BEAT WMU!
Tuesday, December 30, 2008
Don't Call it a Comeback
I have been here for weeks. After a brief hiatus due to somewhat not-planned parenthood (Let's hear a hearty welcome for little baby Restless Chicano), I am back with some comments generated by a brief, off-KP discussion on kids and guns. To get everyone up to speed, Aztec's children (all less than 10) received a veritable arsenal of Nerf weaponry from Jolly Old St Nick. They are currently delighting in SWAT-like special ops involving taking or holding the 3rd floor playroom in idyllic Inner Suburbia. Your correspondent fired off a 3/4 joking scolding to Aztec for introducing his children to firearms, if only in Nerf form.
After some to-ing and fro-ing, I thought I'd post a quick summary of my thoughts on this matter, which are summed up by not having toy guns in the house and expressing my dislike for guns in general to my children, contemporaries of Aztec's.
Yes, they will use other items to represent guns. Partially eaten peanut butter sandwiches make a nice Glock. The vacuum cleaner extensions make a pretty solid shotgun or rifle. I frown on this at home and I do draw the line at pointing them at people. That's where I actually get a little conflicted with the Nerf stuff. I recognize the sheer joy associated with drawing a bead on your older brother and then pulling the trigger while squealing in delight like a feral pig. I just find it creepy and potentially not healthy.
I know I am on the wrong side of the Ruby Ridgers and, more normally, hunters in general, but I really see no reason for anyone to have a sidedarm who is not a cop or a soldier/sailor/marine/flyboy. I know we were all worried about the British taking our guns in the late 1770's. I just honestly don't think we can get to that point in this country (and if Bush couldn't pull off a constitutional putsch, then no one can). I also saw and loved Red Dawn. Seems pretty far-fetched these days, though. I frankly see very little need to hunt, but I am willing to pass on this one and defer to this tradition and the alleged bonds it forms. Hunting with guns, unless I have been misled, is almost always done with single-shot rifles and shotguns, so I suppose we can keep those around.
I firmly believe that the damage our current obsession/legislation with guns does is really awful. To a point made by VooDoo, while knives and swords are certainly a bit bloodier and gorier, I think there are a couple of important distinctions:
1) You want to cut someone you have to get up close and personal (unless you have crazy Ninja skills and can throw a knife with some degree of accuracy across a room). Guns take away the immediacy of the act. You can't tell me that a guy flying a B-2 has the same experience killing people as a guy with an M-16 on the ground. Likewise, the ease and impersonal nature of pulling a trigger makes it seem a bit easier to me to do so. I am admittedly guessing here, having neither shot nor stabbed anyone ever, though not for want of impulse. Waiting periods seem pretty reasonable. Remember Homer: "But I need a gun NOW!"
2) It would be pretty tough to walk into Columbine and kill dozens with a knife or sword (the latter of which, I am almost certain, is much harder to acquire than a gun). While you'd likely get one or two kills in, which is no less tragic for the victims and their families, the sheer numbers go way down. I also have to think that the physical act of slashing someone might have shocked even those kids and they may have stopped much quicker (see Point 1).
3) Knives have plenty of practical purposes outside of killing or maiming. Like picking one's teeth. Try that with a Sig Sauer. Whoa, boy.
At the end of the day, I am really just trying to instill in my children the same East Coast liberal egg-head ideas about guns my mother instilled in me. Recognize their utility (fighting wars, providing protein-based food if the supermarket somehow disappeared) and recognize the toll that these take on a society that has come to regard life so cheaply that drive-bys in the hood no longer make the evening news.
As a provocative corollary here, I find it somehow odd that the majority of right-to-lifers probably also support the 2nd Ammendment and the death penalty, while the NARAL-types generally loath guns and the death penalty. Far be it from me to give the Vatican anything that could remotely pass for praise, but they are at least consistent with their "seamless garment" approach.
After some to-ing and fro-ing, I thought I'd post a quick summary of my thoughts on this matter, which are summed up by not having toy guns in the house and expressing my dislike for guns in general to my children, contemporaries of Aztec's.
Yes, they will use other items to represent guns. Partially eaten peanut butter sandwiches make a nice Glock. The vacuum cleaner extensions make a pretty solid shotgun or rifle. I frown on this at home and I do draw the line at pointing them at people. That's where I actually get a little conflicted with the Nerf stuff. I recognize the sheer joy associated with drawing a bead on your older brother and then pulling the trigger while squealing in delight like a feral pig. I just find it creepy and potentially not healthy.
I know I am on the wrong side of the Ruby Ridgers and, more normally, hunters in general, but I really see no reason for anyone to have a sidedarm who is not a cop or a soldier/sailor/marine/flyboy. I know we were all worried about the British taking our guns in the late 1770's. I just honestly don't think we can get to that point in this country (and if Bush couldn't pull off a constitutional putsch, then no one can). I also saw and loved Red Dawn. Seems pretty far-fetched these days, though. I frankly see very little need to hunt, but I am willing to pass on this one and defer to this tradition and the alleged bonds it forms. Hunting with guns, unless I have been misled, is almost always done with single-shot rifles and shotguns, so I suppose we can keep those around.
I firmly believe that the damage our current obsession/legislation with guns does is really awful. To a point made by VooDoo, while knives and swords are certainly a bit bloodier and gorier, I think there are a couple of important distinctions:
1) You want to cut someone you have to get up close and personal (unless you have crazy Ninja skills and can throw a knife with some degree of accuracy across a room). Guns take away the immediacy of the act. You can't tell me that a guy flying a B-2 has the same experience killing people as a guy with an M-16 on the ground. Likewise, the ease and impersonal nature of pulling a trigger makes it seem a bit easier to me to do so. I am admittedly guessing here, having neither shot nor stabbed anyone ever, though not for want of impulse. Waiting periods seem pretty reasonable. Remember Homer: "But I need a gun NOW!"
2) It would be pretty tough to walk into Columbine and kill dozens with a knife or sword (the latter of which, I am almost certain, is much harder to acquire than a gun). While you'd likely get one or two kills in, which is no less tragic for the victims and their families, the sheer numbers go way down. I also have to think that the physical act of slashing someone might have shocked even those kids and they may have stopped much quicker (see Point 1).
3) Knives have plenty of practical purposes outside of killing or maiming. Like picking one's teeth. Try that with a Sig Sauer. Whoa, boy.
At the end of the day, I am really just trying to instill in my children the same East Coast liberal egg-head ideas about guns my mother instilled in me. Recognize their utility (fighting wars, providing protein-based food if the supermarket somehow disappeared) and recognize the toll that these take on a society that has come to regard life so cheaply that drive-bys in the hood no longer make the evening news.
As a provocative corollary here, I find it somehow odd that the majority of right-to-lifers probably also support the 2nd Ammendment and the death penalty, while the NARAL-types generally loath guns and the death penalty. Far be it from me to give the Vatican anything that could remotely pass for praise, but they are at least consistent with their "seamless garment" approach.
Monday, December 29, 2008
Is College Worth It?
