First, let me apologize for the length of this post. Some folks who've read this blog have commented on my long-windedness. (Okay, complained, not commented.) And rightfully so. But this isn't about economics, or politics. It's a good story, one that deserves to be told. And if it's going to be told, it deserves to be told right. I promise not to post any more this week, so if you want to read it in chunks, you'll have several days to wade through it.
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My daughter is a senior in high school, and trying to keep up with the latest slang is like learning a new language at times ("facebook-official," for example). But one of the terms that I've come to understand perfectly well is, "It's all good."
See, I have an acquaintance - a family member, actually - who is truly all good.
His name is Dominic - Dominic Kohl Hague. He's eight years old. And he's a miniature schnauzer. He's one of three in our house; the other two are litter-mates - Max (Pixie's Maximilian) and Kramer (Baron von Kramer, but really named after the Seinfeld character, because he acts just like him). We love them all, but Dominic ... well, he's just special.
My wife and I both had dogs growing up, and I had an aging mutt when we met, but he had to be put down at the age of 13, shortly before my wife and I got married. Our daughter loves animals, and always pined away for a dog, but all of our allergies pretty much prevented it - my wife's being the worst.
But being the trouper that she is, she went through several years of allergy shots (not just to get a pet), and a little over eight years ago, we decided we could get a dog for our daughter for Christmas, in 2000. We researched breeds extensively to find one that isn't too big (big dog = big poop), is easy to train, is good with kids, and doesn't shed - as near to being hypo-allergenic as we could find. We settled on the mini schnauzer.
Next, we researched breeders, and found a good one in Oklahoma, a few hours south of us. We checked out her website, and she had a litter that would be ready for adoption in January 2001. We contacted her, and picked one, and pulled a picture of him off the website.
On Christmas morning, our daughter opened a package that contained a schnauzer wall calendar, a certificate of adoption that we'd made up for her, and a picture of the pup. At first, she didn't understand that she was actually getting the dog, but when she did, her excitement was uncontainable.
She went upstairs to the computer and spent several hours - this was Christmas, mind you, and her other gifts went entirely ignored - researching dog names. She wrote down the ones she liked. When she was done, she had filled a page front and back.
She told us that she had considered "Algonquin," but when she imagined calling, "Here, Algonquin!", it just didn't sound right. Thank God.
So she settled on Dominic - Dominic Kohl, the middle name's spelling an homage to her favorite store at the time.
(Funny aside on dog names - one of my wife's dogs when she was growing up was named "Hey You." One day a repairman came to their house, and he went out to his truck to get some tools, accidentally letting the dog out. My wife's Mom opened the front door and yelled, "Hey You, get back in here!" The poor befuddled repairman looked at her like she was the most demanding customer he'd ever had.)
When Dominic was old enough to bring home, we made the trek to Cookson, Oklahoma, near Tenkiller Lake. We found the breeder's house. It was like a trip to another world - the lady was in the shower when we got there, so her two little kids, one of them running around in diapers, let us in, and we waited (rather uncomfortably) for her. Rescue dogs were running around the house, eating out of the kids' cereal bowls that were still sitting on the floor, etc. The little guy in diapers wanted to take our daughter into his room to show her his toys, which freaked her out a bit (she was 10 at the time, at least).
Finally the breeder came out, and took us into the yard. Now, Sydney, our daughter, was free to pick any other pup she wanted, not necessarily the one in the picture. But when she stepped over the low fence into the pen, one puppy ran ahead of the others and jumped right up on her, and she recognized him.
It was Dominic, and it was love at first sight, for all of us.
We took care of the paperwork (by now the little diaper-clad guy was completely naked and running around indoors and out), and were on our way. In spite of the third-worldliness of the place, she was a good breeder, and Dom's bloodlines included show dogs.
It didn't take long to figure out that this was the smartest, strongest, fastest, and best-behaved dog any of us had ever known. Oh, he had his moments, which I'll share below, but he's always been just the best dog.
Smart? He's always known when supper time is, and he'll come sit in front of you and bark - just one short bark at a time - until you feed him. Loyal? If I'm upstairs in my office, and my wife is downstairs watching TV, he'll lie at the top of the stairs, to be in between us. Sometimes, he'll come over by my desk and do the sit-and-bark-once thing until I get up and go downstairs - seemingly saying, "That's not important - we need some family time." He uses that bark to tell us all manner of things - if we don't know right away what he wants, we get up and say, "Show me," and he does.
Strong? When he plays "tug" with one of his toys, he can practically pull my arm out of the socket. He never loses at "tug," he just eventually feels sorry for us and lets go, so that we can throw his toy again. He can also do a flip in the air to catch a ball, landing perfectly on his feet every time.
Fast? We have a 20-acre woods behind our house, so we get squirrels, rabbits, birds, and all kinds of other critters in the yard. Even a full-grown rabbit doesn't stand a chance. He's scary-fast, and can turn on a dime. Every summer I get to play "carcass removal" a few times. He's even caught two full-grown robins on the ground, before they could take off.
There are many more examples, but this post is going to run long enough. Maybe I should write a book, a la "Marley and Me."
Some of his "moments":
On his first birthday, my wife made plans to spend the entire day just hanging out with him (she's like that). So, on this particularly nice mid-November day, they were in the back yard, and my wife was going to plant some hyacinth bulbs. Her mistake? Setting the bag down. Dominic grabbed it, and took off running, scattering bulbs all over the yard. My wife tried to catch him, but remember how fast I said he was? If he doesn't want to be caught, it's not happening. And this was his game.
During the chase, he also managed to ingest a bulb or two. So my wife called the vet, and they said, yes, they can be toxic. So in to the vet's office she went, and he spent the rest of his birthday there, getting ipecac squirted in his mouth so he could throw up.
One Wednesday night a little before Christmas, when Dominic was two, I worked quite late while my wife and daughter went to youth group at our church, where my wife volunteered. I got home after they did, and my daughter met me at the door, in tears. When I asked what was wrong, she sobbed that Dominic had gotten into some candy, and had made messes all over the house, and my wife was cleaning them up. Now, this dog never got into much of anything (okay, we found him on the kitchen table once, eating everyone's pork chops), and he was housebroken in about a week, so this was unusual.
My daughter's tears led me to believe that my wife must be pretty mad at the dog - it takes a lot to make Sydney cry - so I went upstairs to find my wife, treading cautiously all the way. I found her in the hallway, outside the laundry room, scrubbing the carpet - apparently he'd had some major explosions from both ends. She was crying, herself. When I asked her what was wrong, she sobbed, "I killed my dog!" (He wasn't dead, but she knew dogs aren't supposed to have chocolate.)
It seems he'd gotten into a dish of Hershey's Kisses that was on an end table in our living room, next to the sofa, onto which he climbed to access the candy. When my wife and daughter got home, the dish was empty. There were four Hershey's Kiss wrappers on the floor. Apparently he'd unwrapped the first four - I said he was smart - then decided, "Screw it," and just ate the rest, wrappers and all. I figure maybe that saved him, as the foil irritated his stomach enough that the stuff came up - and out - right away.
Later, we re-filled the dish to its previous point of full-ness, and counted the Hershey's Kisses. There were 50. He's on the big side for his breed, but still weighs just about 20 lbs. That's a lot of chocolate for me, let alone a dog that size.
When I say he never got into anything, I should mention that when he was a pup and we'd leave him home, he did enjoy going into our half-bath in the entry hall, and grabbing the toilet paper, unrolling it out into the foyer. But that was about it. Oh, we did keep the candy dishes out of reach after the Hershey's Kiss incident.
He also enjoyed getting up on one of the spare dining room chairs, to look out the window at the neighbor's back deck, where they would tie up their dog - he'd sit their and bark that yappy schnauzer bark, indignant at the invasion of his space. After all, he was master of all he surveyed.
On one such occasion, my wife walked to the dining room doorway from the kitchen, and yelled at him to stop barking. Realizing he was in trouble, he took the path of least resistance to get to her - which involved jumping onto our nice inlaid-wood dining room table. When he hit the slick, polished surface, he slid across it, and fearing the fall off the other side, dug in his claws to arrest the slide. Now, our table has "character."
Another time, my wife called me at work. Dominic had gotten out of our fenced back yard, and she couldn't find him. I won't say she was in a panic, but ... my office is just three miles from home, so I left and headed that way. As I was driving down our block, toward our house, there was Dominic, soaking wet and trotting home. Guess he'd had his fill of playing in the neighbors' fountains and so forth, and was ready to come home. So I rolled down my window and yelled, "Dominic! You get home!" He looked at me like, "Where do you think I'm going? Sheesh!" and continued on his way.
When we arrived home at the same time, there was my wife, standing on the porch, trying to be mad but crying as she scolded him: "You little shit!" He ran to her, and she took him in her arms and hugged him, impervious to the mud, while he kissed her tears.
At the risk of getting too long-winded, Dom's story isn't complete without telling how Max and Kramer came into our lives. We had thought for a while that Dominic might like a playmate, but we never really got serious about it. When he was two-and-a-half, my wife accompanied me on a business trip to Phoenix. We were fortunate to stay at the Biltmore, where my conference was. We spent a few extra days there, since we had a suite at the hotel.
I needed a haircut, and for what little hair I have, I just go to Great Clips. So we found one in Scottsdale. There was a wait, so I put in my name, and suggested we go to the grocery store in the strip mall and get some snacks for the suite.
My wife wanted to visit the pet store next door instead.
We went in, and they had some pens set up on the floor with puppies in them. One of the pens had two adorable mini schnauzers and a boxer, and they were fighting like mad. We picked up the schnauzers and petted them for a while, then put them back in the pen and left.
A couple days later, we went to a Mexican restaurant for lunch and had a couple of margaritas, which I blame for everything that followed. I kept saying to my wife, "You're thinking about those dogs, aren't you?" She points out that I wouldn't have kept saying that if I hadn't been thinking of them first. She's smart like that.
Of course, we wound up back at the pet store. When we walked in, the schnauzers were no longer in the pen, so I thought maybe they'd been sold. But my wife inquired about them.
The next thing I knew, we were in "the bonding room" with the two little fellas, and my wife was asking me what would be the $2,000 question (before the vet bills, etc.): "Which one should we leave behind?"
I'm a total softie when it comes to that kind of thing. One of them was just this adorable little guy with long eyelashes, who'd look at you and literally will you to take him home. That was Max, whom we've since come to learn is all about two things: food and attention. He's like Roly in "101 Dalmations."
Kramer, on the other hand, was this happy-go-lucky, ADD-suffering loose cannon of a pup who made you feel that if you didn't take him home and love him, nobody else would appreciate him. His favorite game now is chasing a ball (or a piece of ice - we call that "hockey" across the hardwood floor, sliding all the way; at least he doesn't run head-first into the wall anymore).
So my wife, who is masterful at making deals, said "Maybe they'll make us a deal." They did, and we were suddenly the owners of three miniature schnauzers.
A brief aside here, in the way of a lesson: think about the stuff the grocery stores put on the racks by the check-out line. Those are impulse buys. Chewing gum is an impulse buy. Magazines are an impulse buy. Altoids are an impulse buy.
Pure-bred schnauzers are not an impulse buy. At least not for most people.
