Alkahest my heroes have always died at the end

September 29, 2008

Idle bailout thoughts

Filed under: Social — cec @ 12:30 pm

Okay, this is probably the last of the foreseeable posts on the Wallstreet bailout – and probably the most serious.

I spend the last week extremely pissed off about the bailout. Here were a bunch of idiots absurdly inflating the price of housing, with other idiots actually loaning them money to do so, more idiots treating the bad loans as assets and still more idiots insuring them against loss under ridiculous assumptions. It’s not really a surprise that the whole thing blew up. The only surprise is that it took as long as it did. Hell – 5 years ago in late 2003 when K and I bought our current place, we were worried that there was a housing bubble inflating prices beyond what the properties were really worth. And this was in North Carolina which didn’t have the hottest housing market.

But here we are, we’ve got banks going defunct left and right and we’ve got republicans arguing that they really, really have always supported more federal regulation. The latter is one of the signs of the apocalypse for those keeping score at home. So along comes Paulson saying that he needs $700 billion to keep this from truly going in the crapper. The reason I’m so pissed off is that I agree.

Let’s put it this way – the U.S. economy (GDP) is on the order of $14 trillion. In other words, the bailout proposal was 5% of GDP. Now in real terms $700 billion or 5% of GDP are insanely huge amounts of money. Something like $7,000 per household. But if the economy collapses or if we go into a deeper recession than we otherwise would have, 5% of GDP is chump change. The economy could easily slow 5% in a year (or 2.5% each over two years, etc.). In other words, the proposed cure is cost effective compared to letting the disease run its course without intervention.

Given that we need some form of intervention to prevent a complete meltdown, there are a few questions that have to be addressed:

  1. What is the proper size of the intervention?  How much do we need to spend?
  2. How will the plan work?  How will assets be valued?  Who has oversight?  etc.
  3. Who pays for it?

In all of these, the original (3 page) Paulson plan was completely inadequate.  Paulson picked the $700 billion number out of thin air.  Hell, for all I know he thought it should be 5% GDP and backed out the $700b from there.  The original plan said nothing about how the assets would be valued – essentially, the govt would likely pay the original value of the assets regardless of their actual worth.  Paulson was to have no oversight and all decisions were to be final with no appeal to judicial recourse.  Finally, for the plan to have worked, taxpayers would have to lose money which means that the benefits would primarily go to those of us with money in the stock market (401k retirement funds, etc.) or to the financial institutions themselves and the burden would fall on our standard tax system which places only a slightly higher burden on the rich than it does the rest of us.

So that plan won’t/shouldn’t fly.

What about the new plan?  On Sunday, the congress and the whitehouse finalized a new proposal.  Caveat lector – I haven’t read it yet, I’ve only looked at excerpts.  But from what I’ve seen, it is better in almost every way to the original Paulson plan.

The new bill grants the Treasury $350b up front and the rest isn’t guaranteed.  Congress will have significant oversight.  There are two ways that Paulson can buy assets: 1) conducting a reverse auction to find the true worth of the assets; or 2) essentially buy equity in the company equal to the amount of money received for taking the assets.  The former is likely to generate smaller amounts of money for the companies, but does allow them to get the bad assets off of their books.  The latter may be useful for companies in worse financial shape.  In either case, the govt is essentially getting something of value for the money it’s spending.  Oh – and companies that participate in the bailout have to agree to reductions in executive compensation which is a good thing.  I still wish they were required to participate in credit counseling – along the lines of that required for consumers under the 2005 bankruptcy law, but I might just be thinking punitively.

So, what’s not to like?  Probably quite a bit – like I said, I haven’t had a chance to read the 110 page draft.  One thing that’s probably not to like is that the bill allows the SEC to temporarily suspend Mark-to-Market accounting.  This is just dumb.  It would allow the SEC to look the other way while companies pretend that they are worth more than they really are.  It’s a way to allow the companies to claim that their assets are worth more than the market would pay for them, allowing the companies to appear healthier than they really are.  That’s not really helpful.

So, I’ll probably read through the full bill tonight, but for the most part I think I support it.  It’s not perfect, but it seems to be both necessary and significantly better than the original Paulson bill (oh, and much better than the silly House Republican proposal, but we won’t get into that).

September 23, 2008

We are all socialists now

Filed under: Uncategorized — cec @ 8:18 pm

Welcome to the new socialist state… comrade.

From Propublica, an inflation adjusted comparison of bailouts.

