But does it matter?  Is the extra time we are spending with our kids, chauffeuring them to and from activities, really making a huge difference?

In this freakanomics podcast, a group of economists spend the hour trying to figure out how much parents actually matter.

I strongly recommend taking the hour to listen:

What could economists know about parenting?

Settling Nature vs Nurture…

So what really does matter in the life of a kid?  If you had to focus on one thing that could have a huge effect on your child and on yourself as a parent, what would it be?

Seriously – best podcast I’ve heard… maybe ever.

Yesterday marked a first in American economics.  Standard and Poors has downgraded American foreign debt from “AAA” to “holy crap, this country’s debt is approaching more than 100% of its yearly GDP… I wonder if we’ll ever get paid back!”  If this isn’t a huge shoe dropping, I don’t know what is.  It should be a huge wakeup call to politicians and citizens everywhere that the world will not simply stand idly by while we consume all of its resources and, with a wink and a nod, promise to pay them back from our future economic growth.

I enjoy watching the Suze Orman show.  I like her advice and I like the way she draws links between the person’s interpersonal and sociological behavior to their financial information (even when that link is sometimes a little shaky).  But what is most entertaining is to see the people who call in with $10,000, $50,000, $100,000 of credit card debt and think nothing of it.  They spend thousands of dollars more per month than they bring in.  Who are these people and in what reality can they feel good about that?  How long can they think that this will not catch up with them, and aren’t they completely disheartened to see a monthly statement arriving that gets exponentially larger and larger?

After you watch this show for a while, you begin to understand why our politicians handle government expenses similarly – if we are a government by the people and for the people, then this is just another way our representatives are reflecting the population.  That we feel no shame in this is a sad, sad thing.  That we can’t seem to apply simple financial sense to the problem is even worse.

Suze tells people to stand in the truth of their financial situation.  Often she can show them a way out of their personal debt just by restructuring their expenses; by getting rid of the eating out, hair appointments, land lines, and nearly every ‘subscription’ and recurring expense they can do without.  Sometimes she also has to tell the individual that they need to find a new job, an additional job, or some other way to make more money since they simply do not make enough money to meet even their basic needs.

Our government is definitely in camp #2.  They need to stand in the truth of the situation.  We spend too much, and we dont’ make enough money.  We’ve gone on a decade-long tear of tax cutting while also expanding government expenses like crazy.  The solution isn’t one thing, it’s every thing.  We aren’t going to cut a couple of military programs and reduce the number of reports the government issues annually and solve the problems.  We aren’t going to restructure Social Security and be done.  We aren’t going to solve it by only changing our expenses and not addressing the revenue side as well.  We can’t continue to give new tax breaks to gain popularity, ignoring the huge debt we have accrued and the deficit we perpetuate.

Taxes are going to have to go up, and expenses are going to have to come down.

Every financial advisor warns retirement savers of this reality – that some time in the future taxes in America will have to way higher – yet no politician is willing to entertain that eventuality.

It’s already happening.  In Texas, while the state continues to promise rock bottom income taxes to corporations and individuals, it is raising the state portion of every traffic ticket written in this state, even while the police sit around in 100 degree temperatures in their SUVs guzzling $4/gallon gas.  We are quickly moving to our police force being a tax collection force for those unfortunate enough to be caught in their crosshairs. The state also continues to jack around with silly fees like the “Welcome to Texas” fee you are assessed when you register any vehicle in Texas for the first time.  Gas tax or additional tolling will be next, mark my words.  Even though Good Hair Perry has promised property tax breaks, my property taxes have risen every year since I’ve lived here.

Sure, we don’t have an income tax here, but you pay… oh you pay.  So, look.  I want a government that’s fair, honest, and open.  If we need $ to pay for crap, then raise the money through the front door, not through pulling me over for going 5mph over the limit.

The Surprising Truth About What Motivates Us

I hope the fact that the SEC filed the suit (rather than settling) means that they have a solid case. It will be very hard to prove intent, even with ‘smoking gun’ emails.

