My Apologies

Lori, who is brilliant and keeps me grounded, read my earlier blog entitled "For Mormons Only" and had some choice words. She reminded me of a principal by which I try to abide, namely that I must never, under any set of circumstances, ever be the reason someone's faith is diminished. I would do nearly anything—anything but lose my integrity—to be completely assured that God lives, that Christ died for my sins, and that there are absolute truths that, like a line of mileposts, will direct me home. The fact that I can't achieve this shouldn't be taken as a sign that those who can have been deceived. Since I believe uncertainty to be a necessary human condition, I must accept the possibility that I've been deceived—or at the very least, that the truth is so complicated that all of us are right.

However, here is a point I seemed to have missed or didn't emphasize sufficiently: Even when I'm wrong (for example, let's assume I'm wrong about Prop 8) sometimes I'd rather be wrong and suffer the consequences than to embrace the alternative. I've mentioned in a previous blog that if I were given Abraham's choice between sparing my son or earning some greater gift from God, I would choose my son and not think twice about the decision. That seems fair, doesn't it?

Sorry again. I hope I didn't offend anyone.

Capital Markets Musing

I’m getting off topic here since I’m going to jot down a few thoughts that aren’t in keeping with the idea of a new Christian ethic, but I can’t help it. As someone who spent a lot of time structuring CDOs and Credit Default Swaps, I’m pulling my hair out listening to all the opinions and plans about a roadmap to economic normalcy and I have to say something.
Now, here’s my first observation: When it comes to a host of policy issues, there appears to me to be at least two courses of action. There are:

• Politically expedient solutions that will satisfy the citizenry’s desire for blood, but in the end will do nothing to fix the problem, or
• Market-based solutions that can help put our economy on the right track, but will likely cost a politician his or her career to defend and implement

Let me start out by saying our current economic malaise was destined to happen as soon as subprime lending became commonplace. Do you realize that mortgage loans were going to borrowers with FICO scores of 580 and lower, and who had no money for down payments? To understand how crazy this is, consider the following: The likelihood of a 580 borrower to default on some portion of his or her consumer credit within the next 90 days is 50%. Combine that with a lack of equity to mitigate potential loss and we have the perfect combination for a financial powder keg. Who let this happen? In a way, it was caused by some of the same people who are squawking loudest today—people who from their positions on the Senate Finance Committee (you know who they are) were demanding lenders, Fannie Mae and Freddie Mac included, to put more people in homes.

That was a bit of a digression, but the point I wanted to make is that our foreclosure woes were bound to happen as long as there was a lack of prudence in the lending process and regulators were complicit in the boundless stupidity. Accepting those circumstances as given, what was the first big mistake regulators made as the house of cards began to slip? Here’s my suggestion: We should have never let those pesky Bear Stearns hedge funds collapse.

I’ll tell you why in a minute, but imagine what people would have said if the government had stepped in to bailout a bunch of rich bastards who were investing a million dollars at a pop. Holy smoke, the outcry would have woken the dead and led to a slew of congressional committee hearings, where our nation’s leaders would have waxed sanctimonious in their outrage and never gotten around to asking a single enlightened question. Editorials would have been so full of vitriol, newspapers would have combusted in readers’ hands. Average Joes would have taken to kicking dogs just for spite. But saving those hedge funds would have saved us a lot of heartache—not to mention hundreds of billions of dollars in market liquidity. Here’s why.

(For a review of how we got to our financial meltdown, see my earlier blog entitled “Honesty: The First Step to Progress”)

To understand the role the Bear Stearns hedge funds had in driving market liquidity, it’s important to know something about the structure of Collateralized Debt Obligations, or CDOs. Virtually all subprime mortgages were once sold into CDOs, where a kind of financial alchemy was used to turn them into various securities that could be bought by institutional investors. The securities came in various risk classes or tranches. The highest classes—generally rated AAA and perceived to be low risk—were purchased by insurance companies, banks, mutual funds and similar institutions. By comparison, the other classes were more prone to losses and received lower (or no) credit ratings.

The reason why some tranches were more risky than others is that they were placed in a payment hierarchy referred to as subordination. In a typical deal, the lowest subordinated tranche (often called the “hurdle” or equity class) was the first to be hurt by defaults in the mortgage pool. It would take the first losses—reducing its pro forma yield—until it was completely wiped out. At that point, the next higher class would begin absorbing defaults and so on according to the increasing level of seniority. Obviously, the higher in the hierarchy a tranche appeared, the less likely that it would ever suffer a loss.

The role many hedge funds played, including those controlled by Bear Stearns, was as the investor in the hurdle class securities. Now, you won’t get an argument from me that the loan programs the investment bank sponsored were unsustainable. The programs were clearly unsustainable—no question about it—but the point to be made here is that the relatively small investments made by Bear Stearns made huge loan programs possible. When those hedge funds went away, a black hole was created that sucked away $250 billion worth of liquidity and the marketplace couldn’t handle it.

Nothing happened overnight, but that, my friends, was the beginning of the end. When those loan programs went away, the liquidity that had fueled the real estate engine diminished, leading to lower property valuations and higher foreclosure losses. Subsequently, a stampede of mortgage investors exited the marketplace, diminishing liquidity further and closing the first circle in a financial death spiral. What was once an easily surmountable credit problem became a more serious liquidity problem, which subsequently turned into today's seemingly intractable fear problem.

Why didn’t anybody do something? Here is the truly scary part of the historical record. We are far better at explaining quantum mechanics to lay people than we are at describing capital markets dynamics. In fact, universities don’t teach what occurs on Wall Street. The trading floor, rather than the ivory tower, is where financial theories are developed and put into practice. For that reason, regulators have little basis for understanding, much less regulating, the plethora of financial instruments and the technicalities of capital flows. Even if they did, they would make a lot more money on a trading desk, so why stick around?

Now here is the scariest point of all. I’ve worked with many of the Wall Street executives whose names appear regularly in the financial press. A small number are brilliant. John Meriwether, for example, who was the former president of Salomon Brothers, is the smartest man I know, not to mention the most knowledgeable financial guru this side of Pluto. He, however, is an exception to an abysmal rule. Wall Street has undergone unprecedented changes that have resulted in risk management complexities the old guard are unable to fix or fathom.

Prior to joining Lehman Brothers many years ago, I interviewed with all the people who filled, or would subsequently fill, the top jobs at the firm. They included Dick Fuld, the Chairman who would preside over the company’s demise. I remember sitting with a former COO of the firm one day to explain a transaction my team had successfully concluded. The trade was complex, but no more so than those undertaken by hedge funds today. I wish I could tell you differently, but the man clearly didn’t understand the transaction and never would to the day he left. You see, he had started out on Lehman’s commercial paper desk, a place he'd never left until he took management positions elsewhere within the firm. Take my word for it, the commercial paper desk is not the place to learn how to manage risk.

Unfortunately, I suspect many Wall Street firms are similarly led.

For Mormons Only

In a way, I started this blog as a substitute for church attendance, which I curtailed some months ago. While I love the people of my old congregation and would gladly take a bullet for many of them, I can’t imagine rejoining them any day soon. In that regard I know what people are thinking. I’m sure that when my name comes up in conversation, some sigh and say I’ve given up a heavenly reward to feed a petty objection. They have, no doubt, assumed that anger and pride are what’s keeping me from God’s good grace and that the church’s support of Proposition 8 was at the root of my small-mindedness.

While I certainly opposed Prop 8, I was never angry with the church’s position. Rather, from the mix of emotions I’d felt at the time—shock and embarrassment among them—the one feeling that emerged most dominant was an overwhelming sorrow. As someone who has suffered long episodes of depression, I had to put distance between myself and the church, if for no other reason than to protect my health. My reckoning was this: If God really wants gay men and woman to miss out on the most growth-promoting and love-inspiring of human relationships, I will accept the consequences of not worshipping Him.

That being said, nothing Christ ever taught gives me reason to fear.

I, like many young LDS men and women, fulfilled a proselytizing mission for the church. In my case, however, there was no burning conviction that I was doing God’s work. I could have easily declined the call, since my parents didn’t share my devotion and were alarmed, even upset, by my decision. But I went eagerly, hoping and believing that by my efforts the truth would be revealed to me—that everything I’d been taught would piece together like a finished puzzle and express itself as logical, beautiful and perfect. Yet by the end of my mission, that hadn’t happened. Neither has it happened since.

