ING Direct Buys Universe

I just got an email stating that one of my brokerage accounts has been purchased by ING. Two institutions in a two month period? Coincidence? I think they are out to own my life.

Oil Nears Record Highs

You've heard for a few days now that the price of oil has set records in recent days. That's true in a sense, but not in inflation adjusted terms. However, at $91/barrell, the price of oil will exceed its all time inflation adjusted high price, which was set in the 1980's. Many people will remember price controls, lines at gas stations, economic turmoil, rationing, and general energy chaos.

Yet, today, it seems to be taken in stride. I think we can thank the fact that every day our economy becomes less and less energy intensive. Which means, that we are able to produce a dollar of GDP with less and less energy input. This is partly due to the changing nature of our industries, as we move towards more service industry and less heavy manufacturing, but it is also due to technological innovation that has made almost everything from homes to computers to light bulbs to air conditioners more efficient.

And, the optimistic view is that if the price of oil hasn't killed the economy yet, it probably won't, and every day that it is high is another day that adds impetus to diversifying energy sources and making things more efficient. I think all of that is pretty good.

Credit Problems Getting Personal

It may seem like I rant about far away things and esoteric topics, but in the last week my life has personally been touched by the credit problems currently going around:
1) My bank failed and was closed by the FDIC (the major bank regulator). NetBank was one of the first internet banks, and I never had much trouble with it, but apparently they bought the wrong sort of mortgages and the government forced a sale. The checking accounts and other liquid assets have been purchased by ING Direct.
2) My mortgage was sold. Not sure what the deal is, but ABN Amro closed down their mortgage servicing web site, and sold my mortgage to Citi Group.

Oh, well. The ING and Citi websites seem better than the others, so I guess its for the best.

FPL and solar-thermal energy

Isn't $80/barrel oil grand? Recently, Florida Power and Light announced that they would build a 300MW power plant (that's pretty big) somewhere in Florida. The system uses mirrors to boil water in pipes placed above the mirrors to generate steam. This steam is then stored, and used to drive turbines that generate electricity. The plant will be able to operate for up to 20 hours without sunlight, to help overcome cloudy days and nights.

The costs are competitive, and in some cases cheaper, than coal and natural gas plants. The company to build the plant is Ausra.

You will see a lot more of this.

Ah, normality

So, after all my hand wringing about corporate credit markets, it appears that today, the day that two very large banks announced the damage that the subprime mortgage mess inflicted to their profits, the Dow Jones Industrial Average has set an all time session high. Apparently, fears were a bit overblown, and a major risk seems to be evaporating.

China

Hopefully, all of you believe, as I do, that a prosperous China, integrated with the world economy is the best hope for peace and economic growth. However, I've been reading an article in the latest Foreign Affairs Journal about China's environmental problems; and they are manifest. As the author went on about the various horrors, she concluded that the real solutions won't be forthcoming until China reforms some relevant portions of its government. Point taken.

But, I will take it further. I'll say this is a worrisome confirmation of a point that Milton Friedman made. He argued that capitalism and freedom went hand in hand. That capitalism maintained the means of freedom outside of governmental control. For instance, he pointed out that it was very difficult to exercise free speech if the government controls all the radios, televisions, and printing presses.

Recently, it has become a fashionable thing to write that this is a one way street. Freedom may lead to capitalism, but the opposite is not necessarily true. Russia and China are used as the two greatest examples of a society that seems to be embracing an authoritarian, as opposed to democratic, capitalism. And, it has seemed that these two countries have experienced rapid economic growth and improvements in the average person's material standard of living while personal political freedoms remain, or are even further, curtailed.

But, this article on Chinese environmental matters points to what I think is a hidden truth. A capitalist, free market economy is one of the most powerful, dynamic, and unpredictable forces on the earth. And where people have argued that technology developed by such a system just makes it easier to monitor people and restrict their freedoms, I argue that the opposite is the case as well.

A legal system, or a bureaucracy, is a complex and rigid thing, and is even more so when it is not routinely held accountable in elections that vent popular unrest. It may be strong, but it is also brittle. China's environmental problems, as an example, would never have occurred under the former communist economic model, simply because that model was not capable of unleashing the current amount of activity. In this area, and many others, we are now finding that a government of repression is not well suited to adapt to the dynamic needs of a free market. And, further, as the free market enriches the citizens, and technology expands the capabilities of a single individual, the means to seize and exercise political freedom are more and more available.

