Hey, I'm not really here...

Blogger is kind of a walled garden. I follow a very few people over here, and maintain this account for that purpose. If you're getting comments from me on blogger, and you're ending up here, it's because I like your writing, or I like you, or both.

Screened out... definitely not a preferred customer

I once tried very hard to purchase "ISO/IEC 42010 IEEE Std 1471-2000 Systems and software engineering - Recommended practice for architectural description of software-intensive systems"

I "failed."

I needed to join IEEE (How much does it cost? That information was not prominent on the home page), and pay further for digital subscriber privileges (How much does that cost?). I decided I didn't have time to be their customer, and my customers seem pretty happy with my software description and design as it is right now. So IEEE screened me out as a customer.

However, given 40 years of hand-wringing about poor software construction practices, ISO/IEC 42010 probably ought to be issued under a Creative Commons license.

Personally, I believe that the best software is produced by developers who are committed to excellence, have excellent communication skills, and have great enthusiasm for the project. I suspect these three qualities render "formal development methodologies" moot.

We're All Economists Now

As most everyone not living in a cave (not that there's anything wrong that), the world has just escaped a financial crisis. The escape was expedited by "injecting capital" into thousands of banks. Or at least, capital has been promised to be injected into banks, come one, come all, it's all good.

Does this make sense?

Depends on who you ask.

Certainly, it makes sense to The Powers That Be (TPTB), and probably also to businesses depending on revolving credit to make payroll (wtf kind of business model is that?).

The current doublespeak is "Nationalize the banks to save the free market!" This is pretty much the same as "Destroy a village to save it."

In any case, these actions are classically Keynesian, you know, "in the long run we're all dead."

Two Schools of Economic Thought

Nearest I can figure, there are two main schools of economic theory: Keynesian, and the Austrian School.

Keynes

Keynesian ecomomics is always right, until it's very, very wrong. Then it's too late.

Nearest I can figure, Keynesian economics is best described as "inflate or die."

I used to do a lot of caving in Southern Indiana, back before the wetsuit days. We had a saying: "Move or die." This was because if you stopped moving, you would die of hypothermia. The saying was a joke. The hypothermia was real, and very dangerous.

I believe the analogy here is when an economy can no longer service the debt incurred by inflationary practices, it stops moving. Then dies.

* Keynes: In the long run, we're all dead.

TPTB are all Keynesian, without exception. Ron Paul doesn't count. Ron Paul has no clout. The reason for this is that whenever there is a problem, they can more or less print money and hope it goes away. Strangely enough, if they don't print too much, this works. I think it's because the economy under such "stimulation" (that just sounds obscene) grows faster than people accrue debt. Even though people accrue debt, their ability to pay grows relatively faster.

Where this gets in trouble is when people do things like borrow money to pay interest... this is when nations and empires get in trouble as well.

Austrian School

Austrian school economics is always wrong, until it's very, very right. Then it's too late.

* Austrian school is how most of were raised. As children, we assessed risk more or less along the line of "When I get caught, how much will it cost my allowance." In contrast, the Keynesian world might think: "If I get caught, how can I make someone else pay for it?"

* Austrian school: It always ends badly.

* Most "little people" i.e., middle class, ultimately become "Austrian School" with respect to their personal economy. Sooner or later, and almost certainly after the first bankrupcty. We don't really have the luxury of any other choice.

The really cool thing about running one's own economy in the Austrian mode is the large amount of personal freedom that results. That is, you end up without any debt.

* Good link for gold on Ron Paul forum: http://www.ronpaulforums.com/showthread.php?t=126556

A real head scratcher here, this is

Ledwik [busted for possession of shoulder fired rocket] is "a man who loves guns and loves to hunt, but he's not supposed to be doing it. He can't even get a hunting license, but he hunts anyway. I have no idea where he gets the guns."


Ledwik has served prison time for 10 convictions of burglary in Calhoun County

Ya think?

Iceland 2008: What happens when a country goes bankrupt

Iceland has always enchanted me. Fishing, volcanos, glaciers, all those excellent sagas of bloodthirsty Vikings, northern lights... it's quite a place.

