Why I Go Downtown [and why you're missing out if you don't!]

This weekend has been pretty eventful. I went to the driving range and actually saw some improvement in my shots. I also ran Race for the Cure, which is the largest foot race in NC, drawing about 24,000 participants. I ran it in 25:48, which is my best time since I've taken up running again, though my high school self would balk at that time. The race raised $2 million for breast cancer research, which is awesome of course. I also saw The Hangover tonight.. hilarious, I'd recommend it. I haven't used a bicycle in years but Saturday I got the sudden urge to buy one. About 2 hours later I was the proud owner of a new mountain bike.. I was advised not to make any 'rash' purchases when I told a friend I was considering buying it but I'm thinking I'll get some decent use out of it. Anyway, enough with the weekend update. You know, it's no secret that I like to go out on the weekends. In fact, most weekends don't feel complete if I don't. I think a lot of people, or at least some, view such behavior as something that correlates to 1) immaturity, 2) being single, and/or 3) some level of being an alcoholic. While it's true that such assumptions apply to many people that regularly go out (and I'm guilty of being single, I won't claim that's not a big reason why I go out), I've always known that a lot of it for me is just being out amongst friends and meeting new people. I think last night while I was walking across downtown on a quest to get some of the best nachos I've ever had I further narrowed it down.

I never know what's going to happen when I go downtown. I go out because I love the variety of experiences. I love not knowing what the night has in store. Here's the problem with NOT going out: Although some people substitute 'going out' with other social activities, oftentimes the alternative is staying at home or spending time with a good friend. That's great and important, but when I stay home I know with pretty good certainty what the night will bring. How is that interesting? Part of what makes life awesome is that we don't know what it has in store for us. As human beings, we are instinctively social creatures. In general, we thrive on social interaction. Social interaction is vital to experiencing randomness in life. Meeting people not only makes life interesting, it expands your network. It's amazing the cascading effect that meeting just one person can have in your life. If you've never thought about it, I'd highly encourage you to. The most seemingly insignificant decisions are the ones that change the rest our lives. We make hundreds or thousands of them a day, so odds are at least one of them is going to have a significant effect on your life. The decision to go to one restaurant over another, to walk left or right in a crowded concert, to arrive at a place at one time or five minutes later: those are the decisions that can change your life. Think about it. For example, when I got offered the job I have at IBM I was asked when I wanted to start. The recruiting manager made a passing comment about how other people were taking a month off after graduating to go to Europe. I didn't end up going to Europe, but I decided to wait a month before starting. The start date I chose determined which orientation session I went to. The friends I met there became the foundation for many of the friends I have here today. If I didn't choose the start date I chose, I would not have the friend base I have now and I would not be living in the apartment I have now and would likely not be writing this blog.

I'll give an example of something that happened this weekend to illustrate my point. Last weekend, my friend Joe and I went to a bar nearby for a few minutes where we befriended our waitress. When we were downtown at a concert last night, we saw the waitress a few yards off (small odds since there were a few thousand people present). She gave us free passes to the after party, which determined the bar we went to after the concert. There, I saw her talking to a group of guys. I decided to join in the group for no particular reason because I'd become bored with whatever I was doing at the time. Within a few minutes, I discovered that the guys lived a couple doors down from me in my building! Now I know some neighbors that I would have likely never met if Joe and I had not sat at the table we did a week before. I also would not have ever met them if I did not have a desire to 'go out' nearly every weekend!

When I first moved here, Raleigh's downtown nightlife was... so-so. I went out, but more rarely, because it wasn't that exciting and the odds of meeting someone interesting was much lower than what I was used to in Clemson. There was a lack of vibrancy. Fast forward two years and the difference between Raleigh now and then is substantial. There is a vibrancy and level of excitement in the downtown that was fairly non-existent two years ago. As Raleigh is now the fastest growing city in the country, I expect for the trend to continue. I look forward to it and the energy and opportunities it will bring. I thoroughly believe that a vibrant nightlife is crucial to a healthy downtown and a healthy city full of many opportunities.

