Posts

Showing posts from March, 2009

Baseline

I was reading and commenting on a blog the other day. It is a good blog, make that a great blog, called baselinescenario.com. However, it is chocked full of people who are discussing things that are far from baseline. It does exemplify the problem that we have with our leaders today.

I have my background in system design and troubleshooting. When working on computers we have a “baseline” to determine the level at which the system is still working. It is called the “minimum system configuration.” This requires a motherboard, a power supply, and a graphics generator (graphics card and monitor). This is the bare minimal a computer needs to be functional. Problem resolution can come only after problem identification. It does no good to make up solutions without understanding what the source of the malfunction is. This would be like prescribing aspirin for a brain tumor.

This methodless madness, however, seems to be the approach of the leaders and learned alike. Nobody seems to…

AIG Bonuses To The Best Of My Understanding

Well one of my regular readers, of the 4, asked my take on AIG and this current debacle. I want to start by saying that this is not a “news” blog in the sense that I rarely cover “breaking” or current news. The point of this exercise is to diagnose what happened and try to avoid repeating history. You are more apt to hear predictions about the future then you are to hear about something that just began to be news worthy today or yesterday. I have a fear of commenting on something that I don’t have enough facts about that I can’t make an informed assessment. This AIG Company is wrapped in so many layers of bullshit that I am having a hard time figuring out how holds what part of the blame. But I will share my perspective thus far. Maybe somebody else can fill in blanks or misassumptions that I have.

Now I had written some gobblely goop about who AIG is an their role in this mess. I had planned to start this post with it. But it took too long to get to the question most peop…

The Persistence Of Time

The 4 people that regularly read my dribble (2 of which just to point our how “ignorant” I am.) know that I have an affixation with time. I have written about paying people in time, having your receipt show you how many labor hours you have spent on a purchase, and how important time is to a healthy community. Well, this post is about why this recession soon to be depression is different then any other economic dysfunction in the past. The difference as it turns out is our use of a very powerful resource. Yep, you guessed it, “time”.

First a real quick visit to the only thing one needs to know about economics (not finances or accounting which are often thought of as perfect synonyms but aren’t). One needs only to know that consumers will buy anything that they are “willing AND able”. It is not an “OR” proposition. You must have both pieces to the puzzle in order to attract a consumer to complete the transaction. The more people you have “willing and able” to buy your produc…

A Home Relief Plan With Merit and Consequences

Here is a better way to address the failing housing market. The government opens up a new hosing department. One that is understood to have a hopefully temporary life span. This new agency will negotiate a new value for the home. The new housing authority will then buy the house from the bank for whatever “payoff” is. They get their money back. If they had planned on that interest coming in, they are no different then the home buyer who though he would be employed and healthy for 30 yrs. “You guessed wrong. Here is your consolation prize, your money back.”

People who sign onto these programs are relinquishing the ownership of the house. The difference between the payoff value and the newly negotiated market price becomes a debt to the participant. Strict limits would be placed on their ability to hold credit. The ex-homeowner has proven by their situation that they do not grasp the risk of credit. A 5% increase in their taxes will be asses in order to pay off the rem…

Let me guess, He told you a house was an “Investment” and you “responsibly” believed him.

We have a saying that I am sure most of you know that starts out, “if you believe that, I have a bridge to sell you.” It is a cliché used to point out the most preposterous assumptions by the most naïve people. It usually gets rolled out when only the slightest amount of thought renders an ideal illogical.

So when the pimply faced ex-pizza delivery guy (because I am sure you checked out the credentials of this perfect stranger that all of the sudden had your best interest in his heart.) who turned into a loan agent told you this did you have him explain how? Did he explain that over the next 30 years, at your 7% rate, on a $100,000 loan you would pay $250,000 plus property tax, insurance, and maintenance costs? This was supposed to be an “investment”? How many times your net (bring home) yearly salary is that? When you finally paid it off, it might be worth $200,000, although historically it would be more like $150,000 and that wouldn’t even take into the rise in cost of livin…