Post No. 185: There are 4,389 Reasons the U.S. Economy is Suffering; Let’s Focus on the Top 28

© 2012, the Institute for Applied Common Sense

According to some, those of us who are Baby Boomers are far better "educated" and "more sophisticated" than our parents. However, our parents have or had far more "sumpthin’." To this day, the 92 yr old Father of one of our Fellows speaks of the importance of understanding the "times," and "timing," concepts which are lost on today’s politicians, who reduce everything to a direct, cause and effect formula.

When the Logistician was with us, he used to tell of his days handling medical products litigation where people died in hospitals or ended up as vegetables. What always fascinated him was that there was rarely just one thing that went wrong. It was more likely that 9 or 10 things went astray at the same time.

All muck-ups in life (and those of complex, dynamic organizations) are attributable to a "confluence of events or factors." The same applies to all successes. Milan Kundera, in The Unbearable Lightness of Being, refers to it as "serendipity."

Earlier today, while surfing the Twittersphere, we encountered a lady who complained about the failure of some to “follow the Constitution.” She noted that if they kept a copy in their pockets, they might do a better job of serving US interests. She kept referring to how “clear” things are in the Constitution.

Why, if they are so clear, do people continue to disagree about them? Why, if things are so clear, and attributable to one cause, can’t we as a society simply pull the magic lever and solve our problems? Are we merely arguing over who gets to pull the lever, or when? Or how?

Today, every domestic airline is accused of mismanagement. But not long ago, Pan American Airlines stood alone. Within a relatively short period of time, they bought a bunch of 747s, purchased a major piece of real estate to diversify, and the price of jet fuel went up dramatically. All 3 factors ultimately contributed to its demise. Add a 4th, the terrorist attack on Pan Am 103 over Lockerbie, Scotland (which talking heads today would claim they should have foreseen), and you had a recipe for failure. Yep, sounds like mismanagement to us.

What is most troubling about the current political discourse is that our politicians choose, or are forced to explain in simplistic, one dimension terms, or address using simplistic, one dimension approaches, incredibly complex, global systems. Our ability to solve the complex problems of the future will only be hampered through this discourse.

That having been said, are we capable of identifying one umbrella under which we can place the majority of factors leading to our current status? We suspect the Greedy and Lazy umbrella will do just fine, as reflected in our Pigs Get Fat; Hogs Get Slaughtered piece.

We can't help but think that growing up during the Depression, the Dust Bowl, and WWII prepared parents of Baby Boomers to be more self-disciplined.

They, for the most part, were and are financially risk-adverse. No credit default swap derivatives for them. Our 92 yr old will use one paper napkin over and over, wrinkled to the point of non-recognition – to save a few pennies. Another friend’s Mother, a Holocaust survivor, stealthily dilutes all liquid soaps and detergents when she visits, claiming the products are too concentrated, and thus wasteful.

We Baby Boomers, on the other hand, are anything but risk-adverse, and in lots of ways, that’s been a good thing. We lived through a period of incredible, economic growth and dramatic expansion of the Middle Class. However, as Irving Kristol once noted, in the realm of human affairs there are no benefits without costs.

Brian Tracy has a new book out, The Power of Discipline. In it, he has a quote from Harry E. Fosdick, "No steam or gas drives anything until it is confined. No Niagara is ever turned into light and power until it is funneled. No life ever grows great until it is focused, dedicated and disciplined." The principles are also applicable to individual citizens. We simply got too comfortable, and took our eyes off the big picture.

We do not blame our political leadership in this country for our current state of affairs. We blame the individual citizens for doing it to ourselves. Where we find fault with our elected leaders might be summed up as follows. For political expediency, they want us to believe that the problems are fairly recent, and then suggest that they can be solved by employing one or two simple tactics.

That’s just horse-manure, and all of us know it. Even more troubling is that so many of us bought that snake-oil dogma, and then re-tweeted them. It’s time for us to take personal responsibility for The Disuniting of America.

Here’s hoping that the “better educated” and “more sophisticated” college students, to whom we direct our messages, will not make the same mistakes, and will be far less gullible and irresponsible.

Post No. 178a: Why the Presidential Debate Last Week was a Waste of Our Time

Why a waste of time? Because the candidates debated all around the issues that matter. We will not be able to solve problems in this country until we stop doing two things: (a) politicizing discussions simply to appeal to the emotional component of voters; and (b) suggesting that our problems can be addressed by simply implementing Policy A or Policy B.

We previously generated this piece under the title, "If Tin Whistles are Made of Tin, What are Credit Default Swaps Made Of?" We believe that the neglected issues discussed previously (at the height of our financial crisis) in this piece continue to be applicable to our current situation. It's time for us to get busy folks.


© 2009 and 2012, the Institute for Applied Common Sense

There’s a reason the Logistician likes the Laughingman. The Laughingman can reduce crap to its irreducible aroma.

We generally try to avoid taking sides in our discussions. It just doesn’t get us anywhere. No party or ideologue can legitimately lay claim to the concepts Common Sense and Personal Responsibility, both of which we try to weave into each original article posted.

Our goal is to get 95% of the heads nodding. Sometimes we get close. Others times, it’s a reach.

We recently sought topics from you, with the hope that we would all learn something new through the exchange, and take away something of value. Exasperated by all the barking about our economic situation, the Logistician posted the following comment on a number of blogs he frequents. His thoughts jived with the topic suggested by the Laughingman, and thus the title of this piece.

“We as a society, and as individuals, have to take responsibility for where we find ourselves today. By doing so, we might be able to turn this thing around.

“We have a tendency to forget the basic, big picture stuff, and then we complain when things deteriorate.

“Things on planet Earth are actually quite simple. (Gore Vidal once referred to us as the ‘United States of Amnesia.’ Perhaps we’re such a young nation, we haven’t fully learned to appreciate history.) Consider the following:

“1. Innovation and technology, leading to building and creating 'things,' determines EVERYTHING in a civilized society. (If you don't personally know a scientist or inventor in your neighborhood advancing society's interests, or some kid who WANTS TO DO SO, you have a long term problem.

