Category: Observations

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The Thanks in Giving

We give for many reasons and are better for it.

Poet Alberto Ross provides an understanding.

When Giving Is All We Have 

We give because someone gave to us.
We give because nobody gave to us.

We give because giving has changed us.
We give because giving could have changed us.

We have been better for it,
We have been wounded by it—

Giving has many faces: It is loud and quiet,
Big, though small, diamond in wood-nails.

Its story is old, the plot worn and the pages too,
But we read this book, anyway, over and again:

Giving is, first and every time, hand to hand,
Mine to yours, yours to mine.

You gave me blue and I gave you yellow.
Together we are simple green. You gave me

What you did not have, and I gave you
What I had to give—together, we made

Something greater from the difference.
 

One river gives its journey to the next.

A Teacher’s Story

 

 

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Wisdom: On Regulation

 

Share Insurance & Regulatory Choice

“The fact that there is an insurance option-private insurance for state-chartered credit unions-assures that the NCUSIF will be different from the premium based FDIC fund, that it will be funded with deposits from credit unions, and can be counted as an asset on the books of credit unions.  The fact that there is an insurance option guarantees there will be a charter option, and thus a regulatory option.

This is to the good for everyone.  A single regulator is sooner or later bound to become a lazy or an arrogant regulator.  The best ideas will not bubble up; the regulated will not flourish to their maximum potential.  But with two regulatory options, competition is going to allow the best ideas to come to the fore and allow the dynamic credit unions to expand.”  (pgs 46-47)

 

Note: From the Coach’s Playbook,  a collection of  Ed Callahan’s observations.  These are a summary of operating values for the credit union system. Ed began his professional career as a high school math teacher and football coach.  His thirty years in credit unions included Chairman of NCUA (1981-1985), co-founder of Callahan & Associates, and CEO of Patelco from 1987 through 2002.

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The Cooperative Advantage

Cooperatives Are Unique

“The first word in credit unions always has to be MEMBER.  The second word has to be COOPERATION.

“We are a cooperative movement.  Credit unions are co-ops.  People join, agreeing to cooperative to better one another’s lives.   They pledge themselves to cooperation.

“We have seen what this spirit has done for us in the past.  From fragile, tiny groups of people a hundred years ago pledging to themselves they would save and borrow from from one another in a spirit of helpfulness to a movement of 90 million Americans and $700 billion in assets. That is the power of helpfulness and cooperation.”  (pgs. 58-59)

Note: The Coach’s Playbook is a collection of the thoughts of Ed Callahan from his thirty years working a multiple levels including CEO of Patelco Credit Union and Chairman of NCUA (1981-1985).

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Wisdom: The People’s Movement

The People’s Creation

“We don’t have to concern ourselves when people ask, “but what did Congress intend us to be?”  Our movement does not exist because it was created from the top (i.e. Congress) down.  Rather it was created from the bottom (i.e. the people) up.

We told Congress what we intended to be: cooperatives that would try to serve the needs of their members, whatever those needs might be.” (pg52)

Note: The Coach’s Playbook is a collection of the thoughts of Ed Callahan as a federal and state regulator, innovator and credit union CEO.  The book was published by Member Value Network.

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Wisdom: Running Lean

           On Running Lean

“I started my career as a football coach. Something you learn from coaching is that people can do more than they think they can.   They can be faster, work harder and do more than they thought possible when they got up in the morning.

“When I arrived at Patelco, I reviewed the numbers.  The credit union was sending 10% of income to reserves and returning 4-5% to members as dividends.  Patelco was bloated and did not know it.

“I set a new goal: 10% to reserves 28% to expenses and 62% back to the members,  To get that 10-28-62, everyone had to work leaner and better.  Nothing was considered sacred.” (pgs 22-23)

Note: The Coach’s Playbook is a brief collection of the thoughts of Ed Callahan over his 30 plus years in credit unions. The book was published in 2006 by the Member Value Network.

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Children on the Front Lines of Change

I was sent the following article, The Civil Rights Showdown Nobody Remembers, prior to a reunion.

It is by Louis Menand, published in the New Yorker, July 31, 2023 and in the print edition on August 7 under the title “The Children’s Crusade”

The Supreme Court and Civil Rights:  Separate is Not Equal

Clinton High School, Clinton TN was the first southern school to be integrated by court order in 1956.  This 15-page New Yorker story describes the event.   This initial case is sometimes  overlooked because of the subsequent much publicized Federal Government’s  intervention in Little Rock’s Central High School. In that situation,  President Eisenhower sent in the 101 st Airborne to support the Court’s integration mandate after Governor Faubus called out the Arkansas National Guard to prevent it.

The excerpt below is the final paragraphs which  provide the significance of this first integration effort. The event was seminal. The author’s portrayal  of how children, not grownups, were  on the front line again and again is his most crucial observation.

