The quick solution to that problem is to copy with verify. That takes a little longer, but it should at least let us know if a bit gets flipped.

Saturday we ran into another error when copying a file from the removable drive to its destination on the network:

F: is the removable drive. The machine it was connected to disappeared from the network. I’m still trying to decipher that error message. I can’t decide if we got a disk error or if there was a network error. Did the disk error cause the network error? Or perhaps Windows considers a USB storage device to be a network drive. We removed the drive from that machine, connected it directly to the repository machine, and the copy went just fine. The file checked out okay, leaving me to think that the first machine is flaky.

About a year ago we purchased a Netgear ProSafe 16 port Gigabit Switch (model GS116 v1). It’s been a reliable performer, although it does get a little warm to the touch. Still, we ran it pretty hard and it never had a glitch. We bought another about 6 months ago. Last month, the first one flaked out and started running at 100 Mbps. Not good when you’re trying to copy multi-gigabyte files. This morning, the other one gave up the ghost completely and wouldn’t pass traffic at all.

I suspect that excess heat caused both switch failures. The units were operating in a normal office environment where the ambient temperature is between 75 and 80 degrees. There was no special cooling and we ran the units pretty hard what with the Web crawler and all. As I said, the switch did get very warm to the touch. In a normal office configuration where the switch doesn’t get a lot of traffic, it probably will hold up fine. But I would not recommend this switch for high duty cycles unless you have special cooling for it.

Because the House is responsible for introducing legislation that deals with budgetary matters, the Senate didn’t introduce this as new legislation. Instead, the Senate greatly amended existing legislation, H.R.1424, which apparently has been bouncing around between the House and the Senate for 18 months. The Senate bill now contains the original enacting clause:

To amend section 712 of the Employee Retirement Income Security Act of 1974, section 2705 of the Public Health Service Act, section 9812 of the Internal Revenue Code of 1986 to require equity in the provision of mental health and substance-related disorder benefits under group health plans, to prohibit discrimination on the basis of genetic information with respect to health insurance and employment, and for other purposes.

And then:

Strike all after the enacting clause and insert the following:

And there follows the 110 pages of the House’s Emergency Economic Stabilization Act of 2008 and 350 more pages of additional legislation.  The bill, now 451 pages long, contains three divisions:

Division A: The Emergency Economic Stabilization Act of 2008.

This is pretty much the same legislation that failed to pass in the House on Monday.  A notable addition is Section 136, which temporarily raises the FDIC and National Credit Union Share Insurance Fund deposit insurance limits from $100,000 per account to $250,000 per account.  The idea behind this move is to reassure businesses and prevent them from moving their deposits from small banks to larger banks that are viewed as more secure.

Division B: Energy Improvement and Extension Act of 2008

Provides tax incentives and credits for renewable energy, investments in cleaner coal technology and biofuels, plug-in electric cars, energy conservation, and many other things.  It’s a scattershot energy bill that’s been working its way through the legislature as H.R.6049 since May of this year. 

DIvision C: Alternative Minimum Tax Relief Act of 2008

This part began life in June 2008 as H.R.6275, to provide relief from the alternative minimum tax for middle- and low-income taxpayers.  The original version was a few dozen pages long.  The new version is almost 200 pages in length and includes all manner of personal and business tax cuts, credits, and deductions.  And then there are the miscellaneous provisions, among them:

• The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 states that health insurance companies have to provide the same level of coverage for mental health benefits as they do for medical and surgical benefits.
• A reauthorization of the Secure Schools and Community Self-Determination Act of 2000,
• Disaster relief legislation.

If you read the Table of Contents for each of the divisions, it becomes very clear that the Senate in its infinite wisdom targeted certain provisions to individual parties and even individual states in an attempt to win over those who voted against the original bailout plan.  In doing so, they had to be careful not to add something that would cause members who originally voted for the plan to vote against it.  Honestly, though, I don’t think there was much chance of somebody changing his vote from “aye” to “nay.”

Estimates place the cost of new provisions at about $105 billion, a very large part of which would fit under the category of “pork barrel projects.”  Both McCain and Obama voted for the measure, despite recent public statements about the evils of pork barrel spending.

It’s now five minutes to noon in Washington.  Party whips have been making the rounds in the House, trying to get members’ commitments to support the bill.  The House is set to convene at noon, and will be voting on this bill.  I’d like to think that those who voted against it on Monday will stand their ground, but I fear that politics will once again trump good sense.