Whether or not they win or lose the suit, we should prosecute Goldman and these hedge funds in the court of public opinion. It is clear that they value their own bonuses and bottom lines over the security and health of their customer’s investments. I will never invest a dime with these companies, even if they are the last ones standing.

Because the podcast is an hour long, and WAY to dry for most normal humans, I’ll try to sum up some key findings here.

Once upon a time, there was an evil hedge fund called Magnetar. Magnetar, like all hedge funds, are looking for huge gains. In the middle of a slowing housing market in 2005, when investors were slowing the rate of investment in mortgage-backed secuirites, Magnetar flooded the system with new money and new mortgage-backed security instruments and then — this is the good part — hedged against them. Yes, Magnetar created these CDOs and encouraged the worst types of mortgages to be securitized in them, then they purchased credit default swaps (like an insurance policy) to hedge against their own bet.

Quoting a bit from the Pro Publica Article:

According to bankers and others involved, the Magnetar Trade worked this way: The hedge fund bought the riskiest portion of a kind of securities known as collateralized debt obligations — CDOs. If housing prices kept rising, this would provide a solid return for many years. But that’s not what hedge funds are after. They want outsized gains, the sooner the better, and Magnetar set itself up for a huge win: It placed bets that portions of its own deals would fail.

Along the way, it did something to enhance the chances of that happening, according to several people with direct knowledge of the deals. They say Magnetar pressed to include riskier assets in their CDOs that would make the investments more vulnerable to failure. The hedge fund acknowledges it bet against its own deals but says the majority of its short positions, as they are known on Wall Street, involved similar CDOs that it did not own. Magnetar says it never selected the assets that went into its CDOs.

Magnetar says it was “market neutral,” meaning it would make money whether housing rose or fell. (Read their full statement.) Dozens of Wall Street professionals, including many who had direct dealings with Magnetar, are skeptical of that assertion. They understood the Magnetar Trade as a bet against the subprime mortgage securities market. Why else, they ask, would a hedge fund sponsor tens of billions of dollars of new CDOs at a time of rising uncertainty about housing?

I’ve always been a little suspicious of hedge funds. How can a hedge fund post a 75% growth rate when the market is only growing at 3-5% overall? The only way to do this is through financial manipulation.

In a brilliant stroke, the folks at This American Life compared it to the musical The Producers, where two broadway producers hatch a scheme to make more money with a theatrical flop than they would with a hit.

This is exactly what Magnetar did. That they posted HUGE gains by trickery is infuriating, but to add insult to injury, know this: the bankers who dealt with Magnetar, yes the same banks that the public had to bail out, took millions and millions of dollars in bonuses from the fees on the crappy securities.

So, while the rest of America is recovering from lost jobs and obliterated retirement funds, the ‘good ole boys club’ are all still living like kings off of the millions of dollars they personally banked during this time. by selling each other dying milk cows.

How’s that for the American way? Save your own assets first…

This American Life certainly had the best outro of any financial news piece I’ve heard: they composed a broadway rendition of what happened and how these people made millions of dollars betting against the American Dream.

This little bit of poetry almost counterbalances Litowitz’s (Magnetar’s creator) own piece of poetry: a “magnetar” is a celestial body, a collapsed and dying star whose magnetic field is akin to a black hole.

Thanks, Litowitz. Thanks for creating a huge black hole in the middle of our economy, you turd.

I introduced her to Suze Orman’s Retirement Roadmap which Suze presented on her show last November or December.  In it, she details what she thinks people in every decade of their life (20s, 30s, 40s, etc) should be doing now to save for retirement.

My ears especially perked up when I heard it, because she started with people in their 20′s. Good financial planning or investment advice and strategies for people in their 20′s is practically non-existent out there.  I’ve searched the web pretty extensively, and very few people ever get past a blanket “it’s best to start early because look how much more you can potentially make.”  Well, the problem is, they never get into exactly HOW we make that much more with time on our side.  Instead, they just focus on those in their 40s or 50s who have higher net worths and screw ups to deal with.

