This pretty much says it all. Thanks to CM and BK for the heads up, sorry if it offends you.
-joe

Quote of the Year

Parables and quotes are often an effective way to make complex situations more easily understood. Take the case of the how the smart guys on Wall Street and Washington whose "risk management tools" and "economic philosophy" resulted in our current situation. Their errors can be clarified with a quote by the great boxer and intellectual Mike Tyson:

"Everyone has a plan until they get punched in the face"

-joe

Natural cycles???

Spring turns to Summer,
Summer turns to Fall,
Fall turns to Winter.
Cycles are a natural part of life, for everything there is a season. For most cycles we accept this as fact and act accordingly (think shorts in the summer, coats in winter)except when they apply to economic cycles. Since the great depression we the people have determined that natural economic cycles cannot be tolerated, that the government of our country must be charged with stopping a natural phenomenon. Actually nobody seems to mind when we are in the "economic expansion" phase, it's the downturn they want eliminated. There is of course a reason for cycles: they are essential to life. Summer is great, but if it were 85 and sunny all year long we'd all starve to death and have no water to drink. In reality the problem isn't economic, it's human nature. We like to feel good, not bad. Instead of preparing for the inevitable change in cycle, we would rather charge the government with protecting us from our own folly. (after we have profited from it of course) The boom and bust cycles are essential for capitalism to function properly. Remove the consequences of unwise behavior and humans will act foolishly. The beauty of a naturally occurring economic cycle is that the bust that follows the boom clears out the rotten behavior and makes way for the prepared (survival of the fittest at it's finest). Those that made prudent decisions will be in a position to benefit from the bust, those that were foolish will be decimated.
Human nature is an interesting thing, if you want to know why people do what they do simply look at how they are rewarded. In America we get almost unlimited tax breaks for borrowing money against our house, but we get only limited deductions for savings. It should be no wonder we have a negative savings rate as a nation! We are simply doing what the government is rewarding us to do. By taking away the cleansing effects of the economic downturn we are removing the very mechanism that protects us in the long term. Companies, people, and governments need to be accountable for their actions, meaning that bankruptcies, defaults, and foreclosures are necessary. People need to lose jobs and businesses need to close because ultimately it will prepare us for the next cycle. Think about the typical elderly person who lived through the depression, what characteristics do they embody? Are they thrifty? Do they save their money? Of course they do! They live like that because they remember how much their lives sucked when they didn't have anything so they are going to be damned sure not to let it ever happen again.
We are in the middle of our economic winter, don't let the politicians fool you into thinking they can pass laws to make it summer all the time. Cinch up your belt, learn from your mistakes, and be prepared for the next cycle.
-joe

NNT

if you haven't read "The Black Swan" or "Fooled by Randomness" here is an excellent intoduction to the author Nassim Nicholas Taleb: An interview on the Charlie Rose show on 12/3/08. A special thank you to bk for alerting me.
-joe

the end of american manufacturing???

it's becoming increasingly apparent that true wealth, lasting wealth is not created through financial gimmickry but in actual productivity and production capacity. i question the relevance of our manufacturing base, we simply aren't as good at it as we once were. our once great production prowess and efficiency contributed to the allied victory in WW2, yet a mere 50 years later the very titans (Chrysler, GM, and Ford) who delivered the majority of the production are begging for a government bailout or threatening insolvency. i realize the midterm impact of failure would be painful but perhaps it is necessary. people and businesses can only be absolved of accountability for so long before they start behaving badly. consider GM, less than a decade ago they had a fleet of electric cars (the EV1) but chose instead to purchase the Hummer brand vehicles. GM CEO Rick Wagoner stated this about the EV1's cancellation "It didn’t affect profitability, but it did affect image," and that the worst decision of his tenure was "axing the EV1 electric-car program and not putting the right resources into hybrids." i wonder how GM would be fairing today if they had continued to develop the electric car platform over the last 10 years? perhaps their current troubles could have been mitigated by a ten year head start on hybrid technology? but Wagoner is probably right profitability wasn't affected...unless of course you add millions of electric cars sold placing your company in a dominant market position for the vehicle technology of the future.
the point of my example is this: we need manufacturing as a nation to have economic health, but it can't be crap. many companies compete on price or quality; apparently our major manufacturing companies do neither; they build junk at excessively high prices. damn foreigners making good stuff for cheap!
if it takes economic turmoil and the reorganization of uncompetitive companies in order fix our nations manufacturing perhaps that what needs to happen. poor choices and bad decisions should not be "bailed out." free markets require consequences to function properly, something we haven't had in our country for a while.
what do you think?
-joe

the next three fifty

As I was watching the news today I saw a playback of good ol' Hammerin' Hank Paulson's press conference from earlier in the day. When he was asked about the balance of the 350 billion bailout, er rescue package and when it might be tapped he said something about ...when we get the next three-fifty...blah, blah, blah. He really said three-fifty. Not three hundred and fifty BILLION, but just three fifty. Like me saying to my buddy Joe, 'hey can I have a five spot?'. It seemed really weird to me for him to talk about it like it was just three fifty. Crazy.

