My son Sean recounts a recent misadventure:

Our first La Mirada Disc Golf Saturday trip this year began with Dad and I making our ritual trip to McDonald’s for sweet, sweet Egg McMuffin action. The drive-through line was packed, and time was running out, so we ran inside.

I go to the fountain to fill my soda while Dad received our food, and I turn around to see him holding our bags and looking around, as though I had vanished into thin air (not an unfamiliar expression). I approach him with a wave of my drink hand, and start to say something as I get within I-know-you range of him. He gives me this look, like, you’re way too close to me; you are probably a crazy person in McDonald’s, and pushes me aside. He marches to the soda machine, puts his hand on the shoulder of a young 5′7″ half-Asian guy with short brown hair, a tee-shirt and shorts, says “Hey, boy, ready t… oh I’m so sorry, I thought you were my son,” as the stranger gives him the now-familiar you are probably a crazy person in McDonald’s look.

Now, admittedly, I am young, have short brown hair, and was, at the time, wearing a tee-shirt and shorts. But, he had to push the real Sean Chappell out of his way (waving a drink!) in order to confuse/distress this vague half-Asian approximation of me. Dad immediately realized that the weirdo he’d been recently accosted by was probably the next best guess as to where Waldo was, so we very quickly scrambled out of there.

Dad had, in the past, shared his harrowing tales of picking me up from school and having to guess at the identity of every vaguely-me person walking in his general direction (okay, he’s about Sean’s height; he’s walking right towards me, Sean would do that; he’s saying ‘Hi Dad’, there’s no one behind me; he’s probably Sean).

I never fully understood/believed these stories until that McDonald’s incident, but to Dad’s credit… I’ve known him my whole life and it took me this long to see the face-blindness rear its ugly head, so that’s pretty impressive coping.

In my defense, I think Sean must have been approaching me from my blind side (because I have some actual-blindness in addition to the face- kind, and I just literally didn’t see him as I brushed by him to accost his half-asian Doppelgänger. But yep, that’s my life, 24/7.

Did you ever see that episode of Gilligan’s Island where they almost get off the island and then Gilligan messes up and then they don’t? I saw that one. I saw that one a lot when I was growing up. And every half-hour that I watched that was a half an hour I wasn’t posting at my blog or editing Wikipedia or contributing to a mailing list. Now I had an ironclad excuse for not doing those things, which is none of those things existed then. I was forced into the channel of media the way it was because it was the only option. Now it’s not, and that’s the big surprise. However lousy it is to sit in your basement and pretend to be an elf, I can tell you from personal experience it’s worse to sit in your basement and try to figure if Ginger or Mary Ann is cuter.

Read the full article — it’s great! — here.

16 miles, riding in the hills near my house in Sunland on Sunday, took my pulse rate up to 163 beats per minute, almost 98% of my theoretical maximum (which, if you’re not too familiar with typical pulse meter readings, is more or less stunning).

My breathing has been stellar the last few days, so I’m guessing that the high pulse rate is due to:
    (a) 13 months off the bike, and
    (b) the recent ALYX blood donation, which takes a double-dose of oxygen-carrying red blood cells. I’ve read complaints from athletes that it makes a noticeable difference, compared to a normal donation.

I’m lucky to have these lovely hills so close that I can literally step out of the house, hop on the bike, and be among them just a few minutes later.

I didn’t have any problem actually climbing the darn hills; the only limiting factor was some lower-back pain, and then last night, some leg cramping, both of which definitely have to do with lack of practice.

On Big Tujunga Canyon road, an evil hill.

Next up: a longer ride later this week!

I picked out a few loose flowers, including one of Sylvia’s favorites, the Stargazer Lily, and had them make up a nice arrangement for about $25:

…and then while I was at the flower shop, I saw a bloodmobile ad for a blood drive at the church where I go to vote, so I went down there to check if they could fit me in, and they said, “Sure!”, so I made an appointment, took my flowers home and came back and donated.

It was the first time that I’d given blood where they take a double-size donation of red blood cells, separate out the plasma and return it to you for you to cherish.

Here’s a picture of the ALYX machine, separating my blood into flavors. It has three pouches on the left, and you can see the whole blood going into the right-most pouch of the three, the red blood cells being accumulated in the middle pouch, and the plasma on the left waiting to be fed back into me. Technology!

They do it all with just the one needle in your arm, and an automated blood pressure cuff. First the cuff presses down, and the right-hand pouch fills maybe quarter-full or so with whole blood, and ALYX works on separating it into parts into the other pouches, and then at some point the cuff lets up, and you feel a chill as the left-hand pouch is emptied and the plasma is returned. Then it repeats for maybe four or five cycles. Takes about 10 minutes longer than a regular donation, but with all the paperwork and waiting and so forth, it’s a huge win all around to get what is effectively a double donation in so short an additional time.

Seriously, though, I can’t imagine (or can barely imagine) thinking about that problem and saying, “Sure, we could build that!”

Anyone who is interested can just send a Kiva.org gift certificate to sylviachappell@gmail.com.

I will lend the money out to third-world entrepreneurs in her name, and as the loans are repaid, will initiate new loans to new entrepreneurs.

You can track the progress of the loans initiated by the fund here.

…and isn’t this a lovely photo of Sylvia, by the way? Look at that smile!

A service is planned for 1:00 PM at Crippen Mortuary in Montrose, California on 21 March 2009.

“That sure is a nice global economy you’ve got there…
…Be a shame if anything were to happen to it…”

This is the third big program on the economy from the This American Life/National Public Radio team that brought you The Giant Pool of Money and Another Frightening Show About the Economy.

