Detroit Automakers-slipping one by the people.

President George W. Bush on Tuesday signed into law a mammoth spending bill to keep the government running until early March 2009 that includes a $25 billion loan package for troubled automakers.


This was slipped in while the focus was on the BIG bailout bill. There seems to be no end to corporate slickness and Congressional corruption.

'Con' out of Congress, members bail on bailout...

Today, what was supposed to be a 'sure thing' unraveled. The $700 billion bail-out bill failed to clear the House. The market predictably went down, trying to convince the public that action is needed immediately. Having the luxury of being able to work from home today, I watched the developments on that epitome of business news on TV, CNBC.
So much misinformation, lies, and grossly unethical reporting goes on in the name of 'business news...'

1. The anchors and reporters keep insisting that this is a great buying opportunity. Hey Maria and the gang, if it is such a great buying opportunity why is the market going down? Oh, by the way, why aren't you or Bill Gates or Warren Buffet buying up all the bargains?
2. The money in the bailout is not going to fat cats but is going to 'ease' liquidity. These idiots do not want to say that liquidity is NOT the problem, but that the lenders have become highly risk averse. The bailout bill is exactly that- bailout for the financial institutions.
   
3. The anchors keep encouraging people to BUY, without saying that the current problems are caused by the casino culture they helped create. Playing games with people's retirement money and hard-earned pay is highly unethical.
4. Neither the anchors nor the guests want to address the root cause of the problem. They do not want to discuss why the government should buy assets which no one else wants.
5. An argument made is that 'this is a great buying opportunity for the Government.' If it is such a great opportunity, why isn't GE and other institutions beating to the door to buy these toxic assets?

Amy Goodman of Democracy Now did an excellent interview with Dennis Kucinich. It is worth reading.
“Is this the United States Congress or the Board of Directors of Goldman Sachs?” Rep. Dennis Kucinich Rejects $700 Billion Bailout

Every person has one vote and all votes are equal- NOT in the Electoral College System of the USA

For an outsider, and I am an outsider, the Electoral College System seems anachronistic and ill suited to modern-day needs. If all citizens are equal, irrespective of where they vote, then every vote should be valued equally. If the President is expected to represent every citizen equally, then every vote should be valued equally. With the Electoral College system, the value of a vote is increased or diminished depending on where the person voted. While no one can assess the truth in the 2000 elections, the result was close enough to suggest that Al Gore had received more votes nationwide than GWB.

The Electoral College System is one more reason for not participating in the system. The lack of simplicity and transparency does not help democracy.

I supported the Green party in 2000, hoping that it would help support the growth of an alternative party in the U.S. I bet on Kerry in 2004, and it is hard for me to fathom his loss. I have not yet decided whether to vote for a third party or for Obama, but if my perception of a McCain Electoral College victory gets closer to reality, perhaps a vote for a third party might be in order.

It's in the way that you use it.....

It's in the way that you use it,
It comes and it goes.
It's in the way that you use it,
Boy don't you know.

And if you lie you will lose it,
Feelings will show.
So don't you ever abuse it,
Don't let it go.

Nobody's right till somebody's wrong.
Nobody's weak till somebody's strong.
No one gets lucky till luck comes along.
Nobody's lonely till somebody's gone.

.....Song from the movie 'The Color of Money' sung by Eric Clapton....

Paul Newman passed away today. He certainly ranks as one of the greatest actors of all time. His wonderful movie Sting is the best entertainment money can buy.
The NYT has a nice article, "Paul Newman, 83, Magnetic Hollywood Titan, Dies."

The following part is very touching...

“I’m not able to work anymore as an actor at the level I would want to,” Mr. Newman said last year on the ABC program “Good Morning America.” “You start to lose your memory, your confidence, your invention. So that’s pretty much a closed book for me.”

But he remained fulfilled by his charitable work, saying it was his greatest legacy, particularly in giving ailing children a camp at which to play.

“We are such spendthrifts with our lives,” Mr. Newman once told a reporter. “The trick of living is to slip on and off the planet with the least fuss you can muster. I’m not running for sainthood. I just happen to think that in life we need to be a little like the farmer, who puts back into the soil what he takes out.”

McPalinauguration on January 20, 2009--still time to run for the Exits

Yesterday's debate and the subsequent analysis has made it quite clear that the media, including the moderators and the analysts, is catering to entertainment rather than educating the public. The mainstream media assumes that the public is ignorant and stupid, and works hard to keep it that way. These thoughts are based on some of my observations...

• In the debate, McCain, who claims to have years of foreign policy experience, did not pronounce correctly either the names of foreign countries (including Afghanistan, Pakistan, and Iraq) or the names of leaders like Ahmedinajad or Zardari. Obama pronounced the names effortlessly and correctly, and was gracious enough not to highlight McCain's callousness. People everywhere take their country's name seriously. Mispronouncing it displays a lack of respect and a lack of education. If a person like McCain does not even bother, after 26 years, to learn to pronounce these things properly and nobody highlights it, the American public will not 'get it.' Of course, most people in the media continue to mangle these names as well...And the public wonders why people in other countries dislike us.
  
• While McCain kept twisting Obama's statements and taking them out of context the moderator just let everything go by. Obama's statement that he would talk to all nations without pre-conditions was suddenly twisted to mean that he would be sitting opposite Ahmedinajad and giving the country away.
• McCain claims that the surge worked, but does not admit that the war was wrong and the surge was needed because he and his GWB administration caused the problems. It is also not clear if the surge just 'shifted' the problem. There is no guarantee that once the troops are removed stability prevails.
• Currently the U.S. is conducting operations at the Pakistan Afghan border, sometimes without Pakistan's consent. Yet McCain flailed at Obama because Obama said that he would conduct operations if Pakistan's forces did not do it themselves.

The sad part is that Jim Lehrer, of PBS, did not seriously question the candidates. Both of them got away with semi-truths and accusations, but McCain's were the most egregious. Reviews of the debate in the major papers did not discuss these issues either.

At this pace, it is likely that we will witness the coronation of McPalin at the McPalinauguration on Jan. 2oth. Unless Obama establishes landslide support, Republican 'electorate management' techniques, perfected by Karl Rove and his disciples, will deliver the victory.

The Big Debate Farce

Today's debate was truly a farce. Allegations were flying, with the useless moderator not challenging or questioning them. McCain was especially notorious in using data that was either false or incomplete, and distorted statements made by Obama.
The fact that these were not challenged would mean that quite a few viewers will walk away believing that what they heard was the truth..

Trying to Rise above the Muck of Mediocrity

While returning from class yesterday afternoon, an astute colleague of mine commented on how we sometimes seem to be stuck in mediocrity. It is a suffocating, slow death experience that kills the drive to grow and make things better. Managers seem to be content with the status quo, students go through the motions, faculty members do their little teaching and go...all the while the macro picture is slowly deteriorating or not keeping pace.