Sometimes change in society must be led by the most vulnerable.   Political rhetoric,  governmental orders and passionate ideals can be inspiring.  But who does the heavy lifting?

The Author’s Conclusion

This brings us to the real scandal of (the Court’s school desegregation decision in) Brown. The Supreme Court finally interpreted the equal-protection clause of the Fourteenth Amendment as it had been intended: to protect Black Americans from state-ordered discrimination. The Court was not wrong when it held public-school  segregation laws unconstitutional.

But its decision placed the burden of desegregation—not just some of the burden, the entire burden—on children. Schoolchildren, both white and Black, were required (few volunteered) to do something that no adult was required to do. Socialized since birth to avoid unnecessary contact with the other race, they were suddenly expected to handle a situation that their parents, outside of military service, had never been asked to handle.

Labor unions and police forces and fire companies were not required to integrate in 1954. Restaurants and hotels and theaters were not required to integrate. Places of business were not required to integrate. Water fountains and bus stations and city parks were not required to integrate. Only public schools were required to integrate.

Clinton High School had eight hundred students. It was insane to send twelve Black teen-agers in there while demonstrators screamed abuse outside and there was not a single Black teacher in the building. It was insane to send nine Black teen-agers into Central High School in Little Rock with eighteen hundred white students and no Black teachers. It was insane to ask one Black adolescent, fifteen-year-old Dorothy Counts, to walk a gantlet of taunting whites so that she could single-handedly integrate Harry P. Harding High School, in Charlotte, North Carolina.

Desegregation was a war. We sent children off to fight it. 

This story causes one to ask, what are today’s children fighting for?

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Two Washington DC Observations

Truisms as events unfold in our nation’s capital.

The problem with political jokes is they get elected.  (Henry Gates)

Why government spending is endemic, at all levels:

Politicians are people who, when they see light at the end of the tunnel, go out and buy more tunnel. (John Quinton)

 

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A Fall Bouquet & “Home”

Home

by Edgar Guest (1916)

It takes a heap o’ livin’ in a house t’ make it home,
A heap o’ sun an’ shadder, an’ ye sometimes have t’ roam
Afore ye really ’preciate the things ye lef’ behind,
An’ hunger fer ’em somehow, with ’em allus on yer mind.
It don’t make any differunce how rich ye get t’ be,
How much yer chairs an’ tables cost, how great yer luxury;
It ain’t home t’ ye, though it be the palace of a king,
Until somehow yer soul is sort o’ wrapped round everything.

Home ain’t a place that gold can buy or get up in a minute;
Afore it’s home there’s got t’ be a heap o’ livin’ in it;
Within the walls there’s got t’ be some babies born, and then
Right there ye’ve got t’ bring ‘em up t’ women good, an’ men;
And gradjerly, as time goes on, ye find ye wouldn’t part
With anything they ever used—they’ve grown into yer heart:
The old high chairs, the playthings, too, the little shoes they wore
Ye hoard; an’ if ye could ye’d keep the thumbmarks on the door.

Ye’ve got t’ weep t’ make it home, ye’ve got t’ sit an’ sigh
An’ watch beside a loved one’s bed, an’ know that Death is nigh;
An’ in the stillness o’ the night t’ see Death’s angel come,
An’ close the eyes o’ her that smiled, an’ leave her sweet voice dumb.
Fer these are scenes that grip the heart, an’ when yer tears are dried,
Ye find the home is dearer than it was, an’ sanctified;
An’ tuggin’ at ye always are the pleasant memories
O’ her that was an’ is no more—ye can’t escape from these.

Ye’ve got t’ sing an’ dance fer years, ye’ve got t’ romp an’ play,
An’ learn t’ love the things ye have by usin’ ’em each day;
Even the roses ’round the porch must blossom year by year
Afore they ’come a part o’ ye, suggestin’ someone dear
Who used t’ love ’em long ago, an’ trained ’em jes’ t’ run
The way they do, so’s they would get the early mornin’ sun;
Ye’ve got t’ love each brick an’ stone from cellar up t’ dome:
It takes a heap o’ livin’ in a house t’ make it home.

Edgar Albert Guest, born on August 20, 1881, in Birmingham, England, but raised in Detroit, was a poet known for his popular verse.
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When Will Interest Rates Fall?

On Friday’s market close, traders were talking about the 10-year Treasury yield reaching 5%. Right now, it’s at 4.49%.  Other short term rates were:

  • The one-month Treasury bill is at 5.55%.
  • The two-month T-bill is 5.60%.
  • The three-month T-bill is 5.55%.
  • The six-month T-bill is 5.53%.
  • The one-year T-bill is at 5.46%.
  • The two-year note is at 5.03%.

This inverted yield curve (10-year rates lower than short term yields) has been the situation for over a year.

When might rates stabilize or reverse is a topic for any CEO trying to manage  multiple ALM risks.   But must rates go back down?   Or are are markets developing a new normal, higher yield curve?

