I did something this week that I haven't done in a very long time. I wrote my senators and representative. Generally, I don't think that they care about me, in fact I know that they don't care about me. Nevertheless, I got mad enough at the bailout that I wrote them all e-mails. In fact I wrote Senator Feinstein twice about it. I promised to work hard against their political futures if they did not vote against the bill. They must have listened. Yeah right.
"Bush and a host of leading congressional figures had implored the lawmakers to pass the legislation despite howls of protest from their constituents back home. " This must have been a nail-biter... [the thoughts of some fictitious representative] "Do I trust the President who has lied to us at least a number of times about crises, or do I listen to the voters who elected me...?" I would have reported on the vote of my representative if the Clerk of the House website hadn't just crashed.
Congrats to the House for not supporting the bailout plan!! If I voted, I would keep voting for you.
Monday, September 29, 2008
Friday, September 26, 2008
Most geeky version ever
I love stats. I also love the song 'Baby got Back'.
What could make life better than combining them?
Only real geeks get how funny this is.
What could make life better than combining them?
Only real geeks get how funny this is.
Wednesday, September 24, 2008
Bailout part 2
Excuse me for being cynical, but don't the capital gains tax reductions expire this year? Could it be that immediate action is required on a bailout plan so that stock prices will rise for a sufficiently long enough period so that wise investors can get their money out with some gains. Wells Fargo and Bank of America shares were through the roof on Friday when the doom and gloom in the rest of the market was apparent. By Monday morning's the announcement of a potential bailout plan, they had lost almost $5 per share because there was no reason for investors to make the move to a more solvent and steady bank. Now the market is mostly waiting for news. A bailout would be good for almost every stock except the responsible ones.
$700 Billion
Would someone please tell me why I should support the bailout of the banking industry. Although my marginal contribution would be relatively small (~$2000, assuming 350 million people in the USA and $700 billion in bailouts), I feel very put out by this. My heart-felt belief is that government should only exert its influence over issues of market failure. In this case, the market is not failing, it is correcting itself. It will be painful because businesses will fail. So what! Businesses fail, even big ones. This is exacerbated when they pursue strategies that are high risk, with high profit potentials. They give dividends to their shareholders in the best of times and are now asking the taxpayer to shoulder the burden of their poor decisions. Get real!
The prominent argument is that the taxpayer will pay for this either way. One one hand, these failures will slow the economy and thus hurt employment, capital investment, and the flow of money in the economy. On the other hand, the taxpayer can keep the economy going (the speed of recovery is still indeterminate given the bailout) by digging into government resources, their taxes and programs, and bailing out companies with problems. The assumption is that keeping these companies around will benefit the public broadly.
Maybe I don't worry so much about a complete economic stall because my position is least likely to be impacted (a tenure-track job at a union dominated school) and I have never really endured one.
I have a few alternate economic bailout plans...
1) we give each individual in the USA the $2000 dollars that we would have given to the banks in the bailout plan. They will most certainly reinject it into the economy at a blazing pace.
2) we use the $700 billion dollars to forgive all student loan debt. Thus we free up interest payments from the debtors to banks that they will use to stimulate the economy.
3) we take the $700 billion dollars and pay off a portion of the national debt. Then we take the money that we would have spent on that interest and create temporary government jobs like the CCC of the New Deal.
I am sure that there are better ideas out there...
I have one overwhelming question that lingers. Why, when corporations need $700 billion, the government has it, but when we need better schools, roads, or welfare programs it doesn't?
update:
According to this article in the NYTimes, it really isn't $700 billion lost. The government would buy the bad assets and then sell them for a loss. In real terms Johnny Slick who sold their house in 2004 got $435k, it is now worth $190k because of market deflation and foreclosure, the government buys it for the $435k that the bank paid, the government sells it for $190k. Who wins in this deal? Johnny Slick, the bank, and the purchaser of the house at $190k (also a person with good credit). Who loses? the taxpayers. They just paid Johnny Slick all of his profit and the bank $145k (albeit that gross cost to the taxpayer is only Johnny Slicks profit because the bank gets paid $0 when it should have lost $145k).
The prominent argument is that the taxpayer will pay for this either way. One one hand, these failures will slow the economy and thus hurt employment, capital investment, and the flow of money in the economy. On the other hand, the taxpayer can keep the economy going (the speed of recovery is still indeterminate given the bailout) by digging into government resources, their taxes and programs, and bailing out companies with problems. The assumption is that keeping these companies around will benefit the public broadly.
Maybe I don't worry so much about a complete economic stall because my position is least likely to be impacted (a tenure-track job at a union dominated school) and I have never really endured one.
I have a few alternate economic bailout plans...
