munky.org|v3.0

Getting the economy to a well tuned machine...

The system is broken. Obviously it has been broken for a long, long time, sustained by a series of patches and hotfixes throughout the years. The Great Depression, The Great Recession, and all the recessions in between. The good news is we are not the only one suffering. Free and centrally planned markets have always proven that they are no match when pitted against the true sources of the market’s force, the consumers and the investors (and other elements as well). Sometimes people want to buy stuff, and everyone always wants to make more money.

Recessions are not all that bad though. You can always learn more from failure than success. That’s if we take away lessons learned.

Before we can learn things, we need to figure out what went wrong, bad enough to shake every market in the world. Yes every market, because even the great survivors are getting hit now with inflation and bubble fears of their own. No economy is immune.

So let’s first think about the market’s in the terms set out in “A Beautiful Mind,” a wonderful movie by Ron Howard about John Forbes Nash Jr., the author of the “Nash Equilibrium.” There are 6 guys, one smoking hot babe, and her 5 average friends.

• Centrally planned (the former Soviet Union) – The government matches 5 guys to the 5 average girls, arrests guy number 6 and takes the hot one for themselves.
• Limited centrally planned (China) – The government gives each guy a choice of one of two girls, but the one who gets the hot one gets arrested and the government takes her too
• Free Market (theory) – Best interest for the guys to decide which girl they should take, with the hottest girl going to the hottest guy. Other way around, the girls choose their man in a similar fashion. Men (investors) make rational decisions.
• Free Market (reality) – A couple of guys decide to choice average girls, the other all fight for the hottest. The losers spend a lot of money and time wooing the remaining girls.

There you have it in a nutshell.

But to further expand on this idea, let’s change this to engineering ideas.

• Centrally planned economies think of themselves as Swiss watch makers, know for precision devices.
• Reality is that the pieces don’t quite fit, so these economies either fail or allow for more error in their thinking. Modern China probably has the lead on this technique
• Free market economies relate more to a set of different shaped children’s blocks. Each shape fits only in its whole, and the markets forces everyone to come out correct
• In reality, sometimes the circle makes it through the square hole. If the government realizes this enough they regulate. If they don’t, eventually the entire system fails

Theory to realilty always sucks for economists, because their models are still far too concrete to comprehend in subjectiveness of the forces. Prices set by supply and demand, determined by investors who make rational decisions with their money. More like supply, demand, fear, greed, speculation, etc. Rational thinking is far too subjective for 1′s and 0′s.

But what can we do? Any good enigneer knows that any system that is to operate is designed must work within constraints. They also realize that these systems will be different in real life than in design. Tolerances, deformation due to stresses, vibrations, thermal expansions, etc. etc. etc. A lot can be accounted for, but at some point assumptions will still need to be made. And this is with a far more exacting science than that of economics. But the idea still remains.

I am still a firm believer in a free market system, but to operate closer to its model, it should be constrained. This is not to be confused with regulated. Constrained. While all of the variables to be constrained and hwo to set those constraints are outside the scope of this post (and well outside the amount of time I am willing to put into this for FREE!), some are fairly easy to see.

• Oil futures
  • At one time these prices were regulated. We enjoyed fairly consistent gas prices, and quite often benefitted from local price wars amongst gas stations. I still remember getting gas in the 60-70 cent range, and this was the late 90′s, early 2000′s. Nowadays, this market is unregulated, and extremely volatile. Although it should be considered that consumption is much higher than it was then (with the emerging Chinese middle class and their 60 mile traffic jammed highways), that can’t explain everything. Once again, supply, demand, fear, greed, speculation, etc. A better solution than strict regulation would be a constraint, possibly similar to the current constraint on the yuan (it can only move so much a day against the dollar, and only to a threshold). Allow it to be constrained to within a certain percentage, tied to some measure (or measures) of the economy.
• Food commodities
  • A similar constraint as with gas prices. Part of the cost of food commodities is transportation cost. Properly constraining could also potentially include a government subsidy, driven off of the constraint.
• Interest rates
  • Need I say more

A properly constrained free market economy can - even with pieces being imperfect - allow it to operate more as an expensive swiss watch than a can of blocks. The secret is in using the constraints to allow the pieces of the economy to fit each other in an orderly fashion when looked at from a macroeconomic viewpoint.

Maybe I might spend some more time developing this idea. I might not be a schizophrenic genius, but you don’t always have to be

Anyone who remembers Disney’s The Lion King can understand the circle of life. Well now, I want to introduce you to the circle of broke, that subset of the circle of life that dictates how the poor stay poor.