We inquired as to our options to get them home. Flying them back to Kansas was discussed, but we learned that we couldn't get them on our flight, and it would be expensive to boot. So the next thing I know, we're planning to cancel our return flight, keep the rental car and arrange to drop it off in Kansas City, and drive three days back home with two eight-week-old puppies in tow.
You know this is all true; I'm an imaginative guy, but I could not make this up.
So, we're back at the hotel, and I'm on the phone with my secretary, making the travel arrangements, while my wife is checking in with her Mom, who's keeping Dominic (my wife's parents live about a half-hour from us, and they have three fenced acres, so they're our babysitters - the dogs know "Grandma," "Grandpa," and "Do you want to go to the farm?", and saying any of those things will work them into a cacophonic frenzy).
Then came the news: my Father-in-law had had a heart attack, and was in the hospital.
My wife had to fly home right away, but I still had to speak at the conference, so I couldn't leave. Now, I was darned if I was going to drive, by myself, three days back to Kansas with two little puppies. So my wife got an early flight, and I made arrangements to fly the pups home (which ate up the savings we'd gotten on our "deal," and then some).
At the Kansas City airport, my wife and Dominic met Max and Kramer's flight, while I took the shuttle to their terminal - a harbinger of things to come, it seemed. When their kennel came up the freight elevator, Dominic stood in front of the kennel door, refusing to let them out. That, too, was a harbinger of things to come. It was as if he was saying, "You've GOT to be kidding me! I'M the dog around here!"
The next day, we put the pups in a laundry basket and went to pick Sydney up from middle school. When she opened the back door, she had this wide-eyed look, thinking that perhaps we were dog-sitting. Nope, we told her, they're ours.
We then learned that our city requires a special permit to own three dogs. You have to fill out a multi-page form stating your qualifications and ability to care for them, show that your house will sufficiently accommodate them, and that they won't be left outside all day to bark the neighbors crazy, etc. Then, after submitting the form, an animal control officer visits your house, meets you and your dogs, then interviews the neighbors two doors on either side of you before giving the blessing.
I could be a 17-year-old single mother on crack with eight kids by six different fathers, and the city of Overland Park would not care one whit about my qualifications for or ability to care for my brood, nor the sufficiency of their environment. But by God, have three dogs, and you get the third degree. Plus the privilege of a $100 up-front permit fee and a $50 annual renewal fee to keep them. The crack mother just gets more tax deductions.
Dominic tolerated the little guys pretty well at first. He'd engage in their several-times-daily brawls, even. It was always Kramer and Dominic picking on poor little Max. Kramer's a classic, cowardly in-and-out fighter, waiting for Dominic to pin Max before grabbing a hind leg, then darting to safety when Max squirmed free.
But one day, "poor little Max" pinned Dominic, and that was the end of his participation in their little games.
If you've ever had a schnauzer, you know how deafening the high-pitched, yappy bark can be. Try it with three. Every time we'd come home, they'd all wail - led by Dom - as if we'd been gone for months. Even if we'd just been to the mailbox and back. We even taught them to "sing" - sitting and howling in unison, Kramer throwing his head back in full, lusty howl so far that he nearly topples over backward.
Not long after we brought the little guys home, our vet expanded his office to a larger space. I'm sure we funded it. I told my wife it was like endowing a chair at Harvard - the least they could do is name an examination room after us. "The Hague Wing for Schnauzer Research" - has a nice ring to it, don't you think? They've all been to the emergency clinic, and they've all been x-rayed. About a year and a half ago, our daughter went to work for our vet. She loves animals, and was thinking of going to vet school at one point. We get an employee discount, and with the tabs our three rack up, we keep thinking they'll figure out that the discount costs them more to employ Sydney than they pay her.
But enough about the whole brood. Fast-forward to last summer.
Dominic hadn't seemed his old puppy self for a while. He'd gone through various bouts of this and that - whipworms, viruses, etc. - but we could never pin anything down. Then, last summer, he was diagnosed by our vet as having diabetes - not uncommon in dogs of his breed and age.
That means twice-daily insulin shots to regulate his glucose levels, just as with a diabetic human. We were in the process of getting his glucose levels regulated with the right dosage of insulin, when he developed this impacted bowel problem. So we took him to the vet, and they cleaned him out.
Then, one Saturday morning a few days later, I came downstairs and found my wife lying on the couch, holding Dominic.
I'm no vet, but I could tell he was dying.
My wife asked what we should do, and I said we'd better get him to the vet. We did, and he took blood and ran some new tests, then came out to tell us Dominic had pancreatitis and keto-acidosis - basically, stuff that's as bad as it sounds. He told us to take him to a 24/7 doggie ICU place (which, as it turned out, is owned by a guy in my small group at church), because he'd need around-the-clock care that the vet couldn't provide.
We took him there, and it didn't sound good. They put him on a pain medication patch, and gave him an IV with fluids and meds. His abdomen was bloated, full of fluid from the pancreatitis (he's a lean dog), and that had to go down before he could start getting food, and then he'd have to be eating solids before he could start getting better.
Later, after an internal medicine specialist had examined him, my wife talked to her on the phone. She asked her what she would do if it were her dog. She said, "Well, he's in a lot of pain. I'd give it 24 hours, and if he's not getting better, I wouldn't prolong the agony."
My wife is a pragmatist. I'm eternally hopeful, in a blindly stupid way. So I figured, there's no way at seven years old (as he was then) he's going to just die. We talked about it, and I said that if a couple of days of pain could give him several more years of a good, healthy life, it would be worth it. My wife pointed out that his life hadn't really been good and healthy for a couple of years now; we just hadn't known what the problems were.
We went back to visit him that night. He was in a very large cage on the lower level of their rows of cages, in the ICU. It was nice, in that we could visit him pretty much whenever we wanted, and the cage was big enough that we could both sit in it with him, Dominic lying in between us.
We sat there and petted him. He was obviously in a great deal of pain, and his breathing was very labored. He didn't look good at all - he was going downhill, in fact. We stayed a long time, and when we told him good-bye, it didn't feel like, "See you tomorrow, boy." It felt like good-bye.
I made it to the car before the dam broke. Then I completely lost it, I don't mind saying. This good, good dog - smart, fast, funny, unconditionally loving, patient, forgiving - was slipping away from us. And we were going to have to make a very hard decision the next day. I wasn't ready for it. Every moment that I'd told him to wait until I was finished doing some stupid thing before I was ready to give him attention, all the walks I'd meant to take him on but had some excuse not to, all the beautiful spring and fall days he'd stood in the yard, smiling, tail wagging, imploring me to come outside and play with him, and I'd gone back in the house to watch TV or play guitar or some other selfish thing - all of it ran before my eyes like a guilt-ridden movie. My wife offered to drive home, but I knew the only thing that would keep me from breaking down altogether was to have something to concentrate on. When we got home, I prayed and prayed for him.
I don't recall whether we talked to the internal med doc - Dr. Grigsby, or "Grigs" to us - before we went to see him the next day. But I know I was expecting the worst.
When we got there, he sat up and was happy to see us. His breathing was still strained, but vastly improved. He was better. We were guardedly optimistic.
We went back later that day, and it was time for him to go outside. My wife asked if we could take him, and they said yes. So we put a leash on him and took him out. He practically dragged my wife around the building. He was getting better.
For the rest of that week, he got better every day. Yes, it was a very expensive week. But it was worth every penny. Besides, after a couple of days, what were we going to do, say, "Sorry, but we've hit our limit - we'll have to put him down now"?
When he came home, he was the old Dominic - playful as a pup. He played tug again, strong as ever. In fact, he wanted to play every night - it was part of his routine again. And it had indeed been worth it - a couple of days' pain for what looked like several more years of the old, healthy Dominic. We got his insulin dosage right to regulate his glucose, and while it imposed on our routine, it was more than worth it. At every follow-up visit, he was just fine - our old Dominic, only not "old" at all, but a spry puppy again.
Last Sunday morning, I started a new music gig: leading worship with three other guys from our praise band at a local assisted living facility for the elderly. A bright young seminary intern from our church leads services there the first and third Sundays of each month, and we committed to play one Sunday a month. So at about 8:00 am, with my wife still in bed and the dogs in their kennel, I loaded my guitar and gear into the car and went to play.
On the way home, I called my wife to ask if she wanted me to pick up breakfast. No answer. I got home, and her car was gone. I went inside, and Max and Kramer met me at the door - frantic, as they always are when Dom gets to "go bye-bye" and they have to stay home.
I tried my wife's cell. No answer. I figured it was no big deal; I knew Dominic was out of the special diet food we have to feed him now, and I thought she was out somewhere trying to buy some. So I went down to the basement and started straightening up my studio, getting sheet music put away and setting up my guitars on their stands, etc.
My wife came home a bit later, without Dominic. He was back at the doggie hospital. When she woke up, he couldn't get out of the kennel. She carried him downstairs and outside, and set him on the ground. He just lay there. So she picked him up, put him in a blanket-lined laundry basket, put it in the car, and took him to Mission Med Vet. They said he had the impacted poop issue going again - we didn't know why - so they were going to clean him out, then run some tests and see what the problem was.
They were very busy with emergencies, and didn't call us back. So we went to see him Sunday evening. The doc on duty said that the enema was successful - "very productive," as she put it. He sat up and whimpered when we got there. This time, he was in a smaller, upper-level cage, so we couldn't sit with him. We petted him, and he just sat there with his head down, panting, and I noticed he didn't seem to want to look up. When I lifted his chin, his eyes were closed. When he opened them, he was squinting.
We left, and I tried to think of anything but Dominic. I didn't want to fear the worst. He could have another bout of pancreatitis. We had already agreed that we wouldn't prolong things if he did - with a diabetic dog, that stuff can recur, and we knew that while a few days' pain for a few years' health was worth it, running through that cycle every few months was not.
The next day, they called in an eye specialist to examine him. He had uveitis, an inflammation of the eye. They said it could be cleared up, but that it could also lead to cataracts. I did a little google-searching, and found that cataracts for dogs are operable, as they are with humans. It's not cheap, but again, I'd do it for him. Blindness just wouldn't be an option, not at eight years of age. If he were 13 or 14, it would be different; I could opt to put him down.
My wife brought him home Monday - yesterday. When I came home from work, he was excited as ever to see me, but then he just laid on the couch, resting his eyes. They'd dilated his pupils, and the sun was very bright yesterday, so he didn't want to be outside. I can understand, having had my own pupils dilated by the optometrist, then going outside on a sunny day without sunglasses.
He's on a regimen of various meds - taken both orally and in the eyes - that keeps my wife treating him about 18 times a day, not counting the insulin shots. He's eating fine, and she told me that today he went out in the yard in the bright sunshine and rolled in the grass on his back, as he loves to do.
So we'll see. I'm hoping - and praying - that he recovers from the inflammation, and it's nothing more than that.
I had wanted to post this last fall, after he recovered from the pancreatitis. But I never got around to it, as is typical for me.
Well, I couldn't possibly write any of this if he were gone. It would be too painful. But Dominic is the best dog ever - he's ALL GOOD - and his story needed to be written. So here it is.
He's too good a dog to have to suffer this way. So I hope this goes away, and he has several more years of great health, with no more trips to Mission Med Vet, as wonderful as the people are there.
And I hope that, if that happens, I never take him for granted again.