This week I will look at some industry data about how this rise over the past 12 months has affected credit union liquidity.

Many economic observers have been puzzled why the highest short term rates this century have not stalled the economy, caused a recession, or even undercut the positive stock market gains. GDP is still growing.

But one person thinks this not-too-hot, not-too-cold economy must  face a day of reckoning, unless interest rates come down soon.   This is certainly not the Fed’s latest policy intent from their September meeting.

Kelly Evans is a commentator on CNBC’s The Exchange.  For most of this year, she has been critical of the Fed’s increasing interest rate steps. She cites data from analysts which lead her to believe a recession is inevitable, unless the Fed pulls back quickly.

All of her columns last week examined the sources of interest rate pressures.  These include the changing line up of who is buying Treasury debt, the increased burden from rising federal budget deficits, and why the zero interest rate era of quantitative easing is possibly over.

She has been sounding Cassandra-like warnings  that the Fed’s rate rises are going to break something in the economy-a soft landing is not likely.

Here is  an unusual Saturday column listing all of her commentary from last week.  If you have time to skim only one, start with Friday’s because I believe it summarizes the forces she thinks are now  manifested in growing market jitters.

Her Edited Column

“This was an important week in global markets. Long-term government bond yields showed early signs of a “disorderly” climb, not so much because of any improvement in the economic outlook, but concerningly, as investors seem to be testing how high rates need to go in a high-debt, high-deficit landscape where the key buyer of government bonds last decade (central banks) has vanished from the scene.

Central banks altogether bought $23 trillion of assets (primarily government debt and U.S. mortgages) in the past 15 years, according to Bank of America’s Michael Hartnett. That “liquidity supernova” caused “big asset price inflation…and in recent years subsidized massive U.S., U.K., and European government spending,” he wrote yesterday.

Now, that excess is unwinding. . .

So how did we get here? Here’s a recap of the pieces that examined that issue this week.

Monday: The $2 trillion deficit. How did we get here?   A quick summary of growing government spending and flat revenue growth.

Tuesday: Will the deficit require the Fed to restart QE?  The difficulty in reducing government spending.

Wednesday: When will markets force Washington’s hand? Unless fiscal spending is reduced, there is no telling how high rates might go.

Thursday: If bond yields don’t start dropping… her conclusion: If yields don’t start falling sharply on weaker data–as we’re expected to get in the fourth quarter–investors will really start panicking and rates will rise.

Friday: The sovereign debt bubble is bursting. This is her strongest warning.  It starts by critiquing  Modern Monetary Theory which asserted government deficits don’t matter.  Here is an except:

“By the end of the 2010s, “austerity” talk was ancient history. Global bond yields simply weren’t rising, no matter how much debt governments were issuing. In 2019, almost a quarter of global government debt carried negative yields; it seemed markets were practically begging policy makers for more and more of it, with permission to juice their economies. The New York Times started carrying op-eds promoting the idea of “Modern Monetary Theory,” or near-limitless deficit spending; even mainstream economists like Robert Shiller seemed to half-endorse it.

“And if you really want to take a deeper dive, check out CBO’s writeup (from February) of the U.S. fiscal picture for the next ten years. You can see why markets are getting jittery.”

End

Tomorrow I will review the  liquidity trends in credit union balance sheets for the twelve months ending June 2023.

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Two Ways of Reflecting on  Life’s Possibilities: The Poetic and the Practical

The Poetic

A teenager’s college essay on the value and difficulty of alternative ways of seeing the world  from the Free Press:

“In another scene from The History Boys, one English schoolboy preparing for Oxbridge entrance exams, Timms, asks Hector why they are reading the poetry of A. E. Housman instead of doing something “practical.” 

Timms: I don’t always understand poetry!

Hector: You don’t always understand it? Timms, I never understand it. But learn it now, know it now, and you will understand it. . . whenever.

Timms: I don’t see how we can understand it. Most of the stuff poetry’s about hasn’t happened to us yet.

Hector: But it will, Timms. It will. And then you will have the antidote ready!

Like Timms, I sometimes don’t understand what I’m learning or memorizing when I study poetry, but I believe Hector when he says it prepares us for the very real events of the world—going to war, falling in love, falling out of love, making a friend, losing a friend, having a child, losing a child. 

Understanding ancient authors as they understood themselves is the surest means of finding alternatives to our current way of seeing the world.”

The Pragmatic

From Jake Meador’s essay, The Misunderstood Reason Why Millions of Americans Stopped Going to Church:

“Contemporary America simply isn’t set up to promote mutuality, care, or common life. Rather, it is designed to maximize individual accomplishment as defined by professional and financial success.

Such a system leaves precious little time or energy for forms of community that don’t contribute to one’s own professional life or, as one ages, the professional prospects of one’s children. Workism reigns in America, and because of it, community in America, religious community included, is a math problem that doesn’t add up.”