As you know based upon some of my past posts, I have a disdain for politics in general. The whole reaction to the subprime mortgage situation provides me with another example why I HATE politicians so much.
For those of you who aren't familiar with what the subprime situation is, I will endevor to summarize what it is. Basically, the number of mortgage loan defaults (i.e. "I can't pay my mortgage bill") is increasing, especially in the area of "subprime" loans. A subprime loan is a mortgage loan given to a person who is a high credit risk. This person might have some questionable items on his or her credit report, or they might be asking for a loan that might be too large for their given income. Some lenders will steer clear of such people; however, there is a group of lenders who are willing to look past these blemishes and still give a person a mortgage loan. Usually, they will lend the money by charging a higher interest rate, or they might have an adjustable rate which starts out low but then adjusts based upon the market conditions.
Now these subprime lenders are finding that the number of people who are defaulting on these loans are on the rise, and so our politicians are sounding the alarm bells. There is one proposal in particular that is being put forth by Senator Charles Schumer of New York (a democrat - what a shock!) which would provide government assistance to people who are in danger of defauling on their mortgage loans. There are still some details to work out, but it seems as if this proposal could cost taxpayers anywhere from $120 million to $17.6 billion. That is a lot of money by anyone's accounting.
The question in my mind is this: should the good taxpayers of this country be spending money helping out people who are defaulting on their loans? I believe that the answer is a firm NO!
First of all, the people who took out these loans should be held accountable for their decisions. It's not like anybody forced them to take out these loans. Having taken out a mortgage myself, I know that there is tons of documents, disclosures, and so forth that you have to read and sign in order to complete the transaction. If somebody did not read and understand these disclosures, then shame on them. If somebody took out a loan that was beyond their means, shame on them again. Why should they get a gift from the government to help them avoid foreclosure when responsible citizens like me do the right thing and take out a loan that we are able to pay comfortably every month? I know it sounds harsh, but if the government provides these people with subsidies for being irresponsible, then all it does is encourage people to be reckless with their money. After all, if they screw up, they will know that Big Brother will be there to bail them out.
You might say that our goverment is just being "paternalistic", meaning that the government needs to protect its citizens because the government somehow "knows better". I absolutely hate that assertion. The word "paternalistic" is derived from the Latin work for "father". Now if you are a parent, are you doing your child a favor by constantly bailing your child out of trouble, without letting him or her face the consequences of his actions? Of course not! A good parent is often called upon to dispense "tough love", because this is often the best way for a child to learn some important life lesson.
The problem with the "paternalistic government" philosophy is that it is bad parenting, plain and simple. Why should we tolerate that philosophy in our government when we wouldn't tolerate it in our own lives.
Along those same lines, subprime lenders should be held accountable for their actions as well. Lenders often loan money to credit risks in an attempt to make money for themselves. They can charge higher fees and interest rates to such borrowers, and so there is an obvious risk-reward tradeoff. They are hoping that enough borrowers will pay back these loans to offset the ones that default. In most cases, lenders make money in aggregate. However, there are times when lenders get too aggressive in their underwriting, and they end up taking on too many bad credit risks. If the government bails them out, then the lenders aren't learning any positive lessons either. Lenders will keep on making bad loans because they know that the government is going to step in and make sure that these loans won't default. If lenders were forced to take a loss because they made too many bad loans, then they might be so short-sighted and greedy with their lending practices.
Despite all this, I have no doubt that our government will probably pass some sort of bailout bill, because it makes for good press on the evening news. That is just another reason why I hate politics so much.
Friday, April 20, 2007
Thursday, April 19, 2007
Two Secrets to Success in the Service Industry
I recently came up with Two Secrets to Success (tm) for business owners in the home-service industry (electricians, plumbers, house cleaners, contractors, etc). A competent service provider who implements these two techniques will be GUARANTEED to make LOTS AND LOTS of money. The amazing thing about these secrets is that, even though almost nobody knows about them, they are so simple to implement. I personally certify that any service provider who uses these techniques will immediately have more business than they know what to do with!!
Since I am not in the home-service industry, however, I cannot take advantage of these secrets. As such, I am offering to divulge these secrets to you, for free, right here, in my blog.
Secret #1: When you say that you are going to show up at a particular time, show up at that time!
Secret #2: If, for some reason, you cannot show up at your scheduled time, let your client know ASAP.
If you follow these rules, you will be able to set yourself apart from the competition (because very few people seem to know about these rules it seems), you will get repeat business and referrals (which is the lifeblood of any service business), and, most importantly, you will make LOTS AND LOTS OF MONEY!!!!
If you do decide to use my secret, please feel free to send me a modest donation as a token of appreciation....
Since I am not in the home-service industry, however, I cannot take advantage of these secrets. As such, I am offering to divulge these secrets to you, for free, right here, in my blog.
Secret #1: When you say that you are going to show up at a particular time, show up at that time!
