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.

www.cnn.com/2008/POLITICS/09/29/miron.bailout/index.html?iref=mpstoryview

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:

http://online.wsj.com/article/SB122230704116773989.html

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.

Taxing the Rich

I linked to the main page instead of to this story. This link will make it easy to find.

http://planetralph.blogspot.com/2004/11/taxing-rich.html

Ralph

The Great Faith of Atheists

Before Darwin, no one could come up with credible way that complex processes could arise spontaneously out of simple processes. All people had observed were things breaking down into components and the increases in entropy or disorder that we all see in everyday life. Only creations of human intelligence and life itself would appear to break this pattern and create complex processes. The argument that if you observe a watch, you can safely say that a watchmaker is not only possible, but certainly existed was very difficult to answer. In fact it could not be answered based on the science of the time.

And yet, in spite of all the scientific evidence there were those with enough faith to believe that there was no god. Eventually, Darwin gave their faith more intellectual cover, but surely the amazing faith of the atheist is something that Christians can recognize and respect.

Of course, the belief that atheism is somehow "scientific" or supported by science is nonsensical. To try to take physical phenomena and disprove that it was created just doesn't make sense. Whatever you can prove about the nature of the universe has no bearing on whether the universe is created or emerged without creation. You can perhaps prove that God didn't leave obvious "fingerprints" on the universe. That may reveal something about the nature of God and his relationship with man but nothing about His existence. The atheists have their faith, the religious have another.

Holiday Letter 2006

Dear Friends and Family,

Nothing much happened this year. Oh, there were a few changes.

We moved to Oregon. So, of course we had to sell our old house and buy a new one.

And Ralph got a new job. He works in product management at TransCore, in the transportation industry. And I started working at home in my same position at ADP. Naturally, the kids are in new schools. Kristin wanted to add a few thoughts of Holiday cheer to the letter sso I’ll let her type a few lines:

My life was ruined

MY LIFE SUCKS! IT WENT DOWN THE TUBES YO!!

We didn’t get a puppy

=(

There are too many trees here and way too much fresh air!!!!!!!!!!!!!!!!…need…smog…..*gasp*

As you can tell from her tone, Kristin is in seventh grade. She goes to Waluga Junior High up here. Kristin played soccer this year before we left San Jose.

Grace is in fourth grade and Tim is in first grade at Bryant Elementary. Grace enjoys crafts and making things. She made Gingerbread houses at a party with some of her new friends here. She is still working very hard in school and reading constantly. Tim is making friends and keeping a positive and happy outlook. He is developing a love a books. Grace and Tim have especially enjoyed the network of trails that runs through our neighborhood. All the kids can easily walk to school now since their schools are right next door to each other and only a couple of blocks from our house.

But other than those few changes everything is pretty much the same.

We’re looking forward to having my parents and my brother Greg stay with us during the holidays. My side of the family will all be here for Christmas. My brothers Paul and Kevin and Kevin’s wife Elizabeth and their children Nora and Fiona live nearby in Beaverton. Ralph’s looking forward to visiting with his side of the family to celebrate Jeannette and Al’s 10^th Anniversary.

We are hoping you have a wonderful holiday and enjoy the blessings of the season.

Love,

Michele, Ralph, Kristin (ROCKS!!!), Grace, and Tim

Selling our home in today's market

We're selling our 2,067 square foot home in the 95118 zip code of San Jose. We thought the Summer was prime home selling season--Wrong! Prime home selling season is late winter to mid-spring. People want to move about when their kids end school not around when they begin school. Tough lesson to learn in flat or falling market. It has been pretty dead as far as people looking at the house this Summer.

I set up a web site www.1340maryleeway.com so people can go direct to info on the house without looking at the MLS or general stuff on our realtor's site. Here is the house, call our realtor for a showing, today!

I am also using Google Adwords to advertise the house. I set up the account and campaign today. It was real easy, Google has simplified everything down so the newcomer to the advertising world (just about everybody) can easily set up an ad, place it, and track the success of the ad and the campaign. The ad hasn't been up long enough to track, but I'll be watching closely.

If you want a one story home, over 2,000 square feet, with 5 bedrooms (or 4 bedrooms and a big family room), two master suites, and 3 bathrooms, go to www.1340maryleeway.com

Quantmark Research

I have been busy starting up a new company, Quantmark Research. Quantmark Research is a consulting operation that offers my traditional consulting strengths: product management, white papers, and product marketing and adds quantitative marketing analysis as well as internet business consulting. I am set up to work with large software clients but also smaller (perhaps much smaller) clients in other areas. I am hoping Quantmark Research can take on more the character of a family business with a close connection to the community.

Visit the website and the founders blog. I'll be publishing business and technology oriented topics on the founders blog and publishing more personal comments on this blog.

2005 Christmas letter

Our 2005 Christmas letter. Links to previous letters are at the end. Pictures from the letter are in previous posts.

Merry Christmas!

