Sunday, November 28, 2010


We had a wonderful Thanksgiving. Me and a couple of my girlfriends put together an ACE Thanksgiving menu. I thought I'd share a couple of the dishes... I only have recipes for the ones that I made, so I'll just give the titles of the things the others made, and you can google them.

I am blessed beyond measure. To be able to share a special day with friends is incredibly important. I am so thankful that we have such good friends and that they are willing to indulge a couple of Americans in their need for tradition. And it doesn't hurt at all that they're good cooks.

I decorated the apartment a little- in my mind's eye it was much grander than it turned out. But I was pretty pleased with the home-made decs. 

(that last one is Mike's Opie-dog-turkey)

For starters, we had Jamie Oliver mulled wine. It was incredible.  We followed the recipe pretty closely, although put in a little bit less sugar than the recipe said (mainly because we ran out). It was really beautiful, not too spicy or sweet. It was a really nice warm starting drink. It snowed about 4 inches here, so everyone was coming in from the cold, and it was nice to be able to give them something warm on their arrival.

For meat, we had "turkey a la Minnesota". We couldn't find a whole turkey, that didn't cost a kidney, so we had to make due with a turkey crown. This was PLENTY of food, so it's probably good we didn't have a whole turkey. Basically, I followed Alton Brown's roast turkey recipe and added some sage butter rubbed under the skin. I also used some heather rock salt instead of kosher salt in the brine, which gave it a beautiful smell. And I didn't use any oil for the aromatics. I thought it was too much with the butter under the skin. We also had a lovely French Canadian meat pie called Tortiere, which was really savory and lovely. Finally, we had apple cranberry sausage stuffing. It was a perfect compliment to the meat pie and turkey, because it had a nice sweet flavor.

For sides we had maple butternut squash casserole, sweet potatoes with sugared pecans, a lovely Jamie Oliver salad, rolls, my grandma's mashed potatoes, corn pudding, and whiskey gravy. I only have the recipes for the mashed potatoes, corn pudding, and gravy.

Mashed potatoes:
1 lb potatoes quartered
1/2 heavy cream
5 tbsp butter

In a large stock pot, boil the potato quarters until they fall apart when pierced with a fork (10ish mins). Drain and transfer to a bowl. Add small cubes of butter, salt, pepper, and the cream and smash (if you don't have an electric mixer) or mix (if you have an electric mixer), add as much or little milk to get it to the consistency you want. More milk is runnier, less is chunkier and stickier. Add more salt, pepper, and butter to taste.

Corn pudding:
Cook's note: this is almost my most favorite christmas/thanksgiving dish ever. It's a Mike's Alabama/Kentucky family special. It's loooovely.

3 Tbs flour
3 Tbs sugar
5 eggs
1/2 C milk
1 14 oz can creamed corn
1 14 oz can whole corn drained
1 C heavy cream
2 Tbs melted butter

In large mixing bowl, combine sugar, flour, salt and pepper to taste.  Gradually whisk in cream.  Add eggs and whisk till smooth.  Stir in milk and all corn.  Drizzle the butter on top.  Bake 350 for 45 min. or till set.  (around 1 hour for me)

Whiskey Gravy:
1/2-3/4 cup whiskey
1/4 cup cream
drippings from the turkey
salt and pepper to taste

Start by making a roux in a small-medium saucepan with the cream and flour. Whisk the flour into the cream over low heat. Whisk in enough flour to thicken the cream. Add in the whiskey- the more you add the stronger the taste. Pour in 5-6 ladles of drippings from the turkey. Whisk in milk and more flour to thicken. For thicker gravy add more flour, for thinner add more milk. Keep over low heat. Add in more drippings or more whiskey to taste.
We would have had pumpkin pie and tartre al sucre (french-canadian sugar pie) but it snowed about 2 inches in an hour, on top of the 5 inches that we already had and everyone needed to get home... it wasn't the perfect end to the dinner, but it was a great meal, great camraderie, great homey feeling all the same. 

It's still pouring snow, so we might be stuck here for the next week. Thankfully we have enough leftovers!