Here lies the worry: can China survive a revolution? Would it be a velvet one? Or would the government destroy all that has been accomplished to preserve its power? And, if China were derailed, what would happen to a world economic system that has become deeply tied to it?

It's ironic to be worried about democracy, no?

Some Sunshine

The last several posts have probably painted a fairly bad picture of the markets, and indeed if you've watched the stock market over the past three weeks or so, it has been extremely volatile. But, there are reasons not to be too concerned (and I, in fact, am not overly concerned):

1. The global economy has never been so strong. There are always risks (including environmental collapse in China among other things), but all things considered, things are really good out there.
2. American profits have been at record levels as a percentage of GDP.
3. The economy is stronger than many thought. The second quarter's GDP was revised up to 4.8%, which is a great rate of growth. I think everyone would be thrilled with a consistent 3.5%.
4. Only a fraction of 1% of all homes have a subprime mortgage attached to them. Heck, about one in three homes is owned outright.
5. We are not yet witnessing a collapse in asset values, the housing prices around the country have been coming down, and inventory is certainly building up, but prices have only dropped marginally. For instance, in Orlando prices have recently begun to tick down a few thousand dollars, but over the last five years, prices are still up about 95%.
6. The Federal reserve bank seems determined not to let a panic set in for the commercial paper markets, but rightly, I think, they also seem determined not to bail out people who made poor decisions.
7. People aren't stupid, and therefore people are getting out of their adjustable rate mortgages that are resetting to higher interest rates for a fixed 30-year mortgage, which a qualified buyer can still get for around a 6.5% interest rate - which really isn't bad.
   

This whole scenario might just be one of those great "walls of worry" that disciplined investors hope for. And, hey, you might end up being able to buy that vacation home you've always wanted on the cheap if prices do drop.

Credit Woops - Part 5

So, who bought all these asset backed securities? Lot's of people, but most notably, hedge funds. Hedge funds are just like mutual funds, except they usually require large amounts of money to join, have relatively few investors involved, and don't have to say up front what their investment strategy is (in other words, they can do pretty much whatever they think will make money). They play an important role in the financial system, but they often times swing for the fences since the hedge fund manager can be paid a percentage of the assets gained - double $300 million dollars for investors, and a 5% commission is looking pretty good.

Hedge funds, pension funds, and foreign banks all bought various flavors of these asset backed securities for their varying mixes of risk and reward. Those institutions that bought too much of the bad stuff are going to have to take a hit. And that's how the mortgage in Miami can give a bank in France some nervous moments.

There is one other side to the whole story, and that is that a similar liquidity boom was happening with respect to loans to companies, also called the "commercial paper" market. The same story pervades there. Quickly, typically when a bank makes a loan to a company, it requires "covenants", which are simply benchmarks it requires the borrower to maintain. These requirements help the lender know that their borrower is sound, and will be able to make interest payments. But, in all the hubbub, new "covenant-lite" loans were issued, and companies didn't have to show how they could pay it back. One telling quote I read recently was a lending manager saying that he didn't meet with a borrower over a $25 million loan because "it wasn't worth the meeting time". Not good.

As a result, lenders are now nervous about the loans they have already made, and don't really want to make many new ones. And here is the serious problem: without freely available credit our economy doesn't function, because many companies take loans to make large investments that keep their businesses running. If they can't make those investments, they can't hire people, they can't compete as well, and they can't meet demand.

Put the rising defaults on mortgages which are now connected to the world financial system with the lock-up in the commercial paper markets, and a lot of people are very worried.

Interesting

Where were subprime mortgages used most in 2005?

Credit Snafu - Part 4

Alas, these broken mortgages... where did they go? Firstly, the mortgage brokers that initiated the mortgages promptly sold them to large banks. These banks, of course, had no desire to burden their own balance sheets with risky mortgage paper, so they had to sell them also, but who wants to buy a subprime loan with a high risk of default? There are those with a risk appetite but not enough to consume all of the loans

A solution was devised. The banks can create what are called Collateralized Debt Obligations, or CDOs. How do these work? First, you get together a whole lot of subprime loans. Then, you sell shares of these loans to other people. But, here is the trick, not all shares are created equal. Some are "senior" shares, and others are "junior" shares. What is the difference? When one of the many subprime loans defaults , it is assigned to the most junior shares, and when a mortgage payment comes in, it is first assigned to the senior shares. These share levels are called "tranches", and let's suppose there were five evenly sized tranches for the purposes of an example. If 40% of the subprime mortgages in the CDO defaulted, only the two most junior tranches would feel any pain. The three most senior ones would continue to get paid, and would not have any loss of assets. For this reason, the senior tranche could get a AAA credit rating, while the most junior tranche became known as the equity tranche, or in Wall Street lingo, "toxic waste".

