Entitlement

There is a fierce debate over what constitutes risk, particularly financial risk, and whether it should be the responsibility of its citizens and government to step in when things unravel. The question I want answered is how lenders could allow greed to supersede their fiduciary responsibility for ensuring we are committing ourselves to a supportable loan.

We all know the needs-vs-wants war. A little child wants a giant double fudge sundae. It's evident the child can't eat it and it's expensive, but the child reeeeaaaalllllly wants it. Do her folks buy it anyway or steer her toward a humble single scoop dressed up with chocolate sauce and sprinkles, realizing the child will be satisfied with that?

America is all about options that are exceeded only by opportunities. The sky is the limit for those who know how to play the money game, and for those who don't there's credit. We play so fast and loose with credit, we've come to believe needs and wants are the same thing. We are conspicuous consumers.

Needs are things basic to survival, like food, shelter, clothing, health and welfare, education, freedom of religion, etc. Wants are everything else. Though we want our own home, we need shelter; though we want a car for school, we can get there by walking or using public transit.

Those who take sensible steps toward increasing financial responsibility are rarely told no. There's no mystique to it, really: they listen to the experts, scale their wants and needs, and establish more achievable goals. They respect the relationship between hard work and responsible spending which garners respect in the financial world.

Borrowers who are in the gotta-get world of materialism snub those cautioning them about risk. They feel a sense of entitlement for a house and you bet they are entitled to everything the rest of us are. They're entitled to take responsibility for the consequences of a loan or understand the terms - variables, negative am, interest only. They're entitled to believe once they're in, they can relieve the financial choke of being overextended by refinancing. But they're also 'entitled' to decide what they're going to do when things don't turn out as planned.

The couples in a $600K house, with a new Suburban and full size truck painted to match the boat in the drive are tenuously balanced on an income that can't sustain their lifestyle. It must be terrifying to lay down at night, knowing an emergency or job loss would plunge them into financial ruin.

My first house was a dump of a place that cost $484 a month, PITI. Sounds like a car payment now, but then it represented sixty percent of my income. It was an enormous struggle to make the payment. Six years of sweat equity later it was a pretty home, but learning to be disciplined on a budget eventually led to afford landscaping, and paint, and other improvements. That experience, and others since, shaped my philosophy of consumerism.

I get the difference between needs and wants. There's times I want want want and there's times I indulge myself, too. But I stop short of hurling myself into a financial chasm I cannot possibly scale. I don't expect people to bail me out if the investment doesn't yield what it expect. So I say, let the chips fall where they may as long as their misery doesn't take down the entire financial structure of our country with 'em.

Life is too short to dance on the point of a pin.

Creating Moral Hazard

Has Fed Risked Creating Moral Hazard?
By David Wessel, 9/20/07, WSJ

Federal Reserve Chairman Ben Bernanke and his colleagues clearly explained why they cut interest rates this week by one-half percentage point: "To help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets."

But a vocal chorus is complaining that Bernanke & Co., instead, just bailed out a bunch of greedy speculators, imprudent lenders and short-sighted homebuyers who got too-good-to-be-true mortgages."This is like adding Jack Daniels to the AA-meeting punch bowl," emailed Rob Brantley, a Washington consultant. "The market's reaction provides proof."

"I plan to now sell my house and upgrade to a $4 million or $5 million home in Highland Park. If I find I can't meet my mortgage payments, will Mr. Bernanke bail me out?" Cheryl Kawalsky emailed from Dallas. "Or, is that type of American socialism reserved for hedge-fund managers, investment bankers, and private-equity moguls? The truth is, in America today, I feel like I'm living in a huge house overrun by children. All the adults have left town."

Some of this skepticism is implicit criticism of the Fed's reading of the economy. If one is convinced the economy will muddle through recession or painfully slow growth, then cutting rates is somewhere between unnecessary and unwise because it risks stoking inflationary embers.

That appears to be a risk Mr. Bernanke was willing to take. The more provocative attacks -- which come both from left and right --accuse the Fed of encouraging people to take foolish risks by cutting rates now to protect them from harm. This is known as creating moral hazard, a notion that dates back more than a century and holds that offering insurance encourages people to take risks they otherwise would avoid.

