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"A government that robs Peter to pay Paul, can always count on the support of Paul." George Bernard Shaw

Thursday, April 29, 2010

What will financial reform mean to small business?

In California one can’t lend money to more than one person a year without getting a license from the state.  So if I lend $10 to my brother and $15 to my sister, a month apart I have broken the law.

And despite the fact that banks can charge (with plenty of state and federal regulation) over 20% a year on their credit cards, unless I am a favored institution (like a bank) I can only charge a maximum interest rate of 10%.  This is typical of the regulation that protects the big institutions and hurts small business.  And these kind of state usury laws exist in many states.

What will the proposed financial reform do about this kind of restriction on competition?  Not a thing.  What the legislation will do is give a bigger competitive advantage to the large financial institutions and reduce the amount of lending to small businesses by other small businesses.

Posted via email from John's posterous

Wednesday, April 28, 2010

Berkshire Hathaway and the financial reform bill

CNBC article

Buffet is fine with having everyone post margin on their derivative contracts from now one - just not for contracts they have already entered into.
But if you are "in the money" on the contracts you have already entered into then you would receive money back.

My conclusion is that Berkshire Hathaway is under water on the billions of dollars of derivative contracts that it has made?  Is my logic wrong?

Posted via email from John's posterous

Texans come to the aid of California - not

The average German citizen has no desire to bail out Greece from their excessive spending and debt. 

But would the Texans feel much different about bailing out California.  Or how about the Nebraska Cornhuskers coming to the aid of Michigan?  After all they already paid for bailing out the auto industry.  But then again perhaps the Nebraska farmers are so thankful for their ethanol subsidies that they will gladly bend over to help out Michigan.  Maybe not.
But we have more Germans in the US than there are Germans in Greece, so why don't the Germans send their financial aid here rather than to Greece.  Coincidnentally we also have more Greeks than anyplace in the world other than Greece.  So we have something for everyone that will lend us a helping hand.

Posted via email from John's posterous

Goldman can do a better job of describing their trading business.

I think Goldman Sachs can more accurately describe their trading and market-making business model.  This is different than other parts of their business where they act as business advisors (for example in mergers and acquisitions).

Goldman executives place too much emphasis on their “risk management business”.  They help their clients manage the client’s risk as well as put on more risk when the client wants to make a directional bet.   But risk management is only a critical skill in a trading operation but it is not how they make their money.  Goldman like other traders and market makers make their money by taking a directional bet on a commodity or security and being right more often than they are wrong.

 As a market maker they offer liquidity and transparency and in exchange they see more deal flow and get a better feel for the market than if they were not a market maker.  Their trading counterparties do not expect and do not receive advice from Goldman about if the client should go long or short.

In mergers and acquisitions advisory work Goldman Sachs has an absolute duty to act in the best interest of their clients and to share far more information that Goldman’s trading operation shares.

But Goldman’s trading business is a whole different animal than its M&A advisory business.  When Goldman’s trading arm is selling oil they are trying to sell it at the highest possible price (and their counterparties are trying to buy it at the lowest possible price).  There are multiple buyers and sellers which add to the liquidity (ease in transacting) and transparency (ability to see where prices are currently at).

So the language of putting the client’s interest first does not work in the trading business.  The service that is provided is to offer competitive prices to either buy or sell a commodity or security.  The firm promises that it is easy to transact with, will honor the deal and that it will perform on what it promises to buy or sell.

Trading will not work if any market maker has to tell the world that it wants to go long or go short.  They telegraph that anyway because when they want to go short, they tend to show prices that they will sell that are very competitive but prices to buy that are less competitive.  So it is not that hard for their counterparties to figure out if Goldman is trying to buy or trying to sell and their counterparties get the advantage of this information.

Posted via email from John's posterous

Tuesday, April 27, 2010

We should be calling it the dollar/euro

The relationship between the euro and the dollar is always expressed in a bass-ackwards fashion (in the media).  Today it takes about $1.32 in US dollars to get one euro.  And yet the value is always reported as euro/dollar implying that euro is the numerator and the dollar is the numerator. 

