Quantum Theology

Folks, the sad reality is that we have a subprime financial system which is insolvent. I think that there are some realistic options. You either have government remove the bad assets from the banks balance sheet, or you have the banks default on their obligations, or you print a lot of money and hand it over to the banks. I’m sure there are other things that could happen, I just don’t know what they are.  The bottom line is that we only get to pick who pays and when. There is no solution where the problem just magically goes away.

Clearly the system is not as we would like, but wishing we had a better system won’t stop the current system from sinking us all. A bailout of some form is necessary to deal with the limitations of the current system.

Paulson’s plan for buying up the bad assets at above market prices will probably work. Here is the problem. Paulson and his banker friends want the bailout to happen without any downside to them personally, or in the fundamental way in which they do business. In other words, they want business to continue as usual after this unfortunate affair. This is like carting away the dead bodies from some guy on a shooting ramage without shooting the perp. A great deal for the perp, but not so good for the victims.

The system as it exists today is a systemic risk and needs to be fundamentally changed. Financial innovation is a good thing. Securitization of mortgages is a good thing. Making money is a good thing. Perverse bonus systems which reward risky and destructive behavior is a bad thing. Giving golden parachutes to CEO’s who wipe out their shareholders is a bad thing. The bribery of congress is a bad thing. The existence of institutions which are too big to fail is a bad thing. In general, the lack of accountability is a bad thing.

In order for capitalism to work, you need a way for good decision makers to be rewarded and bad decision makers to fail. This system needs to be restored. Your neighbor who purchased a home he/she couldn’t afford should not be allowed to keep the home and should not get special treatment of any kind including any sort of loan workout deal. Senior management at public corporations have great incentives to the upside if a company does well. They also need to share in the downside if the company does poorly. We need to FORCE companies to be truthfull and transparant when making public statements to shareholders and failures to do so should require either termination or even jail time.

It seems that the liberals want to have to government get shares in any bank that gets the bailout. Government ownership isn’t the answer. The government that can’t fiscally manage the country shouldn’t be allowed to influence others unless it can prove it can manage it’s own affairs. Bailing out homeowners isn’t the answer either. Why should the system protect those who can’t read a loan document or accurately calculate what they can or can’t afford?

It seems that being fiscally conservative has meant cutting taxes while running up deficits, and allowing the market to function without any meaningful oversight. This is just as flawed as what the liberals want. Running up deficits is nothing more than a scheme to tax your children for what you consume today. Capitalism is an unstable system without a minimum of controls. The root of capitalism is self interest and greed, and these vices will consume the system if not checked. It’s not that we didn’t have controls, it’s just that nobody was around to make sure they were followed in the manner in which they were intended. What’s the point of public SEC filings if content is a bunch of lies, half truths, and obfuscations?

Is a bailout necessary? I’d say that it is. I’d also say that after the bailout, the system should be fundamentally reformed. Unfortunately, the liberals don’t get it and neither does the current crop of conservatives. The sad reality is that the system is only as good as those who run it. While the constitutional government and capitalistic market works well even in the face of bad people, no system can work when the corrupt, evil, and incompetent fill every level and every office.

At this point, I wonder if it might be better for the entire system to crumble. At some point you have to stop trying to patch the levy and start building a new one. I didn’t leave the Republican party because I disagreed with the stated platform, I left because the leaders have shown a willingness to circumvent the constitution, place party loyalty over competence and in doing so have shown an ineptness at running the government itself. They have shown a propensity for corruption, and failed to demonstrate any kind of integrity or values in how they conduct our business, while they speak of the same in their speeches. They have appealed to fear instead of courage, and foolishness instead of sober reason. The political parties need to be refined by fire and the dross cleared before I will consider another vote for the status quo.

The Bible holds leaders to a higher moral, ethical, and professional standard. I think that’s sound advice.

The halmark of all the actions made by Bernanke, Paulson, the SEC, and Congress in the last year is that the Government will change the rules of the game in order to fix the outcome to favor a particular party.

This has made investing more a matter of luck then skill. It’s like being in a warzone with bullets flying all around. You just hope you don’t get struck by a stray bullet. And the government are the ones shooting. I managed to dodge one and yet got struck by another. I used to own SKF which shorts the financial stocks. It took a major hit when the SEC decided to ban short selling on a list of stocks that are most financials. I DO own SRS, which shorts real estate stocks. That took a major hit today as well.

There is a thing as financial terrorism, and the guilty parties lie in Washington and in the boardrooms of Wall Street. God help us all while the corrupt try to save themselves and squash everyone else in the process.

The next president is going to get slapped with reality when he walks into the white house.

On a separate, but related topic, McCain wants to take a harder line with Russia and China. How does he square that with tax cuts and massive financial bailouts, all which will have to be paid for by selling bonds to the, uh, Russians and Chinese. I wonder if our creditors will one day tire of lending us the money to buy weapons to threaten them with.

Commenter on Calculated Risk

Last year, Bank of America bought Countrywide before it could declare bankruptcy, in March the government bailed out Bear Stearns, last week the Government bailed out Fannie Mae and Freddie Mac, and this weekend Lehman Bros is looking for a bailout. With all these institutions failing, one might wonder where all the money went, and why the taxpayer has to cover it.

