Tag Archives: Personal

My guidebook DOING DISNEY! has been published by Theme Park Press!

Hi, all,

In 2013, I published a Disney World guidebook.  The editor of Theme Park Press contacted me and asked if I’d be interested in seeing it published by his small press.

It’s finally out!

Doing Disney TPPLinks for purchase follow for Amazon:

For the paperback at Amazon:  https://www.amazon.com/Doing-Disney-Spend-Week-World/dp/1683900359/

For the Kindle Edition at Amazon:  https://www.amazon.com/Doing-Disney-Spend-Week-World-ebook/dp/B01MTXTFBL/

Take a look at it if it interests you!


Health Care Debate

I rarely get political on this blog.  I think I can count two posts that might be seen as having political overtones.  And this will be the third, though for me, it has nothing to do with being a democrat or a republican, a liberal or a progressive or a conservative or right-wing extremist.  It has to do with health care, and what our goals should be.

It seems to me that most discussions between the two sides of our very polarized country break down because we start with different premises.  Case in point:  the second amendment.  There is a legitimate debate about exactly what the “founding fathers” meant when they stated:  “A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.”  Most gun proponents look at the second part — “the right of people to keep and bear Arms, shall not be infringed.”  They therefore assume that they have the RIGHT to own any type of weapon that is manufactured, as long as it can be classified as “Arms.”  Others look at the first part of that quote — “A well regulated Militia, being necessary to the security of a free State…” — and see that right to bear arms as being limited to their participation in a militia, say, the National Guard.  Still others look at the quote, written over 240 years ago, and believe that if the founders had an inkling of what would develop in weaponry — things like assault rifles and grenade launchers and ammo that could punch through the thick metal bodies of tanks (which were also unimaginable to them, certainly, in present form), they would have wisely incorporated some limits.

The point isn’t what is right or wrong about the second amendment, it’s that when we start with different premises, we will never agree.

So the trick is to find a common premise and that may indeed be a difficult trick.  So let’s start with this.  Is health care a right?  If so, at what level?  And if not, how do we deal with the health issues of those who can’t afford to pay for their care?

For example, I start with the premise that some basic level of health care should be accessible to all Americans.  I see that access to affordable health care at some level as a right.  Others do not.  I’d love to hear their reasoning.

I also see it as a reasonable penalty to pay some relatively small amount as a penalty for someone’s choice to not pay for coverage, because if that person ends up in the hospital, be it because of disease or accident, they’re not going to pay for it — the rest of us are, in indirect ways like higher hospital costs and higher insurance premiums.  Others see that as an infringement on their own right to not buy health insurance.  Where does their right end?  Does it end when that choice ends up costing the rest of us a lot more money in terms of health care?

Can we agree that an accident or a disease should not bankrupt a person or a family in order to pay for their health care costs?  That seems like a pretty low standard.

If we can agree that the above is a reasonable thing, then we have to decide how to achieve it.  I can tell you that lowering providers’ reimbursement will not work.  Sure, some physicians might be making inordinate amounts of money compared to an Amazon warehouse worker.  But who gets to decide how much money physicians, who have one of the most important jobs in the world, should be paid?  How much is enough?  I think it should be substantial.  I won’t go into all the reasons here, but I do know that if I’m having surgery, I want the best trained and smartest person available doing that surgery, and so do you.

So if providers’ fees aren’t going to be cut, where’s this savings going to come from?  Everyone has different ideas.  Sometimes those ideas get put together into health care legislation, and an attempt is made to solve some of the problems.  But the people who were getting rich off of other people’s misfortune might not like those solutions because some of them might cut into their profits.  And sometimes the goals of the people purchasing the insurance (employers and individuals) are at odds with the goals of those selling it (the insurance companies).  So nothing is ever going to be perfect.

In a perfect world, we’d all be able to go to the doctor when we were sick and not have to worry about not being able to afford the care we need.  And isn’t that what we should be striving for?  A perfect world?  We’ll never get there, of course, but it should be a goal.  The goals of American society should include affordable and accessible health care for every American, whether they are rich or poor, sick or healthy.  When you need health care, you need health care.  There’s no getting around it.

