As an informal spectator of the finance industry, I had whittled things down enough to make myself happy.  I blamed two fundamental causes for all of this:

1. Artificially low interest rates set by the FED.  More people purchased homes than had the means to.
2. Rating agencies over-rating the hugely risky financial instruments employed by the big investment banks.  Overconfidence led to risk leaking into places it didn’t belong — insurance policies, pensions and the like.

Others site greed, speculation or lack of regulation.  Some blame capitalism itself.  I concede that there are many ways to skin this cat.  One can probably remove only a couple of the many factors cited by just about everyone and successfully avoid a spectacle of this magnitude.  But I like simplicity and I like freedom.  I believe in capitalism.

Recently I came across a post on the Freakonomics blog that teases with the intro “Too Big to Fail” wasn’t the problem.  OK…  Happily, I clicked through to Russell Roberts’ excellent article entitled Gambling with Other People’s Money: How Perverted Incentives Caused the Financial Crisis.  This is, to date, the best article I have read on the financial crisis and I have adjusted my outlook accordingly.

The executive summary gets to the point:

“In this paper, I argue that public-policy decisions have perverted the incentives that naturally create stability in financial markets and the market for housing. Over the last three decades, government policy has coddled creditors, reducing the risk they face from financing bad investments. Not surprisingly, this encouraged risky investments financed by borrowed money. The increasing use of debt mixed with housing policy, monetary policy, and tax policy crippled the housing market and the financial sector. Wall Street is not blameless in this debacle. It lobbied for the policy decisions that created the mess.”

Now I’m paying attention.  The summary continues:

“In the United States we like to believe we are a capitalist society based on individual responsibility. But we are what we do. Not what we say we are. Not what we wish to be. But what we do. And what we do in the United States is make it easy to gamble with other people’s money—particularly borrowed money—by making sure that almost everybody who makes bad loans gets his money back anyway. The financial crisis of 2008 was a natural result of these perverse incentives. We must return to the natural incentives of profit and loss if we want to prevent future crises.”

Preach it, brother!  The well-cited piece continues to explore the housing market, sub-prime lending, Fannie, Freddie and or course our friends, the investment banks.  The meat of the paper deals with how exactly Wall Street was able to wind up 30-, 40, 50- and even 60-1 leverage and not even blink an eye — by using your money.  Roberts says it best:

“If you don’t know who the sucker is at the table, it’s probably you.  We are the suckers.  And most of us didn’t even know we were sitting at the table.”

Zing.  He provides numerous accounts of government bailouts which made creditors whole (or nearly whole) but wiped out equity holders.  In the sub-prime mortgage debacle, the creditors – big Wall Street banks, were mostly made whole.  The equity holders (most consumers and, later on, the taxpayer) got the very large bill.  With only a cursory look at the relationship between the government and big business during the last two decades, it’s clear that big investment banks and their cronies have very little to worry about.  This freedom to play with our money no matter the outcome was the prime cause of the financial crisis.  And we’re perpetuated the problem by doing exactly what they hoped we’d do — bail them out.

What about the executives?  Surely they have a stake at the table.  Not exactly…

“The worst that could happen to [Jimmy] Cayne in the collapse of Bear Stearns, his downside risk, was a stock wipeout, which would leave him with a mere half a billion dollars gained from his prudent selling of shares of Bear Stearns and the judicious investment of the cash part of his compensation.  Not surprisingly, Cayne didn’t put all his eggs in one basket. He left himself a healthy nest egg outside of Bear Stearns.” (Emphasis mine)

“Richard Fuld did the same thing. He lost a billion dollars of paper wealth, but he retained over $500 million, the value of the Lehman stock he sold between 2003 and 2008. Like Cayne, he surely would have preferred to be worth $1.5 billion instead of a mere half a billion, but his downside risk was still small.”

So while there is risk inherent in the system, it’s not enough to stave off bad business when there is no possibility of bankruptcy.

The rating agencies had their hand in the till, too.  As the Wall Street firms bundled up mortgages and sold them off as CDOs, various rating agencies were engaged to put a risk value on these securities.  In order to make things look more attractive, these mortgage-backed securities are divided up into tranches (French for “slices”) and rated separately.  The least risky slices — the senior tranches — command a AAA rating and so on down the line.  One might think that an investment bank paying for higher ratings would be front page news, but alas, not so much.

