Spencer's Blog-Barf-Bonanza

SOPA & PIPA

2012-01-20T14:45:00.001-07:00

Maybe it’s time, maybe not. But just thought I’d post some random thoughts on a current hot topic; namely SOPA & PIPA. I’ve never been an advocate of more laws, I’ve always thought we have a bigger problem enforcing our current laws rather than coming up with new laws. SOPA and PIPA are bills that intend to do away with internet piracy. While this does sound like an honorable ambition, adding new laws is not in my opinion the answer. It wasn’t long ago when eBay permitted the sale of firearms and illegal drugs via auction, no law was ever created that outlawed this behavior. The reason they no longer host those types of auctions is because the market responded negatively to that enablement. The leaders at eBay concluded they would be better off financially (in the long run) by not hosting those auctions. It wasn’t necessary to enact any new laws for eBay to make a change. The ethical values of the customer base dictated what was appropriate.

Ethical values are difficult to establish, however there are some common ethical values that should be held throughout a “free market economy.” One of those values is property rights (as indicated by Greg Mankiw) this includes intellectual property rights. So the question I see is whether the US is a free market? If we are then the citizens of the free market need to reject the idea of piracy, I would certainly concede this at least highly unlikely to be embraced by the masses. However this isn't the end all of our options as an ethical society, and there are ways corporations can encourage ethical behavior. A huge obstacle to teaching ethics requires some level of ethical behavior on the part of the teacher, in this case the movie and music production studios would be required to exhibit the same or greater level of ethical standard they wish to be embraced by their customers.

In my visit to China I observed very little respect for property rights (knock-offs are literally everywhere). In the US knock-offs exist but are not as successful as they are in China. Why are knock-offs unsuccessful in the US? I believe there are a couple of factors at play: 1) pride, US citizens tend to like having products of high monetary value, 2) quality, most knock-offs are of low quality and don’t stand up to the test of time, 3) ethical/moral integrity, I’m certain many people wouldn’t purchase knock-off goods on the basis of moral codes. Some drivers that perpetuate intellectual piracy include: 1) accessibility, a simple google search will net far more opportunity to pirate any copyrighted work rather than to legitimately purchase it, 2) cost, piracy is free (there is a further argument with regard to value of substance but I’ll just leave this as one point), 3) nefarious intentions, some people just like to “break the rules.”

My proposed solution for combating piracy is: increase the quality and accessibility of content, and reduce prices. Movie and music studios need to quit fighting against their customers, the exclusive content license deals are detrimental to the cause, they actually create a greater incentive to pirate movies when they engage in these back room deals. They also need to reduce expectations with regard to revenue per unit delivered, this must be done collectively. I know every studio thinks they produce better content than the next guy but the problem is they are all selling to the same customer base (for the most part). My general opinion is the customer base (people who enjoy movies and music) is not as discerning as the studios would like to believe. In other words, can you tell me the names of you top five favorite music/movie studios? But I bet you could name five of your favorite musicians or movies or whatever. So these studios need to work together to save their industry, people everywhere realize the reproduction of digital content is very simple and inexpensive, the prices charged by most distributors are obviously too high to deride piracy. I appreciate Apple and what they’ve done with iTunes, I think it’s a step in the right direction, though I don’t know what the biggest factors with regard to their pricing strategy are I would presume the studios are a big slice of the pie. It is likely some collaboration is going to have to occur between studios and distributors.

I do believe distributors serve a valuable position with regard to intellectual property; Hulu is a great example of a business model that has made this work well. They are a distributor for many TV networks, I hate it when I want to watch a show and I have to go to the network site because they won’t license it to Hulu to distribute. Apple has some of the same problems, which leads me to believe it’s more of a producer problem than a distributor problem. Lastly they need to improve the quality of product, my own personal opinion is if I could download a high quality (HD) easily and for about $1/per day. I would be more than willing to participate, as it is most sites want to charge $3-4 to rent an HD movie for a 24 hour period. This is again driving more traffic toward piracy, people know they can get a lower quality product by pirating however saving $3-4 for a lower quality product might be worth it where if they could pay a $1 for a higher quality product it likely wouldn’t be worth it. Again the cost of maintaining this property is very low, and reproduction costs are even lower. What is the justification for the high prices?

Here I am again, but keep your expectations very low

2010-05-27T11:05:00.002-06:00

So it’s been a while, yeah like a year or so. Gina inspired me to post something. I don’t really know what to write, cause well I’ve been told all that I ever post about is political. I don’t know why I have so many political rants, but I’m trying to get over it. I do spend time each day catching up on what is going on in the world which tends to revolve a lot around politics. Perhaps this is too much time, maybe I need to shrink my Google Reader list, Candi has told me it would bug her to have so many “unread” things in her list (I usually start the day with a few hundred, but I usually just read headlines unless it looks interesting). So as a result this post is just going to be a virtual vomit of what’s going on, poor sentence structure and sporadic thought process is guaranteed to ensue.

I’m going to Moab tomorrow, I can’t wait. I’m taking Isaac & Kaitlyn, and Doug… It should be lovely, and if it’s not well then hopefully we dry out by Monday. I purchased a replacement Jeep, after selling my little Wrangler last year I’ve been itching to have a replacement, and about a month ago I went out and got an old Cherokee. It’s quite a bit bigger than the wrangler and can actually seat all three kids in the back seat. So when the time comes that Candi will let me take Roxy out on the trails we can all go together. I’ve spent the better part of my evenings over the last few weeks working on the Jeep, it needed some pretty significant love. Isaac has been super excited to help me “work on the Jeep”. It’s really fun to have him out there picking stuff up, holding things and just being curious. I also got to take a little time off work after Roxy was born and it was really cool to be able to take Isaac to school, we practiced riding his bike (no training wheels), and we rode the scooter one day. Lately he has been really interested in gardening, I blame Gina, we have seeds growing all over our house. It is really nice to be in a house where we can grow so many plants. I got to spend last weekend out in Redwood City (thank you Saundra & Dad for putting me up, or putting up with me). My dad put together a conference on water use & reuse, and I got to see my “baby” sister for her birthday, also Trevor and Mike were there. It was a great conference, and good to catch up with my Californian relatives.

Other items that have happened in the last year or so since my last post, my sister got married, and graduated from nursing school, my brother moved to Sacramento, my other sister and her husband moved to Salt Lake, I got a promotion at work and we moved to a new house. Good times, and that’s it for now.

Also this video is hilarious and frightening all at the same time, it's not too political so hopefully it's alright

Part 1 of ???

2009-03-26T16:54:00.001-06:00

So here is part 1 of my giant update, sorry it’s been a month+ and I’ve just been holding all this until now, and I can’t take it anymore.

Politics

Ignore/skip this entry if you don’t want to hear it, I won’t mind. I have some serious concerns with our current administration and their handling of the economy. Today Tim Geithner released his oversight plan for future financial institutions. I don’t think I like any part of this plan, here are my reasons. It creates more bureaucracy that will in no way improve the financial institutions, nor will it “protect” the American people. I think people somewhere along the line forgot that investments are risky, and there is potential to lose money. We are not entitled to make money in the stock market, we are not entitled to keep our retirement if we invest it in companies that we have no control over, we are not entitled to anything really. FDIC exists to guarantee our money (up to certain limits) against bank failure, it’s for banks that meet regulated reserve requirements. When we invest in the stock market there is no FDIC, and there never should be. The only way to guarantee a business will make money is if they are printing it, otherwise it is up to the business to meet the needs of their customers. If I invest in a company that is not meeting the needs of its customers I can expect the stock price, or the value of my ownership, will decrease. The biggest key here is people have invested their 401k with limited investment options in the stock market. Their are solutions, you can still invest in bonds (that market is much more stable), another option would be to opt out of investing in the 401k and move your money to some other FDIC secured institution. I realize that a lot of people depend on their 401k, but… as it turns out they are susceptible to loss. If a person can maintain a long term investment strategy then a 401k works great, generally the market goes up.
My other big issue with Geithner is a sound bite I heard on talk radio the other day where he said he wasn’t opposed to a world currency. This scares the crap out of me, I can’t imagine anything worse for the US. The fact is that whoever controls the currency (currently the Federal Reserve, not the US government) controls the economy. The other issue is that having separate currencies allows countries to make fiscal adjustments to offset things like unemployment and inflation.
I may just be wound up in conspiracy theories but I think this administration is leading faster toward a socialized system than any president has ever before. If people think George W went too far with government power (the patriot act, no child left behind, etc.) they haven’t seen anything yet. The Obama administration would like to have authority to seize business that they deemed “unsafe.” They want to punish employees of certain businesses with illegal taxes, see AIG. On that note, I think it was morally wrong for AIG to pay out those bonuses but that is really such a small drop in the bucket, it’s like people forgot that we just gave this company ~$170 Billion. It’s like if someone gave me $100 to pay my gas bill and I spent $.10 on a piece of candy, would they care? We shouldn’t have ever given them the Billions in the first place, that way this wouldn’t have ever been an issue.
I’m a little sick of our government “protecting” us from capitalism. The beauty of capitalism is that people suffer their own consequences, be it good or bad. The problem is they want the good parts of capitalism (innovation, growing GDP, highly skilled services, etc.) without the perils (chance of failure). You can’t do that, if there are no risks then there are no returns.

Capitalism and MSM

2009-02-07T23:48:00.004-07:00

So Candi and I have had some discussion regarding the media and why the media would be interested in killing capitalism, since it seems capitalism is blamed for nearly every problem we have today. I came across an interesting video that I think helps show why mainstream media is interested in pushing social agendas, national policing, and a world government. It's like an hour long but it's totally worth it.

Video version of the Case Study

2009-01-26T14:09:00.001-07:00

Case Study

2009-01-20T19:48:00.002-07:00

Okay so this is really long, but I think it's extremely important. This is an interesting reflection on the housing crisis and how we got where we are. If this interests you, check out what happened to Falcon after all this was said and done. It's disgusting. This is a case study from one of my classes right now dealing with Finance. Also if you find this interesting, I'm sorry, you may just be as dorky as me.

Case: A Connecticut Yankee in Fannie Mae’s Court
By Gaylen K. Bunker

It was Wednesday, October 6th, 2004 and Christopher Shays, member of the United States House of Representatives from Connecticut was about to enter the large room where the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, of the Financial Services Committee was to hold a hearing to review a report from The Office of Federal Housing Enterprise Oversight (OFHEO) regarding allegations of “Accounting and Management Failure” at The Federal National Mortgage Association, commonly known as Fannie Mae.1
Shays commented to the Chairman of the Subcommittee, Richard Baker from Louisiana, “It was interesting that two members of the larger Financial Services Committee; Michael G. Oxley, Republican from Ohio and Barney Frank, Democrat from Massachusetts had asked to be a part of the hearing.”
“They are both very concerned about the Future of Fannie Mae and its mission.” Baker responded.

History of Fannie Mae

Fannie Mae was established in 1932 as a mechanism to provide home mortgages to the poor. It was added to the Federal Home Mortgage association, a government agency in the wake of the Great Depression in 1938, as part of Franklin Delano Roosevelt’s New Deal in order to facilitate liquidity within the mortgage market. In 1968, the government converted Fannie Mae into a private shareholder-owned corporation in order to remove its activity from the annual balance sheet of the federal budget. Consequently, Fannie Mae ceased to be the guarantor of government-issued mortgages, and that responsibility was transferred to the new Governmental National Mortgage Association (Ginnie Mae).
In 1970, the government created the Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, to compete with Fannie Mae and, thus, facilitate a more robust and efficient secondary mortgage market. Since the creation of the GSEs, there has been debate surrounding their role in the mortgage market, their relationship with the government, and whether or not they are indeed necessary. Fannie Mae, as well as Ginnie Mae and later Freddie Mac, have played an integral part in the development of the most successful mortgage market in the world which has allowed U.S. citizens to benefit from one of the highest home ownership percentages in the world.
In 1999, Fannie Mae came under pressure from the Clinton administration to expand mortgage loans to low and moderate income borrowers. At the same time, institutions in the primary mortgage market pressed Fannie Mae to ease credit requirements on the mortgages it was willing to purchase, enabling them to make loans to subprime borrowers at interest rates higher than conventional loans. Shareholders also pressured Fannie Mae to maintain its record profits.
In 2000, due to a re-assessment of the housing market by HUD, anti-predatory lending rules were put into place that disallowed risky, high-cost loans from being credited toward affordable housing goals. In 2004, these rules were dropped and high-risk loans were again counted toward affordable housing goals.2

http://en.wikipedia.org/wiki/Fannie_Mae

Subprime Loan

A loan to a borrower with poor credit, income or assets that are hard to document, or other circumstances that would hinder loans from more orthodox sources.
http://www.nmhschool.org/tthornton/asia_rising/AsiaRisingTerms.php

After everyone was seated Chairman Baker called the hearing to order and announced: “The Capital Markets Subcommittee meets today for the purpose of receipt of a report from the Office of Federal Housing Enterprise Oversight. It is indeed a very troubling report, but it is a report of extraordinary importance not only to those who wish to own a home, but also as to the taxpayers of this country who would pay the cost of the cleanup of an enterprise failure.”

Office of Federal Housing Enterprise Oversight (OFHEO)

The Office of Federal Housing Enterprise Oversight (OFHEO) was an agency within the Department of Housing and Urban Development. It was charged with ensuring the capital adequacy and financial safety and soundness of two government sponsored enterprises – the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). It was established by the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.

http://en.wikipedia.org/wiki/Office_of_Federal_Housing_Enterprise_Oversight

Shays pulled out of his file a copy of the letter OFHEO had sent to Fannie Mae’s board on the previous September 20 that was subsequently released to the press and glanced over it:

September 20, 2004

Board of Directors
Fannie Mae
3900 Wisconsin Avenue
Washington DC 20016-2892

Dear Board Members:

As you are aware the Office of Federal Housing Enterprise Oversight is conducting a special examination of Fannie Mae’s accounting policies, internal controls, and financial reporting processes. I am transmitting to you a report I have received on our findings to date. The findings raise such serious safety and soundness concerns that immediate action is warranted, rather than waiting until the completion of the full special examination.

