Friday After Hours

On Friday evening my colleague and I took a break from working on a deal and headed to Schroeder’s Café. The negotiator on the other side was in Australia and he had long since started on his weekend.

At Schroeder’s one can usually find plenty of seats---the spacious beer hall is tricked out in 100-year-old paneling and murals and doesn’t appeal to younger sensibilities. However, I had forgotten that Oktoberfest brings out the urge in everyone to party, and Schroeder’s was standing-room only. The polka band had started, and we had to shout to make ourselves heard over the din.

I was on my second beer when the text message, urgently requesting more information, came from Australia. That guy sure was dedicated. I booted up the laptop and picked out some numbers, adding them three times because I didn’t trust myself (no, using a simple summation function wouldn’t have done the trick, thanks for asking).

I shouted the amount to my fellow imbiber, and he transcribed it into a short e-mail, after rounding to the nearest $ million. If you want precision, call during weekday hours.

Poll Axed

Screenshot from RCP this morning.

Many Republicans haven’t totally lost hope. The polls are wrong, McCain adherents say (and pray), because the questions are biased toward eliciting a certain answer, because those polled don’t want to be thought of as racists, because too much weight is given to Democrats in setting up the sample, because conservatives hang up or don’t answer the phone, and any number of other reasons that Senator McCain can still win.

Where there’s hope there’s life. But why would pollsters discredit their own industry and their own brand? Surely the polling companies are aware of the possible flaws in their methods. A McCain win on November 4th would put a lot of them out of business, for who would trust their product?

Well, I suppose that if the financial system is experiencing a crisis not seen since the Thirties, a Forties-like upset of “Dewey Wins” proportions wouldn’t be a total shock. But I often hark back to a rule of thumb: expecting businessmen to act against their own best interest is a loser’s game; I don’t see why that wouldn’t be true here. The Chicago Tribune can start printing its headline now.

Sorrowful Journey

To the Hawaiian diaspora, trips to our birthplace grow more infrequent as lives take root thousands of miles away. In later years more journeys originate due to family obligations, often sorrowful ones.

Less than two weeks before Election Day, Barack Obama has taken off two days from his campaign for an urgent visit to his ailing grandmother in Hawaii. Madelyn Dunham (“Toot”) was a powerful influence in the life of our likely future President. He wrote about Toot in his autobiography "Dreams from my Father", and his obvious admiration for the example she set gives hope that an Obama Administration would be more pragmatic than ideological, more problem-solving than visionary.

She had proved to be a trailblazer of sorts, the first woman vice-president of a local bank [snip].

Not that Toot had anticipated her success. Without a college education, she had started out as a secretary to help defray the costs of my unexpected birth. But she had a quick mind and sound judgment and the capacity for sustained work. Slowly she had risen, playing by the rules, until she reached the threshold where competence didn’t suffice. There she would stay for twenty years, with scarcely a vacation, watching as her male counterparts kept moving up the corporate ladder, playing a bit loose with information passed on between the ninth hole and the ride to the clubhouse, becoming wealthy men.

More than once, my mother would tell Toot that the bank shouldn’t get away with such blatant sexism. But Toot would just pooh-pooh my mother’s remarks, saying that everybody could find a reason to complain about something. Toot didn’t complain. Every morning, she woke up at five A.M. and changed from the frowsy muu-muus she wore around the apartment into a tailored suit and high-heeled pumps. Her face powdered, her hips girdled, her thinning hair bolstered, she would board the six-thirty bus to arrive at her downtown office before anyone else. From time to time, she would admit a grudging pride in her work and took pleasure in telling us the inside story behind the local financial news. When I got older, though, she would confide in me that she had never stopped dreaming of a house with a white picket fence, days spent baking or playing bridge or volunteering at the local library. I was surprised by this admission, for she rarely mentioned hopes or regrets. It may or may not have been true that she would have preferred the alternative history she imagined for herself, but I came to understand that her career spanned a time when the work of a wife outside the home was nothing to brag about, for her or for Gramps—that it represented only lost years, broken promises. What Toot believed kept her going were the needs of her grandchildren and the stoicism of her ancestors.