Some say that the course of one's life is determined by fate and some say by choices. I say it's a combination of the two, but there is no doubt that it is largely determined by one's choices. The more time you spend at home the fewer choices there are to make and the less chance you allow yourself for opportunities and an interesting life overall. If the nightlife isn't your scene, then so be it. There are other opportunities to network. However, if you're just sitting at home, you're missing out. Friendships, business deals and experiences that will last a lifetime are being created while you're sitting at home watching re-runs of Jeopardy.

Airport Randomness and Misc.

Wow, I have gotten... very slack at keeping this up. I may have even waited longer to make a new post if it wasn't for Caroline reminding me multiple times that my blog was falling by the wayside. Perhaps it's because my last posting had so many views (easily set a blog record) that I knew that the views for whatever I wrote next would disappoint me. Or maybe I've just been busy... we'll chalk it up to that. Since my last posting, I went to New Orleans, went to the World Beer Festival in Raleigh, spent a long weekend in Charleston and had a few friends come up for a long weekend here.. all of which could have made potentially good blog topics! One thing I will mention is the large number of random airport occurrences I've had since moving here... I suppose I didn't fly that often before I moved up here but Raleigh is a decent sized city (the Raleigh-Durham MSA [Metropolitan Statistical Area] is larger than the Charlotte MSA, though Charlotte has a bigger airport) and you wouldn't expect to see people you know very often... one thing I've learned is that no matter where you are, we live in a small world.

So these are not all people I know, but here's a few instances off the top of my head:

1) I flew to West Palm Beach last summer. A friend of mine drove me to the airport, and as I was getting my bags out of the car we discovered that she knew the girl getting out of the car in front of us.. they went to high school together I believe. I ended up talking to the girl, she was going to WPB too! We ended up hanging out on the flights/connecting airport down there and then when I was in WPB I ended up seeing her and her family at a restaurant I was at.. I've seen her in Raleigh since then too.. small world!

2) When I flew to Dallas last fall as I was boarding the plane I noticed a girl I know hanging out in the terminal.. unfortunately too late to talk to her but still random. When I arrived in Dallas I saw another girl I know who was on her way to Vegas with her bf.. I later found out that her ex (whom I knew her through) was randomly in Vegas at the same time and saw her (or so I'm told it was random)!

3) When I flew to New Orleans last month, I parked at a private parking area a few miles from the airport and took a bus to the terminal.. when I was in the New Orleans airport restroom later that day I noticed the guy next to me was on the bus with me that morning in Raleigh.. small world.

What blows my mind is that these things seem to happen every time I fly... I'll let everyone know if anything happens next time I fly.

On a side note, I watched Star Trek a few weeks ago.. I don't really advertise it too often, but admittedly I'm a Star Trek fan... the new movie is great and I recommend it to anyone regardless of whether you've seen or liked any of the prior movies/shows (wouldn't normally recommend this but the movie is awesome). I say this for the sole purpose of leading into this video that I found online a few days ago with Jay Leno.. pretty hilarious:

What if God is an Ocean?

So they say there's two topics above all others you should try to avoid in conversation. One is politics, which I've dived into pretty much head first already. The other is religion. What kind of blogger would I be (any serious blogger would probably take offense to me calling myself one) if I didn't try to tackle one right after the other? I suppose I did make some references to religion in my values blogs but I wouldn't really call those religious posts. This is actually a post that I intended originally to write on Easter, but I got sidetracked and forgot about it until now.

One thing that a lot of Christians have problems with (as do I) is the concept of the trinity. Growing up, I was taught the concept of the trinity in vague detail but the church more or less avoids the topic. It wasn't until college that I learned exactly what the trinity was and how critical it is to Christian beliefs. I struggled for awhile because I was surprised I never understood the concept before. Father, Son, Holy Ghost, three in one. All God Himself. I always more or less saw Jesus as God's son, and part of God in some way, but not actually God. I saw Jesus as a somewhat separate entity. There are verses in the Bible to back up this belief too, such as when Jesus says there are certain things that He doesn't even know, only His Father in heaven does. This implies that Jesus does not know everything God does, so he cannot be God, correct? Well, no, but many people point to that as evidence that it does imply that. A lot of Christians understandably shy away from discussing the trinity in detail or from questioning it at all. They don't fully understand it (nobody does, some believe the church made up the concept) and are afraid that questioning it will somehow damage their faith or put some kind of giant crack in their religious beliefs. I think this is dangerous. Christians should not be afraid to question the tenants of their faith. If you don't question your faith, how can you defend it against others that question it? Indeed, the trinity is one of the primary complaints Muslims have against Christianity because they see it as Polytheism. Nobody can claim to understand the trinity for sure, but by discussing it and understanding it better, one's faith might even be strengthened.