The report concludes that “the matters detailed in this report are serious and raise doubts concerning the validity of previously reported financial results, the adequacy of regulatory capital, the quality of management supervision, and the overall safety and soundness of the Enterprise.”

More specifically, the report documents how Fannie Mae 1) Applied accounting methods and practices that do not comply with GAAP in accounting for the enterprise’s derivatives transactions and hedging activities, 2) employed an improper “cookie jar” reserve in accounting for amortization of deferred price adjustments under GAAP, 3) tolerated internal control deficiencies, 4) in at least one instance deferred expenses apparently to achieve bonus compensation targets, and 5) maintained a corporate culture that emphasized stable earnings at the expense of accurate financial disclosures.

These findings cannot be explained as mere differences in interpretation of accounting principles, but clear instances in which management sought to misapply and ignore accounting principles for the purpose of meeting investment analyst expectations; reducing volatility in reported earnings; and enabling fragmented processes and systems, and an ineffective controls environment to exist.

As I stated earlier, these findings warrant immediate remedial action. I have enclosed an agreement for your review and consent that includes the minimum steps that need to be taken to address the safety and soundness problem we have identified to date. Included are corrective actions related to accounting policies and practices, capital adequacy, internal controls, segregation of duties, and further reviews. In addition, we must consider the accountability of management and whether we have sufficient confidence in management to fully implement these corrective measures and bring about broad cultural and operational changes in the areas of concern. The analysis and finding of this report make it difficult to assert such confidence.

We will be available to answer any questions you may have following today’s briefing on the report. I am prepared to work with you to resolve this matter in an orderly manner. However, you must realize I am prepared to act if the Board does not.

Sincerely

Armando Falcon, Jr.

Shay’s mind was brought back to the moment as he heard Chair Baker continue: “Although not intended to fuel the effort to bring about regulatory reform, the analysis makes clear that more resources must be brought to bear to ensure the highest standards of conduct are not only required, but more importantly, they are actually met.
“For the record, I am not pleased and certainly not happy about these revelations. I am saddened by the disclosures. In all my years of inquiry in this matter, I was only in pursuit of appropriate oversight. Never did I question whether the GSEs were professionally managed to the highest standards of business conduct. Now I do. The culture of mismanagement described in the report must be eliminated and assurances gained that the highest standards of conduct will be
consistently practiced.
“I know there will be those who will still cling to the belief that the issues raised are minor or that opinions may differ on technical accounting standards. Some may still think this is all a plot by the big banks to preserve market share. The content of this report, in my view, cannot be legitimately questioned. Utilizing the firm of Deloitte & Touche and the staff of OFHEO, the director's report is delivered after review of over 200,000 documents and e-mails, as well as hundreds of interviews and depositions of current and former staff of Fannie Mae.
“The matters detailed in this report are serious and raise concerns regarding the validity of previously reported financial results, the adequacy of regulatory capital, the quality of managerial supervision and the overall safety and soundness of the enterprise.'' This finding, in my judgment, makes committee action essential.
“For the record, I should also note that the resistance the GSEs have expressed toward enhanced housing goals. In light of these revelations, their opposition now makes more sense than ever. Should the proposals considered in this committee focus clearly on the needs of first-time homebuyers actually become law, the enterprises would have to allocate resources to those
goals at the expense of reduced earnings.
“A reduction in earnings would reduce the likelihood of paying out bonuses to executives. This same observation holds true as to the regulator's decision to increase capital, and Fannie's strong objections to such a requirement. We all know that the enterprise is thinly capitalized, but the potential effect of requiring a responsible capital level would adversely affect earnings per share, and consequently affect the bonus payments to executives.
“I also wish to inform members of the committee of another troubling incident, which I now choose to make public. About a year ago, I corresponded with the director's office making inquiry about the levels of executive compensation at the enterprise for the top 20 executives. This is information that had not been made public previously.
“At the conclusion of this hearing, I will release the compensation information obtained from OFHEO and further, I will forward a letter to the director requesting that all compensation information for both enterprises be provided to the committee for a period covering 10 years for all executives that shared in any bonus distributions. This is now essential, in that OFHEO has indicated that accounting manipulation has impacted the financials on more than one occasion, therefore placing the payment of bonuses in question.
“I find this very troublesome business. Much is at stake. The ability of this committee and this Congress to act will be called into question. Notwithstanding the ultimate outcome, the facts will remain and our duty will never be more clear.

It was then time for opening comments and before any testimony had been given, twenty members of the committee made their five minute preliminary statements. Shays took out a note pad to jot relevant statements from the various speakers.

Paul E. Kanjorski, (Dem---Pennsylvania) Our actions and statements could rile the capital markets and raise the price of homeownership. We should therefore practice caution, prudence and discretion.
Mike Oxley, (Rep---Ohio) This report could reinforce arguments for the creation of a GSE regulator with the powers and authorities granted to other financial regulators.
Barney Frank, (Dem---Massachusetts) The Bush administration was going beyond safety and soundness and said Fannie Mae should not do these new products. We need to go forward in ways that do not impinge on affordable housing and housing in general.

Christopher Shays then had his opportunity for an opening comment: “We passed Sarbanes-Oxley, which was a very tough response to [Enron]. And then I realized that Fannie Mae and Freddie Mac would not even come under it. They were not under the 1934 Act. They were not under the 1933 Act. They play by their own rules, and I am tempted to ask how many people in this room are on the payroll of Fannie Mae, because what they do is they basically hire every lobbyist they can possibly hire. They hire some people to lobby and they hire some people not to lobby so that the opposition cannot hire them.
“Fannie Mae has manipulated, in my judgment, OFHEO for years. For OFHEO to finally come out with a report as strong as it is tells me that has got to be the minimum, not the maximum. I congratulate OFHEO for finally stepping up to the plate and not being manipulated by the very organization they are supposed to regulate.
“I hear these arguments that Fannie Mae and Freddie Mac are looking out for the interests of the homeowners, and they score worse in helping minorities than the private sector banks under the 1934 Act and the 1933 Act.
“Fannie Mae and Freddie Mac are very generous to members of Congress and very generous to the organizations of caucuses in Congress. They do not have to disclose what they do. They do not have to play by the same rules. They are going to crash if this Congress does not wake up and do something about it.
“I am absolutely shocked at the extraordinary tolerance that has taken place in this Congress. This is just the beginning of the story. What did OFHEO say? They said they have accounting methods and practices that did not comply with generally accepted accounting practices, employed an improper cookie jar reserve in its accounting system, deferred expenses to meet compensation targets, did not have proper corporate governance controls in place.
“We need to wake up and the sooner we do the better it will be for Fannie Mae and Freddie Mac and all their investors, and the better it will be for our government.”

Shays relinquished his time and continued taking notes.

David Scott, (Dem---Georgia) Why did Fannie Mae link executive pay to earnings per share, and did this compensation scheme result in inappropriate incentives for management.
Michael N. Castle, (Rep---Delaware) One issue that concerns me [is] multiple interpretations of generally accepted accounting principles, GAAP.
Wm. Lacy Clay, (Dem---Missouri) OFHEO released a preliminary report which not proven, was leaked to the press. This hearing is the political lynching of Franklin Raines. Let due process take its course and let the chips then fall where they may. That is, unless this is truly a witch hunt.”
Edward R. Royce, (Rep---California) Congress must create a new regulator with powers at least equal to those of other financial regulators such as the OCC or the Federal Reserve.
Joe Baca, (Dem---California) I think it is important that we not destroy an institution that is helpful in providing assistance for first-time homebuyers and minorities; an integral part of our economy.
Robert W. Ney, (Rep---Ohio) Enhanced regulations for GSEs should not impede their ability to support affordable housing in America.”
Jay Inslee, (Dem---Washington) Some folks want to hobble the horse when it comes to being a main stream of the housing supply in this country.
Patrick J. Toomey, (Rep---Pennsylvania) There has been a pattern to systematically and intentionally misrepresenting financial statements to smoothing earnings and achieving maximum bonuses.
Carolyn McCarthy, (Dem---New York) Offered little that was new.
Spencer Bachus, (Rep---Alabama) The Bush administration was concerned about the new products that Fannie was offering, and the minority members almost to a person resisted those reforms.
Ruben Hinojosa, (Dem---Texas) Over the last 4 years, the United States has suffered from job loss, poverty, budget deficits, national debt, and high oil prices. Housing has served as the U.S. economy engine. We need to ensure that nothing we do here in Congress harms it.
Ginny Brown-Waite, (Rep---Florida) There are more accusations in this report than findings. It is important that we have funding for home construction that Fannie Mae regularly participates in.
Stephen J. Lynch, (Dem---Massachusetts) We should not forget the good things Fannie Mae is doing. These are violations of accounting principles, let's not make this a criminal proceeding.
Gary G. Miller, (Rep---California) Housing has kept this nation going in recent years. Homeownership spurs economic and community development, provides residents with a sense of pride in their community and the single largest creator of wealth for most Americans. Regulatory change must ensure the high standards of ethical conduct and remain a means to achieve our ultimate goal of expanding the supply of affordable housing.
Maxine Waters, (Dem---California) It is critical that we ensure any action that we may consider not impair the housing mission of the GSEs.
Melvin L. Watt, (Dem---North Carolina) We want to make sure that Fannie and Freddie encourage and support of increased homeownership and housing in this country is made stronger and more vibrant.

Shays reflected on all the issues that seemed to be the central focus of the various members of Congress.

Affordable housing versus regulatory interference
Constituent pressure versus governmental oversight
The importance of accounting rules and transparency
Executives decisions versus auditor interpretations
Damaging the engine that is driving the economy

Armando Falcon

It was then time for the first witness to testify. Armando Falcon, Director of the Office of Federal Housing Enterprise Oversight gave his opening remarks, that pretty much followed what Shay had read in his letter to the board. More specificity was offered in addition to a recounting of Fannie Mae’s board moving quickly to remedy issues that had been raised in the letter to them. Following Mr. Falcon’s statement questions came from the committee and Shay made the following summary notes:

Chairman Baker: “Mr. Falcon, did you find that management of Fannie Mae had adopted and implemented a strategy from a managerial perspective to steer accounting reports for two important goals. One is to present an image of very stable earnings to the broader market; and two, to manage EPS calculations to enable maximum bonus payments to be achieved for executives?”

Mr. Falcon. “Yes.”

Mr. Kanjorski: “Making the worst-case scenario assumption, however, that does not constitute in your mind systemic risk? Is that correct?”
Mr. Falcon. Yes. The solvency of this company is not threatened by the findings we have to date.

Mr. Castle: “You said that Fannie Mae understood the rules, but chose not to follow them.”

Mr. Falcon. Yes. They did not comply with rules that they clearly understood.

Mr. Clay: “And you claim that they were hostile to the examiners. In what way?

Mr. Falcon. They were resistant to compliance with our request for documents and we had difficulty in scheduling their employees for interviews. We eventually had to move to taking statements on the record, rather than having informal interviews of employees. We had to move to the issuance of administrative subpoenas. We had to ultimately try to get those subpoenas enforced in court.

Chairman Oxley: “Fannie Mae is one of the largest users of derivatives in the world. As such, Fannie Mae should be well versed with the rules related to FAS 91 and FAS 133. Is it your understanding that Fannie was aware of the fact that their accounting was not GAAP compliant, but they chose not to comply because, to do so, would be too burdensome and costly? Or is it your opinion that Fannie Mae made a material misapplication of the GAAP rules?

Mr. Falcon. “They understood the rules. They chose not to follow them.”

Mr. Scott: “Mr. Scott. Okay. Two little points here. How are the problems with accounting for derivatives at Fannie, how do they compare with what you have found with the examination of Freddie Mac? Are they the same? Same abuses?”

Mr. Falcon. We have seen the same cultural issues. We have seen the same motivations in terms of smoothing earnings. Some role in compensation issues. So certainly much of that appears to be consistent between the two companies.

Mr. Shays: “One of the things that I find somewhat astounding is, are you saying to this committee that you actually had to issue subpoenas against this organization or consider it or threaten it to get information you are entitled to get?”

Mr. Falcon. We issued administrative subpoenas to get information that we needed for this special examination, yes.

Mr. Frank: “Now, on the question of the substance, Fannie Mae has agreed to a 30 percent increase in their capital. Is that correct, as a result of your conversations with them?”

Mr. Falcon. Yes.

Mr. Royce: “I would like to learn a little more about FAS 133. I am trying to elicit, is a greater understanding of the specifics of this.”

Ms. Deleo [Falcon’s assistant]. One-thirty-three in principle is really a very simple pronouncement because it basically says you need to mark to market your derivatives. But it goes ahead to say that if you qualify for hedge accounting, and what we are looking at there is that you are going to go through and make an assessment test to see if the derivatives are highly effective. If they are highly effective, then you need to measure for ineffectiveness. So that is kind of the second step. If they are not highly effective, you cannot use hedge accounting.
Then in addition to that, there are some exceptions in 133, very rule-based and very specific, that say if you have matched terms, which they do not actually have, and there are very specific criteria that you must meet to do that, then in that case there is no ineffectiveness. They are perfectly effective if the terms are matched. So you would not have to do the assessment test and you would not have to measure ineffectiveness. That is the problem. It is that they moved to that last very specific area and they simply do not qualify under that.

Mr. Hinojosa: “You also mentioned that you did not speak to nor review the working papers of [Fannie Mae’s external auditor] KPMG accounting firm while preparing this report. It seems to me that it is less than clear, then, that Deloitte has signed off on your OFHEO findings.”

Mr. Falcon. “Deloitte fully supports the findings and conclusions of this report. They also view these accounting issues as very clear-cut violations and not matters of interpretation.”

Mr. Ney: “I know the SEC is the final decision maker on it, but is there any mechanism in current law that would allow a debate or a point of view to be discussed in case there are two separate opinions?”

Mr. Falcon. “The SEC would determine what is appropriate for purposes of the disclosures that are filed as required by the SEC. We rely on the financial statements of the company and its books and records in assessing the safety and soundness of the company and capital adequacy of the company.”