After RN's comment a few posts back, I decided to do a back of the envelope calculation on the college investment.
Let's start with the ROI. Here are some stats on average earnings based on education level. There are two statistics - average earnings and average lifetime earnings. Both statistics are troublesome since a lot of details are excluded, but since this is a very rough calculation, let's use the lifetime earnings calculations. A high school degree nets you lifetime earnings of $1.2M and a bachelor's degree nets you lifetime earnings of $2.1M, a $900K difference. I assume this is over around 40 years of working, which correlates reasonably closely with the average annual earnings difference of $22K.
So college clearly boosts earning potential. Now let's look at the investment side of the ROI equation. Here are some college costs statistics. Again, there are a range of costs, but let's take a mid-point number and assume that college costs $25K a year. Add to that the lost earnings, which according to the previous link, should be around $30K a year. For a four-year college, that's a $220K investment.
Let's be a bit silly and assume you could take that whole investment and earn 5% a year on it over 40 years. You would end up with $1.575M, which compares very favorably with the $900K difference quoted above.
There are at least a dozen serious problems with this comparison as calculated above, but even taking those into account, it should be clear that college is not the slam-dunk choice that most people consider it to be.
At a minimum, it is a very bad idea to send your child to a $40K a year college so they can earn a liberal arts degree that will barely boost their income. Financially, at least, it is better for them if you stick that money into an annuity and teach them a real trade.
A few years down the road, I am guessing the plumber with a nice annuity is going to be in much better financial (and possibly mental) health than the Comparative Lit major with the $100K+ in college debt.
Let's start with the ROI. Here are some stats on average earnings based on education level. There are two statistics - average earnings and average lifetime earnings. Both statistics are troublesome since a lot of details are excluded, but since this is a very rough calculation, let's use the lifetime earnings calculations. A high school degree nets you lifetime earnings of $1.2M and a bachelor's degree nets you lifetime earnings of $2.1M, a $900K difference. I assume this is over around 40 years of working, which correlates reasonably closely with the average annual earnings difference of $22K.
So college clearly boosts earning potential. Now let's look at the investment side of the ROI equation. Here are some college costs statistics. Again, there are a range of costs, but let's take a mid-point number and assume that college costs $25K a year. Add to that the lost earnings, which according to the previous link, should be around $30K a year. For a four-year college, that's a $220K investment.
Let's be a bit silly and assume you could take that whole investment and earn 5% a year on it over 40 years. You would end up with $1.575M, which compares very favorably with the $900K difference quoted above.
There are at least a dozen serious problems with this comparison as calculated above, but even taking those into account, it should be clear that college is not the slam-dunk choice that most people consider it to be.
At a minimum, it is a very bad idea to send your child to a $40K a year college so they can earn a liberal arts degree that will barely boost their income. Financially, at least, it is better for them if you stick that money into an annuity and teach them a real trade.
A few years down the road, I am guessing the plumber with a nice annuity is going to be in much better financial (and possibly mental) health than the Comparative Lit major with the $100K+ in college debt.
Monday, December 22, 2008
Bubble Trouble
Karl Denninger has some required reading on our current economic troubles. My take on the situation pretty much mirrors his thoughts, although I could never have articulated my concerns with the precision that he has.
I have been thinking about bubbles a lot lately, and I am starting to wonder if many of the seemingly insane societal trends that we have witnessed develop over the last couple of decades are going to implode in concert with our economic bubbles. Over the last week, I ended up thinking about two potential examples: baseball salaries and weddings. There are probably many more, but I happened to think about these two because I read the New York Post and my wife watches TLC.
Let's start with baseball salaries. Here is a crude and hastily assembled chart of each year's highest salary in baseball.
For a young couple, "foot the bill" really means "create a pile of debt". Historically, weddings were celebrations funded by families where guests provided cash and gifts to the happy couple. It was a carefully orchestrated transfer of wealth to the younger generation to give them a financial foundation on which to build their life. We have now completely flipped the script, burdening newlyweds with a pile of debt instead of a pile of assets. It has been an insane and destructive trend, but as with the baseball's insanity, perhaps a dose of recession will wake us up to our own many follies.
I have been thinking about bubbles a lot lately, and I am starting to wonder if many of the seemingly insane societal trends that we have witnessed develop over the last couple of decades are going to implode in concert with our economic bubbles. Over the last week, I ended up thinking about two potential examples: baseball salaries and weddings. There are probably many more, but I happened to think about these two because I read the New York Post and my wife watches TLC.
Let's start with baseball salaries. Here is a crude and hastily assembled chart of each year's highest salary in baseball.
This was brought to mind by the Yankees' recent $243 million signings. Now I am not impugning Sabathia and Burnett (although Burnett strikes me as an easily impugnable pitching talent), but the economics of supporting a roster like this are difficult. For example, apparently the new list price for a seat behind the dugout for a regular season game is $2500. We are not talking World Series here. We are talking a Wednesday night game in June versus the Mariners.
During the salad days, companies may have been willing to cough up such absurd amounts, but when it comes time to cut costs, season tickets seem like they would be an early victim of the hatchet. There are certainly going to be a lot less Wall Streeters guzzling $8 beers in 2009. And I was told anecdotally the other day that a little company called Kraft finally threw in the towel on their season tickets, deciding they were just too expensive. If Kraft is crying uncle, there must be many lesser organizations in the same position.
Like any poor trader, I am calling a top in baseball salaries. Even as the top talents are able to bring in absurd salaries, overall free agent prices are weakening. I think the combination of a weak economy and baseball's many issues are going to change the landscape so dramatically that a decade from now we will look back on these salaries in astonishment.
And now to nuptials, another institution gone cuckoo on the back of cheap credit. The average wedding costs over $30K. In a nation where the median household income is only $48K, this is insane. It is particularly insane because the funding source for a wedding has changed...
This year only a quarter of brides will count on mom and dad to pick up the tab.
Instead, nearly one-third of brides and grooms will forgo tradition and foot the
entire bill themselves.
For a young couple, "foot the bill" really means "create a pile of debt". Historically, weddings were celebrations funded by families where guests provided cash and gifts to the happy couple. It was a carefully orchestrated transfer of wealth to the younger generation to give them a financial foundation on which to build their life. We have now completely flipped the script, burdening newlyweds with a pile of debt instead of a pile of assets. It has been an insane and destructive trend, but as with the baseball's insanity, perhaps a dose of recession will wake us up to our own many follies.
Saturday, December 20, 2008
The First Real Voice for Labor in Over 30 Years
Perhaps for only the second time in our lifetime, labor will have an advocate at the cabinet level. YGG may not be a fan, but Solis is the only overtly liberal cabinet appointment so far. Gates at Defense, Salazar at Interior, and Clinton at State have been giving progressives fits. On the whole, there is very little room for any "I told you so" moments.
