I just finished reading The Big Short. It’s a story by Micheal Lewis chronicling the lesser known events that lead to the subprime mortgage meltdown, aka the second worst financial disaster in American history. Learning about the fraud that allowed Wall Street banks to go bankrupt was scary. Then learning that $360 billion in tax payer money was given to those same banks to pay off the debts they incurred as a direct result of their irresponsible behavior was infuriating. And then to learn that they used a good amount of that money to also pay themselves an average bonuses of half a million dollars per employee for mismanaging the firm while still getting paid by the US government really set me off.

However, none of it motivated me into action like learning that nothing has been put in place to prevent it from happening again.

Are we chumps?

The whole meltdown occurred is because middle-class and poor Americans were played like suckers. Predatory lending gave average Americans all of the rope they needed to hang themselves. Once droves of people defaulted on loans that banks knew they could never repay, then $700 billion was set aside to bail them out. But, that money was then diverted into the hands of the very criminals that bait and switched us out of our homes.

Why? Because we were too dumb to see it coming. Then we were powerless to direct the money into the hands of the people. And, in the wake of the events, few even realize today just how badly we got played.

We’re a bunch of chumps. Unless we wake up to what happened and apply the necessary pressure to make things right, we deserve our fate.

Quick recap of the subprime mortgage meltdown

If you haven’t had the chance to catch up on what happened, allow me to take a moment to explain things at a high level and in layman’s terms.

At the turn of the millennium, banks began lending money to people who couldn’t afford the loans. Wall Street did this because they were making a lot of money off of packaging a bunch of loans into a bond, which is a pool of loans. To fuel their greed for mortgage bonds, they needed more loans. To increase the amount of loans, they simply lowered their standards for approving loans. The only problem is that investors wouldn’t want to invest in bonds made out of crappy loans, so Wall Street pulled a fast one.

Bonds are made up of tiers of loans that are rated from best to worst. Wall Street took the crappiest loans from bonds and repackaged them into new bonds that would again be rated from best to worst. That means that loans originally rated as shit, now got rated as gold. And they did this over and over, which drove billions of dollars of investment in low quality loans because they tricked people into thinking they were high quality. To fuel the machine, they simply needed more crappy loans so they did things like give a $750,000 loan to a migrant farm worker with a $14,000 annual salary. The ticking time bomb eventually went off and resulted in a meltdown.

So what can we do about it?

There are some very simple measures we can put in place to prevent this kind of disaster from happening again. Here are four:

1. Strengthen predatory lending laws
Since the fuel for the doomsday machine was loaning money to people who couldn’t afford, we simply need to prevent that. Fixed.

2. Improve access to information for ratings firms
Moody’s and S&P are the two largest players that rate the quality of bonds. These ratings are what investors use to determine where to invest their money. The higher bonds are rated, the less risky they are considered and that increases people’s desire to invest in them. However, the meltdown happened because the ratings companies got the ratings wrong. That happened because they didn’t have enough access to information about the originating loans. In fact, the only data they had was “pool level” data. For example, instead of having the FICO scores for each loan in the pool, they only had the average for all loans in the pool. So, if the only data available to Moody’s and S&P is pool level data, then how are they supposed to rate things correctly?

The fix here is simple. Require trails back to the originating loans so ratings can be made off of data for each loan in the pool.

3. Establish the SEC equivalent for the bond market
After the stock market crash that lead to the Great Depression, the Securities Exchange Commission was established to provide oversight. Today, the bond market dwarfs the size of the stock market, but there is no supervision! Let’s learn from history and use a market crash as the impetus to establish oversight in the bond market. Honestly, I don’t care if we simply extend the authority of the SEC or create a new administrative body to focus only on bonds. Either way, this group would enforce that bonds are packaged in compliance with the law and they would audit the ratings companies to ensure they are rating bonds correctly. This is a no-brainer.

4. Consider outlawing banks as public companies
Long before the market melted down in 2008, a shift in liability occurred in the 1980s that paved the way. In the 80s, Wall Street banks began to go public. Before that, banks were partnerships. As a partnership, the risk the banks took was on the partners. As a public corporation, the risk is shifted to the share holders. Share holders can’t possibly be involved enough to prevent executives from screwing up the bank. That means banks can mismanage their company, get paid tens of millions in salary and bonuses, and not care if the company goes under. Keeping the risk on the shoulders of partners would remove incentives to not care about risky investing.

