I am a huge supporter of Obama and it is being confirmed by his budget. I have been very concerned for years that income inequality is a great problem. Now, this is being addressed.
The budget analysis indicates that the middle class (and hopefully, those with even less) will be taxed less and those with more than $250,000 will be taxed more. A radical change in health care will level the field also and add to the security of those in the middle class.
It will be most interesting to see how this process works itself out in Congress. Coming from Massachusetts, a voter need not press their representatives regarding these issues. Our delegation is generally liberal on every issue. For citizens of other states, they will have to press their congressional delegation.
Friday, February 27, 2009
Wednesday, February 18, 2009
"The Story of Edgar Sawtelle" by David Wroblewski
To think that this is the author's first novel, taking over ten years to write, and the book ends up on the New York Times best seller list! What an achievement!
Rather than adding more comments as in a review (cf. LATimes), I want to share my reason for loving the book. It includes dogs! Granted this fictional aspects of the book, the fact that dogs can be successfully trained is well-known. I just know that it is far from easy. My dog is great, but I realize how poorly I have trained him. Per chance I were to forget this, my wife reminds me of it regularly.
Training a dog requires skill, but it also involves understanding a dog. The author captures the uniqueness of each dog, how the dog functions and the various ways the dog responds. There is art and psychology combined with the technical aspects that enable the transition from an animal to a dog that epitomizes our hopes when we become involved with a dog.
Surely, the dogs depicted in this novel are not in the same league as my dog. And I have to live with the fact that I am the cause. The dog is only as competent as its master!
Rather than adding more comments as in a review (cf. LATimes), I want to share my reason for loving the book. It includes dogs! Granted this fictional aspects of the book, the fact that dogs can be successfully trained is well-known. I just know that it is far from easy. My dog is great, but I realize how poorly I have trained him. Per chance I were to forget this, my wife reminds me of it regularly.
Training a dog requires skill, but it also involves understanding a dog. The author captures the uniqueness of each dog, how the dog functions and the various ways the dog responds. There is art and psychology combined with the technical aspects that enable the transition from an animal to a dog that epitomizes our hopes when we become involved with a dog.
Surely, the dogs depicted in this novel are not in the same league as my dog. And I have to live with the fact that I am the cause. The dog is only as competent as its master!
Ignorance is not Bliss
I am always struck by what I don't know. I try to make amends by reading as much as I can. I know some areas are particularly weak, e.g., science and history. I am trying to make a dent in field of history, but admit that my ignorance in science is too great an obstacle to overcome at my age.
But, what really frustrates me is when I find out something new in an area in which I thought that I was relatively well informed.
I have been reading everything that I can put my eyes on re: the proverbial bailout(s). I have discussions about what I read with anyone and everyone who would participate. And yet, this morning I find out that I was totally ignorant re: an important aspect of the bailout of banks.
With all this discussion re: the lack of lending in spite of the bailout funds, I had no idea that the funds were distributed to the bank's holding companies rather than the banks. And the bank holding companies wanted to protect their shareholders by giving as little money as possible to the banks, per chance they would become bankrupt. In short, while the banks have been criticized for their lack of lending, it appears that they were not at fault. You can't lend what you don't have!
My ignorance over this matter makes me angry. I wonder if my ignorance was designed by the playmakers, i.e., never tell the public per chance they will become really angry!
But, what really frustrates me is when I find out something new in an area in which I thought that I was relatively well informed.
I have been reading everything that I can put my eyes on re: the proverbial bailout(s). I have discussions about what I read with anyone and everyone who would participate. And yet, this morning I find out that I was totally ignorant re: an important aspect of the bailout of banks.
With all this discussion re: the lack of lending in spite of the bailout funds, I had no idea that the funds were distributed to the bank's holding companies rather than the banks. And the bank holding companies wanted to protect their shareholders by giving as little money as possible to the banks, per chance they would become bankrupt. In short, while the banks have been criticized for their lack of lending, it appears that they were not at fault. You can't lend what you don't have!
