Mark to Market

I'm a huge fan of Dave Ramsey, but as I've been busy keeping up with things at work lately, I haven't spent a lot of time listening to his show. So today as I was walking the dog I listened to a couple shows from last week.

As you would imagine, the main topic of discussion was the financial crisis and the pending bailout. Dave spent considerable time in a "teaching" section of the show saying that one of the primary causes of this financial crisis was the "mark-to-market" rule in Sarbanes Oxley. Dave urged his thousands of listeners to call their congressmen and congresswomen and demand that they change the mark-to-market rule.

So what is mark-to-market? It's an accounting rule that says that when a company is valuing the assets on their books, they should use the market value (rather than the price that they paid, for example). Sounds reasonable, right? It's a market-based approach to determining the value of assets.

So how was mark-to-market involved in this crisis? It turns out that the investment banks were not only selling a lot of these CDOs (the mortgages bundled into bonds) to investors, but they were keeping a lot for themselves (not sure if it's because they really wanted them or if they just couldn't move them fast enough). As these CDOs plummeted in value on the market, these banks had to update their books to reflect that the value of their assets had decreased.

So what would eliminating the mark-to-market rule do? Without mark-to-market, the banks could claim that the CDOs were still worth what they paid for them. It would allow any public company inflate their balance sheets by hiding the true value of their assets.

Don't we want (shouldn't we demand) transparency from our public companies? Of course. So which is the correct valuation of assets? The market value of course! That's what the market does! I'm sorry to say, Dave, but removing the transparancy and hiding the problems under a rock is NOT a solution. Most every economist is saying so; it's only in the political arena that this is being discussed ... so why is that?

Much like the "blame the poor for it" approach, the "blame regulation for it" approach is the next best thing for Republicans who thought that free markets would solve any problem. So Dave urged his thousands of listeners to call their congressmen and congresswomen and demand that they change the mark-to-market rule. As I mentioned, these shows were from a week ago, so I can only assume that Dave and others like him were part of what caused House Republicans to have their "the Democrats will have to pass the bailout" moment last week.

I predict that in four years, as Republicans are preparing to run against an incumbent President Obama, that they will resurrect this theory of over-regulation as both the cause and the neglected solution for the financial crisis of 2008. Don't buy it!


We sponsored the Olympics!?

Shamelessly copied from this Slate article by Bruce Reed:

Perhaps most urgently, the next president will have to admit what George W. Bush would not—that if we don't put our fiscal house in order, China will foreclose on it.

Think about that for a minute

As Obama has pointed out, "It's very hard to tell your banker that he's wrong."

Preach it, Obama

This year's federal budget deficit will be a record $500 billion, not counting wars and economic bailouts. One of history's headlines on this administration will be, "Bush Owes to China."

The rise of China is the story of this Olympics and threatens to be the story of the next presidency. So it's only fitting to give viewers a sense of what's at stake.

My dream ad would show the robot Wall-E methodically stacking pressed blocks of discarded dollar bills to form giant structures, which turn out to be the Bird's Nest stadium, the Water Cube aquatic center, and the CCTV tower. The script would go something like this:

"Sponsor" (60 seconds)

Voiceover: "Ever wonder what Washington has done with your tax dollars? This Olympics is your chance to find out. For the last 8 years, the Bush administration has been paying China billions of dollars in interest on the trillions it borrowed for tax breaks, pork, and special privileges you never got. That money helped create thousands of businesses and millions of jobs—in China. So as you enjoy the games, keep an eye on your tax dollars at work. The way our economy's going, it's tough to pay your bills. But take heart: You already paid China's."

Tagline: "America's Taxpayers. Proud Sponsors of the Beijing Olympics."

I hate alarmist, the-dollar-is-dead, the-sky-is-falling, the-end-is-near economic writing, but this piece paints an interesting picture to think about as we watch these Games and this growing superpower. It's also a good example of a justified reason to be upset about your taxes! How many email forwards have you received bitching about how much we spend on social services, environmental protection, and (I kid you not, I received this one) grants to organizations such as the Special Olympics? How many forwards have you received that make the connection between our taxes and the interest that we pay to China to cover our irresponsible spending for the last eight years?



Beth and I have managed to see five Broadway shows so far this year. Happily I can recommend all of them:
- Curtains
- Gypsy
- The Seafarer
- Sunday in the Park with George
- November

If you know Patti LuPone at all, go see Gypsy. I know her mostly from a few movies and the cast recording of Evita from the 70s. I can't believe she can still sing as amazingly as she does. She received a five-minute standing ovation after one of the songs in the show. Just blew us all away.

