Hyperpat\’s HyperDay

SF, science, and daily living

Archive for January, 2008

A Drop in the Bucket

Posted by hyperpat on January 29, 2008

The economic stimulus package, as currently set by the House, will do darn little to actually improve the US economy. First, the amount of the individual ‘rebate’ is a comparative drop in the bucket – $600 or $1200 is, for most individuals and families, less than one months rent or mortgage payment. Versus the size of the economy, it represents a miniscule percentage of the GDP. Second is the timing. The earliest we can expect these rebates to appear in our mailbox is May, assuming the Senate quickly agrees to this package without significant changes that will cause more wrangling and delays. By the time May rolls around, the first of the interest rate cuts by the Fed will have had time to actually percolate through the economy, and which will probably be more effective than the paltry rebate sums planned. If this scenario plays out, the rebates will merely act as an inflationary impetus, and we’re back on the rollercoaster of loosening and tightening the money supply, trying to tread that fine line between recession and run-away inflation. If, however, the economy has not already started to dig its way out the hole by then we are likely to be facing a full blown recession, and the money slated for these rebates would be more usefully used as funding for federal job creation and unemployment compensation.

About the only really useful part of the currently planned package is raising the amount that can be funded as ‘normal’ mortgages, up from the current $417,000 to $730,000. There are several areas in this country where this small change (which costs the federal government almost nothing) could have a big impact, as the difference in loan interest rates between ‘conforming’ and ‘jumbo’ loans is significant, and often is the make or break item in whether a particular house is affordable by prospective buyers. As almost all urban housing in places like California and Hawaii exceed the $417,000 figure, this one change could help restart the housing market in these areas. This particular part of the stimulus package should be enacted regardless of what happens to the rest of it, as the maximum size of a conforming loan has not been adjusted for inflation or high cost of living areas since 2005.  In addition, this item should be made permanently adjusted for inflation and median local housing prices so that it does not (again!) fall behind the actual need for appropriate loan sources for purchasing homes. And the nice thing about this change is that it could be implemented immediately, and not have to wait till May.

But as far as the rest of the package, it’s too little, too late.

Posted in Economics | Leave a Comment »

The (Moronic) Thundering Herd

Posted by hyperpat on January 22, 2008

The herd mentality is alive and well. Seems like everyone is stampeding to sell their stocks today. Even as the Fed cuts interest rates by three-quarters of a point, far more than had already been priced into the market. And all the Presidential candidates are talking about some sort of economic stimulus plan.

Now the stock market is supposed to be forward looking, and a drop like today’s seems to be signaling RECESSION.  But is that really in the cards? Sure, there’s some pain on the inflation front, mainly due to the steep rise in oil prices last year, and there’s some more pain on the home mortgage front, which can reasonably be expected to lower consumer economic activity, to at least some degree. But what people seem to be forgetting is that most of this pain has already been priced into the market, and most companies outside of the mortgage lending business are reporting very reasonable earnings. Today’s steep sell-off, with the Dow down over 400 and the NASDAQ over a 100, is not justified by the numbers, but is merely a reflection of the lemming-style mentality that sometimes seems to infect trader’s minds.

So what should you do? Don’t be another lemming. Buy! Now’s the time! Use that old adage of ‘buy low, sell high’ to your advantage. This opportunity won’t last long – just while I’ve been writing this post, the DOW has risen 200 points and the NASDAQ 50.  Sure, it’s a little scary going against the tide, but the big prizes never go to chickens.

Posted in Economics | Leave a Comment »

A Legend Dies

Posted by hyperpat on January 18, 2008

As reported today, Bobby Fischer has died at the age of 64. Chess players around the world must mourn the demise of one of the greatest talents the game has ever known. Players since his day have eclipsed his FIDE rating, but many suspect that if he was at the peak of his powers today and with access to the great aid of powerful computer analysis, he would still be the man to beat. He did a great deal to popularize the game in America, and fought hard to improve playing conditions and prize funds, of great benefit to all. While I started playing the game long before he became a major influence, his prominence helped push me to learn more and to start playing tournament chess, which I continue to do to this day.

Unfortunately, as a man he left much to be desired. While his seemingly paranoid continuous statements about the Russian’s collusion to deny him the world championship have since been, in the main, verified as being true, his attacks on America and Jews were inexcusable, and badly tarnished his reputation. Like the only other American world champion, Paul Morphy, Fischer apparently had some serious mental issues, which became more and more evident as he aged.

His accomplishments were great. His life away from the chess board was not. But his death is still a great loss to the chess world.

Posted in chess | 3 Comments »