Just a catchup

Hi Frankie. Thinking about you lately. It is that time of year. Betty had a party for Ray yesterday. Chris, Charlie, Celeste, Will and someone you do not know, my daughter inlaw Rachel, all made the trip. While the party in the evening was a surprise, the visiting family did what they always do and converged on Ray, swimming in his pool, sunning on his pier and riding in his boat. The pictures I saw looked like fun. But enough of present day, this note is about history, April 15 and you. On April 15, 1865, Lincoln died of his wounds from the night before. Half a century or so later, on April 15, the Titanic sunk from its wounds from the night before. Over a century later we can only guess what will happen today from last nights wounds. I was not at Rays party. Then in 1964, about half a century or so after the Titanic sank, you were born. The seventh. The youngest for another two and a half years, the smallest for much longer. You had a wonderful view of the world as a munchkin. I thinking today of you standing next to Dad, by the master bathroom in the morning while Dad shaved and discussing anything and prefacing your comments with; "Dad, I remmeber when I was a man". I think you always got a dap of shaving cream and a bladeless razor as a reward. When we moved to West Nyack, you were playing football in the front yard as the moving men unloaded the moving van. A very big African American man, stopped and looked for a moment and laughed and told me you were wonderful to watch, with such moves and confidence. No one counld catch you. You held on to that attribute your whole life. Always able to laugh, especially at yourself, conversant in many topics, expert in some (I am thinking sports), you made simple conversation enjoyable and interesting, and usually entertaining. And, you and Julie were wonderful hosts. An attribute I took advantage of often enough on my pilgramages to Rockland County to visit "home". Frankie, Frankie Doodle, Fredo, Rooster et.al., I am thinking of and missing you today. A bit more than most days. Happy Birthday. Love Bill

An Empty Weekend

Friday night: At the end of a two-and-a-half-hour bus ride home on Friday nights, Santa and Spaulding would pick me up at the Kuldiga bus station. The little old Honda CRV would be parked in the Rimi supermarket parking lot across the street from the bus station and as the bus went by the parking lot heading into the station I would get a profile view of the car with Santa in the front seat or not (sometimes she would shop whole waiting), and always Spaulding’s figure in the back seat. He would look big in comparison to the car, which was orange, only slightly lighter than his red color. As I would approach the car he would get in between the two from seats standing on the consul and excitedly lick my face and give me a welcome that repaired the burden of any travels (and on occasion the Latvian bus system will provide you burdens). I would never get close to a hello kiss from Santa because Spaulding would not vacate that middle spot until we were well on our way out of town. The back-left window would be his next destination on that ride, but only after coaxing him to it a few times. When we arrive home, he would plant himself under my table desk. Since I arrived late I would have dinner at my desk. Spaulding, as he would do at any meal he could get to, willing shared my meal with me, ensuring no leftovers and a very clean plate. Saturday morning: Saturday morning would start with me stumbling down stairs and going into the kitchen to make a cup of tea. Tea in hand, I would go to the study where Spaulding would be on the couch or in a chair. Upon seeing me he would pop up and we would head out the door for a short walk down our 200-yard-long driveway. Half the walk was through fields on each side and the other half with forest. I would talk to God, usually thanking him for these beautiful natural surroundings, Spaulding would take care of all the business a morning brings. At the foot of the driveway, I would look up and won our isolated dirt road, to the East to greet the morning sun, to the west to observe the incoming weather. Spaulding would mark the trees and bushes needing marking that morning. After a minute or two we would turn around and head back to the house. He would be in more of a rush to get back than me, usually meeting me at the side door as I rounded a corner. Once inside, the, other Saturday morning activities at my desk would begin liking reading the news or answering emails. Spaulding at my feet under the desk. After a while, Saturday morning breakfast, my favorite meal of the week would begin. Usually Santa would start this by frying up fresh bacon. Some-how only a certain percentage of the bacon being cut got to the frying pan. I suspect Spaulding’s charms do in fact work on Santa. At the table, my fried bacon would be shared in about 50/50 proportions with Spaulding. He could eat eggs, but only from my plate, he had no interest in being served his own eggs. He had egg a lot. After breakfast, we go to town each week to have a latte at our favorite coffee shop and do the weeks shopping. This is Spaulding’s favorite trip because no one but him is ever invited, so it validates his special family status above all other creatures (or persons). He would happily hop into the back seat of the car and immediately get on the consul between the front two seats. He would concentrate on the road in front of us with a concerned look on his face. It would take a minute or two and I would look at him and offer to let him drive. He usually declined and retreated to his window which would be rolled half way down for him to take in all that fresh country air. Once at the coffee shop, Santa and I would hop out of the car and ask him to be good. This was a sincere request because any stranger who strolled too close to the car would discover that there was a fairly effective alarm system semi-sleeping in the back seat. This same request would be delivered at each Saturday morning stop. I have no proof, but I suspect that the little orange Honda CRV was understood by the good people of Kuldiga to be left alone on Saturday morning if ever they would come upon it. The trip home would include the same rituals, where Spaulding would indicate his interest in leading us home from his perch on the center consul but eventually move to the window to enjoy the view and the fresh air. Today: This is how each weekend has started the last four and a half years. But this weekend was different. There was an empty back seat in little orange Honda CRV. I actually got to kiss my wife hello upon being picked up at the bus station on Friday night. I did not have the strength to walk the driveway and talk to God, he knows I have only one request of him this weekend. I ate my own bacon and eggs. The drive to the coffee shop required only my piloting and the Honda sat quiet and unguarded in Kuldiga this morning. The pedestrian of town having no surprises. This weekend seems very empty and it isn’t even 1:00 yet.