Friday, December 19, 2008
A Real Estate Story
I don't have independent confirmation of this story, so there is a chance that it is inaccurate, but it came directly from a source, so I think it is probably accurate:
For those of you unfamiliar with New York's various social strata, the Hamptons is the preferred vacation area of NYC's moneyed class. The prices have been stratospheric over the last few years. As the national real estate market has weakened, there has been a reassuring conventional wisdom that Manhattan and Hamptons real estate was immune.
Well, this story suggests otherwise. A successful trader decided to take some cash and make some bids on property out there. He asked a real estate agent to show him five properties with asking prices of about $5 million each. After touring the stunning properties, he made bids on all five properties.
$1.25 million each.
Two sellers came back and hit his bid. At 25 cents on the dollar.
If this is true, it is so stunning as to be almost unbelievable. But before you scoff, consider some other assets.
S&P: trading 89, down from peak of 149 (down 40%)
Oil: trading 37, down from peak of 147 (down 75%)
Gasoline: trading .96, down from peak of 3.11 (down 69%)
Based on these numbers, it is certainly not inconceivable that real estate should be down 50-75% from the peak. Especially when you consider that the above assets are "productive" assets. They are "productive" in the sense that they should either be creating wealth (corporations), or they should be a necessary component in the creation of wealth (energy).
For the most part, residential real estate is not a productive asset; I don't see how you become more productive by living in a 10-bedroom house versus a 3-bedroom home. As an individual, you actually probably become less productive when upkeep and maintenance are included in the calculation.
When people upgrade their kitchen with granite counters, they like to tell themselves they are making an investment in their home, but this is largely incorrect. Capital investments should make the people involved more productive. In a home, such capital investments might be certain appliances (e.g washer/dryer) or improved internals (e.g. a more efficient heating system). But outside of these few components, larger, more lavish homes do not make the individuals living there any more productive, and again, when taxes, utility, and maintenance costs are considered, the individuals are arguably much less productive.
With all that said, 25 cents on the peak dollar sounds just about right.
For those of you unfamiliar with New York's various social strata, the Hamptons is the preferred vacation area of NYC's moneyed class. The prices have been stratospheric over the last few years. As the national real estate market has weakened, there has been a reassuring conventional wisdom that Manhattan and Hamptons real estate was immune.
Well, this story suggests otherwise. A successful trader decided to take some cash and make some bids on property out there. He asked a real estate agent to show him five properties with asking prices of about $5 million each. After touring the stunning properties, he made bids on all five properties.
$1.25 million each.
Two sellers came back and hit his bid. At 25 cents on the dollar.
If this is true, it is so stunning as to be almost unbelievable. But before you scoff, consider some other assets.
S&P: trading 89, down from peak of 149 (down 40%)
Oil: trading 37, down from peak of 147 (down 75%)
Gasoline: trading .96, down from peak of 3.11 (down 69%)
Based on these numbers, it is certainly not inconceivable that real estate should be down 50-75% from the peak. Especially when you consider that the above assets are "productive" assets. They are "productive" in the sense that they should either be creating wealth (corporations), or they should be a necessary component in the creation of wealth (energy).
For the most part, residential real estate is not a productive asset; I don't see how you become more productive by living in a 10-bedroom house versus a 3-bedroom home. As an individual, you actually probably become less productive when upkeep and maintenance are included in the calculation.
When people upgrade their kitchen with granite counters, they like to tell themselves they are making an investment in their home, but this is largely incorrect. Capital investments should make the people involved more productive. In a home, such capital investments might be certain appliances (e.g washer/dryer) or improved internals (e.g. a more efficient heating system). But outside of these few components, larger, more lavish homes do not make the individuals living there any more productive, and again, when taxes, utility, and maintenance costs are considered, the individuals are arguably much less productive.
With all that said, 25 cents on the peak dollar sounds just about right.
Wednesday, December 17, 2008
Hedge Funds, R.I.P.
For the last several years, I have been preaching to those few with the kindness and fortitude to tolerate my rants that hedge funds are an absolute scam and will eventually be viewed in our collective rear-view mirror with the same hungover disbelief with which our society regards the dot-com bubble and the real estate crash. "I did what last night?" has become "I bought what last year for how much?" Ugh, I need an aspirin.
If you think Pets.com and Inland Empire real estate were overpriced garbage, consider your average hedge fund. Your average hedge fund will charge you an annual fee (usually about 2% of assets) for the privilege of putting your money in their hands. They will then take a percentage of any profits (usually about 20%). It's called two and twenty, and it is the greatest racket in the world.
If the fund makes money, you get your piece minus your substantial costs. If the fund loses money, you get a ringing phone, unreturned emails, and potentially a visit from an SEC agent with tragic news. I regret to inform you your investment was killed in a mortgage deal in Boca Raton.
It is simply astonishing to me that people will pay these levels of fees, only to be told that their money is locked up and cannot be returned. For $10 a trade, Schwab will do my bidding and send me money on request. Why would you pay more for less access to your own money?
There is something else to understand about the average hedge fund. The trader is, most likely, pretty much average. Traders move back and forth between Wall Street firms and hedge funds like the swallows of Capistrano. After a couple of years of successful trading on a Wall Street desk, a trader puts up a shingle, raises some money, and then does basically the same thing he did for the bank. Except as generous as payouts have historically been at banks, hedge fund payouts are simply ridiculous.
The real problem is that the incentives in most hedge funds are designed to benefit the fund, not the investor. Because their payout is linked to upside performance, funds are incentivized to leverage up and swing for the fences. And because most performance fees are calculated annually, funds are incentivized to do everything they can to make a single year's numbers look good. With enough capital, one good year can set a trader up for life, and should the position blow up spectacularly in following years, there is usually no mechanism to claw back the ill-gotten bonus. A case in point.
There are excellent money managers out there, but there are really only a handful that are consistently successful. The best of the rest, on aggregate, are probably only a few percentage points better than the rest of the market herd. By the time you remove your annual fee and 20% of your upside, you have pretty much wiped out that advantage. Add in the risk of either fraud or a massive loss, and investing in hedge fund seems like a loser's game.
The biggest losers lately seem to be pension funds. Eventually someone is going to ask why pension funds are paying these ridiculous fees to funds (and funds of funds) for results that are pretty ordinary. The retirement capital of millions of people is being used to finance highly leveraged trading that is making a few people enormously rich at enormous risk. I don't often say this, but where the hell is the AARP when you need them?
If you think Pets.com and Inland Empire real estate were overpriced garbage, consider your average hedge fund. Your average hedge fund will charge you an annual fee (usually about 2% of assets) for the privilege of putting your money in their hands. They will then take a percentage of any profits (usually about 20%). It's called two and twenty, and it is the greatest racket in the world.
If the fund makes money, you get your piece minus your substantial costs. If the fund loses money, you get a ringing phone, unreturned emails, and potentially a visit from an SEC agent with tragic news. I regret to inform you your investment was killed in a mortgage deal in Boca Raton.
It is simply astonishing to me that people will pay these levels of fees, only to be told that their money is locked up and cannot be returned. For $10 a trade, Schwab will do my bidding and send me money on request. Why would you pay more for less access to your own money?