We have been blessed in many ways this past year. I have been a full time house-husband most of this year. I appreciate the opportunities I have had to be involved in the kids life on a day-to-day basis. Helping the kids with homework, volunteering in Tim's kindergarten class, driving on field trip driving, score keeping for Kristin's basketball team etc. has really gotten me in touch with their lives. Still, I am ready to return to a career working outside the home and I am confident that will happen in 2006.

Michele has been working since March for ADP. She implements Payroll systems for new customers. People like to start new payroll systems at the start of a new year, so the Holiday Season is Michele's busiest season in this position. Busy season is actually barely controlled mayhem that keeps her working weekends as well as very early mornings. Other than that drawback, her job is going well. Michele is really well qualified for the position and is already considered a senior and valued member of her team.

Tim started Kindergarten this year and is one of the most popular kids in the class. As for his ability to pay attention and stay on task....
did I mentioned he is well liked? Tim played T-ball this summer and looked really cute in the uniform.

Grace has really blossomed academically this year. Her third grade teacher is thrilled with her work and her interest in reading has exploded. Grace had a flare up with her arthritis (JRA) that required treatment and physical therapy. We are thankful that it has all calmed down now and she doesn't have any remaining limitations because of it. Grace also had her tonsils out in November. Grace and I spent a lot of quality time with Doctors etc. this year. We are hopeful there will be fewer medical issues next year.

Kristin had another great year in soccer and just started basketball for the year. Sixth grade keeps her very busy since along with her regular homework she has major projects: a country project, a science project, social studies projects. Kristin loves computer games and TV as well as spending time with her friends, so it is a major challenge to focus on her long term assignments. We hope she learns from both her successes and failures. Kristin and Grace had a special two week “Camp Granny and Grandma” in the summer where they visited with both sets of Grandparents and enjoyed Southern California's activities. It is such a blessing that their Grandparents enjoy and are able to spend time with the kids.

Our best wishes for Happy Holidays, a Happy New Year and a Prosperous 2006.

Love,

Ralph, Michele, Tim, Grace, and Kristin

Links to previous letters:

2004 Holiday Letter

2003 Holiday Letter

2002 Holiday Letter

2001, 2000 Holiday letters are missing

1999, 1998, 1997 Holiday Letter links

Grace's Physical Therapy Picture

The other kids had pictures of their sports (T-Ball for Tim, Soccer for Kristin); Grace wanted a picture of her sport which this year was physical therapy.

Kristin's soccer picture, I put this on the Christmas letter. 

This one turned out cute from the Oakridge play area (after the Santa pictures) 

Grace and Santa

 

All the kids with Santa

This was the Oakridge Mall Santa. Nice Santa, good beard but you couldn't take your own pictures. They wanted all the picture profits.

Tim and Santa

Tim trying to convince Santa he'd been nice this year.

The Ceramics of Italy

I have talked about our trip to attend the wedding of our good friends Dave and Sabrina in Italy. They have a ceramics business in Deruta, Umbria. Recently, they put their website online www.setteangeli.com. They are great people and I'm sure you would enjoy doing business with them or learning about Italian Ceramics from them.

Dave and Sabrina see one of their marketing differentiators as being very easy to deal with for Americans. They have a toll free U.S. number that rings through to their business in Deruta. They have a U.S. address and have worked hard on packaging and shipping at reasonable prices. As an American transplant to Italy, Dave is especially eager to share his discoveries in his adopted country. He writes a monthly newsletter that can be found at www.InLoveWithItaly.com.

If you have any interest in ceramics, visiting Deruta, or even just visiting Italy get in contact with Dave and Sabrina at the contact information on their site. I am sure they will have some valuable tips to share with you and will be friendly faces to see if you get to Deruta.

Diet Coke, Diet Coke with Splenda, Coke Zero

There are suddenly a lot of different types of Diet Coke. I've noticed regular Diet Coke, Diet Coke with Splenda, Coke Zero (Coke 0), Diet Cherry Coke, Diet Coke with Lime, and Diet Coke with Lemon. What is a Diet Coke drinker to do?

To my mind, Coca Cola is risking customer confusion with so many brand extensions to Diet Coke (itself a brand extension). They must feel that grabbing more shelf space and appealing to people with fairly highly honed preferences in a diet cola out weighs the costs from confusion and diluting understanding of the taste part of Diet Coke's value proposition.

I ran a bit of a taste test with Diet Coke, Diet Coke with Splenda and Coke Zero. I'll try to describe the taste differences with references to Classic Coke.

Diet Coke--This beverage has had a consistent flavor for quite a few years. As near as I can tell, since the New Coke fiasco, Diet Coke has tasted the same. It was apparently designed to appeal to the New Coke or Pepsi Drinker who enjoys a bland, very sweet Cola. To my taste, not as good as Classic Coke but not much worse and no calories, so its usually what I drink.

