Alex Cannon's Blog

Penn State - Idiocracy

2011-11-10T22:43:00.000-08:00

So JoePa (as well as the university president) is fired over the child sex abuse scandal at Penn State. And the students riot. I'm really at a loss for words. Read the article that I linked to and you'll find descriptions of unruly students dancing on the tops of vehicles and describing the Board of Trustees as an "embarrassment" for making the decision to fire Mr. Paterno. It's football people. I know Joe Paterno is a legend, but we're talking about serious allegations, one of which is that Mr. Sandusky had sex with a pubescent boy, as witnessed by a graduate assistant and reported to both Mr. Paterno and the athletic director of the university. Nothing was ever reported to the police. Whether the allegations turn out to be true or not, the response exhibited by the students is just stupid in my opinion. Honestly it seems like they thought that such injustice was sufficient reason to riot, so riot they did. The kicker is the quote about the Board of Trustees being an embarrassment. What the hell is tipping over a news van, destroying private property and acting afool over the termination of a football coach by young adults who are supposed to be somewhat responsible and of sound mind? These kids are idiots.

The Goods

2011-11-09T16:31:00.000-08:00

See those lovely things off to the right there? What you are beholding are 16 tickets to every Runnin' Rebel home game for the 2011-12 season. I was literally glowing after I picked them up. Seriously, people said that to me, "You're glowing." Needless to say, I'm very excited about this.

I've talked about getting season tickets each of the previous two seasons, but never actually followed through, due to financial difficulties well under my control. Well this year it's over. I finally did it. A nice little bargain too. $130 for the package (the quoted price is actually $105 but they get you for another $25 on "processing" and "order" charges, whatever the hell those are supposed to be). At least they didn't try to throw in a parking charge.

Anyway, first game is this Friday the 11th at 7pm. That would be Veterans Day, which means I'm off from work. This would be an incredibly awesome opportunity to begin tailgating at 3pm in front of The Mack (and still may be, minus some of the fun because of what I'm about to tell you next) but unfortunately I'm unable to drink alcohol while on these anti-biotics. I guess it's really not an iron-clad restriction, but I don't know if it's worth the risk. Don't want to end up all drowsy with a sick stomach and miss the game. Probably for the best, as I will actually remember the game and the minutiae of the action if I remain sober. I will certainly miss that rum slushie at half-time though. Damn.

The Return

2011-11-07T20:36:00.000-08:00

Dadgum, it's been a while. I'm really not too good at keeping up with this thing. Which, really, isn't all that surprising. Without any external accountability or prodding I'm wont to never do anything with any level of consistency or reliability. I deem that as a character flaw (or at least I believe that others find it to be so), a lack of discipline and resolve. It's something I really should work on. Hmmm, wonder how that will turn out. It reminds me of that line in the movie "Tin Cup" (one of my all-time favorites, by the way):

Roy: And then the unfinished symphony of Roy McAvoy.
Molly: What's unfinished?
Roy: I have a short follow-through. It has an unfinished look...
Molly: Why?
Roy: Well, some say it's the easiest way to play in the winds of west Texas...some say it's because I never finish anything in my life.

So, that be that. I'm battling a sinus infection and pink eye at the moment. Been sick for over a week, since last Sunday actually. The pink eye just kicked in last Friday. Levofloxacin and tobramycin are doing the fighting now though. I haven't been on an anti-biotic in quite sometime, but this one ain't bad. Some of them upset the stomach something fierce, but I haven't really noticed any side-effects with this one. I haven't had pink eye since the third grade probably, haha. Hopefully this will be the only illness this year...got to take better care of myself to ensure that happens.

College basketball season is now underway, and the Dave Rice era has begun for the Runnin' Rebels of UNLV. Ed and I attended the Rebels exhibition game versus Washburn last Tuesday night. Boy, what a lackluster performance that was. I was genuinely nervous in the second half as the game stayed neck and neck. The Runnin' Rebs finally pulled it together with about 10 minutes to go and stretched out the lead with some crowd pleasing throw-downs, ultimately winning the contest 58-50. The team looks promising though. We've got a lot of talent and as always, a lot of heart. The home opener is on Veterans Day against Grand Canyon. Go Rebles!

And with that, I'll let it be. Until next time.

UNLV vs. UNM

2011-02-23T21:47:00.000-08:00

Wow! What a game that was.

I'm texting some folks with the game on, not really following, because we are up by 15, on the road, and I'm thinking this game is in the bag. 15 minutes to go in the 2nd half and the sounds from the television begin to sneak into my awareness.

"New Mexico making a little run? Ah, no biggie. It won't last, Rebels will keep it stretched out by 8 points." Back to the BlackBerry.

Then it continues.

"Uh oh. Wait, what the hell is going on here? No! You're letting it slip Rebels...or the Lobos are ripping that shit from your grip!" Better start watching every second.

Before I can remember we are tied. Time is running out and then the real nail-biting began. Are we actually going to lose this game! Thankfully we survived the surge and forced it into OT.

I can't say enough about Quintrell Thomas. He's just looking better and better each and every game. The offensive production inside is just fantastic. And the rebounds! My God, he was snatching those things out of the sky like nobody's business.

Tre'Von was strokin' it! Can't remember the last time he was keeping my attention like that. Must have been back to last season at least.

The team as a unit was looking good too. Finally it felt right. They looked comfortable, anticipatory, with it. I think we are coming out of the longest mid-season slump ever. What a perfect time to heat up. That was such a big road win. And stacked on top of the CSU road win, I think we've got a real solid foundation for some serious confidence going into the last two games and the MWC tourney.

Keep it up fellas! REBELS!

Absence

2011-02-22T21:07:00.000-08:00

It's been a while since I've posted. I'm sure any of you that check in on this have missed me and have been wondering where I've been. I've been around.

Battling the end-stage of a cold right now. I fell ill last Monday and had to take Wednesday off. Pushed through to Friday taking only ibuprofen when somebody reminded me that Nyquil is a good thing to take when trying to kick a cold. Thank God for that stuff. I think I'm hooked. And it's definitely helped with the cold as well. I haven't been sick in at least a couple of years and I forgot how terrible it is. Hopefully I'll stay healthy for another long cycle, because this has sucked.

Anyway, the cold doesn't account for the > 1 month absence from the blogosphere (not that I've had a continuous or large presence here prior).

It's been a busy month. College basketball season is heating up and I've been busy following the Runnin' Rebels. They're looking okay. Likely to receive an at-large bid to the NCCA tournament, barring any miraculously shocking loss through this last part of the schedule. Now I don't like to knock my Rebels, but I'm not living in denial either. I've seen it happen before so I don't count it out. Let's hope they don't disappoint. We've been in a slump most of the season and now would be a great time to heat up. We just saw evidence of this in the 2nd half performance against Colorado State last Saturday. If this team can shoot just 40% consistently we will have a shot at getting into the tourney and making it to the second round. We've got 20 wins and we've been in a slump! Imagine if we had been able to knock shots down in those really big games like Louisville and BYU and SDSU. It's a quality team that we've had this year, but the performance hasn't always been there.

On a side note, the HBO documentary of the Tarkanian era of the UNLV men's basketball program premiered at the Palms a few days ago. It will be showing in the theater beginning March 12 and I'm looking forward to seeing it. Here's a blog post by Katz in the Las Vegas Sun about it.

In other news, baseball season is just around the corner. My mom won a pair of season tickets to the Las Vegas 51's so I'm anticipating spending quite a bit of time at Cashman Field this spring/summer. Dollar beer night anybody? I think so. Haven't been following any news on the Dodgers, but Manny is gone (yay!) and so is Russell Martin (boo!). There were some other roster changes as well, but nothing that I followed too closely. Just hoping for a good season. They Boys in Blue will be here in March to play the Cubs for Big League Weekend at Cashman and Chuch and I are planning on attending.

In non-sports news, not much else is new. Work is, well....work. The world seems to be coming to an end. Revolutions in the mid-east, pirates capturing ships, commodity price inflation, global economic crisis, etc.

That's it for now. I'll likely be posting about the Rebels again very soon. Until then.

Pastime

2011-01-09T20:20:00.001-08:00

I just started reading "The Final Solution" by Michael Chabon this afternoon, with my Webster's dictionary at side (provided compliments of the Clark County School District and the Honors English program of my freshman year of high school) which I use profusely when reading nowadays, as I seem to have forgotten many of the words I claim to have once known.

pastille: an aromatic or medicated lozenge

This is the word I was looking up. I note the definition on my legal pad of vocabulary words to learn/re-learn (likely a futile attempt) and then happen to glance at the next entry.

pastime: diversion; something that serves to make time pass agreeably

An interesting way to frame the description of the passage of time. There's a certain implication there. That the passing of time (I guess put more appropriately, our experience of it) is inherently painful or unpleasing. It often feels like that, when you're not doing something to distract yourself from the awful reality of the situation. I like the line from Mr. Curtis Mayfield's song "It's Alright" (covered excellently by Seal, the rendition I've been listening to lately):

"When you wake up in the morning feeling sad, like so many of us do"

That line makes me feel a bit better. There's a comfort in knowing that you are not alone in the experience. I guess the wisdom to be gleaned from this is quite simply just to live. Distract yourself as much as possible, every second that you can. Idle minds/bodies are sad ones.