“2. New technology, followed by the production of things using the technology, generates JOBS. The tax revenues derived from those technological enterprises determine what government ultimately can do. No innovation and no production of things - no tax revenues.

“3. The more hours that one works, the more one produces. (Up to a point, of course. We do not want people collapsing from exhaustion.) Exhaustion occurs way beyond 40, or even 60 hours a week for that matter. Take a break, and you run the risk of falling behind your competition.

“4. When a substantial segment of your society has to spend the vast majority of their time to cover the essentials, that segment isn’t particularly useful. It’s no different than the role played by mass agriculture in history. Food production has to be relegated to a few, so that the others can engage in the advancement of innovation and technology, and the trade and exchange of the products produced.

“5. The simplest way to reduce rising health care costs (and thus the health care component of our deficit)? Stop eating Kentucky Fried Chicken, smoking Camels, drinking Colt 45, and hit the treadmill. You'll see a dramatic improvement in health, and at a pretty low cost.

“6. Retirement (when workers still have talent and the ability to contribute) kills your society and generates other problems, especially when you shift tax revenue to people who sit on their asses for years. Capable people who work until the day they die are more productive members of society, physically and mentally. And, they feel that they have some value and stake in society.

“7. War is not a revenue generating enterprise. There are few positive ramifications. It’s a resource drain. It kills productive members of society (who could be inventing some stuff), and gets people pissed off at you.

“8. When you treat any segment of society unfairly, for whatever reason, they become less motivated, and less capable, to work in concert with you to pursue long-term societal interests. It makes more sense to have them voluntarily and emotionally 'buy into' your societal goals. They'll be more motivated .”

If one looks back in history, it’s clear that this is simply Common Sense.

A society which rationalizes its poor choices for too long a period of time is ultimately doomed. It might ride its success for a short period of time, but not for very long.

We, as a society, are ignoring all of the stuff that really matters. We're fooling ourselves while we engage in meaningless debates.

And wasting time.

It's like a boat sinking because of a leak, and the sailors are all arguing, while blowing tin whistles, about who’s responsible for the leak, and what mechanism to use to get the water out of the vessel.

If tin whistles are made of tin, what are credit default swap derivatives made of?

We’d like to know.

We also approached our current problems from a different perspective in another piece entitled, "Pigs Get Fat; Hogs Get Slaughtered." Address the issues raised in these two pieces, and we will be on our way back to fiscal and societal stability.

Post No. 162: An Ass-Whupping Wuz ‘Bout da Take Place

© 2011, the Institute for Applied Common Sense

We’ve been spending quite a bit of time on the bus recently. Apart from saving money, being green, and finding time to read the newspaper, we have the opportunity to examine a microcosm of America. During a prior transit adventure, we gained some insight into problems encountered by children in their homes, which spill over into the public schools. Later, we learned what is wrong with the American male, or at least a large number of them, from the perspective of many women.

During our most recent trip, we saw a riot in the making, which may reflect some of the tension and stress the American public is feeling during these difficult economic times.

On certain days of the week, and at certain times of the month, there are more people using the bus system than is normally the case. With more passengers and more frequent stops come incremental delays which build up over the course of a route.

When we boarded the bus, and saw it packed with 40 plus passengers, we knew there was going to be trouble. At our stop, the bus normally has roughly 16 minutes to make it to the Central Depot, and connect with other outbound buses. But on this day, it only had 9 minutes to spare, for a trip which could take 8 minutes under ideal conditions.

Actually, the bus driver did a pretty good job of making the lights while traveling within the speed limit. Unfortunately, he arrived at the entrance to the Depot 1 minute before the other buses were scheduled to depart. Those of you unfamiliar with the bus system might think that this was good enough, and that everyone would be happy since the connections could be made.

But regular riders know, or at least they should, that if an arriving bus is not fully into the Depot 2 minutes before the scheduled departure time, it must wait at a safety line at the entrance to the Depot, until given further instructions.

The reason for the rule is fairly obvious. The operators of the system do not want passengers jumping off incoming buses, running in between other buses about to depart, and banging on windows to get the attention of departing drivers.

And thus, they made our bus wait. Fifty yards back, but with the other buses, not yet departed, within our view. To make it worse, the other buses did not take off at the scheduled time.

Things began to get testy. First a few passengers yelled, “What are we waiting for?” Then a few more bellowed, “The other buses haven’t even left!” “I’m going to miss my connection.” With each passing 10 seconds, the tension thickened. The bus began to rock as the passengers began to stand up and demand that they be let out at the safety line and be provided the opportunity to run across the paths of the departing buses in anticipation of a lucrative lawsuit.

“This is why the Transit Authority is crap!”

Some even suggested that they had been let out at the safety line on previous occasions, in obvious violation of Authority policy.

Amazingly, the African born immigrant driver sat politely in his seat, as only a citizen of a Commonwealth nation could, and said nothing at first, and later that he was only complying with Transit Authority policy. Of course, no one came to his defense.

Once all of the other buses in front of us departed, and the Depot was cleared, permission was given to our driver to proceed forward, as the African-Americans taunted him and suggested that he return to the country of his origin, in not quite so polite terms. Once the bus came to a stop amongst the empty stalls, both the front and rear doors of the bus opened. The insults reached a level where we were sure that someone was going to punch the driver as the crowd exited, and when it would have been difficult to determine the assailant.

Our driver managed to avoid an altercation this time. Something tells us that might not be the case in the very near future.

As we left by the rear door, we heard someone say,” An ass-whupping wuz ‘bout da take place.”

We guess it was a good thing that the bus was full of otherwise law-abiding citizens. We can’t imagine what an irresponsible group of citizens might have done.

Post No. 161: Back in the Day When a Man was Worth Something

© 2011, the Institute for Applied Common Sense

For years we thought that we learned more by talking more. However, after much pain and deliberation, we have concluded that some people learn more through listening to others, and we might be members of that group.

