Xblog: Category Errata

FIRE on fire

Christopher Smith — Sun, 13 Jul 2008 17:49:00 -0700

There is, understandably, a lot of discussion about the economy right now. Eric Janszen’s article in Harpers strikes me as one of the better articles I’ve read on the subject. I find it interesting that he thinks the money is shifting in to alternative energy. It makes sense as a hedge bet, but is so capital intensive I can’t imagine it holds up for long.

UPDATE: Looks like the feds have made their next move. Hold on to your seat belts tax payers! It’s gonna be a bumpy ride.

I've Been Robbed.

Christopher Smith — Thu, 26 Jun 2008 02:47:00 -0700

So, tonight I was robbed. At gun point. Fortunately I was not physically harmed, and all that was stolen was my wallet. I was robbed right outside my house which is more than a bit frightening. I don’t much want to go through the details of the incident itself as I haven’t really been able to digest it yet. Indeed, while the whole thing was going on, I was thinking to myself: “I have a gun pointed at me, and I know this is a really dangerous situation and I could die if things go sideways, but I really can’t process that fact right now. Right now I need to focus on remaining calm, not doing anything to surprise or agitate this guy, and giving him my wallet.” I still haven’t really processed the “you could die right now” or the “this really drives home just how vulnerable we all are” aspect of it.

What I have had a wonderful chance to experience is the joy of trying to report all your credit cards, bank cards, etc. are stolen. I think I was able to remember most of what was in my wallet, but that was where the fun started. Without exception, every credit card company I called put me on hold, typically for 5 minutes, once as long as 15 minutes. Just finding the numbers to call was a PITA in a lot of cases. Sure there are numbers on the back of your card, but are their numbers on the company website? Not really. Searching on “stolen card” on the company website wasn’t too useful either. The “contact us” links frequently didn’t have a 24hr number to call to report a lost or stolen card. A lot of the companies I ended up contacting through automated services that first wanted… my card number (hmm… let me get it out of my wallet here… oh yeah, I don’t have that because it was stolen!!!). Eventually I was able to navigate to all of them except my HELOC. Get this: my HELOC card apparently does NOT have a 24hr number I can call to report a lost or stolen card. My ATM card, and my credit card (both with the same company) do, but my HELOC card, which is tied to a MUCH larger credit line than anything else, doesn’t. WTF?

What I don’t get is why there isn’t a button somewhere on all these websites where I can just deactivate my card online. It would save the credit card companies a lot of money in customer service time, and it doesn’t seem nearly as likely to be subject to abuse as most anything else you can do already on these web sites.

The Pilot Is Expecting Some Turbulence Ahead

Christopher Smith — Tue, 24 Jun 2008 16:36:00 -0700

Unfortunately, the server this blog is hosted on is getting a wee bit flaky (for definitions of “wee bit” that involve “several times an hour”). While it isn’t crashing, it is hanging for several minutes at a time. This appears to be a UML bug, and probably an old one that has long since been fixed at that, but we have limited options in a addressing it for a host of reasons that you truly want to hear nothing about. To further complicate things, my DSL at home has become “intermittent” (the best kind, because it always comes up when you call tech support), so I can’t even host the blog there to achieve better uptimes.

The good news is, new hardware should be arriving soon, and with it an entirely new platform (built on OpenVZ). Cross your fingers and hope that all goes well, and maybe you’ll be able to read more mindless drivel from yours truly Really Soon Now.

Back In The Saddle Again

Christopher Smith — Wed, 18 Jun 2008 14:57:00 -0700

So, xman.org accidentally was left to expire. Any of you domain parkers out there will be disappointed to learn that I’ve now locked it away for the next decade. I kind of feel sorry for Network Solutions given how much spam must have been routed their way. I’m sure mail and other services will continue as per normal shortly.

Back in the Land of the Living

Christopher Smith — Tue, 20 May 2008 03:45:00 -0700

Well, our server crashed today. Weirdest bug I ever saw: we got a kernel oops when smartd tried to get health information from the drives in the 3ware RAID array. One of the drives appears to have malfunctioned, so perhaps that is related. The fragility was possibly caused by running a fairly up to date smartd on a fairly out of date kernel with SKAS patches… but it is far from clear. I need to test this out more to be sure of what the magic sequence was, but needless to say… it’s been an experience.

Wikipedia article of the day

Christopher Smith — Wed, 30 Apr 2008 15:26:00 -0700

All the discussion of economics today led me to this page.

”..the start of a depression is characterized by unusual increases in unemployment, restriction of credit, shrinking output and investment, price deflation and/or hyperinflation, numerous bankruptcies, reduced amounts of trade and commerce, as well as violent currency devaluations…”

Wow, that sounds terrible. Good to know there aren’t any signs of one of those coming. Have a nice day.