To close, let's look at the reasons why this was done. Because a AAA credit rating has less risk, it can sell for a higher price (as was discussed in Part 1 post on risk and reward). Since a subprime loan is risky, it can be bought for a lower price. The difference between these prices can be profit.

Of course, that leaves you holding some "toxic waste". What to do? Buy insurance! This is called a credit swap. A bank can create a AAA quality CDO tranche, sell it for profit, and then pay someone else to absorb the losses if the toxic waste experienced defaults (like when you pay someone else to cover your losses in the case of a house fire).

And, since we all know that house prices go up 15% a year forever, that insurance can be bought very cheaply (wink, wink).

Credit Mess - Part 3

Of course, all of the problems that are being experienced in the lofty world of high finance come from very concrete root problems. So, this time, I wanted to discuss the very foundation of the recent troubles.

After 2001, the Federal Reserve lowered interest rates to 1%. This is ridiculously low, since inflation runs around 2.5%. Now, a lower interest rate could mean a lower house payment, but many people buy houses by asking the question, "How much house can I afford?" And they answer the question in terms of a monthly payment, which means that with a lower interest rate the same monthly payment can by more. So, people spent more, and more people spent.

This surge in demand, and the ability of people to pay more for a house, started a housing boom. A few years in, houses were going up faster and faster. People began to buy investment properties, either to rent or to "flip" (which is when you sell after holding for a short period of time), which added even more demand and drove prices even higher.

When people started to worry that houses historically have pretty much just kept up with inflation, and might be overvalued, others pointed out that the median U.S. house price hadn't fallen since the 1930's in the Great Depression. We weren't in a depression, so the party kept on going.

Everyone was getting rich. The mortgage brokers, the folks who actually help you fill out the paperwork and find a lender for you, were getting lots of fee income. So were the realtors, and the appraisers, and the inspectors, and everyone else involved.

Soon, the boom had exhausted the "normal" market, everyone who wanted a house had one. Mostly the folks who were left were not the sort that usually get loans, but after a boom period, expectations rise. The extraordinary becomes the routine, and there is great pressure to keep the good times rolling. What to do?

The list of things done ranges from stupid to fraudulent. Among them were loans called "NINJAS", which stands for "No INcome Job or Assets". Some lenders asked borrowers to sign the bottom of blank paperwork, and the numbers for income, house value, etc. were filled in later so the loan would go through. People were given loans not just for the price of the house, but for 120% of the price of the house, because it would surely go up another 20% and people "need" cash to furnish their homes. People signed up for adjustable rate mortgages (or ARMs) which start out with really low teaser rates, but a few years later "reset" to a much nastier one (which is happening now). And, appraisers valued homes well above their real value to justify larger loans.

All this is just the beginning of the story, because these irresponsible behaviors led to a whole host of other problems that I'll discuss shortly.

Credit Crunch - Part 2

I'll follow up with a longer post, but this is an interesting graphic from CNN. Jumbo mortgages are $417,000 and higher, and by law are not allowed to be insured by Freddie Mac and Fannie Mae, which are governmental institutions that guarantee to purchase mortgages that are "conforming", which means the borrower meets certain requirements and that the loan is a 30 year fixed rate mortgage for no more than 80% of the houses appraised value.

The government's guarantee for the conforming loans amounts to a serious reduction in risk for the lender if the borrower can't pay. You can see the risk-reward relationship clearly demonstrated in this chart.

Credit Crisis (Part 1?)

Partly just to think this through on my own, I've decided to write a series of posts to see if I can coherently understand and explain the current credit and liquidity crisis on Wall Street. Here goes (remember that what follows is my best understanding):

The root cause of the whole mess is that there was a lot of money trying to find a good return, and investors started to ignore risks while seeking higher returns.

In fact, that is a good place to start. We've all heard people talk about "risk and reward". There is an intuitive sense to it: if you want to win big you have to take risks. Let's think through how that occurs in investing.

Suppose that we have an investment opportunity that provides an income of $100 per year. How much should we pay for that investment? In order to be rational about it, we have to understand the risks. For instance, is it $100 every year with high certainty? Or just once in a blue moon? Is $100 a good year, average, bad? All these help us understand the "quality" of the return.

