Saturday, January 29, 2011

The Great Disconnect............

Neither my grandfather, the old country banker, nor my
favorite community bank would have allowed this sort of
behavior.

In reading through the report from the Financial Crisis Inquiry
Commission, it becomes fairly clear that one issue pervades all of
the identified problems.  And that is....... drum roll please.......

the disconnection between the lending of money and the
collecting the repayment of that same money.

Having people  incentivized to shovel the money (or the
security instrument) out the door, and not be de-incentivized if
that money does not come back, is a sure recipe for disaster.  

As I understand the concept of banking the way my grandfather
practiced it and the way my favorite community bank practices
it today, good answers are required of the following questions:
Is this loan good for the borrower?  Is this loan good for the
community?  Is this loan good for the bank?  Will we get repaid?

While the first three questions are important, it is that last one that
matters the most.  

Fancy new rules and regulations are forthcoming to protect us
from the disaster that already occurred.  The simple, perhaps not
easy, but still simple, solution is to re-establish the compensation
connection between the lending of money and the re-payment of
that same money.

A difference..............

From Charles Darwin's Autobiography:

"..............I happened to read for amusement Malthus on
Population..........."

Wow.

Praising community banks........again

Faithful readers will know that I am a fan of community banks.
Fair, or not, my perception is that the big city banks take from
small towns without adding back consistent significant value. 
Community banks, on the other hand, are in the value adding
business.

You may have read that the credit markets have been in turmoil
for the past three years and the loans are hard to come by.  The
data below suggests that Newark's community bank, Park
National Bank, has stepped up its game.  Whether you care to
measure by dollar volume or loan volume, Park National is
leading the pack in making financing available in Licking
County.

Here is an extrapolation of statistics of mortgage lending
in Licking County for the year 2010.  It is based on data
available from the office of the Licking County Recorder and if
not 100% accurate, it is close enough to paint the picture.


                                                                              Dollar
                                            Number of            amount of
            Lender                      mortgages            mortgages

The Park National Bank...........1,386..............$151,846,118

JP Morgan Chase Bank..............369................$52,222,299 

Fifth Third Mortgage Co............268.................$41,823,777

Wells Fargo Bank NA..........  .....242.................$37,852,664

Huntington National Bank..........394.................$36,963,793

First Federal S & L Newark..  ....363.................$35,721,221

Union Savings Bank...................187.................$28,045,114

First Place Bank........................136..................$23,664,528

Third Federal S & L
Cleveland..................................122..................$20,930,975

Hopewell Federal Credit
Union........................................197..................$18,425,691

PNC Mortgage............................89...................$13,871,287

Fiberglas Federal Credit
Union.......................................211...................$13,768,920

Farm Credit Services of Mid-
America FLCA..........................66....................$12,671,101

Bank of America NA.................58......................$8,046,921

Heartland Bank..........................66......................$7,718,236

Peoples Bank NA................................................$7,025,000

PNC Bank NA............................86......................$6,667,347

Fifth Third Bank.........................85......................$6,531,097

Century National Bank
(Park Affiliate)...........................38.......................$6,031,438

Real Living Mortgage LLC.........39.......................$5,040,207

                                               ___________________________

Total ................................................................$534,867,734

The journey..........continues

"I still resist taking the usual route...and people still try to
make me sit down...which I won't...ever... :)

Taught my kids the same thing...and they sometimes frustate
the living heck out of me but I do admire their not necessarily
elegant solutions...."
-Jeff

On hunches...............

Currently reading  Where Good Ideas Come From by
Steven Johnson.    Here are excerpts from his chapter on
The Slow Hunch:

"But the snap judgments of intuition -  as powerful as
they can be - are rarities in the history of world-changing
ideas.  Most hunches that turn into important innovations
unfold over much longer time frames,  They start with a
vague, hard-to-describe sense that there's and interesting
solution to a problem that hasn't yet been proposed......"

"Sustaining the slow hunch is less a matter of perspiration
than of cultivation.  You give the hunch enough nourishment
to keep it growing, and plant it in fertile soil, where its roots
can make new connections.  And then you give it time to
bloom."

"This is how slow hunches often mature; by stealth, in
small steps.  They fade into view."

Happy Birthday Sweetie..................

Friday, January 28, 2011

They get it right..................

The Financial Crisis Inquiry Commission has issued their report
about the building and subsequent bursting of the housing bubble
and the ensuing financial debacle.

The full report is here.  The conclusions are excerpted here:

We conclude this financial crisis was avoidable.

• We conclude widespread failures in financial regulation and
supervision proved devastating to the stability of the nation’s
financial markets.

