Ursus Pacificus

I admit I may be missing something. A helpful, content rich comment from a reader yesterday got me on the right path. I kid. Jacksplode, I’m glad you’re such a helper.

Much to jacksplode’s chagrin, I’m sure, I’d like to share a little more degree-free lay insight regarding our current financial crisis.

This story on Yahoo! News discusses the US Federal Reserve Bank’s preparedness to “slash” interest rates further in light of the worsening recession.

Firstly, a question of semantics. The Fed’s current interest rate is 1.0%. Momentarily dismissing the notion of The Fed lowering its interest rate below 0% (which would mean they would pay borrowers to borrow), I just don’t understand how you can “slash” something that small. The verb “to slash” is evocative of a telegraphed swing of a low-precision cutting instrument, such as a machete. If the Fed’s interest rate was a kudzu vine, and each percent of interest charged was represented by an inch of the vine’s growth above ground level, slashing doesn’t really seem like a suitable approach. It seems to me that Mr. Bernanke is poised to attempt dissecting an ant with that machete.

Semantics aside, Isn’t satiation of greed through borrowing the problem?

The Sub Prime crisis: Investors bought mortgage-backed CDOs (surely, some “on margin” or borrowed money) supported by an over-heated (or inflated, meaning the prices that housing units are sold at do no reflect their real value, and are, in fact, substantially higher) housing market, and home buyers who were not capable of supporting the mortgages (usually ARMs) they’d signed on for. Predatory lenders preyed upon the greed of both investors and home buyers, and got away with it for a while. The whole thing was pretty wobbly from the start, but when the housing price bubble popped, and the borrowers could no longer pay on the notes, they also couldn’t sell the homes or refinance, because the homes were worth less than they paid, and even less than the value of the mortgage. Perceived value evaporated, people were tossed out of their homes, investors lost a bundle and sub-prime lenders went out of business (or were gobbled up by other banks, whose stability was already questionable).

Of course, with the collapse of the housing market, came the stock market crash (since these mortgage-backed CDOs were securities, traded, more or less, like any other), wherein more perceived value (of over-inflated securities) evaporated, causing share prices of outfits like GM to plummet.

GM, which now probably has a market cap less than the value of its assets, is on the edge of bankruptcy. GM has been operating on such a knife-edge (and made so many bad decisions) for so long, that it can’t weather a really bad year. For decades, GM has been catering to (and encouraging) the notion of conspicuous consumption so pervasive in American culture, making big, garish vehicles cheaply and over-charging for them. Even GM’s “small cars” aren’t small. Buyers borrow to buy the cars. Dealers borrow to have the cars on the lot. GM borrows to build the cars, keep the plants open and pay off benefit obligations to retired (and laid-off) workers. GM’s workers probably all have mortgages, car loans, boat loans, credit card debt, and so on… so when GM goes casters-up, all that debt is left unsupported.

Which brings me back to my original point. The problem is not Wall Street (in and of itself) or the other securities markets. The problem is not car loans or home loans. The real, root-cause problem is untempered greed, and the notion that we can just borrow our way out of problems.

The TARP is borrowing money from future generations of Americans to clean up the mess caused by the greed of past and current generations. The US Treasury is not a bottomless well of free cash. For the Treasury (or the Fed) to bail out banks and car companies, it needs to spend money. If the money is not on hand (i.e. in “savings”) it must be borrowed. The money is clearly not on hand. So, what happens? The government “prints money”. There is only so much “value” in the assets and labor of the United States. A US Dollar is a token which represents a share of all that value. If you make more tokens, but not a corresponding amount of increased value, the value of each token (or Dollar) is diminished. Of course, you might be able to find someone to lend you value to add to your own, but then you’re paying interest on the loan, which means you have to create more value intrinsically to pay the principal and the interest. If you don’t, the value of your tokens, again, diminishes.

So, Ben Bernanke is talking about “slashing” the Fed’s interest rate… to 0.5%, which makes it cheaper to borrow money.

Wait… what was I just talking about?

The memory industry made a gamble, and it lost. It gambled on Microsoft’s ability to dictate to the consuming public what it wants. While Vista was a giant “Fsck You!” to just about every one of Microsoft’s customers (to say nothing of its hardware parners and ISVs), rather than leaving, they’re staying in droves… they’re sticking with XP, even if it costs them more.

When everybody was riding high on the hog, it was hard to convince consumers and governments that a gigantic monopoly (or near-monopoly) was a bad thing.

