The Way the Future Blogs

Lefty, the Cat

Turns out that cats, like people, have handedness. Females are more likely to be southpaws, males righties, but it can go either way. If you want to know the leanings of the Felis domestica in your house watch it the next time it has a one-paw job to do, like fishing something out of a jar,

 
You’re Never Too Poor to Swindle

The bloodsuckers are up and about and their specialty now is seeking out the people who are already in terrible financial shape, to whom they promise help. Which, of course, they don’t deliver, preferring to vacuum out and appropriate whatever crumbs of cash the impoverished may have left. (Bernie Madoff was a great villain, but at least he stole from the rich.) So I went back through my files and came up with “Financial traps are flourishing: Tough times have bred five costly come-ons” in the March ’09 Consumer Reports. So if you, or someone you know, has been hit with threats of foreclosure or evaporation of your 401K or the like, you should take a look at it.

I’ll give you just one example. If all your credit cards had been taken away and nobody would give you a new one, Continental Finance Classic MasterCard was more obliging. You probably don’t want its help, though. The maximum chargeable credit line was $300, and by the time the customer got the card $250 had already been taken out of your balance to pay for the account processing fee: $50, and annual membership fee, $200. The $50 of credit that was left you could use as you liked, bearing in mind that an account management fee would have had to be paid every month, with other fees coming due later. So beware!

So long, Fertile Crescent

The Fertile Crescent, which is the land between the Tigris and Euphrates Rivers, is the place in the Middle East where our planet’s civilizations were born. It was the home of the world’s greatest early cities — Sumer, Ur, Babylon and more — and it fed them from its rich and well watered soil; it is where many of the stories in the Bible took place and where they invented beer.

It is projected to become a full-fledged desert by the end of this century. There’s a brutal drought going on in the region, but the real enemy is dams — the big ones Turkey has erected along the Euphrates and the ones Iran has installed along the tributaries of the Tigris. Both countries have indicated they’ll go right on building them. Already some of the smaller rivers are running dry.

 
The Bush-Cheney Alumni Association

No, we didn’t make that up. It’s real. It’s what it says it is, an association of the people who were most closely connected with President Bush and Vice President Cheney over the last eight years, and its purpose, they say, is “dedicated to setting the record straight.”

Maybe so, but I can’t help thinking it’s more like getting their stories together so they’re all giving the same answers to the hard questions. Questions like: When you had the Taliban and Osama Bin Laden and all of Al Qaeda licked and running and it only took one more push to put them away for good, why did you pull the troops out to invade Iraq? And when you did go ahead and invade, why didn’t you immediately seize all the Iraqi explosives and weaponry instead of leaving them unguarded for the terrorists to steal and kill American soldiers with, as they’ve been doing ever since? And about forty other questions about the doings of the most wrong-headed administration this country has seen, ever.

Related post: Little Known Fun Facts

IQ, Do U?

Lewis Terman

Remember the Terman kids? The high-IQ teenagers Lewis Terman collected in the 1920s to follow through their adult lives to see whether getting high marks on the test (their average IQ was 150) really did mean intellectual success as a grownup? In the end, two of his candidates wound up as Nobel laureates, but they didn’t show up on his results. Terman had dropped them from his study. Their IQs weren’t high enough.

 
If It Hurts, Talk Dirty

Psychologist Richard Stephens (UK’s Keele University), working with volunteers, applied pain stimuli to them and told them their audible response would be recorded. He instructed some, randomly selected, to avoid bad language while the rest were permitted to let the censorable words rip. On analysis of the results, the foul-mouthed sufferers turned out to be able to handle pain better than the prissy ones.

 
‘Stocks That Win If the Health Protestors Win’

That was a headline on Fox for one of its financial-advice guys the other day — for which I have to say:

Thank you, Fox! You’ve finally come clean! As was true all along. those “spontaneous” demonstrations of screaming or bellowing demonstrators, which have made it just about impossible to have a meaningful public discussion — the ones that you and all the other right-wing wheeler-dealers have been so assiduously nursing along — have just one real purpose: to prevent the passing of laws that would threaten the exorbitant profits of the giant so-called “health” providers.

