Whatever Happened to Merrill Lynch?

When I read that 249 more foreclosures were recorded in San Benito County for the month of August, I started fuming all over again.

These foreclosures are the local end of a problem that extends through banks, mortgage lenders and investment banks, all the way to Merrill Lynch, the venerable and, one thought, invincible titan of stock brokering and other sophisticated, high-roller type financial activities.

You know, the Merrill Lynch that was so bullish on America that their logo includes a bull.

It's not directly Merrill Lynch's fault that so many homeowners have been pushed into default and foreclosure. It's partly the fault of the homeowners themselves, for failing to read the fine print and for failing to ask enough questions about the likelihood of their too-good-to-be true low mortgage payments suddenly going through the roof.

For failing, in other words, to understand what "adjustable rate" really means, especially when the initial interest rate is unnaturally low, and the eventual adjusted rate will more closely reflect the true market interest rate.

But it's also the fault of the lenders, who created these mortgages, along with concepts such as the "stated income only" loan. This is a loan where no proof of income is required. So maybe the eager, potential homeowner will include income in his statement that doesn't quite exist yet. And worse yet, the lender will write it down and go on to the next question.

It's unethical, but I know that there have always been unethical people in the world.

What gets me is how stupid it was.

Couldn't they guess what was going to happen when people with too-little money suddenly had to pay double or so the mortgage payment?

Even though the original lender may have sold the mortgage to another institution, and washed their hands of it, eventually the defaults would bite the company that owned them. And that's what happened to Merrill Lynch.

They call it "exposure," meaning they've invested in a bunch of potentially bad loans and they really don't want your house. They'd really rather have the money.

Merrill Lynch was able to find a bigger, more stable (one supposes) company, Bank of America, to buy them. The equally venerable Lehman Brothers, suffering from the same queasiness about its balance sheet, failed to find a buyer and has sought bankruptcy protection.

I still want to know what these companies were thinking. Where was the board of directors, who is supposed to protect shareholder interests, during all this? Merrill Lynch stock has fallen 45% during the year so far, compared to about 14% for the S&P 500.

Board oversight can't prevent all stock price fluctuations, of course. But theoretically it can prevent a corporation from pursuing a stupid course of action, and that sure didn't seem to happen here.

Thinking inside the box

Last week I wrote about how I used the scan function on my car radio to entertain myself when no stations would come in clearly.

I also bemoaned the lack of a jazz station near Monterey.

Hey Elizabeth, take another look at your radio.

A reader, Sony Holland, a jazz singer out of San Francisco, emailed me to say there's an AM station, KRML 1410, that plays jazz 24 hours a day out of Carmel.

Talk about thinking inside the box.

I never even considered the AM band. Once in awhile I would land on it by accident when aiming for the scan button, but I never actually looked for anything on it. Too afraid I would stumble upon Rush Limbaugh or somebody like that.

As someone who prides herself on being imaginative, innovative and open minded, my failure to even think about the AM dial embarrassed me. What else am I missing simply by not seeing something that's right in front of me?

Unfortunately, I don't know. And that's what makes this particular mind-trap so sticky. It took the kindly advice of a stranger to get me to see what I had been missing.

Bookstore and library shelves are full of books on ways to improve creative thinking and move past habitual practices. In fact, one of these, Conceptual Blockbusting, by Jim Adams of Stanford, was the first place I encountered the box you are supposed to think outside of.

It's actually a brain teaser that asks you to connect nine dots arranged in a square with one in the center, with one continuous straight line.

In order to solve the puzzle, it's necessary to break through the imaginary "box" formed by the dots. It seems obvious once you see it but it's unusual for someone to get it on their own.

Another example occurred in a creativity class I took. The instructor asked us to touch the ceiling of the classroom. Most of us stood on tippy toe and reached way up, making little hops to get higher.

One or two students climbed up on the auditorium chairs before reaching up. I suppose several people who'd stayed on the floor thought "I wish I'd thought of that." I actually thought "Hey, no fair, you can't do that."

So in this case, my own self-imposed rules were literally keeping me on the ground. The rule against standing on furniture seems reasonable, but the more powerful mental rule against sticking out in the crowd or doing something crazy is more dangerous.

So even though venturing onto the AM dial for a jazz station doesn't seem that daring, I am grateful to Sony Holland for jostling me into looking there. One way Ms. Holland seems to maintain her creativity is by living in San Francisco but reading the Hollister Free Lance onlline.