We should be calling it the dollar/euro.

The same thing goes for the pound/dollar relationship.

Posted via email from John's posterous

"We're not that stupid" - Senator Tom Coburn

Quote from Senator Tom Coburn today in the US Senate Subcommittee on Investigations hearings about Goldman Sachs today.  But yes Senator - you are that stupid! (The Goldman guys on the advice of counsel did not to answer this way even though it was obviously the truth).
If the same idiots from the US Senate Subcommittee on Investigations are writing the financial reform bill, the new law is bound to be screwed up.  These Senators don’t listen; they don’t understand how risk is managed and they don’t understand how market-making actually functions.   Most importantly they think that Goldman Sach’s market-making function actually caused the housing crisis rather than profited from changing prices.

I know from my personal experience doing business with other market makers and managing market-making trading operations for natural gas, oil, electricity, credit derivatives and metals how these businesses operate and how they are perceived by their trading counterparties.

Hopefully Goldman Sachs does not settle with the SEC.  This has all been grandstanding by the SEC and these Senators and if it goes to trial no reasonable jury should convict Goldman.

There were many contributors to the US housing bubble, the least of which was Goldman Sachs market- making function in synthetic collateralized debt obligations.  Here were the real causes of the housing bubble:

1)       The public and our politicians thought that housing prices would go up forever and that one could never lose by buying a house.

2)      The FHA and our politicians pushed our banks to make riskier loans to families that could not afford to make the monthly payments and were literally putting no money down and risking with the house (US taxpayer) money.

3)      The banking regulators allowed the practice of “liar loans” to prevail whereby the borrowers frequently lied about their income.

4)      The rating agencies did a horrible job of recognizing the changing housing market because most of their models were based on historical trends and missed some of the changing fundamentals.

5)      Our government kept adding subsidies for home ownership and ran out of ways they could pay people to buy homes.

6)      The number of homes per family and the average size of the homes built per family kept going up to unsustainable levels.  Plus all this extra room gave plenty of space for people to move into once prices started going down and it was obvious that homeownership had its risks.

Today’s hearings were a waste.    Let’s ask the Senate to do less because when they are trying to protect us they put us at greater danger.

Posted via email from John's posterous

Monday, April 26, 2010

What are the specifics of the proposed financial reform bill?

Most Americans wanted health reform.  But now weeks after the health reform was passed, very few Americans know what was actually in the new law.

Most Americans want financial reform.  But what do they want?  They want to avoid the chaos that we faced at the end of 2008 when the system almost failed.

But not just any legislation will do the trick.  Just because Americans overwhelmingly want the regulatory weaknesses fixed does not mean that they want what is currently offered.  In fact very few folks actually know what is in the current bill.  So the fact that they want the problems solved does not mean that the current proposals actually solve the problem.

Posted via email from John's posterous

Sunday, April 25, 2010

IF YOU CROSS THE NORTH KOREAN BORDER ILLEGALLY....

(Just got this from a friend)....
IF YOU CROSS THE NORTH KOREAN BORDER ILLEGALLY YOU GET 12
YEARS HARD LABOR..

IF YOU CROSS THE IRANIAN BORDER ILLEGALLY YOU ARE DETAINED
INDEFINITELY.

IF YOU CROSS THE AFGHAN BORDER ILLEGALLY, YOU GET SHOT.

IF YOU CROSS THE SAUDI ARABIAN BORDER ILLEGALLY YOU WILL BE
JAILED.

IF YOU CROSS THE CHINESE BORDER ILLEGALLY YOU MAY NEVER BE
HEARD FROM AGAIN.

IF YOU CROSS THE VENEZUELAN BORDER ILLEGALLY YOU WILL BE
BRANDED A SPY AND YOUR FATE WILL BE SEALED.

IF YOU CROSS THE CUBAN BORDER ILLEGALLY YOU WILL BE THROWN
INTO POLITICAL PRISON TO ROT.