There is something else to understand about the average hedge fund. The trader is, most likely, pretty much average. Traders move back and forth between Wall Street firms and hedge funds like the swallows of Capistrano. After a couple of years of successful trading on a Wall Street desk, a trader puts up a shingle, raises some money, and then does basically the same thing he did for the bank. Except as generous as payouts have historically been at banks, hedge fund payouts are simply ridiculous.
The real problem is that the incentives in most hedge funds are designed to benefit the fund, not the investor. Because their payout is linked to upside performance, funds are incentivized to leverage up and swing for the fences. And because most performance fees are calculated annually, funds are incentivized to do everything they can to make a single year's numbers look good. With enough capital, one good year can set a trader up for life, and should the position blow up spectacularly in following years, there is usually no mechanism to claw back the ill-gotten bonus. A case in point.
There are excellent money managers out there, but there are really only a handful that are consistently successful. The best of the rest, on aggregate, are probably only a few percentage points better than the rest of the market herd. By the time you remove your annual fee and 20% of your upside, you have pretty much wiped out that advantage. Add in the risk of either fraud or a massive loss, and investing in hedge fund seems like a loser's game.
The biggest losers lately seem to be pension funds. Eventually someone is going to ask why pension funds are paying these ridiculous fees to funds (and funds of funds) for results that are pretty ordinary. The retirement capital of millions of people is being used to finance highly leveraged trading that is making a few people enormously rich at enormous risk. I don't often say this, but where the hell is the AARP when you need them?
Monday, December 15, 2008
Dream Come True
Instead of bemoaning the horrendous state of pretty much everything, take a quick second to read this article and tell me all of you haven't had a fantasy that went something like this. Maybe not hockey, but really...you are at the Phils games with a couple of buddies. Game tied and goes to the bottom of the 22nd. No pitchers left so they bring J. Werth in from right field. This begs the question, "Who do we put in right?" Charlie Manuel sees you in the crowd, with your official jersey, your own name and a number not on the roster currently. Oh, and you brought your glove. "Hey Native, get down here. You're going in in Right." Oh, man. Best part is you drop a routine fly ball, the Marlins win, and you get to shower with the team. Towels snapping everywhere. Perhaps an unfortunate accident involving the soap. You'd make SportsCenter for sure.
Saturday, December 13, 2008
Friday, December 12, 2008
Ponziriffic
The headlines today are likely to be about GM and the collapse of bailout talks (hooray!), but this story is mind-boggling. $50 billion. Holy crap!
As a conservative, I love to beat up the government for rampant corruption, but the private sector can clearly compete in this dubious field.
Check out some of their website before it evitably disappears. Lots to marvel at, such as this gem...
In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner's name is on the door. Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm's hallmark.
It would be funny, except some very well-meaning people have undoubtedly been ruined. That seems to be a theme from what I've witnessed on Wall Street. Many "wealthy" people were actually leveraged to the hilt. The pain from this recession is going to run the full height of the socioeconomic ladder.
As a conservative, I love to beat up the government for rampant corruption, but the private sector can clearly compete in this dubious field.
Check out some of their website before it evitably disappears. Lots to marvel at, such as this gem...
In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner's name is on the door. Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm's hallmark.
It would be funny, except some very well-meaning people have undoubtedly been ruined. That seems to be a theme from what I've witnessed on Wall Street. Many "wealthy" people were actually leveraged to the hilt. The pain from this recession is going to run the full height of the socioeconomic ladder.
Thursday, December 11, 2008
Tuesday, December 9, 2008
Car Czar: Crazy
Apparently, we're going to give the car industry $15B and they will have to the end of March to restructure the entire industry or there will be no more money. Here's how Pelosi explains it:
Huh? WHAT?!?
Isn't this what Chapter 11 bankruptcy court is for? There is no way a political appointee is going to be able to make the tough decisions required to break union contracts, change dealership deals, restrain creditors, etc. "Oh, yeah, sorry Barack. I know you really don't want to be known as the president that told Detroit to drop dead. But, you know, I wanted to do the right thing. Got any more appointments for me?" Please. I don't understand why we can't do this in court. It has worked for the airlines. I'm actually okay with the government fronting the money because it's unavailable in the credit markets right now. But I see a real danger entrusting this mess to anyone other than a bankruptcy judge.
"Unless the restructuring that is called for in this legislation and the goal of viability is achieved by March 31, there is no justification for spending more taxpayer dollars."Against my better judgment, I will go ahead and assume that "viability" means the car companies will be able to function on their own by the end of March. They are going to "achieve" the goal of "viability" is by putting a presidential political appointee "in charge" of sorting out the whole mess and making the tough decisions if Detroit is not willing to make them itself.
Huh? WHAT?!?
Isn't this what Chapter 11 bankruptcy court is for? There is no way a political appointee is going to be able to make the tough decisions required to break union contracts, change dealership deals, restrain creditors, etc. "Oh, yeah, sorry Barack. I know you really don't want to be known as the president that told Detroit to drop dead. But, you know, I wanted to do the right thing. Got any more appointments for me?" Please. I don't understand why we can't do this in court. It has worked for the airlines. I'm actually okay with the government fronting the money because it's unavailable in the credit markets right now. But I see a real danger entrusting this mess to anyone other than a bankruptcy judge.
Monday, December 8, 2008
The Black Swan Speaks
Nassim Nicholas Taleb was on Charlie Rose recently. Here's the video.
As a counterpoint, here is a good contrarian viewpoint from Seeking Alpha citing Taleb and Nouriel Roubini as the reasons he sees a market bottom.
As a counterpoint, here is a good contrarian viewpoint from Seeking Alpha citing Taleb and Nouriel Roubini as the reasons he sees a market bottom.
Thursday, December 4, 2008
Two Funny
The first link continually makes me laugh for some reason. I think it is how Gamma and Ron Paul view the environment. Seriously though, if you have not watched BBC's Planet Earth in HDTV, you are missing a tremendous experience. We'd keep it on in repeat in the background without sound when people would come over just for the awe it inspired.
The below I received via e-mail. Not sure who wrote it, but pretty damn good. One would think a UT fan wrote it, but then again, it is clever. Thank god there were playoffs in 1945.
BCS DECLARES GERMANY WINNER OF WORLD WAR II
US Ranked 4th
After determining the Big-12 championship game participants the BCS computers were put to work on other major contests and today the BCS declared Germany to be the winner of World War II.
"Germany put together an incredible number of victories beginning with the annexation of Austria and the Sudetenland and continuing on into conference play with defeats of Poland, France, Norway, Sweden, Denmark, Belgium and the Netherlands. Their only losses came against the US and Russia; however considering their entire body of work--including an incredibly tough Strength of Schedule--our computers deemed them worthy of the #1 ranking."
Questioned about the #4 ranking of the United States the BCS commissioner stated "The US only had two major victories--Japan and Germany. The computer models, unlike humans, aren't influenced by head-to-head contests--they consider each contest to be only a single, equally-weighted event."