Saying Goodbye to an old friend

I have to say goodbye today to my beloved vizsla, Captain Spaulding. He sustained a spinal injury about 2 months ago and his health has deteriorated sharply since. He cannot get up and walk, his blatter and bowel functions are pretty close to gone and he shivers with pain if not on a pain killer. While attributing a human experience like suffering to an animal was not deemed to be appropriate to apply to animals in the past, C.S. Lewis wrote there are higher animals, like pets who become part of a family and so deserve some of the sanctity reserved for people. Whether Spaulding’s pain creates suffering for him the family is suffering for him. So balancing that suffering and the sanctity of his family life, that hard decision to end the suffering and free him has been taken and his suffering and pain will stop today. A vet will visit us this afternoon and do what they do. Sparlings’ remains will be buried just above my vineyard under an apple tree, a tree that is usually very fruitful, but for some reason barren this year. It is a beautiful spot worthy of his memory. We have had Spaulding for a decade. Our house in Prague had been broken into and one of the more tolerable security measures was get a dog. As for providing better security, he failed, but was great to us as a family member. Maybe not so great as a neighbor or friend (to humans that is, he got along well with most of the dogs in our various neighborhoods and had sincere affection for some). To people visiting or who we may come across, he could be an example of the prefect dog or the perfect monster. It was impossible to predict and often you came away with the same result. He terrorized old ladies on the beach for no understandable reason while being affectionate and protective of my aging Mother. On one occasion, he jumped into a visiting friends lap introducing her white blouse to her red wine. So, while Spaulding may have been a saint to some of us, he was not that kind of saint. Spaulding brought us together simply by walking and sitting with us. In the beautiful parks of Prague, the beaches of Florida or the forests of Latvia, walking Spaulding was a totally enjoyable and bonding experience. His instincts as a bird dog and pointer made it impossible for him to walk next to you. Instead, he would be out in front exploring, constantly circling you as you progressed, ensuring that every creature within 100 feet of your path was tormented with curiosity and usually chased away. His nobility upon finishing the task was second to none, his purpose and role in walking we humans safely complete. Nature was a better with Spaulding in it. Sitting at the dinner or picnic table, his place was in my lap, offering the occasional chin lick, never stealing food but seducing me to share what was on my plate. He was always an interested conversationalist, always winding up with the most good stuff without really giving away his motives for participation. On the couch for the occasional evening we might be watching a movie or binge watching some TV show, he only needed to be in the spot you unknowingly pre-warmed for him. He enjoyed television and gave me great competition on who fell asleep first. He never had to hold the TV channel changer and always made sure any bowl of ice cream started was finished and quite clean. Our connection pure, he somehow loved the things I love. He had an incredibly expressive face and was often speaking to you, although in his own language. You pretty much always knew where he stood on most domestic big issues, like; should cats or other dogs be invited to the dinner table, now would be a good time for a walk, now would be a good time for dinner or a snack, and other less important issues. He also expressed the thought; are you two arguing because that is creating too much stress for me. He and his face often promoted domestic tranquility. We shared homes in three countries over two continents the last decade. We shred many movies together. I first saw the film Marley and Me on a plane from Prague headed to New York with him in the cargo hull (maybe increasing its tear jerk ending a million-fold). Walks, meals, movies, all will be less enjoyable without him. So today I say goodbye to my friend. There is no question he is this man’s best friend. I take a bit of comfort though, since I believe heaven will be for each of us a place where God’s love is perfected with all of his creation, I will see you again one day my friend.