Listen to the full episode by going to the Bad Bank program page at This American Life,
and hit refresh if you don’t see the Full Episode download link.

“Bad Bank”
February 27, 2009

For the first time, scientists have been able to map the disruption in neural circuitry of people suffering from congenital prosopagnosia, sometimes known as face blindness, and have been able to offer a biological explanation for this intriguing disorder.

…[U]nlike that of normal brains, there was a reduction in the integrity of the white matter tracts in the brains of individuals with congenital prosopagnosic. Moreover, the extent of the reduced white matter circuitry was related to the severity of the behavioral impairment.

…People with congenital prosopagnosia are not able to recognize faces, while the ability to recognize other objects may be relatively intact.

…So far, few successful therapies have been developed for affected people, although individuals often learn to use feature-by-feature recognition strategies or secondary clues such as hair color, body shape and voice. Because the face seems to function as an important identifying feature in memory, it can also be difficult for people with this condition to keep track of information about people, and socialize normally with others.

…[T]hese individuals appear not to be able to compensate for their inability to recognize faces even though they have had ample opportunity to do so over the course of development,” said Marlene Behrmann, a professor of psychology at Carnegie Mellon.

Behrmann said the team was excited by the possibility that the failure to propagate signals between different regions of the brain might provide a biological explanation for this perplexing disorder.

So distressing to have myself and my face-blind peers around the world referred to as “[T]hese individuals”, and have our brains presented in stark contrast to “normal brains”.

On the other hand, you’d have to say that normal people, when picking up their son at school, wouldn’t have to stare into the crowd on Day 3,000 and wonder if that kid was the one. And really, on balance, it’s a relief to know that there’s a real physical reason for it, and not me just being goofy.

Read the full article in Science Daily.
November 28, 2008

As well, here’s something that made me laugh out loud when I saw it used recently on a forum: someone had posted a message about some subject (as it might be, face blindness), and someone else had posted a reply, asking for a link to more information on the topic. In short order, a link had been posted in a reply, along these lines:

“Sure, it’s here.”

Oh, that made me laugh and laugh.

Closed captions: [...going along normally, matching the acting, and suddenly:]

“…but if you think about it, it kind of makes sense, because her mouth is on her face, but she talks out of her ass!
I’m kidding.
I’m kidding!
I love Ann Coulter!”

…and then no more captions for the rest of the show!

She does talk out of her ass, though.

See the vanity card for this episode:
Chuck Lorre Productions #240

http://www.youtube.com/watch?v=42E2fAWM6rA

It’s a Groundhog Day’s surprise!

Here, ladies and gentlemen, is the crux of the problem: We are reliably informed that whatever part of the economic crisis can’t be pinned on Wall Street — or on mortgage-related financial insanity — can be pinned on consumers who overspent. But personal consumption amounts to some 70 percent of the American economy. So if we don’t spend, we don’t recover. Fiscal health isn’t possible until money is again sloshing into cash registers, including those at this mall and every other retailer.

In other words, shopping was part of the problem and now it’s part of the cure. And once we’re cured, economists report, we really need to learn how to save, which suggests that we will need to quit shopping again.

So the mall we married has become the toxic spouse we can’t quit, though we really must quit, but just not any time soon. The mall, for its part, is wounded by our ambivalence and feels financially adrift.

Read the Full Story at the New York Times (while they’re still a going concern!)
“Our Love Affair With Malls Is On The Rocks”
January 31, 2009

…Indeed, one of the great social benefits of the Madoff scandal may be to finally reveal the S.E.C. for what it has become.

Created to protect investors from financial predators, the commission has somehow evolved into a mechanism for protecting financial predators with political clout from investors. (The task it has performed most diligently during this crisis has been to question, intimidate and impose rules on short-sellers — the only market players who have a financial incentive to expose fraud and abuse.)

…and this one:

And here’s the most incredible thing of all: 18 months into the most spectacular man-made financial calamity in modern experience, nothing has been done to change that, or any of the other bad incentives that led us here in the first place.

Read the full story in the New York Times
“The End of the Financial World as We Know It”
January 3, 2009

About the authors: Michael Lewis, a contributing editor at Vanity Fair and the author of “Liar’s Poker,” is writing a book about the collapse of Wall Street. David Einhorn is the president of Greenlight Capital, a hedge fund, and the author of “Fooling Some of the People All of the Time.”

The blogger Tanta, an influential voice on the mortgage collapse, died Sunday morning in Columbus, Ohio.

Tanta, who wrote for Calculated Risk, a finance and economics blog, was a pseudonym for Doris Dungey, 47, who until recently had lived in Upper Marlboro, Md. The cause of death was ovarian cancer, her sister, Cathy Stickelmaier, said.
…
Tanta used her extensive knowledge of the loan industry to comment, castigate and above all instruct. Her fans ranged from the Nobel laureate Paul Krugman, an Op-Ed columnist for The New York Times who cited her in his blog, to analysts at the Federal Reserve, who cited her in a paper on “Understanding the Securitization of Subprime Mortgage Credit.”

Read the Calculated Risk post about Tanta’s passing.

See an earlier post that featured Tanta in her heydey.

Even I found that a sobering estimate.

That would mean that the median Southern California home price will have done this:
    $505,000 (top $) July 2007
    $300,000 (-41%) October 2008
    $227,250 (-55%) Eventual Bottom

There’s also a table, showing various regions in Southern California, and along with sales and price figures compared to a year ago.

Read the full story in the Los Angeles Times
“Price of Southern California homes falls 41% from peak”
November 19, 2008

Hat Tip: Larry Helmerich

Four people weren’t home, one person wouldn’t talk with me, and one person had already voted.