"With automobile-collision insurance, one is more likely to venture forth on an icy night," Harvard's Richard Zeckhauser puts it in the Concise Encyclopedia of Economics. "Federal deposit insurance made savings and loans more willing to take on risky loans. Federally subsidized flood insurance encourages citizens to build homes on flood plains. ... Products covered under optional warranties tend to get abused, as do autos that are leased with service contracts.

The worries are, in part, practical. "Providing [after-the-fact] insurance for risk behavior ... encourages excessive risk-taking and sows the seeds of a future financial crisis," the governor of the Bank of England, Mervyn King, said with conviction Sept. 12, a few days before he and the British government had to move from the sidelines to fight a bank run.

But there also is an ethical dimension to the criticism, a righteous indignation at speculative excess. "There's a definite feeling, when the crisis comes along, that these un-Christian people are getting their comeuppance," says Brad Delong, an economic historian at the University of California, Berkeley. He cites British thinker Edmund Burke in 1790, bemoaning the ascendance of financiers following the French Revolution, who said, "The age of chivalry is gone; that of sophisters, economists, and calculators has succeeded, and the glory of Europe is extinguished forever."

Lower short-term interest rates do help banks that borrow in the short term and lend for the long term. They help anyone who holds debt securities, since their value increases when interest rates come down. No doubt some speculators, greedy investors and imprudent borrowers profited by the Fed's rate cut. But there are moments -- and this may be one -- where one can worry too much about moral hazard. As Fed officials have quipped: We want to discourage people from smoking in bed, but do we want to prevent the fire department from putting out fires caused by such carelessness?

Or, to paraphrase Charles Kindleberger, the late Massachusetts Institute of Technology economic historian: In a speculative boom, one wants to stir doubt as to whether the lender of last resort will step in. But when the bust comes, one certainly wants him to show up.

At times like these, it is the Fed's job to make sure the financial system functions. The Fed shouldn't cut rates just to protect investors or lenders who made stupid bets they didn't fully understand that only made sense when credit was cheap and rising home prices were thought to be inevitable. But neither should the Fed hesitate to cut rates or otherwise intervene when financial panic imperils otherwise sound investments and businesses; otherwise, people will be reluctant to make such sound investments in the future and the overall economy will suffer.

At times like these, there is a danger that a principled stand to punish the profligate could inflict severe economic pain on millions of innocent bystanders. As Mr. King put it in his Sept. 12 statement: "There must be strong grounds for believing that 'central-bank inaction' would lead to economic costs on a scale sufficient to ignore the moral hazard. When there are such strong grounds, failure to act is wrong, no matter what the critics say."

Relief

The day is unbearably humid. Moisture trickles down from the place where his arm rests at his side, the cotton shorts damp and clinging to the wicker porch chair. Bangs separate on his sister's forehead as they drink from faded aluminum glasses. There is no condensation: what remains are small bits of lemon valiantly floating pulp side up in a sweet, lemony broth.

Two dusty bronzed faces in tender concentration lean toward the board on the wicker foot stool. She absently clicks together the pieces she has stacked, waiting her turn, studying first the threatened pieces in play and hopes for the chance of a counter attack. The air feels so perfectly still, she slides a glance to the tree, the windmill, the weathervane that wait with her in the gathering silence.

Suddenly he shouts and his red checker hops over the black, click, click, click, as he snatches three black disks from the board. Won't it ever rain? she wonders as her disappointed face begins to cloud. Her thought hangs suspended in the soft rustle of leaves as she feels something cool on the wet tracks on her neck. It's here!

The checkers fly as they dash from the porch, taking the stairs two at a time, and race into the wind. Up and around, over and through, the split rail fence is no match for them now, lightning fast over fallow fields of grazing cattle and prairie dogs. They stare upward at the deepest point of swirling silver and stretch wide their arms in thanksgiving. The weighted air thins in twinkles and twirls as they wonder aloud where it will fall first -- the face? no, the tongue! no! the head or the leg -- and the size of the drops.

