Ken Snowden, UNCG Econ Professor, On the Mortgage Mess

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UNCG Econ Professor Ken Snowden is a co-author of an upcoming book about lessons to be learned from the Great Depression that might be applied to our current mortgage mess.  An excerpt can be found at the Freakonomics blog:

For the past four years, the U.S. has faced a housing crisis that shows no signs of ending.  The situation was similar in June 1933 when the Home Owners’ Loan Corporation was created to address the nation’s last severe mortgage crisis.  Some have suggested that a new HOLC could help resolve the current crisis, but their characterizations of the HOLC have been incomplete.  Our goal here is to summarize recent research that provides a fuller picture of the HOLC and its impact on housing markets in the 1930s.        

Between 1933 and 1936 the HOLC bought and then refinanced one million severely delinquent mortgages, representing roughly one-tenth of the nation’s nonfarm owner-occupied homes.  The total amount refinanced was $3 billion, or about 20 percent of the outstanding mortgage debt on one- to four-family homes in 1933.  A program of similar proportions in 2011 would refinance 7.6 million loans worth $2 trillion. 

Trader Joe’s Big Brother

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I remember reading an article (I think in Wired magazine) years ago about the parent company for Trader Joe's, but I'd forgotten about it until I saw this Freakonomics post:

The company is called Aldi and, though I’d seen one or two of its stores in the past, I didn’t even know it was a grocery store. Then I read this very interesting Wall Street Journal piece about the company’s ambitious new plan for the U.S., which calls for 75 new stores this year. The article claims that Aldi is so good at selling cheap goods that WalMart couldn’t compete with it in Germany.

So, for those of you waiting with bated breath for Trader Joe's to announce a store opening in Winston-Salem or Greensboro, you can already shop at its big brother's stores.  Here's a handy-dandy list of locations for you.

I Don’t Know

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Want to surprise someone?  Admit you don't know the answer to a question, especially if it's a question about a topic on which you're supposed to be an expert.  Personally I respect anyone who has the guts to admit they don't know everything, and I took to heart a lesson I was taught early in my career; if you don't know the answer to a question the right response is "I don't know, but I'll be happy to find out for you."

The guys at Freakonomics recently posted two interesting items related to "I Don't Know."  The first was a response to the question “Why do people feel compelled to answer questions that they do not know the answer to?”.  The answer:

What I’ve found in business is that almost no one will ever admit to not knowing the answer to a question. So even if they absolutely have no idea what the answer is, if it’s within their realm of expertise, faking is just an important part. I really have come to believe teaching MBAs that one of the most  important things you learn as an MBA is how to pretend you know the answer to any question even though you have absolutely no idea what you’re talking about. And I’ve found it’s really one of the most destructive factors in business — is that everyone masquerades like they know the answer and no one will ever admit they don’t know the answer, and it makes it almost impossible to learn.

The second was a comment left by one of their readers:

In my classroom, students lose 1/4 point for wrong answers on quizzes. But for writing “I don’t know,” they get 1/4 point. (A correct answer is 1 point). The rationale is that if someone is in a medical emergency, and someone asks me what should be done, the answer “I don’t know” is much preferable to a guess. “I don’t know” leads the questioner to ask someone who hopefully is knowledgeable.

Part of why “I don’t know is so hard to say” stems from an education system based on attempting every single question, whether you know the answer or not.

P.S.: End-of-year student survey showed students strongly supported the +1/4 point IDK and -1/4 point wrong-answer system. 

If you think about it we do a lot of things that teach our kids to fear admitting ignorance, or making a mistake, and that inevitably leads to sending people into society who value being perceived as right more than they do actually being right.  I don't even want to think about the mischief we've brought on ourselves as a result.

Local TV News on Social Media

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I have a question for local TV news folks.  Do you think your social media outlets, Facebook in particular, should reflect your station/corporate values?  I would imagine the answer is yes, and if it is you really should be careful what you post or link to on your Facebook page.  Although I think it's perfectly appropriate to link to stories you don't air on your regular broadcast since, like your website, your Facebook page is a great way to expand your coverage, I don't think it's appropriate to link to stories that you wouldn't air on your broadcast because it's simply too racy. 

If you'd like me to give you examples I'll give you two just from this week: a story about a guy having unnatural relations with a dog, and another story about a guy who got a tattoo on a certain body part that resulted in him developing an unexpected condition normally associated with a Viagra overdose.  Sure, some people will find them funny, and I've been around long enough to know that stories like that grab attention, but if they aren't an accurate reflection of your organization's values then you really shouldn't post them.

By the way, the same can be said for any organization in any industry.  Just because they're a different venue that might have a slightly edgier audience than your norm doesn't mean that your social media outlets should not reflect your values.  Remember, you are what you post.

The Mind is a Powerful Weapon

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Wake Forest's men's basketball team has had a rough couple of years.  Last year was coach Jeff Bzdelik's first year at the helm and he inherited a situation that was challenging to say the least.  I don't care if Wake had hired the love child of Adolph Rupp and Bobby Knight, last year's squad was going to have a losing record and the only question was how bad.  It ended up being VERY bad and as you can imagine Wake fans weren't too happy.  I can recall many a conversation with fellow fans throughout the season who were highly skeptical of the program and of the coach.  My refrain was, and will be for the foreseeable future, that Coach Bzdelik cannot be fairly judged until at least year three of his tenure; it will take that long before he can have his own recruits in place and his system instituted.  

