The Life of the Unborn

In all the buzz surrounding the State of the Union address, an important story was probably missed by several readers. Two federal courts ruled the ban on partial birth abortions unconstitutional. While I don't know all the details, my understanding is that the issue was with the wording, specifically the lack of a clause to protect the mother's health.

Nevertheless, before you celebrate this victory for "choice", I would strongly urge you to watch this video on aborted fetuses in the first trimester (CAUTION: EXTREMELY GRAPHIC AND DISTURBING!, well before the third trimester that the partial birth abortions refer to. I cannot think a person would not be moved by this video.

Swipe that Plastic

The US government today announced that the personal savings rate of its citizens for last year was -0.5%. That means, on average, every citizen is spending more than their disposable income (income after taxes). This is the first time we have had a negative savings rate since the Great Depression era (for comparison, it was 10.8% in 1984). For the month of December alone, spending went up 0.9% while real wages only creeped up 0.4%

Things don't look good. Admittedly, some nations have a problem with too high a savings rate, which means that the market is inefficiently misplacing capital. But to spend more than you have is a recipe for disaster. What it does on a macro scale is to leverage the economy, providing it with a boost when times are good, but unwinding things horribly when times are bad.

Is there any reasonable expectation of change? It appears unlikely. We have positioned our economies incredibly on consumer spending and cheap credit, and seemed to have as a society ignored Puritan values such as thrift. One only needs to look at the craziness of our iPod obsession (I can't fathom someone paying $300 for a fancy walkman!) to realize that something's out of whack!

Add in all those underfunded Social Security and Medicare obligations, commitments many older workers seem to be counting on (I was shocked to talk to people who indicated they didn't need to save because their SS/pension plan was there!) ... and I'd say be scared ... be very scared!

Postscript A 1999 study by the Consumer Federation of America showed that despite the preceding stock market boom, half of all Americans had accumulated less than $1,000 in net financial assets and modest net wealth of $35,000. More households with incomes under $35,000 believed that they are more likely to accumulate a nest egg of $500,000 by winning a lottery or sweepstakes (40%) than by patient saving and investing a modest sum (30%. But most fascinatingly, they found that the quintile with the least net financial assets had a median income of $31,700, while the median incomes of the next two quintiles of net assets were $13,100 and $25,500. This is consistent with another study I read (and that I've been meaning to post on) that disproves the myth that savings are related to incomes. Yes, that's right, you don't have to make a lot of money to have a decent net wealth, and having a high income is no guarantee that you will be wealthy!

Random Quote of the Day

I was watching an old video of a NOW interview of Bill Gates, when host Bill Moyers quoted George Bernard Shaw, refering to the fact that Gates was so affected by the stats of the deaths of millions of children in the developing world due to preventable diseases:

The sign of a truly educated man is to be deeply moved by statistics

Anonymity in an Information Age

Reports that the government is seeking information from the search engines on user searches is troubling. Not just because Big Brother may want to watch us ... although that in itself is cause for some nervousness, but also because it highlights just how much information about us is floating around in accessible domain.

First the government stance - how can the government ask a company to violate an implied (if not explicit) confidentiality agreement with its users is baffling and, I think, inappropriate. One of the hallmarks of our justice system is that the normal people are free from unreasonable scrutiny without probable cause. Last time I checked, even an adult looking for porn is legal, and such an adult has the right to privacy that is not trumped by the need to protect children.

Whoa, you may say, isn't this the guy who supports the administration policy of wiretapping to find terrorists. Yes, I do - when there are a bunch of crazy bastards looking to blow my balls off, I tend to have a slightly different view of privacy. Even in this area, I think giving the government free reign should only be an interim solution. One of my favorite journos, David Brooks of the NY Times, himself a conservative, chided the administration for not pushing through a new solution that would address the outdatedness of the FISA laws while addressing the privacy concerns of this policy.