German Chancellor Adolph Hiter said "Yes, we lost to the US; but we defeated #2 ranked France in only 6 weeks." Herr Hitler has been criticized for seeking dramatic victories to earn 'style points' to enhance Germany's rankings. Hitler protested "Our contest with Poland was in doubt until the final day and the conditions in Norway were incredibly challenging and demanded the application of additional forces."
The French ranking has also come under scrutiny. The BCS commented " France had a single loss against Germany and following a preseason #1 ranking they only fell to #2."
Japan was ranked #3 with victories including Manchuria, Borneo and the Philippines.
United States head coach Harry S Truman was criticized by many as having poor taste for scheduling a "politicking" interview during halftime of the German bombing raids over Great Britain.
In that interview, Truman stated, "Any way you look at it, there is going to be a really good military force that gets left out. But when you come right down to it, our head-to-head victory over the Germans has to be the deciding factor."
A US fan also made the point that "Germany is getting all the style points right now because of their sexy offense, which continues to obliterate weaker opponents and show off their might after the battle is already won. But what about defense?"
The below I received via e-mail. Not sure who wrote it, but pretty damn good. One would think a UT fan wrote it, but then again, it is clever. Thank god there were playoffs in 1945.
BCS DECLARES GERMANY WINNER OF WORLD WAR II
US Ranked 4th
After determining the Big-12 championship game participants the BCS computers were put to work on other major contests and today the BCS declared Germany to be the winner of World War II.
"Germany put together an incredible number of victories beginning with the annexation of Austria and the Sudetenland and continuing on into conference play with defeats of Poland, France, Norway, Sweden, Denmark, Belgium and the Netherlands. Their only losses came against the US and Russia; however considering their entire body of work--including an incredibly tough Strength of Schedule--our computers deemed them worthy of the #1 ranking."
Questioned about the #4 ranking of the United States the BCS commissioner stated "The US only had two major victories--Japan and Germany. The computer models, unlike humans, aren't influenced by head-to-head contests--they consider each contest to be only a single, equally-weighted event."
German Chancellor Adolph Hiter said "Yes, we lost to the US; but we defeated #2 ranked France in only 6 weeks." Herr Hitler has been criticized for seeking dramatic victories to earn 'style points' to enhance Germany's rankings. Hitler protested "Our contest with Poland was in doubt until the final day and the conditions in Norway were incredibly challenging and demanded the application of additional forces."
The French ranking has also come under scrutiny. The BCS commented " France had a single loss against Germany and following a preseason #1 ranking they only fell to #2."
Japan was ranked #3 with victories including Manchuria, Borneo and the Philippines.
United States head coach Harry S Truman was criticized by many as having poor taste for scheduling a "politicking" interview during halftime of the German bombing raids over Great Britain.
In that interview, Truman stated, "Any way you look at it, there is going to be a really good military force that gets left out. But when you come right down to it, our head-to-head victory over the Germans has to be the deciding factor."
A US fan also made the point that "Germany is getting all the style points right now because of their sexy offense, which continues to obliterate weaker opponents and show off their might after the battle is already won. But what about defense?"
StateStats - Search Popularity by State
Don't start typing in search terms unless you have a good amount of time to kill.
via Neatorama by GeekAlerts on 12/4/08
It then compares this ranking with other ways of ranking states, like average income or population density, using Spearman's rank correlation.
Free Plaxico
I should be elated about Plaxico's situation. I never particular liked him as a player, and since he plays for the Giants, his loss was theoretically my gain.
But damn my conservative principles, I now find myself forced to become a drum-banging, black armband-wearing activist crying for justice for poor Plaxico. I was going to rail on about the injustice today, but the WSJ pretty much beat me to it.
But damn my conservative principles, I now find myself forced to become a drum-banging, black armband-wearing activist crying for justice for poor Plaxico. I was going to rail on about the injustice today, but the WSJ pretty much beat me to it.
Wednesday, December 3, 2008
Consider the possibilities
Check out this announcement from Michelin on Monday. It's hard to tell just how viable this solution really is. But wouldn't be amazing if it or something like it turns out to be true and commercially available in the next few years? It would absolutely change everything.Maybe all the bad news recently is us merely collecting all the hearts on our way to shooting the moon. This could be the queen of spades. It's fun to think optimistically for a change.
Some cogent analysis (not from me)
The MSM has finally come to the realization that this recession is going to be a little worse than they expected, but the blogs are still the place for solid analysis. I recommend two posts that Mish put up today...
Unfortunately, in the long-term, every one of Paulson and Bernanke's current interventions will make this recession that much worse. And the size of these interventions suggests the effect could be long-term catastrophic.
Here is some perspective (emailed to me)...
Aztec, I am hoping to get a reply to your earlier arguments posted soon.
Sean Avery Suspended for Off-ice Comment
I don't know how the League suspends a guy for this. While tasteless, it does appear to be true. He's done a lot worse things on the ice and never been suspended before. Weigh in and let KP know what you think.
Here's an article outlining the issue.
Here's an article outlining the issue.
Tuesday, December 2, 2008
Manliness
World Series of Poker - Phil Hellmuth - Hot Babes
Monster Truck Rally - Truckzilla v. Gravedigger - Car-crushing Extravaganza
Guns - Hunting - Beaver - Buck
Fishing - Large-mouth Bass - Small Mouth Bass - Trout
Cigars - The Governator
Beer - Kegs - Funnels - Beer Pong
Monster Truck Rally - Truckzilla v. Gravedigger - Car-crushing Extravaganza
Guns - Hunting - Beaver - Buck
Fishing - Large-mouth Bass - Small Mouth Bass - Trout
Cigars - The Governator
Beer - Kegs - Funnels - Beer Pong
Monday, December 1, 2008
Regulation, Not Participation (because we haven't bashed Fannie/Freddie in awhile)
While I agree with Aztec's comment that the government had to step in and do what they did with Fannie and Freddie, they still deserve to be bashed.
The GSEs go well beyond the realm of regulation into the realm of government participation in the markets. This has led to the ultimate manifestation of the moral hazard problem (public risk, private gain); enormous leviathans that dominated the market; and an expansion of scope well beyond their original charter into risky assets.
Government should set the rules of the road and actively enforce them. (And I agree with Aztec's point that the CDS market should be regulated...probably like the insurance industry.) But that's it. Government should not become an active market participant that distorts competition through unfair advantages like below-market borrowing costs, guaranteed debt, and weak oversight. Fannie and Freddie's size and market power today would make them subject to anti-trust laws if they weren't already government entities with powerful lobbies. And all of this to what end, exactly? Increasing home ownership in America to include people who cannot afford to buy homes? Bad governmental policy + poor implementation = disastrous results not just for America, but for the global financial system. I wonder how Chris Dodd and his ilk can sleep at night.
Essentially, the GSEs are off-balance sheet financing for the federal government. The only good explanation is that they were set up that way to hide debt obligations from creditors and the American public. It's not a stretch to say that such an approach is Enron-esque. Now that they are in conservatorship, the government should break them up, sell off the parts to private investors, and get out of the mortgage business once and for all.
