Jon Reid

Boop

2026-01-02T19:51:50Z

Consider this journal booped.

crossfire @ 2016-12-05T12:01:00

2016-12-05T20:01:33Z

I'll just leave this here:

In which I channel my Inner CJ Cregg

2016-12-05T19:43:03Z

Outraged? I'm barely surprised.

This is a country where black people are regularly killed without provocation or recourse by white police officers, and where "driving while black" is a serious demonstrable problem. This is a country where an entire city can have its water supply poisoned by rotting infrastructure and have the problem go virtually unreported in the press and completely unsolved for years because the majority of the people living there are black. This is a country whose entire agricultural industry is heavily subsidized by the presence of illegal migrant workers who make nowhere near a living wage, and the one time a state forbade the use of those workers the crops literally rotted on the vines because the farmers couldn't afford to pay the replacement workers (many of whom were white) the wages they demanded. This is a country where over 90% of the wealth and property are in the hands of white people.

But Brutus is an honorable man.

Last November we elected to the highest office in the land a man who has zero experience in public office, who faces multiple accusations of sexual harassment and possibly even rape, and who campaigned on a platform of racism and isolationism without a single detailed plan of what he'll actually do about anything, and he won in big margins in both white men and women because apparently white people believe that they're no longer getting a big enough slice of the pie. Because they feel ~left out~.

Am I outraged? No. That is America, our home sweet home.

(Inspired by https://youtu.be/cHGN-1Os31U)

CONCEPT

2016-11-17T18:04:26Z

me, in the year 2030, getting ready for a fancy dinner party commemorating the opening of the Elizabeth Warren Presidential Library, standing in front of my antique gold vanity mirror, wearing a John Phillips tuxedo with diamond cufflinks, taking a sip of champagne: What did you learn at school today, honey? :-)

my future grandniece/grandnephew, school homework spread out on my four-poster king-sized bed with burgundy brushed linen sheets: Not much. In history we learned about the 2016 election, do you remember any of that?

me: [drops my crystal champagne flute]

crossfire @ 2015-10-11T22:26:00

2015-10-12T04:26:56Z

The new Casa Chaos is coming together nicely.

We have a lot of unpacking done, but still have a lot more to do. Most notably all of my books still need to be unpacked. In this house I actually have a legit place for many of them: we had book shelves built in to the alcove in the great room. They should soak up the majority of my books. I am excite.

I've really been enjoying my grill too. For the last four years I haven't been allowed to have a grill (it's against the law to have gas or charcoal grills in apartments in much of California) and now I can. This evening I grilled up zucchini and asparagus (brushed with ghee and chopped garlic) and ginormous steelhead trout fillets from Costco. Those I put a nice barbecue-ish rub on (brown sugar, black pepper, coriander, garlic powder and onion powder) and cooked over pecan. They were very nice.

A friend/coworker was in a terrible motorcycle accident a couple of weeks ago. He's been in a coma, and while he's getting more and more responsive I'm still super worried about him.

We met one of our neighbors finally. Very nice straight couple with an adorable pit bull. They have like 18 cars. (This is an exaggeration. They have two cars. Also a pickup, a van, and an RV.) This isn't unusual in our neighborhood, I am coming to learn; every house around here seems to have 3+ cars.

I still haven't been able to successfully make friends with the extraordinarily talkative dog behind us. I think I've seen him and his owner out for walks. He looks like a wookie (the dog, not his owner) so I've taken to calling him "Chewwie." This has not endeared myself to him, and he spends a lot of time barking and growling at me. The problem is made worse by the fact that we can't actually see each other, due to the seven-foot privacy fence between properties. I should just go over and introduce myself and maybe take him for a walk. (Again the dog, not his owner.)

We're having all brand new windows installed on Monday. At some point the electrician will be out to both add a 240v outlet in the garage so we can hook up our shiny new dryer. He's also going to run cat5 outlets throughout the house, terminating all of them in a closet where he's also going to add an electrical outlet. I already had the cable dude run a live cable to the same closet, so once the ethernet is in place I'll be able to move the cable modem in there, install a network switch, and we'll have good networking throughout the house. (Though to be honest the OnHub is so good I don't really need ethernet, but it will be good to have anyway.)

In other news, my doctor said my blood sugar was doing so good he said I could try stopping the Metformin entirely to see how I did. I told him I'm pretty sure I'm not quite fit enough for that yet, and plus the holidays are coming up. So we agreed to do it after the first of the year.

So yeah, everything's moving along.

crossfire @ 2014-05-16T12:42:00

2014-05-16T19:42:13Z

No, Livejournal. Major changes to the user interface should always be opt-in. DNW.

I don't know why this needs to be said, but...

2012-08-01T00:27:27Z

Dear everyone who has bleated about "freedom of speech" ever,

In terms of protecting speech, the First Amendment of the United States Constitution provides the following:

- protection from congress passing laws that abridge your freedom of speech.

That's it. That's all. (Actually it does other nice things, too, but in strictest terms of what it says about speech, that's it.) And it's not even 100% protection either; we still have the legal concept of slander, so if you say something you know is false and it harms someone, that's not permitted by law. So the First Amendment doesn't even completely protect you from congress.

For future reference, here is a list of the other things that the First Amendment of the United States Constitution does not do:

- it does not guarantee you venue for your speech
- it does not guarantee you audience for your speech
- it does not guarantee you protection from response to your speech
- it does not guarantee you protection from consequence for your speech

Just because you have something to say it doesn't mean we all have to sit down, shut up, and listen to you. It doesn't mean if you say something really stupid we can't all say, "hey dude, that was a stupid thing to say." And if you say something REALLY stupid, it doesn't mean we can't say, "hey, that was a really stupid thing to say and because of it I'm not doing business with you anymore." In fact we can even say, "hey, that was a really stupid thing to say and because of it I'm not doing business with you anymore AND I am recommending to anyone who will listen that THEY shouldn't do business with you either. Because, you know, that was stupid."

If you want to stand up and say (for example) something really stupid like "I think our society is being harmed by gay marriage" then other people can stand up and say "I think our society is being harmed by bigotry."