In our free market system the price of this investment is set in the market, where there are buyers and sellers. If the return is pretty risky, the investment will not be as attractive as another investment that returns the same amount much more reliably. So, what happens? The price of the risky investment will have to be lower to attract a buyer. In other words, why would anyone pay the same price for an uncertain $100/yr as they would pay for a guaranteed $100/yr?

Perhaps people are willing to pay $1,000 for the low risk $100/yr, which is a return (or yield) of 10%. If people won't pay as much for the riskier version, let's say $500, then they would have a yield of 20%. Voila! The higher risk version has a higher return (20% vs 10%), and the law of risk and return is in effect.

It is important to notice that the relationship between the risk taken and the return (or reward) received is determined by the price the buyer paid for the investment. We will return to this.

To be continued...

Interesting

I found this graphic from the Economist sort of surprising. According to the article, there were 58 million deaths in 2005, which, with a world population of 6 billion people, works out to less than 1% of the population dying that year. When you consider all the wars, diseases, accidents, and crime, that seems amazingly low to me (in a good way!)

The point of the article was that "rich world" diseases account for the majority of world deaths, which means they're more global than you might think.

One last note: diabetes, though only representing 1.9% of deaths in 2005, accounted for 11% of U.S. medical expenditures in 2002, which amounted to $92 billion according to the American Diabetes Association.

More Economic Musings

A few people have asked me to explain more about the previous post. So, here is my thinking on this. The U.S. consumer (and government) have been running a current account deficit for a long time. However, as the the chart below shows, as a percentage of GDP (which is the important measure) the current account deficit has spiked. The current account is the overall inflows vs. outflows of wealth into our economy. The chart in the post below indicates that the U.S. has been sending significantly more money overseas. In the long run, this is bad.

However, don't get the idea that the world is more dependent on the U.S. debt-stifled consumer than ever before. I think that the world economy is relying on the U.S. economy less than ever. This is because there are vast new classes (in the hundreds of millions of people) that are just coming into the world economy. They will want to buy many things, and the U.S. will sell them.

Also, I wonder if there is an investment lag taking place, where the U.S. companies are spending vast sums to build out infrastructure (factories, etc.) that haven't yet started generating income back to the U.S. We'll see.

Even as the dollar drops in value, and even as U.S. economic growth moderates, corporations (especially ones with foreign exposure) are reporting record profits. Profits are at their highest levels ever in terms of percentage of GDP.

What's Going on Out There?

I saw these graphics over at a story from money.cnn.com. I think they give a very concise picture of the global economy. Note the relative growth of Japan, the U.S, China, and India vs. the European countries. Also, how much of global growth is fueled by U.S. debt.

How to Become a Billionaire

If you are looking for an interesting web site to read, check out kurzweilai.net. He's a futurist, and has a lot of interesting thoughts about what the future could bring.
One of his observations is that the rate of technological development is exponential. I think this is pretty self evident if you just think about how much new information is being added to the world's knowledge every day. But, an interesting result of an exponential growth in information is an even more exponential growth in the connections that can be made between this information.

A quick demonstration: 2 things can have 1 connection (a line), 3 things can have 3 connections (a triangle), 4 things can have 6 connections (a square with an "x" in the middle), etc.

He crystallizes this point by noting that the number of important connections not made is growing exponentially with time. This means that there are ever more brilliant ideas just lying about waiting from someone to think them.

Protectionism 2

Isn't it ironic that the same folks that tend to engage in class warfare in the U.S., demanding that the rich "pay their fair share", confine their view to the nation and not the world? It would seem that the only "fair" solution is to keep poorer people from competing for jobs while taking money from those more wealthy through the tax code. All roads leading to a single set of pockets.

At least the fair traders are consistent, if short sighted, in their arguments. They say they want fair trade, which is to say, they want foreign nations to respect certain labor standards before the U.S. opens its markets to their goods. The government under such policies can then say that it is "leveling the playing field" for all parties.

Aside from the arrogance that the rest of the world ought to follow our labor policies, tax codes, and regulations, this doesn't seem realistic at all. In 20 years, China is going to be an economic superpower. They won't have gotten there by meeting U.S. labor standards. Come to think of it, has any rich nation gotten where it is by applying such standards? No, because such regulations, as important as they are, are a luxury that only a highly capitalized economy can afford. Demanding the same of developing nations is to demand they not develop.