I was thinking over this subject a month ago or so and trying to think of how the trinity could be explained to fit into human logic. The problem of course is that the trinity (if our understanding of it is accurate) is probably all too complex for humans to understand, and believing in it is more a matter of faith than logic. Still, theorizing can't hurt. We know that we were made in God's image and as a result we tend to imagine God as some old guy propped up on a cloud... and we wonder how that old guy could also be Jesus on earth (did he take a vacation from heaven?) and then also the Holy Ghost. It's very possible that God's form is so complex that imagining him as one entity up on a cloud is ridiculously off. What if... instead of an individual like ourselves, God is more like... water? Humans are made up of mostly water, so that could possibly explain us being made in his image. Also, water (besides air, which would also fit into this analogy) is the thing that we can go the shortest time without consuming. Water is life-giving, just like God. So, let's imagine God is like a body of water, the ocean. Jesus could be like a drop of water that was sent to live among us. That drop of water is still water, and is completely identical to the larger ocean, only smaller. They are physically separate but yet identical and the same. When Jesus died, perhaps like a drop of water he returned to that ocean that is God. Like before, the drop of water is now a part of the ocean again. They are one and the same, but now together again.

Don't get me wrong, I'm not actually suggesting that God is an ocean... but what if the ocean-drop of water relationship is a good analogy for the God-Jesus relationship? Seems feasible to me. Just something to think about... Happy Easter (belated).

South Park Ends Economic Crisis

Hahahah. That was my response to South Park's 3/25/2009 episode entitled "Margaritaville." The show was a hilarious attempt to explain the current economic crisis. I thought Kyle impersonating Jesus was hilarious, along with the scene at the Treasury. They even made a great statement a few times when they referred to the economy as 'people' rather than a 'thing'. That's really all the economy is, people engaging in mutual beneficial transactions. I don't want to give too much away, just watch the episode. This video is part 1 from YouTube, which links to the second two parts at the end of the video. For better quality I'd recommend watching the video legally at www.southparkstudios.com.

Hope for U.S. Economic Policy?

I'll be honest, the last blog of mine (which you should read before this one if you have time) rambled a bit. The economy is such a tough topic to tackle, especially in one sitting. I know I left out a lot of great points and probably included a few lesser ones. Still, it would only seem appropriate that the day after I post it, our economic policy received a big update. Yesterday, Treasury Secretary Geithner unveiled a new plan to have the government auction off 'toxic' banking assets to potential buyers. The stock market soared. Awesome! This would mark the first time off the top of my head that the stock market has reacted favorably to any economic policy announced by Geithner and perhaps even President Obama. If I was writing for a national newspaper instead of a personal blog with only a few readers, I might suggest that Geithner checked out my ramblings yesterday. Odds are likelier that I'll win the lottery tomorrow (I'd prefer the latter anyway). Why did the stock market go up? The plan acknowledges that the private banking sector is necessary to a recovery-the private sector is the answer, not the government!

A 'toxic' asset is basically an asset that is worth nothing. These are assets such as subprime mortgage packages that were purchased when they seemed valuable. When the economic crisis hit, nobody wanted to buy these assets so the 'market' value turned to '0'. In reality, the assets are worth something because they could eventually turn profitable, but if nobody wants to buy them right now the market value is nothing. Banks have had to write down these assets to 'nothing' because of government-instituted (by President Bush I believe) mark-to-market accounting regulations. Those write-offs led to huge artificial losses at banks across the country and translated into shaken investor confidence. The Treasury is hoping that by guaranteeing some portion of the value of these assets and auctioning them off, they can create some demand for the assets and improve bank balance sheets. While there are plenty of reservations with the plan, I think the idea is one of the best policy ideas put forth by this administration. I welcome President Obama's move to boost confidence in the banks in addition to recent comments by his administration expressing confidence in the economy.