“The problem with these explanations is that most investors knew that the issuers were paying the agencies. They also knew that these assets were extremely complex and that the agencies may have lacked the expertise needed to analyze the assets correctly. They took the ratings with many grains of salt. The commercial banks bought the assets, not because they trusted the agencies, but because they could leverage them under the new regulations. The investment banks bought the assets because they were highly profitable and easy to borrow against.

“The lower capital requirements for AAA- and AA-rated securities helped fuel the demand for sub-prime mortgage-backed securities and helped create the crisis. But just because your car can go 120 miles per hour doesn’t mean you’ll choose to go that fast. Why would a firm want to take advantage of this deregulation and put itself at risk of bankruptcy? And how would a firm be able to take advantage of this looser capital requirement? Why would anyone lend them the money?

There are other consequences, too.  The money that drove the housing craze in the 1990s and 2000s necessarily kept funding away from other areas of the economy:

“…And a few trillion dollars flowed from the Chinese and my father and other investors into new houses and bigger houses because the Fannie and Freddie conduit offered such an attractive mix of risk and reward. That flow of money was terribly costly: channeling precious capital into housing meant it didn’t flow into other areas that were more valuable but that were artificially made less attractive. So we got more and bigger houses and less of something else—less money going to fund new medical devices, cars that get better gas mileage, more creative entertainment, or something else creative people could have done with more capital.”

Russel concludes that the system is far too complex to regulate in any meaningful way.  Wall Street is far from unregulated today and still we found ourselves in this mess.  He sums it up thusly:

“Instead of trying to improve a system we only imperfectly understand, we would have better luck letting the natural restraints of capitalism reemerge. Rather than trying to turn this dial or push that lever the optimal amount (holding everything else constant, somehow), we should let natural feedback loops reemerge that encourage prudence as well as risk taking.”

I’ve given only cursory service to the article here so I really recommend reading it in full.  If the original publication is a bit hard to focus on, try the printable version or the PDF.

Around the same time, I had switched to a Mac for my primary home computer. I didn’t care for iPhoto *at all* and there was no OS X version of Picasa (there now is, and I have yet to try it). I started looking around for alternatives and came across the professional digital photography workflow applications like Apple Aperture and Adobe Lightroom. These applications combine rich cataloguing and metadata features with semi-advanced image manipulation capabilities. Both offer free trials so I grabbed a copy of Aperture and gave it a whirl.

Aperture’s code is designed to use the GPU to do much of its work. This is great when you have a lot of GPU at your disposal. On a Mac mini, it’s a world of pain. Apart from the slow editing, I was dismayed at how sluggish it felt overall compared to Picasa. My mini is a Core Duo 1.66 with 2G of RAM and most of OS X is quite snappy. To Apple’s credit, they do not recommend using Pro apps on machines without proper discrete video adapters. Be that as it may, I pushed forward and wound up purchasing Aperture, never having tried Lightroom.

I’d never gotten very familiar with Photoshop and how to do proper digital photography post-processing. When I acquired Aperture, I was more or less starting with carte blanche. I learned the basic import-and-review workflow first. I didn’t touch most of the adjustments beyond the basic automatic correction. Over time, though, I started adding tools to my repertoire. First white balance. Then Highlights/Shadows. Then Exposure. Then some of the color adjustments like Vibrancy. I still have a lot to learn but I find that whereas I used to stay displeased with a mediocre shot, I now have the ability to turn all but the worst ones into pleasing results.

Last month I was vacationing in Florida. We took a 5-night cruise and spent several extra days afterward with family. I had around 500 or so RAW images I needed to go through, post to the web and send to friends. I’d left my Mac at home (it’s small but it’s still a desktop) so all I had was my work laptop running Fedora Linux. Google ships a version of Picasa for Linux so I figured I’d give my old friend a try.

I brought in the RAW shots and started to go through them. Picasa is definitely FAST — a breath of fresh air when you’re used to Aperture on sub-par hardware. But as I began to work on individual images, I realized how severely limited Picasa is. Perhaps it’s the RAW converter, perhaps it’s the tools, but I could not get images I was happy with. Picasa’s Fill Light is weak in comparison to proper level and exposure adjustments. The white balance is decent but the highlight/shadow tools work the opposite of how Aperture’s do. In Aperture, the Shadows slider starts at 0 and as you increase it, the shadows brighten up. Very useful for those situations that needed a fill flash. Picasa’s go the opposite direction!

All this is to say that despite the slowness, I am 100% pleased with Aperture. I’ll be ordering a new MacBook Pro soon so hopefully slow photo editing will be a thing of the past for me.