Secret #2: If, for some reason, you cannot show up at your scheduled time, let your client know ASAP.
If you follow these rules, you will be able to set yourself apart from the competition (because very few people seem to know about these rules it seems), you will get repeat business and referrals (which is the lifeblood of any service business), and, most importantly, you will make LOTS AND LOTS OF MONEY!!!!
If you do decide to use my secret, please feel free to send me a modest donation as a token of appreciation....
Sunday, April 15, 2007
Don Imus Isn't the Only Bad Guy Here
By now, everybody knows about this whole Don Imus flap. He insults the Rutgers Women's Basketball team with some racist and sexist remarks. There is a firestorm of outcry. He tries to recant with a somewhat hollow apology, and then he is fired. Obviously, Mr. Imus was way out of line with his comments, and he probably deserves all of the criticism that he gets. However, I am even more upset with this supposed moral indignation shown by many of his critics.
Let me start out by saying that, for a time, I was a regular listener to the _Imus in the Morning_ show. During the mid to late 90's, his show was part of my wakeup and morning drive routine. At times, I found it to me an interesting show. For those who don't know, the Imus show is a mixture of political and media interviews, combined with bathroom humor which probably earned him the "shock jock" moniker. Very powerful and influential people from politics and the media were frequent guests on his show, and he had an interesting way of disarming his guests with his questions in such a way that they would lower their guard and maybe divulge facts that they wouldn't normally mention on your typical interview show.
That was, of course, the highlight of the show.
Mixed in to the high-brow stuff was a lot of content which I found to be questionable and borderline offensive. He would often launch into tirades laced with personal attacks against people who disagreed with him or slighted him in some way. I don't remember any specific examples of him being racist or sexist, but I do recall times when I felt extremely uncomfortable with his words. While these attacks might have been part of some attempt to bring humor to the show, I found them to be quite un-funny to say the least. Eventually, I grew tired of this aspect of the show, and I decided to tune elsewhere in the morning.
My point here is that Imus has always been "on the edge". While you can argue over whether or not he had stepped over the line in the past, he is certainly comes across as being an insensitive adolescent on the radio. Nevertheless, many powerful people in the media and politics still went on his show, and CBS radio and MSNBC continued to give him a forum for his words.
It seems very hollow for the very same people who supported and enabled him all of these years to all of a sudden distance themselves from Mr. Imus and the content of his show. That includes both his employers, and the guest who, by appearing on the show, gave their tacit approval to his insulting ways. They act so shocked and so moral now, but it's not like his show hasn't always been like this since back when I listened to the show. His show has been filled with insensitive remarks and tirades for a long time. It just so happened that this one caused a public outcry of epic proportions. Mr. Imus just happened to insult the wrong person and the wrong time, but it is not like he hasn't been insulting for his entire career.
I am especially disappointed at CBS radio who thought it necessary to fire him ONLY AFTER all of the bad publicity. He probably should have been fired years ago, and he most definitely should have been fired the moment those words left his lips. However, by firing him almost a week later, it is just an act of cowardice, in my opinion.
I hope that Mr Imus rides off into the sunset to retire on his little ranch in the desert. However, I have no doubt that somebody out there will give him a radio show (maybe on sattelite?), so I am sure we haven't heard the last of him.
Let me start out by saying that, for a time, I was a regular listener to the _Imus in the Morning_ show. During the mid to late 90's, his show was part of my wakeup and morning drive routine. At times, I found it to me an interesting show. For those who don't know, the Imus show is a mixture of political and media interviews, combined with bathroom humor which probably earned him the "shock jock" moniker. Very powerful and influential people from politics and the media were frequent guests on his show, and he had an interesting way of disarming his guests with his questions in such a way that they would lower their guard and maybe divulge facts that they wouldn't normally mention on your typical interview show.
That was, of course, the highlight of the show.
Mixed in to the high-brow stuff was a lot of content which I found to be questionable and borderline offensive. He would often launch into tirades laced with personal attacks against people who disagreed with him or slighted him in some way. I don't remember any specific examples of him being racist or sexist, but I do recall times when I felt extremely uncomfortable with his words. While these attacks might have been part of some attempt to bring humor to the show, I found them to be quite un-funny to say the least. Eventually, I grew tired of this aspect of the show, and I decided to tune elsewhere in the morning.
My point here is that Imus has always been "on the edge". While you can argue over whether or not he had stepped over the line in the past, he is certainly comes across as being an insensitive adolescent on the radio. Nevertheless, many powerful people in the media and politics still went on his show, and CBS radio and MSNBC continued to give him a forum for his words.
It seems very hollow for the very same people who supported and enabled him all of these years to all of a sudden distance themselves from Mr. Imus and the content of his show. That includes both his employers, and the guest who, by appearing on the show, gave their tacit approval to his insulting ways. They act so shocked and so moral now, but it's not like his show hasn't always been like this since back when I listened to the show. His show has been filled with insensitive remarks and tirades for a long time. It just so happened that this one caused a public outcry of epic proportions. Mr. Imus just happened to insult the wrong person and the wrong time, but it is not like he hasn't been insulting for his entire career.