And really, as a humanist, can we say it is a bad bargain to lift 2 billion people out of abject poverty for the price of 30 to 40 years of economic development that does not meet our evolved labor standards? I say humanity will prosper in unimaginable ways by elevating so many people from survival-living to active contributors in the modern economy.

I'll make a prediction, if the economic development of India and China continues without being stifled by nervous rich nations, the damage done to the environment and to people in sweatshopts, etc. will be far, far, far outweighed by the benefits. Consider the inventions that will come from providing education and a free market with capital to 2 billion people.

These developments will raise the standard of living far more than a government regulation about hours worked. They will do more for the environment than a government regulation on green house gas emissions. The vastness of human treasure that is being unlocked is simply not balanced by any other consideration.

Protectionism

I get bothered when I hear people complain about how China is going to take over the world, or that our jobs are all going overseas to places where people will work for a few dollars per hour. I submit there are two possibilities for why the rich nations of the world are rich:

Either, the people of the rich nations have earned it, in which case I see no reason why there should be any sense of entitlement to future wealth, since that ought to be earned as well, or, the people of the rich nations have stolen it, in which case I see no justifiable reason to maintain the status quo (that being most people held in poverty while global elites live the good life).

And if it be a combination of the two, then both of my conclusions would apply in appropriate measure. Being born in America, that is to say winning the geographical or parental lottery, does not bestow an entitlement to wealth at the expense of others who rolled snake eyes (being born in Bangladesh, for example).

I don't take the phrase "that all men are created equal, that they are endowed by their Creator with certain unalienable Rights" to apply only to those holding an American passport. I believe that for the most part the rich nations have earned their wealth and power, through the embrace of both economic and political freedoms.

I don't think there ought to be an orchestrated redistribution of global wealth. But, I do think that such a redistribution of wealth is inevitable as more and more people, previously locked away from the modern world, emerge into it. Such a redistribution would also have the effect of calming global envies.

And, whether the rich nations embrace such an opening of opportunities to others or not, I think the redistribution will take place. We are now determining how bloody and costly it will be when it finally happens. Things are out of equilibrium, which is a fragile and unnatural state.

I just don't see why we can't let a person from China or India compete with someone from the U.S. The work is worth what it is worth, may the best worker win.

A More Reasonable Hour

As I have mentioned on countless occasions before, direct employment is for suckers. After all, benefits can be found on the open market, taxes can be better managed, and you can get paid for every hour as a contractor.

Yet, I am very soon to be a direct employee for EA. Why did I change my mind? Cowardice? Convenience?

Yes. In order to continue my employment with EA as a contractor, legal threats, legal risks, more bothersome governmental regulation, and just the inherent difficulty of doing something differently all had to be contended with. Our world is thoroughly institutionalized. It may be a nice ideal to be my own man, apart from the crowd, standing on my own, independent, free, and in control, but in reality it amounts to constantly fighting the status quo, which is exhausting and frustrating to others. Why grate?

So, while I build up another burst of idealistic enthusiasm, I'll just cruise downstream for a while and enjoy the trip.

Two Things

First, I just finished reading my naval history of WW1 "Castles of Steel" and really enjoyed it. This book is actually credible, and I learned some new stuff, which is always fun.

Second, I've taken a "permanent" position with EA on the NASCAR team. All of you out there worrying that I might starve (more than usual) or something can now put your fears to rest. I've committed to at least a year. At a more reasonable hour, I'll explain how it was that I completely flip-flopped on modes of employment. (I am so fickle.)

So many words, so little substance

Well, I've been duped. I enjoyed reading the first half of 1421, a book about Chinese voyages of discovery that carried them around the world. But, as it likely turns out, the whole thing is a fabrication.

The key to my being taken in was that the conclusions, for the most part, were reasonable presuming the facts upon which they were based were actually true. I regret to say, they are often not true.

But, how was I to know? Here I'm reading a book written by a Royal Navy commander, a master of cartography, ocean currents, and navigating by the stars. He's sailed these very seas (he said), he has special insights due to his vocation that allows him to see things that other "normal" researchers could not (he said), he has provided a framework that neatly fits many pieces of unexplained (he said) history into a cogent whole. He has solved the riddle! (he said)

Must I Wikipedia everything?? I lamented a few months ago to anyone who would listen that one impact of having so much information at our fingertips is the mortifying realization that we really know almost nothing. The things we can be absolutely certain of based on our own experiences are so few that we rely on hearing about the vast majority of things we believe second hand.

