Two industries came up for nationalization last week, one was banking. The interesting and kind of scary thing about bank nationalization was that some guy from the IMF was on the radio being interviewed and it was his JOB to provide infusions of cash for failed foreign economies, in exchange for which gift they basically took the ill managed banks of these countries, recapitalized them, fired all the executives, nationalized them. It's precisely the same medicine he prescribed for US banks, but said we couldn't do it because the entrenched power structure had too much to lose. In marking bad assets to market value, the presumptive capital of the banks is wiped out, so the supposedly wealthy shareholders take a bath. That's too unpleasant for them to contemplate: certainly nobody can be expected to bring that kind of lightning down upon themselves, eh? Such a move would have to happen suddenly (this guy said) 'cause else all the OTHER bankers would pull their alleged capital OUT in fearful anticipation they'd be next. This would leave the bank balance sheet even more impoverished.
I think it's interesting to try to assign "blame" and ask, in the wake of that, whether the bank or the homeowner should be recapitalized. In the latter case, at least we (the taxpayers saddled with this) have a paying tenant, right?
Housing Bailout
Is the Obama housing bailout a good idea?
First what is it? I heard it's a plan to incentivize loan rate reductions, half a % to be paid by the bank and half a % + the documentation fees paid by the government. Clearly this plan will "work" in that it will have takers. People want to refinance (heck, I did) so if it gets easier to do so, more will. If the Govt were to just pay the 1/2%, I would expect market forces would drive housing interest rates down that much, right? It is a little hard to see how the bank is motivated to kick in thier 1/2%. Maybe I'm missing something? (There are other disjoint parts of the plan, but I want to think just about this single factor for a bit.)
Also, I had a little bit of "isn't this how we got into this mess?" reaction to the plan. The lower the interest rate, the more you can borrow. But maybe the problem isn't the principal but rather the fixed expense the loan introduces into the family's budget. People need to get themselves into less trouble, by aiming lower, not accepting high payments. Maybe the loan criteria should be stricter: payments =20% of monthly income, instead of 30%. THAT way you'd be giving out loans with less risk, right? More later, sorry for the half baked thought.
Also, how can we enforce bank participation? They're supposed to contribute 1/2% but in the ongoing re-evaluation of market demand and setting loan rates so they can cover their risks and make a profit, it seems the 1/2% will just vanish in the bookkeeping.
Finally, lets remember, as a transition to and motivation for my proposal (following) that this is essentially America (meaning you and me) taking on additional debt liability in the form of T-bills, to pay for somebody else's mortgage. I think the guys who got in too deep should participate personally in the solution. Here's how:
Consider solving the problem by lowering everybody's payment 10%, and extending their loan commennsurately in duration. It would immediately alleviate the homeowner's cash crunch, and shouldn't cost us (taxpayers) anything other than the additional risk of covering the defaulters. Of course there would be some of that, but this does not amount to a free giveaway, so it's a tiny fraction of the loss. How could it work? Well, this thought stemmed from a discussion about the spread between Tbills and home loans. Currently I understand that to be about 5%. I pay 5% for my home loan (about the best you can get) and I heard our debt is being snapped up for ZERO percent interest right now. Parenthetically, that means that in these hard times, US currency is still viewed by the rest ofthe world as a great deal. Why is that spread so big? Hey, I wannna sell a T-bill to china for 0% and finance my house for nothing! Where does the money go? The answer is middlemen's profits (salaries for the bankers) and to cover the risk of defaulting. Well, let's eliminate the middlemen and since we (the Govt) are forced to cover this risk anyway, let's not let somebody ELSE (the bank) book it as risk and bank it as profit. Essentially we are self insuring, for better or worse, across the spectrum of these loans.
Mechanically it works like this: Say you're in a dire cash crunch annd considering bankruptcy and defaulting on your house loan. You'd have an option where the government pays off 10% of your principal, and your payment drops about the same amount. I'll add some specific numerical examples later. You don't get the money for free though, it's a loan from America, a second lien on your house. When you finish paying off your home loan, your govt subsidy loan comes due, and you start paying that. All the while it's been accruing at the same low rate (ZERO!) the government had to pay to borrow the money from China. Maybe we can even add a point or two: it will still be a great deal (compared to a 5% bank loan) and, while you have to work longer to get out from under your house, so to, do I, to pay off all the additional debt the nation is incurring to fund Chrysler's bailouot, and Citibank's bailout and etc. This is an appropriate shared liability.
Further, anybody could take advantage of it. Heck I might! Since I can make my present house payment, the reduced principal would let me pay the house down faster, and I'd finish off the whole loan with less total outlay. It's like my house got busted into two loans, one still at 5% and the other fraction of the principal at 0%! Of course I pay off the expensive one first. Good deal for everybody.