Wednesday, November 24, 2010


My advisor and I are starting to build a rhythm to our conversations. We talk about the advisor-student stuff, then future stuff, then personal stuff, and finally always end the conversation with me asking “anything else you need from me?” and him recapping the conversation, and mirroring the question back to me- “do you need anything from me?”. Today, I said, I didn’t think so, but could I get back to him later. See, I’ve just spent the last couple of weeks entirely mentally engaged in finishing a really complicated thesis chapter. (And by finishing I mean writing a complete first draft. Yet to be commented on by my supervisors. So not finished at all.) I am only just now coming back up for air and starting to think about my final PhD study. My supervisor said, yeah, it’s a funny thing about research, you’re always in the past or in the future. You’re never right now. I laughed, but that really struck me as a profound statement. You’re either writing up what you’ve already done, trying to defend it, or thinking about what you’re going to do next, trying to avoid the pitfalls that will inevitably be there.

I think this observation, about always living in the past or future might be inherent in the way that society works today. Society and culture don’t lend themselves to being in the moment. You need to meticulously plan and be very deliberate in your actions to be successful. Forget ‘to be successful’. Just to have enough money to eat! A heavy societal premium is placed on those that can anticipate possible problems and account for them before they happen. Simultaneously, we are anchored (a psychological principle) in our past. We are who we are because of what’s happened to us. The way humans perceive the world is based on their point of reference. This isn’t just a philosophical argument, either. It’s how the brain works- short term memories are the most easily accessible, therefore are used when making decisions. Long term memories are deeply ingrained in our neuronal patterns (long term potentiation). Plus, because humans are cognitive misers (not using more resources than required) we seek out patterns that are familiar or confirm our hypotheses about the world around us. So truly, we are physiologically and psychologically stuck in either the past or the future.

Yesterday evening I got the opportunity to go to an advanced yoga class. I haven’t done real yoga in a while (the crap they do at the gym- fitness yoga- doesn’t cut it. Not to sound like a yoga snob…  wow. I am a yoga snob…) and it felt amazing. The teacher said something that I remember my first yoga teacher always saying at the beginning of class- “let your mat be your island. This is just you and your practice. Let everything else go and focus on where you are right now.” I tried to breathe, and focus only on the now, how my feet felt on the floor, how my back expanded with each breath, how my arms were positioned… eventually I was able to pay attention only to my practice, but it took a little while.  I kept inhaling and thinking “breathe innnn (oh my god did you send Tim that email about the simulation on Thursday), breathe outttt (shit, no. it’s ok, just do it when you get home. Oh crap you didn’t look up the bus) breathe innnn (schedule, oh well you can drop by tesco on the way home and grab milk) breathe outttt(and maybe some chocolate. you are doing yoga right now, so eating chocolate is totally ok)” and so on…  It’s almost like the devil in The Screwtape Letters by CS Lewis. The book is beautifully conceived as a collection of letters from a senior demon to one of his demons in training, who is also his nephew. The henchman is always asking questions about how to bring his human over to the devil’s side and away from holiness. Screwtape, the demon, tells Wormwood (henchman in training) to distract his Patient (the human), to interrupt his prayers with mundane thoughts, to undermine the Patient’s faith using the treasured tools Doubt and Loneliness.  Sitting there, trying to breathe and be in the moment, I kept getting distracted by my own Wormwood, who had built a little nest on corner of my mat.

It’s really counter-intuitive to live in the now! How do you pay attention to now without judging it, comparing it to previous experience, thinking about what could happen next, planning the next position, the next class, the next the next thenextthenext… Eventually, through the class, I was able to focus only on my world on the mat, and gradually Wormwood moved and sat right outside the door waiting for me. After the last pose, corpse pose, I felt renewed. Like there was fire in my muscles and I’d been wakened.

As I left class, my advisor’s earlier quote came back to me. Initially, my brain greeted this statement with an automatic anxiety response, tensing my shoulders and frantically scrambling around in the dusty mind grapes trying to remember what I have to do when I get home tonight to be ready for tomorrow. I took a deep breath. The breath reminded my body of where I had just been. Not frantic, not anxious, just patiently existing on my own mat. I tried to reframe my thinking about tomorrow and instead of anxiety, think about the opportunity.

