Fall Fun and Corn Mazes

The leaves are turning, the air is cool and crisp, and the sun is still out. It is the best time of the year. We celebrated last weekend by taking Jude through his first corn maze. He did well and only got turned around a few times. He also learned a little bit about finance along the way... (sound odd? It's true, we found a corn maze that focused on financial education - Rutledge Corn Maze).

Jude getting ready for the maze - fueling up.

Rob and Jude at the maze entrance

Rachel needed a coffee break after the first half of the maze

Rob asks Jude about FDIC insured deposits (this was a trick question because they just raised the limit from $100k to $250k)

Smiling Jude

Jude has been smiling since we brought him home from the hospital, but usually he is either asleep or experiencing some gas... Yesterday Aunt Jeanne and Uncle Chris came by for a visit. After Jude was fed, Aunt Jeanne held him for a while and he looked into her eyes and started a smiling session that lasted for a good ten minutes. I captured a few of them once I came to my senses and grabbed our camera.

How Far will the NYSE Drop?

To 6,900 points (6500 - 7000 range). I'm going out on a limb, I know. Call it overly-simple technical analysis or just the law of averages, but if you draw a straight line over the very long term of Dow Jones returns (starting from the 1930s), the expected return for the stock market today should be around 6,970. That also means that all things being equal, the Dow should be at 7,318 on October 10, 2011. That's a little under 2% growth annually. Granted, that's not likely to happen, but if you think it might, then you're better off opening an E-Trade checking account and letting your interest growth with FDIC insurance.

A special shout-out to my sister Angela, who's really smart but thinks math is boring: you can predict the future with math! The equation I used above is a regression, here's the equation it gives you: y=.3185x-5682.85. x=the day you want to predict what the stock return will be (I think 1=1/1/1900, today is 39733).

Then again, if you start the line at June 29, 1959, then the market should drop no lower than 8,451, so you never really know...

J. at One Month

Little J is one month old. He is healthy and full of personality. A parent can’t ask for more than that!

Jude can also be a little fussy. But he's so cute so you can't be annoyed for too long. Rachel thought both of our faces explained the situation pretty well :-)

We’ve walked a lot in our BOB stroller. Starbucks is a mere 8 blocks away, and we’re training Jackson to sit in that empty stroller space that Jude isn’t yet utilizing.

Four Generations

Last week the Mardock extended family briefly gathered for a rare and wonderful "Generational Photo." Below (from Jude's perspective), is grandpa, great grandpa, dad, and little Jude. Also in the room was great grandma, grandma, and mom.

CDSs Part II, From $0 to $62 Trillion in 7 Years

Eight years ago, we survived the millennium bug, Bush won due to inefficiencies in the electoral college system, and credit default swaps were a thing of fiction. They simply didn't exist. Today, they amount to over $62 trillion. To put that number in context, I graphed CDSs next to the paltry US Gross Domestic Product, and also next to the total market capitalizations of both the US stock exchanges, and the aggregated world stock exchanges. Said another way, the stock market capitalizations represent every stock of every company listed, times the number of stocks outstanding. And yet, CDSs - instruments that most people have never heard of - insure an amount six times greater than the US GDP, and more than every stock market in the world put together.


Data (comma delimited, in millions)
,2000,2001,2002,2003,2004,2005,2006,2007
US GDP,9817.0,10128.0,10469.6,10960.8,11685.9,12421.9,13178.4,13807.5
NYSE + NASDAQ,15131.6,13766.3,11009.8,14173.1,16240.5,16914.6,19286.2,19664.5
All World Markets,31125.4,26904.9,22809.6,31325.8,36863.3,40974.1,50791.7,60874.4
Credit Default Swaps, - ,918.9,2191.6,3779.4,8422.3,17096.1,34422.8,62173.2

US GDP Source: Bureau of Economic Analysis (link)
Credit Default Swaps Source: ISDA (link)
Equity Market Capitalizations: World Federation of Exchanges (link)

Credit Default Swaps: 89 Times Bigger Than $700 Billion

A couple of years ago I took an interesting course called “Credit Risk Management” where we learned how to calculate some of the more arcane derivatives such as interest rate caps, floors, and swaps, and credit default swaps. It's an extremely fascinating science in risk mitigation.