And if as a result of all of this speech you find your business approval ratings dropping significantly, that's not an issue of "freedom of speech," it's a message that society is sending to you.

FYI, this entry was crossposted here from my primary journal at http://crossfire.dreamwidth.org/61282.html. Comments are welcome there as well as here.

Heads Up: The latest LJ misfeature

2011-12-15T16:23:43Z

LiveJournal is presently reimplementing the comment system. You can see a screen shot here: http://igrick.livejournal.com/528687.html

You'll notice there is no subject line. Subject lines are being removed, apparently because less than 1% of the comments on LJ use them.

On the plus side, they are adding a new feature that adds a "new" mark next to comments that are new on a page since your last visit.

You can see more details on what the new changes are in this thread: http://fail-fandomanon.livejournal.com/24177.html?thread=107626865#t107626865

Space Gremlin

2011-02-07T17:47:21Z

Yo Mac users!

My co-worker Sean Christman has put up his very first app on the Mac App Store: Space Gremlin, an app that helps visualize the files on your hard drive. It's way cool, and there's even a free demo available. If you get it and have feedback or questions, Sean sits like ten feet away from me. Well, when he's not in Ireland, that is, which he is about 30% of the time. Yes, he's that cool.

In other news, Sean and I will be working together on a project in a couple of weeks. He'll be working on an iPhone demo app, while I'll be retooling the client's current mobile web app using jQuery Mobile. Exciting stuff.

Because I don't know a loosing battle when I see it

2010-11-19T02:49:09Z

Looks like I was wrong in my previous post. I said that there wasn't enough science to back up worries that the radiation exposure from the new full-body airport scanners is harmful. And I tried to put things into perspective by talking about relative radiation doses. Where I was wrong is that there is evidence and study about the harm that these scanners can cause.

But before we go there, let me review what I said before. Basically I said what these guys were saying in this letter sent to Joseph Holdren, the Assistant to the President for Science and Technology (a job that I lust after in my darkest dreams, by the way).

The letter outlines concerns that several very well-known scientists (I have read papers by Stroud) about the radiation levels that people are exposed to in the full body scanners now in airports.

They are worried about the calculation of effects of radiation absorption in just the skin versus normalizing it over an entire body. They also talk about how the radiation from the scanners is different from other forms of radiation.

They are worried that independent studies do not exist, and that the data that the FDA, TSA, and scanner manufacturers must have is not being shared.

They list some specific populations that, if the radiation is indeed harmful, might be even more at risk than average.

They talk about how vulnerable a person being screened would be if the machine and its failsafes were to fail.

They outline a possible approach to assembling an independent team to test the scanners.

And they spend an entire paragraph explaining that the government doesn't exactly have a stellar track record when it comes to figuring out what's safe and what isn't, and that there hasn't been enough time to study the long-term effects of these scanners.

What the letter doesn't say is that the radiation from the scanners is definitely harmful, or that those populations definitely are at risk. They are rightly throwing red flags, pointing out things they're worried about but don't have enough information to be able to make a determination. They're calling for more information, for more study.

Remember how I said, "My advice is to not use 'radiation exposure' as a reason why the scanners are a bad idea. The science is not there to back it up..." Pretty much what those guys were saying, they just had more specific concerns to go with the call for more study.

So where was I wrong? There has been some good science done to figure this out. What did they find?

Systems based on the detection of Compton backscattered X-rays have been deployed for screening personnel for weapons and explosives. Similar principles are used for screening vehicles at border crossing points. Based on well-established scattering cross sections and absorption coefficients in conjunction with reasonable estimates of the image contrast and resolution the entrance skin dose and the dose at a depth of 1cm can be calculated. Effective dose can be estimated using the same conversion coefficients as used to convert exposure measurements to effective dose. We show that effective dose is highly dependent on image resolution (i.e., pixel size).The effective doses for personnel screening systems are unlikely to be in compliance with the ANSI standard NS 43.17 unless the pixel sizes are greater than 4 mm. Nevertheless, calculated effective doses are well below doses associated with health effects.

Emphasis is mine.

Still, though, it's radiation, right? Might cause cancer, right?

The major public health effect of concern at low doses of ionizing radiation is cancer. There is clear evidence of cancer induction at effective dose above about 200 mSv. Below an effective dose of about 100 mSv radiogenic cancer mortality risk estimates for all cancers is highly uncertain. It is not possible to determine reliably whether a radiogenic risk is present in an X-ray screening population because of the high spontaneous incidence of cancer and multifactorial nature of disease causation.

Use of collective dose to estimate public health impacts when large populations are exposed to trivial doses is inappropriate and not reasonable. The assumptions implicit in the collective dose calculation conceal large biological and statistical uncertainties. If an individual passenger is not harmed by X-ray screening then the population isn’t either.

So yes, sorry folks, I was wrong. There is science being done, and so far it indicates the scanners aren't harmful. In fact, there's a certain amount of disingenuousness in claiming that such low levels of radiation are harmful at all.

Look. I understand the temptation here. Science is a powerful tool in arguments like these. It can effectively shut down opposition. But this isn't one of the times when we get to use science like that.

Maybe someday we will. Maybe someday we'll find out that these scanners are very dangerous--I still think we need more study. The calculations Rez and Mossman do in their paper are good, I can't find fault with them...but ultimately they're just a first pass. We need more study.

In the meantime, we're going to have to find other reasons to argue that they're a bad idea--which was my ultimate suggestion from the start. Reasons like:

Failsafes fail. You COULD get a dose of harmful radiation from one of these things if things went wrong.

They're completely unacceptable for transfolk.

They're not particularly good at finding explosives.

They're simply an unacceptable invasion of privacy, with insufficient guarantees that the images aren't saved or shared.

So, to summarize: These scanners are a bad idea. They're bad for lots of very good reasons...but we not only can we not say radiation is one of them, the very implication is borderline disingenuous.

On the full body scanners now in use in airports

2010-11-18T16:19:16Z

I don't like 'em. It is basically what we've been joking about for years, become horribly real: the TSA has figured out a way to make all of us fly naked.

On the plus side, I've been seeing really encouraging conversations about privacy and privilege as a result of these scanners, and I've been seeing them in the "mainstream." This makes me happy.