The GSEs go well beyond the realm of regulation into the realm of government participation in the markets. This has led to the ultimate manifestation of the moral hazard problem (public risk, private gain); enormous leviathans that dominated the market; and an expansion of scope well beyond their original charter into risky assets.
Government should set the rules of the road and actively enforce them. (And I agree with Aztec's point that the CDS market should be regulated...probably like the insurance industry.) But that's it. Government should not become an active market participant that distorts competition through unfair advantages like below-market borrowing costs, guaranteed debt, and weak oversight. Fannie and Freddie's size and market power today would make them subject to anti-trust laws if they weren't already government entities with powerful lobbies. And all of this to what end, exactly? Increasing home ownership in America to include people who cannot afford to buy homes? Bad governmental policy + poor implementation = disastrous results not just for America, but for the global financial system. I wonder how Chris Dodd and his ilk can sleep at night.
Essentially, the GSEs are off-balance sheet financing for the federal government. The only good explanation is that they were set up that way to hide debt obligations from creditors and the American public. It's not a stretch to say that such an approach is Enron-esque. Now that they are in conservatorship, the government should break them up, sell off the parts to private investors, and get out of the mortgage business once and for all.
How About Them Bears?
KP needs to butch it up a bit. According to genderanalyzer.com, there's a 56% chance KP is written by a woman. I blame GamaGirl.
Wednesday, November 26, 2008
All TV Series Must End (Warning: Yo Gabba Goes Geek)
I had a rough day yesterday, TV wise. I finished off the last episode of Veronica Mars at the gym in the morning. This turned out to be a fantastic show that critics absolutely loved but went the way of Arrested Development, etc. (Except I can’t complain because I never watched it when it was initially on TV either.) I strongly recommend this series.
Then I watched the series finale of the Shield- absolutely amazing. Talk about staying true to the characters, theme, and entire premise of the show. The Wire is the best show of all time because it was true to life and true to the characters, but the Shield really vaulted itself up the list into the coveted YGG top 10 with that finale. It was like the creators knew from episode 1 where this would end. I recall the heinous act our protagonist Vic Mackey commits in episode 1 and thinking, this show has to be a mini-series because it can’t go on. Instead, it carried this story through, and the consequences of this act hit home hard in the finale. The show had a few lurches and a digressions, but overall, there was a strong central arc. I loved this show, especially because of the ending.
IMHO, the importance of a perfect ending to a show’s legacy cannot be understated. Sopranos was a top 10 show, but it meandered too long and then told the viewers to fuck off for complaining and as punishment, wouldn’t even end the show . Artistic? perhaps. Good? Hell, no. Battlestar Galactica may make it; the first two seasons clearly merit classic status, but the ending so far is spotty. Here’s hoping for a good conclusion. Ditto with Deadwood. Six Feet Under was pretty weak by the end, but its ending was very strong, vaulting it into the top 25.
Even worse than a bad ending is the lack of an ending. All shows end (except ER, apparently, or maybe it did, I don’t know), but if you don’t know where it is going to end, the show will eventually suck (see, ER). Lost was heading down this path and the creators wisely gave an ultimatum to the network and said, we need a date certain to tie this up, and the network agreed. Lost is back on track. We’ll see how they end it, but chances are it will finish in the much coveted YGG top 10. Heroes had an outside shot after season 1, but they got so greedy to spin off series and characters, that it is now comically bad (pun intended). Clearly, to be a great TV show, you need an ending in sight and you need the entire series to move toward that ending, maybe not directly, but in some manner. Sticking with the comic theme, it’s the difference between Watchmen and Spiderman. One is a classic that sticks with you, the other is popular and may have some neat storylines between the 800 comics and 20 movies and TV shows, but it is not a classic.
Moral of the story is to have an ending in sight and aim the entire series toward it. Otherwise, the cracks will eventually show. The BBC caught onto this pretty early on, and now the US viewers (if not the networks) are following suit. BBC’s Life on Mars was a pretty good show with an absolutely amazing ending- goes to top 10. Had that show dragged on for three extra seasons and then ended like that, it would have been miserable. (Tellingly, that is probably what the US network hopes to do with its remake.)
Tying up the Veronica Mars reference with a slight digression, there is apparently a huge fandom out there crying for a movie, and it may happen. Season 3 ended without the creators not knowing if there would be a season 4, but it also ended pretty damn well. The show was about “noir in high school” (and then college in season 3), and the ending was pure noir. I’d like to give the creators a shot at tying everything up neatly, but given the themes and character, I’m not sure it didn’t end pretty damn well. (Firefly is a good analogy, it was a very good show, but its lack of conclusion due to early cancellation hurt it. The movie tied up a lot of loose ends.) I'm not a big fan of ending a show with a movie. X-Files was pretty weak (although I wasn't a big fan of the show either. I'll give Sex and the City some props for doing what it did, but again, not a big fan of the show or movie.)
Without further ado, the YGG Top 10 One Hour Dramas…obviously slanted to modern TV because TV is simply better today. Also subject to revision since I’m doing this off the top of my head while at work. Asterisks mean the series has not ended, and thus, could move up or down.
1. Wire
2. Battlestar Galactica*
3. Buffy the Vampire Slayer
4. The Shield
5. Veronica Mars
6. Lost
7. Dexter*/Sopranos (tie)
8. Rescue Me*
9. Deadwood*
10. Rome/Life on Mars (BBC version) (tie)
Then I watched the series finale of the Shield- absolutely amazing. Talk about staying true to the characters, theme, and entire premise of the show. The Wire is the best show of all time because it was true to life and true to the characters, but the Shield really vaulted itself up the list into the coveted YGG top 10 with that finale. It was like the creators knew from episode 1 where this would end. I recall the heinous act our protagonist Vic Mackey commits in episode 1 and thinking, this show has to be a mini-series because it can’t go on. Instead, it carried this story through, and the consequences of this act hit home hard in the finale. The show had a few lurches and a digressions, but overall, there was a strong central arc. I loved this show, especially because of the ending.
IMHO, the importance of a perfect ending to a show’s legacy cannot be understated. Sopranos was a top 10 show, but it meandered too long and then told the viewers to fuck off for complaining and as punishment, wouldn’t even end the show . Artistic? perhaps. Good? Hell, no. Battlestar Galactica may make it; the first two seasons clearly merit classic status, but the ending so far is spotty. Here’s hoping for a good conclusion. Ditto with Deadwood. Six Feet Under was pretty weak by the end, but its ending was very strong, vaulting it into the top 25.
Even worse than a bad ending is the lack of an ending. All shows end (except ER, apparently, or maybe it did, I don’t know), but if you don’t know where it is going to end, the show will eventually suck (see, ER). Lost was heading down this path and the creators wisely gave an ultimatum to the network and said, we need a date certain to tie this up, and the network agreed. Lost is back on track. We’ll see how they end it, but chances are it will finish in the much coveted YGG top 10. Heroes had an outside shot after season 1, but they got so greedy to spin off series and characters, that it is now comically bad (pun intended). Clearly, to be a great TV show, you need an ending in sight and you need the entire series to move toward that ending, maybe not directly, but in some manner. Sticking with the comic theme, it’s the difference between Watchmen and Spiderman. One is a classic that sticks with you, the other is popular and may have some neat storylines between the 800 comics and 20 movies and TV shows, but it is not a classic.
