Haiku Reviews: Avent and Froohar

Makers and takers

A strong commitment

Of the finance industry

Leaves us all in debt

Wealth of Humans

Work is what you want

The robots are what you want

And yet we all wait

No Such Thing as Complacency: On Cowen

Friends

Romans

Countrymen!

I come to praise Tyler Cowen, not to bury him.

I don’t want to bury anyone, really. But the praise will be faint.

I like Tyler. He’s good on the blogs. He’s good on the Twitter.

I just think he’s wrong a lot. And in his book, he over-reaches his thesis.

I’m not sure if this is a failure of me as a reader or of Tyler as a writer, but I’m not really sure who falls in the circle of his “Complacent Class”.

The whole thing reads as someone who decided on a thesis and then tried to marshal some evidence to support it. It didn’t sell me. But that is not to say that the things he looks at are not a problem of cultural and economic dynamism. What I worry about is the direction of power and the decisions that are made.

For example: Tyler looks at the fact that fewer people are moving over time. This might be a problem. But is it because people are complacent? Or is it because people have fuller information. The Joads went to California because they thought that there were jobs there. They were wrong.

There have been some regional booms in my lifetime. Land is cheap in the south and so are taxes so some people go there. But there’s no great migration because people are leaving sharecropping for manufacturing work. Not sure that that represents any kind of Complacency.

And this is in the face of Occupy and Ferguson and Baltimore and the Women’s marches in response to Trump. It’s too clean, and feels so wrong.

J. Edgar Mihelic Quoted in the Wall Street Journal

I have to share this because it is so....random. Journalist found a tweet I made about regretting not refinancing my house and used me as an example for a larger piece about the Fed's asset purchases. A lot of our conversation was cut, but I have to share a line I liked that did get cut: "People of my generation don't know how to be adults in a raising rate environment".

Link is to Morningstar, but was originally in the Journal.

Why the Refinancing Slowdown Matters for the Fed -- Update

By Ben Eisen and Min Zeng 

The Federal Reserve has been buying up fewer mortgage bonds in recent months thanks to a flameout of the American refinancing boom, one factor that economists say is likely to help shape Fed officials' thinking as they consider shrinking their giant bond portfolio.