A wonderful Christmas piece from a very interesting author. Christmas and Living beyond Fear The archangel Gabriel encouraged Mary and Joseph to trust in God. By George Weigel — December 24, 2016 Thanks to the crèche, introduced to Western Christendom by Saint Francis of Assisi in 1223, the Christmas story has become seamless: a unified tale with a single cast of characters, from Mary, Joseph, and the infant savior, wrapped in swaddling clothes and laid in a manger, through the choir of angels, the shepherds, the local Bethlehem townsfolk, the census-takers, the Magi, and wicked Herod the Great. Yet the two gospel “infancy narratives” from which we construct the Christmas story are quite distinct. The leading figure in Matthew’s account of the birth, infancy, and early childhood of Jesus is the just man, Joseph, who is told in a dream that the unexpected child in the womb of his betrothed is “of the Holy Spirit” (Matthew 1:20) — and who then saves the child from the murderous jealousy of Herod by taking his little family to Egypt. By contrast, Mary is the principal actor in Luke’s infancy narrative, and it is to her that the angel Gabriel announces the Incarnation, of which she is invited to be the human agent. Mary is the driver of the story throughout the birth and childhood of Jesus, right through the dramatic scene when she loses her son in the tumult of Jerusalem at Passover time and chastises Jesus after finding him with the teachers of Israel in the Temple. Matthew’s genealogy of the savior, addressed to what is thought to have been a Jewish-Christian audience, begins Jesus’s lineage with Abraham and centers it on King David: Thus, at the very outset of his gospel, Matthew proclaims that this Jesus is the Davidic king-messiah for whom Israel has longed, although he will reign in a different way over a different kind of kingdom. Luke, writing to what is thought to have been a more Greco-Christian audience, drives the genealogy backward through David and Abraham to Adam, “the son of God” (Luke 3:38) — thus underscoring the universality of Jesus’s messianic mission, to which Matthew alludes indirectly by the tale of the “wise men from the East” who had “seen his star in the East” and had “come . . . to worship him” (Matthew 2:1–2). Yet it is the Greco-Christian Luke who tells the story of the miraculous birth of John the Baptist (son of the Jewish priest Zechariah) as the prelude to the story of Jesus, thus making John the hinge between the Old Testament and the New, between the covenant with the people of Israel and the New Covenant in which the “wild . . . shoot” of the Gentiles is grafted onto the “olive tree” of Israel (Romans 11:17). It’s a bit complicated. So we may be grateful to the Poverello of Assisi for bringing this all together in a singularly winsome way by inventing the crèche. Yet what struck me recently on pondering these familiar but nonetheless distinct (and even disjunct) accounts is the link between them: the angelic admonition, “Be not afraid.” In the first chapter of Matthew’s gospel, the archangel Gabriel tells Joseph (who is considering a quiet dissolution of his betrothal to the pregnant Mary) not to fear taking her for his wife. In the first chapter of Luke, the same Gabriel — whose name in Hebrew means “God is my strength” — tells the virgin teenager not to be afraid, for “you have found favor with God” and thus have been chosen to be the God-bearer, Theotokos: to which Mary replies with the paradigmatic statement of Christian discipleship, “Be it done unto me according to thy word” (Luke 1:38). The Incarnation and the birth of the Messiah are a summons to fearlessness: and not the fearlessness that ignores what is objectively frightening, but the fearlessness that lives on the far side of fear in covenant relationship with the God who is Emmanuel (Isaiah 7:14), “God with us.” This is not the fearsome god of the Phoenicians and Carthaginians who demands, and gets, child sacrifice; nor is the God of the Bible like the Homeric deities in the Iliad and the Odyssey, for whom men and women are playthings to be manipulated on a terrestrial gaming board. No, Emmanuel is, literally, God-with-us: with us at the beginning of the Covenant with Israel, on pilgrimage from the bondage of Egypt and into the freedom that truly liberates through righteous living; with us in the manger at the beginning of the New Covenant, dependent on human cooperation for the beginnings of his salvific mission yet radiating peace and light. This is a good Christmas season to be summoned once again to fearlessness, for it comes at the end of a year of fear. Underneath the passions and cacophony of the 2016 election campaign one could sense deep fears — very few of which have been assuaged, on either side of the partisan divide, since the result came into focus in the small hours of November 9. Fear stalks the Middle East, cradle of civilization and birthplace of biblical religion, in various merciless forms. Fear now haunts Europe, as the dry husk of a once vibrantly Christian culture — a German Weihnachtsmarkt, or “Christmas market” — is targeted by homicidal maniacs claiming a religious warrant for their mayhem and cruelty. Throughout the world, order is unraveling, because order must be maintained and has not been for the past eight years. And when order unravels, innocents die and fear drives public life, even as it warps human relationships. There is, in truth, much to be feared in the world, from the resurgence of particularisms that take ugly rather than noble forms to the fragility of the global economic and financial systems: from personal hatreds to systemic deficiencies. The Christian response — the Christmas response — to these and many other very real threats is not to deny them, but to live beyond the fear they engender because God is with us. Emmanuel, God-with-us, is on pilgrimage with his people in history. And Emmanuel continually calls the people with whom he lives to fearlessness. Emmanuel calls his pilgrimage partners to resist the temptation to fall back on the habits of the slaves they were in Egypt, in a vain search for security. Emmanuel calls his people to live the Beatitudes as the royal road to happiness and true human flourishing, rather than settling for the illusory promises of the Culture of Me — another life-warping and death-dealing response to fear. So by all means let us look at things squarely and take the measure of that which is rightly fearsome. But in doing so, let us also heed Gabriel’s call to both Joseph and Mary: to bind ourselves to God-with-us, Emmanuel, who makes his presence known in unlikely ways — a burning bush, a pillar of fire by night, an innocent newborn — yet constantly calls his people to live beyond fear. For Emmanuel is not only with us. Emmanuel goes before us and shows us the way to a brighter future in a Kingdom without fear. — George Weigel is Distinguished Senior Fellow of Washington’s Ethics and Public Policy Center, where he holds the William E. Simon Chair in Catholic Studies.