Flashback to November, 2008. My wife, a 5 year employee of a major employer, was laid off, replaced by a more streamlined (read, cheaper) crew setup, and much of the work done by computers. Step forward to April, when I was laid off after 4 painful months of watching our workload dwindle to nothing, my check included. My wife managed to get a job paying 50% less. I continued on at school, and continued to look for work. At least my unemployment check, with Obama’s gift of $25 a week, helped. Even as we were knocked off our rear ends, we continued to try and climb forward. My wife found a job paying a little bit more, and we moved closer to comfort.

But as you can guess by now, the circle of broke was among us. Things were going alright. I still hadn’t managed to find a job, but my prospects for good paying internships were looking good. My 4.0 GPA was something to take notice of, and a couple of professors were vetting me as a possible grad school candidate, with the hopes of getting paid to go through the NSF. I was a semi-finalist of a major scholarship that would’ve paid me a decent dime to go to school. Then it all falls apart. I wasn’t selected for the scholarship. I wasn’t selected for UNC Charlotte’s SREU. Boston U canceled their SREU. Other programs said thanks but no thanks. My benefit year ended, and when my benefits resumed, I had taken a 40% cut because it was based on my pathetic excuse for 1st quarter pay in 2009. Nobody was interviewing me. Then a break, I got an interview from a place an hour and a half away.

But money kept growing tighter and tighter. Last week, my home phone, cell phone, internet, and tv were shut off because of being 2 months behind. Turns out that that interview I had, they wanted me, but couldn’t reach me and took someone else. ARG!

Then my wife came home today with some more troubling news. Her boss let go of two more people today, and told her she may be next. Really? I hope he at least is nice enough to provide a Sam’s Club size case of KY for the reaming that will follow.

But that’s life. Welcome to the circle of broke. We forever hold on to hope, but unfortunately hope doesn’t sell the bills. Maybe if I could just be a con artist and learn how to sell false hope.

Bank of America Corporate Center - Charlotte, NC

Reading the Wall Street Journal today, an article on the 3rd page caught my eye. Apparently, Bank of America has gotten into the business of home invasions and parrot-napping (NY Daily News).

Angela Iannelli, a 46 year old from the Pittsburgh area, came home to find her door padlocked, her house ransacked, and her 11-year old parrot – Luke – missing. A Bank of America employeed royally screwed up, believed her property to be vacant (it wasn’t, nor was she behind on her payments), and sent a contractor over to install a new lock and “secure” the property. I guess in Pittsburgh, the method of securing a property is to cut the power and water, cut electrical lines inside the house, damage floors, damage furniture, pour anti-freeze into the toilets, and take animals. Maybe the contractor should be lucky it was caught after the fact, because there is a good chance that somebody might have gotten shot.

When Ms. Ianelli returned home, you can imagine what went through her mind. The biggest thing to her was that her parrot was missing. She claims to have stayed with friends until he was returned.

Bad enough that the bank goofed, even worse was the lack of response or helpfulness from the bank when she called. They denied knowing where he parrot was, then eventually was told she could drive the 80 miles to the contractor’s office and retrieve Luke herself.

Needless to say, she is suing the bank for more than $50,000, and she rightfully should. If I had been her, I would’ve wanted to make sure that I received enough to repair all of the damage, pay my lawyer, give myself a little, and, most importantly, had them wipe away my mortgage. Why? Just as we are judged by trustworthiness by the bank (i.e. credit score), we need to have trust in the bank too. Just because they hold the lien doesn’t give them to right to waltz in and out whenever they please, especially when it involves damaging the property.

The bank issued an apology this week after the lawsuit went public. Too little, too late. I’m rooting for you, Ms. Iannelli. Did I mention I have a Bank of America mortgage too?

I'll sell you my tie

Some people will say so. Most of them aren’t broke so, do their opinions really matter? I mean, I can look at the bright side, I have my family, my health, my house, etc. Ok, well, the health is questionable (large amounts of stress does that to people), stress in the family, and the consistent fear of losing my house and everything.

Simply put, being broke is about one of the worst things that can happen to you. Not because of the lack of money, because it’s true, money doesn’t buy happiness. It’s the fear and anxiety surrounding the future. An unknown future.

For the last year I have been on unemployment, simultaneously looking for work and going to school. I’ve managed to get by, even with all of the income that is no longer coming in (we made roughly 50% less in 2009 than we did in 2008). I was proud of myself, putting us in a position where even with both of us losing jobs and taking substantial cuts in pay, we could still squeak by.