Dominic, you are all good, buddy. All good.
Tuesday, March 17, 2009
Monday, March 16, 2009
That's Entertainment
To the best of my knowledge, Helicopter Ben Bernanke's appearance on 60 Minutes last night was a first for a sitting Fed Chairman. It's clear why he chose to do the interview: by making the Fed Chair appear accessible to the American people, he hoped to shore up confidence in the face of the current economic situation. Unfortunately, a Fed Chairman simply isn't going to be able to educate the average American in a (relatively) brief interview.
Especially this one, who's hardly up to the task.
Bernanke must have had some control over the questions asked, as most of them were softballs. On the ones that could have been pressed into a challenge, the interviewer failed to follow up where he could have. For example:
"When does this end?" (Referring to the current recession.)
"It depends a lot on the financial system. The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis ... until we get that stabilized and working normally, we're not gonna see recovery. But we do have a plan ..."
Follow-up opportunity: "Outstanding, Mr. Chairman! What is the plan?"
But that question never came. Of course, there is no cohesive plan at this juncture; Mr. Bernanke and Treasury Secretary Tim Geithner are following the same haphazard, "we'll figure out what to do when the next flashpoint fires up" approach taken by Bernanke and Geithner's predecessor, Hank Paulson. Geithner has been mum about Treasury's plans, in spite of President Obama's promise during his first press briefing that a "detailed" plan would be forthcoming the next day - much to the market's frustration.
So if the recovery depends on the plan to stabilize the financial system, there's no recovery on the horizon. They're just hoping it turns around at some point.
Bernanke finished that answer by saying, "... we'll see the recession coming to an end probably this year. We'll see recovery beginning next year." In answer to the follow-up question, whether we'd see the recession end this year (which would seem academic given his first answer), Bernanke replied, "In the sense that this decline will begin to moderate and we'll begin to see leveling off. We won't be back to full employment. But we will see, I hope, the end of these declines that have been so strong in the last couple of quarters."
Note the key phrase, "I hope." But two points are in order: first, the end of a recession does not come when the sharp declines ease. It comes when the economy stops declining, period. It does not come with leveling off, especially when the level we've hit is a very low one. It begins with reaching a point where year-over-year declines in key indicators turn into year-over-year gains, or at least reach the zero point. We haven't even hit bottom yet, and we're a long way from zero.
The second point is that this Fed Chairman famously said, just about a year ago, that the subprime contagion could be contained, and was unlikely to spill over into the broader economy. Here we are, a year later, in the deepest recession since the end of World War II. Should the American public actually trust Ben Bernanke's prognosticating skills? I think not.
The 60 Minutes crew should have put up footage of Bernanke making that claim last year, to show just how reliable his forecasts are. Heck, even Jon Stewart would have done that. Maybe Bernanke should go on The Daily Show. He probably doesn't have the cojones.
Most of the rest of his responses came back to the "if we fix the financial system, everything else will fall into place" pattern. And that should scare us, given that there is no plan to fix that system. True, by going massively into debt, we're running up long rates, which steepens the yield curve, which is a good recipe for banking profits - maybe sufficient to offset continued asset devaluations, which will only be exacerbated by higher yields. But I hardly think that's the master plan to salvage the banking system.
Regarding the decision not to save Lehman Brothers, Bernanke said it wasn't a mistake, because "we didn't have the option, we didn't have the tools. All the Federal Reserve can do is make loans against collateral."
Really? Then how did the Fed save Bear Stearns? AIG? Merrill? True, it did make loans in those instances. But it also brokered deals with acquirers. Barclay's wanted to acquire Lehman, but the Fed said "Let it fail." The Fed set up a fund to hold Bear's riskiest assets so that JPMorgan Chase wouldn't have to. And it has created vehicles to buy up mortgage-backed and asset-backed securities, in an effort to create liquidity in those lending markets. So it would seem the Fed has whatever powers it wants to have.
As for the AIG bailout, now that it's been revealed that AIG paid billions to other banks - including foreign banks - out of the taxpayers' largess, and plans to pay millions in bonuses to the very derivatives desks that buried AIG eyeballs-deep in the credit default swap swamp that it couldn't ultimately get itself out of, everyone is angry, from you and me to President Obama. What's Bernanke's take?
"Of all the events and all of the things we've done in the last 18 months, the single one that makes me the angriest, that gives me the most angst, is the intervention with AIG." (emphasis added)
Me too, Ben, me too. So tell me, why are you still Fed Chairman? You presided over the AIG bailout, without asking where the money would go. You, Ben. So if you're looking for the object of your anger, look no further than the bathroom mirror. (Oh yeah, you did have help from your cracker-jack New York Fed Bank President - what was his name again?)
************
A quick note on the billions AIG paid to other banks. That seems to have made Congress and the administration quite angry. But let's think about it: AIG was bailed out because it had its tentacles deep in the international financial community, and the fear at the time was that if AIG failed, it would take down the global financial system with it.
So, if AIG subsequently paid its counterparties what they were due ... isn't that what we hoped to accomplish by bailing it out to begin with? So why the sudden hue and cry over AIG making good on its obligations? What did we want them to do with the money, enter into new deals?
************
On a related note, a couple more quick anecdotes. Hank Paulson's whiz-kid Neal Kashkarian, who was hired to oversee the TARP and who remains in place under Paulson's successor, Mr. Geithner, was testifying before Congress last week. He was being grilled by Rep. Dennis Kucinich about B of A and Citigroup having made loans - with TARP money - to a Chinese construction concern and the government of Dubai.
Kucinich asked Kashkarian whether the Treasury believed that it was more stimulative to the US economy to make those loans than to make loans to US businesses and consumers. Kashkarian stammered his way around the politically sensitive question. But I'd have taken a different approach. This would have been my answer:
"You'd better believe it is. What the banks need to do now is make profitable loans, not loans they're just going to lose money on. And let's face it, a construction loan in the US would be a likely money-loser right now. Construction spending year-over-year in this country is at a record low pace of -9.1%. And it's not just residential construction that's driving it down anymore; the pace of non-residential spending - which was the only salvation for total spending last year - has fallen out of bed since September.
China, on the other hand, still has cash to spend on infrastructure projects (which it has decided is a better investment these days than US Treasuries, which I'll get to momentarily). China's economy is still growing, though at a slower pace than last year, but is still expected to grow at a better than 8% clip this year, which will account for more than a quarter of global economic growth. So where better to make a profitable construction loan than in China?
As for Dubai, that country still has a significant amount of petro-dollars, though it too has seen slowing growth. Still, if nobody - including China - wants to loan money to the US government anymore, why should our own banks? Again, a loan to the Dubai government is likely a more profitable loan - and arguably a less risky one - than to the US. As for lending to consumers, please - US consumers don't even want to borrow right now. And making loans to them at a time when they're increasingly facing difficulty just meeting their monthly obligations, when unemployment is rising toward double-digits, is a bad decision for any bank.
So yeah, Congressman, I'd say making a loan that will actually MAKE MONEY for a US bank, enabling it to save jobs and provide the taxpayers a return on their largess, and contribute to positive income that can be taxed, is infinitely more stimulative than continuing to make bad loans here at home, which is precisely what got us into this predicament in the first place."
But they didn't ask me.
************
A final brief note on a somewhat related topic. The Employee Free Choice Act - the much-feared union bill - is being debated among lawmakers. Some see it as the worst possible legislation given the economic situation:
"In a time when we have an economy that's already struggling, we can't put more burdensome regulations on employers." - Sen. John Thune, S.D.
The bill's supporters pooh-pooh that risk:
"In 1935, we passed the Wagner Act that promoted unionization and allowed unions to flourish, and at the time we were at around 20% unemployment? So tell me again why we can't do this in a recession?" - Sen. Tom Harkin, IA
I'll tell you why, Tom. In 1935, we were about four years into the Depression. Then we passed the Wagner Act. And the Depression lasted another 6 years, until World War II began, AFTER which the economy began to recover. So if you want this downturn to last a decade, then yeah, this is a fine time to pass the bill. Otherwise, how about you turn your attention to something else - like that study that's earmarked in the omnibus bill, the one that will try to determine why pig poop stinks in your home state?
Especially this one, who's hardly up to the task.
Bernanke must have had some control over the questions asked, as most of them were softballs. On the ones that could have been pressed into a challenge, the interviewer failed to follow up where he could have. For example:
"When does this end?" (Referring to the current recession.)
"It depends a lot on the financial system. The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis ... until we get that stabilized and working normally, we're not gonna see recovery. But we do have a plan ..."
Follow-up opportunity: "Outstanding, Mr. Chairman! What is the plan?"
But that question never came. Of course, there is no cohesive plan at this juncture; Mr. Bernanke and Treasury Secretary Tim Geithner are following the same haphazard, "we'll figure out what to do when the next flashpoint fires up" approach taken by Bernanke and Geithner's predecessor, Hank Paulson. Geithner has been mum about Treasury's plans, in spite of President Obama's promise during his first press briefing that a "detailed" plan would be forthcoming the next day - much to the market's frustration.
So if the recovery depends on the plan to stabilize the financial system, there's no recovery on the horizon. They're just hoping it turns around at some point.
Bernanke finished that answer by saying, "... we'll see the recession coming to an end probably this year. We'll see recovery beginning next year." In answer to the follow-up question, whether we'd see the recession end this year (which would seem academic given his first answer), Bernanke replied, "In the sense that this decline will begin to moderate and we'll begin to see leveling off. We won't be back to full employment. But we will see, I hope, the end of these declines that have been so strong in the last couple of quarters."
Note the key phrase, "I hope." But two points are in order: first, the end of a recession does not come when the sharp declines ease. It comes when the economy stops declining, period. It does not come with leveling off, especially when the level we've hit is a very low one. It begins with reaching a point where year-over-year declines in key indicators turn into year-over-year gains, or at least reach the zero point. We haven't even hit bottom yet, and we're a long way from zero.
The second point is that this Fed Chairman famously said, just about a year ago, that the subprime contagion could be contained, and was unlikely to spill over into the broader economy. Here we are, a year later, in the deepest recession since the end of World War II. Should the American public actually trust Ben Bernanke's prognosticating skills? I think not.
The 60 Minutes crew should have put up footage of Bernanke making that claim last year, to show just how reliable his forecasts are. Heck, even Jon Stewart would have done that. Maybe Bernanke should go on The Daily Show. He probably doesn't have the cojones.
Most of the rest of his responses came back to the "if we fix the financial system, everything else will fall into place" pattern. And that should scare us, given that there is no plan to fix that system. True, by going massively into debt, we're running up long rates, which steepens the yield curve, which is a good recipe for banking profits - maybe sufficient to offset continued asset devaluations, which will only be exacerbated by higher yields. But I hardly think that's the master plan to salvage the banking system.
Regarding the decision not to save Lehman Brothers, Bernanke said it wasn't a mistake, because "we didn't have the option, we didn't have the tools. All the Federal Reserve can do is make loans against collateral."
Really? Then how did the Fed save Bear Stearns? AIG? Merrill? True, it did make loans in those instances. But it also brokered deals with acquirers. Barclay's wanted to acquire Lehman, but the Fed said "Let it fail." The Fed set up a fund to hold Bear's riskiest assets so that JPMorgan Chase wouldn't have to. And it has created vehicles to buy up mortgage-backed and asset-backed securities, in an effort to create liquidity in those lending markets. So it would seem the Fed has whatever powers it wants to have.