Anyways… Suze’s advice: for those in your 20s who have access to a 401k with a matching contribution, contribute to your 401k only up to the match, and then open a Roth IRA and contribute up to the $5000/yr max there.

What’s the difference, you ask?  The 401k is an employee sponsored account/program for retirement that saves and invests your money pre-tax, thus making your taxable income lower.  This is great for high-income people who are trying to jump into a lower tax bracket by contributing to retirement.  There are great incentives to do a 401k, the foremost of which is an employer match (a.k.a. FREE MONEY).  Always take the free money, I say.

The Roth IRA is an individual account (not owned by the company) that takes money you’ve already been taxed on and invests it for retirement.  The earnings and the corpus of money is not taxed as income when you withdraw it during retirement.

I crunched on this advice in the back of my mind for a few months, and it started making more sense:

1. 401k + Roth IRA provides diversification.  Whether you think taxes will be higher in the future or lower, you just might be right.  :)  The best way to protect against an unsure future is to diversify, and having both a 401k and Roth will give you the ability to draw from each pool at the right time, or preserve the pool if you need to.  Plus, having some of your income tax-free will lower your overall taxable income during retirement, which has the potential to be high if you started saving in your early 20s for retirement anyways.
2. More trading options with a Roth IRA.  The money in your Roth can usually be invested in a lot wider variety of investments.  It can also be quickly turned back into cash, if you need.
3. Fewer penalties with Roth. You can withdraw the money from a Roth much easier than a 401k, and without the 10% IRS penalty.

The downside?

A Roth will require more care and attention than a 401k.  You will usually not have the ability to do paycheck deductions for a Roth, so you just have to be SURE than when you reduce your 401k contribution to the match, you really go through with making the Roth contribution.  Otherwise, you just gave yourself a raise at a great cost to your retirement.

We also found out that even if one spouse works, you can have a Roth IRA in each person’s name and contribute up to $5000 in each, giving you a combined after-tax savings of up to $10,000/year.

More info:  http://money.cnn.com/2006/05/25/pf/expert/ask_expert/index.htm

Yesterday, with the holiday season rolling in and end-of-year bills piling up, my money-anxiety meter was going a little out of control, so after getting back in control, I decided that I needed to set some ground rules on when I would allow myself to freak out about money:

1. No freaking out about money if you actually have money.

If your net worth and/or savings is stable and/or growing month over month (even if only through retirement contributions), then you have no reason to be anxious about money.  No freaking out if you are spending less than what you are making.  Feel free to freak out if you are consistently spending more than what you make.

2. No freaking out about giving gifts.

It is OK to temper the amount of money you are spending on gifts, but it is not OK to feel upset that gifts are being given, as if the recipient doesn’t deserve to be the beneficiary of your hard-earned spoils.  Work on your selflessness here a bit.  It’s not yours in the first place, ya dope.

3. No freaking out about emergencies or unexpected expenses.

It does no good to cuss and moan about the car that needs emergency repairs or the appliance that needs emergency replacement.  This is why you have an emergency fund, and it will do you no good to freak out about it.  Just rip off the band-aid quickly, get it over with, and put together a plan to regroup your emergency fund ASAP.  Usually emotions run high in emergencies, and adding anxiety about money into the  mix is like throwing gas on an already burning fire.

4. No freaking out about betraying your goals for special circumstances.

So you have to dip into the vacation fund to cover your Christmas expenses?  So you have to change your savings goals for one month, or stretch the budget a bit?  Big deal.  Get over it.  The whole world won’t come crashing down.  Just get back on your goal next month.

5. If you ever start feeling down on yourself for being tight, watch this video:

That is what a small vacation, a huge car repair, new tires, and a couple trips to wal-mart will do to your monthly cash flow…

I guess it could be worse…

1. I could be FavUnc and see that bar getting longer and more negative with every pre-wedding month…

2. I could be the Federal Government and not have seen that bar anywhere near the 0 mark for the last 75 years.

I suppose I could always raise my wife’s taxes for being married to me… who says I am “tight”?