But I've seen one common derailing point: whether or not the radiation exposure involved in being scanned is harmful. So I want to clear this up right now.

The science involved in our understanding of radiation is fairly precise. We know pretty much exactly the exposure involved in being scanned. What we're not sure of is exactly how this dose radiation will affect a person's physiology (this is mostly because the effect is not solely dependent on the physics of the radiation involved). So I can't say "yes it's safe" or "no, it's harmful" because I don't know.

I can, however, provide some perspective that I think will be helpful.

The dose of radiation from being scanned is between 0.005 and 0.009 millirems. This figure comes from studies done by experts in the field, not from the information given by the TSA or the company who manufactures the machines (who claim a slightly lower number). Great, so what does that mean?

0.009 millirems--let's round it up to 0.01--is, in fact, pretty small. During a three hour flight, you will get a dose of about 1 millirem: 100 times more than what you're getting in the scanner. And as someone on twitter pointed out, the difference between living in Atlanta and and living in Denver is about 50 millirems of radiation per year, just because Denver is higher (more cosmic radiation) and there is more uranium in the soil. I am speaking of the same kind of radiation in all of these cases, by the way.

So to sum up:

Are the scanners guaranteed safe? I can't say. But I can say that if you're worried about the radiation dose from the scanners, you shouldn't be flying anyway, because the radiation dose you're getting from flying is about a hundred times more than the radiation dose you're getting from being scanned.

My personal opinion, based on my knowledge of the physics of radiation, is that it's probably safe. We evolved on a planet that has a fairly low level of background radiation of various types, and it pretty much doesn't affect us until it gets way above those levels. These scanners are nowhere near that level. Neither is the radiation you get while flying, so that's okay too.

My advice is to not use "radiation exposure" as a reason why the scanners are a bad idea. The science is not there to back it up, and it serves for an all-too-convenient derailing point.

Skepticism

2010-06-08T21:24:28Z

Apropos other conversations I'm having online and IRL, here's a little information about skepticism.

In a nutshell, skepticism is a methodology, a way of searching for knowlege. It involves suspending judgement on the topic at hand and applying reason and logic to examine the claims and evidence. Only after examining the evidence will a skeptic make a provisional conclusion.

Now, there's a lot of meaning encompassed in these two sentences, so let's deconstruct.

Suspension of Judgement

Skeptics use constructive doubt. They do not use doubt to refute, they use it to take a provisional stance that is as neutral as possible while they are evaluating the claims at hand. The goal is to avoid accepting or rejecting claims and evidence prematurely.

This suspension of judgement is, needless to say, difficult. But it is a key step in the skeptical process. If you do not follow this step, everything you learn and reason will be tainted. This is the difference between skepticism and justification.

Inquiry

Skeptical inquiry involves examining the argument and evidence. This process follows similar methodologies to the Scientific Method, and can involve background research, experimentation, and analysis. The exact methodology and the level of rigor applied depends largely on the topic at hand, but there are three important things to remember.

First, skeptical inquiry, like the Scientific Method, requires reproducible evidence. Experimental evidence is regarded as the highest quality, but other acceptable forms of evidence exist (and vary depending on the topic) and include research, analysis, and peer consensus. Anecdotal evidence is considered only in a supporting role, if at all, and is not used as the basis for forming a conclusion.

Second, skeptical inquiry does not require expertise in the topic at hand. The inquirer needs to understand enough about the topic to be able to understand the assertion and the evidence, but this understanding can often be qualitative and need not involve rigorous learning. The trick is to know what is "enough."

Third, the burden of proof is that it is up to the claimants to prove their position, but it is up to the skeptic to seek out that proof. Burden of proof is not an excuse for laziness, often skeptics have to dig hard and long for evidence.

Provisional Conclusions

If the inquiry provides enough evidence, the skeptic can take a position on the topic. However, for a skeptic any position is always provisional: if the skeptic learns of new evidence then the conclusion must be revisited and possibly changed. As a result, skeptical inquiries are never truly "complete." This gives the skeptic the ability to remain flexible, and allows them to continue to refine their understanding and correct themselves.

Abandoned Inquiries

It is not unusual for a skeptical inquiry to stall. The inquiry process can take a significant amount of time, especially if the skeptic is being rigorous, or the topic is broad and has many positions to consider and research, or if a large amount of expertise is required. Sometimes a skeptic will have to abandon an inquiry altogether. In such a case the only position that can be taken is "I don't know." This can be amplified by then saying, "but I have learned this..." but a conclusion cannot be drawn.

False Skepticism

Once you understand that skepticism is a methodology it becomes really easy to spot false skeptics. Here are the three main ways false skeptics fail to live up to their claims:

Skepticism is not a position. Skepticism is a methodology. Opposition, doubt, disbelief, and even non-belief are all positions. If you hear someone say "I don't believe in [whatever]," or "I am a [whatever] skeptic," they are almost assuredly taking a position on the topic. Even the broader "I don't believe in anything anyone says until they prove it to me," while not necessarily a bad position to take, is still a position, and is not skepticism.

Skepticism is not favoring anecdotal evidence. Often combined with taking a position based on that anecdotal evidence, this boils down to "I don't believe [whatever] because my experience differs." That's not skepticism. Remember, depending on the topic at hand skeptics do not automatically discount anecdotal evidence but they do consider it to be less convincing. All the anecdotal evidence one can gather will not stand up to a single reproducible experiment or a well-researched set of data. If all that's available is anecdotal evidence (as sometimes happens) any conclusions reached will be very provisional. Many skeptics will not even profess a conclusion at all if all they have available is anecdotal evidence.

Skepticism is not requiring others to prove their positions. This goes back to the burden of proof: all claims must be supported by evidence, but it's not incumbent on anyone but the skeptic to go find that proof. One would hope that people would make their evidence easily available and would want to talk about it, and if they don't that can be a bad sign. But it's up to the skeptic to engage in the inquiry. Many people use the word "skeptical" to disguise what is really nothing more than intellectual laziness.

ZZ Top Zapping Zombies!

2010-03-26T22:22:24Z

Neill Cameron brings us The A to Z of Awesomeness.