As for the AIG bailout, now that it's been revealed that AIG paid billions to other banks - including foreign banks - out of the taxpayers' largess, and plans to pay millions in bonuses to the very derivatives desks that buried AIG eyeballs-deep in the credit default swap swamp that it couldn't ultimately get itself out of, everyone is angry, from you and me to President Obama. What's Bernanke's take?
"Of all the events and all of the things we've done in the last 18 months, the single one that makes me the angriest, that gives me the most angst, is the intervention with AIG." (emphasis added)
Me too, Ben, me too. So tell me, why are you still Fed Chairman? You presided over the AIG bailout, without asking where the money would go. You, Ben. So if you're looking for the object of your anger, look no further than the bathroom mirror. (Oh yeah, you did have help from your cracker-jack New York Fed Bank President - what was his name again?)
************
A quick note on the billions AIG paid to other banks. That seems to have made Congress and the administration quite angry. But let's think about it: AIG was bailed out because it had its tentacles deep in the international financial community, and the fear at the time was that if AIG failed, it would take down the global financial system with it.
So, if AIG subsequently paid its counterparties what they were due ... isn't that what we hoped to accomplish by bailing it out to begin with? So why the sudden hue and cry over AIG making good on its obligations? What did we want them to do with the money, enter into new deals?
************
On a related note, a couple more quick anecdotes. Hank Paulson's whiz-kid Neal Kashkarian, who was hired to oversee the TARP and who remains in place under Paulson's successor, Mr. Geithner, was testifying before Congress last week. He was being grilled by Rep. Dennis Kucinich about B of A and Citigroup having made loans - with TARP money - to a Chinese construction concern and the government of Dubai.
Kucinich asked Kashkarian whether the Treasury believed that it was more stimulative to the US economy to make those loans than to make loans to US businesses and consumers. Kashkarian stammered his way around the politically sensitive question. But I'd have taken a different approach. This would have been my answer:
"You'd better believe it is. What the banks need to do now is make profitable loans, not loans they're just going to lose money on. And let's face it, a construction loan in the US would be a likely money-loser right now. Construction spending year-over-year in this country is at a record low pace of -9.1%. And it's not just residential construction that's driving it down anymore; the pace of non-residential spending - which was the only salvation for total spending last year - has fallen out of bed since September.
China, on the other hand, still has cash to spend on infrastructure projects (which it has decided is a better investment these days than US Treasuries, which I'll get to momentarily). China's economy is still growing, though at a slower pace than last year, but is still expected to grow at a better than 8% clip this year, which will account for more than a quarter of global economic growth. So where better to make a profitable construction loan than in China?
As for Dubai, that country still has a significant amount of petro-dollars, though it too has seen slowing growth. Still, if nobody - including China - wants to loan money to the US government anymore, why should our own banks? Again, a loan to the Dubai government is likely a more profitable loan - and arguably a less risky one - than to the US. As for lending to consumers, please - US consumers don't even want to borrow right now. And making loans to them at a time when they're increasingly facing difficulty just meeting their monthly obligations, when unemployment is rising toward double-digits, is a bad decision for any bank.
So yeah, Congressman, I'd say making a loan that will actually MAKE MONEY for a US bank, enabling it to save jobs and provide the taxpayers a return on their largess, and contribute to positive income that can be taxed, is infinitely more stimulative than continuing to make bad loans here at home, which is precisely what got us into this predicament in the first place."
But they didn't ask me.
************
A final brief note on a somewhat related topic. The Employee Free Choice Act - the much-feared union bill - is being debated among lawmakers. Some see it as the worst possible legislation given the economic situation:
"In a time when we have an economy that's already struggling, we can't put more burdensome regulations on employers." - Sen. John Thune, S.D.
The bill's supporters pooh-pooh that risk:
"In 1935, we passed the Wagner Act that promoted unionization and allowed unions to flourish, and at the time we were at around 20% unemployment? So tell me again why we can't do this in a recession?" - Sen. Tom Harkin, IA
I'll tell you why, Tom. In 1935, we were about four years into the Depression. Then we passed the Wagner Act. And the Depression lasted another 6 years, until World War II began, AFTER which the economy began to recover. So if you want this downturn to last a decade, then yeah, this is a fine time to pass the bill. Otherwise, how about you turn your attention to something else - like that study that's earmarked in the omnibus bill, the one that will try to determine why pig poop stinks in your home state?
Sunday, March 15, 2009
Cramer vs. Stewart
Not nearly as entertaining as the classic Dustin Hoffman/Meryl Streep film "Kramer vs. Kramer," but not as sad either. I'm referring, of course, to the recent skirmish between Jon Stewart of "The Daily Show" and Bubblevision's loudmouth-in-chief, Jim Cramer of "Mad Money."
Let me first say that I'm a fan of neither of them - at least, for what they try to be. I am a fan of both for what they are.
Stewart first. He's a comedian. He's not a political pundit. He himself said it best: he's at his best making fart noises and funny faces. Political commentary, let alone market commentary, just isn't his long suit.
To wit: this whole escapade started with Stewart's incensed reaction to Rick Santelli's recent rant about having a "Chicago Tea Party," in protest of the housing bailout.
After Robert Gibbs (can you say worst press secretary ever?) stated that Santelli doesn't know what he's talking about, Stewart repeated that, and took it a step further.
Let me first take a quick detour: Rick Santelli has forgotten more about economics and finance than Gibbs and Stewart combined will ever know (and you can throw in President Obama, Treasury Secretary Geithner, and Sens. Dodd, Frank and Waters for good measure). Santelli is a former interest rate derivatives trader - as am I. Trust me, it's not a layman's game.
Anyway, Stewie didn't like the notion that Santelli didn't like Stewie's favorite president's latest bailout plan. So he went after CNBC.
Now, readers of this space know that I'm no fan of Bubblevision. So it was entertaining to me that Stewart went after them. He threw up one example after another of bad calls they've made over the last year, then followed them up with the facts. And Lord knows they've made their fair share of bad calls. That's to be expected; we're in a bear market, and CNBC's advertisers make money off of bull markets. So CNBC gets paid handsomely to talk the bullish talk. If I had a buck for every time they've called a bottom to this market over the last year or so, I could retire.
But some of Stewart's examples made the point that CNBC was saying this company or that was in good shape, when in fact, if you watched the clips, they were interviewing company management, who was saying the company was in good shape, and they simply reported that. I recall watching David Faber grill then-Bear CEO Alan Schwartz, just days before Bear collapsed. Faber was hitting Schwartz hard, and the latter was clearly flummoxed, stammering that Bear had adequate liquidity, to which I wanted to invoke the classic Eddie Murphy line from "Beverly Hills Cop" (British version below):
"You were lyin' your arse off!"
But, what was Faber supposed to do, say that? Call Schwartz on it? No, all a journalist can do at that point is say, "There you have it, folks - according to Bear Stearns' CEO, they don't have a liquidity problem." Then it's up to the market to judge for itself - which it did.
Now, a Stewart could probably call a Schwartz a liar. But that's because (A) Stewart's a comedian, not a journalist, and (B) for that very reason, an Alan Schwartz wouldn't give a Jon Stewart the time of day.
So anyway, one of Stewart's targets is Cramer. Now, let me turn my attention to him. Cramer once ran a hedge fund. And if he'd been any good at it, he'd be at it still. Why?
Because when Cramer ran his fund, the rule of pay for hedge fund managers was "one and twenty" - a 1% management fee, and 20% of the fund's gains. More recently (until last year brought hedge fund redemptions en masse, which brought the funds to their knees), the rule was expanded to "two and twenty."
For a decent-sized fund, that kind of coin would far eclipse what Cramer could make pitching stocks on TV.
Yeah, he has an impressive knowledge of every obscure stock his callers ask him about - so impressive, in fact, that it's obvious the calls are pre-screened, so his staff can bone him up on the stocks in question.
His "boo-yahs," cute sound effects and theatrics are a sideshow. It truly is "Mad Money," but it ain't smart money (you want that, tune in here - my recommendations have beaten the snot out of Cramer's over the last year).
So these two duking it out is about as enthralling for students of the market as Tonya Harding going toe-to-toe with Nancy Kerrigan. Just not very exciting stuff.
************
Gotta take another swipe at Warren Buffett. I read the other day that Berkshire Hathaway's stock got downgraded by Fitch because of:
"Potential losses from derivatives."
Now, in and of itself, that's not such a big deal, compared to concerns like, oh, AIG for instance.
But I immediately recalled Mr. Buffett's 2004 letter to Berkshire's shareholders, in which he made the following statements:
"Derivatives are financial weapons of mass destruction."
"Derivatives generate reported earnings that are often wildly overstated and based on estimates whose inaccuracy may not be exposed for many years."
"Large amounts of risk have become concentrated in the hands of relatively few derivatives dealers ... which can trigger serious systemic problems."
Buffett also likened the derivatives market to hell: "Easy to enter and almost impossible to exit," and he said that some contracts appeared to have been devised by "madmen."
So, were I a Berkshire shareholder, my question would be:
"So, Mr. Buffett, having so eloquently and ominously warned us against the dangers of derivatives, why, pray tell, did you choose to expose us to them?"
Tomorrow, I take on "Helicopter Ben" Bernanke on "60 Minutes."
Let me first say that I'm a fan of neither of them - at least, for what they try to be. I am a fan of both for what they are.
Stewart first. He's a comedian. He's not a political pundit. He himself said it best: he's at his best making fart noises and funny faces. Political commentary, let alone market commentary, just isn't his long suit.
To wit: this whole escapade started with Stewart's incensed reaction to Rick Santelli's recent rant about having a "Chicago Tea Party," in protest of the housing bailout.
After Robert Gibbs (can you say worst press secretary ever?) stated that Santelli doesn't know what he's talking about, Stewart repeated that, and took it a step further.
Let me first take a quick detour: Rick Santelli has forgotten more about economics and finance than Gibbs and Stewart combined will ever know (and you can throw in President Obama, Treasury Secretary Geithner, and Sens. Dodd, Frank and Waters for good measure). Santelli is a former interest rate derivatives trader - as am I. Trust me, it's not a layman's game.
Anyway, Stewie didn't like the notion that Santelli didn't like Stewie's favorite president's latest bailout plan. So he went after CNBC.
Now, readers of this space know that I'm no fan of Bubblevision. So it was entertaining to me that Stewart went after them. He threw up one example after another of bad calls they've made over the last year, then followed them up with the facts. And Lord knows they've made their fair share of bad calls. That's to be expected; we're in a bear market, and CNBC's advertisers make money off of bull markets. So CNBC gets paid handsomely to talk the bullish talk. If I had a buck for every time they've called a bottom to this market over the last year or so, I could retire.
But some of Stewart's examples made the point that CNBC was saying this company or that was in good shape, when in fact, if you watched the clips, they were interviewing company management, who was saying the company was in good shape, and they simply reported that. I recall watching David Faber grill then-Bear CEO Alan Schwartz, just days before Bear collapsed. Faber was hitting Schwartz hard, and the latter was clearly flummoxed, stammering that Bear had adequate liquidity, to which I wanted to invoke the classic Eddie Murphy line from "Beverly Hills Cop" (British version below):
"You were lyin' your arse off!"
