"And if an epitaph be my story, I'd have a short one ready for my own: I had a lover's quarrel with the world." -- Robert Frost
Monday, January 12, 2009
Republicans v. Democrats
I know it's after the election, but this post, from another blogger, neatly summarizes the philosophical differences between Republicans and Democrats. As I've written elsewhere, Americans were very fortunate to have two honorable men vying for America's top post.
Sunday, January 11, 2009
Chrysler's Promises in December 2000
Automobile companies recently received a bailout from the White House. They promised to restructure, become more efficient, and gave the usual platitudes. These promises aren't new. The only difference seems to be that now, the Big Three are playing with taxpayer money instead of their own. Here are some excerpts from DaimlerChrysler's letter to shareholders, dated December 2000:
Over the last five years, [1995-2000] we have completely restructured and refocused the DaimlerChrysler Group...In the process, we have shed not only a number of loss-making and non-core operations, but we have also considerably improved the cost structure of our automobile operations in Germany... [Great! So things should be fine now...right?]
During the course of the year, we have also taken further important steps to focus our operations on the core automobile business...[But] competitive pressure in the US automobile market increased significantly, as evidenced by the strong rise in sales incentives or discounts which are up by over one third compared with a year ago, and are almost three times what they were in 1997... [Oh, I get it. It's not you--it's your competition. You can't compete on the open market. Got it.]
The management team has a wide-ranging mandate to reposition and restructure the Chrysler business to enable it to regain its strong market position and to become highly profitable again...
In order to restore Chrysler to profitability as soon as possible what is already clear is that we must also restructure the business--this will bring with it a cost. [Sounds like the job of the "car czar" has already been done.] This expenditure however should also ensure DaimlerChyrsler maintains its position at the forefront of the modern automobile industry. [Chrysler was mentioned as the most likely candidate for bankruptcy before the bailout.]
It boggles my mind that our government is using our money to finance companies that can't seem to ever get it together. In a hilarious press release titled, "The $13 Billion Industry Is In No Fear Of Collapse, But Why Take Chances?", Larry Flynt satirized the notion of bailing out troubled industries. Jokes aside, when, if ever, does moral hazard trump "too big to fail"? This question isn't just idle thinking. The bailouts have exposed a core weakness in our political system. Apparently, if you can't compete on the open market, all you need is a bunch of lobbyists to convince your government to give you taxpayer money. Luckily, in this case, the political system actually worked--Congress rejected the auto bailout plan. Even so, the White House, over the objections of the public, provided the bailout money. George W. Bush in bed with the automakers and their unions? Historians will be amused.
Over the last five years, [1995-2000] we have completely restructured and refocused the DaimlerChrysler Group...In the process, we have shed not only a number of loss-making and non-core operations, but we have also considerably improved the cost structure of our automobile operations in Germany... [Great! So things should be fine now...right?]
During the course of the year, we have also taken further important steps to focus our operations on the core automobile business...[But] competitive pressure in the US automobile market increased significantly, as evidenced by the strong rise in sales incentives or discounts which are up by over one third compared with a year ago, and are almost three times what they were in 1997... [Oh, I get it. It's not you--it's your competition. You can't compete on the open market. Got it.]
The management team has a wide-ranging mandate to reposition and restructure the Chrysler business to enable it to regain its strong market position and to become highly profitable again...
In order to restore Chrysler to profitability as soon as possible what is already clear is that we must also restructure the business--this will bring with it a cost. [Sounds like the job of the "car czar" has already been done.] This expenditure however should also ensure DaimlerChyrsler maintains its position at the forefront of the modern automobile industry. [Chrysler was mentioned as the most likely candidate for bankruptcy before the bailout.]
It boggles my mind that our government is using our money to finance companies that can't seem to ever get it together. In a hilarious press release titled, "The $13 Billion Industry Is In No Fear Of Collapse, But Why Take Chances?", Larry Flynt satirized the notion of bailing out troubled industries. Jokes aside, when, if ever, does moral hazard trump "too big to fail"? This question isn't just idle thinking. The bailouts have exposed a core weakness in our political system. Apparently, if you can't compete on the open market, all you need is a bunch of lobbyists to convince your government to give you taxpayer money. Luckily, in this case, the political system actually worked--Congress rejected the auto bailout plan. Even so, the White House, over the objections of the public, provided the bailout money. George W. Bush in bed with the automakers and their unions? Historians will be amused.
Federal Budget Outlays
The Epoch Times had a good chart showing what the federal government projected it would do with our taxes in 2007:
http://en.epochtimes.com/news/7-4-15/54114.html
Social Security is the largest outlay, with 21% of our taxes going there. Next up is Defense, with 19%. Obama may reduce defense spending to shift more taxes towards infrastructure spending. Doing it this way would allow him not to raise taxes.
Defense hawks may disagree with any decrease in defense spending, arguing that it would cause a decline in domestic security. I do believe terrorists will hit the United States again, but much of the current defense spending is on major projects, like stealth fighters. Meanwhile, port security is inadequate. Consider this simple, low-tech scenario: a terrorist pays two dock workers to put an unmarked package on a ship. The dock workers will be told they are transporting drugs and will be paid a few thousand dollars for their discretion. In reality, the box would contain a major bomb or chemical weapon. The bomb doesn't even have to be inside a box. The terrorists could place a bomb inside an imported car, major appliance, or some other product that has many electrical components, making the bomb harder to detect.
Rather than focus on large-scale projects, such as the next generation of aircraft, which always seem to run over cost, the U.S. should shift more money into intelligence work. More specifically, Obama should hire more workers to 1) supervise America's major ports (e.g., Los Angeles, Miami, etc.); and 2) more effectively monitor the contents of packages before ships on-load and offload them. I realize modern ports have automated systems, but having more hi-tech automation doesn't necessarily lead to higher security.
If you're interested in reading more about Obama and defense spending, here is an interesting article:
http://www.cfr.org/publication/17793/
http://en.epochtimes.com/news/7-4-15/54114.html
Social Security is the largest outlay, with 21% of our taxes going there. Next up is Defense, with 19%. Obama may reduce defense spending to shift more taxes towards infrastructure spending. Doing it this way would allow him not to raise taxes.
Defense hawks may disagree with any decrease in defense spending, arguing that it would cause a decline in domestic security. I do believe terrorists will hit the United States again, but much of the current defense spending is on major projects, like stealth fighters. Meanwhile, port security is inadequate. Consider this simple, low-tech scenario: a terrorist pays two dock workers to put an unmarked package on a ship. The dock workers will be told they are transporting drugs and will be paid a few thousand dollars for their discretion. In reality, the box would contain a major bomb or chemical weapon. The bomb doesn't even have to be inside a box. The terrorists could place a bomb inside an imported car, major appliance, or some other product that has many electrical components, making the bomb harder to detect.
Rather than focus on large-scale projects, such as the next generation of aircraft, which always seem to run over cost, the U.S. should shift more money into intelligence work. More specifically, Obama should hire more workers to 1) supervise America's major ports (e.g., Los Angeles, Miami, etc.); and 2) more effectively monitor the contents of packages before ships on-load and offload them. I realize modern ports have automated systems, but having more hi-tech automation doesn't necessarily lead to higher security.
If you're interested in reading more about Obama and defense spending, here is an interesting article:
http://www.cfr.org/publication/17793/
Saturday, January 10, 2009
Battle of the Sexes
I was going through some old articles, and I found this one that reminded me of the battle of the sexes. Here are some quotes from the article:
Using hyperbole and humor that became infamous then, and sound far more awful today, Newsweek said those 40-year-olds were "more likely to be killed by a terrorist" than land a mate... Meanwhile, new research suggests that women today who are highly educated are actually more likely to find husbands.
At least we know what can knock the gender wars off the front pages: terrorism, a real war, and a recession.
Deflation--and Why It's Harmful
This PLI "Pocket MBA" article summarizes deflation so well, I had to share it:
http://inbrief.pli.edu/2009/01/deflation-ii-deflation-in-the-real-world.html
Before reading the above post, I didn't understand why deflation could lead to a Depression.
PLI also provides a link to another blog, Debtwatch, which may interest some readers:
http://www.debtdeflation.com/blogs/
http://inbrief.pli.edu/2009/01/deflation-ii-deflation-in-the-real-world.html
Before reading the above post, I didn't understand why deflation could lead to a Depression.
PLI also provides a link to another blog, Debtwatch, which may interest some readers:
http://www.debtdeflation.com/blogs/
Friday, January 9, 2009
Reason #2536 You Might Reconsider Law School
From the California Lawyer magazine (January 2009, page 34):
[L]awyers, as a group, have their own unique set of characteristics. For one thing, they are famously prone to depression. A frequently cited Johns Hopkins University study from 1991 found that among more than 100 occupations surveyed, attorneys topped the list for having major depressive disorders, suffering from depression at a rate 3.6 times higher than the general employed population..."You see figures that 20 to 25 percent of lawyers have an alcohol problem," says [Carol] Langford [who practices state bar defense]. "I think it's more like 40 percent."
When I went into law, I thought I could change the world. My thinking proved to be naive, as I learned about insurance, bankruptcy, overloaded court dockets, and procedure over substance. Hearing about my initial desire to change the world, one of my friends, also a lawyer, told me, with a kind laugh, "The world changed you." There's a lesson in there somewhere, but knowing I'm a positive agent in most of my clients' lives keeps me going. Like everything else, the legal profession is what you make of it.
_____________
As a peace-maker the lawyer has a superior opportunity of being a good man. There will still be business enough. -- Abraham Lincoln
Thanks to the Hon. Judge Morgan of the United States Bankruptcy Court (Northern District of California) for posting Lincoln's "Notes for a Law Lecture" outside her courtroom, where I and many other lawyers have discovered the above words.
