Bike: with note by ~plasket

My son rides his bicycle to school on nice days. He got it as a present from his grandparents. One Friday a few weeks ago he had to leave the bike at school overnight. When we went to get it on Saturday, the bicycle was gone. I stood there thinking who would steal a kid’s bike from an elementary school bike rack… but then thought this was a good lesson for all of us to take care of our belongings.

My wife diligently followed up with reports to the school and the town police in case someone spotted the bike. She also posted a description with a number to call in a few areas nearby the school. A couple weeks later, Mr. G., the crossing guard, told her that some forces were at work regarding the bicycle and that he had a good feeling that something good would happen. She thought he meant that someone had an idea where the bike was left.

Another week went by and we received the following e-mail:

“Dear …,

Please bring your son’s bike helmet to school this afternoon.

There is a surprise for him at the bike rack.

The combination is …

His friends at school.”

Mr. G. and we don’t have a clue who else had bought my son a new bicycle. Expecting absolutely nothing in return, they had taught him, us and all his little buddies at school one of the most powerful lessons in life. My wife and I were completely speechless.

While we could have probably bought him a new bicycle, there is no way we could have given him such a powerful memory to cherish for a lifetime. The blessing of giving and the blessing of a community that cares are the building blocks of this great country. For days I have been remembering those who gave me what I could have never earned myself at the time when I needed their help the most. Just as I will never forget what they did for me, I hope my son will never forget that his new bicycle came from the goodness of our neighbors’ hearts.

Alamo by ~Gekko-chou

Last week I was at a conference in San Antonio. I had to join the event on Saturday but was not required to take part in any activities on Sunday morning. I thought I would take the opportunity to go for a short walk and see the Alamo. Since there was an IMAX theater on the way, I felt compelled to check out what was playing at the time and noticed that a show about the battle of the Alamo was about to start in a few minutes. Quick change of plans and I was watching the battle on the giant screen. I had no idea that the battle had taken place February 23 – March 6, 1836. I was watching the movie on February 28th – 174 years later.

A two minute walk from the theater and I was standing in front of the shrine. It was an experience of a lifetime. I was humbled to stand there remembering those who had perished.

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?

Every time I am at a hospital, I am humbled by the service provided by doctors, nurses, and other hospital workers. These people are truly special people. They serve others as if that is the only way to live. Right before my surgery, one of the doctors, a nice Irish lady, noticed worry on my face and said “This might be an uncommon experience for you but don’t worry we do this every day and you’ll be just fine.” I hear all kinds of negative comments from people about our health care system but I consider it exceptional. Many smart caring people spend years studying and then join a workforce and a system that has only one purpose: to care for the rest of us. I am thankful for living in this country and benefiting from its health care system.

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.

Bentley University

After overnight stays in Paris and Philadelphia, we arrived at Bentley. Who would have thought at the time that five years later I would graduate from this great institution with a Bachelor’s degree in Finance? The three-week immersion program was perfect for a novice English learner like me. But the amazing part of it was the chain of events it triggered which in hindsight seem surreal. Perhaps the lives of others are also chains of interconnected, interrelated events but looking back, to this day I am amazed and consider these to be God’s expressions.

There were seven of us Armenians from the group of thirty-two who were advised to attend the program. I don’t remember exactly the order of events but upon hearing about our arrival, one of the local Armenian priests who lived five minutes from the school came to visit and let us know that if we needed anything, he was there to help. Years later, the same beloved priest conducted our wedding ceremony, then years later christened both our children. He had also conducted the wedding of my wife’s parents a few decades before and had christened my wife. However, the day we met him, I simply knew that it was wonderful to find a reassuring person in a foreign country who shared our Armenian heritage.

On one of the hot summer days during the three weeks, we went on a boat trip to George’s Island. On the boat, I heard some folks speaking the beautiful western Armenian dialect, approached them and started talking to them. I had no clue that I was talking with my future family. The nice man who is now my friend and my father-in-law said that an Armenian picnic was coming up and he’d like to take us there. A few days later, he pulled up in his stretch limousine (years later I drove that car to ear a few dollars) to pick us up. I remember the faces of the other students in the program when the Armenian kids were being picked up in a limo.

My English certainly improved noticeably during the program. With so many new fond memories, impressions of Boston and Cambridge, new Armenian friends, further cultural awareness, I thought that the three weeks flew by quicker than three seconds. The honeymoon period of standard culture shock was well underway as I arrived at my final destination (temporarily final) in southern Florida, the sub-tropical state where nothing from humidity, atmospheric pressure to people and their culture was anything I had ever experienced before.

“To laugh often and much; to win the respect of intelligent people and the affection of children; to earn the appreciation of honest critics and endure the betrayal of false friends; to appreciate beauty; to find the best in others; to leave the world a bit better, whether by a healthy child, a garden patch or a redeemed social condition; to know even one life has breathed easier because you have lived. This is to have succeeded.” ~ Ralph Waldo Emerson

I got this from a forwarded chain letter (there’s even doubt about whether Emerson really wrote this) and unlike the normal actions I take (delete…) I sat there thinking. Is it just another Utopian idea? Is there anything missing in it?

I remembered one of the mistakes I made some time ago. I was a teenager, young and stupid (had to have been). My father and I were at our kitchen table having a discussion about a topic I cannot remember. But I remember asking him “What have you accomplished in your life?” I thought he would mention some scientific discovery, but he looked squarely in my eyes and said “I’ve raised two boys.” I was ashamed to have asked him this question. Years later part of me is very happy to know his answer. As we raise our little ones, I continue to learn the profound meaning of his answer.

.Wealth. by Sarah Khanna

The link is missing. To raise good children, we MUST do everything in the first quote and more. This is what I call building wealth for the purposes of this post. One parent, one family, one community at a time, we must build wealth – we must build good children. You say I’m crazy… Imagine a country where the next generation of kids is healthy, well-educated, raised in loving families, with respect for their communities, with respect for each other, entrepreneurial, mentally and spiritually complete, more united than divided. Would there be a richer country (or family, or community) in the world?

Why am I writing this? Because I am convinced that change happens inside our souls, then inside our families, then inside our communities… It’s not a governmental program with program administrators or a presidential initiative. I read the quote above twice more to see if there was any mention of money, fancy shoes, fashion clothes, nice cars, huge houses, dinners at fancy restaurants, or expensive vacations but it appears there’s no mention of anything to which we as individuals and as a country have becomes slaves. I hope some day if my little ones ask me the same question, I can also say “I’ve raised good children.” I hope the whole country can say the same.