Can we all agree on that premise?  It seems so logical to me, but perhaps that’s because of my perspective as a family man, as a health care provider, and as a businessman who has employees.  Perhaps others have a different perspective on that premise.  Maybe there are those out there who don’t see that goal as being part of a perfect society.  I’d love to know why if that’s the case.  Please feel free to comment, anonymously, if you’d like.  (Just don’t get abusive or disrespectful.)

Because if we CAN agree on that premise, then we should see this new republican plan for what it is:  a BIG step in the wrong direction.


Recent Reading

I haven’t been posting much here, but I couldn’t get through the entire month of March without at least one entry, so here it is.

I recently read a couple of non-fiction books.  First was The Undoing Project by Michael Lewis.  Yeah, it’s the same guy who wrote The Big Short and Moneyball.  I can’t say I liked this one as much as I liked some of his other works.  It just didn’t seem as focused.  In the end, I wasn’t sure if it was supposed to be about the people he was talking about or about the ideas they came up with, or about the impact of those ideas on our everyday lives.  Maybe it was about all of those, but in the past he’s focused more on one recognizable goal and used the other parts to illuminate that goal.  It was an interesting read, but just not as good as some of his others.

The other non-fiction book I finished was Outliers by Malcolm Gladwell.  Now this one made me think.  It’s about success and the role that chance plays in that success.  It doesn’t say that success can come without hard work and a willingness to correct things that might be causing you to veer away from a successful outcome, but it does say that there is a lot of “right place at the right time” involved in peoples’ success.  For example, did you know that an inordinate amount of professional hockey players (at least in Canada) have birthdays in January, February and March?  Why would that be?  It can’t be just a random thing.  It turns out that many of the youth hockey programs have age-cutoff dates of January 1st.  So because of that, kids born in those months are simply older and bigger than other athletes at a period of time in their young lives when a few months can make a large difference physically.  So these are the kids who are a little bit more physically developed and they stand out, so they get selected for all-star teams and traveling teams and such, and get better coaching and more practice time.  And it keeps going until they actually ARE the best players.

I found that take to ring true, even in writing.  Sure, there are things you can control.  You can control the quality of your own writing and storytelling.  You can work to get better.  You can edit and proofread and take advice and criticism from your “team.”  You can work on your covers and on your blurbs.  You can market your works in such a way to increase their visibility, and when something doesn’t work, you can try something else that might work better.

But you can’t write what you can’t write.  If you write in a relatively unpopular genre, like I do (horror), you might just be stuck.  Conversely, if you write in a genre that tends to have voracious readers who stay in that genre, like romance, you might do a lot better.  Or psychological thrillers, or erotica.  Apparently those sell better in e-books.  If you’re just getting started today, you may find yourself with more of an uphill climb than if you had started right after the Kindle came out and e-books really became a thing.  Or if your stories just don’t strike a chord with readers, you are not positioned to take advantage of the market trends that are out there.

Luck might just be described as being in the right place at the right time.  It might be that you published your book on a day that, for whatever reason, it became more visible and grabbed the attention of more people so that it became ranked highly and thus became more visible.  It might be described as already being positioned to take advantage of the opportunities that present themselves.

Even Joe Konrath admits that “luck” played a part in his own phenomenal success as an indie author.  Here’s just one post of many he has dealing with the subject.  (The comments are great, being from respected authors like Blake Crouch, Jude Hardin and Mark Terry, to name a few.)

Anyway, I got a bit sidetracked.

I’m currently reading Creativity, Inc.:  Overcoming the Unseen Forces That Stand In the Way of True Inspiration by Ed Catmull, president of Pixar Animation and Disney Animation, with Amy Wallace.

I’m also reading some fiction, but I think I’ll make another post (with links to what I’ve read) soon.  Before the end of March, for sure!


The Philosophers of Today?