But, what was Faber supposed to do, say that? Call Schwartz on it? No, all a journalist can do at that point is say, "There you have it, folks - according to Bear Stearns' CEO, they don't have a liquidity problem." Then it's up to the market to judge for itself - which it did.
Now, a Stewart could probably call a Schwartz a liar. But that's because (A) Stewart's a comedian, not a journalist, and (B) for that very reason, an Alan Schwartz wouldn't give a Jon Stewart the time of day.
So anyway, one of Stewart's targets is Cramer. Now, let me turn my attention to him. Cramer once ran a hedge fund. And if he'd been any good at it, he'd be at it still. Why?
Because when Cramer ran his fund, the rule of pay for hedge fund managers was "one and twenty" - a 1% management fee, and 20% of the fund's gains. More recently (until last year brought hedge fund redemptions en masse, which brought the funds to their knees), the rule was expanded to "two and twenty."
For a decent-sized fund, that kind of coin would far eclipse what Cramer could make pitching stocks on TV.
Yeah, he has an impressive knowledge of every obscure stock his callers ask him about - so impressive, in fact, that it's obvious the calls are pre-screened, so his staff can bone him up on the stocks in question.
His "boo-yahs," cute sound effects and theatrics are a sideshow. It truly is "Mad Money," but it ain't smart money (you want that, tune in here - my recommendations have beaten the snot out of Cramer's over the last year).
So these two duking it out is about as enthralling for students of the market as Tonya Harding going toe-to-toe with Nancy Kerrigan. Just not very exciting stuff.
************
Gotta take another swipe at Warren Buffett. I read the other day that Berkshire Hathaway's stock got downgraded by Fitch because of:
"Potential losses from derivatives."
Now, in and of itself, that's not such a big deal, compared to concerns like, oh, AIG for instance.
But I immediately recalled Mr. Buffett's 2004 letter to Berkshire's shareholders, in which he made the following statements:
"Derivatives are financial weapons of mass destruction."
"Derivatives generate reported earnings that are often wildly overstated and based on estimates whose inaccuracy may not be exposed for many years."
"Large amounts of risk have become concentrated in the hands of relatively few derivatives dealers ... which can trigger serious systemic problems."
Buffett also likened the derivatives market to hell: "Easy to enter and almost impossible to exit," and he said that some contracts appeared to have been devised by "madmen."
So, were I a Berkshire shareholder, my question would be:
"So, Mr. Buffett, having so eloquently and ominously warned us against the dangers of derivatives, why, pray tell, did you choose to expose us to them?"
Tomorrow, I take on "Helicopter Ben" Bernanke on "60 Minutes."
Wednesday, March 11, 2009
Meet The Man Who Kicked Warren Buffett's Arse
I'm considering that as my new PR line - like it? I watched part of the CNBC interview with the Oracle from Omaha, and couldn't help but be a bit jealous - and peeved.
This is the same Warren Buffett who admits, in hindsight, to having made some colossal investment blunders in 2008. That resulted in the worst year ever for Berkshire Hathaway, which announced recently that it would make substantial cuts in staffing and production facilities at companies it owns.
He penned an op-ed piece in the New York Times in mid-October extolling Americans to "buy American" (stocks, that is). Now granted, he acknowledged that he was talking long-term; he plainly stated that he didn't know where the market would be a month or a year from the date of his piece. (The S&P was down 28.5% from the date of his editorial to March 6, a span of less than 6 months - and I'll explain why I picked the bottom on March 6, rather than today, momentarily.) Of course, he was jawboning, having made some equity investments himself in the previous days, hoping his sage advice would spur a rally that would make him money.
Me? I just had my best 12 months in the market, ever. To wit:
My wife's rollover IRA is up nearly 60% from just under a year ago. On March 12, 2008, convinced that the decline from the previous October's record highs was the beginning of a full-on bear market of drastic proportions, we sold her diversified portfolio of funds and bought two funds that were essentially leveraged bets that the NASDAQ and the S&P would fall. These funds are structured to return two times the decline in the underlying index. As a hedge, we put a small amount in a one-year bank CD at 3.40% - at the time, even though short-term rates were quite low (the Fed funds target was 3.00%, and less than a week later it was 2.25%), liquidity-strapped banks were paying up for CDs. Today, a one-year CD will earn 1.50%.
As for the significance of March 6, that's when we closed the last of those short positions. We had begun the previous Friday, when the S&P breached its November low, systematically taking 50% out of the funds (my wife's idea). We took a little more than 50% of the remainder out on March 2, when the index fell another 35 points (or about 5%), to just over 700. Then we closed it all out on March 6, since which time it's up about 40 points.
Did we time the exact bottom? Probably not. This is likely a dead-cat bounce we're seeing the last couple of days, and we'll probably get a new low at some point. But who cares? We're certainly closer to the bottom than to where we were last March 12 (1,309) - indeed, if that's not true, the bottom will be S&P 58. Not likely.
On those positions alone, the return was 51% over 51 weeks. Even if we missed the bottom, it's hard to feel bad about that. No point getting greedy, after all.
We'll come back to the IRA later, but for now, let's turn our attention to our daughter's college money. That was invested in a 529 plan in New Mexico. Why New Mexico? Because that state's was the highest-rated plan that would allow us to invest as aggressively as we chose, rather than forcing us to reduce risk as she grew older, like most plans (including that of our home state, Kansas). I didn't want the state to tell me what my risk tolerance was based on my daughter's age, I wanted to be able to time my moves.
In October 2007, knowing that she had less than two years until she started college, and believing that the record highs reached that month couldn't last in the face of the coming housing-bubble-collapse-driven bear market, we moved from the most aggressive stock portfolio in the plan to money market funds. As a result, we didn't lose a dime of her college funds. The money market returns haven't been stellar - especially now, with Fed funds at virtually zero and money market returns around a half-point. But a half-point up is way better than half the balance down.
As for my retirement funds, our choices are more limited. In March of last year - about the same time we made the IRA moves - we moved a deferred portion from a couple of equity funds to bank CDs. As a result, we averted losses of 67% through yesterday on one of those funds, and 45% on the other.
True, both funds were down from their peaks in 2007 - 5% and 12%, respectively. Still a timely move, I'd say.
My 401(k) was down a mere 5% last year. For that money, we moved - again in March - out of a diversified mostly-equity portfolio and into short-term government bonds, which had their best year since 1995. So the modest loss was a function of the equity funds' performance from January 1 through March, when we made the move into bonds.
By December, when the two-year Treasury yield had fallen to its lowest level since trading began in 1975, I figured the rally in short Treasuries was pretty much done - after all, when you hit record lows, and the funds target is zero, how much further can you fall? (Note that bond prices and yields move in opposite directions, so when yields go down, prices go up. The two-year yield fell about a full point from March through the December low, or nearly 200%. So the entire time I was long short-term Treasuries, their price was rising substantially.)
Also, with the TARP passed, a huge stimulus bill being discussed, and more bailouts to come, I knew the Treasury would be issuing huge amounts of debt, with fewer willing buyers - a phenomenon I've addressed at some length on this space - which means higher yields, and lower prices. So in December, I moved out of bonds and into money markets in the 401(k) - again, not sexy returns, but not losses either. Since the December low, the two-year yield is up 38 basis points (a basis point is 1/100 of 1%), or about 58%. So bond prices are lower.
Speaking of bonds, let's go back to my wife's IRA. As we began closing out the short equity positions, we rolled into a bond that shorts the 30-year Treasury bond. This one's leveraged 1.25 times, meaning that if the long bond loses X in value, the fund gains 1.25X.
The long bond yield hit its lowest point in history (the data was first recorded in 1980) last December. From the point we began buying the fund, the yield is up almost a half-point, or about 15%. Our blended return over the buy dates from that time is about 5.5% - not bad for a month and a half.
Again, bond yields and prices move in opposite directions, so a bet against the long bond's price is a bet that yields will go up. The December low was 2.52%, our initial buy-in was at 3.26%, and the current yield is 3.73%. Did we miss the bottom? You bet, just as we missed selling at the top of the equity market in October 2007. But consider this: the average yield on the long bond since 1980 is 7.42% - nearly twice today's yield. Even if you take out the high interest rates of the early 1980s, when then-Fed Chairman Paul Volcker was aggressively raising short-term interest rates to fight inflation, and just count the data from the stock market crash in October 1987, the average yield is 6.30%.
So it would seem the long bond yield has nowhere to go but up. Now, the Fed is going to keep the funds target near zero for a long time. But bond yields - especially long-term bond yields - are going to go up anyway, for a couple of reasons. First, massive issuance is coming to fund our record federal debt, and China's not buying anymore - again, I've harped on this plenty already.
Second, long-term bond yields have an inflation component baked in. And more and more pundits - including Warren Buffett - are climbing on my inflation-risk bandwagon.
So whether the long bond yield hits 6% this year, or two years from now, no matter - this fund will do better over that span, whatever it is, than will equities. (The fund's ticker is RRPIX, fyi.)
Besides outperforming Buffett, Bill Gross, Chief Investment Officer of Pacific Asset Management (PIMCO), who is considered the guru of bonds, missed last year's Treasury rally. I didn't.
So what's my point? Am I just patting myself on the back? Nope. I just don't know why CNBC wants to talk to guys like Messrs. Buffett and Gross when there's somebody out there who's made money - big money - in this market. In his annual letter to Berkshire Hathaway's shareholders, Mr. Buffett made this statement:
"By yearend, investors of all stripes were bloodied and confused, much as if they were small birds that had strayed into a badminton game."
Or the flight path of an oncoming jet.
Well, not this winged creature. Sometimes you're the bird, and sometimes you're the jet. I guess I need to get myself an agent.
This is the same Warren Buffett who admits, in hindsight, to having made some colossal investment blunders in 2008. That resulted in the worst year ever for Berkshire Hathaway, which announced recently that it would make substantial cuts in staffing and production facilities at companies it owns.
He penned an op-ed piece in the New York Times in mid-October extolling Americans to "buy American" (stocks, that is). Now granted, he acknowledged that he was talking long-term; he plainly stated that he didn't know where the market would be a month or a year from the date of his piece. (The S&P was down 28.5% from the date of his editorial to March 6, a span of less than 6 months - and I'll explain why I picked the bottom on March 6, rather than today, momentarily.) Of course, he was jawboning, having made some equity investments himself in the previous days, hoping his sage advice would spur a rally that would make him money.
Me? I just had my best 12 months in the market, ever. To wit:
My wife's rollover IRA is up nearly 60% from just under a year ago. On March 12, 2008, convinced that the decline from the previous October's record highs was the beginning of a full-on bear market of drastic proportions, we sold her diversified portfolio of funds and bought two funds that were essentially leveraged bets that the NASDAQ and the S&P would fall. These funds are structured to return two times the decline in the underlying index. As a hedge, we put a small amount in a one-year bank CD at 3.40% - at the time, even though short-term rates were quite low (the Fed funds target was 3.00%, and less than a week later it was 2.25%), liquidity-strapped banks were paying up for CDs. Today, a one-year CD will earn 1.50%.