Credit default swaps (CDS) are a risk mitigation technique. A CDS is an insurance policy against bankruptcy. More specifically, an entity enters into a CDS contract to insure against another entity’s debt (credit) becoming worthless. To calculate a CDS, you must know the entity’s probability of failure and probability of survival for each period of the CDS contract. Throw in t-bill yield curves, future rates, spot rates, discount functions, and you can begin to calculate the basis point spread (margin) between what the debt (bond) is currently trading for, and what you think it “should” trade for given its bankruptcy risk.

A scary document from the ISDA (here)

According to International Swaps and Derivatives Association, the notional value (essentially, the face value or underlying value) of CDSs was $62.2 trillion and growing rapidly. Said another way, if all the companies listed on the stock market went bankrupt tomorrow, someone (like AIG, or now the American people) would have to pay out $62.2 trillion dollars even though the entire worldwide stock market is valued at between $20 and $30 trillion. By comparison, the mortgage market – which has caused the greatest economic crisis since the Great Depression – is a mere $7 trillion and falling. (Source). Another scary number on that ISDA document: $382 trillion – the notional value (the underlying value at risk) of all interest rate derivatives outstanding. On their most basic level, think of an interest rate derivative as the transaction you went through to fix your variable mortgage or student loan. On a whole the derivatives market is around $450 trillion dollars (or 12 times larger than all the economies on earth put together).

So what happens when that $450 trillion starts sloshing around? What happens when an interest rate lowers or raises higher than expected, or when mortgage backed securities go belly-up, or when major companies begin to go bankrupt? I can’t think of anything less than economic catastrophe. We're already seeing companies that pay out CDSs beginning to go bankrupt, and the SEC declared no short selling financial stocks to keep other companies that pay off CDSs from going bankrupt like AIG. AIG was the largest backer of CDSs. Check out an article from February of this year (here). Then follow that up with an article from last week (here). People spoke about AIG’s exposure to CDSs earlier this year, and sure enough, AIG went bankrupt this month.

I encourage others to read more about CDSs, about AIG, and about the dollars associated with these derivatives. It makes you quickly realize that President Bush’s $700 billion is 1) directed precisely at the derivatives market, and 2) grossly and incomprehensibly under funded. $700 billion is 1/645th of $450 trillion. Now I realize what Bush, Bernanke, and Paulson mean when they say: “There is a much greater risk to doing nothing.”

10,000 Visitors and Counting

It seems only yesterday we started this blog. But lo and behold, the official "site meter" at the bottom of this page registers 10,300+ visitors. Wow! To be fair, probably a quarter of those are me...

To Politick or Not?

I'm tempted to interject a few political jabs from the "independent voter" p.o.v. It is, after all, the height of the election season. But how to do it cleanly and insightfully on this blog dedicated to family? Any suggestions? Yes? No? Here's an example of something I'm dying to point out: Sarah Palin said Georgia should be a NATO member, and that she would then attack Russia if Russia invaded Georgia. Sarah Palin would go to war with Russia. Russia, a super-power with as many nuclear missiles as America. Russia, a fiesty country of 150 million people with a long history of distrust towards America. Russia, who for the last 20 years we've had cordial relationships with. Georgia, a pleasant little country the size of West Virginia with a population the size of the greater El Paso area.

To bring it home a bit, I think of that Sting song: "I hope the Russians love their children too." I know I love my little fuzzy headed, Precious Moments(tm)-eyed bundle of joy. Am I prepared go to war with Russia because a sub-clause of an antiquated alliance of nations formed solely to defend against a dead Soviet Union says we must attack? Heck no. I don't think of myself as an effete non-patriotic independent wacko, but the continuation of aggressive foreign policy from the GOP has me a little on guard. The Russians insist they are being "swift boated." They say they were protecting people from a Georgian offensive and that we don't see the whole story. Whether or not I believe Russia's side is irrelavent. What is relevant is whether or not we would attack Russia based on incomplete information. What is relevant is the shift in America's foreign policy that has now made such a possibility worth discussing. The GOP's tough talk on protecting the world by military force, and their cavalier attitude towards invading Russia if something similar happened to Georgia (not mentioning the differing geopolitical points of view of the situation) has me concerned about the possible perpetuation of the GOP's current foreign policy platform.

