No bailout. Yet?

I was pleasantly surprised yesterday when the House failed to pass the Emergency Economic Stabilization Act of 2008.  (Be patient.  That site is getting hit pretty hard right now.  You might be better off visiting your favorite news site for the full text.)  From news reports over the weekend and yesterday, I was pretty sure that it was going to pass.  It’s interesting to note that approximately 40% of Democrats and about two-thirds of Republicans voted against the bill.

What would be much more interesting to me is why the bill didn’t pass.  News reports contain nothing but a bunch of partisan sniping.  Some say that Speaker Pelosi’s comments before the vote angered Republicans.  If true, that doesn’t say much for those representatives whose feelings were hurt, or for Rep. Roy Blunt, who was dumb enough to put forward the suggestion.

I wonder how many voted against the bill because it was unnecessary, or because it was bad legislation.  I also wonder how many members’ votes were cast in response to constituents’ support or opposition.  According to an Associated Press analysis, 13 of the 19 most vulnerable (in the upcoming election) Republicans and Democrats voted against the bill.

And that brings me to the real point I’ve been struggling with:  where should a Congressman’s loyalty lie?  Should he be more concerned with the good of the country, or should he be more concerned with satisfying the whim of his constituents so he can get re-elected?  On the same note, do we elect our Congressmen because we trust them to do what’s best for the country while keeping our interests in mind, or do we elect them to bring home the bacon?

I need to think more about that one.

In all the hype surrounding this mess, I’ve heard a lot of alarmism, but very little hard fact.  Paulson and Bernanke warn us of “dire consequences” if we don’t provide some assistance.  I’d like to trust them, but I trusted President Bush and his advisers when they told us that we needed to invade Iraq.  I trusted that they had credible evidence of nuclear or biological weapons development and that they actually had a plan to transition Iraq into a stable, functioning democracy.  It turns out that they had no credible evidence and their “plan” amounted to “kill the bad guys and everybody else will join hands singing Kumbaya.”

So excuse me if I’m skeptical when the administration all of sudden decides that the economy is in grave danger and the only way out is to spend 700 billion dollars.  This is the same administration (and largely the same Congress) that has been ignoring the problem for the last few years, insisting that there is no cause for concern.  Bernanke and Paulson may very well be smart guys.  But their association with the current administration makes them suspect in my eyes.  They’ll have to provide me with a whole lot more evidence than their vague warnings of “dire consequences” before I’ll believe what they have to say.

Just say “No” to the bailout

Have you read the text of the Bush Administration’s proposed 700 billion dollar bailout of financial institutions?  If you don’t want to wade through the three-page proposal (although it is written in reasonably clear English), this summary will tell you all you need to know.  (Thanks to David Stafford for the link.)

When that proposal was presented, Congress was given the opportunity to exercise its most important obligation under the Constitution:  to serve as a check on the Executive branch.  Were Congress seriously interested in doing what’s best for the economy, for the taxpayers, and for the country, they would have just said, “No.”  Instead, they view the proposal as a starting position and are taking this opportunity to ingratiate themselves with their constituents and extend government’s control over private lending.  You doubt that?  Consider:

  • Democrats are pushing for legislation that allows bankruptcy judges to rewrite mortgages to “ease the burden” on homeowners who are facing foreclosure.  This contentious issue probably will be dropped in favor of getting a bill passed.
  • Democrats want any proceeds of the bailout to go into a fund designed to pay for housing for poor families.  This is the old shell game.  On one hand, they’re telling us that we’ll “get back” much of that $700 billion when the assets are sold.  The reality is that any proceeds will go into the general fund, which Congress can squander at their whim.
  • Lawmakers on both sides have agreed in principal to limit pay packages for executives whose companies benefit.  This is largely a symbolic move, as executive pay is a drop in the bucket compared to the amount of money we’re discussing.  But it looks good to the voters.  “I voted to limit executive pay!”
  • Absent the “No” that they should give, Congress is right in insisting that it be given more control over the bailout than what the proposal allows.  But I doubt that they’ll exercise restraint.  I fear that they’ll make a serious power grab.  For example, Representative Barney Frank has said: “we’re now the biggest mortgate holder in town, and we can do serious foreclosure avoidance.”  That frightens me, as I think it should frighten anybody.

I’m not convinced that this bailout is at all required.  Were Congress to do the right thing—nothing—markets would take an immediate tumble, rebound a bit, and then financial institutions and others affected would get back to business.  Sure, it’d be a struggle.  But the relatively short-term pain involved will be much less than the long-term pain that this bailout legislation will undoubtedly cause.