A while back, I was speaking with my retired MD friend, who is in the process of writing his memoirs.  From his description of what he was trying to accomplish, these memoirs are going to be sort of a combination of a biography and a philosophical treatise. He was bemoaning his view that the young people of today don’t have a clue what is coming at them in the future. He also suggested that there are no philosophers out there today helping to shape thought.

That’s an interesting observation, and I’m not entirely sure what to make of it. Is it true? I just don’t know. I recall back to my own time at Jesuit Loyola of Chicago, where I was required to take 9 hours of philosophy and 9 hours of theology. (I sort of cheated on the philosophy hours – “Logic” counted as a philosophy credit, and I had it in MATH in high school, and was good at those equations. So I took it and aced it. Didn’t feel much like philosophy to me, though…) Who did we study? Well, there were guys like Hume and Kierkegaard, and there was a guy named Mortimer Adler, who wrote the main book we studied, a volume titled The Difference Of Man and The Difference It Makes. Adler may or may not have some association with University of Chicago, and I think he’s still around and still writing.

I’m removed from the academic arena by over 30 years now, and I don’t know what is taught in a philosophy course today. And should philosophy be just about reading what the old thinkers wrote? Or should it be about developing your own philosophy? Learning what that means? Learning how to critically look at an issue and decide what is important about it?

I tend to think that perhaps the pop philosophers of today and of recent vintage are writing fiction as much as they’re writing non-fiction. After all, where else can a thinker work out the issues, speculate on the outcomes if one course of action is taken, explore options, even look at past events in a different light? “Speculative Fiction” is a name I’ve heard applied to some science fiction, and what is that if not an almost philosophical exploration of choices and outcomes?

The trouble is, this sort of “philosophy” isn’t considered serious. It’s ‘just’ genre fiction, it’s just made up stuff.

Still, I think some important thinking can be found in SF books. We’ve often heard the description “a cautionary tale” of a particular story, and that to me is at least a form of practical philosophy.


Cubs win the World Series!

I wanted to do a long and heartfelt piece about what the Cubs finally getting to, and winning, the World Series meant to me.  But I just don’t have it in me right now.

So instead I’m just going to ramble a bit.

I became a Cubs fan as a young kid.  The first season I remember vividly is 1969.  Ron Santo clicking his heels as they left the field, jogging down the left field line to the clubhouse gate in the corner.   Billy Williams taking practice swings at his own spit.  Ernie Banks and his cocked elbow.  The smooth double play combo of Kessinger and Beckert.  And of course the Rebel, Randy Hundley behind the plate.  I remember the winning, but for whatever reason, I don’t recall the downturn that became known in the future as the “September Swoon.”  Maybe because we were back in school, and the games were all day games at Wrigley in 1969.

I’ve suffered through a lot of really bad teams.  Oh, they always had a player or two that gave fans hope, but in hindsight…they were bad.  Then the Tribune bought them, brought Dallas Green aboard, and he built a GOOD team:  he brought in young players like Leon Durham, Ryne Sandberg, and Greg Maddux, and vets like Rick Sutcliffe, Dennis Eckersley, and others.  1984 brought us to the brink…needing one win to go to the series.  Alas, it was not to be.  They lost the final games of that league championship series to the Padres and were back down.  Injuries took their toll on the team, and we next went to the playoffs in 1989, with Don Zimmer at the helm and Maddux and Sandberg the pillars of a good team.  But we came up against a buzzsaw in Will Clark and the Giants, and I believe we were swept out of the playoffs.

In the late 90’s we got there again on Sammy Sosa’s back.  But we had nothing in the playoffs, and we didn’t get anywhere.  Finally, 2003 popped up, and we had a great team built around the dynamic young arms of Kerry Wood and Mark Prior.  We took out the Braves to go to the LCS, and were 5 outs away from the World Series when Moises Alou threw a hissy-fit over what he perceived as fan interference, because a fan may have touched a foul ball.  Ten people were reaching for it, but the unlucky fan who touched it became a pariah and had to deal with death threats from moronic fans who blamed him instead of the pitcher who served up some meatballs and the shortstop who blew a routine ground out.  I threw up my hands.  Could I subject my kids to this kind of torture?

