Burn, Baby, Burn

My takeaway from the people blathering on about the financial crisis we supposedly need to spend a gazillion dollars to avert is the financial system is far more fragile than anybody thought.

My next thought is if it’s so mind-blowingly fragile, why are we trying to save it? Let it burn and figure out how to make a better one that won’t be vulnerable to cascade effects from a single point failure. The time to start rebuilding your house is not while it’s on fire. You wait until the fire is done, and then start.

I also think giving the morons who caused the problem an additional unspecified sum of money is a staggeringly stupid idea. Surely someone out there has heard the expression “throwing good money after bad”? Apparently, none of these people are involved in figuring out what to do next.

Finally, the best and the brightest minds on Wall Street got us into this fucking mess. Maybe we shouldn’t be asking guys like the former Chairman and CEO of Goldman Sachs what the solution is. Maybe, just maybe, we should be telling Hank Paulson and the rest of the financial wizards to blow it out their ass. Y’all got rich riding the wave, y’all can suck it up and figure out how to solve the problem without taxpayer funds. Surely you can think of a way to do that, right? If not, maybe you’re not the right guy to have the job. Get somebody in who doesn’t have any ties to the industry to come up with a solution.

Fuck the Free Market

So, the bailout plan proposed by Henry Paulson, et al.? Give us a whole pile of money to spend and let us be completely unaccountable in doing so. Don’t believe me? Here’s the relevant subsection:

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Excuse me, what? We’re talking about spending $700 billion here. That’s $700,000,000,000 dollars that have to come from somewhere and these ignuts want the decisions to be unquestionable? If you have any kind of a brain in your head, you should realize the magnitude of the colossally poor decision being discussed here. It should concern anyone with functioning brain cells when the government tells you it wants to spend this kind of money and avoid answering any questions about the details.

Let’s review: a bunch of dumb people borrowed money they couldn’t pay back from a second group of morons. Somehow, the poor decisions by the collective idiots in the crowd means we, collectively, have to pony up the entire GDP of the Netherlands or Turkey. Instead, we could buy Vietnam 10 times over.

I’d also like to note the proposal came from the efenants in DC. Let me quote you some choice tidbits.

Republicans will attack wasteful Washington spending immediately.

If billions are worth spending, they should be spent in the light of day.

Congress has a fundamental duty to conduct meaningful oversight on the effectiveness of government programs

We believe government should tax only to raise money for its essential functions.

We do not support government bailouts of private institutions. Government interference in the markets exacerbates problems in the marketplace and causes the free market to take longer to correct itself.

All of these quotes are from the RNC Platform. I guess Paulson and Bernanke didn’t get the fucking memo, huh?

Insurance, Market Failures, and Bailouts

Let's cover a few issues today. As we sit in the midst of the devastation wrought by Ike on his trek north, a lot of people seem to be confused about the proper role of government. First off, the government is not the insurance provider of last resort. Part of the reason there is so much crap in Galveston to lose is because people forgot the nature of insurance. Insurance is to reduce the financial impact of extraordinary events that are unlikely to occur. A hurricane along the Gulf Coast of Texas is not an unlikely event. Statistically speaking, over a long enough term, it's a certainty. Galveston will get hit by another hurricane. It may be in 5 years, it may be in 50. But it's gonna happen. The only question in anybody's mind should be when, not if. Given this fact, insurance for properties on Galveston Island should be ruinously expensive. Any risk assessment guy worth his paycheck is going figure this out, and set premiums accordingly.

Let me digress for a brief moment. I have a large, fast motorcycle. I can afford to insure said motorcycle because I am old and married. A friend of mine, who is much younger and single, bought himself a similar motorcycle. He was unable to get full coverage insurance for a yearly premium that was less than the purchase price of the motorcycle. After many repeated and frustrating phone calls, an insurance agent took pity on him and explained to him the ugly truth. From a statistical perspective, a single male under the age of 25 is going to total a liter-class sportbike within the first year of ownership. So the premium on the bike is going to be what the insurance company figures they'll pay out, plus some extra so they make a profit. Ergo, he was going to have to pay more than the purchase price to insure the bike.

Returning to our property on Galveston Island, some bright soul can figure the odds of a catastrophic hurricane hitting the island in any given year. I'm going to call it as one every 25 years, based on Alicia and Ike. So the insurance company knows that whatever structure you have stands roughly a 4% chance every year that it will be a complete loss. Your premiums for this are going to be set accordingly, right? Wrong. The rates are not set based on risk, they are set by legislators on the federal and state level. Flood insurance is federal, and the wind insurance pool for Texas is state. The premium rates for both of these programs are insufficient to cover the expected payout losses in the event of a large catastrophic event. So who ends up picking up the tab for some asshat who wanted a half-million dollar house on a coastal barrier island? Why, all of us, of course! Don't you feel glad that you're helping subsidize people's poor life choices yet again?

