Still looking for work

I have received fewer job leads during this period of unemployment than any other. Normally, I would have had a couple of phone interviews and at least one on-site interview by now. I don't think I am doing anything different in this job search. Through Linked-In and Facebook, I have contacted more people about my job situation than I have in the past with fewer results.

This is a sign of how poor the local economy has become. Silicon Valley is one of the drivers for the global electronics industry. The only other downturn that comes close, from my perspective, was the crash after the dot com boom. I was out of work for nearly seven months before I found my next permanent engineering job.

At that time, I knew people who switched to the building trades because they could find work and needed the money to support their families. Now with the real estate market in the dumper, I suspect trade work will mostly be in the form of repair and staging homes for sale. The days of people borrowing against their homes for renovations are over, for now.

Thankfully, we have unemployment checks coming in and the Obama administration has a program where the unemployed can qualify for Cobra payment subsidies. We are receiving both. Even so, our expenses are in excess of our combined incomes. At least we have some savings so we are not dire need of good paying work.

A new year, a new me

Hi everybody!

I am a newly unemployed Silicon Valley engineer, of the senior hardware variety. I will try and not bore you with my sad story of losing a good job at a growing company.

I will try to interest you in my new me. I am a man of a certain age that is looking back at my lack of joy and I have decided enough of that. Paid work or not, I am focused on improving my health starting with my physical condition. I have tried many forms of exercise, and found all but one wanting: running.

Running for a couch potato is not easy. My first run will be both short, maybe a city block or less, and quite slow. Why choose running, considering my age, and weight? Well, my overall health is quite good. The basics, like blood pressure, blood panel and the like are all quite good. The reason I am going back to running is what running did for me. I felt free when I ran. I ran for several years in my late 20's and lost weight, built stamina. I just enjoyed the feeling of freedom that came only with running.

So, why did I stop? For reasons many runners know: injuries. I would hurt my back, my knees, my feet. Most of me felt the pain of running on many occasions. I tried as many things as I could come up with to keep me on the road: ice, better shoes, better socks, running on dirt tracks, running on grass. None of this stopped the injury that was sure to happen.

With that background, why in hell would I go back to running? Did I mention I felt free when I ran? This is the only time I have this feeling. Also, I have learned a lot about shoes and their affect on the runner. Humans have run barefoot for, well as long as we have existed until the invention of the shoe and later the running shoe. Our bodies are well optimized for barefoot running. We would not exist today if we needed shoes 100,000 years ago.

How is a tenderfoot like me going to go back to running, a source of joy and pain so long given up, and start over without shoes? Well, I did not say I would run for miles on my first outing. As well as not saying I would not wear protection of a sort. I found a website, http://www.invisibleshoe.com that sells kits and custom "shoes" for barefoot running. This footwear is as close to barefoot as is possible without having the sole of my foot touching the ground. See the website for more information and some videos on the topic.

I now believe the pain I had from running was caused by the pounding I took from heel strike running, the running form most shod runners use. Without the heel strike, I believe I can get back into running.

When I starting running, in my 20's, I would only run in the wee hours of the morning or after dark because I was embarrassed to be seen sucking so much wind and bouncing so much fat. Not only that, but I nearly vomited on my first two or three runs that were only 100 to 200 yards long. But after a number of months, I found I could run a mile or so without feeling like I was killing myself. I actually looked forward to the runs, mostly for stress relief and later for the feeling of freedom.

I suspect my ramp up on mileage will be slower, I will take my time so I can avoid injury. Having almost nothing on my feet does feel good.

World's Greatest Robbery

The most recent value of the derivatives market from the Bank for International Settlements in Switzerland, as of June 2008, is about 650 trillion dollars. If we take the value of all the stocks on all the stock markets, the value of all the publicly traded companies, and add them up, we get about 30 trillion dollars or less than 1/20 of the value of all outstanding derivative contracts.

What does this mean? These contracts are bets on the rise and fall of commodity prices, stock prices, weather; whether or not someone can pay someone else (a naked credit default swap) and anything else the wizards of Wall Street can bet upon.

In a worst case financial melt-down, the gaping maw of derivatives will consume all the world's wealth and still only be satisfied to the tune of 1/20 of all existing debt. The wealth consumed by the derivatives payouts is not destroyed, it is relocated, transferred from the many to the few who are on the payout end of these contracts.

If we do not zero-out the worst of these contracts, we will see the greatest wealth redistribution in history. When the trigger on a derivative is pulled, it is pulled based on some underlying asset, or ability to pay, failing a test written into the contract. Since the value of the contracts vastly exceeds the world's wealth, we have many bets with full value payout placed on the same base asset or action.