I watched after that, but not with nearly the intensity that I did before that.  I watched those teams from 2007/2008 go to the playoffs, carried partly on the back of Alfonso Soriano, but stop hitting and go nowhere.  Then the ownership change.  A FAN (!!!) was buying the team!  Tom Ricketts took over, putting Theo Epstein, who had worked a miracle in Boston, in charge of baseball operations.  Theo brought in his guys and went to work making the Cubs the worst team in baseball.  They tore it down.

Then they built it back up from the ground floor.  Astute drafting and trades brought new good young players like Anthony Rizzo (trade), Kris Bryant (draft), Javier Baez (drafted by previous regime), Kyle Schwarber (draft), Addison Russell (trade), Jake Arrietta (trade), Kyle Hendricks (trade), and Dexter Fowler (trade).  Then came the free agents:  Jon Lester, Jason Hayward, Jason Hammel, John Lackey, Dexter Fowler (their own free agent), and Ben Zobrist, the MVP of the World Series.

In 2015, they were surprisingly good.  Great, at times!  Lost to the Mets, whose pitching mowed them down, in the LCS.  2016, they set records.  They were determined to get to the end.  They kept winning.  And finally, they did it!

Cleveland played really well.  But in the end, the Cubs were the better team, and after 108 years, they have brought the World Championship back to the north side of Chicago.  No goats, no black cats, just great play and teamwork and a focus that was enviable.

I didn’t get to watch as much as I wanted to.  But I feel like I was a part of this, as much as the people who watched every single inning.  Because they’ve been a part of me since I was a little kid pretending to be Ron Santo, and finally, they haven’t broken my heart!  They no longer play the blues in Chicago when baseball season rolls around.  Wrigley is no longer an “ivy covered burial ground.”  And no one will ever call them the “doormat of the National League” again!

We’ll always have Paris?  No, Cubs fans, we’ll always have 2016!


PS  Not bad for off-the-cuff, huh?


Hugh Howey post-debate

Hugh Howey posted a blog today titled “The Greatest Threat” which echoes some of what I’ve been thinking.

I don’t generally post much political stuff here, but I really don’t think this is political.  It’s just common-sense.  Give it a read, if you believe (or if you don’t believe) that income inequality in our country is a serious problem.

The Greatest Threat

What can you expect to find here?

Well, according to most of the spam I get, you can expect to find “excellently reliable information that I will return often to be able to read and interact.”


Okay, that’s enough of that.

So what do I actually blog about?   I don’t exactly have a theme.  I’m a writer, but I rarely blog about the writing process.  I’ve never really taken courses in fiction writing.  What I know is what I know from my own reading.  I’ve read a lot, and fairly broadly.  I read cozy mysteries, hard-boiled mysteries, suspense thrillers, science fiction, fantasy, horror, young adult, middle grade, comedy, biography, political analysis (though not much), economic analysis (also not that much), and even a bit of romance now and then.  (I confess that I’ve read Nora Roberts and Diane Gabaldon among others.)

I like movies,but these days I see so few that I rarely blog about them.  I tend to like most everything, so I’m a terrible reviewer.  I doubt that people can form too many opinions from reading about my reactions to films.  Maybe some, but as I said, I am mostly positive about stuff I watch.

I read a lot, so I tend to put up book reports/reviews on here.  When I find a new author, or read something that I enjoy (which is a lot of stuff) I like to share it.  Whether anyone’s reading it is another story.

I love music, have played music most of my life, and have listened to a wide variety of music pre-2K.  (Some of the stuff I hear these days doesn’t much sound like music, and there is so much stuff out there now that I’ve never heard of…)  I don’t often blog about music, but I will bet that for every new artist that I haven’t heard of, I can name one that hardly anyone else has heard of.

So, in answer to that title question, it’s not really about any of those things…but it could be about any of those things on a given day, in a specific post.

Mostly I want to make people aware about what I’m publishing, and since I haven’t put anything new out since last spring (2015), I haven’t posted too much.  (But look for something coming up…including the addition of a newsletter, as soon as I can take enough time to figure out how to do it.)