What I found more interesting though was the fact that Google and other search engines actually store such information for some duration of time. We don't know if there are links to the IP address of users. The government has clarified it does not want that information, so for now, there is no effort to track user patterns, but that's not to say a hacker or third party couldn't misue this information. Call it the democratization of information - we need not just worry about Big Brother, but also Lil Tim. Coming closely on the heels of a realization that your cell phone call records can be purchased for a few bucks, this really underscores the loss of privacy online. (For example, I received a letter from my broker that some banking information for several users appears to have been stolen, although they do not know who the victims are)

So what can we do? I took the first step, installing an anonmyzer at home. My pick for the freeware Tor, that can be used with IE or Netscape but that is especially convenient with the Firefox browser. For more information, visit the Tor website. I have only just made the switch, and it appears to slow down my online performance, so I may turn it off when necessary (especially easy to do in Firefox). It takes about 15 min for a non-geek computer user like me, so it should be a breeze for savvier users, and may take a little more time if you type with one finger. The instructions on how to donate bandwidth were a little more obtruse, so if any of you figure it out, please let me know.

Postscript I found I could improve by Tor performance by making one change suggested on a blog - to edit the config file to use sock4 instead of sock4a (don't ask me what it means!) My searches online also yielded this list of anonymous public servers that you could use as a proxy server. If you have access to a proxy server at work, you may not be anonymous. Visit this site and click on 'Proxy Test' and ensure your IP address doesn't show up. Also confirm by clicking on the 'Environmental Variables' button on the front page to ensure none of your information is being transmitted.

The Trouble with Boys

Being in academe, I hear a lot of talk about the barriers to women's success, be it at universities or in industry. But maybe we're worrying about the wrong sex - this Newsweek article presents some startling evidence that we need instead to worry increasingly about a male underachievement gap! The article discusses the reasons for this, including the fact that girls mature earlier than boys (an average of 18 months earlier), and also discusses the implications of educational actions, like gutting PE progams, on male academic performance. But there were a couple of interesting ideas that really caught my eye:

Across the nation, educators are reviving an old idea: separate the girls from the boys—and at Roncalli Middle School, in Pueblo, Colo., administrators say, it's helping kids of both genders. This past fall, with the blessing of parents, school guidance counselor Mike Horton assigned a random group of 50 sixth graders to single-sex classes in core subjects....Although it's too soon to declare victory, there are some positive signs: the shyest boys are participating more. This fall, the all-girl class did best in math, English and science, followed by the all-boy class and then coed classes.

Hmm, I'll be darned. I've heard people say that students are less conscious of the opposite sex and can learn better before, but I always chalked it down to traditional Indian ideas. Having lived my whole life in a coed school, I always figured this was the way to go, but maybe those sex-segregated schools may not always be a bad thing.

But this article is also in some ways, a call to action. This is something I knew, but bears repeating:

One of the most reliable predictors of whether a boy will succeed or fail in high school rests on a single question: does he have a man in his life to look up to? Too often, the answer is no. High rates of divorce and single motherhood have created a generation of fatherless boys. In every kind of neighborhood, rich or poor, an increasing number of boys—now a startling 40 percent—are being raised without their biological dads. Psychologists say that grandfathers and uncles can help, but emphasize that an adolescent boy without a father figure is like an explorer without a map.... In neighborhoods where fathers are most scarce, the high-school dropout rates are shocking: more than half of African-American boys who start high school don't finish.

There is a solution, one we can all be a part of, if we cared enough:

David Banks, principal of the Eagle Academy for Young Men, one of four all-boy public high schools in the New York City system, wants each of his 180 students not only to graduate from high school but to enroll in college. And he's leaving nothing to chance. Almost every Eagle Academy boy has a male mentor—a lawyer, a police officer or an entrepreneur from the school's South Bronx neighborhood. The impact of the mentoring program, says Banks, has been "beyond profound." Tenth grader Rafael Mendez is unequivocal: his mentor "is the best thing that ever happened to me."

PostscriptIf anyone has the opportunity to see the new documentary 'Boys of Baraka' do so, and let me know what you thought. I've heard good things about this story of a group of boys from Baltimore, the most violent school district in the country, going to boarding school in Kenya and coming back as honor roll students. None of my local theaters are showing the movie, and I hope to convince a friend to get it from Netflix.

