Thursday, January 29, 2009

HomeLAND Equity Line of Credit

This is the typical path to financial ruin.

  1. You open checking account.
  2. You get tired of bouncing checks.
  3. You get a credit card.
  4. You max out your credit card(s).
  5. All of your extra money goes to making debt payments.
  6. You get a HELOC (Home Equity Line of Credit). It's a large quantity of "free" money to pay off your debt and get some extra stuff you've been wanting.
  7. There's no turning back now.

So what is the U.S. Congress doing?

  1. They pass bills to spend money.
  2. They get tired of being restricted by the Federal budget.
  3. They pass more spending bills anyways.
  4. The Republicans block the bills based on silly ideologies.
  5. They get a HELOC (HomeLAND Equity Line of Credit) in the form of an economic stimulus package. They now have "free" money to spend on their pet programs (give condoms to the poor, chase the global warming windmill, etc.).
  6. There's no turning back (unless our U.S. Senators get wise).


Monday, January 26, 2009

The Pelosi Revelation

I read an interview given by Nancy Pelosi where she stated "contraception will reduce costs to the states and to the federal government". Knowing her stance on abortion and same sex marriage, I had an interesting revelation. It's about the question "what are people?". I think I know the answer now.

People are risk. Creating people is risky, because they may end up being underprivileged. When this happens, your only choice is to give them welfare.

So here is the logic:
People are going to have sex and you can't stop it.
The result is conception, unless we give them contraceptives.
If they don't use the contraceptives,
the result is babies, unless we abort them.
If they don't have abortions, the result is underprivileged children (unless the Government can intervene in their schools).
If they aren't successful in the schools, these people will just be a burden on our welfare system, thus costing us money.
(That's why gays are so wonderful. They don't produce children).

The Republican viewpoint is that if lazy people have babies who grow up to be lazy that's their problem. As long as they shop at my store.

The Conservative viewpoint is to teach values and correct principles to adults and children (even if those values include self control and personal restraint) so that they can improve their lives and society at large. Helping the impoverished is done with the intent of lifting them up.

Here's the full excerpt on Pelosi from the Drudge Report today

Speaker of the House Nancy Pelosi boldly defended a move to add birth control funding to the new economic "stimulus" package, claiming "contraception will reduce costs to the states and to the federal government."

Pelosi, the mother of 5 children and 6 grandchildren, who once said, "Nothing in my life will ever, ever compare to being a mom," seemed to imply babies are somehow a burden on the treasury.

The revelation came during an exchange Sunday morning on ABC's THIS WEEK.

STEPHANOPOULOS: Hundreds of millions of dollars to expand family planning services. How is that stimulus?

PELOSI: Well, the family planning services reduce cost. They reduce cost. The states are in terrible fiscal budget crises now and part of what we do for children's health, education and some of those elements are to help the states meet their financial needs. One of those - one of the initiatives you mentioned, the contraception, will reduce costs to the states and to the federal government.

STEPHANOPOULOS: So no apologies for that?

PELOSI: No apologies. No. we have to deal with the consequences of the downturn in our economy.


Wednesday, January 21, 2009

Declaration of Independence from Consequences

I put my own spin on an assignment for a course I'm taking on the U.S. Constitution.

When in the course of human events, people make choices that result in painful consequences, and it becomes necessary for society and government to absorb these consequences. It is therefore assumed that the Laws of Nature and of Nature's God should be separated from their consequences.

We hold these truths to be fundamentally self-evident, that all men are created equal, so why should any one man or woman suffer more than another if they make bad choices or participate in activities that put them at personal risk. People are endowed with unalienable Rights, that among these are Eat, Drink and be Merry. Whenever any form of government becomes restrictive in these rights, it is the right of the people to vote entitlements and protections for themselves, so that they might have Safety and Happiness.

There are plenty of excuses why one should not suffer the consequences:
"I didn't know it was wrong"
but if I did know it was wrong: "I didn't realize what would happen",
but if I did know what would happen: "I didn't mean for it to happen",
but if I did mean for it to happen: "I was just joking"
but if I wasn't really joking, it's not my fault because: "My friends dared me." or "Everyone else was doing it" or "I had bad parents" or ...

We the people declare that there will no longer be any consequences to any action and that we can do whatever we want, because people that is the key to happiness. But if it's not the key to happiness...


Saturday, January 17, 2009

Value for No Effort - The New American Dream

In a recent post I wrote about inflation and I've been thinking more about how we got to our current financial condition.

This is inspired by Thomas Paine, who wrote:
What we obtain too cheap, we esteem too lightly; it is dearness only that gives everything its value.

This is my postulate:
Speculative bubbles get over inflated due to people wanting value with minimal or no effort on their part.