On the street where he lived. (KITV video)

Tankless Effort

Noritz Heater

The tankless water heater that we installed two weeks ago was expensive--about three times the cost of the conventional 50-gallon heater that it replaced---but so far there's been no buyer's remorse.

Because the device heats up water only as it's demanded, the savings in natural gas usage will be substantial; there's no need to maintain a 50-gallon tank at an elevated temperature.

But it will take over ten years of lower gas bills to make back the cost differential, so economics is not the sole reason for the purchase.

Reduced natural gas emissions will reduce our carbon footprint. Whether or not one believes that global warming is caused by man ("anthropogenic"), whether it is a "bad" thing that should be reversed at considerable expense, or even whether it exists, is open to debate.

Space Freed Up

But AGW advocates could be right(!). At the margin we'll do our part not to make it worse.

The system we bought is powerful enough so that we can take a bath and run the washing machine and dishwasher without running out of hot water. Dan the plumber also said that we can take a shower as long as we want (although that kind of ran counter to the green sales pitch).

Note that a tankless system doesn't fix the problem of waiting for heated water to get to the outlet. That's why we got a recirculation pump.

And look at all the additional storage space we've gained by moving the heater outside.

"Something's Glowing in Your Pants"

....uttered by the youngster moments after I pocketed my iPhone. These words would have been alarming thirty years ago---today, not so much.

Capital Injections

The patient has lost a lot of blood, but he’s showing signs of life: the doctor has an unlimited supply of plasma. The WSJ reports [emphasis added]

The government will purchase equity shares in banks to help institutions unfreeze lending and spur economic growth. Funds for the purchases, which may amount to $250 billion, will come from the recently passed $700 billion bank rescue bill. [snip]

The Federal Deposit Insurance Corp. will temporarily guarantee most new debt issued by insured banks. [President Bush] said that will make it easier for banks to borrow money, which can then be lent to consumers. The FDIC also will "immediately and temporarily" expand its insurance to cover every dollar in all noninterest-bearing transaction accounts, which are widely used by small businesses to cover day-to-day operations.

The Dow Jones Industrial Average was up 11% yesterday and another 1.5% as of this writing (0710 PDT). It will be years before a full recovery, but the patient appears to be out of danger.

Doing Our Bit

Recirculation Pump

In our household waiting for hot water wastes thousands of gallons of water each year, so we installed a hot water recirculation pump. Although the current low cost of clean water didn’t justify the purchase, we decided to do our bit for the environment, not to mention stimulate the sagging economy, by investing about $700 in the pump, including installation. It was placed beneath the kitchen sink, the faucet that is farthest from the water heater.

Pressing the hard-wired button or activating the wireless remote control causes the pump to draw water from the hot water line and force it back through the cold. The pump shuts off when the water turns warm. We still have to wait about the same amount of time—about 90 seconds--but at least clean water isn’t going down the drain. Perhaps it’s so obvious that it doesn’t deserve mention, but because hot water loops throughout the house, the recirculation pump saves water at each hot water outlet, not just at the kitchen sink.

My deliberate strategy of procrastinating on home improvement appears to be paying off, as the gadgets to improve our quality of life and/or help the environment are getting cheaper and better each year.

California Bad-Dreamin'

Despite the aerospace contraction in the 1990’s and the tech bust in 2000-2001, Californians have managed to keep riding high. Our housing prices had been (a lot) more expensive than in most other states, and many homeowners were using their houses as piggy banks, borrowing more and more to finance their lifestyles.

Those who have climbed the highest have the farthest to fall. The recession will be worse in California due to our high cost of living, debt burden, government deficits that started years before the current difficulties, and labor costs that make us uncompetitive with other states, not to mention the rest of the world. One silver lining is that we’ll probably hit bottom---and start to recover---before the rest of the country.

Some economists also believe the state's housing market may hit bottom before the rest of the nation's, and could start an upward tick earlier as well. The loss of construction and finance jobs has slowed. In San Diego, one of the first housing markets to falter, home prices are roughly in line with the city's incomes and rental rates. "Housing is becoming affordable again," said Steve Cochrane, an economist at Moody's Economy.com.

