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Week of 29 September 2008

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Monday, 29 September 2008
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08:15 - Yesterday we finished ripping out the counters. The new counter is to be installed tomorrow, and the plumber is showing up Wednesday to reconnect the sink. Barbara shot this image yesterday afternoon. I'm surprised she could get any kind of angle at all. Most of the kitchen is full of stuff from the base cabinets that's stacked in piles on the floor.

The cutoff valve for the hot water doesn't quite work, so there's a bucket under the feed hose to catch the drip. Since 9:38 p.m. last night, it's accumulated only about 4 cm of water, so the drip isn't really a problem. I'll ask the plumber to replace the valve. Otherwise, we didn't have much problem ripping out the counters.

Barbara's dad is doing much better. He's still weak, but he's walking again with the help of a walker. It looks as though he'll be released tomorrow or perhaps Thursday. Barbara will still have a lot of running around to do until her dad can drive again, but with him home it'll be much better than having him in the hospital.

I'm still working on the gunshot and explosives residues chapter in the forensics book.

15:10 - The $700 billion bailout, which would actually have probably turned into a $2 trillion or larger bailout, has failed. That is, if not good news, at least less bad news than the alternative would have been. The proposed bailout was actually a gigantic corporate welfare proposal, designed to preserve the assets of the stockholders of affected banks.

In college, I audited several economics courses taught by Hans Sennholz. I remember one comment he made, talking about the Great Depression. That economic downturn lasted, he said, from 1929 until 1946, purely because of government intervention. If the government had kept its hands off, the Great Depression would have ended, as previous "panics" had, in a matter of months.

So now, assuming this bill doesn't rise from the dead, our businesses and financial institutions are in for a very rocky ride. A great deal of "wealth" will disappear, but most of that was imaginary wealth in the first place. All of us will be poorer, some much poorer. But a quick purge is the best way to get things back on track sooner rather than later.

Companies and individuals who have behaved responsibly will suffer the least pain. Make no mistake, there are plenty of well-run banks and businesses out there. They will survive and eventually flourish, the more quickly because they won't be penalized to prop up the poorly-run banks and businesses. For individuals, the ideal is to be debt-free. Barbara and I owe nothing to anyone, other than revolving credit card debt, which we pay in full every month.

Retirees, particularly those on defined-contribution pensions rather than defined-benefit plans, will suffer, some of them greatly. Those who owe a great deal of money should be nervous, particularly those in two-income families where both incomes are needed to meet payments. As the economy contracts, we can expect numerous corporate downsizings and bankruptcies, with increased unemployment.

Let's just hope the public sector isn't immune from these changes. Other than fire, police, EMS, public health, and similarly essential services, economic hard times should impact government employees at least proportionately, if not more so than private sector employees. Of course, we'll probably see token cuts at most unless the taxpayers force the issue.

But keep in mind that the real economy is the people who do useful things, and we're all still here.


Tuesday, 30 September 2008
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08:52 - Worst ever? Historical crash? I keep reading headlines about yesterday's stock market crash being the worst in history. In reality, it barely makes the top 20. In fact, it's far from the worst in recent memory. Just remember what happened 22 years ago.

Now, today may be the real bloodbath on the stock exchange. I don't know. No one does. But I do know that people are exaggerating the problem. It's almost as if people want the economy to collapse. Jerry Pournelle says we're a trillion dollars poorer because the bailout package failed. A trillion dollars vanished? I don't think so. Well, an imaginary trillion dollars, perhaps.

What we have here is the collapse of a tulip bubble, except in this case it's homes rather than tulips. Housing prices have been supported by a gigantic government-run Ponzi scheme that goes under the names of CRA, Fannie Mae, and Freddie Mac. As long as home prices continued to rise, the underlying rot was concealed. People paid much too much for homes, expecting to turn around and resell them for even more. That worked, as long as the bubble continued to expand. Now the bubble has popped, and a lot of people are stuck with overpriced homes and no buyers. And banks are stuck holding the mortgages on those overpriced homes.