Isn't it interesting that what we "know" is a function of what we hear and experience, and that our capability for hearing things second hand has traditionally been limited on the supply side? Now we are completely saturated with information. Yet our capacity to personally experience things hasn't expanded as quickly.

Ergo (how often do we get to use that word?), the percentage of our "knowledge" which is personally verified is lower than it has ever been. We've never been more vulnerable to snake-oil salesman, and it's precisely because we have so much information with which to defend ourselves! (A step further and we might conclude that only communities have the experiential context to validate the vast quantities of information we have access to, and that is why Wikipedia is perfect for the information age.)

Obviously time for bed...

Life Continues (Foggy or Otherwise)

Well, I haven't solved all the riddles that trouble me, but I'm determined that it should not keep me from writing. So, here's what's been going on:

1) My sister has just gotten married and is now Carolyn Blake.
2) We are in the final push at work and have about 3 weeks of Alpha left.
3) I'm reading a naval history of WWI along side a very neat book about Chinese voyages of discovery.
4) I'm more determined than ever to use my weekends for active recreation.
5) I saw Jim and Jesse twice on their trip up from Columbia.
6) Zach and Allison continue to cook for me. (This is very good.)
7) I have bought a Mac, and so far it seems just fine. (Though, no one should buy Quicken for Mac. Try Moneydance instead. Cheaper and better.)
8) Apparently, the inside of my car's engine is "immaculate".
9) I made a perfectly complete fool out of myself at the wedding reception. No one is so loved by others than he who dances, not well, but with enthusiasm.
10) I have no plans beyond May.

One ping, one ping only

It's been a long time since my last post. Suffice it to say that when I am not sure of what I think, I don't feel at all comfortable expressing it.

I revisit my beliefs from time to time. The good part about this is that my opinions are usually more grounded and defensible than they were previously. That's probably just normal maturation.

But, since I'm hesitant to let people see the work in progress, the result is alternating periods of murky quiet and definite, reasoned opinion.

It's very murky. I'm very quiet.

But at least I should explain the silence, i.e. I'm still alive.

Unlikely, but I Don't Care

I recently friended my cousin on Facebook, and while I was viewing his profile I noticed that he had joined a group supporting Newt Gingrich for president in 2008.

I also joined this group, but I felt like it deserved an explanation.

I am fully aware that this is unlikely. I know all the reasons why this can never be. But, if I am honest, I must admit to the world that I do hope he becomes president. I've read several of his writings and I've heard him speak on numerous occasions. On the whole, I agree with him.

I'm ready for an intellectual president. (He just has to be one I agree with.) And, I'm tired of just rooting for the best-of-the-inadequate-front-runners.

So, here's to a little idealism and hoping for the best.

Heckling: Finding Friends in the Crowd

I've never been much of a heckler at sporting events. My idea of a great live sporting event is a lot closer to a spring training game than a playoff football game. Or was.

I have some friends who come from a tradition of heckling. We've been going to various UCF sporting events where I've come to appreciate it as a kind of art form that requires practice, discipline, and perseverance.

UCF has very nearly completed it's new 10,000 seat basketball arena on campus, but for the remainder of this season, the UCF basketball team will play in it's current arena, which is much smaller. One of the interesting things about it is that there are no seats behind either basket. There are, however, walkways with railing on the second story just behind the basket. And, if you are willing to stand or lean for the whole game, there isn't a better seat in the house. You are literally right on top of the players.

Which brings us back to heckling. From this vantage point, the players can hear everything you shout, even when the place is pretty loud. For me, attendance has been transformed from an exercise in observation to one of participation. The things I say can be heard by the players (they are human beings remember) and can have an effect. Perhaps I'll write in another post my thoughts about the proper way to heckle, which are still developing.

But, standing behind the railing above the basket is a pretty noticeable place to be, especially if you are shouting various comments the whole game. And so I've noticed that people will suddenly appear behind us, tap us on the shoulder, and say "hi". They never did that when I was just clapping in the seats.

Tutor Take Two

Last Friday, as will hopefully become my custom, I ventured back to UHS for another tutoring session. I skipped a week because the previous teacher, who I thought I had done a really good job for, and who told me he was glad to have me, and who said he would email me about the next good time to come, has not returned my emails. (Perhaps I wasn't as helpful as it seemed.)