But every so often I’ll get on a roll and post a bunch of stuff about something that interests me.  Hopefully it interests someone else as well!


PS:  A post-apocalyptic novel from author M.P. McDonald, INFECTION, is free today!  If you like that sort of thing, she’s a very good author and it promises to be an interesting story!  I just downloaded it myself…

READY PLAYER ONE by Ernest Cline

This book was, for me, one of those special reads.  I could barely put it down.  Bought it at a little indie bookstore on Mackinac Island (The Island Bookstore) with the intention of getting to it someday.  Well, my son read the description and started it, and he could barely put it down.

I finished what I was reading  and picked it up a couple of days ago.  And that was it.  Every spare minute I had I grabbed the book and read.  Finished it this morning between patients, and I have to say that it kept me sucked into the story the whole time.

Anyone read it?

It’s dystopian, in that the real world has devolved into a dirty, poverty-stricken dump.  Wade, the first-person hero of the book, lives in something called “the Stacks” which are vertical trailer parks.  Made me think of the way they park cars in NYC (we don’t do ’em like that in Chicago) where you pull into an elevator of sorts and they hoist your car to the top, then put one under you, and another, and finally, the one on the ground.  They stack up the trailers (even some VW minibuses) in metal frameworks, and people live in them.  Cheap and efficient, but not very desirable.

Wade’s truly happy in the OASIS, a massive virtual world where humanity more or less conducts their lives in this depressing world.  It was designed by a computer nerd named James Halliday, who recently died (at the beginning of the book) and has set into motion a huge on-line quest, the winner of which will get his vast fortune and control of his company.  An evil corporate entity, IOI, wants to win, and is  hiring the best people they can hire to find this Easter egg, and they will literally stop at nothing, including murder, to get there first.  But the true “best” egg hunters, known as ‘gunters,’ are guys like Wade and others who by some combination of luck and brains, find the first key after 5 years of no one having a bit of success in locating it.

I loved the 80’s references (and 70’s references; a lot of the movies and songs and even video games seem to be from the later 1970s as well as the 80’s) and I loved the characters, and I loved the suspense of seeing how Wade and his compatriots would defeat the evil corporation and find the final key and win the game.  Plus, there was the added suspense about just who some of these gunters are.  I mean, all Wade ever sees is their on-line personas, and he clearly believes that it is enough to know whether he can trust them and be friends with them.

I liked the message at the end.  It felt right.

I don’t know if it’s a great book, but for me, it WAS a great book, one I’ll probably read again someday.


The Sub-prime crisis of the last decade and THE BIG SHORT

I knew Michael Lewis from his book Moneyball where he laid out the Oakland As’ strategies using sabermetrics to draft and acquire players and to put together a major league baseball team. He was able to explain some of that in ways that are very easy to understand, even if I wasn’t a big baseball fan (which I am). So when I saw this book by Lewis explaining the subprime mortgage crisis, I wanted to see if he could explain it in a way that made at least a little sense to me.

He was successful, at least in part.  I always wondered how around 8% of total mortgages in this country could bring down financial giants. (I’m not sure of the accuracy of that 8% – it’s just a number I’ve heard often.) I knew instinctively that there was more to it than that, but I didn’t know what it was.

Lewis tries to explain what happened that made these homeowners’ individual hardships come down on the very fabric of our capitalistic society, and he seems to say that it is really hard to spell it out because the ideas behind the whole thing are just totally ridiculous. First, that banks and mortgage lenders would do loans to people who could afford them in the short term but almost certainly would NOT be able to afford them in the long term. Then that they would allow these borrowers to continue to use the “equity” created by inflated home costs to fuel more debt and spending on their part. Then that they would allow them to not even pay INTEREST on these loans – rolling the interest into a larger principle amount somewhere in the future. These buyers had nothing invested in their homes except for fees and maybe a very small down payment (but often not even that). They weren’t making ANY payments on the loans.