IF YOU CROSS THE U.S. BORDER ILLEGALLY YOU GET:

1 - A JOB,
2 - A DRIVERS LICENSE,
3 - SOCIAL SECURITY CARD,
4 - WELFARE,
5 - FOOD STAMPS,
6 - CREDIT CARDS
7 - SUBSIDIZED RENT OR A LOAN TO BUY A HOUSE,
8 - FREE EDUCATION,
9 - FREE HEALTH CARE,
10 - A LOBBYIST IN WASHINGTON
11 - BILLIONS OF DOLLARS WORTH OF PUBLIC DOCUMENTS PRINTED IN
YOUR LANGUAGE
12 - AND THE RIGHT TO CARRY YOUR COUNTRY'S FLAG WHILE YOU
PROTEST THAT YOU DON'T GET ENOUGH RESPECT

WHICH BORDER WOULD YOU RISK CROSSING ILLEGALLY?  I JUST WANTED TO MAKE SURE I HAD A FIRM GRASP ON THE SITUATION...

Posted via email from John's posterous

The downside of consumer protection

We need financial reform - but hold off on any more “consumer protection”.  Consumer protection legislation contributed to the last financial meltdown.  Here are three consumer behaviors that added  to the problem and need repair:

1)       Too many consumers lied on their mortgage applications - with no downside.  Let’s prosecute for this fraud.

2)      Once these consumers stopped paying their mortgages they were allowed to stay in their homes for far too long while the banks were restricted on how fast they could foreclose on the property.  Many folks were living in their homes over a year after they stopped paying on their mortgages.  Let’s make it faster and less expensive for a lender to foreclose on a property when the borrower is not paying the loan.

3)      In many states it is so expensive or simply not allowed to go after home owners that have defaulted on their mortgages.  If your car gets reposed, the bank sells the car and goes after the borrower for the difference between what they collected and what was owed on the car.  That rarely happens in the home loan process.  That is why we are seeing so many “strategic foreclosures” today.  A strategic foreclosure is where the homeowner can afford to make the monthly payment but simply walks away from the home because the home is worth less than the mortgage and he passes the loss onto the bank.  Who makes up the difference - fellow tax payers like you and me.  Let’s enable the banks to more easily pursue defaulting borrowers when they walk away from their obligations.

It is not popular to criticize the little guy but much of the damage in the housing meltdown was caused by the behavior of the home buyer.  Fannie Mae, Freddie Mac and AIG fueled the fire and need reforming but they are not the only culprits; your friends, family and yes maybe even you were part of the problem.

Posted via email from John's posterous

Immigration Control

Arizona took the bull by the horns and now Obama is asking the states to back off managing the illegal immigration problem. Washington will take care of it and your check is in the mail.

The left is trying to solve the problem without racial profiling.  That is fine, but why don’t we simply require all legal US residents and citizens to carry a counterfeit-proof ID card that demonstrates the individual’s right to be here and to work here.  That is the way it is done in much of the Western World.  I am required to carry an ID in most states.  The problem is the state ID usually says nothing about my right to work in the country or how long I can stay on a work visa.

But the left does not really want to send back the 20 million illegal aliens in the US because these folks overwhelming become registered Democratic voters when they get legal residence.  

So mark my words.  Obama’s main proposed solution to illegal immigration will be to give amnesty to most of the illegals currently here.  There will be money thrown at border control;  there will be plenty of talk about keeping the next batch of illegals out of the country but the only significant change will be how many illegals will be made legal.

We absolutely need immigration, but we need to decide who comes here based on our country’s needs and interests.  We need to actively manage how many immigrants are allowed in each year, and what the job and education skills we need. 

Posted via email from John's posterous

Goldman criticized for shorting the housing market

Love ‘em or hate ‘em Golman Sachs and investment banks have an important role.