Alito's Not O'Connor's Replacement

Yeah, you heard it. I'm sick and tired of media outlets saying the court would shift dramatically because of Judge Sandra Day O'Connor being replaced by a conservative like Judge Samuel Alito. A little recap of recent history would help. John Roberts was nominated as O'Connor's replacement. While just how conservative he is is not clear, he didn't appear to be too far off center, and appeared to be a reasonable choice for the swing vote. Then, Judge Rehnquist passed away and Roberts filled that slot instead. So as it stands, we arguably had a shift to a more liberal court than before the Rehnquist passing. Alito is intended as a Rehnquist replacement, not one for O'Connor.

That's not to say that the court will not become more conservative. It probably will - although judges are known to shift after being appointed to the court. But I think emphasizing Alito as O'Connor's replacement overstates that case.

Judge Gung-Ho on Credit Cards

This story about Judge John Ninfo talking about the people who come to his bankruptcy court because of credit card debt seemed to be the usual rant about our consumer society, something every sensible person rants about and yet seemingly many continue to indulge in. But this quote caught my eye:

The rule that I like to use is if it's $10 or $20, pay cash for it. If you can eat it or drink it, pay cash for it. And the best example of that is reported in the Wall Street Journal. When McDonald's started to allow people to use credit cards instead of paying cash, the average sale went from $4.75 to $7. Need I say more?

Hmm, the implication is that it might be the small things that add up, rather than the big ticket items. I have been using my Citibank Dividends card to accrue cashback for my monthly expenses, and always pay my balance in full, but I wonder if I should go on a one-month trial paying cash instead(for everything - grocery store included) to see if my expenditure drops.

Beware the Next Recession?

I was reading an old article on the Economist magazine, where I was lead from a blog post I was reading. The article was written in late September 2005, and concerns global inflation. This passage really struck a chord:

The real worry with rising inflation expectations is less that they herald a surge in inflation than that they will limit the ability of the Fed or other central banks to cut interest rates if growth stumbles. It is commonly argued in America that if the housing bubble were to burst, and falling house prices threatened to choke consumer spending, the Fed would slash interest rates to prop up the economy, as it did after the stockmarket bubble popped in 2001-02. But then inflation was falling. Today, with inflation rising, the Fed would no longer have that option. If the economy hits trouble, investors and homebuyers should not expect to be bailed out again.

Combine that with the very real possibility of a slowdown this year, based on many indicators, and a recession may be a lot more brutal than the one we had starting 2001.

What is the solution? Well, prepare for a shakedown by making yourself indispensible at work, save for a long rainy day (the rule of thumb is 3-6 months of living expenses) and consider some prudent investment choices, including defensive stocks, and inflation-protected securities, notably I-bonds. I'd still invest some amount of money in investment-grade bonds, since a global economic slowdown may dampen inflation and allow a reduction of interest rates.

For those unfamiliar with them, I-bonds are US Treasury savings bonds, that offer a fixed interest rate over the present inflation rate, and currently yield about 6.73%. You have to hold them for a minimum of one year, and are penalized some interest if you withdraw them in under 5 years. You can learn more information on them here. You can purchase I-bonds without commision on the TreasuryDirect page, and can also schedule regular electronic transfers from your bank account in amounts as small as $25.

This may also the place to note that some value-based asset allocation models favor trending down to closer to a 50-50 stock-bond allocation for someone in their 30s (based on present valuations), and a greater proportion of bonds for older employees. Recent history has played a role in much of the exuberance about stocks, but there is some clear evidence that outperformance of stocks over bonds in the past isn't close to a sure thing for the future, at least not to the same degree.