Needed or not, I’m certain that it doesn’t have to happen within the next week, as Secretary Paulson and Federal Reserve Chariman Bernanke insist.  I’m always nervous when Congress acts at all, and I get very, very scared whenever Congress rushes through legislation to “address a serious problem.”  Eight years of an administration and a Congress that have both lost all concept of the term “fiscal restraint” has taught me that much.

The Last Sucker Theory

Join me in a little thought experiment.

Seal a 100 dollar bill in an envelope, affix a price tag to the envelope, and write $110 on it.  Then put it up for sale, telling potential buyers that if they spend $110 on this envelope, they can turn around and sell it for more.  Don’t worry about what’s in it.

Somebody buys it, affixes a new price tag that says $125, and sells it to somebody else who also increases the price and turns it over.

This goes on for some time, with each new buyer swapping out the price tag.  Somewhere along the way, somebody gets the bright idea of putting 10 envelopes into a larger, fancier-looking envelope.  Why not make 10 times the profit in a single transaction, right?

And the party goes on.  The fancy envelopes beget pretty printed shoeboxes and the prices go up again.  Nevermind the party poopers screaming, “But what’s in the box?”  Nobody cares what’s in the boxes.  They must be valuable, right?  People keep paying more for them.

One day, the holder of a refrigerator-sized package wrapped in gold paper and sporting all manner of ribbons and bows tries to sell it for $100,000,000, and fails.  The lender who floated him the loan to buy the thing takes it back and decides to sell it at a loss just to get it off the books.

But the lender finds out that he can’t sell it at any price.  A lot of people have been having trouble selling their pretty boxes and envelopes.  Not only that, but lenders have a lot of money tied up in those pretty boxes, meaning they don’t have any money to lend for other purposes.

Desperate, the lenders start trying to sell their assets at ever-lower prices, trying to get something out of them.  But nobody’s buying.  Nobody wants a pretty box that he can’t resell at a higher price.

Finally, the lender finds a buyer who says that he’ll be happy to buy the box, provided he can open it beforehand to see what’s inside.  The lender reluctantly agrees and looks on as the potential buyer opens the box and pulls out 100 pretty shoeboxes.  Inside each shoebox there are 10 fancy envelopes, each of which contains 10 plain white envelopes holding a single hundred dollar bill each.  The lender’s $100,000,000 “asset” is worth $1,000,000.

My dad used that little parable (also known as the last sucker theory or, more commonly, the greater fool theory) to explain the events leading up to the savings and loan crisis in the late 1980s.  It’s equally apt in explaining much of the current financial meltdown, what with the mortgage backed securities that were “backed” by worthless mortgages, investment firms that were leveraging their investments 35-to-1, and all the while knowing that they were just riding the wave—hoping they weren’t the ones holding the box when somebody demanded that it be opened.

Removable Drives

Although we’ve moved the crawlers and a large part of our workflow to a co-location facility, we still do some of our processing here at the office.  So on a daily basis I hop on my bike and ride down the road (a little over a mile) to pick up the daily data dump.  We do have a VPN to the data center, but the 100 gigabytes in a daily dump is more than we could download.

We have two USB hard drives that we use for this shuttle service.  It didn’t take us long to learn that it’s best to have two of the same type of drive.  That way all you need to carry back and forth is the drive itself.  You can leave a USB cable and power supply at each location.

In the short time we’ve been doing this, we’ve tested a number of different drives.  My favorite is the 500 GB Maxtor Personal Storage 3200.  It has a very conveinent form factor (just a brick), the power supply is not a wall wart, and it has a standard USB 2.0 connector.  We have used several of these around the office, and I have one at home.  It’s been a reliable drive and a good performer.  Unfortunately, you can’t get them anymore.

We picked up a couple of Iomega eGo 1TB Desktop Hard Drives on sale at Fry’s for about $160 each.  Hard to argue with the price, and the form factor is nice.  However, the drive made a lot of clicking noises, got very hot (uncomfortable to touch), and one of them failed outright.  The other started giving errors and we ended up taking them both back.  Considering my experience with the eGo, and also the experience I’ve had with the 160 GB unit I bought several years ago (slow, noisy, and hot), I would not recommend Iomega removable hard drives.

About two weeks ago we picked up two Seagate FreeAgent 1 TB (it’s a PDF) drives on sale at Fry’s for around $150 each.  I’m not real wild about the form factor and the wall wart power supply, nor do I much care for the mini-USB connector.  But the drives are quiet, fast, and reliable.  They do get significantly hotter than the 500 GB Maxtors that I prefer, but not near as hot as the Iomega drives.  We also have two of the 750 GB FreeAgent drives in the office for backups and haven’t had any problems with them.