Today much of the criticism of GS is that they “shorted” the housing market – in other words they bet that housing prices would go down rather than up.  And the pundits are questioning if this process of betting that a price will go down is Un-American.  The general media questions if there if we should even allow these firms to bet that prices of anything will go down.  The exception is oil and gasoline – where the public and our politicians hate high prices. 

When we have a price (whether it is oil, gasoline, the stock market, gold, real estate, or electricity) that is too high, the bubble will get much worse without the pressure of the “shorts”.  The shorts help turn the price around to something that is more reasonable.  And in the process the shorts make money while the longs lose money. 

By the way if Goldman had gone long US housing prices instead of short, it would have simply meant bigger bailouts from Washington.  And that is a discussion for another day.

Posted via email from John's posterous

Saturday, April 24, 2010

8 in 10 Americans don't trust the federal government.

Nearly 8 in 10 Americans say they don't trust the federal government and have little faith it can solve America's ills, the survey found.  Who are the 2 in 10 that do trust them?

 

So why did we ever trust the federal government to “manage things” for us?  The federal government (under both Republican and Democratic leadership) has always been wasteful, inefficient and self-serving.  Then why do we ask the government for “help” anymore?  More of us are saying “Please don’t help us; just leave us alone.”

 

Americans are increasingly determined to help themselves by creating their own jobs, managing their own health care, managing their own salt intake and managing their own children’s education.

 

If in doubt leave the government out!

Posted via email from John's posterous

Friday, April 23, 2010

Other thoughts on the Civil War

The confederate war was about slavery – but that is not all.  President Lincoln cared more about preserving the country than eliminating slavery.  That is why he waited until September, 1962 to announce the Emancipation Proclamation.

I am pleased that we remained as one country and eliminated slavery.  But one question that is never asked is what was the basis for Lincoln thwarting the rights of any state to leave the union.

After the Revolutionary War, the 13 colonies decided to come together .  Imagine the discussion that would have ensued if the colonies had to explicitly give up their right to subsequently leave the union.

Posted via email from John's posterous

Airport Security idea!

 

Received this from a friend. 

 


This is so simple! What a great idea..thought you would appreciate this
one.

Here's a solution to all the controversy over full-body scanners at the
airports;

Have a booth that you can step into that will not X-ray you, but will

detonate any explosive device you may have on you.
 
It would be a win-win for everyone, and there would be none of this crap
about
racial profiling and this method would eliminate a long and
expensive trial. Justice would be quick and swift.
Case Closed!

This is so simple that it's brilliant. I can see it now: you're in the
airport terminal and you hear a muffled explosion. Shortly thereafter an
announcement comes over the PA system, "Attention standby passengers: we
now have a seat available on flight number..."

Posted via email from John's posterous

Wednesday, April 21, 2010

New carry-on baggage charge is terrific!

I am tired of Chuck Schumer (Senator NY) and the media beating up on Spirit Airline’s new carry-on baggage charge.  The concept is called unbundling.  Reduce overall rates and let the customer select the services he is willing to pay for.

When carry-on or checked-in luggage is free, travelers use much more of it and this extra expense gets passed on to everybody else.  When airlines started charging for checked-in luggage guess what?  Travelers used less of it.

Southwest started it all when they eliminated meals and gave us peanuts instead.  They eliminated reserved seats and as a result they found ways to reduce the idle time at airports when they were loading up passengers.   They drove down the cost of flying with these innovations.  But guess what, they still don’t have reserved seats although they are one of the few that does not charge for checked-in luggage.

If Chuck Schumer and the media were running the airlines, we would have travel costs that are twice as much and virtually no choice or competition.

Get off Spirit’s back and while you are at it get off my back.

Posted via email from John's posterous

Tuesday, April 20, 2010

The US government requires an oatmeal and brussel sprouts diet!

The FDA announced its plans to remove salt from the American diet.  Not too long from now we will also see regulations that require the removal of all sugar, caffeine, food with fat contents exceeding 20 percent of the total calories, dairy products,  red meat and cholesterol.  What will be left?  You guessed it, oatmeal (and I don’t mean cookies) and brussel sprouts every meal of every day.

