Divemedic

I Miss

As I write this, I am enjoying the first really cool day that we have had in Central Florida in quite a few months. The windows are open, there is a nice breeze, and a misty sort of rain is falling from a cloudy sky. The temperature is 69 degrees outside, and it’s official: Florida Fall is here. This is the time of year when I put on Youtube videos like this.

A nice, calming sound to play in the background as I do whatever around the house. My memories drift back to when I was a child, the weather the same as it is today, and I watched my mother hang fall decorations like these.

It makes me a bit nostalgic. Now my mother is gone. My father is gone. My innocence is gone, as is my childhood. So is the country that I grew up in.

I miss all of those things. It seems that all is left is an aging guy who is about to become an old man, and a country that seems to be disintegrating. We aren’t coming back from this, are we?

By Divemedic, ago

3D Chess

The courts told Trump that he can’t eliminate Federal jobs because Congress had appropriated funds, which he is then obligated to spend.

Fast forward a few months, and Congress has refused to appropriate any funds unless USAID and free Healthcare for illegal immigrants is included. Because there are no funds, government is shut down.

The firings have begun. The MSM frames it as Trump going after Democrats and getting rid of programs he doesn’t like. I think he’s doing what he was elected to do. He’s the first politician from either party to make real cuts.

Thats exactly what I voted for.

All he has to do now is refuse to sign any budget containing all of the bullshit like free stuff for illegals or USAID kickbacks for Democrats.

Stay the course, Mr President.

By Divemedic, ago

Balance Sheet

To understand how banks work, you need a bit of accounting knowledge. It all starts with the balance sheet. A balance sheet is simply a snapshot of a company’s financial position at a particular point in time. A balance sheet is separated into two parts:

The left side, which is everything that the company owns, called assets, and

The right side, which is the company’s obligations, plus the owner’s stake. The company’s obligations are called liabilities, and the owner’s stake is called equity.

The two sides MUST be equal to each other, that is the right and left side are in balance. There is a simple formula for this:

Assets= liabilities + equity.

To illustrate how this works, suppose you were walking down the street and had $40 in cash in your pocket. Your balance sheet would be:

Cash assets: $40 = No liability + $40 in equity. All in balance.

Now suppose that you enter a diner and order a $20 breakfast. Now your balance sheet looks like this:

Cash asset: $40 + $20 in breakfast= $20 liability that you owe to the diner for the breakfast + $40 in cash equity. Still balanced, because you added the meal to your assets, but that meal came with a liability that you now owe to the diner, so Assets still equal liabilities plus equity.

Your meal is done, so you pay your tab. Now your balance sheet looks like this:

Assets $20 in cash= $0 in liabilities + $20 in cash equity. Still balanced. This is all governed by standard rules called GAAP (Generally Accepted Accounting Principles).

Now let’s apply this to lending. I get some investors, and we start a lending institution. They start off by investing $10 million in my company. My balance sheet looks like this:

Assets $10 million in my checking account = $0 liabilities, $10 million in equity.

Now here is where things get interesting. I loan someone $1 million to open a business. Let’s not get into interest rates just yet, because I want to explain how this accounting entry works. Instead, we will do a flat fee. The loan paper says that the borrower has to repay me the $1 million principle, plus a flat fee of $50,000 for the privilege of borrowing this money. This means that my balance sheet will look like this:

Assets are $9,000,000 in my account, plus a promissory note for $1,050,000. My liabilities are $1,000,000 that I owe to the borrower, plus owner’s equity of $9,050,000. Still balanced.

I do this a bunch of times, and now I have assets of $2,000,000 in my account, and notes totaling $8,400,000. For the right side of the sheet, I now have liabilities of $8,000,000 that are in the accounts of my borrowers waiting to be withdrawn, and $2,400,000 in equity.

The borrowers finally all take the money out to fund their businesses, so now my balance sheet looks like:

Assets are $8,400,000 in notes, plus $2,000,000 in cash. The right side is now $0 in liabilities and $10,400,000 in equity. All balanced.

What if, instead of investors, I open my bank ay accepting depositors? OK, let’s see.

