John Allison Speaks

John Allison is the CEO of BB&T, A successful financial institution. He has a few things to say about the current financial situation:

1. Freddie Mac and Fannie Mae are the primary cause of the mortgage crisis. These government supported enterprises distorted normal market risk mechanisms. While individual private financial institutions have made serious mistakes, the
problems in the financial system have been caused by government policies including, affordable housing (now sub-prime), combined with the market disruptions caused by the Federal Reserve holding interest rates too low and
then raising interest rates too high.
2. There is no panic on Main Street and in sound financial institutions. The problems are in high-risk financial
institutions and on Wall Street.
3. While all financial intermediaries are being impacted by liquidity issues, this is primarily a bailout of poorly run
financial institutions. It is extremely important that the bailout not damage well run companies.
4. Corrections are not all bad. The market correction process eliminates irrational competitors. There were a number of poorly managed institutions and poorly made financial decisions during the real estate boom. It is important that any rules post “rescue” punish the poorly run institutions and
not punish the well run companies.
5. A significant and immediate tax credit for purchasing homes would be a far less expensive and more effective cure for
the mortgage market and financial system than the proposed “rescue” plan.
6. This is a housing value crisis. It does not make economic sense to purchase credit card loans, automobile loans, etc. The government should directly purchase housing assets, not real estate bonds. This would include lots and houses under construction.
7. The guaranty of money funds by the U.S. Treasury creates enormous risk for the banking industry. Banks have been paying into the FDIC insurance fund since 1933. The fund has a limit of $100,000 per client. An arbitrary, “out of the blue” guarantee of money funds creates risk for the taxpayers and significantly distorts financial markets.
8. Protecting the banking system, which is fundamentally controlled by the Federal Reserve, is an established government function. It is completely unclear why the government needs to or should bailout insurance companies, investment banks,
hedge funds and foreign companies.
9. It is extremely unclear how the government will price the problem real estate assets. Priced too low, the real estate markets will be worse off than if the bail out did not exist.Priced too high, the taxpayers will take huge losses. Without a market price, how can you rationally determine value?
10. The proposed bankruptcy “cram down” will severely negatively impact mortgage markets and will damage well run
institutions. This will provide an incentive for homeowners who are able to pay their mortgages, but have a loss in their house, to take bankruptcy and force losses on banks. (Banks would not have received the gains had the houses appreciated.) This will substantially increase the risk in mortgage lending and
make mortgage pricing much higher in the future.
11. Fair Value accounting should be changed immediately. It does not work when there are no market prices. If we had Fair Value accounting, as interpreted today, in the early 1990’s the
United States financial system would have crashed. Accounting should not drive economic activity, it should reflect it.
12. The proposed new merger accounting rules should be deferred for at least five years. The new merger accounting rules are creating uncertainty for high quality companies who might potentially purchase weaker companies.
13. The primary beneficiaries of the proposed rescue are Goldman Sachs and Morgan Stanley. The Treasury has a number of smart individuals, including Hank Paulson. However, Treasury is totally dominated by Wall Street investment bankers. They do not have knowledge of the commercial banking industry. Therefore, they can not be relied on to objectively assess all the implications of government policy on all financial intermediaries. The decision to protect the money funds is a clear example of a material lack of insight into the risk to the total financial system.
14. Arbitrary limits on executive compensation will be self defeating. With these limits, only the failing financial institutions will participate in the “rescue,” effectively making this plan a massive subsidy for incompetence. Also, how will companies attract the leadership talent to manage theirbusiness effectively with irrational compensation limits?

I found this at Rule of Reason, which linked to blogger Dave Wilson.

The Man and His Dream

Great Clip from the 1988 movie:

Burning Down the House

Below is an almost-good video about the current ‘economic crisis.’ You can ignore what it says about immigration and schools, and try to read just the facts from the current political point it is trying to make (please ignore the politics of the video and focus on the facts! This video is somewhat one-sided and ignores the Conservative contribution to this problem.) Ironically, this video correctly identifies that free-markets had little to do with the current crisis, but doesn't seem to know what ‘free-markets’ are.

Still, there are a good deal of facts in this short video, and it’s worth a watch:



It is a common practice for people to point to the failures of government as the failure of free-markets. Let’s just hope people have the slightest inkling to look at the facts.

