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Daynotes
Journal
Week of 29 September 2008
Latest
Update: Saturday, 4 October 2008 08:44 -0500 |
Monday, 29 September
2008
08:15
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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
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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
08:52
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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
08:14
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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?
06:55
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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.
08:42
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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.
08:44
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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.
00:00
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1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008 by Robert
Bruce
Thompson. All
Rights Reserved.
