10/17/2009

When Unit Tests aren’t Enough

Unit Testing of your work is generally accepted as the mark of a professional developer. However – have you thought about what happens when you make a boo-boo on the tests you create?

You guessed it – everything goes to hell in a handbasket. If the tests are flawed, they aren’t really telling you anything. 

Sometimes it can be better (and faster)  to create an old-fashioned, Windows Forms test harness to exercise your “stuff”.

Right now, I’m working on a complex project with many dozens of classes – more of them every single day. Often we are asked to make changes to many of these classes. When I do these, all I need to do is fire up my Winforms Test Harness and press one of the buttons. I can have breakpoints in the code at strategic places, and I can view the end result in a DataGridView that’s on the form. Sure, you can do that with a unit test, but then what you’re doing is “testing a test”.

Unit Tests are definitely the way to go, but sometimes just being a Duct Tape Programmer solves the problem more easily.

Why the FED has turned the banking system into the Living Dead

Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke have denoted that the recession is over. Now that the DJIA has broken the 10,000 mark, we can expect to  have full confidence that economic growth is here to stay.

But the credit markets are in a lot worse condition than some indexes  suggest.

Buried within the October 3, 2008 bailout bill, which set up the Troubled Asset Relief Program (TARP), was a provision permitting the Fed to pay interest on bank reserves. Within a week, the Fed implemented this new power and  essentially converted bank reserves into more government debt.

As the fed funds rate hovers around zero and existing loans in technical default continue to sit in bank portfolios, why should banks make new loans when they can make money for free with the government?

They can now borrow from the Fed and  earn a huge spread by borrowing virtually unlimited amounts of money for nothing and simply lend that same money back to the Treasury.

In sum, the banks now have no incentive to lend. Most of them still have a significant amount of bad loans sitting on their books that they don't want to recognize as nonperforming. If  banks were to recognize these bad loans, all the write-downs could force them into bankruptcy.

So what Bernanke and friends have created is a banking system consisting of the living dead – Banks that suck money out of the system, and which have not made significant new loans to the small to mid-size business sector since the Bailout was enacted. It’s just like in one of those “Zombie” movies. The only problem is – it’s for real.

A few multinational banks like Citigroup are “too big to fail”.
Credit spreads in the markets reflect the relatively risk-free nature of these large companies, which now have de facto government guarantees.

But this protection doesn't apply to smaller banks, some of which are being shut down by the FDIC (over 100 so far in 2009). These smaller banks have done most of the lending to the many small and medium-sized businesses that do most of the hiring in our economy. 

According to ADP’s August employment report, large businesses lost 60,000 jobs, and employment at medium-sized and small businesses declined by 116,000 and 122,000 jobs in August alone. According to Ann Lee, writing in the Wall Street Journal, small businesses,  (employing  from one to 49 people) account for 48 million jobs in the U.S., and medium-sized businesses ( 50 to 499 employees)  account for 42 million jobs. Large businesses account for just 17 million – only about 20 percent of jobs.

Without access to capital, these small and medium-sized businesses will continue to lay off  employees, creating a cycle of shrinking consumer credit and demand similar to the Japanese “lost decade” of the 1990’s.

Bernanke and friends have architected this upside-down, zombie-like banking system with their ill-conceived Keynesian solutions. Is it any wonder that elected representatives like Ron Paul (one of the few in Congress that actually understand voodoo economics) want legislation to abolish the Fed?

We should be questioning whether our current banking system actually makes any sense. Rather than giving capital to businesses with real products and services, Wall Street now plays a government-backed Ponzi scheme, enriching bankers' pockets at everyone else's expense.

10/04/2009

Doomed to Repeat History?

William O’Neil, in his excellent book “How to Make Money in Stocks”, has a chapter on the media, news, and market psychology. In this section he has taken the charts of the Dow Industrials from 1921 through 1942, and overlayed on this a chart of the NASDAQ Composite from February 1992 through March 2009, and indexed the data so that the charts both start at 100:

1929

What is remarkable about this chart is that the two time periods are almost exact duplicates. O’Neil used the NASDAQ for comparison with the 1929 era as it trades more volume now than the NYSE and represents more entrepreneurial companies. The reason history repeats in this amazing manner is that the markets are made up of millions of people acting almost 100% on human emotions.

You can see two important history lessons from just looking at the above chart:

1. This isn’t 1929 right now in October, 2009 – its  Oct 1939.

2. The market (according to history) is not going to be very exciting for a long time – denoting a very sluggish economic recovery that may last years.

So if history really does repeat itself, then what was happening in 1939?  Hitler kept saying he was only interested in peace. By 1938, Britain and France negotiated with Hitler and tried to appease him by making concessions. Britain thought they had a peace agreement with Hitler. Crowds cheered. But in Parliament, Churchill said “We’ve suffered a defeat”. No one believed Churchill. In 1939, World War II began and within just two weeks, Germany rolled right through France.

Today, Iran is a sponsor of terrorist organizations. It will have nuclear weapons very soon, and already has the missiles to deliver nuclear warheads. Even though, just like Hitler, it keeps saying it only wants peace.

We should never underestimate partisan blindness in Washington or in the mainstream media where, “If the Bush Administration did it, it must be wrong”. The Bush Administration kept us safe from additional attacks for over seven years. Too many people refuse to acknowledge that such benefits have costs, even if that means having no more secrecy when making international phone calls, being delayed at airports, and so on.

There are a growing number of threats that can destroy us.  The Roman Empire lasted a lot longer than the United States, yet it too was destroyed. Millions of lives were blighted for centuries after, because the barbarians who destroyed Rome, much like the fanatic Islamic fundamentalists of Iran, Al-Quaida and the Taliban,  were incapable of replacing it with anything at all comparable.

Once suicidal fanatics have nuclear bombs, that is the point of no return. Israel completely understands this. Unfortunately, the Liberal President and Congress now in office do not. in The Media Elite, Rothman and Richter interviewed 240 top journalists and staffers at the New York Times, the Wall Street Journal, Washington Post and the news departments of four major TV networks. 85% of these top journalists were found to be Liberal and voted Democratic in all of the last major elections.

Emmy Award winner Bernard Goldberg spent almost 30 years with CBS News. His book Bias shows in detail how network television has provided one-sided news with little balance or fairness. This kind of bias in the media jeopardizes freedom. It completely misrepresents the de facto equality of left vs right in the general population. Some of my Liberal friends mock FOX News as being “right wing”. The fact is, FOX is closer to the center than all the other networks. They’re all so far left, it makes FOX “look like” it’s right wing. But frankly, I’m not a fan of any network news organization and that includes FOX News.

There are no concessions we can make that will buy off these hatred-filled terrorists. Obama’s apologetic, self-humiliating policy of appeasement does not work. What these maniacs want is our being brought down in humiliation. This kind of hatred is not familiar to most Americans  but what happened on 9/11 should give us a clue – and a very clear warning. Iran and North Korea, along with various terrorist groups, represent a clear and present danger to world peace and stability that hasn’t been seen since Nazi Germany 70 years ago. If we do not defeat them we will suffer dire consequences, and  it will only be because we cannot learn the lessons of history and do not realize how absolutely grave the threat really is.

I sure hope President Obama is not remembered in history for being the guy who allowed Iran and North Korea to threaten and blackmail the free world with weapons of mass destruction; who allowed the Taliban and Al Queda to be emboldened by our pitiful weakness in Afghanistan. But currently, things aren’t looking very promising. The next election is simply too far away for me.