Death by Debt by ~jessiechrist

I recently stumbled upon the exact figures of US Debt to the Penny which as of a second ago indicated that public debt outstanding was $11,043,588,980,678.90. The latest monthly report is available here. I was very surprised to see we still had such debt given this prediction to have the debt paid off by now. The FAQ encourages us, the private citizens, to help pay off this debt with the following statement:

“How do you make a contribution to reduce the debt?

Make your check payable to the Bureau of the Public Debt, and in the memo section, notate that it is a Gift to reduce the Debt Held by the Public. Mail your check to:

Attn Dept G
Bureau Of the Public Debt
P. O. Box 2188
Parkersburg, WV 26106-2188″

I must say that this is not an April fools joke because research a bit further shows that people do make gifts to pay off the debt. However, before you make your contribution, please note this news story which indicates that the bailouts and the various expenditures could total $10.8 trillion.

Also please note that although we are all patriotic citizens who want to pay off this debt (and even if the whole world jumps in to help), this FED report says that there’s only about $8.3 trillion around (M3 is no longer published) and that money is created from around $2 trillion (soon to be $3 trillion) of reserves (interestingly we have only about $900 billion cash out there). If you know how the total debt can be paid off with all of the outstanding money, please help me understand this.

I also cannot figure out if the gifts to pay of the debt count as charitable donations for tax deduction purposes.

Americans are very smart people. I believe I have just understood why they choose to spend instead of saving.

Lenin by ~Belotaurus

A sense of worry about the many negative unintended consequences of recent actions has come over me. Perhaps it has something to do with receiving “healthy” doses of government propaganda during my ten years in the Soviet Armenian school system. I can still remember the brain-cleansing we had to undergo about how Comrade Lenin loved children and how Comrade Stalin also loved children and how many cubic tons of iron ore were required to meet the five year plan of the… In the name of the taxpayer much change is being proposed. I thought corporations also pay taxes. Perhaps, it is the collapse of the Soviet Union which taught me so many lessons. Even today, I remember vividly the day when we heard about the massacres in Sumgait in February of 1988. In my memory, this was the event that sparked the collapse of a dark era started by the events of 1917.

It seems that people forget that to grow anything meaningful in a garden, the soil must be rich with humus and at the right acidity. It seems they forget that once something is planted that the ground and the roots should not be disturbed. What business does Congress have in passing a 90% tax on anything? Given things stay roughly the same, I am sure the economy will get better sooner or later. The challenge right now is that nothing is a given.

For people who trade via systems, I have a question. At which point does one decide to:

1. modify the system (and to what degree and based on what)?
2. discard the system (and why)?
3. continue relying on the system (and for how long); if such a system is producing losing trades more recently but has worked fine for a long time (definition of time scales not relevant)?

Perhaps the answer contains clues regarding our recent government actions (and market reactions) where the scale of the system and the magnitude of its impact is great. The problem is further complicated by control over one’s actions but lack of control over [negative] consequences of those actions in human systems.

The second question that does not leave me alone is whether a game of chess (or any other game) can be won if after every few moves, the game rules are modified. Does the player quickly adjust and remain focused on winning the game according to the new rules (“queen can only move three squares at a time” for example) or does the focus shift on guessing what the next set of rule changes may be? After a few sets of changes and corresponding adjustments, does the player begin to suspect the rule maker in “supporting” the other side?

Wisdom by ~ectrhoi

Daily Speculations is a blog mainly about the markets but hidden under the market context there are very interesting experiences, lessons, and thoughts about life in general. I have recently joined the discussion and hope to add my modest contribution (you can find what I have said so far by clicking on Legacy Daily in the list of the names on the left).

The wonderful human qualities that come across in the various posts include among others curiousity, humble acceptance of one’s own limits, celebration of knowledge and experimentation, respect for others and their words, separation of issues from people, recognition that the whole is greater than the sum of the parts, belief in good human qualities, and passion for freedoms. Expressed points are often enhanced by people chiming in with their perspectives and sometimes with their disagreements.

Right next to the rubble of the Internet garbage there are sometimes jewels that sparkle out in the open. It is up to us to seek them. I cannot help but remember the very first sentence ever written when the current Armenian alphabet was created around year 400: “To know wisdom and instruction; to perceive the words of understanding;” (Proverbs 1:2). Having said this I feel compelled to include a small paragraph from Proverbs 1:

“20 Wisdom calls aloud in the street, she raises her voice in the public squares; 21 at the head of the noisy streets she cries out, in the gateways of the city she makes her speech: 22 “How long will you simple ones love your simple ways? How long will mockers delight in mockery and fools hate knowledge? 23 If you had responded to my rebuke, I would have poured out my heart to you and made my thoughts known to you. 24 But since you rejected me when I called and no one gave heed when I stretched out my hand, 25 since you ignored all my advice and would not accept my rebuke, 26 I in turn will laugh at your disaster; I will mock when calamity overtakes you– 27 when calamity overtakes you like a storm, when disaster sweeps over you like a whirlwind, when distress and trouble overwhelm you. 28 “Then they will call to me but I will not answer; they will look for me but will not find me. 29 Since they hated knowledge and did not choose to fear the Lord, 30 since they would not accept my advice and spurned my rebuke, 31 they will eat the fruit of their ways and be filled with the fruit of their schemes. 32 For the waywardness of the simple will kill them, and the complacency of fools will destroy them; 33 but whoever listens to me will live in safety and be at ease, without fear of harm.”