Another silver lining may be that our kids will learn that the good life shouldn’t be taken for granted, that there’s virtue in saving for a rainy day, and that life doesn’t necessarily get better every year. At the school of hard knocks the tuition is expensive. © 2008 Stephen Yuen

Dog Day Afternoon

Man's Best Friend

I need an excuse to use this photo from Sunday's (next post) Blessing of the Animals.

Here's an old one.

Q. Have you heard about the dyslexic agnostic insomniac?

A. He stayed up all night wondering if there was a dog.

Sunday in the Park

Father David

Fortunately--or was it Providence?--the wind and rain of the previous day had abated. We cheerfully set up the tables and chairs at the Foster City Dog Park on Sunday and awaited our customers. About 30 arrived, some on leashes, another in a tub, and others simply were carried by their two-legged masters. All present were blessed by the priests in our church’s annual celebration of the Feast of St. Francis.

In earliest Sunday School children are taught that St. Francis of Assisi loved all of God’s creatures. Francis was reputed to have a special connection to animals, who loved him back.

Father Jay

The children sold dog biscuits to support Project Bay Cat, which captures and neuters stray cats and tries to place them in a home. The number of feral cats has been increasing. Cats who have been abandoned or who have escaped from their masters feed on the birds of the Bay, and cat and bird lovers are united in their effort to address the growing cat population.

A lady from Project Bay Cat joined us, and we collected over $100 in donations to the cause. Making dog biscuits to help the cats and indirectly help the birds—somewhere in heaven St. Francis is smiling.

Into the Woods

The first Act of Stephen Sondheim’s musical, “Into the Woods”, begins in a lighthearted fashion, as familiar fairy tale icons – Rapunzel, Red Riding Hood, Jack (of beanstalk fame), and Cinderella – mingle with other characters and get in the way of each others quests. Act I ends more or less happily as everyone finds what they’re looking for: true love, riches, or children.

In Act II reality sets in. There is disillusionment, disappointment, and death. Some characters react with anger, some seek revenge, and some leave for what they hope will be a better life. Those who are left accept their lot, and the end of the play, with its finale of dance and song, is unexpectedly uplifting.

I entered the theater with low expectations. The lyrics are as clever as Porter’s, but Sondheim tunes are not as hummable. (I even dozed off in Act I.) But as the characters dealt with adversity in Act II, the primary colors of the various fairy tales turned subtle and interesting. I looked at the youngster. He was captivated.

By the standards of community theater, Broadway by the Bay put on an excellent production at the San Mateo Performing Arts Center. None of the voices, whether speaking or singing, or the instrument soloists in the orchestra, caused me to wince. The actors didn’t get in the way of the production. We’ll be back later in the season.

Gone Loco

The Dow is down 500 points this morning, and I'm surveying the train wreck that is my retirement portfolio. Speaking of which, Caltrain has been delayed nearly an hour because a train hit a big rig in Burlingame. Perfect. (Fortunately, there were no serious injuries.) And I had such a good weekend, too.

Yet Another Analogy to the Financial Crisis

Some Chinese dairy producers adulterated their milk with melamine, a chemical used in the manufacture of plastics and fertilizer. When infants got sick and a few died, the malfeasance was uncovered. But the contamination was not limited to infant formula, and Chinese babies weren’t the only ones at risk. Any product that contains Chinese milk, such as White Rabbit candy shipped to the U.S., has been recalled.

We don’t know what other food products from China are unsafe, and consumers are playing it safe by switching to milk substitutes such as soy, or drinking juice instead. Fear and the lack of trust has frozen one tiny sector of the world food market.

Just imagine if the problem had been corn and all the products---flour, beef, sweeteners, and biofuel to name but a few—that corn goes into. In the back of everyone’s mind would be the question, can I trust this product? Will it kill me?

The problem with subprime mortgages has spread far beyond those who owned them. If you have a large receivable from an institution that invested in these instruments, you might not get paid, putting your own financial health at risk. Or if you owed money to that institution and were counting on it to roll over your debt, it might demand payment instead. Unfreezing the credit markets is fundamentally a matter of trust. It will take a long time to be restored. © 2008 Stephen Yuen