Well, I know where the money went. All the money flowed into the hands of either the brokers through the commission / bonus structure, or homeowners and real estate investors who pocketed lots of money by cashing out real estate holdings during the boom. It’s interesting that the banks are turning out to be the ultimate suckers here.

Who is going to pay for the bailouts? I know who SHOULD pay, and that’s people who made a killing at the expense of the stability of the financial system. Did you know that the profits from the sale of a primary residence is tax free up to 500k for married people?

While some are talking about lipstick and pigs, the financial system of the United States is in it’s worst crisis since the Great Depression.

Why can’t these institutions fail? The United States attracts investments because of the stability of our political structure and of our financial markets. If key entites failed, the foreign investment dollars that our contry depends on might dry up. We are the worlds largest debtor nation, and it’s not a good idea to piss off the people who are feeding you.

As we speak, the Federal Reserve and the Treasury are trying to force the industry to come up with a way to save Lehman Bros without a government bailout. I don’t think it’s going to happen. I don’t think Paulson and Bernanke have the guts to let Lehman fail and I think everyone knows it. I’m hoping federal funds won’t be needed, but I’m not sanguine.

And where is congress in all of this? Isn’t congress charged with spending money for the government?

1. A sense of underachievement, of not meeting one’s goals (regardless of how much one has actually accomplished).
2. Difficulty getting organized.
3. Chronic procrastination or trouble getting started.
4. Many projects going simultaneously; trouble with follow through.
5. A tendency to say what comes to mind without necessarily considering the timing or appropriateness of the remark.
6. A frequent search for high stimulation.
7. An intolerance of boredom.
8. Easy distractibility; trouble focusing attention, tendency to tune out or drift away in the middle of a page or conversation, often coupled with an inability to focus at times.
9. Often creative, intuitive, highly intelligent
10. Trouble in going through established channels and following proper procedure.
11. Impatient; low tolerance of frustration. Constantly needing sexual gratification.
12. Impulsive, either verbally or in action, as in impulsive spending of money.
13. Changing plans, enacting new schemes or career plans and the like; hot-tempered.
14. A tendency to worry needlessly, endlessly; a tendency to scan the horizon looking for something to worry about, alternating with attention to or disregard for actual dangers.
15. A sense of insecurity.
16. Mood swings, mood lability, especially when disengaged from a person or a project.
17. Physical or cognitive restlessness.
18. A tendency toward addictive behavior.
19. Chronic problems with self-esteem.
20. Inaccurate self-observation.
21. Family history of ADHD or manic depressive illness or depression or substance abuse or other disorders of impulse control or mood.

Well, it looks like I don’t have ADHD. I was starting to wonder because I get bored of people so quickly. Well, that’s not really true. I’m bored of the standard ways of socializing in groups. People themselves are highly interesting, but I find group dynamics VERY boring and lame. I also find the rules that Christian have for dating to be very lame and boring. I suppose it’s just that I have ADD for lame and boring things.

One thing is for DAMN sure. If Ron Paul had won the nomination for the Republican Party, then we would be hearing more about foreign policy and the financial system then about lipstick on pigs.

This election season seems more like an episode of one of the unreality shows like Beauty and the Geek or Big Brother. I wonder if people spend so much time watching crap TV that they have lost sight of what it takes to lead a country? How is it possible that McCain is even getting 10 percent of the vote let alone near 50%?

One one had we have McCain, who is half evil and half moron. On the other hand we have Obama who doesn’t have the balls to call his opponent out and is looking really effete in the process. In the middle we have the mass media who seems to act more like a tabloid than a source of reliable information and objective ideas.

How did we get here? Well, this is a republic and the leaders are picked by the people. I can only conclude that nearly 100% of the population is unfit to vote. Has ‘The Man’ really turned the mass population into Lemmings?

My bookshelf is full of books covering my past interests. I’ll often pick a book to glance over again while for bathroom reading. One major interest was the relationship between science and religion, and I thought I’d give my thoughts on my latest read: The Science of God by Gerald Schroeder.

The particuarly interesting part was a single chapter in which he discovered an interesting mathematical coincidence. A guy with a watch at the start of the big bang would observe 6 days, while a guy with a watch on Earth would record 15.75 billion years. This is due to the relativity of time. What’s the coincidence? Well, according to the Bible, creation happend in 6 days. What is also more interesting, is that what occurs in the 6 day account in Genesis lines up with the path of evolution. As Schroeder notes, its as if God used a logarithmic scale to tell the account of creation. This is interesting, but isn’t a proof of anything. Correlation does not imply causation.

Suppose such an observation really is accurate, meaning that God did create the universe and it really did take 15.75 billion years. It must then be amusing to see that most of the world is partly right and partly wrong. The young earth creationists would be right in that God had a hand in the creation of the universe, and wrong in the manner that it actually happened. The atheistic scientists would be right that evolution happened, and wrong to think that there is no God.

I took the motorcycle up into the mountains today, only wearing shorts, t-shirt, and my helmet to keep the wind out of my face. I know you’ve seen those guys in California buzzing down the freeway with just a shirt and shorts. I always figured they were asking to get smeared on concrete.

I must say that it’s a much different experience feeling the wind blowing by your body at 60 MPH. It’s kind of exhilerating. Being in the mountains, every few seconds would bring either a cold gust off the mountain tops, or a patch of sun-warmed air that folds you like a blanket.