Now, we see that consolidation is bad. Well… Not all of us see it. Clearly, the Federal Government of the US seems to think that one way to fix the banking crisis is to let “Teetering On Collapse Bank” buy “Abysmal Failure Bank”, allowing TOCB to become even more dangerously huge.

The problem is evident in the US, with its auto industry. Over the course of the last century, literally dozens of car companies have started, prospered, gotten into trouble, failed, and then got acquired by one of, what, by the end of World War II was known as, The Big Three US Auto Makers (Ford, GM and Chrysler). Now that the US Auto Industry’s “Great Attractors” are on the brink of failure, there’s no one left to buy them out.

Here’s the solution, from where I sit:
If a business concern is so important to the economy that it can’t be allowed to fail, such that the tax-payers have to come to the rescue, then the government should act, but the action should be contingent on painful and disruptive reform of the industry, viz:

1. The CXOs and Boards of Directors should be fired (not retired with golden parachutes… fired) and replaced with properly credentialed business-savvy government appointees, each earning no more than a freshman Congressman. No bonuses, no perks, no deferred compensation. Just a salary, health benefits and a 401k.
2. The companies must be broken up. For instance, General Motors has 8 different brands in the US automobile market, to say nothing of non-automotive divisions like GMAC and Hughes Research Laboratory. Split each brand and/or division off into its own company. Thus, Chevrolet becomes its own car company, top to bottom, as do Buick, Pontiac and the rest.
3. The break-up would also entail a 50-year no-acquire, no-conspire clause, whereby none of the individual new companies could acquire another, nor could it be acquired, nor could the companies cooperate as if they had never been broken up. Each would have to stand or fall on its own. This has the benefit of enhancing competition, forcing innovation, and giving real choice back to the consumer.
4. All employment contracts are made null and void, from the highest executives to the lowest line worker. Wages and salaries are rebooted, such that the highest-paid executive makes no more than five times the lowest starting wage in the company. Production wages are set to track a weighted average of non-restructured car companies with manufacturing facilities in the US.
5. All US auto companies would be required to sell off their stakes in other car companies. For example, Ford would have to divest itself of Mazda.
6. Finally the Government Bailout would be a Final Solution of sorts… The resulting smaller companies could never seek Government assistance again, nor could any successor, survivor or stakeholder, in perpetuity. If you hold a share of Pontiac stock, you’re on your own. If the former GM, Ford and Chrysler divisions can’t survive in the market, at least they will fail piecemeal, rather than as a monolithic block.

Is this a “nice” thing to do? Not really, but it distributes the risk of failure among a much larger group of genuinely independent entities. In the US, we would shift from 3 car companies to 14 or more with real distinctions between them. The diversity of companies would bring back the need for redundancy (because, for example, Chevy, Pontiac, Saturn and Cadillac will all have to design an manufacture their own engines and suspension parts and so on), creating new jobs. Do we need 14 US car companies? No, probably not, but the dead wood would be shaken out naturally by market forces, and in a much less disruptive way.

Another benefit of this plan would be that the leadership of near-monopoly corporations would be more prone to try and work things out on their own than to ask the government for help.

The Church of No, Thanks is running a membership drive with the possibility of winning cool swag.

I’m not eligible, since I already have an account… You have a shot, tho!

OK… Now, the guy’s dead… been dead for 23 years… and the incident I’m going to direct your attention to happened around 25 years ago… There’s a (big) part of me that admires Welles’s frankly expressed disgust with the ad copy he’s charged with reading

Check out this page and listen to the Orson Welles - Frozen Peas Spot.

Having worked in radio and having recorded hundreds of local spots and promos, I can attest to the frustration of trying (and being expected) to read clumsy, awkward copy written by ham-handed hacks. I also sympathize with Welles’s irritation with (what I assume to be) the session’s producer. Sure, the producer had been given a job to do: Have the fat man read the paper. In all likelihood, the producer had no control over the ad’s copy, and had no authority to edit it. Nevertheless, Welles was right. The copy did suck, and there was no way to read it properly. The question is a philosophical one: Does one play the sycophant, or does one tell the emperor that his wedding tackle is hanging out and refuse to compliment him on his new suit? It is, really, a moral issue, and speaks to one’s personal integrity.

Welles can be heard walking out of the session at the end of the clip. Good for him!

Philip Seymour Hoffman was on The Daily Show with Jon Stewart last night, promoting his new movie, “Doubt“. The first thing I thought when I saw him walk out on stage was, “Holy crap! It’s Orson Welles!”

