Tuesday, April 29, 2008

The Bullfrog

Barack Obama’s longtime pastor, the Reverend Jeremiah Wright, threatens single-handedly to derail his parishioner’s candidacy. Reverend Wright infamously said the death of thousands on 9/11 meant “America’s chickens are coming home to roost” and that, although no one knows anyone who is in the Ku Klux Klan any more, our nation is “the U.S. of KKK--A”. In interviews and speeches over the weekend the latter-day Jeremiah thundered against the evils of modern-day America. His speech to the NAACP on Sunday is worth a read.

Some of Rev. Wright’s words would be familiar coming from the pulpit of any mainline church:
In the past, we were taught to see others who are different as being deficient. We established arbitrary norms and then determined that anybody not like us was abnormal. But a change is coming because we no longer see others who are different as being deficient. We just see them as different.
His enjoinder to take the log out of our own eye before worrying about the dust specks in others’ was also familiar, as were pleas to love others, even and especially if the others are very different. (I have no comment on Wright’s theories of neurology, pedagogy, and pathology, which are unconventional and have attracted much criticism—for critiques see these by George Will and Byron York.)

One problem that I have with Rev. Wright is that he has little sympathy for a struggle that all Christians face; we are imperfect beings trying to act perfectly in an imperfect world. Jesus said that there is no difference between committing adultery and just thinking about it. In the real world, however, we distinguish not only between thought and action but among the actions themselves: jaywalking is different from shoplifting which is different from armed robbery, etc.

The United States killed hundreds of thousands in Hiroshima and Nagasaki to end a brutal war when many millions had perished. Horrific as the bombings were, we know that an invasion of mainland Japan would have cost at least as many and likely more lives on both sides. To juxtapose these acts against the destruction of the World Trade Center, an act of terror during a time of peace, is to compare very different events without (to use a fashionable term) context. Yet, hear what Jeremiah Wright said after 9/11:
We bombed Hiroshima, we bombed Nagasaki, and we nuked far more than the thousands in New York and the Pentagon, and we never batted an eye. We have supported state terrorism against the Palestinians and black South Africans, and now we are indignant because the stuff we have done overseas is now brought right back into our own front yards. America's chickens are coming home to roost.
Jeremiah was a bullfrog
Was a good friend of mine
I never understood a single word he said
But I helped him a-drink his wine
And he always had some mighty fine wine
--Three-Dog Night

© 2008 Stephen Yuen

Thursday, April 24, 2008

Good for our Souls

It wasn’t that long ago that we bought a 50-lb. bag of calrose rice---a nine-month’s supply for our family---for $10. But the saving from buying in bulk wasn’t worth the hassle of storage, so we switched to smaller quantities. We also began to alternate our diet with brown rice, which has more fiber and nutrients than white.

The rice shortage finally floated to the top of American media consciousness this week when Sam’s Club and Costco restricted purchases in markets with a high percentage of Asian buyers.

Anticipating this development and feeling slightly guilty about caving in to hoarding mentality, I bought a couple of 20-lb. bags on Tuesday. I didn’t like spending the $26, but it’s a mild comfort to realize that this amount of money doesn’t even buy a half-tank of gas. Food is more important to life than fuel, and food is comparatively a bargain.

The price of rice is twice (per WSJ it's doubled in a year)

The explosion in worldwide demand and various supply constraints have resulted in skyrocketing commodities prices. Yet in this political year the complaining, at least to this observer, seems to be muted. Perhaps decades of preaching about Americans’ overconsumption have finally taken hold in the zeitgeist; a little austerity, though the cause may be more circumstance than choice, may be good for our souls.

Don't Leave Us Out

A rash of shootings and armed robberies has caused Oakland citizens to start shooting back.
After citizens shot and wounded three suspected criminals in the past week, Oakland police acknowledged Tuesday that residents are fed up with crime and expressed understanding for two shopkeepers and a resident who they say fought back in self-defense.
Senator Obama, please don’t leave us out. Even in the San Francisco Bay Area we can be bitter too.