So you might think that that was not very effective.

But apparently, if you multiply me times The Internets, you get: President Barack Obama.

Oh, and there was the $500 or so that I gave directly, and the $1,000 or so dollars that I raised from friends.

In the end, I think Obama raised $500 million dollars, for an average of $86 per person.

We may have witnessed, tonight, a sea change in American political fundraising.

McCain (just now) conceded, and Bush has even called Obama to congratulate him, so apparently our long national nightmare is over. Cue the sunrise-over-America graphic!

-Tom

Thomas –

I’m the Chief Financial Officer for Barack Obama’s campaign. I track the donations coming in and the expenses going out.

I asked for the opportunity to write to you directly so that I could try to explain what’s happening right now.

This organization has thousands of employees and spends millions of dollars a day — and at the moment we’re doing it without a safety net.

Our spending plans have been stretched by John McCain’s negative attacks and the overwhelming resources of the Republican National Committee.

As of October 15th, John McCain and the RNC together had nearly $20 million more in cash than the combined total of Obama for America and the DNC. And just this week, we’re facing new and unexpected spending against us in Montana and West Virginia.

Your incredible generosity has gotten us this far. But right now we need your help more than ever to get this campaign across the finish line.

Please donate $100 or whatever you can afford right now:

https://donate.barackobama.com/RNCadvantage

My team and I are working to stretch every dollar in order to keep as many paths to victory open as possible. But we need whatever help you can provide for this crucial final stretch.

Thank you,

MM

Marianne Markowitz
Chief Financial Officer
Obama for America

…or donate here, where I can note your contribution, steeple my fingers, and gloat, in the manner of Mr. Burns (“Excellent!”)

But seriously, there has never been a starker choice. If you’re not going to donate now, then what campaign are you waiting for?

“If not now…when?”

US mortgage rates have soared this week in an unexpected reaction to the latest Treasury financial rescue plan, which has prompted investors to buy bank debt and sell bonds backed by home loans.

Interest rates on 30-year fixed-rate mortgages, as measured by Bankrate.com, rose to 6.38 per cent on Thursday from 5.87 per cent last week - before the Treasury said on Tuesday that it would take equity stakes in banks and guarantee new bank debt.

Investors responded to the new guarantee by buying existing bank debt, reckoning it could be refinanced with the new government-supported bonds. As they did so, they sold lower-yielding paper issued by Fannie Mae and Freddie Mac, the mortgage companies put into government conservatorship last month.

The sales of Fannie and Freddie paper pushed up yields on their debt, which is backed by mortgages. This, in turn, pushed mortgage rates to levels not seen since the government took over Fannie and Freddie on September 7.

Fannie and Freddie had been taken into conservatorship by their regulator to help keep mortgage rates low and – it was hoped – revive the housing market.

However, the opposite is now happening, making it more difficult for struggling homeowners to refinance their mortgages and for prospective homebuyers to get financing.

As a result, house prices may fall further before they find a bottom.

Oh yeah, baby — will they ever.

Read the Full Story in the Financial Times:
“Treasury plan pushes up US mortgage rates”

Then I saw on the web that a fellow named Hans Andersson had designed a Rubik’s Cube solver that uses only the LEGO Mindstorms NXT Retail Kit.

Watch the video!

My LEGO Mindstorms NXT set is now on order, using my livesystems.com sale money.

I actually got a little more money than that, but of course I shared some with
Industry Figure Chris Gibson.

Initially he told me to just take all the money, but I protested:
“Surely you want half? Even Bill Gates gets half!” [Copyright 1997 TheOnion.com]

“Well, I don’t want to be as greedy as Bill Gates; give me a third,” he said, and so we did.

See full construction details for Tilted Twister, including software, at tiltedtwister.com.

“DOW drops 1000+ in last 3 sessions. The Bailout Goggles! They do nothing!”
–seen on a reddit.com headline mid-week.

“This is worse than a divorce. I’ve lost half my net worth and I still have a wife.”
–seen on The Times of London.

If anyone has another that they liked, post a comment!

Converting Pi to binary: Don’t do it!

Who knew about the, e.g., child pornography risk?

Their building, in Switzerland:

Ooh…looks like I could have asked for more money, rats.

If you’re wondering about how strangers go about transacting a domain sale, we used escrow.com, and I was extremely pleased with their service — really great, I’ll totally use them again.

Here’s a link to an automatically translated version of the new livesystems.com site, via beloved Google.

There was a funny editorial cartoon referring to it, drawn by Eric G. Lewis, a freelance cartoonist living in Orange County, CA.

You need to know that Calculated Risk is written by two people: a man (a retired–and anonymous–executive of a public company), who posts as Calculated Risk, and a woman (a former bank officer), who posts as Tanta:

Okay, for those keeping track, this market freeze-up has been compared, so far in our story, to an oncoming train, an abyss, a monster, and an earthquake. All we need now is a serial killer.

And what made this abyss, earthquake, train, monster materialize all of sudden?

There was one event in particular that frightened the commercial paper market and made it seize up. Explaining it, I’d afraid, means using another finance term, although this one might be a little more familiar: the money market mutual fund.

And we should say here, a money market mutual fund is just, it’s like a savings account: there’s a good chance you even have one; it is, in normal times, it’s one of the safest places to keep your money. You put $1,000 bucks in; you know for sure you’ll get $1,000 bucks out — maybe even $1,010. And you’re happy with just that little return, because you know, at least your money is secure.