Mr. Capuano: “Is it not a normal circumstance where many entities within the rules of GAAP, within the rules of various FAS's and other accounting procedures and tax procedures, try to on occasion smooth out earnings? Is that not something that happens here and there in the business world?”

Mr. Falcon. “If it happens, it is wrong.”

Mr. Kelly: “My question to you is, Freddie Mac apparently has agreed to separate roles. Apparently, Fannie Mae has not. Are they in the process of working with you to try to do that? Can you talk to us about why you think this is a healthy thing to do? What is ongoing with regard to OFHEO working with Fannie Mae to make sure that there is a separation of duties?”

Mr. Falcon. We do think it is important that key functions be separated so that there is not a conflict of interest or that someone with an incentive to meet some goals also has the ability to manage the accounting of those goals such that they are met.

Mr. Lynch: “I just want to ask you, we had the Enron situation. We had a house of cards there, a financial house of cards where there was no strength to the underlying business. They had a very unsound business model. We had serious problems in the underlying business. Is that what you see here? Is that what you see here?

Mr. Falcon. The business model of the company remains sound.

Mr. Toomey: “If I understand it correctly, which is that not only is it simply and very straight forwardly wrong to not report the full number precisely as calculated, which Fannie Mae has done, but that there was a policy within company systematically not to report the precise number, but rather to have this cushion that you describe as a cookie jar, which served the purpose of evening out income. Am I correct to understand that?”

Ms. Deleo (Wanda Deleo, Chief Accountant, OFHEO): “You are correct.”

Mr. Meeks: “Before your report came out there was talk from this committee and from others in the private company that one did not like the status that Fannie Mae had. You would agree with that--right?--the status that Fannie Mae and Freddie Mac currently has in the market?

Mr. Falcon. “No, Congressman, I do not support privatization of these companies.”

Mr. Bachus: “Derivatives have been used to hedge risk and actually have been used successfully. In this case, you have talked about this particular derivative contract had not been approved for hedging. Is that right? Did that affect Fannie Mae from a safety and soundness standpoint, in your opinion?”

Mr. Falcon. Yes. Whatever change in value occurred in the derivative would go through other comprehensive income. I think, overall, everything we find in this report does raise concerns about the company's safety and soundness. We have found practices that are inconsistent with safety and soundness, practices about not complying with accounting rules, not having accurate financial disclosures, not having the appropriate internal controls.

Ms. Waters: “Now, did you discuss the 30 percent reserve with any members of Congress and get a suggestion about that amount prior to concluding that that was the amount that should be in reserve?”

Mr. Falcon. No. We arrived at the 30 percent requirement because we thought that was prudent from a safety and soundness standpoint, given the weaknesses in management and operations, given the uncertainties of the financial statements----

Mr. Manzullo: “Mr. Johnson got a $1.9 million bonus on a salary of $966,000; Mr. Raines, $1.1 million bonus on a $526,000 salary; Lawrence Small, $1.1 million on a salary of $783,000; Jamie Gorelick, $779,000 bonus on a salary of $567,000; Timothy Howard, $493,000 on a salary of $395,000; and Robert Levin, $493,000 bonus on a $395,000 salary. And just by happenstance, coincidence, you could almost say on your terms that for Fannie Mae to pay out the maximum amount in annual incentive payment awards in 1998, the earnings per share would have to be $3.23. It is below the $3.13 minimum payouts threshold, no bonus would occur. Are you saying this is coincidence? Or did somebody cook the books to come up with $3.23 and nine mills so they got the maximum payment.

Mr. Falcon. What we are saying is, there are very strong appearances that the management improperly defer $200 million of this $400 million expense to [1999] for the purposes of achieving bonus targets, in addition to the appearances of smoothing earnings.

Mr. Davis: “Is it possible that by casting all of these dispersions and all of these doubts upon the board at Fannie Mae, and upon the structure of Fannie Mae, that you potentially are weakening this institution in the market, that you are potentially weakening the housing market in this country?”

Ms. Hart: “And one of the things that I know during this debate that you have been seeking--and I think it is important--is to separate the roles of chairman of the board and CEO at both Fannie and Freddie. And I know that Freddie has agreed to do this, but from my understanding, up to this moment, Fannie Mae has not agreed to do this. Why you think that is important to have that separation happen?”

Mr. Falcon. “We have proposed that and found that this was just best corporate practice for these government-sponsored enterprises. We found that the board could not properly fulfill its role as overseer over management as long as the CEO was also the chairman of the board of the company.”

Mr. Crowley: “Do you believe that this report shows any evidence that Fannie Mae may be departing from its mission of increased homeownership through making homeownership more affordable in this country? Mr. Raines has pledged to create 6 million new homeowners, including 1.8 million minority homeowners, by 2014. Do you believe this goal may be threatened now because of this report?”

Mr. Falcon. As long as the company is maintaining its adequate capital, as long as we have taken proper steps, along with the cooperation of the company, I think we will minimize any damage to their ability to meet their affordable housing goals.

Mr. Frank: “There are inaccuracies that can be disturbing, and if they led to inappropriate compensation, I would be very unhappy. But the notion that any inaccuracy implicates safety and soundness, I think, based on what you have said here, where you cannot even conclude--you have said you cannot even quantify any potential amount of loss. To throw ``safety and soundness'' around in that thing I think really is, for a regulator, irresponsible.”

Mr. Falcon. “I think internal controls are a very serious safety and soundness concern. Are they at risk of becoming insolvent right now? No. We have an agreement with the board in place that will address these problems, provide an adequate capital cushion.”

Mr. Shays Interjected: “I would just like to say to you, Mr. Falcon, what you have done is you have exposed illegal activity on the part of Fannie Mae, and you are being criticized for exposing it. If they have a safety and soundness problem, or if the markets are impacted, it will only be impacted based on what Fannie Mae did. And I just want to congratulate you. You have more courage than I realized you had, because the messenger is being shot and not the person who did the wrongdoing. I have seen it here in this committee, and I am pretty outraged by what I am seeing. Congratulations for what you have done.”

Mr. Ose: “I follow this stuff very carefully because, having weathered the storm on the games-playing that took place in some of the energy companies, I am very, very sensitive to what might be occurring in the financial markets underpinning the housing market. If I understand correctly, there are questions as to the validity of the numbers on an ongoing basis within the enterprise known as Fannie Mae. Now, Fannie Mae's securities are held as tier-one capital by any number of additional institutions. My concern here is not so much the direct impact but perhaps the indirect impact that might manifest itself as a result of manipulation of earnings.”

Mr. Falcon. “The banks holdings in the debt of Fannie Mae--if there is some--might have undue concentration in Fannie Mae debt as a percentage of the total capital, if the problems were not addressed quickly with Fannie Mae such that we remedied the concerns that we have found, I think the bank regulators might have some concern about the devaluation in what is being held as capital of some financial institutions.”

Chairman Baker concluded: “I would just like to point out to the gentleman, there is approximately 8,400 insured federal depository institutions. Of that number, in excess of 3,000 institutions hold 100 percent, not 50, not 70, 100 percent or more of their required tier-one capital in GSE securities. It is of extraordinary consequence we fully understand that the financials are indeed accurate, because an impairment in the issuance of debt, it would not require the insolvency of an enterprise, merely an impairment in the ability to issue debt. If the regulator increases capital requirements, where are they going to go to raise the capital? So I think the gentleman has raised an excellent point I think heretofore has not been recognized. I thank him for yielding.”
“At this time the committee welcomes our next two witnesses: Mr. Franklin D. Raines, chairman and chief executive officer of Fannie Mae, and Mr. Timothy Howard, vice chairman and chief financial officer of Fannie Mae.”

Franklin D. Raines Statement:

I am now the chairman and CEO of Fannie Mae. And Fannie Mae is the nation's largest source of funds for homeownership and rental housing for low-, moderate-and middle-income Americans. We like to say we are in the American dream business.
The issue of whether our implementation of FAS 91 and FAS 133 was consistent with generally accepted accounting principles remains with the SEC.
Congress chartered Fannie Mae to expand access to homeownership for low-and moderate-income Americans, and we are committed to that mission. Earlier this year we announced the commitment to create 6 million first-time homebuyers, including 1.8 million minority first-time homebuyers, over the next decade, and to do our part to raise the minority homeownership rate to 55 percent and beyond.
By quickly reaching agreement with OFHEO where we could, we are able to maintain our mission focus. For those that may be concerned that some of these steps, particularly the 30 percent capital surcharge, will constrain our mission activities, let me say this: Fannie Mae will do everything in our power to meet our commitments to expanding homeownership and affordable housing while also doing everything in our power to try to meet the requirements of the agreement.
Before I close, I would like to touch on the issues raised by the OFHEO report concerning our implementation of the accounting standards FAS 133 and FAS 91. These accounting standards are highly complex and require determinations over which experts often disagree.
First, the report alleges that in 1998 the company willfully violated GAAP in order to maximize executive bonuses. These are serious allegations. They concern events that occurred almost 6 years ago. Importantly, I would note that the OFHEO report does not cite any documents or witnesses to support these allegations.
Upon reading of this allegation in the report, the company undertook to assemble the relevant facts. And we have learned of no facts and no other materials that support the allegation that the decision about the amount to book was related to bonuses.
Based on the facts as I understand them, the $240 million estimate was arrived at as part of an analysis conducted by our accounting and financial staff, independent of any considerations of compensation. Additionally, this analysis was documented at the time and was disclosed to and fully discussed with our independent auditor.
We intend to turn all of this factual information over to the independent committee of the board and its outside counsel for review.
Second, the report alleges that we misapplied GAAP with respect to two accounting standards, FAS 91 and FAS 133. We believe we applied those standards in accordance with GAAP, and our independent auditor, KPMG, reviewed our application of those standards and concurred.
Fannie Mae has previously issued and filed with the SEC financial statements that reflect the accounting and financial statement presentation that OFHEO has alleged to be inappropriate. Those financial statements were certified by me and by our chief financial office, Tim Howard, after a thorough process and audited by our independent auditor, KPMG.
Fannie Mae has not withdrawn those financial statements, and KPMG has not withdrawn its opinion that those financial statements were prepared consistent with GAAP in all material respects.
Rather, the issues that have been raised by OFHEO will be taken up directly with the staff of the SEC, which ultimately has the final authority over GAAP.
Our accounting staff has repeatedly determined that our policies and practices with regard to FAS 91 and 133 are reasonable and in accord with GAAP. And KPMG has issued unqualified opinions on our financial statements, and that remains their position today.
In fact, when I certify our financial statements, I certify that these documents fairly present, in all material respects, the financial condition, results of operations and cash flows of the company. That is a very serious statement, and I take it very seriously.
We engage in a rigorous due-diligence process before I ever put pen to paper and make that certification. I only certify after receiving assurance that I can say with confidence that our financial statements fairly present, in all material respects, the financial condition, results of operation and cash flows of the company.
Mr. Chairman, no one is more interested in a full and open examination of these issues than I am. I cherish this company. I believe in the mission that Congress challenged Fannie Mae to carry out. And I am inspired by the 5,000 women and men who come to work every day trying to help lenders help people get into homes.
Most of all, I believe that Fannie Mae's biggest challenge ahead is helping the financial system and mortgage industry to meet the growing and changing housing needs or our growing and changing nation.
This decade is expected to produce 30 million more Americans, who will create 13 million to 15 million new households. Minorities will represent 80 percent of that growth. And as a result, we estimate that 46 percent of future first-time homebuyers will be minorities and immigrants.
Serving their housing needs will require new ideas and innovations in mortgage financing. And we look forward to helping the industry with this challenge.
Given this public mission for which Congress created us and as an instrument of national housing policy, Fannie Mae expects and welcomes OFHEO's rigorous oversight to ensure that we are safe, sound, solid and stable for the long run. As I said the last time I appeared before this committee, strong oversight is in the best interest of Fannie Mae, our shareholders, financial markets and homeowners.
I want to make one thing very clear. I have always tried my best to ensure that our company does the right thing in the right way. And I believe to this day that we did.
If, however, after a thorough review of all the facts, it is determined that our company made significant mistakes, our board and our shareholders will hold me accountable. And I will hold myself accountable. That comes with being a CEO. I accepted that burden on the day I took the job, and I accept it today.

Following Mr. Raines statement Timothy Howard, Vice Chairman and Chief Financial Officer for Fannie Mae made a statement. He ended his statement with: “It is important to note, however, that the matters to be reviewed relate to accounting judgments and not issues of risk management. Financially, Fannie Mae is as strong as ever, and our ability to carry out our mission remains intact.”
Representative Shays contemplated the two very different views presented by Falcon and Raines. Who was right? As he sat wondering Chairman Baker began the questioning of Mr. Raines. Suddenly, Shays was jolted back to reality by Baker.

Chairman Baker: “…bonuses in excess of $245 million. In 1998, the bonuses reported were $27 million. In 2003, the total amount of bonuses was $65 million, the yearly aggregate, the amount of bonuses each year, per year, 1998 through 2003, and that comes out to be $245 million.

Mr. Raines. “The Challenge Grant has nothing to do with bonuses. The Challenge Grant has absolutely nothing to do with bonuses.”

Chairman Baker: “It does in a sense. Challenge Grants incentivizes executives to enhance the growth of the corporation's profitability, based on the corporation's profitability the EPS has calculated. The calculation of the EPS then determines whether the bonus trigger is hit.

Mr. Raines. You just crossed the line again. The Challenge Grant has to do with stock options. It has nothing to do with bonuses. Stock options were granted to every Fannie Mae employee. Every employee of Fannie Mae was given a grant and would only vest if the company doubled its earnings over 5 years, and then it would vest over a delayed period if it did not. So the Challenge Grants have nothing to do with bonuses. Again, Mr. Chairman, I think you are mixing two or three things together.

Ms. Waters: “Parliamentarian query: Is this illegal or is it legal? Is it illegal for us to have this information? Can we display or not?”