[L]awyers, as a group, have their own unique set of characteristics. For one thing, they are famously prone to depression. A frequently cited Johns Hopkins University study from 1991 found that among more than 100 occupations surveyed, attorneys topped the list for having major depressive disorders, suffering from depression at a rate 3.6 times higher than the general employed population..."You see figures that 20 to 25 percent of lawyers have an alcohol problem," says [Carol] Langford [who practices state bar defense]. "I think it's more like 40 percent."
When I went into law, I thought I could change the world. My thinking proved to be naive, as I learned about insurance, bankruptcy, overloaded court dockets, and procedure over substance. Hearing about my initial desire to change the world, one of my friends, also a lawyer, told me, with a kind laugh, "The world changed you." There's a lesson in there somewhere, but knowing I'm a positive agent in most of my clients' lives keeps me going. Like everything else, the legal profession is what you make of it.
_____________
As a peace-maker the lawyer has a superior opportunity of being a good man. There will still be business enough. -- Abraham Lincoln
Thanks to the Hon. Judge Morgan of the United States Bankruptcy Court (Northern District of California) for posting Lincoln's "Notes for a Law Lecture" outside her courtroom, where I and many other lawyers have discovered the above words.
Thursday, January 8, 2009
Wise Words from Bush (Yup, You Read that Right)
Oh, the wisdom before an election.
Update: from the year 2000 debates, George W. Bush:
Q: How would you project us around the world?
A: "I'm not so sure the role of the United States is to go around the world and say this is the way it's got to be...one way for us to be viewed as the ugly American is for us to go around the world saying, 'We do it this way, so should you.' ... If we're an arrogant nation, they'll resent us."
Fed Judge Rebukes U.S. in Guantanamo Case
Just when you think it can't get worse, it does. A federal judge has accused the United States government of withholding evidence in a Guantanamo Bay case:
http://online.wsj.com/article/SB123127182296258253.html
U.S. District Judge Emmet Sullivan said he was forced to delay ruling on whether to free Aymen Saeed Batarfi because as many as 10 documents of classified information were withheld from the court until recently.
So here's what we know: the U.S. sought to deny Guantanamo detainees habeas corpus rights; it specifically placed them in Guantanamo, outside of the U.S., to bolster its argument that the detainees didn't deserve Constitutional rights; it detained them on secret evidence for years; and now it's hiding evidence?
It appears even after Justice Antonin Kennedy, attorney Seth Waxman, and Boumediene v. Bush, the U.S. Constitution is gasping for its life.
Here is an interesting documentary on Guantanamo:
http://www.gwu.edu/%7Ensarchiv/torturingdemocracy/program/
There is also an excellent, must-read article in Transcript, a UC Berkeley School of Law journal (Fall-Winter 2008, Vol. 40, No. 2). I can't find an online link, but it includes an article by Jon Jefferson titled, "Life After Gitmo," and an interview with Moazzam Begg.
Update on January 14, 2009: the Washington Post reports that some Guantanamo Bay detainees were tortured:
The interrogation, portions of which have been previously described by other news organizations, including The Washington Post, was so intense that Qahtani had to be hospitalized twice at Guantanamo with bradycardia, a condition in which the heart rate falls below 60 beats a minute and which in extreme cases can lead to heart failure and death. At one point Qahtani's heart rate dropped to 35 beats per minute, the record shows.
Americans should oppose torture because it's in our own self-interest. The next time an opposing country captures one of our military personnel, our moral authority to object to his/her torture may not exist.
Update: excellent WSJ Op-Ed (12/22/08) by Thomas Wilner.
http://online.wsj.com/article/SB123127182296258253.html
U.S. District Judge Emmet Sullivan said he was forced to delay ruling on whether to free Aymen Saeed Batarfi because as many as 10 documents of classified information were withheld from the court until recently.
So here's what we know: the U.S. sought to deny Guantanamo detainees habeas corpus rights; it specifically placed them in Guantanamo, outside of the U.S., to bolster its argument that the detainees didn't deserve Constitutional rights; it detained them on secret evidence for years; and now it's hiding evidence?
It appears even after Justice Antonin Kennedy, attorney Seth Waxman, and Boumediene v. Bush, the U.S. Constitution is gasping for its life.
Here is an interesting documentary on Guantanamo:
http://www.gwu.edu/%7Ensarchiv/torturingdemocracy/program/
There is also an excellent, must-read article in Transcript, a UC Berkeley School of Law journal (Fall-Winter 2008, Vol. 40, No. 2). I can't find an online link, but it includes an article by Jon Jefferson titled, "Life After Gitmo," and an interview with Moazzam Begg.
Update on January 14, 2009: the Washington Post reports that some Guantanamo Bay detainees were tortured:
The interrogation, portions of which have been previously described by other news organizations, including The Washington Post, was so intense that Qahtani had to be hospitalized twice at Guantanamo with bradycardia, a condition in which the heart rate falls below 60 beats a minute and which in extreme cases can lead to heart failure and death. At one point Qahtani's heart rate dropped to 35 beats per minute, the record shows.
Americans should oppose torture because it's in our own self-interest. The next time an opposing country captures one of our military personnel, our moral authority to object to his/her torture may not exist.
Update: excellent WSJ Op-Ed (12/22/08) by Thomas Wilner.
Wednesday, January 7, 2009
Swiss Helvetia Fund on U.S. Economy
The Swiss Helvetia Fund, Inc. (SWZ) issued its quarterly report. Here are Rodolphe Hottinger and Rudolf Millisits' thoughts on our current economic situation--and it's not a pretty sight:
It is now apparent that the so-called "debt super-cycle" of the the U.S. economy has gone into reverse and that, consequently, savings must be rebuilt. As a result, much lower consumption levels have to be expected for years to come.
Mssrs. Hottinger and Millisits take a dim view of recent government intervention:
While government efforts are addressing the liquidity issue for now and some of the solvency issues, these efforts have not yet resulted in making private credit more available.
I kept waiting for the silver lining, but to no avail:
The world economic order is being structurally re-balanced away from growth driven by the U.S. consumer. The current process of de-leveraging is the result of a reduction in the U.S. current account deficit, a condition that had been pushed to the extreme. During this adjustment period, accidents are prone to happen.
As more investors seek safe havens, the Swiss franc (FXF) may receive a boost. This would allow Swiss companies to increase M&A activity, strengthening their future competitiveness. Roche's expected acquisition of Genentech (DNA) is one example.
If you're looking to invest in Swiss shares, the iShares Switzerland ETF (EWL) has outperformed SWZ over the last two years. Today, for example, SWZ dropped over 3%, while EWL declined by less than 1%. As it happens, I own SWZ. I am unsure whether to add to my SWZ positions, or open a new position in EWL.
It is now apparent that the so-called "debt super-cycle" of the the U.S. economy has gone into reverse and that, consequently, savings must be rebuilt. As a result, much lower consumption levels have to be expected for years to come.
Mssrs. Hottinger and Millisits take a dim view of recent government intervention:
While government efforts are addressing the liquidity issue for now and some of the solvency issues, these efforts have not yet resulted in making private credit more available.
I kept waiting for the silver lining, but to no avail:
The world economic order is being structurally re-balanced away from growth driven by the U.S. consumer. The current process of de-leveraging is the result of a reduction in the U.S. current account deficit, a condition that had been pushed to the extreme. During this adjustment period, accidents are prone to happen.
As more investors seek safe havens, the Swiss franc (FXF) may receive a boost. This would allow Swiss companies to increase M&A activity, strengthening their future competitiveness. Roche's expected acquisition of Genentech (DNA) is one example.
If you're looking to invest in Swiss shares, the iShares Switzerland ETF (EWL) has outperformed SWZ over the last two years. Today, for example, SWZ dropped over 3%, while EWL declined by less than 1%. As it happens, I own SWZ. I am unsure whether to add to my SWZ positions, or open a new position in EWL.
Good Times for SCU Grads
I graduated from Santa Clara Law School in 2002. It looks like Santa Clara University grads are doing well under Obama:
http://www.scu.edu/news/releases/release.cfm?month=0109&story=Panetta
Leon Panetta will take over the Central Intelligence Agency. He will work with another SCU grad, Janet Napolitano, who is the current appointee for Director of Homeland Security.
You smell that? Yup, that's change in the air.
Update: https://willworkforjustice.blogspot.com/2018/04/santa-clara-universitys-law-school-dean.html
http://www.scu.edu/news/releases/release.cfm?month=0109&story=Panetta
Leon Panetta will take over the Central Intelligence Agency. He will work with another SCU grad, Janet Napolitano, who is the current appointee for Director of Homeland Security.
You smell that? Yup, that's change in the air.
Update: https://willworkforjustice.blogspot.com/2018/04/santa-clara-universitys-law-school-dean.html
Tuesday, January 6, 2009
From Brooklyn to Minnesota
I don't own a home. I view big homes as money pits. Once you factor in the property tax, possible HOA fees, and maintenance costs, stocks and bonds don't seem too shabby. Here's an interesting article about one couple's journey to homeownership:
http://escapebrooklyn.blogspot.com/2009/01/dhs-long-awaited-guest-post.html
http://escapebrooklyn.blogspot.com/2009/01/dhs-long-awaited-guest-post.html
Religious Profiling
A t-shirt with Arabic script? 10 dollars. TSA costing taxpayers 240,000 dollars because of its ignorance? Well, 240,000 dollars. Government ineptitude in action? Timeless.
I wish the article mentioned the name of the attorneys handling the case [Update: according to the ACLU's website, the attorneys were Aden Fine, Reginald Shuford, Dennis Parker, Director of the ACLU Racial Justice Program, and Palyn Hung of the NYCLU]. Raed Jarrar was the plaintiff.
I was laughing at the TSA's stupidity until this line: "Last week, nine Muslims, including three children, were ordered off a domestic US flight after passengers heard what they believed were suspicious remarks about security...[E]ight of them [were] US citizens, were cleared by the FBI, [but] they were reportedly still barred from the AirTran flight."