As for the significance of March 6, that's when we closed the last of those short positions. We had begun the previous Friday, when the S&P breached its November low, systematically taking 50% out of the funds (my wife's idea). We took a little more than 50% of the remainder out on March 2, when the index fell another 35 points (or about 5%), to just over 700. Then we closed it all out on March 6, since which time it's up about 40 points.
Did we time the exact bottom? Probably not. This is likely a dead-cat bounce we're seeing the last couple of days, and we'll probably get a new low at some point. But who cares? We're certainly closer to the bottom than to where we were last March 12 (1,309) - indeed, if that's not true, the bottom will be S&P 58. Not likely.
On those positions alone, the return was 51% over 51 weeks. Even if we missed the bottom, it's hard to feel bad about that. No point getting greedy, after all.
We'll come back to the IRA later, but for now, let's turn our attention to our daughter's college money. That was invested in a 529 plan in New Mexico. Why New Mexico? Because that state's was the highest-rated plan that would allow us to invest as aggressively as we chose, rather than forcing us to reduce risk as she grew older, like most plans (including that of our home state, Kansas). I didn't want the state to tell me what my risk tolerance was based on my daughter's age, I wanted to be able to time my moves.
In October 2007, knowing that she had less than two years until she started college, and believing that the record highs reached that month couldn't last in the face of the coming housing-bubble-collapse-driven bear market, we moved from the most aggressive stock portfolio in the plan to money market funds. As a result, we didn't lose a dime of her college funds. The money market returns haven't been stellar - especially now, with Fed funds at virtually zero and money market returns around a half-point. But a half-point up is way better than half the balance down.
As for my retirement funds, our choices are more limited. In March of last year - about the same time we made the IRA moves - we moved a deferred portion from a couple of equity funds to bank CDs. As a result, we averted losses of 67% through yesterday on one of those funds, and 45% on the other.
True, both funds were down from their peaks in 2007 - 5% and 12%, respectively. Still a timely move, I'd say.
My 401(k) was down a mere 5% last year. For that money, we moved - again in March - out of a diversified mostly-equity portfolio and into short-term government bonds, which had their best year since 1995. So the modest loss was a function of the equity funds' performance from January 1 through March, when we made the move into bonds.
By December, when the two-year Treasury yield had fallen to its lowest level since trading began in 1975, I figured the rally in short Treasuries was pretty much done - after all, when you hit record lows, and the funds target is zero, how much further can you fall? (Note that bond prices and yields move in opposite directions, so when yields go down, prices go up. The two-year yield fell about a full point from March through the December low, or nearly 200%. So the entire time I was long short-term Treasuries, their price was rising substantially.)
Also, with the TARP passed, a huge stimulus bill being discussed, and more bailouts to come, I knew the Treasury would be issuing huge amounts of debt, with fewer willing buyers - a phenomenon I've addressed at some length on this space - which means higher yields, and lower prices. So in December, I moved out of bonds and into money markets in the 401(k) - again, not sexy returns, but not losses either. Since the December low, the two-year yield is up 38 basis points (a basis point is 1/100 of 1%), or about 58%. So bond prices are lower.
Speaking of bonds, let's go back to my wife's IRA. As we began closing out the short equity positions, we rolled into a bond that shorts the 30-year Treasury bond. This one's leveraged 1.25 times, meaning that if the long bond loses X in value, the fund gains 1.25X.
The long bond yield hit its lowest point in history (the data was first recorded in 1980) last December. From the point we began buying the fund, the yield is up almost a half-point, or about 15%. Our blended return over the buy dates from that time is about 5.5% - not bad for a month and a half.
Again, bond yields and prices move in opposite directions, so a bet against the long bond's price is a bet that yields will go up. The December low was 2.52%, our initial buy-in was at 3.26%, and the current yield is 3.73%. Did we miss the bottom? You bet, just as we missed selling at the top of the equity market in October 2007. But consider this: the average yield on the long bond since 1980 is 7.42% - nearly twice today's yield. Even if you take out the high interest rates of the early 1980s, when then-Fed Chairman Paul Volcker was aggressively raising short-term interest rates to fight inflation, and just count the data from the stock market crash in October 1987, the average yield is 6.30%.
So it would seem the long bond yield has nowhere to go but up. Now, the Fed is going to keep the funds target near zero for a long time. But bond yields - especially long-term bond yields - are going to go up anyway, for a couple of reasons. First, massive issuance is coming to fund our record federal debt, and China's not buying anymore - again, I've harped on this plenty already.
Second, long-term bond yields have an inflation component baked in. And more and more pundits - including Warren Buffett - are climbing on my inflation-risk bandwagon.
So whether the long bond yield hits 6% this year, or two years from now, no matter - this fund will do better over that span, whatever it is, than will equities. (The fund's ticker is RRPIX, fyi.)
Besides outperforming Buffett, Bill Gross, Chief Investment Officer of Pacific Asset Management (PIMCO), who is considered the guru of bonds, missed last year's Treasury rally. I didn't.
So what's my point? Am I just patting myself on the back? Nope. I just don't know why CNBC wants to talk to guys like Messrs. Buffett and Gross when there's somebody out there who's made money - big money - in this market. In his annual letter to Berkshire Hathaway's shareholders, Mr. Buffett made this statement:
"By yearend, investors of all stripes were bloodied and confused, much as if they were small birds that had strayed into a badminton game."
Or the flight path of an oncoming jet.
Well, not this winged creature. Sometimes you're the bird, and sometimes you're the jet. I guess I need to get myself an agent.
Tuesday, March 10, 2009
The Bloom Is Off The Rose
I'm talking about the rosy projections baked into President Obama's budget (yes, we're back to talking about that stuff again).
The budget - which, as you will recall, is supposedly going to result in a reduction of the deficit, by half, by the end of the President's first term - includes the following GDP forecasts:
2009: -1.2%
2010: +3.2%
2011: +4.0%
2012: +4.6%
2013: +4.2%
Wow. That's big. Especially when GDP shrank by 6.2% last quarter, and is expected to shrink by 7% this quarter (bet the over on that one). To produce the full-year 2009 forecast included in the budget, and assuming the 1Q09 expectation is met (but isn't worse than -7%), we'll need average growth in the last three quarters of this year of about 2.1% per quarter.
If you're buying that, I've got a great deal on some real estate in Phoenix for you.
I could dig back into past recessions to look at what growth was coming out of each of them, but that would be academic, as this isn't much like past recessions, nor is it all that akin to the Great Depression. Besides, I'm lazy. So let's just look at what some other prognosticators are prognosticating.
Here's the view from the Blue Chip Economic Indicators panel:
2009: -1.9% (even that assumes 1.8% per quarter growth for the rest of the year)
2010: +2.1%
2011: +2.9%
2012: +2.9%
2013: +2.8%
Or the Bloomberg Consensus:
2009: -2.5% (still assuming 1.6% quarterly growth for the remainder of 2009, but closer)
2010: +1.8%
2011: +3.2% (that's as far out as they go - and note that the Bloomberg panel tends to err on the optimistic side, especially going out a ways)
Then there's the IMF, which has no bias to be optimistic, as the economists making the projections are neither tied to the US government, nor employed by US banks:
2009: -1.6%
2010: +1.6%
The bottom line is that none of the 2009 projections are realistic, and even the rosiest projections for this and subsequent years represent the following percentages of the budget projections:
2009: 66%
2010: 66%
2011: 80%
2012: 63%
2013: 67%
So, given that President Obama's first term ends just after the end of 2012, let's do some very crude math - I say "very crude," because there are all manner of other influences that come into play (multipliers and the like), but I don't have all the administration's assumptions at hand. So let's just take what the projected 2009 deficit will be (and it will be worse than projected), and then see what the average annual reduction will have to be to halve it by the end of 2012. Then, we'll apply the percentages immediately above to those numbers, and see where it's really likely to be - again, crude math, but I'll make some observations following this little exercise.
The administration pegs this year's deficit at $1.7 trillion (that was immediately after the porkulus bill was signed and the President's budget proposed, but before the omnibus bill now being debated, which is only likely to get porkier). To cut that in half by the end of 2012, we'll need to trim about $850 billion, or about $283 billion a year.
But let's say the 66% figure for 2009 is accurate. That alone - absent any additional omnibus pork, a second stimulus, more bank bailouts, GM, Chrysler, AIG, etc., ad nauseum - means that this year's deficit would be more like $2.3 trillion.
Then, let's apply the 2010 percentage of 66% to the projected $283 billion deficit reduction. The result is an actual reduction of just $187 billion, bringing the deficit down to about $2.1 trillion.
Following the same procedure for 2011 (using 80%), we get a real reduction of $226 billion, which brings the deficit to nearly $1.9 trillion. Finally, applying the 63% figure for 2012 to the projected deficit reduction gets us less than $180 billion in actual deficit trimming, which brings the shortfall down to about:
$1.7 trillion.
Voila. In four years, we're likely to see the deficit shrink, alright - down to the level projected for this year.
Now, for those observations. The downside risk, in consideration of the aforementioned needy banks, AIG, GM, etc., not to mention the precarious situation of the states and municipalities, the likelihood of further stresses in the housing market due to a fresh wave of foreclosures set to hit this summer (due to three factors: prior modifications going back into default, a new wave of ARM resets, and balloon payments coming due on five-year balloon interest-only and jumbo loans), and the effects of the intertwining of global risk in the face of economic stresses abroad, is far, far greater than the upside risk of a miraculous economic resurgence.
Yes, I know, our intrepid Fed Chairman droned just this morning that there is a "good chance" the recession will end this year. The same Fed Chairman who, a scant year ago, told us the subprime contagion could be "contained," and was unlikely to spill over to the "broader economy."
Likewise, there is a significant chance all the recent spending makes things worse, not better. For an easy example, I don't know what the administration's assumptions are for funding costs on the debt required to finance these deficits, but I guarantee they are more optimistic than its GDP assumptions. Rates will go higher. Just today, long yields jumped due to concerns over some $68 billion in notes and bonds being issued this week.
Then there's the delicate task of weaning American business off the government teat, which will require a balancing act worth of the Flying Wallendas. Pull the plug too quickly, and the banks and other businesses fail. Pull it too slowly, and the costs go up, at best. That's the slippery slope of corporate welfare.
Once again, I admit to the use of fuzzy math. But really, can it be any more fuzzy than that used to support the budget's growth assumptions?
************
One quick rant: we all recall - painfully - the billions of dollars the government pumped into Citigroup. We also should recall that the infusion took the form of preferred stock. So what have the geniuses at Treasury done, as stewards of our tax dollars?
The other day, when Citi's stock fell to less than a dollar a share, they converted $25 billion of that preferred to common shares. At the low.
Note to Secretary Geithner: it's BUY low, SELL (or convert) high.
That move cost the taxpayer mightily. We now own about 36% of Citigroup. And what did we pay for that stake? $11.5 billion. What was Citi's total market cap at the end of the day?
$8.2 billion.
So we paid a premium of 40% over the value of the entire company for about a one-third stake. For a total premium, over what we got, of nearly 300%. At that multiple, it's hard to argue for a screaming "buy" signal.
But hey, good news! Citi's stock was up 40 cents today! So now our stake is worth almost $4 billion, and we still only paid $11.5 billion for it! If we can just get Citi to rally another $3 a share, we're at break-even.
