Friday, May 14, 2010

Perspective Impressions...........



















Claude Monet was fond of painting "series", the same
subject from the same vantage point, but in different light
and weather conditions. Between 1900 and 1904, Monet
completed at least ten paintings of the British Parliament
Building. Here are six.

Sacred Cows revisited............







Thanks Hugh








Faithful readers will remember that, on several occasions,
this blog has lamented the willingness of the National and
State Associations of Realtors (my trade groups) to fight
to the death to preserve the "mortgage interest deduction".

My opposition to that type of thinking has been simple (or
simple minded if you so choose), if all special interests (and
all of us belong to special interest groups) fight to the death
to preserve their sacred cows then it becomes exceedingly
difficult to change unsustainable business and/or social
practices. Hello Greece.

I am not advocating the Realtors unilaterally disarm, but
they are a highly effective at advocacy. It would be very
refreshing to hear them say, 'If Congress was willing to
simplify the Tax Code by going to a flat tax with lower rates
and no deductions, then we would be willing to discuss
sacrificing our sacred cow'. Call me naive, but I would
hope that sort of talk might change the whole context.

Richard Florida's essay, Renting the Dream: Housing in
America After the Great Reset, found at Change This,
offers an interesting perspective on housing, our current
economy, and the future of both. In case you choose to not
read his essay, know that he is not a fan of the mortgage
interest deduction.

Here are a few excerpts from the essay:

"...it’s also clear that financial excess in the housing sector was
one of the central causes of the economic crisis. Housing sucked
up far too much of the nation’s and the world’s capital, and too
many people—already overextended by the purchase of
outsized houses—used those homes like virtual ATMs to
finance carefree consumption."

"Every Great Reset has seen our system of housing change,
and this one is no different. The rule of thumb—at least this is
what our parents told us—used to be that you should spend 25
to 30 percent of your household income on housing. But as
average house prices climbed so much faster and so much
higher than average wages, that percentage ballooned. In
some places, people were spending—and many continue to
spend—50 percent or more of their income on housing."

"Mobility and flexibility are key principles of the modern
economy. Home ownership limits both."

He opposes the Administration's attempt to force lenders to
re-work mortgages with underwater borrowers:
"...continue the enslavement of people to houses they couldn’t
afford in the first place. And estimates are that more than half
of those who have their mortgages refinanced under such
programs ultimately end up defaulting on their mortgages.
The administration’s quest to reinvigorate home ownership
actually works against the flexibility and affordability needed
for economic recovery."

"..the bursting of the bubble has created an opportunity to
remake the housing system into one that is more in tune with
the knowledge driven economy’s need for flexibility and labor
mobility."

Not sure that I concur with his conclusion. The bursting
residential real estate bubble and the accompanying
recession has brought economic pain. It may be too early
to tell, however, whether it was just a wringing out of
the excesses- a course correction in the management of
debt and equity, or whether it will create a seismic shift
in the pattern of how we choose to live. Stay tuned.

Thursday, May 13, 2010

It's probably not the end of the world as we know it, but..........

Rule of Thumb quotes R.E.M. in a post about "a week of
catastrophe, disaster, human error, and just plain folly that
was enough to make you laugh or cry or both."

His conclusion: "it may be the end of the world as we know
it......so the question is, what comes next? Why not seize
the moment to help create the new! Try it- and see if it
makes you feel fine."


What they don't teach you at Harvard Business School....

"Boredom occurs when the learning curve flattens out."

-Mark H. McCormack

I think I'll be adding a biography of George Eastman to my library...

"What we do doing our working hours determines what we
have. What we do in our leisure time determines what we
are."

Eastman was creative and inventive, restless to improve,
with a serious entrepreneurial streak. Described by his
company as "a tough competitor, hard-bitten and practical
in business", Eastman was, however, a different kind of a
leader. From the Kodak web site:

"Early in his business, Eastman began planning for "dividends
on wages" for employees. His first act, in 1899, was the
distribution of a substantial sum of his own money -an
outright gift -- to each person who worked for him.

Later he set up a 'Wage Dividend', in which each employee
benefited above his or her wages in proportion to the yearly
dividend on the company stock. The Wage Dividend was an
innovation, and represented a large part of the distribution
of the company's net earnings.