Thankfully, there is another teacher who wanted some help for an Algebra I class at the ninth grade center (the campus where I went to middle school). I was late getting there, which was bad since the teacher I was helping actually had a substitute on Friday, and said she could only hang around for a few minutes in the morning before she had to go. By the time I rolled in, only the substitute was left.

If you seem to remember that days with a substitute teacher were days of lawlessness and chaos, you are remembering correctly. The substitute might as well not have been there. After asking the class if any one needed help (which predictably was answered by blank stares), I was about to abort the mission and just go to work to try again next week. But as I was starting for the door the real teacher arrived for one last check of her classroom.

Suddenly, there was order. Two students were instructed, not asked, to go to the media center, where I thought we had a productive session. I got a permanent badge and everything.

I did completely miss the bell, and so had to try and wrangle a pass for the students so they wouldn't get in trouble in their next classes. This is sort of fun.

Painless Environmentalism

Those who have spoken with me about environmentalism are probably quite fed up with my seemingly endless supply of faith in the markets to solve environmental problems. And, while I'm not ready to say that government and regulation have no role, I steadfastly insist that it hardly matters, and usually makes things worse.

As Ronald Reagan said in his 1986 State of the Union address, "[G]overnment's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."

So, I've got a chance to crow, and I'll take it. This is from the Economist, one of my favorite magazines:

"Lots of firms are growing healthily on the back of America's sudden enthusiasm for alternative energy. Americans invested almost $30 billion in the sector in 2006, according to New Energy Finance, a research firm. American venture capitalists lavish seven times more on greenery than their counterparts in Europe. Ethanol production was expected to double in the next few years, even before the latest boost from Mr Bush. Wind and solar power are also booming. And the bigger green firms become the more influence they will have over politicians."

Also, Martin Eberhard, the CEO of Tesla Motors, a maker of electric automobiles, had this to say about President Bush's recent State of the Union:

"[A]s much as I would dearly love a similar research grant for Tesla Motors, I am not enthusiastic about government spending on battery research. Much better would be incentives that encourage consumers to buy an electric car. ... I actually don’t have a good suggestion about how to encourage consumers to make fuel efficient choices other than to make great electric cars."

Exactly. When the technology is profitable, when it makes sense, when the tipping point is reached, things happen. I personally can't wait to drive a high-performance, high-efficiency, low-cost electric car.

Two Ball, Four Ball, My Ball, Your Ball

Luckily for us, this winter has been very pleasant, with only a few "cold" days (meaning a high in the 60's). And even better, the cold days have been weekdays, but the weekends have been really nice. This will be the second week in a row where the best weather day of the week falls on a weekend.

So, what to do with a beautiful day? Golf! And I did.

But this time, I finally convinced our little foursome to try out match play. If you've ever seen the Ryder cup on TV you'll know what I'm talking about. Match play, or a form of it, is when there are teams of two, and the team members alternate drives and alternate shots.

It looked like fun, but we in America are all about four ball courses, which means there are always four balls in play. Usually this is four individuals all playing their own ball. If you have less than four players you tend to wait around a bit because everyone else has four, and so they generally move along at a slower pace. Match play in general is a two ball game, with two teams playing one ball each.

But we're an inventive lot, so we played teams of two, alternating drives and alternating shots, BUT we each took two strokes every time, and only played the better of the two shots. That way we got in the right number of strokes to equate with four ball golf.

I have to say it was pretty fun. For one thing, my team won on the last hole after mounting a big comeback. But also because when you've only got to shoot every other shot and your teammate is also making mistakes, you don't beat yourself up as much. Yet at the same time, each shot is more significant, because you hold your teammate's fate in your hands as well as your own.

More pressure, more fun, what's not to love?

Algebra as Community Service

Recently I agreed to try tutoring at University High School, which is where I attended high school and graduated in 1997. I was told that I might be teaching anything, and especially kids who are in serious jeopardy of failing in one way or another.

I was also told that motivating the student was probably going to be the most important and hardest thing to do, and that many of the students would probably rather not have a tutor, and that I should go for an entire semester even if I hated it after the first try, because a lot of these kids have been abandoned or let down by adults in their lives.

Add to that the normal stereo-types of high school that are presented in the media, the fact that there was a fatal stabbing at UHS recently, and my own memories of insecurity and inadequacy from high school, and you end up with a mix of thoughts and emotions similar, I would think, to walking a plank on the high seas. You'd rather not, it won't be pleasant, but you're there and all there is to do is jump.