Chairman Baker: “No, Ms. Waters, it is not illegal. I have had it for over a year. I wanted to make sure I released this information. I am accountable for its release, and I put it into the public forum pursuant to my rights as chairman, subject to a response from the regulator, and I wanted to make sure that I did not get criticized for leaks. And we had all these accusations that people got advanced information inappropriately before it was publicly released. I have now publicly released it. I am accountable for that decision.

A couple more congressional representatives asked questions of Mr. Raines, who answered them appropriately and then it was time for Barney Frank who focused on one key question.

Mr. Frank: “So the question is, what will the effect of the 30 percent additional capital be on your reaching an absolute amount, in terms of affordable housing? That arbitrary 30 percent might result in a diminution in your affordable housing activity?

Mr. Raines. “Well, if the capital plan requires us to reduce our activities, yes, it would reduce the impact of the goals as a result of our having made those choices.”

Mr. Clay: “I know that Fannie Mae has agreed to the increase in capital and how much in dollars is that increase?”

Mr. Raines. “We don't have an exact estimate, but if you look back at the most recent periods it would require something in excess of $3 billion.”

Ms. Kelly: “What about the members of the executive committee? Do you meet, and according to what the OFHEO interview shows, the executive team met to cooperatively set salary and bonus?”

Mr. Raines. “The answer is that the compensation for everybody in the company, including mine, is in part determined by our executive team. We have in process where lots of people are involved in setting the compensation. So, the answer is yes, but that is not an unusual thing.

Mr. Lynch: “In your own minds as the CFO and CEO, is this a usual relationship with a regulator that they would go around you and not sit down extensively with you to try to bring you into compliance with a GAAP that they thought you were in noncompliance with?”

Mr. Raines: Congressman, I would agree that it is an unusual relationship. I did note in Director Falcon's testimony that he gave a reason why he felt the necessity to go around senior management he said was the lack of cooperation by senior management. With regard to our cooperation, I think it has been overwhelming. The subpoenas, as we were told, had nothing to do with lack of cooperation. And the Justice Department has indicated that they believe that this was an issue that could and should be resolved between OFHEO and Fannie Mae and it was resolved. All of the material requested by OFHEO has been provided to them.

Mr. Baca: “It seems odd that they would not contact you. Yet, you know, they have gone to the media and they have gone everywhere else. But yet they should have followed, practiced standard procedures, which is a total violation. Where do you think the process will go from here?”

Mr. Raines. Congressman, this process has been so unusual, I cannot tell you. I can tell you what we are doing. Our board has negotiated an agreement with OFHEO, which we are going to faithfully follow and put into effect within the timeframes as agreed to between the director and our board. We are also going to be cooperating with the independent counsel that our board has appointed to look into all of these allegations and to see if we can find out what the facts are, and so we will cooperate with them. We will be attempting to take the two big accounting issues, FAS 91 and FAS 133, directly to the SEC and ask them to give us resolution on those so we can see, and, if we are right, then we are right, and, if we are wrong, we will make whatever changes the SEC tells us to make, and we will also cooperate with any law enforcement agency that is attempting to look at these allegations.

Mr. Bachus: “We are talking about these financial reporting issues in a lot of the discussion, whether, you know, you violated FASB rules or not, but did these issues undermine your creditworthiness?”

Mr. Raines. Well, I have to say, Congressman, that since this report has come out, we have been put on credit watch, and one of our credit ratings was dropped, went down as a result of this report. So a report like this from a regulator has serious consequences in the capital markets. You know, our stock price dropped by $14 billion as a result of this report coming out in the way it did. So, yes, this report has a very, very big impact on how we do our business from our debt costs to our credit ratings to our stock price.

Mr. Meeks: “You know, I understand your statements, Mr. Raines, about you do not understand certain things, but let me just let you in on a surprise. Some people do not want you in business. They do not like the success that you have accomplished by putting people with decent homes and roofs over their head. Some people just do not like that. And so that might be a surprise to you.”

Mr. Raines. Well, prior to the issuance of this special examination report, all of our examinations from OFHEO found that we met or exceeded safety and soundness standards, and that is going back to when OFHEO first organized itself back in, I think, 1993.
So we had never, to my knowledge, had an outstanding issue with OFHEO on accounting, internal controls or any other issue. In the course of their examinations, they would make recommendations to us and, you know, we would adopt them. But we have never had an issue prior to this examination report.

Mr. Howard. Prior to 1998, you know, any amount of this so-called catch-up adjustment, which, again, was the comparison we made after the fact between the amount that we had brought into income based on an old assumption of average life of the portfolio--remember there are millions of loans in the portfolio--and a new average life. That difference we had kept track of but never recorded in current period income. That was the catch-up adjustment.
In 1998, that dollar amount grew to a large size of expense--it was actually closer to $440 million--and we
determined that some portion of that likely did represent a true economic cost. So we put together a group within the
finance department of portfolio people and comptroller's people to come up with a method of determining the best amount to best reflect true economic substance.
The recommendation they made to me and to us as the senior management team was that $240 million was that right amount. So the remaining amount, which was not deferred because it was an amount that never was recorded on the books in previous years--it was kept track of, and that was the audit difference--that turned out to be a judgment that ex-post proved to be correct because next year we did not have an audit difference that was expense. We had one that was income.
So the judgment in retrospect turned out to be correct. It was made as a part of a process that had integrity, and it was independent of any link to compensation.

Mr. Shays: “Why should banks have to set aside between 6 percent and 8 percent of their portfolio and you guys are in the range of about 3 percent?”

Mr. Raines. Banks should do that because they have much more risky portfolios. Banks are allowed to invest in a wide range of assets. We can only invest in single-family and multifamily homes.

Mr. Ose: “Mr. Falcon was asked, on the previous panel, to provide to the committee a record of all contacts that he may have had with the committee or his agents or employees. I am asking: Will you provide the committee a similar record of all such contacts to this committee regarding this hearing?”

Mr. Raines. “My answer is I do not know. I mean, we will have to talk to our counsel and others. Mr. Falcon is a government employee. He is running a government agency. There are laws that relate to the ability of a government employee to lobby the Congress, and I assume that that is what the inquiry was to Mr. Falcon. We are not a government agency. We are not prohibited from lobbying the Congress, but I would certainly take under advisement your request, and we will get back with you with an answer.”

Mr. Davis: “Is it a fairly common practice, Mr. Raines, for almost every single entity that comes before this committee to have some consultation or talk with members of Congress or staffers before their folks testify?”

Mr. Raines. Yes, sir. I typically did that when I was in the government, and I have done it since I have been out of the government.

Mr. Castle: “I am one of those who worries about Fannie Mae. I think, you know, you have good people running it and that kind of thing, but, frankly, it is very large, some of the practices I think are a little marginal. I worry about this perception the Congress will back up whatever Fannie Mae does. I just think there are a lot of issues. I think the regulatory issue is very important though. I just want to make sure that Fannie Mae is being run correctly because it is very, very important. And I worry about the safety and soundness of that. We are all running for office right now. We are criticized daily by our opponents. So a little criticism can't be the end of the world. And perhaps if it is justifiable criticism and changes are made, perhaps that is positive.”

Mr. Raines. Many of these things we would have been willing to do if OFHEO had approached us in a different way. So this isn't an issue of everything OFHEO says is wrong and everything we say is right. I think the fundamental flaw is created by the fact that the OFHEO examination process does not have the same legal protection that the bank examination process has. And that has a negative effect on the entire relationship.

Chairman Baker concluded the questioning of Fannie Mae’s officers and stated: “I certainly hope that the future does not bring ill-advised consequences to the institution, its ability to extend credit to prospective homeowners or, even worse, to have consequences for taxpayers.”

Ann McLaughlin Korologos Statement

My name is Ann Korologos and I am the presiding director of Fannie Mae's board of directors. I also currently serve as chair of the Nominating and Corporate Governance Committee and on the board's Compensation Committee.
I am a shareholder-elected, independent director. The board of Fannie Mae appreciates this committee's oversight of the company, of the board and of our regulator. And I welcome the opportunity to speak on behalf of the board about OFHEO's report to date on its special examination.
The board takes the issues raised by the OFHEO report very seriously. We are here to do the right thing. By that I mean: to OFHEO, the SEC and Congress, and to do so in a way that protects the shareholders and restores the public's confidence.
The board, with independent counsel and independent accountant, will investigate the issues in the report, and we will work expeditiously. So I thank you for this opportunity to speak on behalf of the board. We were moving fast before this hearing, and I can share with you that we now are continuing to do so, and we now know where we are going.
The board has participated through our audit committee, in following the company's response to the examination since it began over a year ago. We have received regular reports from the audit committee on the examination's progress, as best it could be understood.
On Friday afternoon, September 17, Director Falcon contacted me to say that OFHEO wished to share its findings to date with the outside directors of the board. I convened a meeting of the board for the next business day, which was Monday, September 20.
Every non-management director attended in person or by telephone. On that day, we received the written report and OFHEO's senior staff made a presentation to the non-management directors and the company's outside counsel.
The staff also gave us a letter from the director and a draft agreement, to be signed within 2 days, outlining actions to be taken. In addition, the board was informed by management, after that meeting, that they had received a call from the SEC that these issues would be a part of an informal inquiry by that regulator.
The board immediately began a series of meetings and discussions with OFHEO over the week of September 20. I think I either spoke or met with Director Falcon every day that week. I assured Director Falcon that the board and the company would work cooperatively with OFHEO and that we would address all their concerns.
I also expressed the boards hope that our work together would build a constructive relationship based on mutual respect and trust going forward. I told him, however, that the board could not, consistent with its fiduciary responsibilities, sign a document in 48 hours.
On Tuesday, September 21, I advised the director that the board had authorized the hiring of independent counsel, former Senator Warren Rudman, and his law firm, Paul, Weiss, Rifkind, Wharton & Garrison LLP, subject to OFHEO approval, to address the questions raised by the OFHEO report.
I also advised the director that we would provide to him, the next day, a draft work plan based on the actions required by OFHEO's agreement. On Wednesday, Pat Swygert, a fellow board member and President of Howard University, and I met with the director and his senior staff at OFHEO offices.
We provided the draft work plan that was approved by the board and, because so much of the report had been leaked to the press by that time, I also advised the director that the company did not object to OFHEO's public release of the report.
After reviewing the draft work plan, Director Falcon told me later that evening that he thought the plan was substantive and addressed each of the areas of concern raised by the report. I have attached to my written statement a copy of this draft work plan.
On Thursday, in a conversation with OFHEO's general counsel, however, it became clear that OFHEO wanted a written agreement to be signed by the board.
Therefore, at my direction, on behalf of the board the company's counsel began meeting with OFHEO staff to reach such an agreement. Discussion continued throughout the weekend, and after additional board meetings, we and OFHEO announced the September 27 agreement.
With the agreement completed, the thorough process to address OFHEO's report is underway. Importantly, management has pledged its cooperation to the board in effort and we will hold them accountable to that pledge.
The details of the agreement are well known. The company will move immediately to begin making a number of changes including a capital surplus plan, accounting policy modifications, internal control enhancements and other changes.
The board's independent counsel, Senator Warren Rudman and his law firm were approved by OFHEO yesterday. Senator Rudman will hire independent accountants, also subject to OFHEO approval.
Senator Rudman's work will also be reported to the SEC. We expect Senator Rudman to conduct his review as described in our agreement with OFHEO and to report his findings to the board, OFHEO, and the SEC
The company and its outside auditors have a disagreement with OFHEO about some aspects of the implementation of FAS 91 and FAS 133. The agreement establishes a process going forward to resolve these issues.
This board believes in accountability and objectivity. We will not prejudge the outcome of this process, and I respectfully ask you not to prejudge it, as well. We vigorously share your concerns and want to get to the bottom of this.
If I may speak personally for a moment, I have known some of you over the years from my experiences in both public service and the private sector. And I think you know my commitment to ensuring that our laws are upheld and the institutions of our economy maintain the highest levels of integrity.
There is only one way I know how to deal with such a difficult situation: to speak the truth, to find the facts without bias, to base judgments on those facts, and then to act without hesitation. We must do the right thing carefully and deliberately. We must not rush to judgment or take actions in haste today that we will have to correct tomorrow.
I will commit to you that the board is determined to follow a process that will inspire confidence and restore public trust.

Chairman Baker: “I note that the board took rather quick and decisive action in reaching this first agreement, which would seem to indicate to me that there were some reasons the board came to a conclusion that it was appropriate to enter into that agreement.

Various congressmen weighed in on Ms Korologos’ statement and then Ms. Waters asked:

Ms. Waters: ”Would you confirm for me, your understanding of why you entered into this agreement and whether or not you believe that this means that you immediately make great big changes because you were doing something wrong. Or is this just an agreement to say, ``Okay. You want us to look at this? We will be happy to look at it. We believe that we are right and we believe that in the final analysis, we will be proven right.''

Ms. Korologos. “[We said] What can be done? Let us break this apart and see what can be done on the issues that were raised in the report.” And it really came in sort of three chunks. There were the accounting issues and, clearly as you heard in testimony today, the SEC has a serious role there. There were the capital issues, if you will and the capital plan. There was no way we were going to sign an agreement we couldn't deliver on, number one. And, number two, we were very eager to get this process going so we could give answers to the public, to our investors, to our shareholders, to the housing community. We had already seen an economic impact because of the swirl and the fire storm we are in. So, the more these issues hang around, if you will, I think is irresponsible for the board not to set our own timelines and make sure we can reach them.

Chairman Baker. Let me thank you, Ms. Korologos, for your appearance here today and your testimony and also give you an assurance. I don't see further action by this committee until additional information is provided from both perspectives. I think OFHEO would want the opportunity to respond to the testimony today from Fannie Mae, and it is evident that Fannie Mae would choose to give us more information--the board members as well--as to their findings and factual determinations of the OFHEO allegations. So, I think both sides are going to be providing members with a lot of information. I am trying to say we won't act until there is something that validates acting. If there is no further business for this committee, we stand adjourned.

[Whereupon, at 6:19 p.m., the subcommittee was adjourned.]

