Countrywide v. Congress and the China Connection

Today CSPAN had the congressional hearings with Mozilo, who has a 40 year tenure with Countrywide as founder and CEO.  He presided over Countrywide’s meteoric rise and much of the meteoric fall.    I hope people hurry up and wake up to the significance of the events underway in housing right now.    The mortgage meltdown is likely to become the greatest loss of wealth in human history.    CEO pay is a mostly trivial aspect of this situation.I think we’ll see another 10-20% loss from current values and I think we are already down some 4 *trillion*  2+ trillion  in housing value (need to check this, but the number is staggering).    A discussion of the amount is HERE.   Housing is a major depository of American wealth and prosperity, and the recent boom in values has led to various forms of reckless spending by individuals as well as the usual wild, stupid, and reckless spending suspect: the Government.   This is especially true of our unconscionable  and totally indefensible levels of mililtary spending.  Note that you *cannot* be a fiscal conservative and support the current military budget.     $550,000,000,000 to the military and fiscal conservatism are mutually exclusive positions.The impact of the meltdown and the reckless spending will be felt forever because in addition to direct housing problems that we are only starting to feel, I think all this will to depress our economy for several years and thus accelerate the shift of business to China.     This last notion is speculative, but I think it is now pretty clear that the Fed will keep rates low for many years in an effort to fend off an even more disastrous housing and credit situation.    This means China will be buying less of our debt, but I think will switch to investing more*directly* in US companies, and thus owning more and more of the American empire.      Russia’s leader and architect of communism Vladimir Lenin is famous for saying  “The Capitalists will sell us the rope with which we will hang them.”  But he was dead wrong.     The “Communists”, to the extent that term has meaning anymore, have no intention of destroying the USA.   In fact they want to keep us in good shape for as long as needed.  Now it is China who is making the rope, buying the rope, and learning the capitalistic ropes so they can slowly and gradually replace us as the empire of choice on the global landscape. A few things I noted during the Countrywide questions and testimony:

 * Probably Mozilo was just a high powered opportunistic guy and probably was pretty much within the law with his trades and pay, however he must have known things were poised to melt down to some degree.      

* Our congressional system is failing to produce people who are worthy of ruling the amazing American empire.      I don’t think there is much corruption but these guys sure are uninspired.  The congress-as-corrupt view is a “naivety of the skeptic” idea that is not based on a study of the money flow, personalities, and history of public servants who for the most part are bright, helpful people.   However they are mostly lacking in the key skill sets required for innovation and smart reform.   In short:  American politics selects for the wrong skill sets. To wit:  

* Republicans can’t see past Ayn Rand’s ass.   They understand the virtues of capitalism, but simply refuse to focus any attention on the key topic of how our brilliant capitalisic experiment has *failed* in many ways to deliver enough products to the neediest folks and how many capitalists are mostly focused on the creation of opportunistic business structures that are exploitable by the clever and the wealthy to the detriment of the greater society. .

* Democratic congresspeople are overwhelmed by math and economics.  They concentrate on people, “good vs bad”, “rich vs poor”.  * People want to find bad guys rather than find the obvious.   In the case of mortgages  the system as a whole incentified unwise practicies.     Reminds one of the savings and loan debacle although I think government regulations (loan guarantees) were clearly at fault with S&Ls were the mortgage crisis cannot be blamed mostly on the government.

* Is there a simple legal remedy for all the CEO pay and stock manipulation issues?    I propose a  “Captains go down with the ship” law.    If a company you founded fails you lose everything you made from that company except some modest monthly stipend.    This would incentify stability over pump and dump strategies.   I don’t think it would inhibit founding quality companies.   What unintended consequences would this law bring to the business landscape? 

Talent Oregon Wagner Street Project

Wow, lots of work on the old house this past 10 days without a lot to show for it but I think the “turning point” is near where things will start to feel more like the big progress I was hoping for.

The little back porch is completed with some 3/4″ cedar boards that are really pretty and I got at a great discount of .50 per foot. This wood is somewhat thin for a porch though ~3/4 fir was the most common porch board historically around here so it looks correct.

I’ll seal it with special stain today (Red Cedar transparent deck stain) and it should look super nice that way, though I may eventually have to paint this to be consistent with the house exterior paint job. Historically the (clear and gorgeous) woods used in construction were stained dark or painted.

A bottleneck has been the proper removal / disposal of the asbestos sheet flooring that was in kitchen and popcorn ceiling in living room (which may contain asbestos). You can pay a small fortune to have this work done or do it yourself as owner, so I’m doing it. Like so many environmental “evils”, the story of asbestos is really interesting and confusing. The more I know about the many issues (which is quite a bit now), the less I seem to understand. Here’s a neat asbestos identification guide from NY.