Edited to add: you can go to Neill's blog and buy these as a poster! Proceeds benefit SSNAP - Support for the Sick Newborn And their Parents.

Gun Trolls Strike Again

2010-03-17T16:02:54Z

So, some more gun trolls are taking it upon themselves to be dicks again. This time, some of them are open-carrying at Starbucks in the Bay Area.

Here’s the thing. When you learn how to handle firearms, one of the things you’re supposed to learn is that they are tremendously powerful tools which are quite dangerous and should be handled with great care and respect. They have a couple of very specific purposes (self-defense and sport) and THAT’S IT. Any other use constitutes misuse.

Open-carrying for the sole purpose of making a political point is misuse of your firearm. These people should have their weapons taken away from them by their grandfathers, be swatted with a hickory switch on the behind, and be sent to bed without supper. Once they grow back up and promise to treat their firearms with respect, they could have them back. In other words, if you’re going to behave like a petulant three-year-old, you should be treated like one.

Seriously, folks. Open-carrying to make a point is disrespectful to your firearms and it’s disrespectful to your fellow citizens. Grow the fuck up. If you feel your rights are in danger, find a better way to engage in the debate. And I’m talking as someone who knows what it’s like to have his rights actually legislated away. I would NEVER abuse my firearms this way even if I thought it would help my case. Which it doesn’t.

To everyone out there who’s looking at these people and thinking about generalizing, please PLEASE believe me, the vast majority of gun owners in this country are not complete douchebags.

Job Openings at EffectiveUI

2010-01-28T23:37:43Z

My company is looking for contractors and contract-to-hire people in the following professions:

HTML/CSS/JavaScript developers (that would be my team)

Interactive/User Experience Design

Project Management

You can learn more about us at our award-winning website: http://www.effectiveui.com/

I have job reqs I can pass along if anyone needs specifics. They should be posted to the Careers section of the website soon.

Please feel free to forward anyone interested to this posting. Interested folks can either apply via our Careers section on our website--there's an Apply button that brings up a nice form you fill out and upload your resume--or you can contact me here.

TL;DR Theatre Presents: ZOMG WTF BANKING CRISIS, Act II: "I Can Has Bailaut Nao?"

2009-03-25T22:17:06Z

Welcome to TL;DR Theatre, where we're presenting ZOMG WTF BANKING CRISIS, a play in two acts. This is Act II: "I Can Has Bailaut Nao?" in which we will talk about the choices we have for fixing this banking crisis.

Since this got a little long (okay, it got a lot long...hey, this is TL;DR Theatre, remember?), here's a quick Table of Contents:

A Brief Review
Option 1: Fix the Assets
Option 2: Fix the Capital
Option 3: Do Nothing
So what's the O-Man doing?
On the toxicity of fear

It's got a beat, but I can't dance to it

From a strict business standpoint, the cause of this crisis is unbalanced balance sheets. Banks have toxic assets that are eating up the value of their capital and depositor and shareholder equity. These toxic assets are mortgages on houses--which ordinarily wouldn't be toxic, except the value of houses has dropped, up to 50% in some places (you can now buy a home in Detriot for $18,000), and the people who took out these mortgages are not making payments (or are not paying enough).

This has caused the entire United States banking system--and indeed the banking system for the entire world--to destabilize. According to our best minds in the industry, thousands of banks and financial institutions are insolvent, possibly including the two largest banks in the United States: Citibank and Bank of America.

That's pretty bad. Citibank and Bank of America have one quarter of all of the money in the United States banking system. 90% of all the money in the US banking system is in the 20 largest banks--Citibank, Bank of America, and their 18 largest companions. If these banks fail, the US economy--hell, the world economy--is basically over.

So, what do we do? Well, let's go back to our balance sheet. We can fix things from the asset side, or we can fix things from the liabilities side.

That's an awfully nice global economy you've got there, it'd be a shame if anything were to happen to it...

Fixing the assets is the first choice that was mentioned. Henry Paulson, former Secretary of the Treasury, proposed the first TARP ("Troubled Asset Relief Program"). The idea was that the government would buy these toxic assets from the banks, not at their current market value, but at some value much more than that.

In the case of our super-simple First Bank of Crossfire, we have a troubled asset of the house. It was $100, but now has a market value of $50, and that's wiping the bank out. So the government would step in and buy the house for, say, $92. This isn't a perfect fix; the assets still take a hit and therefore so does capital. But the bank stays alive, it keeps its shareholders and depositors, and it is still in business and ready to lend money again.

The problem is that the government (and by extension us, the taxpayers) ends up holding these houses. If the market doesn't go back up, we stand to lose a lot of money.

Also, this plan bails out dudes like me, the guy who lent out the $100 to the deadbeat without checking to see if he actually HAD a job, and how stable it was, and basically whether or not the loan was a reasonable risk. As a banker, I failed to do my job, and this plan basically gives me a do-over. I can hear twfarlan screaming for my entrails now.

Needless to say, bankers are pretty fond of this idea, in spite of the fact that it still means they take a hit in their capital. Actually, I think it's pretty safe to say that bankers love this idea, and want to have its babies.

To give you an idea of just how much bankers love this idea, let's talk about an "economic note" sent out by Deutsche Bank a couple of weeks ago. Deutsche Bank is one of the largest banks in the world, and every week its staff of economists sends out these brief economic notes to anyone they want to do business with, including governments. These notes are quite influential in the financial industry, and carry a great deal of political weight as well.

A couple of weeks ago, Deutsche Bank sent out a note titled "Falling Short: The Government Needs To Buy Toxic Assets." It was pretty much to the point: "Ultimately the tax payer will pay, one way or another, either through greatly diminished job prospects and/or significantly higher taxes down the line. We think the government should do the following: estimate the highest price it can pay for the various toxic assets residing on financial institution balance sheets which would still return the principal to the tax payers."

Allow me to translate: "Either you will have 20% unemployment and further skyrocketing national debt, or you will buy these assets, not for what they're worth, but for as much as you can possibly pay for them. You're going to hurt either way. If you give us the money now, we'll try and make it easy on you."