Monday, April 21, 2008

The Chronicle Loses Another Reader

From a letter mailed today:

April 21, 2008

To: San Francisco Chronicle

Subj: Termination of Subscription

Dear Sirs / Madames:

For the second year in a row you have renewed my subscription and charged my credit card—this time for $247--without my authorization. Last year I let the renewal proceed, because I felt sorry that you had lost so many readers and because you had taken a significant loss in acquiring me as a subscriber during your first-year promotion. But these automatic renewals are no way to do business.

Please terminate my subscription and refund the balance.

Sincerely yours,

Problem Not Confined

Lotta's Fountain in 2006
on the 100th annvy. of the '06 quake.
Last Friday, on the 102nd anniversary of the great San Francisco earthquake, the ground shook over 2,000 miles away. The earthquake measured 5.2 on the Richter scale and resulted in minor property damage and no injuries in southern Illinois. [Update: a 4.5-magnitude aftershock struck this morning.]

The quake surprised us Californians who are accustomed to thinking of earthquakes as a problem confined to the Pacific rim. However, the Midwest experienced large temblors in the 19th century, and the U.S. Geological Survey believes that there is a significant probability one of magnitude 6.0 or greater will strike again in the region in the next half-century.

The prevailing theory is that a remnant of the Farallon plate that slid (subducted) under the North American plate millions of years ago off the North American west coast is the source of the earth’s stresses. (Another California connection: the plate is named after the Farallon Islands that sit outside the Golden Gate.)

Earthquake risk map from USGS.

Although the focus has been on California because of its population density and share of the nation’s economy, an earthquake in the Mississippi Valley is something to worry about:
Unique geology in the Midwest increases the shaking intensity of earthquakes because seismic energy moves through the dense bedrock at very high speeds, then becomes trapped in soft sediments filling river channels and valleys, [Missouri University scientist David] Rogers said.

Rogers and some of his graduate students have been modeling synthetic seismic events in the New Madrid region. Most of their scenarios are modeled after an 1895 earthquake with a magnitude of 6.4 that was centered in Charleston, Mo.

The preliminary results are sobering, said Rogers. Data indicates ground shaking would be magnified about 600 percent within the flood plain of the Missouri River, a development that would cause most of Missouri’s existing long-span bridges to collapse.

"You don't even need a really big earthquake to do significant damage in Missouri," Rogers says. "It could happen tomorrow."

Thursday, April 17, 2008

Bear's Nest

Let’s say that I have a $100,000 remaining balance on my mortgage and that I am in the fortunate position of being able and wanting to pay it off. However, a high penalty may make prepayment a poor financial decision, or prepayment may not even be allowed in the contract.

Imagine, however, that my lender is willing to borrow $100,000 from me for the same remaining term as the existing mortgage. The loan payments cancel, or more likely there’s a small monthly net payment from one party to the other because of the interest-rate difference when each loan was initiated. The new loan advance of $100,000 to my lender negates my mortgage economically, but from a legal standpoint there are $200,000 of loans outstanding.

The frightening derivative totals being bandied about are based on similar arrangements.
a derivative usually isn't cancelled when it is no longer wanted. Rather, a new, mirror-image derivative is created to offset the first one. Banks also balance offsetting exposure with different counterparties, reducing their overall risk. So out of that $455 trillion [of derivative contracts], net credit exposure is a mere $2.3 trillion.
As noted above, what distinguishes the current crisis from my simple mortgage-offset example is that borrowers and lenders use different counterparties to offset their positions. If my loan is from Bank A but I “cancel” it by making the loan to Bank B, my monthly net cash flow is zero or near-zero; however, I still have a $100,000 asset (loan to Bank B) and a $100,000 liability (loan from Bank A). Most of the time everyone performs, and the situation is about the same as if neither loan existed. However, if Bank B defaults, my net worth takes a $100,000 hit; worse, this event may trigger my own default and bankruptcy.

Even if we had the time to pore over balance sheets of companies we invest in or do business with, specific receivables from investment-grade companies (debt rating of triple-B or higher) are not normally disclosed in public financial statements. That’s what made the problem of Bear Stearns such a mare’s nest. All companies who held receivables from BSC would be hurt by its default, and some could have been pushed over the edge themselves, creating a snowball of bankruptcies.