Eastman felt that the prosperity of an organization was not
necessarily due to inventions and patents, but more to
workers' goodwill and loyalty, which in turn were enhanced
by forms of profit sharing.

In 1919, Eastman gave one-third of his own holdings of
company stock -- then worth $10 million -- to his employees.
Still later came the fulfillment of what he felt was a
responsibility to employees with the establishment of
retirement annuity, life insurance, and disability benefit plans.
With these benefits, and the Wage Dividend, employees could
confidently look forward to a more secure future."

In his life time, Eastman gave over $100,000,000 in
philanthropic gifts, with much of it going to the University
of Rochester and to MIT. It must have been something in his
make up, because he started giving to charity when he was
a $60/week clerk. Not sure why his company chose to call
him "hard-bitten". There is a contradiction here somewhere.

After suffering for several years from a painful degenerative
bone disease affecting his spine- and thus his ability to move,
Eastman took his own life at age 77. His final note said,
"My work is done. Why wait?"

Wednesday, May 12, 2010

Captured by an idea........

Act I, Scene I

The year is 1878. Bank clerk
George Eastman is going on
a vacation to the Dominican
Republic. A friend suggests
he take a camera with him
so he can bring back some
photographs. Eastman
acquires a camera, but finds
it bulky and awkward to travel
with. Eastman cancels trip and
spends vacation trying to
figure out how to make picture
taking easier and more
practical.


Act I, Scene II

Eastman is successful in his quest. In 1881 he patents the
"dry-plate process" and creates the Eastman Dry Plate
Company. He keeps his day job, but only for a few months,
then he quits to work on his new company full time.

Act I, Scene III

Eastman introduces the first Kodak camera in 1888. It is
a big success, so much so that Eastman's new company
struggles to keep up with demand. Not satisfied to rest
on the success of his original camera, Eastman replaces it
in 1898 with the "Brownie" camera. Not satisfied to rest
on the success of black-and-white film, Eastman moves
his company (now Eastman Kodak) into color film in
the 1920's.

Flash forward to the early 1980's

Act III, Scene III

Kodak, now a huge and successful "film" company, is faced
with a new dilemma- the electronic camera from Sony.
The digital age was dawning. Unlike its founder, who had
the willingness twice to junk a successful product for a
new and better one, Kodak froze. Digital would not work,
people would always want film. Stuck in their comfortable,
and admittedly profitable groove, Kodak could not bring itself
to truly change. Oops.






Eastman Kodak's stock price bounced around in the $40-$50
range in the 1980's and early 1990's. It peaked in February,
1997 at $89. Since then, Kodak's share price has been on a
long and steady decline. It has been trading for the past year
in the $3 to $6 range.

My favorite "economic futurist" weighs in........

with some positive "baby steps" our economy is taking.


While danger still lurks, the trend line is moving in a good
direction. His full report is here.

Tuesday, May 11, 2010

Sometimes the story behind it is better than......

the well remembered quote. For example: the quote
"...for a man is rich in proportion to the number of things
which he can afford to let alone" is followed by this story:

"My imagination carried me so far that I even had the refusal
of several farms,- the refusal was all I wanted,- but I never
got my fingers burned by actual possession. The nearest I
came to actual possession was when I bought the Hollowell
place, and had begun to sort my seeds, and collected
materials with which to make a wheelbarrow to carry it on
or off with; but before the owner gave me a deed of it, his
wife- every man has such a wife- changed her mind and
wished to keep it and he offered me ten dollars to release him.
Now, to speak the truth, I had but ten cents in the world, and
it surpassed my arithmetic to tell, if I was that man who had
ten cents, or who had a farm, or ten dollars, or all together.
However, I let him keep the ten dollars and the farm too, for
I had carried it far enough; or rather, to be generous, I sold
him the farm for just what I gave for it, and, as he was not
a rich man, made him a present of ten dollars, and still had
my ten cents, and seeds, and materials for a wheelbarrow
left. I found thus that I had been a rich man without any
damage to my poverty."

-Thoreau, Walden

Lord, help us all......

Tom Friedman talks about the death of the Tooth Fairy
here, with a short excerpt below.

