Sunday, December 14, 2008

Soltice Month, December 6th to January 5th

We're in a month where the length of day is short and changes very little through month. I looked it up, the day gets 7 minutes shorter before the soltice, then 9 minutes longer from the Soltice through January 5th. In other words, it doesn't change noticably the wh0le 30 days! By contrast the day got shorter by over 50 minutes the last 30 days and gets longer by over 50 minutes the next 30 days. The sun was up about 8 hours and 45 minutes today and that is pretty much the way it is all month.

The fun thing was we had a beautiful snow fall today. The kids had a ball playing in the snow and the trees and houses were like a christmas card with snow and icicles.

How are you handling the short days?

Monday, November 17, 2008

Surviving Winter in the Portland Area

Portland Winters are more about length of day than change in temperature. We're North of the 45th Parallel here, so the days shorten dramatically.

Midwinter is the 3 months of the year with the shortest days. It started about November 6th and goes through about February 6th. The midpoint of Midwinter is the shortest day of the year, the Winter Solstice.

My tips for surviving the short days:

  1. Get outside in the daylight every day. There are almost always dry parts of the day when you can spend a bit of time outside. Work is the tough thing here. Try to get out before work or at lunch.
  2. Early to rise. You're missing daylight every minute you sleep past Sunrise. The daylight is important to your well being. Be aware of the Sunrise going on outside even if you are inside.
  3. Early to bed. I find I'm ready to sleep early. Take advantage of the natural down time to catch up on sleep so you have as much energy as possible.
  4. Open curtains, stay near windows. Get as much natural light as possible.
  5. Use full spectrum lights indoors. When you have to rely on artificial light, get the full spectrum of light.
  6. Take Vitamin D. With the short day and clouds, you're body might not produce enough from the available Sun light.
  7. Find outdoor Winter activities you can enjoy. Skiing, snowboarding, snowshoeing, hiking, or hunting can help squeeze a lot of fun and light out of a short day.
  8. Enjoy the Winter festivals. They are timed by long tradition to help you make it through the literally darkest days. These are times you can stay up late and draw on the extra sleep you get going to bed early most nights.
  9. Put up Christmas lights so your house feels welcoming and fun when you come home in the dark at the end of a workday.
  10. Take your vacation somewhere Sunny and/or with longer days during the midwinter or early Spring Season. Going to the Mountains counts because you will usually get more Sun than in the Valleys and you'll be doing more outdoor activities.
Seasonal affective disorder, where people feel down during the darker part of the year, is very common. If you feel a bit down, take the time of year into account. Don't think, "The Holidays are the happiest time of the year, I should be happy." Think "It's tough getting through the dark days of Winter, I am going to use the holidays to cheer myself and other people up."

What is your favorite tip for surviving Winter?

Wednesday, November 05, 2008

Barack Obama, Sarah Palin and 150 Years of Progress

This is an update of a post from 2005 that has even more resonance in light of the election yesterday. It might provide some optimism to those who are feeling pessimistic today.

150 years ago in America people were owned, bought, sold, and used like farm animals. The major export of the United States (Cotton) was dependent on slave labor. No major political party dared advocate abolishing slavery where it existed. The "Radical" Republicans only dared oppose the extension of slavery. Most large businesses and other non-religious institutions, North and South, were complicit with slavery by investing or dealing with slave owners and slave based commerce. Most individuals, North and South, practiced and accepted discrimination against African Americans in their own localities. Churches had split over slavery by the 1840's but not because Northerners called for abolition in the South or offered church membership to African Americans in the North. In most denominations, Northern church members didn't call for abolition or offer membership to African Americans. Churches split because Southern branches would accept no condemnation of slavery or questioning of its moral basis.

150 years ago The United States was one of the most free and equal societies in existence at that time.

100 years ago slavery had been gone for 40 years, but:
-open and constant discrimination against African Americans was accepted and practiced by most Americans. Separate but equal had been enshrined by a supreme court ruling. The vote was effectively denied to most African Americans. Theodore Roosevelt was widely criticized for dining with Booker T. Washington in the White House simply because he was black.
-Women were not allowed to vote and women's rights in general were widely dependent on their relationship to a man. Women's participation in the labor force was restricted by the unshared burden of child rearing, open discrimination, and strong social mores.
-Jews as well as many immigrants from "less desirable" parts of Europe were openly discriminated against in education, jobs, and even lodging.

100 years ago, The United States was one of the most free and equal societies in existence.