Some security strings could be attached to this funding. Since a key problem is our propensity to get too deep in debt, perhaps in exchange for access to this money, you must agree not to increase your debt to income ratio. So you can't take the extra $100/month and run out and get a car (loan). The idea here is to become more like the Chinese and LESS like, well, ourselves!
What do you say?
First what is it? I heard it's a plan to incentivize loan rate reductions, half a % to be paid by the bank and half a % + the documentation fees paid by the government. Clearly this plan will "work" in that it will have takers. People want to refinance (heck, I did) so if it gets easier to do so, more will. If the Govt were to just pay the 1/2%, I would expect market forces would drive housing interest rates down that much, right? It is a little hard to see how the bank is motivated to kick in thier 1/2%. Maybe I'm missing something? (There are other disjoint parts of the plan, but I want to think just about this single factor for a bit.)
Also, I had a little bit of "isn't this how we got into this mess?" reaction to the plan. The lower the interest rate, the more you can borrow. But maybe the problem isn't the principal but rather the fixed expense the loan introduces into the family's budget. People need to get themselves into less trouble, by aiming lower, not accepting high payments. Maybe the loan criteria should be stricter: payments =20% of monthly income, instead of 30%. THAT way you'd be giving out loans with less risk, right? More later, sorry for the half baked thought.
Also, how can we enforce bank participation? They're supposed to contribute 1/2% but in the ongoing re-evaluation of market demand and setting loan rates so they can cover their risks and make a profit, it seems the 1/2% will just vanish in the bookkeeping.
Finally, lets remember, as a transition to and motivation for my proposal (following) that this is essentially America (meaning you and me) taking on additional debt liability in the form of T-bills, to pay for somebody else's mortgage. I think the guys who got in too deep should participate personally in the solution. Here's how:
Consider solving the problem by lowering everybody's payment 10%, and extending their loan commennsurately in duration. It would immediately alleviate the homeowner's cash crunch, and shouldn't cost us (taxpayers) anything other than the additional risk of covering the defaulters. Of course there would be some of that, but this does not amount to a free giveaway, so it's a tiny fraction of the loss. How could it work? Well, this thought stemmed from a discussion about the spread between Tbills and home loans. Currently I understand that to be about 5%. I pay 5% for my home loan (about the best you can get) and I heard our debt is being snapped up for ZERO percent interest right now. Parenthetically, that means that in these hard times, US currency is still viewed by the rest ofthe world as a great deal. Why is that spread so big? Hey, I wannna sell a T-bill to china for 0% and finance my house for nothing! Where does the money go? The answer is middlemen's profits (salaries for the bankers) and to cover the risk of defaulting. Well, let's eliminate the middlemen and since we (the Govt) are forced to cover this risk anyway, let's not let somebody ELSE (the bank) book it as risk and bank it as profit. Essentially we are self insuring, for better or worse, across the spectrum of these loans.
Mechanically it works like this: Say you're in a dire cash crunch annd considering bankruptcy and defaulting on your house loan. You'd have an option where the government pays off 10% of your principal, and your payment drops about the same amount. I'll add some specific numerical examples later. You don't get the money for free though, it's a loan from America, a second lien on your house. When you finish paying off your home loan, your govt subsidy loan comes due, and you start paying that. All the while it's been accruing at the same low rate (ZERO!) the government had to pay to borrow the money from China. Maybe we can even add a point or two: it will still be a great deal (compared to a 5% bank loan) and, while you have to work longer to get out from under your house, so to, do I, to pay off all the additional debt the nation is incurring to fund Chrysler's bailouot, and Citibank's bailout and etc. This is an appropriate shared liability.
Further, anybody could take advantage of it. Heck I might! Since I can make my present house payment, the reduced principal would let me pay the house down faster, and I'd finish off the whole loan with less total outlay. It's like my house got busted into two loans, one still at 5% and the other fraction of the principal at 0%! Of course I pay off the expensive one first. Good deal for everybody.
Some security strings could be attached to this funding. Since a key problem is our propensity to get too deep in debt, perhaps in exchange for access to this money, you must agree not to increase your debt to income ratio. So you can't take the extra $100/month and run out and get a car (loan). The idea here is to become more like the Chinese and LESS like, well, ourselves!
What do you say?
Bankrupt Arguments
I have heard three times in as many days, expressions of grave dissapointment and dismay at the proposed financial recovery plans coming out of the democrats. This has driven me to a real anger, to the point that I feel it's unhealthy to politely pretend there is no such thing as politics, just for the sake of maintaining a nice friendly exterior. Our friendships, I hope, can withstand some frank conversations.