Heaviest Element Known to Science

2009-01-12T12:26:00.000-07:00

Got this from my Father-in-Law, and I couldn't agree more:

Lawrence Livermore Laboratories has discovered the
heaviest element yet known to science.

The new element, Governmentium (Gv), has one neutron,
25 assistant neutrons, 88 deputy neutrons, and 198 assistant
deputy neutrons, giving it an atomic mass of 312.
These 312 particles are held together by forces called
morons, which are surrounded by vast quantities of
lepton-like particles called peons.

Since Governmentium has no electrons, it is inert;
however, it can be detected, because it impedes every
reaction with which it comes into contact. A tiny amount of
Governmentium can cause a reaction that would normally take
less than a second, to take from 4 days to 4 years to
complete.

Governmentium has a normal half-life of 2- 6 years. It
does not decay, but instead undergoes a reorganization in
which a portion of the assistant neutrons and deputy
neutrons exchange places.

In fact, Governmentium's mass will actually
increase over time, since each reorganization will cause
more morons to become neutrons, forming isodopes.
This characteristic of morons promotion leads some
scientists to believe that Governmentium is formed whenever
morons reach a critical concentration. This hypothetical
quantity is referred to as critical morass.

When catalysed with money, Governmentium becomes
Administratium, an element that radiates just as much energy
as Governmentium since it has half as many peons but twice
as many morons.

It's been a while...

2009-01-05T12:15:00.001-07:00

So I think it’s been long enough since my last post to justify an update. We had a great Christmas season this year; it was really fun to have all of my siblings out for Christmas. Candi and I also hit our 7^th anniversary this year. Amazing she has put up with me for that long. Last Sunday, I went to my mom’s ward with my brother, and the teacher talked about making a top ten for each year, Trevor actually did it I just thought it was a nice idea. But I’ll give it a go anyway.

1. Successfully completed two semesters of my MBA program! Only 4-5 more to go.

2. Transitioned jobs, now I work more on jobs and less on general ledgers

3. Broke my hand, and still had fun

a. Still went four wheelin

b. Dropped and repaired a transmission

c. Had a great time in Moab

4. Started a new blog, not really that monumental but it’s all I got

5. Survived getting robbed

6. The Presidential Election

a. Even though I didn’t vote for Obama I support him as our new president.

b. I got more involved and educated in politics this year than any prior year.

7. Repaired our leaky roof, it didn’t take me all year to complete but…

8. My Elder’s Quorum did a great Sub for Santa project

9. I helped coordinate a Toys-for-Tots program at my office

10. I helped get my Mom all moved in

a. Of course my kids have the ability to wreak havoc on nearly any household, and they proved it by Christmas morning

So those are my top ten accomplishments, now I am hoping this next year can be more productive here’s what I would like to accomplish

1. Finish the home remodel projects

a. Basement – by February

b. Upstairs flooring & cabinets – by May

c. Complete driveway – by August

2. Lose 50lbs, I’ve been carrying my food storage around with me for far too long – by July

3. Read 2 non-school books – by December

a. Book of Mormon

b. Art of War

4. Get a job promotion/raise – by February

5. Take Isaac fishing (at least 4 times) – by November

6. Go to China – by November

7. Go on a date with Candi once a month

Almost done

2008-12-09T07:42:00.002-07:00

So this semester of school is finally drawing to a close. I have had a couple of interesting classes this semester, my entrepreneurship class has really made me feel like I have found my calling in life. My accounting and financial statement analysis class has also contributed to helping me find what isn't my calling in life. I don't really mind accounting, it makes sense, and it's not too difficult but it just isn't what I want to do.
I recently did a presentation on starting a Volvo Equipment rental franchise, I think it's a market that could prove to be very profitable in a down economy since the companies that are still around are going to have a hard time getting credit they can use rental equipment as a way to maintain their workload while freeing up their assets. If only I had $750,000 in liquid assets, oh well.
My biggest question for my teacher was how do I go about getting the funding for my projects, I have several that I have put together decent financial data for that I think could be beneficial for both myself and the investor, but I haven't figured out how to get that money flowing. My teacher said that if I found an opportunity that I was passionate about and had substantial research, then he could get me the investors.
So I have been working on a couple of ventures, one's a tech company that I have been working with some classmates to develop, the other is a green construction company that is really where my passion lies. I think now is a good time for start ups particularly in real estate. I expect prices will continue to drop for a bit longer but by the end of next year or shortly thereafter real estate values should, and likely will, pick up again. So that provides a good opportunity for a company to pick up parcels on discount, make improvements and resale at an increased margin.
One item I am conflicted on is the idea of HOAs. I really like the idea of having an entity to maintain common space (clear snow, rake leaves, cut grass, etc.). I also think that some amenities are not practical on an individual basis (wind power, swimming pools, tennis/basketball courts, skate parks, etc.). So far the best solution to these kinds of needs is through an HOA. Now the downside to an HOA is that the community has to come to some sort of agreement, and even if they don't agree they still have to pay for it. The other consideration is that all the amenities could be broken off and paid for on a "use" basis but often the "use" is not enough to justify each amenity individually but collectively it works. Like a gym membership, while you pay for the use of the whole club you often use only a couple of peices of equipment, if you broke out the price of just those peices and paid for only them, the gym wouldn't be able to function, but collectively, since you pay for stuff you don't necessarily use it works. The problem with an HOA in this same respect is that the residents don't really have the choice of which gym they are going to join, except by purchasing the home. My question is are HOA's worth it? What would make them worth it? What could make them better?

How do I become "too big to fail"?

2008-11-12T09:09:00.002-07:00

So I am tired of hearing about these banks and automakers that are "too big to fail." I have to disagree, no company is too big. I know Nancy Pelosi would think I am heartless because I don't care if 240,000 people lose their jobs (see this link for her "concern"). I do care but I also think people are better than that. I don't think that just because a major automaker fails people are going to just stop working. Those people who are building cars or working at banks well there are probably many of them who are very good at their jobs, so they can start their own small businesses. This is how innovation works. Both the Banking and the Auto manufacturing indutries have been wanting an overhaul, and now government (that includes congress and the executive branch) wants to stop that from happening. Why?
I know it's tough to let people loose jobs but that is how the economy renews and becomes better. In my opinion it is obvious that the business models for automakers and banks were outdated, or maybe they were never intended to be profitable? So how do we fix a broken industry, with either an outdated or poor business model? Let it die and start over.
I would hate to see so many people loose their jobs but I would hate, even more, to see us propegate a bad business model just to keep people employed.
I think most people would agree that economically based businesses have an end goal of making money. If a business is not able to accomplish that end objective with current business strategies then an overhaul is required, sometimes that means abandoning the old business model. In the case of automakers I think unions are a serious challange to the success of that industry, why is Subaru so efficient? No unions. Banks I think just got greedy, the senior executives were (still are in many circumstances) living well beyond the means of the company, on the company's dime. So scrap the old business model and come up with something better, surely this is possible. I don't have all the answers, but I am sure there are probably at least a hundred or more people in that 240,000 that can figure out a way to create a better automobile, and actually sell it for a profit.
Alright well that's enough for today

So much for "Change"

2008-11-07T08:03:00.002-07:00

I guess the change will be to bring in more people associated with scandal:
http://www.abcnews.go.com/Blotter/story?id=6201900&page=1

I sure hope he appoints better people in other areas.

Prop 8 and hypocrisy

2008-11-05T20:37:00.003-07:00

So even though I didn't get to vote on this, since I don't live in the Golden State, the impact of this is very broad. This was the most expensive ballot measure ever $73million dollars spent, and a voting count that went right down to the wire. I was really disappointed by an ad put up by the opponents of Prop 8 that shows LDS missionaries (they even announce themselves as such in the add) barging into the home of a lesbian couple, they proceed to take their wedding rings, tearing up their wedding license, and rummaging through their home. I am not sure what the message is other than the opponents of Prop 8 seem to hate members of the LDS faith so much that they find it necessary to degrade them. The hypocrisy of this add is astounding, the whole campaign is based on not discriminating, and that is the very essance of this add. I was really happy to read the LDS church's response to the whole deal.

click here to read the whole release, otherwise at least read my excerpts ;-)

Two of the most notable excerpts in my mind is this paragraph:
"The Church’s opposition to same-sex marriage neither constitutes nor condones any kind of hostility toward gays and lesbians. Even more, the Church does not object to rights for same-sex couples regarding hospitalization and medical care, fair housing and employment rights, or probate rights, so long as these do not infringe on the integrity of the traditional family or the constitutional rights of churches. "
and:
"Before it accepted the invitation to join broad-based coalitions for the amendments, the Church knew that some of its members would choose not to support its position. Voting choices by Latter-day Saints, like all other people, are influenced by their own unique experiences and circumstances. As we move forward from the election, Church members need to be understanding and accepting of each other and work together for a better society."

Biased Media?

2008-10-31T00:40:00.004-06:00

So I have to admit I am really glad this election season is finally winding down. However I got wind of this little news clip from my cousin, I'm not sure how many people that read this blog like Savage Nation but I have typically appreciated his take on things, the most interesting thing about this is the person filing the lawsuit is a fellow democrat. Check it out and judge for yourself.

Part 1
http://www.youtube.com/watch?v=jvGtGitwMR0

Part 2
http://www.youtube.com/watch?v=57C9b-ZoNTo

Who robs the house that can't even afford grass?

2008-10-21T14:39:00.002-06:00

What a week! Well I am glad that is behind me.

For those of you that may not know this last week was probably one of the worst I have had in quite some time. I think it was really just in a matter of two days that most of the damage was done but anyway…
So we had our house broke into on Wednesday, the thief stole my laptop, Candi’s laptop, the Xbox (including all 4 wireless controllers, and the charger for the controllers but not the power supply), Candi’s iPod, our Safe (which had exactly zero dollars in it but had all of our titles, birth certificates, etc.), $60 in cash from Candi’s mom, and a few other items. It was crappy. The worst part is we lost photos, and work that can never be recovered, guess I learned my lesson (should-a backed up earlier)
Thursday didn’t really get much better; I was at best despondent the whole day at work. I had to keep busy with physical activities; I couldn’t focus working on the computer. On my way home I was driving along in my out-of-body state when I realized I was going like 45 mph in second gear, I think my tach hit about 6k rpms. Which is not good for the ol’ Jeep. Running the engine that high sent a lot of coolant toward the t-stat, which then blew a seal. So by the time I got home I was leaking about a gallon of coolant per hour. After walking in the house, Tom was getting started to work on the basement, and had just turned on my air compressor which then started to smoke from the engine area, not really ever a good sign. I am pretty sure that is toast now but I am going to try to dismantle it and see what I can find in there. Then we started looking at the bids for our badly needed new roof, anybody have a couple grand I can borrow or even better have ;-)

In other news, I have been working on a business plan that I think is really going to be big. I replaced my thermostat & gasket for $12, Tom is doing some good work on our basement, and my new classes start tonight.

Free Market, my eye!

2008-10-15T07:54:00.000-06:00

So I am currently taking an Economics class, it has been an interesting time to be taking this kind of a class. I am not sure what my professor believes, from his tone regarding political situations I would have pegged him for a solid liberal, but then last night he said he was a proponent of supply-side economics. Supply-side economics is based on the idea that if you make the supply cheaper businesses will thrive and wealth will increase. It is generally classified as a republican doctrine; lots of democrats will refer to it as “trickle-down” economics. So now I don’t know what the heck he thinks, maybe he is just disgusted with the both options? I am not sure what doctrine the democrat party would like to have attributed to them but it seems closer to Marxian than Keynesian, in my opinion. The “new” plan proposed by Obama is based on the concept that if you increase the flow of money to the consumers you will increase revenues, I am pretty sure I have posted my issues with this concept on prior posts. I am not really keen on a redistribution of wealth, I think it discourages innovation and businesses suffer.
Either way I have been thinking a lot about our economic situation and I think we are in a very unique situation. I think we are headed for a recession in some markets and inflation in other markets. I don’t know what the economic explanation for this type of situation is but I don’t think it can be defined with traditional macro-economic theory. Because while many markets such as banking, housing, technology are all facing reduced prices other markets such as oil, food, and energy are still seeing record high prices (even with a massive drop in oil, it is still much higher than our overall inflation).
I was thinking about this because last night we had a discussion of actions that could be taken fiscally and monetarily to “fight” recessions and inflation. A recession is caused by and creates an environment opposite to that of inflation. The proposed solutions to recession can cause inflation and vice versa.
Another point that I thought was interesting was the fiscal solutions for fighting inflation are to increase taxes and cut government spending. The idea is to remove money from the “system”; based on basic supply and demand this increases the “price” of the money. Funny thing is that both candidates want to cut spending and taxes? I am not so sure about the governments ability to cut spending, and raising taxes hasn’t ever been a really popular proposition.
Finally my real point was that the “Free Market” is often blamed for our current financial crisis. I don’t see how it is any more the free market’s fault than the fault of those “controls”. It isn’t like we ever let the market run free, we are too concerned about market failures so we create these controls, fiscal and monetary policies to try to “correct” the market. If the market fails I don’t think any educated person can fairly blame the “Free Market” since there really isn’t such a thing. I think this claim is no more than liberal propaganda trying to vie for more social systems and government intervention and a further reduced free market. I am not convinced that a truly free market would suffer from any of the traditional market failures, since it has never really been attempted.

Partisan Politics

2008-10-01T10:53:00.005-06:00

So I have been meaning to post on this whole financial meltdown for quite a while. I am amazed at what has happened and how mainstream media has pandered to Obama over the last week or so. The whole issue of McCain flying in as a stunt, and how the "Radical Republicans" are responsible for killing the bailout, etc. It is all pandering, the bailout was killed by both parties, and they both were lacking a significant number of votes. Sort of a moot point now though I suppose.

Granted McCain's flight back to DC may have had some political motivations but he wasn't the only one plus it was requested that he and Obama both attend the meeting. So why isn't it a White House political stunt by all parties? Because the media loves Obama.