Here are supporting examples:
  1. Gambling - For the minimal effort of playing a game of chance, a person hopes to win more than they spent. Gambling is the "founding father" of the delusion leading to "value for no effort" thinking.
  2. Lotteries - Gambling for the masses. For the small price of a ticket, a person hopes to get a very large winning.
  3. The Stock Market - For the price of a share of stock, you hope the company holding the stock will give you big returns while you do nothing. I was sucked into this one even though I hated working at a public company and hearing all the time about providing value to share holders while working my butt off and barely scraping by. The light bulb went on recently when I was explaining my stock strategy to my daughter and she asked "Isn't that gambling?". I rationalized what I was doing, yet have found that she was right.
  4. Credit Cards - By giving someone a small plastic card with your name on it, you can receive goods and services without any effort. I'm also a victim of this. Although I convinced myself that I was smart by paying off the balance every month, I was actually stupid since I was experiencing the separation between value and effort. (We have recently put our credit cards away).
  5. Home Equity Loans - Once again getting cheap, easy money. (I must confess that I am not innocent of this example).
  6. Ballot Initiatives - By simply marking "yes" on the ballot next to your favorite cause with no thought were the $100 million is actually coming from (In my home state of California, this would be building a hospital for the orphans of war veterans using recycled grocery plastic bags and run entirely by solar panels and wind mills. It would also employee all of the people who recently lost their jobs in an unrelated industry, provide housing for the poor and a habitat for an endangered desert rat all while alleviating traffic congestion).
  7. Bailouts - Legislatures spends days carefully crafting a law that results in the expenditure of way too much money that will take countless generations to pay for it. (I sure wish someone like Mitt Romney was crafting these bail outs).
  8. Pensions - A person works for a company for many years and upon retiring receives a comfortable pension. This is a dream of many Americans. Do the retirement wages represent only contributions made by the company during the person's employment? I'm guessing that some percentage comes from the value produced by someone actively working somewhere.

I repeat Thomas Paine's words: What we obtain too cheap, we esteem too lightly.

What are the consequences of these examples?

Let's imagine that you find a $100 bill tucked in the pages of an old book. This is money that has not been circulating in our economy and therefore has not been providing stimulus for many years. You decide to take your family out to dinner. You end up tipping big and spend the entire $100. What happens to it? It goes to the suppliers of the food, pays a portion of the utilities and mortgage for the restaurant. The waiter takes his/her tip and wages and spends it else where. The restaurant owner takes their profits and also spends it. The supplier pays their suppliers and buys the fuel to deliver the produce. And so on.

Basically, the $100 get spent over and over again and creates a magnified boost to the economy.

Likewise, the above examples of "value without effort" result in economic stimulus in the form of increased consumption, excess growth in businesses, etc.

In Physics, the Law of Conservation of Mass says that the mass of a closed system will remain constant, regardless of the processes acting inside the system. In other words, matter cannot be created/destroyed, although it may be rearranged.

In economics, I would assume there are similar principles. However, the "pay later" invention of mankind has made it possible to complicate the Law of Conservation of Money by making our closed system include the future. Excess now means deficiency later.

Blah, blah, blah. I'm sure no one made it this far due to boredom. I'm tired and I'm going to bed ;-)


Wednesday, January 14, 2009

Anti-religion lessons from Jesus

This blog is a pretty bold thesis, saying that we can learn lessons from Jesus that are anti-religion. This blog was inspired by a recent news article related to a federal judge ordering a school "to stop promoting religion and prayer in the classroom and at school events".

At first I reacted negatively. I am religious. I pray. This is obviously anti-religion and anti-prayer. But then I started thinking about it. My recent study of Jesus' words came to mind. Jesus was very critical of the religion of his time. I could exhaust you with examples. A whole book in Matthew is dedicated to his criticisms. Here's an excerpt:

Matthew 23
1 Then spake Jesus to the multitude, and to his disciples,
2 Saying, The scribes and the Pharisees sit in Moses’ seat:
3 All therefore whatsoever they bid you observe, that observe and do; but do not ye after their works: for they say, and do not.
4 For they bind heavy burdens and grievous to be borne, and lay them on men’s shoulders; but they themselves will not move them with one of their fingers.
5 But all their works they do for to be seen of men: they make broad their phylacteries, and enlarge the borders of their garments,
6 And love the uppermost rooms at feasts, and the chief seats in the synagogues,
7 And greetings in the markets, and to be called of men, Rabbi, Rabbi.

It's interesting that even with an oppressive, secular government (the Roman's), most of Jesus' criticisms were reserved for the Jews. One of the few comments he had for the Roman government was "Render to Caesar the things that are Caesar’s, and to God the things that are God’s". This was of course a response to a question from the religious people he was criticizing, and they were trying to trap him with a trick question.