1) we give each individual in the USA the $2000 dollars that we would have given to the banks in the bailout plan. They will most certainly reinject it into the economy at a blazing pace.
2) we use the $700 billion dollars to forgive all student loan debt. Thus we free up interest payments from the debtors to banks that they will use to stimulate the economy.
3) we take the $700 billion dollars and pay off a portion of the national debt. Then we take the money that we would have spent on that interest and create temporary government jobs like the CCC of the New Deal.
I am sure that there are better ideas out there...
I have one overwhelming question that lingers. Why, when corporations need $700 billion, the government has it, but when we need better schools, roads, or welfare programs it doesn't?
update:
According to this article in the NYTimes, it really isn't $700 billion lost. The government would buy the bad assets and then sell them for a loss. In real terms Johnny Slick who sold their house in 2004 got $435k, it is now worth $190k because of market deflation and foreclosure, the government buys it for the $435k that the bank paid, the government sells it for $190k. Who wins in this deal? Johnny Slick, the bank, and the purchaser of the house at $190k (also a person with good credit). Who loses? the taxpayers. They just paid Johnny Slick all of his profit and the bank $145k (albeit that gross cost to the taxpayer is only Johnny Slicks profit because the bank gets paid $0 when it should have lost $145k).
Tomorrow today
I am going to drive home right now (12:43am). I will wake up in 4 hours and be back at 6:30am. I spent the majority of my day doing housework with my family, I left for work around 4pm, taught a class, and worked on prepping classes until this very moment. Although my on campus time is 7.5 hours, with the commute, I have around 9hrs dedicated to my job today. I am not complaining in the slightest - who wouldn't love this job? - I am just saying that the flexible schedule of a professor sometimes creates a bit of schedule yoga.
Tonight, one of my students told me that her sons wants to be a philosophy professor so that he can read books all day long, teach on occasion, and spend the majority of his life on the beach or surfing. Yeah, me too.
Tonight, one of my students told me that her sons wants to be a philosophy professor so that he can read books all day long, teach on occasion, and spend the majority of his life on the beach or surfing. Yeah, me too.
Tuesday, September 23, 2008
Too close to them
In an effort to invigorate my students, I have started to inject pop culture into my lectures. It started with a Jonathan Coulton song about an I.T. guy's day at work (warning... one G.D. in the lyrics). Honestly, it was a funny way of demonstrating the principal-agent problem of information asymmetry with little oversight ability in organizations. Now, after a few more, I have found that I really dig it. Tonight while prepping a lecture on the normal distribution, I wanted to demonstrate how an 'A' grade would be special (a.k.a. low probability event) if grades were distributed normally. On the slide, I wrote "[devilish laugh]" as a segway to the next slide. All of a sudden, I am searching Youtube to find the pop reference.
Saturday, September 20, 2008
A Spontaneous Saturday
What are you to do when you don't have any plans but tons of responsibilities on a nice Saturday in southern California? Write lectures like you need to do? Clean the house? No. Buy annual Disneyland passes and go play? Of course!
We decided at around 10 am that it would be a good treat to have annual passes so that R and the fam could just go in for a couple of hours when they didn't know what to do. By 10:30 we had packed up and were on our way for a couple of hours at the happiest place on earth. By 3:30 we were in full 'Disneyland mode' and decided to continue on to California Adventure. We had never been before, but because it was included in the pass, why not check it out? It was much more enjoyable than any of us imagined. We stumbled on the nightly parade, and E.'s face was priceless. R. Indicated that that was worth the prive of the annual prices. I disagree. I think that visiting Disneyland more than 6 times (the zero marginal cost visit) is worth having the pass. Around 7pm, almost 4 hours past our anticipated return time, we drove to In-n-Out burger to finish our unplanned California adventure. It was 8:45 before we got home. Both R and I have a few things that need done, like prepping classes. Should I have done that? Yes. Was it more fun to just be a Californian today? Of course.
We decided at around 10 am that it would be a good treat to have annual passes so that R and the fam could just go in for a couple of hours when they didn't know what to do. By 10:30 we had packed up and were on our way for a couple of hours at the happiest place on earth. By 3:30 we were in full 'Disneyland mode' and decided to continue on to California Adventure. We had never been before, but because it was included in the pass, why not check it out? It was much more enjoyable than any of us imagined. We stumbled on the nightly parade, and E.'s face was priceless. R. Indicated that that was worth the prive of the annual prices. I disagree. I think that visiting Disneyland more than 6 times (the zero marginal cost visit) is worth having the pass. Around 7pm, almost 4 hours past our anticipated return time, we drove to In-n-Out burger to finish our unplanned California adventure. It was 8:45 before we got home. Both R and I have a few things that need done, like prepping classes. Should I have done that? Yes. Was it more fun to just be a Californian today? Of course.
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