50 years ago women had the right to vote, but:
-Schools in the south were segregated, African Americans were still effectively denied the right to vote in many states, Economic, educational, and social opportunities were denied to African Americans.
-Social and Economic opportunities for women were still highly restricted.
-Discrimination against Jews and other ethnic groups was still open in some areas.

50 years ago, the United States was one of the most free and equal societies in the world.

This year:
-An African American, raised by a single mother, was elected to be the 44th president of the United States
-He defeated a mother of 5 children who was running for vice-president on the other ticket.
-Another mother of 5 children is the Speaker of the house
-An African American woman is the current Secretary of State. Her predecessor was an African American man. His predecessor was a woman.
-The face of America to the world as often as not has dark skin. I couldn't list all the African American athletes, entertainers, and public officials who are the ambassadors of the United States to the world.
-Women have greatly expanded economic opportunities and earn more than half of college degrees as well as significant proportions of advanced degrees in most fields including law and medicine. Wage differences between men and women have declined to the point where they can be explained by occupational choices women make and time lost in the labor force due to child rearing.
-Inequality between the sexes is still significant. Today many inequalities including incarceration rates, homicide rates, life expectancy, and college attendance bear unfavorably on men.
-Public schools still don't provide equal education, but choice in education (Vouchers, Charter Schools, etc.) is improving opportunities for the poor wherever it is tried. An African American secretary of education fought the education establishment to win significant accountability through public standards and testing for students in schools nationwide.
-Discrimination on ethnic or religious basis is rarely tolerated openly except for affirmative action which is an attempt to correct for past discrimination.

Of course, there is still work to do on discrimination and inequality

And yes, the United States is among the most free and equal countries in the world today.

Past progress in human rights and equality makes me optimistic for the next 50 years. Over each of the 50 year periods I talked about, living standards for all Americans, particularly the poorest Americans, have improved measurably and dramatically. Life expectancy, infant mortality, average height, literacy rate, just about anything you can measure has improved dramatically. Today, obesity is the most widespread dietary problem among poor and well off Americans.

Worldwide progress on freedom and equality has also been great over long sustained periods. Unfortunately, Europe's and the world's struggles with fascism and Communism created huge backward steps in freedom and equality for many in the 20th century. I am optimistic (perhaps foolishly) that the European Union can create a framework for progress in Europe that can withstand challenges. I am hopeful the two billion people of China and India can create progress for themselves.

America is often portrayed as divided but almost all Americans can applaud the progress of the last 150 years and work for more progress on freedom and equality in the United States and the world.

Sunday, October 12, 2008

Comcast, Comcast, Comcast....

Comcast's three premium services for $99.00 rate ended a few months back. I cut back to just slower internet and basic phone for a few months to get to about $70 dollars a month from the $140 or so they were trying to charge me.

Then Verizon came along with FIOS in my area. They offered the all important three services for $99.00 price point including high definition and a free multi-room DVR for a year. So, off I go to Verizon to give them a shot a for a year. After a year I'll cut back whatever I need to (TV is the least important, phone I can get cheaper from a 3rd party) to keep my bill down in the $70-$100 range.

These companies haven't made the switch particularly easy. Verizon didn't get that I was coming over from a competitor. I don't think they have the whole competition thing down yet. They had to recreate my order through a different department, the "win back" desk. Even the name "win back" implies all the customers were once theirs and will be again.

Once they contacted Comcast and we went through the neutral 3rd party to say "yes I really do want to change my number" Comcast decided they would take the full 10 business days they are allowed to take to move the number. This has to be a less than one minute process for them. I set my Comcast number to forward calls until the cut off date. I am still wondering if they will charge me until they stopped forwarding my calls today.

For Comcast's last delightful trick, they stopped forwarding my calls not on the Monday cutoff date, but on the Sunday before. Sunday when Verizon has no one available in the order department who needs to handle the task of turning on the number for their service. Note to Verizon, if Comcast is going to cut people off on Sunday, maybe you should have someone in the office who can actually turn them back on Sunday.

Now, Comcast may think they are making Verizon look bad making me want to leave when my contract is up. But what they are doing is making it hard to switch. And if I remember it is hard to switch, I'm going to stay where I am. Right now, I'm with Verizon.

So, the marketing lesson for service providers is: When people must leave you, try to leave as good a taste in their mouth about you _and_ about changing providers. Because you want them to change providers at least one more time.

