Christmas is a holiday that expresses multiple thoughts simultaneously. It is multicultural since it can be extruded from its religious context and still survive with the same beautiful message. A message that will always mean 'you can remake yourself and you can succeed'.
I like Christmas because it is mystical and allows me to re-be. Do-overs are what Christmas is all about. Subliminal connections with our ancestors enable Christmas to be a thriving present day holiday.
I wish all my family and friends a very merry Christmas. A new world is born the very next day after Christmas, a day you, and only you, can witness. Be not afraid of the new things the new you can bring about.
Saturday, December 24, 2011
Monday, December 12, 2011
The US is asking Iran to return the RQ-170
It is incredible to read - I had to rub my eyes to make sure I was reading this correctly- that the US has officially asked (http://news.yahoo.com/blogs/envoy/obama-asked-iran-us-drone-back-193035747.html and http://news.yahoo.com/photos/fact-file-rq-170-unmanned-aerial-vehicle-irans-photo-155117944.html) Iran to return the US drone Iran captured while it was flying in a spy mission over its territory (Dec 2011).
If Iran - God forbid!- had a drone spying over any part of the US territory (including Israel) we would declare war and attack Iran right away. When we spy on Iran we ask them to return the spying equipment? How does this work? Are we blind?
Our government needs to realize that the risks associated with spying on other countries are not 0. Hence, accept the loss of the drone and move on.
If Iran - God forbid!- had a drone spying over any part of the US territory (including Israel) we would declare war and attack Iran right away. When we spy on Iran we ask them to return the spying equipment? How does this work? Are we blind?
Our government needs to realize that the risks associated with spying on other countries are not 0. Hence, accept the loss of the drone and move on.
Saturday, December 3, 2011
Declining intrinsic value of the meaning of credit
An individual's ability to obtain a loan used to be an attribute of the rich. Rockefeller and all other rich people before knew that taking a loan was tantamount to being able to communicate with and influence the future.
We should know that a responsible entity will engage in a loan only if they knew they could muster the resources to pay it back as promised. But we should also know that we all cannot be responsible simultaneously. If the distribution of responsible people does not counteract simultaneously the distribution of irresponsible people then the balance is tipped either towards risk or towards centralization. Let me explain why I think this distribution of societal responsibilities colluded with banks' current objectives and caused the current financial cataclysm.
In some sense, the mechanisms of crediting are a gambling mechanism of tremendous value. Credit mediates between the present and the future. From lenders' perspectives loans are opportunities to equalize the risks associated with future endeavors. Lenders need to give as many loans as they can so that they can concentrate future streams of earnings into as much current money -earnings- as possible, and be able to do so on a reoccurring basis. Quality loans given today represent expected future growth. Bad loans handed out today represent the opposite. The present economy is financing future expected growth (in an insidious way, the present has overextended its reach and tapped unrealized yet future growth).
From borrowers' perspectives the ability to obtain loans is a validation of their economic perceptions. If borrowers convince lenders that their dreams can bring current fortune to everybody then why should lenders not oblige them with the loans they are asking for?
The current economic crisis -surprisingly deep given our understanding of the economic theory- is, at its roots, a crisis of the perception of the density of time. Certainly when lenders' perception of time changes at different rates than the borrowers' we get into a sort of confidence crisis. This is a classic time density perception crisis and not necessarily an economic expectation crisis.
The government has usurped credit to fulfill immediate needs and it has forever altered people's perception of 'the credit'. The value of credit is in doubt and not its potential. The government created the current crisis either directly or indirectly and it is the government's problem.
Government's has changed timing perceptions and these distort our ability to distinguish between real and ephemeral economic indicators. When the government can borrow money at low rates when the rates should increase it affects the value of the entire economy. Credit will take a very long time to regain its true value. That is unless the government either changes the credit reference point or the economy changes the government by asking it to pay a 'market' rate for its borrowing cost.
But what is the primary financial source of credit? Financial markets used the leverage savings to transform them in loans, but nowadays that source of credit is rater small since private banks can lend money in a fractional way which by-passes the availability of savings restrictions. The government -via the Federal Reserve System (FRS)- can do the same at a much larger scale. Individual savings are dwarfed by the crediting ability of the FRS.