Despite some of the drawbacks of riding public mass transit, one has the opportunity to listen to the conversations of others; and learn something.

During a prior adventure on the bus, we learned what is wrong with the American education system. During our most recent trip, we learned what is wrong with the American male, or at least a large number of them.

We previously examined the types of friends college students should consider making in Hanging Out with the Right Crowd, and Hanging Out with the Left Crowd. We also discussed young couples getting past giddiness, tingling, and increased blood flow in There Has to be Something More. Today, we explore some Common Sense thoughts which young women should consider in evaluating their man.

There are times, when the Personal Responsibility Freaks of the Universe (including the Members of this Institute), take this responsibility notion too far. We all have to recognize that personal responsibility is a goal to which we should aspire, not a mechanical device on sale at Wal-Mart. But many environments in which we operate, frequently called “systems,” are more mechanical in nature.

The lady on the bus commenting about men of an earlier time was responding to a man alluding to the kind of relationship where the woman wakes up at 5 am to prepare breakfast for her man, before he heads to work. She suggested that she did not have a problem getting up at that hour, if the man had a job to which he planned to go.

But what if the man doesn’t? And what if the disparity between the wages paid a woman and those paid a man for the same task motivate an employer to hire women instead of men?

At one point in our nation’s history, when we were primarily an agriculture-based economy, a man and a woman might stake a piece of land, and try to make something of it. At a minimum, they generated food sufficient to put on the table, or produced enough offspring to increase that probability. Even if the crops were unsuccessful, at least the man had the opportunity to wake up every day, head to the fields, and try to generate something, along with the illusion that he was a man of some value.

But humankind’s greatest invention, cities, changed all that, initially for the better. When industry was everywhere, and jobs aplenty, men could at least fake some self-esteem, pride, and the ability to take care of their families. But as pointed out in Does Anyone in America Have a Real Job Anymore?, as we transitioned into a service economy, finding those clearly recognizable jobs became more difficult.

There used to be a day when a man with a 2nd or 3rd grade education could still respectfully provide for his family. That’s more problematic today. In many inner cities, the transportation and distribution of drugs have become the local economy, on which many young men depend.

Just last week, we saw one of the most powerful pieces ever produced by CBS’ 60 Minutes. It was the story of the dramatic increase in the number of children below the poverty line in recent years. At this point in our history, roughly 25% of children in America live in families whose incomes fall below the poverty line.

Scott Pelly interviewed the parents and their children, and it was apparent that these people enjoyed a middle class existence for years. Now they live in cheap motels in dangerous neighborhoods. You could see the anguish on Pelly’s face as he interviewed the articulate parents and their bright children.

Were the parents the slackers of the world? Drug addicts and other criminals? Entitlement seekers living off the government? Worthless minorities? Absolutely not. These folks were just like you and the Members of this Institute. Just regular, hard-working, law abiding citizens.

The children were obviously most acutely affected by their change in status. Many of them were ashamed of their fathers. “How could you have let this happen to us?”

So who or what is at fault when a woman perceives that her man, or any man, is no longer a man of value?

And has no worth?

Maybe, just maybe, finding someone with a stable job and prospects for the future might be more important than being in love. Maybe that’s the Personal Responsibility message.

But we as a nation need to figure out how to better deal with this issue, which has long-ranging ramifications.

Post No. 159: Are You Tired of Your Bathroom?

© 2011, the Institute for Applied Common Sense

Potential college grads do not need experts to tell them that they have some difficult choices to make this spring. We Baby Boomers have pretty much screwed up things for them. We managed to give the rich, particularly the nouveau riche, virtually all of our marbles and a bunch of our lunch money just to get safe passage to school.

Several days ago, we ran across an article where the author subscribed to the notion that either the solution to, or the root of a, problem can be found in the asking of the question.

Just minutes ago, we heard a radio commercial for a bathroom remodeling company, which may provide a practical example of the concept. (Shortly after, we heard an economist say that consumer spending in the U.S. needs a spark, since it constitutes 70% of the nation’s economy.)

When we heard, “Are you tired of your bathroom,” we laughed out loud. That consumers would seek out the services of any company (or anyone) simply because they are tired of how something feels, looks, smells, tastes, or sounds grabbed us. (Are there such companies to find new spouses?) Our parents born in the Depression were comfortable with conspicuous subsistence, while storing cash in the coffee can planted in the back yard.

It occurred to us that this change in attitude amongst the Boomers might explain much about the American consumer, or even the American psyche, at this point in our economic evolution.

Back in the late 1970s, several of our Fellows worked for a large firm. All employees received one month’s pay as a Christmas bonus. Right in the middle of the double-dipped recession of 1980 - 1982, the most ambitious partners left, carrying a bunch of business (and accompanying staff members), to form a new firm, which had different ideas about the future.

But times were tough, and come Christmas talk was about whether we would get paid, not whether we would receive a bonus. Instead of looking for the icing on the cake, we wondered whether we would get any beans.

Recently, we heard a comment by a caller during a C-Span program. China was the topic, and the point at which it would overtake America as the dominant economic force was the issue. (Last month, China supplanted Japan as the No. 2 global power.) “1.4 billion people seeking what we have is a powerful force.” He further suggested that it can’t be stopped.

Hunger is a powerful force. So is the resultant increase in the ranks and spending power of the Chinese middle class.

Yesterday, a taxi cab driver remarked that the area where the Institute is located was just woods 50 years ago, although there was an occasional shack with an outhouse. Those of you who have never used an outhouse might find it odd that someone might get tired of one.

According to the Wikipedia:

“In 1929, consumer spending was 75% of the nation's economy. This grew to 83% in 1932, when business spending dropped. Consumer spending dropped to about 50% during World War II due to large expenditures by the government and lack of consumer products. It has risen since 1983 to about 70%, as the result of relaxed consumer credit. Spending dropped in 2008 as the result of consumer fears about the economy. Consumers saved instead of spending.”