Unfortunately, many banking executives will likely be reluctant to take part in this program because of recent government efforts to villify Wall Street. The administration realizes that they now need the help (and backing) of some of the same executives they have criticized. Still, President Obama realizes this and has expressed some disapproval over Congress's attempt to "tax away" bonuses paid to certain executives (i.e. AIG). Maybe he's starting to realize that an approach designed to aid the private sector is better than spending money like a teenage girl left in the Mall of America with a no-limit credit card.

Perhaps the no-limit credit card analogy is a bit overboard considering it's likely that the recent stimulus bill has some positive effect on economic recovery. Consider this though: the non-partisan Congressional Budget Office recently projected that under Obama's budget the federal deficit will reach over 80% of GDP by 2019. It's currently less than half that. Consider also that Europe has long passed spend-happy budgets to finance their welfare states. Europe has fairly unanimously (the European Central Bank agreed with this viewpoint today as well) rebuffed U.S. requests to pass a European stimulus package and insists that the government spending more money is not the answer. The current president of the E.U. today called the U.S. stimulus package "a way to hell." Interesting when you consider the continent this statement comes from.

Anyway, the stimulus package is already passed, and all we can do now is hope that we don't further test that no-limit credit card. I'm not going to hold my breath, but I do think some positive steps are now being taken. I may not be confident enough to put anything new into the market right now, but I'll go ahead and keep in whatever I already had invested (too much).

Perception in the Current Economy

Clearly, perception is very important to the economy. I made my case for this in my previous blog, so it would be a good idea to read that one first if you haven't already. So, if we assume that to be true, then it should also be true that perception is incredibly important in any economic recovery. I don't claim to be an expert on the economic crisis, I think that the causes are incredibly complex and it will take time for economists and historians to pinpoint the exact causes and what solutions helped to improve the economy. Obviously, a big cause was a housing bubble, which was encouraged in large part by the Federal government through Fannie Mae and Freddie Mac. Too many people were encouraged to buy more than they could afford on dubious terms. Too much credit was loaned to risky borrowers. I think that perception has also played a role in this. The first major collapse in terms of credit was Bear Stearns. From the pages of information I read on the collapse soon after it happened, I gathered that noone expected the firm to collapse (not even executives) even a couple days beforehand. A few creditors stopped lending money to the firm, which turned into a domino effect. No company wants to be one of the last creditors of a company, so when other investment firms/banks saw creditors withdrawing credit lines from Bear, even though the company may have ended up fine, they followed suit. Bear's credit lines dried up, the firm collapsed. Sure, the issue was much more complex than this, but still, when the firm's perceived reputation tanked, so did the firm. More firms proceeded to fail and the government's response was inconsistent. Some firms were 'rescued', some were not. Investors were nervous; the stock market does not like uncertainty.

The government responded by spending money. Lots of money. Most of it went to banks. Americans were looking for reassurance from the government. Instead, they saw inconsistent behavior. Furthermore, since most Americans did not understand the complexities of the crisis, they did not understand why banks were receiving bailouts while other industries were not. The government was relatively quiet for a few months as economic policy transitioned from President Bush to President Obama. I think that President Bush addressed the crisis fairly poorly, but as his term is now over there's no point in looking at it in detail. What I'm concerned about is President Obama's policies.

I think that a lot of the problems that caused this crisis have eased. Home values have plummeted and any market-based price corrections are probably complete. Bad assets have been identified, the government has injected billions into banks that were on the verge of failing. Now the issue is how to get the economy back on the right track. A significant obstacle that must be overcome is improving investors/consumers' perception of the economy. Obama's first order of business in addressing the economy was to put together a massive "stimulus" package that increases government spending to an unprecedented level in comparison to post-WWII history. The budget deficit over the next 20 months will be greater than the deficit over the previous 8 years. So, we're fixing an economic problem caused in part by too much borrowing by borrowing substantial amounts of money. Even if we assume this is sustainable, and perhaps it is, there's the whole issue of spending to fix the economy.

