Tis a Lazy Sunday
Been forever since I posted. Of course, it’s also been forever since Kerri and I had the chance for a lazy Sunday. She’s snoozing on the couch, and I’m working on some philosophy homework. (Paolo Freire anyone?) Thanks to grandma for taking the kids last night.
Talk Softly and Carry a Big Trust-Busting Stick
Someone finally said it. It’s taken nearly six months, but someone is finally calling for the trust-busting stick. Baseline Scenario linked to this site yesterday.
DECENTRALIZE: Banks must be broken up and sold back to the private market with new antitrust rules in place– new banks, managed by new people. Any bank that’s “too big to fail” means that it’s too big for a free market to function. (A New Way Forward)
That’s what I’m talking about. I’m less certain of the need to nationalize, but only marginally so. This, however, reorganization into smaller companies is something I am convinced of.
It’s the Crushing Debt, Stupid
I’m a big fan of This American Life. One reason is the fantastic coverage of the economic crisis. The most recent installment, Bad Bank, aired a couple weeks ago, and I caught up via the podcast this week. Very good. For those of you who hated economics at university (which is pretty much everyone if the, “Ugh!” and, “I’m sorry,” reactions by those who asked me what my major was is anything to judge by) but want – no NEED! – to better understand what is happening in the world today, it’s a must-listen-to episode. Not only do they do a very good job of making the jargon filled financial world very approachable and understandable, they are also among the first people I’ve heard mention the possibility that everyone might just be completely missing the point, the problem that is really at the core of the crisis.
Toward the end of their act, while talking with David Beim, a professor as Columbia Business School, they throw this out: Rather than toxic assets, perhaps the real problem the crushing burden of household debt that has been fueled the last ten or 20 years of economic growth. (Robert Reich has also been beating this drum with consistency the past few months.) Perhaps, in an age when the ratio of household debt to GDP is 100% – a stat not seen since 1929 – getting back on track, back to “business as usual” might not be a wise move. To quote from the show:
David Beim: Yes. That chart [depicting the ratio of household debt to GDP over the last 80 years] is the most striking piece of evidence that I have that what is happening to us is something that goes way beyond toxic assets in banks, it’s something that had little to do with mortgage securitization, or ethics on Wall Street, or anything else. It says the problem is us. The problem is not the banks, greedy though they may be, overpaid though they may be. The problem is us. We have over-borrowed. We have been living very high on the hog. We are, our standard of living has been rising dramatically over the last 25 years, and we have been borrowing to make much of that prosperity happen.
Alex Blumberg: And so, when you see Congress, sort of saying we need more, we need to make sure there are strings attached to this money, to make sure the banks are lending it out, that doesn’t make any sense.
David Beim: It makes, not only no sense, it makes reverse sense. It’s nonsense. Because what the banks have done is already lend too much. The name of this problem is too much debt. We have over-borrowed, and we have done that over many, many decades. And now it’s reached just an unbearable peak where people on average cannot repay the debts they’ve got. In the face of that, it is no solution to try to lend more.
People are tapped out. Two decades of short-term thinking by everyone, from politicians and CEOs to moms and dads, has gutted the house and left a fragile shell standing… until recently when that shell collapsed. These are the just and expected consequenses of excessive leveraging, i.e. managing the payment instead of the cost. Getting that train back on track is not going to do any good. Unfortunately, I’m beginning to think the only thing that might derail that train is a “Lost Decade” of our own. With the Dow already at late 90’s levels and so much more to go before this is all cleaned up, we may even be looking at a lost quarter century.
If You Give a Bank a Bailout…
If You Give a Bank a Bailout
If you Give a Bank a Bailout, it will probably ask you to leave it alone. It will remind you that it’s a Bank, and it knows what to do with money. So you’ll write a Check and turn your back. And the Bank will redecorate its room.
When you ask it why it refurnished its room, it will tell you that it had to in order to look nice for Investors. And then it will ask you to lower Rates. You’ll ask it why you have to lower Rates, and it will tell you that it’s necessary to restore the flow of Credit. If you mention that the Bailout was supposed to restore the flow of Credit, the Bank will stare awkwardly at its shoes, and mumble something about Toxic Assets.