Instead, it became clear to me that the truth is far more complicated than I, or any mortal, can comprehend, which is why God said, “Let there be light,” instead of, “Let the universe be filled homogeneously and isotropically with a high energy density.” In this way, I liken the words of the prophets to first grade readers that point us in the right direction but leave for us a world of learning ahead. With respect to the teachings of the LDS church, no matter how hard I tried, I couldn’t accept two primary claims supporting it as God’s only “true” religion: namely that the church was led by a prophet and it possessed additional scriptures that revealed more of the mind of God. Nevertheless, the church seemed to offer a helpful—if not imperfect—rule of thumb as to how people should live and I supported it on that basis. Now, I no longer feel that way, but Prop 8 was only one of many reasons leading me there.

To me, Christianity should conform to Jesus’ teachings and not some lesser throwback to Judaism. In this failing, the LDS Church is not alone, but that doesn’t make it right. Its belief in blood atonement, for instance, harkens more to Old Testament justice and animal sacrifice than Christ’s admonition to forgive. The many Mormon scriptural references that describe God’s nature as vengeful and jealous smacks less of John than Leviticus. As a person of color, I’m offended that God cursed his wayward Book of Mormon children with a dark skin and called them loathsome, just like He’d done in Genesis. The numerous oaths Mormons take (and they know what I’m taking about) is consistent with Israelite practice, but is counter to Christ’s directive to “swear not at all.” The prohibition against gay marriage is an extension of the Mosaic Law’s demand to stone homosexuals—not to mention the LDS Church’s early restrictions against miscegenation—but it’s inconsistent with Christ’s ideal of love unfeigned. On this point I could go on and on, but to summarize: Jesus wants us to be better than the Ten Commandments, yet we remain more Judeo than Christian. And while the points I’ve raised may seem minor, they sum to an intolerant worldview that causes its followers to be motivated by fear and a loathing for the very human attributes God imbues in us.

If the church would grant me a wish, I would ask it to eliminate the phrase Mormons everywhere teach their children to repeat like a poor affirmation: I know the church is true. The sentiment not only leads to self-deception, but it runs counter to the intersection of two of the church’s most important beliefs, that: 1) we came to earth, in part, to develop faith and 2) faith is not a perfect knowledge. If we took these two beliefs to heart—embracing uncertainty as a necessary human condition that demands humility and eschews judgment—we would see our dogmatism for what it is: a silly kind of boastful swagger unbecoming of Christ’s disciples. If we were to do that, we might learn to love unconditionally and be the better angels inside of us.

And here’s a final note. If we did practice that kind of humble and non-judgmental faith, we would pray fervently that God, in His infinite wisdom, would make us instruments in His hands to help His gay sons and daughters find solace and a place of welcome somewhere. We would pray that they find joy, not to mention alternatives to what seems like an epidemic of suicide. Unfortunately, they won’t find that in the Mormon Church—not today—where prayers are never uttered in their behalf, but where that adage, “We love the sinner, but hate the sin,” rings as often as it is hollow and hackneyed.

The Necessity of Making People Owners

Bankers are being excoriated as examples of how greed corrupts. On this point I have a strong opinion: There are greedy people in every industry and walk of life, and you don’t have to be rich to be self-indulgent.

There’s no doubt, however, that self-interest runs amok at Wall Street firms, a condition that has led to behavior that’s harmful to the marketplace and Main Street America. You would think it’s a problem we should fix. Yet, from where I sit, I see none of the TARP money and threats about increased regulation aimed at correcting what will amount to an ongoing series of excesses and subsequent corrections. The problem, you see, isn’t the amount of compensation Wall Street pays its people, but how that compensation is determined.

To make my point, consider how an auto company executive (let’s say his name is John) eventually proves his worth to his employer. John is given an assignment to design a new body style for a line of cars. It’s an important responsibility and he works diligently to fulfill its requirements. After a period of time, he offers several style options, one of which is chosen based upon market research and lengthy internal discussion. Before the design can be put into production, however, some of the major components—the engine included—must be modified. In other words, a considerable length of time ensues before the first newly designed car rolls off the assembly line. Furthermore, it will take many more months—years perhaps—to determine whether the change leads to increased sales. In short, John and his managers won’t know how successful his design will be until years after the project is completed.

Now, let’s look at how Jim, a proprietary trader, seeks to make a name for himself. Jim is told to look for arbitrage opportunities and so he examines the marketplace for cheap securities and uncovers a five-year maturity bond that is paying 5%. He decides it offers extraordinary value, so he purchases $100 million of it, using cash that he borrows at 3% interest. Jim is suddenly making a spread of 2% (5%-3%) on the $100 million, or $2 million per year. Pretty neat, huh? But that’s not all. A salesperson comes to him and says he has a client who needs a guaranteed $2 million per year for the next five years and is willing to pay $8 million today for that annuity stream. The trader says, “You’re done,” and money changes hands. He has booked a nice profit.

This is a simplified example of a trade known as a swap. In reality, a swap is far more complicated and can involve an exchange of cash flows based upon multiple currencies, credit events, indices, and interest rate movements. However, the simplification doesn’t obfuscate key points to be made.

• While the auto executive’s contribution to his company’s bottom line isn’t discernible until years have passed, the trader knows immediately and unambiguously how well he is doing on any given day.
• While the trader has generated $8 million—which immediately flows through the company’s income statement—he also retains other positions, namely: a $100 million bond (an asset), a $100 million loan (a liability), and an obligation to pay $2 million each year for the next five years (another liability). These appear on the company’s balance sheet and their values are subject to change.
  

While all companies try to compensate employees on the basis of individual contribution, few are able to track performance in the way of a Wall Street manager by simply glancing at the tally in a trading ledger. From this perspective investment bankers are like ballplayers and actors: Trading gains have their corollary in home runs and ticket sales as an irrefutable and real time metric of success. High contributors, therefore, have considerable negotiating leverage. On the other hand, there is no tolerance for individuals who don’t perform. In fact, a Wall Street manager’s primary responsibility is to determine who among the workforce should receive walking papers prior to bonus season. Layoffs are expected each year and are meant to reduce the number of ways the bonus pool is split.

That being said, there’s a problem in how trading profits are calculated and you might have noticed it already—particularly if you consider what has happened at AIG. In the example above, the trader booked $8 million in profits today, but he still holds positions that can turn on him tomorrow. In particular, the $100 million liability is huge in comparison to the profit he booked. To demonstrate what can go wrong, let’s say the asset (the bond) defaults. The trader no longer receives the 5% payment from the bond, but he’s still required to pay: 1) the 3% on the borrowed money and 2) the $2 million a year on the swap. In addition, when the loan comes due in five years, the trader will have to repay $100 million and may not receive any money from the maturing bond. In short, while he made $8 million today, he exposed the company to a potential loss that could be in excess of a hundred million dollars.

So where am I going with this? The way Wall Street employees are compensated is based upon income in a given period and doesn’t fully reflect the residual risks of their positions. This encourages traders to book as much income as possible today and deal with future problems only as they arise. After all, getting a multimillion dollar payout this year will go a long way to easing the disappointment of getting canned the next. Do you think those AIG swap traders will shed tears if the company doesn’t survive? I’m sure they’ll cry all the way to their yachts.

And that’s the problem in a nutshell. The traders were compensated in such a way that they were encouraged to book income today that subjected the company (and the entire marketplace) to enormous risks for an extended future. One might say that they felt ownership for the periodic income, but not so much for the risks in the positions they retained. If we really want Wall Street to act with more integrity and prudence, bankers must be made liable for their mistakes. Forcing companies to reserve against leveraged positions and restricting bonus payments until trading positions mature or are unwound is the right direction. That would accomplish more than any other regulatory change to the industry.

Furthermore, on a broader scale the notion reemphasizes a point I’ve made in earlier blogs: When we make people owners of creative resources and value-generating processes they are more likely to act with a social conscience.

Wall Street: Is Greed the Problem?

Lori and I stick to a budget today and we worry about the next tuition installment with three boys at school. We, like most people, have seen our 401K—not to mention the equity in our house—drop like a rock in value. We’d like to sell our place and buy something smaller, but that might not be possible for years to come. I don’t know when I’ll be able to retire.

One day, while I was pondering these circumstances, I began to apologize to Lori about the twists and turns in our lives. We didn’t start out wondering how to make paychecks last. At one time we didn’t worry about money at all. Saving was something we could do without much thought or planning, but not anymore. Before I could finish my apology, Lori interrupted with what I thought were the kindest possible words: “I love that you turned your back on a good paying career to be a better person.”