Stupid in America

John Stossel is simply one of my favorite op-ed type journalists. His latest, aired this Friday on 20/20 on ABC, was a hour long piece called 'Stupid in America'. He rips up our failing public school systems which, despite spending a record-breaking $10,000 a student a year, still ranks 25th out of 40 countries that took an international standardized test. Ahead of us - South Korea (No. 2), Poland, Latvia - not exactly rich countries. Stossel blames public school monopoly and unions for the mediocre performance.

He's clear to point out that there are great teachers, but our system does nothing to reward them. Teacher unions have consistently fought a merit-based system. In fact, shockingly, in New York, there are school districts with sex offenders who cannot be fired because of union-negotiated contracts, and desperate school districts have a seperate building to house them, paying them for no work because they are so dangerous to children.

I agree wholeheartedly with Stossel's assertion that competition will help. I've seen it in my lifetime in my home country of India, where horrendous goverment-run loss-making businesses have thrived when privatized, or even when private competition has forced a change of the inertia that dominates their being.

Opponents of vouchers will inevitably point to some study that suggests that charter and private schools are not much better. But that's not the point. If a charter school is no good, it will fail, it will have to shut down. The consumer will dictate if the school survives or not. The fact that 70% of charter schools have waiting lists at least as long as their enrollment suggests a great demand exists.

Vouchers will benefit the poorest the most, but help the middle class too. In their eye-opening book, The Two Income Trap Elizabeth Warren and Amelia Tyagi argue that the biggest predictor of bankcruptcy was not wasteful spending using credit cards, but having children. Why, you ask? Parents desperate to put their kids in good schools are forced to try to buy a house in a good school district, overly leveraging themselves in the process. In fact, here's an excerpt from James Glassman in Reason magazine:

Critics accuse charters of "skimming" the best students from public systems, which is often a coded way of claiming they have predominantly wealthy, white students. But the Advantage school's large minority student body is actually pretty typical for charters. A study released last May by the U.S. Department of Education found that 48 percent of charter school students are minorities, compared with 34 percent for all public schools nationwide. In Arizona, the study found that 45 percent of charter students come from families with incomes low enough to qualify for the free or reduced-price lunch program, compared with 40 percent for all public schools in the state. Nationally, 13 percent of charter school students are in special education programs, vs. 10 percent at regular public schools.

It's time to end this silliness, and support school choice. If public schools are better, they will survive and become stronger. If they are failing, we can celebrate the transition of students to better schools.

Warner's State of the State

I was quite impressed with Gov Mark Warner in his State of the State address yesterday to the Virginia House. I like this guy as a presidential candidate from what I've seen. Here's a Democrat who talks about attracting IT and other tech jobs, investing in science and math education (rather than a broad call to throw money into failing schools), and - this is the best part - enforcing measurable performance standards for public employees. Under him, Virginia has earned an 'A' grade for all metrics of performance by the Governing magazine, and is one of only 6 states with a AAA bond rating. He talks of running government like a business, which he should know a thing or two about, considering he co-founded Nextel and also owned other businesses. While he did raise taxes, his plan had support from businesses as there was a feeling that the money was being invested wisely.

This is the type of Democratic governor I can see supporting. Obviously, we don't know his views on a whole suite of issues, but it does strike me that Democratic governors tend to be a lot more sensible and pragmatic than the Washington types (I remember being supportive of Janet Napolitano's successful bid in Arizona). These are professionals who are not idealogues, and come into governance with a whole different mindset from the leftist idiots who control much of the national party, and both Napalinto and Warner strike me as candidates who would not be hostage to special interests like the big unions.

Perspectives on Health Care Costs

Now, I'm a huge fan of the Newshour with Jim Lehrer on PBS, as you may have realized from the fact that I have it listed on my favorite sites tab on the right part of this page. Unlike the usual soundbite junk you find on the other network news, here you get true analysis from the experts. (I did like Peter Jennings, but have stopped watching all the major commercial networks' nightly news broadcasts after he left)

With that plug, on to this discussion Margaret Warner had with Susan Dentzer on health care costs in America. I found myself learning several things I didn't know from watching this segment. Some tidbits ...

Overall health spending in the US doubled from 1993 to 2004.