Iceland decided to turn itself into an international banking powerhouse. They got overleveraged, ran out of money. Here's what happened:

• Iceland turned into a 3rd World nation yesterday. They closed their stock exchange. I hear the Atlantic Salmon fishing there is world class. Maybe I will be able to do that one day.


• From a Bloomberg article Iceland is running out of groceries:
  

  Magnusson said last week that one of Iceland's largest supermarket chains was unable to get any foreign currency to make purchases abroad and another retailer's electronic payment didn't go through. Iceland will begin to see shortages of ``regular goods'' by the end of the week if nothing changes, he said.

  
  
  Iceland is trying to prevent capital flight:
  

  Sedlabanki told lenders on Oct. 10 that residents who want foreign currency should first prove they need the money for traveling by providing documentation for their trip.

  
  
  This is grotesque. People aren't allowed to leave without state permission.
  

Securitization --- Wish I had thought of that!

Bloomberg just published the best article I have yet read on securitization.

Very cool stuff.

Brilliant in fact.

The benefits have been obvious: an amazing, unprecedented spurt of prosperity over the last 20 years.

The drawbacks are just now becoming painfully obvious to pretty much everyone in the world that uses money rather than barter.

So, how do we a planet tame the power of these "weapons of mass financial destruction" to retain as many of the benefits while reducing as many of the drawbacks as possible?

Full Recourse Student Loans --- How to financially cripple an entire generation

Here is an interesting story on student loan repayment avoidance.


I never did understand why lenders would even want to get the laws changed such that more loans, especially student loans, became full recourse. Sure, the person in this story was exceedingly foolish to borrow so much money. But what the hell are lenders thinking? Lifetime indentured servitude? Debtor's prisons? I can see why a lender would want to grab a student with loans requiring the same time and money commitment of a small house with 30 year mortgage. Good business under the current conditions: borrower has to pay a lot of money for a very long time, and the lenders get these people before they acquire a mortgage.

Socially, what a disaster.

Might as well repeal usury laws and reinstitute debtor's prisons.

Seriously, what can these lenders really do if someone refuses to pay? Garnish their pay? Then the borrower has no incentive to work. It's ridiculous and unsupportable. This student would have been better charging all his school expenses to credit cards, then defaulting on those after graduating. The law should be changed such that bankruptcy clears all student loans.

---

[Update] After reading through several hundred comments on the article, several things seem pretty clear:

1. Lending agencies are pretty much legally protected from default. That is, it really is in their best interest to loan as much as possible to anyone who will sign the papers, because they will be first in line to garnish paychecks. The borrower's ability to repay is almost inconsequential.
   



2. The logical end game here is criminalizing default. Yes, that means imprisoning people for not paying their debts. There really is no other result this path can take.



3. House prices are going to have to come down a long, long way if the current generation of student loan debtors is ever going to be able to buy. And with such horrible experiences with borrowing money, I personally would not bet on them paying the house premiums common in the last 15-20 years.



4. People commenting that the borrower should pay everything back no matter what don't understand that in a truly free market, lenders would not make loans as colossally risky as student loans for most LA degrees. Lenders would instead take a look at the degree being sought, and the near and far term demand for such degrees. They would then lend appropriately instead of lending for government supported, legally guaranteed profits. Frankly, I don't really much care myself whether people pay off their student loans. They didn't borrow from me, and I don't have any stock in lending institutions, so why should I care whether people pay their loans?



5. The current student loan system is legalized loan sharking. My student loan was purchased by Nelnet from Suntrust about a year ago. My only attempt to pay ahead on the principle resulted in Nelnet applying more than $237 of a $250 payment to the interest, about a $2.50 payment on principle. I was absolutely stunned and furious, so I cut them a check for the balance. They could have made several thousand dollars more from me over the next several years, but they had to be greedy. Jerks. (As an aside, I am happy to see Wachovia nee NCNB go essentially bankrupt. They fine-printed me into a rule-of-78s loan for a truck once. When I went to trade up, I was informed I had no principle on my loan. That cost Toyota a sale of a brand new truck during the 1991 recession. Jerks.)