And then, like a whisper, something grazes his cheek. He holds his breath, not sure what it is, knowing a false guess forfeits the game. But there again: did you feel that? He turns to his sister and follows her gaze as a drop run down her leg. She excitedly lifts her eyes to his as another hits her nose, and together they laugh and dance its cool arrival.

Christopher Michael

Loading...Loading...

Have you ever thought of someone unexpectedly, someone you don't normally see but can't get out of your head? For the last week, I've been meaning to drop Chris a line.

It's funny how memories grab hold. There was that time we scrounged around on the floor of the car for gas money to get to The City because he'd heard the Geary needed volunteer ushers and we could see the play for free. I can see him now, across the balcony, flamboyantly flipping that ridiculously long black cape over his shoulder to untangle it from the programs. He flashed me a smile as he led folks to their seats, completely oblivious to the fact they narrowly missed stepping on the edge of his cape which would have catapulted him into the orchestra pit.

Ah, Chris! We'd sit shoulder to shoulder, letting our feet dangle over the edge of the pier, eating cold cracked crab and sourdough bread with our fingers. I'll never forget teaching him to drive stick in the City and my tears of laughter as he screamed his way down Lombard Street.

He let me stuff him with Donut Wheel donuts. He pawed through and shared my lunches at school. We practiced the blocking and lyrics for musicals, cut class to hang out on a sunny patch of grass, rode bikes without jackets in the pouring rain. He let me cry on his shoulder and laugh at his skinny legs in those ugly striped pants. I guarded his secrets.

When my dad died, there he was, knowing to come even with thirty years between hugs. So this morning when I opened my email, a little piece of me flaked away at the news that he was gone.

The last day we were together, we laughed about moments like these and how much of a difference our friendship made. The last time we held hands, he was still wearing the engraved bracelet I gave him on Graduation Day, 1973.

As it turns out, he was dropping me a line in passing. Rest in peace, my friend. Some of my very best moments on earth were with you.
Loading...
Christopher Michael passed away on September 6, 2007, in Sunnyvale, CA. Born on October 25, 1955, Christopher graduated from Buchser High School in 1973. As a teenager, he loved musical theatre, and was a talented young performer with the Saratoga Drama Group. A computer natural, he installed and supported many of the early library cataloguing systems in the United States. Christopher loved to travel and cruised the Mediterranean, Caribbean, Hawaii and Mexico, making friends along the way. He was passionate about billiards and participated in Gay Games in Amsterdam, Sydney and Chicago. Christopher was a determined soul with a brilliant sense of humor, which helped him in his long-term survival of AIDS. He will be deeply missed by his family, his devoted canine companion, Buddy, and the many dear friends he leaves behind.

The Other Woman

Funny how things stick in your mind.

My folks split up when I was 12. In that lonely and unsettled time, when kids take on full responsibility for it -- and why not throw in Global Warming while we're at it? -- I was faced with knowing that my father was dating a woman the family knew from church.

I sit writing this nearly forty years later, and I can still feel the stab of his apparent disloyalty. Never mind we had known the family in Sunday School and camped with them: I heaped the entire responsibility for the break up on 'the other woman.' It couldn't be my father's fault. I loved my dad. I thought I would still live in the world I deserved if it weren't for her.

And that is how things remained for many years. Through a courtship, engagement and wedding that I did not toast, things eroded into socially disconnected holidays bordering on disrespect. I had clearly pulled free of my moorings with my father and was emotionally adrift. How I resented her for the attention he paid to her children while at the same time recoiling from his outstretched hand for me!

My father stood gently beside his wife, taking it all in, never lashing back in anger, although he would have had every right. And so we faced off in what I'm sure felt to him like an unresolvable game of Tic-Tac-Toe.

Time sailed on, through high school, college, and into marriage while my father's wife gently carried on. I pretended not to notice the love she had for my father, although it was unmistakable, or my father's irrepressible devotion to her. Why, they actually seemed happy!

It is hard now to imagine the faith and patience it must have taken to believe that maturity and curiosity would eventually win the day. Through hundreds of conversations and letters there gently did develop a small crack in the door, which I found the courage to nudge wide in 1985. And when I did, there was no list of transgressions waiting for me as I expected. My father's wife embraced me hungrily with acceptance and love, as if I had not misjudged and underestimated her, as if she had been waiting too long to welcome me home.

