The Big Short and Being Human

Back in the late 80s when I attended UW-Madison, I had a conversation with a fellow student and expressed my opinion that the way we value a nation’s economy is going to have to change – that we can’t continue to measure economic growth largely by how much of its natural resources we’re expending. In essence, I argued that the entire world economy is a one giant Ponzi scheme (though I didn’t know the term Ponzi scheme until Bernie Madoff entered the picture). I still believe this to be the case. After all, a stock’s price is supposedly the present value of all future earnings, but we know that most companies that exist today will one day disappear and be sold for peanuts (Pan Am, Blockbuster, Enron, Woolworths, Tower Records), and the present value of a string of zeros is zero, so we’re really betting on short-term earnings. Even Amazon founder Jeff Bezos who has a rare long view when it comes to business success recognizes that his company will one day be disrupted and perhaps no longer exist (watch 13:20 of this 60 Minutes video).

It’s one thing to have this viewpoint about a system that’s largely on the up and up: that’s run by smart people with good intentions but who sometimes fall short or make mistakes. It’s quite another to discover that the people driving our economy are incompetent, greedy, short-sighted, ruthless criminals. If you’ve seen The Big Short or read the Michael Lewis book upon which the film is based, you’ll likely spend some time rethinking your investment strategy. After all, does it make sense to invest your retirement savings in corporations run by buffoons? The answer: what choice do you have? If you could earn 5% guaranteed in CDs you might do so, but you can’t, so if you’re like me you’ll throw the dice and hope that the pyramid scheme of the U.S. economy can hang in there for a little while longer.

I tried reading The Big Short a few years ago and had some difficulty. It does get complicated. But having a visual helps me enormously, and the film’s director Adam McKay (of Anchorman fame) does a marvelous job of acknowledging the complexity of the movie’s subject while helping the audience along the way. I still left the movie with a few lingering questions (that I hope to answer by giving the book another shot), but generally felt more informed than when I arrived, while still being entertained in between. 

No small feat.

Michael Lewis has a terrific piece in the week’s Vanity Fair that describes the minor miracle that any of his books have been made into movies (and successful ones at that: Moneyball, The Blind Side), least of all a film about credit-default swaps and collateralized debt obligations. You’ll also learn what you likely already knew: that incompetence and greed are as prevalent in Hollywood as they are on Wall Street. 

If only it ended there. But it doesn’t matter whether it’s Wall Street, Hollywood, government agencies, the Chicago police force, horny priests, Oregon ranchers or religious zealots: we as humans seem to be preprogrammed to abuse power, blur the lines between right and wrong, desire more even when we have enough, sacrifice long-term benefits for short-term gains, and hurt people for our own benefit. So why is it when we read about our brethren behaving badly we feel smug about it and think we would never fall into the same trap despite history telling us otherwise?

There are different schools of thought here. My own viewpoint is that religion – for all its faults – helps ground us in humility and gratitude, two essential ingredients to keep from following our worst instincts. Perhaps the people running our biggest firms would do well to spend more time in the pews or our nation’s religious institutions and less in the office.

But then how do you explain the clergy sex abuse scandal? Yeah, that's tricky. After you see The Big Short go watch the marvelous film Spotlight and then tell me your faith in mankind hasn’t been just a wee bit shaken.

Prince's Refrigerator

A little trifle for the holidays...

Prince, the former The Artist Formerly Known As Prince, has been shown over the years to be a weird dude.  For a lengthy but funny example of this, check out film director Ken Smith’s monologue about his experience filming a documentary for The Artist himself.

But earlier this week a friend of mind shared a fantastic blurb brought to you by the food and drink magazine Heavy Table.  Now you too can know the contents inside Prince’s refrigerator (or at least what was in his fridge four years ago), and what’s really cool are Prince’s comments.  He sounds funny, approachable and human.  Go figure.

And can a guy who really likes Dunk-a-roos really be that weird?

Have a terrific end to 2015, everyone.  More music, essays, fiction and gigs are to come in the New Year.