State Department Interview The following is a transcript of an interview between a new political appointee named Till, interviewing a career foreign service officer named Neverbright. Political appointee (Till) :Good Morning, thanks for coming. Help us understand what you do: State career employee (Neverbright): I am deputy undersecretary second secretariat peace negotiator for the Middle and Near East. I negotiate our peace treaties with our peace partners in the region. Till: And what are those agreements you have negotiated? Nerverbright: I negotiated the landmark Bilateral Peace Agreement between the USA and Durka Durkastan. Till: And what does that agreement do? Neverbright: That agreement ensures that the government of Durka Durkastan does not support terrorism and remains in the US's sphere of influence. In return for not supporting terrorism, we provide 20 billion a year in aid. Till: Have they supported terrorism in the past? Neverbright: Yes, we have intelligence reports going back 25 years indicating that they have supported radical Islamists groups engaging in various Middle Eastern conflicts with money or weapons which were sourced from Russia. Till: And how do they finance this support? Neverbright: From oil revenues. The country has the 12th largest known supply of oil reserves in the world. Till: And the government structure? Neverbright: They are an Islamic Republic ruled by the same Mullah for 50 years. Till: A republic? How? Neverbright: The people elect a powerless legislative body every 5 years. The legislature approves the Mullah's edicts, incorporating them into law and regulation. They are a very advance society of laws. Till: I see. And the treaty you negotiated, how long did you have to negotiate? Neverbright: Only 12 years. Till: I see. And once signed, how was compliance? Neverbright: Well, we have mixed signals. Through the Durk Durkastan self monitoring program, they have been in full compliance now for the10 years since signing the agreement. Through covert intelligence monitoring, they violated the agreement in the first three minutes after signing. Till: I see. Was the aid stopped? Neverbright: No of course not, the US honors its agreements. Where would we be of we sacrificed our influence in the world by dishonoring our agreements? We went right back to the table with the Durka Durkastanies and negotiated with the threat of sanction if they failed to negotiate. Till: And how did that go? Neverbright: Well we have continued to productively negotiate for 8 years now. Till: And the support for terrorism? Neverbright: Well, we have had mixed results. The CIA provided us with an analysis showing the support for terrorism has gone up when the price of oil is high, but gone down when the price of oil is low. Additionally, their trade deficit with Russia seems to go up when the price of oil is low. We think this causes internal economic stress. A secondary conclusion to our analysis was Russian weapons merchants like to be paid. Till: I see. And going forward where do you see yourself in the state department? Neverbright: No one in this agency has the in-depth knowledge of the Middle and Near East terrorism financing or supporting mechanisms than me. I would like to keep supporting my country by negotiating agreements or the resulting non-compliance agreements that support American influence in the region. Till: I see. Just two more questions. What kind of car do you drive? Neverbright: A Prieus. Till: How is the electricity to your home supplied?? Nevebright: I reduce my DC Power and Light bills with renewable clean energy. I got a good deal on some Solyndra solar panels a few years back. My carbon foot print is amongst the lowest at State. It would be even better if I could afford the current solar panels offered in the market at that time, but for some reason the Solyndra panels were a steel. I am a great negotiator. Till: Well, thank you for talking to us. We will get back to you.

