Saturday, February 28, 2009

Dysfunctional Passivity

For what it's worth, I think the following applies to how we all view the economy, if not the world in general. (from ShrinkWrapped)

There is a particular type of patient I often see in the clinic who has arrived there in a particular, predictable way.
This patient is middle class and has a history of full time employment but has recently fallen on hard times. He, or she, arrives at the clinic in a state of despair, on the verge of losing their apartments, in serious financial difficulty. Their problems are identified as beginning when they lost their job yet upon further investigation, that is hardly the full story. Very often they recognized their jobs were at risk long before arriving at the clinic yet could not overcome a type of passivity that led them to behave as if nothing was ever going to change. They could not or would not change their behavior even when their behavior was no longer functional or adaptive. For example, they could see that their company was cutting back, that their jobs were insecure, yet continued going into the office everyday, making only the most vague and cursory attempts to look for alternative work. They felt a lassitude that is inadequately diagnosed as depression but is more correctly thought of as a dysfunctional passivity (which can be attended by depression, of course.) By the time they arrive at the clinic, they would typically be 6-12 months out of work, with no insurance, and thoroughly defeated. Although they are treated as if they are depressed and often gain some symptomatic relief, in reality their dysfunction started well before their depressive symptoms appeared; their problems began when they assumed that nothing would ever change in their lives even as they could see the writing on the wall.

Monday, February 16, 2009

Ease credit for whom?

Insights from Peter Schiff on the difference between consumers and businesses in their use of credit:

Consumers default on credit much more frequently than businesses.

This is because businesses typically use loans to expand, and then have greater cash flow to repay the debt. In contrast, consumers typically borrow to consume and in the process do not improve their ability to repay.

As a result, one would expect consumer credit to be harder and more expensive to obtain. But that is currently not the case. Government guarantees have altered the playing field, so that now consumers are still being offered credit while businesses are being shown the door.

By shifting credit away from producers, fewer goods and services will be produced for consumers to buy and fewer employment opportunities provided for them to earn money with which to buy the goods.

Saturday, February 14, 2009

Boom, doom, gloom, plume

Cartoon credit New Yorker's Liza Donnelly
I know, the title is a bit lame, but here for free and worth every cent of its price is my latest analysis of all things financial.

Boom (now on hold):
Doom (underway and not nearly finished):
  • Greed and hubris (among politicians, financial jockeys and the general public) led to an asset bubble, notably in housing at the individual level, in credit-related derivatives at the financial jockey level and in hopelessly naive and costly policies at the political level. The unwinding of all of these is only just starting, and is being actively resisted every step of the way by people who should know better.
  • Just as we think the weather should be whatever we grew up with (otherwise we label it climate change), we believe that market valuations should be in the range of whatever we have experienced in our adult lives. But for most of us, these valuations were set during the overlapping waves of demographics and easy credit described above. True historic values are lower, for instance with the S&P at 16 times earnings not at 21 times earnings.
  • If earnings are heading lower, and the normal P/E is lower than we are used to, the market is still overvalued by a factor of two. This includes the market in your country, wherever you are.
Gloom (just starting):
  • Wealth and income are related but distinct. House prices and portfolio valuations determine our wealth. Changes in wealth level affect our mood long term. But having/not having a job, or stock dividends, affects our income, which affects our mood right now.
  • When house prices and employment levels both fall, a sense of gloom grows and willingness to take on new risks diminishes. Expansion becomes contraction as moods change, and the cycle intensifies through internal reinforcement.
  • Governments spend more and earn less when the economy contracts. The difference is made up by borrowing (if there are willing lenders) or by debasing the currency, or both. There is more of this to come. Depend on it. Both these government actions will make you poorer. So will increased tax rates, if and when they come, and if you have anything taxable.
Plume (smoke rising from crash and burn, visible and growing):
  • In terms of every paper currency in the world, the US Dollar is the tallest midget. If you want to hold paper currency, sell your other currencies and buy the USD. But remember that in 1930 it took $21 to buy an ounce of gold, from 1933 to 1971 it cost $35 and today it costs $940. Gold hasn't got better, which leaves just one explanation for the change. And note that in terms of Euros, British Pounds, Canadian dollars, and pretty much every other major currency besides the Yen, gold is at an all time high. Got gold, or at least silver? In your personal possession?
  • In terms of government help, every government is faced with declining revenues and increasing social demands, while attempting to maintain a brave face to the rest of the world so that their national currencies and banking systems, for example, do not lose the confidence of the rest of the world. Politicians do not willingly tell their voters "suck it up, buttercup, government is not going to help you". Even if they should.
  • What does it mean when the value of your house is dropping, your job is at risk, your currency is being debased, your tax burden is rising and your government can not actually provide the help that you were led to expect? I think it means that having a vegetable garden and a big source of firewood is a good idea.
We have lived large on borrowed money. It is time to readjust our expectations, pay our debts, figure out how to survive, and live with common sense.

