Money for the Sake of Our Families

We work hard to take care of our families, and we are paid with money, not gold coins or bushels of soybeans.  Most of us work at a job to earn our money.  I have friends who have lost their jobs due to our bad economy.  I have friends who have been hit with a 20% furlough from the Federal sequestration action.  And I think everyone is waiting for the economy to improve.  We are still in tough times.

We need to watch out for the economy getting worse instead of better, and there are a few things we can do to keep our economic recovery on track:  (1) we can understand the threats to our economy and (2) we can write our representatives, encouraging them to take prudent action.

The Federal Reserve Did Nothing to Prevent the Subprime Mortgage Meltdown

A recent newspaper article in the New York Times said that Ben Bernanke and the Federal Reserve did not know the subprime mortgage industry was going to collapse; supposedly, they were as surprised as everyone else.  The American people learned of the collapse of the sub-prime market when Lehman Brothers went bankrupt in 2008.  But in 2007 Edward Gramlich published "Subprime Mortgages, America's Latest Boom and Bust."  Dr. Gramlich had previously been a member of the Board of Governors of the Federal Reserve System and he knew the subprime mortgage market had gone bust, publishing a book about it a year before Lehman Brothers collapsed.

Early in 2007, Fabrice Tourre at Goldman Sachs was selling the Abacus 2007-AC1 CDO, a collection of mortgages assembled by John Paulson that he was betting would fail.  John Paulson made billions of dollars short selling subprime mortgages in 2007.  The Federal Reserve and the U.S. Treasury Department have some of the best information available on the American economy.  They knew the subprime market was collapsing and did nothing about it because there were people making money as the economy went down by short selling.

We are Not Out of the Woods Yet

Lehman Brothers collapsed five years ago, but Adam Davidson in "Did We Waste a Crisis?" (New York Times Magazine, August 11, 2013) reports that it is still hard to determine if the financial industry is healthy.  On top of a shaky financial system the Federal Reserve has been pumping money into the world economy using a program called Quantitative Easing.  The problems with the Fed's program are that (1) it puts the value of our money (yours and mine) at risk of dilution and inflation, (2) it creates asset bubbles that can burst, leading to another down turn, and (3) the big banks borrow the money and invest it outside of America, so we taxpayers take risk but get no reward.

The value of the Indian Rupee nose-dived recently on the fear that the U.S. Federal Reserve would cut back on its quantitative easing:  the fear that money from the Fed would quit flowing into India.

The American Interest, January 2012, pages 5 to 12, has the article, "The Death of Money" by Peter Hartcher.  On page 12 he writes, "Even though some members of the Fed itself aren't sure that hyper-liquidity will restore the U.S. economy to health, there's one thing we can be pretty confident of:  America and the rest of the world will pay a price for it.  If recent history is any guide, hyper-liquidity will lead to another bust in asset prices and another downturn in the economy."

If the Federal Reserve Makes Mistakes, You and I Pay the Price

Ben Bernanke, the Fed chairman, launched the quantitative easing program at the Fed, but has not wound it down.  Maybe he has the talent and skills to turn on and then turn off the money spigot without causing harm, but he is retiring from the Fed and will not be there to wind down the money flow. If the wind-down goes wrong then the value of our savings and our income can diminish and put us all in a financial bind.  We work hard for our money, but it is the big shots in Washington and New York that roll the dice with our life savings.

The next chairman of the Federal Reserve could really hurt us.  One of the leading candidates for the position is Larry Summers, the consummate insider.  If he becomes chairman of the Fed, he will not be an objective college professor like Ben Bernanke.  Dr. Bernanke taught at Stanford and Princeton.  Larry Summers has received between 7 million and 30 million dollars from various Wall Street firms.  It is my opinion that he cannot be trusted to regulate the institutions that have enriched him.

You should form your own opinion of Larry Summers.  The New York Times on Sunday August 11, 2013, had a cover story on Larry Summers:  "The Fed, Lawrence Summers, and Money" by Louise Story and Annie Lowrey.  This is one source for your reading.

What Can We Do?

I have already contacted my senators about the next Federal Reserve chairman.  The next chairman could wipe out your life savings.  I encourage you to form an opinion about Larry Summers and share that opinion with your senators.

The firewall between investment banks and federally insured deposits was removed when Senator Phil Gramm repealed the Glass-Steagall Act.  The banking system will not be safe until a form of Glass-Steagall is put back in place.  Senators John McCain and Elizabeth Warren, along with others, have sponsored the 21st Century Glass-Steagall Act.  I have contacted my senators to share my opinion on this legislation, and I encourage you to do so as well.