To survive this downturn, we must consider zeroing-out the worst of these derivative contracts. When Lehman Brothers failed, the underlying assets for 100's of billions of dollars worth of derivative contracts was destroyed. The shock waves from this, one of the smaller investment banks, failure caused world-wide lending to freeze-up solid. We can not afford one of the larger banks to collapse without first dealing with derivatives.

Once the nuclear weapon of the financial world, the derivative contract, is defused, we can start to unwind the failing banks and begin a true economic recovery.

Bankruptcy law blocks AIG recovery

The 2005 bankruptcy law passed by the Republican House, Senate and President is preventing the current administration from properly disposing of AIG. In short, the problematic change is to move the holders of derivative contracts to the head-of-the-line in a bankruptcy hearing.

How can the order of payouts in bankruptcy make a difference? According to the International Bank of Settlements, BIS, in Switzerland, there are 1000 Trillion dollars in active CDO, and CDS derivative contracts. The world GDP is only 60 Trillion dollars. If we payoff the bad derivative bets before, say employees, creditors, or shareholders, we will have a massive movement of dollars from stakeholders to financial gamblers. A massive transfer of wealth from the tax payers to the owners of these derivative contracts. Unless the laws are changed back, we will be paying our tax dollars for generations to make good on these financial market creations.

Push your elected leaders to repeal the 2005 bankruptcy bill. We must not payout on Wall Street bets with our futures. Remember AIG has already sent about 90 Billion dollars to other banks, some outside of the US, to payoff these derivative bets. Once the derivative contracts are placed at the back-of-the-line in a bankruptcy hearing, we can start to properly unwind the failed financial institutions and start on the road to recovery.

Repeal the Reagan tax cuts

Netflix CEO, Reed Hastings, has an excellent point, but misses the mark. Yes, the very wealthy use more of the commons than the rest of us and should pay a higher tax rate to pay for using the courts, roads, airports, police, fire, etc. What he should have added: Yes, CEOs use their membership on boards of directors to game more compensation for themselves. Yes, many CEOs are more interested in their own compensation than the health of the companies they are well paid to run.

But the real issue is: economic bubbles caused by top wage earners. The last time we entered a period of economic deflation was after three Republican administrations lowered the top marginal tax rates and reduced regulations. The current economic cliff we peer over was brought upon us by the last three Republican and one free-trading Democratic administrations that did very much the same thing. In both cases, the depression followed bubbles in stock and housing. America's experience and understanding the cause of the Great Depression and the current economic colapse shows that top tax rates that are too low cause economic instability, bubbles and ultimately major resessions and depressions.

I am not talking about taking wealth from the highest wage earners, I am suggesting that a system that allows massive capital movement from corporations to the top executives results in decisions that benefit management over the employer. When Reagan lowered the top marginal tax rate, he set into motion the fleecing of well capitalized companies and transfer of taxation from the top wage earners to the middle and lower income earners.

Remember the leveraged buyout mania of the 1980's? The top marginal tax rate of about 70% prevented the would-be corporate raider from profiting by buying and parting-out companies. If the raider had the cash to purchase the company, then there would still be profit, but a heavily taxed profit. The leveraged part of the LBO is: performing the buy-out with others peoples money. Once the cost of capital, from borrowing, was factored in, LBOs, in most cases, would not be profitable for the corporate raider. Leveraged buyout mania equals fleecing corporate America for the benefit of the very few, the corporate raiders.

The I'll-give-you-millions-if-I-am-on-your-board-of-directors, if-you-agree-to-give-me-millions-as-a-member-of-my-board-of-directors game, would not be played if most of the wages, above the top marginal rate level, were heavily taxed and went to the government. When this "game" is played, capital that would be used for employee health care, a war chest for economic down times, research and development for new products and services would go to the top executives. Now we have decisions made for personal gain, in violation of the fiduciary responsibilities of top management.

To say its not fair to heavily tax the very rich is to take the me point-of-view over the we point-of-view. When monies are taken, in the form of excessive compensation, from companies, there are consequences, namely, long term viability and competitiveness of the, now poorer, companies. What is more important, giving top management with whatever compensation they want, or insuring steady long-term growth for the corporation, all its employees and shareholders?

Cutting taxes never results in increased government revenue. The Reagan top marginal tax rate cut reduced tax revenue. This forced Reagan to raise taxes, mostly on the middle class in the form of doubling Social Security deductions, to make up for some of the tax revenue shortfall. Bush Senior also increased taxes, even with his pledge of "no new taxes" to make-up for the shortfall caused by his predecessor.

It's time to revisit the Reagan tax cuts. Tax cuts never fixed a road, never built an airport, put police on the beat or put out a fire. Starving the government, a long term goal of the far right, does not leave the lender of last resort, our federal government, much capital upon which to fight the economic depression our nation, and the rest of the world, is now facing.