The film looks interesting, and Hoffman gives a good interview, viz:

…then peruse these pictures.

Ignorant Ig”no*rant, a. [F., fr. L. ignorans, -antis, p. pr.
of ignorare to be ignorant. See Ignore.]
1. Destitute of knowledge; uninstructed or uninformed;
untaught; unenlightened.
[1913 Webster]

This post on the HeliOS Blog is both revealing and frightening. Karen xxxxxxxxx, a teacher at xxxxxxxxx Middle School (AISD) must be living under a rock. A big rock. On the surface of Titan, the largest moon of Saturn. I can only guess that AISD is the Austin Independent School District in Austin, TX, based on service details listed on the website of HeliOS Solutions, and Karen X teaches at one of AISD’s middle schools. Anybody know her email address? If you know Karen X, please forward this to her.

An excerpt from Karen X’s email, as posted in the above-mentioned blog:

Mr. Starks, I am sure you strongly believe in what you are doing but I cannot either support your efforts or allow them to happen in my classroom. At this point, I am not sure what you are doing is legal. No software is free and spreading that misconception is harmful.

Wow.

Well, regular readers of UrsusPacificus will know that I am worried by Texas. Further, they will know that I don’t suffer imbeciles well.

Karen: Please allow me to direct your attention to a few resources which might enlighten you:

• Wikipedia article on Linux - note that MediaWiki, the software that Wikipedia runs on is free.
• The Free Software Foundation, which is the cornerstone of Free and Open Source software
• The GNU General Public License, among a host of others legally provides just the kind of freedom you claim is illegal.
• Microsoft Windows is not the only Operating System out there. It’s not even the only MS Windows-compatible Operating System.

Also, in the interest of piling on, this blog is hosted on a Debian GNU/Linux machine in my basement. I’m writing this blog post on an Acer Aspire ONE netbook, which has Ubuntu Hardy Heron (LTS) installed. No machines in my home run MS Windows (and I have 15 computers). The office I work at has 2 MS Windows laptops and one MS Windows desktop. The rest of the workstations and servers (around 40) run Linux. For free. Legally. I’ve been using Linux for free, legally, for over 10 years, and have written a fair amount about Linux ( and Fear, Uncertainty and Doubt about it propagated by Microsoft)

Karen: Please get yourself educated. If not for yourself, for your students.

The Church of No, Thanks has a blog post about a story on a Christian news website that suggests large percentages of kids are abandoning their churches in high school or college and feel no compelling reason to go back.

Yay!

Hey! Guess what! There’s groovy new Church of No, Thanks gear available over at the Kitsch Kave! That’s right! in addition to the other spiffy designs, you can assert your Personal Liberty with a Polite Refusal!

It’s time to say, “Yes, Please” to “No, Thanks”!!

I hope the irony of that is not lost on you.

This video on YouTube, called “The Good Consumer”, which I found on AdBusters was quite good… and quite disturbing.

While Buy Nothing Day has come and gone, we can still buy nothing. Buy Nothing Day is one of those phenomena where people profess a belief, and demonstrate it powerfully, on one occasion, then go back to their old ways almost immediately afterwards. Why not skip societally-programmed calendar-driven gift-giving, and just reform yourself to be a more generous person all year long?

If you still think a consumption-driven holiday is a good idea, just remember there are people, who, as a result of their enthusiasm for the high-holy consumer holiday, Christmas, won’t see it.

… is found a religion.

Well, crap.

Don’t worry, I still don’t believe in gods, devils, faeries, Santa or The Easter Bunny.

“How,” you may ask, “can you have a religion without a god?”

Good question. While your common, off the shelf religion is typically centered on a god as a target of worship, praise and adoration, there’s usually more to it than that. Most religions have a social engineering aspect to them, and achieve their goals through intimidation, peer pressure and promise of reward in the afterlife for the righteous, and punishment for the naughty.

First, you can strip the god out of the equation pretty easily, and what you’re left with is a totalitarian regime. What if you could turn the social engineering on its head? What if, instead of operating on fear of a capricious invisible friend, you could operate a religion on promoting conscience, consciousness, personal liberty, personal responsibility, quality of life, and strength of will? You just might have a pretty powerful thing on your hands. If you could take the rituals and symbolism of religion, and use them as a tool for each individual to affirm the value of this life and his or her place in it, without straining credulity or forcing anything down their throats, you might just make the world a better place.

So, why not? Why not put together a philosophical framework and a social network and see if anybody bites?

Curious? Hop on over to The Church of No, Thanks