And if your body weight gets beyond the government mandated level for your height and age then you lose the right to your oatmeal.

The logic for these changes is simple.  The government knows best what is good for you and if you don’t have good enough sense to take care of that body of yours the government will mandate compliance.

Now that the government is going to be paying for most if not all of your health care costs, they will no longer put up with your dietary indiscretions.

Posted via email from John's posterous

Sunday, April 18, 2010

30 ways to reduce federal spending today!

April 15 brought lots of attention to taxes and the expected increase in taxes because our spending is so out of control.  But alas not much discussion about how we can reduce the spending of the federal government.  Some folks will point out that such a high percentage of the budget goes to the military, social security, Medicare and Medicaid that it is not worth the time to start on the little things. 

But alas being thrifty is a habit (just not in our government).  Let’s build some momentum and actually start cutting programs, agencies and services from the federal government that are too expensive or too ineffective.  It is kind of like a messy garage.  Once the garage reaches a certain level of messiness you need to bring in the dumpster and start tossing stuff away.  It is hard work but work that we need to get down to.

Here are 30 things the Federal Government should consider in reducing our spending today (other than cleaning up the huge medical insurance system we are about to have)!

1.        Remove all agriculture subsidies and agricultural departments and shut down the Farm Credit and Small Business Administrations. 

2.       Disband the Mine Safety and Health Administration.  We saw from the recent accident in West Virginia that they are not very effective.  Replace the system with a simple massive penalty for every death that one incurs and for every accident that incurs on your job site.  If you have a death then there is a $25 million penalty per loss of life (in addition to what is paid out in civil lawsuits).  If there is loss of a limb then the company is fined $5 million.  And for every $100 that the company is fined the CEO is fined an additional $1 out of his own pocket.  Require a bond be posted to insure that the company and their insurance company have the wherewithal to pay the penalties.

3.       Remove all energy subsidies and add a 50 cents a gallon tax on gasoline and diesel.  Just look at the ethanol fiasco and ask yourselves what your average congressman knows about energy.

4.       Shut down the US Department of Education and leave it entirely to the states and local governments.

5.       Shut down all subsidies for public television, public radio and the arts (the Commission of Fine Arts to begin with).  When PBS was created in 1970 there was little cable television, no Discovery Channel and no History Channel.  We don’t need to subsidize this anymore.

6.       Stop all lending of any kind (this includes college loans, small businesses and farms).

7.       Shut down NASA.  Let private enterprise go to space when they can make it pay off.

8.       Slash pay and benefits to Congress and the Executive branch by 50%.

9.       Eliminate all transportation subsidies.

10.   Stop all scientific and medical research by the federal government other than that associated with National Defense.  Let the private sector manage this.

11.   Re-privatize the security function at airports.  Privatize the air traffic control function.

12.   Stop all subsidies for small local airports.

13.   Charge the losing side in federal court actions for their share of the court costs.

14.   Convert the federal retiree retirement program going forward from a traditional pension program to a 401K matching program.

15.   Stop all programs that “serve” and I say serve very loosely the Native Americans.  Specifically the Bureau of Indian Affairs.  Give each Native American currently living on an Indian reservation a one time lump-sum payment and then get out of their way and leave them alone.

16.   Stop all subsidies for rural families and communities.

17.   Get the government out of all job training - they consistently train our fellow citizens for yesterday’s jobs.

18.   Get the federal government out of the business of funding unemployment benefits.

19.   Disband the US Department of Labor’s Women’s Bureau.  You don’t know what it does and neither do I.

20.   Shut down the Food and Drug Administration.  Replace it with a private system.  For a new drug a company would have to post a bond for every pill they sell (say $50).  So the bonding authority does the due diligence that the government does today and stands behind their research financially.  The drug company must periodically publish how much is in this reserve bond for each of their drugs.  A new drug would have little in the bond and potential users and their doctors would thereby recognize that this drug has less of a history and might pose more of a risk.  As for food, I would use the same kind of bonding process.  If you poison me then I can sue you for up to the amount in the bond for that food item.