Mr. P.J. O'Rourke

2011-01-07T18:05:00.000-08:00

The only thing I've ever read by P.J. O'Rourke is "On The Wealth of Nations". I don't think I even finished, but I liked his style, his wit...his logic.

While reading The Week (you should really check it out if you've never read it, great little news magazine), I saw a quote from his new book "Don't Vote, It Just Encourages The Bastards". Here it is:

I have a twelve-year-old daughter, Muffin. All I hear is, “It’s not fair! It’s not fair! It’s not fair!” I say to her, “Honey, you’re cute. That’s not fair. You’re smart. That’s not fair. You were born in the United States of America. That’s not fair. Darling, you had better get down on your knees and pray to God that things don’t start getting fair for you.”

Love it.

SDSU vs. TCU

2011-01-05T18:10:00.000-08:00

Just caught the second half of San Diego State vs Texas Christian. San Diego has got a lot of talent. And I'm glad that the Mountain West Conference has three top 25 teams. But at the end of this game San Diego was acting too arrogant. I know that they're number six, they know they're number six, but seriously, have some class. They're winning by double digits with less than 10 seconds to go and they go for a huge nasty block and then saunter up the court with the ball while the clock ticks down. Then TCU jets up from behind, steals the ball and gets another bucket before time expires. I'm glad TCU did that. Billy White and co. can swagger all they want right now, but someone is going to beat their ass, and I can't wait for it to happen, because these guys need a reality check. I'm not feeling them at all.

Today is the day

2011-01-05T08:55:00.000-08:00

The time has come. UNLV faces off against conference foe BYU tonight at 7pm. Are you ready?

Here is some love from ESPN for the Mountain West Conference.

Over 17,000 tickets have been sold thus far. The house will be rocking tonight.

Uh oh, I smell trouble...

2011-01-04T16:41:00.000-08:00

"Despite Fredette's accolades, BYU has never beaten UNLV in Las Vegas with him on the roster."

Story.

I Threw It On The Ground!

2011-01-02T19:52:00.000-08:00

This is great! Why haven't I heard of it until now? Thanks Hendrik Hertzberg.

BYU Jeremiad

2010-12-31T09:31:00.000-08:00

BYU beats Buffalo (?) by only 8 points, with Fredette scoring 34 of the Cougars 90 points. Why is this team ranked 16? Yes, it was a road game for the Cougars, but shouldn't a top 20 team be destroying marginal opponents on the road? It's Buffalo! Look at their schedule! They play nobody, yet BYU and Fredette continue to receive the praises of all. Wait until January 5th folks. The Runnin' Rebels will show you what a winning basketball team should look like.

Healthcare

2010-03-04T18:36:00.000-08:00

A letter to the editor of The New York Times:

"To the Editor:

After reading Robert B. Reich’s article, I cannot help but ask what may seem a naïve question. He writes, “America’s five largest health insurers made a total profit of $12.2 billion last year.” When is this country going to realize that health care should not be a for-profit industry but a basic human right in a civilized society? Where did those $12.2 billion go, or rather, where did they not go?

As long as we are unable, as a country, to face this question, everything else in the health care debate seems irrelevant and a paltry response to our problems. Colette Windish

Mobile, Ala., Feb. 24, 2010"

I don't think $12.2 billion is going to do anything miraculous in this country. We spend trillions per year on problems and they still aren't solved; $12 billion isn't going to fix anything. But that's beside the point. The ultimate result is this: Remove the profit motive from the health insurance industry, and you remove the availability of health insurance to those who can afford it now. I thought the goal of health care reform was to get more people insured, not less.

For some reason it seems that most talk about health care reform frames the problem in the following manner: in order to get more people insured, we have to make health insurance less expensive. I'm not so sure this is the best way to think about the problem.

Twitterfication

2010-02-05T18:25:00.000-08:00

As Internet culture has grown, we’ve come to romanticize certain kinds of unmediated, old-fashioned “human” interactions. But this fantasy ignores how much of normal social interaction is fleeting, bite-size, instant, tweetlike. Humans have always talked to each other via a kind of analog Twitter. These new technologies just get us there with maximum efficiency. Meeting a new person is thrilling, in a primal way—your attention focuses completely, if only for a nanosecond, to see if the creature in front of you has the power to change your life for better or worse.

Read more: Is ChatRoulette the Future of the Internet or Its Distant Past? -- New York Magazine http://nymag.com/news/media/63663/index1.html#ixzz0eicpG7tp

Very insightful. Many people these days complain about how Twitter and Facebook and the likes are making human interaction less...well, "human". I've not really agreed with this idea, and the idea presented above is why. Just because the interaction isn't face-to-face doesn't make it any less "real". Read the article, it's very interesting.

Yes!!!

2010-01-28T14:03:00.000-08:00

Somebody finally dealt a blow to BYU! We knew it would happen. 15 game win streak was pushing it...but I guess when you're playing marginal squads it's easy to rack up 15 in a row. #10!?! Seriously! I've been griping about BYU's position in the polls since they made an appearance. They've beaten nobody big. Nobody worthy. So how they've come to ride the wave to the #10 position is beyond my understanding.

But that's all over now. Thanks to the Lobos. What's that you say? Oh yes, you're correct, UNLV did beat the Lobos....on the road. So by the logic I see displayed in the polls that got BYU to #10, that means UNLV should slide in to the top, say, 20? Heck, how about top 10? Because we beat the team that beat the #10 team, so we must be THE BOMB! Right? Wrong.

BYU never belonged in the top 25. And if they aren't dropped on 2/1/10, we can totally disregard anything the polls have to say about college basketball. I don't know why the polls even bother me, I know that they mean absolutely nothing. I guess it's because so many others think they DO mean something. Have you ever tried to contest the thinking of an idiot? That's what it's like talking college basketball with somebody who thinks the polls mean something.

Anyway, I'm glad they finally got served a loss. Can't wait until 2/6/10 when they roll to the Mack. IT IS ON!

Pointless Ruminations

2010-01-16T14:43:00.000-08:00

Cassie and Steve are getting hitched today. Raul is down in Hawaii to be a part of the wedding party. I was supposed to be there, but things didn't work out with the money situation and getting the time off work. Hope they're having a great time.

Waldo and I are stuck in Vegas, but it's not so terrible because the Rebels play today at 7pm, and we will be present. A quick bite at In-N-Out, then pre-gaming in the infamous Black 3 until tip-off. Jesse, nota bene. At last Wednesday's game I was surprised with a delicious rum slush (double of course) from Eduardo when he returned from a trip to the restroom. It was exquisitely timed...either just before the end of the 1st or just after the start of the 2nd, but precisely when the buzz was starting to fade. Along with the Rebels excellent performance in the 2nd half, this kept our spirits high until it was time for the traditional post game tailgate while waiting for traffic to clear out. It was a fine evening, you would have enjoyed it.

Well, 3:30pm is the time, In-N-Out is the place, so I must go now. Adieu.

"Jersey Shore" Analysis

2010-01-12T21:17:00.000-08:00

A funny article in The New Yorker about MTV's "Jersey Shore".

Move Your Money

2010-01-03T21:30:00.001-08:00

Hello 2010

2010-01-01T16:47:00.000-08:00

Welcome to the new year.

A little upset right now. My paycheck was supposed to direct deposit to my account Thursday night, just like it always does, but it didn't. What's up man? Seriously? This is not a good sign for the start of the year. Why can't things just work?

The saddest thing I read today

2009-12-30T20:28:00.000-08:00

Of course, plenty of taxpayers themselves are eager to live to see the new year. One wealthy, terminally ill real-estate entrepreneur has told his doctors he is determined to live until the law changes.

"Whenever he wakes up," says his lawyer, "He says: 'What day is it? Is it Jan. 1 yet?'"

That's from an article today in The Wall Street Journal. The estate tax for the super-wealthy is going to be non-existent in 2010, and it's really framing peoples decisions about health.

What's most depressing about the man in the quote above is that it seems his only remaining desire/purpose to live is to beat the tax. How awful.

Eagles vs Broncos

2009-12-27T18:39:00.000-08:00

The Eagles squeaked out a win today against the Broncos. Just a few things to touch on.

What the heck is happening in the 2nd half? The offense falls apart and the defense gets lackadaisical. We almost gave the game away as a result. They're acting like the Runnin' Rebels, and it's frustrating me.

Positive notes: McNabb's 27 yard rush to get a crucial 1st down! That was awesome. Hope he didn't hurt his left hamstring...he did grab it a bit at the end of the run. Oh, and let's not forget that insane catch by Jeremy Maclin! So glad they reviewed that and made sure to get the call right, because that would have been a shame if it was left ruled as incomplete, not to mention that the game probably would have went into overtime had the ruling not been corrected.

Overall I think we look pretty solid. Definitely need to get and keep the rhythm after the half though. Leaving them that close could mean a short lived run in the Playoffs.

Rebels lose their second

2009-12-25T22:05:00.000-08:00

Don't fret, the Runnin' Rebels are now 12-2 after a tough loss to USC in the Diamondhead Classic final on Christmas night, but it's going to be okay. There are a couple of things I want to address though.

