Alabama Announces Foreclosure Prevention Program for Unemployed (via Loaning4Less.com™)

This is an interesting idea. Partly paid for the federal government, the program tries to prevent families from being hit by two financial disasters at the same time, unemployment and the loss of a home. I am curious about one thing. If the feds have allocated 2 billion dollars to such programs and Alabama is going to use 162 million, who is using the rest of the money and for what? Is there some innovative program to save the unemployed’s homes that I am unaware of? If you know something about this, please let me know.

James Pilant

Alabama Governor Robert Bentley recently announced the creation of Hardest Hit Alabama (HHA), a new program that will provide $162 million for foreclosure prevention efforts in the state. In August 2010, the U.S. Department of Treasury announced $2 billion in federal funding to provide additional assistance targeted at unemployed homeowners in states with the highest jobless rates. The Alabama Housing Finance Authority (AHFA) has been allocated $ … Read More

via Loaning4Less.com™

Bismuth Nanoparticles

I have been telling my students that way back in the 1960′s, there were television series and magazine articles that tried to predict the future. Their aim was not very good. What has come to be was not predictable, what was predicted has not come to be. Reading the future whether by ancient Mayan calendars or scientific speculation is not a matter of certainty. One unpredictable development is that of nanoparticles. Nanoparticles offer often bizarre science fiction like capabilities to many fields in particular medicine.

This is from Science Daily -

Now, researchers at Washington University School of Medicine in St. Louis report that they have designed nanoparticles that find clots and make them visible to a new kind of X-ray technology.

According to Gregory Lanza, MD, PhD, a Washington University cardiologist at Barnes-Jewish Hospital, these nanoparticles will take the guesswork out of deciding whether a person coming to the hospital with chest pain is actually having a heart attack.

“Every year, millions of people come to the emergency room with chest pain. For some of them, we know it’s not their heart. But for most, we’re not sure,” says Lanza, a professor of medicine. When there is any doubt, the patient must be admitted to the hospital and undergo tests to rule out or confirm a heart attack.

“Those tests cost money and they take time,” Lanza says.

Rather than an overnight stay to make sure the patient is stable, this new technology could reveal the location of a blood clot in a matter of hours.

This is a positive development. But there should be caution in these developments as well.

From ANSES, French Agency for Food, Environment and Occupational Health and Safety:

At present, there is no routine method for measuring nanoparticles in a soil or water sample. Accordingly, few data are available on the presence of nanoparticles in these two matrices, and knowledge on the fate of nanoparticles in the environment is therefore limited. For the same reasons, it is also difficult to study the effectiveness of current drinking and waste water treatments to eliminate nanoparticles, and it is subsequently hard to estimate population exposure to such particles through water.

One of the prerequisites to the improvement of knowledge needed to assess the risks of nanoparticle presence in water is therefore the development of data acquisition tools.

More bluntly, if nanoparticles get in the water or soil, we can’t detect them and we don’t have any idea what to do if we do detect them.

That’s a substantial downside.

The French Agency recommends tough regulation -

Given this context, the Agency stresses the need to set up a system for listing and controlling the marketing of all products containing nanoparticles.

There is always going to be the question whether or not we are rushing into a technology that has the potential for enormous destruction.

I can point out based on my experience in the field of business ethics, that when confronted by the opportunity to make billions of dollars, safety concerns shrink in importance.

There is a great deal of opposition based on ideological grounds. But is it wish to allow private companies with financial stakes in positive outcomes to determine acceptable risks? There are not only many accounts of businesses that developed products without proper testing. There are accounts of businesses that when informed of serious problems closed their eyes to the danger. And lastly, there are literally thousands of cases where dangerous substances were casually dumped in the water, soil or air.

I believe regulation is necessary.

James Pilant

A Department of Defense Purchase that Makes Sense

Grand Strategy: The View From Oregon has this from an article entitled – Precisification of Small Arms Fire -

Too many weapons systems are enormous projects that are driven by the employment that they create in a congressman’s district. When a prototype is received as enthusiastically as the XM25 by the soldiers who would actually use the weapons system in theater, this is a powerful vote of confidence. One wonders why this weapons system is not being moved into production when the initial reports on the prototype are so favorable. I’m sure there’s story behind it. There always is.

Many precision weapons systems have not only been expensive boondoggles, but have also had long and troubled histories of development. The reception of the XM25 prototype, however, shows how powerful precision technologies can be when designers and producers get it right. There will always be a question of killing badly designed weapons systems before good money is thrown after bad, and this is sometimes a difficult call to make. The M247 Sergeant York was eventually axed after a long and troubled history, but US and allied troops put up with the sub-par performance of the M-16 for decades before the design was refined to a robust and reliable iteration.

XM-25

 

One of the more troubling areas in business law are the persistant cost overruns, improper influence and illegality in defense procurement.

J.N. Nielson has found a weapon system that works and is a credit to its manufacturer. May we see many more.

James Pilant

P.S. I am still unimpresed by the M-16 (or M-4).

Finance Industry Laments New Curbs on Securitization (via The Fiscal Times)

Yesterday, I was explaining to my students that the word, securities, had become an oxymoron. (I am a reality based instructor.) Ironically, within 24 hours, I run into this article which says that the problem of securities being a highly speculative investment has abated somewhat. If the numbers are accurate, things have improved.

From The Fiscal Times (from an article by Zachary A Goldfarb) -

For nearly two decades before the financial crisis erupted in 2007, the securitization market allowed Wall Street to manufacture all manner of financial products. The most basic of these were bundles of home, auto and credit card loans that were turned into single investments that firms and countries worldwide could buy.

But then things got more complicated. Wall Street found ways to allow investors to speculate on Hollywood films, patents, lawsuits, airplane sales, and fast food revenues. The most infamous financial engineering, of course, involved the creation of seemingly high-quality investments that were in fact backed by high-risk home loans, extended to people with weak finances.

These subprime mortgage-backed securities helped doom the financial system starting in 2007, and the securitization market has been working to make its way back ever since. Although it has had some success, particularly in auto and student loans, participants at the ASF conference here said that they expect financial engineering to play a far smaller role in the markets for years to come.

“Banks will be utilizing securitization less in the future than they have in the past,” said Bianca Russo, managing director at J.P. Morgan Chase.

In total, there was $145.3 billion in securitizations in 2010, compared with $875.5 billion in 2005, and far below the number even a decade ago, according to industry newsletter Asset-Backed Alert.

Every time I explain what a security based on home loans looks like broken down into its parts, my students are amazed that anyone would buy them. But then I show them what the paperwork looked like to an investor. If you can divide the home loans between, prime and sub-prime, only then can you see how much trouble you are in. But the poor investor can only see a list of smaller investments perhaps of thousands of mortgages which for accurate knowledge need to be researched individually. The investor would have felt that they needed no such investigation because the security was  rated as triple A by an international ratings corporation like Moody’s. Investment firms like Goldman Sachs are not required by law to disclose risks with an investment they are selling. So, the investor was swathed in assurances that he was making a good investment when for all intents and purposes he was driving blind in a snowstorm. And in 2007, they hit the wall.

James Pilant