I had to look away so she couldn’t see the feelings running through me—emotions as varied as they were powerful. On one hand, I felt grateful that she believed I’d left Wall Street to become a better me, but in truth, I wasn’t sure it was the best explanation for what I’d done. In the back of my mind, I’ve always wondered if I simply wasn’t tough enough to keep going.

It took me a long time before I could think of those years without hyperventilating or feeling a wave of nausea. Today my memories of Wall Street are accompanied by a feeling I can only describe as a murky cloud. It’s the same cloud that sought to engulf me every day I sat at a trading desk. Perhaps you will understand a portion of what I’m saying if I mention that I started my career structuring CDOs and went on to run a Structured Product desk that turned out, among other esoteric instruments, Credit Default Swaps. Both, as you probably know, have been significant contributors to our current financial debacle.

What you won’t know, however, is how much of my business was about avoiding regulations that were meant to protect shareholders and the integrity of financial markets. Nevertheless, I can say without equivocation that I never did anything illegal. In fact, I can point to a mountain of legal opinions to prove it. But therein lies the conundrum: If you need a legal or accounting opinion to prove you’re in compliance with regulations, chances are you’re trying to get away with something.

I learned early on that the most profitable Wall Street deals never appear on trading screens or League Tables, but are consummated quietly in order to hide embarrassing situations or past mistakes. Since confidentiality is always essential for these quiet deals, they're seldom subject to open bidding. Many are meant to fabricate income that isn’t really there, or avoid losses that really are. Some are tax-related and designed to assign losses to a party that needs them.

Even as I tell you this, I know what you’re thinking. I know because I've heard dozens of people say it, including the President: There's too much greed on Wall Street. Yet, if that’s the case, then I must suggest the problem is not limited to high finance. I’ve met executives from a range of industries who were just as greedy as people working on trading floors. If greed is the underlying problem with our economic malaise, it’s a general problem of which the majority of Americans are at fault. I will, in future blogs, describe the cause of Wall Street's risk taking and management problem and what can be done to fix it (Surprise! The solution is related to ownership!) but for now let me say this: Maybe I wasn’t tough enough to survive Wall Street, but I’m certainly a better person for having left it.

On the Prospect of Being a Grandpa

Shh…this is just between you and me, okay? I have a secret. You see, it appears that I’ll become a grandfather in June. Consider yourself informed. Now, mum’s the word.

At first, the news wasn’t easy for me to accept. It was another reminder that I was heading inexorably toward creaky-limbed old-fart status. What was to come next? Adult diapers and soft food didn’t seem too far behind it. Then something remarkable happened: I saw that little girl on TV. You know the one—the precocious child who demonstrates how to email a photo of her pet fish and ends the commercial by saying, “I’m a PC and I’m four and a half.” Suddenly, I wanted one exactly like her.

My change of heart is due, in part, because my daughter-in-law, Piper, is a beautiful young woman from China, whose childhood pictures remind me of that PC girl. But there’s more to it than that. During the twenty seconds, or so, while the commercial played, I was reminded again of the reasons we cherish children and how much we can learn from them.

Here are a few ways they are infinitely superior to us old coots.

Children are refreshingly honest. Even when they stray, they don’t make excuses. Listen to a child ask for sweets and what do you hear? They don’t say, “Nine out of ten dentists claim this is good for your teeth.” It takes them a while before they can justify, cajole and haggle like an adult. All they say is, “I want it.”

Children believe in magic. They jump from stumps and fence posts, run like the wind and act like masters of the universe. And because they are unburdened by adult fears, they are free to be motivated by love and the best of all intentions.

Children invest in dreams. I'm not speaking of our day-time musings or even our night-time fantasies, but rather the sense for who we can become. This sense is important, because the alternatives to proper dreams are horrific. In fact, it’s difficult to imagine anything as frightening as a human being with evil intent, unless it’s the mass of humanity with no intent at all. And while most adults have spent their dreams, children continue to invest in them. In the end, it’s what will save us all.

Children are insatiably curious. Despite their natural tendency to believe everything we say, children still ask “Why?” It’s the best of words. I’m sure a youngster invented it and it’s the driving force behind a child’s incredible growth.

Children are fair to a fault. Take the youngest child out for an ice cream cone and he or she will insist that you take more home for the siblings. They are our fairness monitors and they fulfill their roles to perfection.

On second thought, tell the world my secret. I’m starting to feel pretty darn good about the prospect of being a grandpa.

Why Noblesse Oblige IS Important

Do you remember that awful moment in American history, when the big news of the day was about a stain on an intern's dress? Do you recall the incredulity we felt as the Starr Report was published for the world to read and how we weren't sure what was worse: the arrogance of a man who'd deemed himself untouchable, or the incredible waste of time and energy the arrogance had caused?

At the time the facts were emerging, my family and I were living in Japan and my children were going to the American School on the outskirts of Tokyo. One morning my oldest boy got into trouble for making a reference to subject matter that had been covered in great detail in the media. When the school called to tell me of the punishment he would receive, I couldn't help but see a terrible irony in the situation. Both disappointed and embarrassed, I wrote the following letter, which was published in the Japan Times. Please, let's not ever say character doesn't count.

Dear Sirs:

Today my fourteen-year old son was told that, as punishment for something he said, he won’t be welcome on the school bus next week. This action raises an interesting question regarding what is–and is not–acceptable behavior.

The facts are not in dispute. There was a conversation at the back of the bus regarding the Starr Report. A boy asked a question that, though tasteless, was consistent with the juvenile curiosity of those involved. He speculated as to whether Ken Starr asked Monica if she, “spit, or swallowed.”

As a course of observation, my son replied, “There’d be no reason to ask that since the evidence was on her dress.” People within earshot agree: This was his only contribution to the discussion. However, a parent, who happened to be sitting nearby, complained to school officials. As a result, several students, including my son will have to arrange alternative transportation next week.

I won’t fight the punishment. I think it’s reasonable to maintain standards of taste and decorum. But what of Bill Clinton? In a world where a young boy can be punished for making a comment no more vulgar than the factual events detailed in the Starr Report, what lesson have we taught the most powerful man in the world about the acceptability of his behavior?

Yet more importantly, what underlying message have we passed on to our children? One thing is for sure; my son has learned a lesson and it’s not a pretty one. He might say: If you’re the president, it’s okay to engage in illicit sexual activity. Moreover, you can lie about what you’ve done and even get others to lie with you.

But if you’re a fourteen-year old boy, watch yourself. Don’t even talk about what the president does. That would be too vulgar.

The Great Debate

Let’s tone down the hyperbole. It just isn’t helpful. People on the pro-choice side of the debate are no more murderers than pro-lifers are Nazis trying to take away civil rights. Folks on both sides of the question are trying to do what they believe is proper—they simply have differing points of view. If we put aside the rhetoric, perhaps we can come to some common understanding.

To me, the issue reduces to this: When does human life begin?

One of the most interesting questions I heard during my years in school was: How do we define life? It’s not as easy to answer as one might assume. Is digestion or respiration life's defining component? If so, some chemical processes mimic the functions and would demand inclusion. Is sentience the requirement? That would exclude a whole host of what we consider life, including the beautiful oak tree I’m looking at beyond my back deck. Is the ability to propagate the standard by which we measure life? Here again, some inorganic processes involving protein strings might classify by such a definition. Life, therefore, is a lot like pornography: You might know it by looking at it, but defining it is a different matter.

But that’s exactly what we must do if we’re going to get anywhere in our often rancorous discussion about abortion. Between conception and birth, if there is a point beyond which life can be reasoned to begin, a woman should have a choice about her body prior to reaching it. On the other hand, once that point has been crossed, it becomes our Rubicon.

If we focus on the issue, rather than call each other names, we might find our way out of what seems an inextricable impasse. For a nice treatment of the subject, take a look at the following:

http://moreunsolicitedthoughts.blogspot.com/2009/02/right-to-life-argument-critque-follow.html

The author, Joe Huster, is an academic and lawyer, who makes a carefully reasoned appeal for understanding.

Musings on the Nature of Time

What is eternity? Is it simply a never ending series of days?

If Einstein taught us anything, it’s that time possesses extraordinarily complex physical properties. For example, one of the questions Brian Green raises in his book, Fabric of the Cosmos, is: Why does time appear to have an arrow? Why, in other words, does it seem to progress only into the future, when nothing in Einstein’s equations prevent it from slipping into the past?

Interest in the nature of time isn’t a recent phenomenon, as people have been musing on its properties for centuries. A central theme in Jewish mysticism, for example, is the unknowable quality of the infinite and eternal. The Greeks, too, considered time’s many complexities, asking whether it could be subdivided to some atomic equivalent, or if it was continuous in a way that defied division. They had two words for it: chronos and kreinos—the former being man’s time and the latter God’s time—which suggests it comes in two versions.