A Loss of Electricity

Two years ago my boiler stopped working just as the outside temperature plummeted to the single digits, leaving my family scrambling for a solution as our thermostat displayed 55 degrees and falling.  Luckily a knowledgeable neighbor provided a quick fix until I could get my HVAC guy in, and all ended well, but the episode left me aware of just how unprepared I am to withstand even the shortest power outage, especially in the winter months. 

Although numerous communities in the U.S. have suffered severe outages as a result of natural disasters, as a nation – with the exception of the short-lived Northeast blackout of 2003 that affected over 55 million people – the U.S. has managed to avoid the widespread calamity that Ted Koppel illustrates in his new book, Light’s Out: A Cyberattack, A Nation Unprepared, Surviving the Aftermath.

Poke around on-line about the electric grid and you’ll soon find commentary from the most extreme elements of our society (i.e., complete wack jobs).  Fortunately, veteran journalist Ted Koppel’s voice lends a degree of sanity to the polarizing issue.  Will his voice make any difference?  Time will tell, though I think he’s done a great service to highlight to the general public just how vulnerable our electrical grid is to terrorism – most likely of the cyber variety.  We’re talking potentially a hundred million people without power for weeks or months, a crippling of the U.S. economy and the U.S. military, and people’s worst instincts taking hold through looting and violence.  (You know, the kind of scenarios we pay millions to see as long as they’re on the big screen and not happening in our own backyards.)

Koppel provides expert testimony from both in and out of the electric industry and the government agencies who are supposedly equipped to either handle a major crisis (FEMA) or prevent a crisis in the first place (DHS).  (A word of caution: neither has a plan in place to respond to a major cyberattack.)  When Koppel asks General Lloyd Austin of U.S. Central Command if there is a danger of a cyberattack taking out a major section of the U.S. electric grid, he answers, “It’s not a question of if, it’s a question of when someone will try that.”

The words of a paranoid?  We would do well to recall the domestic terrorist attack on a California substation in April of 2013 that knocked out ten transformers.  Many think that this event was a dry run to something bigger, but with a cyberattack one doesn’t need AK-47s to inflict damage to the electrical grid – it can all be down remotely.  As Koppel reports, there are nation states to be concerned about like China and Russia, but they have a limited desire to inflict damage on a country that could inflict as much damage in return.  Of more concern is a country like North Korea who’s already demonstrated a desire to inflict damage to the U.S., who’s already hacked Sony, and who has absolutely nothing to lose.  Of course, a cyberattack wouldn't need to be state-sponsored; terrorist organizations also pose a significant threat.

Light’s Out isn’t all doom and gloom (though it is, mostly).  Koppel interviews a number of “preppers” – people who prepare for the worst through a variety of measures, including the storing of food, water, medicine, fuel and the like – who would likely be able to withstand an electrical outage for months.  Yes, some of them are wack jobs, but many are just regular people who want to have a plan in place in case of a long-term loss of power.  Even better prepared are the Mormons who – in addition to instructing personal actions – have a structural system in place that would help provide safety for its members in the event of a national disaster.

Where does that leave the rest of us?  Koppel doesn’t delve into details, which is rather a shame, but there are countless resources on-line and in print that can help the average Joe become a little more prepared than he is currently.  We're not talking silly duck and cover drills in the event of a nuclear explosion; we're talking sensible steps involving freeze-dried food, water storage and the like.  If enough Americans do this, then some of the panic that might ensue after a significant loss of power can be avoided while responders attend to those who are most in need. 

I’m going to devote a little time and a little money in 2016 to be a little more personally prepared, and I hope you consider doing so.  Getting our politicians to prepare will be a whole other endeavor.

Getting Lost

One of my favorite books is James Hilton’s Lost Horizon, a tale whose premise seems almost quaint these days: a group of people are kidnapped and taken to the mysterious and hidden city of Shangra-La deep in the Himalayan Mountains. That such a land could be unknown to the world must have seemed like a very real possibility when the book was first published in 1933, but in 2015 it seems absurd. Today, surely even a hidden city would be viewable on Google Maps with Yelp offering a list of hotspots.