Moral of the story is to have an ending in sight and aim the entire series toward it. Otherwise, the cracks will eventually show. The BBC caught onto this pretty early on, and now the US viewers (if not the networks) are following suit. BBC’s Life on Mars was a pretty good show with an absolutely amazing ending- goes to top 10. Had that show dragged on for three extra seasons and then ended like that, it would have been miserable. (Tellingly, that is probably what the US network hopes to do with its remake.)
Tying up the Veronica Mars reference with a slight digression, there is apparently a huge fandom out there crying for a movie, and it may happen. Season 3 ended without the creators not knowing if there would be a season 4, but it also ended pretty damn well. The show was about “noir in high school” (and then college in season 3), and the ending was pure noir. I’d like to give the creators a shot at tying everything up neatly, but given the themes and character, I’m not sure it didn’t end pretty damn well. (Firefly is a good analogy, it was a very good show, but its lack of conclusion due to early cancellation hurt it. The movie tied up a lot of loose ends.) I'm not a big fan of ending a show with a movie. X-Files was pretty weak (although I wasn't a big fan of the show either. I'll give Sex and the City some props for doing what it did, but again, not a big fan of the show or movie.)
Without further ado, the YGG Top 10 One Hour Dramas…obviously slanted to modern TV because TV is simply better today. Also subject to revision since I’m doing this off the top of my head while at work. Asterisks mean the series has not ended, and thus, could move up or down.
1. Wire
2. Battlestar Galactica*
3. Buffy the Vampire Slayer
4. The Shield
5. Veronica Mars
6. Lost
7. Dexter*/Sopranos (tie)
8. Rescue Me*
9. Deadwood*
10. Rome/Life on Mars (BBC version) (tie)
Free Market Utopia
The conventional wisdom on KP seems to be that individuals are better suited to efficiently allocate their wealth than the Federal Government. I submit that if you goal is to maximize individual utility, KP is right. If, however, your goals are to help the economy to regain its feet and to foster long-term economic growth, then KP is wrong.
Maximizing Individual Utility
If there is one thing that Americans do particularly well, it's doing stuff that is going to make them feel good. Americans are self interested machines, both rapacious and ruthlessly efficient. We see that in the Country's spending trends. For example, as the US's coffee pallet has become more refined, our need for fine coffee outlets has increased dramatically. As a result, we have channeled our dollars and focused our spending to facilitate the creation of a vast, private coffee delivery infrastructure never thought possible in this country. Our Starbucks-to-consumer ratio that is the envy of the java swilling world.
Similarly, many Americans are exceptionally good at making money. Eschewing such antiquated asset valuation models like the CAPM, our brave equity warriors learned that intrinsic asset value is much less important that perceived value. Of course, the obviously excessive P/E rations of the .com era served to stem some of the irrational exuberance inherent to the greater fool model. Thus, traders came to rely upon delicate, intricate, and sophisticated computer models put together by some of the best quants money could buy. The realities of stated income loans, interest-only ARMs, and refinance opportunities without end took a back seat to the highly crafted superior wisdom bestowed upon the few by their eight flat panel monitor arrays: these were worth something and there was money to be made.
But even those Americans who may not be financial wizards know how to make for a happy holiday. Both parents and their kids can recite from memory the relative merits of newest generation of ipod nanos when compared to say, the Zune or even the Touch. Both are probably aware of the new "it" toy, i.e. that toy which is most calculated to bring delight to the kids and make them the envy of their classmates. Never mind if the kid's 529 hasn't seen a contribution in 18 months. Never mind if you have to finance the purchase. It's the holidays: a time during which we are all entitled to a little joy.
Okay, you get the point. The truth is that people aren't even good at maximizing their own individual long term utility. If behavioral economics has shown us anything, it's that people will usually take the quick payoff at the expense of greater reward in the future. CEOs do it. Traders do it. Everyone does it. Compounding the issue is that people, at times, don't even know what will make them happy. They underestimate the utility of future rewards and over estimate the pain of certain trade offs. Sometimes, it's not their fault - they lack sufficient information about their consequences of their choices.
The Truth
And here is ugly truth for all of those libertarians who want to live in a country of hundreds of millions: people make bad decisions and do it often. Efficient market theories assume perfect information and rational actors. Neither exist nor will they ever exist. Dreams of unfettered markets self-regulation are as unrealistic and as Utopian as anything dreamt up by the left.
Case in point: civil suits. Civil litigation is the ultimate in open market, government-free regulation. Someone rips you off or sells you a bum steer - don't go to government for help! Rather, settle the matter one-on-one, citizen-to-citizen before a neutral with a jury of your rational-acting, efficiently resource-allocating peers. Worried that some new food additive might cause cancer? Why wait for the government to waste millions of taxpayer dollars or burden industry with even more regulations when you can rely upon private individuals using private funds to research the issue and arrive at an answer? Do you think private corporations have a duty to make their products safer with newfangled improvements like seat belts? Why wait for government to decide the issue when you can quickly create an economic incentive for companies to behave responsively.
The truth is that every single one of KP's so called free market proponents would love nothing more than use more government regulation to reign in the US plaintiffs' bar. They would love to rip apart privately-negotiated contingency fee agreements and to prevent average Americans from playing their role in the resolution of private disputes. Somehow the very same people that libertarians believe should make their own decisions about savings, retirement, insurance, and capital investment become blithering idiots once they step into the jury box.
Even with government assistance, the markets failed to allocate sufficient investment in infrastructure and growth to tackle issues such as energy independence, math & science education, and basic road maintenance. Take energy independence for example. The markets failed us in the 1970's. After the embargo and after the Reagan administration took Jimmy Carter's solar panels off the White House's roof, the private failed to allocate sufficient resources to prevent future shocks. Even after 9/11, SUV sales continued to rise in the US. Neither the public nor US industry were committed to doing what needed to be done in order to properly tackle the issues.
I will acknowledge that a number of externatilites may distort the energy markets, so it's not a "pure" example. But we have one example of a regulation-free market: CDSs. The government was actually prohibited from regulating this market. Look where that got us.
Maximizing Individual Utility
If there is one thing that Americans do particularly well, it's doing stuff that is going to make them feel good. Americans are self interested machines, both rapacious and ruthlessly efficient. We see that in the Country's spending trends. For example, as the US's coffee pallet has become more refined, our need for fine coffee outlets has increased dramatically. As a result, we have channeled our dollars and focused our spending to facilitate the creation of a vast, private coffee delivery infrastructure never thought possible in this country. Our Starbucks-to-consumer ratio that is the envy of the java swilling world.