".....they’ll have to figure out how to raise some taxes to
increase revenues, while cutting other taxes to stimulate
growth; they’ll have to cut some services to save money,
while investing in new infrastructure to grow economic
capacity. We have got to use every dollar wisely now
."

The "they" he is talking about is Congress. Politics will be
getting more and more interesting.

A short lesson in economics...........

"It is an obvious but often forgotten lesson of economics:
what cannot continue will not continue."

One take on that lesson is here.

Monday, May 10, 2010

The season is over, but a very good time was had by all.......


A poem for Monday

Invictus

Out of the night that covers me,
Black as the Pit from pole to pole,
I thank whatever gods may be
From my unconquerable soul.

In the fell clutch of circumstance
I have not winced nor cried aloud.
Under the bludgeonings of chance
My head is bloody, but unbowed.

Beyond this place of wrath and tears
Looms but the Horror of the shade,
And yet the menace of the years
Finds, and shall find, me unafraid.

It matters not how strait the gate,
How charged with punishments the scroll,
I am the master of my fate:
I am the captain of my soul.

-William Ernest Henley

Editors note: Sometimes the context is more important
than the content. Henley wrote this poem in 1875.

He suffered from childhood with "tuberculous of the bone".
At age 25, he had one leg amputated just below the knee.
He wrote Invictus the following year.

Some Thoreau.......

"I had this advantage, at least, in my mode of life, over those
who were obliged to look abroad for amusement, to society
and the theatre, that my life itself was become my
amusement and never ceased to be novel. It was a drama
of many scenes and without an end. If we were always,
indeed, getting our living, and regulating our lives according
to the last and best mode we had learned, we should never
be troubled with ennui. Follow your genius closely enough,
and it will not fail to show you a fresh prospect every hour."

-Walden

Don't forget- it is often the little things.........


Sunday, May 9, 2010

A short lesson in history.......

"All the lessons of history in four sentences:

Whom the gods would destroy, they first make mad with
power.

The mills of God grind slowly, but they grind exceedingly
small.

The bee fertilizes the flower it robs.

When it is dark enough, you can see the stars."

-Charles A. Beard

Sunday's Verse.......

"In the beginning God created the heaven and the earth.

2. And the earth was without form, and void; and darkness
was upon the face of the deep. And the Spirit of God moved
upon the face of the waters.

3. And God said, Let there be light: and there was light.

4. And God saw the light, that it was good: and God divided
the light from the darkness.

5. And God called the light Day, and the darkness he called
Night. And the evening and the morning were the first day.

6. And God said, Let there be a firmament in the midst of
the waters, and let it divide the waters from the waters.

7. And God made the firmament, and divided the waters
which were under the firmament from the waters which
were above the firmament: and it was so.

8. And God called the firmament Heaven. And the evening
and the morning were the second day.

9. And God said, Let the waters under the heaven be gathered
together unto one place, and let the dry land appear: and it
was so.

10. And God called the dry land Earth; and the gathering
together of the waters called he Seas: and God saw that it
was good.

11. And God said, Let the earth bring forth grass, the herb
yielding seed, and the fruit tree yielding fruit after his kind,
whose seed is in itself, upon the earth: and it was so.

12. And the earth brought forth grass, and herb yielding seed
after his kind,and the tree yielding fruit, whose seed was in
itself, after his kind; and God saw that it was good.

13. And the evening and the morning were the third day.

Genesis 1:1-13 King James Version

I've been spending my Sundays.........

.........watching volleyball tournaments. My daughter is a
member of the New Wave Volleyball Club, playing for one
of their Under-18 teams.

The New Wave club competes in the Ohio Valley Region of
USA Volleyball. Dedicated to "Advancing Volleyball in Ohio,
Western Pennsylvania, and West Virginia", the Ohio Valley
Region
organizes spring time week end tournaments for
clubs in the region. Some 11,000 girls, ages 11 to 18,
participate.

It is a fairly huge, but well organized, undertaking. We have
traveled to tourneys in Springfield, Maysville, Alliance,
Maumee, Uniontown, and Columbus. The teams play four
to six matches in each tournament. Lots of play.

It has been fun.