700

This is my 700th post. Since the number 700 has been so closely associated with the financial system bailout in the last few weeks, I figured that I would talk about that. There are two real dangers in such a topic. The first is that it gets too academic and boring. The second is that it gets too political. I will try to avoid both.

It's been an interesting ride watching different perspectives on how the country got to its current point. If you know anything about economic history, though, this issue followed the normal pattern, which I will lay out below. I am sure that a lot of other intelligent people picked up on this pattern as well.

1. A financial opportunity presents itself. In this case, real estate was made more attractive through cheap money (low interest rates).
2. Large numbers of people start noticing that the first people to the party have already made a lot of money. In this case, people started noticing that home prices were going up fast. Rather than thinking that this indicated that real estate's best days were behind it, a lot of people decided to stretch to buy a house even though it was financially wiser for them to rent.
3. Since all the people joining the party in step #2 inflate prices over a period of time, caution is thrown to the wind. Since prices have gone up for this long people assume that they will continue to do so indefinitely. This is where everyone gets stupid. No one in their right mind should ever conclude that five years of price run-ups indicate a long-term indefinite trend, but usually it becomes accepted as gospel truth. It helps that the people preaching it have already made a ton of money. In this case, a lot of people who didn't otherwise know much about real estate started thinking that flipping houses would be a good idea because house prices only go up, and because they watched too much TLC and HGTV. On the investment bank side, derivatives that were essentially outsized insurance policies against bad mortgages were created and traded in droves under the bad assumption that prices would continue to go up. Hedge funds also magnified things by making the same bad investments as everyone else, but largely with borrowed money.
4. Reality sets in. In this case, foreclosures started increasing as peoples' ARM interest rates increased. This created a vicious cycle of house devaluations and increasing foreclosure rates that we are still trying to work our way out of. Almost regardless as to the cause of the cycle (dot-coms, bad mortgages, etc), the key phrase you are going to hear a lot is "excess inventory." The cycle will not be complete until excess inventory is removed, and that can cause a large percentage of the pain in the next two steps.
5. People overreact during the aftermath. A bad situation is made worse because fear grips those who just had their dream world ripped away from them. There is mass selling. Companies layoff or refuse to hire due to a similar fear of the unknown. In this case banks, who are gripped with fear, have decided to sit on the money that they do have, thus presenting a very real threat to short-term economic progress.
6. The government implements a fix. The fix may or may not be effective. The title of this post is obviously in reference to the current $700 billion fix (no one really knows how much the fix will ultimately cost, but that is beyond the scope of this post). In the Great Depression the fix was the New Deal, which created such things as Social Security and (believe it or not) Fannie Mae. The low interest rates that spawned the current crisis were part of the government fix for the recession created by the dot-com bust.
7. Repeat. How long it will take until the cycle is repeated, I don't exactly know. The Great Depression required over a decade, serious deficit spending, and a world war to end. Most recessions, however, are less than two years long. I do know that we will see all of these steps again, regardless of whether the Republicans or the Democrats are running the show.

Now, I have just a few thoughts about the proposed solution. I don't like it, but I agree with the analysis that to do nothing is to invite another depression. The Great Depression was caused by a failure of the banking system, so the banking system as a whole absolutely cannot be allowed to fail. As someone who believes in free markets, it hurts a little to take that position.

I have noticed that Democrats tend to blame a lack of regulation and Republicans tend to blame the push in the late 1990s to make loans much more available to higher risk recipients as a root cause of the problem. They are probably both right to some extent. I don't really know who is more right. At the moment neither is a pertinent problem, though, because we are still working through the overreaction stage of the crisis. Addressing either of those five to ten years ago would have helped, but now they don't do too much.

If I had to guess what the focus of the next cycle will be, I'd bet on alternative energy. That has a ton of potential to produce an irrational bubble, because the very few alternative energy winners will make a ton of money. People usually forget that there usually are many more losers than winners. We are actually already in the middle of a small ethanol production bubble burst, so it would make sense that we would repeat this whole process on a larger scale.

I hope what people get out of the whole situation, though, is an understanding that these stages are completely propagated by human stupidity. Irrational exuberance and overwhelming fear drive overreactions in both directions. To me my house is worth the exact same as it was worth a couple of years ago, when taking into account the changes I have made to it in that time. It is only the market's opinion that has changed. The sun will come out tomorrow. The only real question is whether tomorrow is next year or a decade from now.