The study of mathematics has had far-reaching effects on our ideas of time. Einstein’s general theory of relatively, for instance, relies upon a complex number line to define what has been labeled the fourth dimension or time space. Complex numbers—sometimes referred to as imaginary numbers—appear often during the course of solving certain mathematical equations (the term x2 = -1 is an example) that results in the square root of a negative number. Such a solution shouldn’t exist—at least not in any world we understand. Mathematicians have invented a sleight-of-hand to deal with them, but for a long time people didn’t know what to do when complex numbers appeared. Then Einstein came along and showed how they were essential to a fully developed theory that would replace much of Newtonian physics.

Perhaps the most interesting discovery that furthered our understanding of time is Georg Cantor’s studies on infinity (which, if you think about it, is the mathematical corollary of eternity). His proofs are elegant and simple, but rather than show them here, let me summarize the implications of his work with a single sentence.

Infinity comes in various levels of value and complexity!

It seems incredible, I know, since every infinite set has no end to it, but they can differ with respect to dimension. One of the least complex varieties is, for example, the set of all integers, which relates to our common reckoning of eternity as a never ending number of days. It can be thought of as a number line—a single dimension. However, there are higher—much more complex—versions of infinity that are not bound by anything resembling a series of integers.

Cantor showed, for instance, that all the numbers between 0 and 1 (let’s call this set A) is greater than the set of all integers (this we’ll call B). Again, I won’t show the proof, but suffice it to say that A contains dimensions not included in B, including an infinite set of transcendental numbers. Transcendental numbers, as you probably know, include pi (π), which in their various decimal representations never end or repeat. (Pi is approximately 3.14159, but the digits continue on and on without pattern). If you’ve ever thought about transcendental numbers, you’ll have considered how they relate to a number line. We can show approximately where they are and do so with increasing degrees of precision, but they defy being placed in a precise location.

Is it possible that eternity is more than an endless number of days, but something that is unbound by time in the way of a complex number? Can a particular moment in eternity defy placement in the way of a transcendental number? At the very least, these are interesting ideas to ponder.

A Recovering Banker's View of the Economics of Jesus

When I was just a young grunt working on Salomon Brother’s capital markets desk, one of my tasks was to structure what were then cutting edge products known as option-embedded notes. Typically, the investments were designed to pay a fixed coupon, but return principal based upon the performance of an index. My job was to manage and close the transactions, which involved pricing the deals and then negotiating and finalizing their terms. One day a senior salesperson came to me and said a client of his—one of the biggest institutional investors in the world—had a pile of cash to put to work and wanted to see investment ideas, including the products I developed. Then he told me what his client wanted to achieve in yield.

The first thing I did was to check with our banking group on the borrowing rates of various high-grade issuers. After making a few calls and running some numbers, I couldn’t believe what my spreadsheet was telling me: We stood to make tens of millions of dollars on the deal! I confirmed with our traders that my calculations were right, and then thought: Why be greedy? Give the investor a slightly better yield and give the issuer a slightly lower cost of capital. They’ll both be giddy and Salomon will still make several million dollars for the effort.

Before I could talk to the various parties, however, my boss caught wind of my intentions and called me into his office. The next thing I knew, he was yelling and screaming and doing what people sometimes refer to as rip me a new one. Before it was over, he’d impugned my intelligence—not to mention my manhood—and offered me two rules, which he said I should live by, if I wanted to amount to anything on Wall Street. The two rules were:

• Never leave money on the table
• Protect the firm
  

I never forgot his words. In fact, I bought into them like they were the last two Beanie Babies at Walmart, but a year later circumstances caused me to recognize how the rules could be at odds with each other.

At the time, we had an aggressive government trader, who was known for bumping up against volume limits at Treasury auctions. During one such auction he—in violation of the rules—sent in principal orders that were destined for Salomon’s own book and disguised them as agency trades for clients. He was able to do it, because Wall Street firms use fictitious street names when bidding on behalf of others. As you probably already know, however, the trader was caught and the SEC fined us. Since other sanctions were possible, Salomon was put on credit watch and clients left us, especially those who were involved in my structured trades.

Eventually our stock price fell to such an extent that investment guru, Warren Buffett, couldn’t resist but purchase a controlling share in the company. To put Salomon’s fiscal and operational house in order, he fired people, changed our management structure, established new rules for the business and met with key clients in an effort to keep them loyal. Later, as the new face of our company, Buffett was called to testify before a congressional committee to speak of the changes occurring at the firm. And here I’m getting around to making my point.

At that extraordinary session before a congressional committee, Buffett was asked a question I’ll never forget. The inquisitor—a congressman who’s name I don’t remember—asked about one of our traders, a man named Larry Hilibrand, who had negotiated a sweet compensation package that included a piece of every dollar his proprietary trading desk earned. The prior year Hilibrand had been paid a whopping $15 million, which prompted the congressman to ask what the trader had done to deserve that kind of money, adding that traders, after all, did little else than buy low and sell high.

Buffett, in response, agreed with the congressman’s assessment, but used a baseball analogy by claiming that Hilibrand—while only a trader—had been the equivalent of a .400 hitter and had made the firm a lot of money. (I can’t help but digress here: To say a trader only buys low and sells high is akin to claiming Maxwell only solved a nifty little arithmetic problem. Most of the proprietary traders on Wall Street are physics and math Ph.D.s, which indicates how numerically rigorous and demanding the work is). But let me get back to the point. The congressman, in reply, said he couldn’t understand how a trader, who did nothing else but buy and sell for a profit, could make millions of dollars when our country’s most dedicated and inspirational teachers—teachers who were preparing future generations for success—were earning barely enough to survive.

Wow, I can’t tell you how much I thought about that statement. In fact, over the years I looked at it from all directions. At first it made me angry. I wanted to write the congressman and tell him how my job was different than any other in the world—that by me saying, “You’re done,” I could send billions of dollars across the globe. My job, I wanted to say, brought liquidity and stability to the marketplace, which is something that can’t be valued. Besides, I lived a principled life—a life ruled by two aphorisms: Never leave money on the table (after all, as Ivan Boesky once said: Greed is good) and protect the firm.

After a while, however, that question poked and prodded me. Why does a teacher—one like my high school choir teacher, Renee Henderson, who inspired so many kids that the community named a 2,000-seat auditorium in her honor—get paid so little. After all, if a teacher by his or her acts inspires students such that they stay in school, avoid drugs and unplanned pregnancies, and otherwise contribute to society, what is the value of that? If that value is greater than their pay, what accounts for the difference?

That’s when I began to view free-wheeling economies (and the increasing gulf between haves and have nots) in a whole new light. Even the staunchest laissez faire economist admits that capitalism breaks down to a less-than-optimal solution in certain situations. When monopolies occur, for example, they tend to restrict production and keep prices higher than would be the case in competitive marketplaces. Furthermore, monopolies are a natural end to certain markets that require infrastructures that are difficult to duplicate—like telephone landlines, for example, which is why AT&T had a telephone monopoly before it was broken up in the 70s.

There’s another downside to capitalism that’s referred to as the problem of externalities. Many externalities occur because ownership rights aren’t clearly defined. For example, the sky gets polluted, because there is no clear owner of it and therefore no one who is bearing the cost of ownership. If, on the other hand, the sky could be parceled out to individuals, who each then carried around his or her portion that was affected only by what he or she did, the sky would be much cleaner. Individuals would consciously weigh the tradeoffs between pollution in their personal spaces and the value of their pollution causing activities.

Perhaps a better example of an externality is how we care (or don't care) for public land. Without clear ownership rights or regulations, forests are harvested without concern for how they will be replaced. Public policy regarding such externalities is generally designed to induce people to act like owners. The development of green credits is a case in point. When a company buys a green credit, it’s paying for the cost of the pollution it’s putting in the air and begins to think like an owner by weighing tradeoffs of further production. Similarly, forests are parceled to timber companies through long-term leases that give them the benefits of proper stewardship. They become better caretakers, because it’s in their best interest to do so.

Now, here is where I make a leap in logic, but let me introduce it with a question: What is our greatest resource? If you’ve ever been to a graduation ceremony, you know the answer. Our children are our greatest resource. They’ll eventually pay for our mistakes, not to mention our social security benefits. But do we treat them as such? Going back to the question that Warren Buffett was asked, the fact that teachers are paid so little seems to indicate that we feel little “ownership” for society’s children. As a result we incur the costs of economic externalities in the form of crime, drug use, and the wasted lives of young people.