So far, I haven’t encountered the mysterious drive removal problem with the FreeAgent drives.  I’m beginning to think that permissions might have something to do with it.  Let me explain why.

I edited the security properties on the FreeAgent drives (right-click on the drive, select Properties, and then click on the Security tab) to give Everyone full control.  This allows me to attach the drive to any of our machines at the office or at the data center, and be able to add, copy, rename, delete, or otherwise manipulate files without trouble.  Since I did that, I haven’t had any trouble removing the drive.  I’ve yet to try this on the other drives I was having trouble with.

Hurricane Rescue

Almost every year during monsoon season in the Phoenix area, some idiot will drive around a barricade and attempt to cross a flooded low water crossing. In most cases, search and rescue workers are successful in plucking the occupants from the stranded car. Invariably, the driver will claim ignorance, despite signs warning of the danger, barricades across the road, and many years’ experience living in the area. It’s impossible to live in the Phoenix area for any length of time and not know of the dangers inherent in driving through flood waters.

Things got so bad in Arizona that they finally passed what is termed the Stupid Motorist Law which, when translated to simple English, says that a motorist who drives around barricades to enter a flooded stretch of roadway may be charged for the cost of his rescue. I don’t know if the law has actually prevented anybody from trying to drive through a flooded area. It seems to me that if the threat of being swept downriver and drowned doesn’t deter somebody, the prospect of having to pay for rescue won’t raise a red flag either. In any event, I support the law simply because I believe that people should have to pay for their own stupidity–especially when said stupidity puts others’ lives at stake.

As hurricane Ike approached last week, officials in Galveston and other coastal areas urged citizens to evacuate, warning of a possible 25-foot storm surge and “certain death” if they stayed behind. By all reports, most people heeded the warnings and got out before Friday at noon. But somewhere between 100,000 and 150,000 people decided that they knew better, and stayed behind.

I was in the Williamson County Emergency Operations Center from midnight until 6:00 AM on Saturday. The eye of Ike made landfall at about 2:00 AM. The entire time I was at the EOC, I heard reports of 911 calls from people who had elected to stay behind, begging for somebody to come help them. Of course, nobody was going to send rescue workers out in the middle of a hurricane. Those people who elected to stay truly were on their own–just as officials had said they would be.

Today, 48 hours after Ike came roaring through, we’re still in the middle of what Governor Rick Perry is calling the largest search and rescue operation in Texas history. Over 1,500 rescue workers are searching Galveston and surrounding areas for people who are stranded in their houses, still surrounded by floodwaters. So far, every person I’ve seen interviewed after being rescued said pretty much the same thing: “I never thought it would be so bad. I was wrong to stay.” I’ve yet to hear anybody say they didn’t know that the storm was coming, or they didn’t hear the warnings to evacuate.

Those who stayed and survived were very fortunate that the projected 25-foot storm surge never materialized. The estimated 13-foot surge did a very good job of devastating the area. I imagine that nothing would be left had there been twice as much water, and it’s doubtful that any of the holdouts would have survived.

Those who did survive (and we may never know how many got swept away by the storm) are now stranded in the attic or on the roof, with no services, no food or water, and no way to get out except being rescued. It’s unfortunate that Texas doesn’t have a Stupid Homeowner Law that allows us to bill those people for the cost of their rescue. Whereas I fully support a citizen’s right to stay even in the face of “mandatory” evacuations, I also believe that they should bear the consequences, including paying the cost of pulling them out of an area they were advised to evacuate three or four days ago.

Here in the Austin area, Ike had almost no effect. We got a little bit of wind Saturday morning. Some parts of the area might have received some rain. We didn’t get a drop at our place.

Hurricane Ike

The latest projection of hurricane Ike’s path puts a tropical storm right over our house sometime early Sunday morning.  Of course, that’s just a projection based on current conditions and input from a half dozen climate models.  The storm could still move considerably north or south of its projected track.

I typically rely on the National Hurricane Center for information about hurricanes and tropical storms, and the Navy/NRL Tropical Cyclone Page for satellite pictures.  I recently learned about this Tropical Cyclones page, which has a whole bunch of graphs and images from many different places.  Not only does it have the graphs, it also has links to the pages the graphs came from.  I didn’t realize there were so many different hurricane tracking sites out there.

I especially liked this image, which shows Ike’s historical track and its projected path.  I’ve cropped it to show my area.  Click on it to get the full-sized image.