From Bloomberg:

``Not only is the U.S. in a recession, but the rest of the world is slowing down,'' Ford Motor Co.'s Chief Executive Officer Alan Mulally said in a speech this week. ``I've never seen anything quite like it.''

It's called a depression Mr. Mulally.

"Getting" a mortgage

From this AP story: http://www.msnbc.msn.com/id/25665655/

"And, for consumers already squeezed by tightening credit standards, it could mean getting a mortgage will become even harder." [Emphasis mine.]

Speaking of mortgages as something one just goes out and "gets" reduces the notion of potentially lifelong indebtedness to the moral weight of a burger. Gonna "get" me a burger. Gonna "get" me a mortgage.

Language matters.

A 30 year loan should be hard to "get."

Fundamentally flawed assumptions

A large number of politicians are now on record as stating Fannie and Freddie are "Too big to fail" because it would ruin liquidity in the housing market.

Excuse me?

Personally, I think they are too big to survive. We have what, 5 trillion dollars in bad loans tied up in these monstrous companies. 5 TRILLION! WTF!

It's ridiculous to think that the housing market will dry up if these agencies are treated as the morally and financially bankrupt institutions that they are. No, what will really happen is that there will be another rapid transfer of wealth. But this transfer will be away from the wealthy and into the hands of people that can afford to purchases houses at reasonable prices.

Frankly it's also insulting to the ingenuity and entreprenuerial spirit of Americans as well. Let Fannie and Freddie die on the vine. A very large number of small, fast-moving people and companies will fill void very quickly. And that would be a good thing.

A Winter Tale

One day, perhaps I will tell you about how it feels at the end of 16 hour trip underground in a large stream cave when you come out into subzero weather and all your clothes freeze to your body and the stars are glittering intensely because there are no clouds in the sky and the city lights are far, far away.

It starts far into the cave because of the cold air sucking in. It forms fog hundreds of feet from the entrance that gets thicker and thicker until it suddenly clears out because all the rock around the entrance is frozen. It's all frost shatter left over from the Wisconsonian glaciation, you have to crawl through the blocks that are all jumbled together. Your clothes stick to the frozen rock until they finally freeze as well. It was a long cold trip anyway and you feel exhausted and this is not helping, you just feel much colder much faster. Your hands are numb, retracted into claws. And you forgot to undo your boot laces before leaving the cave, the laces are now covered with frozen clay. Mild panic starts to set in as you feel your feet start to become frostbitten.

Finally, you get your boots off, then your pants, which are so covered with frozen mud that you lean them against the VW bus. Now, you are in the bus. Since it is an old VW, the heater doesn't work, but you are out of the wind, which makes you feel better. At least you are not getting any colder, even though feeling warmer seems impossible. But there is still the bus. You parked in the pasture at the top edge of a broad shallow sinkhole, because the starter doesn't work. You have to roll start the blasted thing. So there you are, sitting in the bus, hoping and praying it starts, as your buddy turns the key, releases the emergency brake, then the clutch. You are gathering speed rolling down the side of the sinkhole. The consequences are ugly, you feel your heart is pounding. This bus better start, or it's a cold, cold night in the pasture stuck at the bottom of a sinkhole.

Now you are approaching the bottom of the sinkhole, rolling at a pretty good clip. Your buddy has it in second gear. He pops the clutch... the bus coughs, shudders, coughs again... and roars to life! Yay!!! You guys are laughing insanely! This is so cool! You did it! It feels like you have defied gravity or something impossible. He floors it and you roll across the frosty grass up the other side of the sinkhole and off towards camp. You don't even need the headlights because the moon is almost full and heavy frost is glittering off of everything. Now, the cold doesn't matter so much. You feel warmed up just knowing you're homeward bound to hot chocolate, fire and warm sleeping bag. It just feels like heaven. This is what you live for.

Hrm.

Maybe I will tell you another story some other time. I have lots of them.