Coffee klatsch
July 25th, 2012
05:00 AM ET
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  1. Ichal

    CIndy,What clott is saying is that the fiicaannl crisis is so wide spread an so deep that no one actor can address it. Regardless of whether that actor is a state a country of a school teacher.Q.Why?A. There are about 700 800 trillion is global derivatives in the global market right now. The global GDP is approx 65 trillion. The root cause of the fiicaannl crisis is that the global fiicaannl system is currently holding 800 trillion in derivatives that were valued at that price based on homes appreciating in value at 10%/yr. The creation of these derivatives assumed that such growth rates would continue for the life of the derivatives (years, decades). As long as everyone agreed that homes would indeed continue to increase in price at such a rate then banks would loan money to each other based on the value of the derivatives. As this behavior continued the banks found that the more money they invested in these instruments, the more they would make. And even prudent banks were forced into this as they could not compete with the banks that were doing it, if they stayed out of the derivatives. The end result is that just like the consumer, the banks spent all of their money and then borrowed more money so that they could keep spending (investing) in these derivatives. Now banks are required to hold a minimum amount of cash in its vaults, a rrequired reserve rate. US law states that the required reserve rate for commercial banks is 3%. So if a bank has $100 in checking and savings accounts, then they are required to keep $3 in the bank and can loan out or invest the other $97. It gets more complicated. If the bank does not have the 3% as required by law the bank can borrow it from the FED in the form of a loan at a certain interest rate. As of Spring 2008 100% of cash reserves in ALL of the US banks is borrowed money. All of the banks in the US combined have $0 of their own money in their vaults. Every dollar they have, every dollar that they hand you when you withdraw money is money that has been borrowed from the federal reserve and must be paid back with interest. There is yet another component. Just like you and me, banks must make minimum payments of the loans that they have taken to buy derivatives. And like credit cars, the payments that the banks have to make can change based on certain criteria such as credit rating ( i.e moodies rating a derivative AAA).Now how does all of this come together? The 800 trillion in derivatives can be seem as collateral for a set of loans ( a huge number of loans between a huge number of banks around the world). Remeber that the 800 trillion value was based on 10% annual home price increase. Well homes are now decreasing in value so those derivatives are no longer worth 800 trillion. Well now the banks have a problem. they loaned out 800 trillion (not exactly but this is a rough overview)on the basis of 800 trillion worth of derivatives as collateral. The collateral is now worth pennies on the dollar based upon the few transactions that have actually taken place. This means that if i dont pay the bank the 800 trillion i owe them now along with an interst rate, they will take the derivatives and sell them in order to recoup their money. But the derivatives are only worth 100 trillion. the only way i was able to pay the bank back was to use that 800 trillion to buy homes ( as an example and then sell them for more then i bought them in a very short period of time ( i.e flip them). Well i can no longer flip houses as there are not enough people who have enough money or make enough more for me to sell them homes ( the problem of 1st time buyers being priced out of the market). Now i can no longer pay back the bank of the 800 trillion so the bank may take all of my derivatives and sell them, similar to a foreclosure. But the banks has a problem too. It will not get 800 trillion for the derivatives because the same problem that caused me to not be able to pay the bank causes the bank to not be able to cell the derivatives. The bank has now lost 700 trillion. But the bank owes that 700 trillion to its account holders ( people with checking and savings accounts) and to the FED (or their national equivalent). We have all lost money. The only way to replace the 700 trillion is to print it. but that would cause massive inflation and all of the money you got back would actually be worth less then what you originally gave the bank due to inflation.lets recap: I put $100 in the bank. The bank bought $100 worth of derivatives ( i.e loaned someone the money). But by law has to have 3% reserves so the bank borrows $3 from the FED. Housing prices stop increasing at 10% and start to drop so the person who borrowed the money has lost it and cannot pay it back. The bank can only sell the collateral for $20 but owes me $100 and the FED $3. Now the borrower has lost $100, the bank has lost $80 but still owes me and the FED a total of $103I walk to a bank and deposit $100Start of cycle (assets and Liabilities):Bank: $+100Borrower: $0Step 2, Bank loans money to borrow for a $10 fee and borrows from the FED to cover its reserve requirement:Bank:(-)$103 negative $103 due to its reserve being borrowed money and owing me my account balance, but it would be booked as a positive value as the borrower owes the bank $110. The bank accounts for this as a net positive $7Borrower:$100Step 3, homes lose value:Bank:(-)$3 + collateral _+ FeeBorrower:$0 (he cant pay his bill, the principle $100 of the $10 fee, so the bank takes the derivatives as collateral)Step 4 bank tries to sell collateral and only gets 20% of the original value:Bank:(-)$103 + $20 = (-)$83Borrower: $0Step 5 who does the bank pay back?FED: +$2Me: +$81bank: $-20the bank now owes me money and if it cant pay me then i lose $19, and the FED loses $1 even though i did not take part in the loan cycle directly