If you know David Mamet at all, go see November. It's a great play and classic Mamet dialogue. I love Nathan Lane in it and even four months later I am still amazed by all of the layers of plot Mamet is able to pile on top of one another. I love everything Mamet writes and I'm going to see [the movie] Redbelt as soon as possible.

If you think all musicals are the same, go see Sunday in the Park with George. Most musicals have an amazing musical experience -- and this Sondheim play certainly delivers in that regard -- but this show is an amazing visual experience as well. I came into this show knowing nothing about it, and came away just amazed by the experience. I guess it shouldn't be surprising that a play about the composition of a painting would be visual in nature!

Curtains is hilarious and will be loved by anyone who likes David Hyde Pierce as much as we do. The Seafarer is an Irish play that had an amazing collection of actors, demonstrating an impressive range of drunken acting and uses for the f-word (including my new favorite use). Unfortunately, the show is closed now.

I think this may be a good post to plug my friend Jonathan who is currently in the Broadway production of Avenue Q. We went to see Jonathan play the lead roles of Princeton/Rod last year... we loved the show, but mostly I just came away thinking "my friend is a freakin' rock star". There was a point in the musical where Jonathan came down the aisle close to the audience and these teenage girls surrounding us went nuts over him... really? Jonathan? If you have a chance to see Ave Q, go see it. And if you have a chance to see Jonathan in the lead roles, you're in for a treat!

One of our favorite musicals is Rent, which we saw at least 10 times from the $20 seats while we were Columbia students. Rent is closing this year, so we're planning to go see it one last time. If anyone else is planning a farewell visit to Rent, let us know and we'll join you.


Transparency ... Accountability

As almost everyone who knows us already knows, Beth and I have been living on "the envelope system" for almost one year. We have cut up our credit cards, "given every dollar a name" at the end of each month, and have tried to work quickly to reduce our debt. As anyone who reads this blog knows, we have not completely deprived ourselves of travel and entertainment, but I assure you that our primary focus for the past five-plus years has been on eliminating our debt.

We use Google Documents to create and manage our budgets. It's a fantastic program and its web-based nature allows us to do our budgeting from anywhere we can find an internet connection (we did our March budget from Barcelona).

This pie chart is tied directly to the numbers in our Google Spreadsheet budget. They reflect actual dollars allocated toward various categories (some of the money is not yet spent, but it's all been "given a name" as Dave Ramsey says) (btw, we have a few more budget categories than this...some have been consolidated for the chart). As our budgets change over the next few months/years, this pie chart will automatically reflect the changes.

Beth and I will finally have our last student loan paid off by this time next year. You may notice that "Loans" is a big part of our budget. One of the challenges that we will face after paying that last loan is how we will use the excess money. We could put it into Housing...perhaps get a bigger place, or move to a better neighborhood. We could put it into Fun/Big Buys...get new furniture and electronics, take expensive vacations. We could create a new pie category called Savings...we still need to build up our emergency fund and eventually save some more money for retirement (full disclosure: we have a 401k that is not part of the budget). We could shrink the size of the pie...if my work becomes unhealthy for some reason, I could take a different job or work fewer hours, even if it meant a pay cut.

Some of those are good options, and we might choose to do all of those things to some degree. But our hope -- and the reason to create this blog post and provide some transparency into our financial life -- is that we will be able to greatly increase that Giving wedge. Please keep an eye on it -- we're counting on you.


Zuper Respect!

On our last day in Barcelona, we drove to Parc Guell. The parking is very limited in this area, so unless you want to walk several kilometers you must be a fearless parker. Observe my masterful parking job in the attached photo! Manual transmission on a hill! A German tourist walking by as I was finishing parking exclaimed, "Zuper!"

Stop #8

Saint Pierre des Champs / Carcassonne. We rented a car and pressed ahead to the beautiful Le Roc Sur L'orbieu guesthouse located in Saint Pierre des Champs. This guesthouse is a 1100 year-old castle in the French countryside, surrounded by acres of vineyards. We plan to come back here as often as possible over the remainder of our lives! It was a beautiful old building with surprisingly comfortable accommodations and a charming hostess named Helen. Helen cooked dinner for us and the two French men who were also staying at the guest house (on a fishing holiday) named Serge and Patrice. The six of us had a wonderful evening as we shared about four hours of discussion over many delicious courses. Serge and Patrice were two extremes – Patrice was quiet and Serge was a character. When we sat down at the beautifully-prepared table, he remarked, “oooh... french table... very competiteev!”