So all we middle-class consumers need to do is start spending.

But what’s the source of income for ordinary consumers? Many are having difficulty finding jobs, and just putting food on the table.

Then it hit us. All of a sudden we understood why some contend that tax cuts to the rich will aid the economy. Someone recently sent us an economic chart reflecting how the economic status of the middle class has not improved over the last 25 years.

It also reflected a 33% increase for wealthy Americans.

Common Sense suggests, at this point in our economic evolution, that it’s the rich folks who aren’t spending, or investing, or hiring, or much of anything else to benefit those of us at the bottom of the heap. And that’s who we Baby Boomers are going to have to wait on.

But upcoming college graduates can learn from our mistakes, and not be so foolish about their personal economies.

Just the other day, we ran across a company, Get It Together, which describes itself as a leader in independent financial and legal education. They provide workshops and mentor programs on financial and legal planning, coupled with credit management. What group is their primary target audience?

College students.

Better late than never.

Now, are you tired of your bathroom?

P.S. The Logistician always contended, while working 3,000 hour years, that he could have realized more dollars on an hourly basis being a plumber.

Post No. 122a: Re-Posting of Post No. 90: Making Use of the Current Financial Mess

We frequently re-visit earlier posts to determine their continuing applicability. In February of this year, we generated a piece entitled "Making Use of the Current Financial Mess."

Since we continue to be in an economic "______ession" of some type, we thought that we would re-visit our earlier thoughts, and see if any of your thoughts have changed in the interim.


© 2009, the Institute for Applied Common Sense

Mark Twain observed that if a cat sits on a hot stove, she will never do it again. Unfortunately, she'll probably never sit on a cold stove either.

Everyone has their favorite villain for the current economic collapse. The Logistician sent me a list of 10 ways in which he felt consumers were responsible.

I told him that I did not buy into his premise, but in thinking about it further, I realized that if we only point the finger at the fat cats, we will have learned little. We all bear some responsibility.

We are behaving much like Mr. Twain’s cat. Despite our efforts to revive our financial system, we have little to show for it… yet. We definitely can’t sit at the starting line waiting for the next guy to say, “Go.”

We simply need to use some Common Sense, on which the left and right should be able to agree.

According to the Scientific Method, bad ideas and experiments that don’t work are as valuable as those that do, provided we learn from the experience, and use that knowledge productively.

So, with 2/3rds of our economic well-being based on our own behavior, we would like to suggest a few topics for discussion, the results of which may assist us in finding our way out of this financial wilderness.

1. If a deal sounds too good to be true, it probably is.

You don’t need a Ph.D. in economics to realize that markets don’t always go up. The observation that a few people are making great sacks of money, and violating the rules of Common Sense, does not relieve us of the obligation of doing our own home work.

If you can’t make the numbers work within your current income, don’t bet on massive increases in the value of your investment to bail you out.

You have a better chance in Vegas than in a financial commodity you do not understand. (And the truth be told, few of us really understand them.)

2. Don’t bet your home on things you don’t need.

Contrary to the Logistician’s mantra, there is nothing wrong with wanting a better, more luxurious life, but not at twenty percent interest. Here there are demons…like bankruptcy…and acid rain falling on your childrens' heads.

Save the money 1st; then buy the Lexus. It’s only Common Sense.

3. Ignore herd instinct.

When everybody agrees on the direction of a market, guess what…?

4. Be careful when building and buying things which are more than you need.

Advertising not withstanding, buying an Escalade won’t make you an NBA star. There is a reason why the Toyota Camry and the Honda Accord are the 2 best selling cars in the country.

5. Particularly avoid using credit or going into debt to build or buy things which are more than you need.

We went into debt, both individually and collectively, based on the assumption that the party would never stop.

Pick up any book on history…it always does. And, you don’t want to be the guy playing musical chairs when….

6. Remember that gluttony and greed are 2 of the 7 deadly sins.

Really want to make a 20% return on your income? Pay off your credit cards.

7. Carefully weigh the impact of retirement on an individual and societal level.

The Logistician and I differ on this point. The Logistician feels we got lazy and retired too early. My take is that we took the money and ignored our inherent desire for a more worthwhile job… and after 30 years we couldn’t wait to get out.

With our most experienced workers, although still productive, leaving the workforce early, all of this experience went to waste… and it is experience we can ill afford to waste.

8. Avoid being seduced by the short-term Sirens.

There was a time when we bought things to last. Next time you are in the park, look at the number of people taking pictures with manual focus SLR cameras.

This desire to last drove a subsequent demand for quality… producing a pride of workmanship that represents the essence of “Quality of Life.”

9. Don’t leave the education of your kids to the entertainment industry.

Not wanting to engage them, we abdicated our responsibility to the likes of Nintendo, Disney, and MTV, as long as they didn’t interfere with our pursuit of the “good life.”

If you don’t want children, don’t have them. You can not experience the sense of wonder children project, as they learn about the world via remote control.

You have to be there… and evolution suggests that this is one of the few primal pleasures we have inherited undiminished.

10. Lend a helping hand.

If you know someone in need of a job, through no fault of his own, ask around. Do what you can to help him get re-employed.

Want to raise the “quality of your life,” watch the face of a man or woman you have helped put back to work. Government can’t do that.

You see, we do most of the spending. No income, no spending. No jobs, no income.

Is there anything on this list which defies Common Sense?

After all, we should be smarter than Mr. Twain’s cat.

© 2009, by the Laughingman for the Institute for Applied Common Sense

Post No. 85: Why We Suspect, To Our Dismay, That “Whatever” Our Leaders Devise Will Not Work

© 2009, the Institute for Applied Common Sense

Unlike apparently most citizens, we haven't, here at the Institute, read the most recent versions of the economic stimulus bills proposed by the House and the Senate.

Consequently, we are not in a position to competently comment about them.