Now most teens are pinheads in some ways. But here the blame falls primarily on the parents of the girl, who obviously have little control over her or even over Britney Spears. Look at the way she behaves.

I wonder, then, what Mr. O’Reilly thinks about 17-year-old Bristol Palin’s bun in the oven? Her mother, the Republican nominee for Vice President of the United States, ostensibly does everything “right” — she’s pro family, pro-life and a strong supporter of abstinence-only education in our schools.

Maybe permissive parenting isn’t always to blame. Maybe teaching abstinence as the only choice fails to educate human teens who will eventually get into situations that are hard to resist.

I will give credit where credit is due. Bristol is keeping her child and while I may disagree with Sarah Palin’s socially conservative agenda, at least she’s not a hypocrite.

At this point we were unsure what to think of all this, but one thing was for sure: AirTran is either the most efficient, cutting edge airline or among the stupidest.

Captain Bill made incredible time to Atlanta and I have never seen such aggressive taxiing. Unfortunately, Atlanta is a busy airport and elation changed to distress as we waited over ten minutes on the tarmac for our gate. I should mention that several of the passengers, from both Raleigh and Richmond, had outbound connections and it was after 9:00pm.

Of course the flight attendants had no information about connecting gates (how is this possible?) so I hurried off the plane to check with the Atlanta CSR about my outbound connection. “Ft. Lauderdale is gone”, he said. Well shit.

Just to be sure, I walked over to the gate listed on my boarding pass, which turned out to be the wrong one. I rushed over to the correct one to find the plane was still there but the jet way had pulled back (about 3 feet). I explained our situation to the gate agent who began making calls to see about holding the flight. By that point, other FLL-bound passengers had showed up and were frantic to make their connection. 9:09pm is the last AirTran flight out before morning!

We all stood there at the gate for a further fifteen minutes while the Ft. Lauderdale flight sat at the gate and we were told that FAA regulations prohibited them from pushing the jet way back out to let us on. Frustrations set in for all of us, especially the Richmond folks who had no reason at all to be late, let alone miss connections. The AirTran CSR took the typical abuse from us and we stood there while our plane departed without us.

So the way things played out, this bold move proved a stupid one. AirTran put us up in the Crowne Plaza, got us on the first flight out and compensated us with a round-trip voucher. Moral of the story: when you don’t have the authority (or the foresight?) to hold a few connections, don’t re-route perfectly good flights!

Within the first hour of use (not including all the OS upgrades), I was using all up and running with a Bluetooth wireless keyboard and Mighty Mouse. I also had my Nokia 6682’s contacts synchronized with Address Book via Bluetooth. iTunes was playing my music library, Front Row was playing DVD’s (from across the room with the Apple Remote) and I was surfing the web with Firefox.

The out-of-the-box experience is first rate. Nothing else out there compares. Windows has a lot of good hardware support but as of Windows XP MCE 2005, it still didn’t play DVD’s without a third-party coded installed. And Bluetooth? Good luck!

There are things I haven’t adjusted to yet. Avidly using, supporting and administering every version of Windows from 3.0 forms some pretty strong habits.

• The mouse acceleration curves are just wrong and you can’t adjust them. Things like MouseFix are out there, but leaving this parameter off of the Mouse control panel widget is just inexcusable.
• The side buttons on the Mighty Mouse are so hard to press, they might as well not exist. Other than that, the thing is fantastic.
• Checkboxes and buttons don’t get focus. For a keyboad-centric user like myself, this is a big deal. The typical username/login/remember combination of just about every website now requires me to go touch the mouse. Suck. This isn’t in every browser, though. Safari and Firefox behave this way, but Camino (which uses what looks like the native checkbox widget) allows focus. Go figure.
• The keyboard is nice, but dammit, can’t they make an ergonomic one?

If anyone has advice for these gripes, I’m all ears.

Part of the reason for this is situational. While it’s easy to lump all Washington politicians together, there are some pretty important philosophical distinctions at work. Differences in core economic and social thinking prevent lawmakers from finding a suitable mutual starting point. The first step to a cure is admitting there’s a problem, and we’ve beat that one to death. We know it’s broken, we know it has to be fixed, but let’s define what we want before we define how we’re going to get it.

So what do we want? Is health care too expensive? Too unavailable? Are not enough Americans covered? How many should be covered? Are we entitled to have routine checkups paid for out of public coffers? Are poor people entitled to the same care as rich people? Do we have a right to free health care? If not, should it be tax deductible? Why should Joe get a great PPO for he and his family while Fred gets an entry-level HMO for himself and the option to pay out of pocket for coverage for his wife and two children? Should gay couples in committed relationships have family coverage made available to them just like heterosexual couples? How about hetero life partners or cohabitant unmarried parents?