September 20, 2008

Public service announcement

Filed under: Social — cec @ 8:14 pm

As a public service announcement, I am hereby warning the people I know that in light of the bailouts of Fannie Mae, Freddie Mac, AIG, and the entire freaking banking system, all of which will cost tax payers about $1 trillion, the next person that tells me that deregulating markets will provide a solution to anything will be asked to STFU.

thank you and good night

September 17, 2008

Happy birthday to the U.S. Constitution

Filed under: Uncategorized — cec @ 3:22 pm

Oh, on an entirely unrelated note, the U.S. Constitution was signed 221 years ago today – happy birthday!  Okay, it wasn’t ratified for a couple of years after that, but still…

If you’ve got some time, take a read.  It’s still the most impressive government document I’ve ever read.

A few years ago, I wanted to start a project that took the individual clauses of the constitution and traced the arguments for and against them back to the original sources or at least to the debates between the signing and ratification.  The Federalist Papers , Notes of Debates in the Federal Convention of 1787 Reported by James Madison and many of the documents collected in the two volume Library of America’s Debate on the Consitution would have featured prominantly.  Never did have the time to kick that off.

Baton Rouge – good news, bad news

Filed under: Uncategorized — cec @ 2:58 pm

So, one more update on Gustav in Baton Rouge and then I’ll return you to your regularly scheduled odd musings, rants and wildlife pictures.

First, the good news – I got a text message from my mother last week.  They got power back!  Only 10 days without power.  I suppose that’s not too bad.  No word from K’s parents, but they had moved into K’s sister’s condo that did have power, so I’m guessing they’re still there.

The bad news is that my parent’s 100+ year old pecan tree that was struck by lightening a few years ago (and dying) just couldn’t take the hurricane.  Too much concern that the root structure was loose and that it was going to fall on a house and completely crush it.  So, they had to have it taken down.  Three nice sized pecan trees in my parent’s yard – all gone, along with most of the limbs on an old magnolia and their Japanese magnolia.  🙁

The ironic news is that even though I knew they had power, I couldn’t get in touch with them on Monday to wish my father a happy birthday.  So last night, I called my mom’s cell which was answered by my dad.  Odd, but okay.  I wished him a happy birthday and told him that I was sorry that I couldn’t reach him the day before.  It turns out that I couldn’t reach him because their power was out again.  Apparently the tree service accidentally dropped a limb on the power lines and took out power for them and the 3 or 4 nearest houses.

Somehow I’m imagining that a self-inflicted power outage is not going to be too high on the power company’s list of priorities.  Fortunately, they are down to a manageable number of outages in Baton Rouge, so even with the majority of the power assistance now going to Houston/Galveston for Ike, my parents might still get power back soon.

September 3, 2008

Baton Rouge . . . disaster area

Filed under: Uncategorized — cec @ 9:58 pm

I spoke to my mom for a little while this evening and got an update on where things stand in Baton Rouge or at least in her corner of it.  A summery for those of you interested in Baton Rouge:

  • The news keeps talking about how mild things were in New Orleans, but the only time you hear about Baton Rouge is in passing.  For example, I’ve heard at least two NO evacuees mention that things are better in NO than in the shelters in BR.  That is, in part, what’s driving the exodus back south.
  • While the winds weren’t as bad in BR as they were in NO, they were (near) record winds for the city.  BR has more trees and they haven’t experienced winds like this, so there were a lot of trees that fell down.
  • The local power company is estimating six to eight weeks before they get power to everywhere in the city.  There are major grids in the city that don’t have power and then once those major sections are restored, they will still have to restore to the local homes/offices.
  • My parents did find a plumber to get the water line fixed.  They are on the waiting list for a tree guy that can cut up a tree trunk as large as the one that fell in their yard (3′?) – it’s not really a do it yourself job.
  • Almost every yard in my parents’ neighbourhood has a tree down.
  • Most of the houses have experienced some damage.
  • Probably 20% of the houses have trees through the roofs.
  • There are a large number of cars that were struck by falling trees.
  • Many of the power poles on the main road outside of the neighbourhood are down.  In the neighbourhood, there are few intact sections of power line more than 3 to 4 houses long.  Entergy will probably have to replace many poles and string a lot of new line.
  • There is a curfew in effect.  The National Guard did fire shots (in the air?) when some people tried to break into a FEMA trailer full of tarps.
  • Good news: there is fuel in many gas stations.  Bad news: there’s no power to pump it with.  Stations with fuel and power have long lines, in some cases backing up down the road.
  • My parents underestimated the amount of gasoline their generator requires (about 5 gallons a day) and are trying to find more 5 gallon cans.
  • It’s still raining and there’s little power, so some underpasses are flooding.
  • The humidity is very high.  To the point where my parents’ wood floors are damp and are occasionally collecting puddles.  Oh, and the mosquitoes are breeding, so the health authorities are warning people about West Nile.
  • There aren’t too many stores open, those that are open can’t accept credit cards (no phone lines) and so are requiring cash.

