Todd Lappin recently visited Modesto, a central California city that was hit hard by the mortgage bubble. He posted his photos and comments on his blog, Telstar Logistics.
A city of more than 210,000 people located about 90 miles east of San Francisco, Modesto had the nation's third-highest home foreclosure rate during the third quarter of 2010 (just behind Las Vegas, Nevada and Cape Coral/Fort Meyers, Florida).
In practical terms, that means 1 in 36 homes in Modesto is in foreclosure, and as we discovered, the evidence of this is visible from street level.
"We're going to be near the top of the foreclosure list for a long time," Bob Johnson from Direct Appraisals in Modesto told us. "The majority of the foreclosures here are people who used home equity loans to buy cars and other things. Banks often try to help out with loan modifications, but that doesn't really help, so people just walk away. Bottom line is, people here say they just won't pay mortgages that are worth more than the value of the property."
Kelsey C., a master’s student at the University of Colorado-Boulder, sent in this image from Calculated Risk showing the percent of jobs lost in each recession since 1948, relative to the peak of the pre-recession job market. In terms of the percent of jobs lost, the current recession is by far the worst we’ve seen since World War II
I've been researching alternative currency systems for the past decade or so, ever since I became convinced that a 21st Century economy simply can't be run on a 13th Century printing-press-era operating system. As most of us know, the centralized currency we use today is a legacy of the early Renaissance, when kings, threatened by the rise of a merchant middle class, made all peer-to-peer and local currencies illegal. Debt-based currencies helped monarchs centralize their power and the worth of their treasuries. And these currency systems worked particularly well as colonial empires expanded via their chartered corporations.
Nowadays, however, most of us have more value we wish to transact than there is cash out there to do it. (I personally blame the derivatives markets, which now are more predictive than derivative - their bets being placed before the so-called "real" markets have a chance to operate.) But whatever the cause, there are plenty of real people willing to work and exchange value; there's just not enough money available to do it.
I've been looking hard at many of the systems out there, from exchanges like LETS and TimeDollars to reputational currencies like Whuffie. The main obstacle - usually unacknowledged, but mostly just ignored - is the tax. And I think that's what sets Superfluid apart from the rest. They've got two sides - a "community" portal for people to do favors for one another in the way a LETS system might allow. And they've also got a commerce portal through which people can begin to sell merchandise or commercial services.
What makes Superfluid interesting for the Boing Boing community, I believe, is that its philosophy and methodology - as described in the video above - is so consonant with that of the programming community. It makes sense to me that a technology based in shared computing resources would be great for administrating the sharing of programming skills. And it also seems to me that the programming community is the more likely birthplace for a robust and legal p2p currency than the kinds of communities that have attempted to scale up their currencies in the past.
See what you think. I'll try to get the founders of Superfluid here to engage in the comments if people are interested.
"An executive at a billion-dollar Connecticut hedge fund was arrested on felony charges of allegedly running a huge year-round pot farm inside her home. But her boyfriend says the cops have it wrong, that they're goat farmers, not dope farmers."
Information designer Jess Bachman has a new piece out which isn't so much an info-graphic as a graphic article. Jess explains:
It deals with the nightmare that has become student loans. Default rates on student loans are worse than sub-prime mortgages, and the total debt is bigger than all our credit card debts combined. It's a huge issue than many people are keeping quiet about. College students are a hugely under-represented and unadvocated group in Washington, and what we and the government are doing to them is just wrong.
"There is a feline quality to standing in Indian lines. Certain parts of the man behind you—you don't know which—brush against you in a kind of public square spooning, the better to repel cutters. (Women do less touching.) Still, this is no deterrent to cutters. They hover near the line's middle, holding papers, looking lost in a practiced way, then slip in somewhere close to the front. When confronted, their refrain is predictable: 'Oh, I didn't see the line." // Snip from a New York Times story on the sociology of waiting in lines, and what the prevailing etiquette tells us about a given culture's place in global economic evolution. (thanks, Marina Gorbis)
The finance and economics blog Calculated Risk publishes an unofficial, periodically updated list of problem banks in the USA. The most recent edition includes 800 such institutions.Every time a bank fails, they post a haiku ode. Here's a snip from the most recent entry, regarding failed banks in Washington and Oregon
The Cowlitz Bank failed.
