stress tests

Let's all rejoice now that our financial system has passed the stress test. Sure the bigger banks need some more money, but fundamentally -whatever that means in this context- they are fine. Unlike the auto-industry, my friends, our banks are essentially well-run businesses led by the best and the brightest our country (aka the world) has to offer. That is why we keep on paying them these huge bonuses. Because, god forbid, what would happen if they ran away? Where would that leave us?

Let me make two observations: the banks and financial institutions caused this crisis. It wasn't the government that said the banks were wrong, it was the market. The "free" market, in case you wonder. Fraud, misbehavior and in general irresponsible management practices got us in this mess. All the while, those same bankers paid themselves huge salaries and bonuses and they threw lavish parties. They still do.

Yet for all their bad behavior the banks were hardly chastised. Even when they continued to pay themselves exorbitant bonuses, the government did not intervene. The Obama camp continued to give them funds and they are planning to give them more. The Obama camp even sat down with them to prepare a stress test. Just like your teacher sat down with you in high school and told you the answers to your exams? Oops got that wrong!

Now take the car makers. The car makers were badly run for sure. They were in trouble. Yet look at how the government responded to them. Obama fired the CEO of GM. He is prepared to let the auto makers go bankrupt. He is withholding funds and beating up auto makers and their unions to renegotiate contracts. The UAW, unlike the Wall Street Bankers has to make concessions. And in this case we are not talking about paying back some undeserved bonuses. We are talking about people forgoing cost of living increases, health care and their retirement benefits. Of course these people are not the geniuses that we need to keep around to run our economy!

You think this is fair? You think this shows leadership in Washington?

Take a look at the donor lists for the presidential campaign. Look at the donor list for Congressional campaigns. Who paid for the lavish parties and the "historic" inauguration of our new president? Are you surprised at what is happening?

Unfortunately it doesn't stop there. By failing to intervene and fix the banking system, our government has all but assured that the crisis will continue. Maybe not immediately so, as the financial wizards can surely cook up another bubble of prosperity. But it won't last. At some point we will have to pay the piper. And the longer we wait the more we will have to pay.

Right now we are seeing the money bubble. Instead of building, we are printing.

The government is printing money at an ever increasing rate. Money that is essentially promissory notes. Ever wonder what will happen when people no longer want all that paper? When people suddenly lose trust? You think it can't happen? Remember how housing prices could never go down either? Think again (and buy some gold. You may need it to buy food one day).

follow the money and other tales

Those looking for change may be in for a surprise. If Barack Obama wins, which now seems all but certain, his successful fundraising may come to haunt his presidency. According to the latest numbers, Obama has raised well over $650 million and that is more than any other presidential candidate ever. And no, these are not the little $25 contributions coming in over the internet, as the party would want you to believe.

Fully three-quarters of Obama's fundraising is big money donations. Big, big money. The type of big money that is looking for favors. And who is there you may ask? How about those investment bankers in need of a government bailout and in fear of more regulation? Some of the people who got Wall Street into trouble may be advising McCain, but the people running those banks, the "greedy Wall Street bankers" are the ones filling Obama's coffers. Those same bankers were more than a little bit ticked off at McCain's language of late.

The GOP depends on two constituencies that have little in common: the fundamentalist christians, and the superrich elite. The elite provides the money, while the christians make up the bodies. McCain may be a maverick but he should know better than antagonize the money men. Sarah maybe delivering the christians but without the money it won't matter much. Those money men have already run over to the other side. They weren't too thrilled with all the talk about "cleaning out Wall Street."

What that also means is that Obama may soon do a Bill Clinton on that tax break for the middle class that will be funded by milking the superrich. We have heard all these promises before. All that talk about change is nothing new. The only thing that ever changes is the "face" in the White House. As I have indicated before, that face is just a face. An actor or puppet, beholden to the puppeteers who hold the money strings. It appears this will soon be more true than ever. $$$

money and happiness

Often people wonder if money can buy happiness. Most people I think would say yes, although some may qualify their answer a bit. Yes is definitely the answer a consumer society favors. Furthermore, consumer societies work hard to instill this "value" into their citizens. The more time these citizens spend pursuing money and wealth, the more the overall economy and hence the collective power grows. And societies are often ruled by those with an unhealthy appetite for power. 

Unfortunately, we all know that the answer to money and happiness is not as simple as that. There are very many rich but distinctly unhappy people. And the happiest nation on earth is not the richest, although it is clearly a first world country -the current winner is Denmark, but Norway, Switzerland, and others have also won the title in recent memory.

Which brings us to a minority of "hard core" people who will tell you they firmly believe that money does not buy happiness. That is of course easy to say when one lives in a wealthy country where all basic needs are taken care of. One only needs to imagine transporting these happy people to some of the more destitute areas on the planet to see that their beliefs are problematic. A few would merely need to be transported out of their protected neighborhoods to make the same point.

In comes the "yes, but" view. A qualified view that claims a certain amount of wealth or money is needed to take care of basic needs. Any money beyond that does not correlate with happiness these folks would argue. That begs the question, what is a basic need? Are cellphones and cars basic needs? Or is it just limited to food and shelter? If so, does food include restaurant meals and does shelter mean a 4,000 sq ft home? 

It occurred to me that the answer is rather simple. "Can money buy happiness?" is an ill-posed question. Money and happiness have some relationship but it is not a linear or even a smoothly evolving one. It isn't even a fixed one that holds across all societies and time periods. And it certainly is not a causal relationship. "Can money buy happiness" is simply the wrong question to ask. There is no good answer for it. Sometimes it does and sometimes it doesn't.

Psychological studies have show that two factors are key to happiness. One is the perception of being in control of one's life and destiny. The more people feel in control, the happier they tend to be. Events beyond anyone's control, so-called "acts of god" definitely play a role in happiness. If fate hits it can put a pronounced damper on one's enthusiasm.

Surveys in Money magazine consistently find that biologists are among the happiest professions, even though their compensation is low, and few biologists are rich. However, as anyone who is familiar with the current situation in academic biology will tell you, biologists are in charge of their careers. They can run their labs like despots if they like. They answer to nobody -within reason of course. They don't have to collaborate unless they desire to do so. They are free to pursue their interests. In short, unlike many other scientists or the majority of employed workers, biologists have nearly absolute control of their little kingdom. And that makes for happy people.

The second factor is perceived success within a peer group. Humans compare their success with that of their peers. That is why we always want to keep up with the Joneses, or do better than the neighbors. We judge our success based on what we perceive in others. But not just any others. We can be quite picky when it comes to selecting peers. And we can also be quite selective when it comes to measures of success. So your neighbor may outdo you in having a fancier car, or a bigger house, but you feel you have better behaved children. Or children that do better in school. Or a better looking partner. Or a nicer yard. Or you may beat the neighbor in a race.

Success and control over one's destiny are closely related. They are but aspects of a single core value. A value that judges how well you are doing compared to others. These are universal correlates of happiness and they have nothing to do with money or wealth per se. Although, in a first world society, there can be some correlation.

As would be expected there is a spread around a mean for these values. A few people grow very obsessed with power and the size of their peer group. They want power over everything. A similarly small group care very little for power and are happy to bob around on the current and ignore most others. Some have a very small and select peer group, while others try to outdo everyone they bump into in one way or another. Some have many interests and can find many ways to achieve success, while others are dead-set and focused on one item, eg. money, partners, cars, etc.

And as is often the case in biology, the ones in the middle are doing best. They are the happiest of all.