Worry Vectors
Jun. 7th, 2022 08:00 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
walkitoutI’ve been noticing that a lot of people are kinda all over the place emotionally when thinking about the near future. I am not excluding myself from this — I keep trying to find interesting and important things to think about that are not what everyone is currently obsessed with, but instead of _avoiding_ thinking about overwrought possibilities, I find random new things to become overwrought about. So, the war in Ukraine got me thinking about logistics. I spent a bunch of time recently thinking about property insurance and wind risk during hurricane season. I learned that dogs could sniff out electronics, wondered how that worked, discovered TPPO, and was somewhat appalled at the relentless lack of any kind of meaningful research into how that might be a bad thing, given we’re busily dumping it into groundwater and it is persistent. I mean, that’s a bad pattern we’ve had with some other forever chemicals.
I talked to several people about what might be causing us all to worry about everything all the time. I mean, things are going really great for a lot of people right now (except for the Ukraine thing, notably), even factoring in inflation, it’s way better than things have been. Even factoring in how awful Putin is, at least there’s been a real reduction in the number of parties and leaders around the world signing on for that kind of awful enthusiastically. So, why do we seem to feel panicky and like everything is getting worse? _It’s not getting worse._ It’s either the same (climate) or getting better (covid, many, altho not all, other things).
I’ve entertained several, not incompatible theories. Waves of covid — we think it’s better, then it’s not — have trained us to be paranoid of any good news. Legitimately learned lessons (Republicans are better at messaging and somehow everything they do wrong gets blamed on Democrats) have become fatalistic feelings of doom, rather than concrete obstacles to go around, under, over or through. So many obstacles of the last couple years were really pretty … unsurmountable for many people, so it may have caused a lot of people to really reduce their sense of agency and stop believing in the possibility of change for the better. A loss of hope, if you will. I am opposed to hope, so that one doesn’t particularly bother me.
Another theory I have is that now we have the spare capacity to look at things _other than_ covid, we are trying to do everything all at once. It’s going to take a while to process it all. So in that spirit, I did what I often do when I’m overwhelmed, and I sat down and got it all out in writing (not on paper this time; in a Note — I usually resort to paper, but I didn’t have to this time, and I feel really good about that). And I looked at it. Because for each area of concern, I had identified things that were pretty likely, and things that I could do to adapt, and noted connections to other areas of concern and started to see how many of the things I was worried about were likely to cancel each other out. Any movement in the wrong direction on a lot of them was likely to be self-limiting — not fun, but the cure for high prices is … high prices. There are some things that are _so_ bad, that we really can’t risk them getting worse, but I’m giving those things the summer to develop fully. I’ve got the time, and the correct action will be much clearer once we see what goes to trial and how those trials go.
Whenever we see regulation and enforcement occur, we feel bad. Someone, somewhere, did something bad, and had to be stopped and corrective action taken and maybe punishment. Never a good feeling. People were sickened or died or money was wasted or the environment further harmed or we are shocked to learn that organizations we respected were actually doing really horrific things. We had a solid 4 years of basically no regulation and enforcement. We have to catch up. It’s going to be ugly, but it has to be done, if we want to have nice things again.
Also!!!
Turns out that the tranches that mortgages are chopped up into when sold to investors are often split up by time (years x - x+ 5, for example). Long story short, I think that the prepayment risk on the later years is probably mostly balanced out by the risk of a general rise in interest rates. That is, if you write a 30 year mortgage on a house in 1968, and you are a bank that holds the mortgages it writes, you are fucked. That thing just plummeted in value. But if you write a 30 year mortgage on a house in 2021, even if you didn’t just sell it to the GSAs, it got sliced and diced and whoever bought years 25-30 or whatever bought it at a massive discount to reflect the fact that it might get paid off early and they wouldn’t collect much at all. Now, the person who took that mortgage out might stay put with their super cheap mortgage for the whole 30 years, and while there is some amount of loss because the interest rate environment around that mortgage changes, the person who bought it at a discount may well still see an increase in value because the prepayment loss goes down a lot.
Neat!
I talked to several people about what might be causing us all to worry about everything all the time. I mean, things are going really great for a lot of people right now (except for the Ukraine thing, notably), even factoring in inflation, it’s way better than things have been. Even factoring in how awful Putin is, at least there’s been a real reduction in the number of parties and leaders around the world signing on for that kind of awful enthusiastically. So, why do we seem to feel panicky and like everything is getting worse? _It’s not getting worse._ It’s either the same (climate) or getting better (covid, many, altho not all, other things).
I’ve entertained several, not incompatible theories. Waves of covid — we think it’s better, then it’s not — have trained us to be paranoid of any good news. Legitimately learned lessons (Republicans are better at messaging and somehow everything they do wrong gets blamed on Democrats) have become fatalistic feelings of doom, rather than concrete obstacles to go around, under, over or through. So many obstacles of the last couple years were really pretty … unsurmountable for many people, so it may have caused a lot of people to really reduce their sense of agency and stop believing in the possibility of change for the better. A loss of hope, if you will. I am opposed to hope, so that one doesn’t particularly bother me.
Another theory I have is that now we have the spare capacity to look at things _other than_ covid, we are trying to do everything all at once. It’s going to take a while to process it all. So in that spirit, I did what I often do when I’m overwhelmed, and I sat down and got it all out in writing (not on paper this time; in a Note — I usually resort to paper, but I didn’t have to this time, and I feel really good about that). And I looked at it. Because for each area of concern, I had identified things that were pretty likely, and things that I could do to adapt, and noted connections to other areas of concern and started to see how many of the things I was worried about were likely to cancel each other out. Any movement in the wrong direction on a lot of them was likely to be self-limiting — not fun, but the cure for high prices is … high prices. There are some things that are _so_ bad, that we really can’t risk them getting worse, but I’m giving those things the summer to develop fully. I’ve got the time, and the correct action will be much clearer once we see what goes to trial and how those trials go.
Whenever we see regulation and enforcement occur, we feel bad. Someone, somewhere, did something bad, and had to be stopped and corrective action taken and maybe punishment. Never a good feeling. People were sickened or died or money was wasted or the environment further harmed or we are shocked to learn that organizations we respected were actually doing really horrific things. We had a solid 4 years of basically no regulation and enforcement. We have to catch up. It’s going to be ugly, but it has to be done, if we want to have nice things again.
Also!!!
Turns out that the tranches that mortgages are chopped up into when sold to investors are often split up by time (years x - x+ 5, for example). Long story short, I think that the prepayment risk on the later years is probably mostly balanced out by the risk of a general rise in interest rates. That is, if you write a 30 year mortgage on a house in 1968, and you are a bank that holds the mortgages it writes, you are fucked. That thing just plummeted in value. But if you write a 30 year mortgage on a house in 2021, even if you didn’t just sell it to the GSAs, it got sliced and diced and whoever bought years 25-30 or whatever bought it at a massive discount to reflect the fact that it might get paid off early and they wouldn’t collect much at all. Now, the person who took that mortgage out might stay put with their super cheap mortgage for the whole 30 years, and while there is some amount of loss because the interest rate environment around that mortgage changes, the person who bought it at a discount may well still see an increase in value because the prepayment loss goes down a lot.
Neat!