"If the pilot is uncomfortable with someone flying on their plane, that's their decision," said Christopher White, a federal Transportation Security Administration spokesman. Is the TSA serious? Under their logic, if you pay for a ticket, and you say something the driver/pilot doesn't like, or you just happen to look at him the wrong way, s/he has the complete discretion to kick you off. Sounds like another lawsuit is in order.
Update: here's a link to more information, including a neat vid:
http://www.aclu.org/freespeech/gen/jarrar.html
Hat tip to Political Colors for the link.
I wish the article mentioned the name of the attorneys handling the case [Update: according to the ACLU's website, the attorneys were Aden Fine, Reginald Shuford, Dennis Parker, Director of the ACLU Racial Justice Program, and Palyn Hung of the NYCLU]. Raed Jarrar was the plaintiff.
I was laughing at the TSA's stupidity until this line: "Last week, nine Muslims, including three children, were ordered off a domestic US flight after passengers heard what they believed were suspicious remarks about security...[E]ight of them [were] US citizens, were cleared by the FBI, [but] they were reportedly still barred from the AirTran flight."
"If the pilot is uncomfortable with someone flying on their plane, that's their decision," said Christopher White, a federal Transportation Security Administration spokesman. Is the TSA serious? Under their logic, if you pay for a ticket, and you say something the driver/pilot doesn't like, or you just happen to look at him the wrong way, s/he has the complete discretion to kick you off. Sounds like another lawsuit is in order.
Update: here's a link to more information, including a neat vid:
http://www.aclu.org/freespeech/gen/jarrar.html
Hat tip to Political Colors for the link.
Law Students: Caveat Emptor
This WSJ article, from 9/24/08, has information for aspiring attorneys:
http://online.wsj.com/public/article_print/SB119040786780835602.html
He's making less money than at his last job and has thought about moving back to his parents' house. "I didn't think three years out I'd be uninsured, thinking it's a great day when a crackhead brings me $500."
http://online.wsj.com/public/article_print/SB119040786780835602.html
He's making less money than at his last job and has thought about moving back to his parents' house. "I didn't think three years out I'd be uninsured, thinking it's a great day when a crackhead brings me $500."
Monday, January 5, 2009
Bankruptcy Filings Show Consumer Overspending
UC Davis Magazine (Winter 2009) published an interesting study on bankruptcy filings:
Simple overspending has driven most personal bankruptcies in recent years, a change from previous decades when illness and unemployment were major factors, concludes a new study from the University of California, Davis, Graduate School of Management.
"The reasons people file for personal bankruptcy indeed have shifted during the past couple of decades," says Ning Zhu, the study's author and an associate professor of management at UC Davis. "Although our research supports the notion that adverse life events, like losing one's health or job, contribute to personal bankruptcy filings, excessive consumption contributes more to the recent increase in personal bankruptcy filing."
According to the American Bankruptcy Institute, 2,039,214 personal bankruptcies were filed in 2005, up nearly five-fold from the 412,510 bankruptcies filed in 1985. Indeed, personal bankruptcies jumped from 0.3 percent to 1.8 percent of all U.S. households during the same period.
The UC Davis study looked at all personal bankruptcy filings in Delaware in 2003, because the state was among the first to make its bankruptcy filings available through the Public Access to Court Electronic Record system and its demographics closely resemble those nationwide. The year 2003 was chosen because it allowed the study to follow cases to their conclusion, and permitted observation of filing patterns before 2005. (Filings may have been accelerated in the months leading up to October 2005, when the federal Bankruptcy Abuse Prevention and Consumer Protection Act took effect, by households wanting to avoid the new act's stricter requirements.)
So that he could compare bankrupt households with solvent ones, Zhu also collected information from the Federal Reserve Board's national Survey of Consumer Finance about households that had never declared bankruptcy.
Overall, Zhu concluded that debt accounted for more than 50 percent of recent bankruptcies, while medical problems caused just 5 percent and unemployment led to only 13 percent.
Zhu found that bankrupt households have bigger mortgages, car loans and credit card balances than solvent ones, but make less than half as much money.
Among bankrupt homeowners, mortgages were 3.21 times higher than annual household income, versus 1.73 times for solvent households. Auto loans were double the annual income for bankrupt households, versus 0.4 times for solvent households. And bankrupt households carried credit card balances that almost equaled their annual household income, while the average credit card balance for solvent households was 6 percent of annual income.
In addition, bankrupt households had a median annual income of $25,738, versus $43,341 for solvent ones. (The median is the midpoint in a set of values; a median income of $25,738 for bankrupt households means that half of the bankrupt households in the study made higher salaries and half made less).
Interestingly, more than 5 percent of bankrupt households owned at least one luxury automobile (average age of the car was 7 years), compared with 8 percent of solvent households (average age was 8 years).
The study also suggests that some Americans deliberately spend beyond their means with the intention of using the bankruptcy system to erase some or all of their debt, and recommends reforms to discourage such abuse.
"Our results emphasize that bankruptcy law reform should aim to address the issue," Zhu writes. "Current means test focusing on income, rather than consumption patterns or adverse events, may not set the best criteria for sorting out the households who truly need bankruptcy protection from those that consume beyond their means to take advantage of the system."
The research has been presented at Boston College, the Massachusetts Institute of Technology, UCLA and Yale, and will be published in an upcoming issue of the Journal of Legal Studies, a publication of the University of Chicago Law School. The working paper is online at [PDF file]:
http://www.gsm.ucdavis.edu/Faculty/Zhu/PersonalBankruptcy [PDF file]
Zhu earned his doctorate in finance from Yale in 2003. He specializes in individual behavior in financial markets, bankruptcy and distress, and investments.
Simple overspending has driven most personal bankruptcies in recent years, a change from previous decades when illness and unemployment were major factors, concludes a new study from the University of California, Davis, Graduate School of Management.
"The reasons people file for personal bankruptcy indeed have shifted during the past couple of decades," says Ning Zhu, the study's author and an associate professor of management at UC Davis. "Although our research supports the notion that adverse life events, like losing one's health or job, contribute to personal bankruptcy filings, excessive consumption contributes more to the recent increase in personal bankruptcy filing."
According to the American Bankruptcy Institute, 2,039,214 personal bankruptcies were filed in 2005, up nearly five-fold from the 412,510 bankruptcies filed in 1985. Indeed, personal bankruptcies jumped from 0.3 percent to 1.8 percent of all U.S. households during the same period.
The UC Davis study looked at all personal bankruptcy filings in Delaware in 2003, because the state was among the first to make its bankruptcy filings available through the Public Access to Court Electronic Record system and its demographics closely resemble those nationwide. The year 2003 was chosen because it allowed the study to follow cases to their conclusion, and permitted observation of filing patterns before 2005. (Filings may have been accelerated in the months leading up to October 2005, when the federal Bankruptcy Abuse Prevention and Consumer Protection Act took effect, by households wanting to avoid the new act's stricter requirements.)
So that he could compare bankrupt households with solvent ones, Zhu also collected information from the Federal Reserve Board's national Survey of Consumer Finance about households that had never declared bankruptcy.
Overall, Zhu concluded that debt accounted for more than 50 percent of recent bankruptcies, while medical problems caused just 5 percent and unemployment led to only 13 percent.
Zhu found that bankrupt households have bigger mortgages, car loans and credit card balances than solvent ones, but make less than half as much money.
Among bankrupt homeowners, mortgages were 3.21 times higher than annual household income, versus 1.73 times for solvent households. Auto loans were double the annual income for bankrupt households, versus 0.4 times for solvent households. And bankrupt households carried credit card balances that almost equaled their annual household income, while the average credit card balance for solvent households was 6 percent of annual income.
In addition, bankrupt households had a median annual income of $25,738, versus $43,341 for solvent ones. (The median is the midpoint in a set of values; a median income of $25,738 for bankrupt households means that half of the bankrupt households in the study made higher salaries and half made less).
Interestingly, more than 5 percent of bankrupt households owned at least one luxury automobile (average age of the car was 7 years), compared with 8 percent of solvent households (average age was 8 years).
The study also suggests that some Americans deliberately spend beyond their means with the intention of using the bankruptcy system to erase some or all of their debt, and recommends reforms to discourage such abuse.
"Our results emphasize that bankruptcy law reform should aim to address the issue," Zhu writes. "Current means test focusing on income, rather than consumption patterns or adverse events, may not set the best criteria for sorting out the households who truly need bankruptcy protection from those that consume beyond their means to take advantage of the system."
The research has been presented at Boston College, the Massachusetts Institute of Technology, UCLA and Yale, and will be published in an upcoming issue of the Journal of Legal Studies, a publication of the University of Chicago Law School. The working paper is online at [PDF file]:
http://www.gsm.ucdavis.edu/Faculty/Zhu/PersonalBankruptcy [PDF file]
Zhu earned his doctorate in finance from Yale in 2003. He specializes in individual behavior in financial markets, bankruptcy and distress, and investments.
Media contacts:
* Ning Zhu, Graduate School of Management, (852) 9848-2096, nzhu@ucdavis.edu (Ning is on sabbatical in Hong Kong; note time difference when calling his cell phone.)
* Tim Akin, Graduate School of Management , (530) 752-7362, tmakin@ucdavis.edu
* Claudia Morain, UC Davis News Service, (530) 752-9841, cmmorain@ucdavis.edu
Law and Verdicts
Below are recent stats for employment discrimination jury verdicts. Remember, these only apply if the case actually goes to trial.
In 2007, the median discrimination verdict rose some 70 percent to $252,000 from $147,000 in 2006.
Employers won only 38% of discrimination cases in 2007, prevailing most often in race discrimination cases (43 percent) and losing most frequently in sex discrimination cases (30 percent).
Employers in the manufacturing and industrial sectors had the biggest verdicts, followed by the government, transportation and service sectors.