It’s just interesting the juxtaposition between past, now, and future. It’s essential to attend to all three, but impossible to do so.  Or at least, I haven’t figured it out yet.

Tuesday, November 16, 2010

A bit out of my league...

Ok, so today I want to talk about something entirely different than I usually do.

Basically, I want to write about the psychology of the subprime mortgage crisis in the states. I want to do this, not because I think I am the first person to have thought that this would be a good idea. I am sure somebody has written a book on it and probably been on Oprah or at least the Freakonomics podcast. I think that there’s such a huge human psychological element to all this and I don’t think it’s been explored adequately. I think people have focused on the psychology of the outcome of the financial meltdown (people losing houses and jobs, fear, greed, anxiety) and have focused on individual stories (for example: Planet Money, a free podcast from NPR does a great job of asking real people about what has happened to them as a result of the meltdown.) But I haven’t read a book yet that specifically discusses the psychology that got us to the point of meltdown. The closest thing I’ve read is Michael Lewis’ FANTASTIC book The Big Short (which if you haven’t read it, STOP READING THIS, and get in your car or go to Amazon and buy it. It’s fascinating.) In this book he articulately details the story of those that saw the meltdown coming, how they were able to predict it, and exactly what they did about it.  He hits on some of the psychological details of how people were able to see a pattern in the chaos, but doesn’t really focus on it.

Disclaimer time: I am (as will become increasingly obvious) not an economics expert. I am a person who reads a lot, and because we’ve been overseas for most of this disaster, I’ve been able to watch it from afar. I care very much about my country, and about what’s happened and will happen to small businesses, retirement, and future funding for health care and education in America, so I think I have a vested interest in doing my best to understand what’s going on.

I have found that to discuss anything about this financial meltdown, (which I would’ve called The Big Clusterf&*%k (TBC) had I been Michael Lewis, but to each his own) you have to understand a little bit about why it happened. I think this is an imperative step, and I also think it’s one that most Americans have thus far successfully avoided. Which is very unfortunate. Because that leads to discussions not based on fact, not even on theory, but based entirely on emotion. And while I will discuss that later, I don’t think that emotion serves us well when we are trying to understand something like this.

Again, I am not a financial expert, so I am going to explain this how I understand it. Go and ask your broker/lawyer for the real story.

First things first. TBC happened because of subprime mortgages, we all know that. A subprime mortgage is a mortgage that is given to a borrower that is ‘below ideal’. Now this doesn’t mean that they are a farmer with a 14K income asking for a 2Million loan (although that did happen). This is anyone that has a lower credit rating, therefore has a higher chance of defaulting (not paying) their mortgage a) on time or b) at all. Just because subprime mortgages were a centerpiece to TBC, that doesn’t mean they’re always bad. Initially, they were designed to help people “get a small piece of the American dream”. Help those with poor credit get into a home, which could build equity and eventually help them to improve their credit.  This is point of interest for psychology 1 (POI for PSY 1).

Subprime mortgages were given out by mortgage lenders, not always banks. These mortgage lenders make their money off the top by setting up the mortgage. Therefore, they have no vested financial or personal interest in the loan actually getting paid off, rather they get paid when the loan is made. This is POI for PSY 2.  These lenders then sell the mortgages to banks. Again, taking a little off the top for expenses and whatnot.

The second problem is that all these mortgage loans were made with ‘variable interest rates’ which is exactly what it says it is. The interest rate is one thing at one time and could go up or down (probably not down, but could) depending on a variable interest rate index, which I think is set by the Fed. I can’t find it online from a credible source, so don’t quote me on that. So the interest rate would be 6% when you bought the house, but would skyrocket to 18% 3 years in. This is why there was a housing bubble, which seemed to suddenly burst, but it could’ve probably been predicted had anyone put the pieces together. Everyone started defaulting on their loans when their 3 year grace period was over. Suddenly, they weren’t paying for their houses, but just for the interest. This is POI for PSY 3.