While a successful trader can negotiate a portion of the profits he or she generates because the profit is calculable and “owned,” when it comes to the cost of failed education, there is little attempt at a proper calculus, because we don’t seem to take ownership in the resource it’s meant to develop. But this is just an example of a much larger problem that is vectoring us toward a catastrophe. The gulf between executive pay and compensation for the working class is unconscionable and unsustainable, especially when considering the costs of decisions made by Wall Street CEOs—not to mention the strategic choices made by auto executives—that have led to today’s economic malaise. When a CEO screws up, chances are he or she has pocketed millions of dollars leading up to the mistake. It’s a condition that encourages enormous risk taking, while in the end failure hurts the working class most. Shouldn’t that be part of the payment calculus for all people involved?

For this, and a host of other reasons, we must encourage companies—and other public institutions—to look for ways to put ownership into the hands of workers.

Walking My Dogs In Briones

I’m so angry, I could spit.

For a couple of days now, I’ve been thinking of the ways in which we practice a cultural Judaism that ignores what Christ tried to teach, when a perfect example slapped me with a citation. Do you mind if I vent a little?

This morning I took my dogs to a wilderness area not far away. It was still early and no one—not a single solitary soul—was in the staging area. I scanned it to make sure and then did something that was technically wrong. You see, the dogs aren’t supposed to be off-leash until they’re on a trail beyond a gate approximately a hundred yards from where I parked. To get to the trail—again, only a hundred yards away—I had to walk through an open field that includes a number of picnic tables and barbeque grills, where the dogs are supposed to be on leashes. Now, it seems clear to me that the reason for the rule is to prevent unrestrained pets from becoming nuisances to the people who are enjoying the picnic area. Since I was all alone, I freed the dogs and they immediately headed for the trail. They know where it is.

Twenty feet short of the gate, I stopped to pick up some poo—I’m very conscientious that way—when a cop drove up and told me to leash my animals. He then asked for my ID and told me to wait while he ran a check on it. Fifteen minutes later, I was still holding the bag of dog poo, when he cited me. I don’t know what it will end up costing, neither did he. I asked why a ticket was necessary, when at 7:30 in the morning there was no one in the park to disturb. His answer: “It’s the rule.”

I know what you’re thinking: We can’t be arbitrary about how laws are enforced—that was his point, too—but quite frankly that’s a load of…well, it’s a load of what I had in the bag when he gave me the citation. There are all sorts of laws that are arbitrarily enforced. Californians, for example, aren’t supposed to use hand-held phones while driving (now, that’s a heck of a good idea) but I’ve never seen it enforced. Yet, the more important point is this: When we’re so caught up in the technicalities of rules, rather than the intent behind them, we haven’t gotten beyond the nitpicking that Christ described as, "Strain at a gnat and swallow a camel."

Even as I vent, however, I understand the allure of having clearly defined standards to define our acts, whether they be good or evil. I, too, am seduced by the belief that our regulations can and should be enforced in all circumstances and in all places. The Mosaic Law was meant to do that and it did a lot of thinking for us in the process—going so far as to dictate our actions when one of our oxen gets stuck in the mud on the Sabbath—but Christ wants us to use our heads and hearts. He doesn't want us to be commanded in all things. His gospel sounds simple, but it’s infinitely complex. In short, he tells us to love and then He does a remarkable thing: He lets us decide how to accomplish it. The trust implicit in that is astounding. Can we do the same for each other?

Perhaps not, but I feel so much better, now. Thanks for listening.

We All Play Together

The house is quiet now, but when the kids were with us, we were always surrounded by music. We made them practice their instruments in the living room so we could hear the progress they made. Boy, am I glad we did. Though in the beginning the sounds they made were more reminiscent of geese flying overhead than anything musical, they improved.

Josh, who is a genius and therefore welcome to make his own mistakes, left school for a period of time to play guitar in an alternative rock band, which is to say he really waited on tables. He had one of those VH-1 Making the Band experiences and is now back in school. Matt, while an undergraduate studying physics at Berkeley, was the principal bassoonist for the school orchestra. He's scheduled to begin a Ph.D. program in the fall, but I'm sure if he had his choice, he'd play for the San Francisco Symphony instead. Aaron is the most serious musician of the bunch. A jazz trumpet player and multiple DownBeat Award winner, he's the 2008 Jimmy Lyon Scholar at the Berklee College of Music in Boston (the other Berkeley).

When I was a young father, my dream was to have a family band. You'd think it had been within my grasp. Unfortunately, our tastes in music are so different that when we try to play together, we nearly come to blows. Yet, my sons are my greatest joys. Music, as you'll see here, is pretty high on the list, too.

A week before I began my sixth-grade year in school, my father set in motion a series of events that would lead to nearly every good and wonderful thing that has happened to me since.

And he did it against my will.

Early that morning, before he left the house to register me for my classes, I reminded him of the courses I didn’t want. At the top of the list were these: art, drama and music—especially music.
Back then I had a clear vision of my future self. I would be the kind of man who could walk into the hills with just a pocketknife and a shaker of salt, then return two weeks later with a full belly and the stink of wood smoke and something feral. I wanted to attend formal gatherings dressed in thermal shirts and mukluks, knowing all the while that other men envied me. I planned to be a boxer—and not just a boxer, but the undisputed champion of the world—because Ultimate Fighting wasn’t an option at the time. And that picture of me as an adult didn’t include a musical sound track.

After registering me for school, my father returned home, carrying something that resembled a briefcase. It must be a tool kit for shop class, I thought, but no. My father handed it to me and said: “This is what you’ll be playing for your middle school band.”

At first I figured he was only kidding, but then I opened the case and there inside was a shiny brass trumpet. To this day I have no idea why he did it. Music wasn’t important to my folks and we rarely listened to it at home. If you were to ask my dad who the greatest musician of the twentieth century was, he’d probably shrug and say: Hank Williams? Patsy Cline? I can only suppose my father was motivated by the kind of inspiration to which loving parents are entitled.

But for the first week of band I didn’t play a note—only sat and fumed. The second week began in much the same way, except that I began to listen and critique the kids around me. (Johnny keeps missing that F#, I’d think, and Mary can’t count to four). Then at home I’d take the trumpet out and play it when nobody was listening. By the third week I was an unapologetic band geek.

I couldn’t get enough of music, so in high school I joined the choir. Oh, I still played sports and went camping, but music became a passion. My best friend then was 6’6”, 220 pounds and as strong as an ox. He would eventually play college basketball, but he was first and foremost a choir nerd. We would go moose hunting each fall and, while traipsing through the woods, we’d sing from Mozart’s Requiem Mass. We especially liked the bass line from Dies Ire, which is a movement about the Judgment Day. We would sing it like we were Pavarotti and Domingo. Unfortunately, the music’s effect on moose was to put the fear of the Judgment in them and cause them to flee.

Then on Easter morning in 1975 I had the opportunity to sing at the Vatican with a wonderful choir and my life changed completely. We were ushered into an alcove off the main dome of St. Peter’s Basilica, were we began to sing Karl Heinrich Graun’s motet: Surely, He hath Borne Our Griefs. The piece begins with the word “surely” sung in a pensive minor chord, followed by a rest. It was after we gave voice to that first chord and we were waiting for the director’s next cue that two disarming things happened. First, we heard our own voices whispering through the catacombs in the back of the basilica, repeating with quiet assurance: surely, surely, surely, surely. Then the second thing happened: My eyes filled with tears, my voice choked up, and I couldn’t sing another word.

I was completely unprepared for what happened. At home my parents didn’t talk about spiritual matters. My mother had been raised a Buddhist and my father was a self-proclaimed “Jack Mormon”, who would roll his eyes at any reference to religion. As a kid, one of my few experiences with the church occurred a few months after we moved to Alaska and two men dropped by and knocked on our door. I suppose my father’s membership records had finally made their way to the local branch, but Dad wasn’t ready for any welcome committees. He glanced out the living room window and said quietly, “Don’t nobody move.”

That’s when one of the men—the one whom I would later know as Brother Carlson—rapped a knuckle on the window and said: “We’re your home teachers and we can see you in there breathing.”

Dad told us to ignore them and eventually they went away, but they continued to rap on our window every few months, only to be ignored again or told to go away. My father was dismissive about them and wouldn’t explain who they were, aside from telling us they were nuts. The whole affair was quite bizarre to me. What were the men hoping to teach us—some Tony Soprano-styled lesson? And why were they spying on us? My brothers and I wondered if we’d moved to Alaska under the auspices of some witness protection program.