Ecclesiastes

1

1 The words of the Teacher, son of David, king in Jerusalem: 2 “Meaningless! Meaningless!” says the Teacher. “Utterly meaningless! Everything is meaningless.” 3 What does man gain from all his labor at which he toils under the sun? 4 Generations come and generations go, but the earth remains forever. 5 The sun rises and the sun sets, and hurries back to where it rises. 6 The wind blows to the south and turns to the north; round and round it goes, ever returning on its course. 7 All streams flow into the sea, yet the sea is never full. To the place the streams come from, there they return again. 8 All things are wearisome, more than one can say. The eye never has enough of seeing, nor the ear its fill of hearing. 9 What has been will be again, what has been done will be done again; there is nothing new under the sun. 10 Is there anything of which one can say, “Look! This is something new”? It was here already, long ago; it was here before our time. 11 There is no remembrance of men of old, and even those who are yet to come will not be remembered by those who follow. 12 I, the Teacher, was king over Israel in Jerusalem. 13 I devoted myself to study and to explore by wisdom all that is done under heaven. What a heavy burden God has laid on men! 14 I have seen all the things that are done under the sun; all of them are meaningless, a chasing after the wind. 15 What is twisted cannot be straightened; what is lacking cannot be counted. 16 I thought to myself, “Look, I have grown and increased in wisdom more than anyone who has ruled over Jerusalem before me; I have experienced much of wisdom and knowledge.” 17 Then I applied myself to the understanding of wisdom, and also of madness and folly, but I learned that this, too, is a chasing after the wind. 18 For with much wisdom comes much sorrow; the more knowledge, the more grief.

2

1 I thought in my heart, “Come now, I will test you with pleasure to find out what is good.” But that also proved to be meaningless. 2 “Laughter,” I said, “is foolish. And what does pleasure accomplish?” 3 I tried cheering myself with wine, and embracing folly–my mind still guiding me with wisdom. I wanted to see what was worthwhile for men to do under heaven during the few days of their lives. 4 I undertook great projects: I built houses for myself and planted vineyards. 5 I made gardens and parks and planted all kinds of fruit trees in them. 6 I made reservoirs to water groves of flourishing trees. 7 I bought male and female slaves and had other slaves who were born in my house. I also owned more herds and flocks than anyone in Jerusalem before me. 8 I amassed silver and gold for myself, and the treasure of kings and provinces. I acquired men and women singers, and a harem as well–the delights of the heart of man. 9 I became greater by far than anyone in Jerusalem before me. In all this my wisdom stayed with me. 10 I denied myself nothing my eyes desired; I refused my heart no pleasure. My heart took delight in all my work, and this was the reward for all my labor. 11 Yet when I surveyed all that my hands had done and what I had toiled to achieve, everything was meaningless, a chasing after the wind; nothing was gained under the sun. 12 Then I turned my thoughts to consider wisdom, and also madness and folly. What more can the king’s successor do than what has already been done? 13 I saw that wisdom is better than folly, just as light is better than darkness. 14 The wise man has eyes in his head, while the fool walks in the darkness; but I came to realize that the same fate overtakes them both. 15 Then I thought in my heart, “The fate of the fool will overtake me also. What then do I gain by being wise?” I said in my heart, “This too is meaningless.” 16 For the wise man, like the fool, will not be long remembered; in days to come both will be forgotten. Like the fool, the wise man too must die! 17 So I hated life, because the work that is done under the sun was grievous to me. All of it is meaningless, a chasing after the wind. 18 I hated all the things I had toiled for under the sun, because I must leave them to the one who comes after me. 19 And who knows whether he will be a wise man or a fool? Yet he will have control over all the work into which I have poured my effort and skill under the sun. This too is meaningless. 20 So my heart began to despair over all my toilsome labor under the sun. 21 For a man may do his work with wisdom, knowledge and skill, and then he must leave all he owns to someone who has not worked for it. This too is meaningless and a great misfortune. 22 What does a man get for all the toil and anxious striving with which he labors under the sun? 23 All his days his work is pain and grief; even at night his mind does not rest. This too is meaningless. 24 A man can do nothing better than to eat and drink and find satisfaction in his work. This too, I see, is from the hand of God, 25 for without him, who can eat or find enjoyment? 26 To the man who pleases him, God gives wisdom, knowledge and happiness, but to the sinner he gives the task of gathering and storing up wealth to hand it over to the one who pleases God. This too is meaningless, a chasing after the wind.