The Terrible, Horrible, No Good, Very Bad Day

Christopher Smith — Wed, 16 Apr 2008 00:16:00 -0700

The title is probably overstating it, as it’s not like anyone died or is terminally ill, but the last 24 hours haven’t been the best. I think part of it is how it started off as just mildly bad and then grew progressively worse, so the trajectory just made it feel worse and worse.

So, 24 hours ago, I was sitting at my computer, trying to finish up my taxes. Unlike last year, circumstances and my own procrastination had left things up until nearly the last minute. While I contemplated some of the more bizarre elements of the California Tax forms, and yes we really did pass a law providing tax exemptions for victims of the Armenian genocide, fate’s hand was at work in more than one mysterious way.

First there was the realization that the tax man got me good this past year. Despite truly impressive amounts of money handed his way over the course of the year, I still owed him more, Bush tax cuts be damned. Nearly enough to wipe out the ol’ checking account balance. Not that bad really, but not exactly a great way to get you in a good frame of mind, particularly when you are exhausted and ready to crash.

I woke up in the morning to my son’s usual antics, although he was particularly fixated on a pair of his shoes that had been misplaced over the weekend. He’s a clothes horse (yeah, definitely didn’t get that from me), so not being able to wear the preferred pair of shoes to school is a crisis roughly as significant as when the Soviets tried to sneak some missiles in to Cuba. Fortunately, I managed to find the shoes hiding in the last place I’d ever have thought to look for them, so we didn’t have to nuke Russia. That crisis had put me behind schedule, but I’d almost made it out the door when the phone rang. Stupidly, I answered it. That’s when it became clear that this was not going to be a good day….

It was the collections department for the Pottery Barn. Apparently I’d applied for a Pottery Barn credit card this past October, and then promptly ordered over $3,000 worth of Pottery Barn merchandise to be delivered to some place in Gardena. Now, I have never ordered anything from Pottery Barn. My wife certainly has, but frankly she is more than frugal enough that she’d probably have a fit before ordering that much stuff from them. Beyond that, the Gardena address was the dead give away that this was a case of fraud. The nerve racking bit was that whoever ordered the card clearly had some personal information, so this wasn’t a case of mistaken identity, but rather a case of identity theft. The rest of my afternoon was spent unravelling the Kafkaesque world of identity management, which I’ll write about in more detail once I’ve got my head fully wrapped around it.

My wife was tied up in meetings today, so she came home late and exhausted, and my son was in a fussy mood too. While he’s mostly over the horrid period that was our mid-year crisis (terrible twos be damned, as far as I’m concerned it’s a cake walk compared to 3.5), he does seem to be regressing on a few points, the end result being me having to get him to clean up his mess while trying to cook dinner, feed the dogs, and a few other tasks. I can’t complain too much about this part of my day, because I’m all but certain this is what my wife typically experiences during the hour or more before I get home each day.

After surviving dinner, we slogged through the nighttime routine, and all of us were starting to drift off to sleep… Then my son woke up, and promptly vomitted all over his bed. We scrambled him in to the bathroom as quickly as we could. There was enough stuff in his stomach that despite getting a lot on the bed there was more to spread all over the bathtub. Lovely. “Daddy, I don’t like throwing up.” Yeah, me too kid, me too.

So much for getting to sleep early.

The good news is the day is over, and we survived it almost entirely intact. Here’s to a new day, with less drama.

Free Trees

Christopher Smith — Sat, 12 Apr 2008 10:27:00 -0700

Your tax dollars at work.

Apparently, you can get free trees through the LA DWP. It is all part of the Million Trees LA initiative. I feel like an idiot for paying a gardener for the trees he installed on my property…

The Money Squeeze Comes Home To Roost

Christopher Smith — Thu, 10 Apr 2008 09:55:00 -0700

I got one of these “nice” little notices from WaMu as well. I had some extra cash that I’d need at a later date, but in the meantime was sitting around earning interest at some pathetic rate, so I thought I’d put it in to my HELOC and then grab the money when I needed it. In retrospect this was kind of stupid, as HELOCs specifically have provisions for lowering their limits if housing prices decline and well…. housing prices have been declining if you haven’t noticed. I guess I should consider myself lucky for not getting an overlimit fee.

Anyway, I’m posting this as a public service announcement.

A Mortgage Proposal

Christopher Smith — Tue, 01 Apr 2008 09:23:00 -0700

It is a melancholy object to those, who comb through the financial pages of this country or the world, when they see the balance sheets of our great financial institutions covered in mortgage backed securities, worth little more than rags as nobody wants them, representing thirty, forty, even sixty times equity. These financial institutions, instead of being able to lend money for their honest livelihood, are force to employ all their time in strolling to beg for capital in order to buffer the massive losses from these fraudulently valued securities. Securities who, when they mature, either default for want of property value, or end up aiding foreign sovereign funds in acquiring the core of our economy.

