Pain train is coming to town.

Holy cow I am very tired. In addition, the US capital markets seem to be going down quick and there isn't any real hope they will get better any time soon.

So, the quick summary is that for a long time housing prices had been rising. During this period some very questionable loans were made because *if* the house prices kept raising even if the homeoners couldn't pay the loan off the bank was left with a house that was worth more than the loan was worth. Thus from the bank's point of view it was a win-win. Huge adjustable rate loans matched to properties that couldn't drop in price.

Well the reality of the situation is that properties definitely can and do drop in prices. There is really no such thing as a safe real estate investment.

From the homeoner's point of view, when the property values rise this is awesome. Put down a 10 or 20 grand and you leverage a at least 2 or 3 hundred thousand dollars. If it rises, lets say 5% you have just about doubled your investment. This is called leverage and it really works both ways. Should it fall 5% you lost twice what you put in.

A lot of people bought houses they could barely afford in order to leverage the most amount of money they could. By barely I mean that for all intents and purposes they could not afford these houses.

Now lets say you can't really make the payments on the loan. Then you sell in the best case or default/foreclose in the worse case. If the property value has appreciated, then the bank wins whether you sell or whether you foreclose. If the property values drop, then the bank is only better off if you sell.

Lets say you have a lot of these properties. You are the bank. Now a ton of them have dropped substantially in value *and* your homeowners (odd term when there is a mortgage involved) can't pay you are screwed. Thus you lost a lot of cash.

In any case, this is probably a gross simplification but a huge amount of capital seems tied up in bad mortgages on bad properties.

The effect of banks going out of business is that everyone from you to your grandma to the farmer down the road cannot get capital easily. This will hit businesses increadibly hard because it is difficult to buy stock without capital. Thus the easier it is to get capital the easier it is to buy stock. This is also important because farmers need to buy seeds and, quite frankly for the US economy, people need to buy houses.

--digression--

A lot of stinky Europeans are talking about how much the US deserves this because we have an extremely unregulated financial market. I think this is a load of bullshit, personally. Europeans tend to be the most fiscally risk-averse people you have ever met. They like to have a single job for 1000 years and throw a fit when they might actually have to change that job. Of course our financial system is more unregulated but in the long run I think that it is probably more effective because of this. We think of all sorts of interesting ways to make money that you just can't do in Europe because the risks are too great. Every now and then there is going to be a serious correction; but at least we *can* buy a house. At least we *have* access to good fair credit.

So if you listen to a lot of BBC and various other outlets you will continually hear the reporters ask if this will lead to more regulation. I sincerely hope it will not; that regulation will make capital for small businesses harder to come by and make owning a home a much more distant proposition for millions of Americans.

--end digression--

In any case, we are going into a serious correction. This will most certainly end in a recession but it should not end with a depression. A lot of smaller businesses are going to have a hard time because they can't invest in stock required for their operation as easily. A lot of people are not going to have houses or are going to lose their houses and that is the way it is.

So lets talk about the government's buyout plan. First, let me explain my biases because I am sure they have colored my analysis of the situation.

When I hear the Bush administration talking about $700,000,000,000 of money going to someone I assume it will be the top 1% of Americans it will go towards and it looks like initially this is the case. I haven't made it into this percentage group yet so of course I think this is utter bullshit.

They want to buy the bad assets from the banks. This will let the banks off the hook and leave the taxpayer holding onto approximately $700,000,000,000 of foreclosing mortgages and poor property values. Should the taxpayer hold on to this long enough they will surely get this money back. The main question is how long is long enough and what is the real return on investment.

Notice that I didn't say they will buy the high-interest-rate ARMs from the home owners. The home owners get no protection; the banks and financial institutions get to continue business as usual. Most likely the managers of said banks will continue get their awesome bonuses just as they would have anyway and a lot of them will talk about how hard the crisis hit them to ensure the proletariate don't get too upset.

They needn't worry about it, however, as the proles will never revolt.

The Democrats in congress are attempting to provide the other side of the equation. They want some of this money to go to homeowners buy most likely refinance the sub-prime mortgages into ones that have a little more lenient interest rates.