The banks and lenders didn’t care, though, because they were selling the loans off to another agency as quickly as possible. And then big concerns on Wall Street were packaging these loans into bonds and selling off the bonds to investors. These bonds were backed by loans that almost certainly were not going to be repaid in full, and in the end, the holder of the mortgage was going to own a house, not a note from a borrower. And what happens when there’s a huge supply of these types of houses and no buyers? Prices plummet.

But that’s not all. Some smart investors bought insurance on these bonds. They didn’t buy the bonds themselves – they bought insurance on stuff they didn’t own. For this insurance they would pay a “premium” of maybe 2.5%. So for example, a 50 million dollar triple b rated bond backed by lots of terrible mortgages was insured for 1.25 million a year. The life of the bond is the same as the life of the mortgage – 30 years. So theoretically you could end up paying 37.5 million in premiums to insure this bond if it goes belly up. (Remember, this is a bond you don’t even own.) But these smart investors recognized that the loans backing the bonds were mostly adjustable rate mortgages with teaser rates that lasted for 2 years and then the interest would rise dramatically. At that point, a lot of people who might be able to barely afford the payments on their mortgages now were not going to be able to afford them any longer. So they were figuring they’d have to pay the premiums for two years, then loans should start going bad and their credit default swaps (the insurance they were purchasing) would pay off for the full value of the bond. (The higher rated the credit default swap, the higher the premium charged.)

But someone had to be buying the other side of these credit default swaps – and for a long time that someone was the huge company AIG. (Sound familiar?) But not only AIG – many banks and big Wall Street firms owned the other side of these instruments. The things were generating a steady cash flow of premiums each month, and this was positive income. After all, they’d only become liable for the amounts of the CDS if the bond went to zero.

For those smart investors, there was no question that the bonds would default – the only question was “when?” And this is where I am now in the book – just finding out what happens when they start to default. The timing of this event was apparently artificially manipulated by the big houses and by their manipulation of Moody’s and S&P rating agencies, so it didn’t come immediately as the default rates of the underlying mortgages started to climb – but happen it did, as we all know.

Which begins to explain how a relative handful of mortgages in default could precipitate the near-collapse of our entire financial system. It wasn’t the mortgages really. It was the greed that sold and resold these mortgages in the forms of bonds and securities which basically had no value, and the fact that it was perfectly legal to place bets (almost literally) on whether people could pay these mortgages or not.

I used to think simplistically, when I first heard about this stuff several years back, that they just needed a way to force refinances of these troubled properties. The best way to make them worth something was to keep their owners in them. As I read this book, I realize that it went far deeper, and it really didn’t matter if they could refinance at lower rates, the bonds were still bad, and the bets placed were still going to bankrupt those on the wrong side of the bet. AIG “insured” way more of these CDS’s than they had assets. Any sort of honesty, either in regulation from the government, or ethical action on the parts of Wall Street and the financial houses, would have prevented this from happening. Someone knew, as they packaged these mortgages into bonds, that they were essentially worthless, ticking time bombs set to go off two years from their inception.

It becomes obvious that Wall Street, not homeowners, ultimately built their own mess, and caused all the problems.

I read the entire book and I still can’t say I understand it. Not all of it, anyway. I think this speaks to the opacity and complexity of what these bond traders did.

First, I’m not totally sure what a sub-prime mortgage is. It sounds like a mortgage that has a really low, below prime rate of interest. This would seem to be a good thing. A low interest mortgage is something I certainly would like to have. But later the author says, quoting one of his characters (a major player in this book, Steve Eisman) “A subprime auto loan is in some ways honest because it’s at a fixed rate. They may be charging you high fees and ripping your heart out, but at least you know it. The subprime mortgage loan [from HSBC, who had bought Household Finance] was a cheat. You’re basically drawing someone in by telling them, ‘you’re going to pay off all your other loans – your credit card debt, your auto loans – by taking this one loan. And look at the low rate!’ But that low rate isn’t the real rate. It’s a teaser rate.”