Ok, so now you’ve got a bunch of subprime mortgages that aren’t owned by the mortgage lenders, but rather by various banks. The banks then, in order to have liquidity (cash), sell the mortgages to investors. Here’s where things get kinda messy. The mortgages are packaged. Normally when this happens, mortgages are packaged with a lot of other loans that the bank makes, like car loans or college loans. These are not debt from a single person, but from a variety of sources. Not even always just from the one bank. This is done because it diversifies the package (my new favorite euphemism), which means that, as a whole, the package of loans is safer. It’s safer because there is heterogeneity in the package so people won’t be as likely to suddenly default on a school loan, a car and a house all at the same time. I believe this is the point in the process where the package is renamed ‘Mortgage Backed Security’. I am not sure about that though.The problem started because now, for whatever reason, these packages of loans were mostly mortgages- and above that, mostly sub-prime mortgages.

So the bank sells the MBS to an investment facility. The investor can be other banks, individuals, groups, venture capital firms, etc. Really, anyone wanting to invest, but usually a large company. Now, again, this is where I get a little fuzzy. I think what happens is the MBS’s are split into Tranches based on risk. Tranches (French for slice) is a ‘grouping’ of the MBS’s. so it goes:


Mortgage backed securities (MBS) are rated by national rating agencies such as Moody’s and Standard & Poor’s (of S&P 500 fame). Rating is just like grading, only it’s based on risk of default. The agencies look at what’s in the MBS and say, ‘what is the risk that this won’t be paid off?’ and then grade it. The grading scale is from AAA (the best) to AA to A to BBB to BB to B (worst). AAA means that there is virtually no chance of default. B means, ‘yeah, this is crap. Sorry.’ So these groups of loans are rated and then assigned to a tranche based on risk.

As I said, the ratings are based on risk of default. However, as you can see with all these crappy mortgages all in the same package, the rate of default should be pretty high, right? Well, here’s where things become very fishy.

What started happening is whoever puts together the MBS’s started packaging them in such a way that they looked better than they actually were. This was easy to do because when rating the mortgages, only the AVERAGE risk score for the entire group was examined. AVERAGE. NOT THE MODE. NOT THE MEDIAN. THE AVERAGE. This is important because there could be a few really low risk mortgages in the MBS, and they would bring the whole score up. This is POI for PSY 4.

There is more to this part of the story, but I don’t completely understand it, so I don’t want to discuss it too much here. Suffice to say, there was also a ‘redefining’ of what AAA meant. Basically, things that were formally A grade or even BBB, were now being considered AAA. I don’t understand how this happened, so further research on my part is needed. I think I don’t understand this because it seems so completely backhanded and wrong I can’t wrap my mind around how it happened legally. 

We’re almost there! Don’t go to sleep on me now!

So creators of the tranches (the original investors) then have people invest in the tranches. Within these there is a hierarchy. So there are people who are at the top of the tranche down to those at the bottom of the tranche. However, those at the bottom are still better than those at the top of the next tier lower tranche. The people that have invested at the top of the tranche get paid off first, so when the poor subprime mortgage borrower sends his/her monthly check, a percent goes to the investor at top of the highest (AAA) tranche first, then whatever’s left trickles down the tranche. If anything is left after it’s gone through the AAA tranche, then it goes to the AA tranche and so on…

Phew! Wowsa. OK.

So there are many places where this house of cards could get caught in a slight breeze. Or tornado. Basically, it’s people buying risk.  They are making a bet that someone they don’t know will pay off their mortgage on time, and in the prescribed increments.

This would work, except that it doesn’t. It worked for a long time, but people got cocky. And even more appalling then the rampant cockiness and blatant greed is that people didn’t take the time or make the effort to understand what it was they were buying or selling. I mean, I know hindsight is always 20/20, but when you have someone walk you through the story of how things got the way they are, I don’t understand how you can’t see the problem from a million miles away. Maybe it’s like that Monty Python and the Search for the Holy Grail bit where the guy is running toward the castle and every time the guards look at him he’s still far away and then all the sudden he’s at the gate and clotheslines them both. Or maybe people didn’t understand the meaning of the word ‘variable’.

