Comments Posted By Larry your brother
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Some comparisons can be funny, some satirical, and some simply in bad tasete. I opt for the last for this post. I'm not sure what that says about my intelligence.

BTW, I think the of the Nazis were probably awakened by the guy who came up with the term "Homeland Security." I hear the thump of jackboots every time I hear that phrase.

Comment Posted By Larry your brother On 24.07.2008 @ 10:00


"But his speech on the responsibilities of parenthood before the 20,000 member Apostolic Church of God – an almost all-black church near the loop in Chicago – revealed something about the man that I didn’t know was there; a basically conservative outlook on personal responsibility and the importance of family."

I don't think you've been listening carefully enough. I don't know where he's been on the issue for the last 18 years, but since he announced his candidacy (and I believe during that speech) he has talked about fatherhood and family on a number of occasions. Like #9, I find it amusing that conservatives think liberals disdain the idea of personal responsibility and advancement. The difference between liberals and conservatives on this issue may be that we are more willing to help those in more distress catch up a little.

Comment Posted By Larry your brother On 17.06.2008 @ 10:20


Must be a real, real, slow news day.

Comment Posted By Larry your brother On 22.05.2008 @ 08:21


Pope's quote is good, but I prefer something a little more mundane:

"And they'll walk out to the bleachers, and sit in shirt-sleeves on a perfect afternoon. They'll find they have reserved seats somewhere along one of the baselines, where they sat when they were children and cheered their heroes. And they'll watch the game, and it'll be as if they'd dipped themselves in magic waters. The memories will be so thick, they'll have to brush them away from their faces.

People will come, Ray.

The one constant through all the years, Ray, has been baseball. America has rolled by like an army of steamrollers. It's been erased like a blackboard, rebuilt, and erased again. But baseball has marked the time. This field, this game, is a part of our past, Ray. It reminds us of all that once was good, and it could be again. Ohhhhhhhh, people will come, Ray. People will most definitely come."

Kind of a stupid movie (though not a bad book), but I watch it to see James Earl Jones give that one speech.

So have you been tempted to pick up a glove again and join those 50+ players. You were pretty good in your youth...probably like riding a bicycle, you'd pick it up again right away.

I used the Jones speech a couple of times over the years and in an article last year - damn good speech. And a couple of years ago I tried to swing a bat in a batting cage and nearly had a hernia. So no, my ballplaying days are over.


Comment Posted By Larry your brother On 7.04.2008 @ 09:09


Robert Bolt, in his classic "A Man For All Seasons," summed up the situation as well as anyone. Thomas More, Henry VIII's chancellor, is being ordered to recognize the King's authority over the Pope's. Being a good Catholic, he is refusing to sacrifice his immortal soul and so risks his life. His son-in-law, William Roper, is telling him to simply sign the document to save his life, that it's just a piece of paper. More rightly points out that it's recognizing a law, and a bad law at that. They start arguing about using the law, or getting around laws, to achieve the desired end:

William Roper: So, now you give the Devil the benefit of law!
Sir Thomas More: Yes! What would you do? Cut a great road through the law to get after the Devil?
William Roper: Yes, I'd cut down every law in England to do that!
Sir Thomas More: Oh? And when the last law was down, and the Devil turned 'round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man's laws, not God's! And if you cut them down, and you're just the man to do it, do you really think you could stand upright in the winds that would blow then? Yes, I'd give the Devil benefit of law, for my own safety's sake!

Call it morality, call it enlightened self-interest, call it whatever you want. Torture is wrong and puts us all at risk. And the clever words used by commentators here that try to define the limits of torture are simply Roper-like arguments meant to justify a position. To try and use hypothetical situations to justify torture ("If you could save your daughter....", "If it could save an American city....") may be the start of an interesting parlor game but doesn't help answer the question. If something is immoral, it is immoral. Period.

Great film. Have you been watching "The Tudors" on Showtime? A little less sympathetic portrayal of More but just as fanatical a Catholic - even going so far as considering plotting with the King of Spain to keep Catherine as queen.

I also love More's soliloquy after Rich perjures himself and implicates More.

Comment Posted By Larry your brother On 3.04.2008 @ 09:06


I think the rationale behind the 90% limit is that, because they are AAA rated and reasonably assured of paying back principal and interest on a timely basis, their value should not fluctuate too widely (think of U.S. government bonds). In "normal" times (whatever that means) this may be true, but as these securities got more complex, small changes in interest rates caused huge negative changes in value (bond values move in the opposite dirction of interest rates--it's the way the math works out). You can see this reasoning in the fact that with stocks, for example, you can only borrow up to 70-75% of their value (depending on if their are big or small companies). Stocks tend to fluctuate in value more (witness the last couple of months in the stock market) and they hold a subordinate position for claims on a company's assets if it goes bankrupt (subordinate to bank loans and bond holders); with that kind of risk, lenders are less interested in lending money on those securities.