Did I just scare the crap out of you? Because when I first read that I had to change my underwear. (Actually, the first time I read it I thought it was a joke, but when I verified that it was true I got really scared.)

The guy who wrote that note is Joseph LaVorgna. When asked about it, he said, "I think the bottom line is, simply, someone has to pay for the mess that's been created. And there's no escaping: The taxpayer is on the hook."

Actually, this is kind of refreshing, in a bracing OH HI JESUS WELCOME BACK sort of way. LaVorgna is saying something that the banks and the regulators and the politicians have all been bending over backwards to not say: this is going to cost the taxpayers, and it's going to cost us a lot.

Dogs and cats, living together...mass hysteria!

Okay, so that's one choice. That's the fix-the-assets choice. But there's another side of the balance sheet, which means there's another choice. That's the fix-the-capital choice.

Under this choice, the government steps in and forces the banks to mark their assets to market. These houses aren't completely worthless, but they are devalued, and now the balance sheets reflect this. Of course, the balance sheets are also out of balance, so the government infuses cash into the banks. It pays off lost assets, it replenishes the capital, it insures the depositors and shareholders equity, and the bank is back in business.

Sounds good, right? Well, it would be, except the way businesses work, if you infuse a huge amount of money into a business as capital, you own a share of the business. And since we're talking about banks that are pretty much insolvent, we're talking about banks that have no capital whatsoever. So the government is replacing all the capital, which means the government will own the bank outright.

I bet you can imagine how the bankers feel about this idea. Right, they HATE it. It means they lose their capital, they lose their business, and they're out of a job. It's nationalization, and that's socialism, and the next thing you know the United States will be Nazi Germany and the fall of Rome all rolled into one horrible nightmare. Just see if it doesn't.

On the other hand, nationalizing a bank means that at least taxpayers have a stake in a stable, functioning bank, not some dangerously overvalued toxic asset. And the idea is that the government doesn't own the bank forever, it cleans it up and then sells it back to new investors, perhaps at that point recovering some of the money used in the cleanup. Certainly not making a profit, that's not going to happen, but at least mitigating the loss.

And the thing is, this is how governments fix banks. Governments all over the globe have done this numerous times--usually after the United States has twisted their arms pretty severely. Even the US has done it before, during the S&L crisis back in the 1980s.

In 1984 every large bank in Oklahoma and Texas failed. So the FDIC stepped in, shut every bank down, cleansed them of their bad loans, and relaunched them with new management and new shareholders. It was scary, but they did it, and they did it quickly and efficiently and everything was fine.

So why aren't we doing this? First, because when you clean up a bank this way, it means that some currently powerful people lose. They lose their banks, they lose their money, they lose their access. They lose their power. Guess what people like that are going to fight tooth and nail?

Second, there are serious logistical issues. It's one thing to buy a bank, or even all the large banks in Texas and Oklahoma. It's quite another to buy The Banking System. Who do you sell it to when you're done? And it takes a huge number of regulators to take over a bank. We'd need thousands of government workers to take over Citibank, and that's just one bank out of possibly up to a thousand.

Third, nationalizations are like potato chips: it's hard to have just one. You can't announce "we're nationalizing Citibank today at 9am" because people at the other banks will start to get nervous. They'll wonder when their bank is going to be nationalized, and they'll take out all their money and you end up with a run on the system. So you'll need to come up with a plan to do all of the banks, or at least, all of the big banks, at once. That's a pretty tall order.

Those are the main arguments against nationalization. (Well, they're the main arguments that aren't based entirely in fear mongering about socialism and comparisons to Nazi Germany, anyway.) The thing is, these arguments aren't new. Indonesia, Korea, Russia: all of these countries had to nationalize their banks in the last couple of decades. Before they did it they made all of these arguments. And yet, once they sucked it up, they did it. Because the longer you wait, the weaker your economy gets and the harder it is to successfully nationalize your banks.

There are always alternatives. It's just in this case they suck.

Those are two of our choices. I would be remiss if I didn't mention a third, and that's "do nothing."

In our simple example, I was a stupid banker, I didn't do my job, so just let my bank fail. Let it go under like any badly-run business should. Your guys' deposits are insured, so you're safe. I get wiped out financially and lose my bank and my job. Fair is, after all, fair, right?

I think it's important to say that if there's one thing the economists, the bankers, the regulators, and the marketeers agree about, it's that doing nothing is the wrong idea. If we do nothing, if we let the bad banks collapse, even if it's just a few of them, at this point the economy is so bad that it would guarantee an economic depression at least an order of magnitude worse than the one in 1923. That may be an interesting intellectual exercise for detached pragmatists like Ron Paul (who to my knowledge is the only person advocating this publicly), but I don't want to live in a world where we've actually done it.

Enter Obama

All right. Those are our choices. So what is the Obama administration doing?

Well, they announced their plan a couple of weeks ago: they are going to wait and see. They are going to take two months to figure out how healthy the banks are--the "stress test"--and another six months to give money to the banks that need it. And they've said to the media and to congress that they're pretty sure they already know what these stress tests are going to reveal: that America's biggest banks are healthy and well capitalized, and that there is no need for nationalization.

So between option 1 and option 2, they're going for a sort of lite version of option 1.

But here's the thing: they left themselves plenty of wiggle room in their public statements. If they were planning on nationalizing the banking system, they wouldn't announce it ahead of time. They'd wait until they had all their ducks in a row, all the people hired, all the assets in place, and then, one Friday evening, they'd make an announcement, and take over the banks over the weekend. So watch for the government bringing aboard lots of financial experts in the next few weeks. That will be the sign that nationalization is in the offing.

Anger, fear, powerful emotions are these. Lead to the Dark Side, they do.

twfarlan said (if I may paraphrase) that the situation isn't just financially toxic, it's intellectually and emotionally toxic. And he is right; there is a lot of anger out there. Regardless of what we do to fix this crisis, the taxpayers--most of whom didn't have anything to do with causing this crisis--are going to have to pay through the nose. And the people who did actually cause this crisis are getting do-overs, and in some cases are taking huge bonus payments. This has engendered a great deal of anger.