Source: Employment Practice Liability: Jury Award Trends and Statistics, 2008 report by Jury Verdict Research.
In 2007, the median discrimination verdict rose some 70 percent to $252,000 from $147,000 in 2006.
Employers won only 38% of discrimination cases in 2007, prevailing most often in race discrimination cases (43 percent) and losing most frequently in sex discrimination cases (30 percent).
Employers in the manufacturing and industrial sectors had the biggest verdicts, followed by the government, transportation and service sectors.
Source: Employment Practice Liability: Jury Award Trends and Statistics, 2008 report by Jury Verdict Research.
Letter to Miss Manners
It's blast-to-the-past time again. I found another letter I wrote, this time to Miss Manners. She doesn't list the names of people who send in questions, but this one's mine:
SJ Mercury News, November 13, 1999:
Dear Miss Manners:
I am a young adult who is hearing-impaired and consequently wears a hearing aid. I am often approached by curious children of friends and strangers who ask what is in my ear. The "glasses for ears" analogy is getting old, and I wonder if the 4-9 year-old children understand what I'm talking about anyway. Do you have any suggestions as to what I can do when approached by these young people? I have not been able to come up with an answer that successfully satisfies their curiosity and also dissuades them from attempting to touch my ears.
Gentle Reader:
"It's to turn up the volume." If it weren't for the satisfaction of answering your question, Miss Manners would regret that no child will fail to understand this. Your next problem will be what to say when those children ask where they can get these for themselves.
To this day, Miss Manners' advice works for me. It's stunning how she was able to come up with the perfect answer.
SJ Mercury News, November 13, 1999:
Dear Miss Manners:
I am a young adult who is hearing-impaired and consequently wears a hearing aid. I am often approached by curious children of friends and strangers who ask what is in my ear. The "glasses for ears" analogy is getting old, and I wonder if the 4-9 year-old children understand what I'm talking about anyway. Do you have any suggestions as to what I can do when approached by these young people? I have not been able to come up with an answer that successfully satisfies their curiosity and also dissuades them from attempting to touch my ears.
Gentle Reader:
"It's to turn up the volume." If it weren't for the satisfaction of answering your question, Miss Manners would regret that no child will fail to understand this. Your next problem will be what to say when those children ask where they can get these for themselves.
To this day, Miss Manners' advice works for me. It's stunning how she was able to come up with the perfect answer.
Letter from the Past
I am going through my old things and found this letter I wrote way back in 1999. Even then, you could see my libertarian leanings:
San Jose Mercury News, July 25, 1999, 7G:
I never cease to be astounded at how utterly stupid people show themselves to be while judging "moral" content. All the hoopla over "Austin Powers" neglects to see that the movie is a farce that lampoons filmmaking and general society. As such, it isn't meant to be the focus of discussions on the same level as, say, Kantian ethics. If you have something against laughter, stay near your white picket fence and watch a Disney flick with your 2.2 kids--the rest of us will be at the theaters, trembling and writhing on the floor in our moral bankruptcy.
The best part? On the same page is an ad for "Austin Powers, The Spy Who Shagged Me."
San Jose Mercury News, July 25, 1999, 7G:
I never cease to be astounded at how utterly stupid people show themselves to be while judging "moral" content. All the hoopla over "Austin Powers" neglects to see that the movie is a farce that lampoons filmmaking and general society. As such, it isn't meant to be the focus of discussions on the same level as, say, Kantian ethics. If you have something against laughter, stay near your white picket fence and watch a Disney flick with your 2.2 kids--the rest of us will be at the theaters, trembling and writhing on the floor in our moral bankruptcy.
The best part? On the same page is an ad for "Austin Powers, The Spy Who Shagged Me."
War is Hell
The SJ Merc published an interesting letter (1/4/09, 12A) about the current Middle East war:
The similarity between the Native American Indians and the Palestinians is that in the case of both people, lands were taken from them by violence, and their people were decimated so that someone else could establish a new nation on their land. The difference between them is that Native American Indians eventually gave up, accepted their fate and moved to reservations. The Palestinians have never given up, and they still want their land back.
Bob Christensen
San Jose
I am a fervent believer in non-violence, but as an attorney, I also accept the legal principle of self-defense. This principle states:
Use of force is justified when a person reasonably believes that it is necessary for the defense of oneself or another against the immediate use of unlawful force. However, a person must use no more force than appears reasonably necessary in the circumstances.
Force likely to cause death or great bodily harm is justified in self-defense only if a person reasonably believes that such force is necessary to prevent death or great bodily harm.
The following line, from above, strikes me as pivotal: "However, a person must use no more force than appears reasonably necessary in the circumstances." Its essential meaning is that self-defense must be proportionate.
The Gaza Strip, because it is densely populated, presents an interesting moral question. When dealing with one of the most densely populated places in the world, how does a country attack and defend itself proportionately? If it uses ground troops in an effort to avoid indiscriminate bombing, it will sustain more deaths on its side. On the other hand, if it uses air attacks, it will knowingly kill many more civilians than necessary, but with fewer losses on its own side.
Palestine is also presented with difficult moral questions. It appears its neighbor is continuing to annex more Palestinian land through settlements, an action both the U.N. and the U.S. have opposed. Palestine's weaponry is not as sophisticated as its neighbor's, so attacking only military installations would be impossible or futile. If, however, it is completely non-violent, then it will lose more land and civilian lives as Israel builds more settlements and protects those settlements with force. Malcolm X once pointed out that nonviolence isn't always wise: "Concerning nonviolence: It is criminal to teach a man not to defend himself when he is the constant victim of brutal attacks. It is legal and lawful to own a shotgun or a rifle. We believe in obeying the law." (Of course, both Israelis and Palestinians could use this Malcolm X quote to justify their actions.)
In the end, neutral observers are left with a Catch-22 situation. When confronted with a Catch-22 situation, any ethical action must involve extricating both sides from the Catch-22. This means creating an environment where each side has viable options. What makes this goal so complicated is the presence of religion (i.e., Jerusalem) and an absence of products that can create substantial trade.
Palestinians, being generally poor, cannot afford high-margin Israeli products, which are generally marketed to developed countries. While Palestinians can function as laborers for the generally more affluent Israelis, even this potential economic cooperation is complicated because of the limited land in Israel and Palestine. The fact that land is limited creates disincentives for Israel to treat Palestinian workers as anything more than short-term, throw-away workers. Just as Palestinians oppose the building of settlements on their land, Israel will most likely never accept substantial Palestinian immigration or permanent settlement. As a result, Israel is forced to treat Palestinian workers as means to an end, rather than an end in itself. When the best-case scenario violates Kant's rule, we can see why this situation is so complex. (In contrast, America has vast tracts of land and liberal citizenship laws, allowing America to more easily accept and assimilate Mexicans.)
I have always believed economics is the key to any successful relationship, because it causes each side to be useful to each other, which leads to a natural interest in each side's long-term health. After all, one cannot sell products to a dead man, no matter how great the product, or how much money the dead man has.
From my non-expert angle, I see peace only when the following occurs: one, territorial boundaries are firmly established and protected (temporarily) by a strong, neutral third-party; and two, Palestinians become more affluent through trade--which requires them to manufacture products needed in neighboring countries and to be able and willing to trade with Israelis and other neighbors.
Update on January 6, 2009:
A U.N. school has been hit by an Israeli mortar:
http://news.yahoo.com/s/ap/20090107/ap_on_re_mi_ea/ml_israel_palestinians
Also, according to CNN, "A Hamas rocket penetrated farther than ever before into Israel on Tuesday, landing in the town of Gadera, about 23 miles (36 kilometers) north of the Gaza border, the Israeli military said. On Monday, a rocket hit a kindergarten in Ashdod, about 16 miles (26 kilometers) north of Gaza." The school was vacant at the time, so no civilian casualties were reported.
Bombing any densely populated area will knowingly result in civilian casualties. Thus, no matter how civilized a society is, and no matter how much it strives not to target civilians, bombing densely populated areas is an automatically uncivilized course of action. Call me an idealist, but I just can't wrap my head around the concept of "collateral damage." I agree with Mohandas K. Gandhi when he said, "What does it matter to the dead, the orphans, and the homeless whether the mad destruction is wrought under the name of totalitarianism or the holy name of liberty or democracy?"
Idealism aside, the question still remains: "How can the world persuade Hamas to stop firing rockets?" Hamas has agreed to several cease-fires, which shows that it will respond to various incentives. If the British were able to persuade the Irish Republican Army to disarm, especially after bombs like this, there must be a way to persuade Hamas to disarm as well. The alternative is more civilian deaths on both sides, more images Hamas will use to recruit more men, and more pain and suffering on both sides.
Here is one idea to reduce civilian casualties: prior to an attack or war, Israel should offer safehouses on its own soil. All children under 18 years of age and all women would be able to cross the border into the safehouses. These Palestinian residents would be returned after the war or attack was over. I am not an expert on war, but there must be some way to mitigate civilian casualties so that schoolchildren are not at risk.
_________
"I like to believe that people in the long run are going to do more to promote peace than our governments. Indeed, I think that people want peace so much that one of these days governments had better get out of the way and let them have it." -- President Dwight D. Eisenhower
_________
Update on January 8, 2009: Charlie Rose interviewed Bob Simon with a special focus on the Israeli-Palestinian situation. The result is an informative primer for anyone searching for answers on how to improve Israel-Palestinian relations:
http://www.charlierose.com/view/interview/9900
Readers who prefer a transcript rather than video should scroll down and hit the "Transcript" tab (located next to "Comments").
More info: here is a NY Times op-ed, from the Palestinian perspective ("What You Don't Know about Gaza").
Update on January 10, 2010: here is a WSJ op-ed (this link doesn't appear to work, so you may want to google ALAN M. DERSHOWITZ, July 3, 2009, "Has Obama Turned on Israel?"). Dershowitz agrees with and quotes Yousef Munayyer: "'Obama should make it clear to the Israelis that settlers should feel free to grow their families as long as their settlements grow vertically, and not horizontally,'" he wrote last month in the Boston Globe. In other words, build 'up' rather than 'out.'"