Stop #7 (unplanned)

Saillagouse. After turning around in Andorra, we finally made it to France, albeit later than expected. So it was almost 11 PM when our car suddenly decided to die. We were on a mountain road in the middle of nowhere, 30km from Saillagouse and 20km from Prades. We moved the car to a somewhat safe spot off the road (hard to tell for sure in the darkness) and after a few unsuccessful attempts to flag down a car, we finally got one to stop... and thankfully it was a pair of firemen with a radio! After determining that we don’t know any French and they don’t know any English, we found that we all knew a little Spanish. They took a look under the hood and tried to start the car, but couldn’t determine the problem. After a while, they offered to give us a ride to Saillagouse and hand us off to the police. This was a very small town with only two hotels, both of which were closed at this late hour. However, the police contacted the owner of Planotel, a 110 year-old hotel in town, and asked him to open up for us. They also gave us information for contacting a local garage to fix the car. All of the French people we met were beyond nice, beyond friendly, ... they were magnifiques.

Stop #6

Andorra is a small country in the Pyrenees between Spain and France. Since we were crossing from Spain to France it made sense to check out this neighboring country which is a renowned ski spot. We quickly located their famous spa and pool facility – Caldea – and treated ourselves to a few relaxing hours. My favorite part was the pool’s tunnel to the outdoors where we could look up at the mountains as the snow fell on us...amazing. Unfortunately, the road we had planned to take to France was snowed in, so we had to backtrack through Spain.

Stop #5

Tossa de Mar / Roses. We drove through many small towns along the Costa Brava. Each one was unique and beautiful. We stopped in Tossa de Mar for lunch, where we walked through the old fort (castle?) and along the beach. I was shocked by the blueness of the water of the Mediterranean.

Stop #4

Montserrat. We drove from Barca into the mountains north of the city to Montserrat. We walked the grounds of the monastery and listened to a service of singing from the famous boys choir. It was a transcendent experience.



I did not brush up on my spanish in anticipation of my trip to Barcelona. My spanish isn't very good to begin with, but it's sufficient to get directions, order a drink, and do most of the day-to-day things a tourist does.

What language do you think is used in the subway advertisement in the photo???

Yep, after spending a few days in Barca, I'm very glad I didn't invest any time brushing up on my spanish -- it wouldn't have done me any good.

Stop #3

Barca! What a great city -- beautiful parks, beautiful beaches, beautiful streets, and simply amazing buildings. I will have to devote several future posts to the details, but for now I'll just say that stop #3 is beautiful Barcelona.


Stop #2

I arrived in Amsterdam last weekend. It's such a pleasant, quiet little city compared to London (or NY of course). It feels good to be back. My days have been very full: lots of projects to work on, then drinks and dinner with colleagues after work, then more work from the hotel (the New York workday continues to about midnight CET). I haven't had any opportunity for tourist activities this trip.

It's been a good trip, but I'm really missing my wife! Good thing I'll see her tonight!


Stop #1

I flew into London on Thursday and had meetings in the City of London. This was my first time in our London office meeting with this particular group. These folks live on an island in so many ways :)

And I finally got a chance to see the Gherkin up close (see the pic). But the highlight of my stay was getting to spend the evening with a beautiful pregnant Katherine and her husband Alex. They took me to a pub for drinks and then a great Indian dinner. Thanks guys!


He's on a roll (and She's earning her reputation)

Obama is on a roll! He's now won 23 of 34 contests, including the last 8 in a row!

I'm incredibly optimistic that we're going to pull this thing out and I could not be more proud of the manner in which we're winning -- with integrity and a positive, hopeful message.

ON THE OTHER HAND, Hillary has been embarrassing herself since South Carolina. The Clinton campaign has mentioned race at every turn in this campaign. She pledged, along with all of the democratic candidates, not to campaign in Michigan and Florida. But when it came down to it, she was the only candidate not to remove her name from the ballot. When she "won", she actually held a victory celebration! And now her legal team is calling for "every vote to be counted" and for the Michigan and Florida delegates to be assigned to her.

Last Wednesday, the Clinton campaign finally announced their contribution total for January -- $13 million -- and acknowledged that $5 million was on loan from the Clintons themselves. Her problem, according to many articles, was that she had already raised the maximum allowed ($2300) from many of her donors. Her solution to this problem was to ask those donors to give another $2300 to her general election campaign! Apparently this is legal; however, if she does not make it to November, her campaign will have to refund all of that money. How irresponsible can you be? By contrast, Obama's huge number of donors (418,000 so far in 2008) have given only $25-100 each, permitting them to make many more donations before reaching the limit. Speaking of which: please donate to the campaign if you can; we have Texas and Ohio coming up in a couple weeks and we're going to need the money.

And finally, Hillary has refused to even acknowledge that she has lost the last 8 contests. It's customary to congratulate your opponent on their victories, as Obama has done each time. Clinton is in denial now, but I don't think it will be long before she has to face reality.