For my part, I remind myself daily to avoid the rut. I try to be fearless and stand up for quality. This term I have helped set up a few students with some great mentors, have arranged great field trips for some others. My first year students are coming around. I have tried to write interesting commentary on this blog. But I could be doing so much more and so much better....

Some folks who worked hard to avoid getting stuck in the muck...
My dad (died when he was 62 years old).
Ghantasala (52)
Kishore Kumar (58)
Lata Mangeshkar (going strong at 78)
David Byrne (56 and still a creative force)
Sanjeev Kumar (47)
John Ritter (55)

Couric does a Brain Drain of Palin

And voila...nothing comes out of it....

The fact that the Republican party elects McCain, who then selects Palin, and still gets more than 40% of the voters in polls shows the triumph of ignorance and the desire to stay ignorant over questioning and seeking.
And people ask why companies are outsourcing jobs to other countries.....

The Blame Game

Who Does Bush blame for the financial crisis? Here is an extract from Bush's speech on Wednesday 9/24. (courtesy the White House website).

"Well, most economists agree that the problems we are witnessing today developed over a long period of time. For more than a decade, a massive amount of money flowed into the United States from investors abroad, because our country is an attractive and secure place to do business. This large influx of money to U.S. banks and financial institutions -- along with low interest rates -- made it easier for Americans to get credit. These developments allowed more families to borrow money for cars and homes and college tuition -- some for the first time. They allowed more entrepreneurs to get loans to start new businesses and create jobs.

Unfortunately, there were also some serious negative consequences, particularly in the housing market. Easy credit -- combined with the faulty assumption that home values would continue to rise -- led to excesses and bad decisions. Many mortgage lenders approved loans for borrowers without carefully examining their ability to pay. Many borrowers took out loans larger than they could afford, assuming that they could sell or refinance their homes at a higher price later on.

Optimism about housing values also led to a boom in home construction. ..."

Ah, It is the fault of the foreigners who gave us the money when we wanted it...

To which the German Finance Minister Peer Steinbrückgave a sharp reply, outlined in the NYT article, Germans Receive Bush Speech Coldly. “Investment bankers and politicians in New York, Washington and London were not willing to give these up,” he said. “The financial market crisis is above all an American problem.”

The long-term consequences, Mr. Steinbrück added, could be serious for the United States. “The U.S. will lose its status as the superpower of the world financial system,” he told the Bundestag. “The world financial system will become multipolar.”

The United States of America has benefited greatly from the Globalization of Capital, and blaming others for one's lack of moral fiber is par for the course for people who claim to live on faith.

Overcoming The GAP - Greed Against Principle

"Integrity is an important character trait in every human being because it is the main moral that keeps our world responsible and functioning. If integrity was absent in our lives, nobody would be responsible to anyone else, and nothing would ever be accomplished...." - an extract from a passage by VW, one of my students.

WSJ reports that "At CVS Golf Gala, Suppliers Pay for Access to Executives."
An extract..."Like other retailers, CVS Caremark Corp. has an ethics policy meant to keep suppliers from using pricey travel, entertainment or gifts to buy the favor of its employees. But many companies have found a way to spread largess to the drugstore giant's influential executives -- with the blessing of CVS.

This year, for example, KKM LLC of Lincoln, R.I., paid at least $50,000 for a weekend of yachting and golf with two top CVS officials. In past years, KKM, which sells goods to CVS on behalf of manufacturers, has funded other vacations that paired its executives with ..."

Eli Lilly to disclose payments to doctors The company's move to report money for speeches and advice comes as Congress pushesdisclosure legislation.

From the Associated Press

September 24, 2008

WASHINGTON -- In an industry first, Eli Lilly & Co. says it will begin disclosing how much money it pays to individual doctors for advice, speeches and other services.

The drug company's move comes as members of Congress push a disclosure bill in an effort to prevent such payments from improperly influencing medical decisions.

Beginning next year, Eli Lilly will disclose payments of more than $500 to doctors for their roles as advisors and for speaking at educational seminars. In later years, the company will expand the types of payments disclosed to include such things as travel, entertainment and gifts.

Some have voiced concerns that doctors are influenced by these payments in their treatment decisions and that this in turn can drive up medical bills. Although most physicians believe that free lunches or trips have no effect on their medical judgment, research has shown that these type of payments can affect how people act.

Bush - The MBA* President

MBA = Must Be Afraid

Credit must be given to George Bush and the bunch for sticking to one basic principle throughout their tenure - spreading fear and making people afraid- afraid of almost everything and almost everyone.
Consider the language used by Ben and others in intimidating Congress into passing the trillion dollar give-away.
From CBC.com...."The White House pressed the U.S. Congress publicly and privately Tuesday to pass a $700-billion US bailout package it hopes will contain a spreading financial crisis. Congressional leaders — especially those who oppose the package — are being asked whether they want to be responsible for even greater economic harm than has occurred so far, the CBC's Henry Champ reported from Washington.
"And the whispers always include references to Oct. 29, 1929, the Great Depression and things of that nature," he said. Although no one can be certain what would happen if the package is not passed, the threat is likely to carry the day, Champ said.".....

"Action by the Congress is urgently required to stabilize the situation and avert what could otherwise be very serious consequences for our financial markets and for our economy,'' Bernanke said in testimony prepared for delivery today to the Senate Banking Committee. "Global financial markets remain under extraordinary stress.'' (Bloomberg)
"I believe if the credit markets are not functioning, that jobs will be lost, the unemployment rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover,'' Bernanke told the Senate Banking Committee today. "My interest is solely for the strength and recovery of the U.S. economy.''
U.S. Securities and Exchange Commission Chairman Christopher Cox said Congress should "immediately'' grant authority to regulate credit-default swaps amid concern the bets are fueling the global financial crisis.
*************

Turning Green with Ambition

While the folks in Congress are tripping over themselves in a rush to give Hank a trillion dollars, a student came to me expressing interest in learning about 'green' architecture. She likes architecture, creating drawings and blueprints, and wants to learn to incorporate 'green' elements into design. While I have work to do to help this student, it gave me great pleasure to see a freshman take such interest in this topic.

Talking about green living...

GREEN Affordably

Chicago's greenest person?

The Trillion Dollar Give-Away: Preaching Capitalism, Practising Socialism

The NYT reported today that "The Bush administration on Saturday formally proposed a vast bailout of financial institutions in the United States, requesting unfettered authority for the Treasury Department to buy up to $700 billion in distressed mortgage-related assets from the private firms.

The proposal, not quite three pages long, was stunning for its stark simplicity. It would raise the national debt ceiling to $11.3 trillion. And it would place no restrictions on the administration other than requiring semiannual reports to Congress, granting the Treasury secretary unprecedented power to buy and resell mortgage debt...."

Some thoughts....

