April 30, 2008

Disturbing Economic Idea

So I'm flipping through the Wall Street Journal and notice an article "Fed to Weigh Paying Interest On Banks' Reserves", and it strikes me as odd. Then I read the article and begin to become very annoyed. It seems that the idea is to pay banks for their overnight reserve requirements. Now, call me crazy but in order to do this it would seem they would have to pay them with Government money, which in my world means tax dollars.

So let me understand this, they are going to pay banks, most of which are in trouble from the subprime housing mess because they made bad loans, and for the most part were not required to own up to those loans, interest on money they have to have for deposits anyway. So not only does the Fed not let the banks fail for bad investments they then pay them with our money to hold our money. I really can't believe this could be real, I feel like I'm in an alternate universe. The reasoning is to help with the credit crisis. Last I checked you don't help a gambler overcome gambling by giving him more money after he has lost his shorts.

I can't believe this or the logic of it. If anyone has something good that I'm missing I would love to hear it.

April 22, 2008

My Views of the Economy

I'm nervous about the FED and Secretary Paulson and their solutions to the current economic challenges. It is seemingly right headed but in both situations we are altering normal market functioning with the intention of creating a better outcome. I'm no economic genius, but I can't recall a time in history that this has worked out.

One of my favorite books, and one I highly recommend to everyone, is A Random Walk Down Wall Street, by Burton Malkiel. In this book he talks about the stock market and how it is virtually impossible, or at least extraordinarily rare to beat the market over time. I know this from personal experience, both watching my families managed accounts and managing my own funds, both in the stock market and the currency markets.

That said, the reason you can't beat the market is the fact that the market is unbelievably efficient. The moment a news report comes out it is digested into the market, earnings reports, scandals, wars, horrors, good news, expansions etc. The market takes the information and instantaneously re-allocates. With this in mind it begs the question, "how do you exploit a market that has virtually instantaneous information on which to base it's decisions?" The answer is, "you don't." You play the averages and the indexes of the market.

With this as a backdrop the reaction to the housing crisis seems fairly simple, you let the market sort it out. There are going to be bankruptcies and short sells and problems for many people and many companies but in the long run the market will adapt and correct faster than a non-market solution will allow. Once we impose non-market solutions we simply force the market to deal with inefficiencies, we cause more indecision and capitulation, none of which helps anyone over the long term. Unfortunately the best action may be no action, maybe, to let it shake out, to take our lumps for mistreating the financial systems, for greed, and carelessness. The market will right itself and continue forward, albeit after a painful moment.

April 13, 2008

Fishing Proof

It is official and proven, the curse was broken, here is the proof. That is my first fish I reeled it in and the guide grabbed and pulled the hook out for me. Thanks to George Kramer

April 01, 2008

Part 1 the Baker's Percentage

Bread is one of those things I love to bake, but in which I bake (according to my wife) in a weird way. I highly recommend for the bread afficianado the book THE BREAD BUILDERS, it will go into greater depth on some subjects I will discuss in this post.

The first part of this post will describe the "baker's percentage" and give some typical recipes using the "baker's percentage. I'm often asked, "Can I have the recipe for this bread?" My typical answer is yes and no. I can give you the recipe but unless you are familiar with the baker's percentage you won't understand or be able to use it.

The Baker's Percentage, is simply a way to make recipes using weights and ratios based on the flour required for a given recipe. Obviously, then, you will have to have a scale to follow my recipes. Frankly, every kitchen should have a scale as it comes in handy all the time. So I will give you an example of a recipe. Let's say I want to make 2 loaves for my family. I know that 2 nice loaves requires about 1400g (g is for grams) of flour.

My typical whole wheat recipe requries 70% Water, 2% salt, 4% sweetner (sugar, honey, molasses, or brown sugar) and 4% oil. So for a 2 loaf recipe that will equal 980 g water, 28 g salt, 56 g sweetner, and 56 g oil. Doing it this way may seem complicated but if and when you have to scale a recipe it becomes very simple. Say I want to make 15 loaves for church: 10,500 g flour, 7350 g water, 210 g salt, 420 g sweetner, 420 g oil. Everything scales perfectly up or down and always remains the same. Plus it is easier to remember recipes. I don't need to know how many cups, tsp's, Tsp's or anything. Simply percentages is quicker and cleaner in the kitchen. This will be part 1 of multiple parts

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