First: why are we shooting so many 3-pointers if we aren't draining them? 5 for 22 tonight, that's under 25% folks. Really? QUIT SHOOTING 3's! That's a guaranteed turnover when we don't get the offensive board. Giving the ball away when the offense isn't doing squat is not going to help you win the game.

Second: 17 for 50 on FG's. That is 34%. Not an impressive offensive performance from the team tonight. Rather dismal I'd say. The ball just wasn't going down tonight. 17 for 19 on free throws though, so looking good when we get to the charity line.

In praise of the Rebels, I will say OUTSTANDING DEFENSE! Did you see that full-court pressure? Wow. I have come to expect no less from the Rebels, they play tough, hard D all game long. I'm surprised we only lost by 11 considering how poorly we were shooting. But when you look for a reason as to why it was not a complete blow-out, the defensive play is what you find. Keep it up Rebels!

So, we chalk up a loss. Shrug it off, get home, get rested, and get ready to blast BYU in Provo on January 6th.

GO REBELS!

Well, hello!

2009-12-25T16:06:00.000-08:00

So it's been a while since I've posted. A long while. More than one person has mentioned to me how I'm not posting anymore. So, as I sit on the couch watching movies on this lovely Christmas day, I think of these remarks and think it's time to make a post.

Christmas has been great so far, a bit hungover today, but when you start drinking egg nog at noon hangovers are no longer an issue. Got some cool stuff for Christmas. A very nice Eagles sweatshirt, and a bitchin' Eagles backpack. I now have a backpack with working zippers, so no more stuff falling out. Got some cool Nautica sweaters, some sweet new running/exercise shoes, and some new books that look pretty enticing. I usually only watch Glenn Beck to find someone to disagree with, or to laugh, but I got his new book "Common Sense" (inspired by Thomas Paine no less) and am actually looking forward to reading it. I also received a book by Paulo Coelho by the name of "The Alchemist" which looks very good. And last but not least, a book about drinking. It's called "McCarthy's Bar" by Pete McCarthy. Looking forward to that one. I read a book by J.R. Moehringer called "The Tender Bar" (good book, read it) and I imagine this is similar.

So now I sit drinking egg nog and watching Christmas-themed movies. I just finished reading some posts on Marginal Revolution and am now inspired to blog again.

I also just finished an intense "argument" with my Dad about the following: free market economies-politics-racism-standards of living-cultural analogies. He didn't listen to one thing I had to say, and is still thoroughly engrossed in his own beliefs. I will try not to argue with him in the future, as it is a futile exercise. Trying to change old men's opinions is as impossible as moving a mountain. Don't even try.

For now, adieu. Talk to you shortly.

My s%it is bananas, b-a-n-a-n-a-s

2009-07-07T09:29:00.001-07:00

I brought a banana with me to work today for a mid-morning snack. As I sat eating it just a bit ago, I wondered why the damn things are so inexpensive. A quick Google search led me to a slew of information on bananas. This article from the New York Times gives a breakdown. Bananas are cheap because:

1. The corporations that grow and distribute built a solid infrastructure;

2. The workers are treated like crap;

3. And they only grow one variety, the Cavendish, which allows growers to reap the benefits of economies of scale.

A Freakonomics blog post pointed me to this page, which has a bunch of interesting banana info. Did you know India is the largest world producer of bananas? I was shocked. I thought bananas only grew in tropical climates. And did you know that there is enough energy in two bananas to sustain you through strenuous 90-minute workout? I'll definitely be eating more bananas before my Ultimate matches from now on.

I'm crushed

2009-05-03T15:19:00.000-07:00

Why are people such idiots?

Considering deleting Twitter, Facebook, and MySpace

2009-04-26T12:11:00.000-07:00

Because this post has reified my thoughts about why I'm using these services.

Awesome!

2009-04-24T18:31:00.000-07:00

You don't even have to panhandle anymore!

$4 Trillion - Seriously? This is getting funny...in a sick sort of way

2009-04-07T19:06:00.000-07:00

The International Monetary Fund is now said to be projecting $4 trillion in losses on bad assets. Via Calculated Risk.

PPIP, Geithner, and the Great Bail-Out

2009-04-07T13:21:00.001-07:00

Why are people so surprised about the PPIP (for those not in the know, this stands for public-private investment program) that Geithner is proposing?

Here is a good article. But it's a little off. Jeff Sachs postulates it will turn into a profit scam that the banks can "game".

Of course it's a scam. We knew that the day the plan was announced. Anytime you get to sell something worth nothing for near face-value it's a scam. The investors get to borrow 85% of the purchase price from the FDIC, Treasury kicks in half of the remaining 15% needed and the investor puts in the rest, a whopping 7.5%.

But it's not a profit scam....it's a loss-reduction scam, er uh, "program".

We will use Jeff Sachs' example from the article cited above. Citi forms a little PPIP, bids the face value, $1 million, on an asset that Citi owns, and only has to put in $75,000. The PPIP defaults on the federally guaranteed FDIC loan and Citi is sitting pretty with $925,000 profit.

The problem is, it really isn't profit. If Citi had originally paid any more than $925,000 for the security that gets sold to the PPIP then they are net zero. They just recouped any potential loss of the security really turns out to be worthless. Profits would only materialize if the PPIP is buying the security for more than what Citi originally paid for it (which is possible and likely to happen if these auctions aren't held in check...but why would they be held in check? the point of this plan is that the federal government doesn't know how to value the assets, so they're going to let the "experts" figure out the value and then bid that value with taxpayer dollars. Adverse selection anyone?).

The whole PPIP program is really just an indirect bail-out. The government is buying assets for more than what they're worth. Period. End of story. The Geithner plan is merely creating the illusion of price discovery through market transactions. People aren't cool with the government just writing a check to the banks. To circumvent public scorn and discipline they have to make it look like an "investment program". But really, we're just giving the banks money for assets with unknown and likely inflated values.

Don't get irate. If the plan goes through and this actually happens then we will have achieved what we wanted to: saving the banks. Nobody wanted to let them fail. Well, that's fine and dandy, but if you don't want them to fail then this is the only option--reimbursing them the lost value of bad assets. There's now way around it. So don't think Geithner is pulling the wool over our eyes. He's doing what he's been charged to do, and just making it seem less like what it actually is.

UPDATE - APRIL 7, 2009 - 7:00PM:
Via Calculated Risk.

The FDIC thinks there will be no losses on the loans it insures to investors participating in the PPIP. Seriously. This is no joke.

So my question is, if the FDIC is so confident that there will be zero losses on loans made to purchase assets of questionable value, then why do the loans need to be guaranteed? There's obviously no risk in purchasing these assets if the investors who choose to buy them are able to make the loan payments. So if they're so safe, how come nobody wants them?

Oh, and the FDIC has some stipulations on the loans it insures. It says it will carefully vet each loan and require borrower's to pay loan fees and post collateral. No risk loans, but they are to be collateralized and vetted carefully? Something smells fishy.

Aside from that, who the hell is going to post collateral that actually has value for a loan to make a gamble on some obscure and mysterious asset of unknown value? Some investors might be pretty risk tolerant, but this ain't the craps table on the strip--these are businessmen looking for a handout. They're not going to post good collateral. The point of PPIP is to encourage investors to buy these "toxic assets" (I hate that term) by minimizing the risk of loss, ie giving you 92.5% of the money, no strings attached, to purchase them, with no recourse and no collateral needed. The strings are going to discourage anybody from borrowing to buy the damn things, leaving us in the same situation that we are in now.

Our Greatest Legacy

2009-04-07T11:54:00.000-07:00

"We are all culpable for this mess. Almost all of us have been acting irresponsibly and self-indulgently, in varying degrees, for a long time."

Here is the article in the NY Times. (Quite short).

I like his analogy comparing drugs to debt. Many of us were indeed getting high on consumption. Now the withdrawal comes, and withdrawal, for those of you who have never experienced it, is very tough. One of the things that sucks the most about this mess is the huge negative externalities. For those who didn't choose to play, this calamity will extol its wrath on them just as equally as those who borrowed irresponsibly and percipitated the whole debacle. Is your employment situation as stable as it was a few years ago? In addition to the short term consequences that will be born by all, we will all also deal with much longer term consequences like the GARGANTUAN national debt. For teens and twenty-somethings our lives will never be what they once could have been. Most of us will remain in the lower or middle class, but instead of paying a 15% to 20% tax on our moderate incomes, we will likely be paying taxes somewhere in the 30% to 40% range in order to payoff this massive debt incurred to bail-out banks, financial institutions, auto companies, and home-owners. The array of opportunities once available to us are no longer possibilities. Our future budget constraints just shifted left, big time. We now have the honor of paying for the previous generations' excesses. A legacy of rapacious appetite for ever more.

It's social science!

2009-04-02T14:18:00.000-07:00

“Look, economics is not rocket science. Think of the US Government as like McDonalds, a bank and a toxic asset are just like a franchisee and a Big Mac. Once you see it that way, its simple.”

An interesting sentence from Steven Levitt. It can be seen in context here.