• We conclude dramatic failures of corporate governance
and risk management at many systemically important
financial institutions were a key cause of this crisis.

• We conclude a combination of excessive borrowing, risky
investments, and lack of transparency put the financial
system on a collision course with crisis.

• We conclude the government was ill prepared for the crisis,
and its inconsistent response added to the uncertainty and
panic in the financial markets.

• We conclude there was a systemic breakdown in
accountability and ethics.

• We conclude collapsing mortgage-lending standards and
the mortgage securitization pipeline lit and spread the flame
of contagion and crisis.

• We conclude over-the-counter derivatives contributed
significantly to this crisis.

• We conclude the failures of credit rating agencies were
essential cogs in the wheel of financial destruction.

THESE CONCLUSIONS must be viewed in the context of
human nature and individual and societal responsibility.

First, to pin this crisis on mortal flaws like greed and hubris
would be simplistic. It was the failure to account for human
weakness that is


Second, we clearly believe the crisis was a result of human
mistakes, misjudgments, and misdeeds that resulted in
systemic failures for which our nation has paid dearly. As you
read this report, you will see that specific firms and
individuals acted irresponsibly. Yet a crisis of this magnitude
cannot be the work of a few bad actors, and such was not the
case here. At the same time, the breadth of this crisis does not
mean that “everyone is at fault”; many firms and individuals
did not participate in the excesses that spawned disaster.
We do place special responsibility with the public leaders
charged with protecting our financial system, those entrusted
to run our regulatory agencies, and the chief executives of
companies whose failures drove us to crisis. These individuals
sought andaccepted positions of significant responsibility and
obligation. Tone at the top does matter and, in this instance,
we were let down. No one said “no.”

But as a nation, we must also accept responsibility for what
we permitted to occur. Collectively, but certainly not
unanimously, we acquiesced to or embraced a system, a set of
policies and actions, that gave rise to our present predicament.

All we need is the Bond theme song..................

Old fashioned retailing......................

Borrowed from the vaults at Shorpy.

The old newsstand



The bicycle shop




The drug store




The clothing store


On curiosity........

My favorite teachers in school were those who ached for us to
learn to think for ourselves. This approach may work best for
history majors.  While the victors usually get to tell the story,
there are often many sides to the tale. After receiving a lecture,
in which several sides of  an event or an issue were offered, the
question was asked of us, 'What do you think?"  Parroting
scored no points with these professors.

I suspect that the quality of questions we ask goes a long way
goes a long way to determining that answer.

Kira Newman posted an interesting essay on the role of curiosity
in a healthy person and healthy society.  She seeks to explain
"why curiosity is the unsung virtue of the free enterprise system."  

Full essay here.  Excerpts here:

"In 2004, psychologists Martin Seligman and Christopher
Peterson created an index of 24 character strengths, such as
kindness, wisdom, and gratitude; based on their research,
curiosity was one of the top five most closely linked to
fulfillment and happiness."

"Market forces are often derided as cold and inhuman. But in
fact, the free market—and the curiosity it encourages—calls
upon what is uniquely human within us.  While animals have
instincts, human beings possess the capacity of choice, and
fully exercising that choice requires a curious mind that is
open to new knowledge, opportunities, and experiences."

I've told my kids that I would be happy with their educations
if they mastered two things:  to learn to think for themselves, and
to learn how to get along with all sorts of people.   Think I will
add a third:  to learn to be curious.

Focusing...............

"If I look at the mass, I will never act.  If I look at
the one, I will."
-Mother Teresa

Thursday, January 27, 2011

The Journey..........

"I failed my way to success."
-Thomas A. Edison

"First they ignore you, then they laugh at you, then they
fight you, then you win."
-M. K. Gandhi

"You gotta play the hand that's dealt to you.  There may
be pain in that hand, but you play it.  And I've played it.
-James Brady

"The proverb warns that, 'You should not bite the hand
that feeds you,'  but maybe you should, if it prevents you
from feeding yourself."
-Thomas Szasz

"Never let your head hang down.  Never give up and
sit down and grieve.  Find another way.  And don't
pray when it rains if you don't pray when the sun shines."
-Satchell Paige

"Wise men follow their own direction."
-Euripides

"The best way out is always through."
-Robert Frost

"For myself I am an optimist -  it doesn't seem to be
much use being anything else."
-Winston Churchill

"You will not find poetry anywhere unless you bring
some of it with you."
-Joseph Joubert

The furniture guy talks real estate...........

............and he talks it very well.