My ignorance over this matter makes me angry. I wonder if my ignorance was designed by the playmakers, i.e., never tell the public per chance they will become really angry!
Tuesday, February 17, 2009
False Wealth
I have been struck during the last several weeks that our nation's total wealth will not reappear possibly in my lifetime. I am not questioning that there will be a return of much normalcy, but the amount of personal wealth as determined by individual's net worth will take much, much longer. One of the reasons that I saw was that much of the wealth was associated with the extraordinary inflation in home prices. Those prices were unrealistically high and it will take a long time to sell off the excess stock as well as work out the problems associated with people's problems with their mortgages, whether the threat of foreclosure or negative equity.
Paul Krugman has a most interesting insight into our economic plight. He focuses on the fact that much of our national wealth was not supported by value. He cites the problems that much of the nation's shareholder wealth was supported by financial instruments that carried little value in and of themselves. Making money from money without the infrastructure of manufactured goods is a problem cited by Kevin Phillips and others. In short, there is no easy way to make money. It has to be earned, as Barney Smith used to day.
Paul Krugman has a most interesting insight into our economic plight. He focuses on the fact that much of our national wealth was not supported by value. He cites the problems that much of the nation's shareholder wealth was supported by financial instruments that carried little value in and of themselves. Making money from money without the infrastructure of manufactured goods is a problem cited by Kevin Phillips and others. In short, there is no easy way to make money. It has to be earned, as Barney Smith used to day.
Sunday, February 8, 2009
Health Care Reform
It has been clear to me for a long time that universal health care is the way to go! From my perspective, it would achieve the goal of ensuring that each person would have access to health care. For me, it is a right of a human being. It would be easier to administer, cheaper to run, and would provide a mechanism by which costs could be reviewed and practice patterns evaluated. When necessary, changes could be administered to the benefit of the system. And it would be good for businesses who would no longer have this huge overhead cost.
Jonathan Cohn has presented the case, as complex as it is, with clarity. He includes all sides of the issue and gives the reasons for each view.
Everyone should be as well informed on this issue as possible since the debate will be bolstered, one way or another, by the views of citizens.
Jonathan Cohn has presented the case, as complex as it is, with clarity. He includes all sides of the issue and gives the reasons for each view.
Everyone should be as well informed on this issue as possible since the debate will be bolstered, one way or another, by the views of citizens.
Friday, February 6, 2009
Stimulus Package: a Nightmare?
Everything is supposed to be transparent in the new administration. People will be informed because they are assumed to be intelligent. And yet, here we are: very confused!
The more you read, the more confused I become. There are economists supporting essentially every point of view. If very intelligent people based on their credentials can differ so markedly, how can we expect the politicians to agree? How can we be enlightened?
Into this morass, Niall Ferguson brings even more ominous ideas with solutions that are markedly different than anything I have yet read.
First, he assaults those who adhere to Keynesian precepts because the situation is so different than anything yet faced by this nation and the world. At the time of Keynes, the economies were essentially closed. Now, they are global. Secondly, the amount of indebtedness is significantly different than anything in the past. The degree of indebtedness makes a road to further indebtedness more deflationary. The values of our economy will be less and consequently, the products will be less valued.
While various commentators of the various stimulus plans suggested include both ideas of Ferguson, he is different in indicating that ONLY these two actions are warranted:
(1) banks should be restructured to assess the real value of their assets and whatever capitalization of the banks by the United States should be time limited with re-privatization to occur at a fixed time, e.g., ten years.
(2) mortgages in danger of foreclosure should be refinanced at lower rates and for longer periods of time. This will put more money in the pockets of mortgage holders to be spent and secondly, it will support the housing market that continues to falter. He downplays the moral hazard aspects of such a strategy because there is no chance that the causes of the problem will be repeated, e.g., subprime loans.