With summer nearing, I began seeing light at the end of the tunnel. I’m a semi-finalist of a major scholarship which would give me a livable stipend (starting at $25,000 a year). I’ve got realistic chances for great internships that would provide decent pay and a wealth of experience. It looked like all of my hard work may be beginning to pay off. All of the restless nights working on school work, studying and forcing myself to understand and apply the concepts, working hard on teams to complete projects and set up conferences. Then yesterday I found out my unemployment benefits are tapped out, a couple of weeks shy of a full year.

Fear, anxiety. How am I going to get by? How am I going to keep paying the bills, keep a roof over our heads, put food on the table. This is where broke is the worst. It isn’t that you aren’t being a man or a woman, doing everything you can to make things right. It’s the lack of any control, knowing you are powerless to fight back.

I’ve applied for my extension, and even though everything appears to be ok, but who knows. I have no power to make them do anything, and now all I can do is hope and wait that that check keeps coming. In the mean time I will keep doing what I do, yet deep down slightly unhinged by the fear.

Is it just me, or is the economy giving us mixed signals. The Dow Jones has recovered nearly 3000 points from it’s low, yet 84 banks have failed this year as of last week. That averages out to 2.5 bank failures per week. Ouch! There are still signs of things sinking, particularly in commercial real estate. Yet other signs show we are improving. Mix signals? As the only vice presidential candidate we’d wanna see in a centerfold would say, “you betcha!”

However, this is a little bit of silver to an otherwise dreary lining. Our recession is moving through its progressions, which equals progress.  Our markets are also clueing us in that the big picture ahead is looking brighter. Just remember that the markets don’t reflect our current reality, but our perceived future. We’re continuing to hit turning points, which is good news for our future.

Unfortunately for us laid off folk, future doesn’t fix the present.

But being laid off does have its advantages. Especially in a recession. This is the perfect time to step back and take stock in our life. Do we like where we were going being we were laid off? Should we change paths? Would furthering my education advance me, or should I look at another career. Some of us may be used to working in industries that routinely lay off and rehire (defense contractors and the like are notorious for this. My friend’s dad has been laid off and rehired between Solectron and General Dynamics for almost two decades, ouch!). Maybe this one stings a little bit more, and makes us realize we need to find something more stable.

So to all my fellow unemployed/underemployed persons, use this as your opportunity to start going in the direction you want to go. Although the “potential employee” pool is larger than normal, we now have the opportunity to make a move and shine. So take advantage,

As for me, I used this as my sign to go ahead and finish school. I was almost done with my associates when I was laid off (I graduated in July), but instead of taking time off before transferring to a 4-year, I took being laid off as my sign to go ahead and get it done with. I’m now in my first semester at UNCC, majoring in Mechanical Engineering and Physics, with a minor in Mathematics. I still have withdrawal pains from the job world, and it is still weird being the “old fart” around campus. yet it has already been challenging and rewarding, and I can now focus on everything a lot more. By the time we’ve mostly recovered from this recession, I will have positioned myself to be a strong candidate for anywhere I want to go.

So use this opportunity wisely, recessions don’t happen everyday.

Akula class Russian submarine, like the two that were found off the East U.S. coast

Seems like Russia wants the world to know that it is supposedly back on top of its military game. The U.S. has been tracking two Russian submarines off the east coast of the U.S., hanging around in international waters. That’s comforting to know given that A) I don’t trust Russians and B) I live on the east coast. Of course, I’d be a maniacal conspiracy-theorist to believe that they are out there sitting for me, but it still isn’t comforting. Russia has been showing signs of wanting to reunite its former soviet states, and has been showing that this new “democratic” government – lead by Medvedev, prime minister Putin’s puppet – is still built a lot like it’s former socialist self. I’ll save my evidence for another day though, I’m sure I’ve pissed enough folks off saying I don’t trust Russians.

Aside from Russians, wtf is this about clunkers? If you guessed CARS – Cash for Clunkers – then you’d be absolutely right. This geniously little program, which is about to run about $3 billion once Obama signs the latest bill, has done more to stimulate than the $750 billion+ economic bailout/stimulus. They are estimating 750,000 cars sold. Even if half of the buyers were planning on buying anyways (according to economists), that’s still hundreds of thousands of new car buyers out there.  That’s billions of dollars worth of new loans flowing into the market place, hundreds of millions if not billions being pulled out of savings to pumped back into the economy. That’s salesmen who finally are getting a decent check, sales managers who have work to do. A definitely positive shot to the economy. So for all you naysayers, complain once you kiss your elbow.