3

1 There is a time for everything, and a season for every activity under heaven: 2 a time to be born and a time to die, a time to plant and a time to uproot, 3 a time to kill and a time to heal, a time to tear down and a time to build, 4 a time to weep and a time to laugh, a time to mourn and a time to dance, 5 a time to scatter stones and a time to gather them, a time to embrace and a time to refrain, 6 a time to search and a time to give up, a time to keep and a time to throw away, 7 a time to tear and a time to mend, a time to be silent and a time to speak, 8 a time to love and a time to hate, a time for war and a time for peace. 9 What does the worker gain from his toil? 10 I have seen the burden God has laid on men. 11 He has made everything beautiful in its time. He has also set eternity in the hearts of men; yet they cannot fathom what God has done from beginning to end. 12 I know that there is nothing better for men than to be happy and do good while they live. 13 That everyone may eat and drink, and find satisfaction in all his toil–this is the gift of God. 14 I know that everything God does will endure forever; nothing can be added to it and nothing taken from it. God does it so that men will revere him. 15 Whatever is has already been, and what will be has been before; and God will call the past to account. 16 And I saw something else under the sun: In the place of judgment–wickedness was there, in the place of justice–wickedness was there. 17 I thought in my heart, “God will bring to judgment both the righteous and the wicked, for there will be a time for every activity, a time for every deed.” 18 I also thought, “As for men, God tests them so that they may see that they are like the animals. 19 Man’s fate is like that of the animals; the same fate awaits them both: As one dies, so dies the other. All have the same breath; man has no advantage over the animal. Everything is meaningless. 20 All go to the same place; all come from dust, and to dust all return. 21 Who knows if the spirit of man rises upward and if the spirit of the animal goes down into the earth?” 22 So I saw that there is nothing better for a man than to enjoy his work, because that is his lot. For who can bring him to see what will happen after him?

4

1 Again I looked and saw all the oppression that was taking place under the sun: I saw the tears of the oppressed– and they have no comforter; power was on the side of their oppressors– and they have no comforter. 2 And I declared that the dead, who had already died, are happier than the living, who are still alive. 3 But better than both is he who has not yet been, who has not seen the evil that is done under the sun. 4 And I saw that all labor and all achievement spring from man’s envy of his neighbor. This too is meaningless, a chasing after the wind. 5 The fool folds his hands and ruins himself. 6 Better one handful with tranquillity than two handfuls with toil and chasing after the wind. 7 Again I saw something meaningless under the sun: 8 There was a man all alone; he had neither son nor brother. There was no end to his toil, yet his eyes were not content with his wealth. “For whom am I toiling,” he asked, “and why am I depriving myself of enjoyment?” This too is meaningless– a miserable business! 9 Two are better than one, because they have a good return for their work: 10 If one falls down, his friend can help him up. But pity the man who falls and has no one to help him up! 11 Also, if two lie down together, they will keep warm. But how can one keep warm alone? 12 Though one may be overpowered, two can defend themselves. A cord of three strands is not quickly broken. 13 Better a poor but wise youth than an old but foolish king who no longer knows how to take warning. 14 The youth may have come from prison to the kingship, or he may have been born in poverty within his kingdom. 15 I saw that all who lived and walked under the sun followed the youth, the king’s successor. 16 There was no end to all the people who were before them. But those who came later were not pleased with the successor. This too is meaningless, a chasing after the wind.

5

1 Guard your steps when you go to the house of God. Go near to listen rather than to offer the sacrifice of fools, who do not know that they do wrong. 2 Do not be quick with your mouth, do not be hasty in your heart to utter anything before God. God is in heaven and you are on earth, so let your words be few. 3 As a dream comes when there are many cares, so the speech of a fool when there are many words. 4 When you make a vow to God, do not delay in fulfilling it. He has no pleasure in fools; fulfill your vow. 5 It is better not to vow than to make a vow and not fulfill it. 6 Do not let your mouth lead you into sin. And do not protest to the temple messenger, “My vow was a mistake.” Why should God be angry at what you say and destroy the work of your hands? 7 Much dreaming and many words are meaningless. Therefore stand in awe of God. 8 If you see the poor oppressed in a district, and justice and rights denied, do not be surprised at such things; for one official is eyed by a higher one, and over them both are others higher still. 9 The increase from the land is taken by all; the king himself profits from the fields. 10 Whoever loves money never has money enough; whoever loves wealth is never satisfied with his income. This too is meaningless. 11 As goods increase, so do those who consume them. And what benefit are they to the owner except to feast his eyes on them? 12 The sleep of a laborer is sweet, whether he eats little or much, but the abundance of a rich man permits him no sleep. 13 I have seen a grievous evil under the sun: wealth hoarded to the harm of its owner, 14 or wealth lost through some misfortune, so that when he has a son there is nothing left for him. 15 Naked a man comes from his mother’s womb, and as he comes, so he departs. He takes nothing from his labor that he can carry in his hand. 16 This too is a grievous evil: As a man comes, so he departs, and what does he gain, since he toils for the wind? 17 All his days he eats in darkness, with great frustration, affliction and anger. 18 Then I realized that it is good and proper for a man to eat and drink, and to find satisfaction in his toilsome labor under the sun during the few days of life God has given him–for this is his lot. 19 Moreover, when God gives any man wealth and possessions, and enables him to enjoy them, to accept his lot and be happy in his work–this is a gift of God. 20 He seldom reflects on the days of his life, because God keeps him occupied with gladness of heart.