Now, let me quickly say what is really going to happen. Should congress authorize this gigantic bill who controls all of this money of the long run? Somehow money will start flowing into some account, and some group of legislators will be put in charge. A bit of it will go towards the advertised uses; whether the banks or the homeowners. The rest will be buying the most cocaine, hookers, and bridges to nowhere you have ever seen in your life. Those senators will suddenly have amazing reelection campaigns because whoever stands to get even a little bit of that money will fucking hook a brotha up.


Which is why, at the end of the day this just will suck for a while and who knows what will happen. Everyone will say how they supported whatever solution the legislative branch comes up with and talk about how they were really working for the American people. These guys are assholes. First rate assholes.

Chris

Blogging is hard

Writing blogs, at least for me, is one of the harder things i have ever tried to do.

I guess I imagine a reader who is as critical as I am of things, perhaps everything.

Depending on how cocky or conceited you think I am, you may consider me completely ignorant of how I sound to other people. Perhaps a few of you think that I have no idea my effect on other people or that I have no knowledge of how different I seem to other people.

I know that I come across as perhaps over-emotional and very sophomore. I also realize that I have had a really difficult time communicating the deeper things that I think about. As everyone I have ever met, I of course feel I have very intelligent, important things to talk about. Just like everyone else, however, I also know that I am an extremely poor judge of what will be considered intelligent, interesting or anything else to other people.

In retrospect, I don't find the really interesting bits of things I come up with in the blog. One of the things I really enjoy doing is shocking people with a deep or clever insight. I love the look in someone's eyes when you say something that they really consider to be abstract or interesting. It seems that my ability to do this is based, at least partly, on social circumstances. I cannot do it in writing; it is something I have to feel the flow of the conversation to really do it well.

I also feel, however, that it is at least partly rude or perhaps even violent to do it at will. Because I love to do it so much I really never considered the fact that it might upset someone or make someone feel uncomfortable. In a way it kind of rips control away from the person you do it too. A lot of times it may even be just showing off; perhaps a super sophisticated way to bully someone.

I guess the sad part of it also is that I appreciate sophistication and extremely subtle communication. Unfortunately the type of people who I would usually do it to may be exactly the type of people who would be most upset or uncomfortable with someone coming in and doing it to them.

Anyway, this is hard for me. I walk a line between trying to be unemotional enough to be intellectually stimulating while trying to also have the courage to express things that are hard for me; the expression of such does leave me a little more open than I am otherwise comfortable with.

Chris

Amante thoughts

Back at the coffee shop, getting ready to go out tonight and having some tea and a gin n tonic.

This post is going to be quite idle, so tune out now if you have better things to do.

It occurred to me that what I really like about well-written software is its composability. The more composable a piece of software is the more options it gives people to do something cool with it.

I spoke with my father about building tools for the pathology lab and he had a superb insight. Please place this into context; my father and I are a lot alike but technical ability we don't share. He has the social ability that I lack and I have a higher order mathematical ability.

Anyway, he said that you want to make every tool as general as possible; this is what makes it useful. I didn't expect to hear that from someone who is not an engineer but it is one of the golden truths of computer science. Most likely it is the golden tool of anyone who builds and uses new tools in different ways; it then occurred to me that the diagnosis that he does probably involved quite a bit of problem solving. For some reason this never occurred to me.

This is the one primary advantage of functional programming if you are talking about the microscopic version of composability. It is also one primary advantage of open source software when are are talking about software development in the large.

I think we actually took quite a large step backwards in terms of software composability and reuse when we started compiling every down to binary. For some reason it seems that c,c++ based systems are inherently tougher to compose. Perhaps because malloc is a global, perhaps 1000 other reasons.

--context change--

It seems there is a lot of contention around garbage vs non-garbage-collected code. As far as monads and monadic forms are concerned, couldn't you consider the memory allocation system to be a monad? Isn't creating a new object implicitly changing state of the system in one way or another? Thus shouldn't every function that allocates new data use a monad passed in?

Granted this would be tedious but it would also allow you to use different memory management systems with different pieces of code.

Chris