• A few years ago, institutions got the bankruptcy law changed to their benefit. As usual, Congress gave it a grandiose name - Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005. "The consumer credit industry had lobbied Congress for nearly ten years in an effort to pass the kind of bankruptcy reforms adopted in 2005. The industry went to great lengths to paint a picture of consumers using bankruptcy as a means of financial planning, running up huge credit card bills with complete disregard for their ability to repay them, and then discharging them in bankruptcy when the well ran dry. On October 17, 2005, the changes they'd been pushing for more than a decade took effect." (from /www.totalbankruptcy.com)
  It is bitterly ironic that these same financial institutions are now get bailed out by the government, rather than going bankrupt or getting bought out.
  
• The total money spent on this bail-out will easily exceed a trillion dollars. When financial institutions fail the government rushes to their aid. When individuals are suffering...
• Many students struggle to get financial aid in College. After graduation they often end up taking many years to pay off the loans, because of the terms. These students are the ones who could truly use financial assistance, but they do not get these 'bailouts.'
• According to the U.S. Census Bureau 45.7 million people were without health insurance was in 2007. They accounted for 15.3% of Americans. These people could get $21,884 each if the trillion dollars were spent on them- enough money to obtain life insurance for a few years. Further, according to the Chicago Tribune, "In 2009, the combined average premium and out-of-pocket costs for health-care coverage for an individual worker are projected to climb nearly 9 percent, to $3,826 a year, according to an annual study by Lincolnshire-based Hewitt Associates in preparation for open-enrollment season. Companies, meanwhile, will see their health-insurance costs rise 6.4 percent, to an annual tab of $8,863 per employee. "
  
• It is also depressing that folks who knowingly or through stupidity bought houses they could not afford will be able to keep their homes. There appears to be no risk associated with making asinine decisions.
• This is the country that tells others to deregulate, privatize, and protect property rights. Now every politician is talking about more regulation, and the government is buying assets, not selling them.
  

***
Going Green..Affordably

Don't moon the Full Moon stories...

Today, word came out that the bail-out of financial institutions is going to cost the tax payers $700 billion... yet another political way of making the rich richer using public money..

On to other topics...

Full Moon Energizes Birds

Sept. 18, 2008 -- If the night sky seems less tranquil on nights when the moon is bright, the observation probably isn't imagined since a new study has determined that at least one bird's level of activity dramatically increases with moonlight.

The finding adds to a growing body of evidence that lunar phases affect the behavior of insects, birds, fish and mammals -- including humans...

Hats off to Mayor Daley - Chicago Unveils Multifaceted Plan to Curb Emissions of Heat-Trapping Gases - Mayor Richard M. Daley of Chicago on Thursday unveiled perhaps the most aggressive plan of any major American city to reduce heat-trapping gases.

The blueprint would change the city’s building codes to promote energy efficiency. It also calls for installing huge solar panels at municipal properties and building alternative fueling stations.

Ron Burke, a director with the Union of Concerned Scientists, which helped shape the plan, said it was “more robust and quantitative than those in any other city.

Just stuff..

Mr. McCain seems to be showing his age and memory (or lack thereof). First he said he would fire SEC Chairman Mr. Cox. Then he said he would ask the FEC Chairman to leave. Sarah Palin, on the other hand, shows that she has a good memory. She keeps repeating the same words - reform, thanks but no thanks, etc., no matter what the question is.

No bailout package needed for Canada's banks: Harper

As Text Messages Fly, Danger Lurks

Green roofs are taking root in American cities-Other cities push to take Chicago's crown

Slaughter of the Innocent Taxpayers

Today's episode of the Ben & Hank's Bail My Buddies Show

Ben Bernanke pumped $280 billion today into the credit markets to increase liquidity or 'grease the wheels,' and found that Wall Street didn't think it was enough.
So the big dogs Ben and Hank have now proposed that the Government will buy up any all distressed assets of all struggling financial institutions. Clearly this will burden tax payers with hundreds of billions of dollars of debt in exchange for worthless assets of these financial institutions.
This is being spun as "helping the little guy on Main Street."

It is unbelievable that when South Korean banks faced problems in 1997 the IMF, dominated by U.S., told South Korean government that it should let banks fail so that only the strongest will survive. Quite a number of banks did go bankrupt. Now, to realize that we would rather bail out our banks and everyone else rather than let them go....

Must Read to be Well Read

Some excellent articles came out today-

Chicago tops America's Most Stressful Cities

The 2008 summer sea ice extent is now officially the second lowest on record, the lowest being 2007. If the trend continues, the North Pole could soon be ice-free every summer.

Ocean Noise Too Loud for Marine Mammals...

Common chemical BPA under scrutiny as study links it to diabetes, cardiovascular disease

McCain on U.S. economy: from 'strong' to 'total crisis' in 36 hours

In Asia, bloom is off the U.S. rose

Europe and Asia see U.S. as no longer practicing what it preaches

U.S. Supreme Court's global influence is waning

Politicians Point Fingers, Assign Blame

United Airlines Faces Losses on Its Contracts for Jet Fuel

**Daley blasts biz bailout, vague on own budget shortfall**

Need to get to the Root before Rooting Out the Mess

As the Ben Bernanke / Hank Paulson / George Bush Bailout Spending Spree (BS-S) continues, many folks in the media, particularly the corporate friendly CNBC and other similar outlets, are putting out the usual stuff:

• This is a once-in-a-century event
• The decline is too big and the government has to rescue the financial system, i.e. Wall Street
• Short Sellers are distorting the market...never mind that the same Wall Street banks invented short selling and its variants, and made a lot of money by selling these products, including puts and other derivatives
• Everyone will be hurt if the system is not bailed out
• The fundamentals are strong, and the downturn is a BIG buying opportunity
• Financials are a great BUY
• Investors should STAY THE COURSE
• and others

It is reasonable to assume that at least some people get the 'root cause' of the problem, but no one in the media wants to focus on it.
A country's prosperity depends on people working productively, creating new products and services, and making them efficiently. The finance industry exists to serve other industries and make those more productive. When the finance industry and associated industries become an end to themselves, the apparent prosperity needs to be questioned.
Ever since the Internet Bubble burst, George Bush and his crowd have used the finance industry (directly and through the housing industry and others) as the solution to all problems. As a professor I look at students and what they are picking for majors and where they go when they graduate. It has been very clear to me that the quality of work, quality of work life and of work benefits have been trending down over the past eight years. This is in addition to the 'real' degradation and decline in employment, not the fake numbers reported by BLS. When an engineer with a Masters degree loses a job at a high-tech firm and goes to work as a checkout clerk at a place like Home Depot (as a friend of mine did) for a quarter of his/her earlier wages, that is a significant degradation in employment. Several factors are at work- outsourcing, more competition globally for jobs, capabilities of our students not keeping up with those from other countries, increasingly more innovation happening abroad, and so on. When the best and brightest students are picking Accounting or Nursing or Education to major in, one has to ask the question why and ponder the consequences down the road.

When one looks at the budget of the U.S., it is clear that the Congress and the White House are putting more than thirty nine cents out of every 'discretionary' budget dollar on Defense. The implication is quite straight-forward- we are going to militarily fight our way and get what 'should' be ours. One has to wonder if we could get more remarkable results by spending the bulk of that money on education.

