Checks and Balances

Power tends to corrupt, and absolute power corrupts absolutely.

— Lord Acton

I was born in Canada and came to the US between my sophomore and junior year in high school. One of my first courses in my newly adopted country was high school civics. I learned with a newcomer’s sense of awe about the three branches of government and their important role in each checking the power of the other. It is highly attributed that this system of checks and balances is the genius of the America.

In the intervening years since those wide-eyed high school years I have been a casual observer of the reality that power and money are self preserving. …

Consumers Go On Strike

As the economy continues to sour, consumers have gone on strike. For the past few months, I have been contemplating the following economic and social trends that seem to explain why.

  • American productivity has risen almost 20% in the last decade (Source)
  • Real median income over the same period has declined (Source)
  • Executive compensation has risen astronomically (Source)
  • Consumer debt has risen substantially (Source)
  • Consumer spending comprises 70% of GDP

Rising productivity is what enables companies to increase employee’s pay. Increases in pay result in the overall rise in our standard of living. However, in the last decade, this relationship between productivity and rising employee pay seems to have been fractured.

Simple Financial Recovery Plan

Simple Financial Recovery Plan

My new favorite podcast is Planet Money. As the economic turmoil has progressed from frightening to surreal, the NPR crew at Planet Money have done a wonderful job explaining the intricacies of the complex financial world in terms that are easy to understand.

Here is what I have been able to figure out so far. Forget about the subprime mortgage crisis. A huge part of the problem is these credit default swaps – to the tune of $55 trillion dollars. These “insurance policies” were not only taken out by people who lent money to protect themselves against potential loss. Financial gamblers were also taking out credit default swaps on other people’s loans! This is raw gambling. Some analysts estimate that for every CDF taken out to by a lender to protect a loan, ten other CDFs were sold by and for third parties on the same loan.

A Ringing Anniversary

Three years ago today I woke up in a hotel room in Warrington UK with a shrill ringing in my right ear. Imagine the smoke alarm going off in the hall. Now imagine that you can’t escape the sound. In my pursuit of relief I have been seen by:

  • Three general physicians
  • Four ENT’s (ear, nose, throat specialists)
  • Two hearing specialists
  • One acupuncturist
  • One chiropractor
  • Two dentists

I have had a half-dozen hearing tests and three MRI’s. After three years, all that I know for sure is that what I have is called tinnitus and that the medical system is badly in need of repair.

On the Financial Meltdown

As they say on Wait, Wait, Don’t Tell Me, “and now for some quotes from this week’s news.”

First, a delightful blog I discovered called The Big Picture by Barry L. Ritholtz. In a post titled The Underlying Basis of Finance and Credit, Mr Ritholtz observes:

Over the entire history of human finance, the underlying premise of all credit transactions — loans, mortgages, and all debt instrument — has been the borrower’s ability to repay.

Except for [the 5 year period from 2002 to 2007] the entire history of human finance was rather reasonable about the basis for making loans in general, and extending mortgage loans in particular.

For 99.9996% of the last 1.2 million years, loans were granted primarily on the condition of whether or not the lender believed that the borrower could repay. Between 2002 and 2007 this condition was dropped.

Kindle Chronicles

A tip of the hat and a hearty thank you to Len Edgerly and his new podcast, The Kindle Chronicles. I joined the Kindle revolution a few months ago and have been amazed at how beautifully this gadget fits into my arsenal of tech toys. I went looking for a podcast that would allow me to get even more out of my Kindle. I stumbled on to Len’s Kindle Chronicles and have been hooked ever since.

The Kindle Chronicles have a wonderful format that includes well defined sections for

  • The latest Kindle news
  • Hints and tech tips on getting the most use out of the reader
  • A regular interview with a Kindle user or a mover and shaker in the Kindle ecosystem that always fascinates
  • An excerpt from something Len is reading on his kindle, and
  • Reader feedback.

It is a great format and his recent effort to keep the show around 30 minutes has resulted in an outstanding half-hour of content. …

Gorilla Marketing

I am an avid fan of podcasts. I listen to many hours a week of interesting and compelling content completely on my own schedule. The TWiT Network produces some of the best, including This Week in Tech, MacBreak Weekly and Roz Rows the Pacific. Leo Laporte is a master behind the microphone.

Leo continues to chase profitability by adding an ever-increasing array of sponsors for his “netcasting” ventures. Drobo and GoToMeeting are recent additions and he is pushing the boundaries of tolerance with the seemingly endless droning on about Visa’s security protection for online fraud. …

Flattery is the Cinnabon of Human Interaction

Rob Long is a brilliant television writer who offers a weekly five minute commentary on KCRW. He outdid himself this week.

The very best thing about flattery is how incredibly flattering it is. If you’re on the receiving end of a nice blast of “you’re so wonderful” it barely matters – what am I saying, it doesn’t matter in the least! – if it’s true. If you really are wonderful. If the personal telling you how wonderful you are even thinks you are wonderful.

What’s important is that the person delivering the flattering cascade thinks you’re worth the butter. It’s like a kubuki moment: I’m probably lying, you know I’m probably lying, but you’re the kind of person it’s worth lying to.

And if you’re on the other side, if you’re delivering the flattery, it’s amazing how instantly it works, how immediately the recipient begins to glow and swan around. It’s like a sugar rush. It’s cheap, it rots your teeth and makes you fat, but for a few moments, you feel invincible. Flattery, done correctly, is the Cinnabon of human interaction.