6

1 I have seen another evil under the sun, and it weighs heavily on men: 2 God gives a man wealth, possessions and honor, so that he lacks nothing his heart desires, but God does not enable him to enjoy them, and a stranger enjoys them instead. This is meaningless, a grievous evil. 3 A man may have a hundred children and live many years; yet no matter how long he lives, if he cannot enjoy his prosperity and does not receive proper burial, I say that a stillborn child is better off than he. 4 It comes without meaning, it departs in darkness, and in darkness its name is shrouded. 5 Though it never saw the sun or knew anything, it has more rest than does that man– 6 even if he lives a thousand years twice over but fails to enjoy his prosperity. Do not all go to the same place? 7 All man’s efforts are for his mouth, yet his appetite is never satisfied. 8 What advantage has a wise man over a fool? What does a poor man gain by knowing how to conduct himself before others? 9 Better what the eye sees than the roving of the appetite. This too is meaningless, a chasing after the wind. 10 Whatever exists has already been named, and what man is has been known; no man can contend with one who is stronger than he. 11 The more the words, the less the meaning, and how does that profit anyone? 12 For who knows what is good for a man in life, during the few and meaningless days he passes through like a shadow? Who can tell him what will happen under the sun after he is gone?

7

1 A good name is better than fine perfume, and the day of death better than the day of birth. 2 It is better to go to a house of mourning than to go to a house of feasting, for death is the destiny of every man; the living should take this to heart. 3 Sorrow is better than laughter, because a sad face is good for the heart. 4 The heart of the wise is in the house of mourning, but the heart of fools is in the house of pleasure. 5 It is better to heed a wise man’s rebuke than to listen to the song of fools. 6 Like the crackling of thorns under the pot, so is the laughter of fools. This too is meaningless. 7 Extortion turns a wise man into a fool, and a bribe corrupts the heart. 8 The end of a matter is better than its beginning, and patience is better than pride. 9 Do not be quickly provoked in your spirit, for anger resides in the lap of fools. 10 Do not say, “Why were the old days better than these?” For it is not wise to ask such questions. 11 Wisdom, like an inheritance, is a good thing and benefits those who see the sun. 12 Wisdom is a shelter as money is a shelter, but the advantage of knowledge is this: that wisdom preserves the life of its possessor. 13 Consider what God has done: Who can straighten what he has made crooked? 14 When times are good, be happy; but when times are bad, consider: God has made the one as well as the other. Therefore, a man cannot discover anything about his future. 15 In this meaningless life of mine I have seen both of these: a righteous man perishing in his righteousness, and a wicked man living long in his wickedness. 16 Do not be overrighteous, neither be overwise– why destroy yourself? 17 Do not be overwicked, and do not be a fool– why die before your time? 18 It is good to grasp the one and not let go of the other. The man who fears God will avoid all extremes. 19 Wisdom makes one wise man more powerful than ten rulers in a city. 20 There is not a righteous man on earth who does what is right and never sins. 21 Do not pay attention to every word people say, or you may hear your servant cursing you– 22 for you know in your heart that many times you yourself have cursed others. 23 All this I tested by wisdom and I said, “I am determined to be wise”– but this was beyond me. 24 Whatever wisdom may be, it is far off and most profound– who can discover it? 25 So I turned my mind to understand, to investigate and to search out wisdom and the scheme of things and to understand the stupidity of wickedness and the madness of folly. 26 I find more bitter than death the woman who is a snare, whose heart is a trap and whose hands are chains. The man who pleases God will escape her, but the sinner she will ensnare. 27 “Look,” says the Teacher, “this is what I have discovered: “Adding one thing to another to discover the scheme of things– 28 while I was still searching but not finding– I found one upright man among a thousand, but not one upright woman among them all. 29 This only have I found: God made mankind upright, but men have gone in search of many schemes.”

8

1 Who is like the wise man? Who knows the explanation of things? Wisdom brightens a man’s face and changes its hard appearance. 2 Obey the king’s command, I say, because you took an oath before God. 3 Do not be in a hurry to leave the king’s presence. Do not stand up for a bad cause, for he will do whatever he pleases. 4 Since a king’s word is supreme, who can say to him, “What are you doing?” 5 Whoever obeys his command will come to no harm, and the wise heart will know the proper time and procedure. 6 For there is a proper time and procedure for every matter, though a man’s misery weighs heavily upon him. 7 Since no man knows the future, who can tell him what is to come? 8 No man has power over the wind to contain it; so no one has power over the day of his death. As no one is discharged in time of war, so wickedness will not release those who practice it. 9 All this I saw, as I applied my mind to everything done under the sun. There is a time when a man lords it over others to his own hurt. 10 Then too, I saw the wicked buried–those who used to come and go from the holy place and receive praise in the city where they did this. This too is meaningless. 11 When the sentence for a crime is not quickly carried out, the hearts of the people are filled with schemes to do wrong. 12 Although a wicked man commits a hundred crimes and still lives a long time, I know that it will go better with God-fearing men, who are reverent before God. 13 Yet because the wicked do not fear God, it will not go well with them, and their days will not lengthen like a shadow. 14 There is something else meaningless that occurs on earth: righteous men who get what the wicked deserve, and wicked men who get what the righteous deserve. This too, I say, is meaningless. 15 So I commend the enjoyment of life, because nothing is better for a man under the sun than to eat and drink and be glad. Then joy will accompany him in his work all the days of the life God has given him under the sun. 16 When I applied my mind to know wisdom and to observe man’s labor on earth–his eyes not seeing sleep day or night– 17 then I saw all that God has done. No one can comprehend what goes on under the sun. Despite all his efforts to search it out, man cannot discover its meaning. Even if a wise man claims he knows, he cannot really comprehend it.