This was in response to a loan offered that suggested that they amortize a loan over 15 years but spread out the repayment over 30 years. Eisman and the author seem to agree that this changes the rate from 7 some percent to 12+ percent. I’m not ashamed to say that I don’t get the math here. (Maybe someone can help me in the comments?)

Anyway, what happened in the mid 2000’s is that they started making these subprime loans with adjustable rates, where the low intro rate was fixed for two years then would reset at whatever the rate was then. And the borrowers would then default at very high rates. These mortgages were being aggressively sold to people who couldn’t afford them. Lewis gives the example of a migrant fruit picker making 14K a year who, through one of these mortgages, is able to afford a 750K house on a 30 year floating rate ARM. As Bill Murray would say in Groundhog Day, “Chances of default on this loan are 100%!”

Now I’ve seen it suggested that it’s ACORN’s fault (and by extension, since he did some work for them, President Obama’s fault) when what it looks like is that the reason these were so aggressively marketed to people who clearly couldn’t afford them was because the companies who were making the loans had the “essential features of a Ponzi Scheme: To maintain the fiction that they were profitable enterprises, they needed more and more capital to create more and more subprime loans.” Their accounting rules allowed them to assume the loans would be repaid in full and not early. So they could book this as profit when they made the loans. Then the people who made the loans sold them off to the people who packaged them into mortgage bonds, so they (falsely) assumed that the risk was no longer theirs.

(Those companies were the first to go bankrupt when this whole crisis hit.)

Now onto the bonds themselves. A mortgage bond is “a claim on the cash flow from a pool of thousands of individual home mortgages.” Failure to repay is only one of the risks with these bonds. Another risk is prepayment. Mortgage borrowers usually prepay or repay their loans when rates are falling and when they can refinance at a much lower rate. The owner of the bond, then, gets paid off in cash for that part of his investment, and this comes at a time when he least wants his money back, because it’s not a good time to invest, when interest rates are coming down.

So brokers came up with a way to identify and use this risk: They carved up the payments into pieces, called ‘tranches’. The buyers of the first tranch gets hit with the first repayments, so he gets a higher interest rate. The second gets a little lower rate, and so on and so on until the investors who buy the loans least likely to end before they want them to get the lowest rates.

With subprime mortgage backed bonds, the issuee wasn’t early repayments, it was defaults. So they structured them the same way: The first level is the most likely to default, and they get higher interest rates. They then take losses until their investment is completely wiped out. Then the defaults start hitting the second level, and so on.

Even so, at first it was a trivial portion of US credit markets – only a few tens of billions of dollars of the total loans made. But later there was a lot more being made. “In 2000 there hadbeen $130 billion in subprime mortgage lending, and 55 billion dollars’ worth of those loans hadbeen repackaged as mortgage bonds. In 2005 there would be $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds. Half a trillion dollars in subprime mortgage-backed bonds in a single year.”

Guys like Eisman, Michael Burry, and three young guys investing their own money at Cornwall Capital looked at these bonds, their underlying equity, and said to themselves, how can we “short” these things? There wasn’t an instrument, but there soon would be: the Credit Default Swap. As I said in my last post on this topic, these were sort of like insurance. Perhaps a good analogy would be, say you walked over to your neighbor’s house and looked at his SUV. You note that all four of his tires have nails in them. They’re still inflated, but sooner or later they’re going to go flat. So you call your insurance agent and say, “I want to buy insurance on my neighbor’s tires.” You don’t own the tires. But you buy the insurance and when the tires all go flat and need replacement, you collect the money. Are you being reimbursed for any actual loss? No. It’s your neighbor’s loss. Does he get anything from your purchase insurance? Again, no. Not a penny.

Same here. These CDS’s didn’t help the homeowners and they apparently didn’t help the people who bought the bonds. What they did was make whoever bought the CDS’s rich.

Lewis does not vilify people like Eisman, Burry, and others. In a way they’re the heroes of the story. Eisman is characterized as a “socialist” on Wall Street because he was one of the only people actually concerned with what these companies were doing to the poor who were the targets of their loans. For the rest, it was just a case of smart people who weren’t really rich taking advantage of the stupidity and greed of the big Wall Street investment banks. The CDS’s that they bought they mostly sold back to the banks at a huge premium, enough to make them wealthy by most standards. Michael Burry closed his hedge fund because of the way investors treated him when he was having moderately bad years waiting for his investments in these CDS’s to pay off, then how they treated him when his persistence paid off.

