Benny and his friend Griffin at Ocean Beach in San Francisco.

Tuesday, June 30, 2009

Paycheck Liberation Day

Today is a day I've been dreaming of for nearly two years, since September 2007 when I wrote my first astonishingly large check to Benny's Dinosaur Preschool.

I am forever grateful to this amazing school. Those teachers have pretty much raised Benny during the week after I returned to newspaper work. This year it received 80 applications for a handful of spots for the 2009-2010 year. But it wasn't cheap. For two years, my first paycheck of each month has been the Dinosaur School paycheck. This year, the amount of that paycheck and the amount of monthly tuition has been eerily similar.

Until today.

Today I received my June 30 paycheck and clutched it to my chest, resisting the impulse to shout "Mine! All mine!" For last month's tuition payment was our last. Our security deposit will pay the July tuition and this August Benny starts attending public school.

I never thought we'd make it. Now I know how parents feel after they put a kid through college. (What I've paid the Dinosaur School would finance two years at a pretty nice college.) I spent $250 we really didn't have on a personalized tile for the school's new mural. The tile will include our names and the dates Benny attended. I wish we could put the total dollar amount there too.

So what will we do with the extra money? My plans are pretty dull. First we'll go on a short vacation in August to Mt. Lassen Volcanic Park. Then I'll buy Benny back to school stuff and go on a (controlled, I hope) spending spree. Then we'll plump up our savings. We also plan to move to a larger apartment next year.


Friday, June 12, 2009

Clueless Business Timeline 2008

Sometimes families have a lot going on and don't notice the biggest economic events. We were no exception. I gathered a timeline of major financial events in 2007-2009 and added what my family was doing at the same time. My conclusion: yes, we really were that clueless.


Jan. 11
Bank of America agrees to acquire Countrywide Financial.
-- Christine begins negotiating with her mortgage lender to sell the house in Michigan.

March 16
JPMorgan Chase agrees to acquire Bear Stearns at firesale price.
-- A week later, Ron and Christine sell their house. Hooray!

July 11
Mortgage lender IndyMac Bank becomes the third-largest bank failure in U.S. history.
-- Ron, Christine and Benny live the small life. “We've downsized our lives so drastically in the last year that I still have relatives convinced we sleep on straw mats and eat off a blanket on the floor. At the moment we have a small apartment and that's it. No deck. No car. No playroom.”

Lehman Brothers files bankruptcy; Bank of America agrees to acquire Merrill Lynch. Government takes control of insurer AIG. WaMu files for bankruptcy.
-- Ron and Christine hardly notice; we’re booking school tours for the Great Kindergarten Search.

Sept. 17
The government seizes Fannie Mae and Freddie Mac.
-- Christine reads the Greek tragedy "Agamemnon" to boost her spirits.

Oct. 6
Dow closes below 10,000 for the first time since 2004.
-- -- Christine attends her newspaper’s Infrastructure Business Forum, still coping with the trauma from producing an infrastructure special section.

Oct. 9
AIG bailout #2.
-- Ron and Christine tour San Francisco elementary schools until they want to puke, until the very phrase “test scores” causes a PTSD reaction that involves excessive drooling and a fear of chalk. Who cares about AIG?

Nov. 10
AIG bailout #3.
--We buy Benny a snazzy TIE fighter toy and a little Imperial Engineer. Benny immediately sets the Engineer to chasing zebras on the African plains (seems a bit unsporting).

Automakers receive government aid.
-- We arrive in Detroit for the holidays. Merry Christmas!


Dow Closes below 7,000 for the first time since May 1, 1997.
-- Benny is assigned to Lucky Elementary School in San Francisco. What stock market collapse? It’s a great day!.

March 30
Rick Wagoner resigns from his role as GM CEO.
-- Benny and Christine wander about Cole Valley to celebrate Cesar Chavez Day. Now Wagoner has time to celebrate too.

April 3
Unemployment report shows 8.5% of Americans out of work.
-- A San Francisco mother posts on Christine's mother's group looking for a desk job with no commute, no deadlines, no demands, nobody actually depending on her ... one that she can do only when she feels like it, and presumably requires no capitalization. Good luck with that!

Hmm, perhaps we’re not the only ones who were a little clueless in this economy.

My Clueless Business Timeline 2007

In the frantic pace of everyday life, it’s easy to miss business events on a national or even global scale. Even a huge bankruptcy or plunge in the Dow can’t compete with unpacking moving boxes, rushing for the 43 bus or touring elementary schools.