I find most ironic the continued battering of Obama that this crisis is a result of deregulation. It is actually the opposite. It is the result of improper regulation. Here is a video link that explains it quite well though it does have some very obvious political overtones I think the facts that it presents are very valid.
http://www.youtube.com/watch?v=1RZVw3no2A4&feature=iv&annotation_id=event_597487

Here are some key facts out of this video that it blows over very quickly.

The Community Reinvestment Act (CRA) was regulation designed to force banks (in order to get FDIC approval) to provide loans to low income. Initially created in 1977 this program was helpful and housing prices grew consistently with inflation.
In 1994 under the Clinton administration the CRA was expanded and forced higher levels of low income "affordable" mortgages from banks. Housing "value" exceeded inflation by monstrous amounts for the next 10 years.
Who gets money from Fannie Mae & Freddy Mac. Why are these "government regulated" companies making campaign contributions? Seems like a massive conflict of interest to me.
There were attorneys who actually sued banks for not maintaining their minimum required "affordable" loan packages, Obama was one such attorney.
It takes time for the effects of bad politics to make an impact. I think both Bush Sr. and Clinton were riding on the coattails of Reagan's fiscal plan. Unfortunately "W" got stuck with the mess that Clinton and company made. I think they were too distracted by scandal to actually take care of the economy.

In other news the stock market has been tumultuous at best over the last couple of weeks. I think it is going to get worse before it gets better. I am most concerned by Obama's supposed "economic plan". Can't say that I would personally hate having all my personal income exempt from tax, but I don't think many people realize what the other consequences of that "benefit" really are. Under an Obama administration businesses would be taxed to death, small businesses would likely suffer the most, since the tax burden would be proportionately larger. Obama's plan is a completely backwards form of economics. The Reagan administration has often been referred to as following the idea of trickle-down economics. Basically what this means is that if you reduce the tax burden on businesses they can thrive. When businesses thrive people have more job opportunities, more competitive pay, and the capital required to invest in further R & D. Obama's concept is "trickle-up" economics. By relieving the tax burden on individuals making less than 250k the idea is to give consumers more money so they can spend more then the businesses have more revenue to compensate for the higher tax burden. The problems with this philosophy are: it completely removes a huge source of tax revenue generated by illegal immigrants (since they don't file tax returns), it doesn't work if people don't spend money, and most of the products that would be purchased with additional expendable income are not manufactured in the United States (it would likely benefit China a whole bunch). The reason I draw the last conclusion is base on the tightening of the credit market. The US has primarily converted to a services based economy, the products that we do create are often very large and require credit (houses, cars, etc.), as the credit market continues to tighten it becomes more and more difficult to afford these types of products.

Alright well there is my political post for the last little while. I am sure everyone was just dieing to know what I was thinking.

The Highly Visible (formerly invisible) Hand

2008-09-17T11:16:00.003-06:00

I am almost half way done with my first block of classes for this semester. I am taking an Economics class, which seems rather timely considering the current state of affairs on Wall Street. I guess I am just a complete capitalist. I am not really happy with the idea that tax payer money is bailing out these businesses that were plagued with incredibly poor and shortsighted management. It is quite troublesome to me that the federal government feels like it needs to take over the industry. I can’t see any reason why the banking market would benefit from a government takeover; didn’t we just finish de-regulating this industry? I think that they should just let them crash, that is how the market stabilizes itself, it purges out those greedy institutions. I think it would be sad for all the investors that had stock in those institutions, and unfortunate for the good employees of those banks. But, that is how the market works, investors are expected to complete their due diligence prior to investing and employees who are not responsible for the catastrophe are nearly always employable by competitors. I know I am heartless and cruel, but I guess I just think that is the way it is. This is where I draw a stark contrast from Barak Obama, who would like to blame the capitalist market for the troubled financial market. I can’t stand that blame game, why can’t it be the financial market’s fault that they got into that situation? Why should taxpayers have to pay for a bloated governmental institution to oversee these markets? What ever happened to the ideals that Democrat JFK was famous for “Ask not what your country can do for you, but what you can do for your country.” Obama certainly does not prescribe to this doctrine; he seems to think that somehow taxpayers (who he has classified as the rich) are somehow responsible for the non-taxpayers. I can’t stand this shift in responsibility. I’ll tell you who I am responsible for, myself and my family, nobody else. Now if I someday become independently wealthy I think it would be in my best interests to contribute to the well being of America however I don’t think I should be forced to. I think that if I want to contribute to charitable organizations I should be able to decide, independently, which ones and how much. I don’t need a politician to tell me who needs it the most.

Bailouts reward bad behavior; it sends a message to CEOs everywhere that this bad behavior and poor management will not have negative consequences. If the government wants to help out an industry they should create positive incentives, not bailouts. If they want to improve the efficiency of cars they should provide incentives for businesses that create more economical cars, they could create a competition (similar to the Virgin Records Airplane to the Moon). The bailouts and tax penalties work in the wrong direction; it puts the focus on the negative behavior rather than on the innovation and positive behavior. The best thing the government could have been doing during these times of “lax regulation” is to have provided incentives to those financial institutions that were willing to meet certain criteria, including making proper disclosures and maintaining adequate capital. It would also help the less educated masses gain a little transparency as to the legitimacy of the firm they are considering investing in. This method would give an incentive to operate an institution within the guidelines without unnecessarily restricting the market. The reason I am so vehemently opposed to market regulations is they discourage innovation. Discouragement is the nature of restrictions.

Here is the problem with my proposition. I think it kills the current legislative branch, no longer would they be spending time figuring out how to word the bill so that it would restrict a very specific action, no longer would they be accepting bribes from companies or lobbyists trying to undermine the system (unless they were for less than the potential gain of the company), and it would require them to actually be creative in how they formulated incentives. I have already voiced my opinion of the Pork and Barrel spending in politics, I think its garbage, if a bill can’t be voted on its own merit then don’t vote on it at all. I am opposed to personal income tax because it undermines one of the basic building blocks of this nation “no taxation without representation” when is the last time we got an update on how and where personal income tax is being spent? This doesn’t apply to businesses so I don’t have much of a problem with that. Property taxes are accounted for; sales taxes are accounted for, even fuel taxes are accounted for. I don’t have any clue what the number is but I would venture to guess that if we eliminated Pork and Barrel spending entirely we would have a national surplus within a year maybe two. Of course then we will have these special interest groups that would go un-funded. Based on their inability to draw up financial support from the community, maybe they should stay that way.

Well that’s probably enough for this week or so… By the way if you have money invested in the banking industry just remember, buyer beware.

The Most Important Election, EVER

2008-09-04T16:37:00.000-06:00

So I was listening, in and out, to the Republican Convention last night. I caught most of Rudy’s speech and most of Sarah Palin’s. I love how every election is the most important, I suppose it is because it always determines the future, at least to a certain extent. I thought Palin did a good job and that following Rudy made her look like an even better speaker. I seriously thought Rudy was supposed to be eloquent and what-not but he really seemed to me to be stumbling through the majority of his speech. I did like the contrast that was brought up regarding executive experience vs. legislative experience. Legislators don’t have to make any real decisions, they can just be Present, and not vote yea or nay. Executives can’t do that their decision is yea or nay, no present votes allowed. It accounts for about 3% of all the votes he cast as a state legislator, so not too many but… I think present is a stupid vote; it shouldn’t even be an option. Either vote yes, no, or not at all. I also think it illustrates the difference between being a leader and a law-maker. I think Palin did a very good job with her speech, I think she is a nice contrast to McCain, the only area where I think she could really use some help is in the experience department, but what other options are there?
I’m not sure if I am going to listen to McCain’s speech tonight. While I think the conventions could serve a purpose, they tend to be somewhat of a pandering event for either party just to sell themselves to their current constituents. I would like both parties to actually make a plan, and present it to the people. Instead of just saying you will increase jobs, reduce taxes, reduce spending, etc. I would like to know how they plan to do all these things. I am really turned off by contradictory statements like lowering taxes for working class while raising wages and balancing the budget. The money has to come from somewhere, if they reduce personal income taxes then they will have to increase business profit taxes, or they can take out a loan (unbalanced budget). I am a little tired of Obama’s statement that he is going to “reign in government spending” how exactly does he plan to do that? Does he see areas where there is excess? Why not just say he is going to cut funding for XYZ project? Or if it is the intent remove pork and barrel spending, and all these projects that can’t pass without being attached to a more important bill? Of course politicians are famous for their ability to add on to bills (irrespective of parties) traditionally the democrats have a greater propensity to inflate bills, at least in the cost department.
I would like to change the process for presidential elections. I think it would be nice if we set up job qualifications to apply to be president. Like maybe some sort of quantifiable economic understanding, it would also be nice if they really understood the constitution (one reason I really like Ron Paul), I hate to say it but military experience of some sort is almost essential (aren’t they applying to be commander in chief?). We could have them take a series of personality tests that can then be published to the masses, evaluate their ethical behavior, personal conviction, ability to relate with others, even sense of humor. Of course the biggest challenge in doing this would to be to maintain an unbiased perspective. Drug testing isn’t a bad idea either; this is pretty cut and dry as far as I am concerned. It makes me cringe to think that here Americans are left to choose between two candidates that in many ways aren’t really qualified for the position; of course that is my opinion so… I think the business world understands what it means to hire people; all those tests and interviews actually are there for a reason. Attrition is very expensive, at the Presidential level it can’t even be put into numbers the cost. I guess my choice has just come down to who is the most qualified, or the closest to being qualified.

Eco-Capitalist

2008-09-02T11:53:00.003-06:00

So my thoughts of late have revolved around the environment. I consider myself a pretty “green” conservative, which in most people’s minds sounds like a walking contradiction, but I don’t think so. Anyway I have a small collection of some interesting thoughts regarding energy efficiency:
1. CFLs – Compact Fluorescent Lights you may know these as those swirlly looking light bulbs, they are about 7 times more efficient in their use of energy over your standard light bulb, and they last about 12 times longer. The downside is they have a ballast structure built into the base of the bulb that contains Mercury. Mercury is a toxic chemical that requires disposal in a toxic waste site (check the CFL package, they are not to be discarded in a standard landfill)
2. Hybrid Cars – we now have a whole gamut of “hybrid” cars, trucks, and SUVs hitting the market. I have several issues on this one,
a. First is the inflated MPG numbers that are often reported, this happens across the board for the most part, in my experience Toyota and Honda are the most prominent offenders.
b. My other gripe is the fact that the Hybrids really aren’t all that environmentally friendly. While they may provide better gas mileage, they generally use Nickel Cadmium as the base for their batteries. The mining of this ore uses strip mining, and leaves a sludge that is highly acidic; it destroys vegetation and water for miles. Then you have an issue of how to deal with the battery once it is used up, that is another story though.
c. Finally, the maintenance cost is very high, the batteries are very expensive (~$5k), and don’t last beyond 100,000 miles, most are only guaranteed for 30,000. So you pay a premium on the initial car purchase, then within 10 years you get to pay another premium. Hybrids on average are about 15% heavier, this leads to an accelerated schedule for other maintenance items such as tires, axles, transmission, etc.
3. Cow Farts – These things are toxic, comprising an estimated 15% of total greenhouse gases (per myth busters). Scientists should be spending more time finding ways to streamline the digestive process of livestock, beano for cows or something.

Going back to where I started; I think that being a capitalist doesn’t have to be mutually exclusive from having environmental responsibility. My evidence that this is successful is to look at all the “Organic” food in your grocery stores, if they can charge a premium for that label then why can’t we charge a premium to sell items that are environmentally friendly. The challenge is being able to charge a premium high enough to offset any additional costs incurred to create a more environmentally friendly product/service. I don’t think it is that hard, and I think the real problem is not the additional “cost”, but the all too common misconception about “green.” I saw a survey, forgot where sorry, that said that most CEOs estimated the cost to make their company green at about a 25% premium above their current costs, when an outside analysis was performed it was found the costs would only increase 5%, on average, and that is short term. So the work that needs to be done in my mind is creating more awareness for environmentally friendly alternatives and the benefits of these products over their less friendly alternatives. However it should also be given a fair analysis, I think some of these “green” alternatives are just hype and no substance.

Finally just an interesting thought (I couldn't figure out how to create a poll): Which house do you think uses less energy Al Gore's primary residence or George W. Bush's Ranch? You could probably guess by the question that it is actually old W who has the smaller carbon footprint, how's that for some irony, or maybe it's just "An Inconvenient Truth."

Olympics, Life, and Overtime

2008-08-13T14:53:00.001-06:00

So lets see, I’ve apparently been busy, or something. I’m really liking my new position at work; it is a good fit for me. I have recently spent a good deal of time watching Olympic events, I love the swimming, basketball, and I can even tolerate the gymnastics. In past Olympics, excluding the 2002 games, I wasn’t really very interested but for some reason this year has been pretty interesting to me. I like the more definite events though like swimming and basketball because it is exact as to who wins; there isn’t really any speculation other than the possibility of cheating. Gymnastics is tough for me because most of the time I don’t even know why one person gets a lower score than another. For example the other day on the men’s gymnastics this guy did a freakin sweet routine on the palm horse (sp?) and his score didn’t seem to reflect it. Plus the women would do these floor routines that appeared to be much more difficult than the Chinese (I am not very knowledgeable as to what is really hard there) but the “difficulty” level was not representative of that appearance. Anyway it has been fun and that Phelps is just amazing, my favorite so far was the relay where they beet the “heavily favored” French by a couple hundredths of a second, awesome finish.

In other news we sold the Durango, it was a nice vehicle for us for the time we had it, but the gas mileage was killing us plus it is nice to have one less car to insure. I fixed the jeep; it took all of about 10 min. I had pretty much already figured out what the problem was. I got this new coil and ignition wires for my birthday a couple of years ago, for the novices out there the coil is the part of the engine that sends electricity to the spark plugs. Anyway, I installed it because it was “high-performance” it was supposed to allow me to gap my spark plugs wider so I would get a larger spark, therefore better combustion, and more power. Well suffice it to say that it didn’t deliver, in fact I put the original one back in after it completely failed and as soon as I put the old one in the engine fired right up. So the moral of the story is “if it ain’t broke, don’t fix it” or at least make sure to do diligence when purchasing after market “high-performance” parts when you are replacing OEM parts that haven’t failed.

