In appreciation and gratitude to the readers of my Catalogue of Calculations, who have been my extended family for so long and at whose relentless insistence I moved everything to WordPress (after learning about this incredible place from Eitan, who I can never thank enough), I humbly comply with the multitude of requests to share Calculation #182324 “As to ending recessions, bankruptcies and insolvencies” with everyone else; and yes; I’ll also include the anecdote about the inspiration for the math. To the entire lot of you, who have been there, doing the math, for so long; my thanks and my love pour out, and to those of you who may be wondering what the heck I’m referring to; I bid you a warm welcome to a family who simply put, shares the math. Enjoy!
Back in June of 2010, while driving home, I passed the abandoned construction site of what looked like a planned upscale community. For just a moment, it took on the air and aspect of a scene from any one of the “post-apocalyptic” science-fiction movies set in the near future. The development apparently suffered from a sudden and perhaps unexpected construction halt; probably in mid-2008, after everything in the world lost half of its “value”. The partially built houses had an eerie aspect to them and the piles of construction materials still stacked here and there looked so much like a movie scene that it was freaky, then; all of a sudden I noticed a pickup truck parked in front of one of the lots and a man loading what looked like cinder blocks onto the bed of the pickup from a huge pile of blocks that were right next to where he had parked. I became way too curious to let an opportunity for that kind of adventure pass, so I pulled off of the freeway and found my way to where the pickup truck was parked. There was indeed a man loading blocks onto his truck, it was an old man, with that grizzly and weathered look that just screamed of grumpiness and opinions. I pulled up behind the truck and got out, waving to the old man as I did.
– “Hey there, old man, could you use a hand?” I asked.
– “Well, I can’t do a whole hell of a lot with only one of ‘em, but I wouldn’t mind both of them for a bit.” He replied.
– “Fair enough.” I said.
I started to help the old man load the blocks onto the truck and asked;
– “So, what’s up with the blocks? Are you building something?”
He eye-balled me up and down once and snapped back:
– “What, are you a construction cop or an inspector or something? Go give someone else a hard time, these blocks have been here for months. As far as I’m concerned, they’re fair game.”
I loved this guy!
– “I’m nothing of the sort, Sir; I just thought I’d lend a hand and got curious. So, what happened here, do you know?” I asked.
– “What happened?” he said, quite loudly, as if barking almost. “Where have you been? It was the damned RECESSION, that’s what! It stopped work on this project in two days! Damned recession! Cost me my job, too, the recession did, and now it won’t let me find another one!”
I put on my best “what are you talking about” face and said;
– “Recession? A recession did all of this and took you job?”
– ”You’re darn tootin’!” he replied (he actually said “darn tootin’!)
– “It must have been a pretty big one, to do all of this.” I was dead serious when I said this. “Heck, to do all this and take your job? I must have been bigger than Godzilla! Did you actually get a look at it?”
I will never forget the look he gave me; as if he had just seen an alien or something. He became a little agitated, threw the block he was carrying into the pickup’s bed and walked right up to me. He said;
– “What the hell are you talking about? Are you an idiot or something? What do you mean Godzilla! For Pete’s sake, are you serious? This is no laughing matter! What, are you going to tell me that you haven’t noticed that everything is f****-up and that there’s no money, no work and everything has gone half crazy? What the hell is wrong with you anyway?”
I bumped my wrist against my forehead and rolled my eyes, in the universal gesture for “I’m such a dummy.” and said;
– “Oh, you mean the economic recession?”
– “Yes, the economic recession!” he retorted, mocking me with the mush-mouth voice.
– “The economic recession did all of this?” I scratched my head and looked around. “Sir, you do realize that a recession is merely a mathematical formula that someone wrote down after they made it up in their head? It’s a MATH EQUATION, it can’t do anything at all, it’s not alive, it’s not even a thing; it’s just numbers and symbols. We are the ones, who give it life by believing that it’s a real, physical phenomenon; like a hurricane or a tornado, but it’s not; it’s just a mathematical equation.”