POI for PSY 1: I think it’s fascinating that ‘The American Dream” (capitals intended) includes owning a house. Americans in the 80’s and 90’s and 00’s believed that it essential to own a house. The government encouraged it, by offering tax incentives to own a house.  News and magazines encouraged home ownership, offering great deals on various appliances NEEDED for YOUR NEW HOME. Commercials showed the typical American family outside of a home with a white picket fence. The commitment to home ownership is quite an emotional one.  Its branded into the psyche of most American children. The goal is to own a house, once you own a house, you’ve made it. Psychologically, renters are people who can’t put down roots. Home-owners are people who are serious about their neighborhoods, who value their community, even attend PTA meetings and take care of their yards. This brings perceived stability to neighborhoods and families that “make sense” to the rest of the neighborhood. The psychological pressure to own a home is tremendous in the US. It’s just what people do.

POI for PSY 2: The point of interest here is how important personal relationships are. As I said, I was listening to Planet Money and the hosts had bought a $1000 toxic asset, so a lower tranche group of MBS’s. They went to meet a guy whose mortgage they had invested in. As it happened, the guy was a 80 year old retiree who had made a ‘strategic default’ meaning that because his perfect credit rating is no longer of the utmost importance at age 80, he defaulted on a $300,000 mortgage. But when the two people who owned his MBS went to meet him, they asked why he stopped paying. He said he couldn’t afford it, and it wasn’t worth it to him. But what I thought was most interesting was what he said next: he said, if I’d know it was you guys that owned the loan I would write you a check right now. How fascinating. He liked the people who’d invested in his mortgage, and felt personally liable to pay the mortgage. But when the investor was a faceless entity, he was able to change is moral creed and allow himself to not follow through on his loan. 

In the past, mortgages were made by local banks and the person who gave you your mortgage probably knew you, did a thorough credit check, checked out the property you were wanting to buy and it’s value and probably checked your references. Now, mortgages are these impersonal things, a transaction, not an interaction. I am not saying that the old way was the best. It was slow and sometimes too personal (I don’t like this guy so won’t give him a loan), but there was an element of human decency in it. People had to interact with each other. You know who had your mortgage and you knew who was loaning you the money to buy your house.  There’s an element of responsibility on the borrower’s side this way. The borrower actually understands and cares where they are putting the loan, because they’re paying back a real person. Not a faceless entity.

POI for PSY 3: The idea of a variable interest rate is such an American creation. The reason why everyone votes for lower taxes for the rich is because most people believe that some day they will be that rich person. Again, the American dream.  I think this belief is akin to the reason why people took out variable interest rate loans. They always want to believe the best- have the most positive possible outlook. We will be making more money in 3 years, or interest rates could go down in 3 years. In psychology, this is also called confirmation bias. Confirmation bias is when people favor information that confirms what they already think. They don’t seek out disconfirming information, rather find all the confirming stuff.

I also think that this idea of actually taking advantage of a 3 year variable interest rate could be cognitive dissonance. Cognitive dissonance is when two conflicting ideas are held simultaneously. People think their choices are correct despite evidence to the contrary. For example: I believe that I will get paid more in 3 years and I just got told that there would be massive layoffs at work.  Cognitive dissonance causes emotional turmoil, and results in self-bargaining and convincing ones self that the evidence is wrong or at least that the possible results of the behaviour probably won’t happen to me. Smoking is the oft used example. I smoke because I like it even though I know that it causes lung cancer, heart disease, obesity, general smelliness, etc.

The cognitive biasing and dissonance in the housing market, I think, had a huge impact in the months and years leading up to the crash. People were convinced they were invincible despite massive evidence to the contrary.

POI for PSY 4: The last point I want to make is about measurement. My friend Cakil always says that statistics is the only weapon that we psychologists have. I think this is true. Using the average instead of the mode or median is ridiculous. There is potential influence of outliers, the mean never tells the whole story, doesn’t give you any information about what’s actually in this group of mortgages…  I am sure that someone much much smarter than I has pointed this out. I don’t want to labor the point more than to say  SERIOUSLY??