So now what does the 1st part, and this last part, hackers, have in common? Is it that they are both listed using an odd number, or that putting the numbers together makes an unlucky American number (13) ? Well, its true and all, but the meaning is much deeper than that. Russians = hackers. Maybe. At least some who manage to stay away from the Vodka water fountains long enough =)

As I said, it could be. If you haven’t heard, someone or a group of someones led a distributed denial-of-service – DDoS – attack against twitter and some other services yesterday. Turns out that this attack was launched specifically at sites by a man named “George”, including his twitter page, livejournal, and facebook. As of this writing, his Livejournal and Facebook page is still down. But why him? To quote CNN:

His recent posts include: “How Russia was preparing military agression (sic) against Georgia, how they were training soldiers and mobilizing military equipment, what kind of provocations were carried out by the separatists prior to the war.”

“Seems somebody did not like such a chronicle of events,” he [ "George" ] told CNN.

So was it Russians? Was it someone in Georgia who is pro-Russian? Hopefully the world may end up finding out. Given that this dipshit(s) didn’t just take out one page, but knocked out Twitter, numerous groups are now involved with this, including the Georgian government. But I would be more concerned with the hackers that use Twitter.

What this all boils down to is more Russians or pro-Russians afraid of the truth. They should’ve just stuck with the vodka.

Oh, and for one last jab. I just noticed that if you look at Medvedev and Putin side by side, Medvedev looks like 007, while Putin fits the bill for one of his Russian enemy masterminds.

I’ve been slacking off here! Sorry I’ve been ignoring this site, but life has been busy. In-laws in town, redoing the backside of my house (unfortunately with little help), and dealing with life in general.

And my god, so much has happened over these last couple of weeks. Michael Jackson dies, his mom aks for temporary custody, his dad puts his foot in his mouth and shows once again what an ass he is, Madoff get’s 150 years in prison, a plane crashed straight down into the indian ocean, with the only survivor a 15 year old who can’t swim. Oh, almost forgot about Billy Mays, my favorite TV commercial pitchman, dying. Then Sarah Palin, a wonderful MILF yet a hapless politician, has announced she’s resigning.

And Michael Jackson. I’ve never been a huge fan, although I did like his stuff. But he did, in many ways, shape our current pop culture. Even though I still thought he was a pedophile, I hated to hear that he passed away. I will say I am shocked with the numerous suicides that have been committed because he died. People get a little too caught up in things. It’s truly amazing that we idolize people who have more issues than we do.

And Joe Jackson. I’m kind of waiting for the bolt of lightning to strike him: I’m surprised the Rev. Al Sharpton would be willing to stand so close! Using his son’s death as an opportunity to market new material. I always heard he was a dick, but man, I think they were being nice calling him that. A monster is a better term. And with Al Sharpton tagging along for his few words, it lowers my stock in him as well, and I didn’t care much for him in the first place.

And Sarah Palin. Hah! She figured that her lame duck status would just make it “politics as usual.” What a load of crap. Palin said she planned to make a “positive change outside government,” without elaborating. Maybe she’s about to go visit Hugh Hefner, and become the first Governor/almost Vice President centerfold the magazine has ever had. That may be about the only positive change she could make outside of government. And before you feminists start blasting, I have nothing against a woman as governor, vp, president, secretary of state, etc. etc. I have a problem with a woman who lives in Alaska and believes she can see Russia outside of her window being in power. Or someone who has more political flip-flops than my wife owns! How she’s “Drill, baby, drill!” yet has fought hard against the big oil companies, when they are the ones that are needed to make the plans successful. The same Sarah Palin who gave $500 million to a CANADIAN company to do a feasibility study of the proposed new pipeline. That’s 1/2 a billion to a non-American company just to let us know if we should build it. All the while, big oil was running their own studies, at fractions of the cost, and keeping the work for AMERICAN workers. Imagine if she had gotten to be VP?!

As for Madoff, I hope they keep his body there for the full 150 years. When he dies, preserve it, and put it for public display. A warning to anyone else who wants to play his game. We won’t even give you a proper burial till you’ve served your bloody sentence. Son of a bitch.

Well, that’s about it for now. I’m redoing the whole backside of my house (new sheating, rigid foam insulation, fiber cement siding, energy star windows and doors, rebuilding the chimney chase, etc.), so I’m whooped, and not sure when I may get a chance to post some more. But in the words of General Douglas MacAuthor, “I shall return.”

It never hurts to add up your own numbers

It’s a good question. A couple of jobs back, I had an 401k account. They didn’t match, but they put 3% of my salary into my 401k, regardless of what I put in. So I put in 3%. As the times were good, I watched it grow. It was a measly amount, maybe $3500 at its best time. Gains were totaled in the 20% range, even after 2-3 years of not working for them anymore (no more in).