I think we all agree, that the prodigious amount of MBS’s weighing down our the balance sheets of our financial institutions is, in the present deplorable state of our economy, a very great additional grievance; and therefore whoever could find out a fair, cheap, and easy method of making them useful financial instruments of the economy would deserve so well of the public, as to have their statue set up for a preserver of the economy.

But my intention is very far from being confined to provide only for the MBS’s of professed near-bankrupt financial institutions: it is of a much great extend, and shall take in the whole number of subprime mortgages, who are born of financial institutions clearly not able to back them, as those who demand tax payer charity on Wall Street.

As to my own part, having turned my thoughts for many months, upon this important subject, and maturely weighed the several schemes of our projectors, I have always found them grossly mistaken in their computation. It is true, an MBS just dropped on the market, may be supported initially by short term loans form the Fed, with little other nourishment: at most not above the value of the paper they are printed on, which the financial institutions may certainly get, or the value in scraps, by their lawful occupation of begging the Fed for money; and it is exactly at the end of this period that I propose to provide for them in such a manner, as instead of being a charge upon their financial institutions, or the economy as a whole, or wanting a real valuation fo rthe rest of their term, they shall, on the contrary contribute to the rebuilding of our economy.

There is likewise another great advantage in my scheme, that it will prevent those voluntary write offs, and that horrid practice of institutions declaring bankruptcy, alas! too frequent among us, sacrificing the future value of these innocent MBS’s. I doubt, more to avoid the forensic accounting than the shame, which would move tears and pity in the most savage and inhuman breast.

The number of trillions in this economy usually reckoned thirteen trillion, of these I calculate there may be about one trillion who are MBS’s, from which I subtract thirty billion, who are sure to mature without default, (although I apprehend there cannot be so many, under the present distress of the economy), but this being granted, there will remain nine hundred and seventy billion in at risk MBS’s. I again subtract thirty billion, for those MBS’s which will be rescued by earnest politicians playing election year politics with tax payer’s money. There only remain nine hundred and forty billion MBS’s born of overinflated mortgage valuations, incomes and credit scores. The question therefore is, “How this number shall be addressed, and cashed out?” which, as I have already said, under the present situation of affairs, is utterly impossible by all the methods hitherto proposed. For we can neither employ them to continue to inflate property values; we neither build houses, nor develop existing property; they can very seldom pick up value when some idiot stubbornly continues to pay their underwater mortgage. As I have been informed by a principal gentleman in the county of Los Angeles, who protested to me, that he never knew above one or two instances under the age of six, even in a part of the country so renowned for idiocy and inflated property values.

I am assured by our financial intelligentsia, that an MBS is no saleable commodity, and even when they come to this age, they will not yield above three percent or three and a half percent at most, on the exchange; which cannot turn to account either to the lenders of the economy, the charge of consulting fees and executive bonuses having been at least four times that value.

I shall now therefore humbly propose my own thoughts, which I hope will not be liable to the least objection.

I have been assured by a very knowing consultant, that asset-backed securities are a most wondrous and secure source of revenue, whether WAM or WAC; and I make no doubt that it will equally serve as a retirement investment or college fund.

I do therefore humbly offer it to public consideration, that of the nine hundred and forty billion in questionable MBS’s, already computed, we reserve two hundred billion for social security and medicare funding, wherefore only one fourth part need be worth something in the next ten years, which is more than we can ever hope to get from our own government’s budget. The remaining seven hundred and forty billion at fiscal year end, be offered in lieu of cash or stock as compensation to our astute financial leaders for their services. Always advising packagers to include the riskiest, most ridiculous mortgages in the securities. Indeed, I recommend we, by force if necessary, exchange these securities for all the cash and assets which said leaders have not nailed down.

I grant that these securities are difficult to value and understand, and therefore very proper for financial CEO’s and consultants who, as they have already devoured most of the solvency of our money supply, seem to have the best title to the MBS’s.

Insolvent MBS’s will be in season throughout the year, but more plentiful during December, and a little before and after; for we are told by a mortgage broker, an eminent real estate salesman, the financial institutions are most desperate to run up the books during the holidays.

I have already computed the charge of changing the title on the securities to be about two cents per page; and I believe no gentleman would repine to give a dime for the carcass of a good, horribly mismanaged mortgage.

Those who are less innovative (as I must confess the times require) may flea the MBS’s; the paper of which, artfully folded, will make admirable hats, shirts, or summer boots for fine gentlemen or ladies.

As to our Wall Street, shambles may be appointed for this purpose, in the most convenient parts of it, and liquidators we may be assured will not be wanting; although I rather recommend acquiring the MBS’s before bankruptcy, and dressing them up with fresh paint, as we do with houses when selling them.