9

1 So I reflected on all this and concluded that the righteous and the wise and what they do are in God’s hands, but no man knows whether love or hate awaits him. 2 All share a common destiny–the righteous and the wicked, the good and the bad, the clean and the unclean, those who offer sacrifices and those who do not. As it is with the good man, so with the sinner; as it is with those who take oaths, so with those who are afraid to take them. 3 This is the evil in everything that happens under the sun: The same destiny overtakes all. The hearts of men, moreover, are full of evil and there is madness in their hearts while they live, and afterward they join the dead. 4 Anyone who is among the living has hope–even a live dog is better off than a dead lion! 5 For the living know that they will die, but the dead know nothing; they have no further reward, and even the memory of them is forgotten. 6 Their love, their hate and their jealousy have long since vanished; never again will they have a part in anything that happens under the sun. 7 Go, eat your food with gladness, and drink your wine with a joyful heart, for it is now that God favors what you do. 8 Always be clothed in white, and always anoint your head with oil. 9 Enjoy life with your wife, whom you love, all the days of this meaningless life that God has given you under the sun–all your meaningless days. For this is your lot in life and in your toilsome labor under the sun. 10 Whatever your hand finds to do, do it with all your might, for in the grave, where you are going, there is neither working nor planning nor knowledge nor wisdom. 11 I have seen something else under the sun: The race is not to the swift or the battle to the strong, nor does food come to the wise or wealth to the brilliant or favor to the learned; but time and chance happen to them all. 12 Moreover, no man knows when his hour will come: As fish are caught in a cruel net, or birds are taken in a snare, so men are trapped by evil times that fall unexpectedly upon them. 13 I also saw under the sun this example of wisdom that greatly impressed me: 14 There was once a small city with only a few people in it. And a powerful king came against it, surrounded it and built huge siegeworks against it. 15 Now there lived in that city a man poor but wise, and he saved the city by his wisdom. But nobody remembered that poor man. 16 So I said, “Wisdom is better than strength.” But the poor man’s wisdom is despised, and his words are no longer heeded. 17 The quiet words of the wise are more to be heeded than the shouts of a ruler of fools. 18 Wisdom is better than weapons of war, but one sinner destroys much good.

10

1 As dead flies give perfume a bad smell, so a little folly outweighs wisdom and honor. 2 The heart of the wise inclines to the right, but the heart of the fool to the left. 3 Even as he walks along the road, the fool lacks sense and shows everyone how stupid he is. 4 If a ruler’s anger rises against you, do not leave your post; calmness can lay great errors to rest. 5 There is an evil I have seen under the sun, the sort of error that arises from a ruler: 6 Fools are put in many high positions, while the rich occupy the low ones. 7 I have seen slaves on horseback, while princes go on foot like slaves. 8 Whoever digs a pit may fall into it; whoever breaks through a wall may be bitten by a snake. 9 Whoever quarries stones may be injured by them; whoever splits logs may be endangered by them. 10 If the ax is dull and its edge unsharpened, more strength is needed but skill will bring success. 11 If a snake bites before it is charmed, there is no profit for the charmer. 12 Words from a wise man’s mouth are gracious, but a fool is consumed by his own lips. 13 At the beginning his words are folly; at the end they are wicked madness– 14 and the fool multiplies words. 15 A fool’s work wearies him; he does not know the way to town. 16 Woe to you, O land whose king was a servant and whose princes feast in the morning. 17 Blessed are you, O land whose king is of noble birth and whose princes eat at a proper time– for strength and not for drunkenness. 18 If a man is lazy, the rafters sag; if his hands are idle, the house leaks. 19 A feast is made for laughter, and wine makes life merry, but money is the answer for everything. 20 Do not revile the king even in your thoughts, or curse the rich in your bedroom, because a bird of the air may carry your words, and a bird on the wing may report what you say.