Then times weren’t so good. I dragged my feet on opening up an IRA and rolling it over, and it cost me. By the time I rolled it over, the account was worth slightly south of $2100. $1,400 hit. And these were invested into very good funds. I had a slight amount in a very aggressive fund, some in a more moderate fund, then 40% in bond and money market funds. I did the safe path, just like they tell you to do.

When I opened up my IRA, I had already gained some experience with the markets before hand. I decided to take “the risk” of using some money, particularly from overtime to start with, and buy some stock. But what to buy?! There are soooooooo many options out there, and even with screeners, you can find hundreds that fit your criteria. So I went with what I knew, and in some ways trusted my gut. (more…)

The real world can be daunting to those who've never been in it.

Some people may not realize this, but being a non-traditional college student may be one of the hardest experiences in someone’s life. And when I refer to non-traditional, I’m referring to that rare breed of student: independent, with a family, a mortgage, a full-time job. Actually, you need not to even include to full-time job. Just consider someone like myself – a husband and a father – those alone being a full-time commitment. Then add in a full-time job, and we’ll sprinkle a full-time education on top. So go ahead and work three full-time jobs, all three requiring a lot out of you, and you will soon get a taste of their life.

The typical traditional student is much younger, still considered a dependent. Many of the permanent concepts of real life, including the real responsibilities, are not yet on the plate. Their school might be paid by family, by scholarships, or through student loans. They may work a part time job – wait staff is probably the number one college job – and the rest of the time is either in class, studying, or hanging out and having fun.

Non-traditionals, not so much. They generally don’t have the option of hanging out and having fun. The concepts of the real world are real to them. The bills are real, the responsibilities are real. The traditional student concept of owing for college “oh, that’s in the future,” doesn’t apply: they see that amount and they KNOW what that costs.

Non-traditional students are a very important mix into the college community too. While the younger students may bring in fresher minds (and bodies), non-traditional students usually bring in a ground sense that is required to survive the real world. They provide a balance to the free-living lifestyle of so many college students.

I’m writing this because I’m a non-traditional student, I understand the difficulties first hand. The stress of waking up early, putting in 40, 50, even 60+ hours a week, dragging myself to class in the evening, doping myself with steady streams of caffeine half the night in order to get my homework done. How to spend so much time away from your family, while doing everything you can to hold it together. I also know how it begins to wear you down, slowly at first, then eventually depleting your energy, yet still fighting on to get it over and done with.

And it surprises me that there are not more financial options out there for non-traditionals. Sure, there are some scholarships out there specifically for non-traditionals, but not too much else. In the FAFSA application, we might be treated as dependant students, but generally, we are treated the same as traditionals. We don’t have parents to help, and we didn’t spend the last 18 years of our lives planning on sending ourselves to college.

It also shocks me, given the number of MBA grads who completed their MBA’s at night, while working full-time. Every one I’ve talked to who went down this path made many points to which I can easily relate. Working full-time while doing it may make you stronger, but after a couple of years it wears you out. Grades drift down towards the end, and we are thankful for just getting through it alive. But for those MBA students, they had the easy option of calling it done.

But what about students like myself. Finishing up at a 2 year, getting ready to begin my 4 year this fall. Hopefully early entry into the graduate program. By the time it is all said and done, I will have been through this for around 8 years. Yet what extra help will I get for this? Minimal at best.

I think it is time we start making some changes for non-traditional students. The government (and society) has incentives to do this too. Let’s take people who were in the workforce earning X dollars, people are productive members of society who already understand the realities of society, and get them a college education. Now you have people earning 2X, 3X, 4X, even 5X, who bring in extremely valuable skill sets not found in the typical college grad. The government gets more taxes; society gains more knowledgeable, productive members. Companies get well trained employees that are naturally more adept at being responsible and is already used to making tough decisions that affect others.

What I suggest is a program specifically for non-traditional students. Students who are independent and receive no financial help from their parents. Students who have families of their own. Students who own their own home or have been long time renters. Students who are working full-time and have a history of working full-time. Why can’t the government subsidize a percentage of their income, provide health insurance benefits, pay for school or mostly pay for school. Not off of standardized numbers. Based upon how much their earn compared to how much they pay out.

Provide these students an opportunity to reduce their working hours, to help even up the playing field with traditional students. Non-traditionals are proud, we take care of ourselves, but we wouldn’t mind the hand up. Can’t we get a break?