As a general rule, we try to refrain from judging legislation which we have not personally reviewed.

Additionally, we have not personally viewed all of the “legislative history,” to the extent that any actually exists at this point in time, to determine the specific intent of the writers of specific provisions.

Quite frankly, after all of the, what appears to have been intentional misinformation or false information disseminated by various factions during the presidential campaign, we are not inclined to believe some of the partisan media outlets and organizations, and most of the spin out there.

We realize, as does most of the public, that with most laws, after being enacted in broad terms by a legislative body, some administrative agency (consisting of bureaucrats and not elected officials) actually interprets the goals of the legislation. It writes the rules and regulations applicable thereto, thus generating the details for implementation.

Being aware of that, we are simply not in a position to contest anything which any faction might suggest.

However, we will note this.

If it were all that simple, to come up with the formula, as so many seem to suggest these days, it would have been done by now.

By this we mean that, if society, including the top people in the field of economics, had arrived at some clear consensus about what works under these circumstances (including a true cause and effect relationship), with some degree of certainty, we would have done it by now.

Obviously we haven’t figured out what works, at least not with any degree of certainty.

That's just common sense.

In an emergency, you do what works based on experience, assuming you’ve been there before, or you switch into a common sense survival mode.

However, this is not about common sense, because this is not about the American people as a collective whole. It’s far more complicated than that.

This is significantly about what the politicians can get for their constituents back home, in the various 50 states, and various thousands of counties and cities.

And thus the potential beneficiaries are not similarly situated or interchangeable units.

We’re afraid that this is, quite simply, just another exercise in herding cats.

And lots of them.

Of all different breeds and sizes.

And with different appetites, including some mountain lions, cougars, and panthers.

You can't have this many individual elected officials, each trying to advance their own personal interests and the interests of their constituents, and come up with anything that makes “common” sense.

Apart from the common sense issue, this “effort” defies even the most basic principles of organizational management theory. Keep in mind that governance, in theory, is about management.

Simply put, there is no central, unifying purpose or goal, upon which the citizens have agreed.

Rarely has a nation found that degree of unity in purpose in the absence of war.

Right now, we’re too busy squabbling amongst ourselves, and we will continue to do so, even after a measure is passed.

Just think about it. What is the probability of success of this measure after passage, when some factions will continue to whack and snip away at it?

That’s roughly akin to a marriage where the parents of each spouse spend each day telling their child why he or she should not have entered into the marriage, and why it will not work.

As if they don’t have enough problems with which to deal without the parental involvement.

If we truly viewed this as a broad-sided attack on our survival and ultimate existence economically, we’d all be facing the same direction, with similarly drawn weapons, ready to defend against the oncoming missiles lobbed our way.

Instead, we’re spending the bulk of our time attacking one another.

And with ferocity.

At least we’re a colorful bunch of cats.

We’d like to find someone willing to put a substantial wager down on the probability of success of this team winning the roll of the dice.

Just let us know. We’ve got our money ready.

© 2009, the Institute for Applied Common Sense

Post 84b: Article of Interest: We Still Say a Country Needs to Know Its Limitations

Do you really have any confidence, or even just some hope, that our government has the ability to address serious problems in society? Take a look at this article which appears today in USA Today and let us know what you think after reading it. Does it provide us with an indication as to how the economic stimulus funds might be handled?

Post No. 73: An Opportunity Lost (Well, Sorta)

Copyright 2009, The Institute for Applied Common Sense


This one is a tad tricky for us.

Then again, we should all have some degree of ambivalence about the positions we take in life.

It permits us to be open to other views, and allows us to gracefully modify our views, and change course.

And thus grow.

Quite frankly, all the hoopla about this inauguration bothers us.

Sure, this is an historic event, of which the country should be proud.

But why couldn't we, during this time of economic hardship, simply conduct this event in the office of a local mid-western justice of the peace, followed by a dinner with the President-Elect's closest friends at the local Olive Garden.

We don't have a problem with broadcasting it throughout the globe via the latest media outlets.

But why spend the money, even if it is privately funded?

Does it send the wrong message at this time?

We've never been fans of big, expensive, catered weddings. What a less productive utilization of funds and human time. Or grand graduation ceremonies.

But then again, some folks obviously think that there is some value to such staged events.

The Logistician often tells the story about how he never marched in his graduation ceremonies after high school (where he was forced to do so since his Mother rented the cap and gown), thinking them to be frivolous. Same with the graduation ring.

Following his Mother's death, he spoke to one of her close friends, who confided that his Mother was disappointed that she was not able to attend those undergraduate and graduate school ceremonies upon his graduation.

He tells of his response to the effect that he did not consider the events to be of value to him.

The response of his Mother's friend was to the effect that those events are not for the children.

But for the parents.

Sorta put a whole new light on the issue.

So what are we saying that Obama should have done here?

The events are already planned, including the elaborate balls and parties. However, we still believe that this will be a missed opportunity to send a very simple message to the citizens of this country, and the world.

Just seems to us that frugality, or something vaguely akin to it, should rule, at least for some period of time going forward.

As the President-Elect has often said, we should all plan to make some sacrifices going forward.


Copyright 2009, The Institute for Applied Common Sense

Post No. 71: Our Responsibility as Citizens

© 2008, the Institute for Applied Common Sense

In response to two of our recent posts, dealing with same-sex marriage and abortion, one of our readers facetiously suggested that we were engaging in “mental masturbation,” while another suggested that we were “going in circles.”

Both comments were constructive in that they reminded us, here at the Institute, that we should occasionally engage in a discussion about why we do what we do.

There are three of us here engaging in multi-disciplinary masturbation. The Laughingman keeps us in check, and reminds us of the historical, psychological, and anthropological underpinnings of things. The Logistician is engineering, management, and policy oriented. The Optimizer injects the human and governmental elements, and impresses upon us the importance of nuance.

Together, we have a goal. We’re three Baby Boomers who recognize that, despite our lofty, idealistic goals and views in the 70s, we did little to improve on the citizen model. And for that we must take responsibility.