The money we use for the sake of our families is not safe.  If the value of our currency collapses, it will be too late for us to act.  Now is the time to act.  I encourage you act now and email or write your representatives.

Thank you,
Robert

Your Child a Millionaire

Your child or grandchild can become a millionaire.  Software is the best way for young people to get rich.  Everyone has heard of Mark Zuckerberg and Facebook, but he is not alone.  David Karp started programming as a teenager and got rich as a young man.  Nick D'Aloisio became a millionaire while still a teenager with his product, Summly.  We will consider David Karp and Nick D'Aloisio in just a minute.  First, let us discuss the child prodigy.

There are fields where the child prodigy can exceed the capabilities of mature adults.  These fields include mathematics, where Carl Friedrich Gauss and Blaise Pascal were child prodigies, music, where Mozart was one of many prodigies, and chess, where Sammy Reshevsky is a fine example of a child prodigy.  I believe that computer programming has enough in common with mathematics, music, and chess that we should have wunderkind programmers.  Perhaps there are wunderkind programmers and we have not heard about them. Perhaps if enough young people are exposed to computer programming at a younger age, then the wunderkinds would start to appear. Are David Karp and Nick D'Aloisio programming wunderkinds?
 

David Karp at Tumblr

David Karp was a teenager when his parents decided he could drop out of school and focus on computer programming.  You might have heard of Tumblr, the product he developed that made him a millionaire.  If you are unfamilar with Tumlr, check out this website, McKayla Is Not Impressed: http://mckaylaisnotimpressed.tumblr.com/

Tumblr is a blogging website, not unlike this Blogger website, although Tumblr seems more oriented towards posting photos than posting articles.  Tumblr was purchased by Yahoo and David Karp's take is estimated at $250 million.  That is as much money as Mitt Romney made at Bain Capital, a private equity investment firm, after a lifetime of work and a Harvard MBA. David Karp is just 27 and dropped out of high school.

Here are two articles about David Karp.
Before Tumblr, Founder Made Mom Proud. He Quit School
By JENNA WORTHAM and NICK BILTON, New York Times

Weekend Confidential: David Karp
by ALEXANDRA WOLFE, Wall Street Journal

Nick D'Aloisio at Summly

Nick D'Aloisio started programming at age 12.  At age 15 he started working on a a newsreader app, Summly, which he sold to Yahoo for an undisclosed amount, estimated to be in the tens of millions range.  At age 17 Nick is estimated to be worth millions of dollars.  He had help from SRI International, a California think tank, in developing algorithms for summarizing articles.  His product is more sophisticated than Tumblr, and he had a number of investors, so he has to share the money.  The moral of this story is that complex products are not necessarily more profitable than simple products, like Tumblr.

Here is an article about Nick D'Aloisio and Summly from the Wall Street Journal Online:
At 17, App Builder Rockets to Riches From Yahoo Deal
by AMIR EFRATI

A Blog to Assist You

If your child is interested in computer programming, he or she might hit it big and become a millionaire.  If your child is interested in computer programming, I have started an entire blog to assist you.

Canright on Software and Programming
http://canrightonsoftwareandprogramming.blogspot.com/


Good for Your Child, Good for Texas

Developing a greater supply of computer programmers is good for Texas.  I have described the importance of software and the supply of programmers in these posts:

The Texas Software Initiative  Thursday, January 3, 2013

The Texas Young Programmers Project  Friday, January 4, 2013


If your child is interested in computer programming, do not discourage him.  There are many paths and many resources for a person to pursue programming at a young age.  It is not unusual for programmers to start while they are teenagers or younger.

Robert Canright

The Importance of Sound Leadership

The entire world economy went into a tailspin in the financial meltdown of 2008.  The meltdown was not an accident.  It was not a normal business cycle.  It was a failure of leadership and it was avoidable.  The failure was not isolated to 2007-2008.  In 2011 the company MF Global Holdings failed under the leadership of Jon Corzine.  Since Mr. Corzine had previously been CEO of Goldman Sachs, U.S. Senator for New Jersey, and Governor of New Jersey, you would think he would have been a success at MF Global.  But former FBI Director Louis Freeh accused Mr. Corzine  of "acts and omissions" over several months that were "grossly negligent" and a "breach of fiduciary duty" that led to the company's collapse in a 61 page lawsuit (Corzine Sued Over Collapse by AARON LUCCHETTI, JULIE STEINBERG and JACQUELINE PALANK, Wall Street Journal, April 24, 2013).  Bad leadership led to the 2008 meltdown, just as bad leadership led to American failure in Vietnam.