I was also amazed at the remarkable stupidity of the talking heads on the PBS news (don't ask me why I was watching it). Apparently, the 'experts' think all we need to do is get 'credit flowing', and 'confidence up' and 'people buying houses' again. If credit were accessible they said, surely people would be buying cars. What the hell? Maybe people aren't buying cars cuz they woke up to the fact that they don't need them. Perhaps the car they already have is just fine. Or maybe people are lacking confidence because they don't have jobs or fear losing their jobs? Perhaps people aren't buying houses because there are too many houses already. I have no idea who these people were- one was from something called the Brookings Institute- whatever that is. Maybe they should talk to people who actually know what's going on and don't expect that some politician is going to wave a magic wand and make it all better. Like you can just create demand and wealth out of thin air. Idiots.

Whatever...

Brian

Labels

Does it seem like virtually all discussion that takes place in this country is done through the prism of how we label one another?



"you're a big goverment liberal jerk"

"you're a right wing neo con evangelical pig"



...and so forth.



It's really interesting to discuss ideas without labels. Since I actually started reading and thinking (since I turned my TV off 8 months ago) I've lost interest in easy labels.



Why are we taught to use labels? How is this useful? Have they become a substitute to real discourse and discussion of logic behind beliefs? I believe they have.



I have identified myself with a certain party that is supposed to be about fiscal responsibility and limited government for my entire adult life. It was convenient to adopt labels and to cast labels on others. However, I may have been lulled into a false sense of confidence in what I stood for because I left the thinking to those who defined what the label 'conservative' or 'republican' meant. It's become apparent that the labels no longer fit.



I hope that the Revolution Tavern is a place where people will drop preconceived notions and labels and will engage in a discussion of what's best for our country.

Special election coverage!

what does it say about our country when NBC's "special coverage" of the presidential election is done as a parody by comedians? (the Saturday Night Live cast) i have to admit that the show will likely be humorous, however it's no laughing matter that this airtime will likely garner a higher rating than the presidential debates. we may not get what we expect from our elected officials, but we will get what we deserve.
-joe

The end of the FICO score?

i'm going to make the bold assumption that a significant number of credit scores will be damaged in the coming months. like most things in life institutions are forever attempting to rationalize human nature and reduce it to a perfectly logical math equation. an algorithm can not consistently nor accurately predict irrational human behavior, especially during times of crisis (just ask the guys on wall street). i wonder if lenders will change their underwriting standards to discount the value of the FICO score? how many people with 720 credit scores are going to have their homes and SUV's repossessed? the determining factor in the repayment of a loan is not how many credit card payments a person has payed on time, but their character. character compels a person to fulfill their obligations even in difficult times. character cannot be deciphered from a credit score; the only way to determine character is through a relationship. relationships cultivate accountability between people and form the basis for a successful transaction. unfortunately a relationship can not be quantified with math.
good luck to the lenders!
-joe

inaugural Address

To the people of America. For too long now we have allowed politicians and special interest groups to steer our country into oblivion. The time is at hand to wake up, take responsibility, and demand accountability from our elected officials.

At it's current rate our federal deficit will broach the TEN TRILLION dollar mark before the end of 2008.

What does this mean to you?

It means that if significant changes are not made immediately, the future of our nation is at risk.

In the Revolution Tavern there are no republicans or democrats...liberals or conservatives... only Americans. Citizens concerned with the direction of our country. This is no place for rhetoric or slogans, only intelligent debate.

Through education, dialogue, and discourse, members of the Revolution Tavern plan to alter the course of a nation. Just as our Founding Fathers convened to hatch the bold ideas that formed the foundation of our country, we take up the task of restoring the ideals that made us great.

So come, join us for a cold one and discuss the restoration of a government that is by the people and for the people.

In other words: complacency must die.

-Joe and Brian