21.   Privatize all the Power Administrations (like Bonneville).  There is no reason for the federal government to be in the electricity business and they are far less efficient than the private sector.

22.   Shut down the Center for Nutrition Policy and Promotion.  The government is not very good at promoting good nutrition - so let’s leave this to the private and non-profit sector.

23.   Let’s close down the US Commission on International Religious Freedom. 

24.   Shut down the Corporation for National and Community Service.  Americans volunteer more than any other country in the world and we don’t need a bunch of Washington bureaucrats urging us on while charging us far too much for this cheerleading.

25.   Shut down the Office of English Language Acquisition.  They are failing at their mission.

26.   Close the Office of National Aids Policy.  We needed a major effort to fight aids 30 years ago but now the disease is far more manageable and the causes are understood by any adult with an IQ over 90.  Leave this problem to doctors, parents and churches to take forward.  The government does not help.

27.   Shutter the National Institute for Literacy.  This organization never did much good for all the money they spent.  This problem is much better being fought at the local level.

28.   Close down the Peace Corps.  Ask anyone that has served in this organization and you will find how useless they are.

29.   Privatize the US Postal Service.  Break it up and sell it off.

30.   Close Radio Free Europe.  Leave this to the EU.

I am not saying that none of these programs and agencies do any good.  I am simply saying is that there is never any push back on expenses or changing their missions.  The goal of every bureaucracy once established is to continue to exist.  So a program gets stated and there is no constituency to reduce expenses and to notice when the function is no longer needed.

Posted via email from John's posterous

Tuesday, April 13, 2010

Job Lock

“Job Lock” - Just heard the term on an interview with Stephen Dubner coauthor of Freakanomics.

The first kind of job lock is if one has a pre-existing health condition and have health care through your employer.  You can’t afford to change jobs because you are likely to end up without health insurance for the very condition for which you need it.

The second kind of job lock is when you have a pension program through your existing employer and you have not vested yet.  For example, someone in the military that has 18 years of service and gets zero pension if he retires with less than 20 years of service. 

A third example of job lock is a teacher or airline pilot and whose seniority and compensation is tied so closely to years of service with the same employer.  If she changes jobs she goes to the end of the line, has the lowest seniority and the lowest pay.

Of course a fourth kind of job lock is when there is only one employer in town and because you can’t leave the area (say for family reasons) then the employee loses the practical option to change jobs.

A related example of lock is “state lock”.  A woman loses her job in California but can’t move to another state with better job prospects without giving up her unemployment benefits.  She stays in the state with the bad employment prospects rather than moving on to greener pastures.

But our economy is most dynamic and healthy when employees can easily move around – especially where they move to a company that will make the best use of her skills.  Every individual changing jobs takes his experiences and ideas with him to the new opportunity.  Fewer people get into ruts and there is a better mix of people, skills and experience.

In general the idea of far greater benefits and compensation for seniority creates job lock and is a bad idea.  I have always thought that new employees should get four weeks of vacation and the longer they stay on the job the less vacation they get (say two weeks by the time they are 65).   Just the opposite of how it is done today.

Posted via email from John's posterous

Sunday, April 11, 2010

California cities and counties pension programs are underfunded by $28 billion

What do we do about our public employee pensions?

Why not change these retirement programs from defined contribution plans (traditional pensions) to defined benefit plans (IRAs and 401Ks).  Virtually all US employers have eliminated their public pension programs and replaced them with 401K programs.  The only exceptions are government and public utilities which can maintain these pensions because they face little or no competition and can generally pass on the costs to their ratepayers.

But defined benefit programs have universally gotten governments into big problems.  It is just too easy for politicians to garner favor with their public employee unions with pension benefits far above the private sector.  And when times turn tough, they find themselves with commitments that they have no chance of meeting.

The cities and counties in California are about $28 billion underfunded for what they have promised.  And this does not even consider the massive underfunding for the state workers in California.

