Turn to Your Left at the End of the Sky

Mortgage Micromanagement

Apparently “playing by the rules” , according to Obama, includes taking an adjustable mortgage that results in monthly payments equal to 43% (or more) of income. According to the Homeowner Affordability and Stability Plan

“For a sample household with payments adding up to 43 percent of his monthly income, the lender would first be responsible for bringing down interest rates so that the borrower’s monthly mortgage payment is no more than 38% of his or her income. Next the initiative would match further reductions in interest payments dollar-for-dollar with the lender to bring that ratio down to 31 percent…”

So in the case of two families with identical earnings and living in identical houses we take the tax money of the responsible family that saved for a downpayment and give it to the irresponsible family that didn’t. And if you were responsible enough to rent until prices came down then you’re just out of luck.

Redistributing wealth based on income is a crude, but necessary, manner of levelling an uneven playing field. Redistribution based on debt introduces considerably more unfairness.

February 18, 2009 Posted by | Economics, Government, Housing | , , | Leave a comment

Kahneman and Taleb Panel Discussion on Economic Crisis

Panel discussion at Edge between behavioral economist, Kahneman and author Taleb on the economic crisis.

Note: They might be at the edge of thought but they certainly aren’t at the edge of the network! Get yourselves a CDN people!

February 10, 2009 Posted by | Economics, Government | Leave a comment

Change in Employment in a Recession

February 9, 2009 Posted by | Economics, Government | , , | Leave a comment

Iowans for Corn-powered, All-American Web Browsers

H1-B visa holders are the Palestinians of American politics (with apologies to the Palestians). Each side uses them for their own interests. One side wants to protect them from being exploited and the other side wants to prevent them from exploiting. Neither side has their best interests at heart.

U.S. Senator Charles Grassley, an Iowa Republican, sent this letter to Microsoft [emphasis mine].

January 22, 2009

 Mr. Steve Ballmer

Microsoft Corporation

One Microsoft Way

Redmond , WA   98052-6399

Dear Mr. Ballmer: 

I am writing to inquire about press reports that Microsoft will be cutting approximately 5,000 jobs over the next 18 months.  I understand that the layoffs will affect workers in research and development, marketing, sales, finance, legal and corporate affairs, human resources, and information technology. 

I am concerned that Microsoft will be retaining foreign guest workers rather than similarly qualified American employees when it implements its layoff plan.  As you know, I want to make sure employers recruit qualified American workers first before hiring foreign guest workers.  For example, I cosponsored legislation to overhaul the H-1B and L-1 visa programs to give priority to American workers and to crack down on unscrupulous employers who deprive qualified Americans of high-skilled jobs.  Fraud and abuse is rampant in these programs, and we need more transparency to protect the integrity of our immigration system.  I also support legislation that would strengthen educational opportunities for American students and workers so that Americans can compete successfully in this global economy.

Last year, Microsoft was here on Capitol Hill advocating for more H-1B visas.  The purpose of the H-1B visa program is to assist companies in their employment needs where there is not a sufficient American workforce to meet their technology expertise requirements.  However, H-1B and other work visa programs were never intended to replace qualified American workers.  Certainly, these work visa programs were never intended to allow a company to retain foreign guest workers rather than similarly qualified American workers, when that company cuts jobs during an economic downturn. 

It is imperative that in implementing its layoff plan, Microsoft ensures that American workers have priority in keeping their jobs over foreign workers on visa programs.  To that effect, I would like you to respond to the following questions:

*          What is the breakdown in the jobs that are being eliminated?  What kind of jobs are they?  How many employees in each area will be cut?

*          Are any of these jobs being cut held by H-1B or other work visa program employees?  If so, how many?

*          How many of the jobs being eliminated are filled by Americans?  Of those positions, is Microsoft retaining similar ones filled by foreign guest workers?  If so, how many?

*          How many H-1B or other work visa program workers will Microsoft be retaining when the planned layoff is completed?

My point is that during a layoff, companies should not be retaining H-1B or other work visa program employees over qualified American workers.  Our immigration policy is not intended to harm the American workforce.  I encourage Microsoft to ensure that Americans are given priority in job retention.  Microsoft has a moral obligation to protect these American workers by putting them first during these difficult economic times.

 Sincerely,

Charles E. Grassley

United States Senator

Of course, no mention of Microsoft’s moral obligation to its shareholders. And I don’t remember anyone caring about “the American workers” when we tied Microsoft up in court for years and drained their coffers. Maybe those laid off can dust themselves off and volunteer at Mozilla, the organization “dedicated not to making money”.

If US immigration policy is not intended to harm Americans then who is it intended to harm? 

 

 

 

January 25, 2009 Posted by | Economics, Government, Politics, Technology | , , , | Leave a comment

Analysis of the Trial of Sir Thomas More

Article on the trial of Sir Thomas More:

For instance, did you know that we have no copy of the oath which More famously refused to take? That no official transcript of the trial was made? That we are not certain whether there were one, three, or four formal charges? That, contrary to current legal practice, the more grave the case, the fewer the rights of the accused? That More’s civil rights, as defined by English law at the time, may have been more or less respected? In other words, there was nothing procedurally unusual about More spending years imprisoned in the Tower of London, undergoing several interrogations, being suddenly brought to court for trial, and hearing the charges against him (read in Latin) for the first and only time. And there was considered nothing untoward in having judges sitting on the bench with a vested interest (to put it mildly) in seeing More condemned, such as an uncle, a brother, and the father of Anne Boleyn.