Saturday, February 07, 2009

More Blackberry Brickbreaker tips

Well it's clear that there are more people interested in Brickbreaker visiting this little blog than people interested in all my other themes put together, including Workplace Wisdom, Investments, Global Warming (or the lack thereof), Words that Stir the Soul, Politics, Religion, old Mercedes 280e sedans and coupes, or all that other stuff that I post up here. Who knew?

So I will add a couple of new things that I have learned about Brickbreaker, and I offer a warm welcome and a hearty thank you to anyone who is stopping by in search of something useful, or at least something new, on Brickbreaker. Check out the rest of the blog, leave a comment somewhere (even one that tells me I have my head up my fundamental orifice) and stop by again.

So, Brickbreaker Addict, here are a few new things I have learned lately. Keep your eye on the main prize, and make conscious choices about which pill to take depending on the situation you are in:
  1. Keep your eye on the main prize. The first two times through the 34 levels, points don't matter, LIFE matters. Don't risk a LIFE by racing over to grab some bonus pill that is not a LIFE. Don't get distracted by multiple pills falling and lose track of where the ball is.
  2. If you are in one of the levels where a horizontal row of silver bricks marches relentlessly towards you, and you have CATCH on your paddle, it will often be worth dodging a LIFE pill just to keep all your current lives. Remember that LIFE pills erase your LASER and your CATCH paddles. If the silver bricks are coming down you can lose multiple lives, making the original trade of CATCH for a new LIFE a bad one.
  3. If you have MULTI balls in play and a BOMB or a CATCH comes along, decide quickly whether you want to be down to just one ball, because that is what you will get if you collect one or both of those new pills. I lost a life because I was on the wrong side of the screen collecting a CATCH and waiting for a ball to hit my paddle, and the ball I was about to play simply vanished.
  4. Learn which bricks on which levels always contain pills. Level one only ever has two pills, for instance, and they are always in the same places. It bugs me greatly if the last pill on a level had a LIFE in it and I could not collect it. In the higher levels, manage the ball so that you have time to react, avoiding a FLIP or a WRAP but going after something useful. Level 14 is the best example of this, because the two bricks at the bottom right always contain pills. Steer the ball away after hitting the first brick so that you can decide what to do with the pill. If you like it (CATCH for example) try to keep from hitting the second brick for a while.
  5. Some games there are lots of LIFE pills, other games not very many. You can tell by the time you complete Level 3. Use the games when there are not many LIFE pills to practice other things, for instance going out of your way to collect FLIP or WRAP and figuring out how to survive with them if for some reason you are forced to collect one during an important game. I want to win every time, and so this is hard advice for me to practise, but I will still preach it...
  6. Brickbreaker has occasional random acts where a ball slips through the edge of a row of silver bricks towards your paddle, and out of play, or where a ball takes a weird bounce off the frame, or when despite your best efforts the paddle does not bounce the ball fairly. Be prepared. The randomness rarely works to your advantage.
  7. SLOW and LONG can be your friends when the game speeds up, but if you keep the ball in play then eventually the game will slow down again. At this point it may be worth accepting a GUN or LASER or CATCH pill to reset your paddle, giving up on LONG in favor of knocking out some silver bricks or dealing with a bunch of red bricks. But be careful. If the ball is nearing the edge of LONG and your pill resets you to one of the other paddles of regular length, the ball can go right past where the LONG end used to be.
  8. If you get past Level 16 with more than a couple of lives left, congratulations. But there is still plenty of trouble ahead, and many levels do not offer any sort of pills, including the all-important LIFE pill that you will need to replenish lost lives. For me, basic success means getting past Level 16 and into the second half of the game; that is like a bronze medal. Silver is getting through Level 8 the second time around, because Level 8 drops very quickly the second time through and never offers any pills to compensate if you lose a LIFE. Gold is getting through Level 16 the second time around. Platinum was completing an entire second round, which means overcoming the incredible speed that some levels throw at you right from the start. After the second round everything slows down again. I am now at 175,000 points and 55 lives, having gone around about 11 times, with no end in sight.
  9. Keep your thumb dry. Play where light conditions are in your favor, including no reflection off the ceiling. Take a break in the middle of your level not between levels (more on this in other postings about Brickbreaker on this blog).
  10. No matter how much you like Brickbreaker, you should occasionally set it aside and try to collect a real life, not a Brickbreaker LIFE...
  11. It may be surprising to some Brickbreaker addicts, but a Blackberry also includes a phone, email device, calendar, photo album, MP3 player, GPS, browser, camera and other neat things. Especially if your employer has provided you with your Blackberry, consider devoting more time to using these other tools than to mastering Brickbreaker. 2009 is not the year to steal time from those who buy your groceries.
Good luck to all. Feel free to comment here or elsewhere at Half Wisdom, Half Wit...and check out the handful of other posts on this Blog about Brickbreaker.