Current policies have all tried to make the future growth less appealing (maintaining persistently low interest rates -negative real rates actually- as well as -as a nation- spending far more than what we have or even expect to have) and I think this is an incorrect and myopic approach.
The FTS is the time density mediator of last resort, but it has not been able to convince anybody that its attempts are meaningful. The FRS is supposed to defend the value of credit and it has done just the opposite. Why do we continue to tolerate the FRS' actions when all it does is to usurp the private savings and nationalize them via purchases of credit instruments issued by the USG? Who is going to defend the savers if the FRS is not able to do it?
We should know that a responsible entity will engage in a loan only if they knew they could muster the resources to pay it back as promised. But we should also know that we all cannot be responsible simultaneously. If the distribution of responsible people does not counteract simultaneously the distribution of irresponsible people then the balance is tipped either towards risk or towards centralization. Let me explain why I think this distribution of societal responsibilities colluded with banks' current objectives and caused the current financial cataclysm.
In some sense, the mechanisms of crediting are a gambling mechanism of tremendous value. Credit mediates between the present and the future. From lenders' perspectives loans are opportunities to equalize the risks associated with future endeavors. Lenders need to give as many loans as they can so that they can concentrate future streams of earnings into as much current money -earnings- as possible, and be able to do so on a reoccurring basis. Quality loans given today represent expected future growth. Bad loans handed out today represent the opposite. The present economy is financing future expected growth (in an insidious way, the present has overextended its reach and tapped unrealized yet future growth).
From borrowers' perspectives the ability to obtain loans is a validation of their economic perceptions. If borrowers convince lenders that their dreams can bring current fortune to everybody then why should lenders not oblige them with the loans they are asking for?
The current economic crisis -surprisingly deep given our understanding of the economic theory- is, at its roots, a crisis of the perception of the density of time. Certainly when lenders' perception of time changes at different rates than the borrowers' we get into a sort of confidence crisis. This is a classic time density perception crisis and not necessarily an economic expectation crisis.
The government has usurped credit to fulfill immediate needs and it has forever altered people's perception of 'the credit'. The value of credit is in doubt and not its potential. The government created the current crisis either directly or indirectly and it is the government's problem.
Government's has changed timing perceptions and these distort our ability to distinguish between real and ephemeral economic indicators. When the government can borrow money at low rates when the rates should increase it affects the value of the entire economy. Credit will take a very long time to regain its true value. That is unless the government either changes the credit reference point or the economy changes the government by asking it to pay a 'market' rate for its borrowing cost.
But what is the primary financial source of credit? Financial markets used the leverage savings to transform them in loans, but nowadays that source of credit is rater small since private banks can lend money in a fractional way which by-passes the availability of savings restrictions. The government -via the Federal Reserve System (FRS)- can do the same at a much larger scale. Individual savings are dwarfed by the crediting ability of the FRS.
Current policies have all tried to make the future growth less appealing (maintaining persistently low interest rates -negative real rates actually- as well as -as a nation- spending far more than what we have or even expect to have) and I think this is an incorrect and myopic approach.
The FTS is the time density mediator of last resort, but it has not been able to convince anybody that its attempts are meaningful. The FRS is supposed to defend the value of credit and it has done just the opposite. Why do we continue to tolerate the FRS' actions when all it does is to usurp the private savings and nationalize them via purchases of credit instruments issued by the USG? Who is going to defend the savers if the FRS is not able to do it?
Sunday, August 28, 2011
On the Federal Reserve's 'Independence'
The Fed is considered to be 'independent' from political influence of the USG and the Congress. But, is that assertion true when we consider all economic actors and political processes?
I do not think that I -as an economic theory agnostic- can consider Fed to be independent from the influence of the financial sector it is supposed to oversee. The Fed may be independent from the influence of Congress but it cannot be independent from the realm of actions of the government, by definition. Ergo, the Fed is an arm of the government but it is paradoxically 'independent of it'. What? Nowadays the Fed has become the 'magic' bullet in terms of economic policy at national, and arguably international, level.