Our front yard looks like a mini-tornado went through it, it’s pretty ugly. The basement has somewhat stalled out since I got the carpet into “initial” position. I need to get more money before I can work on it too much more.

I was supposed to go on a Fathers & Sons campout this weekend but it looks like they are going to want me to help out with the accounting department. I find this somewhat funny since as I was getting ready to come over to the Outside Plant division my old boss said that she thought I would be begging for my old job back, and now she is begging for me to come back. I was a little tired of camping after this last weekend anyway (at least for a little while), so it’s probably for the best.

a New job, a New office, a New 10-Key

2008-07-30T14:38:00.002-06:00

So here I am in my new office, I started in my new position officially on Monday. This position is rolling out as a beta for the company. I am really looking forward to taking on some different responsibilities and see what kind of an impact I can make. So far I have spent a good deal of time just getting settled, and trying to figure out what kinds of things I can do that would be useful to the department. My new assignment is as Project Controller for Outside Plant. Basically I am responsible for making sure jobs get done on budget and on schedule. I have spent the first few days working on the budget aspect and I want to get to some training to help me better figure out the scheduling side of things.
So far I like the opportunity; it has been a good transition for the most part. My former boss seems a little overly tight on the “security” she wants to grant me. I am not sure if she took away my security clearance because I am suddenly a different person or what, it was in the name of internal controls but it seems more to me like an exercise of power than anything else.
I am now working for Randy and he seems to have a good amount of faith in me and what I can do to help his department. I also had a meeting with the owner where he basically said it was up to me to step up and take control, the authority is in place. I really like the idea of having the corresponding authority and responsibility, one reason I really like Americom; the owners seem to be very aware of that balance.
I just want to say a little bit, or maybe a lot, about Politics. Mostly my comments revolve around the idea that a Bi-Partisan system in no way serves the greatest number of people. I think the only president ever elected that wasn’t just the lesser of two evils was George Washington. But my real concern revolves around the idea of sensationalism. Before I go bashing the liberals I should probably preface my remarks with the fact that I don’t find either candidate appealing, at least not at this point. I think Obama is a pro when it comes to being sensational. He has the media wrapped around his little finger (I am coughing in Letterman’s general direction, can’t even watch that show anymore). Not to mention the ridiculous “endorsements” he has received. I get a little tired of hearing about endorsements; I think they are a bunch of crap. Should I even care who the governor of Florida is voting for? I find some of it rather amusing, especially when candidates try to back-peddle out of endorsements that may have at one time served them well but have since turned very sour. How will people act? I think most all people change how they act when given a new level of authority, not even I am exempt from that one. So how would either candidate act if they were elected to be president? Would they act based on their voting record? Maybe. Would they act based on their values? Maybe. Would they act based on what their spouse told them to do? Probably. The problem is we really don’t know how people will act, surely a longer voting record may provide some level of trust that their actions would follow the pattern but it certainly isn’t a guarantee. What if they don’t have a voting record? Should we just believe what they say? I don’t believe a single one, the first one that starts voting for lower wages for politicians is the first one I would consider believing, don’t worry that will never happen. Our political system is so dirty it makes me sick; laws get passed based on the size of a pocketbook or in many cases black book. What ever happened to the idea of putting a bill up, and if it doesn’t get voted in, it goes away, instead of pulling the bill back (add a whole bunch more crap to it, like a fund for sickly Africanized spiders) then resubmitting it at twice it’s original size with the caption that it will only get bigger if it gets rejected again.
I don’t know if it is possible for politicians to be ethical, unless they work pro bono including rejecting all those little perks, like NBA season tickets, golf club memberships, etc.
Maybe lobbyist should be illegal, if people want a voice they should try using their own rather than purchasing one.
My last line is traffic sucks, I can’t wait until the teleport technology is perfected.

Wait for the End!

2008-07-17T15:11:00.002-06:00

Send a JibJab Sendables® eCard Today!

So I suppose I haven’t updated in a bit today I have been surfing the disturbing news stories a bit so I have some stuff to rant on, including but not limited to: political fundraising, home foreclosures, and jibjab.

1^st jibjab, just because I am guessing you already watched the video before even reading my post, yep that is Sir Isaac there at the end, awesome ehe? Go ahead and make your own.

2^nd Political fundraising is ridiculous; these people have raised more than 200 million dollars, and what for? Just so they can further plaster there images across the web, TV, and various other media outlets. Seems like a massive waste of money to me. Especially since the reason they are spending money at this point is not to increase awareness but to persuade people that they are right.

3^rd Housing crisis, what a mess this country has gotten itself into. So in Las Vegas in the month of June (and only the month of June) 1 in 99 homes was sent foreclosure notifications. That seems staggering to me, since it is just one month of a now 6 month slump for the Vegas area. Not to mention that they have said there current downturn has come because construction has slowed, well that means it is going to get even worse because if energy prices (including gas) stay the same then people are going to stop heading down to Sin City, and I am pretty sure the biggest revenue in Vegas comes from tourists.

In other news Candi and I have been working on our basement for the last couple of nights. We got some shelving built in the “mechanical room” and put a whole bunch of crap in there, but now it looks nice. My next project down there is to finish rolling out the carpet and frame the last two walls. It is coming along and I think in the next month or so it is going to look pretty nice. Plus it is nice and cool down there. We really look forward to having the extra space. Finishing the basement will make it so we can move one couch, the TV, the DVDs & CDs, all of our books, and the LoveSacs. That will make room for us to have a dinning room upstairs. I am really looking forward to the idea of having a place to eat dinner; getting a little tired of the coffee table, 4 years is just too much.

Consider yourself "Blog-Tagged"

2008-07-09T12:36:00.003-06:00

I've been blog-tagged. I guess here are the rules: come up with 6 unimportant facts about myself, link back to the person who tagged my blog, and tag 6 new people.

This came from Steph

This is tough because everything about me is important, but I will give it a try.

One of my pet peeves at the office is crappy staplers – when the staple doesn’t go through and just bends up, or it doesn’t bend after it goes through (leaving a nice sharp point that you can later rip your finger open on)
I like to cook, not to be confused with baking (baking is for the women folk ;-D). I like throwing spices and stuff together in a pan as well as grilling up delicious meats and veggies
My iPod has enough songs on it that I could listen to music for 9.87 days straight, without getting a single repeat. However my longest playlist is only 1142 songs. I am also obsessed with iTunes, making sure all my music is organized the way I like it with album covers and all.
I am an aspiring Ham Radio operator, I am taking some classes to become an amateur operator starting next month.
I don’t like cake, especially yellow or white. I like some pies and love the crisps, but cake is just too cakey.
I have only fainted twice in my life, once from dehydration (I fell down a mountain, fractured my hip and sprained my knee), and once from a combination of low blood sugar and loss of blood (I cut my thumb tip off, the next morning when I took the bandage off I lost a bunch of blood, and knocked my head on the shower door a couple of times, while Candi was showering)

So now I am supposed to “tag” six other people, since the likelihood that 6 other people actually read this banter is rather slim I will just go with the default “tag” line, if you read this you have been tagged, sucker.

Scars Revealed

2008-07-01T22:01:00.003-06:00

So the bandages came off yesterday. I thought I should put up a picture of my new “zipper.” It kinda looks like the cut could just split right back open again, but it seems to be okay for the time being. I have been doing massages and stretches to try to get the tendons back to the point where I can grip stuff again. Sometimes when I think I am grabbing something it just falls out of my hand, since stretching the tendons is already a lot of resistance. So I am going to have to put aside my aspirations of becoming a hand model, unless somebody is looking for a Frankenstein version.

I started training the “new guy” yesterday, my replacement. I am glad they got someone to start, though I am a little frustrated with the way some things have been implemented. They knew this guy was going to start two weeks ago and yet HR never bothered to get his user name, email, or any log in stuff set up. So it makes it so that I can’t do anything when he is doing something and vice versa, the problem is it takes him a lot longer to get stuff done than it does me, so if we have time sensitive tasks he just has to sit back and watch.

We busted out our tent yesterday, it was a little on the stinky side, so hopefully we will be able to get it cleaned up in the next day or so. Candi washed the rain fly in the tub so that part is so fresh and so clean. We are getting ready for our regular 4^th of July trip up to Bear Lake. It should be a good trip, as long as we can keep the bugs off.

Well I have to go play some rock band so hope ya’ll have a good evening

It's 4:57 and I am ready to go home

2008-06-27T16:46:00.001-06:00

So I still have a stupid half cast on my right hand. It is pretty annoying. But I get it off on Monday so that should make for some good times. I have found that I can type pretty well but my handwriting is absolutely horrible. I had to look at the incision; it is a lot longer than I thought would have been necessary. I guess that plate is like a salad plate or something. It is going to be a pretty cool scar though.

I have finished my summer classes for my first semester of my MBA program at Westminster. I really liked my classes; I feel like I learned a lot.

We decided to get our front yard redone by some trained professionals, so now Tom is working feverishly to make something beautiful out of our disastrous front yard. I am looking forward to him getting started on it, since I have been meaning to for months now. I guess it just speaks of my serial entrepreneurship nature. I love starting new projects, but then if it doesn’t come together rather quickly I get bored and lose interest. I think it is my patience that I really need to work on. Speaking of patience, I was promised another position with my current employer like 2 months ago and now it is going to be another month and a half, so I can train the new guy. I think I am going to ask for a raise in the interim, I think I have been performing well and I would like a little more money. I was supposed to be getting an increase with the new position, but that seems to be taking forever to actually happen.

Anyway it’s go time so peace out.

What would you do for a Klondike bar?

2008-06-15T12:29:00.002-06:00

So I am going in for surgery on Tuesday. That should be a grand ole' occasion. I am trying to get my reading for my classes done before that so I don't have to worry about it while I am heavily medicated. They wouldn't let me schedule a time for the surgery, they will call me on Monday to tell me what time I can come in. Seems pretty pathetic to me that they can't schedule a surgery more than 24 hours in advance. It isn't even at the hospital so it isn't like it would be affected by emergency situations. I get to have a metal plate put into my hand with some screws, I will forever be searched at the airport.
Work is going well, they finally hired a replacement for me, so now sometime in the next two months I can move over to my new office. They are in the process of rebuilding a house that is next door to our current office for the purpose of expansion. I think it will work out pretty nicely once all is said and done.
School is nearly over for the summer, only two more of each of my classes. Seems like they just barely started too. They are going pretty well, I should get a pretty good grades this semester.
I got a new grill for father's day, it is pretty nice. We grilled up some burgers last night and I just wasn't used to how fast the new grill cooked, they came out a little dry, I even had it on low the whole time. I think I am going to get some of those ceramic heat dissipaters for the bottom to help spread out the flame a bit more.
Well that's all I have to say for now, maybe I will try to put up a post after my surgery, I try to do it before I get too far out of the "drunken state"

Busted Stuff

2008-06-06T22:44:00.006-06:00

So here is my hand, and that little spur coming off the back of it is... not "normal"
While I was making preparations for our Moab trip I wanted to check the brakes on the durango to make sure they would be okay for towing. Somehow during that process my brain forgot (twice) how close my jack handle was to our concrete steps, the first time I smashed my thumb so I decided to get a different grip, at which point my vigorous nature took over and my overzealous arm attempted to push my hand (with the jack handle in it) through the concrete steps, they won. So here is the proof of either my stupidity or severe short term memory loss.
I thought maybe some of the medically aware people that read my blog may fully appreciate the pics
So now on Monday I have to go see a specialist (hand doctor, not sure what they are called). It may require surgery because of how it is spiraled.
And to answer the potential question, yes I have just been dealing with it for the last 13 days, thinking that somehow it would fix itself. It didn't hurt excessively bad until last night, the doc did prescribe some heavy pain killers, we'll probably get those tomorrow.

What do you say when it snows in June?

2008-06-05T22:30:00.004-06:00

So I don’t know what the heck is going on here in Utah but today is June, and on my way to class, in the Salt Lake Valley, I came across this little pile of what appears to be… that’s right snow. Are we ever going to be done with this crap? I like the desert because it is supposed to be nice and dry but not this year it has turned into a regular tropical climate around here.

In other news, Obama is now the “presumptive” democratic nominee, whatever that is supposed to mean. Why can’t the news just tell it like it is? Here is my version of this story… “For today’s top headline we have determined that this coming November voters will be able to head to the ballot boxes and place their vote for the person whom they feel would best be able to lead our nation for the next four years, or if they don’t feel like throwing their vote away or they just can’t figure out how to write in on an electronic ballot, they can vote for either Obama or McCain. Either way it doesn’t really matter though because the colligate system has taken the voice away from individuals and given it to states.”

Just exhibiting a bit of wishful thinking here: what if a “write-in” name won the general election, how does the vice president get chosen? Could the winner just pick whoever they want? Weird.

I am sure some are getting tired of my complaints about national and local politics, but really if I didn’t complain about it what else could I do? It isn’t like I can actually change the two party system, or sew Rocky Anderson’s mouth shut. So my only resolve is to vent through the World Wide Web.

So my classes at Westminster are now more than half over, and we just barely got back our first sets of grades. Must say I am pretty happy with myself so far. I have not really ever considered myself an over-achiever, I don’t really try to get A’s, most of the time I just like putting forth a concerted effort. In my Strategy class our group presentation was the first item graded, I pretty much wrote the whole paper that accompanied the presentation, since I was in Moab when the presentations were scheduled. It came out very nice thanks to some solid editing from my lovely bride. We got the highest score in the class on that project with a 9.5/10. Then tonight I got back my first assignment for my Ethics class. It was a journal assignment, which I always thought were very easy since they are very informal and handwritten. The teacher gave mine back and made some comment like, “you did very well” and another student asked “Didn’t everyone just get a check or a check minus?” the teacher proceeded to say, “Well mostly but there was one check plus.” Now that was awesome when I looked down and realized that I had got the check plus. There is something really gratifying about being the best in my classes. I think it is because I consider my fellow students now to be much more competitive and overall more intelligent than my undergraduate classes. I will try to not let it all go to my head but it sure is nice to gloat for a bit.

