Sunday, September 11, 2011

iPads, cellos, and medical economics, part I


Truth be told, I'm not a very good cellist.

I've played off and on since grade school, never reaching any great level of proficiency. In my adult years I've dabbled a bit, not taking the instrument very seriously until earlier this year when I resumed lessons for the first time in 40 years.

It's much easier to learn an instrument in the Internet Era. I've learned more about, for example, vibrato technique by visiting YouTube than I had with hands-on teaching. And anyone and everyone has posted a video of themselves playing something. You can see plenty of Rostropovich recordings, but if you'd rather, there are plenty of 7 year olds whose parents have posted videos of a very scratchy performance of Suzuki book 1.

The most elusive quality in the art of the cello is intonation. The cello has no frets, so you have to place your fingers exactly on a spot to generate the proper pitch. Early on the process might be characterized as "just kind of guessing". The more you practice, the better your guesses become.

The most helpful thing I've found for my intonation is to play with someone else, typically a pianist. The piano's pitch isn't going to change, and it isn't the pianist's fault if your note is just off a little bit. Playing a duet forces me to play as accurately as I possibly can.

I shouldn't take this personally, but it's always been almost impossible to find a pianist who can join me at any regular interval.


The greatest invention for frustrated rank amateur musicians since the tuning fork is GarageBand. This software, packaged with an iMac, is a very nice music processor. It's not the easiest software in the world to operate, but with a few trips to YouTube to watch GarageBand tutorials I learned the art of multitracking. Multitracking is when you play one line of music into the machine, then play a second one which you can layer on the first one, up to eight tracks. Musicians only 20 years ago would have killed to get such a seamless program.

I can now play duos, trios, or as shown in the above screen-shot, quartets with myself. For now, pay no attention to the checked "Autotune" box in the lower left corner.

For $100 I built up the prestigious Klengelhasser Recording Studio, which consists of a Blue Snowball microphone I got at 40% off at (can't beat that deal with a stick), an $18 mic stand, a $15 set of monitor headphones, and assorted extension cords.


This is all nestled in between the toy box we have for our grandchildren in the family room and our computer station.

My "studio time" is limited by other members of my family watching TV, talking, or the phone going off. I made one pretty decent recording only to have my wife open the dishwasher in the last measure. I kept it anyway. I thought the tinkling of the dishes together gave the recording a rather pleasing "patina". Still, I really wanted to be able to move my "studio" into some other room so I wouldn't have to compete with "Buried Alive" or "What Not To Wear" or all the other stuff the distaff members of my family enjoy.

To be continued.

Thursday, September 8, 2011

Financial crises for the Compleat Idiot

"You really should read this", said my son-in-law after he perused The Big Chill by Michael Lewis. "These guys figured out a way to get rich during the sub-prime mortgage fiasco. You won't believe how they did it".

As little as I know about micro-economics, it would dwarf my understanding of macro-economics. I ordered the book and polished the whole thing off during the Labor Day weekend.

Getting through the book required little effort. It's well-writing in a very compelling narrative style. I wanted to know which political party the author would place the blame for the whole mess, and I was pleasantly surprised how apolitically Mr. Lewis presented the events.

We all lead very busy lives so I will take the liberty to offer a synopsis of the book. If you think I mess up any of the points, please let me know. As I said, I claim no expertise in this subject.

How to destroy an economy in a few easy steps:

15 years ago Big Banks (BBs) were centers of capital investment, providing businesses and institutions with the credit needed to allow them to function.

During the 1990s and 2000s the BBs discovered that they could make even more money by engaging in Market Speculation. They developed an appetite for speculative ventures that would make lots of money for them.

Mortgage companies, especially loan originators underwrote loans to darn-near anyone who could fill out a form. People with poor credit scores had to pay more than the prime interest rate, called the Sub-prime interest rate (since the rate is higher than the prime rate, logically it makes more sense to call this the Supra-prime rate. Get used to this).

Loan originators didn't worry if the debtors could never repay the debt, because they turned around and sold the loans which were called Asset-based securities. BBs bought them. The loan originators made lots of money on the origination fees.

Moodys reviewed these securities, and for reasons that defy all reason, rated the lions' share of these securities AAA.

The securities that were not rated AAA were repackaged by a system that can only be described as alchemy into Collateralized Debt Obligations (CDOs). No one really knows what that means.

The CDOs were resubmitted to Moodys, where the lions' share were rerated AAA. How this was done is a greater mystery than abiogenesis.