"But the dirty little secret is you have to live somewhere, and
you can't live with mom forever. The ultimate denouement of
the destruction of the housing industry and the degradation
of mortgage financing is not going to be super cheap housing
if you just hold off buying long enough. It's going to be no
house, high rent, or eventually mom's going to have to spring
for a bigger mailbox to hold all those AARP newsletters
when you're both receiving them."

I'm not sure, but I think he is saying, "buy now."   I concur.

Full post here.  Thanks Greg.

The Wisdom of Alexander Pope..........

"No one should be ashamed to admit they are wrong, which
is but saying, in other words, that they are wiser today than
they were yesterday."


"If I am right, Thy grace impart
Still in the right to stay;
If I am wrong, O, teach my heart
To find that better way!"

"Whatever is, is right."

"An honest man's the noblest work of God"

"Our judgments, like our watches, none  go just alike, yet
each believes his own"

"Some people will never learn anything, for this reason,
because they understand everything too soon."
 
"Act well your part; there all the honour lies."
 
"A little learning is a dangerous thing"
 
"Fools rush in where Angels fear to tread"
 
"Lend, lend your wings! I mount! I fly! O grave! where is
thy victory? O death! where is thy sting?"

"Reason’s whole pleasure, all the joys of sense, Lie in three
words — health, peace, and competence."

"Heaven from all creatures hides the book of Fate, All but
the page prescrib’d, their present state."

"I never knew any man in my life who could not bear
another’s misfortunes perfectly like a Christian."

"Know thyself, presume not God to scan;
The proper study of mankind is man."

Lewis Carroll understood.........

"There is no use trying," said Alice; "one can't believe
impossible things."

" I dare say you haven't had much practice," said the Queen.
"When I was your age, I always did it for half an hour a day.
Why, sometimes I've believed as many as six impossible
things before breakfast."


with a thank you to Walter Russell Mead

Wednesday, January 26, 2011

Spent half the day trying to fix a broke building, this just felt appropriate.............

Interconnectedness indeed..........................

If you do not believe it is a small world, check out this video
showing air travel around the globe over a 24 hour time period.


On taking notes.....................

   "Darwins's notebooks lie at the tail end of a long and fruit-
ful tradition that peaked in Enlightenment-era Europe,
particularly in England: the practice of maintaining a
'commonplace' book.  Scholars, amateur scientists, aspiring
men of letters - just about anyone with intellectual ambition
in the seventeenth and eighteenth centuries was likely to keep
a commonplace book.  The great minds of the period -
Milton, Bacon, Locke - were zealous believers in the memory-
enhancing powers of the commonplace book.  In its most
customary form, 'commonplacing' as it was called, involved
transcribing interesting or inspirational passages from one's
reading, assembling a personalized encyclopedia of quotations.
There is a distinct self-help quality to the early descriptions of
commonplacing's virtues:  maintaining the books enabled
one to 'lay up a fund of knowledge, from which we may at all
times select what is useful in the several pursuits of life.' "

-Excerpted from  Where Good Ideas Come From  by
Stephen Johnson

Not wanting to be mean-spirited....................

...........I still hope this is true.  The best way to stop financial
fraud and abuse is not through new regulations, it is through
prosecutions of existing violations.

Headline here:

Financial Crisis Commission Finds Cause For Prosecution Of
Wall Street

Excerpts here:

In the three years since major lenders teetered on the brink
of collapse, prompting huge taxpayer rescues and amplifying
an already painful recession into the most punishing downturn
since the Depression, public indignation has swelled while few
people who played prominent roles in the crisis have faced
legal consequences.

That may be about to change.

Though civil charges appear a more likely outcome should
prosecution result, one source familiar with the panel's
deliberations said criminal charges should not be ruled out.

Full essay here.

Capable of Greatness...........

How perilous our infancy.............
How humble our beginning............
How many rivers we had to cross before we found our way.........

Well worth the look-see.



Thanks Wimp.com

E pluribus...........

"If there were one religion in England, they would have to
fear its despotism; if there were only two, they would cut
one another's throats; but there are thirty; so they live
peaceably and happily together."
-Voltaire

Tuesday, January 25, 2011

The laugh factory.......









If I wasn't so mild mannered, this would make me angry.........

From the pages of the New York Times............

"Since the government took over Fannie Mae and Freddie
Mac, taxpayers have spent more than $160 million defending
the mortgage finance companies and their former top
executives in civil lawsuits accusing them of fraud. The cost
was a closely guarded secret until last week, when the
companies and their regulator produced an accounting at
the request of Congress."


"Mr. Raines retired in December 2004 and Mr. Howard
resigned at the same time. Ms. Spencer left her position as
controller in early 2005. The following year, the Office of
Federal Housing Enterprise Oversight, then the company’s
regulator, published an in-depth report on the company’s
accounting practices, accusing Fannie’s top executives of
taking actions to manipulate profits and generate $115
million in improper bonuses."