You can spend a really long time watching his videos on YouTube, but let me boil down what I know about his positions:

• America needs to focus on productive, profitable companies and rebuild companies that add value to our everyday lives.  For too long we’ve focused on pretend, service industry jobs which wheel and deal in the financial sectors of our economy.  They are jobs of manipulation, not jobs of creation.  They are jobs which, if the ceased to exist tomorrow, would not rattle the very fabric of human-kind.
• Our economy is like a heroine addict.  We keep putting off rehab by giving ourselves ‘injections’ of captial – fake money which is mean to give us a quick fix rather than actually solving the addiction and getting the bad stuff out of our system.
• Companies who are in trouble deserve to fail.  Letting the automakers or insurance companies will not be the end of the automotive industry as we know it.  The factories wouldn’t stand still long.  It would only take long enough for a new corporation to be set up, free from the liabilities of the old ones, to build itself from the ground up, making a profitable business model.
• The government is partially at fault for fueling the consumer economy, encouraging unreasonable housing prices, and ignoring economic best practices and free-market policies.

Now, the guy gets a little extremist/absolutist when he starts going down the path of complete financial armageddon, but if you take away the shrillness & alarmism, overall he strongly reflects my economic views.

If you are going to watch one of his videos, watch this one:

He makes a lot of great points in this video:

1. real estate is a place to live, not an investment
2. companies that make money trump companies that do well in the market
3. you can’t go back to sound lending practices and keep bubble pricing
4. work is to produce value, not to just have a job

1. to define what we currently have
2. to understand what is being proposed and where it might lead us

I want to get it #1 nailed down, first, before we get into #2.  Perhaps the single most frustrating thing is to discuss a topic when not everyone in the room is coming from a similar basic understanding of the actual state of affairs…

So here we go…

The hallmark of our American culture is free-enterprise.  Free-enterprise has taken our country from a fledgling colony to the world’s last super-power.   This point is not up for debate.  It’s who we are, where we’ve been, and what we do.

However, as we’ve grown and matured as a country, our citizens have gradually changed the expectation of citizenship in this country.  Consider the difference between the “wild west”, when you were lucky if there was one ‘Wyatt Earp’ in any given city.  Now, law enforcement, fire departments, traffic controlling, and emergency management of all kinds are just a given.  Rather than focusing on individual preparedness, we have systematized all our life’s unknowns to our government.  If there’s a fire, crime, disaster, family dispute, orphan, poverty, retirement, or even if you want to build something on your own land – we, as a society, have provided for that.  I suppose it’s the price we’ve paid for ‘culture’ and the cost of living with each other – we’ve introduced this huge arbitrator between us, called the government.

In the last 100 years we’ve moved to systematize sectors of our economy from “industries” to “systems”.  This is an important word.  A system is typically characterized as being stable, predictable, and uninterruptable.  Systems tend to have deep pockets, steep overhead and large bureaucracy.  Government tends to run “systems.”

Industries are different.  Industries are typically made up of many companies and individual entrepreneurs and innovators.  Industries are volitile, nible, and fragile.  They ebb and flow with the times.  They rise and fall with demand, capital, and the market.  They can produce large profits, but also run the risk of taking huge losses and ultimately failing.

The question is: Is our Health Care a “system” or an “industry”?

The answer is: Yes.

The industry is made up of two major components: Health care providers & Health care payers

Providers are largely still an industry.  Doctors set up practice in locations where they will have enough patients to make a decent living.  Hospitals, clinics, and private practices tend to ‘follow the money’, making a really good living based on their local reputation and skill at their profession.  Drug and medical equipment companies live or die by their successful products and innovations.