I lovingly refer to her now as Wicked Step Mother. Had I not come into womanhood with acceptance and reconciliation, I would have missed appreciating her many gifts. I would have missed witnessing a marriage of soulmates and learning the importance of seeking that for myself.

As I begin fresh, I hope that I will be as insightful and courageous in keeping the home fires burning should I encounter any closed doors. I will have faith that time will heal the wounds, and will patiently wait until whomever is on the other side is ready to step through.

The Oxymoron

A joke worthy of reprint.

Last year I replaced all the windows in my house with those expensive double-pane energy-efficient kind.

Yesterday, I got a call from the contractor who installed them. He was
complaining that the windows had been installed a whole year ago and I hadn't paid for them yet.

Now just because I'm blonde doesn't mean that I am automatically stupid. So I told him just exactly what his fast-talking sales guy had told ME last year ... namely, that in just ONE YEAR these windows would pay for themselves!

'Helllooooo,' I told him , 'It's been a year !!! '

There was only silence at the other end of the line, so I finally just hung up. He hasn't called back, probably too embarrassed about forgetting the guarantee they made. Bet he won't underestimate my intelligence again.

Media Dogs

Watching the Presidential hopefuls scurry through the media making themselves visible has got its risks. On the up side, there's a chance for name recognition at voting time, and on the down side the same is true. Reporters hammer them with questions designed to alienate one group or another if they take a serious stand on any issue, and the group who often screams the loudest isn't the one deciding the vote.

I question the motives of media scrounges who dredge up questionnaires filled out years earlier by political hopefuls. Do they think people seeking office shouldn't have the same rights as the rest of us to temper our thoughts by maturity and insight before it becomes political dogma?

My views certainly have changed. Experience usually deepens into a broader, wiser, more temperate view of the world. Folks hang somewhere between the far right and the far left because we eventually learn that life just isn't all one way. We seem to be a complicated blend of independent thoughts strung together: Republicans when we want to protect our earnings, Democrats when others are in need, and Independents when we want a non-partisan thinker to represent us in the White House.

The media delights in criticizing our future leaders for re-examining important issues along the way. Are they kidding?

I want a Thinking-Man's President. I want someone with the character to re-examine important issues in light of a complex, constantly changing and dangerous world. I want someone who thinks on their feet, who can react and respond when it all boils down to a keen mind that can sift through an issue and make an informed decision.

What the media is really encouraging is mediocrity and inflexibility in our political leaders. Seems to me that hasn't worked out so well for us in the past.

Fireside Chats

Just at dawn, my father's sleeping bag would rustle as he quietly rose, fumbled for warmer clothes and reached for his shoes. The hollow whirr of the zippers would fill the room, first to open the screened door and then the canvas flap. My mother would follow a few minutes later, stretching up tall into her morning, brushing her hair back with the smallest brush I've ever seen, and straightening the sleeping bags and pillows before slipping on her shoes.

I'd listen to their morning footsteps, the click and pop of the camp stove as the propane caught, their quiet companionable murmers, birds chirping and rustling in the trees, the spit and crackle of bacon as its scent filled the air. Stiff from the air mattress having gone flat during the night, my eyes would drift along the color coded tent poles, along the seams to the little windows with pockets that stored stuff like a flashlight and Kleenex we might need during the night.

My brother would be curled into his dreams and scrunched down so far only the top of his head was visible, and I'd scramble for a sweatshirt and tumble out of the tent, knowing the first one up got a taste of bacon. And that began an exploratory day of hiking trails and fishing and swimming until twilight.

At dusk, a conch shell would sound and everyone would head over to the place where rough-hewn benches and a little stage sat. The Ranger would pick a volunteer to help him light the gigantic bonfire and I'd envy the little badge or magnifying glass or little book on birds he'd give away as a thank you. My folks would laugh as we sang silly camp songs like 'we're going on a bear hunt' and pantomimes as chipmunks or raccoons.

