Silver Lining

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Just got my quarterly IRA statement. Gak! I’ve been reading that I’m a sucker because I bought and am now holding.  Well, I guess I’m just not a financial playa’.  The flip side of all this financial turmoil is that I now understand much more about the financial system than I ever did before.  Impending doom does do wonders for one’s focus after all.

I was talking to someone close to me, who shall remain nameless to protect his or her privacy, and I was telling him/her that I remembered a few years back when he/she got a LIBOR+margin, interest only loan for his/her house and at the time I had no idea what he/she was talking about.  I misheard "lie-bore" as "lay-bore" and so was befuddled at how my corporate-honcho acquaintance had finagled a loan out of the hated unions.  Well, now I know what the LIBOR is and how cool a loan that really was at the time.  I also mistakenly thought my acquaintance had refinanced with a more traditional loan since then, but was quickly set straight during our chat.  It seems that the loan is very much in place and resets every six months, and in fact just reset on September 30.  The conversation included a "funny if it isn’t your money" story about my acquaintance eating soup at a business lunch a couple of weeks back when someone checked their Blackberry and said, "Holy sh– the LIBOR just went up 7 points" at which point the soup was almost jettisoned.  Luckily the LIBOR dipped again before the reset on September 30 so the rate is at a respectably dismal level until at least April.  Still, the monthly payments on that loan have more than tripled since it was taken out.  At least it’s still affordable for him/her, which some people can’t say.

So I guess you could say that the silver lining of this whole meltdown is that I now know what mortgage backed securities are, what hedge funds are (kind of), what credit default swaps do and, yes, what LIBOR stands for.  Of course that’s kind of like knowing the number of the train that’s about to run you over.

Voter Info from Google

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Want to know if you’re registered to vote?  Want to know what Congressional district you’re in?  Google has mashed up voter data with Google Maps so that all you have to do is enter your address and it will provide you with links to sites that can provide you with all the info you need.  Here’s the Google Maps site.  I plugged in my address and here’s what came back:

Registration Info
State: North Carolina
Days left to register by mail: 5
Registration must be postmarked by:
Friday, October 10
Get information about voting in your state:
North Carolina voter hotline: 1-866-522-4723
Coming
soon! Voting location information will be available by mid-October.
Until then, please check with your state or local election officials to
verify your voting location.

Pretty cool.

WTF Wall Street?

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Those who have been skeptical of the big bailout, or The Splurge as some call it, had more reasons to be skeptical than they thought.  Congress puts us on the hook for a bazillion bucks and the schmucks on Wall Street may say, "Thanks, but no thanks."  From The Guardian:

Last Monday, after the bill was thrown out by the House of
Representatives, more than $1 trillion was wiped off the value of US
stocks as the market was gripped by panic. The bill was passed on
Friday afternoon, however, after the inclusion of $149bn of tax breaks
and strict rules for participating banks.

But Wall Street analysts, believe the addition of so many terms to the bill might deter potential participants.

One
of the least attractive elements is a section designed to curb
executive pay at banks that participate in the bail-out package. These
include limiting stock-related pay and banning ‘golden parachutes’ for
executives.

‘I think this hodge-podge of regulations and rules
will be enough to put many [chief executives] off participating,’
Caldwell said.

Sources close to Goldman Sachs and Merrill Lynch
indicated the banks might choose not to participate in the bail-out as
there is a growing view on Wall Street that the market may be bottoming
out.

Analysts also believe that the mere presence of the government as buyer
of last resort will be enough to get credit markets moving again, and
that a large number of banks would not need to take part for the
legislation to succeed.

In other words there’s the possibility that the pinstripe and wing tip set might find their balls and actually figure out a solution to the "impending financial doom" if their gilded lifestyle is seriously threatened.  Am I the only one who fantasizes about seeing these goobers seated around Al Capone’s conference table like in The Untouchables?  Forget taking away golden parachutes, let’s start playing baseball with these jerks.

Ringing off the Hook

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The robo-calls hit a fever pitch this weekend.  At last count we’d received six calls on Saturday, but I might have missed some since we have standing orders with the kids to erase all political messages before the message is done playing.  We heard from Republicans and Democrats, but unfortunately we didn’t hear from the candidates themselves.  The Republicans had a sultry sounding woman call us, but since she didn’t end her sentences with the "ya" sound I’m assuming it wasn’t Sarah Palin.  We had two chances to try and figure it out, though, because we heard from the Republicans in both North Carolina and Virginia.  It was awful nice of the Virginia Republicans to call us, but as residents of North Carolina I’m not sure what we can do for them in their "crucial battleground state." 

We also heard from T. Boone Pickens.  Something about his energy doo-dad, but he lost us after his first sentence and he was promptly deleted.  Maybe he’ll call back.  Actually I’m pretty sure he will since we’re one of the seven households in Forsyth County that still has a land line.  If this keeps up we might finally have our impetus to finally dump the wire.