When the government (read the Cabinet and the Congress) cannot promote coherent policies the Fed just magically shows up and lowers the interest rates to close to 0% levels or even below 0% in real terms. Or, 'it purchases' government issued bonds and calls that euphemistically 'quantitative easing'. Or, the Fed chairman has a public appearance where he/she utters 200 words and the entire financial industry deconstructs the entire speech into (in)coherent parts. How is it acceptable that we get no say in the election of any members of the Fed but they have the ability to affect our lives in the most profound of ways? This is as clear of a contradiction of our political tenets as it gets.
We -as economic actors, consumers, and political beings- cannot continue to tolerate an independent -from-the-people central bank authority. This is totally anti-democratic and surely subversive to the entire democratic processes. When the Fed deliberately debases the currency they are performing nonrestrictive political functions, and all in the name of -possibly- flawed economic theories. How are we supposed to accept that? Since when do we tolerate economic 'noises' in our decision making processes?
Eliminate the Fed and make the Cabinet and the Congress be the only macroeconomic decision makers in our country. Otherwise we have lost our independence and have given up our economic soul to a theoretical construct. The effects of our voluntary abjuration of our macroeconomic powers to a body that only represents theoretical domains are dramatic and we can witness the effects of that as clearly as daylight. What do we see because of the Fed's actions? High unemployment, monetary savings that lose value every day, assets that are worth less and less over time, negative real interest rates, economic decisions beyond the political realm, and so on.
Our currency is part of our economy and not outside of it and control of the currency should be an inherent part of our government, without much doubt. We elect the government and we cannot elect the value of our currency our nation issues? How does this make any sense to you? To any rational human being...
I do not think that I -as an economic theory agnostic- can consider Fed to be independent from the influence of the financial sector it is supposed to oversee. The Fed may be independent from the influence of Congress but it cannot be independent from the realm of actions of the government, by definition. Ergo, the Fed is an arm of the government but it is paradoxically 'independent of it'. What? Nowadays the Fed has become the 'magic' bullet in terms of economic policy at national, and arguably international, level.
When the government (read the Cabinet and the Congress) cannot promote coherent policies the Fed just magically shows up and lowers the interest rates to close to 0% levels or even below 0% in real terms. Or, 'it purchases' government issued bonds and calls that euphemistically 'quantitative easing'. Or, the Fed chairman has a public appearance where he/she utters 200 words and the entire financial industry deconstructs the entire speech into (in)coherent parts. How is it acceptable that we get no say in the election of any members of the Fed but they have the ability to affect our lives in the most profound of ways? This is as clear of a contradiction of our political tenets as it gets.
We -as economic actors, consumers, and political beings- cannot continue to tolerate an independent -from-the-people central bank authority. This is totally anti-democratic and surely subversive to the entire democratic processes. When the Fed deliberately debases the currency they are performing nonrestrictive political functions, and all in the name of -possibly- flawed economic theories. How are we supposed to accept that? Since when do we tolerate economic 'noises' in our decision making processes?
Eliminate the Fed and make the Cabinet and the Congress be the only macroeconomic decision makers in our country. Otherwise we have lost our independence and have given up our economic soul to a theoretical construct. The effects of our voluntary abjuration of our macroeconomic powers to a body that only represents theoretical domains are dramatic and we can witness the effects of that as clearly as daylight. What do we see because of the Fed's actions? High unemployment, monetary savings that lose value every day, assets that are worth less and less over time, negative real interest rates, economic decisions beyond the political realm, and so on.
Our currency is part of our economy and not outside of it and control of the currency should be an inherent part of our government, without much doubt. We elect the government and we cannot elect the value of our currency our nation issues? How does this make any sense to you? To any rational human being...
Saturday, August 20, 2011
The Federal Reserve is a form of exogovernment
Many creatures have exoskeletons. Turtles and crabs are typical examples of creatures with exoskeletons. These creatures need exoskeletons because the outside skeletons are part of their bodies and they have no other way to 'preserve' their shape. Certainly, creatures with endoskeletons (mammals and birds, for example) do not need an exoskeleton in addition to their endoskeleton. This happen to be so for several obvious reasons related to evolutionary pressures, energy conservation, and -most of all- mobility.