And I love the slogan of video: “if you don’t believe it, just Google it.” There is a difference between facts and opinions, ideology and reality. The idea that this mess was caused by free-market ideals is factually untrue; I don’t care what political spin anybody, on any side, puts on this; this simple fact is irrefutable. Period.

Fun Video on Quantum Physics

Quantum Physics is weird.

Maps of War

Maps of War is an interesting site, it’s dedicated to several major historical trends, and plays them out on animated maps; it also has several articles.

This video, which shows the rise and fall of major powers in Europe, Africa and Asia (from 1400 B.C. to 1979) is great.

I also liked thier History of Religion video; which only shows Hinduism, Buddhism, Christianity, and Islam, but is fascinating none-the less:

Some Sense among Economic Woes

I know I’m basically the only one that reads this blog, but I thought I would post these and spread them around as much as possible, just in case:

Free Markets to the Rescue, by Donald J. Boudreaux

Organic Market, by Russell Roberts

At a time when political vultures are circling and the widespread ignorance of economics is leading people to believe the most silly of things; it important to have as many voices of reason and logic as possible.

Just like the Enron crisis, this will be a time when politicians advance, some people of dubious intent get rich, and many others panic; all at the expense of the economy and freedom.

Where’s Matt?

I thought this was a fun video:



Go to Matt’s blog here.

By the way, I survived the hurricane! (I’ll talk about that later.)

My Impending Doom

So Hurricane Ike is hitting the Texas coast, gunning it straight for my house (actually, I think it’s aiming for my house in particular.) Bummer.

My house is all taped up, I notice my neighbor has a power generator (and I don’t), Fox News says people in Galveston will face “Certain Death,” I can’t find my cat, and I’ve grown really bored with the constant ‘wind began to twitch’ Wizard of OZ references. Not to mention I have come to accept my fate.

Still, I can’t help feeling that it would be a shame if I met my demise at the hands of a hurricane named ‘Ike.’ It’s such a puny and unimpressive name for a hurricane. So, if I survive the hurricane is still just puny old 'Ike'; but if I die, I demand it be renamed ‘The Megaglamoton.’

But I hope I do survive; the looting, and the subsequent breakdown of society, should be fun.

Remind Me

I hope people don’t think I’m lazy because I’m just posting videos:



I also found this one at Twenty Sided.

Trust Computing

You can find a good post on Trust Computing at Twenty Sided.

The God of the Banana

Finally! Somebody found irrefutable scientific evidence for the existence of God.

Blue Brain Project

"In July 2005, EPFL and IBM announced an exciting new research initiative - a project to create a biologically accurate, functional model of the brain using IBM's Blue Gene supercomputer. Analogous in scope to the Genome Project, the Blue Brain will provide a huge leap in our understanding of brain function and dysfunction and help us explore solutions to intractable problems in mental health and neurological disease."

I would say that the project offers far more advantageous then that; understanding the nature of the brain, and by extension, the nature of intelligence, could radically accelerate our knowledge in dozens of fields.

I see technologies like this as the first real steps to the digital human analogue that I spoke about before; as well as created truly intelligent machines; improving the human brain; and from a more academic perspective, improve our understanding of ourselves and the universe.

Visit the site here (and be sure to look around, information is a bit hidden.)

Don LaFontaine: 1940 - 2008

Abortion on Trial in Colorado

Colorado’s recent attacks on abortion have brought up some issues. Here is an article about why Amendment 48 (which would ban abortion completly) is a very bad Idea:

Amendment 48 Is Anti-Life: Why It Matters That a Fertilized Egg Is Not a Person

Even if the Amendment passes, it will have to make it through the federal Supreme Court; in which case I think Roe v. Wade will be upheld. Though I don’t know what Bush’s appointees will do (and it's clear that the whole purpose of this Amendment is to challenge Roe v. Wade.)

Which Super-Villain am I?

Your results:
You are Lex Luthor

A brilliant businessman on a quest for world domination and the self-proclaimed greatest criminal mind of our time!

Lex Luthor
60%
Dr. Doom
58%
Green Goblin
58%
Riddler
55%
The Joker
54%
Mr. Freeze
54%
Magneto
51%
Apocalypse
51%
Venom
50%
Kingpin
48%
Mystique
46%
Dark Phoenix
46%
Catwoman
45%
Juggernaut
38%
Two-Face
34%
Poison Ivy
33%

Click here to take the "Which Super Villain am I?" quiz...