Rockefeller-Snowe Measure Proposes Government Regulation of Private Cyber Security

2009-04-01T09:07:00.000-07:00

The idea is that private networks, which control the country's infrastructre systems for things like water and electricity, are vulnerable to malicious attacks from foreigners, and therefore are a national security concern. The measure suggests a central government agency to establish security standards and regulations for both private and military networks in order to safeguard against possible cyber-attacks. The full story is here.

I understand the need for securing these types of networks, but one of the may costs of allowing the government to control private network security is the privacy issue, which is brought up in the last paragraph of the article.

Blair acknowledged there will be privacy concerns about centralizing cybersecurity, and he said the program should be designed in a way that gives Americans confidence that it is "not being used to gather private information."

I don't like it. It's another encroachment on private property and privacy for the "national security." Besides, don't the entity's that own and operate these networks have incentive to protect their investment? Why would the government be any better at developing cyber-security than the private sector?

Union Owned Companies - Corporate Suicide?

2009-04-01T08:23:00.000-07:00

From the Washington Post this morning:

Under the government's proposed reorganization for General Motors, the union health plan and the company's bondholders would give up much or most of those claims in exchange for an equity stake in the reformed GM.

This is interesting. What would be the implications of a union having a massive ownership stake in the very company that its members are employed by? Hoepfully they'd gain control of the board, modify operations in a way that we might think a union would, and end up killing the zombie on their own. The government doesn't seem to want to kill it; they're content with pouring billions of dollars into it.

Mile High Club

2009-03-29T17:48:00.000-07:00

If you'd like to get it on while flying in an airplane, you can do so by visiting these fine folks. I find it cheapening. Plus, getting down on a commercial airliner with other people on the flight is where the real excitement and glory would seem to come from. I'm surprised to see that there are enough people wanting to "accomplish" such a goal that a business exists to supply the demand. Thanks MR.

Impending Doom

2009-03-19T14:44:00.000-07:00

“You have the black hole of commercial real estate and that hasn’t happened yet,” said Mr Black in a wide-ranging interview on FT.com.

That's from a Financial Times article. It goes on to mention that the extra costs associated with this segment of the downturn could be as much as $2 trillion.

Remember what I said?

Boiling Blood & Conspiracy Theory

2009-03-17T09:57:00.000-07:00

Unbelievable!

An internal memo from AIG was leaked (you can find it here) and in it they argue that they have to pay these retention bonuses because if they don't it's a cross-default on their part and they'll have to pony up billions more in payments to CDS counterparties. Are you effing serious! I've never even heard of a cross-default.

I think these assholes engineered it this way. How can we not pay these crooks to stay on and untangle the mess they've created to screw everybody over now? If these jerks are not paid they'll walk, and then you and I will be pumping in however many more billions to cover the cross-default payments! It's a lose-lose situation for the American taxpayer. You clever bastards!

U.S. Debt

2009-03-13T12:29:00.000-07:00

Geithner wants China to sell Treasuries.

Clinton wants China to buy Treasuries.

China is getting scared.

The U.S. is on a path to ruin.

Rant

2009-03-08T21:12:00.000-07:00

Read this transcript of a call on the Rush Limbaugh show. The hypocrisy in this is ridiculous. They're whining about the government being too involved in people's lives and telling people that they cannot succeed without government assistance. It's not really even a coherent conversation. What does her question about effective policy have to do with her buying a home? I guess she's talking about the government bailing out homeowner's and the policy solutions to the large number of foreclosures occurring.

But to my point. I bet those student loans she's repaying are government guaranteed, and I bet you that she probably couldn't have afforded college without government guaranteed student loans offering low interest rates. So where the hell does she get the gall to say that the government is rewarding underachievers and inefficiency? If she is such an achiever, as Rush tells her she is, she wouldn't need government guaranteed student loans to get through college. She could have toiled on her own and made her own success. But she chose to take the government handout, MY handout. You and I subsidized her education, and now she's going to criticize the assistance of others.

And on a side-note, buying a house right now is just stupid. Because when she get's laid off in the next year and can't afford her mortgage payment anymore it won't seem like such a smart decision to "refuse to participate" in this recession. And then she'll take the next government handout, a bail-out of her mortgage to prevent foreclosure and unemployment benefits.

Talk is cheap. Ideology is hogwash. What matters is incentives. I'm so sick of the "left" and the "right" and the "liberals" and "conservatives". They all talk a lot, but when it comes down to it their philosophies are hollow. Just an image. When it all comes down to the bottom line, people take what they can get. Costs and benefits are what matter. The rest is bull.

Blogs of no importance to Obama Administration

2009-03-08T18:48:00.000-07:00

An excerpt from a NY Times article about President Obama:

Mr. Obama rode to the White House partly on his savvy use of new technology, and he has a staff-written blog on his presidential Web site. Even so, he said he did not find blogs to be reliable, citing the economy as one example.

“Part of the reason we don’t spend a lot of time looking at blogs,” he said, “is because if you haven’t looked at it very carefully, then you may be under the impression that somehow there’s a clean answer one way or another — well, you just nationalize all the banks, or you just leave them alone and they’ll be fine.”

I think this is a bad policy. There are many bloggers offering analysis and opinion grounded on extensive knowledge of both economics and finance. I'm not saying that we should subscribe to any one econblogger's ideas, but in this situation more information is definitely better, and there is some high quality information available via the econblogs.

Reducing Your Subsistence Expenses

2009-03-07T14:39:00.000-08:00

Here is a good find. GreatDepressionCooking.com.

Comic!

2009-03-06T18:15:00.000-08:00

Source

Counter-cyclical Asset via Marginal Revolution

2009-02-28T18:52:00.000-08:00

I find it funny that Ayn Rand (the champion of unbridled capitalism) is selling ridiculously well during an economic downturn purported by many to be caused by unrestrained and under-regulated greedy capitalist bankers.

Marginal Revolution's "counter-cyclical asset" posts are generally quite good. I would suggest following them.

Things to Come

2009-02-20T20:02:00.000-08:00

The red bars are predicted vacancy rates for office space in the United States. The blue are the actual rates. Things could get hairy.

Thanks CalculatedRisk.

Frustration

2009-02-20T19:46:00.000-08:00

Many people are upset over this possible housing rescue plan that President Obama is proposing. I've been thinking about it, and I'm rather upset myself. I'm of the opinion that we should just let this thing correct itself. Very philosophical, very principle driven...the consequences would be dire, but saving everybody's ass because of bad decisions and random events is just not something we should do.

Anyway, since the federal government is borrowing all this money, and me and my kids (if I have any) will pay through the nose for it, I'm wondering where my cut is. Since people under the age of, oh let's say 40, will be begin footing the bill about 15 or 20 years from now, I want a little something now to compensate for the future sacrifices I'll be making. Now I don't own a home, so all this bailout isn't doing a thing for me. But all those people who kept sucking the equity out of their homes to finance their spending are going to get a break on repaying their debt. And me? Oh, well I don't get anything. I borrowed money to finance a lifestyle that I couldn't afford too, I'm not saying I didn't. So why don't I get special consideration in the repayment of my debt, since so many others are? It's the least society could offer me for footing the bill for everybody else. Modify my debt. Send me a check right now for about $20,000 to lube me up before you screw me, okay USA?

Whom to Blame for this Mess...

2009-02-15T20:46:00.000-08:00

The biggest culprit in my mind.

Round 2

2009-02-15T16:19:00.000-08:00

"There are many more bank failures to come over the next couple of years, mostly because of losses related to Construction & Development (C&D) and Commercial Real Estate (CRE) loans..."

Many people that I speak with about the current economic crisis reject the idea that this contraction will get considerably worse due to a likely wave of defaults in commercial loans. I have a feeling that the default frenzy in home mortgages was just a glimpse of what is to transpire in commercial real estate markets.

I spoke with a colleague the other day about a property in Las Vegas that was appraised for over $6 million about two years ago. We just received a current appraisal and the value came in at under $2 million. A $4 million loss in just two years! And we're probably not even half-way through this contraction in terms of lost growth. So as businesses continue to fail and the number of new ventures to replace them declines, the demand for commercial real estate will fall through the floor in a market that is already arguably vastly over supplied.

Let the good times roll.

The Re-Birthday

2009-02-11T20:38:00.000-08:00

I turned 24 at 9:49am today.

First, a quick run-down of the day. It was a good day. My boss and co-workers brought me a large box of donuts this morning at the office, along with a flipping sweet Napoleon Dynamite card and 100 bones. Very fine people indeed. We also lunched at the Claim Jumper in Town Square (for approximately 1.5 hours, which makes the workday feel much shorter even though it's only 30 min more than usual). Pepperoni pizza for dinner and a quite night at home. Not very eventful, but a great birthday all in all. Friday night will be party night; some friends and alcohol and a great time will be had.

My 23rd birthday passed without much notice (or perhaps I'm more perceptive this year), so I found myself more appreciative of the "Happy Birthday"s from friends and family. Thank you all again if you read this.

The start of this 24th year has me thinking about making some changes in how I live this life. The attitudes, habits, and conceptions that I've had for the past 5 years are in need of recalibration. So with this new year of life starting, I intend to make some resolutions and change the way I experience the world. This sort of thing is usually reserved for New Years, but why should resolutions be made only on January 1st?