Now many on the left would be quick to point out that a lot of the people whose livelihoods and homes have been destroyed by Ike are not multi-millionaires with expensive vacation homes. They are, in fact, normal working-class folks just trying to get by. This is true. This also doesn't change the cold, hard facts. Building a structure you want to keep on a coastal barrier island in a region known for hurricanes is a dumb fucking idea. For that matter, building houses any number of places subject to earthquakes, avalanches, mudslides, typhoons, or any other regularly occurring natural disaster falls under the heading of fucking stupid. Actually, it's not necessarily stupid. Building in full foreknowledge of the possible consequences and managing your risk so that you are not rendered penniless and destitute should the easily foreseeable disaster occur is not stupid. Anybody who has done so, please raise your hand. Hmm. I'm not seeing a lot of hands raised. Expecting everyone else to pay for the consequences of your risky behavior is also not stupid. Greedy, selfish, and immoral would be the words I would use to describe that behavior. There are some hard truths here for many, many coastal residents. It's nice that you wanna live on the coast and smell the salt breezes. I wanna live in Antarctica in my Fortress of Solitude
at the Mountains of Madness. When all you shore-dwelling types agree to pony up for my desired lifestyle choice, I'll think about helping you. In the meantime, accept the risk of living where you do and quit expecting the rest of us to subsidize your choices and pay to rebuild your house when the inevitable happens.

Some people would also call the insurance prices that would prevail in the absence of the government rigging the market (poorly, I might add) a market failure. The failure of the market to provide something you think should be available at a price you are willing to pay is not now, nor will it ever be, a market failure. If we accept the common definition of a market failure as a situation where the market does not provide the most efficient resources, absurdly expensive insurance for the coast is the furthest thing from a market failure. Let's have a simple thought experiment about which is more efficient in terms of resource utilization. Option A: pricing insurance realistically and not building much on the coast. Option B: underpricing insurance and having 25 billion dollars worth of shit destroyed? Here's a hint for the slower members of class. Google "Bastiat broken window fallacy" and get back to me.

Finally, who on earth decided it was a good idea to bail out the dumbasses on Wall Street who keep running their businesses into the ground? Do none of you ignuts understand the concept of a moral hazard and the iron rule that if you subsidize a behavior you get more of the behavior? Yay! More risk taking from investment banks, because what the hell, if they fuck it up the Feds'll pick up the tab. I'm glad I'm going back to work tomorrow so I don't have to pay as much attention to all of this. What kind of fucked system are we trying to make where reward is private and the risk is passed on to the public?

Trees Suck

The only damage suffered to YPS Manor from the hurricane was a shitload of branches blown down. Actually, the top halves of trees is a more accurate description. Well, a piece of siding came loose on the eaves of the guest house, but that's minor. As you might guess, we have power and internet again. Judging from the news, this puts us in a rather distinct minority.

Of course, we had a generator running yesterday when the power was out, so we didn't do too badly, anyway. We had cold beverages and food, plus radio and fans. Out of all our service providers, the winner has to be the gas and the water. We never lost either one, which means we had hot showers yesterday after dragging debris all around the yard. Of course, with no AC and a humidity level of 90%+, if you moved at all after the shower you were covered in sweat again. Next would be AT&T. The landline and text messaging were fairly relaible throughout the events. Comcast and the power company are about tied. They both went out early, but were restored within 24 hours. Given the magnitude of the disaster, I guess I can't complain.

Definitely some lessons learned about the disaster planning, though. One important lesson: gas-powered chainsaw. My little bitty electric chainsaw is the wrong tool in this environment. However, most of the lessons are at the margins. We had everything we needed, just not necessarily in the right place. The generator was an issue in that you have to locate everything you want to run in close proximity to the generator. Some prior planning in this respect would have been helpful.

Anyhow, I'm off to see if I can find a retail establishment open and to check on the new house. Enjoy your Sunday.

I Like Ike

Actually, I'm not real fond of Ike. The impending watery doom has forced me to engage in actual work, something I try to avoid. The main house is completely boarded up and the guest house is as boarded as it'll get. Now we sit and wait. Whee!

I'm roasting a pork loin and drinking whiskey sours as we wait. You might deduce my level of concern is not particularly high. You would be half-right. We've done what can be done. Now, it's in the hands of fate. Or Lorenz's pet butterfly, whichever.

Since I am not closing on my new house today, I'm going to go back to packing boxes and waiting on my pork roast. No fancy recipe this time, just season liberally with an appropriate choice, sear in a skillet, pop in the oven at 300. It'll be done soon. In the meantime, I'm going off to contemplate appropriate sides. Maybe if I'm lucky, they'll replay the video of Geraldo drinking the bay as wave knocks him over down in Galveston.