8:30

Last night Golden and I went to the mall. The trip ended up being in vain because we didn't get anything that we had intended to get, but for once I wasn't bothered by it. I was quite content that we had piled into the car, dealt with all the rain that fell last night, and burned an hour out of the evening. This was because all of this occurred before 8:30PM.

Any more, the time after I get home from work on weekdays is divided into two parts. The first part is when NJ is awake. We keep him entertained and make sure he stays out of trouble. The second part is when he is asleep, which is a valuable commodity given the number of television shows that we try to keep up with. We don't really watch any of our shows when NJ is awake, so this limits our viewing to about an hour each night. This also means that I don't necessarily accomplish much after 8:30. It feels like I am wasting time if I do work after 8:30.

It seems my home life is spent in one of two modes. I am either waiting for NJ's bedtime at 8:30 or I am trying to get my TV watching and Internet surfing done after 8:30. While I love my time with NJ, I still try to do what I can to make the time before 8:30 go faster. Going on small errands is one of those things. When we go somewhere I still have time with him, but he is usually more easily distracted and better behaved.

It is nice to be with NJ. That doesn't take away from how nice it is when NJ is asleep.

what i'm supposed to be

When I was in high school I got the bright idea to write a subject guide of the Bible for my own personal use. The idea was that I was going to read through the entire Bible and write down the reference of every verse to every issue I knew. It was a herculean task for me, and I did get quite a ways through it, but I stopped on it for two reasons. The first problem was that it simply took too much time, and the second was that I did not know how people with different doctrines interpreted specific passages of Scripture. There were simply too many times when I wasn't sure what issues should be linked to what Scripture passages.

When I started that guide I thought that, if the Bible is directly from God, I would be able to get a specific picture of the type of life God expected from me using such a guide. I thought that if I noticed a pattern of specific virtues and vices showing up a lot, then those were the important things to pay attention to in my life. As I noted, this was easier said than done. There are many passages of Scripture that are infuriatingly difficult to interpret in a way that they can be referenced in a subject guide.

Tonight, though, I started thinking about a similar project that I am seriously considering undertaking. I am thinking about reading through the Bible and marking down different people's virtues, vices, and all of the in between, then seeing what the Bible says about that specific person. What behaviors marked the people who were close to God and what behaviors marked those who weren't? There is a very simple reason I want to do this.

Probably the thing that most struck me in the book that I read, Why Men Hate Going to Church, was that the number one thing that men who were polled would like to learn in a church setting is what true manliness is. I am one of the men who wants to know. Most of what I know the church expects of men is summarized in the Promise Keepers' seven promises. If this is the true definition of what God expects from me, though, that is quite depressing. Something about it all feels inadequate. I just can't quite put my finger on what is inadequate.

I think that conflicts among my nature as a man, what I learned in church, and what I read in the Bible are what ultimately drove me to start the subject guide. I have long known that many of the men in the Bible who were the closest to God would never have come anywhere near fitting the model of manhood that I understood to be Godly. Outside of Moses and Joseph almost no Old Testament men would fit in a modern church. Because of that, I want to know what I know to be right about what God expects that is wrong and vice versa.

I want to know why deeply flawed people like Abraham, David, and all of the disciples were able to be close to God in a way that few else in history have ever dreamed. I want to know if there are specific traits that God consistently expected in everyone He used. I want to know if there are specific vices that always resulted in God's refusal to commune with that person. I want to know what personality changes God expected of key people in the Bible.

We'll find out over the next few years whether this is all talk or whether I actually put some effort into this initiative. I do hate starting things unless I know that I will finish them. This would be a useful reference to have, though.

permanent typos

Several years ago I remember seeing a case on one of those court TV shows where tattoo parlor customer was suing the parlor due to a misspelling in a tattoo. I remember thinking that having a typo permanently etched on my body would be horrible, but I figured that it was an isolated incident. It appears that it may not be as isolated as I thought.

I recently came across a website detailing some of the worst tattoo misspellings (language warning). There are quite a few, and one is even on a celebrity, so I guess that it is something that happens more often than you might think.

I don't make any judgments on most tattoos, but I wouldn't get one. They probably make sense for someone who knows that they will like the tattoo in five, ten, or fifty years. My tastes are so subject to change, though, that it wouldn't make sense for me. So many tattoos are prone to be dated, like the barbed wire around the bicep tattoo, that even if I were looking to get a tattoo I would have to take that into account. If I got a tattoo I also think I would avoid getting any words to avoid the possibility of having a misspelled word inked into my body for a lifetime.