The Fed expects to buy $18 billion of agency mortgage-backed securities in the month ending next Wednesday. That is less than half the amount it bought in the month ended right after the presidential election, according to data from the Federal Reserve Bank of New York, and the smallest purchase since mid-2014.
Because the Fed is buying up less of the mortgage bonds currently in the market, in many ways monetary policy is already tightening on its own, some traders and analysts say. They add that the Fed could view it as a step toward shrinking its $4.5 trillion balance sheet, as it considers whether to begin selling some securities later in 2017 after years of stimulative bond buying.
At their policy meeting in March, Fed officials agreed that they would probably start shrinking their portfolio later in the year but didn't decide on key details of how to do it, minutes released Wednesday show.
The Wall Street Journal reported Friday that the Fed is formulating a strategy to start winding down its portfolio by slowing or stopping reinvestments of maturing debt, perhaps after raising short-term interest rates two more times this year. The minutes of the Fed's latest meeting, due out Wednesday, may provide more clues about the central bank's latest thinking.
"From my perspective at least, it is sensible to begin thinking now about balance-sheet moves," Federal Reserve Governor Daniel Tarullo said in a CNBC interview on Wednesday, his last day at the central bank.
The Fed's holdings of agency MBS is likely to be a key area of consideration, given that the Fed holds nearly $1.8 trillion of the debt, or more than 40% of its holdings of securities scooped up through its open market purchase program, New York Fed data show.
Such securities are made up of pools of mortgages, and are backed by payments on those home loans. They are issued by government-sponsored enterprises such as Fannie Mae or Freddie Mac, and are seen by many investors as high-grade fixed-income instruments due partly to the notion of an implicit government guarantee, which reduces the risk.
Now, the pace at which those bonds are maturing is being slowed down by the drop-off in refinancing.
Last summer, around the time benchmark interest rates hit record lows, J. Edgar Mihelic, a 35-year-old accountant at a nonprofit, considered refinancing the 30-year mortgage on his Cape Cod-style brick home in Brookfield, Ill.
But he didn't move fast enough. Following the U.S. presidential election, mortgage rates jumped as investors bet on faster economic growth and higher inflation once Donald Trump took office. An average fixed-rate 30-year mortgage came with an annual interest rate of about 4.3% this week, versus 3.5% about a month before the election, according to Bankrate.com.
"I waited around too long," Mr. Mihelic said. Though he had thought about getting a new 15-year mortgage to replace his current one, he stuck with his current mortgage, taken out in the spring of 2013 with an annual interest rate of 3.65%.
Refinances are expected to have made up 41% of total mortgage originations in the first three months of the year, down from 51% in the fourth quarter of 2016, according to the Mortgage Bankers Association. That share is forecast to drop to 28% in the second quarter and 26% in the third.
When refinancing slows down, so does the rate at which mortgage bonds mature, because less mortgage principal is flowing directly back to bondholders in the form of so-called prepayments. That is already hitting the Fed's portfolio of mortgage bonds, where the one-month annualized rate of paydown on the portfolio slowed to 15% at the end of February, down from 28% at the end of July, according to an analysis by FTN Financial.
The Fed in turn has less maturing bonds to reinvest. Many economists and investors say the Fed's purchase of bonds is what eases financing conditions, and slowing those purchases can signal to markets that it intends to tighten policy.
"They have already started tapering because of the nature of the reinvestments," said Walter Schmidt, a strategist at FTN Financial who focuses on the mortgage market.
To be sure, some argue that the act of holding debt on its balance sheet is a stronger easing measure -- and slowing reinvestments doesn't necessarily affect the size of the balance sheet.
But many analysts agree the purchases play an important role in how markets react. Bond yields shot up, for example, when the Fed signaled in 2013 that it could slow the pace of its quantitative easing program.
The slowing pace of purchases are already impacting the market, traders say. One measure showed the yield premium on a benchmark MBS security relative to the 10-year Treasury note reached 0.77 percentage point last week, up from 0.66 percentage point at the end of 2016, according to Michael Lorizio, senior trader at Manulife Asset Management. Some add there could be more pressure on the market.
"It is likely that we will see some spread widening in MBS bonds if we continue to see strong MBS issuance and slow prepayment speeds from the Fed's MBS portfolio," said Andrew Pace, a vice president at Performance Trust Capital Partners LLC, a fixed-income trading firm, in an email.
Still, bond traders say a big selloff is likely to attract fresh buyers which in turn could keep a lid on how wide the yield premiums rise. And the current impact of slowing prepayments could mean there is less of an impact later on when reinvestments stop.
"The last thing the Fed wants to do is to disrupt the mortgage market," and create a negative feedback loop into the broader economy, said James Sarni, managing principal at Payden & Rygel Investment Management.
Write to Ben Eisen at ben.eisen@wsj.com and Min Zeng at min.zeng@wsj.com

(END) Dow Jones Newswires
April 05, 2017 17:06 ET (21:06 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.

Thank You, Brookfield

Well Friends, it looks like fortune wasn’t on my side tonight.

No matter. I can’t claim that it is not a personal disappointment, this loss.

But what I do know, and knew all along, was that there was going to be someone who cared deeply about the library and the future of Brookfield who would not get enough votes.

There are no losers here, the winner is the Village of Brookfield and the current and future residents who will have a strong board to support them and push their vision for growth.

For all of you who voted for me, I thank you for the support. It means a lot. And I have a feeling that for better or worse, you haven’t heard the last from me.

Thank you so much,

J. Edgar Mihelic

Candidate Endorsement Opportunity from Landmark newspaper - Filled Questionnaire

Below is the unedited version of the Questionnaire I filled out for the Landmark:

Previous political experience: Applied and interviewed for democratic candidate – lieutenant governor when the party forced out Scott Lee Cohen; volunteered for the Lozano and Jesus Garcia campaigns in Chicago. Applied to fill empty seat on Brookfield Library Board in summer of 2016.

Previous community experience: Canvassing Chair with PAC supporting new library in Brookfield 2016

Occupation: Director of Finance, Community Support Services, Brookfield

Education:  West Virginia University, BA English.
Kansas State University, Graduate work in English.
Concordia University, River Forest, MBA

1. Do you support building a new library? If no, why not? If so, what does the board need to do to make that a reality? Does it involve different outreach, revising the design? When should the library board seek another referendum?