I agree that the 90% rule tempts people to do things they shouldn't. Usually, you could think of some economic reason to the rule, but I can't see why anyone would try to double their investment, half with leverage. But then, I don't work on Wall Street and have a home in the Hamptons, so what do I know.

Comment Posted By Larry your brother On 18.03.2008 @ 17:27

The real problem is a typically American phenomenon: We took a good idea and drove it into the ground. Making loans to people, packaging them up, and selling them to investors is what has made home ownership possible for more people over the last 30 years or so. The idea is that, if you group a number of loans together with similar characteristics (region, credit profile, interest rate, etc.) you may have some failed loans but the vast majority (more than 95%) will be repaid on time; you can see this pattern over time. While it gets a little worse during times of economic downturns, it is not dramatically different.

So what do we do with such a simple idea? We take those packages, slice and dice them into unrecognizable pieces, and sell them (collecting a fee in the process). No one really understands what they own, or what effect a slowing economy or rising interst rates (which started last summer) will have on asset values. And we've seen this movie before--the credit crisis of 1994 came about for almost exactly the same reasons.

We probably could have survived if this was all that was happening (as we did in 1994 without any huge government intervention as I recall). But the really neat part about these sliced and diced packages is that they were given a AAA rating by the rating agencies (side note: why is Congress spending time and effort trying to decide if Roger Clemens took steroids when we should be asking why the rating agencies were asleep at the wheel?) That AAA rating enabled owners to borrow up to 90% of the value of the investments and--guess what?--buy more! The problem comes when, after borrowing that money, if the assets go down in value, the banks require you put up more collateral. Which is what's been happening since last summer. The Carlyle Group took $1 billion and turned it into $22 billion, which has now all disappeared. Again, we've seen this movie before--it ran in the 1998 credit crisis with Long Term Capital Management almost dragging down the financial system.

So the moral of this story is not the investment itself. It probably is not even the financial engineering some bright whiz kid came up with to create some of these toxic investments. The real killer is leverage (borrowing against the asset to buy more of it). Leverage creates outsize returns if it works, but wreaks havoc if it doesn't. The solution? Restrict the amount of money that can be borrowed against assets. Instead of borrowing 90% against assets like this, restrict it to 50% or 60%. The Fed has the power/authority to do this. It may not help totally avoid the problem, but it should reduce the impact.

That's the best explanation of how these securities came into being that I've read to date. Thanks, brother.


Comment Posted By Larry your brother On 18.03.2008 @ 09:17


I love the broad brush commentators on this blog use against the people who think differently than they do.

I believe global warming may be a possibility. I am not a scientist (as Rick will attest to) but I try to understand the debate. I am not in favor of shutting down the economy. I do not want to tell people to stop doing fill-in-the-blank. But it seems to me it would make sense to do a couple of things JUST IN CASE the global warming advocates are right:

1. Find a different way to power cars, and not biofuel. I'm not even talking about planes or, the worst offender, ships.
2. Either find another way to power houses or clean the emissions better that we do now. The technology is out there now; find a way to efficiently make it.

Do these things and you receive two benefits:

1. Create a new sector of the economy we might actually be able to export.
2. Increase national security by not depending on people who don't like us in the first place.

It seems to me that each side has this incredible need to be right, when all we really need to be is reasonable

Comment Posted By Larry your brother On 3.03.2008 @ 09:42


As I recall, you didn't really give a sh*t about what you said at 30, either!

Anyway, happy birthday. Hope it warms up enough to get out for a while.

Comment Posted By Larry your brother On 25.01.2008 @ 09:35


The problem is not with unscrupulous lenders or stupid borrowers (though those certainly are problems). The problem is also not with honest, well meaning lenders and borrowers who were duped by the counterparty (duped, or overly-willing). The problem is with what Friedman calls "the neighborhood affect," which is literally the problem here. Neighbors of these forclosures have done nothing to warrant some of the havaoc being played out in their neighborhoods. Read the Atlantic this month, or yesterday's NYT. Foreclosures are not simple--they take forever, emotions run high, and sometimes people vandalize the property on their way out. Or they simply just walk away, leaving an unattended house that becomes an eyesore. And that hurts people who are not involved in the problem. I don't know what the solution is, and I realize we don't want to encourage crazy lending or borrowing, but there must be some solution that banks willingly (mostly) can take that helps those people at the margin, not those way past the margin. And for banks, it's enlightened self interest: it's bad enough they made stupid mortgages; they don't want to become landlords of houses that lose value by the day.

Comment Posted By Larry your brother On 14.01.2008 @ 09:39

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