I tell you this to describe just how unprepared I was when the spirit touched me that day in 1975. As I stood there in St. Peter’s Basilica, I wondered what could inspire someone to compose such a beautiful motet, but that only led me to ask other similar questions. Where had Michelangelo obtained the inspiration to paint the ceiling of the Sistine Chapel and sculpt the Pieta, both of which I’d seen that day? And what had caused so many people to sacrifice so much to build the edifice in which I stood?

In the end I could only conclude that it had something to do with the man, Jesus, of whom I knew so little and must know more. Within days after I returned home, Brother Carlson’s son, Dave, invited me to attend church with him and I couldn’t refuse.

Taped to a wall inside the middle school band room where my kids once played is a list of rules the students are expected to follow. The first rule is my favorite. It reads, quite simply: We all play together.

The ideal of playing together is one reason why music is so compelling. No matter the geography or culture of origin, all musical forms share an oddly familiar beginning. You can hear it in the melodic chants uttered during a bar mitzvah, or a Buddhist funeral, or a Native-American powwow, or the Islamic call to prayer. In every case, they are meant to join communities of people in a spiritual communion. When all our voices blend together—expressing longing and joy, angst and perfect love—the nature of that communion puts us as close to heaven as nearly any other earthly experience. But what if we don’t sing in tune or in perfect rhythm? If getting there is half the fun, the road to perfect harmony can still be exhilarating, despite the occasional need for a tune-up.

I had a dear friend once who happened to be a dog. Jesse loved music and had impeccable taste in it, preferring the masterworks of the Late Baroque composers. It didn’t matter where he was, whenever Lori played a movement from Handel’s Messiah, or some other similar piece, Jesse would come running. He’d flop down beneath the piano’s soundboard and roll onto his back with legs in the air and ears outstretched to capture every note. The grin on his face suggested a kind of spiritual ecstasy. A year before he passed, Jesse was diagnosed with a tumor in his hip that required one of his hind legs to be amputated. Afterward he couldn’t balance on his back anymore, but he still loved to lie beneath the piano. I don’t want to be maudlin here, but Jesse seemed to take refuge in music, as if it transported him to a dog-version of heaven, like the long walks through the woods we eventually had to curtail. Is there any wonder why David tells us to, “Sing to the Lord a marvelous song?”

Justice and the Higher Law

I grew up in a fishing village called Kenai in Southcentral Alaska. It’s an idyllic place with a history rich in interesting anecdotes and colorful people. One of the town’s more fascinating stories dates back to 1778 when the British sea captain, James Cook, discovered the rocky bluffs and the quiet bay at the mouth of the Kenai River.

At the time of his visit, a tribe of Athabascan Indians were living there. When they saw Captain Cook’s ships, Resolution and Discovery, the natives thought the vessels were whales of some large breed they’d never seen before. So, a few of them approached in seal-skin canoes to investigate. When they got close, they were met by an awful stench. Shipbuilders at the time sealed the hulls of large ships with tar to protect the timbers against the caustic effects of salt water. The Indians had never smelled anything like it before and the scent made many of them sick. A few brave souls, however, ventured onto the ships and were immediately amazed by the things they saw.

In particular, two observations had a lasting influence on them. First, the Athabascans had never seen people smoke tobacco before and they found the habit fascinating. Second, they were amazed by the unusual clothing that Cook's men wore and they were especially impressed with the rows of brass buttons sewed onto the men's sleeves. Later that day, the natives returned to their village with an astonishing, but perfectly understandable, story. They had met a fire-eating and smoke-breathing breed of men, who had arms like octopi and lived on the dead and decaying carcasses whales.

I tell you this story to illustrate a point: It’s quite easy to create and perpetuate a myth. And I hope you forgive me when I say there are many myths surrounding our views of justice. In particular, the way it intersects with our concept of the atonement is contrived in such a way that it causes Christ’s followers to live a lesser Mosaic Law. Consider the following question:

What’s the purpose of justice?

A. To protect the innocent?
B. To rehabilitate the guilty?
C. To prevent crime?
D. To restore a cosmic order to the universe?

I’m certain most people will say the right answer is some combination of A through C, but now consider another question: What does our concept of the atonement say about the purpose of justice? Follow that line of thought and see why it makes me want to pull out my hair.

Most descriptions of the atonement follow a logical argument similar to that which Anselm of Canterbury proposed in his treatise Why God Became Man. His reasoning is as follows.

• The existence of sin wounds God's honor, a condition that demands justice
• Because God is infinite, any acts to satisfy the demands of justice must also be infinite
• Since humans are not infinite, they are unable to satisfy such demands
• Satisfaction is only possible through the sacrifice of Jesus, who is sinless and exempt from punishment due to sin
• Since Christ’s sacrifice is voluntary, the merit of the act is therefore infinite and God's justice is thus appeased, allowing mercy to be extended to humankind.

If that seems contrived and confusing, it is, at least for me. It’s an example of apologetic thinking, which first assumes a set of axioms as factual and only then seeks a way to explain them logically. I’ll let you decide whether the argument accomplishes the latter, but consider a similar analogy proposed by a general authority of my church. Though it seems to clarify the argument, its implicit conclusions remain troubling.

There once was a man who wanted something very much. It seemed more important than anything else in his life. In order for him to have his desire, he incurred a great debt. He had been warned about going into that much debt, and particularly about his creditor. But it seemed so important for him to do what he wanted to do and to have what he wanted right now. He was sure he could pay for it later. So he signed a contract. He would pay it off some time along the way. He didn't worry too much about it, for the due date seemed such a long time away. He had what he wanted now, and that was what seemed important.

The creditor was always somewhere in the back of his mind, and he made token payments now and again, thinking somehow that the day of reckoning really would never come. But as it always does, the day came, and the contract fell due. The debt had not been fully paid. His creditor appeared and demanded payment in full. Only then did he realize that his creditor not only had the power to repossess all that he owned, but the power to cast him into prison as well.

"I cannot pay you, for I have not the power to do so," he confessed.

"Then," said the creditor," we will exercise the contract, take your possessions, and you shall go to prison. You agreed to that. It was your choice. You signed the contract, and now it must be enforced."

"Can you not extend the time or forgive the debt?" the debtor begged. "Arrange some way for me to keep what I have and not go to prison. Surely you believe in mercy? Will you not show mercy?"

The creditor replied, "Mercy is always so one-sided. It would serve only you. If I show mercy to you, it will leave me unpaid. It is justice I demand. Do you believe in justice?"

"I believed in justice when I signed the contract," the debtor said. "It was on my side then, for I thought it would protect me. I did not need mercy then, nor think I should need it ever. Justice, I thought, would serve both of us equally as well."

"It is justice that demands that you pay the contract or suffer the penalty," the creditor replied.

"That is the law. You have agreed to it and that is the way it must be. Mercy cannot rob justice."

There they were: One meting out justice, the other pleading for mercy. Neither could prevail except at the expense of the other.

"If you do not forgive the debt there will be no mercy," the debtor pleaded.

"If I do, there will be no justice," was the reply.

Both laws, it seemed, could not be served. They are two eternal ideals that appear to contradict one another. Is there no way for justice to be fully served, and mercy also? There is a way! The law of justice can be fully satisfied and mercy can be fully extended—but it takes someone else. And so it happened this time. The debtor had a friend. He came to help. He knew the debtor well. He knew him to be shortsighted. He thought him foolish to have gotten himself into such a predicament. Nevertheless, he wanted to help because he loved him. He stepped between them, faced the creditor, and made this offer.

"I will pay the debt if you will free the debtor from his contract so that he may keep his possessions and not go to prison."

As the creditor was pondering the offer, the mediator added, "You demanded justice. Though he cannot pay you, I will do so. You will have been justly dealt with and can ask no more. It would not be just."

The mediator turned then to the debtor. "If I pay your debt, will you accept me as your creditor?"

"Oh yes, yes," cried the debtor. "You save me from prison and show mercy to me."

"Then," said the benefactor, "you will pay the debt to me and I will set the terms. It will not be easy, but it will be possible. I will provide a way. You need not go to prison."

And so it was that the creditor was paid in full. He had been justly dealt with. No contract had been broken. The debtor, in turn, had been extended mercy. Both laws stood fulfilled. Because there was a mediator, justice had claimed its full share, and mercy was fully satisfied.

What is it about Anselm’s argument and the preceeding analogy that bothers me? Here are my reasons, in reverse order of their significance—the first I see as mere logical inconsistencies, the last is more problematic.