My Little Brother

My Little Brother My second youngest brother lost his battle with cancer on Sunday. I was shocked, although I had no right to be. For eight or nine months the tumors had been releasing a hormone which raised his blood pressure and heart rate to dangerous levels. The medical community added more and more to their counter attack on his body, and on Sunday his heart just stopped. I was in shock. I had spoken to him just 2 weeks ago. He had been getting better for over a month after a four month period of more in the hospital than out of it. He was upbeat and we fooled around on the phone as usual. We spoke of our mutual love of Barry White albums and their effect on our spouses. He had been out to a restaurant the weekend before. We were un-rushed and covered all we wanted to cover. Today, this morning, sitting in my office in Riga, seven hours before my family on the East Coast of the US were up, I opened Facebook. One of his college friends had a link to his obituary. I read it in horror. I wailed. I did not know grown people could wail. I wailed. For half an hour, alone at my desk, I cried, hard. For four years I had the conviction that he would get through this. I thought no other way. How could I? The alternative was unthinkable. The first year of his illness, his professional life was slow, so I drafted him into a business venture I had been developing. I did not need his money, only his company. We spoke almost every day. We travelled to California and Latvia together. We played it out until there was nothing left to play out. He gave his advice from experience in the field. It was more entertainment than business, but it was an enjoyable ride. Of the five boys, we shared the same attributes. Tools did not belong in our hands. We played with balls as children, not trucks, not tools. Our handyman abilities are a running family joke. We were meant for office work. Our hands, at best were for cooking, not building. My other three brothers can repair anything, Frank and I were lucky to start the car or lawn mower. It was a bond between us. He was my best man at my first wedding, for no other reason than we were naturally close and had much in common. About eight years ago, we together drove one of my parent’s cars from New York to Florida for them. It was a BMW 5 series. The cup holders flipped out of the console between the driver and passenger seat. The cup holders are incomplete loops, opening toward the seat it is meant to serve. Every time we stopped for a break and picked up a coke or coffee, the turn back onto the highway spilled the beverage in the seat the cup holder was meant to serve. We wore our beverages, from New York to Florida. We laughed at ourselves because we knew; our other three brothers would have been able to fix the problem. We just had to live with it. Frank was special. He had an ability to compete that none of us other brothers has. He developed sporting capabilities that allowed him to compete at levels we just did not have. In team sports or individual sports, he was competitive, the rest of us were average. He was comfortable and in that ability and it made playing with him a pleasure. At the golf course it made him popular. It was pleasure to be there with him. When he felt his worst, a few months ago, I was told he said he missed my father and wished he were here to support him. My father passed away a little over seven years ago. I know my father is supporting him now. I can’t imagine how I will miss you Frank. You are a clear, familiar voice in my head. You occupy a unique place in my heart. As shock fades to grief. I wail.