So, what we now have is a lot of homes that are actually worth, say, $150,000, but that have $250,000 mortgages on them. But those homes never were worth more than $150,000, and that has now become apparent. That imaginary equity, times a million, is what has disappeared. Basically, the government encouraged and subsidized home building, and far too many homes were built. That hurts us all.

Obviously, it hurts those who will lose their homes, homes that they really couldn't afford to buy in the first place. But it hurts even those of us who could afford homes, because the real value of our homes has declined. Barbara and I own our home, but if we wanted to sell it, this mortgage crisis harms us in two ways. First, we'd have trouble finding a buyer in the current market, which makes our investment illiquid. Second, when the house did eventually sell we'd get a lower price because we'd be competing with all of those government-subsidized homes that should never have been built in the first place. In effect, CRA, Fannie and Freddie have stolen equity from us and given it away.

All of that said, our home is still here and its real value to us is as a place to live. If the government just keeps its damned hands off this mess, things will come back into equilibrium. Not that that's likely to happen.


Wednesday, 1 October 2008
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08:14 - Bush and the rest of the politicians are still spreading vicious lies about the extent of the problem, not to mention its cause. If I were cynical, I'd think this was just one more example of the government's continuing efforts to keep the citizens afraid of something, anything. Citizens who are afraid let the government do just about anything to "protect" them. Citizens who aren't afraid tend to ask awkward questions.

Barbara's dad came home from the hospital yesterday. It may take quite a while for him to recover completely, but Barbara thinks he's over the hump and on his way.

The new kitchen counter and sink are installed. The plumber comes today to hook up the faucet and disposer. The new electric cooktop is in place, but not yet connected. I'll do that sometime in the next couple of days. This weekend, I'll take a look at the range hood. The old one is still in place, but I should be able to remove it and install the new one.

12:06 - Jerry Edwards, our plumber, just left. The sink is now plumbed, and the new dishwasher is running its first load.

While he was here, we were talking about the so-called economic crisis. Jerry commented about the difference between folks like us, who live in typical suburban ranch homes, and the folks over in New Sherwood, who live in McMansions. Jerry said he frequently goes on service calls to homes in New Sherwood, and it's nearly always the same story. It'll be a couple in their mid-thirties, with two BMWs in the garage, a gigantic flat-panel TV in the den, and all the other useless status symbols so beloved of that generation.

They call him because they have a problem with a sink or toilet, and Jerry says the first thing they always ask him when he arrives is how much it's going to cost. When Jerry says maybe $150, they usually tell him they can't afford that much this month. Talk about living on the edge. As Jerry says, they're one paycheck away from bankruptcy. And all for a bunch of useless status symbols they don't need and can't afford. The sad part is, they don't realize that they can't afford them.

When Barbara and I bought this house more than 20 years ago, the real estate agents and bankers all told us we could afford much more house. But we went into it with one absolute priority: that if one us became unemployed, we would still be able to pay the mortgage and other routine expenses from the other's salary. Our friends Paul and Mary, who are half a generation younger than we are, did the same thing when they bought their house. It's called making responsible decisions. I remember Mary talking about how nervous it made her to sign the mortgage agreement. It was the first time she'd ever owed money other than credit card debt, which she like us pays off every month. She even paid cash for her car.

So, while I have some sympathy for the people who are about to lose their homes, I don't have a great deal of it. They made their own decisions, and they made bad decisions. It's time to pay the piper, and it's unreasonable to expect those of us who made good decisions to them bail out through higher taxes. If they lose their homes and their BMWs and their big-screen TVs, well tough. They couldn't afford them in the first place. Why should those of us who behaved responsibly subsidize their life style?


Thursday, 2 October 2008
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06:55 - Autumn has definitely arrived. It was 48F (9C) when I took the dogs out first thing this morning. Barbara is off early to have an MRI done on her knee. She's having knee surgery at the end of this month.

I've finished writing the chapter on gunshot residue and explosives residue and will start the next one this morning. Actually, I'm going to start by writing up an orphan lab session, in the sense that I'm not sure which chapter it'll be a part of. Perhaps the chapter on impression analysis, or perhaps I'll stick it in the chapter I just finished.