Little Jude

Little Jude sleeps 20 hours a day, whines and squeeks several times an hour, poops about 4 times a day, and smiles (aka, stretching his face muscles) about 2 times a day. He's the cutest thing we've seen in a while. Rachel and I are constantly impressed with the little sweet spirit that we brought into this world. Last night at Chevy's (chain tex-mex restaurant), a waitress came over, told us her brief life story, and continued to recommend we have more kids, because "people who have cute kids usually only have one kid... and that's going to be really bad for America's future, if you know what I mean." (note, that is verbatim). Today at Costco, the 80-year old lady serving potato salad samples told us 1) that we shouldn't take Jude out so early in his life, 2) take care of your wife because she's no doubt in great pain, and 3) "back in my day child birth was a horrendous experience; we had to stay in the hospital for two weeks ... we used lots of ice packs." (again, that's verbatim).

We really do appreciate all of the suggestions. We may or may not use them. But at the very least they make good potential blog posts and topics of conversation.

Jude is a cutie. We're already sad that his first couple of infant weeks will quickly pass. But we're also looking forward to the next stage of development. And eventually, for the time when Jude and dad can play checkers.

Jude Has Arrived!

This labor day weekend was the best labor weekend ever!
Introducing Jude - the live version: 8 lbs 10 oz, 20 inches, full of hair, and super cute.
We are very, very excited. Rachel is doing great. It's a very exciting time in our lives.
Here are a few pictures of the blessed day.
More fun news soon.

Visually Displaying Information

I'm preparing a presentation to my co-workers covering findings from an Edward Tufte lecture I attended last month. Tufte is best known for popularizing the visualization of quantitative information. Below is the classic Joseph Minard graph drawn in 1861. Due to its age, its impact, and its detail, many call this the best graphical depiction of information ever drawn. I've seen "flashier" graphs than this, but I agree that this is very deep and very rich. It tells the story of Napoleon's ill-fated 1812 march to Moscow. The tan line indicates Napoleon's charging army, while the black line indicates his retreating army:


Tufte describes it as follows:
"Beginning at the left on the Polish-Russian border near the Niemen River, the thick band shows the size of the army (422,000 men) as it invaded Russian in June 1812. The width of the band indicates the size of the army at each place on the map. In September, the army reached Moscow, which was by then sacked and deserted, with 100,000 men. The path of Napoleon's retreat from Moscow is depicted by the darker, lower band, which is linked to a temperature scale and dates at the bottom of the chart. It was a bitterly cold winter, and many froze on the march out of Russia. As the graphic shows, the crossing of the Berezina River was a disaster, and the army finally struggled back into Poland with only 10,000 men remaining. Also shown are the movements of auxiliary troops, as they sought to protect the rear and the flank of the advancing army. Minard's graphic tells a rich, coherent story with its multivariate data, far more enlightening than just a single number bouncing along over time. Six variables are plotted: the size of the army, its location on a two-dimensional surface, direction of the army's movement, and temperature on various dates during the retreat from Moscow."

Below is another good example that he points to from the New York Times. Despite the message it's trying to convey, it does a good job of graphically telling a story. It's causal and explanatory, it includes sources, and it makes you want to learn more:

Jude: Almost, But Not Quite, Here

As of today, Rachel is still quite pregnant with little Jude. According to the doctors, Jude is bigger than the average tyke his age. That fact has Rachel and me worried, so we're hoping and praying for a smooth delivery. We are happy that we found Swedish Hospital in Seattle, the poshest place in the Northwest to give birth. Sure, Swedish has the best doctors, the best facilities, a top intensive care unit, and one single dedicated nurse. But the part that I'm most impressed by is the jacuzzi tub. It's like the W Hotel of hospitals.

On the home front, Jude's room is full of man goodies: a manly crib, manly diaper changing table, a real masculine baby monitor, and a bookshelf full of man-centric baby books like "Excuse Me: A Baby Book of Manners," and "Little Johnny's Pocket Book of Nano-Sciences." Oh yes, we're ready.

Rachel is taking a couple of months off from her work (that's all that America has determined a mother needs), and Rob is taking a couple of weeks off to bond as much as I can before Corporate America demands that he (I) return to work. Little Jude: when you're old enough to read this, we're sorry if our busy lives caused you to be strange. At least we don't live in a country like the UK where mothers get about 9 months longer to bond with their children, because, you know ... they pay higher taxes.

