Mercury Rising 鳯女

Politics, life, and other things that matter

Archive for March 22nd, 2009

In defense of the Administration

Posted by Charles II on March 22, 2009

[Please check my arithmetic. This is a flu day, so my brain is operating especially poorly. But the outlines of the argument work, even if the detailed calculations are wrong.]

I’ve criticized the Administration’s approach to the financial crisis. They have focused on working through the banks rather than on the fundamental problem, namely the debt burden on the American people as manifested by failing mortgages, defaulting credit cards, and repossessed cars and appliances. Relieving that debt burden by raising wages and backstopping mortgages is not just morally right, but sound economics. But the blogospheric reaction to the Administration’s decision to work through the banks, with opinion leaders like Paul Krugman pronouncing “despair,” is misguided as well.

The key comes down to understanding leverage. In fractional reserve banking, banks keep $1 in their vaults for, say, every $4 that they lend out for 4:1 leverage. If 25% of loans defaulted, that would be $1 of loans vaporized, which is backed by the reserve. More than 25% defaults and, Houston, we have a problem.

It’s an amazingly sound system. Even in the Depression, without any federal help for the 1929-1932 period, the default rate for banks was only 6.6%.

Now, obviously, if one levered up 100:1, lending out $100 for every $1 in reserves, that would not be prudent. The likelihood that two or more creditors will default is much higher than the risk that 25% of them will do so. And the problem is that with deregulation, the ability to limit or even to track leverage was greatly diminished.

The present situation is somewhere between those extremes. Read the rest of this entry »

Posted in financial crisis | 7 Comments »

Windows “Easy Transfer”? More Like NO Transfer

Posted by Phoenix Woman on March 22, 2009

I wanted to transfer stuff from my old XP machine to my new Vista machine. I could have done so using a thumb drive, but I fell for the hype and decided to give Windows Easy Transfer a try.

I got a Belkin Easy Transfer cable, complete with Easy Transfer software. I installed the software on the XP. I connected cable to both machines. The Easy Transfer program installed on the XP machine stops on the “Install the Easy Transfer cable and connect your computers”.

Went to check the PC manufacturer’s website for advice on transferring files from XP to Vista. Their recommendation: Use a thumb drive. Oh, and I can’t return the cable to the store — only to Belkin, and only on a like-for-like exchange. So long, $60.

Avoid my fate of being hosed. Get a thumb drive and use that to move your data.

Posted in computers and software, WTF? | Tagged: | 14 Comments »

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