If they weren't so permanent the misspellings would be hilarious. Actually, I still think they are.

blogging

When I saw this new Despair.com demotivator I knew I had to post on it. I didn't even know what I was going say, but as the poster indicates, the quality of my content is quite irrelevant.

I always figured that I was well suited for a career in journalism. I did not necessarily intend to go into a career in journalism, though. I like writing things that are to the point (no, really, I actually do), and I am interested in finding out what the truth about situations is. I also maintained a three-page monthly newspaper for a couple of years when I was fourteen and fifteen. While keeping a deadline was annoying, the whole process of writing, editing, and layout was a blast. For some reason, though, other careers were always more appealing.

That mild interest in journalism has carried over to this blog. Like with the family newspaper, my circulation is about ten to fifteen people. In both situations I have kept a pretty tight schedule (which I horribly violated today).

Really, I don't have much more to say than that. I'm just prattling on a lot about a little to a small number of people.

sunday school

I have been filling in as the teacher in our young adult Sunday School class over the last few weeks. We are going through the book Celebration of Discipline, which is certainly not a bad book, but it is a challenging one to use as a lesson guide. The book can be a very valuable guide to growing your spiritual life and getting closer to God. For someone with limited free time, though, it reads like a series of things that you should do to be more spiritual, but that you can't do because you have other things that take up your time. It is also difficult to turn topics such as fasting or solitude into things that hold people's interest for an entire lesson period.

I was discussing this with Golden and got the idea to look around and see what other materials are available so that, once we complete this series, we can do another that might be easier to teach. So far, I am feeling that I must be a bit overly picky. I don't want people to wonder why they bothered getting up and going to class, so any series I teach has to have meat. I don't want to torture the people in class, either, so I need something that is somewhat entertaining as well. I can't be spending my entire weekend creating lessons, either, so I can't just write my own lessons as I have in the past.

The drawback in doing a search for Sunday School lessons is that I have to filter through a ton of children's series to find even a few adult programs. That is deeply disturbing. Do people really think that Biblical learning ends at age thirteen? Another drawback is that experience tells me that a large percentage of the adult materials will be lacking as well. As an example, I don't like that most series' lesson questions simply fish for predetermined answers.

Why aren't there more Sunday School lessons that present actual theologically useful teaching in a way that isn't ridiculously dry? I know I would use them if they existed. For all of the Christian literature that exists, you would think that someone somewhere would have noticed the need for a Sunday School material overhaul. That would be far more useful than most of the books that litter most Christian book stores.

Also, am I the only one who wishes that the phrase "Sunday School" was changed to something less nerdy? I think the term has too many negative connotations. I absolutely hate continually typing that phrase on my blog. Maybe I could come up with a code word for it that doesn't annoy me as much. How about, "Pre-Service Coffee Time"? That's the best I can come up with right now.

bucket list

I haven't seen the movie yet, but I get the concept. A bucket list is a list of things you decide you are going to do before you die. I have considered creating a list of my own at some point, but I always end up in the same logical conundrum. I would enjoy creating the list, but I don't really know what my motivation should be for doing the things on the list. Is the only reason that I would be doing some of the things on the list just to have something to accomplish before I die? After I'm dead I won't care, so why is the boundary time death?

In theory, I should put things on the list that I want to do. There isn't much that is so important as to put on a list, though. I could add some things that would be nice to do, but I don't want to force myself into doing something later in life just because I arbitrarily put it on a list when I was thirty (or forty, or fifty...). I also don't want to put effort into doing things if the only point is to put another checkmark on a list.

The idea is still a popular one, though. It inspired a movie and I have heard, and used, the phrase, "I want to be able to say I did such-and-such," used a lot. Whether it is about visiting a specific city, watching a specific movie, learning a specific language, or just doing something unique, everyone seems to have something on a list in their mind somwhere that they want to be able to say they did. As an example, just the other day someone at work told me that I should bungee jump at least one time in my life just to say I have the experience. If I made a list, bungee jumping would probably make the list, if only because I haven't done too many dangerous things in my life.

What about you? Do you have a list? Do you expect that you will someday create one? Why or why not? What is or would be on any bucket list that you have created or would create?