And this anger is causing a lot of lashing out, usually in exactly the wrong direction. Regardless of which side of the balance sheet we're trying to fix, when we give money to the banks it's to heal themselves. It's to pay off their bad debts, reorganize, and restructure, so that they can start lending money again. People are calling for banks to turn around and lend the money we give them right back out again, and that's exactly the wrong thing to do. Banks are in bad shape because they lent more money than they had. That's what we're trying to fix. So the banks that are in the worst shape should be lending the least amount of money, just enough to keep things going while they take the infusions of cash to fix their problems.

This anger and fear is understandable, but we can't let it rule us. We don't have the luxury of engaging in witch hunts or finger pointing, not at this time. We need to learn from our mistakes so we don't repeat them, but even before we do that we need to fix this crisis. Partisan bickering, witch hunting, and finger pointing are all wastes of energy right now. We do not have the resources to spare.

If you take nothing else away from this, remember this hard, cold truth: this mess is huge, it is extensive, and we're going to have to pay to fix it. Fixing this won't be quick, it won't be easy, and it won't be cheap. And it won't be safe; there are no choices facing us that aren't gambles in one way or another.

But I think we can do it. Right now, the majority of people who have mortgages are paying them right on schedule. 80% or something like that. But the market is acting as if it's the other way around, that only 20% of the mortgages are "good" and the rest need to be written off. That's simply not the case, and is causing an artificial low in the market. It's quite literally holding the banks underwater, rendering them insolvent and unable to lend more money.

And there's still a lot of money in the housing market right now. If you currently have equity, you can easily buy a lot of house for your money. It's not such a good time for first-time buyers, unless you have a lot of cash to put down as a down payment. But the market is moving, it's just artificially depressed because of the bubble. It will recover, and when it does things will get better.

But this leaves us with a whole new pile of uncertainties. How long will it take for the market to recover? Will it recover enough? Can our banks last that long? Will our steadily weakening economy? Sorry folks, I just don't know. But those are the questions to keep in mind as we work our way through this.

So there you have it: the banking crisis in two acts. I hope this has been helpful, and that you can now follow what people mean when they talk about assets and nationalization and toxicity. Knowledge is power.

This has been TL;DR Theatre. Y'all be cool.

TL;DR Theatre Presents ZOMG WTF BANKING CRISIS, Act I: "Banking Ain't Rocket Science"

2009-03-25T06:19:37Z

Good evening everyone and welcome to a very special edition of TL;DR Theatre, in which I'm going to present ZOMG WTF BANKING CRISIS, a play in two acts that attempts to explain the banking crisis we are currently facing. I've been doing a lot of reading and research on this, and though I don't have any formal education in business management, I do have years of experience modeling businesses in software and I have a pretty good grasp of financial basics. I think I understand what's going on, and so here it is.

This is Act 1, "Banking Ain't Rocket Science," and I'm going to talk about something extremely dull and boring but nevertheless very germane to the banking crisis. What might that be, I hear you ask?

In order to understand the banking crisis, you need to understand something that's actually quite boring: balance sheets. Balance sheets, and more specifically the ways the numbers on a balance sheet change, are a method of modeling a business on paper. If you already understand about balance sheets, feel free to skip down to where I start talking about toxic assets.

Let's start with a simple example. Let's say that I want to open the First Bank of Crossfire. I have $10 of my own money I'm investing, and I'm ready to go.

You can't do much with $10, so the first thing I need to do is get some investors. Banks get investors in two ways: by enticing in depositors, and by selling shares. Right now I don't want to share my bank with anyone, so I hit up my friends list. "Hey, guys, I'm opening a bank. If you deposit your money with me in this thing called a Savings Account, I'll pay you 3% interest every year." And because you guys are super cool, eventually I get $90 in deposits into savings accounts.

Now I have $100 in my bank: $10 of my money, and $90 of yours. But this kind of sucks, because I'm actually loosing money. I have to pay you guys interest, and that's going to have to come out of my pocket.

Fortunately, banks don't work like that. They make money by making loans and charging interest. So let's say along comes someone who is looking to buy a house for $100. I agree to lend this person a $100 mortgage if they agree to pay me 6% interest ever year.

Now I'm in business. I get 6% interest from the mortgage, 3% of which I pay to the savings accounts and 3% of which is profit. I can choose to pay myself that 3% as a nice tasty bonus. (*glances sideways at siliconshaman*) Or I can choose to re-invest the money as capital.

So let's draw up a balance sheet for the First National Bank of Crossfire. It looks like this:

Assets	Liabilities and Capital
Mortgage for $100	$10 capital
	$90 in savings accounts
Total: $100	Total: $100

As you can see, you have $100 on the left side, and $100 on the right side, and that's why it's called a balance sheet: both sides must balance.

Now, there's some words on that balance sheet which I didn't explain yet, in the column headers: assets, liabilities, and capital. Generically, "capital" is any form of wealth that is employed to make more wealth. In this case, it refers to my $10 that I've invested in my bank to get things going. To my banking business, any money I owe--that is to say, the money contained in the savings accounts you super-cool people opened with the First Bank of Crossfire--are "liabilities." This is because I have to be able to pay you your money at a moment's notice; I am liable for that money. And to me, any money owed to me is an "asset," because I can count on it. Just like you guys can count on me to pay you your money. The Magic Formula for a balance sheet is Assets = Liabilities + Capital.

Balance sheets, along with a few other specific reports, constitute a company's financial statements (or simply financials). Publicly traded companies are required to publish their financial statements, and have strict legal requirements for them. If you google for, say, Citibank's financial statements, you'll find that they claim $1.5 trillion in assets as of last quarter.

Of course Citibank's balance sheet is much more complex than this. But at their core this is how banks work. They make money by leveraging money that's not theirs. This is the way banking has worked since...well, forever. And it works pretty well for 99% of the time.

But let's say that something goes wrong. Let's say that this person I lent the mortgage to stops paying me. I mean, he said he had a job, but I didn't really check, and he didn't have any money to make a down payment that I might be able to use to defray this hit to my financials, but I was so keen on getting into the banking business during the housing bubble that I went ahead and lent him the money anyway and now he's laid off and won't be paying me and, well, tough noogies.