    August 6, 2012 at 4:07 am | Reply
  2. Jiji

    Brian Posted on I like MacBook computers very much, there are nuuomers great features presented by them. I agree with the fact that investing money in developing the CPU in the case of such devices was a very good idea, an idea that was necessary and which enabled them to design products that were considered much more developed than other similar products that had been previously released on the market

    August 6, 2012 at 1:32 am | Reply
  3. Buket

    I tried Circuits (on a Linode 360 running Linux 2.6) buacese its component architecture looked interesting and the example code was clean.$ sysctl net.core.somaxconn net.core.netdev_max_backlog net.core.somaxconn = 250000 net.core.netdev_max_backlog = 2500$ cat /proc/sys/fs/file-max 1001000$ ulimit -n 1001000I changed port to 10000 in Circuits example code to match your httperf command-line.I also followed the instructions for installing a custom httperf. Be careful to use the proper httperf if you already had it installed (e.g. by default it installs to /usr/local/bin/).I also made sure that Circuits was using epoll:PongServer((‘localhost’, 10000), poller=EPoll, backlog=500).run()$ httperf –hog –timeout=60 –client=0/1 –server=localhost –port=10000 –uri=/ –rate=400 –send-buffer=4096 –recv-buffer=16384 –num-conns=40000 –num-calls=1httperf: warning: open file limit > FD_SETSIZE; limiting max. # of open files to FD_SETSIZEMaximum connect burst length: 3Total: connections 40000 requests 33288 replies 33216 test-duration 204.995 sConnection rate: 195.1 conn/s (5.1 ms/conn, <=16450 concurrent connections) Connection time [ms]: min 0.1 avg 12921.3 max 45608.6 median 0.5 stddev 20278.0 Connection time [ms]: connect 12973.1 Connection length [replies/conn]: 1.000Request rate: 162.4 req/s (6.2 ms/req) Request size [B]: 62.0Reply rate [replies/s]: min 0.0 avg 162.0 max 400.0 stddev 195.6 (41 samples) Reply time [ms]: response 16.2 transfer 0.0 Reply size [B]: header 38.0 content 5.0 footer 0.0 (total 43.0) Reply status: 1xx=0 2xx=33216 3xx=0 4xx=0 5xx=0CPU time [s]: user 37.28 system 167.49 (user 18.2% system 81.7% total 99.9%) Net I/O: 16.6 KB/s (0.1*10^6 bps)Errors: total 6784 client-timo 6784 socket-timo 0 connrefused 0 connreset 0 Errors: fd-unavail 0 addrunavail 0 ftab-full 0 other 0No errors (all 2xx).

    August 4, 2012 at 9:10 am | Reply
  4. Morgana

    Posted on incredible, that was a very good read. In cinolusocn, someone who actually thinks and understands what they are blogging about. Quite difficult to find of late, especially on the web . I bookmarked your web blog and will make sure to keep coming back here if this is how you always write. thank you, keep it up! .

    August 4, 2012 at 4:24 am | Reply
  5. Mary Shannon@Kat Kinsman

    Hi, Kat. If you guys ever need a human interest story for Eatocracy, how about a post about a local (Putnam County, NY) library that received grant $$ to develop a program, including a garden, to teach children how to grow, prepare and eat their own vegetables? The is in its third year. http://pattersonlibrary.org/2012/06/08/kids-have-a-great-time-planting-the-2012-story-time-garden/

    July 25, 2012 at 9:48 am | Reply
  6. Mary Shannon

    Good morning! I think one guy in the picture said the other guy's girl's skirt was ugly, and he'd be right.

    July 25, 2012 at 9:29 am | Reply
    • Mildred

      The scenery reminds me of the movie Dirty Dancing for some reason.