American leadership is dragging our country down, but we can do something about it.  We can quit accepting failure.  We can recognize the fruits of bad leadership and reject bad leadership, and keep rejecting bad leadership.  The old school board put Plano schools into decline so that our neighbors (Richardson, Frisco, and Allen) all had better academic results in their schools.  But we saw the problems and voted out the old board that was up for re-election.  Now it is time to vote out what is left of the old board and support those members of the new board who are up for re-election.

As Thomas Jefferson said, "Eternal vigilance is the price of liberty."

Please join me in voting for these wonderful people who are running for the Plano ISD Board of Trustees.  Our children deserve the very best!


     TAMMY RICHARDS – PISD Place 1
     PAUL KAMINSKY – PISD Place 2
     NANCY HUMPHREY – PISD Place 3
     MARILYN HINTON – PISD Place 6
     STEVEN KRAVIT – PISD Place 7

Early voting has already started.  Here is a link to early voting schedules and locations.  Please ask your friends to join us in voting for sound leadership.

Robert Canright

School Board Election is on the Way

Plano ISD school board elections are now held every 2 years.  This year is an election year for the school board.  This year the positions up for re-election are Places 1, 2, 3, 6 and 7.  The positions on the board are called "Places."  Here are the election choices:

Place1
Tammy Richards (incumbent)
Tammy Hooker

Place 2
Paul P. Kaminsky
Allison Johnston
Carrolyn Moebius (incumbent)
Mark Hanna

Place 3    
John Caldwell
Nancy C. Humphrey (incumbent)

Place 6    
Patty Harris
Marilyn Hinton (incumbent)
Yoram Solomon

Place 7    
Missy Bender (incumbent)
Steven Kravit

Election day is  May 11.  I hope you follow the campaigns and vote in the PISD election.  Parental involvement is important for successful school districts.  You get to vote for all 5 Places.

Robert Canright

College Loans

Teaching our kids about debt is an important lesson we can provide them.  It is especially important that we coach our kids about college loans.  The laws were changed so that kids cannot shed college loans.  Heavy debt can follow a child throughout his life.  I remember reading one story of a lady who went through college and medical school on borrowed money and would not be free of college debt until she was in her 70's.  She said she would never be able to buy a house.  I did not save that article, but the theme is still around, as described in Student Loans: Debt for Life By Peter Coy, September 18, 2012 Businessweek.

Debt is dangerous and we need to inform and guide our children through the process of borrowing for college.  The truly wealthy can pay for college out of their regular cash flow, but even families with incomes in the top 5 percent cannot do that.  There is a huge difference between the top 5 percent and the top 1 percent.  Google for the Wall Street Journal article College Debt Hits Well-Off By RUTH SIMON and ROB BARRY, August 9, 2012 and you can read how the upper middle class is being squeezed out of the top tier schools by high tuition costs.  The financially astute can tell when the cost is excessive.

People in the middle income ranges sometimes cannot understand the consequences of the college loans made available to them and end up being crushed by the debt, as described in To Pay Off Loans, Grads Put Off Marriage, Children by SUE SHELLENBARGER, Wall Street Journal, April 17, 2012.  You need to Google for this article.

The poor often cannot understand the consequences of large college loans and are also crushed by heavy debt, as described in For Poor, Leap to College Often Ends in a Hard Fall by JASON DePARLE, New York Times, Sunday December 23, 2012, pages 1, 28, and 29.  (You can read it online by Googling for it.)  In this story, an expensive private college tells a poor student that she would be provided with enough grants and financial aid to put this private college within her reach.  But then the process of financial aid was too complicated for the poor girl and by bungling the financial aid process she ended up with large loans instead of large grants.  Three girls are profiled in this in-depth article.

We need to explain to our children how much debt they can afford to incur for college and to steer them towards good interest rates and safe loan programs.  There are a lot of bad loans looking for suckers.  It is heartbreaking to read about the plight of the poor and the uninformed.  And our children will be uninformed if we do not help them through the process.

Robert

PS: An explanation of why college tuition has sky-rocketed can be found in Deans List: Hiring Spree Fattens College Bureaucracy - And Tuition by By DOUGLAS BELKIN and SCOTT THURM, Wall Street Journal, December 29, 2012, pages A1 and A10. You can read this article by Googling for it.  The online date is usually a day earlier than the newspaper date.  The gist of this article is that colleges have hired hoards of highly paid managers.