You’ll ask what a Toxic Asset is. The Bank will start speaking very quickly about Mortgage Backed Securities, Collateralized Mortgage Obligations and Credit Default Swaps. You’ll scratch your head and look confused, so the Bank will try to reassure you. The Bank will tell you that although it’s very complicated, it’s really very safe and provides a very good Return.
You’ll ask how safe, and the Bank will start to blush. It’ll say that it depends.
You’ll ask what it depends on. The Bank will sigh for a moment, and then hem and haw while making vague comments about Over-the-Counter instruments Sub-Prime Borrowers. You’ll ask what THEY are, and the Bank will blush again.
Eventually the Bank will sort of fess up and tell you that those really safe investments might not be so safe, especially if no one is really paying attention to who is on the other end of those Mortgage Backed Securities and Credit Default Swaps. You’ll ask who is paying attention, and the Bank will tell you it is.
At this point you’ll put everything together and ask the Bank the Question its been avoiding: If these Mortgage Thingys and Credit Default Whats-its are safe – so long as someone is paying attention to whomever is on the other end, like the Bank says it has been doing – then why is the Bank in trouble and in need of a Bailout?
When you ask the Question, the bank will turn get angry and start huffing and puffing. It will tell you to stop asking so many questions. It will tell you not to worry about the Past and instead to think about the Present. It will tell you about all the People who aren’t getting car loans and student loans and mortgages. The Bank will tell you to think about all the businesses who aren’t getting loans to expand and grow… or even make Payroll!
The Bank’s argument will distract you and tug at your heartstrings just enough. And when that’s happened, the Bank will probably ask you for another Bailout. And a ride to the Interior Decorator’s on your way out of town to leave it alone.
School Daze
So, this week, the cat came out of the bag at work, so I finally feel free to talk about some exciting steps I’m taking. In the midst of what might turn out to be the next great depression; as the sole source of income for our family of five (plus Nigel); from a place of relative comfort and prestige in my little pond… I am making a career change.
I am going back to school in order to go back to school. First as a student; then as a high school teacher. Starting with this coming spring quarter, I will be attending Sinclair CC and U of Dayton to get my teaching certificate. If all goes according to plan, I should be student teaching this time next year.
It’s something I’m pretty excited about. If I knew then what I know now about myself, I think I would have gon this route as an undergrad. As it was, I didn’t. But I do now, and a variety of circumstances over the fall have given me the boost necessary to overcome my ordinarily high internal inertia. Kerri, too, is super excited, and my employer couldn’t be more supportive. (Aside from hoping I change my mind and stay, they’re being super accomodating.)
This week I registered for classes for the first time in more than a decade. I have six content courses to complete, and Sinclair is the most affordable way to get through them. I had everything all figured out over the weekend, and then I realized that the Sinclair spring quarter and the UD summer term, which is when I will begin my grad school education classes, overlap by a month. So, on Monday morning it was back to the scheduling board. I wound up pushing one class off to a future quarter in order to fit everything in and still have hours available for work. Still, for one month I will be taking a total of seven classes, five at Sinclair and two at UD.
What am I thinking?
The White House – Blog Post – President Obama delivers Your Weekly Address
President Obama has posted his first weekly address since being sworn in. It’s available at WhiteHouse.gov. In it, he talks about the American Recovery and Reinvestment Act. While I think he’s targeting the right areas with the proposed government spending, I’m still undecided as to the bigger question of whether or not the spending is necessary.
If you use an RSS reader, you probably ought to subscribe to the White House blog. Like it or not, Barack Obama is the President of the United States for the next four years.
WhiteHouse.gov RSS Feed: http://www.whitehouse.gov/feed/blog.aspx
What Is the Bush Legacy?
While I’m sure there will be many electrons spilled answering this question, I will add my own to the mix. The last eight years of the US government has been… interesting. I’ve thought on this a bit, and there are several ways one could go with this recap. I think I’ll go with this as my theme word:
Discombobulated
Yes, that’s right. Discombobulated. That’s the theme I will append to President Bush’s legacy. Here’s how I see it.
- 9/11 – Beyond his control. Less than a year into his presidency and this changes everything. Education reform? Backburner. Healthcare reform? Maybe tomorrow. Fiscal reform? First things first. President Bush never really had the chance to try and execute his gameplan. He was down nil – 3 within minutes of the opening whistle.