Working for the referendum, I supported the building of a new library. The ultimate issue is that there is not enough space, and that lack of space has not gone away just because the referendum was narrowly defeated.

We need to go back to the people and make our case again, but it is harder to have gone forth once and then go back and ask for the same thing. I have heard it explained both “if at you first don’t succeed, try try again” and “the definition of insanity is to do the same thing and expect different results.” So, we as a board have to refigure how to approach the need for a new building in light of having lost.

When I was interviewing for the empty seat last summer, I specifically asked about contingencies if the referendum lost – but none were volunteered to me at the time. Therefore, I believe that we need to go back to the community with a slightly scaled back plan. Show that we can listen to what the community said but also sell the idea and need for a new building.

I think we need to go back next year with a new ask. The library can grow its reserve and strategize and show the community that the board is concerned about being stewards of the village’s funds and its trust.

2. What is the role of a library in the 21st century? What kind of programming and services should a library offer; what should it not offer? Is the library meeting its mission now? Why or why not?

When a lot of people think of the library, they imagine it is just books. But the library as it evolves towards the next century is more than just books. The library is the center of the community in terms of knowledge and self-improvement and one of the main contacts that you can have with the community as a whole.

The idea of the library at the center of the community is why the issue of space is so important. If you have ever been at the library when any kind of class or event is going on, you see just how crowded the library is. The people and the books are squeezed. If you see the library as only about books, then this is not an issue for you. But I believe that the library can scale classes and resources in a way that anyone member of the community would have trouble doing. It is investing in our future so that we can have reading groups and classes on your 401k. It works in concert with the schools but extends them so that it is about a lifetime of self-improvement and learning.

The current staff works admirably within the restraints they have, but there is so much more potential in the people we have but are limited by space.

3. If a referendum is not approved within the time period allowed by the village, what then? What is the way forward if it does not involve a new facility? Is there a way to make the existing facility more usable?

The status quo is unsupportable. The building is aging and maintenance costs will continue to increase. The current board already examined ways to maximize the usage of the current building. As far as I know, upgrading the building as is was not possible in a way that ultimately didn’t cost more money than an entirely new building.

If it doesn’t pass in time, then the reserves will be spent on maintenance and interest rates will go up as well as the cost of living and materials, and then the amount of library you could buy with the same amount of money will go down. It is not an enviable position to be in. Then we’re down the road asking for more and the new building is an emergency because the old one is falling apart.

4. What other issues are important to you as a library board candidate? How would you advocate for them as a board member?

Everyone involved in this election was either on the board or was on the volunteer group working towards the building of a new library. I would not have volunteered my time if I did not think that having a new library would be beneficial to the community.

The problem for all of us is that the referendum for building a new library lost. We can try to mollify ourselves and our supporters with whatever words we want, but there is an honest truth. Either we did not do enough to sell our vision or we over-promised that vision. The positive effects of a library are both subjective and quantifiable, but precision is difficult since we’re projecting into the future.

This unknowable future is why the library is so important to me though. The building we didn’t approve is one that was open and flexible in a way that the current one is not. Space is limited and programs are closed. Our vision was broad and open.

The library as we know it will always be the center of learning. It is not just books but a place for everyone to communicate and learn and grow. Ultimately the library is a community resource. No matter what happens it will serve the people of Brookfield.

Ultimately the goal is continued good governance of the library and ensuring the people of Brookfield the best library and services with the resources we have.  I hope that when we ask the citizens again for a new building, we will be able to make the case. I want to be part of that and believe I can play a role in the success of the Village and its investments.

On My Career and Education

Working in the food service industry, I twice was elevated to roles where I oversaw the store for the shift. At Quizno’s that was only usually me and one other person, but by the time I was at Casa, that meant that sometimes there were 20 people working who I had to make sure were coordinating service to the customers by all stakeholders so that food would go out and the money would come back in and all transactions were accounted for at the end of the night, and the prep was completed for the next shifts and the restaurant was clean before leaving. I was also involved in higher-level strategic decisions about staffing and menu items, though I was not directly responsible for these decisions. One of the key responsibilities was managing the labor levels. I had to ensure that sales were in line with the staffing in the moment to ensure we weren’t losing money by paying too many people to just stand around. Thankfully I was usually able to work with under 10% labor as pizza is a relatively high margin food.