Excessive top level management compensation weakens the companies run by these managers. Since management and the compensation committees who set the executive wages are compromised, corrupted, we the people have to step in and ensure the health of our jobs and of our country. Restoring Roosevelt, Teddy (the Republican one) that is, level taxation will restore buying power to America's corporations and give our government the capital it needs to fight the worst economic downturn since the Great Depression.

Song and Dance before November

The Federal Reserve Bank, a private institution, is spreading money around Wall Street to keep the financial system and therefore, the economy afloat. Even though The Fed is not a federal government institution, we, the tax payers, are on-the-hook for the massive lending via the new lending window. What's a lending window? Its a place and a method to borrow money directly from the Federal Reserve. Why is the Fed doing this? They believe the financial system is gummed up so badly that lending tens of billions of dollars is prudent and necessary to keep the investment banks solvent and prevent a total freeze on new loans.
Why don't we let the greedy bastards fail? This reason: the retail banks, investment banks and insurance companies are all tied together by the mostly complete elimination of the Glass-Stegal Act. This act of Congress, from about 1933, was written into law in reaction to the banking crisis of the Great Depression. Since the repeal, credit default swaps, a form of insurance that is not called insurance to skirt regulation, became a way to reduce risk on the part of a lender. If I lend a company, say 100,000 dollars, I can by a CDS, credit default swap, from another institution as a form of insurance in case the borrower defaults on the loan. If done correctly and with integrity, a CDS can be a good way to reduce risk associated with lending. The fishy part comes in a couple of ways: lenders can lend to less qualified borrowers and the sellers of the CDS can re-sell the credit default swap.
So we have a way to decouple risk from lending. The best example of this going wrong is in the meltdown of the sub-prime mortgage industry. The house of cards starts with a loan broker writing a loan to a borrower who will never be able to continue payment when the interest rate resets to the higher rate. Then the bank that lent the money re-sells the loan to another bank or investor, like a pension fund. Since the quality of the loan is no longer an issue, someone else approved it, the loan can be bundled with other debt and this new bundle carries the rating of, well, the best of the bundle, not a rating comenserate with the mix of loans it is comprised. So where does the CDS come in? In the chain of re-selling and re-packaging of these loans, each of the sellers can buy this, we do not call it insurance, CDS to cover the risk of the loan or loan bundle.
And this is bad because? We have removed and given the risk lending to unqualified customers to someone else. Here is where the scammers come into the picture. A loan broker lends money to someone who can never repay the loan. The broker gets a fat commision when escrow closes, a bank gets a loan which has a time bomb attached. A broker has a built-in conflict of interest, make the loan, and get a commision, do the right thing, deny the loan, make no commission.
Because of overuse of the credit default swap, we have a large, huge part of the financial industry playing a game of make money up front, pass the bad loans onto someone else.
How do we fix this mess? Bringing back Glass-Stegal is a start. We may have to nulify the CDS contracts to get risk sent back to the originator. This is extreme and will cause problems. Consider the fact that the dollar value of all the CDS contracts vastly exceeds the value of all lending!
Enough for now.

Secret trade agreement between senior Democrats and Bush

I have just heard about this today, 15May07, and I am quite mad about this agreement.

1. Why secret? If this agreement is so good for middle class Americans, why not provide the text of the agreement? Why is the mainstream media reporting that this is a good agreement, with no details provided publicly?.
2. This country is moving in the wrong direction with respect to trade. Once the tariffs were dropped and the top marginal tax rates reduced, America started to and still is exporting manufacturing jobs. Thank you Ronald Reagan. The situation is so bad that we no longer make shoes, clothing, computers and once the Chinese cars start coming to America, automobiles. The cost of many of the imported goods is not less due to the reduced cost of manufacturing. Case in point: running shoes. Did the price of Nike shoes drop when manufacturing was moved to China? The prices, if anything, have gone up.
3. I cannot believe that Democrats would be a party to an agreement that will hurt workplace standards enforcement, one of the details talked about in the press. Once the government, and only the government can initiate workplace abuse investigations, there will be no workplace investigations or enforcement. The ability to report workplace violations is one of the ways the unions have to ensure the safety of its members on-the-job. In China, the company controls the unions. So enforcement actions can be stopped before the infraction is reported. If the inspector can be fired for doing his job, then he will do what the company wants. In the US, I believe that the Bush Justice Department will not initiate any action that will reflect poorly on any company that has ties to the White House.
4. I am sick and tired of the Republicans and some Democrats selling out the middle class with trade agreements that only help the extremely rich, the investment bankers (like Rhom Immanuel(sp?)), and the corporate raiders. NAFTA, CAFTA, the WTO all protect the interests of the international corporations, and ultra rich at the expense of the middle class.
   

I am laying down the gauntlet on these agreements. I will refuse to vote for anyone who votes for, or approves of these agreements. Even if this means a defeat for a Democrat.