Predictably False

So, browsing back though the archives, it appears I made the prediction Fred would be the Veep pick for the McCainiac. Again, that goes down as a loss. I'm going to have strong words for the tech support people on my crsytal ball if I ever get off hold. So far my predictions for the current election cycle have been dismal failures. On that note, I'm going to venture the prediction that Barack Obama will win the election.

Now I'm gonna go cross my fingers and hope my record remains consistent.

Done!

Well, Rush is over and young N has chosen her sorority or they chose her or something. I’m a little ignorant of how the process works, despite having it explained to me several times over the past week. Seeing as how I joined the last fraternal organization I’ll ever need to be associated with in 1987, the exact processes of the college kind were always obscure to me. The explanations came with a host of caveats and exceptions based on the difference between when J went through and now, which didn't make them any easier for the uninitiated like me to follow. In any event, the goal was reached and a final state acceptable to both of my ladies has been achieved. N is now a pledge, or whatever they call them, of the same sorority and chapter J pledged back in the day.

Honestly, I’m glad because the possibility of her pledging a different sorority was bad enough. The actuality of her being in some other, (read: lesser), organization for the next four years would have driven my lovely wife mad. And as those of you who are married know, that means I would have gotten to go along for the trip. So it all works out for the best.

Bitter, Bitter Irony

Once again, the loathsome people over at PETA have crossed my radar. Apparently, being concerned about the number of euthanized animals, PETA decided to upset pet owners through an ad in Dog Fancy magazine. Call a number to receive a free gift for your new dog, and PETA will send you a body bag for your canine friend. Why?

"It is shocking and it is a way to get into people's heads, but we are in crisis and it is time to pay attention to how we can stop millions of animals from being abandoned and euthanized," said PETA spokeswoman Melissa Karpel.

Umm. Yeah. Would this be the same PETA that killed 90% of the animals it received in 2007? That PETA? The irony would be breathtaking if it weren’t so sickening. I realized I’ve mentioned this before, but I’m going to keep hammering the point. I find PETA to be a disgusting bunch of maladjusted morons who have no more idea of how to act ethically than my dog does. Actually, my dog probably acts more ethically. Whatever else he may do, he’s never hypocritical and he doesn’t rack up a body count in the thousands every year. That’s a lot more than PETA can say.

Bruno

Whilst traversing the series of tubes today, I found an article at Salon on Giordano Bruno. Ostensibly a review of a new biography of Bruno, it goes into detail about his life and times. I find the article of some passing interest because of family history. One of the earliest progenitors anyone has been able to trace was an Italian follower of Bruno's who hightailed his ass to England so as to avoid Bruno's fate. Heresy and subversion go way back in the family tree, apparently. Who would have thought?

Inspired Choice

Okay, so I'm still not voting for John McCain. I'm making that clear right now. He could have picked James Madison's ghost as his running mate and I'd still pass. I won't vote for somebody who has demonstrated not only a complete misunderstanding of the Constitution but an active hostility to same. So McCain, no matter who he picked as VP, was not getting my vote.

Having said that, Sarah Palin was possibly the best pick he could make given the need to shore up his support among the base. Let's face it, both McCain and Obama were not going into the fall with the complete support of their respective 30%. Sarah Palin is one of the few people he could have picked that would get him a lot more support among the efenant base. Really, I have to give big points to the McCain team for this one. They may still lose the race, but they're playing smart politics.

Hurricanes Ahoy!

So, the weekend marked the first big hurricane of the season. We'll call Eduard a little one, just for the sake of argument. Gustav is a Cat 3! Cat 4! Cat 5! We all need to evacuate! We're all gonna die! OMG!

Not so much, actually. I saw some incredibly ill-informed panic this weekend, some of it from people who should know better. I guess now is as appropriate a time as any for some lessons learned from those halcyon days of 2005, when we were all so innocent about the potential for destruction. The short version: there is no problem so great the government can't make it worse. We like to preach the gospel of self-reliance around here. If you live on the Gulf Coast, as we do, expecting your local .gov to have a clue can be harmful to your health. You need to be prepared to handle your own problems for a minimum of 72 hours. Longer is better. On that note, the bright boys over at Blackfive have some advice. The most important thing to keep in mind is Laughing Wolf's advice at the end of the first link:

Whatever decisions you make, do prepare and do remember that in any emergency of any type, the only person who is responsible for you and your safety is you.

Do try to remember that in the future, and make preparations to handle your own issues instead of expecting the rest of the world to drop everything and come assist you. In general, the rest of us will come assist you once our things are squared away. I'll also note the more you have done for yourself, the more likely it is that someone is willing to help you finish up. This applies in a whole host of situations other than just hurricanes, too.

In other weekend news, UH stomped the crap out of Southern and UT did much the same to Florida Atlantic. Now I think I'll go see what NOAA has to say about Hannah, Ike, and Josephine.