November can’t come soon enough.

Credit Default Swap

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I just finished watching 60 Minutes’ latest piece on the financial crisis.  The focus was mostly on credit default swaps (CDS) and why and how they caused most of the problems in the financial markets.  I still think the best description I’ve heard of the role CDS’s play in the grand scheme of things is something I heard at the Frost & Sullivan event in San Francisco a couple of weeks back.  It was part of a presentation by James Anderson, President of SVB Analytics (SVB stands for Silicon Valley Bank) and I think it’s good enough that I want to post it again here:

Credit default swaps: Think of the market as a $1
million Texas Hold ‘Em game being held in a Vegas casino with a room
full of spectators.  All of the spectators start placing side bets on
which player will win, and eventually the amount of money in the side
betting is $70 million vs. the $1 million that’s at stake in the actual
game.  Credit default swaps are the side bets.

BTW, one of the people interviewed in the 60 Minutes piece said that the CDS "shadow market" is estimated at somewhere between $50-60 trillion, but that estimate is based on information garnered from a voluntary survey.  Since the CDS market is unregulated no one really knows for sure exactly how big the market is, which of course is scary as hell.

Finally, I need to tip my hat to Fec.  I first heard of credit default swaps when he started looking into them earlier this year. Here’s a link to the 9 (so far) posts that he has on the subject, beginning in January, 2008.

Who Needs Editros?

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Newspaper cutbacks have hit an absurd level over in the UK. The Express papers have made 80 editors "redundant" and are asking their reporters to type their stories directly into templates and then having them reviewed by lawyers and "rewriters".  From the article in the Guardian, which must have been written with much relish:

Express Newspapers has provided staff on the Daily Express and Sunday Express
with details of its proposal for reporters to input stories directly
into page templates, as up to 80 subeditors across the titles are made
redundant.

In an email to staff, the Express Newspapers group
managing editor, Ian Parrott, detailed how reporters would fit stories
into an editorial template containing the necessary styles. Rewriters
and lawyers would then check the pages.

A section of the email
memo, seen by MediaGuardian.co.uk, called "Changing Ways of Working",
outlined the proposed changes to workflow at the newspapers after the
introduction of the Woodwing editorial system.

However, staff
remain concerned about the new system. The Express NUJ chapel reached a
resolution last week calling on the management to give full and proper
information on the proposals.

The memo said that despite the planned redundancies of up to 80 staff, including all casual production staff,
there would be "around 26 highly responsible roles for former
subeditors". A team of "rewriters" would then be organised into two
distinct groups, news and sport, with staff expected to cover all areas
within in each section.

Personally I love that last paragraph, especially the term "casual production staff".  I picture these layout guys reclining on lounge chairs with pints in one hand while slowly clicking away on their keyboards with the other.  It reminds me of when there’s a big snowstorm and they announce that the government offices are shut down and only "essential personnel" are expected to show up. Oh to be non-essential or casual.

Also, did you notice that once again the lawyers have found a way to survive?  I swear they’re like cockroaches.

Obama Set to Thump McCain?

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As I’ve wearily watched the Presidential and less interesting but consequential Congressional campaigns I’ve begun to wonder why I haven’t seen one really important piece of information reported in the news: how the Presidential race is breaking down by electoral college votes.  All we hear is that Obama or McCain is ahead or behind by some small percentage of the popular vote.  That’s all fine and dandy, but that doesn’t give us an accurate picture of what’s really going on out there.  As we’ve learned in recent elections you can win the popular vote and lose the election, just ask Al Gore, so if you really want to know what’s going on you need to look at the electoral vote breakdown.

So I’m heartened to find that Nate Silver, the Baseball Prospectus genius, has a blog that breaks down the election by electoral votes in addition to the popular vote.  A month before the election he gives Obama an 85.4% chance at winning the election even though he shows that Obama will get 51.4% of the popular vote to McCain’s 47%.  Why the high likelihood of winning for Obama if the popular vote is so close?  Because he projects Obama getting 336 electoral votes to McCain’s 202.  In other words he foresees a butt-whipping.

Personally I think the media is shying away from electoral college projections for the same reason that the pre-game shows in sports take an "anything can happen on any given day" approach to game analysis.  They know that if they admit that the game is likely to be a blowout you’re likely to tune out, and they’d rather be wrong and have you watching than accurate and have you stop watching or reading their "analysis."

Why Don’t Teachers Have Blogs? Or Facebook Pages?

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Okay, first let me say that this post is geared towards middle school and high school because that’s where my kids are now.  Second, let me say that I’m pleased as punch that some of my kids’ teachers are utilizing their web pages to communicate information like curriculum, homework requirements, upcoming events, etc.  I’m sure it’s a big time saver for them since they no longer have to make dozens of copies of handouts to send home with the kids every time they give them an assignment.  Unfortunately it has caused an issue on our end (the parents’ end): we now have to check every teachers web site in order to get an idea of what our kids are supposed to be doing.  This requires the following:

  • Remembering to visit the teachers’ pages each day.
  • Visiting each teacher’s page. Sounds easy until you consider that we have three kids with at least six teachers each.  That’s 18 web sites if you’re counting.
  • Finding the daily assignments on each teacher’s site.  Some use the school system’s calendar, other’s use the document manager function.
  • Jotting down the assignments if they have them there.