Coming into the current season I think any reasonable fan would say that in order for the team to be considered successful it would need only improve on the number of wins, be competitive in more ACC games and look like an actual team on the court.  So far it's looking good for the Deacons.  As you'd expect with a very young squad the team has been inconsistent, but compared to last year they're a dream to watch.  On the days when they're bad they look like a high school team out there, but they look like a team.  On the days when they're good they look exactly like what they are – a team that is trying to climb the ACC ladder and is a dangerous foe on any given day to all but perhaps UNC and Duke. And yes, they look like a team.

Obviously the jury's still out on Coach Bzdelik's program, but personally I'm liking what I see.  I also think every player and coach in every sport should listen to this blurb from the coach's press conference after his team's win over Virginia Tech last Saturday (found at Dan Collins' excellent My Take on Wake blog). He's spot on about the power of believing in yourself and the mind being a powerful weapon:

Americans for a Better Tomorrow, Tomorrow

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I catch The Colbert Report every once in a while, but after reading this article about Colbert's (real) Super PAC and the way he's using it as a kind of grand performance art experiment/exploration of our current political environment, I think I need to add him to the old DVR list.  This is just brilliant:

In June, after petitioning the Federal Election Commission, he started his own super PAC — a real one, with real money. He has run TV ads, endorsed (sort of) the presidential candidacy of Buddy Roemer, the former governor of Louisiana, and almost succeeded in hijacking and renaming the Republican primary in South Carolina. “Basically, the F.E.C. gave me the license to create a killer robot,” Colbert said to me in October, and there are times now when the robot seems to be running the television show instead of the other way around.

“It’s bizarre,” remarked an admiring Jon Stewart, whose own program, “The Daily Show,” immediately precedes “The Colbert Report” on Comedy Central and is where the Colbert character got his start. “Here is this fictional character who is now suddenly interacting in the real world. It’s so far up its own rear end,” he said, or words to that effect, “that you don’t know what to do except get high and sit in a room with a black light and a poster.”

In August, during the run-up to the Ames straw poll, some Iowans were baffled to turn on their TVs and see a commercial that featured shots of ruddy-cheeked farm families, an astronaut on the moon and an ear of hot buttered corn. It urged viewers to cast write-in votes for Rick Perry by spelling his name with an “a” — “for America.” A voice-over at the end announced that the commercial had been paid for by an organization called Americans for a Better Tomorrow, Tomorrow, which is the name of Colbert’s super PAC, an entity that, like any other super PAC, is entitled to raise and spend unlimited amounts of soft money in support of candidates as long as it doesn’t “coordinate” with them, whatever that means. Of such super-PAC efforts, Colbert said, “This is 100 percent legal and at least 10 percent ethical.”

 

In Sickness and In Health

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There is an excellent piece in the Washington Post that I found to be at turns heart warming and heart wrenching.  It's a story about love, the vows of marriage, and at the most basic level, love.  I don't want to provide any excerpts for you here because quite frankly the story is too well written as a whole to be sampled in pieces. I've shared it with a few people and have been fascinated by their varying reactions; people I trust and with whom I almost always agree have disagreed with me and each other on certain aspects of this story. Despite those disagreements I feel safe in stating that after reading it all of us found our own "issues" paled by comparison.

Here's the link to the story – I can't recommend it highly enough.

NewsRight

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I just read a story on the Winston-Salem Journal's website that its parent company is one of a group of news organizations spearheaded by the Associated Pres that's launching a company called NewsRight.  The purpose of this company is to track the usage of news stories on "unauthorized" websites, blogs and other newsgathering services and turn those users into paying customers.  Later in the article the president of the company talks about using the data to inform advertisers about who's reading which articles, but let's be honest here – they're going after folks they think are impropertly profiting off of content they've created.  

On the surface I have no problem with the idea of content creators getting paid for their content*, but I get a little tired of newspapers ignoring the flip side of the coin.  You see there are a lot of people out there who use content appropriately – they quote a paragraph or two and then provide a link to the source material.  Are the news organizations compensating the people who are providing a free reader to them?  Remember, if someone clicks a link from this blog to a story in the Winston-Salem Journal the Journal gets to count that reader towards their ad count. Even if they only make a penny on that reader that's a penny I gave them and I didn't get compensated for it.

My point is this – they might want to view people who are properly using the information they produce as partners rather than customers.  You know, maybe reward people like me for bringing you readers rather than assuming I'm stealing your content.  Maybe that's what the company president meant when he mentioned the advertising, but I didn't take it that they were going to share ad revenue with "partners", but that they were going to use the data gathered to raise ad rates.  

I'd love to know what John Robinson (recently retired editor from the Greensboro News & Record) and Lex Alexander (was responsible for the News & Record's online initiatives before he jumped ship) think about this.

*Back in the early days of my blogging ('04-05) I thought newspapers were wrong-headed for going after blogs that copied and pasted stories wholesale – basically I thought it was overkill – but since then I've changed my mind.  There's no reason for them not to protect their product, but at the same time I think they truly missed an opportunity to develop a new business model that used those very same people to build their audience and profit.  That's a longer post for another day.

BTW, if you're reading this and you work for Media General you're welcome for the link.