As it turns out, the US (and -as far as I know- all other nations) has an exoskeleton too in addition to its endoskeleton. The extra exoskeleton which I call exogovernment is destroying our chances of economic growth. It is slowing down our ability to react to economic evolutionary pressures. Let me explain why I think this is happening.
The US government is the natural and organic internal skeleton of the American nation. It represents its people's freely elected choices and it has deep historical connotations and roots, in addition to unbeatable practicality. As a nation, we could not live for a very long time without our government. The question is: can we live with a paralyzed government while we use an external skeleton? I fail to see how.
As we stand right now and as I see it as clearly as daylight, the endoskeleton has delegated its fundamental economic and regulatory functions to an external body that functions as an exoskeleton. This external skeletal body is the Federal Reserve.
Our economic problems are as deep as they get: impossible to manage public debt levels, lack of a robust manufacturing base, ultra high dependence on consumption in the formation of GDP, unstable financial markets, regulatory confusion, the most expensive health care system in the world, wealth disparity worthy of a banana republic, severe educational inconsistencies, the dominance of financial markets over real economic development, and the list goes on and on.
The endoskeleton (read the US government) cannot seem to be able to address any of the economic problems above and has delegated their resolution to the Federal Reserve. As an exogovernment, the Federal Reserve is not elected and not fully accountable to anyone. The Fed has a very vague mandate that cannot be regulated and fully ascertained. For instance, it can, and it does -based on very new developments called 'quantitative easing'- , 'buy' bonds issued by the USG and prints money at will in exchange for those bonds. What will the Fed do if the USG cannot pay off the bonds? Nothing. Nada. Zilch. And the Fed knows that very fact extremely well and it knows that the value of the currency is being debased deliberately and conscientiously. And we are simply treated as peons in the face of pure monetary adulterations.
Is currency debasing not the ultimate form of white collar crime? The Fed is slowly and surely replacing all the financial wealth we have with lower value dollars. In addition, it is encouraging us almost openly to invest our financial wealth in US equities. Let me recap the following facts: the Fed is stealing from us almost openly and it is screaming at us that nobody can guarantee financial stability. This is purely insane, I think.
The Fed (our exogovernment) sets the interest rates both by statute and by using a bit of fear. Right now interest rates are extremely low and by deliberately setting the rates this low the Fed is undermining the economy since interest rates are forward looking.
When economic players see interest rates near 0% they rationally think that the future is going to be a lot worse than the present. Why would anybody invest in an economy with such low future prospects? It is almost criminal for the Fed to tout that keeping interest rates low for the next 2 years 'will spur economic growth' when it knows very well that just the opposite is expected to happen. In addition, savers are being punished wile spenders are being rewarded. Why should this trade-off be allowed? And why should it be allowed to be made by an institution not truly controlled by anybody?
Problems endemic to the government must be solved by the government. External bodies cannot do the government's 'dirty' and hard work and we are being robbed by our wealth by the Fed. Why do we continue to tolerate this? We need a responsible government that eliminates the interference of the Fed in our economic processes. The Fed has poisoned the economic climate of our nation for too long and it is about time for us to stop that.
How can we stop the Fed from distorting our perceptions of the economy? Here are a few avenues, but I am sure there are many more than the ones I list below.
As it turns out, the US (and -as far as I know- all other nations) has an exoskeleton too in addition to its endoskeleton. The extra exoskeleton which I call exogovernment is destroying our chances of economic growth. It is slowing down our ability to react to economic evolutionary pressures. Let me explain why I think this is happening.
The US government is the natural and organic internal skeleton of the American nation. It represents its people's freely elected choices and it has deep historical connotations and roots, in addition to unbeatable practicality. As a nation, we could not live for a very long time without our government. The question is: can we live with a paralyzed government while we use an external skeleton? I fail to see how.
As we stand right now and as I see it as clearly as daylight, the endoskeleton has delegated its fundamental economic and regulatory functions to an external body that functions as an exoskeleton. This external skeletal body is the Federal Reserve.