Antoher marketing lesson, one year deals are risky. If it takes a good one year deal to get someone to go with you, chances are they value your service at about that one year price. If you try to jack them up very much, they are going to cut services to get to that one year price or leave you. At least they will if they are paying attention. I guess Comcast and Verizon can tell us if enough people aren't paying attention to make jacking the price up at the end of one year worthwhile business. At minimum, one year deals gives you a lot of "at risk" customers after one year. Companies should have a strategy for retaining those at risk customers.

Thursday, October 09, 2008

Financial Bailout, Market Failure or Government Failure

Failure to regulate or regulatory failure?

Like many regulated industries the financial industry bought the regulation they wanted. Huge contributions and lobbying by the financial industry, led by Fannie and Freddie, bought the lax oversight and government guarantees the financial industry wanted.

So, is that a market failure? It was the free market financial industry that bought access to taxpayer money. Free market incentives led Fannie, Freddie, and commercial banks to take on excessive risk to claim profits for private parties while backed by guarantees and insurance from taxpayers.

Or is it a government failure because government officials sold access to taxpayer guarantees for campaign contributions, contributions to lobbying firms, high paying jobs for Washington insiders, and sweetheart VIP mortgage deals.

It is the government that has the responsibility to look out for taxpayer money and the implied guarantees offered up on behalf of the government. The U.S. Government could not walk away from the implied guarantees to Fannie and Freddie so taxpayer money went out to take over bankrupt institutions that private parties profited handsomely from creating.

Government clearly has the power and responsibility to regulate commercial banks. They simply failed to do that. They allowed commercial banks to get over leveraged and to rely on assets the regulators didn't understand for their capital. Regulators should be aware that banks with insured deposits and especially banks that are "too big to fail" have incentives to take on excess risk and earn additional profits because failure is less likely than for uninsured institutions that aren't "too big to fail".

Investment banks are regulated differently, but if the failure of an investment bank can bring down regulated and insured commercial banks, then commercial bank regulators should have an eye on that risk and either regulate the investment banks or force commercial banks to mitigate the risk even if it means lower profits.

Yes, private greed went unchecked. But it was government policy that turned private greed into a national crisis and put taxpayers and our children on the hook to pay for risky bets that we would not have benefited from if they worked out well.

Tuesday, October 07, 2008

Selling our San Jose Home

I've been keeping you in suspense about our San Jose home. I posted about our difficulties selling but didn't tell you what happened.

Our contract with our realtor ran out at the end of Summer 2006. We were contacted by many realtors who specialize in "expireds", expired listings. This actually seemed to be a fairly competent group of realtors. They advocated listing at a considerably lower price than we had been listing. One thought he could get some bidding going by listing it low enough to attract attention.

One of the realtors who contacted us wanted to buy the house himself. He set the price low enough that he got all the benefit from not paying a third party realtor the commission. This price seemed really low at the time and it was really hard to sell at that price.

In late September I was offered a job in Portland which is where we were wanting to move, so selling the house became a fairly urgent priority. I took the realtor's lowball offer. I considered it selling at about the price I wanted with a 10% commission to get a quick sale. The sale went very smoothly, he got his financing and cleared contingencies quickly. We had already done inspections and he accepted ours.

We were able to buy a house in the Portland area so I could start my new job on the day the house was available for us to move into. We were able to stay with my brother-in-law a few days while we prepared our house to move in.

We like it here in the Portland area and real estate in the Portland area has so far retained more value than California real estate. So, overall it worked out well.

Rent Seeking and Bailouts

Rent seeking behavior is using resources to claim "free money" or economic rents. Rent seeking causes what are called "dead weight losses", wasted resources, because free money is available to claim.

Taxpayer money given out to private enterprises is one form of "free money". As financial companies recognize that free money is available they turn their attention away from saving themselves by raising capital, doing deals that make sense, and running their businesses towards grabbing a piece of the political pie, lobbying for a bigger piece, and paying off the political class in Washington.

We saw this behavior as Lehman Brothers potential acquirers dithered looking for a Bear Sterns style guarantee. We see it with Citigroup getting a taxpayer handout to acquire what turned out to be a very valuable Wachovia. To review, taxpayers took on billions of liability so Citigroup would buy Wachovia for around 2 Billion dollars. Wells Fargo offered 16 Billion without taxpayer liability! In short, taxpayers were getting screwed to the tune of billions for the benefit of the well connected, privately owned Citigroup. It turned out Wachovia shareholders were getting screwed too. Citigroup even has the gall to sue to protect their taxpayer funded purchase!