Here are the three arguments.
In reverse order, my rebuttals are...
3) Isn't it a little late for the pot to point at itself and say "you're black as sin!" and, does Cheney's pet company and the money wasted thereupon necessarily imply or even suggest that some other companies would be equally guilty? Fundamentally, the solution is to carve out the rot. It is logically corrupt to visit the sins of the father upon the son. Furthermore, the gentleman entirely misses the point that money spent on Halliburton ends up in their corporate accounts or Iraqui infrastructure, often employing foreigners. From our perspective, it is money destroyed, entropy. A school or road built HERE has lasting benefit. A bomb exploded in the desert is eventually filled in again with sand, a complete and utter waste of the sweat that built that. It's the fundamental difference between destructino and construction. I understand Halliburton is not directly involved in the exploding part of the Iraqui enterprise, but inasmuch as they reconstruct infrastructure we priorly disassembled with explosives, it is part of the overall equation, which, let's not forget, has been > $100B/yr
2) The senator's Freudian gaffe at the beginning almost makes my case for me. Again, we have a very clear case of simply turning the argument around because of political partisanship. It couldn't be any clearer. Sir, I've been burned once before too; I used to be a republican.
1) Let's ignore for a moment the recurring theme of immediately changing one's mind about policies the very day the presidency changes political parties, although that alone should destroy this guy's credibility. Lowering taxes is the form of borrowing cited here, and tax relief is a very big part of the bailout plan. (ok I guess we have to ignore that the diatribe was always tax and spend," right? It's Republicans who borrow and spend, right.) It changes the budget balance. The essential question each year is how much defecit to accrue, and where to spend the money. In lowering taxes (and that's proposed, for pete's sake!) you elect to broaden the defecit in hopes of alleviating the individual financial pressures that constrain spending. There is the further distinction of where in the income histogram (down at the subsistence level, up in the wealthy level) to apply the benefits or extract the tolls, and that is a fundamental republican/democrat schism lately. As one of the wealthy ones, and in particular a principal at a corporation strapped for credit and at risk, I feel qualified to offer that I think I have more than enough money, and less than enough security. Those of you secure in your wealth had better not offer that the rich are being taxed too much, and had better remember that families making under $200k will receive tax cuts. If you are making more than that, and you want to complain, I have no ears for you.
I am very interested, and will not delete, your arguments. If you want to reply privately, I will honor that privacy. But I will not spare you the full force of whatever arguments I have. I am very very sick of this shit, and not interested in another fatcat trying to win arguments with tricky emotional arguments. I understand English very very well, unfortunately for some of you senators. My main hope is to educate enough children to a clear and concise method of parsing what is said rather than listening to the jeering and snorting, to run you bastards out of office forever.
Mark
Here are the three arguments.
- "Oh my God, he thinks he can borrow and spend our way out of this." This congressman expressed absolute horror at the concept of the (second half) of the bailout, after voting for the first half of it.
- "I've been burned by this, err, by the current administration once, <> so now I can't be fooled a second time <>"
- And finally, this last a very loose paraphrase, but as accurate as I can make it, an argument that we shouldn't select infrastructure projects as a way to apply stimulus because "that's thesame thing we did in Iraq with Halliburton and look at all the corruption and opportunities for fraud we have uncovered there!"
In reverse order, my rebuttals are...
3) Isn't it a little late for the pot to point at itself and say "you're black as sin!" and, does Cheney's pet company and the money wasted thereupon necessarily imply or even suggest that some other companies would be equally guilty? Fundamentally, the solution is to carve out the rot. It is logically corrupt to visit the sins of the father upon the son. Furthermore, the gentleman entirely misses the point that money spent on Halliburton ends up in their corporate accounts or Iraqui infrastructure, often employing foreigners. From our perspective, it is money destroyed, entropy. A school or road built HERE has lasting benefit. A bomb exploded in the desert is eventually filled in again with sand, a complete and utter waste of the sweat that built that. It's the fundamental difference between destructino and construction. I understand Halliburton is not directly involved in the exploding part of the Iraqui enterprise, but inasmuch as they reconstruct infrastructure we priorly disassembled with explosives, it is part of the overall equation, which, let's not forget, has been > $100B/yr
2) The senator's Freudian gaffe at the beginning almost makes my case for me. Again, we have a very clear case of simply turning the argument around because of political partisanship. It couldn't be any clearer. Sir, I've been burned once before too; I used to be a republican.