The few things I intend to start with to begin changing my life:

1. Change my philosophy. I think it was Tyler Cowen who gave me this idea, either in his book Discover Your Inner Economist or on Marginal Revolution. The idea is to keep in mind the following question: "What can I do today to improve my life?" I was struck deeply by this when I first came across it. I'd never thought of my life like that before. The idea of controlling the quality of my own life experiences, given the exact same conditions, is still a profound one to me, and in my mind evidence of continuation of my enlightenment.

2. Become happier by making progress in self-development. I need to grow as a person. I'd never really comprehended that statement before, I guess I was too young. I'm now starting to catch glimpses of what this actually means. The past 3 to 4 years of my life have been like that movie Groundhog Day. I've stalled out. I'm numb. Depressed. Indifferent. In a way, it could be said that I've been insane for the past few years. It's been said that insanity is when you keep repeating the same actions while expecting different results. It's time to move forward, grow, and become a happier human being.

3. Take better care of my physical self. Stop smoking completely and for good, exercise more, eat healthier (even if just a bit at first) and take a vested interest in the condition of my vessel. Physical health greatly impacts emotional health. It also expands the list of possibile life experiences.

I'm seeking a higher quality life, and am preparing myself to take action to make this a reality. A Happy Re-Birthday to me!

I'm back

2009-02-09T18:45:00.001-08:00

God Bless America. And nobody else.

Fiscal Stimulus

2008-12-23T14:24:00.000-08:00

A fantastic post by Greg Mankiw.

Auto Bail-out

2008-12-21T20:23:00.000-08:00

Here is a good article from Megan McArdle's blog at The Atlantic.

At first I thought the insane labor costs of the Big 3 were the reason they are unable to generate profits in an era of true competition against foreign manufacturers that are efficient and producers of quality products. Then I learned that labor costs are only 10% of total costs for these companies. After reading this post I've changed my mind.

An oligopoly exists in domestic auto manufacturing and the labor supply to this oligopoly is monopolized; this isn't new information to me. What is new information to me is the way these two elements interact. It's not so much about them being able to make money by reducing the cost of generating quality output, but the lack of incentive to actually produce quality products. If they actually made good cars that people wanted to buy they could make money given current costs. Hell, they've done it in the past. Their brand is now so tarnished and there are so many better alternatives available that demand for their products is finally diminishing. Quantity demanded has fallen at every given price level.

It's pretty clear to me now, and I don't know why I didn't realize it earlier. Common sense: if you build a crappy product people won't buy it...period. It doesn't matter if you produce it inefficiently or efficiently. If sales revenues are zero then you're going to lose money. I'm now a believer that people just don't want to buy American cars any more (at least not as much as they used to). And that changes the whole business model.

A day of excitement

2008-12-17T21:26:00.000-08:00

The Runnin' Rebels come through brilliantly and it snows all day long in Las Vegas! What a day!

Up until today I haven't seen any real excitement in any of the Rebels performances. Come to think of it, even last year didn't impress me that much. But tonight. Oh yes, I saw some things I really liked tonight.

Rene Rougeau has been catching my eye every game since the start of this season, and after tonight's performance I'm ready to ask for his jersey for Christmas. He hustles every damn game; plays his heart out, scores points and gets boards.

DID YOU SEE THE OOP?!? Damn that was sick! The feed to Santee down low for the dunk was also great! Then there were a couple of flat-out rejections on the Broncos. I was jumping up and down in front of my TV screaming silently at every exciting play that happened. It's good to see the Rebels asserting themselves and really demonstrating some good, selfless teamwork and exciting basketball. Wink seems to be coming out of his slump and Joe Darger is finally making some three's. Bellfield is looking good, as is Willis. All around the team was just looking much better.

As Coach Kruger was heard saying in practice on Tuesday: "We have to dictate more!...We have to deny!" And we certainly showed tonight a little bit that we are capable. Let's keep it up Rebels and dominate Arizona on Saturday!

Culture & Cars

2008-12-11T09:56:00.000-08:00

More important than regulatory change is the need for a cultural shift to better
emphasize long-term issues, Useem says. Utlimately, he notes, Americans
may adopt a disdain for short-term risk taking similar to the disgust they have
developed for smokers who light up in crowded rooms. A new
risk-consciousness held by the public should work its way into the boardroom and
executive suite, he says. "Rebuilding the national culture becomes
absolutely vital."

That's from a piece over at Knowledge @ Wharton.

In some of my conversations with friends, family and colleagues about the current economic and financial situation I have asserted that the cultural values of Americans concerning business matters are fundamentally flawed. The quote above resonated with me and succinctly summarizes what I had in mind when speaking of this. More generally, a lack of concern for longer-term issues is causing bad decisions to be made in the present.

Consider the fight for a U.S. auto industry bail-out as an example. We know that the U.S. auto industry is not competitive against foreign manufacturers and their operations are inefficient, partly because of the use of union labor. The same people fighting for the bail-out even admit this. But how will a bail-out help if their operations are inefficient and unprofitable? The kind of change needed in domestic auto manufacturing won't come in a few months (the bail-out is probably only going to sustain operations until March of 2009). It will take years, if not a decade to change. Does the American taxpayer continue to subsidize operations during the transition period? I certainly hope not, because it is not improbable that they will take tax dollars and still not change, leaving us in the same position years from now. No, the answer is to adopt a long-term view of what is best for the nation. Oh yes, their will be many jobs lost if the U.S. auto industry goes under. But is that really such a bad thing? I mean, in the long-run? Resources are not being used efficiently right now; workers labor and material could be put to better use. Sure, it will take some time for new industries to develop and utilize the resources, but they will use them more efficiently and more importantly, profitably. The problem is that darn trade-off between short-term comfort and long-term viability. A society focused only on the former can never achieve the latter.

Auto Woes

2008-12-01T00:49:00.000-08:00

Well it looks like most people are thinking about the auto industry debacle the right way.

If the automakers’ difficulties can be traced to a single, essential failure, it is their belief that they could avoid change. This is evident in their management structure, their labor contracts, and, most consequentially, their cars. For the past thirty years, the Big Three have been promising one hyper-efficient vehicle after another—the electric car, the “super car,” the hydrogen car—only to produce bigger and bigger gas guzzlers. (It was while the carmakers were supposedly working together, and with a billion dollars of federal money, to create a “new generation of vehicles” that G.M. purchased the rights to the Hummer.) The only compelling argument the companies can make at this late date—if a man strapped with explosives can be said to be making an argument—is that they will not suffer alone.

That's from the New Yorker. And the fact that many will suffer if the Big Three go under is not being disputed by anyone. The question is whether or not avoiding that suffering is worth doling out free money to save inefficient firms that are unwilling to change. It's obvious to me that without the proper incentives they will not change their behavior. Let them save themselves or fail, but don't ask for my tax dollars.

Liquidity Preference

2008-11-30T23:24:00.000-08:00

I'm not so sure about this idea of Arnold Kling's.

If it gets pricier to stay liquid with Treasury securities then it will be less attractive to acquire said securities. However, this does not solve the counter-party trust issues. If firms still don't trust each other they will still demand some type of collateral. If it's too expensive to use Treasury securities then what will be used? Cash?

U.S. Auto Industry Bailout

2008-11-18T19:47:00.000-08:00

Should not be done. That's what I have to say. I won't elucidate my own thoughts why; just read this fine post from Will Wilkinson and we'll be on the same wavelength.

Let them fail, let them fail, let them fail. Purge the inefficient producers and move on to the next stage.

The Future?

2008-11-14T15:41:00.000-08:00

From an AP article talking about the economic downturn:

Bush and other leaders from the Group of 20 nations, representing the world's
richest economies plus major developing nations such as China, Brazil and India,
were expected to agree during two days of talks to set up a new "college of
supervisors" to oversee the global financial system. The group would include
financial regulators from many nations.

A flashing thought ran through my mind: this sounds ominously like nascent one world government.

Maybe I'm just a nut.

Tangents

2008-11-11T13:37:00.001-08:00

It's odd how the mind wanders. I was watching television when I saw a suit against the drug Seroquel. I'd never heard of it, so off to Wikipedia for knowledge. While reading about Seroquel's uses (antipsychotic drug used for schizophrenia and bipolar disorder) I read about other drugs used to treat the same conditions. Benzodiazapenes are mentioned, and lorazepam in particular. Now I used to take lorazepam for anxiety and panic attacks. So now my focus moves to lorazepam and it's uses and side-effects. This brings me to a disorder I've not heard of before: depersonalization disorder (DPD). After reading about it for a bit I acknowledge various similarities between DPD and the way I often feel. And finally I come across this quote in the Wikipedia article:

I find myself regarding existence as though from beyond the tomb, from another world; all is strange to me; I am, as it were, outside my own body and individuality; I am depersonalized, detached, cut adrift. Is this madness?

So, the point? I'm not sure what the point is, but I know that reality and consciousness are wildly difficult things to fully comprehend and understand; and that is a great thing.

Woe America

2008-11-11T09:50:00.000-08:00

“My house is underwater, so I’m not doing too much impulse shopping or any renovation. But I’m not cutting back on this,” said Ray Lopez, a database administrator, as he placed a $24 petite sirah on the counter. “Life’s too short.”