You see, we believe that all adult citizens bear most of the responsibility for the current state of our nation. Not our purported leaders.

We abdicated our responsibility each time that we stepped into the voting booth, we shopped, we worshipped, we sent our kids to school, and the manner in which we functioned as employees and managers.

And each time that we remained silent and acquiesced.

Someone recently suggested that we are approaching a new era in our nation with respect to the role of government going forward.

At the same time, we recognize that a new crop of kids will inherit a mess of massive proportions. Consequently, we’re here to assist them in recognizing that there are more than 2 or 3 ways to view any issue; there are at least 27.™

Because it is going to take thinking outside of the box, and coming up with bold, innovative, untried approaches, to tackle this monster. We’re getting our asses kicked, soundly, and the first step in turning that around is to admit that it’s our fault. Each one of us.

It’s now the turn of the kids to turn this thing around.

We will ultimately take our concept on the road and engage college students throughout the nation in a conversation about Personal Responsibility, and how the decisions that they make ultimately bear on the success of the nation as a collective whole.

We need more engineers.

We need more scientists.

We need more inventors.

We need more entrepreneurs.

And we need each member of these groups to tackle our problems, not from their personal perspectives, and what might be in their best interests, but what is ultimately in the long-term best interests of the nation.

We will utilize adults who have encountered and recovered from various difficulties in life, as teaching vehicles, in conjunction with the latest research on the brain, and decision theory. The goals of the Institute are the following:

(a) To provoke thought;

(b) To encourage students to consider their choices in life;

(c) To assist students in analyzing the decisions that they make along with the consequences; and

(d) To have them recognize the importance of taking personal responsibility for their choices.

We hope to achieve, during our discussion of issues, the de-personalization of the analysis, by avoiding subjective and partisan approaches. We believe that the analysis will improve through objectivity (as much as it can be achieved) and creativity, along with “digging deep” to expose the root causes of issues, instead of merely being distracted and sidelined by symptoms. We can thereafter craft better solutions.

Although maintaining the status quo might be, solving problems shouldn’t be, partisan and political.

If the election of President-Elect Obama signifies anything, it tells us that we all need to chip in and do our respective parts. It’s our duty as citizens.

It’s time for a whole new collective approach.

Remember, experience isn’t expensive – it’s priceless.

© 2008, the Institute for Applied Common Sense

Post No. 68a: Outgoing Bush Administration and Incoming Obama Administration Working Together

The link below will take our readers to an article of interest appearing in today's electronic edition of the New York Times. The article outlines the manner in which President Bush and President-Elect Obama are working together to deal with the economy, in an effort to calm jittery nerves. Our hats are off here to both individuals and their respective administrations. This is the type of common sense collaboration which the American public and the world expect from responsible leaders.

Once again, it shows that doing the right thing is not rocket science.

http://www.nytimes.com/2008/11/25/us/politics/25obama.html?pagewanted=all

Post 55a: WATCH NOW Panel Discussion on Economy: Tom Friedman and Others

Panel Discussion on the Economy with Thomas Friedman, Barbara Ehrenreich, and Michelle Singletary.

On C-Span2 Book TV, right now as this e-mail is being generated. Started at 2 pm EDST. Some of these presentations you can watch on line.

http://www.booktv.org/program.aspx?ProgramId=9889&SectionName=Politics&PlayMedia=No

Post 53a: Understanding the Word Swaps and their Role in this Financial Mess

Earlier this week, we mentioned that several former CEOs of AIG Insurance testified before the House of Representatives. During the course of that hearing, the interrogating Representatives and the CEO witnesses frequently referred to "swaps" and their risky nature.

It occurred to us that many others might not understand the concept of swaps and the role they played in our financial mess. We thought that more Americans might want to gain a better appreciation of this financial vehicle since there are "$62 trillion in credit-default swap derivatives out there. [Emphasis added.]"

One of our readers recently forwarded a September 27, 2008 article from The New York Times written by Ben Stein, entitled In Financial Food Chains, Little Guys Can't Win. In that article, Stein writes:

"[A]ccording to what I hear from my betters in the world of finance, the most serious problems are not with the bundles of subprime mortgages themselves — a large but not lethal quantum as far as I can tell — but with derivatives contracts tied to subprime and other dicey debt. These contracts are superficially an attempt to “insure” against risks of default, hence the name “credit-default swaps.” In fact, they are an immense wager — which anyone with lots of money or borrowing ability can enter — about how mortgage-backed bonds, leveraged loan bonds, student loan bonds, credit card bonds and the like will perform."

Read the remainder of the article: http://www.nytimes.com/2008/09/28/business/28every.html?_r=1&ei=5070&oref=slogin&emc=eta1&adxnnlx=1223740921-R1il7UykUJKI/O7CnpNPmw&pagewanted=print

Post No. 53: Are We Really Interested in Crafting a Solution to Our Financial Mess?

© 2008, The Institute for Applied Common Sense

Washington, we have a problem.

Now, I am neither an economist nor a rocket scientist, I am just a consumer, and as such, along with the rest of you, I am responsible for two thirds of America’s economic activity.

And, along with the rest of you, I don’t have much trouble defining the problem:

In the last ten years, the cost of energy has gone through the roof, taking the price of everything that moves, from food to flashlights, along with it.

Similarly, the cost of housing is up more than 50%.

Unfortunately, our real income has actually declined, along with the value of our homes… and in the last two weeks, the value of our retirement savings has declined more than 20%… some two trillion dollars worth of evaporated wealth.

But, if you had turned on the television and watched C-Span, as I did while generating this article, you would have seen the hearing, conducted in the House of Representatives on October 7, 2008, regarding the collapse of AIG Insurance.

Several former CEOs testified during that hearing. Probably most of us think that both corporate America and our politicians, on both sides of the aisle, have failed us.

Apparently, the feeling is mutual. In corporate think, the above problems seem to be our fault.