If you want to hear the result, you can listen to clips at www.sonyholland.com.

The amazing airwaves

My route to work every day from Hollister to Monterey takes me on two, three or four highways, depending on how you account for Highway 156. It also takes me through uncountable radio zones, so that the stations I like to listen to become static-y and disappear, only to reappear later once I've passed around a curve or a hill.

I've learned to cope with this by punching another pre-set and listening to another station for awhile. Sometimes, though, the only station that's coming in clearly is in the middle of a long string of ads, most of which I've heard enough times that I can not only recite them but imitate the different voices.

It particularly baffles me that KBOQ, a classical music station, has so many ads for debt-reduction, mortgage relief, nutritional supplements, and home-based businesses (never specified). I guess this reveals my bias that classical-music listeners aren't susceptible to the same kind of financial predicaments as the rest of us, or at least that advertisers would know better than to use such sleazy-sounding voices when addressing them.

Then there are a couple of rock stations that I like okay, that strangely carry women's names: Alice and Delilah. Just today I discovered a new one, called the Hippo. They sound kind of strange and plastic compared to my favorite rock station, KFOG out of San Francisco, but I need music on my drive, so they'll do.

You would think the Monterey area would have a jazz station, since Monterey has both a Jazz and Blues festival. But jazz seems to be a taste few have acquired, like peanut butter and pickle sandwiches.

Sometimes, though, the airwaves produce nothing. Ads everywhere, or only static, or KBOQ is coming in okay but playing something unbearable, like Elgar or Mahler.

That's when I resort to a little game I made up. I punch the "scan" button and let the stations roll by. I realize that the traditional use of the scan button is to let it search for receivable signals and then punch it again to stop at one you like. But being ready to re-punch the scan button requires almost as much attention as talking on a cell phone, and they just made that illegal.

So I punch the scan button and let California speak to me.

I've noticed that there's sort of a spectrum of station types: starting in the lower frequencies, the public radio stations, then some evangelical Christian stations, then Spanish-language, then country & western, then rock.

There are probably some subdivisions I've missed since I only listen to each one for a few seconds. Sometimes, for example, I catch an Asian language or one I don't recognize at all. (Farsi? Tagalog?)

I've also noticed that with every pass through the frequencies, the audible ones seem to change. So every trip around the dial results in a different assortment of voices, languages and music.

In my imagination, if I keep listening, the different genres, languages, and musical styles will converge to produce an important message.

This summer's fires

Some friends of ours were trapped, more or less, in their home off Carmel Valley Road for about ten days.

When the sheriff's deputies came to evacuate them, they chose to stay and protect their home and livestock themselves rather than leave it to others.

Whenever I've heard of people doing this in the past, I envisioned some kind of diehard shotgun totin' redneck who would rather go up in flames than let any kind of government person set foot on their property.

As with so many stereotypes, this one did not stand up to investigation.

Our friends do have shotguns and probably wouldn't really mind if you called them rednecks. But their position is not diehard or fanatical.

While they did have to sign a waiver proferred by the deputies that they were staying voluntarily and were thus "victims" of the situation, they could have left at any time, if the road weren't blocked by fire, but without assistance and possibly without being able to take their animals.

But staying allowed them to keep an eye on the encroaching flames from a distance (never closer than two ridges away) and make what preparations they could, including flagging previously-cut dozer and jeep trails so that they could be re-used by firefighters if necessary.

In the meantime, we were all wondering when this state is going to figure out the proper place of wildfires in our landscape and ecology.

Forty years ago, I saw an exhibit at the Oakland Museum that explained the beneficial role of fires in many of the ecosystems that are found here. When fires are allowed to burn every year, on a small scale, they not only keep the fuel supply from getting out of hand but cause the seeds of beneficial plants (manzanita? madrone?) to germinate, thus keeping the ecosystem healthy.

The passage of time may have dulled the precision of this memory but I don't think the science has changed since then. Yet 40 summers have gone by with each fire season more catastrophic than the last. This year our friends were fortunate, but what about the future?

What keeps us from using the knowledge we have of wildfires in a pro-active way to keep ecosystems strong, spare the loss of property and life and save the millions of dollars that have been needed so far to fight this year's huge fires?

I suspect part of the reason is that the money for sane fire management is never available, so we end up spending even more when the fires have to be fought. Sort of like cutting the education budget but spending more on prisons.

Smokey the Bear also needs to change his message, and a coalition of tree-huggers and gun totin' rednecks probably wouldn't hurt either.