So, jump.

I found the cafeteria where the displaced Algebra II class was currently meeting. Turns out, the class was honors, and the student was very sharp, he'd just been away from school for about a week and needed to catch up. We did polynomial division. We factored. We solved an open-ended puzzle type problem. And then I left.

I did not feel inadequate, and I did not feel insecure. It wasn't hard to teach the student, and the class was taking a test and was very quiet. The lessons were not trivial. I did not feel the material had been dumbed down. It was a good thing to do.

So, after only one myopic experience, I conclude that the demise of our public schools and our teenagers is a bit overblown.

What was the "Curse"?

I received a book for Christmas from my Aunt and Uncle titled "Heaven" by Randy Alcorn. It is a very interesting survey of the theology of heaven, a subject that I have previously thought very little about.

At any rate, I am coming to notice that I have a very underdeveloped sense of what the "Curse" actually was (when Adam and Eve sinned in the Garden of Eden, and the whole universe was "Cursed" because of it).

I'm coming at this from a sort of scientific perspective, and some thoughts I've had are entropy, chaos, moral corruption, removal of some ordering property, etc. In fact, I've noticed that I don't really even have a clear understanding of what is wrong with creation now (the world, not humanity), other than symptomatic: dirty, painful, tiring, etc. Is granite or diamond, for instance, somehow in a fallen state? Do I perceive anything wrong with flowers and trees? How about weeds?

So much of what I think of as "wrong" is just things happening globally where I think they should happen locally. As an example, weeds are fine, and some are beautiful, just not in my flower beds.

Much to think about...

Facebook faux pas

I've been scolded repeatedly by a certain person for my mishaps surrounding descriptive language of, and actual behavior on, facebook. As it would be inappropriate for me to apologize for writing on my own wall on my own wall (that would just exacerbate the crime), I will apologize here.

I won't ever write on my own wall again.

PS. I still think "Children of Men" was a pretty good movie. (And this is the correct place to say it.)

To Complete the Capitulation

I have been harassed, harangued, and bullied into joining a social networking site. I was told that blogging just, well, wasn't enough. It was time to take the next step. So, there are really only two options: facebook or myspace. It used to be I couldn't join facebook, but now that I have the choice, I think I can do without the "really cool backgrounds", and annoying music clips, and slow load times, and page loading errors, etc. of myspace.

I am now established on facebook, and to go there or add me as a friend just click the link under my picture.

I'd better be friended...

Good Wine

In answer to questions about the wine of the last post. I decided that since I was going to do some reading the other night, and because I was going to make pasta to eat, I should have a red wine. I had recently tried the Yellow Tail Shiraz-Grenache blend, and I really liked it. The Shiraz is a peppery wine, and the Grenache is a raspberry type flavor. The ratio of the Yellow Tail was 80% Shiraz, 20% Grenache.

I had tried Shiraz before, and I like that wine, but I had never had Grenache, so I went into the wine store and was searching for the Grenache section, and not finding it. An observant gentleman who worked there asked me what I was looking for, and when I said "Grenache" he said, "I know just the thing." As it turns out, he had tried a wine on Thanksgiving and had enjoyed it very much. So, he recommended it to me.

The wine is from South Australia from the d'Arenberg winery. It is called "The Stump Jump", and the label on the back says that is because in Australia they used to use a special plow that could jump over difficult to remove stumps, thus saving time. But, this wine is a blend of the following:
46% Grenache
34% Shiraz
20% Mourvedre

I don't know what Mourvedre is, but I now have something else to search for.

New Year's Flourish

My kitchen wasn't the only victim of my spare time.

I also did some reading: War and Peace, Dostoyevsky, Surprised by Joy, C.S. Lewis, and I'm finishing a book I've had for a while Evil, Morrow.

I also started the next phase of my never ending front yard project. I am building another planting bed in the front of the house, right in front of Josh's window (that would be Jim's old window) for those familiar with the property.

I think I know why all my plants died, as well. I discovered in some disbelief that the dirt immediately in front of my house has a lot of clay in it (instead of the expected sand). As a result, poor drainage and deadly fungus. I'll have to do something about that.

I went and saw a couple of UCF basketball games, all of which we won and which we should have won.

I've been cooked for by Zach and Alison more times than I deserve in a life time, and decided that their Tristan is an acceptable addition to humanity.

Last night I discovered a new wine that like a lot.

So, now everyone is caught up.