My problem with the current response to the economic crisis is that the government seems to be aiming to improve the perception that the government can help us out of the crisis rather than the perception of the actual economy. It's true that there's something to be said for this. Consumer confidence is extremely important and knowing that the government is spending massive amounts of money to prop up the economy undoubtedly is reassuring for some people. However, consumer confidence is also significantly affected by the stock market, which theoretically is a fairly accurate representation of the value of all publicly traded companies. I don't think that the economy can recover to a large extent until the stock market begins to recover (true, they kind of go hand in hand, so that statement could be argued). Government spending CANNOT replace private spending in the economy. The economy IS private spending, and the more the government spends the less capital is available to the private sector. A short-term stimulus to the areas of the economy hurting the most could be used to potentially boost private spending in those areas as well. Instead, we have a stimulus bill that increases spending for years and funnels money to areas of the economy that aren't suffering, i.e. education and healthcare. These areas may be deserving of more funding, but a lack of funding there is not ailing the U.S. economy. Investors agreed, as the stock market tumbled when the stimulus package was announced. If our goal is to improve the economy, i.e. the private sector, than how is legislation that causes the stock market to tumble good for the economy?

My impression of the stimulus package is that it's a massive spending bill filled with pet projects for which the Democrats have been wanting funding for years. Analyses I've seen suggest that at most 12 cents of every dollar spent are going to something that could remotely be considered 'stimulating' for the economy. Obama further convinced me of this by his change in attitude before and after signing the bill. Before the bill, Obama stated that the economy is the worst it's been since the Great Depression. He attacked McCain for saying the economy was fundamentally sound. After getting his stimulus bill passed, he claimed the economy is fundamentally sound (in different words, I don't feel like looking up the quote right now). Also, he signs a bill filled with some 9,000 earmarks and then starts talking about the need to cut down on earmarks. I congratulate President Obama on realizing that it's about time to start building Americans' faith in the economy itself by saying it's fundamentally sound, it was a good sign of his intentions. However, the timing suggests that the 'stimulus' bill was political and nothing that needed to urgently pass to save the economy. Granted, I think that if McCain had been elected, he would have also created a stimulus bill, but it would have gone to Republican pet projects rather than Democratic pet projects. My point: I'm not trying to demonize President Obama or the Democratic party, but as they are in charge they get to answer for the policies.

I'm sure that the stimulus bill will create jobs, but they are jobs that depend on government funding. If government was the answer, then fixing the economy would be a cinch. We must not create dependencies on the Federal government, but create incentives for the private sector to grow and for the stock market to increase in value (when investors see added value in the economy). Tax cuts, incentives, and healthy regulation would be far more beneficial than adding trillions of dollars to the national debt. If we lowered the capital gains tax, then investors would pour money into the stock market as it would be cheaper to own stocks. This would ease the difficulty many companies are having in borrowing money. If President Obama is convinced that we need to spend our way out of the recession, than perhaps limits should have been put on the bill to significantly scale back or halt spending when key economic benchmarks were met i.e. Dow Jones reaching 9,000 and unemployment less than 5.5%. Just a suggestion, but it would clarify his intentions for people like me. Many of the other policies being proposed right now (i.e. cap and trade, ending secret ballots for unions) are anti-business and will not increase confidence in the economy. These policies should not be debated until the economy is back on its feet.

On a side note, it's important to notice that the stock market DID jump when Citibank unexpectedly announced they expected to make a profit. That announcement was apparently more beneficial to the economy than the announcement of the stimulus package. Let's not advertise the government as the answer to our problems, but use the government to clear the way for the companies that are the bread and butter of our economy to be successful on their own.

The Importance of Perception in the Economy

It's amazing how important perceptions are. I would argue that in many ways perception is more important than reality. In some circumstances, perception is reality. If enough people perceive something as true than it becomes true. There's really a lot of areas this could be applied to, including individual personalities. Perhaps I'll cover some of those other areas in a later blog. For now, let's think about the economy.