Then there was a transition period. During this transition period, I worked jobs that were related to my education at the time. I taught Chemistry at WVU and Saint Rita and English at Kansas State University. I also worked as a reporter for three different newspapers. Two of these were student papers, but one was the region’s main daily paper. These positions all represent similar skill sets that are hard to quantify. I was able to work autonomously under my different supervisors and editors, who I all had to ultimately answer for. There were additional stakeholders in the readers and the students and their parents who were the ultimate consumers of my work. I wrote in genre-specific ways and developed soft skills both in reporting and in teaching. Interpersonal communication is so important because you must show that no matter what your ultimate role you are selling to people the necessary intimacy. They should believe that you are in the same boat as you are. It is a collaborative and not an adversarial process.

Ultimately, making things a collaborative process has been my management style for good or ill. I have always been of the opinion that you shouldn’t ask someone to do something unless you were willing and able to do it to. For me that is the essence of leadership. We are all in this together, and we are working towards similar goals. If you need help doing the essence of what the organization does and I can step in, I will. There’s an important balance though. People must be trusted to work on their own and present the results that come and be self-directed. You cannot just jump in arbitrarily. This is as true as it is making pizzas as it is making sure someone has submitted all the billing to the state.

This leads into the last six years at CSS. I started at CSS as an intern for a couple of months. In that time as an intern, my role was limited. I entered in paper billing sheets into the computer system and helped generate invoices from the internal system that would be in turn entered into external systems to create billing claims from the state. I made enough of an impression that a month or so after the internship ended, I was invited to replace my former supervisor when she left the agency for a different position. I was in that role for over three years, and as I gained experience the role grew. It became not just tracking the A/R and the payments in the internal billing system (I would generate reports from these activates that would be entered in the financial system) but also receiving money for the participants and tracking their spending, as well as invoicing families for more billing. I supervised up to three people in this role.

As that role grew, I became familiar with the inner workings of the agency. An additional task was to gather the statistical and usage data for our participants’ usage of different programs offered by the agency. Various funding bodies ask their own specific questions about the number of clients and the programs they use and I had to know based on our internal codes how to report this.

This knowledge of the internal workings of the agency helped me in what was the biggest project I undertook at CSS. Simultaneous with an effort to reduce paper use in the agency, I was one of the key people in a project to replace the legacy internal payroll, billing, and record-keeping system with a new uncorrupted database. This was a multi-year project on top of the regular duties of the agency. Though the developer had a system he expected we would be able to use with little customization, we ultimately found the needs of the agency to be more complex. As such, we had to pull apart our process, define them, and then reenter client data and test the integrity of the database and create reports that answered the questions our funders asked – all hand in hand with the developer. 

Gaining this internal organization knowledge meant that my role kept expanding. I was promoted to the Accounting manager with the responsibility now also over payables. It was not much longer when I was promoted again to Director of Finance. As Director, I handed off most of the responsibilities I had inherited to the other people in the department. My new role was working hand in hand with the CFO as a second in command situation. I learned to prepare the income statement and the balance sheet for external reporting, aided in the annual budget, and prepared grant applications for our various funders as well as create the reports to those funders based on statistical reports generated from the new database we had worked so long on. In this last role I had less autonomy and I worry that I did not learn enough of the accounting to go with my institutional knowledge side.

My journey has not only been professional though. This also tracks back to my initial round of college. I have both writing and quantitative skills and liked to exercise them both. I was a chemistry major until my junior year where I switched to English because I saw myself as a writer much more than I saw myself as a chemist. That English degree led to the grad school in English and those transitional jobs. In the liberal arts is all about reading widely and thinking critically and being able to apply this to the world you encounter. Everything becomes, pace Derrida, a text to be read. 

I’ve never stopped learning, both formally and informally.  I set up my blogs and started reviewing on amazon as a way to continue engaging critically with the world – and to help create some audience for my more creative writings. 

I also went back to school to help leverage my intellect and skills into something marketable. First it was through Chicago Career Tech, where I received certification in medical coding and billing. I was also certified by a third-party group, though that certification has since lapsed. Through CSS I was in the Nonprofit Leadership Program at Notre Dame. That made me realize that if I wanted to grow in my career I would need to continue my education even more. I took and did well the basic accountings and economics classes as a preparation for the MBA at Concordia. In the last ten years with about 80 hours attempted of college and graduate level work, my lowest grade was one A-.