Asbestos went from wonder material used in millions of houses and thousands of schools and buildings to despised cancer-causing nightmare material requiring very special disposal procedures. There is a substantial bureaucracy in place via the DEQ to give advice about removal procedures but they won’t help identify the materials. For that you need lab analysis at $20 per sample. I’m treating the ceiling popcorn stuff as contaminated but should have had it sampled because it’s messy and if it’s *not* asbestos I could do this work faster, but it’s almost done now. The ceiling stuff scraped off smoothly after wetting using a sheetrock taping blade. I covered the floor with the 6 mil plastic required for disposal (2 layers of 6 mil plastic, both layers sealed with duct tape for most of the disposal wrapping though I can also use a cardboard box, sealed with duct tape and then wrapped with 6 mil).

Hey, maybe I AM making good progress!

Wagner Street Talent – roof and porch repairs almost done

Tomorrow we’ll finish roofing the section that needed repairs. The strand board had some warping but it flattened out nicely with screws.

The website is a great resource for this type of old house remodelling. Lots of 1-2-3 step by steps with pictures.

Today was nice weather-wise but on the roof I was baking my butt so we quit early and will start tomorrow morning earlier than usual to get this done in the cool of the morning.

An Ashland friend has convinced me I should add a staircase up to the very large attic space so this becomes a more valuable feature of the house and I think he’s right, but finding the right place for the stairs is a challenge. The risers can only be about 9″ maximum height and the height to the next floor is about 9 feet 6″, so I need about 13 feet along a wall for the stairs. Also, attic is only high enough to stand near the middle so there are only a few appropriate places for the stairs unless I put in a roof dormer and I’d like to avoid that for now.

Update:  Roofing done.  I am SO sore.  How do people do this stuff all year long?

Wagner Street, Talent Oregon

Wow, I always forget how hard it is to do a good few days of physical labor. I’m sore all over the place. The panel passed the inspection and Pacific Power hooked me up so now there is power at the house and we are fixing the area in the back – porch and roof. I’d originally tried to save an old porch that had been added on – perhaps in the 1930s – but decided it would be better to take it down due to bad condition and the fact it’ll open up the kitchen window to the sun.

The process is going somewhat slower than I’d hoped, but progress is progress, and we should be able to get the wood and felt up today on the section of new roof over the porch – about 125 square feet I think. I matched up the asphalt 30 year architectural style shingles at a great price at Home Depot of about $60 per 100′ square of roofing.

Wagner Street, Talent Oregon

What better way to process a big project than … blogging! ?

Today I had the Pacific Power guy come over tell me what tree trimming was needed to reconnect the service Panel that I’d installed some time ago but had been disconnected. The Electrical inspector was by the other day and told me I would need to add a ground to the water pipe (this is in addition to the ground running to two 8′ iron grounding rods!) I think this is standard Electrial Code stuff. I’ve certainly got nothing against the inspectors personally – most are courteous and professional around here.

However what seems to me to be a lot of unneeded change and overkill in the regulations is very interesting and I think can only be explained if you assume that there is a sort of “priesthood” of contractor/inspector folks who make these rules and want to both cover themselves against the slightest chance of problems arising combined with the fact they make more money and have more power if the rules are more complex.

The difference in mishaps in houses that have ONE 8′ grounding rod (old code) vs TWO 8′ grounding rods has GOT to be unmeasurably insignificant, yet those extra rods represent a huge amount of time/expense. Believe me, pounding an 8′ rod into the soil here is not fun and not educational!

Hmmm – let’s assume it takes a contractor a total of 30 minutes extra to install that extra rod, plus materials at $15, and the contracted labor is $60 per hour. This is $45 per install extra. So, one way to determine if this extra cost makes sense we could use the value of an American life according to the Dept of Transportation, about 2.7 million, and try to answer this question:

Since it costs folks about 2.7 million to install a second ground rod in about 60,000 houses, we’d expect to see at least one life saved by the second rod.    This seems EXTREMELY unlikely given that electricity is not a major cause of death at all (There are typically under 500 electrical fire deaths per year from ALL causes.  I’d bet there is not a single death attributed to the lack of a second ground rod).

House Painting

We are almost done painting our house and most of the neighbor report it’s looking good to them.

We’ve gotten fancier than last time with 4 colors, the last two just for highlights. I’d started this because I thought we might be selling the place to buy the Nut Ranch – a cool old historic place just out of town, but I’m no longer enamored with that house.