The BBs liked them because they were rated AAA by Moodys so they bought lots of them and made lots of money on them initially.

A few investors, upon reviewing these ASBs, determined that these securities weren't worth the paper they were printed on. Everybody told them they were stupid.

The investors wondered how they could make money by "shorting" these securities. They turned to yet another weird investment tool called Credit Default Swaps (CDSs). Credit default swaps are really inexpensive (relatively) insurance policies that allow the bearer of the swaps to collect the total value of the ASB if it defaulted.

What's weird is that you didn't have to own an ASB to buy a CDS. Why should this be? No one knows.

The small group of investors bought all the CDSs they could get their hands on. The BB that sold the most of them was AIG-FP. They were happy to sell the CDSs because the ASB they were insuring were all rated AAA by Moodys.

In early 2008, predictably almost down to the month and maybe even the day, the sub-prime mortgage loans defaulted in huge numbers. The ABSs became worthless. This was bad for the BBs because they held billions and billions of dollars worth of them.

This was even worse for AIG-FP because they had to pony up for the CDSs, which made the investors who held them a blue fortune.

All of a sudden the BBs realized they didn't have much money. The entire US economy was screwed. They went to the Federal Government for a bail-out, which they got for the most part (TARP).

On retrospect, it seemed unwise to offer a migrant worker who made $14000/year a $750,000 home loan. This really happened and it's what led one investor to take an interest in this market.

It seems criminal to have allowed predatory lenders to have originated these loans in the first place.

It seems beyond stupid that the BBs did not perform due diligence when they were purchasing massive amounts of these ABSs and issuing CDSs.

It seems that the people who took BBB ABS and mysteriously turned them into AAA CDOs should be arrested for market fraud.

And you, dear reader, if you are one of the 55% of American voters who actually pay Federal income taxes, have underwritten the entire thing.

Saturday, September 3, 2011



This is a poster from the late 1980s during the transition of Russia from a collectivist nation to whatever it's become today. My Russian is a bit rusty, but I believe it says something to this effect:

Democracy - it's not just about rights, it's (about) responsibility, obligations, and discipline.

The talking heads of the era were hopelessly confused. Americans for the most part are pro-democracy, and see democracy as a force for good. This meant that Yeltsin was good, ie. a liberal, and the hard-line Communists were not good, ie. conservatives.

You'd think that the talking heads would pause and consider the implications of calling hard-line Communists "conservatives", but they didn't. The whole right wing/left wing dichotomy should have been scrapped, but it wasn't. I'm in the camp of considering the mainstream American media as lazy and unimaginative rather than cunning and conspiratorially evil, but I might be wrong about that.

Still, the 'conservative'/'liberal' dichotomy should be replaced. Presently the 'liberals' are the most adamantly entrenched in the status quo, and the 'conservatives' are actively working to change it.

I've been on websites where I was called 'fascist' for expressing conservative viewpoints, and then shouted down or censored in moves that any fascist would approve of. It's galling.

These classifications are not original, but I do not remember to whom to give credit. Here we go:

Collectivist - all property is owned by the state, and the state is the final authority of all things economic and ethical.

Statist - the state may lay claim to any property but chooses not to. Markets may exist but only under the strictest of government supervision. The state may define issues of ethics as it sees fit.

Corporatist - the state allows private corporations to do as they please with the understanding that the corporations will support the state economically in an incestuous fashion.

Liberal Democrat - the state exists to provide for security and infrastructure, but otherwise it lets citizens have as many freedoms as possible under the guidance of the Judeo-Christian ethic.

Libertarian - same as liberal democrat, but without the guidance of the Judeo-Christian ethic.

Anarchist - anything goes. Anarchists almost always morph into collectivists.

Note that fascists and communists would actually be very near each other: the communists being of course collectivists and the fascists being statists. Most of the Democrat party would be in the upper three categories. Most Republicans would be corporatist, liberal Democrat, or libertarian.

The non-economic concerns, ie. 'the social issues', I lump into 'sexpolitix'. This would include gay marriage, abortion rights, and radical feminism. Note that there is no inherent reason for sexpolitix to fall into the statist camp. It would at home with any of the categories except for liberal democrat, as sexpolitix falls outside of the behavior endorsed by the Judeo-Christian ethic.

Interestingly I was tossed out of a musicians' forum for posting this classification. Calling a 'conservative' a liberal democrat and a 'liberal' a statist was way too mind bending, leading to some testy comments and counter comments.

Anyway, this is the nomenclature I choose to use in future discussions.