In situations like this, the mortgage goes into foreclosure. This changes my balance sheet a bit, because now instead of a mortgage for $100 I have a house for $100. No big deal, right? Right.

Unless the market value of the house drops. As we all know the housing market bubble has burst in a big way. So this house, which was $100, is now only worth $95. And now my balance sheet is out of balance. And it has to balance, or, well, it won't be a "balance sheet."

So what do I do? Well, I can't reduce my liabilities (the savings accounts) because you guys were good enough to trust me with your money and I have to be able to pay you at a moment's notice. So that money has to come out of my capital. Poof. With the stroke of a pen, I've lost $5 of my investment. I've lost half my money.

In reality, the situation is even worse. The housing bubble, as I said, has burst in a big way. The loss in value of these houses has been 10%, 20%, even 50% of the original market value. They have gone from being assets to being toxic assets. Toxic assets are assets that behave like liabilities, but are still reported as assets. They eat up capital, and when the capital is gone, they start eating up the other stuff on that side of the balance sheet. In our example, that would be your money in your savings accounts, my friends. My money goes first, because I want to protect yours as much as I can, but when all my capital is gone, your investments are next.

So I come up with a plan. "Don't worry, friends," I tell you. "I'm not going to sell the house. I'm going to keep it on my books, because I just KNOW that the housing market is going to recover. And furthermore, because the market is illiquid, that is to say I can't sell the house for its face value, I can't even determine what it's really worth. But eventually the market will recover, and I'll be able to sell the house, and everything will be copacetic. Trust me." And here I would give you a big smile.

This is, perhaps unsurprisingly, exactly what bankers are saying, according to David Biem, a professor at Columbia Business School and an ex-banker himself. "Most often the bankers say, 'Well it's not as bad as that.' For example, in the current crisis, many banks hold these so-called toxic assets whose quoted prices are down around 20 or 30% of their face value and the bankers say, 'I'm just sure it's worth more than that, I don't want to mark it to market.'"

The phrase "mark it to market" means to valuate an asset at its market value. In our very simple case of the First Bank of Crossfire, it would mean marking the house at $50 instead of $100 or even $95, which would not only wipe me out financially, but take a goodly portion of your guys' money as well. Sucks to be us, huh?

Yeah, it sure does. Because banking experts and economists right now estimate that more than a thousand banks are in this exact situation, including many of the largest banks in the banking system. They owe more money than they have, and there's a word for that: they are insolvent.

In fact, if you ask Jeremy Siegel, the so-called Wizard of Wharton (of the Wharton Business School) how many banks are in this situation, he'll tell you, "I don't know how many but I think there might be on a current market value, and again I think the market may be overdiscouting some of these, but probably, I wouldn't be surprised if Citi and Bank of America really at current value of their assets don't cover the depositors and the bondholders and would wipe out shareholders equity, and there could be others too."

Let's pause and take that in, shall we? Citibank and Bank of America are the two largest banks in the United states, and Siegel is saying their assets are too small to cover their liabilities. The losses would wipe out their capital, and there's still not enough left to pay all the depositors and other people who lent them money.

I should point out right now that normal peoples' savings and checking deposits are insured by the FDIC for up to $250,000. But banks rely heavily on investors, who invest millions and even billions of dollars, and those investments aren't insured. If the bank goes under, these investors lose their money, and the consequences of that will ripple around the world.

Now, Citibank and Bank of America both claim solvency, and for the most part the government and regulators are agreeing. The government agrees with Citibank and Bank of America that the housing market will recover, and everything will be fine, probably sometime quite soon.

And maybe it will. But right now the stock market does not agree. Currently, Citibank claims on its balance sheet capital in the amount of $150 billion. But if you look at its total stock value, it's at less than $10 billion. So the stock market says Citibank is worth less than its stated capital by fifteen times, and that doesn't even address the liabilities.

We're basically seeing two different interpretations of reality. Who is right? Citibank, or the stock market?

This is a very important question because what you think needs to be done about the crisis depends on which side you buy into...and I mean "buy into" quite literally, because guess who's going to pay for all of this! You get three guesses and the first two don't count and I'll even give you a hint: it ain't the Easter Bunny.

Tune in for the Act II of ZOMG WTF BANKING CRISIS, "I Can Has Bailaut Nao?" in which I'll explain what our choices are for dealing with this situation, and explain as best I can what the Obama administration is actually doing (as near as I understand it), and why.

This is TL;DR Theatre signing off, wishing you a safe and pleasant tomorrow.

Another post about the account restructuring

2008-03-17T03:30:25Z

When you are running a business based on offering an online service of any sort to a userbase, the standard practices of usability say that the ONLY thing that matters is how the users view your site. Everything else is secondary at best, and often plain irrelevant. This is the Usability Prime Directive: Ignore your users at your peril.

Of course, this assumes that the owners of the business in question want a viable business with growth potential. This is not always a valid assumption, so it bears mentioning.

On the other hand, the Usability Prime Directive does not mean the users are automatically relevant. True, the users should determine how you will design, build, and offer your service, but only as long as that input is productive. Users are greedy, and just because they say (for a wild example) they want a telepathic interface doesn't mean you should invest all of your resources into research and development of online telepathy. In other words, it's important to separate usability issues from entitlement issues.

Let's now come out of Theoryland and apply these basic principles to the recent kerfluffle with SUP and their restructuring of the Livejournal account levels.

First and foremost, it's wrong to say "SUP is running a business and if you don't like it, vote with your dollars and leave" as if that is the only option. That's ignoring the Usability Prime Directive. It's also dismissive and mean-spirited, because Livejournal is a community site and people tend to have an emotional investment in it. You may not have one, but it's wrong and unfair to trivialize the feelings of those who do. Plus, you know...ignore the users at your peril, and all that.

Second, it would also be wrong to sell out the future of the site by rolling back the restructure. If it's a business viability issue, then that trumps even the Prime Directive, even if there's a bunch of users whining about how they thought Brad had made promises about permanent free accounts.

Now that we've got those facts out of the way, let me point out a very important thing that nobody so far has noticed: SUP did not say they eliminated the Basic accounts for business reasons. Nope. They didn't. I don't know if they have yet or not, but I do know that they didn't at first. At first, they said they did it because the signup process was "too confusing." And they stuck with that for a while.

