Worm Food

These thoughts were on my mind, and I jotted them down in my journal on Monday. I felt compelled to put them up here on the off chance someone might find them (useful).

I felt compelled to write these thoughts down. They are not empirical, but they do have a certain truthiness.

• Markets are more robust, lifting more people, when they are free from monopolies of any kind.
• The government itself is a kind of monopoly that can influence overall economic performance, either for good or bad. Therefore, regulation and stimulation, both of which will always have unforeseen consequences, must be carefully considered before being implemented.
• Unregulated markets tend to evolve into monopolies or oligarchies that maintain their status-quo by suppressing creativity, innovation, and overall economic growth. Everything becomes zero-sum.
• Every market has winners and losers. When the elites perceive themselves as losing, they will use any means necessary to protect their power. They will also convince themselves they are acting for the greater good. Some won’t care about the greater good so long as they benefit.
• “What’s bad for the hive is bad for the bee,” but the bees are not very good at recognizing what is good for them—especially when what is bad for the hive is pitched as being good for it. The inverse of Marcus Aurelius’s truism is patently false. Otherwise, nobody would poison the common well for their own profit.
• Humans are remarkably immune to cognitive dissonance. Double think is a real thing.
• I believe Greenspan was correct when he said the biggest problem with the economy was that nobody took the long term view. When asked why, he said, “because in the long run, we’re all dead.”

We are all “food for worms.” Memento mori.

The Recession, RIFs, and Wow

I’ve wanted a camper van for a long time. This one looks fun, but not for a long trip.

Photo source: BBC

This week was a difficult week on the job front. Yes, I still have a job, but my days are numbered. More on that later; I’m going to stay chronological in this post, even though I don’t really believe in linear time.

The first thing that happened was that I was invited to interview for a job. That’s never a bad thing, and I was excited. The interview went well, and we all had a good time. Anytime you spend most of the interview laughing with the interviewers, it’s a good thing, whether or not you get the job.

The next morning, I called the recruiter to touch base. She still hasn’t heard anything, and it’s a bit premature for that interview. But she did tell me that the fire has gone out around one of my other irons. That regulatory body decided to move someone they already employed into a contract position rather than reduce headcount in one place and bring me on in another. I have to admit it makes accounting sense, even if I don’t like it.

Then the department where I’m currently contracting at the Fruit Company was reorged. My boss is now filling the vacancy I originally interviewed for. Given the length of time it takes them to make a decision an the current economy, my contract will be long over—I may even be retired—before they free up the funding to add another instructional designer.

The state of the economy causes me to worry a bit, but I’m still confident and hopeful. I heard a promising bit on the news. It seems most companies are taking their RIFs upfront this year, front-loading the job cuts to save money the whole year. That means many economists are expecting job losses to slow as the year progresses. They’re now talking about peak unemployment of less than 20%.

I may not be able to find another contract soon, but at least the one I’m on can only expire once. That’s something to look forward to.

Put Your Money Where Your Mouth Is

Howard Schultz, CEO of Starbucks, showed real leadership this week.

Photo scource: Pro Commerce

Everyone knows that the economy sucks right now. It seems we learn of more closures and layoffs every day. If fact, the latest number from the government show the highest number of people on unemployment this week since statistics were tracked. And that doesn’t count those on a special extension enacted last year. (In case you aren’t depressed enough already, Stateline.org has a state-by-state breakdown of unemployment.)

So I wasn’t surprised to learn this morning that Starbucks closing another 300 locations and reducing payroll by thousands. This action comes after Q1 profit fell by 69%.

I listened to Wendy Kaufman’s article (NPR.org) with growing numbness until something unusual caught my attention. Chief Executive Howard Schultz is showing incredible leadership and responsibility in his drive to turn the company around. Schultz has taken the remarkable step of asking the board of directors to reduce his base salary to $10,000 from more than $1M last year.