The budget - which, as you will recall, is supposedly going to result in a reduction of the deficit, by half, by the end of the President's first term - includes the following GDP forecasts:
2009: -1.2%
2010: +3.2%
2011: +4.0%
2012: +4.6%
2013: +4.2%
Wow. That's big. Especially when GDP shrank by 6.2% last quarter, and is expected to shrink by 7% this quarter (bet the over on that one). To produce the full-year 2009 forecast included in the budget, and assuming the 1Q09 expectation is met (but isn't worse than -7%), we'll need average growth in the last three quarters of this year of about 2.1% per quarter.
If you're buying that, I've got a great deal on some real estate in Phoenix for you.
I could dig back into past recessions to look at what growth was coming out of each of them, but that would be academic, as this isn't much like past recessions, nor is it all that akin to the Great Depression. Besides, I'm lazy. So let's just look at what some other prognosticators are prognosticating.
Here's the view from the Blue Chip Economic Indicators panel:
2009: -1.9% (even that assumes 1.8% per quarter growth for the rest of the year)
2010: +2.1%
2011: +2.9%
2012: +2.9%
2013: +2.8%
Or the Bloomberg Consensus:
2009: -2.5% (still assuming 1.6% quarterly growth for the remainder of 2009, but closer)
2010: +1.8%
2011: +3.2% (that's as far out as they go - and note that the Bloomberg panel tends to err on the optimistic side, especially going out a ways)
Then there's the IMF, which has no bias to be optimistic, as the economists making the projections are neither tied to the US government, nor employed by US banks:
2009: -1.6%
2010: +1.6%
The bottom line is that none of the 2009 projections are realistic, and even the rosiest projections for this and subsequent years represent the following percentages of the budget projections:
2009: 66%
2010: 66%
2011: 80%
2012: 63%
2013: 67%
So, given that President Obama's first term ends just after the end of 2012, let's do some very crude math - I say "very crude," because there are all manner of other influences that come into play (multipliers and the like), but I don't have all the administration's assumptions at hand. So let's just take what the projected 2009 deficit will be (and it will be worse than projected), and then see what the average annual reduction will have to be to halve it by the end of 2012. Then, we'll apply the percentages immediately above to those numbers, and see where it's really likely to be - again, crude math, but I'll make some observations following this little exercise.
The administration pegs this year's deficit at $1.7 trillion (that was immediately after the porkulus bill was signed and the President's budget proposed, but before the omnibus bill now being debated, which is only likely to get porkier). To cut that in half by the end of 2012, we'll need to trim about $850 billion, or about $283 billion a year.
But let's say the 66% figure for 2009 is accurate. That alone - absent any additional omnibus pork, a second stimulus, more bank bailouts, GM, Chrysler, AIG, etc., ad nauseum - means that this year's deficit would be more like $2.3 trillion.
Then, let's apply the 2010 percentage of 66% to the projected $283 billion deficit reduction. The result is an actual reduction of just $187 billion, bringing the deficit down to about $2.1 trillion.
Following the same procedure for 2011 (using 80%), we get a real reduction of $226 billion, which brings the deficit to nearly $1.9 trillion. Finally, applying the 63% figure for 2012 to the projected deficit reduction gets us less than $180 billion in actual deficit trimming, which brings the shortfall down to about:
$1.7 trillion.
Voila. In four years, we're likely to see the deficit shrink, alright - down to the level projected for this year.
Now, for those observations. The downside risk, in consideration of the aforementioned needy banks, AIG, GM, etc., not to mention the precarious situation of the states and municipalities, the likelihood of further stresses in the housing market due to a fresh wave of foreclosures set to hit this summer (due to three factors: prior modifications going back into default, a new wave of ARM resets, and balloon payments coming due on five-year balloon interest-only and jumbo loans), and the effects of the intertwining of global risk in the face of economic stresses abroad, is far, far greater than the upside risk of a miraculous economic resurgence.
Yes, I know, our intrepid Fed Chairman droned just this morning that there is a "good chance" the recession will end this year. The same Fed Chairman who, a scant year ago, told us the subprime contagion could be "contained," and was unlikely to spill over to the "broader economy."
Likewise, there is a significant chance all the recent spending makes things worse, not better. For an easy example, I don't know what the administration's assumptions are for funding costs on the debt required to finance these deficits, but I guarantee they are more optimistic than its GDP assumptions. Rates will go higher. Just today, long yields jumped due to concerns over some $68 billion in notes and bonds being issued this week.
Then there's the delicate task of weaning American business off the government teat, which will require a balancing act worth of the Flying Wallendas. Pull the plug too quickly, and the banks and other businesses fail. Pull it too slowly, and the costs go up, at best. That's the slippery slope of corporate welfare.
Once again, I admit to the use of fuzzy math. But really, can it be any more fuzzy than that used to support the budget's growth assumptions?
************
One quick rant: we all recall - painfully - the billions of dollars the government pumped into Citigroup. We also should recall that the infusion took the form of preferred stock. So what have the geniuses at Treasury done, as stewards of our tax dollars?
The other day, when Citi's stock fell to less than a dollar a share, they converted $25 billion of that preferred to common shares. At the low.
Note to Secretary Geithner: it's BUY low, SELL (or convert) high.
That move cost the taxpayer mightily. We now own about 36% of Citigroup. And what did we pay for that stake? $11.5 billion. What was Citi's total market cap at the end of the day?
$8.2 billion.
So we paid a premium of 40% over the value of the entire company for about a one-third stake. For a total premium, over what we got, of nearly 300%. At that multiple, it's hard to argue for a screaming "buy" signal.
But hey, good news! Citi's stock was up 40 cents today! So now our stake is worth almost $4 billion, and we still only paid $11.5 billion for it! If we can just get Citi to rally another $3 a share, we're at break-even.
Friday, March 6, 2009
The Last of the Mohicans
I'm tired of politics. I'm sure you are, too. So how about if I give us a break?
Several of my friends have been telling me I need to get a Facebook. For those of you who've been fortunate enough to have been exiled on a desert island these last few years, Facebook is a social networking website where you can set up your own page, say whatever you feel like saying on any given day, post links, pictures, etc., and people can leave comments for you.
Sort of like a blog.
I plan to be a late adopter on this deal, as I tend to be on most things technological. I don't have Blu-ray, and I hear it's about to die a slow death. I don't have digital cable or HBO. (I can hardly ever find anything worth watching on the 70 or so channels I've got now; why would I want to pay more for more channels of nothing worth watching to have to surf through, only to find that I should go read a book?)
I don't have HDTV. Several years back a friend was gushing over his, and he said, "You just HAVE to get it!" "Why?" I asked. Knowing I was a fellow football fan, he said, "When you watch a football game, you can actually see the hairs on the players' arms!"
Yeah, that's why I watch football, alright. Though I must admit, when he then presented his argument in terms of the benefits of watching the Sports Illustrated Swimsuit Special, I was more interested. (He was a bond salesman, by the way.)
I don't have Tivo or a DVR yet, either, though I'm considering that one. I like the idea of being able to pause a show I'm watching, if for no other reason than to fast-forward through the commercials. (I think you can do that, right?)
So back to this Facebook thing.
Hey look, I already spend way too much time on the computer, which is my chief argument against getting a Facebook. Between e-mail, this blog, a couple of football message boards (one of which thankfully goes largely dormant during the off-season, or I'd never get anything done), writing commentary and articles for our company website, and the occasional music or worship message board - I just don't need more PC time. I need more family time, more dog time, more chore time, more book time, and more guitar time. But not more computer time.
But still, well-meaning friends try to pitch me on why it's a must-have. Here's how the advantages have been sold to me (by people who fortunately are NOT bond salesmen, or they'd be starving):
1. The only people that can view it are people you invite to view it - your "friends."
Well, the only people I e-mail, or whose e-mails I bother to read before I delete them into cyber-oblivion, are my friends. Most of the people on the message boards I'm friendly with, even though I haven't met very many of them. The ones I have met are nice people that I'd be happy to call "friend." And I doubt that many people who aren't friends of mine, or at least "cyber-friends," read this blog, much as I'd like to consider it required reading for anyone who hopes to know anything about economics.
Like Timothy Geithner. (Sorry, I wasn't going to get political today.)
Besides, I don't think I have to worry too much about cyber-stalkers these days. I'm hot, but I'm not that hot.
2. You can very quickly let a large number of people at once know how you're doing, what you're doing, how you're feeling, or what you're thinking.
All kinds of problems with that one. First, if this thing is limited to my friends, that rules out "a large number of people." I don't have that many friends, and I'm fine with that. I prefer quality to quantity.
Second, there are many times when I might not necessarily want everyone to know what's on my mind. That's fine, I don't have to put it out there, right? But, more to the point - there are probably even more times that I might want to let people know what I'm thinking, and they don't want to know.
See, I've seen some of the snippets that people throw on their Facebooks. They're fine - I'm not making light of them. But, really: "Molly's watching 'The Bachelor.'" "William's happy that he got his taxes done on time." "Jerry's fighting a nasty toe fungus."
Who wants to read, "Brian had Chipotle for lunch, and wishes his office windows could be opened"?
Finally, why can't I communicate a quick thought to large numbers of people now? In the time it would take me to log onto Facebook, I can type, "Brian's on his third cup of coffee this morning" into an Outlook e-mail, type my own e-mail address into the "To" field, BCC my entire contacts folder, and voila! Everybody knows what I'm up to.
Then, there are the pictures that can be shared. Well, I can always attach a picture to said e-mail. Or post one on this blog, if I could figure out how. Or post one on the football message board (I have figured that one out). But really, most of my pictures I'd just as soon not share. I don't like most pictures of me, current or past. Maybe that's a sign of a problem:
"Brian has self-image issues, and probably needs therapy."
But the argument I keep hearing is that nobody e-mails anymore, that instead everybody communicates via Facebook.
Well, I have a couple of problems with that, too. First, I fear that just when I get accustomed to Facebook, something else will come along. Just a couple years ago, Xanga was the big thing. Remember Xanga? To the best of my knowledge, it's gone the way of the dodo bird. Next we had MySpace. It's still out there, but it seems to have become the domain for musicians who can't afford a full-blown website, as near as I can tell.
So now there's Facebook. If Xanga was the eight-track tape and MySpace the cassette, Facebook must be the compact disc. But now we have mp3 discs, blu-ray (I don't even know whether that's just for video, or for music too, but humor me), memory sticks, and who knows what else. How long before Facebook sinks into the LaBrea tar pit of technology, only to be replaced by something else - something to which I can't just transport my Facebook page? I mean, it took decades to progress from eight-track through cassette to CD (and I'm not even mentioning reel-to-reel, phonographs, etc.), but just a couple years to go from Xanga to MySpace to Facebook. At that pace, by the time I get my Facebook built, we'll be on to the next thing.
And why don't people e-mail anymore? It seems we're creating a cyber-caste system here. I keep hearing all this angst about the widening gap between the haves and the have-nots in our society. Has this extended into cyber-space as well? Am I a second-class citizen of the interwebs? Don't I have rights? Am I being discriminated against? Is this a hate crime? Can I get a bailout?