Our economic problems are as deep as they get: impossible to manage public debt levels, lack of a robust manufacturing base, ultra high dependence on consumption in the formation of GDP, unstable financial markets, regulatory confusion, the most expensive health care system in the world, wealth disparity worthy of a banana republic, severe educational inconsistencies, the dominance of financial markets over real economic development, and the list goes on and on.
The endoskeleton (read the US government) cannot seem to be able to address any of the economic problems above and has delegated their resolution to the Federal Reserve. As an exogovernment, the Federal Reserve is not elected and not fully accountable to anyone. The Fed has a very vague mandate that cannot be regulated and fully ascertained. For instance, it can, and it does -based on very new developments called 'quantitative easing'- , 'buy' bonds issued by the USG and prints money at will in exchange for those bonds. What will the Fed do if the USG cannot pay off the bonds? Nothing. Nada. Zilch. And the Fed knows that very fact extremely well and it knows that the value of the currency is being debased deliberately and conscientiously. And we are simply treated as peons in the face of pure monetary adulterations.
Is currency debasing not the ultimate form of white collar crime? The Fed is slowly and surely replacing all the financial wealth we have with lower value dollars. In addition, it is encouraging us almost openly to invest our financial wealth in US equities. Let me recap the following facts: the Fed is stealing from us almost openly and it is screaming at us that nobody can guarantee financial stability. This is purely insane, I think.
The Fed (our exogovernment) sets the interest rates both by statute and by using a bit of fear. Right now interest rates are extremely low and by deliberately setting the rates this low the Fed is undermining the economy since interest rates are forward looking.
When economic players see interest rates near 0% they rationally think that the future is going to be a lot worse than the present. Why would anybody invest in an economy with such low future prospects? It is almost criminal for the Fed to tout that keeping interest rates low for the next 2 years 'will spur economic growth' when it knows very well that just the opposite is expected to happen. In addition, savers are being punished wile spenders are being rewarded. Why should this trade-off be allowed? And why should it be allowed to be made by an institution not truly controlled by anybody?
Problems endemic to the government must be solved by the government. External bodies cannot do the government's 'dirty' and hard work and we are being robbed by our wealth by the Fed. Why do we continue to tolerate this? We need a responsible government that eliminates the interference of the Fed in our economic processes. The Fed has poisoned the economic climate of our nation for too long and it is about time for us to stop that.
How can we stop the Fed from distorting our perceptions of the economy? Here are a few avenues, but I am sure there are many more than the ones I list below.
- Strong legislative action by the US Congress;
- The US Attorney General should open up an investigation in the Fed's decisions;
- The Fed should have much better defined and restricted roles using 1 above;
- The USG should solve our economic problems so that the Fed has no opportunity to be an exogovernment agency;
Thursday, August 4, 2011
The stock markets tanked today
It is unusual for me to be proven right, but I did cash out of my stock positions a few weeks ago and I did that for a reason. The US economy -via vast amounts of debts- sucks the future into the present with tornado-like-forces winds and we are practically traveling into the future, in a figurative way.
The consumer debt levels in the US are incredibly high and every time anybody gets a loan it is either because they are either optimistic about the future, because they are crooks and lie to themselves, or purely because they need to live.
Optimists who take loans are the most hurt since they believe that the economy grows perpetually at sustainable levels but they forget that politics, black swans, and external shocks exist to change our world as we know it.
Crooks take loans just so that for a short period of time they can show that the world revolves around them, but we know better, and banks should know the best. Banks have behaved like crooks for a very long while.
People who need to live day by day and manage to get loans do so because they have 'assets' but cannot live off of them. Assets are an euphemism for materialized dreams and the material nature of assets is indisputable. The dream components are purely imaginary. Banks have assets too and our loans on which we make regular payments to banks are their assets.
So, the stock market crash of today is due to the fact that we have too many optimists, in a bizarre way of looking at it.
The US economy relies on banks and financial instruments too much, no doubt. We need to think outside the banking mentality in order for the stock market to regain its shine. Stocks are companies and not what banks think companies are.
The consumer debt levels in the US are incredibly high and every time anybody gets a loan it is either because they are either optimistic about the future, because they are crooks and lie to themselves, or purely because they need to live.