Contrast this determination with the actions of Merill Lynch CEO John Thain, who spent more than $1.2M (Wall Street Nation) redecorating his office while his company burned around him. (Hampton Roads has his complete shopping list.) While negotiating the sale of Merrill, Thain and the board also pushed through measures to speed their bonuses before Bank of America took over. These bonuses totaled several billion dollars while the company lost more than $15.3B in one quarter. In my humble opinion, that constitutes theft of the stockholders’ equity. Thankfully, I have never owned Merill stock.

So I want to nominate Howard Schultz for some kind of award. He is actually walking the walk instead of just expecting his employees to cover all the slack.

While most CEOs don’t come anywhere near Thain’s Nero-esque behavior, you also don’t hear of many of them offering to cut back their salaries.

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6 February 2008 Update: The economy continues to real under the weight of the theivery of those who had the helm of some of the world’s largest financial companies. Even relatively conservative outlets like The Motley Fool, an investment firm and advisor, are calling for blood. See “Hundreds Should Go to Jail.”

Cowboy Bush

I always knew that boy just ain’t right. Once again, he wants the taxpayers to bail out his buddies.

Photo source: List of the Day

Last night our Supreme Leader issued a call for the American taxpayer to rescue his cronies from their own greed. In what is the largest cash-grab in our history, Bush proposes giving billions—maybe trillions—of dollars to his drinking buds on Wall Street to keep them from going broke.

Bush does paint a relatively accurate picture of how we got into this mess, but he blames foreign investors and consumers. While these people were culpable to some degree, I believe it was a shameless financial industry—or as my dad would say, the worshipers of Mammon—that got us into this mess.

Since good rhetoric always denies itself (“I come here not to praise Caesar…”), let’s take a look at what he actually said:

“Financial assets related to home mortgages have lost value during the house decline, and the banks holding these assets have restricted credit. As a result, our entire economy is in danger.”

The banks and consumers may be overreacting, but what got us there in the first place was deregulation and greed. The housing bubble was driven by an unrealistic expectation that home prices could inflate to infinity. Deregulated financial institutions were able to relax their lending standards to lend money to people with absolutely no chance of ever paying back those loans. They did so in the expectation that when they foreclosed on those mortgages the properties would be worth more than the loan or that the purchasers would be able to flip those houses for a profit.

In some cases, purchases were not even required to be able to pay the interest on the loans; the amount over a specified minimum payment would be rolled back into the loan. After making payments for several years, the consumers would actually owe more money than they originally borrowed. Even Bush admits, this.

Many mortgage lenders approved loans for borrowers without carefully examining their ability to pay. Many borrowers took out loans larger than they could afford, assuming that they could sell or refinance their homes at a higher price later on.

Then the bubble burst. Again.

Bush swears he only wants to help us all.

This rescue effort is not aimed at preserving any individual company or industry. It is aimed at preserving America’s overall economy.

Then why does the money all go to Wall Street, the ones whose greed caused the problem? Mr. President, the amount of money you’re talking about equates to almost $300,000 per adult in this country after taxes. If you simply gave that much money to the people, almost all of us could pay off those mortgages on which you blame the problem.

What happens if we don’t save the rich? Bush essentially says we’re screwed.

• America could slip into a financial panic and a distressing scenario would unfold.
• More banks could fail, including some in your community.
• The stock market would drop even more, which would reduce the value of your retirement account.
• The value of your home could plummet. Foreclosures would rise dramatically.
• And if you own a business or a farm, you would find it harder and more expensive to get credit.
• More businesses would close their doors, and millions of Americans could lose their jobs.
• Even if you have good credit history, it would be more difficult for you to get the loans you need to buy a car or send your children to college.
• And, ultimately, our country could experience a long and painful recession.

So the options presented are either to save the rich, or we all go down together. Is it better to go down together or drown keeping the heads of our betters above water? Isn’t there another option? What about just using that money to pay off those troubled assets and giving working class people a break? That’ll never happen here.

The irony is that under the Republican free-trade regime, the United States is about to become the most heavily socialized country in the world—without doing a thing to promote social justice or take care of those most at risk. But then, as one friend of mine put it, “We socialize losses. We privitize profits.”