Hurricane Ike projected path

A tropical storm here shouldn’t be too big a deal.  Although Ike is expected to be a major hurricane when it makes landfall, we’re about 200 miles inland.  The storm will lose a lot of its intensity in the 24 hours between when it hits the coast and when we begin to enjoy it.  I expect some high winds, but not enough to do major damage.  And we certainly could use some rain.  I suspect, though, that we’ll get too much too soon and there will be some flash flooding.

I wouldn’t want to be in the grocery store between Thursday and Sunday.  People around here tend to panic when they see a storm coming, even though it’s highly unlikely that we’ll lose power or suffer other storm related inconvenience.  You do not want to be the only thing between the last case of bottled water and a woman who has visions of hurricane Katrina in her mind.  I wouldn’t be surprised if there are more injuries resulting from the pre-storm supermarket rush than from the storm itself.

All told, it should be an interesting weekend.

An Hour A Day

I hear a lot of people say that they want to change their lives: lose weight, make more money, learn something new, take up a new hobby, accomplish some physical challenge, etc. Sadly, most of those people then go on to say that they wish they could do that, but they can’t. And most of the time the reason they can’t ends up being a variation on one of these two:

  1. I don’t have enough time.
  2. I’ll be too old before I complete it.

Excuse me, but both of those reasons are bullshit. The second one, especially. How old will you be if you don’t complete it? You can sit there and wish all you like, and complain about how you’re not getting any younger and the world is passing you by, or you can decide that you want to do something. Either way, time will pass. But after five or twenty years, the person who actually tries will have something to show for it. The person who spent that time complaining about how it’s too hard or will take too long will have nothing but bitterness.

As for the “I don’t have enough time” complaint: that’s crap, too. You might not have enough time to dedicate your life to a new pursuit, but you most definitely have time to improve your life. All it takes is an hour a day, and most people spend way more than an hour every day watching TV, surfing the Web, or doing other things that are neither relaxing nor productive.

Let me give an example. I’ve mentioned a time or two that I used to run marathons when I was younger. I since stopped running and took up bicycling, but lately I’ve wanted to get back into running. So I set myself a goal of running a 10K race (6.2 miles). I can’t run 6 miles today. I’m hard pressed to run even one mile without stopping. But I can run a bit, walk some, run a bit more, and so on for an hour every day. I don’t know yet how long it’ll take me to build up to 6 miles, but every day I go out I find that I can run a little bit further. And in a few months I’ll be up to 6 miles.

Another example is education. A lot of people think they need school in order to get educated. It’s true that if you want a degree or a certification, you need to attend formal classes. But if you just want to learn about a particular topic, you have all the educational resources you need on the Web, in your public library, bookstores, and Amazon.com. All you need to do is start reading. Try reading on your topic for an hour a day.

Want to learn the piano? Spend an hour a day practicing. Build strength? Get some weights and a beginner’s book and spend an hour a day lifting. Learn to write better? Practice writing an hour every day. Pretty much whatever you want to do, you can get a very good start on it by allocating one hour per day, and I don’t know anybody who doesn’t have at least an hour per day to spend on self improvement.

Try it. Rather than complaining about how something is too hard or will take too long, sit down and plan how you can accomplish that thing you’ve always dreamed about. Spend an hour per day working toward your goal. You’ll be surprised at how much progress you make in just a few weeks. The longer you work at it, the more you’ll learn and the better you’ll become, and the more you’ll want to continue. All you have to lose is time, and the rewards are potentially limitless.

Disposing of a refrigerator

Some friends gave us a refrigerator about 10 years ago when they were moving to a new house.  It really wasn’t much of a refrigerator, even back then, but it fit nicely in the laundry room.  We used it mostly for beer and sodas, and the top freezer helped with the overflow from the main fridge in the kitchen.

A few weeks ago it started getting very noisy and then Debra noticed that the freezer wasn’t keeping things frozen.  It got to making more noise and the louder it got the warmer it got until it wasn’t keeping my sodas very cool, either.  Debra emptied it and I started looking for a way to get rid of the thing.

My first thought was to recycle the thing.  The Williamson County recycling facility takes appliances, but refrigerators and other appliances that contain or contained freon must be accompanied by a certificate showing that the freon has been recovered.  So I’d have to take the thing to a shop, pay somebody to recover the freon, and then haul it to the recycling center.

I was about to break down and pay to have the thing hauled off when somebody suggested that I post it on craigslist.  That worked great.  Sunday afternoon I posted a note in the Free Stuff section, describing the refrigerator’s condition and offering it free to the first person who came to haul it off.  I got a call within an hour, and 30 minutes after that the refrigerator was gone.  Works for me.

I’m sold.  Next time I need to get rid of something, I’ll know to try craigslist first thing.

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