The Cost of Trust

“Our distrust is very expensive” said Ralph Waldo Emerson. I love the quote above. It may define our times. But it raises the question; what is the cost of trust lost? Merrill Lynch Credit Corporation, a mortgage lender to Merrill Lynch clients won the Malcolm Baldridge Award in 1997. It was the first financial services company to win the award. Since that time, it has been common to hear total quality management or six sigma, be emphasized at financial services firms (although GE Capital subsidiaries had been working with it from the early 1990’s). While new and connected technology was being introduced by just about every financial services firm, the decade before the mortgage crisis was characterized by process improvement in time and cost. Leveraging the new technologies by efficient processes was paramount to competitive advantage. Better, faster, cheaper was on every leaders mind. Those efforts were paying off. In 2000 the cost to originate a mortgage loan was 141 bp’s, in 2003 it was down to 93 bp’s per the Mortgage Bankers Association Cost Study for those years. In cash to the bottom line that was $265. I use 2000 and 2003 because they are not too close to the financial crisis and may be more balanced as a benchmark than the years closer to the crisis when volumes were way up. It was a low interest rate environment where industry experts knew that most home owners, enjoying steady appreciation could be counted on to refinance possibly twice in a decade, if you provided good service. A focus on key performance indicators by a management team could improve customer satisfaction, speed to approvals and closings and lower costs, improving profitability or price competitiveness. Management sciences was at work (along with technology and very often driven by technology) in the mortgage industry. This was a great time to be in the business. Loans per production employee improved from 41 to 62, for the same period per the same study. Yes a 50% improvement. Ok, channel management might help that one a bit, but not 50%. What’s more, personnel cost per loan went from 70bp’s to 48bp’s for the same period. A very positive trend was developing. Let’s skip the crisis in this discussion and acknowledge you need to be managing production much tighter today than in 2003. Investor put-backs are requiring better quality controls are in place. But with the crisis, trust was lost. Government and investors (same stakeholder really) reaction to the industry’s performance to the crisis was lots of new rules because there is little trust that the industry participants will operate looking out for consumer or investor interest. That lost trust is costing quite a bit as every compliance officer knows. How much is that lost trust costing? Well the MBA released some cost numbers in December for the third quarter of last year. The total loan production expense was 2.13%. The loans per production employee were 16 (annualized). This is just over $3,000 more costly per loan than the 2003 value of 93 bp’s. That’s a lot of compliance. Fortunately for lenders, in the 2012 study secondary and marketing income was 271 bp’s, compared to 94 bp’s in 2003. That kind of spread can mask a lot of issues. But is that spread sustainable? The government has stated in many different ways they want to retreat from their current share of the secondary markets and have private investors come back to the market. The government insuring or buying over 90% of the loans originated is unsustainable. Private investors will want a lot more of that spread than the government has been taking. That brings us back to the cost to originate. The operational risk of sustaining a profitable business model is on the lenders shoulders. Maintaining access to capital markets is too important than cutting any corners to save on costs. Running at the current efficiencies is just as unsustainable as the governments participation rate in the secondary markets. Now that the rules are being defined and implemented, automation will help drive down some costs, but not all of it. The human process that originates a loan will need to be managed better than ever before. The management of that process had better be able to inspire trust, or it will not be competitive or sustainable. That is where leadership, not just management will be the differentiator. Those abilities beyond just control and coordinate are needed. Firms will need the key performance indicators of the loan origination process along with the metrics that evidence an aligned and engaged work force, with a strong values driven culture and clear responsible empowered decision makers ensuring compliance beyond anything programmable or the limits of policy memos. Are you ensuring that for your business? Can you evidence it when someone like a regulator or investor asks to see it? You will not be able to rely on trust, it has been lost. They know you can do, they just don’t trust you will do it. The cost of trust lost is usually handled in a very macroeconomic fashion like the cost to society or to generations or market access or liquidity. But sometimes you can calculate it on what you do every day. So the answer to the question; what is the cost of trust lost? If you’re a lender today; about $3,000 per loan originated.