Optimists who take loans are the most hurt since they believe that the economy grows perpetually at sustainable levels but they forget that politics, black swans, and external shocks exist to change our world as we know it.
Crooks take loans just so that for a short period of time they can show that the world revolves around them, but we know better, and banks should know the best. Banks have behaved like crooks for a very long while.
People who need to live day by day and manage to get loans do so because they have 'assets' but cannot live off of them. Assets are an euphemism for materialized dreams and the material nature of assets is indisputable. The dream components are purely imaginary. Banks have assets too and our loans on which we make regular payments to banks are their assets.
So, the stock market crash of today is due to the fact that we have too many optimists, in a bizarre way of looking at it.
The US economy relies on banks and financial instruments too much, no doubt. We need to think outside the banking mentality in order for the stock market to regain its shine. Stocks are companies and not what banks think companies are.
Monday, July 25, 2011
MagicJack is much better than I expected
A few weeks ago I became an unexpectedly happy user of MagicJack. It is is unreal how well it works and I do use it quite a bit to dial international numbers... For a $40 entry cost nobody can beat that. Mostly since I was paying over $42/mo to Cox Communication for standard access to a phone (taxes included). Plus, I was paying for usage and that was adding an extra $20/mo. So, I was paying more than $60/mo to have access to a voice enabled channel. I was constantly asking myself: why exactly do I do that?
I called Cox Communications to cancel my phone subscription and was told -by an unusually friendly customer care representative- that they would like to 'keep me as a customer' with a $10/mo phone plan that would allow me to get unlimited incoming calls 'plus 60 minutes of free local calls'. What? Why have they not told me about this 3 years ago? Anyways, I was so mad when I heard that that I cancelled my subscription to the Cox 'provided' phone line on the spot. Oh, well, live and learn, I guess.
RIP POTS (plain old telephone service)!
Long live MagicJack! I somehow feel free and clear, just like if I have paid off all my debts... I have my sights on cancelling the Cox cable service next...
I know this is not a post about wine, but it could be since I have an extra $45/mo in the budget to try out new wines.
I called Cox Communications to cancel my phone subscription and was told -by an unusually friendly customer care representative- that they would like to 'keep me as a customer' with a $10/mo phone plan that would allow me to get unlimited incoming calls 'plus 60 minutes of free local calls'. What? Why have they not told me about this 3 years ago? Anyways, I was so mad when I heard that that I cancelled my subscription to the Cox 'provided' phone line on the spot. Oh, well, live and learn, I guess.
RIP POTS (plain old telephone service)!
Long live MagicJack! I somehow feel free and clear, just like if I have paid off all my debts... I have my sights on cancelling the Cox cable service next...
I know this is not a post about wine, but it could be since I have an extra $45/mo in the budget to try out new wines.
Wednesday, May 18, 2011
Salice Salentino - epicuro - riserva 2006
Red wine needs context. I knew nothing about this wine (Salice Salentino) until a few weeks ago when I saw it on sale at the local Trader Joe's and decided to buy a few bottles. And I could not be happier that I did that.
Salute!
For $6.99/bottle it was/is a steal. And I mean a great steal. After opening a bottle, pouring a glass, and taking a sip I needed a moment to recover from the depth of well defined, developed, and matured flavors it reveals. Salice Salentino riserva 2006 displays with ease and elegance black currant, dark chocolate, and has a mysterious and yet uplifting finish with hints of mulberries. This is a wine that can be had without any food pairings, and for a red wine at this price it is not an easy accomplishment. I have had +$25/bottle wine that did not have the qualities needed to make it palatable or pleasant to have without food.
My 'reserve' now includes this wine and it needs to be in all of my friends wine cellars. Without a doubt, the value to price ratio (VPR) of this wine is above 3.5 and I am recommending it for casual consumption, without much pretentiousness.
My 'reserve' now includes this wine and it needs to be in all of my friends wine cellars. Without a doubt, the value to price ratio (VPR) of this wine is above 3.5 and I am recommending it for casual consumption, without much pretentiousness.
Salute!
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