Their milk shake was drank.
Jess Bachman, infographic designer extraordinaire, shares this new work which shows how Glenn Beck "uses his influence to peddle dubious information and endorse fraudulent companies, and how how those companies go about scamming fear ridden consumers into buying terrible investments."
It's a pretty epic infographic, complex and big, like much of what Jess does. I've just shown the top, oh, 20% of it above to whet your appetite.
"I love the expression on people's faces when they come here," says "Bamboo Charlie" Walker in this Los Angeles Times profile. "A homeless man with toys? Whoa!"
For the better part of 18 years, Charles Ray Walker, a homeless man from Houston, has made his home near the junctions of the 5, 10, 60 and 101 freeways in Boyle Heights, on a plot with a shock of green bamboo trees. There, he grows nectarines, peaches and strawberries and displays a collection of found objects.
When I guestblogged here last year, I wrote about crowdfunded securities. The upshot was that crowdsourcing platforms like Kickstarter can't support investment, because that's illegal; they can only offer tiered "perks" for donations at various levels. But I (and others) believe that crowdfunded securities should be legal without expensive SEC registration under certain conditions, starting with if individual investment is capped at a relatively low figure, like $100.
In that post, I also floated the idea of crowdfunding a campaign to pursue such a "crowdfunding exemption." I invited people to contact me if they wanted to keep up with such efforts, and got nice feedback from a bunch of folks. Encouraged, I dug in some more and found out that getting something like this going would actually be easier than I thought. First of all, the SEC has the authority to rewrite its own regulations, without any congressional review (which sounds like a recipe for corruption, and indeed...). Second, the SEC, via its website, lets anyone submit Petitions for Rulemaking and solicits comments on these petitions. You send it, and they will post it-- and then also post all the comments they receive. This quiet backwater of the SEC's website struck me as good territory for some crowd action.
Stocks in the US were down 1,000 points earlier today. Initial reports blamed the plunge on fears over debt in Greece, but CNBC is now reporting that the dramatic drop may have been caused by user error: "According to multiple sources, a trader entered a b for billion instead of an m for million in a trade possibly involving Procter & Gamble, a component in the Dow." (* Hey, at least he didn't type g for gajillion)
Nicole sez, "Philebrity posted a haunting video of the recent demolition of the Drexel Shaft in Philadelphia. The tripped out music and slowly tumbling smoke stack aptly visualize a crumbling American economy."
A copyeditor at the Toronto Star greeted the news that union copyeditor jobs were being eliminated in favor of freelancers by heavily editing the publisher's memo announcing same, pointing out all the ways in which the publisher could benefit from editorial aid.
This is very funny stuff, but having looked at the markup, I have to say that I would ask for a different copyeditor in future. A lot of these edits ("avoid simplistic qualifiers" for "very") fall under the heading of "creative disagreement" not "helpful suggestion" or "correction." I've generally benefitted from copyeditors who know the difference, but on the rare occasion where I've had to deal with a couple hundred pages of redlines by a copyeditor who thought that he was my co-author, it's been quite a struggle.
Our friends at Good have a post up with striking images by photographer Mathieu Young. These photos were shot during harvest time (last year) in California's Mendocino County region, where an awful lot of marijuana is grown.
"On the one hand it seems like an illicit activity," Young told Good. "But on the other hand, you have a bunch of people who are living off the land, which is beautiful."
Speaking of poor children reminds me of Sitting Bull, as good an authority on our economy as anyone, even if he wasn't an economist and even though he died in 1890. After the Lakota were defeated, he joined Buffalo Bill's Wild West show for a season, but he never got ahead financially. He gave the bulk of his earnings to the street urchins who hung around the show. He was shocked that a nation powerful enough to conquer his people couldn't or wouldn't feed its own future. The white man was good at production, he concluded, but bad at distribution.