Is that what Bush meant when he said,

The government is the one institution with the patience and resources to buy these assets at their current low prices and hold them until markets return to normal.

If so, let’s all hope that the government can turn a profit on them—eventually.

Politics and the Feast

Two more weeks until I join the ranks of the unemployed again. I am a bit worried because the local economy seems to be following the national economy into the toilet. Thanks, Republicans. You took a balanced budget and turned it into something worse than the “tax and spend Democrats” could have done under Tip O’Neil. I have a new term: Don’t tax but spend anyway Republicans.

Hey! This wasn’t supposed to be a political rant. Let’s eat something. I think I’d like a fried Republican.

Friday’s Feast

Appetizer: Do you consider yourself to be an optimist or a pessimist?

Like Suna, I prefer to think of myself as a realist. At the same time, I choose to be upbeat about most things that happen in my life. Every life has good and bad events that work together to shape who we become. Take away anything and we are someone else. Not that I like the icky parts. But I know they are inevitable. So why not cherish the growth that results from them?

Soup: What is your favorite color of ink to write with?

Black.

Salad: How often do you get a manicure or pedicure? Do you do them yourself or go to a salon and pay for them?

Uh…Never. I’m a guy.

Main Course: Have you ever won anything online? If so, what was it?

Nope.

Dessert: In which room in your house do you keep your home computer?

My work computer is in the office. My home computer is in the entertainment center in the media room. There is an old laptop in the guestroom—mainly because the keyboard died and it can’t be used as a portable anymore.

You Can’t Always Get What You Want

What I want:
Photo Source: Wikipedia What I need.
Photo by Suna

You can’t always get what you want

But if you try sometimes

You might find

You get what you need

—Mic Jagger & Keith Richards

Prospects

Well, I had another interview yesterday. This one was with a niche-market software company. They seem to be really good people who have a solid business model. They are looking for someone to wear a bunch of hats, which usually means a lot of hours. They are also looking for someone who is really innovative, and I’m not sure I passed that test. Should hear one way or the other by sometime next week.

Friday Feast

Appetizer: How much money do you plan to spend this upcoming holiday season?

The short answer is “As little as possible but as much as it takes.’ That is my usual approach to the holidays. There will probably me more emphasis on economizing this year because of the pending ending of my contract.

If, on the other hand, I have more permanent employment, I may be a little less frugal. I certainly do not enjoy being frugal at holiday season.

Soup: What was the last television show you watched, and was it good?

Here, I have to quote Suna. “The last show I watched was the Colbert Report on Wednesday night, because we were at a Thursday football game last night.” I dozed through parts of it, as usual.

Salad: If you had to paint the walls of your living room tomorrow, what color would you choose?

I would go along with whatever Suna chose. She has a much more refined sense of color than anyone I know. I might provide some input, but the final decision would be hers.

Main Course: Name something clever or practical you have thought of that should be invented, but hasn’t yet.

Genetically engineered microorganisms that eat arterial plaque. When the arteries were clean again, they would die back from starvation. Many Americans eat enough junk that their cultures would thrive for decades.

Dessert: List 3 things you would like to receive as gifts this upcoming holiday season.

The answers to this question would vary a lot depending on whether or not the responses are required to be reasonable expectations. For example, I would like to receive a million dollars, but that is not a reasonable expectation. I would also like the third Trio CD, but Linda, Emmylou, and Dolly haven’t recorded it yet. So—sigh—here are three reasonable things.

• A quiet place to write
  This would just be a room where I can close the door for a couple of hours at a time and think.
• A new mattress
  This would really be a gift for both Suna and me.
• Bowflex exercise machine
  This would have to be a shared gift with the whole family. I couldn’t expect to spend this much money on myself, or to have anyone spend that much money on me. And we would have to figure out where to put one. Luckily, they have a nifty space planner.

Of course, this list has three things. I am always more interested in intangible gifts.