He posts a neat photo with the horizon in the middle..............

...............apparently this is against the "rules."   For whatever
reason Blogger won't let me upload the offending photo.  You
will just have to go here to enjoy it

David duChemin, ace photographer and blogger, opines on art,
and maybe about life its ownself:

"Art created in adherence to rules is art about rules, not
about passion or beauty or any other thing about which
humans have made honest art over the centuries.

That’s not to say there aren’t helpful principles, but they are
only that. They’re guides to help us make our decisions, but
divorced from the Why, separated from the reason they
became rules in the first place, they’re more a shackle than
a permission to experiment and express."

A daily reading from Emmet Fox............

January 25        The Law of Subconscious Activity

"As soon as the subconscious mind accepts any idea, it 
immediatelybegins trying to put it into effect,  It uses all its
resources (and these are far greater than is commonly supposed)
to that end.  It uses every bit of knowledge that you have ever
collected, most of which you have totally forgotten, to bring
about its purpose. It mobilizes the many mental powers that you
possess, most of which you never consciously use.  It draws on
the unlimited energy of the race mind.  It lines up all the laws of
nature as they operate both inside and outside of you, to get its
way.
     Sometimes it succeeds in its purpose immediately.  Sometimes
it takes a little time, sometimes it takes a long time; but if the thing
is not utterly impossible, the subconscious will bring it about -
once it accepts the idea.
     This law is true for both good and bad ideas.  This law, when
used negatively, brings sickness, trouble, and failure; and when
used positively, brings healing, freedom, and success.  We give
the orders -  the subconscious does the work."
Around the Year with Emmet Fox: A Book of Daily Readings    

Monday, January 24, 2011

Calvin goes deep....................

Moodling................

The Brave New Kitty advocates "moodling" - here

"Moodling is great for your mental health. It’s calming
and relaxing, and it nurtures the spirit."

"Moodling is a term used by Brenda Ueland in the classic
book  If You Want to Write. Ms. Ueland defined moodling as
'long, inefficient, happy idling, dawdling and puttering,'
which she believed was necessary for the writer’s imagination
to flourish. I absolutely believe this, but I think the benefits of
moodling stretch far beyond those for people in creative
fields.

Monday's Poem................

























                        Lost

Stand still.  The trees ahead and the bushes beside you
Are not lost.  Wherever  you are is called Here,
And you must treat it as a powerful stranger,
Must ask permission to know it and be known.
The forest breathes.  Listen.  It answers,
I have made this place around you.
If you leave it, you may come back again, saying Here.
No two trees are the same to Raven.
No two branches are the same to Wren.
If what a tree or a bush does is lost on you,
You are surely lost.  Stand still.  The Forest knows
Where you are.  You must let it find you.

-David Wagoner

More fun from the Borderline Sociopathic Blog for Boys......



S01E00 Timeline - Trailer featuring Xavier de le Rue from
TimeLine on Vimeo.

Hurt Feelings Report??????

It is only a matter of time.....................




































Thanks Ka-Ching!  Click here for full size copy

Sunday, January 23, 2011

There are most likely other outcomes............

Merle Hazard asks the inflation/deflation question:

A Verse for Sunday

12.   And so when He had washed their feet, and taken His
garments, and reclined at the table again, He said to them,
"Do you know what I have done to you?
13.   "You call Me Teacher and Lord and you are right, for
so I am.
14.   "If I then, the Lord and the Teacher, washed your
feet, you also ought to wash one another's feet.
15.   "For I gave you an example that you also should do
as I did to you.
16.   "Truly, truly, I say to you, a slave is not greater than
his master; neither is one who is sent greater than the one
who sent him.
17.   "If you know these things, you are blessed if you
do them."
-John 13:12-17
The Open Bible

An introspective Stoic gets hard on himself...........

     "You have no real love for yourself; if you had, you would
love your nature, and your nature's will.  Craftsmen who love
their tread will spend themselves to the utmost in labouring
at it, even going unwashed and unfed; but you hold your
nature in less regard than the engraver does his engraving,
the dancer his dancing, the miser his heap of silver, or the
vainglorious man his moment of glory.  These men, when
their heart is in it, are ready to sacrifice food and sleep to
the advancement of their chosen pursuit.  Is the service
of the community of less worth in your eyes, and does it
merit less devotion?"
-Marcus Aurelius,  Meditations, Book 5

A funny thing happened while sweeping one day.................

Genius comes in all sizes, shapes, and opportunities..............