Assets= $8,000,000 in deposited money, plus $2,000,000 in owners’ cash = $8,000,000 of liabilities (That deposited money isn’t mine- I still owe it to them), plus $2,000,000 in equity. Balanced. I have lots of funds that I can lend out, so I am said to be liquid.

I make the same loans under the same terms, but this time, it looks different:

Assets are $8,400,000 in notes, plus $8,000,000 in depositor cash, plus $2,000,000 in owners’ cash. We now owe $16,000,000 in liabilities, plus $2,400,000 in equity. So how did we do this? Did we create money out of thin air? How can we have $16 million when all we did was lend out the $8 million that was deposited in our bank? That $16 million is just us counting the same money twice. It doesn’t make sense if you are a concrete numbers person. That’s what is meant by the money multiplier of banks. If you want to look at it as a concrete number, it certainly seems that we have created that money out of thin air. After all, we were given $8 million, but now there is $16 million out there circulating in the economy.

This, to me, was the most difficult part in understanding finance. So how did I get to the point where this made sense?

At the end of the day, we didn’t really create any money. For every dollar we lent out, we still owe a dollar to our depositors. If those people all came to us and wanted their money back, I would be in deep shit. After all, I loaned out their money and I no longer have it. Their money is nothing but a bunch of ledger entries and withdrawal strips. One way to make all of my depositors come to me demanding all of their money at the same time is to have them think that I don’t have enough funds to pay them. That’s called a “bank run” and is a near guarantee of my bank going out of business.

To prevent the scenario where we don’t have enough money to pay depositors’ demands, we keep a percentage of that money still in our hand, and we call that our reserve fund. That way, if one of our depositors came to us and wanted to withdraw his deposit, we have enough on hand to make that happen. The amount that our bank holds back is the reciprocal of the loan to debt ratio (LDR). It’s simple to calculate.

LDR= total loans/total deposits

A healthy bank maintains an LDR of between 70 and 90 percent. If a bank goes below that, they are underutilizing their assets and leaving potential profits on the table, and if they go over that, they risk not having enough funds on hand to pay depositors who want to withdraw money, and thus are risking a bank run and the bankruptcy that comes with it. Banks that go over 100% are lending out more money than they have, and aren’t liquid enough. They are facing a potential crisis.

That LDR is our bank’s reserve. That reserve, being a fraction of my assets, is called fractional reserve.

To be able to lend out more money, we can do some things, and some of them are fraudulent. That’s where the 2009 lending crisis enters the chat. In that case, banks and other lenders were downright committing fraud. This is how the scheme worked:

Let’s say that we want to be more liquid so we can loan out more money. My balance sheet looks like this:

Assets are $10,500,000 in promissory notes and nothing else. I have no more funds. On the right side, I have $10,000,000 in liabilities to my depositors, plus liabilities of $100,000 to my employees, the landlord of my rented business location, the electric company, and others. I have only $400,000 in equity. I need money so I can keep lending because my LDR is 105% and I am in trouble.

So this is what I do- I sell my promissory notes to an investor. I sell them at a discount, and the person buying them makes money on the margin. So let’s say that I sell those notes for $10,250,000. Now my balance sheet looks like:

Assets: $10,250,000 in cash. Liabilities of $10,000,000 to my depositors, and $100,000 liabilities to my other creditors. I now have $150,000 in equity, but now I can loan out more money because my LDR is is back down to 0%. Now I am back in the lending business because someone else owns those loans.

Wash. Rinse. Repeat.

They did this, even though they knew those promissory notes were unlikely to be profitable because they were made to people unlikely to repay them. The people who bought those promissory notes just got screwed. Who bought those notes? Investors- people like you and I when our pension funds and 401k’s were investing in various securities.

That’s where the fraud is, and there were a lot of lenders who took advantage of that. I still can’t believe that no one went to jail over that.

By Divemedic, ago

Meltdown

Many on the right AND the left are melting down because the MSM is reporting that Trump is letting the Qatar government build an airbase in Idaho. This is pure, 3D level bullshit.