December 4, 2008 Posted by | Christianity, Government, Philosophy, Politics, Spirituality | , | Leave a comment

Still 50 Years to Wait

[Welcome to our first-time guest blogger]

 

It is a relief to many that Obama is in. Credit goes to those who feel that way for significant, i.e. policy, reasons, but public comments made it seem we were simply proud we have proven to the world that we’re not racist.

 

Oddly enough, no one is eager to show we are not sexist. To the contrary, like bullies on the playground, we shouted at the female candidates: “She-goat!” “Dominatrix!” and my favorite, “Breeder!” (Thank you for that last one, Bigot Maher.)

 

Reuters photographed Palin from behind and between her legs…ah, harkens back to the good-old-days when She-Ra’s legs framed the shots of He-Man in the 80’s.  I say those were the good-old-days because that was a time when educated women called foul on things like that. But this time I heard crickets.  Even my (former) hero Steinem held the coats for the ensuing mob.

 

Especially mesmerizing was the “role of the vice president” discussion. Palin said the VP is in charge of the Senate.  Article 1 Section 3 of the constitution says:

The Vice President of the United States shall be President of the Senate, but shall have no Vote, unless they be equally divided. The Senate shall choose their other Officers, and also a President pro tempore, in the absence of the Vice President.

This election was indeed about audacity — the audacity to take direction from the Constitution.  If only legislators would treat Article I Section 8  with more reverence we would have a much simpler government. (I’ll give you a hint, establishing a post office and postal roads is 1 of the 18 things with which they are actually tasked.)  But I digress. For this comment Palin was burnt at the ignoramus stake.  I can’t bring myself to discuss the bikini characterizations, the dolls, and the frenzy on fashion. It is a confounding hatred for the very gender that promoted the abolition of slavery (to make no mention of the party.)

 

And now to keep hope alive: history suggests we have only 50 more years before a woman is in the White House:

  • Voting rights:  African American Men – 1870. Women – 1920.
  • US Senate:   AAM – 1870. Women – 1922* 
  • US Congress: AAM – 1868. Women – 1917

If history repeats once more, Obama’s daughters will have to wait until they are nearly 60 years old for our great nation to consider their application on merit.  Chelsea will be in her 70s, and, apparently, too old for the job.

 

We’ve come a long way from slavery. But we’ve hardly come a long way from the Salem witch trials. In fact, some might say we just had one. 

 

*Rebecca Latimer Felton of Georgia, the first woman to serve in the United States Senate, took the oath of office on November 21, 1922. Having been appointed to fill the vacancy for her husband, Felton served for just 24 hours. The first woman elected to the Senate was Hattie Wyatt Caraway of Arkansas in 1932.

November 23, 2008 Posted by | Government, Politics | , , , | Leave a comment

Rationalism in Politics

What has been wanting on the right at the start of this century is a true “conservative disposition” — the disposition to enjoy what is rather than pining for what might be (to paraphrase Himmelfarb), to enjoy the givens and the goods of life without subjecting them to social or political validation.

Rationalism in Politics, despite being clouded by the “fumes of tradition”, is a breath of fresh air.

His [the Rationalist’s] mental attitude is at once sceptical and optimistic: sceptical, because there is no opinion, no habit, no belief, nothing so firmly rooted or so widely held that he hesitates to question it and to judge it by what he calls his ‘reason’; optimistic, because the Rationalist never doubts the power of his ‘reason (when properly applied) to determine the worth of a thing, the truth of an opinion or the propriety of an action. Moreover, he is fortified by a belief in a reason’ common to all mankind, a common power of rational consideration, which is the ground and inspiration of argument: set up on his door is the precept of Parmenides–judge by rational argument. But besides this, which gives the Rationalist a touch of intellectual equalitarianism, he is something also of an individualist, finding it difficult to believe that anyone who can think honestly and clearly will think differently from himself.

November 23, 2008 Posted by | Books, Economics, Government, Philosophy, Politics | , , , | 1 Comment

Calculating daily volatility

Volatility is usually expressed as the annualized standard deviation of returns. Volatility is proportional to the square root of time. That means one can approximate a volatility over a smaller time period than one year by dividing the annual vol by the square root of the number of trading periods one is interested in.

So, to convert annual volatility to a daily vol, divide by 16, which is the square root of 256 — about the number of trading days in the year.

Back in the days when vol was 15-20% annually (way back in 2007), a daily vol was about 1%. These days, the VIX is closer to 80 which implies a daily return of +- 5%.

On Sept 15th, 2008, when Lehman was allowed to go bankrupt (“Lehman is not too big to fail” – Paulson), the VIX went up to 80 and has been in that region ever since. The Lehman bankruptcy has turned out to be a massive event in financial history.

November 19, 2008 Posted by | Economics, Government, Investing | , , | Leave a comment

100,000 ft View of Government Spending

In very rough numbers (good enough for government work) for 2009:

US GDP: $15 trillion

Federal Government spends 20% = $3 trillion

Breakdown of the $3 trillion

  • 20% Defense
  • 20% Medicare/Medicaid
  • 20% Social Security
  • 10% Interest on Debt
  • 30% Everything else

The full budget (and historical trends) is available online. Despite the din, not much has changed. The inexorable rise of medicare / social security continues, though. Medicare and social security represented 20% of the federal budget in 1971. Today they represent 40% and growing…

July 26, 2008 Posted by | Economics, Government, Investing, Politics | , , , , | Leave a comment