I strongly suspect that if you asked the average citizen, he or she would tell you that they feel that both corporate America and our politicians, on both sides of the aisle, made out like bandits during the period of high flying and free wheeling, without much in the way of restrictions or regulation, or concern for the American public for that matter.

Virtually every nickel we contributed to the growth of the American economy, through productivity improvements and cost reductions, was channeled to the occupants of America’s executive suites.

Less than ten days after borrowing $85 billion from us to keep from going broke, the executives of AIG spent $400,000 on themselves at a management retreat at an ocean front resort. (One of the Representatives even had pictures of the resort, and a breakdown of the costs of the rooms!)

That’s FOUR HUNDRED THOUSAND DOLLARS… and it obviously occurred to no one running that company that this might not be the best time to continue business as usual, as is their right and due. What good is being a Master of the Universe if you can’t enjoy the perks?

To borrow a notion from Ross Perot, perhaps we should reconsider who we put in charge of our financial well-being.

Perhaps we should reconsider allowing lawyers to become elected officials.

Perhaps we should do the same with CEOs.

Because what was to be witnessed during this hearing was not an effort to get at the truth and underlying causes for our current economic emergency, but lots of posturing, blame assignment, and defense of the status frigging quo.

You can’t really blame these guys; if any of us were trousering (oops, my bad, or skirting) $60 million a year, we would also mount the best defense that money could buy in support of our right to haul home such lucre.

Yesterday, we posted a poem by Pablo Neruda (http://theviewfromoutsidemytinywindow.blogspot.com/2008/10/post-no-52-and-now-some-pablo-neruda.html). Apparently neither the former CEOs nor any of our politicians have read You’re the Result of Yourself. It’s well worth a read.

Lawyers, particularly experienced ones, develop a skill for asking the right questions to get to the heart of the matter. They also know how to make arguments in favor of their positions, and against those of others.

That’s what they get paid for.

What should concern us now is that none of this is appropriate in connection with the current financial mess in which we find ourselves as a nation. And time’s awasting....

What we need now is for our politicians, leaders, and the members of our government to “dig deeper,” and try to expose the underlying causes of this situation (no matter who’s at fault), and how we might best prevent it from occurring again.

What we do not need is yet another PR campaign, pointing to a light at the end of the tunnel, and pretending that it is not an oncoming freight train. (By the way, the laws of physics repeatedly suggest that you will not beat that collision.)

I’m one of the few people who actually enjoys listening to hearings before governmental bodies. Any sensible person would not. Frequently, those being questioned present prepared statements, exculpating themselves from liability, and then proceed to provide responses more concerned about liability than solutions. In many instances they are accompanied by counsel who coaches the witness.

Even more disturbing is the manner in which the “questions” are posed, if you can really call them questions. During the House hearing, for example, we witnessed Representatives essentially make speeches, reflecting their positions, and condemning the conduct of AIG. They chose the words to characterize the conduct, and they injected emotion into the issue, when and where they saw fit.

It was more than clear that the purpose of these self-serving speeches had more to do with elections than economic enlightenment.

Once they had almost used up their allotted time, they would ask a very short question, which would be very difficult to answer considering the 3 minute monologue preceding the question. When the witness tried to answer, he was frequently interrupted by the Representative, only to have the time expire without the witness having said anything of real value or substance.

Now we know that many of you will simply say, “That’s the way these things work.”

However, in this period of economic uncertainty, that’s just frankly, unacceptable. That any of our politicians would place their continued occupation of a political position above our need to know and the financial interests of the American people is not only sad, but something in which we should no longer acquiesce.

This is ridiculous folks. Even I, an insignificant nitwit, could pose a series of questions designed to get to the bottom of this mess. Why can’t our highly compensated, highly educated, highly sophisticated, highly experienced elected officials pose questions that really matter, without consideration of their interests?

What’s more disturbing is that the ineffectiveness of conducting a hearing of this sort, at least in terms of getting to the root of the problem, is fairly obvious, even to the casual observer. That our politicians think that this is appropriate, and acceptable to us, is, quite frankly, pissing me off.

This is the question we need to have asked and answered until it makes sense even to an insignificant nitwit:

“You gentlepeople have managed to hitch this great country’s economic star to a wagon, and the mule just died. How do you propose we fix that, this week?”

© 2008, The Institute for Applied Common Sense

Post No. 50a: One of the Better Political Cartoons of the Year

Compliments of Dana Summers of the Orlando Sentinel

http://www.orlandosentinel.com/news/opinion/columnists/orl-summers-cartgallery,0,5845995.photogallery?index=orl-cart-constituents-100208

Post No. 49: Finally, Someone Explains Something That We Can Understand

I was fortunate enough to receive a decent education at some decent educational institutions. I also took corporate, business, accounting, banking, finance, and various other management courses.

However, I must be honest. I do not understand even a quarter of what occurred over the past 20 – 30 years to lead to our current financial situation.

Although I am sure that most of us can point to some emotional, conceptual issues, be it outsourcing, illegal immigration, two foreign wars, decreased industrial output, and greed, I just really feel like I am in the minority in terms of understanding investment banks, hedge funds, selling short, bundling, derivatives, and such.

Just last week, I contacted two of my graduate school buddies, one with a specialty in banking, and the other in corporate securities, and I told them that I hoped that they were in the Senate Banking Committee sessions to keep them honest.

One of them, “The Bear” (no relation to the term to describe financial markets), forwarded the following article to us by John P. Hussman, Ph.D. of Hussman Funds, entitled You Can’t Rescue the Financial System If You Can’t Read a Balance Sheet, which was posted by Dr. Hussman earlier today. It provides food for thought.

September 29, 2008

You Can't Rescue the Financial System If You Can't Read a Balance Sheet
John P. Hussman, Ph.D.
All rights reserved and actively enforced.

This is a bad idea.