First, it isn’t an operational base. It’s a training facility located within the US Air Force Base in Mountain Home, Idaho. That base has been used for decades as a training facility for US allies to train their pilots to fly aircraft that they have purchased from the US. Singapore was there before Qatar as the 428th Fighter Squadron, flying the F-15.

Second, this deal was made as a part of a purchase agreement that was signed eight years ago as a part of a $12 billion deal where Qatar paid for 36 F-15 fighters, with the option to double that number to 72 aircraft. The deal included the aircraft, weapons, maintenance support, spare parts, ground support equipment, and TRAINING on all of the above. This facility is part of the training for this equipment.

Stop freaking out. The US has done this for DECADES. There is nothing nefarious going on. Good Lord, you would think people would know by now that the MSM is lying.

By Divemedic, ago

News from the ED

During the past week or two, I had a few notable incidents:

Of the more than 100 nurses who work in my hospital’s Emergency Department, only 9 of them are board certified in Emergency Medicine. Only three of us are board certified in a second specialty. For that reason, I now spend most of my days in the critical care zone.

For starters, this being the tail end of summer/start of fall, there are almost zero cases of Flu/COVID/RSV coming into the ED, but there are quite a few cases of pneumonia and sepsis, mostly in our older population. Of our patients, I would say that the biggest reasons for visits are people who are sick because they are old, abusing intoxicants, homeless, having a mental health crisis, or a combination of those.

One of my patients had come in having some mild stroke symptoms. He had my undivided attention for the first 30 minutes he was there. It turned out, no stroke. It was a complicated migraine. So while we were waiting for further testing and for the migraine cocktail to kick in, we suddenly were inundated with some very sick patients. Four cardiac arrests, and 3 other patients who required intubation in less than a two hour timespan. It happens like that sometimes- things are calm, then it is like a bus full of sick people pulls up. As the only nurse in the critical care zone who is certified to insert IV lines by ultrasound that day, I was busy for that two hours. One case in particular, I had to start an ultrasound line, then stick around to give Etomidate and Succinylcholine for the rapid sequence intubation. After that, I was in a cardiac arrest for another 30 minutes.

In the middle of all of this, the patient with the migraine had pushed his nurse call button. When I was finally able to get to him, he was indignant: “I pushed this button 20 minutes ago. This is ridiculous.”

Me: “I’m sorry for the delay, sir. I was busy with some very sick people. I’m sure that you understand, it’s just how things work in the Emergency room sometimes.”

Him: “Where were you? Are you really that incompetent?”

Me: “Sir, I am sure you heard the announcements. I was literally doing CPR on someone for the past half an hour.”

Him: “I don’t care about that, I called for you and you should come. I am never coming to this shitty hospital again. I want to see your boss, you should be fired.”

My charge nurse enters the room, and the man goes on a rant. The charge tells him what happened, and he still keeps complaining.

All of that. Do you know what he wanted? Some water and a warm blanket.

Working in emergency medicine has convinced me that far too many people have Main character syndrome.

Later, I had another 34 year old patient come in complaining of a severe headache and nausea. He reeked of weed. When I asked him about that, he said “Oh, I have a weed card. It’s medicinal.” He then told me that he smokes 6 or 7 joints a day. We tested him fully, finding nothing. Did I mention that he was covered in tattoos, had green hair, a septum ring, and two lip piercings? He was telling me how he is too poor to afford a ride home, and wanted the hospital to make arrangements to get him home. Uh, you can afford all of that ink, those piercings, and weed, but you can’t afford an Uber? Medical marijuana is bullshit 99% of the time, by the way. It isn’t for medical reasons, they just want to get high. If it were medicinal, wouldn’t there be a prescribed dose and schedule, like with every other medication? What other medication says “take however much you want, as often as you want?”

Anyhow, I now have a few days off.

By Divemedic, ago

GIGO

Every so often, a set of statistics comes up where I can show evidence that it is likely false. Like this one:

Look at Florida. This claims that there are under 29% of households with a firearm in it. Let’s take a look at the actual numbers.