Taken as a whole, it reminds you of a post-apocalyptic distopian movie with people stocking up on water, fuel, food, guns, cash and gold.  Maybe Mad Max, The Stand or The Postman.  I suppose a comparison to Water World would be in poor taste…

September 2, 2008

Gustav (updated)

Filed under: Personal — cec @ 8:28 am

Both K’s and I are from Louisiana, Baton Rouge to be specific, so we kept a close eye on Hurricane Gustav over Labor Day weekend.  Fortunately, it looks like the storm weakened and the damage wasn’t as bad as it could have been.  There were a couple of levees in New Orleans that were topped (a good thing the storm surge wasn’t any higher or there would have been major flooding).

Baton Rouge is about 90 miles inland, so we weren’t too worried about flooding, but the rain and high winds can cause a lot of damage.  Since Gustav seemed to hold together pretty well, they did receive hurricane force winds in Baton Rouge, and online we saw the parish sheriff say that this was the worst storm damage he had seen in BR in his entire life.

I heard from my parents yesterday.  Everyone there is fine.  They did lose one of the three large pecan trees in their yard.  Fortunately, it wasn’t the oldest one which seems to be dying, but whose trunk is about 8′ in diameter and would have caused massive damage to anything on which it fell.  Even more fortunately, the tree that did fall fell in the one way that wouldn’t cause significant damage to my parent’s house or the neighbor’s house (see picture below).  It did take up a water line, so no water until they can get it capped off (assuming that the city pumps are working).

We still haven’t heard from K’s parents or sister.  We don’t have any reason to think that they aren’t okay, but it would be good if we could get through to them sometime today.

Update: We received a voice mail from K’s parents today around 2pm.  Everyone’s fine.  They had some carport damage and noted that there’s a lot of damage around the area.  We still haven’t been able to get in touch with them, but it’s good to know that they are okay.

August 1, 2008

notes from a Cramer mini-reunion

Filed under: Uncategorized — cec @ 9:50 am

Just got back from a mini-reunion of Cramers in Tennessee.  This was all of my uncles and cousins on my father’s side with the exception of my sister who has a three-week old baby at home.  To answer the obvious question, no.  No one lives in Tennessee, it’s just a more or less central place.  We came in from Texas, Louisiana, Georgia, North Carolina, Washington D.C. and New Jersey.

A few notes:

  • Tell your friends before you leave town for a week.  I forgot to do that and on Wednesday when we were driving home, I got a phone call asking if things were okay.  Sorry about that folks, and I appreciate the concern.
  • Never debate my uncles about anything.  It’s not that you’ll necessarily lose – it just isn’t worth it.  Example, on the first night we were there, we were sitting around talking and sampling some whiskey my cousin brought.  At some point, we get on the topic of Woodrow Wilson.  One uncle admits to being fond of Wilson, his twin says that he was the first fascist and a Nazi.  Huh?  After going around quite a bit, discussing Wilson’s flirting with eugenics (not too uncommon at the time), we get to the point where Wilson is also being accused of treason for undermining (iirc) Taft; which then gets to Nancy Pelosi being accused of treason for undermining Bush.  At that point I noted that neither of these cases met the constitutional definition of treason.  Uncle #2 (the one making fascist and treason accusations) didn’t realize that the constitution defined treason (sigh).  He then further admitted that he didn’t really know that much about Wilson either, he hadn’t even read a book on Wilson; but he had read a review of a book on Wilson.  This became the punchline of many jokes later in the trip.
  • The family either a) drinks more or b) talks more about drinking than it did when Grandma Cramer was alive.  Some of this may be that almost all of the cousins are over 21 now.  Some of it may just be that Grandma Cramer didn’t approve of drinking alcohol and everyone kept it under wraps when she was around.
  • Whitewater rafting is still a blast.  We rafted the middle section of the Ocoee river which I haven’t done in maybe 20 years.  Of course, it’s been about 13 years since we’ve done any rafting at all.  We managed not to lose anyone from the boat this time, in spite of my father’s best efforts at drowning us while we were surfing a rapid 🙂
  • It was great to see all of the cousins again.  I didn’t see Matthew since he was only there the first day and we didn’t get in until the second, but other than that, I saw folks that I haven’t seen in more than five years.  It’s funny how people with so many different political and social views, located in entirely different parts of the country who haven’t seen each other in years can be so similar.  Chalk up another win for nature as opposed to nurture.
  • Finally, the drive each way was a little more than six hours for us.  That was among the shorter drives, but I’m really getting too old for long car trips.  Next time, maybe we’ll fly into Knoxville and drive the hour from there.