Payers are largely a system.  The three categories of payers are now: for-profit insurance companies, not-for-profit health care cooperatives, state government programs, and federal government programs.  These companies have various goals, though:

• For-profit insurers want to keep as many customers as possible, offering premiums and programs that cover their customer base without draining their cash supplies they can claim as “profit”.
• Non-profit are similar to for-profit except that rather than returing profits to shareholders, the profits are used to grow the company, and grow the number of people who can be served through the coop.  The profits are just banked against future loss and growth.  (Similar to bank vs credit union)
• Government services’ primary goal is to control cost, keep from bankrupting itself, and fulfill its government mandate.

So what’s the problem with health care?

Cost!  Cost!  Cost!  It all goes back to the almighty dollar!

It’s been the problem for the last 100 years.  Cost is the reason why we need a middle-man/payer in the first place.  When we get sick, we all want the best care available.  To be able to pay for this, we have to have advanced medical centers and well-trained physicians everywhere.  There is demand everywhere for the best drugs, the best medical equipment, and the latest advancements.  This is not cheap.  It is very expensive!  We have to pay for it somehow, and so the cost of treatment has gone up and up.

It’s so expensive to get treatment, we have to insure ourselves against the possibility that we’ll get sick.  Medical insurance is now the fixture in the industry, and all the money is funneled through their hands.  Because of this, they have become the tail that wags the dog, and the target of intense scrutiny.  They are the final word to the patient and to the doctor.  They dictate what they will pay for, when they will pay for it, and how they will pay.  Doctors, in turn, spend more and more time and resources understanding and maximizing what they can get out of each insurance company.

Then there’s the government.  We decided we needed to help those who could not afford insurance (the poor and the retired), and the Medicare system was born.  Medicare’s role in today’s system is to set the ‘baseline’ for all other insurance companies.  Medicare decides what it will pay for any given procedure, and other insurers have to pay at least that.  Medicare dictates to the doctors the minimum they will get paid for any particular thing.

Lest we criminalize the insurers too badly, remember it is on the backs of these insurers we have built the largest, most advanced health care system in the world.  All the great health innovations continue to come from the United States, due to the great educational system, infrastructure, and momentum.  People get paid (and get paid well) to innovate and invent new medical procedures and medications, and insurance companies (as evil as they can be to both doctors and patients) continually finance it and make it all possible.

So that’s how our medical system works today.  The next posts will focus on some of the proposed reforms and transformations of our health care “systems” and “industries”.

• “The Customer is Always Right”
• “We sell for less”
• “Where’s the beef?”

Well, I’m here to inform you that there’s a new strategy out there.  It must be due to the recent recession, so I’m calling it Recession Strategy 09 or RS09 for short.  It appears to be: “We pay you to shop here!”

Three examples from this past weekend:

We went to Cinemark to see the new Harry Potter movie on Thursday.  We had just come from dinner, so no appetite for popcorn or drinks… we just sat down to enjoy the 30 minutes of previews before the show.  As the exposition was just coming to an end and the train was on its way to Hogwarts, the power in the entire cineplex went out.

We waited patiently for about 15 minutes, but when we caught wind that a transformer had blown, we decided to get our money back and leave.  I will give Cinemark credit… they tried to push what was best for them on us first… they were pushing the “rain check” option.  My dad explained that they were from out of town and wouldn’t be visiting a Cinemark anytime soon.  The girl emerged from the out-of-order box office with $50 cash – $5 more than what we paid for the tickets!  We got paid $5 for sitting through the previews and first half-hour of Harry Potter!

A2 and I went to DSW Shoes on Saturday to return a pair of shoes she didn’t want.  We had also received a coupon in the mail (rewards for buying the last pair of shoes), so we took that coupon in to shop as well.  A2 bought a new pair of shoes, returned the old pair, and used the $10 coupon.  Net cost +$8.  Seriously… they paid us $8 to carry that pair of shoes out of their store!

Later that day we went to Target.  A new Super Target has recently opened near us, and we have gotten several coupons in the mail as promotions for the grand opening.  We took one of the $5 coupons with us to shop.  When we went to check out, I place the coupon on the check-writing shelf, but the checker forgot to scan it before applying the total to my debit card.  Rather than handing the coupon back to me, she simply scanned it as a new transaction and took a crisp $5 bill from the register and handed it to me.  I felt $5 richer!