What's interesting (and wryly amusing, and a wee bit alarming) is that everyone--and I mean everyone, from the "hey, they're running a business here" people to the "but BRAAAAAD said it would always be FREEEEEE" people--immediately dismissed out of hand the assertion that it was a usability decision, and instead went with the immediate assumption that it was a business decision. This tells me that the userbase of Livejournal does not trust SUP at all, to the point where we don't even think twice about discarding without question what SUP says.

I would assert that this alone indicates that SUP's hold on the business that is Livejournal is tenuous.

Possibly they know this, and that's why they're so Keystone Kops when it comes to handling things like this--they just get so scared they can't help but mess up. I don't know. But I do know they need to get their act together if they want to manage Livejournal properly.

[Edited to clarify a bit of language upon leaving Theoryland, and to make entry public.]

Promo for Fabric Lab

2007-08-10T18:33:03Z

Hey folks, The Fabric Lab needs your help.

The Fabric Lab, for those of you playing along at home, is a great local business run by Josh (one of the designers here at Texturemedia and generally all-around way talented dude) and his wife. The Fabric Lab showcases handmade items made by local designers: clothing, accessories, and other amazing things. They're bringing real art and fashion to East Colfax and doing the neighborhood and community a good turn as well. I know a lot of you have even been to their monthly fashion shows, which I've mentioned before.

They're up for Channel 7's A-List, but they need votes. So go to http://kmgh.cityvoter.com/details.aspx?business=48730 and vote for them. Use a disposable email from Spamgourmet if you like, just be sure you click through on the link on the email they'll send.

Go forth my minions, and click!

I finally figured out what "caw tok tok burble" means

2007-06-14T14:04:45Z

Fred says "Hi."

OMG I have to tell my flist, redux.

2007-06-14T05:31:41Z

For those of you wondering, there are a few things that are actually true in the preceeding story.

We do have an emergency generator for our building, outside, just off the alley. I did just see it for the first time a few days ago. I have no idea if it is in working condition, or how much fuel (if any) it has, or if it would come online should the power fail (I'm guessing it wouldn't). Our office was previously a data center/tech support center, and so that's probably why it's there.

And yes, right across the street from us is the Boulder Police Annex. The front of the annex is made entirely of glass. I have never been in there, so I have no idea if there's actually a gun cabinet or not. But I do know that Boulder Police are famous in local LEO circles for having lots of expensive and unnecessary weaponry.

We do have a crow who hangs around the building and I have taken to calling him Fred. He is fond of the rich pickings from the garbage that the restaurants in the building generate. He is big and fat and amiable--amiable for a crow, anyway. I'd estimate his wingspan at nearly a meter. He also has quite the vocabulary of caws and toks and strange squabbling noises. He does not, however, fly up to the windows and watch us as we work.

That would be creepy.

crossfire @ 2007-06-13T23:29:00

2007-06-14T05:29:45Z

they came for me fred and his friends they are the only ones left in town besides HIM and me just him and me and fred makes three and we all have to tell you how to tell you now to tell you tell you tell you that they came and got me and showed me HIM and it hurt to see like when you are asleep and you are just waking up and you cant hear the fan in the room and then you can like it fades in like the screaming because it hurts to see HIM and the screams and then i went back to the sleep place where i couldnt hear my screams and then HE looked at me and he told me what i have to tell you all to tell you all have to tell you all that i am waking up now and i could only see some of HIM because i can only look with my eyes and you cant see some things like when lines cross and move apart at the same time and we should just take off and nuke the site from orbit its the only way to be sure and it is like jesus is coming and boy is he pissed so everyone look busy except its not jesus its HIM i tried to hide but they found me and they took me down to HIM down in the green and the honey and the gunpowder and he touched me he TOUCHED me he TOUCHED ME ON MY FACE i have to get back to the sleep place because of my screaming but first HE wants me to tell you all i have to tell you all that he is sending them they are his and he is sending them to you all they are for you all and they are for him and from him and to you and they are coming they are cOMING THEY ARE COMING

(omg i have to warn my flist)

crossfire @ 2007-06-13T22:48:00

2007-06-14T04:48:10Z

Okay, very weird. The light on campus isn't from electrical lights. There's no power here as near as I can tell.

The light is coming from the stadium, and it's green. I'm over by the physics building, where I spent so much time as a student, right across the street from the stadium. It's completely silent, but almost as bright as twilight from the glow of...whatever it is.

It stinks here, enough that it's starting to upset my stomach. Rotten pineapple and pesticide.

Fred and his buddies are watching me from the roof of the building over there.

I'm debating whether or not I should check

(omg i have to warn my flist)

crossfire @ 2007-06-13T22:42:00

2007-06-14T04:42:04Z

The reason why it's not dark is because there's light coming from campus. CU has its own power generation subfacility; maybe it's still running. I'm going to be heading through campus on my way out of town, so I'll check it out.

Still haven't seen anyone. Except for Fred and his buddies, who seem determined to follow me.

(omg i have to warn my flist)

No, Mr. Hitchcock, please

2007-06-14T04:39:30Z

Fred has brought some of his friends. They're all staring at me, through the window. There's about a dozen of them. I'm having my very own Tippi Hedren moment.

What's weird is that even though they all look alike, I can still tell which one is Fred.

Anyway, I'm posting this from one of our new Ricochet-enabled laptops. I'm getting the hell out of Dodge, I'm done here.

It's mostly dark outside, this sort of sickly greenish dark. And it stinks. Like bananas and fertilizer. It should be completely dark by now but it's not, I'm not sure why. No lights in the city, and just the light from the laptop screen here, since I turned off all of the lights in the building lest the light attract attention.

Anyway, I'm bugging out. Maybe not the best idea, I know, but I'm not staying here, that's for damn sure. The only problem is...I took the bus up here, so I'm going to have to hoof it, at least at first. There's nobody outside except Fred and his buddies, so I don't think I need to worry about anything other than being grossed out by the smell.

Right, then, off I go.

(omg i have to warn my flist)