...says a man about wine. I'm not cutting back on the booze either....only I'm drinking Miller Lite instead of fine wine. And it could very well be Keystone soon. I bet cheap beer is a counter-cyclical asset.

From a story in the New York Times.

Rebel Fever!

2008-11-10T20:29:00.000-08:00

If you're a Runnin' Rebel fan then you need to put this site on your list of those to visit daily:

The Rebel Blog

With college basketball starting up and a hot Runnin' Rebels squad to watch all season, this is one of your best sources for Runnin' Rebel info. The posts are splendid. Take this one for example.

I've been visiting this site for the past two seasons, and will continue to visit as long as it remains up.

Many heads are better than one

2008-11-06T15:50:00.000-08:00

I've never heard of this theory before and I was trying to explain this concept to my dad just last night. Aggregated intelligence, a truly amazing thing.

Condorcet rigorously demonstrated that, in large elections, many heads are better than one. Consider a contest between two candidates. Each voter has some information about which candidate will be better, but no individual can be sure that his or her information is accurate. If any one individual has to make the decision, he or she would choose according to the information available. However, there is a significant probability that the decision would be incorrect.

On the other hand, if each person's information is somehow correlated with the truth, then, even though no single individual is well-informed, the electorate in the aggregate is very well-informed. Condorcet's theorem demonstrates that if people vote according to the information they have at hand--even if it is scarce or incomplete--then, in large elections, the outcome will be the same as it would be if all voters were perfectly informed. That is, elections successfully aggregate information and produce results better than any individual acting alone.

Thanks to Greg Mankiw for finding this piece at Forbes.

Truly an historic moment...

2008-11-04T20:24:00.000-08:00

"Barack Obama will be the next president of the United States"

from the Economist...

Ouch!

2008-11-02T21:35:00.000-08:00

Thomas Sowell slams Barack Obama and the Democrats.

After this man has wrecked the economy and destroyed constitutional law with his judicial appointments, what can he do for an encore? He can cripple the military and gamble America's future on his ability to sit down with enemy nations and talk them out of causing trouble.

A thought...

2008-11-02T21:23:00.000-08:00

from the Economist on Barack Obama:

"There is no getting around the fact that Mr Obama’s résumé is thin for the world’s biggest job. But the exceptionally assured way in which he has run his campaign is a considerable comfort. It is not just that he has more than held his own against Mr McCain in the debates. A man who started with no money and few supporters has out-thought, out-organised and out-fought the two mightiest machines in American politics—the Clintons and the conservative right."

[emphasis added]

Ha-Ha!

2008-11-02T21:07:00.000-08:00

What a coincidence

2008-11-02T20:46:00.000-08:00

I wonder if he hangs out with Joe the Plumber.

Time Banks

2008-11-02T19:08:00.000-08:00

Here is a short post about time banks. I've thought about something like this before, but have never heard of it actually taking place. I like the idea of building social bonds through it's use. Instead of just trading services explicitly (like with money), participants would seem to gain cultural experiences and social interaction that could make people happier and more satisfied.

Disappointing

2008-10-29T19:26:00.000-07:00

This makes me sad and ashamed of not only my fellow countrymen, but of humanity in general. My pessimistic world view has just been given new life.

I like the guy with the Acorn banner; he isn't even coherent.

I support neither McCain nor Obama. It doesn't matter who the hate is directed towards, the fact that it's bred in ignorance and thrives in a modern society is unacceptable.

Thanks to Rob Pitingolo for the post.

Hilarity

2008-10-29T14:42:00.000-07:00

I laughed so hard for two minutes straight because of this. I still can't pin why it's so damn funny.

Whiners

2008-10-23T10:36:00.000-07:00

I've had about enough of the complaint that the media is unfair in the coverage of the Presidential candidates.

Honest, I just heard a Fox News employee say that he has been in the media for 10+ years and that the media is absolutely biased (except for Fox News, you know, because they're "fair and balanced"). Well that's a shocker! For some crazy reason I thought the media had my best interests in mind. I mean, why would they be concerned about drawing the largest audience possible to make profits from advertisers? The media wants to bring me the truth. Anyone who believes that is a damn fool.

On top of telling us something that any intelligent person already knew, this guy goes on to complain that bias causes unfair coverage of the candidates and the "liberal media's" excessive positive coverage of Barrack Obama is going to discourage McCain supporters and thus ultimately shape the outcome of the elction in favor of Obama! Are you serious! I didn't really just hear that.

I guess that the biggest problem I have is the supposed premise behind this type of complaint. For whatever reason, some people seem to think that the media has a responsibility to the public to be fair and balanced. I'm not sure if I believe media outlets have any responsibility to the public. They are competitive firms, offering a product to people who desire it. The cost to the consumer is advertisements, which firms make a tidy profit from. End of story. They can get up and say anything they want, spin the facts any way they wish and endorse (implicitly or explicitly) whomever they prefer. Don't whine about unfair coverage and the possible effects on voters actions as a result. If McCain supporters are going to admit defeat and not cast their ballot because the media made it look like a landslide victory for Obama then so be it. They're responsible for their own actions (however stupid those actions may be). But don't get up and whine about fairness because things aren't going your way.

George is gettin' UPSET!

2008-10-22T10:47:00.000-07:00

"What should you -- the young -- do? First, get angry..."

That's what Mr. Robert J. Samuelson says about this election and the candidates. A good article in the Washington Post.

Who said patience is a virtue?

2008-10-21T15:51:00.000-07:00

A fairly scathing criticism of Fed Chariman Ben Bernanke.

Bernanke suggests that “prompt passage of the financial rescue legislation” will allow financial firms to fulfill “their critical function of providing new credit”, but even there he misreads the problem. Banks don’t so much lack money to lend as they don’t trust the balance sheets of other banks. The latter in mind, the alleged financial rescue plan will only serve to make the health of banks and the securities on their balance sheets even more opaque due to the insertion of money not from market-disciplined investors, but from the federal government itself.

This part of the piece really hit the nail on the head in my mind. Tyler Cowen posted a while back over at Marginal Revolution on the same idea. His example was something along the lines of this:

Suppose there are 10 banks in an economy, 3 of which are insolvent. The public doesn't know which ones are insolvent, but the insolvent banks know who they are. If the Fed steps in and starts giving all 10 of them money then we end up prolonging the process of discovering which banks are the bad apples and should be allowed to fail.

It makes sense when you think about it. Masking the problem doesn't fix it. But I guess some would argue that giving the bad banks money may actually resolve their problem of insolvency...changing the bad apples into solvent institutions. But this would only happen if the insolvent banks received enough cash. The biggest banks in America are only receiving a proposed $125 billion. If you're a bank in serious trouble then a relatively small injection from the government will only delay your failure. The banks that are in good shape know that there have to be some minimum number of insolvent banks out there that will go under in time. The smart thing would be to shorten the amount of time it takes for the discovery to take place. Injecting capital into financial institutions is only increasing the amount of time needed; we should be doing exactly the opposite to hasten this crisis of trust.

The Bubble: Part 2

2008-10-21T10:46:00.000-07:00

An interesting excerpt from a piece at RealClearMarkets:

The market responded to the price signals given by the Fed and loaned money that the Fed deemed nearly worthless. When the price of anything is held artificially low the logical result is a future shortage. Thus we now have a shortage of credit just as one would predict based on past experiences with price controls.

At first reading I completely disagree with this statement. "Easy money" no doubt contributed to the current debacle, but it was not the primary reason. Government policies that encourage excessive levels of home-ownership (and thus artificially high demand for mortgages) and the absence of anything else profitable to invest in are a much bigger cause of this mess.

During the tech boom of the late 1990's the big investment banks like BearStearns and Lehman Bros were making profits on the deals they brokered to bring ".com" ventures online. After the bust of that bubble they were caught sitting on their hands with not many ways to generate the large level of profits they had during the boom, so they got into a new market: mortgages. The only way to make big profits is to take big risks. But nobody wants too much risk, so enter the MBS (mortgage backed security). Let's bundle mortgages together and issue bonds that pay from the interest stream of the mortgages. The risk gets spread around to everybody; the risk is mitigated now, so let's keep demanding more mortgages to securitize, encouraging the banks originating mortgages to increase their risk tolerance (really not even tolerance, since they didn't hold the loans on their portfolio's anyway---they were sold off for fat premiums). Hello subprime! Banks will originate mortgages to nearly anyone, because they're not holding the loan for it's life. Brokerage houses package them up and "distribute" the risk and collect a hefty fee for the securitization services. And the ultimate investors buy the bonds backed by the mortgages because house prices never decline!--the interest will keep on coming because any mortgage borrower in trouble can simply refinance.

The point of my ramble is that "easy money" wasn't the sole issue. There were artificially high levels of demand too, leading to the inflation of a bubble that how now burst.

Investor's were used to the excessive profits of the tech boom and demanded that Wall Street continue to perform; and Wall Street delivered, by finding new ways to make boatloads of money without ever creating any real value. It was a repeat of the tech boom, with mortgage assest substituting for tech stocks.

The rest of the article is good though; I actually agree with the idea of letting the market work everything out on it's own, even though Keynes is probably surely looking at me incredulously for saying that.