There are approximately 14.6 million adults over the age of 21 in Florida. About 2 million of them are ineligible for a concealed weapons permit because of criminal history, immigration status, domestic violence orders, etc.. There are 3 million people licensed to carry firearms in the state (including cops, retired cops, judges, and others), even though they aren’t required for concealed carry. This likely means CCW holders are underrepresented, but it’s the best proxy we have. Still, this means that roughly 24 percent of Florida’s eligible adult population has a CCW permit. Now assume that not all legal gun owners have a CCW permit, and not all people who are ineligible for a permit or gun ownership are without a firearm. (In other words, have a gun despite the fact that it is illegal for them to do so.)

This makes me believe that this number is not accurate. What likely happened was that a survey taker called random people and asked them “Do you have a gun in your house?” and the person said, “Nope, lost them all in a tragic boating accident during the last hurricane, when the gators ate them.”

Now extrapolate that to the three states where less than 10% of the households own guns: Hawaii, Massachusetts, and New Jersey. Do you think the numbers there are likely higher?

In researching this post, I also came across this interesting fact: There were 15 million hunting licenses issued in the entire US in 2018. At the same time, more than 21 million people have concealed weapons permits, even though the number of people with permits is dropping as more states become Constitutional Carry states. This indicates to me that gun culture 2.0, the move from guns being about hunting to guns being about defense, has taken over the entire gun culture.

By Divemedic, ago

Discussions With Communists

Some commie online was upset that lenders charge interest, claiming that it is usury. He feels that loans should be interest free. Being that I have completed the finance and economics courses for my MBA, this is where I decided to help educate him. I shouldn’t have bothered.

Lenders have expenses.

They have fixed administrative costs like accounting, clerks, and other things that they must pay for. Those costs are the same for every loan.

Then there are the variable costs, the cost of defaults. About 1 percent of those who have a 750 or higher credit score default, but this rises to more than 15% of those with a score of less than 600. This default rate means that interest rates must be higher for those who have a higher chance of default. If interest rates are capped, then lenders will simply refuse to lend to those whose likelihood of default makes it uneconomically feasible. That tends to mean minorities, who historically have much higher default rates.

The commie went on to handwave that point away, saying it is a bad approach to paying for things.

In response to this, I posed a question:

So what’s the alternative? It takes about 14,000 hours of labor to build a house, plus materials. Where does the money come from?

Here are the alternatives that he proposed. I answer each in turn.

1) We could eliminate the usury/interest rates system altogether. If it’s too expensive, we have no business buying it yet. If a low cost bought huge portions of America, we can restore that same value.

Much of that was when each person was building their own house, growing their own food, etc. Have you built your own car? House? Can you? Most people cannot. Money is what makes specialization possible. Sometimes, a transaction takes more money than you have on hand. The cost of waiting to save and pay cash isn’t practical. Try living in a carboard box while you save to buy a house.

2) We could have a fixed flat member fee. Nothing too small, nothing too big. Something that keeps a company in business, especially when factoring in multiple customers. We could cap the compounded debt.

How large would the membership fee go to buy a house or a car? What would be the terms? Imagine walking to work for 5 years while you make payments on a car that you don’t yet have.

3) We could simply cap the profit of compounded debt.

What would happen then would be that no one with bad credit would get a loan.

4) We can focus on reducing the root costs of resources (wood, etc.) after eliminating interest rates.

The largest expense in almost any business is the cost of labor. To build that house, you still need to fund those thousands of hours of labor. Who pays for that, and how?

5) The sellers could get monthly payments directly while cutting out the middleman. Extra cost could be minimal.

So you want the sellers to also be the lenders. That’s inefficient and actually increases costs. Now the seller’s funds are tied up in the products that haven’t yet been paid for. The time between selling the inventory and receiving payment is called the cash conversion cycle. Without financing, this could mean years of a company waiting to be paid for things like appliances, homes, and cars. There will still be defaults, meaning that those costs will be passed on to consumers. Also, only wealthy people and those with good credit will receive goods. Minorities need not even apply.

6) Sellers can start by asking for a lump sum in the beginning to give them a buffer before monthly payments.

Again, with sellers asked to also be lenders. This disrupts the seller’s cash conversion cycle. Funds that are tied up in inventory that has already been sold are not available for the company to continue operations, causing losses and delays. This is expensive. The term here is called “The Time Value of Money.”