The fundamental problem today is that there is a lack of confidence in the financial system. Not so much by you and me, but by banks that lend money and large institutions that buy the banks’ debt for investment purposes. Investors demand more documentation and higher interest rates, which causes the banks in turn to charge higher interest rates and to be more careful in selecting borrowers. Ultimately, fewer individuals and companies will qualify for loans, and those who do will end up paying higher interest rates. Credit hasn’t dried up, but it’s a lot less available than it was previously. Creditors and investors got burned (in large part by their own greed), and now they’re being very (perhaps overly) cautious.

A key factor in the lack of confidence is that financial institutions’ portfolios have large numbers of assets that are difficult or impossible to value. A simple example would be mortgage backed securities. A mortgage backed security is, in essence, a bundle of loans that a lender has packaged up and sold as a single investment instrument. The price the bank asks for the package is based on the quality of the mortgages that make it up: their face value, the interest rates they pay, their maturities, the quality of the collateral backing them, and the credit worthiness of the borrowers. Industry rating agencies such as Moodys and Standard & Poor’s assign ratings that give some indication as to the risk level of such securities. Investors demand higher interest rates (or, sometimes, lower prices) for more risk.

But there’s a problem. It’s exceedingly difficult to know the real value of even one mortgage. Imagine the difficulty involved in computing the real value of a box that contains 100 mortgages. If you buy the box directly from the originating bank then you can have some confidence in the box’s value. Assuming, of course, that you trust the bank and the rating agency. But if you as an investor want to sell that box on the open market, you’re subject to the whim of the market. When things are going well, that’s a good thing. People are willing to spend $1,000,000 on that box of low-risk loans that pay an average of 5% interest because they have confidence that they’ll get their payments and that they can re-sell the box if they need the cash.

But the market can go sour. If a bank starts reporting higher levels of loan defaults, then every box of loans that the bank sold becomes less valuable because the probability of the box actually paying the stated interest or being sold at face value is lower. You could find that the market value (the price people are willing to pay for) your million-dollar box of loans is only $900,000.

Because of the difficulty in valuing mortgage backed securities (and many other investment vehicles), a very commonly used method of determining their value is mark to market. The box’s value is what people are willing to pay for it. Generally accepted accounting principles state that financial institutions use mark to market in determining their assets’ values. And transparency laws on the books insist that banks and other regulated financial institutions calculate the value of their assets on a daily basis.

Now, imagine that you’re a small bank. You take deposits from customers and lend money to individuals and local companies. You also buy high-quality (i.e. low-risk) mortgage backed securities to invest the depositor’s money. You’re very conservative with your investments, always get good documentation from your borrowers, and everything’s going great. Whenever you need a little cash to meet depositors’ demands, you sell one of those securities on the open market. This is how the financial system works when people have confidence in it.

But if the bank from whom you bought those mortgage backed securities starts seeing a higher than usual number of loan defaults, the value of the security you’re holding in your vault declines. As that bank’s troubles deepen, so do yours because it becomes increasingly difficult to sell those securities–not only at face value, but at all. If the originating bank defaults, you could very well end up unable to find a buyer for your box of loans. At any price.

You know that if you could open the box and show the individual loans to potential buyers, you could at least salvage some value from your investment, but that’s not the way it works. Your investment is essentially worthless. And since you have to report your financial condition on a daily basis, it doesn’t take long for the public (your depositors) to find out and begin demanding their money. You’re wiped out, and you didn’t do anything wrong.

I’m not just spinning a fantasy here, by the way. Such things do happen, and they have a cascade effect. As more securities become worthless, investors become less inclined to buy any securities. Institutions who hold those securities are unable to sell them in order to meet other obligations, and the financial system grinds to a halt.

That’s it in a nutshell. I’m sure there are economists who will say that the problem is more complex than that. In some ways, that’s true. I haven’t mentioned the more creative investment vehicles (like tranches) and the mania that helped get us where we are. I’ve tried to concentrate on what the problem is, rather than what caused it.

The problem, then, is that financial institutions are holding securities that nobody wants to buy. The securities’ values, based on mark to market, are essentially zero because there is no market for them. The truth is that some of those securities are very valuable and some really are worthless. But right now there’s no way for buyers to know which is which. The point behind the bailout is to create a market—to buy securities and by doing so restore some investor confidence so that they, too, will begin buying.

So that’s the problem and the rationale behind the proposed solution. Whether the proposed solution is right or even necessary is still a matter of some debate among economists, and also in my own mind.

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.

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.

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.

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.

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.

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.

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.

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.