1) Let's ignore for a moment the recurring theme of immediately changing one's mind about policies the very day the presidency changes political parties, although that alone should destroy this guy's credibility. Lowering taxes is the form of borrowing cited here, and tax relief is a very big part of the bailout plan. (ok I guess we have to ignore that the diatribe was always tax and spend," right? It's Republicans who borrow and spend, right.) It changes the budget balance. The essential question each year is how much defecit to accrue, and where to spend the money. In lowering taxes (and that's proposed, for pete's sake!) you elect to broaden the defecit in hopes of alleviating the individual financial pressures that constrain spending. There is the further distinction of where in the income histogram (down at the subsistence level, up in the wealthy level) to apply the benefits or extract the tolls, and that is a fundamental republican/democrat schism lately. As one of the wealthy ones, and in particular a principal at a corporation strapped for credit and at risk, I feel qualified to offer that I think I have more than enough money, and less than enough security. Those of you secure in your wealth had better not offer that the rich are being taxed too much, and had better remember that families making under $200k will receive tax cuts. If you are making more than that, and you want to complain, I have no ears for you.
I am very interested, and will not delete, your arguments. If you want to reply privately, I will honor that privacy. But I will not spare you the full force of whatever arguments I have. I am very very sick of this shit, and not interested in another fatcat trying to win arguments with tricky emotional arguments. I understand English very very well, unfortunately for some of you senators. My main hope is to educate enough children to a clear and concise method of parsing what is said rather than listening to the jeering and snorting, to run you bastards out of office forever.
Mark
Politics
Politics
- Democrats are more fiscally conservative than republicans. I was carefully raised to think otherwise, and probably it wasn't always so, but here is an astounding summary: From 1946 to today, Democratic presidents pushed the deficit up by 3.2 percent per year. Meanwhile, Republican presidents increased the budget deficit by 9.7 percent. In other words, since 1946, Republican presidents have outspent Democratic presidents by almost 3 to 1. The reference needs validation, and I will try to find some. Subjectively, I think NAFTA is the largest conservative activity of our time and as we recall, that's Clinton's. Meanwhile, the Fed housing give-away/bubble is a consequence of Republican policy years. How does pundit thinking assess the connection between low interest rates and high home prices: surely they are coupled. Was that good policy?
- In partial support of the above, Gina provided this link which identifies numerous economic indicators such as GDP, disposable income & deficit, including assessments assuming various lag times (assuming a president doesn't instantly affect the economy). It's well supported in terms of identifying references (which look good to me) and critiques. In summary, I believe the "tax and spend" mantra is propaganda, and insupportable.
- Besides just spending, and possibly way more important, is what you spend it on. Military (and space, I gotta admit) investments (beyond those needed to stay sovreign) reduce money to entropy, while school, infrastructure, technology investments leave something tangible in their wake. Both stimulate the economy. In the long run, the military method is worse.
- We should lower military pay until we're short of soldiers, then start a draft. Our mercenary army removes the compulsion to be damn sure we really really want to have a war. (Obviously we need very strong legal setup to avoid a silver spoon draft: preventing people at the top (like me) from finding a nice safe field hospital for their special progeny. My suggestion is that the decisionmakers in our society must have their progeny at risk. I do not say we should drift to a mostly conscript army: our military is the most professional, humane, effective because of professional soldiers, but there should be an element of conscripts, just to force us to remember we all must share their risks in a very real way.
- Income is unequally distributed (no surprise, and I am not suggesting inequity). The wikipedia article has a pretty good graph used to showing a growing spread, but the importance is not the time trend so much as the vertical distribution: roughly half the income is distributed amongst the top quarter of the households. While your reaction to the data is your own, the information is not good or bad, it is just unvarnished fact. Do we want it that way? What, if anything, should we do about this? Again, the trend is growing. Economic and taxation policies affect the curve: income EARNED is not the same as income KEPT after taxes & you should properly imagine that factor flattening the curve. I suggest, (and this is not a new argument) that where the government takes action, it should inject stimulus near the bottom. Living with less margins, those people will have to spend. Bubble up instead of trickle down.
Unusual workouts
I want to come up with a bunch of unique & fun training events for this coming year. Here are some ideas I haven't done yet.
Here are ones I did...
- Funny walks: lunges & such.
- NCAR repeats.
- Water running? Vertical kicking, certainly.
Here are ones I did...
- Backwards! Running, bike trainer, hills & stairs.
- Ergometer with the aft end elevated a few inches (to work hamstrings).
- Snowboarding (counts 'cause of extreme unusual pain: that's the criteria after all.)
- towing loaded snowboard.
- Running up Scott Carpenter hill (sometimes backwards) at a dead sprint. (30 reps).
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