11

1 Cast your bread upon the waters, for after many days you will find it again. 2 Give portions to seven, yes to eight, for you do not know what disaster may come upon the land. 3 If clouds are full of water, they pour rain upon the earth. Whether a tree falls to the south or to the north, in the place where it falls, there will it lie. 4 Whoever watches the wind will not plant; whoever looks at the clouds will not reap. 5 As you do not know the path of the wind, or how the body is formed in a mother’s womb, so you cannot understand the work of God, the Maker of all things. 6 Sow your seed in the morning, and at evening let not your hands be idle, for you do not know which will succeed, whether this or that, or whether both will do equally well. 7 Light is sweet, and it pleases the eyes to see the sun. 8 However many years a man may live, let him enjoy them all. But let him remember the days of darkness, for they will be many. Everything to come is meaningless. 9 Be happy, young man, while you are young, and let your heart give you joy in the days of your youth. Follow the ways of your heart and whatever your eyes see, but know that for all these things God will bring you to judgment. 10 So then, banish anxiety from your heart and cast off the troubles of your body, for youth and vigor are meaningless.

12

1 Remember your Creator in the days of your youth, before the days of trouble come and the years approach when you will say, “I find no pleasure in them”– 2 before the sun and the light and the moon and the stars grow dark, and the clouds return after the rain; 3 when the keepers of the house tremble, and the strong men stoop, when the grinders cease because they are few, and those looking through the windows grow dim; 4 when the doors to the street are closed and the sound of grinding fades; when men rise up at the sound of birds, but all their songs grow faint; 5 when men are afraid of heights and of dangers in the streets; when the almond tree blossoms and the grasshopper drags himself along and desire no longer is stirred. Then man goes to his eternal home and mourners go about the streets. 6 Remember him–before the silver cord is severed, or the golden bowl is broken; before the pitcher is shattered at the spring, or the wheel broken at the well, 7 and the dust returns to the ground it came from, and the spirit returns to God who gave it. 8 “Meaningless! Meaningless!” says the Teacher. “Everything is meaningless!” 9 Not only was the Teacher wise, but also he imparted knowledge to the people. He pondered and searched out and set in order many proverbs. 10 The Teacher searched to find just the right words, and what he wrote was upright and true. 11 The words of the wise are like goads, their collected sayings like firmly embedded nails–given by one Shepherd. 12 Be warned, my son, of anything in addition to them. Of making many books there is no end, and much study wearies the body. 13 Now all has been heard; here is the conclusion of the matter: Fear God and keep his commandments, for this is the whole duty of man. 14 For God will bring every deed into judgment, including every hidden thing, whether it is good or evil.

The Falling Capital by ~Latuff2

My friend sent me a funny link about CNBC that brought forward a few thoughts about assets. What I am about to write you can and should safely ignore as it is likely to have little to no impact on your life. If you know me, you already know I don’t know anything and carry my cross like everyone else in the world. If you don’t even know me, how can you take what I say as anything of value, anything to use as basis for even a simple decision. Please apply this test to all the noise that comes at you at hundred miles per hour from all the sources of your information. It is actually fun to find the hidden assumptions, the flaws in arguments, the hard-to-notice issues with the opinions given out so freely by everyone. Find issues with what I say, and I’ll thank you.

I only watch CNBC, keep an eye on the papers, and the Internet to gather clues about public feelings. Don Chu’s eloquent points about the fractal nature of humanity come to mind here because just as we have good days and bad days, so does the society. Our aggregate public feelings appear in media. As an example, jokes are only funny because we can relate to them. These feelings in today’s complex and constantly changing world cannot be internalized without one keeping both eyes and ears open and watching and listening on all frequencies. Often the clues are subtle, insignificant and sometimes I cannot even verbalize what I’m “hearing” but I don’t stop listening. My only limitation is time. CNBC plays its vital role in filling in the picture of public sentiment. All of the networks cater to their audiences so well, that we can easily approximate the mood of the audience by simply keeping an eye on the media catering to that audience.

Why did I think about assets? Actually, I don’t like that word at all. The reason is debt. Assets can be acquired with debt. It is not difficult to have significant assets balanced by significant debt. I like the word capital much better. Much of the media, your neighbors, everything you see screams “assets.” Assets are visible and quantifiable. Debt is a hidden, private matter. Of the various definitions of capital, I like this one “any form of wealth employed or capable of being employed in the production of more wealth.” This concept is too basic, I agree. However, often the very basic and simple ones contain more energy than complexities (who would have thought tiny atoms could produce so much energy).

The first challenge is the preservation of capital which encompasses everything we do to make sure that whatever capital we have does not turn into nothing as a result of everything that happens around us. Public sentiment is critical for this because after all the vehicles for storage of capital only work if someone out there is willing to accept them in exchange for something we need. I lived through a period when currency turned into nothing after the collapse of the Soviet Union. Every day I would take the money I earned with my friend and buy something, anything I could buy (cheese, butter, dollars, etc.) because the next day that money would buy less. To contrast that, I was speechless when I visited the Vatican and realized how the Roman Catholic Church had preserved its wealth throughout centuries, changing regimes, wars, and changes in public sentiment. It is a superb lesson in wealth preservation which even includes sovereignty. Contrast that with someone trying to hold on to their property during the gold rush. Keeping in touch with the world and public sentiments is critical for taking the necessary measures ahead of time to protect one’s capital.

