Subprime

The subprime mortgage mess is under every one's radar. People are talking about it, its impact on the economy, who caused it, etc. Here are two good explanations. One is a google doc ppt and is very funny. The other is a well written piece on how mortgages were given out and managed in the past and how it was done that led to the mess.

It is common sense. You give loans to risky people, fully aware they are risky and fully aware their other documents (income, etc.) are not verified. You give loan amounts to people that is not in line with their income. And interest rates can go up making these loans even less affordable to the people. With house values sky high, the prices can only come down. What do you expect? Bundling and selling them to wall street does not make them a safe and sound investment. They continue to be junk investments in the hands of someone else and we all know in our economy, when wall street catches a cold, the whole world sneezes and coughs and suffers.

To add to this, the government wants to intervene. Sometimes, leaving things to take its own course will be better than trying to do something. People who made stupid choices need to pay the price for it. Not the general public through their tax money.

Here is an interesting take on who is to be blamed:
" At the crisis' core are loans that were made with virtually nonexistent underwriting standards - no verification of income or assets; little consideration of the applicant's ability to make payments; no down payment. ...
From the current hand-wringing, you'd think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards - at the behest of community groups and "progressive" political forces."

It is an interesting take and sounds plausible. Government fiddling with the operational guidelines and risk management principles of the bank in the name of 'doing good for the people' - so familiar.

ATM & grocery

Sadness may encourage more extravagance

The article says:"A new study shows people's spending judgment goes out the window when they're down, especially if they're a bit self-absorbed."

No wonder my grocery stores has an atm machine at the entrance - I go in, check my balance, feel sad and shop a lot. Damn.

MacBook Air Ad

Many people like many things about the new MacBook Air. To me, it is the ad for Air, which then led me to discover the artist Yael Naim. Lovely song and great picturization.

Under grad Bay Area visit

Last weekend, my friends from under grad had come over for a small vacation here to the Bay Area. It was a total blast, catching up, having fun, pulling each other's legs. With half of these guys getting married very soon, it was also in some sense, the last big 3 day party where they could have unabridged fun.

Alameda C'Mas

Thomson Street in Alameda transforms itself into a Christmas paradise every December with the whole street beautifully decorated with lights, santa, cartoon characters, etc. This is a tradition going on since WWII. The street wore a very festive look, with people kids and dogs all jostling for place. There was a Santa sitting with kids waiting to get a minute to tell their wishes. I met someone from as far as San Jose who had come to look at this. Check here for more details. Below are some pics I took while I was there tonight.

Cowen on incentives

In this interview, Tyler Cowen, a professor of economics at George Mason University, answers why people blog and why many continue to remain in jobs even when they could potentially be making more money in a different company or job:

"Knowlege@Wharton: So we can be motivated to do a lot of work, even highly skilled work, just because it’s fun?

Cowen: Absolutely. A lot of science works on the same basis. It’s true that scientists get paid, but typically they don’t get paid more, or much more, for discovering something that will make them famous. They do it because they love science, or because they want the recognition or because they just stumble upon it. Einstein was never a wealthy man but he worked very hard. So blogging is a new form of an old idea: that people do great things for free. Adam Smith didn’t get paid much for writing Wealth of Nations, even though it’s a long book that required a lot of work. He had an inner drive to get his ideas out there."

I could not agree more. I blogged about this earlier and reiterate it here: money is not the only motivation. We are more complex than what some economists would like to think of us as. We try to optimize our rewards over a longer period of time - lower salary now might mean better opportunities in the long run. Lower salary now might mean a better learning opportunity, more job satisfaction, etc. It is a balance and each one arrives at a balance and mix of money and satisfaction and other incentives based on what makes them happy and satisfied and feel smug about themselves.

Frame your ideas

Don't think of an elephant. The author of this book, while a liberal; the ideas discussed here are for any one interested in communicating effectively. He discusses how to frame your ideas and facts so that people can digest it. He talks about how setting the context, making sure the ideas are palatable to people's existing frame of mind is critical in ensuring in winning them over. He sites numerous examples of how republicans do it very well and democrats bungle it.

This is a thought that many in the sales field have spoken to me about. They tell me how framing is critical in putting you on the offensive and the competition on the defensive, how it makes the competition compete on your terms rather than their terms, how the client will start looking at the different products through the prism you provide, giving you an edge.

The author says that when there is a conflict between an existing frame in people's mind and truth, it is truth that loses. A fact that could not be stressed enough in our business life. We all need to be aware that people were punished and burned for saying the earth goes around the sun. When you try to throw facts at people and they are not ready to catch it, tough luck. They will drop what you say and keep the gloves that does not fit what you just threw at them. George Lakoff talks eloquently on this concept in his book.

SW boarding

South West airlines does not assign seating on their flights. Earlier, it was a mad rush for the seats, people getting early to the boarding gate, placing their bags in the queue, sitting on the floor, etc. Recently, they have slightly modified their system such that each passenger is assigned a boarding order. Not a seat number but just the order in which you may board the aircraft. They have also modified the boarding area such that it is easy for people to stand in the order of their boarding.

So, no more placing our bags in queue and squatting on the floor for one of the coveted front row seats. I like the system, though could be better. Given it is new, people were still getting used to it and lead to an interesting conversation with a copassenger at a boarding gate in San Diego. We commented how SW treats its passengers like school kids, testing them for numbers and orders, punishing those who approach the gate out of turn by sending them to the line, and finally, if all behave well and settle down in the seats, get rewarded with - peanuts. I don't know if I should feel like a kid or a monkey.

This system of assigning boarding order, or doing it on a first come first serve basis leads to a single problem - people want to sit in the front so they can get out first. So they enter the aircraft and block the flow of the rest of the passengers as they try to settle down in the front. Instead, I feel the whole system would work great if airlines could figure out a way to board from the front but exit from the back. That way, there is a strong incentive for people to just keep moving towards the back and letting people board as fast as possible. Of course, there are some logistical issues to this and I am not even sure if this is possible with the current gate infrastructure. This could not be so bad if the gate operators could make say let passengers out from the back, and let the new set of passengers in through the back as well, but let them know that at the destination, they will exit from the front (opposite to what end they used for boarding). This would reduce the logistical issue of moving the bridge from one end to the other while at the same time ensuring passengers don't try to block the entry area.

An other option would be to ask passengers with checked in baggage to move to the back. They could create two zones within the aircraft - one in the back and one in the front. They should board the checked in baggage customers first and assign them to the back zone. Then, they should let the passengers with just the checked in baggage to occupy the front zone. Again, there are some practical issues here, but nevertheless something the airlines should consider, if they have already not done.

Birthdays

My friend bragged about the people she shares her birthday with. That prompted me to look up who share my birthday with. It was interesting to note a pattern. For example, among the worthy people who share my birthday, many were artists - painters, musicians, etc. On the other hand, my friends' birthday is shared by a lot of notable mathematicians.

I didn't look deeper but is there any correlation between the date of birth and field of excellence? Some work has been done to explain say why lot of the professional athletes were born earlier in the year. Taking cues from that, may be due to the weather say around a baby's 1st birthday, he/she was either playing outside, or painting the landscape or learning math because it is gloomy or thinking of stories inspired by the snow. May be.
Again, this theory needs to be vetted by comparing people with birthdays in the same month. Which would only validate the sun signs claims of people behaving in certain manners based on the date on which they were born.

To check who were born on your birthdate, check here. Wikipedia rocks. Can't imagine any other site having this information for every day in a year.