Diet Coke with Splenda--This is something new I have seen on the store shelves. Splenda is an artificial sweetener made from sugar, so billed to taste like Sugar. Diet Coke with Splenda tastes a bit more like Classic Coke than plain Diet Coke. A little less bland than Diet Coke a little bit of "cola kick".

Coke Zero--This is also something new I have just started seeing. I haven't seen much positioning from Coke on Coke Zero, so I had no idea what to expect. Coke Zero is much closer to Classic Coke than plain Diet Coke and even closer than Diet Coke with Splenda. It is a little less bland and has that small cola kick that Classic Coke has. If you have had Coke Light overseas, Coke Zero tastes just like Coke Light. Coke Zero (along with Coke Light overseas) is my new favorite cola drink, although so far I can't buy it from a fountain, only in bottles and cans.

I'm not sure where Diet Coke with Splenda fits in here. If you like Diet Coke with Splenda better than regular Diet Coke, you will probably like Coke Zero even better.

The flavored diet cokes (Cherry Coke, with Lime, with Lemon) are fairly uninteresting offerings to me. Diet Cherry Coke has the bland, sweet flavor of regular diet coke with a bit of an artificial cherry soda flavor. Not enough of a unique flavor to make it interesting. Dr. Pepper is a better more interesting soft drink in this flavor range to my taste.

The lemon and lime offerings are also based on regular Diet Coke and add just a bit of a different flavor. I add lime if I'm stuck with only the choice of Diet Pepsi and I have access to limes. The lime taste doesn't add much for me if there is no "off" taste to cover up.

Even though the lack of calories and sugar can make Diet Soda seem cost free, I recommend keeping diet soda consumption down. Apparently, the diet cola's are just as bad or worse for your teeth than the sugared colas. There is a lot of acid in these drinks and the acid eats into teeth. I want to preserve my teeth a bit longer, so I only drink soda with meals when I can brush my teeth right afterward.

Linguica Casserole Recipe

I haven't found this Recipe anywhere, so Michele must have made it up. Thought I better preserve it for posterity. We enjoy it and its not too hard to make. A batch makes enough to serve about 8 adults so we make it in 2 8 x 8 pans and freeze one.

Linguica is a spicy Portuguese sausage. In the San Francisco Bay Area it can be found at Costco and most grocery stores. In some parts of the country, it can be hard to find so you may need a specialty sausage store.

Ingredients
2 Linguica sausage sticks
1 1/2 cups shredded cheese (Monterey Jack and Cheddar works fine)
10 Medium sized Potatoes
2 Red, Green, or Yellow Bell Peppers
1/2 Cup Milk
1/8 Pound Butter
1/2 Teaspoon salt

Peel potatoes, slice and boil about 45 minutes. When potatoes are soft, mash them with Milk, Butter, and salt.

While potatoes are boiling:
Slice linguica and cut slices into bits (about a 1/4 to 1/2 inch bits)
Chop peppers
Fry Linguica in a pan until cooked through

In 2 8x8 pans, put a layer of Mashed potatoes (if you are freezing one pan, you may line that pan with wax paper)
Sprinkle linguica and peppers evenly on Mashed potatoes
Cover with another layer of mashed potatoes
Cover the mashed potatoes with the shredded cheese
Bake both pans (or put one in the freezer and bake the other) at 400 Degrees for 25 minutes.

To cook Frozen casserole, bake at 400 Degrees for 1 hour 15 minutes.

Peerflix, Great Idea, Implementation doesn't work for me yet

Peerflix is a DVD sharing service that aims to give a user experience similar to Netflix with much less overhead and lower cost to the user. Instead of using a central wherehouse to hold and match DVD's, peerflix always keeps the DVD's with the users of the service. The users of the service do the labor of mailing the DVD to the next user. Peerflix also allows users to put their own DVD's on the service and get credit for them.

So, as a member you have no monthly fee and you only pay $1.00 for each trade of DVD's. To get started you put some of your own DVD's on the service. You can keep DVD's you trade for or send them back to the system. There is no maximum DVD's you can donate to the service.

Sounded perfect to me. If I had a movie I just had to have immediately I could buy it and trade it into the service for credit that would let me buy more movies. I could buy one movie every other month or so for what I would spend on Netflix or Blockbuster rentals, make trades and see all the movies I could want.

I thought the problem would be availability of new movies on the system. The problem for me has been getting people to take my movies so I can trade for other movies! I have a couple of good "last year's" movies ready to trade. So far, I haven't been able to trade out, so I can't trade in!

I hoped to get started by signing up with my credit card to get a free movie. I expected a newer movie that would be easy to trade in and get started. The choices were much older than the movies I had ready to trade. I settled on a John Candy movie. I was able to trade it out, but it is only one credit. Most movies worth having cost two or three credits.

So, Peerflix is an interesting idea but for me it is a non-operational so far. Note that the whole thing is in beta. They may figure out a way to make it easier for people to get started before it goes into full operation. I'll be watching.

Timmy, ready for Rivercats T-Ball action.