The second challenge is employing the capital to produce more wealth. I actually consider this an easier challenge than the preservation of capital but there is nothing easy about this. CNBC and millions of “advisers” are ready to give us that one perfect method that will surely increase our capital. They (referring to the money machine) even convinced a lot of people to borrow someone else’s capital (mortgage or margin put into stock market). They “help us” with enormous amounts of data (real-time quotes, hundreds of statistics, derived metrics, research reports, derivative instruments, etc.), with “education” contrasting investors with speculators (no real difference here), with language (buy and hold, dead cat bounce, MBS, ABS, CDS, etc.), and everything else one would ever “need” to turn capital. The US government wants constant turnover of capital because at every turn increases can be taxed. If capital is not turned (artwork passed from one generation to another), no worries as there are laws to tax the transfer. I still cannot understand how the capital gains are taxed fully but capital losses are only used to offset gains (+$3,000 break). People unfortunately do not often understand what capital is because we sometimes start out with negative capital (student loans, mortgages, etc.). By the time we create enough value to pay off these loans by helping someone else turn their capital, time (our most valuable resource) becomes depleted. CNBC, the mutual fund companies, the government, our friends, this blog, and nothing else in the world can tell you how to preserve and increase your capital. Once this became clear to me, CNBC and all forms of media and information took their proper place in my mind.

Federal Reserve by ~Venar

After years of focusing on nano-economics (too small to call it micro) of my little family, I went on a pleasant trip down the macro-economics lane today. At the end of it I realized that I must have slept through the undergraduate class on Federal Reserve monetizing the nation’s debt because I was “surprised” to see almost a trillion dollars of Treasury obligations on the asset side of the Fed’s balance sheet. Its Annual Report is about 400 pages but the numbers on page 315 are fascinating when contrasted with the numbers on page 322. This video provides a very basic overview of what money is, how it’s created and destroyed.

These are some simple observations:

1. The dollar is backed by debt obligation of our government – no debt > no dollars.
2. Gold mining could not produce enough gold to sustain the growth we needed giving way to the current system.
3. I understand the home mortgage deduction (and why it’s not a home mortgage full repayment deduction). Mortgages are good things as far as our system is concerned. The bank does not need a foreclosed house because that cannot be used as collateral with the Fed to meet the reserve requirements.
4. All other governments are married to the almighty dollar. For example, Russia had to spend billions of dollars in foreign currency reserves to defend its Ruble.
5. We pay thin air for the natural resources and efforts of other countries (oil from middle east, for example).
6. Our current troubles are in part from bad loans getting in the way of the money multiplier.
7. I would need another lifetime to begin to understand the current and past monetary systems, let alone make recommendations for changes.

In the meantime, I made the following comment in an e-mail yesterday:

I have come to think of money as some kind of a complex score in a game – and not much more. The higher the score, the better the player is at the game. Since the game rules are far out of my reach, I try to waste as few cycles as possible on changes I cannot implement but at least two elements bother me:

1. The devastation brought upon many people who fail in the game (real suffering from game “score” issues)
2. The incredible amounts of time (of our life – the real value which we cannot increase in any way) spent in playing the game for maintaining or increasing our scores

One more element bothers me but I did not mention it. People who are not the best at the game (myself in the list) sometimes feel that they are not good for anything. That could not be farther from the truth. My mother never had or paid attention to money and she was …. again searching for words to represent her true greatness.

When others say that time is money, I think the reverse. Money is time, actually. It’s the effort spent every day on earning a living. Here I have to say I feel bad for seniors who after decades of work got 50% cuts in their retirement accounts in the past year and are considering to continue working longer. They have every right to be mad at the system, the government, the brokers, the cheaters, the fund managers, and everyone else because time is what they have lost. Money can be created, but time cannot be created.

Unfortunately, time cannot be taxed (it would be a form of slavery). Therefore, it is converted to money which is then taxed. As a citizen of this great country, I actually like to pay taxes at all levels of government. The higher the tax bills, the higher our score and the better we’re playing the game. My earlier observation is not about the country but for the world as a whole.

Around the same topic, I must remember my uncles living in a small village where my father grew up. There was one little non-functioning store there at the time. Their basic existence revolved around the bounty of the land and their animals which were loved like family members – no money, no tax, no government, hardly a road, no shopping malls, no technological innovation, no Internet, no computer, no indoor plumbing (in the earlier years), no gym memberships, no stocks or bonds, no fancy cars or elaborate houses, but still a pretty happy life.

fairytale house by ~Siska92

I bought a house for $150,000 eight years ago and had a loan of $120,000. The value of my house increased to $350,000. I took advantage of the situation and refinanced, being a conservative person, only borrowing $280,000 at a favorable 5.5% rate fixed for 30 years paying $1,600 per month for the mortgage and another $400 per month for real estate taxes and insurance. I was conservative and spent the $135,000 of home equity that I took out on improvement to my home (new kitchen, new bathrooms, hardwood floors, finished basement, and a small swimming pool for the little ones). This caused my tax bill to increase by $200 per month due to higher assessments. After a few years, the real estate market crashed and my house is unfortunately now only worth $180,000. I still owe $270,000 and have to pay $2,200 per month to live in “my” house. My choices are a) continue paying the high monthly payment with a giant negative balance sheet or b) rent a place for $1,200 per month, let the bank have the house and start from a clean slate.