Perhaps far more significant than juicing up the financial industry is the culture that GWB and his team have created and spread like cancer. One can create a super-platinum disc based on this culture.

Bush and the Faithful's Greatest Hits - 2001-2008

The Band:
GWB, Dick Cheney, Karl Rove, Alan G., Ben 'Helicopter' B., and other supporting players

• Fear...Making people afraid- of foreigners, of muslims, of strangers, of liberals. This culture of fear has pervaded the air and clogs people's minds.
  
• Laws, Blahs....Ever since he came to power in 2001 through the Supreme Court intervention, GWB has shown complete disregard for the law and for legal procedures. Signing statements, destroying email, using private email for public matters, not co-operating with the Congress, (ab)using executive privilege as a birth right and having the villains get away and not testify before Congress, and many many more.
• Lie, Baby, Lie...
• A friend in need..can always get a job in the government
• Putting Compadre over Competence
• Exploiting faith for personal gain
• Science is a bad word
  

The consequences of this culture will be felt for a long time, even if the new President and Congress begin to make changes. Unfortunately, it is this collective culture that has prevented us from taking steps to understand the root causes and then putting our efforts in the right places.

Ben Bernanke renAIGs - does one more bail-out

This evening Dr. Bernanke, together with the Treasury's Hank Paulson, cooked up a scheme to bail out AIG. After refusing AIG a $40 billion loan over the weekend, Ben made a 180 degree turn and now has doled out $85 billion of public money to AIG as a loan. Under the agreement, the government got warrants that, if converted to common stock, would give it nearly 80% ownership of the company.
While Lehman is left wondering why it did not get the "preferential" Ben treatment, tax payers should be concerned about these grossly gross bailouts. While Helicopter Ben and the High Flying Treasury are raining money on Wall Street, no one is being held accountable for this tsunami. Neither Mr. Paulson nor Dr. Bernanke nor Mr. Bush is putting up his own money.

Of course, after the independent Congressional Budget Office said that "the proposed government rescue of the nation’s two mortgage finance giants will appear on the federal budget as a $25 billion cost to taxpayers- according to the NYT, "less than a week after the government took control of Fannie Mae and Freddie Mac, the White House announced that there is no reason at this time to account for the companies in the federal budget.That is great news for officials who prefer to hide the cost of the bailout since it is due, in large part, to their failure to adequately regulate the financial markets and steward the economy. But it is an insult to taxpayers, whose money is at risk, and it is a reckless gambit."

And we professors are expected to teach and inculcate ethical values in students...It would be unethical to teach ethical values in this climate of gross excess and wilful neglect of one's obligations.

The A(lan)B(en)C(EO)s of the Tragedy- Show - "Faith wins over Science"

As Lehman Brothers went down without a whisper and Merrill got 'Lynch'ed, Mr. Alan Greenspan, that great sage, said this on ABC's This Week - "This is once in a half-century, perhaps once in a century type of event." (quote is typed while watching the extract on TV...)

Greenspan, Ben Bernanke, George Bush, Hank Paulson, Obama, McCain, members of Congress, all the Street CEOs, and others are putting the blame on speculators, some bad apples and renegades. But none of them are putting the blame where it should actually rest- with themselves.

Some basics-

The phrase 'once in century' event is usually used when referring to a nature- related event, like a flood or an earthquake. This financial mess, Mr. Greenspan, was not caused by 'natural phenomena,' but by your and Ben B's mismanagement of the financial system of this country.

A major part of statistical analysis is devoted to developing models that explain the variability in observed 'outcome' variables based on other observed 'independent' or causal variables. The 'unexplained' variability is often referred to as 'error' - the difference between the observed outcome and the predicted outcome based on the model. The reason for error is that the model that is developed does not fully explain (or predict the outcome variable with certainty. The reason for the error in weather forecasting, for example, is that the models that have been developed for weather forecasting do not account for (or model the) weather variations completely.
Mr. Greenspan, many people including myself predicted a few years ago that your "easy credit- have it on Alan" policies in support of the administration's "ownership society"will result in a financial tsunami. It did not require much intelligence- basic high school analysis combined with elementary human psychology.

Ben Bernanke doing taxpayers a favor- lending their money and dumping toxic assets on them in return

Extract from the Fed's press release-
"The collateral eligible to be pledged at the Primary Dealer Credit Facility (PDCF) has been broadened to closely match the types of collateral that can be pledged in the tri-party repo systems of the two major clearing banks. Previously, PDCF collateral had been limited to investment-grade debt securities.

The collateral for the Term Securities Lending Facility (TSLF) also has been expanded; eligible collateral for Schedule 2 auctions will now include all investment-grade debt securities. Previously, only Treasury securities, agency securities, and AAA-rated mortgage-backed and asset-backed securities could be pledged.

These changes represent a significant broadening in the collateral accepted under both programs and should enhance the effectiveness of these facilities in supporting the liquidity of primary dealers and financial markets more generally.

Also, Schedule 2 TSLF auctions will be conducted each week; previously, Schedule 2 auctions had been conducted every two weeks. In addition, the amounts offered under Schedule 2 auctions will be increased to a total of $150 billion, from a total of $125 billion. Amounts offered in Schedule 1 auctions will remain at a total of $50 billion. Thus, the total amount offered in the TSLF program will rise to $200 billion from $175 billion.

The Board also adopted an interim final rule that provides a temporary exception to the limitations in section 23A of the Federal Reserve Act. It allows all insured depository institutions to provide liquidity to their affiliates for assets typically funded in the tri-party repo market. This exception expires on January 30, 2009, unless extended by the Board, and is subject to various conditions to promote safety and soundness."

As NYT comments- "...But the Fed, and ultimately the taxpayers, could get left holding the bag. In allowing investment banks to post collateral that includes stocks, junk bonds and subprime mortgage-backed securities, the Fed said it would be mirroring the rules of two industry-operated overnight lending systems, known as tri-party repo systems, operated by JPMorgan Chase and Bank of New York.

Fed officials have themselves expressed concern that those lending programs needed to reassess their practices because lenders were holding collateral that might prove difficult to sell. In recent years, financial institutions have been making loans based on relatively less liquid assets, Donald Kohn, vice chairman of the Federal Reserve, warned in a speech last May."

Looks like Ben does not care about loading taxpayers with toxic assets, but cares a lot about his friends on Wall Street. Rather than letting nature take its course and punish those who took bad risks, he is making it easier for people to 'bail.'