- “Mission Accomplished” – OK, that was just boneheaded. Baghdad had fallen, true; but that wasn’t the mission was it? I thought it was Bin Laden who was behind 9/11, not Hussein. And the destruction of something is only the beginning. A life, which takes nine months to be born can be ended in a second. The real work is in creating. To his credit, President Bush has pretty much admitted that this was premature at least.
- Hurricane Katrina – Come on now. Seriously? First terrorists and now the nature’s wrath? I can only imagine the conversation in his head went some thing like this: “OK, GW, lets put it together. Iraq is turning into a bit of a debacle, but it’s not yet beyond us. We’ve still got nearly four years. Let’s just put aside distract — WTF!!! You’ve got to be kidding me!” Unfortunately the response was about as well coordinated and planned as the post-invasion effort in Iraq.
- The Financial Meltdown – The experts are still weighing in on the causes, but I don’t think anyone can credibly lay this at President Bush’s feet. This ball started rolling many years before him. He likely gave the whole thing an extra push, and that only made the inevitable fall that much more harsh, but even his push was only one of many. Where was Congress? Where was the market’s “Invisible Hand?” It’s unfair that he will likely go down in history as the one responsible for the whole thing.
Bottom line: Do I think he was a good President? Not particularly. I don’t think he was able to marshall effective reponses to the unquestionably large challenges that were thrown at him. I think they knocked him for a loop and he never regained the plot. I don’t fault him for effort, but the results left much to be desired. I don’t think we’ll ever know who George W. Bush wanted to be as President, and we can only speculate about how Kerry or Dole or Gore or anyone else would have faired in his shoes.
Casting a Bold Vision
Today I nearly cried. As someone who doesn’t remember the last time he had an actual cry, an almost cry is pretty significant. 150 years ago, a black man in the United States was denied his humanity. 50 years ago, he denied his citizenship . Today, he has become our Chief Citizen. The promises and struggles of the past are bearing fruit in the present. This is not a moment whose significance is to be underestimated.
I heard President Obama’s speech on my lunch hour. While this isn’t particularly substantive and it probably reveals a certain snobbery of my character, I am happy to have an eloquent president whom I enjoy hearing. President Bush took folksy and home-spun too far. In his effort to sound ordinary he sounded ignorant, something unbecoming of a President. This is a small change I gladly welcome.
As far as substance, I believe the President has laid out a grand vision for the future of America, a vision rooted in its foundation. He wishes to draw a line in the sand of history, and I, for one, hopes he succeeds. I am as cynical as any toward government (and business and religion, too, for that matter), but I would gladly embrace a rason for optimism. “Love hopes all things.” I want and need help loving more.
Surely President Obama is not so naive to think the change he heralds will be complete on his watch. Rather, I believe he sees his task as one of setting a new course and of countering the inertia of previous decades. For our President I pray courage and wisdom.
When You Gather…
These words of Paul’s have been in my mind this week as I look forward to our church meeting this evening:
So here’s what I want you to do. When you gather for worship, each one of you be prepared with something that will be useful for all: Sing a hymn, teach a lesson, tell a story, lead a prayer, provide an insight.
One of my resolutions for 2009 is to be more intentional during our meetings, to be more proactive in spurring by brothers and sisters on to love and good deeds. (Heb. 10) The words above will help me to focus and give me ideas.
This morning’s Office encouraged me to grab the guitar and sing for a few minutes. I started singing “Prepare the Way,” by Charlie Hall. I couldn’t quite remember the original melody and rhythm, but I found something close enough that worked. While singing I stumbled into a couple of new verses that fit well… and promptly forget them by the time I set the guitar down and grabbed a pen. 
Ain’t that always the way. Perhaps I’ll be able to remember them later on today.
2009 Resolutions
January is the time for fresh starts, new goals, and all that. I’ve got a couple that I’m not yet ready to talk about, but let’s see what I dare put to paper… so to speak.
Family
- More bedtime stories and snuggles.
- A regular date night with Kerri
Faith
- Regular observation of the Hours
- More frequent intentional substance at church meetings.
Hobby
- Create something at least monthly
- Finish one book a month
Home
- Get the attic in order
- Get the deck in
- Bunk beds for the boys
- Paint our bedroom
Let’s stew on this for a bit and see where it leads us.