Microsoft Mathematics Instead of MATLAB

I tried to buy a student version of MATLAB for my son, but could not.  You have to go through a sales department and that process did not work when I tried it.  Maybe that company is not interested in single item sales of student versions.

Microsoft Mathematics is available for a free download.  You might want to google for the download site. Here is the URL for today:  http://www.microsoft.com/en-us/download/details.aspx?id=15702

You will want to read the system requirements. Microsoft Mathematics is nice.  You can help with math without having to learn to use your child's calculator, or to borrow it, or to look around for it. Microsoft Math will do linear algebra and solve equations.  Here is a review of it on the internet: http://www.remo-knops.com/review/microsoft-mathematics-4/

Here is a screen shot of the equation solver with an equation input:

Next, you hit the solve button.  This tool solves for x automatically.  You have to click next on the link that says "solve for y."

Next, you can click on the link that says "plot this equation in 2D."

Now you have the graph, but the equations seem to be gone.  They are still available on the "Worksheet" tab, to the left of the "Graphing" tab.  If your child is doing a science project, the graph can be exported as a picture file (I chose JPEG):

It is not a pretty graph for reports, but it is free and I don't believe you can export graphs to a computer from a handheld calculator.  I think if you want pretty graphs for reports, you will want a different tool.

Microsoft Mathematics is a nice tool to use for education, and you cannot beat the price.

Robert

Where Can Our Children Go?

If there are not enough jobs in Texas for our children, where can they go to find employment?  If the rest of America is in no better shape than Texas, do they have to leave America?  The economy all around the world is in bad shape, so if our children have to leave America to find employment, where can they go?

I have read that engineers from Spain are finding work in Germany.  Perhaps our children who are trained in engineering and computers can find work in Europe.  I have heard that in America McDonald's pays higher wages to their managers than trained machinists can make running numerically controlled machines.  American companies have given up on manufacturing, but some of the European countries have not.  Where in Europe can our children go?  Certainly not Greece or Spain.  Maybe Germany, or maybe the Scandinavian countries:  Norway, Sweden, Denmark, and Finland.

Norway is prosperous according to the Wall Street Journal article, They All Scream for Edvard Munch, but Oslo Can't Satisfy Demand by Saleha Mohsin, November 28, 2012, page A1.  Yet it seems that Norway is the most expensive country to live in  amongst the Scandinavians.  Sweden is much more affordable according to  Scandinavian On $125 a Day by Seth Kugel, New York Times, Sunday December 2, 2012.  Unfortunately, there is a lot of unemployment in Sweden, as described in the Wall Street Journal, Saturday December 22, 2012, p. A10, Jobless Swedes Heed Call From Booming Norway by Charles Duxbury and Kjetil Malkenes Hovland.

England is not a place for our children.  The English are moving out, as described in the book Time to Emigrate? by George Walden, one of whose children left Great Britain for Canada.  Australia and New Zealand might have opportunities for our children if they have the skills that are sought.  I did read of a skilled welder who left America and did well in Australia, although it did take years to get the paperwork approved to emigrate to Australia.

Technically, the American welder is a boilermaker.  You can read about his experiences by googling for this Wall Street Journal article: American Fills a Jobs Shortage in the Aussie Outback by JOHN W. MILLER, October 23, 2012

Of course, the best recourse is to provide good opportunities here in Texas for our children, which is why I have started the Texas Ascendant Campaign.  We need to work together to help our children have a prosperous future in America, in Texas.

Robert Canright

Follow-up:
The December 8, 2013 Wall Street Journal ran an article called, "A Move to New Zealand" by Susanne Ames (p. R7).  The on-line version is entitled "A New Life in New Zealand."  You can read the article by Googling on the title an author..  Don't ask my why the same article has two titles (print and on-line).  Ms. Susanne Ames moved to New Zealand from Washington state and enjoys life in Wellington, New Zealand.

The Tuesday February 11, 2014  Wall Street Journal ran an article called, "Badly Raised Kids? Sweden has a Word for That" by Jens Hansegard.  You can read it by using Google to find it.  The online edition of WSJ has a slightly different title:  "Is Sweden Raising a Generation of Brats?" by Jens Hansegard.  This article says that Sweden is a bad country to raise a family because the government has undermined the authority of parents and teachers.  So Sweden might be a fine country to work in, but you would not want to settle there to raise a family.