I read Ferguson's ideas and they make all the sense in the world, until I read someone else's perspective, e.g., Krugman who indicates that his problem is that a trillion dollar plan is too LITTLE! But, I admit that Ferguson's now hold sway with me (for the moment) because he addresses the problems clearly and simply. The potential benefits are great and the costs are less.
The more you read, the more confused I become. There are economists supporting essentially every point of view. If very intelligent people based on their credentials can differ so markedly, how can we expect the politicians to agree? How can we be enlightened?
Into this morass, Niall Ferguson brings even more ominous ideas with solutions that are markedly different than anything I have yet read.
First, he assaults those who adhere to Keynesian precepts because the situation is so different than anything yet faced by this nation and the world. At the time of Keynes, the economies were essentially closed. Now, they are global. Secondly, the amount of indebtedness is significantly different than anything in the past. The degree of indebtedness makes a road to further indebtedness more deflationary. The values of our economy will be less and consequently, the products will be less valued.
While various commentators of the various stimulus plans suggested include both ideas of Ferguson, he is different in indicating that ONLY these two actions are warranted:
(1) banks should be restructured to assess the real value of their assets and whatever capitalization of the banks by the United States should be time limited with re-privatization to occur at a fixed time, e.g., ten years.
(2) mortgages in danger of foreclosure should be refinanced at lower rates and for longer periods of time. This will put more money in the pockets of mortgage holders to be spent and secondly, it will support the housing market that continues to falter. He downplays the moral hazard aspects of such a strategy because there is no chance that the causes of the problem will be repeated, e.g., subprime loans.
I read Ferguson's ideas and they make all the sense in the world, until I read someone else's perspective, e.g., Krugman who indicates that his problem is that a trillion dollar plan is too LITTLE! But, I admit that Ferguson's now hold sway with me (for the moment) because he addresses the problems clearly and simply. The potential benefits are great and the costs are less.
Thursday, February 5, 2009
Straightening Out the Financial Mess!
Regulations are often considered detrimental to capitalism. My view of capitalism is that it a great system, the best yet invented, but it needs to be complemented by regulations and oversight by government. Capitalism unbound by regulations usually ends in self-destruction. And surely, many get hurt in the process.
James Stone has provided me a great overview of issues that need to be addressed in the present climate.
His call that there should be less leverage in lending institutions is most reasonable. I doubt that I was alone in being unaware that these institutions had so little capital to back up its lending practices. One does not need an economics degree to see problems when an institution is borrowing at a 30/1!
I agree totally with those, including Warren Buffett, that complex derivatives are so convoluted that the institutions using them are begging for disaster. One can see benefits from securitizing the basic assets, e.g., mortgages, credit debt, but when derivatives are then generated at a further distance from the these original assets, we have problems.
He zeroes in the downfalls of large mergers resulting in unmanageable extraordinarily large organizations. His principle, shared by others, that an "institution too large to fail" is too large!
The deregulation of mortgage rules was clearly a disaster. It does not require much understanding to see the benefits that the process of acquiring should be sufficiently regulated that the sales people are appropriately licensed and that regulations assure that the people can afford the mortgage.
Finally, the ability of institutions, especially hedge funds, to avoid disclosing sufficient information for outsiders to know whether the metrics used make sense. We are not requiring overly much, but sufficient for those who should know to judge the soundness of the investment strategy.
James Stone has provided me a great overview of issues that need to be addressed in the present climate.
His call that there should be less leverage in lending institutions is most reasonable. I doubt that I was alone in being unaware that these institutions had so little capital to back up its lending practices. One does not need an economics degree to see problems when an institution is borrowing at a 30/1!
I agree totally with those, including Warren Buffett, that complex derivatives are so convoluted that the institutions using them are begging for disaster. One can see benefits from securitizing the basic assets, e.g., mortgages, credit debt, but when derivatives are then generated at a further distance from the these original assets, we have problems.
He zeroes in the downfalls of large mergers resulting in unmanageable extraordinarily large organizations. His principle, shared by others, that an "institution too large to fail" is too large!