Instead he uses them to offset the greed and incompetence of those big influential Wall Street types. That greed hasn’t gone away. Has it learned the lessons it should learn about risk? Doubtful. The problem will come up again, in some other form.

I read the book twice, and learned a whole bunch, but I have to say there are some points on which I’m still a bit confused. I’ve touched on a couple of them in this blog post, but to tell you the truth, I’m not even sure how to STATE what’s confusing to me about the whole scenario.

I suppose that sometimes, nonsense doesn’t have to make sense and is inherently confusing. Maybe that’s the case here.


Pessimism in Science Fiction

I’ve been interested in the Walt Disney Corporation for some time now.  The whole history of the company and its genesis and growth to finally become the behemoth it is today fascinates me. I’ve gone to visit the parks several times as a adult (and parent) and enjoyed it every time, especially Epcot. I read a book called DISNEY WAR by James B. Stewart, and was doing some internet searches when I happened upon a blog called Re-Imagineering, which seems to mostly be a series of short essays about the problems with Disney as it exists today and what could be done to solve some of them.  The blog is basically dark today; it hasn’t had new content posted in years.

One of the old discussions (about Epcot) was talking about exhibits people would like to see, and what sorts of things they might try to freshen it up, make it less corporate in feel. It was also talking about Tomorrowland and its original optimism about our future. But that discussion shifted to some comments about the science fiction, especially in film, of today.  As an avid reader of SF and as an author, the discussion interested me enough to write this blog post about the topic.

It seems that most of today’s SF is dystopian, and that most of the film projects outside of stuff like STAR TREK and STAR WARS (not really SF in any classic sense) are very dark visions of the future. They named Blade Runner, Minority Report, AI, and The Matrix. (I’d say that Vanilla Sky, Dark City, and I, Robot are also fairly dystopian, along with stuff like Final Fantasy, Waterworld, all of the Terminators, The Postman, Battlefield Earth, and maybe even The Day After Tomorrow (though the last is not far in the future at all).)  There’s a bunch more SF films that I haven’t seen recently because I just don’t have the time to get to the movies or even watch them on TV.

As I think about the SF I’ve read in the not-too-distant past, first, there isn’t a whole lot of it. ALTERED CARBON was a good book but pretty dark. Dan Simmons’ HYPERION series and his latest pair, ILIUM and OLYMPOS, are not exactly happy fantasies of the future. I haven’t read much else in the field recently, sticking mostly to mysteries with some horror tossed in here and there.

Indie fiction introduces more variety, and more optimism, into its vision.  But even there, the story comes from the “negative.”  I’m thinking of Steven M. Moore’s THE CHAOS CHRONICLES and Edward W. Robertson’s REBEL STARS series.  There’s also Hugh Howey’s WOOL series, which is pretty darned negative for most of the series, right up until the very end.

As I think about it, my question is, is there a story in a utopian future? Is it a story I want to read about? Novels are about resolving problems. In some ways it seems to me that any story is essentially a mystery. If there is a mystery, there is a problem to be discovered and sorted through. If there are no problems to resolve, if everything is hunky dory, it might make for a nice pretty painting but is there any story? I don’t know. I was thinking about something like Asimov’s Empire series, and while there is a lot of optimism there with the direction of humanity, when the story takes place, things are not so good. Heinlein’s juveniles are more adventure story set in a fairly positively imagined future, but some of his adult works are a lot darker.

I see where they’re coming from with respect to Tomorrowland, they don’t want pessimism at Disney World, nor does it have a place. But I don’t see a story in a future where everyone is happy as clams. Those Morlocks in HG Wells’ novel weren’t all that happy, and the surface beings couldn’t have been thrilled with the status quo either. But THE TIME MACHINE wouldn’t make for a very good Disney ride.