Financial Engineering's Atomic Repurcussions (FEAR)

This evening's headlines in the media are about:

• Lehman most likely filing for bankruptcy
• Merrill to be bought by Bank of America (with some help from Fed?)
• AIG in crisis
• WaMu in crisis

Remarks by then Chairman Alan Greenspan

May 8, 2003 - "...The use of a growing array of derivatives and the related application of more-sophisticated methods for measuring and managing risk are key factors underpinning the enhanced resilience of our largest financial intermediaries. Derivatives have permitted financial risks to be unbundled in ways that have facilitated both their measurement and their management. Because risks can be unbundled, individual financial instruments now can be analyzed in terms of their common underlying risk factors, and risks can be managed on a portfolio basis. Concentrations of risk are more readily identified, and when such concentrations exceed the risk appetites of intermediaries, derivatives can be employed to transfer the underlying risks to other entities. As a result, not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient. Individual institutions’ portfolios have become better diversified. Furthermore, risk is more widely dispersed, both within the banking system and among other types of intermediaries and institutional investors. Even the largest corporate defaults in history (WorldCom and Enron) and the largest sovereign default in history (Argentina) have not significantly impaired the capital of any major financial intermediary. Likewise, record amounts of home mortgage refinancing and accompanying declines in mortgage asset durations have not imperiled the principal intermediaries in the mortgage markets, in substantial part because these institutions were able to use derivatives to transfer a significant portion of the convexity risk associated with prepayments of fixed-rate mortgages to investors in callable debt and issuers of putable debt.
Risks Associated with the Use of Derivatives
If derivatives and the techniques for risk measurement and management that they have facilitated have produced all these benefits, why do they remain so controversial? The answer is that the use of these instruments and the associated techniques pose a variety of challenges to risk managers. Inevitably, risk-management failures occur, and in two instances--the highly publicized cases of Barings and Long Term Capital Management--they proved destabilizing. Those that question the net benefits of derivatives see daunting risk-management problems and thus foresee catastrophic outcomes. In particular, they fear that common deficiencies in risk management will result in widespread failures or that the failure of a very large derivatives participant will impose heavy credit losses on its counterparties and yield a chain of failures. Others, like myself, who see the benefits of derivatives exceeding the costs, do not deny that their use poses significant risk-management challenges. But we see ample evidence that the risks are manageable in principle and generally have been managed quite effectively in practice, at least to date. Indeed, credit losses on derivatives have occurred at a rate that is a small fraction, for example, of the loss rate on commercial and industrial loans. Market discipline in the largely unregulated derivatives markets has provided strong incentives for effective risk management and has the potential to be even more effective in the future. To be sure, there undoubtedly will be further risk-management failures. But the largest market participants have such diversified businesses that a risk-management failure involving a single product line is unlikely to be a threat to solvency. Furthermore, risk-management failures are more likely to be idiosyncratic than to reflect common deficiencies in procedure or technique among market participants...."

Alan Greenspan In May 5, 2005 - "...The benefits are not limited to those that use derivatives. The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions, which was so evident during the credit cycle of 2001-02 and which seems to have persisted. Derivatives have permitted the unbundling of financial risks. Because risks can be unbundled, individual financial instruments now can be analyzed in terms of their common underlying risk factors, and risks can be managed on a portfolio basis. Partly because of the proposed Basel II capital requirements, the sophisticated risk-management approaches that derivatives have facilitated are being employed more widely and systematically in the banking and financial services industries..."

Mr. Greenspan, through his lax credit policies and poor oversight of banks, created the "drunken with credit" marketplace that drove financial engineering. Amazing that people think this guy was a good banker!

Washed out!

Today was an interesting day. Lots of rain in Chicago, and Ike in Texas. Bombs exploded in India and in Iraq. Train crash in LA. According to BBC, "The number of Chinese babies known to have fallen ill with kidney stones as a result of contaminated milk powder has risen to 432, officials have announced."

NYT has an interesting piece "Once Elected, Palin Hired Friends and Lashed Foes" that examines Gov. Palin's history and her work in Alaska.

Funny cartoons from Mike Luckovich.

On days like this, one cannot help but be cheered up by that wonderful song by Natalie Merchant...

These are days youll remember.
Never before and never since, I promise, will the whole world be warm as this.
And as you feel it, youll know its true that you are blessed and lucky.
Its true that you are touched by something that will grow and bloom in you.

These are days youll remember.
When may is rushing over you with desire to be part of the miracles you see in every hour.
Youll know its true that you are blessed and lucky.
Its true that you are touched by something that will grow and bloom in you.

These are days.

These are the days you might fill with laughter until you break.
These days you might feel a shaft of light make its way across your face.
And when you do youll know how it was meant to be.
See the signs and know their meaning.
Its true, youll know how it was meant to be.
Hear the signs and know theyre speaking to you, to you.

When Lies Trumped the Truth, and the Media McCained

Major media outlets including the NYT and the Chicago Tribune have reported on the lies being spread by Sen. McCain, Gov. Palin, and their campaign folks. These include the bridgegate, troopergate, and lipstick on pig gate. Yet according to the media, polls indicate McCain leading Obama 48% to 44%. On Intrade, the last trade indicates McCain leading Obama 51.3 to 48.6.

I was discussing Culture in my first year seminar course and the values on which it rests. Many students identified honesty as one of our values. Perhaps the price one pays for College and post-College education is giving up honesty and truthfulness and not challenging lies and deceptions.

'Fresh' Optimism -

I am co-teaching a first year seminar course on Sustainable Living, along with a colleague from Administration. This is the second year I am doing this course. Teaching first year students (freshmen) is quite exciting and challenging, as I have to find the proper level to communicate and engage with them. After nearly three weeks, my 'guardedly optimistic' outlook has been reinforced. I have found at least some of the students to be motivated, aware, and excited- the recipe for success. Overall, a fun group.

The Large Hadron Collider is up and running.

Productivity Gains...Who Gains?

There is an interesting article in the WSJ today about "Human Capital Management" systems. Retailers including Ann Taylor and Wal-Mart are using software systems to schedule workers, especially those working "on the floor." I have dealt with software vendors who are in inventory management, supply chain optimization, and other "operations" optimizing systems, and am familiar with the value propositions behind them. What is ironic about this particular software is the use of the "human capital" phrase. Almost every CEO will say that his/her company's biggest asset is its people- more important than assets like cash, equipment and inventory. Now the employees' time is being managed for efficiency, like these other assets (which are often managed by systems called 'Asset Management Systems.') It is difficult to swallow that 'human capital' is just like 'financial capital' which just needs to be managed for maximum financial ROI.

Interestingly, an article titled "Mixed Economic Data Show A Changing Business Cycle" in the same WSJ tries to explain why the wages of employees are under strain when the productivity is rising. The classical economic argument is that increasing productivity means more output for the same work-hours, and this allows firms to pay their employees more.

Another article on the same theme, "High-Degree Professionals Show Power- Survey Highlights Worry of Winners, Losers in Economy" reads as follows: 'Workers with professional degrees, such as doctors and lawyers, were the only educational group to see their inflation-adjusted earnings increase over the most recent economic expansion, adding to the concern that the economy has benefited higher-earning Americans at the expense of others.

Workers in every other educational group -- including Ph.D.s as well as high school dropouts -- earned less in 2007 than they did in 2000, adjusted for inflation, according to data from the Census Bureau. Data don't include 2008 earnings.