In 2004, total health spending accounted for 16% of GDP!

New drugs are one of the big cost drivers. A cancer drug like Urbatux extends life for colon cancer patients by at least a few months but it costs $100,000 a year.

Considering that the average child growing up today has a 50% chance of diabetes, not to mention other obesity and lifestyle-related ailments, the future health costs are scary! (For more on this statistic, check out my post on Frontline's diet wars)

The $1.9 trillion spent on health care represents $6,000 per person (children included). That's 50% more than the next biggest spender, Switzerland. And yet, a National Health Quality report analyzes 44 measures of health quality and says that the quality of healthcare is actually deterioting!

We now have 46 million uninsured in the US.

These are really startling revelations, and are only the tip of the iceberg. Some will see the last bullet and proclaim support for a national health insurance plan. And yet even the current Medicare plan is infeasible, and unless dramatic cuts are made, could seriously endanger US economic prosperity. (All that talk of Social Security privatization, and sane minds were pointing that a Medicare crisis was much more immediate!)

Dickheads of the Week

As my MRI takes some pictures, I thought I'd file this post on the biggest dickheads in the news this week. (I wrote much of this Saturday, so now it should read 'last week')

First is the ridiculous couple who left their kids home, even though the puppies got a dog-sitter, while they went on vacation to Vegas. The kids were 5 and 9 years old, but evidentally the dad and stepmom thought their party was more important. Oh, and when investigators called their cell numbers, the ones they could be reached by the kids in the event of an emergency, they didn't get a call back for three days. Hope these parents rot in jail!

Second is Marcus Vick of the VT Hokies, who disgraced all athletes, collegiate and professional, by stomping on a Louisville defender after a tackle. The video clip is available on the web, and clearly shows the act was not accidental as Vick claims. Kudos to the Hokies for getting rid of that garbage! Of course, the sad part is he will probably make it big in the NFL, although I suspect not for too long. The record of excessive troublemakers in the NFL is less than impressive, and for a case study, one need only look at a very talented athlete called David Boston. (Of course, if you are less troublesome than extreme, you're the average NFL player!)

And last, but certainly not the least, is the man who should get an Award for Dickheaddom. I'm talking, of course, about good ol' Pat Robertson, who suggested Ariel Sharon's illness may be punishment from God for "splitting God's country". Well, I find it difficult to be shocked too much by a man who has, in the past, stated that the US should assasinate that President Hugo Chavez of Venezeula (seriously, maybe these evangalists should spend more time contemplating what Jesus would do, rather than just put the bumper sticker on their cars!) and warned that a natural disaster would strike a town that voted down intelligent design. I don't wish ill on anyone, but I confess I'm waiting for the day ol' Pat falls ill, to see why God hath cursed him!

Why I Will Have a Job for a While ...

I was once at a environmental engineering conference, and casually asked a group of more experienced peers if they thought environmental engineering would ever disappear as a profession. After all, a lot of the sites I was working at were involved in (what we now know to be) hideous disposal practices. Now that we have a lot more regulations and knowledge, and given that we are moving into an information age from the manufacturing age, will we see a dropoff in environmental contamination?

The guys at the table laughed and assured me of humanity's ability to continue being a nasty citizen! And this 20/20 story shows that even in our information age, we deal with some pretty nasty chemicals. We may be exporting the problem to Third World countries, but I suspect a day will come when we will be not just ethically liable but legally liable for our passing the buck.

The issue of "green engineering" is a tricky one. Some companies like GE and Toyota are making big investments in a cleaner manufacturing process, in some cases saving substantial amounts of money. Indeed, GE's Jeff Immelt is a firm believer that the future marketplace will demand greener products, and has made big bets on the same. To me, this seems the way to go, rather than Europe's regulatory approach. The problem with Europe's apprach is that too many rules have killed entrepreneurship, and the last thing we need is the perception that environmental stewardship and economic growth are tradeoffs. If the Prius showed one thing, albeit on a relatively small scale, it is that green technology can present an extraordinary business opportunity.

