Posted by: Travis | March 5, 2009

An engineer’s musings on the economy, bailouts……..and PIZZA (and wine)!

Please keep in mind that I took a took a total of 2 semesters of economics in high school and college, so take everything i say about economics with a grain of salt.

I’m a big proponent of the idea that before you judge someone’s position on an issue, you should walk a mile in their shoes (that way, if you still disagree at least you’ll be a mile away and you’ll have their shoes!). For the most part, people tend to think logically on most issues, so a little bit of work figuring out where they’re coming from goes a long way to having a debate that doesn’t devolve into a shouting match where no one is actually listening to anyone else. In the polarized political climate that we’ve been building for at least the last 15 years, liberals and conservatives want us to think that all issues are black and white and that there is a right and a wrong position on every issue. But the reality is actually quite the opposite. Most issues are complex and nuanced, with shades of gray rather than a line between black and white. A person’s cultural back ground, life experiences, job, values passed to them from their parents, education, socioeconomic status, and both the environment in which they currently live and the one they grew up in, all combine to dictate how a person comes feels about the issues (is this a magazine?) or reacts to current events.

Up until this point i haven’t really commented on the continuing nose dive of our economy, the first round of bailouts for banks, bailouts for the ‘Big 3’ automakers, the second round of bank bailouts, Obama’s housing bill, or any of the other stuff. It’s not that i didn’t care, or think it was irrelevant, quite the contrary, it’s that i was still chewing on it. After much thought, i’ve decided that most of these bailouts are necessary and best for the country as a whole, but they should happen with many more contingencies than they have.  But don’t worry, I’m still in the ‘mad as hell’ camp.

While my first reaction was certainly of the ‘screw these greedy assholes, let their companies fail!’ variety, after a few days the emotions calmed down and rationality set in. I realized that these guys (both in banking and autos) have already made their money from their reckless decisions. While it feels like not bailing out their companies will punish them for their actions, the reality is that no matter what happens, most of these guys are going to be fine and continue to live the disgustingly wealthy lifestyle, whether these leaches on our society continue to work for their current company, find a job with another company, or decide not to work again. The unforeseen consequence of allowing their company to fail (especially with the auto makers) is that the hundreds of thousands of people with lower level positions for these companies, who are already stretching pretty hard, are going to be pushed off the edge, and all they did was what their manager told them to do. The whole bailout situation is really a catch-22. No matter what happens, the higher ups who were responsible for all this crap are going to get off without much more than a slap on the wrist, while the people who had no part in the decision making get screwed.Then, the rest of us have to suffer through an economy where the country’s biggest companies are falling like flies.

While a bailout sucks because it rewards ridiculous behavior, right now i think it’s our best option. However, the government should attach some pretty serious strings to the bailout. Whether that includes wiping out current management, introducing salary caps to bailed out companies, or even clawing back paid wages, i feel this is the best way to punish the people responsible for all of this. For the initial bailout some of these things were discussed, but most of them weren’t done because the banks getting bailed out wouldn’t agree to the terms. What? When you’re asking for money, you don’t have leverage. Banks should know this. If they don’t agree to the terms, then don’t accept the bail out money.

For the most part, the same goes for Obama’s housing bill. Yes, there were some people who irresponsibly borrowed more than they could afford, who were gullible enough to get tricked into believing that they could afford the house of their dreams. And yes, there were people who offered adjustable rate mortgages to people they knew full well couldn’t afford them. Both groups will likely get off without fully having to see the consequences of their actions under Obama’s plan. Sure it is unfair to those who were responsible with how much they borrowed for their home and have stayed on top of their payments. But housing prices are in free fall. Some of the homes Rachel and i have looked at in our area are worth less than half what they were two years ago. The government needs to do what it can to stop home prices from dropping further without creating another bubble. Just like the bailout, Obama’s plan has been the best proposed option.

I’ve got another idea though. What if the government loaned people money to subsidize their payments, thus lowering their monthly payments, but keeping the money the bank gets to the amount both parties originally agreed upon. Once the loan is paid off to the bank, the individual continues to make the same monthly payments, except now instead of paying back the bank for the mortgage, they are paying the government back for the loan they got to subsidize their mortgage payments. This way the bank gets all of its money on time, borrowers lower their monthly payment and extend the term of their loan, but they are still responsible for the full amount that they borrowed, and the government only gets to loan money instead of giving it away. Everybody wins and it is about as fair for people who acted responsibly as possible.

Pizza…i mean calzone

I’m a big fan of pizza. It’s one of those things that’s so simple, but so complex. And when made with whole wheat crust, low fat cheese and fresh veggies, it doesn’t fall into the ‘healthy’ category, but it isn’t far off. It certainly helps that you can buy whole wheat pizza dough from Trader Joe’s that’s really tasty. Last night Rachel and i were planning to make just such a pizza. I pulled the dough from the fridge to let it warm up before i started working it and noticed it was especially sticky. After about 30 minutes and went back to the kitchen and started working out the dough with very little success. After about 15 minutes at war i finally rolled it out on our pizza peel and loaded with delicious toppings. However, in my attempt to transfer the pizza from the peel to the stone in the oven, the pizza decided to hold onto the peel for dear life. The whole transition ruined the pizza, and after a few out of character f-bombs were dropped, i was ready to give up and order a pizza. Luckily Rachel came running to the rescue and came up with the idea of tuning the pizza in on itself and making it into a calzone. I was skeptical but agreed since the alternative was to toss the whole thing. Turned out pretty damn good, though i think i would have liked the pizza just a bit better.

Wine Report!

In response to the EPIC FAIL that was our pizza making adventure, i decided it was time to crack one of our new bottles of wine. Since our calzone wasn’t particularly hearty (whole wheat crust, cheese, mushrooms, pepperoni, and basil) and i was trying to stretch the bottle for tonight’s dinner of pasta, we decided on a light, old world red wine, the 2005 Campo Viejo Rioja Crianza (Spain, $7 at BevMo). It was a good choice. It had much more of a reserved, complex, old school, like it or leave it flavor from old Europe to it (this wine was sooo Spain)  in contrast to the flamboyant, punch you in the face flavor of some of the cheaper California wines have. This one is definitely a keeper. Even though we ate it with pizza, the book recommends it with duck or lamb, i might just have to buy another bottle and cook up Batali’s duck ragout recipe that i like so much.

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Responses

  1. Campo Viejo is one of my favorite red wines for under $10. I like LAN Rioja Crianza a little more, but it also costs a few dollars more.

    • LAN was actually my first choice, but BevMo didn’t have it. Guess i’ll have to look elsewhere. Campo Viejo was damn good though.


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