Also, here is an interview with Mr. Olmert (NYT, by Ethan Bronner, 9/29/08):
Prime Minister Ehud Olmert said in an interview published on Monday that Israel must withdraw from nearly all of the West Bank as well as East Jerusalem to attain peace with the Palestinians and that any occupied land it held onto would have to be exchanged for the same quantity of Israeli territory.
The similarity between the Native American Indians and the Palestinians is that in the case of both people, lands were taken from them by violence, and their people were decimated so that someone else could establish a new nation on their land. The difference between them is that Native American Indians eventually gave up, accepted their fate and moved to reservations. The Palestinians have never given up, and they still want their land back.
Bob Christensen
San Jose
I am a fervent believer in non-violence, but as an attorney, I also accept the legal principle of self-defense. This principle states:
Use of force is justified when a person reasonably believes that it is necessary for the defense of oneself or another against the immediate use of unlawful force. However, a person must use no more force than appears reasonably necessary in the circumstances.
Force likely to cause death or great bodily harm is justified in self-defense only if a person reasonably believes that such force is necessary to prevent death or great bodily harm.
The following line, from above, strikes me as pivotal: "However, a person must use no more force than appears reasonably necessary in the circumstances." Its essential meaning is that self-defense must be proportionate.
The Gaza Strip, because it is densely populated, presents an interesting moral question. When dealing with one of the most densely populated places in the world, how does a country attack and defend itself proportionately? If it uses ground troops in an effort to avoid indiscriminate bombing, it will sustain more deaths on its side. On the other hand, if it uses air attacks, it will knowingly kill many more civilians than necessary, but with fewer losses on its own side.
Palestine is also presented with difficult moral questions. It appears its neighbor is continuing to annex more Palestinian land through settlements, an action both the U.N. and the U.S. have opposed. Palestine's weaponry is not as sophisticated as its neighbor's, so attacking only military installations would be impossible or futile. If, however, it is completely non-violent, then it will lose more land and civilian lives as Israel builds more settlements and protects those settlements with force. Malcolm X once pointed out that nonviolence isn't always wise: "Concerning nonviolence: It is criminal to teach a man not to defend himself when he is the constant victim of brutal attacks. It is legal and lawful to own a shotgun or a rifle. We believe in obeying the law." (Of course, both Israelis and Palestinians could use this Malcolm X quote to justify their actions.)
In the end, neutral observers are left with a Catch-22 situation. When confronted with a Catch-22 situation, any ethical action must involve extricating both sides from the Catch-22. This means creating an environment where each side has viable options. What makes this goal so complicated is the presence of religion (i.e., Jerusalem) and an absence of products that can create substantial trade.
Palestinians, being generally poor, cannot afford high-margin Israeli products, which are generally marketed to developed countries. While Palestinians can function as laborers for the generally more affluent Israelis, even this potential economic cooperation is complicated because of the limited land in Israel and Palestine. The fact that land is limited creates disincentives for Israel to treat Palestinian workers as anything more than short-term, throw-away workers. Just as Palestinians oppose the building of settlements on their land, Israel will most likely never accept substantial Palestinian immigration or permanent settlement. As a result, Israel is forced to treat Palestinian workers as means to an end, rather than an end in itself. When the best-case scenario violates Kant's rule, we can see why this situation is so complex. (In contrast, America has vast tracts of land and liberal citizenship laws, allowing America to more easily accept and assimilate Mexicans.)
I have always believed economics is the key to any successful relationship, because it causes each side to be useful to each other, which leads to a natural interest in each side's long-term health. After all, one cannot sell products to a dead man, no matter how great the product, or how much money the dead man has.
From my non-expert angle, I see peace only when the following occurs: one, territorial boundaries are firmly established and protected (temporarily) by a strong, neutral third-party; and two, Palestinians become more affluent through trade--which requires them to manufacture products needed in neighboring countries and to be able and willing to trade with Israelis and other neighbors.
Update on January 6, 2009:
A U.N. school has been hit by an Israeli mortar:
http://news.yahoo.com/s/ap/20090107/ap_on_re_mi_ea/ml_israel_palestinians
Also, according to CNN, "A Hamas rocket penetrated farther than ever before into Israel on Tuesday, landing in the town of Gadera, about 23 miles (36 kilometers) north of the Gaza border, the Israeli military said. On Monday, a rocket hit a kindergarten in Ashdod, about 16 miles (26 kilometers) north of Gaza." The school was vacant at the time, so no civilian casualties were reported.
Bombing any densely populated area will knowingly result in civilian casualties. Thus, no matter how civilized a society is, and no matter how much it strives not to target civilians, bombing densely populated areas is an automatically uncivilized course of action. Call me an idealist, but I just can't wrap my head around the concept of "collateral damage." I agree with Mohandas K. Gandhi when he said, "What does it matter to the dead, the orphans, and the homeless whether the mad destruction is wrought under the name of totalitarianism or the holy name of liberty or democracy?"
Idealism aside, the question still remains: "How can the world persuade Hamas to stop firing rockets?" Hamas has agreed to several cease-fires, which shows that it will respond to various incentives. If the British were able to persuade the Irish Republican Army to disarm, especially after bombs like this, there must be a way to persuade Hamas to disarm as well. The alternative is more civilian deaths on both sides, more images Hamas will use to recruit more men, and more pain and suffering on both sides.
Here is one idea to reduce civilian casualties: prior to an attack or war, Israel should offer safehouses on its own soil. All children under 18 years of age and all women would be able to cross the border into the safehouses. These Palestinian residents would be returned after the war or attack was over. I am not an expert on war, but there must be some way to mitigate civilian casualties so that schoolchildren are not at risk.
_________
"I like to believe that people in the long run are going to do more to promote peace than our governments. Indeed, I think that people want peace so much that one of these days governments had better get out of the way and let them have it." -- President Dwight D. Eisenhower
_________
Update on January 8, 2009: Charlie Rose interviewed Bob Simon with a special focus on the Israeli-Palestinian situation. The result is an informative primer for anyone searching for answers on how to improve Israel-Palestinian relations:
http://www.charlierose.com/view/interview/9900
Readers who prefer a transcript rather than video should scroll down and hit the "Transcript" tab (located next to "Comments").
More info: here is a NY Times op-ed, from the Palestinian perspective ("What You Don't Know about Gaza").
Update on January 10, 2010: here is a WSJ op-ed (this link doesn't appear to work, so you may want to google ALAN M. DERSHOWITZ, July 3, 2009, "Has Obama Turned on Israel?"). Dershowitz agrees with and quotes Yousef Munayyer: "'Obama should make it clear to the Israelis that settlers should feel free to grow their families as long as their settlements grow vertically, and not horizontally,'" he wrote last month in the Boston Globe. In other words, build 'up' rather than 'out.'"
Also, here is an interview with Mr. Olmert (NYT, by Ethan Bronner, 9/29/08):
Prime Minister Ehud Olmert said in an interview published on Monday that Israel must withdraw from nearly all of the West Bank as well as East Jerusalem to attain peace with the Palestinians and that any occupied land it held onto would have to be exchanged for the same quantity of Israeli territory.
Steve Nash Video
Although Reggie Miller will always be my favorite NBA player, Steve Nash isn't far behind on my personal list. For those of you who don't follow basketball, the white player is former NBA MVP Steve Nash, who attended Santa Clara University and who plays for the Phoenix Suns. The other player is Baron Davis, who was born in L.A. and who rejuvenated the Golden State Warriors. Wait till you see Nash and Davis street dancing:
http://sports.yahoo.com/nba/blog/ball_dont_lie/post/Video-Gold-Steve-Nash-and-Baron-Davis-are-Step?urn=nba,97409
Oh, the awesomeness.
http://sports.yahoo.com/nba/blog/ball_dont_lie/post/Video-Gold-Steve-Nash-and-Baron-Davis-are-Step?urn=nba,97409
Oh, the awesomeness.
Sunday, January 4, 2009
NY Times and Madoff
Today's NY Times mentions Madoff. Michael Lewis says that Wall Street's misaligned incentives led to corruption.
Poetry and My Poems
Once in a while, I like to take a break from economics and read poetry. Here are some of my favorites:
AUBADE, by Rick Barot
Scintillas of the anatomical
on the vines, buds opening—
make me a figure
for the woken.
On the vines, buds opening—
blue, little throats.
For the woken,
this different tin sky.
Blue, little throats
speak to me in the right voice.
This different tin sky,
the playground thawing.
Speak to me in the right voice,
only clean, sweeter.
The playground thawing
into its primary colors.
Only clean, sweeter,
briary as honeysuckle,
into their primary colors
the words come: bitter, astral.
Full version after the jump: http://enskyment.org/poetsatog.html
I am sharing part of Barot's poem for educational purposes. It sounds and reads perfectly--a difficult combination. Even the unusual repetition, "bitter, astral," feels perfectly placed. The only blemish is the phrase, "blue little throats," which seems too harsh among "clean, sweeter," and "honeysuckle." This poetic form, which relies on repetition, is the "lilibonelle." More on poetry forms at Sol Magazine.
I also love a poem by C. Milosz called "Hymn," but I can't find it online. Here are the first few lines:
There is no one between you and me.
Neither a plant drawing sap from the depths of the earth
nor wind walking between the clouds.
The most beautiful bodies are like transparent glass.
Here is an interview with Mr. Milosz.
Another poem by Bill Watterson is a must-read. It's from Calvin and Hobbes' Indispensable Treasury:
I made a big decision a little while ago.
I don't remember what it was, which prob'ly goes to show
That many times a simple choice can prove to be essential
Even though it often might appear inconsequential.