I thought about this recently as I viewed a map of the world that showed city lights illuminated at night across the globe. Sure, there are still some dark spots in remote areas, but places that were once unexplored or unknown to much of the world are now lit up like Christmas trees, and I imagine that a person filled with wanderlust in the 21st Century might conclude that he was born a couple of centuries too late.

Earlier this year Tim Wu of The New Yorker wrote about how technology has pushed us closer to Never Lost Land, where even an exploration of wilderness is coupled with our ability to know our exact coordinates at all times via GPS – not a very interesting scenario for a would-be explorer. But the author also rightly points out that our dependency on technology could lead to much more severe consequences than a couple of decades ago:

It is, after all, much more dangerous to be lost in the wilds with a dead G.P.S. than with a map and compass. We’ll be never lost until we lose our tools, and then we’ll be much more lost than ever before.

I suspect many of us have fallen victim to this when we’ve been unable to make a phone call, find our way in a city or even look up a vocabulary word due to a power outage or a drained battery. @@Going off-line for even a few hours at home might seem more isolating than being stuck on a dessert island with unrestricted Wi-Fi.@@ Ask a child to look up a word using a real dictionary, and she’ll need extra time to figure out how to navigate this relic of days gone by. Hell, I used to know every phone number of most of my friends and family members. Today, I think I can accurately recite three or four phone numbers.

If one ever pines for the days of driving somewhere and having no clue where the journey will end, take note that you might be in luck, for some of us can still get lost even with a working phone. A few summers ago my wife typed a downtown Chicago address on her phone and started driving, only to find herself thirty minutes later on a rundown street in an unknown part of the city. She called me in a panic and asked, “Where the hell are the big buildings?” I asked her if during her drive she happened to look up. After all, the Willis Tower is viewable even from our hometown of Elmhurst eighteen miles away.  She hadn’t, apparently.

Which just goes to show you two things: 1) reading a map is still a valuable skill even with GPS; and 2) getting lost will always be possible for the directionally challenged.

Blueprint for Charitable Giving

Over the years I’ve devoted two blogs to the topic of charitable giving and how much of our time and money should be spent helping those in need, a concept I often wrestle with.  (One could argue that if I spent as much time giving as I do wrestling with the question of how much I should give, I’d be a much better person!)   In my writings I referred to the Jewish concept of tithing, the “upper limit” concept of the Babylonian Talmud and the New Testament reading of the Good Samaritan, but I’ve never walked away from these investigations with a clear-cut sense of what I should be doing to help others – only that I should be doing more.

Well, leave it to a pastor to help clarify things.  As I’ve discussed in previous posts, I get a double dose of religion as I occasionally attend Friday night services at synagogue and regularly attend Sunday morning services at a Presbyterian church where I play piano.  Once again, I’ve concluded that the applicable teachings of Sundays often trump the intellectual teachings of Fridays.  At Elmhurst Presbyterian last Sunday, Pastor Lyda offered a concept of giving so obvious that I had a hard time not uttering the words “well, duh!” out loud.  Ready?  Here it is:

Give to others as much as you spend on entertainment for yourself.

How simple is that?  

On the surface, it’s straightforward.  If you spend $30 on a movie, allocate $30 to a charity or other cause that’s in need of money.  

Ah, but what do we consider entertainment?  If you think about it, much of what we spend could fall into this category: electronics, cable, Netflix, internet, sports events, concerts, amusement parts, going out to eat, hobbies, junk food, parties, presents, timeshares or second homes, alcohol, coffee, cigarettes.  Last year, my family did what it had never done before: spent a great deal of money (for us) on an all-inclusive vacation to Mexico.  Clearly, this falls under the category of entertainment, but a vacation of this magnitude would have to be looked at twice if the cost suddenly doubled to include an equal amount for charity.

Still, I think it makes sense.

The hard-core rationalist might find a way to avoid matching the cost of most of the aforementioned categories.  A cycling hobby could be placed under a health category instead of entertainment, or an internet bill could be listed as a necessity. But look at what you spend your money on, and I think you’ll conclude that much of it is inessential.

As we head toward the holiday season, spend some time taking a close look at what you spend on yourself and your family, and consider matching it for those in need.  It might do two things: raise your awareness for just how blessed you are, and offer some assistance to make the world a better place.