We can’t even begin to work on a solution until these questions are well on their way to being answered. And here is where the compromise will have to come in. There’s a damn good chance that we’ll screw the whole thing up again just trying to arrive in the middle. But we need to define the problem first.

I generally consider myself a Libertarian so I’d love nothing more than to see the free market at work here. The health care industry is far too regulated to say that we’ve given this an honest try. We’ve protected big pharma from cross-border competition to the detriment of just about everyone, and the FDA prevents common, safe drugs from being dispensed without a costly doctor visit in which the patient may or may not even see an MD.

But the Liberal in me tends to think that in this day and age there ought to be some way of taking care of the citizenry to the extent that a doctor visit is neither a complete hassle or a huge expense. But the Liberal in me isn’t Liberal enough to admit that every American has the right to free health care, no questions asked. Sure we have the unalienable right to life, liberty and the pursuit of happiness, but when did the land of opportunity become the land of guarantees or the land of handouts? At what point does entitlement for the truly needy turn into redistribution of wealth on an unfair scale? Is redistribution of wealth fair because those who cannot should be entitled to the fruits of those who can? At what point does this become Communism?

But I digress. I’d love to hear some opinions on this so comment away!

At first glance, this looks completely reasonable especially if you consider that each corresponding environment declares a container-level variable whose value is one of the directory names (Development/Integration=dev, UAT/Test=test, etc.). Developers get to configure each environment and at deployment time the server simply knows how to behave based on the preset environment variable. Sounds OK, right?

NO! It isn’t OK. It is horrible and you should never do it. Packaging configuration in with code leaves the System Administrator powerless to administer the system. See the problem? No? Here are more reasons:

• Configuration changes require a redeployment of the application (possibly even repackaging)
• Developers may not (indeed, should not) be privy to certain config information (passwords, let’s say) for production environments
• Test environments of the same “level” can’t have differing configuration unless you jump through hoops like branching source code
• Turning a dev/test/stage box into a production one (or vice versa) with one small change is just scary
• A developer can change production and nobody will notice until the code gets to production!
• A developer can change production and nobody will notice until the code gets to production!
• A DEVELOPER CAN CHANGE PRODUCTION AND NOBODY WILL NOTICE UNTIL THE CODE GETS TO PRODUCTION!

Get it?

The way to manage configuration is to provide a nicely-commented prototype config file (that can’t/won’t be read) with your application and leave the runtime configuration in a file outside the deployed application path. There are many ways to make such files available to your program regardless of whether you’re using a container or not. You can:

• Add a conf directory to the runtime classpath
• Put the config files in a known directory such as common/classes on Tomcat
• Jar them up and name them according to environment, if you just absolutely must not let the admins touch them.

Any of these tactics work. As long as you aren’t marrying code and configuration, you can’t miss.

So far I’m pretty pleased. The out-of-the box suite of applications is more than adequite for the average user, and it’s Linux, so the power user will never be left wanting. The only stumbling I’ve done is on multimedia codecs. So far I have yet to get anything resembling Internet-type audio/video to play, but I’m not sure I’ve done everything right. Flash 9 beta is installed so all my favorite rich-clienty sites work well (Google Finance, YouTube, etc). No MP3 or AVI joy yet though.

I’ll wrap this up and hope it posts, with the thought that I’ll do a more in-depth review soon.

Marissa decided the house was way too quiet without our furry friend around. Even the cats were looking at each other, waiting for someone to challenge their reign of the house! That’s when we found our new friend in the online classifieds. A family in Port Charlotte, FL (about 2.5 hours drive) had been surprised with a litter of nine purebred rottie puppies! They had only one left — the one they’d considered keeping as their own.

We drove that day to look at the little guy and fell in love. He’s just over eight weeks old and his name is Guinness.

View the Photo Album

Last week our 9-year-old rottweiler Bodi was diagnosed with cancer. He had two large tumors and we were forced to make the choice that no pet owner ever wants to make. Bodi did not come home with us.

Bodi was at Marissa’s side almost every waking moment from the day he came home with her in college. He protected the house, his owners and his dog pals. He always knew what was going on and would not tolerate violence. He’d step in to break up a fight regardless of whether it was human or canine.

We will miss him dearly.