Ron and I moved to San Francisco in July 2007, and even two business journalists like us failed to notice that this financial, professional and personal leap of faith was executed against a backdrop of economic collapse. Looking back, our sense of optimism was stunning, and surely had no basis in fact. We did notice the mortgage crisis – um, our house wasn’t selling – but there was still plenty of work in San Francisco, retail stores were packed with shoppers and San Francisco office space was reaching $100 per square foot (seems incredible now). We fretted about friends and family in Michigan —a state which never did get the full benefits of the most recent boom and was visibly sagging – but considered ourselves well out of it.

Like everyone else, we were simply too busy. Daily life requires some tunnel vision: you can’t remember to pack lunches and pay bills if you’re fretting over hedge funds at Bear Stearns or executive bonuses at AIG. I was too busy dealing with our own red ink to worry about Chrysler’s. I was tracking kindergarten tours in October 2008, not the Dow, which plunged below 10,000 that month.

Were we really that clueless? I didn’t want to believe that, so I gathered a timeline of major financial events in 2007-2009 and added what my family was doing at the same time. My conclusion: yes, we really were that clueless.


Bloomberg News reports on the linkage between increased foreclosures and localized housing price declines.
-- Benny’s wooden Thomas the Tank Engine trains go on recall. Ron leaves for San Francisco.

June 14
Bear Sterns spends $3.2 billion to bail out two ailing hedge funds that invested heavily in subprime assets.
-- Two weeks of single motherhood in Michigan — filled with packing, potty training and house showing — and Christine’s ready for a padded cell.

The Boston hedge fund that manages money for Harvard University’s endowment and the Massachusetts state pension fund loses half its value.
-- Ron, Christine and Benny arrive in San Francisco to start a new life there.

Oct. 17
U.S. Treasury Secretary Paulson calls the bursting housing bubble "the most significant risk to our economy."
-- Christine moans about her long to-do list. “I don't have a California driver's license. I can’t remember my new phone number. Benny's preschool needed a form filled out by a pediatrician, which required finding a pediatrician, making an appointment, finding the office, etc. Now I've finally got the damn form, but I keep forgetting to bring it to the school.”

The recession begins, although we don’t know it yet.


Tuesday, June 02, 2009

The Franco-Prussian War: Revenge of the Paper-Pushers

“The Franco-Prussian War” by Michael Howard

I’ll confess that when I opened this book, I knew very little about the Franco-Prussian War. I didn’t even know who won until I read the front flap. (“Darn, now I know the ending!”

The author, Michael Howard, would be appalled by this, of course. He wrote this book for serious history students who know all the players, read French and German fluently (1), and can find Staarbrucker on a map.

But despite the language barriers, the Franco-Prussian War fills a vital gap in history for me. I’ve spent some time with Napoleon I and Clausewitz and the Civil War generals, but then it’s a long dark night until Franz Ferdinand gets shot in Sarajevo in 1914.

So it’s time for the Franco-Prussian War, 1870-1871, between a barely united north Germany under Prince William and France under Napoleon III.

SPOILER ALERT: The Germans win.

In the 40 years following the Napoleonic Wars, Howard says, big armies supported by mobilized nations went right out of style. European governments were back to running little armies as a side hobby. The emerging middle class was more interested in making money than going to war.

“Everywhere armies languished in unpopular and impoverished isolation,’ Howard said.

Well, isn't that so sad. Poor, peaceful Europe.

That changed when Prince William took the Prussian throne in 1858. In a few short years he and his buddy Roon remodeled the army, created a North German Confederation and won some victories. The French also reformed their own military somewhat, creating a bigger army, but they didn’t account for the changes science and industry had made to war.

The Germans did. They realized that army commanders needed a good general staff now so they could split up their big armies and move them around. “The Prussian general staff acted as a nervous system animating the lumbering body of the army,” Howard said.

The French, on the other hand, “huddled together in masses without the technical ability to disperse.” They had a good breech-loading system, but terrible artillery. (2)

In effect, the Franco-Prussian conflict was the first Paper-Pushing War. Its outcome would depend on organization, not skill in leadership or courage in battle. Armies had to be in the right place, on time and in adequate strength. That certainly didn’t bode well for the French.

But in 1870, France felt fairly good about their reforms. They had nearly 500,000 soldiers available and could scrape up 300,000 more. They had tons of supplies.

“By the standards of its last campaigns, the French Army was ready,” said Howard. “It was the tragedy of the French Army, and of the French nation, that they did not realize in time that military organization had entered into an entirely new age.”


(1) The book's footnotes are filled with long quotes in French or German that probably begin “Ha ha, you monolingual Americans have no clue what’s going on here! Ha ha!” Not that I’m paranoid.

(2) Howard makes a little side joke about the artillery in French here. Apparently France’s minister of war just filed away reports about some great steel guns with the comment “Rien a fair.” I think that means “Nothing to do.”