Cheat Codes

Almost everyone who was born after the Ford Administration knows what "cheat codes" are. But for my fellow boomers I'll explain that cheat codes are (generally undocumented) special inputs to video games that allow the player to gain an advantage. They usually consist of pressing controller keys in a very exact sequence. They reward the game player with a variety of goodies: special powers and strength for their game avatar, or in "shooter" games, new and more powerful weapons or unlimited amunition.

You can search the internet for game walkthroughs and cheat codes. Whenever a new game comes out, dedicated players try out different obscure combinations of a game controllers keys, trying to find the combination that will give them an advantage in the game.

Game creators are aware of this interest and will make sure that cheat codes are "accidentally" leaked to their most loyal fans. These loyal fans then pass this along to their friends. There is even a market for books detailing the cheat codes of various video games.

My favorite nephew passed this tweet along to me this morning:

I was knocked back on my heels by this bit off tossed-off wisdom.

Proverbs do encode shortcuts to wisdom gathered through hard experience. Proverbs don't substitute for actually thinking the problem through.

Note the many proverbs that seem to contradict each other: "Many hands make light work," vs. "Too many cooks spoil the soup." or : "All things come to him who waits," vs. "Strike while the iron is hot."

But I do love the word image of the tweet, "I think proverbs may actually be cheat codes."

I love the idea that these nuggets of wisdom give us access to advantages put into our lives by the designer; and that if I take advantage of this wisdom I will find myself boosted with new strength, longer life, and unlimited spiritual amunition.

Heh.

More Bailout Thoughts

A few posts back, I said this about the impending government bailout of the financial industry:

So the government (via its new version of the RTC) becomes the mortgage holder for hundreds of thousands of Americans. Already the cry from Democrats is "People before profit."

Will the US be able to resolve the most clear out the very worst of these loans in an fiscally responsible manner?

If there is any possibility of making money on these loans, won't that cause an outcry on the Left?

Jonah Goldberg points out:

Democrats in Congress had great fun using Fannie and Freddie as public policy piggy banks, rewarding constituencies, funding pet projects, forcing the private sector to dance to their tune. What’s to stop them from renegotiating this week’s deal after the election and using Bank of America, Wells Fargo, JPMorgan Chase and the others as Fannie Mae 2.0?

Please don’t say that the terms of the deal are set and the government can’t revise them. If there’s one thing the last month has hammered home, it’s that nothing is written in stone. Besides, the banks may grow to like the security of partial nationalization and even lobby to Congress to stay on as less-than-fully-silent partners.

Heck, that way they wouldn’t have to pay back the loans.

I never thought of that.

Banks might tout the participation of the government as a way to sell their stock, "Hey, the government won't let us fail!"

Bailout Thoughts

So there is a lot of back-and-forth about whether the Paulson Bailout will cost the U.S. trillions of dollars; or whether it will in the end reap a windfall of trillions of dollars.

The question that I have for those that think this may actually make money is this:

Are you nuts?

(Note that I generally applaud buying up distressed assets a fire-sale prices, then making a killing once everybody starts to realize how stupidly they have acted. I am, after all, a heartless capitalist.)

Andy Kessler makes this point in his Wall Street Journal article:

In 1992, hedge-fund manager George Soros made $1 billion betting against the British pound. In 2007, John Paulson's Credit Opportunities fund correctly bet against subprime mortgages, clearing $15 billion for the year and $3.7 billion for him. Warren Buffett is now hoping to make big money on Goldman Sachs.

Chad Crowe

But these are small-time deals. My analysis suggests that Treasury Secretary Henry Paulson (a former investment banker, no less, not a trader) may pull off the mother of all trades, which could net a trillion dollars and maybe as much as $2.2 trillion -- yes, with a "t" -- for the United States Treasury...

Firms will haggle, but eventually cave -- they need the cash. I am figuring Mr. Paulson could wind up buying more than $2 trillion in notional value loans and home equity and CDOs for his $700 billion.