A very worth person, a true lover of this unregulated market, and whose virtues I highly esteem, was lately pleased, in discoursing on this matter, to offer a refinement upon my scheme. He said, that many leaders of this financial market, having of late leveraged their own companies in to the ground and no longer having any assets of value, might well be in need of their own loans from the very financial institutions they have so imperiled.

And so, the wondrous power of an unregulated capitalist market, guided by the desperately motivated genius of our most vaunted financial geniuses, shall be saved. Having their entire net worth tied in MBS’s shall motivate them to steer the economy through to the point where they are again worth something more than as an implement to wipe one’s arse, and at said time their desperate need for liquidity will encourage them to find ways for our financial institutions to continue fund loans for new, high risk loans to customers with poor prospects and limited assets.

Many other advantages might be enumerated. For instance, the addition of some thousand new borrowers to the Manhattan area may increase the availability of payday loan retailers in the financial district. But this, and many others, I omit, being studious of brevity.

Supposing that one thousand financiers in Manhattan would be constant customers of high interest loans and credit card companies, besides others who might have it at merry meetings, particularly at weddings and christenings, I compute that Manhattan would add annually about twenty billion in unsecured loans, and the rest of the economy another twenty billion.

I can think of no one objection, that will possibly be raised against this proposal, unless it should be argued, that the number of people with savings will be thereby much lessened in the economy. This I frely own, and ‘twas indeed one principle design in offering it to the world. I desire the reader will observe, that I calculate my remedy for this one industry: investment banks, and for no other that ever was, is or, I think, ever can be upon earth. Therefore let no man talk to me of other expedients: of taxing any capital gains from MBS’s as income, of providing these financial leaders with neither limo nor cellphone, except what they can sell their bodies for themselves, of utterly rejecting the notion of unregulated businesses reselling debts so that those who know the quality of the debt retain no responsibility for it, of insisting that those who are rewarded for taking successful risks with the core components of our economy be equally punished for those risks which prove unsuccessful, of suggesting that the wealthy who profited obscenely from the free flow of money ought to bear the burden of its consequences, of teaching investment banking wizards that complexity that obfuscates securities is not a virtue. Last, of putting a spirit of honestly, industry, and skill into our investment bankers, who, if a resolution could now be taken to buy the Fed’s paper at discounted prices, would immediately unit to cheat and exact upon us in the price, the measure and the goodness, nor could ever yet be brought to make fair proposal of just dealing, though often and earnestly invited to it.

Therefore I repeat, let no man talk to me of these and the like expedients, ‘till he hath at least some glympse of hope, that there will ever be some hearty and sincere attempt to put them into practice.

But, as to myself, having been wearied out for many years with offering vain, idle, visionary thoughts, and at length utterly despairing of success, I fortunately fell upon this proposal, which, as it is wholly new, so it hath something solid and real, of no expense and little trouble, full in our own power and whereby we can incur no danger of disobliging borrowers. For this kind of commodity will not bear exportation, and MBS’s being of no legal tender or consistent value, to admit a long continuance in single family homes, although perhaps I could name a country, which would be glad to buy up the land of our whole nation without them.

After all, I am not so violently bent upon my own opinion, as to reject any offer, proposed by wise men, which shall be found equally innocent, cheap, easy, and effectual. But before something of that kind shall be advanced in contradiction to my scheme and offering a better, I desire the author or authors will be pleased maturely to consider two points. First, As things now stand, how they will be able to find capital and equity for our billions of useless MBS’s. And Secondly, there being around ten million of creatures in humane figure throught this country, whose whole mortgage valuations against the values of their homes, would leave them in debt one trillion dollars, adding those who are now beggars by profession, to the bulk of farmers, retirees, and small business owners, with their families, who are beggars in effect; I desire those politicians who dislike my overture, and may perhaps be so bold to attempt n answer, that they will first ask the owners of these MSB’s, whether they would not at this day think it a great happiness to have been sold for cash, in the manner I prescribe, and thereby have avoided such a perpetual scene of misfortunes, as they have since gone through, by the oppression of investment bankers, the impossibility of paying the mortgage after introductory rates expire, with neither house nor clothes to cover them from the inclemencies of the weather, and the most inevitable prospect of intailing the like, or greater miseries upon their breed forever.

I profess, in the sincerity of my heart, that I have not the least personal interest in endeavoring to promote this necessary work, having no other motive than the public good of my country and the world economy, by advancing our financial markets, providing liquidity for MBS’s, relieving the rich, and giving some pleasure to foreign investors. I have no MBS’s, by which I can propose to get a single penny; the closest being some bonds in my 401(k), and my wife’s IRA.

With countless apologies to Jonathan Swift.