I am especially disappointed at CBS radio who thought it necessary to fire him ONLY AFTER all of the bad publicity. He probably should have been fired years ago, and he most definitely should have been fired the moment those words left his lips. However, by firing him almost a week later, it is just an act of cowardice, in my opinion.
I hope that Mr Imus rides off into the sunset to retire on his little ranch in the desert. However, I have no doubt that somebody out there will give him a radio show (maybe on sattelite?), so I am sure we haven't heard the last of him.
Wednesday, April 4, 2007
Health Care and Politics
Now that the Presidential Election cycle is starting up again in earnest, we will no doubt be bombarded with schemes on how we can "improve" our ailing health care system. Candidates will come up with all sorts of amazing ideas of how we can both provide coverage for everyone while at the same time reducing the cost of health care in this country:
I have a dream. I have a dream of a nation where health care is a right... just like our rights to life, liberty, and the pursuit of happiness. I have a dream of a nation where the everyone will have access to all of the advanced medical procedures that this great country has to offer, without some insurance company telling them what they can or cannot have covered. I have a dream of doing this without raising the cost of doing business in this nation, so that our companies and employers aren't forced to move labor offshore due to rising health insurance premiums.
Of course, that is the type of snake oil which sounds good on the campaign trail but has about a snowball's chance in hell of happening. So you are going to provide better health care to more people while spending less money? Sounds like you are living in a dream world.
There is a metaphor in engineering known as the "tradeoff triangle". It is a triangle that has three sides labelled "schedule", "cost", and "quality". You have the ability to control two of the three sides. However, once you choose two of the sides, the third side is determined for you by the geometry of the problem. For instance, you can choose a schedule (ex: "I want it done by the end of next month") and a cost (ex: "I want it to cost less than $1 million"). However, if you do that, then your quality will suffer. On the other hand, if you want to choose a schedule and a quality level (ex: "Must work perfectly the first time"), then it will cost you a lot to meet such a schedule and level of quality. This is a classic trade-off when designing a system. Normally, a smart project manager will ask his users: "You can have schedule, cost, or quality. Pick two."
Health care has a similar tradeoff triangle: "coverage", "cost", and "quality". You can choose two of these properties, but once you do, the third is determined for you. If you want to give everybody the highest possible level of care, then you can expect that the bill for this will be very high. On the other hand, if you want to give everybody coverage for a reasonable price, then you might have to lower the quality by rationing health care. Unless there is some sort of miracle breakthrough, the fact of the matter is that you cannot give everyone high quality care at a low price. Something's gotta give!
Unfortunately, it is very tempting for politicians to promise just that when they are on the campaign trail. It is an appealing message that is certain to get votes. However, the discerning voter (which are very few and far between it seems unfortunately) will see through the smoke and mirrors to see this empty promise for what it is.
I have a dream. I have a dream of a nation where health care is a right... just like our rights to life, liberty, and the pursuit of happiness. I have a dream of a nation where the everyone will have access to all of the advanced medical procedures that this great country has to offer, without some insurance company telling them what they can or cannot have covered. I have a dream of doing this without raising the cost of doing business in this nation, so that our companies and employers aren't forced to move labor offshore due to rising health insurance premiums.
Of course, that is the type of snake oil which sounds good on the campaign trail but has about a snowball's chance in hell of happening. So you are going to provide better health care to more people while spending less money? Sounds like you are living in a dream world.
There is a metaphor in engineering known as the "tradeoff triangle". It is a triangle that has three sides labelled "schedule", "cost", and "quality". You have the ability to control two of the three sides. However, once you choose two of the sides, the third side is determined for you by the geometry of the problem. For instance, you can choose a schedule (ex: "I want it done by the end of next month") and a cost (ex: "I want it to cost less than $1 million"). However, if you do that, then your quality will suffer. On the other hand, if you want to choose a schedule and a quality level (ex: "Must work perfectly the first time"), then it will cost you a lot to meet such a schedule and level of quality. This is a classic trade-off when designing a system. Normally, a smart project manager will ask his users: "You can have schedule, cost, or quality. Pick two."
Health care has a similar tradeoff triangle: "coverage", "cost", and "quality". You can choose two of these properties, but once you do, the third is determined for you. If you want to give everybody the highest possible level of care, then you can expect that the bill for this will be very high. On the other hand, if you want to give everybody coverage for a reasonable price, then you might have to lower the quality by rationing health care. Unless there is some sort of miracle breakthrough, the fact of the matter is that you cannot give everyone high quality care at a low price. Something's gotta give!
Unfortunately, it is very tempting for politicians to promise just that when they are on the campaign trail. It is an appealing message that is certain to get votes. However, the discerning voter (which are very few and far between it seems unfortunately) will see through the smoke and mirrors to see this empty promise for what it is.
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