Now, one of the main things that money market managers do, to get that little return, is they lend money out on the commercial paper market. They give guys like Mark Peterson at ServiceMaster that $999,000; he gives them that $1,000,000 back the next day. It’s an OK return, but the main thing is: it’s safe, their money is safe, because they’re lending it to huge, trusted companies, many of which have been around for decades, reliably paying back these loans.

At least, that’s the way it was until two weeks ago, when one most dreaded things happened, at least in the world of money market managers — it’s the thing they have nightmares about.

One of the biggest, and oldest funds, called the Reserve Fund, that was its name, it broke the buck. What that means is, for the first time ever, it lost its depositors’ money. For every $1.00 they put in, they were left with only 97 cents…

It’s a big deal.

“Breaking the buck, is, is sort of like, uh, having a serial killer in high school; it caused a little bit of panic… People are not concerned with getting a return on capital; they just want the return of capital. So that, that is panic; that is fear.”

That panic and fear caused an old-fashioned bank run. People, and more importantly, pension funds and big endowments, called their brokers and said, “Get me out of those funds!” The government had to step in and guarantee the money market funds.

And this, right here, as near as we can tell, this is what freaked out Henry Paulson and Ben Bernanke. Because this, right here, is the mortgage crisis spreading out into the rest of the world.

This fund that broke the buck? They weren’t investing in risky mortgages or anything related to the mortgage industry; they were not free-wheeling Wall Street fat cats taking big risks and hoping for a windfall. They were investing in investments that those fat cats laughed at. These were fund managers doing everything possible to be Totally Safe, doing what they always did: buying very safe, very short-term commercial paper.

But it just so happened that the company they bought it from, was Lehman Brothers, and the day before, Lehman had gone bankrupt, in part, because of its exposure to risky mortgage products. So all the money this money market mutual fund, the Reserve Fund, had lent to Lehman was suddenly gone…

“That’s what caused the panic. All the other money market mutual fund managers freaked out. They wondered, who’s gonna be next? And then, like a horror movie, at least, a horror movie made for money market mutual fund managers, another fund broke the buck. And then AIG, the largest insurance company in the world, nearly collapsed.

That was it: money fund managers decided, we’re not lending out any more money out to companies at all.”

The scary monsters in the story: the lock-up of the commercial paper market (above), and the leverage in the credit default swap market. I swear to God I’m not kidding.

“That doesn’t sound scary…that sounds boring,” I hear you say.

“Well, allow me to retort:”

The amount of credit default swaps used for speculation grew to dwarf the amount that were actually used for insurance…

“The corporate bond market cash market is approximately $5 trillion, and the notional value of [credit default swaps] outstanding is approximately $60 trillion.”

In other words, there are $5 trillion of bonds in the world, but the total amount that people have bet on those bonds is $60 trillion. For every bond, there are 10 people promising to pay the full amount if the bond goes bad.

Oh, and there’s one more thing:

“All of this is unregulated, partly because they wanted it to be unregulated…”

“The idea that you can have $60 trillion in a financial market, which is more than all the stocks sold anywhere in the world, and not have any oversight whatever, is self-evidently absurd, and we’re seeing the end result of that today.”

Finally, the show details why an equity-injection plan would be (so!) much better than the big, stupid Paulson bailout plan.

Don’t wait! Get it via podcast from This American Life right now!

Or, download it directly from the This American Life website here.

Or, download it from iTunes here.

“#365: Another Frightening Show About the Economy”
October 3, 2008.

It will be available for streaming or downloading shortly afterward, but in the meantime, they have produced a cut-down version of the story for NPR’s All Things Considered, which you can listen to now.

It’s just as gripping as the original. I can’t wait for the full-length version!

Listen to the short version here on NPR’s Planet Money site:

“The Week America’s Economy Almost Died”
All Things Considered
September 26, 2008

And then, in a piece dated today on how perhaps the votes aren’t there for passage after all, I see the name of my actual Congressman:

[Sen. Dennis] Kucinich [D-OH] attended a meeting of the “Skeptics Caucus,” organized by Rep. Brad Sherman (D-CA) and consisting of House Democrats skeptical of the bailout effort. The meeting’s speakers included economic professor James Galbraith of the University of Texas and former FDIC chairman William Isaac. Sherman called the legislation a Bush administration “power grab” and a handout to Wall Street. “This is greatest shift of power to the imperial presidency and the greatest shift of wealth to a still wealthy Wall Street that anyone could imagine,” Sherman said.

“None of this has been subject to a critical analysis,” charged Rep. Kucinich. “We haven’t had access to the books to the people who are claiming they are going broke.”

“They rushed this Congress into the Iraq resolution and look what happened,” he added, comparing the rushed tone behind the bailout effort with the push to invade Iraq, “Catastrophe for this nation as well as for the people of Iraq.”

Yes, finally! Go, House! Represent!

Read the full article on The Raw Story:
“Kucinich says bailout doesn’t have the votes”
September 28, 2008

…while there are many objections to this proposition [banning gay marriage] — further government encroachment on personal lives, ambiguously written text — it is the chilling and discriminatory effect of the proposition on many of our employees that brings Google to publicly oppose Proposition 8. While we respect the strongly-held beliefs that people have on both sides of this argument, we see this fundamentally as an issue of equality. We hope that California voters will vote no on Proposition 8 — we should not eliminate anyone’s fundamental rights, whatever their sexuality, to marry the person they love.

Read the full Google announcement:
“Our position on California’s No on 8 campaign”
September 26, 2008

Although it is true that the current debt crisis in America originated in the mortgage market, it is not accurate to say that the root of the crisis is strictly in this one sector. Rather, the debt crisis has multiple and varied roots, with excessive risk-taking in credit cards, auto loans and virtually every other form of private-sector debt.