I must have been distracted when I left my home because
Left or right I'm sure I went. (I wonder which it was!)
Anyway, I never veered: I walked in that direction
Utterly absorbed, it seems, in quiet introspection.
For no reason I can think of, I've wandered far astray.
And that is how I got to where I find myself today.
As you can see, poetry doesn't have to be in a Norton Anthology to be required reading. I own the complete Calvin and Hobbes collection, and Calvin has so many lines that are poetic in their own right. I shared the above lines to show readers that poetry can be found in unexpected places and to encourage readers to discover Calvin and Hobbes if they haven't already done so. Newer fans can share their thoughts on Calvin and Hobbes here.
Oh, the beauty.
___________
Here are a few poems I found today, which I wrote about 10 years ago:
Haiku
The mahogany maelstrom
stares at me.
Charred black holes
peeking through space,
gentle lashes nurturing
smoldering volcanoes.
copyright Matthew Rafat (written 1995-1999)
Embezzlement
Bank statements invade dreams
Of holding hands, making babies, laughing for no reason;
And eyes that once sparkled are now jaundiced,
Critiquing every missing George Washington,
Forgetting the spontaneous smiles
That once would follow accidental breaking of dishes.
Now your reassuring voice seems like an important historical event
One should remember, but can't,
Like the date of the Missouri Compromise or the victor at Yorktown.
The laundry undone and the mold growing
Used to sit patiently while we lay on our backs feeling the wind brush our faces--
And it would be okay if we missed dinner
When I wanted to see your face above mine,
Your falling sweat sticking to my just-showered stomach.
But bringing Benjamin Franklin in the bedroom
Made you sexually insolvent, and I felt cheated, because I never invited him in--
It was as if you were making me part of a threesome without my consent,
Allowing little green men to rape me while you watched and did nothing.
Even the prospect of your copper-stained hands going through my hair
Would have aroused in me forgiveness--
But you always just plopped down next to me in the dark, faceless and foreboding.
One day, as you mentioned going down a tax bracket,
I packed my bags and left without your interest
And with the realization I would never be included
In your value estimations.
copyright Matthew Rafat (written 1995-1999)
Pellucid Life
Children dance their songs of glee,
Roses approve with laughs of scent,
The sun joins in, beaming smiles of light.
Women cradle bundles of sound,
Men walk with words of friends,
The world turns with slow of sure.
I sit amidst sights of smell,
Enjoying feel of touch,
Remembering you of love.
copyright Matthew Rafat (written 1995-1999)
Dupont Circle was one of my favorite hangouts when I lived in D.C. around 1999. I loved its coffeeshops and used bookstores. Back in the day, as soon as you got off the Metro and exited the escalator, you saw the aptly-named Xanadu's Cafe on your left. Dupont has become much more gentrified since then.
Dupont Circle
"No talking please,"
"No talking please,"
The jolly old man bellowed out,
Hovering over the chessboard,
About to devour his opponent,
Another old man, teeth and glasses broken,
Reflecting his shattered condition.
The old man must have wanted to be more than a wino once--
Whatever the dreams were, they certainly never included
Prostituting his knowledge of a queen's gambit for a ham and cheese sandwich.
The words of death didn't need to be said,
And they weren't, but the black king lay prostrate on the board
As 25 dollars exchanged trembling hands.
A drunk Physics major stumbled about,
Mumbling, "A win is a win is a win is a win,"
But then lost the next two games.
"Pow! Pow! Pow!"
In the corner, an entrenched Vietnam Vet, between sips,
Echoed out threats
Against the man who had just
Refused his request for a light.
A size six waist and double Ds walked in,
Capturing the crowd,
And I remembered thinking,
"God I wish those are real."
But they're not, and they're just as empty and heavy
As the old men's machismo
And their dances and drunkenness,
Gambling money they don't have,
Hollering words without force,
Trying to find connections in a city
That offers none,
As sorry and hopeful
As those two pneumatic sacks.
copyright Matthew Rafat
AUBADE, by Rick Barot
Scintillas of the anatomical
on the vines, buds opening—
make me a figure
for the woken.
On the vines, buds opening—
blue, little throats.
For the woken,
this different tin sky.
Blue, little throats
speak to me in the right voice.
This different tin sky,
the playground thawing.
Speak to me in the right voice,
only clean, sweeter.
The playground thawing
into its primary colors.
Only clean, sweeter,
briary as honeysuckle,
into their primary colors
the words come: bitter, astral.
Full version after the jump: http://enskyment.org/poetsatog.html
I am sharing part of Barot's poem for educational purposes. It sounds and reads perfectly--a difficult combination. Even the unusual repetition, "bitter, astral," feels perfectly placed. The only blemish is the phrase, "blue little throats," which seems too harsh among "clean, sweeter," and "honeysuckle." This poetic form, which relies on repetition, is the "lilibonelle." More on poetry forms at Sol Magazine.
I also love a poem by C. Milosz called "Hymn," but I can't find it online. Here are the first few lines:
There is no one between you and me.
Neither a plant drawing sap from the depths of the earth
nor wind walking between the clouds.
The most beautiful bodies are like transparent glass.
Here is an interview with Mr. Milosz.
Another poem by Bill Watterson is a must-read. It's from Calvin and Hobbes' Indispensable Treasury:
I made a big decision a little while ago.
I don't remember what it was, which prob'ly goes to show
That many times a simple choice can prove to be essential
Even though it often might appear inconsequential.
I must have been distracted when I left my home because
Left or right I'm sure I went. (I wonder which it was!)
Anyway, I never veered: I walked in that direction
Utterly absorbed, it seems, in quiet introspection.
For no reason I can think of, I've wandered far astray.
And that is how I got to where I find myself today.
As you can see, poetry doesn't have to be in a Norton Anthology to be required reading. I own the complete Calvin and Hobbes collection, and Calvin has so many lines that are poetic in their own right. I shared the above lines to show readers that poetry can be found in unexpected places and to encourage readers to discover Calvin and Hobbes if they haven't already done so. Newer fans can share their thoughts on Calvin and Hobbes here.
Oh, the beauty.
___________
Here are a few poems I found today, which I wrote about 10 years ago:
Haiku
The mahogany maelstrom
stares at me.
Charred black holes
peeking through space,
gentle lashes nurturing
smoldering volcanoes.
copyright Matthew Rafat (written 1995-1999)
Embezzlement
Bank statements invade dreams
Of holding hands, making babies, laughing for no reason;
And eyes that once sparkled are now jaundiced,
Critiquing every missing George Washington,
Forgetting the spontaneous smiles
That once would follow accidental breaking of dishes.
Now your reassuring voice seems like an important historical event
One should remember, but can't,
Like the date of the Missouri Compromise or the victor at Yorktown.
The laundry undone and the mold growing
Used to sit patiently while we lay on our backs feeling the wind brush our faces--
And it would be okay if we missed dinner
When I wanted to see your face above mine,
Your falling sweat sticking to my just-showered stomach.
But bringing Benjamin Franklin in the bedroom
Made you sexually insolvent, and I felt cheated, because I never invited him in--
It was as if you were making me part of a threesome without my consent,
Allowing little green men to rape me while you watched and did nothing.
Even the prospect of your copper-stained hands going through my hair
Would have aroused in me forgiveness--
But you always just plopped down next to me in the dark, faceless and foreboding.
One day, as you mentioned going down a tax bracket,
I packed my bags and left without your interest
And with the realization I would never be included
In your value estimations.
copyright Matthew Rafat (written 1995-1999)
Pellucid Life
Children dance their songs of glee,
Roses approve with laughs of scent,
The sun joins in, beaming smiles of light.
Women cradle bundles of sound,
Men walk with words of friends,
The world turns with slow of sure.
I sit amidst sights of smell,
Enjoying feel of touch,
Remembering you of love.
copyright Matthew Rafat (written 1995-1999)
Dupont Circle was one of my favorite hangouts when I lived in D.C. around 1999. I loved its coffeeshops and used bookstores. Back in the day, as soon as you got off the Metro and exited the escalator, you saw the aptly-named Xanadu's Cafe on your left. Dupont has become much more gentrified since then.
Dupont Circle
"No talking please,"
"No talking please,"
The jolly old man bellowed out,
Hovering over the chessboard,
About to devour his opponent,
Another old man, teeth and glasses broken,
Reflecting his shattered condition.
The old man must have wanted to be more than a wino once--
Whatever the dreams were, they certainly never included
Prostituting his knowledge of a queen's gambit for a ham and cheese sandwich.
The words of death didn't need to be said,
And they weren't, but the black king lay prostrate on the board
As 25 dollars exchanged trembling hands.
A drunk Physics major stumbled about,
Mumbling, "A win is a win is a win is a win,"
But then lost the next two games.
"Pow! Pow! Pow!"
In the corner, an entrenched Vietnam Vet, between sips,
Echoed out threats
Against the man who had just
Refused his request for a light.
A size six waist and double Ds walked in,
Capturing the crowd,
And I remembered thinking,
"God I wish those are real."
But they're not, and they're just as empty and heavy
As the old men's machismo
And their dances and drunkenness,
Gambling money they don't have,
Hollering words without force,
Trying to find connections in a city
That offers none,
As sorry and hopeful
As those two pneumatic sacks.
copyright Matthew Rafat
Answer to W.H. Auden
At the party,
Go sit in your dismal, desolate corner--
Good friends laugh and play
As you deem yourself their official mourner.
Blow the cobwebs from the mirror,
See the face of optimism resisted;
You cannot plunge the penknife
Into a heart that never existed.
Time will only say "I told you so,"
You've said over and over;
Let Time watch from the shadows--
I will kiss while it coughs, and be Life's lover.
At the party,
Go sit in your dismal, desolate corner--
Good friends laugh and play
As you deem yourself their official mourner.
Blow the cobwebs from the mirror,
See the face of optimism resisted;
You cannot plunge the penknife
Into a heart that never existed.