More evidence is in the Bear Sterns bailout. Taxpayers took on bad debts in a deal where stockholders appropriately for a a failing firm got very little. Stockholders pushed and got more. Taxpayers didn't get a better deal! The deal was more about getting taxpayer free money than ding the economically best deal.

Unfortunately, a lot of smart, hard working people working at financial companies are going to be spending their time, effort, and money maximizing their share of taxpayer's bailout money instead of doing anything that creates wealth.

That deadweight loss is one reason market reaction to the bailout has been so negative when it was proposed, when it failed, and when it passed.

Tuesday, September 30, 2008

Anti-bailout commentary from Harvard economist

It sounds like this is Harvard's token Libertarian. He takes about the same point of view as my original bailout post, but elaborates more on the causes of the problem.

Thursday, September 25, 2008

Another View on the Bailout

Interesting different perspective from my point of view that the bailout is a bad deal for taxpayers. This view says our investment banker in chief, Paulson is getting a great deal for the taxpayers. Since it looks like we're going to do this thing, I hope he is right. I would much prefer that the government is a neutral arbiter on the economy, not a trader going for a big profit. I think that is extremely dangerous and not worth the trillion dollars that it might net us this time. Taking the cost out of running up the bubble ensures the next bubble will be bigger and more costly when it deflates. And this one is pretty big and pretty costly.

Here is Andy Kessler's point of view in the Wall Street Journal:

Wednesday, September 24, 2008

I have to write about the 700B Bailout

I don't think a taxpayer bailout of financial institutions makes sense. There are several alternatives that are better:

1. Amend the "Value at Market" rules for these derivative instruments that are so toxic. Create a "value to maturity" model and allow the financial institutions to use it for derivatives they intend to hold for more than a year. As defaults in the underlying instruments go up or down, they can use the model to revalue. Companies can use the derivatives for capital requirements on lending. The derivatives are no longer toxic for financial institutions and will regain market value that is much closer to their value if held to maturity. The advantages of the Bail Out with no taxpayer cost or or risk. Save 700 Billion with an accounting rule change.

2. Do #1 or not do #1 and let the chips fall where they may. All these assets (including the homes) need to find their true market value in the new situation. The sooner they do, the sooner recovery can begin. From my point of view, the Lehman version of a "bailout" is going very well. Sell the valuable parts of the insolvent company, bond holders get the cash proceeds and the securities that are hard to value, preferred stockholders get something if the bond holders end up getting paid. The market is freaking now because every company is treated differently by the treasury secretary which creates enormous uncertainty. Maybe Lehman could have been sold intact if everybody wasn't waiting for the high inquisitor treasury secretary to kick-in a few billion of taxpayer dollars like he did for Bear Stearns.

3. If we're going to inject a huge sum of money, why not inject where the root problem is, excess homes and inability to figure out where the bottom of the market is. Subsidize 1st time buyers and small investors who buy foreclosed homes or homes in depressed areas in a sustantial way. And lets not slow down the foreclosures that are needed to get the properities and toxic derivatives valued properly. How about buying up some homes for future public works projects (a lot of deferred road building needs to happen) and demolishing them right away. The people and the money will have to go somewhere.

4. Stabilize the dollar and be clear the Fed is not going to allow any further inflation. No one knows what the Feds going to do to the dollar. Uncertainty about the dollar is killing the market. Inflation has happened already but it is hard to tell how much. The money supply is hard to measure because of de-leveraging. The fed should say those things. "Over the last 2 years we think 9% inflation has happened that will be shaking out in Consumer Price Index and other measurements over the next 3 years. We are not allowing any more inflation than what is has already happened. So, expect measured 3% inflation a year over the next 3 years" Or say we're targeting 1% more than what has already happened. Give money supply targets and tell how you are taking deleveraging into account in your money supply calculations. The Greenspan approach of being the genius who fiddles with the controls in response to events isn't working any more. It was a bad approach to begin with but Greenspan was smart enough to make it work, for awhile. Now we're paying for monetary dial turning. Monetary policy needs to be on zero or near zero inflation autopilot whatever economic events are for at least the next few years.

Those are a start. We can't spend or bail out our way to prosperity. The companies and individuals who took risks they didn't understand need to pay the price and turn over their assets to more prudent operators through sales or bankruptcy.