The recent data are the latest reminder of how college degrees, long seen as a path to the middle class, no longer guarantees fatter paychecks every year. The statistics also indicate how deeply economic divisions have grown despite the economic expansion that started in 2001. Both presidential candidates have proposed policies to address this inequality.

Economists cite a number of reasons for falling wages for people with a bachelor's degree. Open borders resulted in blue- and white-collar jobs being sent abroad -- and skilled immigrants competing for jobs in the U.S. Job growth during the 2001 to 2007 expansion was weak compared to the late 1990s boom, thus putting less pressure on employers to dole out pay increases. Rising health-care costs are also a bigger part of total compensation than they were in the past. The Census data measure income, which doesn't include the health-care bills employers pick up for workers.'

The article includes the following chart- it is being included here because it is quite interesting:

Based on my experience in industry, the productivity gains have been captured by management and shareholders, leaving almost nothing for the workers. The productivity gains are real, but management has effectively used tools like outsourcing, combining jobs, downgrading jobs, having professionals work more hours because of fear of loss of jobs, and others to keep nominal wages almost flat over the past decade. Management has rewarded itself well for a job well done- one has only got to look at the increase in CEO pay during the same time period. Shareholders have done well, in capturing the earnings gains that resulted from higher productivity.
***
On Monday I had commented on the F&F nationalization. In a piece titled "U.S. Seizes Mortgage Giants" WSJ says that "Bush administration officials argued that the cost of doing nothing would be far greater because of the toll on the economy of falling home prices and defaults in the $11 trillion U.S. mortgage market.

Mr. Paulson noted that more than $5 trillion of debt and mortgage-backed securities issued by Fannie and Freddie is owned by central banks and other investors world-wide. "Failure of either of them would cause great turmoil in our financial markets here at home and around the globe," Mr. Paulson said.

By taking this action, the government has seized control of the vast bulk of the secondary market for home mortgages and will have a more direct responsibility than ever for solving the housing crisis. The intervention also marks the failure of the public-private experiment that was created to boost home ownership among Americans. Fannie and Freddie were created by Congress to help prop up the housing market, and investors have long believed the government would bail the companies out in a crisis. But the companies have long been owned by private shareholders seeking to maximize profits."

Ostensibly the current administration was worried that Saddam was developing dangerous weapons, and acted- resulting in the deaths of a few hundred thousand Iraqi people and a few thousand of our own. But when the leaders of F&F were creating an even bigger financial bomb, the administration was asleep at the switch. Now, when the bomb is about to explode, all of us are asked to "share the pain" and "sacrifice."

The answer, my friends, is blowin' in the wind....

How many roads must a man walk down
Before you call him a man?
Yes, 'n' how many seas must a white dove sail
Before she sleeps in the sand?
Yes, 'n' how many times must the cannon balls fly
Before they're forever banned?
The answer, my friend, is blowin' in the wind,
The answer is blowin' in the wind.

THANK YOU, Bob Dylan, for these words and the song.

Real Peso?

From China View......
Brazil and Argentina agreed Monday that their bilateral trade will be settled by Brazilian reals and Argentine pesos, eliminating the U.S. dollar as an intermedium. Brazil's President Luiz Inacio Lula da Silva and his Argentine counterpart Cristina Kirchner signed the agreement in Brazil's capital city Brasilia. According to Brazil's Minister of Finance Guido Mantega, the new system will reduce the costs of intermediation, making trade easier for smaller companies of the two countries. China is the biggest importer of soybeans from Brazil.

According to FT...
Coca-Cola's 47 products in China range from its trademark Coke to Ice Dew bottled water, and nearly everything in between.Yet Muhtar Kent, the company's new chief executive and president, still saw a gap in the array of products Coke is offering in its fourth-biggest market.He is now trying to fill it by making a $2.4bn offer for China Huiyuan Juice Group, the country's biggest juice-maker.

According to FT...
The latest cheap manufacturing site for European companies is not in Asia or eastern Europe but the US, say top executives from some of the continent's biggest companies."It may sound like a joke but it can be cheaper than you imagine to manufacture there," the chairman of one of Germany's largest automobile groups told the Financial Times.The reason is less the level of the dollar, which remains relatively low in spite of the euro's recent plunge, but rather the huge level of incentives some US states are offering companies to set up factories in their region.Tennessee, for instance, has just disclosed that it agreed to give German carmaker Volkswagen $577m in incentives for its $1bn plant in Chattanooga.A senior executive at Fiat, the Italian industrial conglomerate, said: "With the amount of money US states are willing to throw at you, you would be stupid to turn them down at the moment. It is one of the low-cost locations."

"Stuff"ed....

• Appears that abstinence and waiting until marriage to have *** is the "go to market" slogan of Republicans, except when one of their own has a daughter who is 17 and gets pregnant. Then everything is A-OK as long as she marries the "father" of the child. She is then praised for bringing life into the world. Heck, why bother with teenage pregnancies when they all bring lives into the world?
• Roger Federer has won his 5th consecutive US Open. While Bjorn Borg remains my favorite, for his cool, unflappable demeanor while winning five successive Wimbedons and six French Opens, Roger Federer comes close in being successful and also acting like a gentleman.
• Business Week reports that "Annual staff turnover at India's outsourcing companies is 24%, above the country's average of 18%, with lower bonuses to blame."Anecdotal reports indicate wages increasing in double digits.
  

Missing Content for the Delivery - TV analysis

Back in the early nineties, a client of mine told me that he had pulled the plug on the main family TV and had put it on his driveway for garbage pick-up. The reason: kids were spending too much time watching TV and not enough on reading, sports, and helping around the house.

Today, the WSJ reports on academic research by economists into television watching. According to the article, "University of Chicago Graduate School of Business economists Matthew Gentzkow and Jesse Shapiro aren't sure that TV has been all that bad for kids. In a paper published in the Quarterly Journal of Economics this year, they presented a series of analyses that showed that the advent of television might actually have had a positive effect on children's cognitive ability.

The two are part of a tight-knit group of young economists using statistical techniques to examine how television affects society. The group's research suggests TV enabled an earlier generation of American children in non-English-speaking households to do better in school, helped rural Indian women to become more independent and contributed to lowering Brazil's fertility rate."

My observations:

• A key part of any analysis of this type has to include marginal utility or marginal benefit, and opportunity costs. If a kid has already watched 4 hours of TV, what is the marginal benefit of an extra hour of TV? What is the next best option, and what is the opportunity cost incurred by choosing to watch that additional hour of TV?
• Content matters as much as time, and content relative to the watcher. Content that makes a difference to an adult woman in India may not have much of an impact on women in other countries.
• The Internet has become a compelling alternative to TV, and in fact, the line has blurred between the two. This enables a better matching of content to consumer.