I just figure if people really want me to know how they're doing, or to see the funny picture of their cat wearing sunglasses, they'll e-mail me. If not, maybe they're not really my friend.
And that brings me to another point: I'm pretty old-school, and I resist all this new techno-lingo that keeps cropping up. Criminy, I'm still trying to get used to the notion that "text" is a verb. ("Class, conjugate the verb, 'to text.'" "I text, you text, he texts, we text, she's texting, they texted, I have texted, I will text ...")
Now, Facebook has brought us a new verb: "to friend." When one adds someone to their list of friends on Facebook, one has "friended" them. Worse, if one decides to remove someone from said list, they've been "de-friended." How awful. As I said, I have few enough friends as it is. I don't need to be "de-friended" by any of them.
What are the grounds for de-friending? What if I post something to which someone takes offense (like I probably do every day on this blog)? Do I get a message: "You've been de-friended by Susie. Have a nice day!" Do I have recourse? Is there an appeal process? If so, who is the arbiter? Do I need counsel, or can I represent myself? Can I recover the costs of therapy? In the interest of the quest for equality that has gripped America, maybe there should be a policy that before one can de-friend someone, one must first find that person a replacement friend, so that net-net, there is no loss of friends - a zero-sum social cyber-networking game, if you will.
And the new lingo doesn't stop there. There's "Facebook-official." This seems to be largely a high school phenomenon: the rumor mill in the hallways (assuming anybody in high school actually talks to anybody else anymore; for all I know they just text and Facebook one another) says that Ashlee and Justin are an item. But until they each update their facebook relationship status to "in a relationship," and post, "Ashlee's dating Justin!!!!!!!!!" and "Justin's dating Ashlee!!!!!!," it's not "Facebook-official."
How binding is "Facebook-official" status? Are rings exchanged? Is a license required? Can they file a joint tax return? If they break up, can Ashlee get the sub-woofers out of Justin's car in a settlement?
And speaking of breaking up, that practice is even more heinous and cruel in the Facebook age. Kids (and maybe adults) can break up via Facebook: "Ashlee is soooo dumping Justin." Or, they break up in person (or by texting), then rush to update their Facebook relationship status to "single" (aren't all high school kids who aren't married single, by definition?). It's just too confusing for my curmudgeonly mind to grasp.
I can see other possibilities from all this as well. The wife walks into the bedroom unexpectedly, only to find hubby in bed with the neighbor. "WHAT ARE YOU DOING???" she shrieks. "Uhhh, we're just 'friending.'"
Sorry, I know this sounds like an Andy Rooney rant. I'd like to think I'm not yet becoming Andy, though I do have to pluck my eyebrows with more frequency these days.
But I intend to hold out on this one, to resist the Facebook Movement for as long as I possibly can. Don't get me wrong, I don't dislike it, and there's nothing wrong with it. I'm just bound and determined to be the last kid on my block to get it, like I was with DVD players and the iPod.
It's just another of my curmudgeonly tendencies to try and hang on, for as long as possible, to concepts long considered outdated.
Sort of like my advocacy of financial responsibility.
Several of my friends have been telling me I need to get a Facebook. For those of you who've been fortunate enough to have been exiled on a desert island these last few years, Facebook is a social networking website where you can set up your own page, say whatever you feel like saying on any given day, post links, pictures, etc., and people can leave comments for you.
Sort of like a blog.
I plan to be a late adopter on this deal, as I tend to be on most things technological. I don't have Blu-ray, and I hear it's about to die a slow death. I don't have digital cable or HBO. (I can hardly ever find anything worth watching on the 70 or so channels I've got now; why would I want to pay more for more channels of nothing worth watching to have to surf through, only to find that I should go read a book?)
I don't have HDTV. Several years back a friend was gushing over his, and he said, "You just HAVE to get it!" "Why?" I asked. Knowing I was a fellow football fan, he said, "When you watch a football game, you can actually see the hairs on the players' arms!"
Yeah, that's why I watch football, alright. Though I must admit, when he then presented his argument in terms of the benefits of watching the Sports Illustrated Swimsuit Special, I was more interested. (He was a bond salesman, by the way.)
I don't have Tivo or a DVR yet, either, though I'm considering that one. I like the idea of being able to pause a show I'm watching, if for no other reason than to fast-forward through the commercials. (I think you can do that, right?)
So back to this Facebook thing.
Hey look, I already spend way too much time on the computer, which is my chief argument against getting a Facebook. Between e-mail, this blog, a couple of football message boards (one of which thankfully goes largely dormant during the off-season, or I'd never get anything done), writing commentary and articles for our company website, and the occasional music or worship message board - I just don't need more PC time. I need more family time, more dog time, more chore time, more book time, and more guitar time. But not more computer time.
But still, well-meaning friends try to pitch me on why it's a must-have. Here's how the advantages have been sold to me (by people who fortunately are NOT bond salesmen, or they'd be starving):
1. The only people that can view it are people you invite to view it - your "friends."
Well, the only people I e-mail, or whose e-mails I bother to read before I delete them into cyber-oblivion, are my friends. Most of the people on the message boards I'm friendly with, even though I haven't met very many of them. The ones I have met are nice people that I'd be happy to call "friend." And I doubt that many people who aren't friends of mine, or at least "cyber-friends," read this blog, much as I'd like to consider it required reading for anyone who hopes to know anything about economics.
Like Timothy Geithner. (Sorry, I wasn't going to get political today.)
Besides, I don't think I have to worry too much about cyber-stalkers these days. I'm hot, but I'm not that hot.
2. You can very quickly let a large number of people at once know how you're doing, what you're doing, how you're feeling, or what you're thinking.
All kinds of problems with that one. First, if this thing is limited to my friends, that rules out "a large number of people." I don't have that many friends, and I'm fine with that. I prefer quality to quantity.
Second, there are many times when I might not necessarily want everyone to know what's on my mind. That's fine, I don't have to put it out there, right? But, more to the point - there are probably even more times that I might want to let people know what I'm thinking, and they don't want to know.
See, I've seen some of the snippets that people throw on their Facebooks. They're fine - I'm not making light of them. But, really: "Molly's watching 'The Bachelor.'" "William's happy that he got his taxes done on time." "Jerry's fighting a nasty toe fungus."
Who wants to read, "Brian had Chipotle for lunch, and wishes his office windows could be opened"?
Finally, why can't I communicate a quick thought to large numbers of people now? In the time it would take me to log onto Facebook, I can type, "Brian's on his third cup of coffee this morning" into an Outlook e-mail, type my own e-mail address into the "To" field, BCC my entire contacts folder, and voila! Everybody knows what I'm up to.
Then, there are the pictures that can be shared. Well, I can always attach a picture to said e-mail. Or post one on this blog, if I could figure out how. Or post one on the football message board (I have figured that one out). But really, most of my pictures I'd just as soon not share. I don't like most pictures of me, current or past. Maybe that's a sign of a problem:
"Brian has self-image issues, and probably needs therapy."
But the argument I keep hearing is that nobody e-mails anymore, that instead everybody communicates via Facebook.
Well, I have a couple of problems with that, too. First, I fear that just when I get accustomed to Facebook, something else will come along. Just a couple years ago, Xanga was the big thing. Remember Xanga? To the best of my knowledge, it's gone the way of the dodo bird. Next we had MySpace. It's still out there, but it seems to have become the domain for musicians who can't afford a full-blown website, as near as I can tell.
So now there's Facebook. If Xanga was the eight-track tape and MySpace the cassette, Facebook must be the compact disc. But now we have mp3 discs, blu-ray (I don't even know whether that's just for video, or for music too, but humor me), memory sticks, and who knows what else. How long before Facebook sinks into the LaBrea tar pit of technology, only to be replaced by something else - something to which I can't just transport my Facebook page? I mean, it took decades to progress from eight-track through cassette to CD (and I'm not even mentioning reel-to-reel, phonographs, etc.), but just a couple years to go from Xanga to MySpace to Facebook. At that pace, by the time I get my Facebook built, we'll be on to the next thing.
And why don't people e-mail anymore? It seems we're creating a cyber-caste system here. I keep hearing all this angst about the widening gap between the haves and the have-nots in our society. Has this extended into cyber-space as well? Am I a second-class citizen of the interwebs? Don't I have rights? Am I being discriminated against? Is this a hate crime? Can I get a bailout?
I just figure if people really want me to know how they're doing, or to see the funny picture of their cat wearing sunglasses, they'll e-mail me. If not, maybe they're not really my friend.
And that brings me to another point: I'm pretty old-school, and I resist all this new techno-lingo that keeps cropping up. Criminy, I'm still trying to get used to the notion that "text" is a verb. ("Class, conjugate the verb, 'to text.'" "I text, you text, he texts, we text, she's texting, they texted, I have texted, I will text ...")
Now, Facebook has brought us a new verb: "to friend." When one adds someone to their list of friends on Facebook, one has "friended" them. Worse, if one decides to remove someone from said list, they've been "de-friended." How awful. As I said, I have few enough friends as it is. I don't need to be "de-friended" by any of them.
What are the grounds for de-friending? What if I post something to which someone takes offense (like I probably do every day on this blog)? Do I get a message: "You've been de-friended by Susie. Have a nice day!" Do I have recourse? Is there an appeal process? If so, who is the arbiter? Do I need counsel, or can I represent myself? Can I recover the costs of therapy? In the interest of the quest for equality that has gripped America, maybe there should be a policy that before one can de-friend someone, one must first find that person a replacement friend, so that net-net, there is no loss of friends - a zero-sum social cyber-networking game, if you will.
And the new lingo doesn't stop there. There's "Facebook-official." This seems to be largely a high school phenomenon: the rumor mill in the hallways (assuming anybody in high school actually talks to anybody else anymore; for all I know they just text and Facebook one another) says that Ashlee and Justin are an item. But until they each update their facebook relationship status to "in a relationship," and post, "Ashlee's dating Justin!!!!!!!!!" and "Justin's dating Ashlee!!!!!!," it's not "Facebook-official."
How binding is "Facebook-official" status? Are rings exchanged? Is a license required? Can they file a joint tax return? If they break up, can Ashlee get the sub-woofers out of Justin's car in a settlement?
And speaking of breaking up, that practice is even more heinous and cruel in the Facebook age. Kids (and maybe adults) can break up via Facebook: "Ashlee is soooo dumping Justin." Or, they break up in person (or by texting), then rush to update their Facebook relationship status to "single" (aren't all high school kids who aren't married single, by definition?). It's just too confusing for my curmudgeonly mind to grasp.
I can see other possibilities from all this as well. The wife walks into the bedroom unexpectedly, only to find hubby in bed with the neighbor. "WHAT ARE YOU DOING???" she shrieks. "Uhhh, we're just 'friending.'"
Sorry, I know this sounds like an Andy Rooney rant. I'd like to think I'm not yet becoming Andy, though I do have to pluck my eyebrows with more frequency these days.
But I intend to hold out on this one, to resist the Facebook Movement for as long as I possibly can. Don't get me wrong, I don't dislike it, and there's nothing wrong with it. I'm just bound and determined to be the last kid on my block to get it, like I was with DVD players and the iPod.
It's just another of my curmudgeonly tendencies to try and hang on, for as long as possible, to concepts long considered outdated.
Sort of like my advocacy of financial responsibility.
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