The Fireside Chat always involved an entertaining Ranger who taught us about animals, birds and snakes from their point of view. Each night was a different topic with a different Ranger so we went more than once. And afterwards, with the flashlight leading the way in the dark, I most loved the sounds of walking back together, talking about the chat, knowing we would build a little bonfire of our own and roast marshmallows.

Alternative Fuel

It's about that time. Yep, the dreaded moment of truth when it's time to get smaller because the clothes in the closet aren't getting any bigger. Let's call it the search for Alternative Fuel.

Ya, ya, I've read the books and seen the videos. Hey, I stand in the check out line, too! I know what to do. The question isn't which diet works as much as which fits my current mood.

The most popular diet is the 'eat-with-total-abandon-notwithstanding -clogging-of-the-arteries' plan. Ya, I'm harpooning my future, but first let's get down to that dress size and THEN I'll stop eating a pound of bacon at every meal. How comforting it must be to know your friends will stand over your casket and exclaim, "I wish I looked that great! What do you think she is, a size 7?"

There's the 'eat-one-thing-for-two-weeks' diet. ANYONE can lose weight if they only eat one thing, even if it's avocadoes. Your kidneys may have a thing or two to say about that.

The 'write-each-thing-down-and-count-points' diet is hot. What, do people have nothing to do with their day other than develop an Excel spreadsheet to keep track of this stuff? This is waaaay too complicated, especially with the exchange thing. They did come up with a nifty game board like the ones you used to play on long trips when you were a kid, but it's still hard to get all the sliding doors closed for the win.

The 'liquid' diet is clever. I did that recently when I had to prep for a colonoscopy. I wouldn't recommend it, even though I did lose three pounds.

There's the 'diabetic' diet but that's for -- um-- diabetics. Non-diabetic dieters on this need to be speed readers for all the labels you have to read. I recommend you hit the frozen aisle last.

The 'better-living-through-modern-chemistry' diet involves a doc giving you B-12 injections and pills so you can down size. While the rest of us are doing the fight-to-the-death struggle with willpower and facing down those fierce moments of temptation and discouragement, they are using enhancements. I'm warning ya: dieters are less kind than baseball fans about stuff like that.

I enjoy TV infomercials about pills that magically capture fat so you can eat anything you want and not gain weight. I wonder how many of those little pills you'd need to take in order to eat a funnel cake at the State Fair. HELLO.

The 'buy-our-food-and-we'll-make-you-thin' diet is in vogue. That combines convenience and small portions but it's expensive. Hey, I've got an idea: if you put small sensible meals in little Tupperware containers in the freezer, you'd lose the same amount of weight AND have money for that new wardrobe you'll need when you thin down. Of course, if any of us were disciplined enough to do that, we wouldn't be having this discussion.

So that brings us to 'the-free-and-easy diet' which doesn't involve a membership fee, a charge for weekly weigh-ins, counting points, or taking shots in the cheek. Eat sensibly, walk more, eat natural foods, slow down at meals, drink more water, plan meals better and not take seconds.

Hey! Let's start a new fad.

ChoreBoy

Every parent wants their kids to grow up to be productive members of society. Loosely translated, that means: if they are taught to cook some, clean some, work some, save some, love some and laugh some, they'll eventually move out.

The lower-division coursework began at three, with refilling toy boxes and straightening beds. At seven and eight, they helped prepare meals and sweep the garage. Upper division began at ten, with mowing and trimming the yard and rotating through indoor chores. By twelve they had advanced to laundry and money management.

I thought I was on the right track until one evening I observed one of my teenage sons doing laundry. We were companionably standing together in the laundry room, the way you do when you're both busy, and he chatted about practice and school as he turned on the washer, filled it with filthy boy togs and tossed in a capfull of liquid. I waited and watched him close the lid and start down the hall.

Hey wait up, mister. What about soap?

He heaved a weary sigh and returned to the washer, pulling the container down from the shelf to show me what he had added to the water. I opened the storage container from between the appliances and pointed to the granular soap dispenser of Tide.

Now I had his attention! He peered over my shoulder at the dry soap and then lifted the bottle in his hand to read the label. It was Downy.