Peer-to-Peer Debt: A Game Changer

I try not to use words like that too loosely, either.

This banking system is dying.  I don't talk about it too much anymore because there's nothing that can be done to stop it at this point, but the Bretton Woods monetary system that has been in place since 1944 at the conclusion of World War II is coming to an end.  An interest-bearing debt based monetary system, which is what we have, has a finite life span from the moment it's born, and this one has reached its unsustainable peak and is on the way back down, fast.

It's sixth-grade math, you can't deny it, there is no wishing it away.  It just is.

So then, the question is what will rise as the next monetary system.  Never complain about me giving problems and not answers, here's a doozy.  I've been sketching these ideas out for several years now, and I've finally found a few other people who are thinking along the same lines.  If the current crisis has the end result of giving an alternative monetary system critical mass then it may be worth it.

My phone and my car don't like each other

Cisco decided to stop paying for my cell phone, so I FINALLY went out and bought an iPhone yesterday.  (Short review:  I love love love love love love love it.)  Have been waiting for this thing for like two years now, but it rocks.

My car, which runs a version of Windows CE (the stereo head unit, to be exact), has been perfectly content playing music from my iPod.  However it does not like my iPhone because of the iPhone 3.0 software, and it turns out that I have to patch my stereo in order to control my iPhone with it.

I was struck by the fact that I had just experienced a version compatibility issue between my phone and my car.  How crazy is that.

Should I Worry?

A mathematician, an accountant, and an economist

A mathematician, an accountant and an economist apply for the same job. 

The interviewer calls in the mathematician and asks "What does two plus two equal?"   The mathematician replies "Four." The interviewer asks "Four, exactly?"  The mathematician looks at the interviewer incredulously and says "Yes, four, exactly."

The interviewer calls in the accountant and asks the same question "What does two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four."

Then the interviewer calls in the economist and poses the same question "What does two plus two equal?"

The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says "What do you need it to equal?"

...

And that little economist grew up to be Lawrence Summers.  (Kidding.  Kind of.)

King Obama

We have a president who thinks he is king.  What's worse is that he appears to be right, until things get so bad that the citizens will rise up against him.

For all of the fraud and stupidity that has transpired thus far in this financial crisis, I was absolutely floored by what happened recently with Chrysler's bankruptcy.  The Obama administration ramrodded through a deal with completely obliterated black letter law in regards to who has precedence in a bankruptcy.

Pension funds and investors--regular people just like you and I--had invested in Chrysler bonds.  These bonds are, by law, senior to other debt in a bankruptcy.  Obama decided that it was more politically expedient for the unions to take precedence, and so it was.  Pensions and individual investors received basically nothing, while the unions who contributed to Obama's campaign got full payment on their debt.

The administration argued that this was better for the economy.  Ok.  So what.  You have sworn to uphold the Constitution of this country.  You lied.

The Supreme Court issued a temporary stay on this decision, but they caved today and it will proceed.  So much for checks and balances.

I was willing to give Obama the benefit of the doubt, but this is indisputable.  He does not care about the rule of law, he is already campaigning for the next election.  The laws of this country be damned, all hail King Obama.

This is a sad day.  I really don't care what he does from this point on, the Chief Executive of this country has proven beyond any doubt that he does not care about fulfilling his duties as the head of the Executive branch--that is, enforcing our laws--but is more concerned about scratching the backs of the people who scratched his.

If I had any shred of faith left in our government before today it is gone.  Sorry all you Obama-supporters out there--I know many of you--your guy is an empty suit with no moral compass or sense of duty.  Our Commander in Chief blows with the wind.  Yay.

By the way, this is going to do wonders for the credit markets.  When you're thinking about buying debt that is supposed to be senior to other debt, you'd like to know that that is, in fact, what you are buying.  When this can be changed by the whims of The King you might think twice.  So long, credit market, nice knowing you.

Hi ho, all hail King Obama.

Professional Superhero

A real gem found here:

What's more, I think I know his secret identity!

Green Shoots

Good thing we passed Obama's stimulus plan, he says it's working very well:

(BTW the Treasury used 8.9% unemployment as it's "worst case scenario" number for all of 2009 in those bank stress tests.  Glad we have experts on the job.)  Paying for this powerful medicine is hammering the bond market, doing great things for mortgage rates:

This is going to be fantastic for real estate, especially since we are about to get a wave of mortgage resets.

Hope everyone locked their rates while the getting was good.

To those of you who are looking at buying a "bargain" house right now, let me just say that catching falling knives is best left to circus performers.

Needless to say, I believe we are at or near a top for the year in the equity markets, soon to punch through the year's low of 666 on the S&P 500.  Just wanted to go on the record with this since everyone is so unbelievably optimistic right now.  Those green shoots are weeds.

Leverage from Boutique Hosted Services

I continue to ponder the implications of people with rare skillsets who are capable of making huge operational impacts on companies.  Skillsets like a combination of business knowledge and predictive analytics, of which I've recently become enthralled.

One of the areas that seem to be untapped so far but with a metric ton of potential is leveraging these unique individuals by way of hosted services.

Side Note:  I'm reluctant to use the word "Leveraging", by the way, because it is often used incorrectly.  When used properly and not by somebody who is simply trying to sound smart, it means that you get more work out of something than you put in.  (Hence the word lever, duh).  When used correctly it can increase your productivity exponentially, when used incorrectly it can bankrupt you, and when used by somebody who doesn't understand what the word means it is a synonym for the verb "to use".

Is China the next money machine?

By far the biggest question facing the global economy is where the money supply will come from going forward.  Money is debt, and money is really only created when consumer debt is created.  Government debt simply shuffles existing debt around.  Since the 1944 Bretton Woods agreement the U.S. consumer has been the global source of new debt, but we are tapped out.  Consumer debt is plummeting at an unheard of rate and this is causing deflation around the world.

The average U.S. consumer is now indebted for the rest of his life and current generations cannot be counted on as a reliable source of debt creation. We've had an incredible stint as the primary money creation engine of the world, what with our consumerist culture and our willingness to take on new debt to buy a Big Mac and all, but we're tapped out, and a new source of money must be found.  Our current system of compounding interest and debt-based money has been around for some 600 years and the people who own the most debt would certainly like to see it stay intact if possible.  It's a wonderful system if you own the debt, not so much if you create it like most of us do.

Extraordinary Skill Sets

I've really been enjoying my recent study of predictive analytics and data mining.  It's provoked me to think about the nature of value, how much of it there is lying around waiting to be uncovered, and what it takes to uncover it. 

It has also caused me to gain a much deeper appreciation for people who both have expertise in an area of business and the desire and drive to learn the skill set they can use to turn that experience into something extraordinary.