In God We Trust

The basis of all economic systems is trust.

Part of the American myth, that inspires trust, is the American Dream. A sense that life will be better for the next generation, that hard work will be rewarded. And, just as importantly, as we ignore death, we also ignore that wealth often makes mistakes.

Reading the news today can be confusing to follow the path of the sub-prime mortgage crisis. But this crisis is only accidentally about sub-prime mortgages, and is primarily about how greed, and the ability to make a profit, blinded intelligent wealth managers who should understand debt into making a very large bet and losing.

In as simple of terms as possible, because that is all I can understand:

1. Lenders made loans that were not viable
   
   
   
   1. Low introductory rates which borrower could qualify
      
   2. Expensive fees
      
   3. Interest Rates would adjust upward over time
      
   4. Borrowers did not have to prove income/savings
      
   5. Borrowers did not understand the loans
      
   
   
2. Lenders packaged those loans
   
   
   
   1. Took a large group of loans and turned them into an investment contract
      
   2. Sold the contract with promise to pay the interest and principal from the underlying mortgages to the investment contract owner
      
   3. Made a fee/commission on selling the loans
      
   4. Make a fee/commission on servicing the loans
      
   
   
3. Hedge funds purchased the package of loans for the high rate of return
   
   
   
   1. Borrowed money to leverage their investment, used 200 dollars to buy 1000 dollars worth of debt
      
   2. Borrowed money at a rate less than the investment were calculated to return
      
   3. Made an assumption about the value of these bonds
      
   4. Assumed that the loans would start to earn high rate of return over time
      
   
   
4. Some of the homeowners could not pay the underlying mortgages
   
5. Homes that were financed at very high prices suddenly were worth much less
   
6. Hedge funds and Banks stopped trusting each other because underlying investment might be worthless
   

Now all lenders are wary of lending to investors and/or banks because they cannot clearly see whether the bank and investor has the assets and income necessary to service a new debt.

The US Treasury is now looking at ways to bail the system out and re-establish trust. Other companies, like Goldman Sachs, made huge amounts of money trading the bad loans and selling them to others as a great investment, and are now making money betting that those loans will go bad.

The morale of the story is:

1. Caveat Emptor
2. You can't do step 1 if you don't understand what you bought

On the down side, this could be the end of America, politically and economically. We as a country, and population, are highly dependent on debt. No one wants to loan money to anyone right now because they are afraid they won't get paid; and certainly not to us Americans since we are more likely than not to offer up something that is worthless for the money invested.

On the up side, every economic downturn creates opportunities. What those opportunities will be, and who will take advantage of them only time and history will tell. Here's where I should admit I do invest with Warren Buffet.

As a liberal Democrat, it will be interesting to watch as the GOP and Democrats will unite to make sure wealth in this country is protected; and to admire the next scheme that will fleece money from the uneducated and underfunded poor in this country unfolds. This is as American as apple pie.

Too bad Democrats and GOP can't unite about the importance of the Rule of Law.

Headline - Obama not Perfect!

Paul Krugman lashed out at Obama today. Krugman is an economist and columnist whom I respect, and Dr. Krugman, like myself is a staunch liberal. Krugman and I would probably agree that health insurance should be a single, socialized service provided by government for it's people.


But Dr. Krugman and I disagree about Obama, and that is what I'd like to focus on today. Obama is the only choice that I can support in the Democratic primaries, even whle Senator Obama is not a perfect choice.

The reasons not to commit to Obama are almost too many to list:

• He is a sitting US Senator
  
• He is black
  
• He found faith late in life
  
• He relies on charisma and rhetoric
  

Hopefully you get the idea. What many of you may not know unless you've been reading the inside the beltway news, is that only two sitting US Senators ever won a US Presidency. Only one of those Senators is a household name. Obama would actually be better served if soon after IA he retires from the Senate, at least statistically speaking.

Race is also an issue, but again Obama seems to be able to transcend the race issue for now (although the Jesse Helm's of the world are just waiting to pounce). There is a confulgration of events that make race less important: Tiger Woods, Michelle Wie, and the failure of the Southern Strategy to create a GOP majority.

Obama has the following advantages - advantages that attract my vote - even while I may wince a bit at his conservative rhetoric. He

• Understands the power of communication and conversation (like Bill Clinton)
  
• Understands that disagreements are okay (unlike Bush and Hillary)
  
• Understands that America is not perfect
  
• Understands that helping others is the only viable solution
  

He is showing through his organizational skills that he as learned the Howard Dean lessons, and hopefully he will not make the Dean mistakes. He is the liberal voice, even while his rhetoric will infuriate the keepers of the liberal flame.