It was a super Tuesday for me

For the first time in my life, I became a campaigner! Last Saturday, Beth and I paid a visit to our local Obama 08 campaign office, picked up some materials, and attended a rally in East Harlem. Last Sunday, I campaigned in front of markets and churches on the Upper West Side. There were several meeting places to choose from; I went to the Starbucks on 103rd. I couldn't believe that at 9:00am on a Sunday morning that there were FIFTY volunteers assembled and ready to go. It was a cold day, but I spent about four hours standing on the sidewalk, holding an Obama sign, handing out flyers, and asking people to "Vote Obama!" It was one of my best New York days ever! It was amazing to talk and interact with so many people -- the other volunteers, the Obama supporters who were ecstatic to see us, and some folks who were not happy to see us. It was amazing and strange to be proclaiming my politics so publicly. People would just stop and ask 'so why do you support Obama' and I'd have a chance to tell them.

It was such a good experience that Beth and I spent another hour Monday evening handing out flyers and talking to people as they exited the subway. Then, on Super Tuesday, I campaigned from 7 to 9 in the morning and 5 to 9 in the evening. The Obama volunteers were amazing! We had someone on nearly every street corner up and down the UWS. During the evening shift, I campaigned 100 feet from a polling place adjacent to a small group of Hillary supporters (the only Hillary supporters I had seen all weekend). We talked to each other about our candidates, the issues, our predictions for the night, and the (un)likelihood of an Obama/Clinton ticket in November. I campaigned with an old gentleman who is a former NY State Senator and with a lovely woman who campaigned for Bobby Kennedy in 1968. She said that this is the first campaign she has seen since that 1968 campaign that has inspired so much grassroots enthusiasm and participation.

My efforts on that Tuesday may or may not have won many votes for Obama, but I was rewarded to come home exhausted and hear Obama deliver this great speech:

"Change will not come if we wait for some other person or if we wait for some other time. We are the ones we’ve been waiting for. We are the change that we seek."


Keep Hope Alive

Went to an Obama rally today with supporters of all ages!

Super Tuesday -- Yes We Can


A huge win!

Even after the huge misinformation campaign, the Clinton/Edwards tag teaming in the SC debate, and repeated attacks from Bill Clinton, Obama is unstoppable!!! Not only did Obama win, he pulled in more than twice as many votes as Clinton!

It's tough to maintain a positive message of hope in the face of everything that was thrown at him in South Carolina, but Obama managed to finish even stronger than he started. We're almost there, folks! -- 22 states go to the polls on February 5th. If you haven't had a chance to make up your mind about the field of candidates, learn more about Barack at his website and donate to make sure we get the right person into the White House!



About three years ago when presidential candidates started campaigning (okay, maybe it hasn’t been quite that long), I began to take an increased interest in Barack Obama. I was mesmerized by his presence and his message of hope at the Democratic Convention in 2004. That night, I talked to my mom on the phone and she said “I want to vote for that guy!” I was one of many who were privately wishing for Obama to enter the 2008 race. When he did, I was cautiously optimistic.

When he joined the race, I began to pay attention to his news coverage, subscribed to his podcast, and generally did everything I could to keep track of him. The more I listened and the more I learned, the more I believed Obama was unlike any presidential candidate I’d ever seen. He spoke about issues in such a reasoned and rational way, without any of the sensationalism that is typical of a congressman trying to get his or her name in the paper. Obama is older than I am, but for the first time I felt like I was hearing the voice of my generation: someone who wants to address the issues that I care about, who really appreciates the complexity of these issues, and doesn’t just treat them as a prop in his sound bites. In short, I believed that he must be completely unelectable!

Last Tuesday, the day of the New Hampshire primary, after Obama had won the Iowa caucus, the front page of the Wall Street Journal had an article about how Obama had double-digit leads over Hillary in NH polls. I was beyond ecstatic. I literally felt the same way that I felt on Election Day 2004 when exit polls showed John Kerry way ahead of Bush. I now completely despise pollsters, by the way. When Obama was edged out in the NH primary, I felt motivated like never before: This is too big an opportunity at too critical a time for our country. On Wednesday, along with more than 20,000 others similarly motivated, Beth and I donated to Obama’s campaign. We later discovered that our brother- and sister-in-law (registered Republicans, for the record) had also donated to Obama on Wednesday.

This is the first of many ways we hope to be able to support the campaign. I’ll post more about that later, but for now let me encourage you to go to the Barack Obama website. It’s a fantastic site and if you don’t know anything about Obama it’s a great place to see where he stands on the issues and watch some of his speeches. If you come away with as much hope as I have, then make a donation.