John Schwartz at the New York Times writes about what it's like to have a son in college whose job is to sit around with no clothes on. Hey, from the son's perspective, what's not to love, right? The only job requirement is that you have a body. Snip:
As a little boy, Sam once asked me: "Dad, is there a job where you get paid a lot and don't do much work?"
Being paid $15 an hour to sit around naked is one option. That's nearly twice as much as most other student jobs. And it's not like he's dancing at Chippendale's.
"There's a difference between nude and nakedness," says Charles Garoian, the director of the university's visual arts program. Context is vital: a stripper is naked to arouse prurient urges, while a nude model is there to unleash an artist's creativity.
Here are some of my recent posts about money for Credit.com.
Charts to Help You Succeed in Online Dating: "If you're investing your time and money in an online dating service and want to increase your chances of getting a reply from someone you're interested in, don't tell them they're "hot." Instead, tell them you dig zombie movies."
Strategies for Happiness: "The shift from being a rat racer to pursuing happiness is not about working less or with less fervor but about working as hard or harder at the right activities -- those that are a source of both present and future benefit."
New Boom on Metal Detectors: "A 55-year-old metal detector enthusiast discovered a cache of Anglo-Saxon treasures earlier this month, estimated to be worth $10 million, in a farmer's field in Birmingham, England."
Kevin Poulsen at Threat Level has a great item up about the growing menace of "money mules." The term refers to bank customers who've been conned into unwittingly laundering cash that hackers have stolen from business bank accounts. The con and the funny phrase have been around for a while, but the US Federal Deposit Insurance Corporation issued a new warning to American financial institutions about the increasing spread on Thursday. Snip:
Using specialized Trojan horse malware, cybercrooks have been intercepting web-banking credentials from the computers of small and midsize businesses, and then initiating wire transfers to mules around the country. The mules are consumers who’ve been lured into fake work-at-home scams, in which their employment involves receiving money transfers and then forwarding the funds to Eastern Europe, either directly or through other mules.
The scheme has exploded in the last year, with the FBI estimating losses at $40 million so far, according to a recent story from WashingtonPost.com reporter Brian Krebs, who’s been closely following the attacks.
In a new exhibit opening in just a few weeks, conceptual artist Jonathon Keats will propose an antimatter-based mirror economy designed to boom as the regular-ole economy continues to tank.
"Economic equilibrium is upset by our unbalanced pursuit of material wealth," says the artist. "My plan is to offset materialism with modern science, by exploiting the economic potential of antimatter, which is the physical opposite of anything made with atoms, from luxury condos to private jets."
The bank will serve as a hub for antimatter transactions worldwide, eventually financing
the building of antimatter infrastructure and providing the public with a full range of
investment opportunities. "But our first order of business will be printing money," says
Mr. Keats. "Cash is the foundation of any economy, and an anti-economy is no
Issued in three convenient denominations, ranging from 10,000 positrons to 1,000,000
positrons, and initially trading at an exchange rate of $10 to $1,000, the anti-money will
be backed by antimatter stored in the bank's vault. Because matter and antimatter
annihilate each other on contact, antimatter positrons will be continuously produced on
location by decay of the radioactive isotope potassium-40.
Today is the launch of my new novel, Makers, a book about people who hack hardware, business-models, and living arrangements to discover ways of staying alive and happy even when the economy is falling down the toilet.
Image above: an example of what those happy blue bailout bubbles look like, bouncing about on the thoroughly bailed-out streets of Washington, DC. My only criticism so far (I haven't tried the apps): instead of blue circles as representational icons, the designers really should have chosen taxpayers' tears. Snip:
Layar is an application that overlays your view of the real world with waypoints representing your favorite coffee place, the movie theatre you're trying to find, or in this case, where some of that $787 billion from the American Recovery and Reinvestment Act is going. If you have an iPhone 3GS or Android device you can install the Layar app for free and then search for "recovery" or "sunlight" within Layar to find this layer. The layer works best near large cities where you are most likely to find recovery contracts.