On Krugman

2008-10-20T14:12:00.000-07:00

Here is a good article from the Economist on Paul Krugman's contributions which earned him the Nobel prize in economics. If you've never read his blog or his columns in The New York Times, you should start.

It'll be like an extended tailgate...

2008-10-15T12:33:00.000-07:00

An excerpt from the Beige Book on the 12th District of San Francisco concerning retail sales:

"...outdoor equipment such as camping gear was one bright spot, as households gravitated towards low-cost vacation options."

Low cost vacation or preparation for 1929 again? Well, if we do end up with Hooverville's again,

at least we'll have some very nice camping gear (thanks to technological improvements) to get us through.

Craziness

2008-10-06T16:52:00.000-07:00

From the Prime Minister of Iceland:

There is a very real danger, fellow citizens, that the Icelandic economy, in the
worst case, could be sucked with the banks into the whirlpool and the result
could be national bankruptcy.

and...

The task of the authorities over the coming days is clear: to make sure that
chaos does not ensue if the Icelandic banks become to some extent
non-operational.

It's crazy to hear the leader of a nation talking like this. Could this ever happen to the United States? I'm a pessimist, so you know my answer. I fear, "Yes."

Interest Rates

2008-10-04T22:15:00.000-07:00

Greg Mankiw asks why real interest rates are rising. Short term Treasury bill yields are very low (because of increased demand for safe assets) but the yields on 5 year government bonds (inflation adjusted) are rising. He says "It's a puzzle."

It sort of is. I'll admit now that I don't know much about how rates typically move together and my simple conjecture is probably inadequate, but it's the best thing I can think of off the top of my head so I'm going to make it.

There's obviously great uncertainty out there about what's going to happen in the near future and in the medium-run/long-run as a result of the crisis we're in and the attempted rescue by the federal government. That said, even though 5 year government bonds are probably a pretty safe bet, I would think that most savers want to maintain liquidity right now. A 3 month T-bill is a much better purchase compared to bonds considering that nobody knows what's going to happen over even the next few months, let alone 5 years (Even though the bonds are inflation adjusted people may be so freaked out right now that they are only concerned about the return of their money and not the return on it [thanks to Mark Twain for that phrase]). As a result, demand for longer term assets is not as strong as that for very short-term assets such as T-bills. People holding longer term assets may actually be selling off and putting their cash into the T-bills.

Adidas has a good slogan for the current times: Impossible is Nothing. We've seen things happen over the past year that basically had a P(0) or damn close to it; so why would faith in the government's going concern not be shaken. It's not very likely, but there is that slight chance that the government might not be able to pay back those 5 year bonds, and with all the fear out there right now people are considering such a default more seriously.

Oh Thank Heaven!

2008-10-04T20:42:00.000-07:00

7-Eleven is offering coffee cups that show everybody which presidential candidate you support (or dislike the least). They started with the 2000 election (I've never heard of this) and the poll has successfully predicted the two elections it's covered. It's called 7-Election (cute). Here is the website. Results are published weekly in USA Today newspaper.

Thanks to NPR's Wait Wait... Don't Tell Me!'s website for the tip.

The Crisis Continues

2008-10-04T20:03:00.000-07:00

Now even municipal governments are having trouble getting the short term funds they need to operate. This thing gets wilder by the minute.

Thanks to Marginal Revolution for the lead.

A Funny

2008-10-01T16:17:00.000-07:00

The Dominoes Continue to Fall

2008-09-28T22:57:00.000-07:00

From the AP. Monday morning ought to be nuts!

Get Schooled

2008-09-28T20:04:00.000-07:00

If you've got about an hour to spare then watch this video which explains simply and accurately the current economic and financial market turmoil that we are experiencing.

The Most Important Criteria to Consider...

2008-09-23T20:06:00.000-07:00

This is from an open letter to Congress on the possible bail-out plan. I think it's the most important consideration...

3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, Americas dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

Thanks to Marginal Revolution for the post.

Food For Thought

2008-09-22T11:35:00.000-07:00

Oil just jumped over $20 a barrell today. Looks like people are responding to the potential jump in inflation due to the federal government's decision to tack on $1 trillion in debt to "save" the financial system and the economy. In case you cannot tell, I'm not very confident that current actions by the Federal Reserve, Treasury, and Congress are going to "save" anything. It's looking more and more like the implications of decisions to assauge current issues will seriously endanger our long-run economic stability. So what's next?

Light Reading

2008-09-19T22:26:00.000-07:00

Will Wilkinson with an interesting post...

The Best...err, Worst is Yet to Come

2008-09-19T13:45:00.001-07:00

A good point from David Roche in the WSJ:

When bank credit does contract, the impact on the real economy will be more marked than we have seen thus far. The reason is that most bank credit is the sort of money that gets spent in shops and garages, or is used by the corporate sector to invest in real assets. NDFI money is used to invest in financial markets, causing security prices to rise and fall, which only indirectly affects the real economy by changing the value of wealth.

The Future of Regulation

2008-09-19T13:45:00.000-07:00

From Paul McCulley at Pimco...

What Lies Ahead

2008-09-17T15:10:00.000-07:00

While most are concerned with the present moment (and have every reason to be), Kenneth Rogoff is looking beyond the current situation to the future implications of our attempts to avoid total catastrophe by giving bail-out after bail-out.

A large expansion in debt will impose enormous fiscal costs on the US,
ultimately hitting growth through a combination of higher taxes and lower
spending. It will certainly make it harder for the US to maintain its military
dominance, which has been one of the linchpins of the dollar.

The shrinking financial system will also undermine another central
foundation of the strength of the US economy. And it is hard to see how the
central bank will be able to resist a period of allowing elevated levels of
inflation, as this offers a convenient way for the US to deflate the mounting
cost of its private and public debts.

So even if all the magic tricks work and we avert a complete meltdown caused by exotic finance and the folly of making too much money off of money, the repercussions of our rescue efforts (whether successful or unsuccessful) will be felt for years to come.

REBELS!!!

2008-09-15T08:46:00.000-07:00

Okay, so the Rebs upset No. 15 ranked ASU on Saturday night in a thriller of a game. Of course there was barely any coverage on the television, but at least there was an article [actually just a game recap] posted on ESPN.com. Something that made me chuckle:

"No disrespect to them, but we let them hang around in the game, and look what
happened -- they beat us," ASU safety Troy Nolan said.

Well, just take a look at the stat sheet and try to tell me again that ASU "...let [UNLV] hang around in the game..."

Owned son! 'Nuff said. Good luck against Georgia next week....CHUMPS!

The Political/Economic Debacle

2008-09-10T14:03:00.000-07:00

From Tyler Cowen at Marginal Revolution regarding the Fannie Mae and Freddie Mac bailouts...

In essence we already agreed to the bail out some time ago. Have you ever spent $17,000 on a car and asked the dealer what the warranty for the car "really meant"? Well, the Chinese spent $340 billion on agency debt and probably asked the same question at least once or twice. They live in a world of secret agreements with leaders, not transparent democratic arrangements. So when it comes to the U.S government decision, we're not just starting from scratch here. How many phone calls do you think Hank Paulson has received from the Chinese central bank since August 2007?
"Are you *sure* that paper is safe enough for us to keep on buying?"
We'll never know exactly what kind of verbal dance Paulson concocted in response, but just look at the resulting flow of purchases and the relatively slight mark-up over Treasuries over that period of time. The Chinese (among others) thought we were standing behind the securities, at least in any world-state short of federal government quasi-bankruptcy. (In fact Paulson is in a total bind once that phone call comes in. He doesn't have much incentive to just say "tough luck" and precipitate a crisis when otherwise no crisis is on the horizon.)
So should we try this: "Oh, is that what you thought? Guaranteed? Did we use that word? Sorry, try reading our signals better next time. We love you. Great job with those Olympics. And when it comes to those Treasury Bills, we really do still mean it. And don't forget to support us on Iran and North Korea."

I think Mr. Cowen has brought up an important point that I haven't heard many (if any) people talking about, and that is the political implications of this credit crisis. The global economic implications have been pondered. But the political have yet to be speculated upon.

There's no shortage of people arguing against the bailouts, but they seem to fail to understand that we cannot just tell all the foreign institutions that bought Fannie and Freddie debt to eat crap. We still have to maintain relations with them. The common (and even preferred) shareholders are more ambiguous entities that are easy to forget, and we can wipe them out without fear of significant negative repurcussions; but foreign countries that bought hundreds of billions of dollars in debt from these companies can't be disregarded. Take the Chinese for example, as Mr. Cowen has. They've been buying American debt (both private and public) for probably the past decade (I'm not sure how long exactly and haven't looked up the figures). Their investment has fueled American economic growth from the late 90's on. If we crap out on them now by refusing to guarantee the debt they've bought then we won't be seeing much capital coming from them for the next decade or so, severely limiting our government's ability to borrow money and our national economy to grow.

The political implications are mentioned in Mr. Cowen's hypothetical situation. Where do foreign relations end up if we screw them over on this? They probably won't be likely to back us in foreign disputes and could potentially become hostile regarding trade.