Rhetoric is important. Mandate will lose you an election, even with GOP approval ratings into the toilet thanks to our well seasoned, well advised team of Cheney and Bush. Mandate scares people, along with the term socialized. Those terms have been defined by the Rush Limbaughs of the world. Let go, Dr. Krugman, let go.

Ideas transcend words, rephrase the problem in how do we help, and suddenly you have a solution conservative, rural America can accept and internalize.

Rhetoric matters. Obama understands that. My advice to Mr. Krugman, become an adviser to Obama, I'm sure he'll listen even while he disagrees. And keep writing those great articles about the importance of economics and politics. You are definitely right about that! The "invisible hand" of the market is amoral. People need help understanding that key phrase.

Denial of Death

Death is a key force in our lives - a force we ignore with almost unfailing regularity.

Many religions are focused around death, whether it is the Egyptian quest for immortality through the preservation of the physical self, or the Christian focus on the promise of eternal life.

J.K. Rowling brought this subject up vividly in the stunning conclusion of her Harry Potter series. Reading her inspired re-telling of the Christ story reminded me of something that always has rankled me about Christianity.

Christ in the gospels has one key reward, one key motivator, the promise of eternal life. Looking back at life around 0 A.D., I can imagine many more promises that would have been more appealing. A promise of freedom from war, a promise of good food, a promise that your children would survive. But instead the key message is always, and essentially, eternal life.

Understanding that promise is key. In the USA and many other places around the world, that understanding is literal. Heaven is a real place. Not on a map, not in the Universe, but none the less as real as any material substance [or digital signal] that I can hold in my hand.

My own faith is certainly a question for me. I believe in the God of Creation, i.e. that the miracle of the existence of Earth, amoebas, biological evolution, and large multi-celled organisms capable of communication inspires within me belief in the existence of a powerful deity. A deity that can take many shapes.

But the state of the body of Christ, the church, is troubling to me. My father devoted his life to God and serving the Church, the body of Christ on Earth. My experience is that the Church is flawed, like all human organizations, and does not seem to have acted in the past or the present as I would expect a divinely inspired organization to act.

For example, the Church has not maintained unity. The Christian Church has broken into hundreds of factions, all of which accept basically one common theological truth, that Christ was the son of God. But they accept very little else. I am certainly not a fan of dogma, or of Thomas Aquinas' contorted logic that supposes change should be avoided because it encourages further changes. But it does seem to me that a clear sign of divine presence would be the ability to work in harmony in the world and with other organizations that believe in Christ. I don't see that harmony in my life, but maybe I'm not looking hard enough.

The Church when mostly unified (as the Catholic Church) committed many egregious sins as a Church, including antisemitism, torture, selling indulgences, slavery, and sexual abuse. The Church has participated in the Jewish Holocaust, and while speaking out as been ineffectual against the force of genocide in th 19th and 20th centuries. Many acts of unspeakable horror were committed in the name of spreading the gospel of Christ to the new world. We have not done well, on the whole, as Christians.

So for me, my journey of faith has become how I answer the following questions about death. Can I believe in Christ, The Holy Spirit, and God even while I do not believe in eternal life for my soul? Can I be a Christian who does not deny death?

News addict

You are like me. You are addicted to news from all sorts of sources:

• 
  New York Times


• Washington Post




• The Fix


• Dan Froomkin


• Paul Kane




• Christian Science Monitor


• BBC


• Economist


• Huffington Post


• Daily Kos

Maybe you are even into the esoteric world of Foreign Policy like:

• The Washington Note
  

I even suspect that you have set up your Personalized Google homepage to aggregate multitude of new sources, technical articles, RSS feeds, and Apple insider info, who hasn't? You may even blog.

But at the end of the day - does this constant inflow of news and information actually provide benefit? And have you asked yourself this question? Are you happier when by some quirk of fate your iphone breaks leaving you stranded in an unconnected world?

I imagine that you, like me, have other interests - photography, music, the arts. You interact in the world

Clearly, being ignorant of the world is not an option, not even a thought. But is the total news immersion that is now possible in this wired world actually a good thing? Does it bring profit? Happiness? Better relationships? Does the constant flow of quotes to friends and families give you strength, to do the things that need to be done?

I'll try to muse on this subject along with the other key topics:

• Death


• Religion


• Politics


• Charles Dickens


• Java programming language

I'll end with a quote written on the board by Gisela Berns at St. John's College on my first day as Freshman, "Man by nature is a political animal". It is a truth that has served me well.

Ciao,

David