Time will only say "I told you so,"
You've said over and over;
Let Time watch from the shadows--
I will kiss while it coughs, and be Life's lover.
copyright Matthew Rafat
Gift Cards and Refunds
Now that the X-Mas shopping is done and the gifts opened, what happens if you want to return your gift? Or, if you received a gift card, do you know when you can get cash from the card? Here are some tips, prepared by the Consumer Protection Unit of the Santa Clara County District Attorney's Office, relating to refunds/returns and gift cards:
Refunds
A retail store in California does not have to accept your return of merchandise simply because you have changed your mind.
A retail store in California can set its own policy on returning merchandise. It may elect to refuse any returns once a purchase has been made, or accept returned merchandise for a store credit only.
However, if a retail store elects not to give a full refund or store credit within 7 days after purchase, it must post that written refund policy:
*on a sign at each cash register and sales counter;
*on tags associated with that merchandise;
*at each public entrance; or
*on order forms.
The policy must state:
*whether the store will give a cash refund, store credit, or exchange for the full amount of the purchase price;
*the time within which the return must be made; and
*any other conditions related to the policy.
There are exceptions under this law so be a wise shopper and ask to see the refund policy.
Gift cards and gift certificates
While gift cards and certificates make for very flexible and easy gifts, you should keep in mind the restrictions allowed under California law.
While the gift card or certificate cannot have an expiration date, the card may include a dormancy fee (a fee charged for not using the card or certificate within a certain time period); such fees are required to be printed on the front or back of the card or certificate. You also need to consider the likelihood that the store will close before you can use the card or certificate.
Finally, sellers of gift cards and certificates must redeem them only when the balance on them falls below $10.00.
Refunds
A retail store in California does not have to accept your return of merchandise simply because you have changed your mind.
A retail store in California can set its own policy on returning merchandise. It may elect to refuse any returns once a purchase has been made, or accept returned merchandise for a store credit only.
However, if a retail store elects not to give a full refund or store credit within 7 days after purchase, it must post that written refund policy:
*on a sign at each cash register and sales counter;
*on tags associated with that merchandise;
*at each public entrance; or
*on order forms.
The policy must state:
*whether the store will give a cash refund, store credit, or exchange for the full amount of the purchase price;
*the time within which the return must be made; and
*any other conditions related to the policy.
There are exceptions under this law so be a wise shopper and ask to see the refund policy.
Gift cards and gift certificates
While gift cards and certificates make for very flexible and easy gifts, you should keep in mind the restrictions allowed under California law.
While the gift card or certificate cannot have an expiration date, the card may include a dormancy fee (a fee charged for not using the card or certificate within a certain time period); such fees are required to be printed on the front or back of the card or certificate. You also need to consider the likelihood that the store will close before you can use the card or certificate.
Finally, sellers of gift cards and certificates must redeem them only when the balance on them falls below $10.00.
Saturday, January 3, 2009
Memories of 10 Years Ago
I am going through some old items and re-discovered two old songs I love.
This one's from Meatloaf, and this one's an incredible old-school rap song.
I also discovered an Atlantic article written by Miranda Seymour--Seymour's review so captivated me, I saved it. I must have been in a really foul mood at the time:
This is, even for Brookner, an unusually cheerless work, about the moral education of a young woman as assessed by herself in retrospect. The lesson she learns is that a wise woman expects nothing from life and will probably get it. Only a fool, Brookner suggests, would believe the lessons offered by the novels and fairy tales in which Zoë, like many of her predecessors, has rashly placed her trust. Poor girls who sit and wait to become princesses get nowhere. Ordeals may lead only to further suffering. There are no rewards for virtue beyond self-respect. Life is best viewed as a journey toward death, to be lived with attentive restraint.
Ah, memories.
This one's from Meatloaf, and this one's an incredible old-school rap song.
I also discovered an Atlantic article written by Miranda Seymour--Seymour's review so captivated me, I saved it. I must have been in a really foul mood at the time:
This is, even for Brookner, an unusually cheerless work, about the moral education of a young woman as assessed by herself in retrospect. The lesson she learns is that a wise woman expects nothing from life and will probably get it. Only a fool, Brookner suggests, would believe the lessons offered by the novels and fairy tales in which Zoë, like many of her predecessors, has rashly placed her trust. Poor girls who sit and wait to become princesses get nowhere. Ordeals may lead only to further suffering. There are no rewards for virtue beyond self-respect. Life is best viewed as a journey toward death, to be lived with attentive restraint.
Ah, memories.
Wise Consumer Tips (California)
My readers are no doubt enjoying the new year--the Nasdaq is up 3.5% and the Dow is up almost 3%. But stock market gains mean nothing if you get scammed in personal economic transactions. To help my California readers avoid fraud, I found some excellent consumer tips, prepared by the Consumer Protection Unit of the Santa Clara County District Attorney's Office. The resolutions/tips are very helpful and definitely worth a look:
As a consumer, I resolve, in 2009, to:
-read and understand every consumer contract, especially when purchasing or leasing a car, BEFORE signing it and get all oral promises added to the contract in writing
-check with the Contractors State Licensing Board on the status of a contractor before hiring one to work on my home (Licenses can be checked by telephoning the Board at 1-800-321-CSLB or using the Board’s website at www.cslb.ca.gov .)
-understand the refund/return policy before purchasing in a store or from a store online
-watch the register when items are being scanned to catch pricing errors (Consumers may call the Santa Clara County Department of Weights and Measures’ toll-free scanner hotline at 1-866-SCANNER to complain or ask questions about scanning devices at stores.)
-use my credit card for purchases, whenever possible and reasonable, so I can write to my credit card company to dispute any charge
-make all car payments on schedule to avoid repossession and a bad credit record
-obtain a written estimate for any auto repair and ask for replaced parts, if I need them (Licenses can be checked by telephoning the Bureau of Automotive Repair at 1-800-952-5210 or using the Bureau’s website at www.bar.ca.gov .)
-review my itinerary and cancellation terms before purchasing travel arrangements, whether online or through a travel agent
-not disclose my personal or financial information, such as credit card or bank account numbers, over the telephone or online to any organization I cannot verify as reputable
-check with the Better Business Bureau, Consumer Reports, the Bay Area Consumer Checkbook or simply do an internet search on any company from which I am purchasing
For more information, call the Santa Clara County District Attorney’s Office, Consumer Protection Unit at 408-792-2880.
[Note: this number goes to a local D.A.'s office, designed to assist residents of Santa Clara County, or those complaining about businesses in Santa Clara County.]
As a consumer, I resolve, in 2009, to:
-read and understand every consumer contract, especially when purchasing or leasing a car, BEFORE signing it and get all oral promises added to the contract in writing
-check with the Contractors State Licensing Board on the status of a contractor before hiring one to work on my home (Licenses can be checked by telephoning the Board at 1-800-321-CSLB or using the Board’s website at www.cslb.ca.gov .)
-understand the refund/return policy before purchasing in a store or from a store online
-watch the register when items are being scanned to catch pricing errors (Consumers may call the Santa Clara County Department of Weights and Measures’ toll-free scanner hotline at 1-866-SCANNER to complain or ask questions about scanning devices at stores.)
-use my credit card for purchases, whenever possible and reasonable, so I can write to my credit card company to dispute any charge
-make all car payments on schedule to avoid repossession and a bad credit record
-obtain a written estimate for any auto repair and ask for replaced parts, if I need them (Licenses can be checked by telephoning the Bureau of Automotive Repair at 1-800-952-5210 or using the Bureau’s website at www.bar.ca.gov .)
-review my itinerary and cancellation terms before purchasing travel arrangements, whether online or through a travel agent
-not disclose my personal or financial information, such as credit card or bank account numbers, over the telephone or online to any organization I cannot verify as reputable
-check with the Better Business Bureau, Consumer Reports, the Bay Area Consumer Checkbook or simply do an internet search on any company from which I am purchasing
For more information, call the Santa Clara County District Attorney’s Office, Consumer Protection Unit at 408-792-2880.
[Note: this number goes to a local D.A.'s office, designed to assist residents of Santa Clara County, or those complaining about businesses in Santa Clara County.]
Wednesday, December 31, 2008
Beautiful Piano Music
I'd like to share Michael Nyman's "The Sacrifice" with my readers. The song can be heard on this youtube clip, which has been viewed over a million times. It's one of the most beautiful pieces I've ever heard. I discovered it on the Miramax Greatest Hits soundtrack.
Happy new year to all.
Happy new year to all.
Tuesday, December 30, 2008
Addison Wiggin's The Demise of the Dollar
Addison Wiggin co-authored two good books, I.O.U.S.A. and Empire of Debt. As a result, I was looking forward to reading The Demise of the Dollar (and why it's even better for your investments). I should not have been so eager. Unless you are a gold bug, skip this book, or get I.O.U.S.A. instead.
First, the title, "The Demise of the Dollar, and why it's even better for your investments," is misleading. Readers don't get any tips or insight on why the dollar's fall would be good for investments until page 157. (My paperback edition has only 181 pages). If you do buy this book, and you agree the U.S. dollar will collapse, you may want to save yourself time and skip to the end if you're looking for investment ideas.
Predictably, the author likes gold and commodities and dislikes the Federal Reserve: "As the value of the dollar begins to fall, a corresponding and offsetting rise in the value of commodities, raw materials, and tangible goods will rise." [p. 157] Gold is mentioned several times as an "ultimate dollar hedge." [p. 175] Wiggin says that America's "decision to go off the gold standard was devastating," [p. 8] and "[n]o fiat money system has ever succeeded." [p. 71] As for the Fed, Wiggin calls it a "banking cartel" and "not part of Congress," making it unconstitutional. [p. 22]
The entire gist of Wiggin's book can be found on page 152:
The consequences [of a declining dollar] will be huge declines in the stock market, savings becoming worthless, and the bond market completely falling apart. As the value of the dollar falls, that dollar will no longer be worth a dollar; it will be worth only pennies on the dollar. It will be a rude awakening for everyone who has become complacent about America's invulnerability.