We are awash in a sea of information, yet it never seems enough or the right kind. © 2008 Stephen Yuen

Vaillancourt Fountain on 4/16: visual jumble

Tuesday, April 15, 2008

No Marichals Here

50 years ago today the San Francisco Giants and the Los Angeles Dodgers introduced major league baseball to a West Coast crowd at Seals Stadium.
The starting lineups included five future Hall of Famers: Mays and Cepeda for the Giants, and Pee Wee Reese, Duke Snider and Don Drysdale for the Dodgers.
The two legendary New York teams moved to California just in time for a young Hawaiian kid to catch Giants (and 49ers) live broadcasts on his new Sony transistor radio. Lon Simmons’ gravelly voice became as distinctive and familiar as President Kennedy’s Boston accent.

Willie Mays, Mickey Mantle, Al Kaline, Stan Musial, Sandy Koufax, Maury Wills, Tom Seaver…the list of baseball greats from my childhood goes on and on. Perhaps radio forced us to use our imaginations to make these players seem larger than life or perhaps events and people are made bigger when we’re small, but whatever the reasons the Giants of yesteryear, unlike the Giants of today, were worthy of their name. © 2008 Stephen Yuen

It's Only April

Friday was a perfect day to take in a game at AT&T Park. Sitting in the bleachers above home plate, I enjoyed the view of the East Bay, ships meandering lazily on the blue waters, and the videos on the bright new scoreboard. The downside was that I had to watch the Giants play baseball.

The Giants don’t have the worst record in the major leagues, but on Friday they looked like the worst team. There’s no shame in losing to clubs with more talent like the St. Louis Cardinals, but there are no excuses for making little-league mistakes that kill whatever chances you do have. Lumbering veterans were thrown out twice trying to score from second base on a single to the outfield; the runners were so slow that the crowd didn’t even boo the umpire’s decision. And a critical infield error allowed the Cardinals to score three times when the Giants had a 2-1 lead.

His supporting cast was so poor that Barry Zito, the most overpaid pitcher in baseball ($18 million per year for seven years, currently with a 4.50 earned run average and 0-3 record), looked good in comparison, and most commentators didn't blame him for the loss. After the Cardinals built their lead to 5-2, fans started to leave. We stayed to the end—the final score was 8-2—just in case the Giants mounted a highly improbable comeback. Hey, you never know, and as for the season, it’s only April. © 2008 Stephen Yuen

Monday, April 14, 2008

These Words Have Legs

Barack Obama has taken some flak for his remarks about rural America:
You go into these small towns in Pennsylvania and, like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing’s replaced them….And they fell through the Clinton administration, and the Bush administration, and each successive administration has said that somehow these communities are gonna regenerate and they have not…And it’s not surprising then they get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or antitrade sentiment as a way to explain their frustrations.
I think he had the best of intentions at the outset. In the fashion of “if that happened to me I’d feel the same way as you”, he meant to show empathy. But there’s a fine line between empathy and pity, and people don’t like to be pitied and he should have stopped right there (I’m making a generalization too, but I’m not running for office).

He dug himself deeper when he attributed bitterness--an emotion that mature adults try to rise above--and political beliefs--guns, religion, anti-immigration--to small-towners’ financial misfortunes. Not only did he generalize about their feelings, Senator Obama implied that their political beliefs were irrational because they originated from anger and bitterness. (I’ll refrain from observations about how the emotional state-of-mind of some Democrats influences their decisions---too easy.)

Words damage the speaker when they confirm our worst suspicions about him. A southern Republican’s use of a racial term, even a mild one, means he’s a racist if not a Klansman. And a liberal Ivy Leaguer can never betray his belief that he’s smarter---and it’s only a short hop to better---than everyone. This story has legs.

An historical note: over 60 years ago Eleanor Roosevelt espoused similar sentiments about another downtrodden group:
If I were a Negro today, I think I would have moments of great bitterness. It would be hard for me to sustain my faith in democracy and to build up a sense of goodwill toward men of other races.

© 2008 Stephen Yuen

Sunday, April 13, 2008

Two Things To Look Forward To

Bernard Yuen (his dad and my dad are cousins) made the news last month when a New York couple returned the high school ring he had lost 33 years ago. Bernard has always been reserved, but he couldn't contain his happiness about the find.