Bailout of Fannie and Freddie- new meaning to the song "What a Wonderful World"

As expected and widely reported, Treasury Secretary Hank Paulson announced the 'bailout' of F&F. In the government's code language, as reported in NYT, "The Treasury Department on Sunday seized control of the quasi-public mortgage finance giants, Fannie Mae and Freddie Mac, and announced a four-part rescue plan that included an open-ended guarantee to provide as much capital as they need to stave off insolvency. At a news conference on Sunday morning, the Treasury secretary Henry M. Paulson Jr. also announced that he had dismissed the chief executives of both companies and replaced them with two long-time financial executives. Herbert M. Allison, the former chairman of TIAA-CREF, the huge pension fund for teachers, will take over Fannie Mae and succeed Daniel H. Mudd. At Freddie Mac, David M. Moffett, currently a senior adviser at the Carlyle Group, the large private equity firm, will succeed Richard F. Syron. Mr. Mudd and Mr. Syron, however, will stay on temporarily to help with the transition. "

What should make any intelligent person's blood boil is the reasoning put forth by Mr. Paulson. “Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe,” Mr. Paulson said. “This turmoil would directly and negatively impact household wealth: from family budgets, to home values, to savings for college and retirement. A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance. And a failure would be harmful to economic growth and job creation.” (NYT).

There is no accountability in the system. Paulson never addressed the issue of culpability. Who is being held accountable for allowing these institutions to get so large without any oversight? Why isn't the President taken to task for promoting an "ownership society" without any responsibilities? Why aren't the heads of SEC and the Fed not being charged for dereliction of their duties? And Paulson's assertion that F&F need to taken care of because "this turmoil..." is blatantly inconsistent and irresponsible. Hundreds of thousands of people suffered from the evil actions of the leaders of firms like Enron and MCI Worldcom. The government never stepped in to bail out the employees and shareholders who suffered.

Hank Paulson helping his buddies, Bush helping his buddies, Cheney helping his buddies....and the foreign governments parking their dollars in Treasuries. It is becoming more and more difficult to teach ethics.

Bush and Co. doing the FnF Bailout - Taxpayers get the Shaft

According to the NYT, Bloomberg and others, the government plans to announce the takeover of Fannie Mae and Freddie Mac. The proposal is to place both companies, which own or back $5.3 trillion in mortgages, into a government-run conservatorship. The chief executives of both companies will be pushed out, according to those briefed on the plan. The cost of the government’s intervention could rise into tens of billions of dollars and will probably be among the most expensive rescues ever financed by taxpayers.

According to the NYT, "both presidential nominees expressed support for the government’s plans. Senator Barack Obama, Democrat of Illinois, said as he campaigned in Indiana that not acting could place the housing market in further distress. Senator John McCain’s running mate, Gov. Sarah Palin, said at a rally in Colorado Springs that Fannie Mae and Freddie Mac have become too big and too expensive .

Senator Barack Obama, in comments to reporters in Terre Haute, Ind., said that although he supported the concept of a takeover, he would withhold final judgment until the Treasury Department released a detailed outline of the plan.

“Any action we take has to be focused not on the whims of lobbyists and special interests worried about their hourly fees,” said Mr. Obama, the Democratic presidential nominee, “but on whether it’s going to strengthen our economy, whether it’s going to help strengthen the housing market and help struggling homeowners who are also being hit by lost jobs and stagnant wages.”

Senator John McCain, the Republican nominee for president, said at a rally in Albuquerque that “we need to keep people in their homes, but we can’t allow this to turn into a bailout of Wall Street speculators.”

His chief economic adviser, Douglas Holtz-Eakin, said in a telephone interview that Mr. McCain saw the takeover as distasteful but essential. “You’ve got to do what they’re doing today,” Mr. Holtz-Eakin said. “You make every effort to insulate the mortgage and financial markets from financial distress so there’s no further harm to homeowners and businesses in general.”

Mr. McCain’s running mate, Gov. Sarah Palin, went further and called for the mortgage giants to be scaled back.

“They’ve gotten too big and too expensive to taxpayers,” Ms. Palin said in Colorado Springs. “The McCain-Palin administration will make them smaller and smarter and more effective for homeowners who need help.”"

The Chief Executive Officers who made a killing by taking imprudent risks have not been asked to pay back their ill-gotten gains, nor have they been tried in court for ruining the lives of many. The investors who made their money by supporting the unethical operations of F&F are long since gone, and they have not been asked to pay back their gains. However, the tax payers, many of whom have nothing to do with these crooks, are now asked to share the burden of bailing out these folks.

It should be kept in mind while this bailout costs the tax payers plenty of dough, the Bush government will do it the same way it has done other things, by piling the costs on to the federal deficit. Bush, Paulson, and others in the administration appear to have no moral values as they burden the future and the poor with larger deficits, which results in lower and reduced services.

Senators Obama ad McCain are singing the same tune, implying that F&F cannot be allowed to fail. Yes, when it is not your money, you can give it away freely. Further more, Obama wants to give another $100 billion in "refund checks" to the public to jumpstart the economy. Where does he think the $100 billion is lying around? It is this type of irresponsible behavior that has led us to these problems in the first place.

These bailouts should be deeply disconcerting to anyone who believes in accountability and and punishment for poor judgement and imprudent risk taking.

Getting High BP fron Health Care Costs -

MSNBC reports:

"A survey being released Thursday by the Mercer consulting firm found 59 percent of companies intend to keep down rising health care costs in 2009 by raising workers’ deductibles, copays or out-of-pocket spending limits.

On average, health care costs will go up by an estimated 5.7 percent next year for both workers and their employers, the study found. That repeats this year’s 5.7 percent hike and a 6.1 percent jump in 2007."

One more reason to stay healthy and eat healthy, and one more data point for the students in my Sustainable Living course.

Sequel to "Senator Barack Obama - Please don't get 'Kerry"d away!"

On Thursday Sen. Obama appeared on the Fixed News' O'Reilly show. The transcript is posted on that organization's web site.
In it Obama agrees that the surge in Iraq was a great success, says that Iran possessing a nuclear weapon is not acceptable, and that he would not take the option of military action off the table. He played up to O'Reilly's war mongering and supported the "war on terror" thesis.

As the campaign is dragging on, Obama is becoming a bigger disappointment to people who had hoped that the Senator would present a different kind of leadership- based on principles and ethics and humanitarian considerations.

Airlines....Grounded

Some interesting data, courtesy of today's Dallas Morning News...
***American Airlines Inc. said Wednesday that it filled 83.5 percent of its seats on its August flights, down 1.5 percentage points compared with August 2007.While the Fort Worth-based carrier reduced capacity 1.1 percent, traffic declined at a faster rate, 2.9 percent.Regional partner American Eagle also reported that its passenger loads declined in August, down 7.3 points to 69.7 percent.Its traffic decreased 13.6 percent on a 4.5 percent reduction in capacity.

United Airlines Inc. said its August traffic dropped 5.1 percent, with a 3.1 percent cut in capacity. Its load factor dropped 1.8 points to 84.5 percent.The results were consistent with those of Continental Airlines Inc., which reported Tuesday that its August flights saw a decline in passenger loads. However, Continental's traffic increased 0.7 percent on a 2 percent increase in capacity.***

The macro picture: The Airlines' management's strategy to fly high?