When Wiggin isn't repeating the same anti-dollar ideas, he makes some good points. For example, he laments the loss of domestic manufacturing: "We've given up making things to sell elsewhere, closed the store, and gone shopping. But we're not spending money we have; we're borrowing money to spend it." [p. 10] Those are good lines, but The Wire said it better:
You know what the trouble is? We used to make sh*t in this country, build sh*t. Now we just put our hand in the next guy's pocket.
A much better way to get the information in Wiggin's books is to watch his movie, I.O.U.S.A. More information, including an excellent 30 minute film, after the jump:
I.O.U.S.A. the Movie
While I recommend the I.O.U.S.A. movie and book, I cannot recommend Demise of the Dollar. It reads like the author finished it in one day and then handed it to students to add the citations. Demise contains nothing that hasn't been said before, by someone else, with more eloquence. That's one reason I.O.U.S.A. is so much better than Demise--it contains interviews with Warren Buffett and other investors who explain the economic times much better than Wiggin, and without the hysterics. (Read my take on the situation here and here.) Readers should skip Demise of the Dollar and watch/read I.O.U.S.A. instead if they're into economic horror stories.
As for me, I agree the U.S. dollar is in for a bumpy ride. That's why I've already bought a commodities ETF (DBC) and some Swiss francs (FXF).
Some stats from Demise:
At the end of 2006, foreign holdings of U.S. dollars had a market value of $16.295 trillion. [p. 43]
U.S. borrowing has expanded to the point that foreign central banks own major portions of the U.S. debt. The Bank of Japan held $668 billion of Treasury securities in 2004, compared to the Federal Reserve holdings of $675 billion. In other words, the Bank of Japan nearly matched the Fed in ownership of U.S. debt...If you just add in China, South Korea, and India, central banks own a lot more debt than the Fed does. [p. 153]
[O]ur actual inflation rates are understated by around two percentage points per year. [p. 30] For more on this phenomenon, click here.
First, the title, "The Demise of the Dollar, and why it's even better for your investments," is misleading. Readers don't get any tips or insight on why the dollar's fall would be good for investments until page 157. (My paperback edition has only 181 pages). If you do buy this book, and you agree the U.S. dollar will collapse, you may want to save yourself time and skip to the end if you're looking for investment ideas.
Predictably, the author likes gold and commodities and dislikes the Federal Reserve: "As the value of the dollar begins to fall, a corresponding and offsetting rise in the value of commodities, raw materials, and tangible goods will rise." [p. 157] Gold is mentioned several times as an "ultimate dollar hedge." [p. 175] Wiggin says that America's "decision to go off the gold standard was devastating," [p. 8] and "[n]o fiat money system has ever succeeded." [p. 71] As for the Fed, Wiggin calls it a "banking cartel" and "not part of Congress," making it unconstitutional. [p. 22]
The entire gist of Wiggin's book can be found on page 152:
The consequences [of a declining dollar] will be huge declines in the stock market, savings becoming worthless, and the bond market completely falling apart. As the value of the dollar falls, that dollar will no longer be worth a dollar; it will be worth only pennies on the dollar. It will be a rude awakening for everyone who has become complacent about America's invulnerability.
When Wiggin isn't repeating the same anti-dollar ideas, he makes some good points. For example, he laments the loss of domestic manufacturing: "We've given up making things to sell elsewhere, closed the store, and gone shopping. But we're not spending money we have; we're borrowing money to spend it." [p. 10] Those are good lines, but The Wire said it better:
You know what the trouble is? We used to make sh*t in this country, build sh*t. Now we just put our hand in the next guy's pocket.
A much better way to get the information in Wiggin's books is to watch his movie, I.O.U.S.A. More information, including an excellent 30 minute film, after the jump:
I.O.U.S.A. the Movie
While I recommend the I.O.U.S.A. movie and book, I cannot recommend Demise of the Dollar. It reads like the author finished it in one day and then handed it to students to add the citations. Demise contains nothing that hasn't been said before, by someone else, with more eloquence. That's one reason I.O.U.S.A. is so much better than Demise--it contains interviews with Warren Buffett and other investors who explain the economic times much better than Wiggin, and without the hysterics. (Read my take on the situation here and here.) Readers should skip Demise of the Dollar and watch/read I.O.U.S.A. instead if they're into economic horror stories.
As for me, I agree the U.S. dollar is in for a bumpy ride. That's why I've already bought a commodities ETF (DBC) and some Swiss francs (FXF).
Some stats from Demise:
At the end of 2006, foreign holdings of U.S. dollars had a market value of $16.295 trillion. [p. 43]
U.S. borrowing has expanded to the point that foreign central banks own major portions of the U.S. debt. The Bank of Japan held $668 billion of Treasury securities in 2004, compared to the Federal Reserve holdings of $675 billion. In other words, the Bank of Japan nearly matched the Fed in ownership of U.S. debt...If you just add in China, South Korea, and India, central banks own a lot more debt than the Fed does. [p. 153]
[O]ur actual inflation rates are understated by around two percentage points per year. [p. 30] For more on this phenomenon, click here.
Monday, December 29, 2008
Banks Did It, in the Dining Room, with the Rope
The Jan 2009 issue of The Commonwealth has a fascinating speech by Dick Kovacevich, Chairman of Wells Fargo (WFC). Most interesting is how quickly the banking sector grew.
Wells Fargo started as a business in 1852, and Norwest, where I worked before merging with Wells Fargo, started in 1873. By 1950, our combined assets were less than $3 billion...By 1985, both companies together were still only about $50 billion. Today, they are $610 billion. When our merger with Wachovia is completed, we will be nearly $1.5 trillion. So what happened...that caused this unprecedented growth? ... deregulation, new technologies, non-bank competition, and industry consolidation.
The banking sector is a rarity--despite multiple mergers, competition continues to be fierce. The internet banks, especially ING Direct, keep threatening the big players. Consumers owe (in the abstract) more to ING and other internet bankers than we realize.
The 1980s was a very difficult time for our economy. We had 16 percent inflation, 20 percent interest rates, double-digit unemployment and a severe recession.
Mr. Kovacevich differentiates between an economic crisis and a financial crisis. He says the 1980s was worse than today's crisis, because it was a full-blown economic crisis. Today, however, we have more of a financial crisis than an economic crisis:
We're probably in a recession; we'll be in one until early next year, but we've still got 6.1 percent unemployment, not 14 percent. We have 2 or 3 percent inflation, not 20 percent. We have interest rates at record lows, not at 20 percent...[So] It is a more serious financial crisis...We [the financial sector] really caused this crisis.
His willingness to accept blame should earns points. It's nice to see a Chairman of a major banking company speaking so frankly. He ends with a positive note:
I wouldn't want to bet against all the regulators and all the governments of the world -- this is a coordinated effort. If you want to bet against them, go right ahead, but I wouldn't. They'll get this thing fixed.
Very reassuring words from Wells Fargo's chairman.
Disclosure: I own shares of Wells Fargo (WFC). Warren Buffett's Berkshire Hathaway also holds WFC shares.
Bonus: In the same issue of The Commonwealth, Meg Whitman, former CEO of eBay, talks about California's budget:
Revenues have got to be greater than costs. This is one of the real laws of business. Otherwise, we go bankrupt. We need to change the structural way our budget is being done.
Although I live in California and consider myself a fairly comprehensive reader, I have no idea what's really going on with my state's budget. Last I heard, the Democrats were trying to call taxes "costs" to push through a budget over Republican objections. Come state election time, I may just vote against all the incumbents.
Wells Fargo started as a business in 1852, and Norwest, where I worked before merging with Wells Fargo, started in 1873. By 1950, our combined assets were less than $3 billion...By 1985, both companies together were still only about $50 billion. Today, they are $610 billion. When our merger with Wachovia is completed, we will be nearly $1.5 trillion. So what happened...that caused this unprecedented growth? ... deregulation, new technologies, non-bank competition, and industry consolidation.
The banking sector is a rarity--despite multiple mergers, competition continues to be fierce. The internet banks, especially ING Direct, keep threatening the big players. Consumers owe (in the abstract) more to ING and other internet bankers than we realize.
The 1980s was a very difficult time for our economy. We had 16 percent inflation, 20 percent interest rates, double-digit unemployment and a severe recession.
Mr. Kovacevich differentiates between an economic crisis and a financial crisis. He says the 1980s was worse than today's crisis, because it was a full-blown economic crisis. Today, however, we have more of a financial crisis than an economic crisis:
We're probably in a recession; we'll be in one until early next year, but we've still got 6.1 percent unemployment, not 14 percent. We have 2 or 3 percent inflation, not 20 percent. We have interest rates at record lows, not at 20 percent...[So] It is a more serious financial crisis...We [the financial sector] really caused this crisis.
His willingness to accept blame should earns points. It's nice to see a Chairman of a major banking company speaking so frankly. He ends with a positive note:
I wouldn't want to bet against all the regulators and all the governments of the world -- this is a coordinated effort. If you want to bet against them, go right ahead, but I wouldn't. They'll get this thing fixed.
Very reassuring words from Wells Fargo's chairman.
Disclosure: I own shares of Wells Fargo (WFC). Warren Buffett's Berkshire Hathaway also holds WFC shares.
Bonus: In the same issue of The Commonwealth, Meg Whitman, former CEO of eBay, talks about California's budget:
Revenues have got to be greater than costs. This is one of the real laws of business. Otherwise, we go bankrupt. We need to change the structural way our budget is being done.
Although I live in California and consider myself a fairly comprehensive reader, I have no idea what's really going on with my state's budget. Last I heard, the Democrats were trying to call taxes "costs" to push through a budget over Republican objections. Come state election time, I may just vote against all the incumbents.
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