Is this a coincidence, or is there some kind of market research which says that leaving an establishment with cash in your hands is a great loyalty winner?  I’m not talking about discounts, I’m talking about taking cash out of the till and putting it in your hot little hand — making literal the old car salesman’s “Cash Back” slogan.

I’ve never understood retail, but I do have a sense that retail is absolutely bonkers.  How many convoluted ways can you get consumers out there to spend money?  Where else is brand popularity worth more than profits?

Only in retail is being #1 is more important than making money!

Which led me to think… what kind of major event would happen which would stimulate this country’s economy out of such a severe recessional slump?

Well, by this graph, it looks like something happened some time in early-mid March… maybe around March 21…

I’m no economist, but it appears that the ramp-up to our wedding was pretty much the single factor that stimulated the economy back into shape.

Congratulations to the Brows, Mrs. Brows, and all our awesome friends and family who supported us during our wedding festivities!  Pat yourself on the back for a job well done!

(The thank you cards are all in the mail.  We’re working on official thank you cards from the White House as well… stay tuned!)

Before I saw Wall-E, a few articles and videos crossed my desk:

1. Washinton Post: Prices Fall to Match A New Frugality

2. The web video: “The Story of Stuff”

The first article discusses how high-end retail is dropping prices to try and keep their customers who now feel much less rich than they used to.  These stores have been hurting during the slump, as they just can’t justify such high prices for things that have only phantom psychological value. (If you can get a pair of jeans for $20, why do you need to buy the $200 jeans?  And don’t tell me it’s cause they make your backside look good.)

In the second video, I developed a much better understanding of the concept of “sustainability” that I didn’t have before.  It’s worth your time, if you can stand to wade through her activist/absolutist tone.  If you can get past her alarmism, you will note that we do have a problem in that our current production and consumption models are unsustainable.  While it’s not quite as dire as she’d like us to think, it is certainly an unsustainable way to live.  Imagine if the entire world lived like we did…

The part that really got my attention was the section on disposal – how we build and program our products to fail, and that we no longer repair anything – we simply replace it.  Take your cell phones, for example.  How many have you been through since you first got one? Me… I’ve been through about 5 phones in 7 years.  Electronics are the major culprit of the sustainability crisis, as they are cheaply manufactured and quickly become outdated or obsolete by Moore’s Law or by the fragility of the device.

But here’s the thing that really got me thinking: my job depends on us selling electronics.  Not just my job, but the jobs of the guys who resell our products, and the jobs of the guys who install and service them.  Not to mention the thousands of jobs at Best Buy, the Apple Store, and all the other retailers who depend on customer demand for the newest, most capable electronics on the market.

So here’s the key question: how does a new emphasis on frugality and sustainability affect the ability to generate wealth?  If we create our products to last forever, do we limit our ability to generate wealth in this country?

In last week’s episode, the White House was attacked and the President is taken hostage, all because they chose to stick by their ‘ideals’ rather than continuing a torturous interrogation of a key player who was about to give up the location of the imminent attack.

Characters in high ranking government positions are being forced to ask themselves the question, “Does this betray our American ideals?”  and “At what cost of life and property do we hold onto our ‘ideals’?”

Much political hay was made of the CIA harsh interrogation techniques – torture – in recent political campaigns. This significant issue was used often and harshly by Democrats against Republicans who were even remotely tied to President Bush in this recent election.  By now, everyone has been beaten down so hard by this issue that they’ve run for political cover wherever they could find it, and the idea that we should do “whatever it takes” to protect America has fallen in the wastebasket of political correctness.

I’m not necessarily making an argument for or against torture… just pointing this out as a prelude to the real meat and potatoes of this post…

Our country is now facing an economic crisis, the enormity of which is still being uncovered, and the question I ask you is: what of our ideals are we willing to compromise to resolve it?