I think there’s a lot more to big disasters like this than just what’s on the surface. There was a long lead up to this. If you have spoken to me in the past, you probably know about the ‘Swiss Cheese Model’ of error. Basically, what it says is that errors are lying dormant in a system. The system has layers of defense, but they have holes in them, much like slices of swiss cheese.  Infrequently, these slices or layers are arranged in such a way that an error has a free path through all the layers of defense and takes everyone by surprise. This shouldn’t be the case, because it’s been sitting their laying in wait, but it does. Every time. I think, in the financial meltdown there is something far more fundamental wrong with our system than financial regulations can fix. There’s a psychological issue, a relationship issue, a person to person issue.

Wednesday, November 10, 2010

Just do it.

I want another glass of wine.

But I have come to the age that when I have another glass of wine, sometimes it gives me weird dreams, sometimes I can't sleep well, or sometimes I don't sleep at all. When did that happen? And while we're on the subject, when did I get so many grey hairs? Last February, Mike and I were at the Louvre- ON VALENTINES DAY- standing in line, waiting to get in, and he looks at me lovingly and says 'You've got more grey hair now. I just saw a new one.' not in a snarkey way, just in a really lovey, kind way. I laughed. Cause what else do you do in that situation?

I am feeling very... intense about my PhD lately. I have absolutely no perspective on it. Everything about it is life or death. I mean, cognitively, I know it isn't. But whenever I have an advisory meeting, or have to turn in a paper or chapter I have this uncontrollable emotional reaction. I don't really understand where it's coming from. I'll be talking about the design of my next study, and then suddenly be all teary, worrying about whether or not it'll work, and how am I going to write this, and how the eff am I going to defend this in my viva?? I guess that's what this process is about, but I find the constant fear life sucking. The PhD is such an ego-centric exercize. All of it is "how am I going to (fill in the blank)?" not we. Not us. Not team. Just me. ME defending MYSELF and MY IDEAS. I really genuinely don't like that. I don't do well in an environment that is centered on me. I really don't enjoy that attention. I don't want it, and I don't want to be that person. Plus, I don't think that's what life is actually like. I really hope not, anyway. That's for another post, though.

And, really? Really?? This is what I am going to spend my time worrying about? I mean, my life is pretty freakin great. How is it that I spend so much of my mental energy worrying about this?

I was called my dad the other night. I told him I needed a pep talk. I told him that I hate my PhD right now, I am sick of not knowing what I am doing, I really don't understand the minutia of research, and most of all, I DON'T CARE. I just want to help. I just want to be done with this and move on. I want to do something that matters, not format my chapters with 1 inch margins, and headers and footers and my page numbers in the RIGHT corner (cause god forbid they're in the left!).

And you know what he said? He said, Sarah. Get. Over. It. You have to do this. You have to finish. You can't be a swashbuckler until you're a sailor (how awesome is that metaphor??). He said, you just have to tick the boxes and do what you're told. You have to format your papers and you have to get over your hesitations. You will do good, but you have to do this first. Just finish. Head down. Remember why you're doing this. Just finish.

This advice is very interesting, especially coming from my dad. My father is one of the most passionate, go-all-out people that I've ever met. He can't half-ass anything. It's not in his blood. And for him to tell me to just move forward and finish was really eye opening. So, he's not telling me to half-ass this, but he's telling me to get over it and just do it. Stop questioning every little bit. Put the blinders on and keep your head down for the next 10 months. And finish.

I guess I always thought that this process would be one in which the things that I thought and believed would be confirmed and that I could move forward confident in my own ideas and my own well-formed, well-articulated, theoretically-grounded positions.  I don't know how I didn't realize how naive this is... And not just about research. About life, about friendship, about what it is that I actually like to do, about being a grown up.

The thing I've learned, more than anything else during this PhD is exactly how little I do know. 

I've also learned that a little perspective can go a long way. Not that I, in any way, have this mastered. I most certainly do not. But it's like the grey hair. It's coming. And no matter what I do, it'll be there. And I suppose the thing is to accept it, and just move on. With the PhD, it really is just a matter of finishing. The best PhD is a finished PhD. Head down. Just do it. Cause what else do you do in that situation?