It's also interesting that the religious people are responsible for bringing him to trial and crucifying him. When the secular government (Pilate) found no fault with Jesus and tried to show mercy and release Jesus, the religious leaders chose to release the dangerous Barabbas instead.

Do people have a right to fear religion? Sadly yes. Even today religion fuels many violent conflicts.

What should religious people do? The answer is simple. Live your religion.

Friday, January 9, 2009

I don't like checklists

I've never liked checklists. A little piece of paper telling me what to do and how to do it. I always wonder who made the checklist. What gave them the right to tell me what to do? I don't mind "to do" lists that I make myself. Then I'm just reminding myself to get stuff done that I want to. Of course, a checklist would have helped me on one camping trip where we ended up with no spatula to flip pancakes.

Several years ago I took my kids to a Young Eagles event. They give kid's a chance to fly in small planes (my daughter got to be the pilot as well!). As my kid's were getting ready to get in the airplane, the pilot carefully went through his checklist. I thought it was a little silly since he had been flying groups all day and had probably already checked his plane a dozen times.

Recently, I came to a better appreciation of checklists while on a project at work. A coworker, who happened to be a certified flight instructor, helped me understand better the value of checklists. Checklists are one reason why flying is safer than driving.

More recently I read a magazine article on checklists (I must have been really bored in the doctor's office, but I'm glad I read it). It talked about the value of checklists in many businesses. The most obvious is in hospitals, where checklists actually save lives.

Okay, so if you have read any of my blogs, you might realize that I'm about to make an analogy. So, here it is.

Checklists are like morality and religion. There are a lot of people who don't like morality or religion and see them as some arbitrary rules that some unknown person invented who has no right to tell anyone what they should do. Yet, like checklists, morality and religion can provide value in many ways, safety being a big one.

I could go on and on but I'm tired and I'm sure you get the point :-)


Tuesday, January 6, 2009

Relative vs. Absolute Truth

In aircraft navigation, small deviations in course result in large errors over long distances. Since the beginning of aviation, the methods and tools for navigation have improved. Today, a common approach is to use the combination of GPS and INS. Most of us are familiar with GPS. An amazing technology that can pinpoint our location on the earth using signals from satellites. Unfortunately, GPS isn't sufficient for the sophisticated guidance systems of modern aircraft. These aircraft can make an entire flight from takeoff to landing without a pilot. This is accomplished with the use of computers that make hundreds of adjustments per second. The relative accuracy and the slow update rate (once per second) of GPS is insufficient for current needs.

The solution to this is the INS, or Inertial Navigation System. The INS has sensors that detect motion. The INS is mounted in the aircraft and as the aircraft rolls, pitches and flies, the INS detects these movements and reports them to the flight computer. The change in position can be reported 1000 times a second. The INS provides a much more precise position than the GPS and requires no external signal.

The INS only detects relative changes. It knows how much things have changed since the last measurement. From these changes it computes position, velocity, acceleration, roll rates, etc. Although the INS is very precise, it is not perfectly accurate. The small inaccuracy of the INS becomes a problem because each error gets added to a previous error. Over the long distances of aircraft flight, the accumulated error can be catastrophic.

Here is an example of 20 seconds where the INS inaccuracy is 1/1000th every 1/100th of a second. The circles show the GPS position.

A simple solution to this is to correct the INS to the correct GPS position for every GPS update. The actual solution is much more sophisticated. The result is below.

So what point am I trying to make? As time goes on, the norms of society are more like an INS. They use relative truths. We are not that much different than last few years. Taken over the last few decades, the differences become more noticeable. What used to be unacceptable at the margins has gradually made its way into the mainstream.

An example is marriage. Our society has drifted all over the map. It's been an arrangement. It's been all about romantic love. It's been a loose contract. What is the truth? I personally believe the Proclamation on the Family.

How about morality? I also believe there is an absolute truth.

How about our current financial crisis? Can we endlessly increase our debt? Is there a basic growth rate and standard of living that is sustainable? (See my blog on this)

In aviation, the acronym "CFIT" describes what happens when these small errors accumulate. CFIT stands for "Controlled Flight Into Terrain". You fly right into the side of the mountain or into the earth. Without some absolutes, what are the CFIT consequence for marriage, our economy, morality, etc?


Thursday, January 1, 2009

Some Good News for the New Year

I've been blogging mostly about controversial issues and "doom and gloom" predictions. I decided to share some good news.

With all the talk of global warming and the peril our planet is in, all that it takes is a drive across country to make you scratch your head in wonder. There is still a lot of nearly pristine land and abundant resources. There are blue skies. Why aren't we using them?

The problem is how to take advantage of these extra resources with the main problem being water supply. This article shows how researchers have developed an approach to provide grazing lands in arid lands that can be irrigated with salt water.

By doing this, they can free up other lands for typical agriculture. Go BYU!