There are currently $14.8 trillion in residential and commercial mortgages in America. But beyond mortgages, there is another $20.4 trillion in consumer and corporate debt. This means that mortgages represent only 42% of the private-sector debt problem in America.

Holy hell. And those auto loans and credit-card debt are underwater from the get-go.

Read the whole white paper from Weiss Research:
“Proposed $700 Billion Bailout Is Too Little, Too Late to End the Debt Crisis; Too Much, Too Soon for the U.S. Bond Market”
September 24, 2008

If Americans choose McCain, they will be turning their back on the rest of the world, choosing to show us four more years of the Bush-Cheney finger. And I predict a deeply unpleasant shift.

Until now, anti-Americanism has been exaggerated and much misunderstood: outside a leftist hardcore, it has mostly been anti-Bushism, opposition to this specific administration. But if McCain wins in November, that might well change. Suddenly Europeans and others will conclude that their dispute is with not only one ruling clique, but Americans themselves. For it will have been the American people, not the politicians, who will have passed up a once-in-a-generation chance for a fresh start - a fresh start the world is yearning for.

And the manner of that decision will matter, too. If it is deemed to have been about race - that Obama was rejected because of his colour - the world’s verdict will be harsh. In that circumstance, Slate’s Jacob Weisberg wrote recently, international opinion would conclude that “the United States had its day, but in the end couldn’t put its own self-interest ahead of its crazy irrationality over race”.

Even if it’s not ethnic prejudice, but some other aspect of the culture wars, that proves decisive, the point still holds. For America to make a decision as grave as this one - while the planet boils and with the US fighting two wars - on the trivial basis that a hockey mom is likable and seems down to earth, would be to convey a lack of seriousness, a fleeing from reality, that does indeed suggest a nation in, to quote Weisberg, “historical decline”. Let’s not forget, McCain’s campaign manager boasts that this election is “not about the issues.”

I would remind you all that the Obama “Donate!” link beckons on the right-hand column.

Read the Full Column in The Guardian
“The world’s verdict will be harsh if the US rejects the man it yearns for”

How? Click on the graph to go to InTrade, and press the Trade button.

Graph displays recent action; all times in UTC:

The price is labeled on the right-hand axis, showing implied percent chance that the nomination will be withdrawn before the election.

As of the original time of this posting, the markets were offering 12.5% odds that the nomination would be withdrawn, and then crashed to 5% shortly thereafter.

“Not so much.”

Were the Kuznets Cycle to confirm to past patterns, real median CA house prices will not again return to the ‘04-’06 levels for another 15-20 yrs., if then, given the longer-term demographic profile, normalized lending standards, and likely slower real GDP growth trend (2% vs. 3-3.5%).

Seen another way, nominal SoCal median house prices will not bottom until prices return to the ‘99-’01 levels, implying another 20-30% avg. decline in prices hereafter; but even then nominal prices will likely not rise more than inflation for many years thereafter.

Click on the image for a larger, clearer version:

Read the Full Story at Mish’s Global Economic Trend Analysis:
“When Will Southern California Home Prices Bottom?”
September 1, 2008

What do we know about her? Well, she’s an book-banning, creationism-teaching, abstinence-only, anti-choice evangelical, for starters — I can hear the stampedes of supposed disaffected Democrats already!

And then there’s this:

Lawmakers will hire someone within a week to investigate whether Governor Sarah Palin abused her power in firing Public Safety Commissioner Walt Monegan. The legislative council approved 100,000 dollars for the investigation that will find out whether Palin was angry at Monegan for not firing an Alaska State Trooper who went through a messy divorce with Palin’s sister.

Read the Full Story at the KTVA web site.

We first noticed it was “a little smoky” around 1:00pm, and within 15 minutes, it looked like this, with the whole ridge on its way up to Smoky Town (this photo taken as we bravely retreated to our cars):

Industry Figure Larry Helmerich, our office building, and a passing fire. Click to enlarge.

Consider that both the reporter and the editor would have had to let this mistake slip through.

That’s right, the freaking Washington Post!

Keri Rainsberger isn’t rich. She works in the nonprofit world for a relatively low-profit salary. Yet, as many Americans are scrimping for every penny, she hardly feels the pinch.

…”I live so far below my means that it doesn’t really register,” says Rainsberger, a 31-year-old Chicagoan with a wiry frame and unusually sunny outlook. “I don’t have to think about money.”

How is this possible?

For starters, she has no car and commutes by bicycle each workday. She also has no mortgage payment and chooses to live in an “intentional community,” a partly shared space where $775 a month covers everything from utilities to meals.

…”In one fell swoop, I pay for the roof over my head, the food in my stomach and the lights to read by. That’s a big advantage,” says Rainsberger, whose high-rise living space is part of the residential program at the Keystone Ecological Urban Center in Chicago’s Uptown neighborhood. Her private quarters — larger and a bit more expensive than some — are about 400 square feet, divided into a sitting room, a craft room and a small bedroom. She shares bathrooms, showers, a kitchen and a large dining room with 28 other residents whose ranks include young professionals, professors and retirees.

“It’s like a college dormitory, but with better conversation,” she often jokes.

…The Fellowship for Intentional Community, a Missouri-based nonprofit that began a steadily growing directory of such communities in 1990, estimates that at least 100,000 Americans now live in one. They define them as groups of people living together who share common values that are religious, economic, environmental, social or any combination of those. Sometimes they own property; others rent. About a third live in urban areas, while the remainder are rural.