Hook 'em Horns!

This is my first sports-related blog post, and I certainly didn't think it would come from the world of college football. I'm not the biggest fan of the game at the college level - defenses are weak, there are too many trick plays and way too many teams! But last night, despite struggling from pretty severe allergies that had me bed-ridden, I saw what I think was one of the best games of any kind I have seen, when the Texas Longhorns beat the USC Trojans to win the BCS National Championship! I found myself unable to peel myself off the TV screen in a cliffhanger that seemed to swing from one side to the other. Here are my picks for different categories:

MVP No question - Vince Young almost singlehandedly led a Texas offense to keep up with a dynamic USC team, and kept the Trojan defense listless and confused. It was pretty incredible to see Young swat away tacklers with one hand as he ran for it!

Most incredible play There were a few contenders, but in the end, Reggie Bush like superman flying into the end zone and doing a somersault to land on his legs was out of this world!

Stupidist play by a player Bush is here again. After an incredible run effort, he was victim of the desire to try too much, as he tried to lateral the ball at the end of the run. Instead, the 'horns recovered the fumble and a great run ended tragically!

Stupidist call by a coach This in my mind has got to be Pete Caroll's decision to go for it on 4th and 2 with the ball on the USC 40 yd line and just over 2 min to go. Never will happen in the pros! Yes, a first down would have sealed the game, but you never gamble so big on one play. Instead a good punt would have put the pressure on the 'horns, who didn't have a superfynamic passing offense (I think Young had more rushing yards than passing). The Trojan defense showed some effectiveness blitzing Young towards the end, but when you start 40 yds from the goal line and over 2 min to go, you are gonna at least kick a field goal if you're the #2 (ok, now #1) team in the country!

Crystall ball Vince Young will have an incredible couple of years in the NFL when he foes go pro, before he realizes there is a reason McNabb and Vick don't run like they used to - it's called injury. Defenses in the NFL are much more physical, and even with his size, I don't think Young will last long before he tries more of a passing game. Leinart will meanwhile thrive in a balanced team like Brady in New England, never being the one everyone's talking about (there will always be a Payton Manning) but will nevertheless be one of the winnigest QBs in the NFL in the right team.

The 10% Down Rule

A friend of mine (let's call her Ms Jane Doe) wrote to me disagreeing with my 10% downpayment rule for buying a house. She argued that as a single mom, a 10% down was impractical, and would put people out of the benefits of home ownership forever. After some discussion with Jane, I realized her situation's a little atypical, and it actually meets several other rules-of-thumb I like to use. I'd like to discuss it here, because she actually has several things going for her that you should consider, even if you put 10% down.

Cost of the home I'd like to see mortgage payments no more than 25% of pretax income (ideally of one person's income - I'll explain why later). At present interest rates, that would work out to a house roughly 3.5 times gross income (preferrably one spouse's). While I don't know what Jane makes, her house appeared to satisfy this rule easily, and her mortgage payments were probably less than the 25% mark since she picked up her home when interest rates were lower.

Mortgage Payments In the event of a two-income family, I'd like to see a quarter of the second spouse's salary go to excess mortgage payments. In Jane's case, she indicated she's been paying extra on her mortgage (I think she mentioned double!), so she's quickly reducing her leverage, and thus protecting herself from the ill effects of debt.

Duration of ownership As I had pointed out in this earlier post, an analysis of housing data suggests that annual housing prices can fluctuate. If you are young and want the flexibility (or the need) to move around in search of work, a new home in a possibly overheated market is a bad idea. The risks reduce with time. Jane intends to live in her house for the rest of her life, a lot longer than even the 10-year time frame I analysed in my post.

Of course, all rules-of-thumb are just that. Your own situation may be different, so do your homework. If, for example, you have a kid, you also need to factor in tuition costs (which are increasing at 6-8% a year!). Or maybe you need to start a small nest egg not just for yourself, but for unforeseeable events - health issues, either for you or your parents or children, layoffs, disability, etc that may not be covered by your life, disability and health insurance.