• Cut capacity
• Cut pilots
• Cut Flight attendants
• Cut basic amenities
• Cut service/ Provide lousy service
• Raise fares
• Raise add-ons

As the airlines are finding out, this is leading to a decline in traffic that's more than the reduction in capacity- people are just sick of the high fares/lousy service, and as the traffic cuts back, the fares go up even more and capacity becomes even less- this is a death spiral.

Eventually, folks have to figure out that management, pilots, and other labor need to take big pay cuts (perhaps 50% or higher) to lower the operational expense to a level that will allow traffic to grow by keeping prices attractive yet profitable.

Need an Ice breaker?

There are folks, even on my campus, who still argue that human activities are not contributing to global warming and climate change. Anyone who has breathed the exhaust coming out of a petro-fuel based engine should understand the deadly nature of the carbon emissions.
Chicago Tribune reports that "19-square-mile chunk of ice breaks loose from Arctic ice shelf in Canada's far north." According to the story "A chunk of ice shelf nearly the size of Manhattan has broken away from Ellesmere Island in Canada's northern Arctic, another dramatic indication of how warmer temperatures are changing the polar frontier, scientists said Wednesday.

Derek Mueller, an Arctic ice shelf specialist at Trent University in Ontario, told The Associated Press that the 4,500-year-old Markham Ice Shelf separated in early August and the 19-square-mile shelf is now adrift in the Arctic Ocean."

'Firing the customer' from customer service

Lucy Kellaway wrote an interesting piece in the FT on customer service, titled "The case for turning customer delight into disgust." Here is an extract..."I shall try to keep this story brief as the details are tedious even to me - and it is my money that is at stake.

Last March I visited the EasyJet website and bought six flights to Menorca for £1,285.80. The promised e-mail confirmation didn't arrive, and on the "My EasyJet" page there was no record of the booking. So I went through the rigmarole of booking the tickets again. This time all went smoothly - until my bank statement arrived and I saw that EasyJet had pocketed the money twice.

Then began an e-mail correspondence with the EasyJet Customer Experience Team that is still going on, five months later. First they said it was my fault, as I had mistyped my e-mail address, and they owed me nothing. Then, after many protests from me, they finally agreed to repay the rather lower sum of £1,193.82.

Unfortunately, the money got lost in between leaving the cheap and nasty airline's bank account and arriving in mine. So we are still slogging it out..."

This experience is not unusual, especially when one is dealing with airlines. I teach customer relationship management and discuss these paragons of customer (dis)service in my classes. The Univ. of Michigan customer satisfaction survey (ACSI) ranks the cable companies and the airlines at the bottom- your experience is just one more data point affirming the
rankings..The current mode of operation appears to be to distress the customers enough so that they are delighted to get 'any' service at all.

For a different experience- yesterday I had gone to Menards, a local hardware store here, to get some scrap wood for a book shelf I am building. I needed 5 pieces, but the store had only 2 in the scrap wood bin (cheap wood). The manager of the section, Kyle, saw us sorting through and offered to help. He took a nice long piece of wood (not scrap), cut it into the three pieces I needed, and put bar codes on them so that I would be charged the same price as scrap wood when I checked out....I did fill out a form commending him and turned it in to his manager.

Owning up to the Mirage of the Ownership Society

The ownership society, promoted to much fanfare during the early part of the decade by the administration and specifically George Bush, has been unraveling for the past couple of years. The changes that have been made, including taxing investment money differently than wages, subsidizing owners in certain sectors of the economy, loosening regulations, and stacking the courts with justices who are anti-labor and pro-owners, are beginning to show their effects. Of course, even among the suffering, there is a segment of the populace that takes comfort in religion, prayers for relief, and votes for more of the same. Folks should be aware that a Commander in Chief should lead the country and overcome internal challenges before showing "muscle" abroad.

A few recent articles shed some light on the transformations taking place in the country.

• A WSJ article "Help Wanted: Senior-Level Job, Junior Title, Pay" describes strategies being employed by companies to reduce their salary and benefit expenses. Companies first fire people, of course calling it "right sizing" or "reducing overhead." Now, some firms are not eliminating positions entirely, but are combining a mid-level position or senior position with a more junior one -- then advertising it as a junior slot and offering a lower salary. This allows the firm to get the work done, but effectively at a much lower cost. The article adds that "In other cases, more-senior persons are being hired, only to find that they are charged with handling both their own work and the tasks that once fell to subordinates." It should be pointed that this is quite separate from outsourcing, the phenomenon that has caused much angst as a source of job loss.
• According to a report released by Rutgers School of Management and Labor Relations, "more than 10 percent of Americans are unemployed, discouraged from seeking work or underemployed. That is a nearly 25-percent increase from one year earlier.
  Professor Douglas Kruse, a labor economist who created the scorecard, said a sharp decline in the number of Americans able to find full-time jobs, along with growing consumer debt and health care costs, were causes for concern." It should be noted that the report is based on data from BLS...the inventor of the birth-death fake jobs model.
  
• In a downright depressing article,"Hard Times Hitting Students and School," NYT reports that "With mortgage foreclosures throwing hundreds of families out of their homes here each month, dismayed school officials say they are feeling the upheaval: record numbers of students turning up for classes this fall are homeless or poor enough to qualify for free meals. “We’re seeing a lot more children in poverty,” said Lauren Roberts, spokeswoman for the Jefferson County school system, a 98,000-student district that includes Louisville and its suburbs. At the same time, the district is struggling with its own financial problems. Responding to a cut of $43 million by the state in education spending and to higher energy and other costs, school officials in Jefferson County have raised lunch prices, eliminated 17 buses by reorganizing routes, ordered drivers to turn off vehicles rather than letting them idle and increased property taxes. The Jefferson County system is typical this school year. As 50 million children return to classes across the nation, crippling increases in the price of fuel and food, coupled with the economic downturn, have left schools from California to Florida to Maine cutting costs. Some are trimming bus service, others are restricting travel, and a few are shortening the school week. And as many districts are forced to cut back, the number of poor and homeless students is rising.
  
“The big national picture is that food and fuel costs are going up and school revenues are not,” said Anne L. Bryant, executive director of the National School Boards Association. “We’re in a recession, and it’s having a dramatic impact on schools.”
Louisville’s pain is minor compared with the woes of some cities. Detroit has laid off at least 700 teachers, Los Angeles 500 administrators and Miami-Dade County hundreds of school psychologists, maintenance workers and custodians.
Schools in many states have cut bus stops to save diesel. Districts in California and Ohio have gone further and eliminated bus service either completely or for high schools, leaving thousands of students to find their own way to school.
In Maine, officials worried about the cost of heating their classrooms this winter have restricted travel for field trips to save money. Districts in Louisiana, Minnesota and elsewhere have taken a more radical measure and adopted four-day school weeks. Hundreds of districts, responding to higher food prices, are charging more for cafeteria meals."