WordPress 2.7.x, automatically updated from SVN

Just switched the blog software over to the new WordPress 2.7. The biggest change you’ll be able to see is the ability to have threaded comments, and hopefully faster performance.

Since this blog is anything but critical to anybody, I’ve also decided to just run the latest code in the current branch from now on. Every night, a cron script will run that will update the blog with fresh code from the SVN repository. (SVN is the version control software used by the developers of WordPress.) You can see the current version at the bottom of the page.

So, this blog will serve as a live, working test of the current branch of the WordPress code base. Will this be useful to anybody? I don’t know. But it will amuse me.

Are our demographics engineered for moral hazard?

For all of the hand wringing about the $700B bailout, the Feds have put our nation’s children on the hook for about $8T (and counting) without a single vote from Congress (who, by the way, is doing everything they can to do as little as they can so that they can avoid political liability that comes with actually doing anything). I have a feeling that if (a) Americans weren’t so constitutionally apathetic and (b) ignorant of what is happening, there would be marches in Washington, Greenwich would be burning, and people in Manhattan would be throwing bricks through every piece of tinted glass on Wall Street. Hell, this country was started by enraged citizens chucking tea in Boston Harbor because they felt they were being unfairly taxed, and now we sit around doing nothing while HALF OUR GDP is spent to bail out the criminally stupid (and sometimes just plain criminal) without due process.

Maybe not enough people care about the debt burden on our nation’s children because the only people who are having kids these days are the bottom half of the income ladder, who pay no federal taxes. The upper half is too busy working dual incomes (about half of which goes to the government) to have kids (I don’t remember the stats, but the birthrate is well below replacement).

So, the people who pay for the government have no interest in the next generation, and people with an interest in the next generation have no stake in the government. Exactly a recipe for bad government and massive public debt.

Messing around with GarageBand

I’ve been playing around with GarageBand on Michele’s Mac, and I think I may need to buy a one of the new MacBooks just so I can use this software. It quite literally puts a recording studio in your lap. Here is a riff on Bruce Hornsby, blatently stealing the chords from his song “Country Doctor.”

Country Doctored

Disclaimer: I quantized some of the MIDI, partly because there is a ridiculously large latency in my USB MIDI interface, but also because I play piano like a palsied badger. Other than the quantization help, however, it’s all me playing. I didn’t speed anything up. The beauty of multitracking is that it averages out the mistakes, and often turns them in to “happy accidents,” to quote Bob Ross. It’s amateurish, but what you probably can’t appreciate is how much less it sucks than it really should, given my ability.

If you can’t listen to the file, right click and download it and listen to it in separate software. For some reason the latest version of the QuickTime plugin is choking on this, at least on Windows.

Are long bear market rallies history?

I have no clue what’s going to happen on the market, but I’d just like to point out something that I haven’t seen anybody really talk about yet. For all the talk about comparing this present market to the bear market of the early 30s, there is one huge, obvious difference: information moves a lot faster today, and we have much more extensive “instrumentation” on the worlds economies. Not only does the flow of information mean that markets will adjust quicker, but the liquidity provided by ubiquitous electronic trading and derivatives means that market swings will occur on a much shorter time scale. Perhaps most importantly, we have much more universal access to economic data than ever before. This means that price information and the beginning of deflation have become apparent much quicker, and to a wider audience, than they did during the great depression.

The upshot of all of this, if I’m right (which is a big if), is that we may never see the kind of extended rally that occured during the bear market that started in 1929. Maybe they’ll just last a few days, or maybe a few weeks. A corrolary of this is that volatility will be much higher than in the aftermath of the 1929 crash. This may be one explanation for why we’ve seen historic levels on the CBOE volatility index (VIX). Usually the VIX peaks around 40 or 50, but these days we’re seeing sustained levels around 70.

So, while I’m going out on a limb, if you’re sitting on cash and tempted to try to time the market and ride the rally we’re currently in, you might want to rethink it. In this day of electronic data and trading, I think the aftermath of the financial crisis will be an extended period of volatility that will eclipse anything the market has seen in its entire history. This crisis may have put the final nail in the coffin in the foolish academic theory of “efficient markets,” but that doesn’t mean the markets can’t be inscrutible and chaotic for an extended period.

Schwarzenegger to nation: Let’s drag out the recession as long as possible, ok?

The central cause of the current recession (or maybe depression) was the overextension of credit, especially in the housing sector. So, how do you get out of that kind of jam? Foreclosures and time. Those that can’t afford their homes will have to lose them, and the banks will get back as much as they can, allowing their balance sheets to be repaired up to a point. Those that can afford their houses will just have to stop taking on more debt, and begin the process of paying off the principle to the point where the loan is rightside up. This will eventually lead to healthy bank balance sheets, and thus the resumption of normal (but hopefully not excessive) lending that will get industry moving again.

If you really wanted to screw with the country, what would be the worst thing you could do? Halt foreclosures and/or slow down the repayment of debt. And yet that’s exactly what Arnold “I am here from the future to destroy your economy” Schwarzenegger has just proposed. He has asked that state lawmakers impose a 90 day moratorium on foreclosures. That sounds really good, but another way of saying it is that it’s a three month state imposed time window wherein banks will not be able to repair their balance sheets. Given that California is ground zero for the housing bubble, this is pretty significant, and in my amateur opinion is tantamount to extending the recession by at least three months. It’s also a slippery slope, and given that it’s highly unlikely a farm hand living in a $750k house (yes, true anecdote) will be able to suddenly improve his cash flow in 90 days in the middle of a recession, I can’t imagine the moratorium will do anything besides delay the day of reckoning.

It would also be the height of selfishness for Californians to use the power of their state government to clog up the nation’s financial system in order to avoid having to deal with the consequences of their feckless consumerism. Where California goes, so goes the country, and that includes really bad ideas. I expect other states, such as Nevada, to follow suit with similar populist legislation. Hopefully the Feds will clamp down before this gets out of hand, because otherwise I can see economically illiterate do-gooder state legislators launching the mother of all depressions by bringing down our entire financial system through a morass of legislation designed to prevent banks from clearing bad credit.

Why is foreclosure considered such an anathema, anyway, at least compared to the prospect of having our entire financial system collapse? People will be released of their debt burden, with the only consequence for their foolishness being that for the next seven years they’ll have to rent an apartment at a much cheaper monthly payment than they had before. I can’t imagine that’s such a bad thing, especially when the alternative is for the credit crunch to deepen, an outcome that would have potentially dire consequences for everybody. Given that the Fed has been only marginally successful in freeing credit markets, the last thing we need is for states to push the other way by obstructing the neccesary process of clearing out bad debt through default.