So I have another ethical perspective for those that are interested it is Cognitive Rational. Basically makes an association between intelligence and morality, not that all who are intelligent are moral (we can simply look at Hitler for a stark contrast to that statement) but those that are most moral are inherently intelligent. I believe this works with Egoism to establish what my basis for thinking is. I think that people will serve the interests of others by serving their own best interest if they have a complete understanding of all consequences. In other words if people are more intelligent they are more apt (at least capable) of making a morally correct decision. Another view we looked at but one that I certainly don’t agree with was Peter Singer, check out YouTube for the crazy talk. It was interesting because he professes to be the ultimate Utilitarian. He is certainly the ultimate vegetarian; he says we should treat animals just like we treat humans. I wonder if he believes animals should treat each other the same way. Does this make the lion unethical because it eats other animals? Personally I love my meat group, so I won’t be prescribing to this doctrine at any point.

Vaca - Moab

2008-05-30T17:01:00.000-06:00

So we made it back in one piece, sort of. Moab was a ton of fun; we did a couple of trail runs, some hiking, and a jet-boat tour. Only downside(s) my hand is all messed up, and my jeep decided to die on me (though at least it waited until we were done with the trail rides. I also got to change the transmission fluid in the Durango since it overheated towing the jeep down. On the bright side, the food was good, the games were fun, the sights (and weather) were beautiful, and we all got an intense workout on our “race” up to Delicate Arch. We have hiked Delicate probably 7 times now; Ike went the whole way on his feet this time. I would really like to do another hike but we keep going down with new people and they want to see the famous arch. It was pretty intense since I figured the hike should take about 3 hours, at a slow pace for the kids, and we all got to the top within 40 minutes. It made us super early for the Jet-boat tour but it was a nice work out.
We did Fins-N-Things in Slickrock state park and Gemini Bridges. My mom rented a jeep (which Mike drove most of the day), so it was nice to have a second vehicle. I am just hoping to have got Mike infected with the 4 wheelin bug.
In light of the car troubles I am once again thinking about looking to make a change. Though this time it would be fairly dramatic since I am actually considering getting rid of the jeep. Of course I will get it all fixed up and saleable in the next week or two but it would be nice to get one of those 4 door wranglers, and the Rubicon models have come down about 10k since I last looked. I know I just got a “new” car but… I suppose it only makes sense to me. It’s a Walsburg thing

Politics

2008-05-23T09:31:00.001-06:00

That’s right I am feeling overzealous this week so I am going to put up a whole bunch of posts that way when I forget about my blog for a month or so the average is still good.
This post is regarding political turmoil. I am really, really, really disenchanted by the current presidential options. As some of you may know in the beginning of the primaries I was a big fan of Mitt, I still am. I have also been very interested in another former republican nominee Ron Paul, granted some of his views are a little extreme for my liking but the thing I have come to really appreciate about him is how he has, and does stick to his guns. He has been very, very consistent in his voting record, so I like that he is predictable. I also like most of his stances especially those regarding taxes, illegal immigration, and fiscal policy. I do vary from him somewhat on foreign policy but I think that part would work out anyway.
This all comes at a time when it doesn’t really matter anymore though because we are a two party system, a vote for anyone else is just throwing it away. I really don’t like this because then we are literally stuck with the choice of voting for the lesser evil, not the best man/woman for the job. The whole system kind of sucks because the delegate system is a necessary evil, since it gives smaller states a voice, however it is inherently flawed in that it has thwarted the voice of the majority.
My current take is this:
I am not real happy with the current options for president this year, seems like pretty tired politics with none of them willing to make a real difference. I also can't say I am really happy with our current state of affairs either. I think it is unfortunate we can't get someone in as a president that is not afraid to get rid of the excessive government spending, and the lobbyist's who are padding politician's pockets. I liked Ron Paul because he has a really consistent and long record that has emphatically shown how he acts in political arena, was willing and adamant about securing our borders. I also thought that throughout the GOP debates he had much better responses and questions than any of the other candidates. He also takes issue with the IRS on some issues that I have, as far as personal income tax being taxation without representation, and the Federal Reserve, which is the governments outsourcing of our currency production. I feel strongly that the Federal Reserve is actually it's own conflict of interest, however thanks to the crash of the housing market it is finally being punished, hopefully to the point where the government will take the control of this back, we don't really have a US dollar, it is actually a Federal Reserve Dollar. McCain always struck me as just being a name dropper, like every time he got a question he would just respond with well I know so and so and they like me, not really very intelligent responses in my mind, plus his voting record while long is sporadic at best, one day he is a "staunch republican" the next day (when he is trying to appeal to the independent vote) he is a moderate or liberal republican, he has never been strong on border control, and he has admitted to being weak on economics (that is just frightening considering the current status of our economic system). On the other side of the spectrum I haven't seen any major differences between Obama and HRC, other than Obama tends to have a bit more class. They both have one major strike against them in my book and that is simply the fact that they have both exhibited a significant propensity to work for "special interest groups" which in my mind are not where any democracy should be spending significant time, it is a democracy because it works for the majority, the minority will have to fight for rights just like the majority did when they were the minority. Don't get me wrong I believe fully in diversity and protection of our rights to pursue life, liberty, and happiness. I just don't think that special interest groups should get more attention, or time, than concerns of the majority. I think Obama has a charisma that is very appealing in public. However his voting record provides very little information about him, and how he would act as president. HRC is just running a campaign on her husband's reputation, I am not really sure what drives this woman so again I don't know what her position would be as president, other than universal (read: socialized) healthcare, which is an obvious flaw in my mind. So I think this year I will just vote for a gang of wild monkeys or maybe a pair of old shoes, really what’s the difference?

Ethics

2008-05-23T09:26:00.001-06:00

So as some of you may know I am taking a class right now on Business Ethics. Currently we are discussing theories of philosophy. The two that we have reviewed thus far are Egoism and Utilitarianism. Here are my quick and summarized descriptions of the two theories.
Egoism – every person should/does serve their own self interests. Self-interest can be defined as anything a person “wants” to do.
Utilitarianism – every person should/does submit to the cause that will generate the greatest volume of happiness, with respect to every person that is affected by the cause.
I am not afraid to say I am much more an Egoist than a Utilitarian. My fundamental critique of Utilitarianism is that it doesn’t respect any unalienable rights. There is no rule that is greater than the “popular vote”. I believe Egoism is only flawed by fallibility, in other words people only make what we would commonly refer to as selfish decisions because they are missing information. I also believe that all people are born/created with certain rights that are not in anyway dependent on what will bring the “greatest net happiness”. I think there are some laws that are greater than the popular values. I would also say that Egoism is very complementary to capitalism. At its root capitalism suggests that the market or individual demands of the people will provide or lead to the greatest good. Of course this means that both the people creating the products/services and the people buying the products/services are serving only their own self-interest. My critique of Egoism is that it is too circular, since it is easy to say that people are serving their own self-interests by virtue of saying that anything they do is serving their own self-interest just by virtue of them doing it. This implies that the only people who are not Egoists are those that don’t do, or it could even be taken to the level that those that it includes all who exists and even those that don’t exist, since just by existing we are doing. Therefore I am more of an Ethical Egoist than a Psychological Egoist, the difference being that I believe people should serve their own self-interests but that the definition of self-interest is more defined and constrained than encompassing all that we do.
One very interesting subject that was brought up in class was the war in Iraq, I know hot topic but I thought it was very interesting. One person posed the question of how we evaluate or determine levels of happiness. Since most Americans, according to polls, want us out of Iraq we can conclude that it would increase happiness in America if we were to pull our troops out. However a true utilitarian has to consider the effect on the people in Iraq, how would their happiness be affected, and does it “count” for more or less than the American’s? The teacher suggested that the Iraqis happiness would be impacted much more than the average American therefore it would have to receive more weight, this led to another interesting problem and that is the quantification of future generations. How do we evaluate their happiness? It must be accounted for since they are affected, but does it hold the same value, and to what extent? This is a very common critique of Utilitarianism so it easier for me to rely on others to make this point, it also isn’t as personal to me.
So my question is; would you consider yourself an Egoist or Utilitarian? Why?

Where am I?

2008-05-22T10:26:00.002-06:00

So apparently my name doesn't actually exist in the US, at least it is "statistically unlikely"

HowManyOfMe.com

There are
0
people with my name
in the U.S.A.

How many have your name?

1 out of 7 ain't too bad

2008-05-19T10:44:00.001-06:00

Well I made it through my first week of classes, only 6 more to go (for this semester). The last week or two is going to be crazy because that is when Candi is starting classes, and she is taking some intense/insane class that gets over in like 2 weeks but drains every last drop of life right out of you. So far I have enjoyed my classes I have one really off the wall teacher (though he refers to himself as an interlocutor) and another relatively tame yet intriguing teacher. I am taking “The Ethical Leader” (a business ethics course) from the Socratic teacher and “The Language of Strategy” (a strategic management course) from the more traditional teacher. So far I gather that both require extreme amounts of reading so I pretty much will be spending my evenings and weekends reading a lot.

This weekend was pretty fun, we had Natalie, Josh & Cannon down for a visit, it was Natalie’s birthday so Candi made cake and I hung some streamers. Candi and Natalie went to some book signing thing for some weirdo author. So I got left with the two monsters to go get groceries and clean up the house. I didn’t get anything done on any of my projects since I can’t really do much on any of them with the two rug rats. But we did clean house and while we were out getting groceries I saw a model rocket that I just couldn’t resist. Isaac was really excited to shoot it into space; little did we know how much we should have cherished that first shot, since it was also the last. It was fun though and Ike had a good time trying to find it. I think it may have landed on our roof or in one of the trees, I am going to check on the roof tonight but I am not really optimistic. We tried to find a park for like 30 min that we could shoot it off at but there were like 5 billion baseball games going on so they were all occupied. We ended up shooting it off from the empty lot next door to our house, probably not the best idea but… it was fun anyway.

Other random news: my pinewood derby car came in 3^rd place, I got a pink tie, Candi and I learned a new game called “Yoink”, The Office season finale had a lot of unexpected surprises, I got a new album from Rosie Thomas that I like, I re-installed all the A/C’s so our house is nice and cool again, Isaac got a new “Tar Shirt” (it has a picture of a guitar on it), the “wind factor” is exponentially greater at about 200 ft, and spray painting is not a good idea for an activity with a 3 year old.

Archieves

2008-05-14T15:32:00.002-06:00

By the way my old blog is still on the web, I just won't be updating it anymore, if you are interested in the archives they can be viewed at http://360.yahoo.com/spencerjcriddle
just thought I would throw that one out there.

Welcome aboard

2008-05-14T10:07:00.001-06:00

Welcome to my new blog:

Ground rules:

No weirdo comments, I don’t want the spam comments or the comments from people, I don’t know, that have absolutely nothing to do with their lives except leaving comments on random blogs.
If you are going to read this blog then you must understand that I am a very sarcastic person and writing with sarcasm is very difficult, so just assume that most of the time I am being sarcastic.
Finally keep your expectations low. There is nothing quite as nice as being impressed and the lower you set your expectations of this blog the more likely you are to be impressed.

So now that we have taken care of the official business lets move on to the important stuff.

Recently I haven’t been very good at updating, I wanted to get to a point where I could update weekly but it just hasn’t happened quite like I was hoping. My life is very busy starting today, since I start the first class of my MBA program tonight. Then tomorrow I have my second class then this weekend I have a bunch of Elder’s Quorum assignments, then I have to finish carpeting the basement, then I have a bazillion meetings on Sunday (starting at 7am). I think going back to school will be nice, I am really looking forward to my classes but somewhat dreading the accompanying homework and studying that I know will be necessary. Last night Candi and I went to the Temple; it was really nice since it has been like a year since the last time we were able to go. It gets really hard with the kids and stuff. Then I went and played basketball because I want my whole body to ache and playing basketball is really the best way to accomplish that. Although based on my eventful last weekend I would say a few hours of dodge ball and carpet wrestling can really do the trick too. We had the Elder’s Quorum presidency over for dinner on Sunday (yep even on Mother’s Day), it was really productive. I feel like we can get a lot done and have a lot of work to do.

Candi just completed her first semester of grad school at the U and she got straight A’s. We are so proud of mommy and her hard work. She is substitute teaching a couple of days a week for the time being. She is a favorite sub, she has been called back to the same classrooms several times and Lincoln Elementary really likes her. They even offered her a part time job next school year, teaching music lessons in the early morning. I think it would be awesome for her to be able to use her talents to teach kids, plus it would only be like 4-5 hours a week, so that would be a pretty easy schedule to work around.

Isaac is just as active as ever, he loves riding his “motorcycle” (actually a tricycle) up and down the drive way, and playing outside. He really likes to help when we have our family projects, like the front yard reconstruction or as he likes to call it “digging the dirt”. He and I have been working on a couple of special projects, our Elder’s Quorum is doing a pinewood derby race and he wanted his own car so I started carving his “Shark Car”.

Kaitlyn is just as cute as ever and always finding ways to get into trouble. She really wants to talk, and she does, just not in a language that I am familiar with. She shares Isaac’s passion for the outdoors, she loves going outside and just exploring, she like to play in the dirt and get pulled around in the wagon.

My work life is undergoing a bit of a change right now. I just accepted a position that will change a lot of what I do. I am going to be working with specifically one of the three departments that Americom has. I am going to work with the Outside Plant division, which basically means they do all the work that our company does outside of buildings. They do the directional drilling and trenching, lying pipelines, fiber optics, etc. I am going to be working with the project managers over there to help with scheduling, job costing and stuff like that. I think it will be a lot of fun, and a welcome change of pace. It is going to be a couple month transition so it will be some time before I am completely moved over but I am not really unhappy right now so I’m not in a huge rush.

Only other news that really comes to mind is; there is a Jazz game on tonight that I am probably going to miss all of. I hope they can get a win against the Lakers in LA but I am not really confident, just yet. Otherwise things are pretty much same old, same old.

2007-09-28T10:33:00.000-06:00

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