and throw a no-hitter.

The Silent Tsunami

The April 19 - 25, 2008 issue of The Economist had a cover story on the food crisis - "The Silent Tsunami" is how they titled it. It's based on "a wave of food-price inflation moving through the world." Here is the setup in some of the poorer countries in the world:

The middle classes in poor countries are giving up health care and cutting out meat so they can eat three meals a day. The middling poor, those on $2 a day, are pulling children from school and cutting back on vegetables so they can still afford rice. Those on $1 a day are cutting back on meat, vegetables and one or two meals, so they can afford one bowl. The desperate - those on 50 cents a day - face disaster.

That is pretty amazing that this is still going on in the world. But what is happening due to the food-price inflation is very disheartening:

Roughly a billion people live on $1 a day. If, on a conservative estimate, the cost of their food rises 20% (and in some places, it has risen a lot more), 100m people could be forced back to this level, the common measure of absolute poverty. In some countries, that would undo all the gains in poverty reduction they have made during the past decade of growth.

Where are these areas though, that are in risk of this major decline?

The starting-point should be that rising food prices bear more havily on some places than others. Food exporters, and countries where farmers are self-sufficient, or net sellers, benefit. Some countries - those in West Africa which import their staples, or Bangladesh, with its huge numbers of landless laboruers - risk ruin and civil strife.

But what is causing these rising food prices? The May 10 - 16th, 2008 issue of The Economist has one person's theory:

India's finance minister said that biofuels and speculators were responsible for soaring food prices and criticised the practice of converting land use from food to palm oil production...Earlier, George Bush upset some Indian politicians by suggesting that the country's increasing prosperity was a factor behind rising prices.

Maybe this should serve as a reminder that things are very bad outside of where we are. I heard about a website that has a setup that allows the individuals to make micro-loans to people in these developing countries. When I find that site, I will post it.

Laptops going the way of the PC

Looks like the laptops days are numbered. From The Economist:

Sprint Nextel, America's third-biggest mobile-phone operator, unveiled an alliance with Clearwire, an internet service provider, to create a network based on WiMax, a technology that delivers fast wireless-internet access. Other companies, including Google, Intel and Time Warner, are investing in the venture. The deal may allow Spring Nextel to steal a march on AT&T and Verizon Wireless. Its larger rivals are backing a different wireless technology that will not be ready for two years.

It just makes me think, what is the point in carrying around a lunky laptop when your phone now has the capability to do everything that your laptop does?

The laptops days are numbered...

Fishing

I've kind of taken up a new hobby.

And yes, I am from South Carolina.

I have started fishing a little. I have had some pretty good luck so far. I have caught, except for this past Sunday, 2 fish every time I have gone out. I have caught mostly bass. The first 2 I caught actually swallowed the hook, so I cooked and ate them. They weren't bad, actually.

It's nice to be outside when it's sunny and pleasant outside. But working in an office, I don't have the ability to be outside too often. But using fishing as an excuse to be outside, well, is nice. Let's say I might be the only person in the office with a tan.

Conspiracy of Fools

I have to say that for a business book - a book that you can learn an awfully lot from - its a pretty good read.

Conspiracy of Fools is a book that recounts the years leading up to the collapse of Enron - and the ultimate collapse - and deals in depth the utter incompetence of one of the largest energy companies in the history of America.

Working (kind of) in the mortgage industry - and reading this book - makes me wonder if the entire banking and MBS-type companies are as poorly run as Enron was. Seeing how these large companies, specifically Bear Stearns, could crumble nearly overnight makes you wonder if all of these MBA's and complex hedge-funds are based on the same concept that ultimately brought down Enron - the belief that things could only go up.

Obviously things did not continue going up. Houseing prices fell. Liquidity in the secondary market dried up. The equity-value of many people's houses, due to the decrease in the value, is now negative. Bonds that had AA and A ratings fell overnight to junk status.

Sounds to me that the underlying mistake that was made by Enron has been made again. The thinking that there will not be a downturn and not preparing properly in the event that there was a downturn. Inaccurate recording of assests (such as the MBS that were one day safe investment grade securities and the next day junk status) and greed over common sense.

A few excerpts from The Economist (May 10 - 16, 2008) to mention some of the companies that seemed to be a little too greedy (or incompetent):

"Countrywide Financial's share price took another dive, after an analyst advised that if Bank of America went ahead with its proposed $4.1 billion takeover of the stricken mortgage lender it would be saddled with massive writedowns. Although the analyst recommended it "completely walk away" from the deal, BoA gave assurances that it would proceed."

"UBS announced it would cut 5,500 jobs by the middle of next year (2,600 of them in its investment-banking business) as part of an effort to repair its tattered balance sheet. The Swiss bank, which has written down $38 billion during the credit crisis, one of the largest sums of any financial group, also said it had sold billions of dollars of subprime debt at a discount to BlackRock, an asset manager."

I'm sure we will hear more about BlackRock shortly...

Passion for the worst of teams

So I am hearing on tv that the Cubs are one of the best teams in the National League. Not only that, but they are one of the best teams in baseball. Funny.

Growing up a Cubs fan, I know I shouldn't get too excited. I've seen it all.

Growing up watching the Cubs taught me a lot about life. Players like Ryne Sandberg and Mark Grace were the players I said I wanted to be like. No real reason why. Maybe because they were the only good players on, for the most part, a very bad team.

But I could do that. I could relate to the winners on a losing team. I figured that is what life is about - it's about being that winner, even if you are on the losing team.

I saw the Cubs, back in 2003 - October 14, 2003 to be exact - 5 outs away from breaking the "curse". 5 outs away from a World Series (which they haven't been to since 1945). But as the baseball gods would seem it fit, that wouldn't happen.

Again, I figured I could relate to that. I figured that God would allow me to become what he saw fit me to become. Nothing to worry about there.

I have also watched as last year, the Cubs had a great second half of the season, turning around what seemed to be an underachieving season and winning the National League Central division title - and advancing into the second round of the playoffs.

Relating to that, I seemed to have - although a bit distorted view - that no matter how bad things looked, it could be turned around by cramming in a lot of hard work. Or begging. Or brown-nosing...

But with all of this talk about the Cubs being one of the best teams in baseball...I don't know what to think. I have been accustomed to living like the Cubs: early failures due to a belief that I did not have to worry about the future because no matter what, that Invisible Hand would orchestrate what needed to be done, and with just a little brown-nosing things would work out, but never to the highest level it could have been.

Then again, these are the Cubs and it's only May...