7) The seller of resource materials can drop their prices for the seller of products.

So now you want the suppliers to bear the costs? The electrician drops prices for the home builder. Now how does that work?

8) Financial aid (if spending isn’t going to the people, why is it so much better for government money to go to the usury sin of lenders?) To eventually pay off the government in a fixed fee of profit. No fee. Failure to cover is taxed — last resort.

So the government will pay interest instead of consumers? This results in unsustainable debt, or in runaway inflation.

9) A non-profit source of assistance to fill in a time of struggle.

Where does this non-profit get their funding? Money is a material, just like steel, wood, or labor. It has to be paid for. Someone, somehow, someway will bear the costs of money. It will be the consumer who has to wait until he can get a house or car on layaway, the business that has paid for labor and materials and now can’t use those funds for the next project because they are awaiting payment, or the taxpayers who have to fund the government. It’s a cost, and someone will pay for it. You are expecting the government, who has famously paid $600 for a hammer, to control costs.

10) Pay as we go. A product might need to be covered completely, but duration of services could be ongoing payment. Instead of a government paying a lump sum of a project, they only shell out service cost totals as the project goes on, that way if there’s a cancelation, it basically freezes the pay where it is at, instead of being trapped a lump sum covered by loans and then owing the initial cost and a potentially unending debt with immeasurable interest rates, the costs of services are already covered.

So you pay for the land to be cleared. Then save for a few months before you have the money to pay for the underslab work like plumbing to be done. Three more months for the outside walls, ad nauseum, ad infinitum. Twenty years of being homeless later, you finally are ready to move into your house. This is just a repeat of your first point- and still won’t work.

11) Lay Away. Pay First. Receive after. No middleman.

Again with the point of paying for it before you get it.

12) A combination of these things..

None of which will work, for the reasons above.

His answer to all of this? He focused on the “Time Value of Money” and the cost of money.

“That’s the cost of money” ignores everything I just said. I know that my wages don’t satisfy my time. Time is not an objective value. Too bad. Your explanation is some weak sauce.

The base issue here is that young people (who make up the majority of useful idiots) have no concept of money, value, or economics. My son once asked me (when he was 4 years old) for some expensive toy. I told him that we don’t have money for that, and his reply was to tell me to go get more from the ATM. Communists display all of the economic knowledge of a 4 year old who wants a new toy.

By Divemedic, ago

Fascism?

The left loves to call us fascists and Trump a dictator, yet I keep seeing more and more evidence that the left was engaged in the systematic destruction of the Constitutional protections that we are supposed to have here in the USA. For example:

Senate Judiciary Committee Chairman Chuck Grassley has been conducting a Congressional investigation, and has uncovered FBI documents showing that President Biden’s administration was engaged in intelligence gathering operations through the use of illegal interception of the electronic communications of at least eight different opposition leaders. That’s right- the FBI was spying on Republicans.

The FBI targeted the following Members of Congress:

  • Sen. Lindsey Graham (R-S.C.)
  • Sen. Bill Hagerty (R-Tenn.)
  • Sen. Josh Hawley (R-Mo.)
  • Sen. Dan Sullivan (R-Alaska)
  • Sen. Tommy Tuberville (R-Ala.)
  • Sen. Ron Johnson (R-Wis.)
  • Sen. Cynthia Lummis (R-Wyo.)
  • Sen. Marsha Blackburn (R-Tenn.)
  • Rep. Mike Kelly (R-Pa.)

Tell me again how Trump is the one acting like a dictator. Keep in mind that Nixon was about to be impeached, and resigned from office, for doing far less than this.

By Divemedic, ago

Regime Change

President Donald Trump has activated hundreds of Texas National Guard troops and federalized 300 Illinois National Guard troops for duty in Illinois despite the governor’s objections. The left is bitching because they have suddenly rediscovered states’ rights.

Once again, they are deploying our troops into a combat zone with no strategy, no clear definition of what a victory would look like, and worse yet no exit plan. All to yet again just to prop up another failed regime that will never become a true democracy…………

By Divemedic, ago