I was skeptical at first about the bailouts, even a bit weary. But as more light is shed on the situation, it's becoming more and more clear that this is a necessary action, even though it's putting taxpayers on the hook for potentially hundreds of billions of dollars.

The 20 Rule

2008-09-08T11:10:00.000-07:00

Update: More thoughts from Arnold Kling.

Arnold Kling thinks you should have to put 20% down to get a mortgage.

"My approach would make it more difficult for many families to achieve home ownership, because many families find it hard to save the money for a 20 percent down payment. I am willing to let those families deal with being renters. As fantasy mortgage czar, I value stability of housing markets and financial institutions more than raising the home ownership rate."

I don't think that's too bad an idea. In the past decade, getting a mortgage was so easy because you could come in with basically nothing down. This encouraged excessive demand, leading to rapid building and resulting in the over-supply of homes. Combined with the general distress in credit-markets, the over-supply has combined with tight credit to drive prices down and set off a chain of events that have caused a lot of economic turmoil.

George W. Bush has been talking about and advocating increasing home ownership for a while now (since at least 2002). Here, here, and here. In fact, he said in a June 18, 2002 speech:

"...I believe owning a home is an essential part of economic security."

and

"The goal is, everybody who wants to own a home has got a shot at doing so. The problem is we have what we call a homeownership gap in America."

Now what is so important about owning a home? How does it increase economic security and why should we care about the "homeonwership gap in America"? As long as people have a roof over their heads then we're doing okay. Whether you are renting an apartment or living in a home with a mortgage on it, you have a place to live. Owning a home isn't for everybody. There's maintenance and taxes that go along with it, in addition to lack of mobility. Renting is just plain better for some people. As far as I know, nobody was complaining about not being able to have the chance at owning a home. Mr. Bush just started blabbing about the American Dream one day and decided to do something that looked patriotic.

If you can't save the money to put 20% down on the home you want to buy then you shouldn't own a home. Some may say this is "unfair" (that's the vibe I get from Mr. Bush's statements and stated goals -- oddly a Republican is talking about social and economic equity, ha!), but life ain't fair. In my opinion, as long as people can afford to put a roof over their head (via renting or purchasing), then we are doing just fine.

Kling opines that the housing market would be more stable if 20% down were required, and I'm inclined to agree. It just makes sense. There's risk there. If you have to put 20% down, that is cash out of your pocket. Even if housing prices decline one day in the future, your 20% is gone and you still owe on a mortgage. I would think you'd be less inclined to walk away and let the bank foreclose. But if you only had to put $2,000 down then you don't have much to lose when times get tough, making you more likely to walk away. In the current situation this "walking away" by a large number of borrowers is causing banks further losses and driving home prices down further, making everything worse off for everybody. The situation might not be so bad, or in existence, if we had stuck with the 20% down principle of lending for homes.

Voting

2008-09-07T16:44:00.000-07:00

From Michael Munger.

"All votes are wasted unless the election is decided by a single vote. The question is, how are you going to allocate that single vote that you have? Are you going to honor your principles or vote for the lesser of two evils?"

That didn't take long

2008-09-07T14:46:00.000-07:00

It was pretty much inevitable.

"The Treasury Department on Sunday seized control of the quasi-public mortgage finance giants, Fannie Mae and Freddie Mac, and announced a four-part rescue plan that included an open-ended guarantee to provide as much capital as they need to stave off insolvency."

But will this really help make things better in the short-run? I don't believe so. The downward spiral of housing price declines will continue nonetheless because the supply of homes is simply too great. When the new equilibrium is reached prices will settle and stay low for quite a while.

Wants and Needs

2008-09-05T22:21:00.001-07:00

Here is a little something original. I wrote this a few years ago and just stumbled across it while rummaging through old files trying to clean up my drive. I was probably high or drunk (maybe not drunk; this is too coherent for a soused writer like me) and feeling profound. Anyway, as I read it again I realize that I still hold some of these beliefs. I guess I haven't changed as much as I thought I have since then.
------------------------------------------------------------
Want is the desire to fill need.

Most people don’t understand this. Most people view need as the superior to want. Everyone agrees that want is a desire; but most people think that need is something beyond human control, beyond human manipulation.

‘Tis not so. Need is not above want. It is the other way around. Want is beyond anything in the world, anything in existence.

I’ve come to this conclusion after analyzing the standard interpretation of want and need. What put me on to this subject of thought was the idea of value. I know that my life is pointless, so is everybody elses. There is no purpose, no point, no value in this life. The only value that exists is that which we create.

The general consensus is that for people to feel valued they must be needed. I feel differently. For me to feel valued I must be wanted. For people to need me gives me no value; at least not to myself. Everybody needs other people, but when somebody, or other people, want you, you become a commodity in demand. It’s basic economics. When I am in demand I am of value, both to myself and to others. Anybody can satisfy a need, but only those who strive to please and fulfill the needs of others are wanted. The only way to place any value on oneself is to be desired by others.

It’s simple, really. When others need you they just utilize you because you will do the job. You will suffice. I don’t want to suffice. I want to go beyond expectations, to go beyond need. When you are wanted others desire you; others will go out of their way to use you.

It’s far to common, people being used just because they are available. We see it everyday. Relationships, jobs, friendships. They are all out of need.
------------------------------------------------------------

Something funny

2008-09-05T21:23:00.000-07:00

I got a good chuckle out of this. It's funny on a couple of levels.

One Utah community is cheering a special bear — but don't call him Smokey.

I'm not dead!

2008-09-05T18:33:00.000-07:00

A really good article from the New York Times Magazine.

Random

2008-08-28T13:40:00.000-07:00

Some disturbing images...

"Education" is Flawed

2008-08-21T16:15:00.000-07:00

"Today, there are two worlds that use the word education with opposite meanings: one world consists of the schools and colleges (and even graduate schools) of our education complex, in which standardization prevails. In that world, an industrial training mega-structure strives to turn out identical replicas of a product called "people educated for the twenty-first century"; the second is the world of information, knowledge, and wisdom, in which the real population of the world resides when not incarcerated in schools. In that world, learning takes place like it always did, and teaching consists of imparting one's wisdom, among other things, to voluntary listeners."

Jesse, I thought you'd find this interesting.

A Second Stimulus?

2008-08-08T08:28:00.000-07:00

"Before last Thursday, there was no second stimulus proposal. Now there's a proposal from the Chairman of the Senate Appropriations Committee, Senator Byrd (D-WV), but we have seen no indications that House or Senate Democratic leaders have signaled support for that proposal."

Greg Mankiw has a source in the White House with the scoop.

Decisions, decisions...

2008-08-07T21:06:00.000-07:00

"With mounting inflationary pressure, the Fund added: “Policy trade-offs between inflation, growth and financial stability are becoming increasingly important.”"

This is from an article in The Financial Times covering the outlook offered in a report issued by the International Monetary Fund concerning the credit crunch.

What I see happening is high commodity price inflation combined with a now risk-averse financial system and limited economic growth in the U.S. because of dampened consumption. We've been financing our consumption for the past decade or more, so now that we can't borrow anymore consumption will fall and the economy will slow or stall. Cutting the federal funds rate in an attempt to affect real interest rates hasn't had much impact and probably won't while the general outlook for lending and investment remains extremely risk-averse. The Federal Reserve has maintained financial system stability through the use of new tools such as the TAF, the TSLF and the Primary Dealer Credit Facility as well as the Bear Sterns bail-out...but preventing a meltdown hasn't restored confidence in the markets to previous levels.

So, consumers can't borrow to consume and firms can't borrow to invest and the result is declining consumption and crawling (if not negative) economic growth. Rapid and sustained commodity price increases are driving inflation upward (let's hope the weak labor market constrains wage growth, otherwise a wage-price spiral will be the next calamity). And maintaining financial system stability isn't restoring confidence in the basic ability of the financial system to channel funds from savers to borrowers.

The Federal Reserve is trying to juggle a few balls at once, and the appropriate response to these problems isn't easy to come by.

Lowering the federal funds rate further probably won't have much of an effect considering the fear of risk in lending right now; the net effect on the economy would be nil, so this isn't really an option (or one with any impact, anyways).

Raising the federal funds rate would drive real interest rates higher than they otherwise would be in the current situation, further curtailing growth, but at the same time relieving the upward pressure on prices and thus constraining inflation (before long-term inflation expectations become unanchored) and restoring some faith in price stability. This is a possibility, but the cost is slow or negative growth (and rising unemployment). The FOMC expressed concerns about both growth and inflation in it August 5th policy statement, but didn't say which was the priority at this time. Personally I would argue that inflation should be the priority right now. I say this because inflation expectations are very difficult and take a long time to cement. If inflation expectations are unanchored now it could take 10 years to correct, making it difficult for growth to occur during that time because of uncertainty about prices and interest rates offered on loans.

Growth can bounce back and forth relatively quickly, compared to inflation expectations. Raising rates might not be such a bad move.

Wishful Thinking

2008-08-07T20:57:00.000-07:00

"The company [Freddie Mac] also reiterated its commitment to raising at least $5.5 billion from investors."
...
"The company’s [Freddie Mac] entire worth as measured by the stock market was $4.2 billion as of Wednesday afternoon."

Yeah, right. Here is the NY Times article.