Good for Bernard, and good for the Sheleys for taking the time to search him out.

Witnessing the serendipitous event and the kindness of strangers are two things that make me want to get up in the morning. Just maybe Hobbes and Malthus were wrong about the human condition.

Friday, April 11, 2008

He's Grown in Office

The big local story was not a big national story because Mayor Gavin Newsom chose public safety over playing to the cameras. He moved Wednesday’s Olympic torch run from the crowded Embarcadero to Van Ness, which is two miles away. Many were disappointed—some because they didn’t get to see the torch and some because they were unable to preen their causes or raise havoc before an international audience. Kudos to the mayor. He’s grown in office. © 2008 Stephen Yuen

The original and revised torch route (obtained from the Chronicle).

[Addendum: See this excellent man-on-the-street article with photos.]

Thursday, April 10, 2008

Rep. Jackie Speier

If ever there was a sure thing, it was Tuesday’s election of Jackie Speier to Congress as our district’s Representative. Ms. Speier first came to public attention when her boss, Congressman Leo Ryan, was assassinated in 1978 on an airstrip in Guyana. Shot five times herself and with help more than 20 hours away, it was a miracle that she survived. Shortly thereafter over 900 people died in the murder-suicide that became known as the Jonestown massacre.

Ms. Speier served in the State Assembly and State Senate for two decades and recently co-authored the book, This Is Not The Life I Ordered, which has garnered favorable reviews. She was the only politician whose name most of us recognized on the ballot, and she pulled in over 75% of the votes cast. She’s a shoo-in to win a two-year term in November, and it wouldn’t be a surprise if she holds onto the seat nearly as long--27 years--as the late Tom Lantos . Think of all the time we’ll save by not having to pay attention to local politics.

[Update - 12:25 PM PDT: When one holds a safe seat there's no need to moderate one's comments:
Newly elected Democratic Rep. Jackie Speier of Hillsborough was sworn into Congress this morning and delivered a fiery speech criticizing President Bush's Iraq policy that led some Republicans to boo and walk out of the House chamber.]
© 2008 Stephen Yuen

Tuesday, April 08, 2008

That Time of Year

I’ve been pre-occupied--as I am every year--with our tax return. We have a complicated tax profile that is way out of proportion to our income bracket. If any of the political candidates had a credible program to simplify the tax code, I would support that candidate in a heartbeat even if it meant that my bill would be, say, 10% higher, and in our case we’re talking about an increase of thousands of dollars.

The value of tax simplification lies in the dozens if not hundreds of man-hours that a middle-class family like ours wastes in record-keeping, calculations, and researching stuff that we don’t work with every day. And I’m not even including the difficulty of building a financial plan, which involves modeling future scenarios under tax rules that could drastically change next year (and not in the direction of simplification).

For 2007 we’re adding a few pages to our return because of DPAD, which sounds like a videogame accessory. The Domestic Production Activities Deduction encourages domestic manufacturing activities, and it has some value to us because we have a small investment in a manufacturing business with export sales. So I’ve had to read up on IRC Section 199. Make no mistake, I’m happy to get DPAD, but I’d also be happy to give it up if everyone else gave up something too. © 2008 Stephen Yuen

Friday, April 04, 2008

Keeping Tabs

One advantage of owning a working old car is that the cost of operation can be quite low. Monthly lease or loan payments are a distant memory, and, unless the car is a collectible, there’s no need to purchase collision insurance. Also, in California the cost of a smog check need not be incurred if the car is over 32 years old. Yes, neighbor, while you're driving to work in your very nice luxury SUV, I'll be collecting my early retirement check.

But today I had to put my chortle on hold. The plastic sticker that denotes the month of registration (the one for the year is replaced annually, of course) had become illegible after decades of exposure to sun and rain. A Foster City patrol officer finally noticed and wrote a $25 ticket for “tabs on vehicle”. In most other cities the police would have more pressing concerns, but that’s the price one pays for living in a town where the year’s big police story is about how they pulled a drunk driver from the lagoon © 2008 Stephen Yuen

I suppose the tab on the left is looking a bit worn.

© 2008 Stephen Yuen