Related post: More Little Known Fun Facts

The House of Cards, Jean-Baptiste-Siméon Chardin, 1736–7

You remember what has gone before. I posted some text called, “My Worst Prediction Ever: Corporate Leisure Time,” and before you knew it, I was claiming that the recent fad for paying top corporate personnel mostly by huge bonuses rather than by straight, if large, salaries is what caused the world financial melt-down of 2008.

“Oh,” you say, “what nonsense! How could so simple a bookkeeping device have such catastrophic effects?”

Well, like this. Let’s say that the board of directors of the XYZ corporation calls you in and says, “Mr. Phan, we like the cut of your jib, so we’re going to offer you the job as our CEO. Since you don’t have an impressive work history, the salary we can offer you is only $37.50 a week. Now, we know that’s not much. But we’re willing to pay for results.

“So here’s what we’ll do. XYZ’s stock hasn’t been doing well in the market lately. It’s been running at about $18 a share on the Big Board. We’d like to see it at around $30. We will give you a year to get it done, and we don’t care how you do it, but if 365 days from today, XYZ is at that higher figure, we’ll give you a $2 million bonus.”

So what would you say to that? I think I know what you would say. I think you would say, “Yes, sir!” And I think you would say it with great speed, so the nice XYZ man wouldn’t have time to change his mind. After all (you might calculate) there was a chance that you could just stumble into some new business opportunities that would actually make the company gain that much in a year.

And — this, you promise yourself you might try but only as a very last resort — you might go to dealing in those “derivatives” that nobody seemed to understand but some people seemed to be making an awful lot of money on.

 
What are these “derivatives”? There are two that caused most of the trouble, and they are called “sub-prime mortgages” and “credit-default swaps.” The sub-prime mortgage is easy enough to understand. “Sub” means below and “prime” in this case means “a good investment.”

So what happened is that some banker (call him the “predatory lender” or just “thief”) had gone to nice old Mrs. Whitehead, who had lived in the shotgun flat behind the AME church since Lyndon Johnson was in the White House, and made her an offer she couldn’t refuse. “Sign this mortgage paper,” he said, “and I’ll give you forty thousand dollars. Here’s a pen.”

Now Mrs. Whitehead is not a fool. The first question she asks him is how in the world she can make the payments called for on a monthly income that is derived mostly from Social Security, plus what few bucks remain of what Mr. Whitehead left when he passed. But she’s not a CPA, either. Thief shows her in black-and-white that her house cost $10,000 when she and the Mr. bought it, has been gaining value ever since.

Were the payments on a $40,000 mortgage too onerous? No problem. Before you know it the house will become worth $60,000 or more. So you refinance at the new value, pay off the old mortgage, and walk away with a few thousand more of spending money, and ain’t America grand?

That system worked well as long as house prices kept going up … but not one day longer.

Then the system came cascading down. Real estate prices stopped rising, maybe dipped a little. Mrs. Whitehead couldn’t pay her mortgage any more. Thief’s bank foreclosed and poor Mrs. Whitehead was out on the street.

 

Did Thief know that was going to happen when he sold her that first mortgage?

Of course he did. He just didn’t care. His pay wasn’t based on how reliably the customers paid off their mortgages, it was based only on how many mortgages he sold.

That’s when I might lose you. “Hey,” you say, “hold on a minute. If that’s the way these people run their bank, aren’t they going to wind up with a vault full of worthless paper?”

I pat you on the head. “Exactly, my son. They do.” Of course, they could foreclose the mortgage — say the one on poor Mrs. Whitehead’s shotgun flat. But what would they do with the house once they had taken it over? If they want to get actual money, they have to sell it. But in today’s market, all they could get for it is say, $35,0000, while the amount due on the mortgage — the amount they’ve been carrying on their books as an asset — is now at, say, $50,000. So every mortgage foreclosure that they handle in that traditional way shows up on the books as a thumping great cash loss for the bank, and there are millions and millions of them.

You think that over for a moment, then you sigh. “Beats me,” you say. “I don’t see any way out for the bank. They should have seen this coming and avoided it, maybe by being a little less unethical in the way the loans took place. But they didn’t, and now only a miracle can save them.”

I have been patting your head again, this time quite hard. “Clever child!” I cry. “That’s what did it for them, at least for the moment. A miracle! Have you ever heard of transubstantiation?”