Read the full story at USA Today:
“Living simply provides economic shelter”
August 5, 2008

Los Angeles economist Christopher Thornberg believes that home prices will stabilize when homes are affordable to about 25% of the adult population. For that to happen in Southern California, home prices would have to come down 20% to 35% from their current levels, Thornberg said.

“There’s no way in hell the house you buy now will be more expensive next year,” he said.

Home prices are also relatively high compared with rents. The ratio of home prices to annual rents in the Los Angeles area was 20 as of March 31, meaning the median home sale price was 20 times a year’s rent for a comparable property, according to Moody’s Economy.com.

The 15-year average ratio in Los Angeles is 16.4.

As a completely uncontrolled experiment to see if Mr. Thornberg is right: Zillow currently thinks that my home is worth $414K, which I think is…ambitious, to say the least.

Click here to see the recent price history; does that look like a bottom to you?

We’ll check back in a year.

Read the Full Story in the Los Angeles Times:
“Should you buy a home now?”
August 3, 2008

No.

This morning, there were 4 peacocks perched on the fence outside my front yard; the squirrels were going crazy, and the cats were Highly Interested in the squirrels:

Left to right: Bitey, Queenie, Tiger Lily (ears, lower right)

Note that the bottom of the lender page lists the distribution amongst gender and locale.

How it works: you make small loans to small entrepreneurs. They pay you back.

Olesya Mikitina is my cutest recipient — if you’re in the Ukraine, stop by and pick up a lovely new stove exhaust fan (in high demand, this season!), and while you’re there, try a delicious khrustyky!

Comments:

“This is precisely the sort of thing that’ll reduce readiness when a REAL zombie attack occurs!”
–pavel_lishin

“I know it’s supposed to be funny, but it’s only a matter of time, people!”
–TheColonel

“You know what’s scary? I’m not entirely sure what I would do if I would be driving home and saw that sign. I’ve been planning too long, waiting for the sign of their emergence. It is no laughing matter.”
–anime_wars

Commenter truffle_shuffle made the excellent point that zombies are fantastically good at viral marketing, and it’s true that they’re surprisingly effective — I mean, you might not think that you’d be lurching around, moaning for brains, but just wait until you’ve been exposed to it; it grows on you.

Read the full Zombie Survival Guide Interview in the Washington Post:

Falls Church, VA: What do zombies do during the day?

Max Brooks: Attack and kill, just like the night. One of the reasons they scare me so much. They don’t have any rules.

(”Freaking spineless Democrats!” — oh, uh… ok, all better now)

Obama says he will vote to remove immunity from the bill but knows full well that this effort will fail, and that the final bill will have telecom immunity in it. The bottom line is that he will nonetheless end up voting for this bill with immunity in it even though he previously vowed to support a filibuster of “any bill” that contains retroactive immunity. Put another way, Obama claims he opposes telecom immunity but will vote for a bill that grants it.

…Whether it’s better than the Protect America Act (PAA) is irrelevant. The PAA already expired last February. If the new FISA bill is rejected, we don’t revert back to the Protect America Act. We just continue to live under the same FISA law that we’ve lived under for 30 years (with numerous post-9/11 modernizing amendments). So whether this bill is a mild improvement over the atrocious, expired PAA is not even a coherent reason to support it, let alone a persuasive one.

Read Glen Greenwald’s full response.

Note the incredible L-shaped finale:

Snapshot above is through May, 2008. Click here for updated, even scarier Scary Graph.

Whoa, that’s pretty awesome. Observe the relatively small amount of Fed lending associated with, say, the aftermath of 9/11, or the Federal Savings and Loan Fiasco or the Stock Market Crash of the 1980’s.

And then look at what’s happened in the last month.

What’s going on? The Fed has agreed to a debt swap with banks. The Fed gives the banks highly-liquid T-bills, and in return, the banks give the Fed “collateral”:

…the Federal Open Market Committee authorized an expansion of the collateral that can be pledged in the Federal Reserve’s Schedule 2 Term Securities Lending Facility (TSLF) auctions. Primary dealers may now pledge AAA/Aaa-rated asset-backed securities, in addition to already eligible residential- and commercial-mortgage-backed securities and agency collateralized mortgage obligations, beginning with the Schedule 2 TSLF auction to be announced on May 7, 2008, and to settle on May 9, 2008. The wider pool of collateral should promote improved financing conditions in a broader range of financial markets.

Translation: The banks can use their crappy non-performing real-estate CDOs for collateral, and in return, the Fed gives them delicious, highly-liquid T-bills at a cost of 2%/year. So naturally banks are rushing to take advantage of this in droves, to the tune of several hundred billion dollars.

Now, whether you think that this a good action by the Fed or not, consider that the Fed believes it to be necessary. They’re not eediots; the fact that they have made a move this large indicates how large they think the problem is.

Seriously, hold on to your hats; it’s going to be a bumpy ride.

My retinal specialist said that things were so stable that I could cut back to seeing him annually, which would still be about 2.5x more often than I’ve been going.

Oh yeah, and the staff at his office made a huge fuss about how much weight I’d lost, more than 65 pounds since when they knew me well:

“You look…fantastic!”

And…we’re getting there! Banks, at least, are finally capitulating in a big way, and buyers are returning. Industry Figure Larry Helmerich points out an article in Thursday’s Los Angeles Times, which shows that statewide in California (note that we’ve just gone from discussing oranges to apples), the median price has fallen 30% from its peak of $484K in May 2007 to $339K in May 2008, with about 38% of sales statewide coming from foreclosures.

“All of a sudden, [homes] are in our price range,” said Elizabeth Trezza, a paralegal in Oakland.

Trezza has been on the hunt for a foreclosed property and placed offers on at least six in recent weeks.