The lab session is on the use of 8-hydroxyquinoline to detect trace metal residues on skin. I tried it yesterday by gripping a metal bar tightly, spraying my hand with a solution of 8-hydroxyquinoline in alcohol, drying it by waving it around, and then putting it under UV light. Sure enough, I got some fluorescence, but it was quite dim and blotchy. So dim that it may be impossible to photograph, and so blotchy that it wasn't obvious that it had been caused by gripping the metal bar. Still, the concept works.

08:17 - Jerry Pournelle has been pushing hard for passage of the bailout. I just sent him the following:

I'm sorry to hear about your pension fund, but the truth is that your loss occurred much earlier than this week. It occurred when your fund managers made a poor investment decision. The money you're missing is now sitting tied up in homes that should never have been built, and which can never be sold for enough to recoup your loss.

I'm completely against any bailout, as are literally 99% of the American people. It has little to do with wanting to punish the malefactors. It has to do with not wanting our taxes increased (or the currency inflated, which amounts to the same thing) to throw good money after bad.

In effect, by advocating a bailout, you're saying that I should pay more taxes to eliminate your pension fund losses. I know it's not really on that personal level, but it effectively amounts to this. And I also know that you didn't make the actual decision about where to invest your pension fund, but in effect you gave your proxy to the people who made bad decisions about that.

The thing about a bailout is that it does nothing to solve the problem. It merely hides it for a while longer. The fundamental problem is that assets have been very badly invested. If you want to blame someone, blame the government,  because CRA, Fannie Mae, and Freddie Mac are the root cause of the problem.

The best thing we can do is nothing. Let the free market sort things out. It was government intervention in the financial markets that got us into this mess. More government intervention will make things worse, not better.


Friday, 3 October 2008
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08:42 - Palin either won the debate or at least held her own, depending on who you believe. I haven't heard anyone say she lost it. Which I guess means she won it, because otherwise the Democrats would be trumpeting a victory.

The House may or may not vote today on a revised bailout that's considerably worse for all of us than the version they rejected Monday. Let's hope there is a vote and that the proposed bill goes down in flames. I tried to email my representative yesterday to ask her to vote against the bailout, but the House mail servers are apparently down, swamped by messages from citizens demanding that the bailout bill be defeated. Mail is running more than 100:1 against a bailout, so if these people are in fact representing us their decision is clear.

Of course, they're our representatives in name only. The one bright spot is that there's an election imminent, and any representative who votes in favor of a bailout has to know that he's giving the election to his opponent.

And, in stunning news, Wachovia has jilted Citi in favor of Wells Fargo. It's a shame, really. Wachovia was our home-town bank, founded in Winston-Salem. For a century, Wachovia was known as a responsible, conservative, well-run bank. The slide started when Wachovia was bought by First Union, which had a reputation as a risk-taking bank. It's all been downhill from there. It reminds me of the merger between Allegheny, one of the worst US airlines, and Piedmont Aviation, another well-run business that was founded in Winston-Salem. It's never been otherwise. When a good company merges with, buys, or is bought by a bad company, all of the goodness disappears. Which makes me worry about Wells Fargo, because Wachovia is now a poster child for bad companies.

11:47 - Here's a link to Pat Condell's commentary on the UK adopting sharia law. I've been wondering for a couple of weeks why he hadn't posted a video about it on Youtube, where he posts new videos frequently. The answer is that those weasels at Youtube blocked it.


Saturday, 4 October 2008
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08:44 - Whoever said that congress was a creature with 535 heads and no brain nailed it. They've passed a bailout bill that's immensely worse than the original, which was bad enough.

I've had to disable new registrations on the messageboards because spammers have apparently beaten the captcha. When I checked this morning to approve new registrations, I found a dozen new registrations for one board, all bogus, and about 30 on the other board, all but one bogus.

Barbara and I are headed for Lowes sometime today to look at tile, return the unused kitchen sink faucet, and look at some other stuff. I also need to get the new electric cooktop connected.


Sunday, 5 October 2008
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