July 15, 2008

Oil makes you stupid. . . news at 11

Filed under: Uncategorized — cec @ 12:05 pm

I knew that there were a lot of chemicals that when ingested could make you stupid.  Drugs, sure.  Lead and mercury, definitely.  But apparently even thinking about oil makes people stupid.  Consider the following:

For weeks, republicans have been pushing the idea that either a) the Cubans are drilling in Cuban waters off the coast of Florida; or b) that the Chinese are drilling for oil in Cuban waters off the coast of Florida.  The only problem of course is that this is demonstrably false.

More recently, republicans have started talking up the idea that off shore drilling is much safer than it used to be, and that during hurricanes Rita and Katrina, there were no oil spills.  Except, um, that’s not really true either.

And then yesterday, Bush lifted the executive coastal drilling ban put in place by his father.  According to the NY Times, he said:

“With this action, the executive branch’s restrictions on this exploration have been cleared away,” he said Monday. “This means that the only thing standing between the American people and these vast oil resources is action from the U.S. Congress.”

And, yeah, in case you were wondering, this is also not true:

  1. Oil companies already have drilling rights and leases on large amounts of land that they are not currently drilling under.  Allowing them to drill off shore does not mean that they necessarily will
  2. Development of the drilling sites is 10 years away.  So the soonest the oil would have an effect on supply is 2018.
  3. The amount of oil that we are talking about is relatively small.  While there are a lot of estimates about the totals, the key is the daily amount.  Putting this into perspective, the world uses about 74 million barrels a day of oil (about 84 million barrels of oil plus oil equivalents).  The US uses a quarter of that – around 21 million barrels per day.  At it’s peak, most estimates I’ve seen are that off shore drilling plus drilling in the ANWR would generate about 250,000 barrels per day – a mere drop in the bucket.  If you consider the amount the US and the world are projected to use by 2018 (assuming unrestricted supply), you find that all of that drilling is estimated to reduce the price of oil by a few dollars per barrel.
  4. Finally, over the next 20 to 40 years, the US is (or more to the point, should be) committed to using less oil.  The current G8 targets are to cut CO2 emissions by 50% over the next 40 years.  That seems to imply that we need to be using much less oil than we are now – starting very soon.  Far be it from me to suggest that the selection of CO2 targets was disingenuous, so taking these folks at their word, we should skip the drilling and start working on the alternatives.

I suppose that I shouldn’t be surprised that discussing oil brings out the stupid.  It’s a very touchy subject in the US.  I came across one good reason for this in Kevin Phillips’s two recent books: “American Theocracy” and “Bad Money.”  Phillips notes that in the same way that knowledge and use of coal was the key to the British empire and knowledge and use of wind was the key to the Dutch empire before that,  the key to US power is the knowledge and use of oil.  So any discussion of using less oil or not having enough oil, strikes directly at the heart of US power.

However, oil is a finite resource.  If the US wants to retain its power in the second half of the 21st century, we need learn to use other, renewable sources of energy, and the continued focus on maintaining cheap oil supplies are not going to help.

July 4, 2008

Happy 4th of July

Filed under: Social — cec @ 8:41 pm

I hope everyone’s having a great 4th of July (at least those of us in the States, folks from other countries can be forgiven for not thinking too much of it).

July 4th, along with Thanksgiving, is one of my favourite holidays.  That may surprise some folks.  It’s not like the house is decorated in red, white and blue.  I’m not wearing a flag pin, the Pledge of Allegiance makes me uncomfortable and I’m not that into fireworks.  But external trappings aside, I consider myself to be a very patriotic person.  I just don’t define patriotism as being synonymous with “flag waving.”

Patriotism to me is not about loving your flag, or thinking that your country can do no wrong.  To me, patriotism is the love of the ideals that founded the country.  Thinking that your country can do no wrong or that you should love the flag or say the Pledge of Allegiance is no more than nationalism.  If you had been born in any other country, you would be equally “patriotic” to that nation.  The United States was not born from such nationalism, instead we were founded with a belief in 18th century enlightenment values.  The first paragraphs of the Declaration of Independence are filled with such ideals:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

As a country, we have not always lived up to these ideals, but it is the ideals themselves and not the trappings that are important.  This is the reason that the president is subject to the rule of law.  This is the reason that criticism of the government is a patriotic act and that refraining from such criticism when justified is an act of cowardice.  It is only when citizens criticize and elected officials act on such criticisms that the country can improve and come closer to the ideals that we were founded upon.

Have a happy 4th of July.

« Newer PostsOlder Posts »

Powered by WordPress