The economy today, more so than at any point in history, is dependent on perception. The purpose of the economy, in essence, is to allocate resources in the most efficient way possible. Before the adoption of currency, barter systems ensured that items involved in all transactions were useful to the individuals who were on the receiving end of the trade. When currencies were later adopted, currency had a set exchange rate to something of value, usually gold because of its relative global scarcity and perceived value. When the world left the "gold standard," a fairly unpopular decision led by the United States, the world's currencies became valued only by their exchange rates to other currencies. No longer could a U.S. dollar be exchanged for a set value of gold, its value now rested solely on faith in the United States government. Perception. People perceived the dollar to have continued value because everyone else did too. In other words, if suddenly everyone in your community lost faith in the U.S. economy and perceived little to no value in carrying U.S. dollars, your cash would be worthless.

The banking industry is another aspect of the economy heavily dependent on perception. Many banks collapsed during the Great Depression because depositors lost faith in them. Hence the creation of the FDIC to help prevent 'runs' on the banks by individuals unnerved by the hint of bad news. One of my favorite stories illustrating this is one I learned in economics class in college. I don't have my notes readily available from freshman year and so I don't remember the details but the big picture is still fresh in my mind. Back around the Great Depression there was a bank that was rumored to be running out of cash. With no such thing as the FDIC to calm people down, a massive crowd began to form in front of the bank after the rumors had circulated. Everyone was fighting to be first in line to get their money out before the bank crashed. The problem: the bank WAS low on cash! They weren't low enough to be in danger of failing, most of the bank's assets were loaned out... but they did not have enough to give depositors back all their savings [no bank does, banks use their deposits to make loans, so banks only have a small fraction of deposits available at any given time]. The bank manager called the local Federal Reserve office. In an attempt to save the bank, the Fed rushed over a truck full of government cash. When the bank opened, the manager showed off the vault full of cash to the nervous crowd. Assured by the sight of cash, most depositors left their money in the bank. The extra cash was returned to the Fed, and the bank was saved because the bank was no longer perceived to be in danger of failing. If enough people believe a bank will fail, it WILL fail.

Another crucial aspect of the economy dependent on perception is the stock market. The stock market is where investors buy and trade shares of public companies. A company's stock price represents the market's (i.e. investors) collective valuation of that company. A stock price is theoretically equal to the present value of all future profits of a company combined with a few other things, such as assets-liabilities. Since the present value of a company is by no means perfectly scientific (unless you can read the future) then in essence a stock price represents investors' perceived value of a company. This is why when companies don't meet their expected earnings, EVEN IF those earnings were higher than last year's earnings, the stock price will go down. The company didn't do as well as expected. Stock prices are continuously fluctuating as "the market" (investors) digests a never-ending stream of information. Hence, the total value of the stock market is the perceived value of all companies publicly traded on a particular stock exchange! Since exchanges such as the NYSE and NASDAQ list such a large number of companies, the value of the stocks on those exchanges is an excellent barometer of the perceived value of the United States economy. When the stock market goes down, this usually means the perceived value of the U.S. economy has gone down. When the stock market soars, new information has given investors the perception that the expected future performance of the U.S. economy has improved. If enough investors believe a company (or all companies, i.e. the stock market) will fail, then the chances of that company failing significantly increase. When a company's stock price plummets, the ability of that company to raise cash by selling ownership rights to the company (equity/stock) is severely diminished.

Few people have a thorough understanding of the stock market, or the economy for that matter. This is a very dangerous fact that I may address in another blog. However, even people who do not understand how the stock market works understand that the stock market is important. They see green arrows or red arrows every day on CNN and in the newspaper. Regardless of someone's understanding of the stock market, people know that poor stock market performance is bad. Therefore, stock market performance, which is rooted in the perception of the economy by investors, then affects overall perception of the economy. A crashing stock market tells people the economy is bad. Those people get nervous. They invest less, they spend less, they save more. Companies make less money, investors see this nervousness and diminishing profits and they sell. The stock market continues to go down, creating a vicious downward spiral. Sound familiar?

There are so many other areas of the economy where perception is important, but I think I've covered what I believe to be the most important. In my next blog I'll tie my ideas on economic perception to the current economic situation that we've seen during the past year or so.