Now our kids are old enough that in a perfect world they would be responsible enough to do their homework every time, but this ain’t a perfect world and we don’t have perfect kids.  So when we get an interim report that shows some missing work we like to get the 411 on what happened.  That can be difficult to do if your only source of information is the offending kid and if the missing work happens to be from a class with a teacher who doesn’t post his calendar online. 

What I propose as a win-win for everyone is that the teachers put the same data in a system that allows us to receive updates by email or RSS feeds. I’m thinking they could each have a blog that they could use to communicate with
parents and students, easily sharing study guides, providing updates to
the curriculum, providing links to outside resources and anything that might help the students.  While at first blush it might seem that it creates more work for them, I’d say it’s easier than the mish-mash of communications they currently have and it enables parents to "subscribe" to get updates which would make life a lot easier for everyone at home.  They could also add things like Google Calendar to provide a schedule of upcoming events, and maybe figure out a way to include those events in the RSS feeds or email updates.

Obviously it would be best if the school system would provide a system like this for teachers, but waiting for that could mean that it will be available when my grandkids are in high school.  It would be better if someone mashes up a system for them using free services like Google’s collaboration tools and then makes it easy for them to use it.  Of course they could do it themselves, but the idea here is to create something that’s ready to drive as soon as they turn the key.  I don’t want them wasting time learning how to make they system work for them, I want them to be able to click on the site and instantly realize how they are going to have a much easier time from that point forward.  That’s why I think if someone took the free tools out there and tweaked them to fit teachers’ unique needs and made it blindingly simple to use you’d have a chance at them actually using it. 

On the other end of the equation if parents were shown how to use a feed reader like Google Reader then they would quickly realize how much easier it would be to stay on top of all this information.  Take it from someone who’s tried, it’s difficult to explain why a feed reader is useful.  However, once someone sees you using it then they quickly understand. 

One thorny issue would be the kids with no computer at home.  The simple answer is that the teachers could simply print off as many copies as needed for those students and in the long run they’d still end up saving time and effort, not to mention paper.

As I was typing this it occurred to me that I might have been making it too complicated.  An EASY solution would be for teachers to set up their own Facebook pages specifically for their classes, then "friend" their students and their students’ parents.  Since Facebook is a social network it already has the tools that teachers would need to effectively communicate with students and parents. They could post whatever information they want.  Assignments could be set up as events in the calendar along with field trips, projects, and the like.  Documents could be uploaded and shared.  Pictures from class events could be shared.  Video of lessons could be posted.  Whatever.  Best of all their "friends" would be notified automatically via the updates.  Actually, best of all is little or no training needed.

Sure it requires everyone signing up for Facebook, but since the majority of students at the junior high and high school level already seem to be there then the only real issue are the adults, and if they think it will make their lives easier then they will most likely do it.  Let’s just say that when the parents see all of the teachers’ communication in one place (the status update page), and when the teachers see that they only have to type once for everyone to see it they’ll probably wonder how they got along without it. Not a perfect solution, but probably better than anything we have right now.

Wake Forest to Host Panel Discussion About Financial Crisis

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If you’re interested in hearing what folks like BB&T’s chairman and CEO John Allison think of the current financial crisis then you should check out the free public panel discussion titled “Exploring Today’s Financial Crisis: Business, Politics, Ethics and You”  that Wake Forest is hosting this Friday (October 3, 2008) at 4 p.m. at the Scales Fine Arts Center.  Other panelists will include PNC Bank managing director Reggie Imamura and several Wake Forest professors.  From the news release:

Banking industry panelists will be John Allison, chairman and chief
executive officer at BB&T Corp. and Reggie Imamura, managing
director at PNC Bank.  Panelists from Wake Forest University will be
Sheri Bridges, associate professor of marketing at the Calloway School
of Business and Accountancy; David Coates, professor of political
science; and Alison Snow Jones, associate professor at the School of
Medicine’s Program in Bioethics, Health and Society.

Moderators will be Bill Marcum, associate professor of finance at
the Calloway School and Rob Nash, associate professor of finance at
Wake Forest’s Babcock Graduate School of Management.  To promote
informal dialogue among the panelists, a moderator-led
question-and-answer format will be employed.  The two-hour session will
include time for questions from the audience.  Dean of Business and
Professor of Leadership and Strategy Steve Reinemund will offer opening
and closing remarks.

You may recall that John Allison is the banking executive who wrote a letter to Congress about the bailout that garnered just a little attention.