So the U.S. will be stuck with a portfolio in the trillions of dollars in bad loans and last-to-be-paid derivatives. Where is the trade in that?

Well, unlike Mr. Buffett or any hedge fund, the Treasury and the Federal Reserve get to cheat. It's not without risk, but the Feds, with lots of levers, can and will pump capital into the U.S. economy to get it moving again. Future heads of Treasury and the Federal Reserve will be growth advocates -- in effect, "talking their book." While normally this creates a threat of inflation and a run on the dollar, and we may see dollar exchange rates turn south near term, don't expect it to last.

First, with Goldman Sachs and Morgan Stanley now operating as low-leverage bank holding companies, a dollar injected into the economy will most likely turn into $10 in capital (instead of $30 when they were investment banks). This is a huge change. Plus, a stronger U.S. economy, with its financial players having clean balance sheets, will become a safe haven for capital.

So where is the downside?

L. Willaim Seidman and David C. Cooke list some of the lessons they learned from the Resolution Trust Corporation in the Savings & Loan bailout of the 1985:

Here are the most important lessons we learned from our experiences in the late '80s and early '90s:

- Acquired assets require active management. Assets tend to lose value while in government hands, as the government seldom can duplicate a private owner's interest in enhancing value. The RTC employed over 10,000 people in the first year of operation.

- Holding large inventories of assets will lead to depressed prices. No one wants to buy when the market has a large overhang of assets just waiting to be dumped when prices improve.

- To get the market started, assets have to be sold at very low prices. Such sales will attract buyers, with a resulting increase in prices. At the same time, selling at low prices could trigger accusations that the agency is "depressing the market."

- Every government sale or purchase creates winners and losers. This results in intense political and economic pressures to influence the actions of the agency. The RTC's independent governance and operations protected against fraud and political influence.

So the government (via its new version of the RTC) becomes the mortgage holder for hundreds of thousands of Americans. Already the cry from Democrats is "People before profit."

Will the US be able to resolve the most clear out the very worst of these loans in an fiscally responsible manner?

If there is any possibility of making money on these loans, won't that cause an outcry on the Left?

Pure, Intense, Brilliant Pain

There is an index to measure insect sting pain?

Of course there is, my dear.

The bullet ant sting scores highest on the Schmidt Sting Pain Index, a rating created by entomologist Justin Schmidt, director of the Southwestern Biological Institute, which compares the ouch factors of different insects.

How does he know how much these insects' stings hurt? He's willingly endured each of them himself.

Schmidt's rating gives a poetic description of the bullet ant's sting: "Pure, intense, brilliant pain. Like fire-walking over flaming charcoal with a three-inch rusty nail in your heel."

There's a job that's gotta make it hard to get out of the bed Monday morning.

The Enduring Popularity of HP Calculators With Geeks

Many people don't realize that technophiles can be the most conservative of people.

In the drive for miniaturization and ease of use, there are those who smile and stand aside:

While not the sexiest consumer product out there, our engineering audience will likely see the appeal that HP's latest scientific calculator had for me. The 35s, which this new model is dubbed, is similar in many ways to the 15c I bought twenty-some-odd years ago when I entered engineering school... There's no doubt that the 15c was the premier calculator of its time. Just about everybody in engineering school seemed to have one...

I bet many of you are smiling to yourselves saying the same thing, "yeah, I bought one of those, too." But the kicker for me, and I'd bet for many of you, is that my 15c is still going strong. In fact, it still serves as my everyday calculator. And it doesn't get lost like many of the other objects on my desk, such as the tape dispenser, stapler, and scissors, thanks to its use of reverse Polish notation (RPN). My family members take the attitude that it's easier to find another calculator than to learn RPN. And that suits me just fine...

It's Not a Bug, It's a Feature

The headline reads:

Too Much Sugar-Free Gum Linked to Severe Weight Loss

Does this seem like bad news to Wrigley's? I can just see overweight people thinking, "Hey! I didn't know it was that good!"