This country has a rich legacy of self-sufficiency, efficiency, and capitalism.  We have been the world’s engine of innovation and invention.  Even the stuff that was invented or discovered elsewhere has only been successful due to the marketing, packaging, and commercialization of it here in the United States.

Yet we keep pushing our country further and further toward socialism.  The federal government is the largest enterprise in the world, with a 16 trillion dollar annual budget.  We pay benefits and social programs to our citizens for health care, retirement, unemployment, etc.  The taxpayers provide for at least some aspects of almost every American citizen’s daily life.

We have issued billions upon billions of dollars which have been called ‘stimulus’ or ‘bail outs’, but which are quickly turning into government takeovers and socialization of the financial sector of our country.  In fact, it looks like it might even become cheaper to just pay the American people directly rather than propping up their failing financial institutions and corporations.

I am the furthest thing from a libertarian.  I actually think that there are things only a government can do, that private industry has no business doing (security being the first and foremost).  However, I don’t think government can or should do everything.  The government was intentionally created to move slowly, so that no despot could come in and make wholesale changes overnight.  Ever heard of checks and balances?

So which ideals are you willing to give away to get out of this crisis sooner?  Do we nationalize banks?  Nationalize the auto industry?  What happens in the next crisis then?  Who chooses the winners and losers?  Everyone seems to go bonkers when we refuse to torture a known terrorist to get information vital to our national security, but we seem to all be fine with selling ourselves, our companies, and our future to a monolithic, proscriptive federal government.  Why are we not just a little more hesitant on that?

I question the intentions of everyone.  Everyone has an agenda.  Some want to kill the stimulus just to show that they (Republicans) aren’t dead yet.  Others genuinely oppose such huge government spending.  Others really want pork.  Others genuinely view this as a way to prop up our economy and create jobs.

I see it this way…

WhiteEyebrows’ Economic Allegory

Imagine a very large house – a mansion.  The mansion is big and beautiful.  It is constantly under construction/expansion.  The owners are filthy rich.

In the last few expansions the contractors perscribed some ‘structural enhacements’ to the core of the house which would make the house easier to remodel and expand going forward.  They removed many major support beams and tried to just distribute the load of the enormous structure on every 2×4 in the house.  This would allow them to build onto it faster and cheaper, and without regard to structural engineering.

The house continued to grow at an astouding rate.  New floors, patios, porches, wings, and garages were added like crazy.  Then one day, lacking the structural integrity to bear the weight of all the new construction, a key part of the house slowly started collapsing.  It didn’t happen all at once.  Several workers started seeing cracks in the plaster while others just felt that something wasn’t right.

Then there were some bad days.  Whole pieces of ceilings and walls started collapsing, but the house still stood – distributed across the weight of much of the rest of the house.  Some part of the house were unaffected, and others were slowly and completely decimated.  Soon, there was a big gaping hole to the exterior of the house for the whole world to see.  Slowly but surely the hole grew until a large, central part of the house was considered rubble.

The many workers got together to decide what to do.  Two solutions emerged:

1. They could pay massive amounts of money to hire scores of people to come in and quickly clean up the mess.  Then pay more people to continue building by doubling the number of materials.  Instead of using 1 2×4 for each stud, they would use 2 2×4′s.  They would simply double the materials, propping up and supporting the old, poorly built construction by fusing new material onto it.  Then hastily building new construction over the areas of the collapsed house to return it to tip top condition.  This new work would hide the destruction of the past and patch up a good number of structural problems.  This would be the most expensive solution, but might produce results quickly.
2. They could go in and strategically place temporary supports in the house, which would keep the destruction from spreading to other parts of the house.  This would buy them time to repair the structural problems they had created for themselves.  They could hire some real structural engineers and create new, innovative ways to support, monitor and regulate the massive weight of the structure that they would undoubtedly want to continue building upon after this crisis was over.  This would cost less, take more time, be much more painstaking, and show results slowly.

Which way would you rebuild the house?