Catch up Post

During the months of July and August, Rachel and Rob kept themselves as busy as they could before Jude's blessed arrival. A few weeks ago, our very great friends, Katherine and Jerrod visited from Houston. Even as I write that, it sounds impressive. Thanks, Jerrod and Katherine, for flying across the country just to visit us for the weekend. We really miss you guys! It's always taking visitors around because we get to see all the best parts of Seattle over again. We saw Snoqualmie Falls, the underground tour, the Pink Door, Macrina Bakery and Bakery Nouveau, Pike Place market, and about half a dozen coffee shops.

The next weekend, Rob's sister Angela came to stay with us for a week. Again, we saw Pike Place market, drove around the area, she went to work with Rachel, and she spent a day at work with Rob (me). That Saturday, the Steele's came down from N. Seattle for a BBQ.

The next weekend, Rob and Rachel drove from Tacoma to Portland, picked up Chris and Jeanne, and drove down to Sunriver, Oregon. All on Friday afternoon! It was a long trip. Actually it reminded me how old I'm getting, and that in the future such a trip should be reserved for a 3-day weekend! But once we arrived at Sunriver (around 1am-ish ... thanks for driving Chris), we visited with about 30 relatives on Rachel's side, hung out in the hot tub, rode bikes, and breethed in fresh pine mountain air. I love that area of Oregon. I could definitely spend a couple of weeks rafting, hiking, and biking. As soon as Little Jude gets bigger, he and I shall do extreme sports together... oh yes, we shall...

Special props to Josh B. - the man of the day for two reasons. Most importantly, for bringing Rock Band, where I could karaoke and jam on a fake guitar, fake bass, or a semi-fake trap set. The whole time I jammed, I couldn't help but think of that one Guitar Hero episode of South Park. The other reason Josh was the man of the hour was because he left from Sunriver for Sacramento. Yes, we lost another Bellamy to a distant land. First Andy and Joanne to Tampa, and now Josh to Sacramento. Hopefully Josh will find his way back up to Portland in the next couple of years. But in the meantime, flights between PDX, SEA, and SAC are pretty cheap.

Angela came up from California to spend a week with us. Also shown is cousin Andrea

Jackson the entertainer

Jerrod & Katherine came from Houston just to visit us. Pretty sweet

Rachel and Jude posing for a photo in Sunriver

Josh riding the cruiser in an upright position in Sunriver

Rob, Natalie, and Josh working on our mad Rock Band skills

Rachel and Jude!

House Pictures; After

Here are a few "after" pictures... but we'll definitely post more. They don't really do it justice. We've moved more furniture in since these were taken, but it gives an idea of the progress we made.

Living room. The ceiling use to have the "popcorn ceiling" texture, but Rob put on the space suit and gas mask and scraped it all off in one long evening (yey, me!). Evidently the fireplace use to have an insert (a big metal wood stove-type device), but one of the previous occupants took it out and left it a big void.

Hannah and Christina doing what they do best :-)

Dining room with new chandelier. We have great evening sunshine in this room.

Jude's "pink" room - we have a fun crib set now, more pictures later. Rachel bought a great orange-ish, brownish set. And we also have the Harrod's teddy bear from Rachel's trip to London.

Kitchen: I know it may not "seem" much to look at, but we did a huge amount of work (mostly Rachel, Linda and Jeanne ... and Josh and Chris). Jeanne re-textured the gross space left behind when Josh took the cabinet off from above the fridge. Soon we hope to have a new fridge and stove sometime in the next year or so.

Kitchen again

Our new "kitchen nook" area. We mostly eat here. This kitchen is about 2x the size of our last cute rental house kitchen.

House Pictures: During

Here are some of our work party pictures. These are mostly from the 2nd weekend. We forgot to take pictures on the 1st weekend. There's no way we could have done this all in two weekends without everyone's help. We don't have pictures of Josh and Jeremy (our British friend), but they were definitely there and helping out.

Mom & Rob sanding cabinets. The process for each cabinet door and cabinet frame: 1) course sand, 2) fine sand, 3) pre-stain, 4) 1st coat lacquer, 5) 2nd coat lacquer, 6) sealer. Props to Linda, Rachel and Jeanne.