Before he could say anything, I was overtaken by an episode of what my wife has come to call “Pontification” and spent the next 45 minutes or so subjecting the poor man to a full-out lecture on recessions and other human creations that we have given life to. When I finished, he wasn’t as upset as I’d expected, in fact, he understood everything I said and thanked me for taking the time to explain what I had just explained. We shook hands, exchanged phone numbers and went about our business. That encounter left me inspired, and when I got home, I sat down and wrote calculation #182324, which follows.
By the way, for those of you who don’t know me yet, this really did happen. The “old man” who sat through almost a full hour of my unforgiving lecture with such grace turned out to be a pretty cool guy by the name of Joseph Teeter. I told Joe I would be writing this, so Joe, if you’re reading it now: “How are you, you foul-mouthed old coot! I love ya’!”
CALCULATION NO. 182324
TITLE: AS TO ENDING RECESSIONS, BANKRUPTCIES AND INSOLVENCY
DATE RECORDED: 19 JULY 2010
THE MATH SAYS:
Any and all recessions, states of bankruptcy and/or insolvency can be permanently eliminated with no collateral damage or residual effects.
All of us are terrified of the possibility that a recession may strike or that anyone can go bankrupt or become insolvent suddenly. These things terrify us to the point of death, for many people have died from the physical reaction to the emotional trauma that we invite when contemplating or actually dealing with any or all of these things. While we are all terrified at the thought of a recession, bankruptcy or insolvency, few of us have actually seen any of the three, much less all of them and the vast majority probably of us would not know if or when we might be looking directly at one, since only a select few of us actually know what any of them look like.
It makes no sense to live in fear and it makes even less sense to fear something that you could not identify or recognize in order to fear it (in fact, most people affected by any or all of the three are usually informed of its presence or existence by others. i.e.: Did you know that there is a recession here, now? Or “Hey! You’re bankrupt!”
Inasmuch as this is true, I feel it is my duty as a human being to introduce you to each one of them or at the very least, give you a photograph of each one, so you know what to look out for. It’s incredible that no one has done this yet. Not only do I consider the above my duty, I have the same duty to communicate to you that all 3 are mortal; they can be killed – as in dead – and to further show you how to kill them. In this way, we can eliminate them forever. Would you like to meet them? Very well.
Allow me to introduce you to a recession:
R= [FOR Y/12] → (GDP<0)/(Q x 2(C))
Y/12 = 1 month
GDP = Gross Domestic Product where GDP = C + I + G + (X-M) [GDP = consumption + gross investment + government spending + (exports − imports)]
Q = fiscal quarter
(C) = consecutive
Are you all right? Okay, just checking. For those of you who did the math and came up with the conclusion that a recession is born during the first month after two consecutive fiscal quarters of negative GDP, you would be correct. Oh, and by the way; I don’t get it either; it’s rather sloppy math, isn’t it?
Are you ready to meet a bankruptcy and insolvency?
I’d like for you to meet a bankruptcy, as seen by Z-scoring:
(1.2*T1) + (1.4*T2) + (3.3*T3) + (0.6*T4) + (.999*T5) < 1.80
- T1 = Working Capital / Total Assets
- T2 = Retained Earnings / Total Assets
- T3 = Earnings Before Interest and Taxes / Total Assets
- T4 = Market Value of Equity / Book Value of Total Liabilities
- T5 = Sales / Total Assets
Now, here is a young insolvency, just entering prime age.
D > p
D = the sum total of an entity’s debts
p = the sum total of an entity’s property, at fair valuation.
There. Now you’ve met them. If you are thinking what I hope you’re thinking, again, you would be correct; all three are simply mathematical formulas that sprung out of a human being’s head.
Now that you can recognize them, we can proceed to section where you will learn how to kill any or all of them.
HOW TO KILL A RECESSION, A BANKRUPTCY OR AN INSOLVENCY
You would use this formidable weapon:
- An eraser
It’s called AN ERASER.
You ERASE the formula from wherever the idiot who summoned one of them wrote it.
This calculation has a bonus feature which was not originally planned when I started writing it about two hours ago. If for no other reason than the inspiration present at this moment, following is a suggestion and solution to how we can prevent ANOTHER recession, bankruptcy or insolvency from being created and how to eliminate all possibility of a mutated, related or similar thing from ever being thought of again:
We write NEW math.
We can do better
Choose, don’t excuse.
Math courtesy of having QI