The 24-year-old made an offer Tuesday on a two-bedroom, two-bath bank-owned home in Oakland listed at $234,000 — just below her maximum spending limit, $250,000.

“Right now our mortgage would be relatively close to what we pay for in rent,” she said.

If Southern California homes have fallen the same 30% from their peak (moving back from apples to oranges), then they’ll have fallen from $505K to about $354K — still too high, but getting there.

Whether we’ve fallen as much is anyone’s guess. The hardest-hit markets are those out in the boondocks (e.g. Temecula), where high oil prices are taking a huge toll on residents, who often accept terrible commutes in order to find an affordable home. Plus, we’ll still have to work through all the buyers from the last four years who would find themselves under water at today’s prices — if they want to sell, they either have to get their lender to accept a short sale, or else wait until they can find that one extra-special crazy buyer with the moneybags.

Read the full article in the Los Angeles Times.
“Median home price in California drops 30% in May”
June 19, 2008

So don’t give any more! — we’ve already made our goal.

And really, I can’t think of a better point to make than McCain’s repudiation of the recent Supreme Court decision reaffirming the centuries-old right of habeas corpus.

(And when I say “centuries-old”, it actually was part of British common law by the time of the Magna Carta in 1215 — that’s old)

McCain is against it; Obama is for it. There’s no starker contrast than that.

If you were thinking about donating, or donating more, to the Obama ‘08 campaign, you’ll help me reach my goal if you use this link. You’ll ultimately end up on Obama’s site to make your donation, but I’ll get credit (”Attaboy!”) for having gotten you there.

It doesn’t have to be a whole lot of money; one of the main tenets of Obama’s candidacy is raising money from a lot of little donors, rather than a few huge donors.

They’ve notified their customers that no new authorizations for playing a given song on a given PC or a given device will be issued after August 31, though any existing authorizations will continue to work, as long as you’ve started to play the song at least once on the existing PC or device, and haven’t had to reinstall Windows, or purchased a new PC or device that you were hoping to play music on. Enjoy!

(”So, everybody run out and buy a Zune! We’ll never screw you over a second time!”)

One customer posted the text of the letter, along with his “snarky translation of the meaning”:

“MSN Music is constantly striving to provide you, our user, with the most compelling music experience that we can. We want to tell you about an upcoming change to our support service to ensure you have a seamless experience with the music you’ve downloaded from MSN Music.”

Translation: We’ve got bad news that’s really going to piss you off, and we need to soften you up first…

Read the full Dear-John Letter from MSN Music, and Translation

I’ve never seen the cats flatter — stretched out for maximum surface area. Our fluffy cat, “Bitey” (possibly the smartest of the lot, and certainly the fluffiest) quickly learned to hang out in the bathroom exclusively…all that cooling tile. It was kind of funny, every time we wanted to use the bathroom, to find her there, stretched out on the tile.

Still, she was perhaps the only thing in the house that was more miserable than her owners. We tried opening a few windows at night, but couldn’t leave the doors open because our front screen door is down, awaiting delivery of its replacement, and the house has so much thermal mass that it doesn’t end up cooling off until about 5:00am. Bitey, at least, had the advantage of literally being able to sleep in the window.

I had left a message with the folks who had serviced our A/C a year ago, but when I called them back at opening time, 08:00am this morning, they told me that they still had jobs left over from Friday, and they couldn’t promise me anyone before tomorrow morning at 08:00am. So I had them pencil me in, and set about looking for another outfit to call.

Several of the places that I called just answered the phone with “Hello?” You’d think that beggars wouldn’t be choosers, but I want just a little more professionalism than that.

I ended up calling Mountain Electric, who wanted a $75 diagnostic fee for coming out, which they would refund if the work was ordered. This actually sounded reasonable to me, and the flip side of that policy was that they could be here today! All righty, then. Cancel the first guys. The mountain men showed up at 4:30pm, went up on the roof, and came back down directly, having diagnosed a failed motor of some description — $575 to replace.

We gave them the go-ahead, and after about 2 hours total, they were done. Call it four man-hours, plus the cost of the part. I’m satisfied with the price.

One interesting thing was that they brought a large patio umbrella up on the roof with them, so that they wouldn’t have to be working in the blazing sun all day — brilliant.

And the house is cooling down! Sweet, merciful Jesus.

He’s ironic — sarcastic, even — and is properly wary when Bear Markets are stalking around. Back when the dot.bomb bubble was rising, and then falling, he couldn’t have been more (rightly) sardonic about the Glory of the New Economy.

And he’s often been heard to say that bottoms don’t come when everybody is sniffing around, waiting to buy, looking for which stock is undervalued — they come when everyone has given up, and all have sworn off stocks forever.

Which brings us to last week’s column:

AS STEPHANIE POMBOY reminds us in her most recent MacroMavens commentary, this isn’t by any means the first time that the prayer parading as forecast — “the worst is over” — has been heard in Wall Street. In March 2001, the Nasdaq was off by more than 70% from its peak set only a scant year earlier. Investors became increasingly convinced that lightning had already struck, the landscape was littered with shattered stocks and a turn had to be in the offing. Were they ever wrong! Instead, recession reared its ugly head, profits posted their biggest declines since the 1920s and Nasdaq fell another 50% before hitting bottom deep into 2002. [...and that's not even counting the companies that had failed and been delisted --Tom]

Stephanie, who has a thing for scary comparisons (the scarier the better, of course) notes some unsettling resemblances between then and now. The most conspicuous of which is that, just as in March 2001 when the Nasdaq was off 72% from its top, so the home builders today are down eerily the same percentage from their all-time high. And there has been, at least until the shock of AIG perhaps nicked it a trifle, a revived appetite among investors for risk.