However the final legislation is written, the Troubled Assets Relief Program (TARP) being rushed through Congress will evidently be built around its single worst provision, which is that the Treasury will have authority to purchase distressed mortgage securities from U.S. financials.
As I noted last week in An Open Letter To Congress Regarding the Current Financial Crisis, the sequence of bankruptcies that we've observed among U.S. financials has been almost exactly in order of their gross leverage (the ratio of total assets to shareholder equity). The reason for that is:
1) as the assets of a financial company lose value, the losses reduce the asset side of the balance sheet, but also reduce shareholder equity on the liability side;

2) as the cushion of shareholder equity becomes thinner, customers begin to make withdrawals;

3) in order to satisfy customer withdrawals, the financial company is forced to liquidate assets at distressed prices, prompting a further reduction in shareholder equity;

4) go back to 1) and continue the vicious cycle until shareholder equity goes negative and the company becomes insolvent.

Let's return to the basic balance sheet of a typical financial company before the writedowns:
To read the remainder, click on: http://www.hussmanfunds.com/wmc/wmc080929.htm.

Post 47b: First Draft of Economic Rescue Package Released at 5 pm EDST

View the first draft. Still to be finalized.

http://www.foxbusiness.com/story/markets/economy/draft-economic-rescue-package/

Post 47a: If You’re Willing to Momentarily Laugh about Our Current Financial Crisis

We, here at the Institute for Applied Common Sense, generally try to avoid cynicism, since our ultimate goal is to encourage the development of innovative solutions to serious societal issues. We always assume that positive changes can be achieved. At the same time, we recognize the importance of entertaining views across the spectrum to stimulate thought and keep us on our toes. We further appreciate the role of wit and humor.

It is in this spirit that we submit for your consideration the Con Man’s Blog of Jack Payne. The following is an excerpt from his September 26, 2008 post, entitled:

Legal Scam? – Con Artists’/Politicians’ Ace in the Hole: Create Controversy

Generating 2 Strongly Opposing Sides is Key to a Good Legal Scam Employed by Con Artists and Politicians Everywhere

“It’s said that the hand that turns the knob opens the door.

If you be the con artist / politician, you know that to succeed in selling a legal scam, several steps are essential – steps necessary to just getting to the door, before you can even hope to open it.

As it’s said: Never wrestle a pig; you’ll both get dirty, and the pig likes it. Take the easy way.

You must hatch a problem so that you can organize a group of people to step in with the “solution.” You must then employ the Us and Them technique so that your group of suckers can be manipulated, with strong emotion, to become the “void-filler” in this legal scam. Tell them your powers can only be used for good. At no time overlook the potency of collective stupidity….”

It only gets better. Check it out: http://www.legalthriller.blogspot.com/2008/09/legal-scam-con-artists-politicians-ace.html



I

Post No. 47: Needed - Attitude Adjustment Following Meltdown

© 2008, The Institute for Applied Common Sense

Much has been made in recent days regarding a prospective leader’s ability to multi-task. And yet we must recognize that there are consequences.

Just yesterday, a colleague here at the Institute mentioned that there was plenty blame to go around in connection with this economic mess. He also suggested that the first step in addressing a problem is to take responsibility for having participated in its creation.

Consequently, we the citizens of this nation, must examine ourselves, since a nation is not comprised of political and business leaders alone.

Most available evidence suggests that members of the last two generations do not read anything but comic books. They purportedly depend almost entirely on friends, and the Internet, for their news. In the competition to be among Phil Night's "Cool Five," (http://www.meetup.com/members/3961181/) being first with the rumor counts more than being right with the implication.

And when you are doing six things at once, who has time to run the numbers, or check the sources? In the interest of fiscal responsibility, GM has canned more than half its North American work force in the last five years... replaced them with a workforce with virtually no experience in auto manufacturing… but willing to work for half as much. And while GM was busy canning workers, revisiting the expectations of retirees, cutting "supplier" costs, building new factories in the cheapest labor markets possible, and taking a fling in the sub prime real estate lending market, Toyota increased its US production by half to become the best selling brand in the US, and the best selling producer in the world.

In the mean time, Toyota's credit arm surpassed both Ford and GM's captive units to become the most profitable lender in the US.Toyota's currently underutilized employees are still working for Toyota... most receiving more training, and thus looking toward the future.

That may be partly due to government involvement in corporate conduct, as is the case in many countries, but it still reflects the nature of the competition, not quite as anxious to post quarterly profits and thus sacrifice the long term. The scientific method teaches us that experience is not expensive; it is priceless... that results you cannot duplicate cannot be attributed to the work you are doing... and that repeating the same actions and expecting different results is insane.We do not need to reproduce the ten year long recession Japan suffered after their housing bubble burst.

But if we are going to avoid it, we are also going to have to concentrate on what they did right...and wrong, and learn from their mistakes.

We as a nation need to observe how others do things, and take notes. To do that, some of us are going to have to spend a bit more time reading printed material other than comic books...and a bit less time on FaceBook, running down the latest rampant rumor.

A colleague, after teaching adults students at a local community college, called me up and said that he felt that someone had “cheated these people out of an education.” The cheaters obviously did not appreciate that cheating affects us all, and for the long term.

With the New Deal, more and more of our citizens learned to depend on government. In recent years, more and more workers learned not to depend on jobs, particularly in the corporate arena, and launched out on their own.

Having now determined that we can not trust our government and political leaders, perhaps it’s time for ordinary citizens to take charge of their destiny, and rely less on our purported “leaders.”

Maybe McCain had it right in picking someone who could connect with “regular citizens.” I can’t imagine any hard working citizen from that social strata doing to this nation what our corporate and political leaders have done.

© 2008, The Institute for Applied Common Sense

Post No. 46a: A Somewhat Different Analysis of What Led to Our Current Economic Situation

Article of Interest from Edge.org

Economic Dis-Equilibrium: Can You Have Your House and Spend It Too?

by George Dyson

http://www.edge.org/3rd_culture/dysong08.1/dysong08.1_index.html