      July 25, 2012 at 12:19 pm | Reply
    • ™©JbJiNg!eŚ®™

      I think both skirts are ugly...maybe they were having coffee after the square dance...or maybe there was something in that coffee. He looks majorly PO'd though.

      July 25, 2012 at 1:19 pm | Reply
      • angrybabykitty

        You know now I think about it, it looks like the guy in the red is trying to act out a scene from a Bruce Lee movie.. and both skirts are ugly!

        July 25, 2012 at 1:21 pm | Reply
        • AleeD®

          It looks like he's trying to do an impersonation of Jim Carrey and the rest of them are trying to convince him to stop.

          July 25, 2012 at 2:39 pm |
    • Dynasty

      I feel this is largely msfiniorming to someone who doesn’t understand how the frameworks work as the approaches and architectures wildly differ:For example, would fork in two processes and that’s the only reason it won the benchmark. It’s a nice feature but one could argue that this should be handled elsewhere (loadbalancer/clustering).gevent is largely written in C (well, pyrex apparently) and that’s the reason it’s the second fastest (it would clearly win if would run in single process mode).Also, the code approaches differ, some start coroutines/greenlets/whateverlets on a new connection and some don’t. This is a very important difference and the results can differ much depending on this aspect.The error rates worry me – I think it’s a good exercise to find out why they happen. I would add portability and test code coverage to the comparison table.

      August 4, 2012 at 11:56 am | Reply
  7. Truth™

    Good morning all!
    How's everyone doing today?

    July 25, 2012 at 8:35 am | Reply
  8. Rav

    I have found that eating raw asparagus
    in the spring rejuvenates you like Magic.

    Instead of getting that Gee i wish i had steamed it
    (in your stomach feeling)
    you end up going back for more.

    July 25, 2012 at 8:33 am | Reply
    • ™©JbJiNg!eŚ®™

      Dang, I thought this was from RH and had to do a double take...RH and veggies do not mix.

      July 25, 2012 at 1:20 pm | Reply
      • RichardHead@JBJ

        Ummmm...What are Veggies?

        July 25, 2012 at 2:19 pm | Reply
        • AleeD®

          I'm not sure, but apparently they dance for Jaina.

          July 25, 2012 at 2:37 pm |
        • ™©JbJiNg!eŚ®™RH & AleeD

          RH – You know those things that grow mostly in the ground, mostly green, healthy stuff??

          AleeD – Good one!

          July 25, 2012 at 4:13 pm |
    • Suparjo

      Posted on I’d must test with you here, which isn't something I uulasly do! I get pleasure from reading a post that will make folks think. Thanks for permitting me to remark!

      August 4, 2012 at 1:31 am | Reply
  9. JainaJade

    Morning! I have some "preacher" cookies for the group. Not sure how long I'm going to be at work today due to fun fun fun construction....

    July 25, 2012 at 8:27 am | Reply
    • angrybabykitty

      Morning. What are "preacher" cookies? I've never heard of them. How are you this morning?

      July 25, 2012 at 9:07 am | Reply
      • JainaJade

        they are a type of no-bake cookie, whole idea that they can be done in the time it takes the preacher to walk up your drive. I'll have the recipe up on my blog next week (dancingveggies.com)

        July 25, 2012 at 11:42 am | Reply
        • angrybabykitty

          Awesome, thanks. I bookmarked your blog too :). Love the Star Wars pancake recipie. We are big SW fans!

          July 25, 2012 at 12:25 pm |
  10. angrybabykitty

    Whoa, what's up with the picture? Haha!

    Good morning to everyone! Hope you have a good day. The mold problem is massive mess. Looking at two weeks of repair work. Will be staying at a friend's house while they are on vacation. It's supposed to be very hot today so I plan on staying indoors!

    July 25, 2012 at 6:15 am | Reply
    • RichardHead

      Either the guy in the red shirt was just accused of having a terrible haircut or he bit into a jalapeno thinking it was a pickle.

      July 25, 2012 at 7:47 am | Reply
      • angrybabykitty

        Makes sense, I tend to think more along the lines of having a bad haircut.

        July 25, 2012 at 7:51 am | Reply
      • ™©JbJiNg!eŚ®™

        Bad haircut and buck teeth, not a good look...

        July 25, 2012 at 1:22 pm | Reply

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