So here is my suggestion.  First replace all public pensions with programs where the government contributes a certain amount each month to the employee’s retirement plan and the employee also contributes a certain amount each month.  In good times the government can choose to increase their contributions and in bad times they can reduce their contributions.  Private companies don not feel locked into a given pay system but government seems incapable of adjusting compensation down (they are good at ratcheting it up).

And what do we do with the $28 billion deficit?  Split in some form between the local government (via borrowing), the state (also via borrowing), the federal government (also via borrowing after all they have been guaranteeing pension for years) and finally discount the amount of cash going into every employees account.  For those over 70, no discount, for those from 60-60 say a 5% discount, down to those 20-29 say a 25% discount.  If you were a politician I would add a further 25% discount since you were asleep at the wheel to begin with. 

Public pensions are like other public spending and public debt, it is easy for politicians to borrow from tomorrow to satisfy today’s unions and it eventually catches up.

Posted via email from John's posterous

Friday, April 2, 2010

Prisons cost so much!

Prisons cost so much.  Why aren't we using GPS tracking of those on parole, juvenile offenders, drunk drivers, with GPS tracking technology rather than the far more expensive prison option? 

Posted via email from John's posterous

Thursday, April 1, 2010

A true hero dies!

Forget Michael Jackson, forget Keith Ledger, forget Farah Fawcett. They were all pretenders ; JaimeEscalante was the real deal.

Escalante died a few days ago amid far too little media coverage.  Born in Bolivia, he moved to the US in 1964.  When he got to the US, he could not speak English but he learned it fast.  He studied at night at Pasadena City College and earned an AA degree in Biology and eventually a BS degree at Cal State Los Angeles in Mathematics.

He first worked in the private sector but eventually got a teachers job at Garfield High School.  Determined to change the status quo, Escalante had to persuade the first few students who would listen to him that they could control their futures with the right education (as opposed to the Ethnomusicology studies that some were suggesting).

Escalante continued to teach at Garfield High, but it was not until 1979 that Escalante instructed his first calculus class. By 1981, the class had 15 students,  14 of whom passed.  

In 1982, Escalante came into the national spotlight when 18 of his students passed the Advanced Placement calculus exam. The Educational Testing Service found these scores to be suspicious, because all of the students made the exact same math error on problem #6, and also used the same unusual variable names. Fourteen of those who passed were asked to take the exam again. Twelve of the 14 agreed to retake the test and did well enough to have their scores reinstated.

In 1983, the number of students enrolling and passing the A.P. calculus test more than doubled. That year 33 students took the exam and 30 passed.  By 1987, 73 students passed the A.P. calculus AB exam and another 12 passed the BC version of the test.  

1988 saw the release of a book Escalante: The Best Teacher in America by Jay Mathews (ISBN 0-8050-1195-1) and the movie Stand and Deliver ( a very good movie) detailing the events of 1982. During this time he shared with them: "The key to my success with youngsters is a very simple and time-honored tradition: hard work for teacher and student alike".  In my mind he introduced the first “charter school” principles.

By the way, he was opposed to bilingual education.  Apparently he thought that our immigrants needed to learn the English language to be successful.

We will miss him.

Posted via email from John's posterous

Dear Employees

Here is an email from a friend

Dear Employees:

As the CEO of this organization, I have resigned myself to the fact that
Barack Obama is our President and that our taxes and government fees
will increase in a BIG way.

To compensate for these increases, our prices would have to
increase by about 10%.  But since we cannot increase our
prices right now due to the dismal state of the economy, we
will have to lay off sixty of our employees instead.

This has really been bothering me since I believe we are family here and
I  didn't know how to choose  who would have to go.

So, this is what I did. I walked through our parking lots and found sixty
'Obama' bumper stickers on our employees' cars and have decided
these folks will be the ones to let go.

I can't think of a more fair way to approach this problem. They
voted for change......  I gave it to them.
I will see the rest of you at the annual company picnic.

THE BOSS

Posted via email from John's posterous