• The basis of the argument—which John Calvin first referred to as penal-substitution—indicates that justice can be accomplished through an injustice. I can think of nothing more inherently unjust than punishing someone who is innocent, but that’s exactly what is said about the atonement. Christ, according to common thinking, volunteered to be punished—I understand that—but such punishment could not have been a requirement of justice. Not only is it improper to punish an innocent person, it is also improper to forgive a guilty person based on the suffering of someone else. If the existence of sin causes justice to be satisfied, the penal-substitution theory has an odd approach, since its solution runs counter to the basic premise of what is just.
• At first glance, the analogy explains why God cannot forgive the sinner by introducing a creditor, who would not receive money that he was rightly owed. We take comfort in the argument, because in a financial transaction there is no injustice in someone paying the debt of another. But the analogy contains a subtle sleight-of-hand that breaks down when we map it to the real world. The debt—which represents the punishment required for sin—can be paid justly by another, but punishment should not. Why? Because there are real world debits and credits associated with financial transactions. To assume the same about the transferability of punishment is problematic. How would you like a court of law to incarcerate your mother, for example, because you broke a law?
• There seems to be no real-life analog to the creditor. Is it Satan? To assume so would indicate that Satan has a vested interest in our repentance. Is God the creditor? To believe He is wounded by our sins (aside from the sadness a parent feels) is to believe He isn’t much of a God. The alternative—to claim there are cosmic debits or credits that we rack up by our actions—leads to a similar conclusion, since it points to a construct that even God must obey. Furthermore, saying God only forgives the debt after it is fully paid is tantamount to saying God does not forgive, which runs counter to Christ’s higher law (see below). Finally, is justice the creditor? That seems to make no sense, because the conclusion brings us back to the idea that justice demands an injustice and that there are demands that supersede God’s will.
• Finally and most importantly, our notion of justice is an Old Testament, rather than a gospel, requirement that stands apart from what Christ teaches about the nature of God.

Since the last point is critical, let me develop the argument further. The idea of justice was born out of a different time and comes from the Mosaic requirement that can best be described as an “eye for an eye.” Recall the history of the Jews prior to the time Moses received the Ten Commandments. They were a people who were first slaves to the Egyptians, then led through the wilderness as vagabonds. As slaves, they'd lived a hand-to-mouth existence. Their only laws, enforced by the whips of bondage, were based upon survival of the fittest. Punishments, at the time, far exceeded their attendant infractions—steal a crust of bread, for instance, and off came your hand. Under such conditions, an eye for an eye was less a requirement than a restriction meant to insure punishments were reasonable.

Christ, however, wanted his followers to exercise a higher standard. Jesus expressed this idea in the Sermon on the Mount by saying:

Ye have heard that it hath been said, An eye for an eye, and a tooth for a tooth: But I say unto you, That ye resist not evil: but whosoever shall smite thee on thy right cheek, turn to him the other also.

This is consistent with other utterances He made. For example, when Peter asked how often we should forgive a brother’s sins, Jesus answered, “Until seventy times seven,” a euphemism that meant always.

It would be easy to wonder, therefore, why God would demand one standard for His children (forgive all) but employ another for Himself (justice without exception). The answer is, quite simply: He doesn’t. To understand why this is the case, go back to the Sermon on the Mount and chapter 5 of Matthew. Christ ends His discourse regarding lesser and higher laws with an interesting admonition that sheds light on the true (not the Mosaic) nature of God:

Be ye therefore perfect, even as your Father which is in heaven is perfect.

By this directive, Christ says His description of the higher law—the gospel that includes forgiveness—is the same variety of perfection that God practices. Accordingly, I believe He forgives in all instances and does not demand any cosmic rebalancing of sin’s debits and sacrificial credits aside from our truly repentant hearts. Though repentance may require restitution when it’s feasible, I cannot believe God requires a justice that is based upon an apparent injustice. Yet, even while I write this and understand what it implies about the atonement, I remain in complete awe and reverence for what Christ did for us. It does not diminish my love for Him.

A final note: Human society is imperfect. Earthly justice, therefore, continues to be necessary in order to protect the innocent, rehabilitate the guilty and discourage criminal acts. Anything more than this, however, is inconsistent with Christ’s teachings. In particular, to demand justice only as payback for crime is little more than revenge.

The Power of Hope

A few miles from the town where I grew up, there’s a boulder—cup shaped and tilted on its side—near a place that has been turned into a campground. God must have made it for bait fishing because it’s high in the back, sloped to the river and covered with soft moss. It juts off the bank and causes the water to eddy downstream, so silver salmon rest at its foot before moving on. As a kid, I used to cast into the swirl, lie on the rock and wait for a strike. It was as cozy as a favorite chair and I suppose that I caught my share of fish from it.

The rock gets traffic from the campground these days, so I don’t think of it as mine anymore and since I fish differently these days—with a method requiring floating line and a lot of walking—I haven’t been back in a long time. Yet, I still think about the boulder and love it for the way it was.

I learned things while sitting there, things about human nature and me. One summer I pulled two grown men from the river after their canoe tipped. Once safe on the rock, they watched their camping gear float away and the first words either of them could say was: “Hell, there goes my cigarettes.” I laughed until I recognized a sad side to wanting.

Yet, that didn’t stop me from doing the same thing, too: wish for things that seemed to be drifting away. At one time or another, I wanted to be a dozen different things, including a baseball player and a writer. Those dreams seemed within my grasp, until I would step away from the rock and strike out on curve balls or flunk a spelling test. Still, I could go back to the rock and plan and hope. (That’s when I decided to step up in the batter’s box to get a crack at curve balls before they broke away). Though I was never much of an athlete, the planning seemed to raise my batting average a few points.

Since I’ve gotten older, my dreams have changed. I’m not sure if they’re any more mature than my childhood wishes. At times they haunt me, as a good chunk of my life has already passed without accomplishment. But I know this much: when our wishes are right, they make our lives worthwhile. Hope is what whispers that when life is trying, the best we can do is try. Success isn’t what makes life joyful. It’s hoping and dreaming a better world into existence.

His Name Was Emil

When I was a kid, my family lived on a road that ran through thick woods. A mile behind our house, in an area we referred to as our backyard, a narrow creek flowed at the bottom of a gully. One day I was on my way to fish the creek and happened across a small shack made of old logs and roofing material. Judging from its signs of wear, the structure had stood there a long time. I walked towards it until movement showed through a tiny, curtain-less window.

"Who’s that?" I heard an old man's voice say, but more than a little frightened, I walked away without replying.

The thought of an old man living alone in our backyard was disconcerting. Perhaps he was an escaped convict or a deranged lunatic. Yet, after relating the meeting to my parents, my mother made a strange request. She asked me to take food to the man and check to see if he needed our help. Despite my feelings of apprehension, Mom couldn’t be dissuaded. In that gentle, but firm, way mothers come to master, she encouraged me to take an extra plate of dinner to our neighbor.

Within seconds of meeting him, I could tell my concerns had been overblown. He had one of those ambiguous, part-Russian, but mostly-Alaskan native, faces that sported a week's worth of sparse stubble, deep wrinkles and an almost toothless grin. He told me his name was Emil Dolchuk and when he saw the food I carried, his cloudy eyes opened wide. Emil invited me into his one-room home where the smell of urine and mildew jolted me as I entered. Inside, the shack's meager decor included a cot along one wall, a fold-up table opposite from it and two unmatched chairs. There was no electricity and no running water. His source of warmth was a wood-burning stove constructed out of tin tubing and a 50-gallon drum.

As he ate, Emil talked without pause. He seemed compelled to share stories of his life, but I can remember none of them, because I could only think of leaving—to be gone from the sight of the old man's poverty. During the following months, checking up on Emil became a family project, but after moving form the area, we lost track of him. Then several years later, we were reminded of our former neighbor in a startling way: an obituary notice in the local newspaper marked his passing.

Now, the story would end there except that after the passing of a few more years, I went to the city library to research the area's early history. There I found a shelf full of old journals written by Orthodox priests, commercial fishermen and homesteaders. As I read the sour-smelling and forgotten pages, I was impressed by several references to a man—a former city father. He’d been first to suggest the need for a new school (which he'd helped build and, thirty-years later, I attended). He had been a member of Kenai’s first volunteer fire department and for many years, as the village post master, he had braved winter toil by delivering mail to the town via dog sled.