The biggest flaw in the notion that the worst is over, in her view, is that the source of the problem — home-price deflation — is not only continuing but intensifying. “According to the latest Case-Shiller Index,” she notes, “home prices are now deflating at a 32% annual rate, versus 8% six months ago. And the deflation is sure to intensify as the 4.6 million new and existing homes still sitting on the market find a clearing price.”

She exhorts us to “Think of it…that 4.6 million inventory is nearly double the 2.6 million average inventory in the 20 years leading up to the bubble. More disturbing still, a record 2.27 million of those homes are sitting empty!” Well, leery of getting her mad, we followed instructions and thought of it, and, we’re sure she’ll be pleased to learn, we felt an appropriate shiver go up our spine.

For good measure, Stephanie adds that those melancholy figures fail to include all the homes “stuck in purgatory at banks, which are now collecting keys faster than they can list the properties.” The Federal Deposit Insurance Corp., she relates, reckons that “other real estate owned” by banks is up more than double the year-ago total.

And, she concludes, “As long as the largest asset on household — and bank — balance sheets continues to deflate, the credit and consumption hits will keep coming.” In short, the worst sure ain’t over.

IF, WE’RE DEAD WRONG (which, hard as it may be to believe, would not be a first for us) and the worst really is over, we wish that some illustrious personage — say [Treasury Secretary] Mr. Paulson or [JP Morgan Chase Chairman and CEO] Mr. Dimon — would take a few minutes out of his busy, busy schedule to pass the good news along to [Federal Reserve Chairman] Ben Bernanke. For if the credit crisis truly is winding down, why in the world is Mr. Bernanke’s Fed running around like a proverbial chicken without its head and still working feverishly to prop up the banks?…

Read the Full Column at Barron’s
“It Ain’t Over”
May 12, 2008

It’s a gripping story, filled with debauchery, jargon, and really, really bad math:

A mortgage-backed security… is a pool of thousands of different mortgages. These are all put together, and divided into different slices — Jimmy’s word, tranche: “tranche” is just French for slice.

Some of these slices are risky, and some are not.

OK. A CDO is a pool…of these tranches…a pool of pools.

And Jim, and most companies like his, weren’t buying the top-rated tranches, the safest ones, the AAA’s, they were buying the lower-rated stuff, the high-risk stuff. Jim’s company bought tranches that came from [Glen's] company, the guy who hung out at nightclubs, with B-list celebrities, the guy who said he was selling mortgages to people who didn’t have a pot to piss in.

There’s another term the industry uses — this is not a joke — they call these lower-rated tranches “toxic waste.” They’re so high-risk, they’re toxic.

And so basically a CDO is sort of a financial alchemy: Jim takes this toxic stuff, these low-rated, high-risk tranches, puts them all together, re-tranches them, and…Presto! He has a CDO whose top tranche is rated AAA: rock-solid, Good as Money.

If this seems too good to be true to you, you’re in good company. Guys like billionaire investor Warren Buffet said the very logic was ridiculous.

But back in 2005, 2006, the Global Pool of Money? They couldn’t get enough of these things. And the CDO industry was facing the same pressures everyone else was, at every other step of this chain: to loosen their standards, to make CDO’s out of lower and lower-rated tranches.

This is Jim’s partner…

“Actually, in 2005, already, we had an internal debate, here, because there were two banks coming to us, saying, ‘Why don’t you do a deal with us? — BBB securities — and, uh, you get paid a million bucks in management fees per year.’ Very clear, just like that, in 2005. And…we declined those deals, we said, ‘We just don’t believe that those BBB assets are Money Good. We don’t think they’re well-underwritten, and we think that if we do a CDO of those, that’s going to blow up completely. We were a little early in ‘05, by not wanting to do those deals, and people were laughing at us, to be honest, to say, ‘Well, you’re crazy. You’re hurting your business. Why don’t you want to make…per-deal, you could make a million dollars a year.’”

“And did somebody do that deal?”

“Absolutely! Everybody!”

---

…by late 2006, the average home cost nearly four times what the average family made. Historically, it was between two and three times. And mortgage lenders started to notice something they’d almost never seen before: people would close on a house, sign all the papers, and then default on their very first payment. No loss of a job, no medical emergency: they were under water before they even started.

And although no one could really hear it, that was probably the moment when one of the biggest speculative bubbles in American history…popped.

Listen to the entire show at This American Life:
“The Giant Pool of Money”
May 9, 2008

By most measures, prices are still above the levels implied by the fundamentals. Using a model that ties house prices to disposable incomes and long-term interest rates, analysts at Goldman Sachs reckon that the correction in national house prices is only halfway through. They expect an 18-20% correction overall, or another 11-13% decline from now. But their models suggest that six states—Arizona, Florida, Virginia, Maryland, California and New Jersey, could see further price declines of 25% or more.

Ooh…further price declines of 25% (or more!)

Read the Full Story in The Economist
“Map of misery”
May 8th, 2008

An interesting point is that such a fall in Southern California (on top of the 20% fall we’ve already had) would be equivalent to a 40% drop from peak prices:

(1 - .20) x (1 - .25) = (1 - .40)

…which is the same most-pessimistic drop predicted by the most pessimistic of the industry analysts quoted in the Los Angeles Times article that I wrote about here a few months ago. It would mean that median prices here would fall from a peak of $505K to about $303K, which again, I have to say, sounds like the likely bottom to me.

“Oh, man, watch out, the sky is falling.” –me, August, 2005.