Chris, the master pin-nailer

Dad enjoying a momentary respite from painting the dining room

Dad working into the evening - he just moved everything in a few minutes earlier but thought a break was for wusses

Angela helped Jeanne paint the inside of the cabinets - they used to be blue and pink!

Jeanne working hard on the kitchen cabinets

Dad painting. I also included this picture to show the fabulous chandelier included with our home.

House Pictures: Before

Here are a few long awaited before, during, and after photos of our new home in t-town. First, before. The house was built in 1925, so there have been lots of previous occupants who did a real great job of "personalizing" the place. If you think this blue paint is "unique," you'd be even more impressed by the key-lime green underneath it.

From living room looking into dining room. Note the rough patch on the left side of the wall. Imagine that rough wall patch scattered throughout the house. Why would they be all over the house? Your guess is as good as ours. But it's because of those patches, and numerous other strange wall issues, that we had to call in professional wall texturers to smooth everything out.

Busy dining room with old chandelier. We still have the chandelier in the basement if anyone wants it. Let us know soon before it goes in the trash.

Dining room again - looking into the living room area.

Jude's pink room. It looks much better with the neutral beige/latte tone.

Old orange kitchen with plastic nobs! Now you can see why Rachel felt it was an imperative to "just do something" to the kitchen. Imagine that picture circling 360 degrees and all around you is orange cabinets and big white nobs. Not a relaxing way to make a meal.

Blue living room. We tore out the shelf above the window. Why? We just haven't been around long enough to accumulate so many knick-knacks.

America's # 1 Killer: Chocolate Cake

America, nay, The World is under a threat bigger than terrorism, war, global warming, AIDS, and BPA leaching from Nalgene bottles. The biggest threat to mankind is chocolate cake. Every year more citizens of this world fall victim to its yummy, decadent succulence. We've always known that heart disease, obesity, and type II diabetes together account for more American deaths than all other ailments combined. But we're now seeing the sinfully delicious killer strike more and more of the most vulnerable youths and elderly in places as far away as Holland, Bavaria, Oompa Loompa Land, and China.

My friend, Todd, chooses to ignore the peril of chocolate cake. He believes free will allows us to choose between eating the cake or ignoring its lascivious allure. Don't listen to people like him. Their fallacious spin doctoring is mere argumentum ad ignorantiam and they will try to confuse you by appealing to your lust rather than your sensibilities. Don't be ignorant to this man-made travesty. End this arteriosclerotic menace before it strikes you and the people you love.

Like Jiffy Pop

June really flew by! Amazing... Rachel is a little more pregnant (her belly looks like Jiffy Pop - Jude must be playing a game of hacky sack in there), and we moved into our new home in North Tacoma. We closed around the middle of the month but immediately began the following major projects:

1) Scraped the popcorn ceilings in the living room and dining room
2) Textured all the walls in the downstairs (professional texturizers)
3) Painted all the walls and ceilings in the downstairs (3 coats total)
4) Resurfaced all the kitchen cabinets and installed new hardware
5) Installed washer and dryer
6) Moved everything into the house!
7) Am I missing something? I dunno, but just thinking of all of that makes me tired. We've been installing curtains, buying extra furniture, spraying down the outside of the house, pruning the arboretum that came with the house, taking trips to the dump... it's crazy.

We could not have done this without the following special hard workers:

• Mom (Linda)
• Mom (Carol)
• Dad (Bob)
• Chris*
• Jeanne*
• Josh
• Andrew, the traveling Brit that Mom (Linda) met on the Amtrak train somewhere between Klamath Falls and Eugene. Very funny... I may write a special story about Andrew.
• Angela
• Hannah & Christina (they helped eat our food :-)

*Chris and Jeanne had so much fun the first time that they took 2 days off and came back the next week!

We'll definitely post photos in a few days. It's fun to see the before and after "greatest generation" style make way for the "gen x" style.

A Sunny Day in Seattle

We took advantage of the sunny weather the other day by taking Jackson and Jude to Lincoln Park (in West Seattle). Behind me is the Olympic Mountains. Rachel and I really need to get over there, but between Jude and moving into a house, such a journey might be delayed by another summer. (the Hoh Rainforest must wait...)

Rachel looking adorable and coy on the park bench.

A close up of Jackson, Jude (at 6 months along), Puget Sound, and the Olympics. We're really going to miss W. Seattle!