Yes we can

There are probably more loopholes that would have to be plugged to protect our economy from another bond market failure, but these four simple measures would be a great start. Obama was elected into office on the premise of change and hope. But, that was our message. We can’t expect him or anyone else in the government to take care of our responsibilities for us. We have to hold them accountable and demand the reform we need to protect us. That said, I’m not sure what the next steps are for implementing these four measures. Clearly we need to organize. What are you thoughts about the best way to do that? Do we need a petition? Or what?

Chip Kelly then made a rookie coaching mistake and threw Blount out for the season. You don’t think it was a mistake? What about the fact that there are fights in every hockey game? As the Houston Chronicle put it:

We rarely discuss the inequity of a football or basketball player being treated like a felon for throwing one punch, while we laugh when baseball players get into all-out brawls.

College baseball players, who play more games in a season than football players do in a career, are given an automatic — and measly — three-game suspension if they are ejected for fighting.

Why is there an “automatic” suspension for fighting in baseball? Because it happens all the time.

Now, after a month has passed things are looking a little different. Blount has been a well-behaved player. Mentors like Kermit Washington and Tony Dungy have come in to provide a voice of reason. And now Oregon is reconsidering their decision, which is making them the subject of national scrutiny again.

What Kelly should have done was announce that Blount was suspended indefinitely and then wait for time to tell him how long. Playing Monday morning quarterback is easy. However, now that reinstatement is on the table, it should be acted on immediately. This will become a source of constant discussion by the media as the ask players and each other whether Blount is coming back and what they think of the decision. While Kelly didn’t make the right decision in the beginning, he still has the chance to get the reinstatement right by getting it over with quickly. The news will fade into the background much faster and everyone can move on with their life. Critics of his decision can be told to look at how intense the punishment was for the other players involved in fights this year. Tell them to look at hockey and baseball and how they deal with fighting. Quit acting like this guy did something that never happens in sports. The death penalty was just too severe for punching a guy that was talking shit.

Blount has served his time. Bring Bloung back now!

To rank or not to rank pre-season college football, that is the question!

Since the birth of the BCS; coaches, fans, and players have been contemplating the importance of preseason rankings. It does not matter! Being an athlete, I can tell you from experience that every season teams change, some for the better, and some for the worse, no matter who the team is. I came from Michigan and I always saw the Big Ten as the best. Now I live in Oregon, and watch the Pac 10 teams like USC, Oregon, and Cal rock college football. And I follow SEC teams like Florida and Georgia.

The question that everyone needs to be asking and talking about is, “Why does the NCAA allow this BCS ranking to continue?” I suspect the answer is television ratings, because it brings in a massive amount of money each game year after year. For example, Utah has been undefeated twice in the last four years. Unfortunately, pre-season rankings locked them out of the right to play in the National Championship.

Why would the USA Today rank California above Oregon? I hope the BCS rankings aren’t as disappointing. The AP Poll seemed to understand. Oregon just beat California by over thirty points! California did not even score a single touchdown against Oregon! California came in as the better ranked team but they failed to even get inside the Oregon 20 yard line.

So, for the world’s sake, here is The Rockstarbrother’s Top 25 as of 9/29/09 is:

RK/ Team/ Record/ PTS
1. Alabama 4-0 1490
2. Texas 4-0 1420
3. Florida 4-0 1400
4. LSU 4-0 1225
5. Boise State 4-0 1203
6. Cincinnati 4-0 1190
7. Iowa 4-0 998
8. TCU 3-0 979
9. Oklahoma 2-1 957
10. Ohio State 3-1 946
11. Virginia Tech 3-1 896
12. Houston 3-0 844
13. USC 3-1 788
14. Michigan 4-0 591
15. Oregon 3-1 470
16. Oklahoma State 3-1 462
17. Kansas 4-0 452
18. Georgia 3-1 418
19. Miami(FL) 2-1 400
20. Penn State 3-1 349
21. BYU 3-1 340
22. Nebraska 3-1 271
23. Mississippi 2-1 340
24. Georgia Tech 3-1 206
25. Missouri 4-0 185

And for my game picks of the week:

1. Alabama wins by 21
2. Texas bye week
3. Florida bye week
4. LSU wins by 7
5. Boise State wins by 42
6. Cincinnati wins by 35
7. Iowa wins by 21
8. TCU wins by 28
9. Oklahoma loses to Miami by 3 (Game of the week)
10. Ohio State wins by 21
11. VTU wins by 28
12. Houston wins by 21
13. USC beats CAL by 21
14. Michigan beats MSU by 14 (sad but true sorry Spartans)
15. Oregon wins by 42
16. Oklahoma State bye week
17. Kansas bye week
18. Georgia loses to LSU by 7
19. Miami(FL) wins by 3
20. Penn State wins by 28
21. BYU wins by 21
22. Nebraska bye week
23. Mississippi wins by 14
24. Georgia Tech wins by 21
25. Missouri bye week

I’m twitter @rockstarbrother

The Ducks just manhandled Cal. Cal was ranked #6 in the nation. Last week, the Ducks beat Utah who were ranked #18 in the nation. Two weeks in a row we beat ranked teams, one of which was a top ten team. Yet, after the impressive performance by both our offense and defense, the USA Today Poll has us ranked #25. Here are some of the teams ranked ahead of us:

#24 Nebraska – They have played 4 games so far. Three of their games were against nobody opponents: Florida Atlantic, Arkansas State, and Louisiana-Lafayette; and of course they won those games. Then they played a good team, #13 Virginia Tech and they lost. How do they deserve to be ranked above a team that has won against two ranked teams (one in the top 10) and their only loss is to the now #5 team in the nation by a respectable 11 point margin?

#21 BYU – BYU isn’t a total sham, but if you look at the facts; they don’t deserve to be ahead of the Ducks. They have a win against Oklahoma, who was ranked #3 at the time. But, Oklahoma hasn’t played anyone good yet either. Oklahoma has won against Idaho State and Tulsa. Boring. They lost to BYU. BYU has won against nobody teams too like Colorado State and Tulane. When they played a good team, Florida State, they lost. Their only respectable win was against a team that hasn’t played anyone respectable. Not worthy of a higher ranking than the Ducks.

#18 Mississippi – Another joke ranking. Last week these guys were rated #5 in the county. Who have they played? The pattern of nobody teams: Memphis and Southeastern Louisiana. When they played a good team, South Carolina, they lost. Get them out of this lofty ranking so we can have respectable polls. South Carolina deserves to be ranked above these guys for beating them head to head and from having matching records.

#14 Georgia – Georgia has played some named teams. None of them have been ranked, but at least they are from programs that do well year after year. I won’t rip too hard on them, but I will say they haven’t won against any ranked opponents yet and their margins of victory are really slim. Georgia probably isn’t too overrated, but they haven’t earned a spot above the Ducks who have beaten two ranked teams.

#13 Penn State – Perhaps the most undeserving ranking of the group, Penn State has really not earned their high position. Playing little sisters of the poor teams like Akron, Syracuse, and Temple earned these guys a #4 in the nation ranking coming into yesterday’s game against unranked Iowa. Iowa decidedly beat the overrated Nittany Lions and exposed them for what they are: another Big Ten team that gets the love of the polls because of memories from when the Big Ten mattered. The Big Ten has done shit in a decade. The Pac 10, on the other hand, consistently beats them head to head and kills them in bowl games. Sigh.

#12 Oklahoma State – Rice and Grambling State are not strong opponents, so beating them is expected. Beating Georgia is note worthy, unless you see how unproven Georgia is as well (see my commentary above). Yet, when they play a good team, Houston, they lost. However, that undefeated Houston team is ranked 3 spots below the Cowboys at #15. WTF!!?! How does this even make sense?!

I could probably go on, but I think any rational person sees my point. Few of the top ranked teams have played decent opponents. When they have, they’ve lost. Where do those prevailing opponents sit in the polls? Below the loser. Disgusting bias and the pollsters should be ashamed of themselves.

Teams that deserve higher rankings (in no particular order): Oregon Ducks, Houston Cougars, South Carolina Gamecocks, Michigan, Georgia Tech, and South Florida.

Teams that should be ranked lower (other than the ones I mentioned above): Oklahoma and Ohio State.