The man's life took on shape and substance as I read. I could imagine him preparing to pick up the mail at Moose Pass 200 miles away. I could see him take a cautious step onto the crust of old-fallen snow and grimace as he fell through. He would grumble as his breath formed a lazy vapor that disappeared slowly into empty winter air.

In those days, unbroken and thinly-crusted snow was his greatest nightmare. It required him to "break trail" by running ahead of the dogs. With snowshoes lashed to his feet, he would land spread-legged and heavy on the snow's frozen crust to create a pathway for his huskies. While inching across wind-swept and frozen tundra, the sled would shimmy and shudder along the jagged edges of the scarcely broken trail.

After traveling only a short distance, but already wet with his own sweat, he would tell himself that Soldotna Creek was only twelve miles away and that he could rest his aching lungs there. By the time he would reach the cache, winter’s fleeting light would already have left the sky and he would still have much to do. He would need to build a fire and dry his drenched clothes before the night settled fully and sought to freeze him in his own perspiration. He would go to the cache and bring out dried chum—dog salmon they called it because the fish filled local rivers like maggots on a carcass and gave homesteaders the chance to catch a year's worth of dog food during a few summer weeks of gill netting. With coarse tools and nature's gifts, this remarkable man helped carve a community out of the wilderness. And his name was Emil Dolchuk.

If Emil were alive today, his stories would be worth gold to me. Unfortunately, all that reminds me of his good works and wisdom are a few scattered entries in hand-written journals. Yet I am fortunate to have them, for they are testimonies to the contributions of a man I've learned to appreciate and long to see again.

The Gospel In Practice

Think not that I am come to destroy the law, or the prophets: I am not come to destroy, but to fulfill.

Christ made the declaration just before introducing His gospel as a requirement of greater standing than the prevailing Mosaic Law. What did He mean by the assertion? In particular, what does the reference to “fulfilling” the law and prophets suggest? Here are my thoughts.

Since His followers were required to obey the Mosaic Law—albeit by adherence to the higher standards of the gospel—Jesus didn’t destroy the lesser law. Obedience to the Ten Commandments, in fact, remains a necessary condition to living a Christian life, but while it may be a necessary condition, it’s also insufficient. We’re asked, in short, to be better than the demands of the Old Testament (see my first blog on the topic). Consequently, Christ fulfills the Mosaic Law in two important ways. First, He represents the culmination of the Messianic prophecies and associated promises of spiritual freedom contained in the Old Testament. Second, He asks us to fulfill the lesser law (in the way graduation from high school is a requirement to enter college) on the road to greater levels of spiritual advancement.

But why is this important? Consider the following.

Case 1—Geoff walked up to an ATM, intending to take money out of his account. The screen, however, asked if he wanted another transaction and he quickly realized that the previous user hadn’t logged out. He had access to someone else’s funds! Geoff looked around and saw that no one was watching. At first he considered making a withdrawal from the account, but decided it wasn’t the Christian thing to do.

Did Geoff do the right thing? Certainly he did by not stealing. However, a helpful construct to consider is contained in the following question: What standard was followed? While the Mosaic Law prohibits theft, Christ asks that we rise to a higher plateau. It’s not enough that we avoid acts that do harm to others. The gospel asks for clean hearts, as well. The fact that Geoff was tempted to steal runs counter to Christ’s directives against immoral thoughts and unbridled emotions such as lust, greed and anger. These are not only precursors to sinful acts, but they lead to spiritual decay even when the behaviors are avoided. Clearly, following Christ’s admonition in this way is easier said than done. We may never achieve complete purity of thought, but it’s the standard to which Christians are to aspire.

Case 2—Geoff agreed to perform landscaping work for a new client, but before he could draft and execute an agreement, a more lucrative opportunity fell into his lap that would take up all his spare time. Since he wasn’t contracted with the first client, he decided it was fine to walk away from the deal.

Though the Mosaic Law required the performance of oaths—and prescribed a hierarchy of their countless varieties—Christ would have a person’s word be his or her bond under all circumstances. However, in this way our culture is far more Judeo than it is Christian. For example, the requirement to swear on a Bible prior to giving legal testimony, smacks of Leviticus rather than the Sermon on the Mount. Christ wants our communications to be Yeah or Nay and our performances to be perfect regardless of whether an oath (or contract) was executed.

I have more to say on this topic as the idea of justice, in particular, is quite interesting and complex. Moreover, what Christ has to say on the topic runs counter to our usual practice, which again is more closely aligned to the Mosaic Law than the gospel.

Scribes and Pharisees, Hypocrites!

Did you happen to notice where our president had to go to rally his troups last night? After everything our illustrious elected officials have said to condemn lavish junkets made by bankers, what do you think our leaders did? Yup, you guessed it, they gathered at an exclusive resort. As CNN's Campbell Brown said:

Leave it to members of Congress to be completely daft, entirely clueless, and unbelievably out of touch. Seriously, only a member of Congress can make a Wall Street executive seem like a sympathetic figure these days. And boy, do they make my job easy. Yes, while our representatives have been jumping up and down screaming about the excesses of Wall Street, condemning those corporate boondoggle trips to luxurious resorts, what do they do? They all go away on retreat together to a luxurious resort. First it was Republicans, who last week decamped to the lovely Homestead Resort, famous for its golf, fly-fishing, and luxurious accommodations, with its own golf course and five star amenities. Now, in fairness, members do pay for lodging with personal funds or their campaign accounts. But yes, taxpayers do foot the bill for some of the expenses. For example, according to Politico.com, we all paid about $70,000 for Democrats to take the train down to last year's getaway. Then they racked up phone and Internet bills of more than $40,000 on our dime. Not to mention the enormous security costs, which are even higher this year with the president and vice president both stopping by. How exactly in this economic climate Congress could possibly see the need to all go on a spa retreat together is frankly beyond me. Their offices are next door to one another. They see each other every day. Yes, they have important businesses to do on behalf of all of us. But can't they do that in Washington?

Random Musings

On God’s First Commandment—Do you recall God’s first instruction to humanity? It was this: Be fruitful, and multiply, and replenish the earth. While human history suggests we’d rather leap over these initial directions on our way to subduing the earth and exercising dominion over its creatures, the priority of God’s commandment lands squarely on our responsibility to be good stewards. Shouldn’t Christians, therefore, be the greenest of all people?

On Levels of Heaven—Followers of my religious tradition believe heaven contains various degrees of glory and that those who attain the highest level become like God Himself. If the notion is true, I believe our Heavenly Father will allow us to select our various kingdoms. If we weren’t comfortable hobnobbing with the sanctimonious here, we won’t feel any different beyond the veil. As for me, I think perfection is overrated. Quirky is my preference. I’d rather associate with people who can fart and laugh about it than with the pious creatures who believe they deserve Godhood.

On Mercy and Justice—Who invented the need for justice? Justice by another name is payback and is little more than revenge when its sole purpose is to exact an eye for an eye. Does justice restore the eye? If not, what cosmic order does it maintain? To punish a child already bludgeoned by guilt is akin to piling on and demands more than any reasonable parent would ask. But to assume God—who knows the content of our hearts—does so is antithetical to the idea of a loving father.

On the Atonement—Why did Jesus have to die for my sins? Even an imperfect court of the land would balk against incarcerating my brother for a law I broke. Why would God require something so blatantly unfair? In the end, I’d rather burn—if that’s what justice truly demands—than allow someone I love to pay for my sins. Hopefully, I’ll have a choice in the matter.

On Praising the Lord—To assume God needs us to praise His name is to believe He has a self-esteem problem. Conversely, if we think He’s offended by what we say or think, we really don’t believe He’s much of a God. Worship, as a component of any other relationship, is unhealthy. Why must it come between us and the father of our souls? To me, it seems far better to approach God as one would a respected and trusted teacher. Worship is more akin to fear than love.

On Eternal Rest—What kind of a reward is eternal rest? The notion causes me to shudder. Death, without the gospel, gets us the same thing. As for me, I hope there will be plenty to do when this life is over. Even bowling would be a better option than rest.

What bothered me most about my church’s response to Prop 8—While so much zeal was applied to passing the proposition, there was nothing said about the people who would be most affected—no prayers were uttered on their behalf, no outreach of love and concern was ever offered. So many of our young gay members have gone on missions and tried to live the church’s directives, only to resign themselves to who they are and commit suicide with feelings of utter desolation. If you believe God condemns gay marriage, campaign against it, but also pray for gay men and women everywhere that they will find refuge and God’s love somewhere. Hopefully, we can be instruments of peace in that regard.

On Satan's Role—If we're to be tested here on earth, couldn't the devil defeat God's plan by withholding temptation?