I wish the situation was as nice as the above description. Here are a few additional realities:

• All my neighbors got foreclosed and my whole neighborhood has been downgraded whereas before I thought I lived in a decent part of town.
• My town is unable to meet budget demands and has to increase taxes to pay its bills.
• I actually spent the money on Made in China products worth $0 today and a GM vehicle that’s lost a lot of its value instead of home improvements.
• My bank let me borrow up to 100% of equity so I borrowed the full $350,000.
• The loan I got had a variable interest rate and my payments are more than $2,200.
• The $30,000 stock portfolio cushion that I had is now only worth $15,000.
• I am about to lose my job even though I work hard. They say that the company has to cut back because of the economy.
• I also had a credit card balance of $38,000 and student loans of $24,000.
• Even though my wife really loves to shop, we just cannot afford to buy anything any more.
• I had never signed any contracts before buying this house, let alone the sixty thousand mortgage documents they made me sign at the closings.
• I’ve called the bank every month for the last six months asking for help or a way to get me out of this pickle.

What are my choices? I think I better let the bank have the keys, declare bankruptcy if I have to, move out into the $1,200 a month apartment and hope I can find another job so I can pay the rent before the economy gets any worse. How is any of this bull shit they talk about on TV going to help me this month? I voted for Obama to make a change but so far I see more of the same. There is little they can do to make me stay in this house given the reality I am facing.

Saltwater Fish Tank by ~yooki42

U.S. Treasury Secretary Timothy Geithner yesterday unveiled thoughts to improve the US economic situation. The market gave its mark to his appearances but I wanted to share a couple of my thoughts from software development perspective.

No significant software is ever created overnight. The first release takes an enormous amount of effort. In competitive situations, information surrounding the release time frames and content are typically very sensitive. The team usually gets formed along the way. Even if an existing high performance team undertakes a new project, it takes some time to gain expertise in new technologies. These times eat into the project schedules. Even if all technologies are well understood, it takes some time to establish the project and get everyone familiar and following the new processes. As the project forms and begins to progress, the “product” starts to take on a very rough shape. Decisions made earlier can be reversed later in the project but always at a cost. There are always numerous inter-dependencies, many reasons for the project to become delayed or derailed. The scope of the original project often changes based on realities so much that initial documents become almost completely irrelevant in later phases. This is unfortunately an oversimplification of the typical process. Though one would expect the second release to be more streamlined, that release also follows a somewhat similar path for a number of reasons one of which is the omission of key features from the first release.

If comparatively a micro-project like the development of software can have so many variables, complexities, and reasons to fail, how can we expect a gargantuan organization like the Treasury or the Federal Reserve to come up with a “perfect” plan to tackle the fundamental forces behind the current recession. My expectation is that the actions that have been taken and the plans being released and to be announced are incorrect, inadequate, and at best lacking. My main hope is for the government to do no harm. The programs and the funds are very large. Much electricity can be generated by diverting rivers but the same waters can also wash a lot of land. Trillions and billions are being discussed as if those funds will spend themselves automatically. It takes a lot of effort to put a million dollars to work in a small business. It takes a number of people a month or two to close on a loan of $100,000. It takes audit departments and independent accountants weeks to review books of companies with a few billion dollars in annual revenue. What type of accounting is required for a trillion dollars? How many small business loans would 10 billion dollars make? How long would those small business owners need to work to turn that money from a loan into salaries, profits, savings, spending?

I hear some hosts and guests on TV and elsewhere talk about their “expectations” as if they could do a statistically significantly better job had they been appointed to the post of the Treasury Secretary or any meaningful post. Think of the economy at any given date as steady state. Now imagine these “plans” as the initiatives individuals push to improve the steady state. I stress the word “initiatives” and “individuals” because that is what I see and most of us fail to implement average size initiatives, let alone ones to change the steady state of the world’s largest economic machine. My point is that these are not simple tasks. I give much credit to our leaders for their courage and pray that their actions do not result in negative unintended consequences. I do not want them to rush with any plans as “haste makes waste” and waste at this scale could really pollute the fish tank and affect the health of us, the little fish.

SEUSSICAL - Wheelock Family Theatre

A few years ago, my wife implemented a weekly program of getting over a dozen books from the library for the nightly reading with our children. Periodically, she gets a Dr. Seuss book or two which are truly enjoyable.

Past Sunday, we went with our son to a musical called the Seussical at the Wheelock Family Theatre which brought together many of his stories into a very nice performance. I have already mentioned about the importance of exposing children to the arts but in this case the musical impacted me more than it impacted my son (I think). The stress relief that comes from a couple hours of moving out of this world into a world of art, music, or performance cannot be underestimated.

As a side effect, I was reminded to view the world as a theater in a constant performance; and under the influence contributed this to Daily Speculations.

I will conclude with a wish for the key actors on the world stage to not be concerned with their ratings and rewards as much and consider the impact of their performance on us, the participating audience. Their powerful performance will always be rewarded by history’s everlasting applause.