• Developing a baseline program – Specify a structured program built on proven social media strategies, like blogging, that will deliver measurable value. Program definition includes infrastructure, business processes, and staff training.
• Campaign support – Assist the rest of the marketing team to support campaigns using the baseline program. Develop strategies to support camapaigns outside of the baseline program using knowledge and experience gained through R&D.
• Research and Development – Systematic evaluation of new tools, services, and networks to vet new strategies for application in the baseline program, campaigns, and further R&D.
• Subject Matter Expert – Assist management with the development of policies, tools, materials, and training for the global organization. Provide Subject Matter Expert support to consulting services, engineering, and product teams on social media mechanics.

We discussed the job description and title for quite a bit before selecting Senior Manager Social Media Marketing. At the end of the day, I work for the marketing department so my success is measured in terms of branding and lead generation. I was reluctant to use Social Media Marketing because there are so many people out there giving that title a bad name. It’s got a bit of a smarmy reputation for overly aggressive sales tactics and Big Brother style stalking of customers. We considered the title Community Manager, but that role is really about caring for a community owned by the company, such as a developer’s forum or a support community. So, we decided to call a spade a spade because trying to call the position anything else felt like an attempt to skirt around the negative connotations.

Social media marketing is in it’s infancy and struggling with reputation problems akin to the early days of email marketing and direct marketing before that. My goal is to help bring respect to the title by demonstrating that companies and customers can have a harmonious interaction through social media that helps both parties happily exchange value (fair money for desired products/services). My lofty goal is to show that social media is currently the best venue to achieve and scale truly consensual value exchanges. My experience tells me that informed consent is the most sustainable business model. I believe that consensual value exchange is the result of good communication and that it provides the optimal outcome for both parties.

I’m super excited to take on this challenge along side an energized Webtrends team. Wish us luck!

In case you don’t know, I’m a very social guy and love Portland, so it was tough for me to work remotely. I also want to focus on a single client to really see what kind of a program and results I’m capable of. So it’s time for the next chapter in my life. I don’t have any announcements just yet on what I’ll be doing next, but I have some discussions going that should lead to an announcement next week. I can say that one thing I’m really looking forward to is spending more time at local events supporting the groups my friends organize.

Lifestream

As I have become more integrated with communities locally and afar, the types of interaction I have are much more diverse than blog posts. Over the Holidays, I set up Sweetcron to aggregate my online activity into my lifestream.

Blogging

I’ve learned a ton about how and why I blog since I set up my first blog. When I started, I owned my own company and I was blogging about topics that I thought would increase traffic for landing new business; in other words for marketing. Well, I don’t own my own business anymore and I help a ton of people with blogging these days, so I’m not feeling passionate about writing blog posts to be link bait for potential customers anymore. That doesn’t mean I’m not still interested in blogging about my industry, in fact I’m going to write those posts for the business I support now, Voce Nation. On this blog, I’m going to talk more about the things I care about like Portland, the Ducks, RC helicopters, tequila and such.

Home page

I am planning to make my home page more of a gateway to my online presence—links to the various places I have accounts online, my lifestream feed, and some basic “about me” info. I’m planning to move my blog to http://www.justinkistner.com/blog/ as blogging becomes a part of my activity rather than all of my activity.

Beer & Blog

I ended up pulling out of the Legion of Tech elections for their Board of Directors to focus more on Beer and Blog. I didn’t feel like I was going to be able to give them the time commitment they deserve to get from someone else. LoT rocks and I will still help them get sponsorships, attend their events, and help in every way I can because I think what they are doing for Portland is unique and special. I attribute them with the reawakening of the Portland tech scene!

Beer and Blog is hoping to bring that same DIY community spirit to more cities throughout 2009. We’re also planning to do more workshops to bring additional people into the community.

What I am looking at is how far can a person go in automating his social media. Obviously whatever I come up with while interesting in a geeky way is only going to be a shadow of the real me. However I hope to make him quite fun.

I believe social interaction could have rule engines. Etiquette is programmable.

via Ethan

“Sen. Obama is a classic liberal with an outdated economic agenda. We should take that agenda on in a robust manner. As a party we should not and must not stand by as the small amount of haters in our society question whether he is as American as the rest of us. Shame on them and shame on us if we allow this to take hold.”

via Politico.com