Over at The Awl, there's a total bummer infographic showing circulation data for major American newspapers going back to 1990.
Spoiler: the lines look like steep cliffs. You can almost see the shuddering clusters of journalists at the edge being pushed over to a most splattery demise by the invisible hand of the market.
Adam Greenfield's "Breathe Deep and Let Go of Things" tee is a nice variant on the classic WWII "Keep Calm and Carry On" posters that crowded graced England's streets during the Blitz (by contrast, today's posters warning you that the man next to you on the bus is probably a terrorist and inviting you to go through your neighbours' trash-cans looking for evidence of bomb-making might as well read, "When in trouble/or in doubt/run in circles/scream and shout").
Philip Greenspun explains how Wall Street makes billions -- by bilking taxpayers.
Because of the Collapse of 2008 financial reforms, the big investment banks are able to borrow money from the U.S. government at 0 percent interest. Then they can turn around and buy short-term bonds that pay 2 or 3 percent annual interest. Now they’re making 2 percent on whatever they borrowed. They can use leverage to increase this number, by pledging some of the bonds that they’ve already bought as collateral on additional bonds.
"Computational Complexity and Information Asymmetry in Financial Products," a new paper by Princeton computer scientists and economists Sanjeev Arora, Boaz Barak, Markus Brunnermeier, and Rong Ge suggests that complex financial derivatives are computationally intractable: that is, once you have mixed together a bunch of weird-ass securities and derivatives, you literally can't tell if the resulting security is being tampered with as it pays off (or doesn't). Freedom to Tinker's Andrew Appel likens it to cryptography: you can mix together a bunch of known quantities to get a new number that can't be turned back into the old numbers.
The paper shows the example of a high-volume seller who builds 1000 CDOs from 1000 assert-classes of home mortages. Suppose the seller knows that a few of those asset classes are "lemons" that won't pay off. The seller is supposed to randomly distribute the asset classes into the CDOs; this minimizes the risk for the buyer, because there's only a small chance that any one CDO has more than a few lemons. But the seller can "tamper" with the CDOs by putting most of the lemons in just a few of the CDOs. This has an enormous effect on the senior tranches of those tampered CDOs.
In principle, an alert buyer can detect tampering even if he doesn't know which asset classes are the lemons: he simply examines all 1000 CDOs and looks for a suspicious overrepresentation of some of the asset classes in some of the CDOs. What Arora et al. show is that is an NP-complete problem ("densest subgraph"). This problem is believed to be computationally intractable; thus, even the most alert buyer can't have enough computational power to do the analysis.
Arora et al. show it's even worse than that: even after the buyer has lost a lot of money (because enough mortgages defaulted to devalue his "senior tranche"), he can't prove that that tampering occurred: he can't prove that the distribution of lemons wasn't random. This makes it hard to get recourse in court; it also makes it hard to regulate CDOs.
The US airlines that created the largest, most redonkulous and abusive fees this year lost the most money last quarter. Airlines with low or no fees lost the least.
Accountants have rigged the system. They create a stream to track the ancillary revenue from fees and they look like heroes when they can report they earned the airline millions of dollars of "new" revenue. But ask them if they can track the revenue we lose because passengers booked away or chose not to fly and they look at you like you have nine heads...
To celebrate the victory of fees over profit, several airlines used their first-quarter reporting to add still more ancillary revenue initiatives:
+ Delta Air Lines, which lost $693 million in the first quarter and suffered a 15 percent decline in revenue, will now charge you $50 if you check a second bag on an international flight.
+ Alaska Airlines will charge a first-bag fee of $15 on domestic flights.
+ US Airways is raising its checked-bag fees by $5 each if you don't prepay on the Web.