The deregulation of mortgage rules was clearly a disaster. It does not require much understanding to see the benefits that the process of acquiring should be sufficiently regulated that the sales people are appropriately licensed and that regulations assure that the people can afford the mortgage.
Finally, the ability of institutions, especially hedge funds, to avoid disclosing sufficient information for outsiders to know whether the metrics used make sense. We are not requiring overly much, but sufficient for those who should know to judge the soundness of the investment strategy.
Feeling Old!
A week's visit to visit my son and family was precipitated by the fact that I wanted to see him prosecute a case in federal court. However, it was also an occasion to share some time with the family and be with my grandchildren.
As it is, we have only one male grandchild and it was quite the experience to witness the energy of a healthy, soon to be three year older. Wow! the pace of this child was incredible. While not unusual to those with such active children, I admit to being overwhelmed. I could not recall that our sons were as active at this age, but my memory could fail me or I may have buried the memories! At any rate, what I witnessed last week made me feel very old. I was so impressed with the patience of his parents and their ability to successfully manage his needs.
What a treasure that their second child is such a delightful, patient, happy girl! She smiles at her brother as though his behavior is designed to entertain her (except for those occasions when he takes what she has because he "needs them").
Being a parent is a task for young people. We know that and surely this week was evidence that I am old!
As it is, we have only one male grandchild and it was quite the experience to witness the energy of a healthy, soon to be three year older. Wow! the pace of this child was incredible. While not unusual to those with such active children, I admit to being overwhelmed. I could not recall that our sons were as active at this age, but my memory could fail me or I may have buried the memories! At any rate, what I witnessed last week made me feel very old. I was so impressed with the patience of his parents and their ability to successfully manage his needs.
What a treasure that their second child is such a delightful, patient, happy girl! She smiles at her brother as though his behavior is designed to entertain her (except for those occasions when he takes what she has because he "needs them").
Being a parent is a task for young people. We know that and surely this week was evidence that I am old!
Unbelievable Experience!
Anyone who is a parent can identify with the joy of experiencing the success of a child, especially when the child becomes an adult. I had such an experience last week when my older son was the lead prosecutor in a criminal case involving the trafficking of counterfeit goods. He was great!
First, though, I share some other impressions.
I was impressed with the elegance of the federal courtroom. It was large, attractive, and used advanced technology to advance the progress of the case. The various members of the US Attorney's Office talked with me about many things, including my questions regarding the proceedings. It surely was interesting and i learned much. During the proceedings, I tried to identify with the jury, listening to the testimony as though I would have to join the jury to decide the defendant's future.
But, all of this, was second to my son's performance. He had organized the case which involved multiple witnesses and a lot of evidence that could be shown to the jury. His opening and closing statements were articulated clearly, simply, thoughtfully, and precisely. The jury would have no problem following the train of thought and the reasons for the government's claim that criminal actions occurred. He questioned witnesses with questions that traced his/her relationship with the defendant that could support the government's claims. He acted as though this was routine even if it was the first time that he was the lead prosecutor.
It was terrific and surely an experience of a life-time for me.
First, though, I share some other impressions.
I was impressed with the elegance of the federal courtroom. It was large, attractive, and used advanced technology to advance the progress of the case. The various members of the US Attorney's Office talked with me about many things, including my questions regarding the proceedings. It surely was interesting and i learned much. During the proceedings, I tried to identify with the jury, listening to the testimony as though I would have to join the jury to decide the defendant's future.
But, all of this, was second to my son's performance. He had organized the case which involved multiple witnesses and a lot of evidence that could be shown to the jury. His opening and closing statements were articulated clearly, simply, thoughtfully, and precisely. The jury would have no problem following the train of thought and the reasons for the government's claim that criminal actions occurred. He questioned witnesses with questions that traced his/her relationship with the defendant that could support the government's claims. He acted as though this was routine even if it was the first time that he was the lead prosecutor.
It was terrific and surely an experience of a life-time for me.
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