Similarly, many Americans are exceptionally good at making money. Eschewing such antiquated asset valuation models like the CAPM, our brave equity warriors learned that intrinsic asset value is much less important that perceived value. Of course, the obviously excessive P/E rations of the .com era served to stem some of the irrational exuberance inherent to the greater fool model. Thus, traders came to rely upon delicate, intricate, and sophisticated computer models put together by some of the best quants money could buy. The realities of stated income loans, interest-only ARMs, and refinance opportunities without end took a back seat to the highly crafted superior wisdom bestowed upon the few by their eight flat panel monitor arrays: these were worth something and there was money to be made.
But even those Americans who may not be financial wizards know how to make for a happy holiday. Both parents and their kids can recite from memory the relative merits of newest generation of ipod nanos when compared to say, the Zune or even the Touch. Both are probably aware of the new "it" toy, i.e. that toy which is most calculated to bring delight to the kids and make them the envy of their classmates. Never mind if the kid's 529 hasn't seen a contribution in 18 months. Never mind if you have to finance the purchase. It's the holidays: a time during which we are all entitled to a little joy.
Okay, you get the point. The truth is that people aren't even good at maximizing their own individual long term utility. If behavioral economics has shown us anything, it's that people will usually take the quick payoff at the expense of greater reward in the future. CEOs do it. Traders do it. Everyone does it. Compounding the issue is that people, at times, don't even know what will make them happy. They underestimate the utility of future rewards and over estimate the pain of certain trade offs. Sometimes, it's not their fault - they lack sufficient information about their consequences of their choices.
The Truth
And here is ugly truth for all of those libertarians who want to live in a country of hundreds of millions: people make bad decisions and do it often. Efficient market theories assume perfect information and rational actors. Neither exist nor will they ever exist. Dreams of unfettered markets self-regulation are as unrealistic and as Utopian as anything dreamt up by the left.
Case in point: civil suits. Civil litigation is the ultimate in open market, government-free regulation. Someone rips you off or sells you a bum steer - don't go to government for help! Rather, settle the matter one-on-one, citizen-to-citizen before a neutral with a jury of your rational-acting, efficiently resource-allocating peers. Worried that some new food additive might cause cancer? Why wait for the government to waste millions of taxpayer dollars or burden industry with even more regulations when you can rely upon private individuals using private funds to research the issue and arrive at an answer? Do you think private corporations have a duty to make their products safer with newfangled improvements like seat belts? Why wait for government to decide the issue when you can quickly create an economic incentive for companies to behave responsively.
The truth is that every single one of KP's so called free market proponents would love nothing more than use more government regulation to reign in the US plaintiffs' bar. They would love to rip apart privately-negotiated contingency fee agreements and to prevent average Americans from playing their role in the resolution of private disputes. Somehow the very same people that libertarians believe should make their own decisions about savings, retirement, insurance, and capital investment become blithering idiots once they step into the jury box.
Even with government assistance, the markets failed to allocate sufficient investment in infrastructure and growth to tackle issues such as energy independence, math & science education, and basic road maintenance. Take energy independence for example. The markets failed us in the 1970's. After the embargo and after the Reagan administration took Jimmy Carter's solar panels off the White House's roof, the private failed to allocate sufficient resources to prevent future shocks. Even after 9/11, SUV sales continued to rise in the US. Neither the public nor US industry were committed to doing what needed to be done in order to properly tackle the issues.
I will acknowledge that a number of externatilites may distort the energy markets, so it's not a "pure" example. But we have one example of a regulation-free market: CDSs. The government was actually prohibited from regulating this market. Look where that got us.
Freakonomics does Ron Paul
If Ron Paul is still a bit of a mystery to you or just seems too wacky, check out this interview with the NYT Web column, Freakonomics.
Tuesday, November 25, 2008
Tin Foil, Part Deux
Traders are big on conspiracies. We are endlessly shuffling rumors about who is doing what and why, with the recent financial turmoil and fickle bailout process (AIG saved, Lehman dead) giving us ample red meat on which to chew.
So one of my fellow traders suggested I look at this video about the Kennedy assassination and a link to the Bush family. Ridiculous? Seemed so, but this is a very well-documented video, and it makes some pretty compelling arguments. In any case, it strikes me as something KP could sink its collective teeth into.
Like Loose Change, which was mentioned in GBB's Mark Cuban article, I assume there are strong rebuttals to some of the arguments in the video, but I haven't seen them yet.
Regardless, it does makes for some thought-provoking watching.
So one of my fellow traders suggested I look at this video about the Kennedy assassination and a link to the Bush family. Ridiculous? Seemed so, but this is a very well-documented video, and it makes some pretty compelling arguments. In any case, it strikes me as something KP could sink its collective teeth into.
Like Loose Change, which was mentioned in GBB's Mark Cuban article, I assume there are strong rebuttals to some of the arguments in the video, but I haven't seen them yet.
Regardless, it does makes for some thought-provoking watching.
Monday, November 24, 2008
Wow, a media organization doing actual journalism!
I missed the first episode of the IFC media project, but as a frequent trasher of the MSM, I am hoping to catch the rest of the series. It's nice to see at least one news organization doing its job.
Anyone who still thinks the U.S. government is a champion of the people and is stalwartly striving to better their situation is absolutely deluding themselves. One might argue the Obama administration will act differently, but with many of the same actors taking starring roles, I don't believe it. The looters might have different names, but they will be looters just the same.
To those impressed with my stylish tin foil hat, may I recommend the film Zeitgeist as a good starting point. Some of its suggestions are outlandish and really fringe, but the stuff about banking has a solid basis.
Financial news organisation Bloomberg has requested the details of who the US
Federal Reserve is lending its trillion dollar bailout cash to under the Freedom
of Information Act, as well as suing the Fed in a bid to force disclosure.
Anyone who still thinks the U.S. government is a champion of the people and is stalwartly striving to better their situation is absolutely deluding themselves. One might argue the Obama administration will act differently, but with many of the same actors taking starring roles, I don't believe it. The looters might have different names, but they will be looters just the same.
To those impressed with my stylish tin foil hat, may I recommend the film Zeitgeist as a good starting point. Some of its suggestions are outlandish and really fringe, but the stuff about banking has a solid basis.
Where's the change?
I thought Obama's whole raison d'etre was bringing change to Washington. So what's with the crew of ex-Clinton cabinet members parading into his administration?
Lawrence Summers is my favorite. For as much as Obama bashed Wall Street, to bring in Summers is a bit breathtaking. He currently is an advisor for a major hedge fund and was one of the architects of the current mess, thwarting the few reasonable attempts that were made to reform some of the most dangerous markets.
I had this vision of Obama bringing in a whole bunch of new faces, but apparently my few days of optimism got the better of my normal cynical, but apparently more accurate, judgement.
Update: An echo of my thoughts here.
Lawrence Summers is my favorite. For as much as Obama bashed Wall Street, to bring in Summers is a bit breathtaking. He currently is an advisor for a major hedge fund and was one of the architects of the current mess, thwarting the few reasonable attempts that were made to reform some of the most dangerous markets.
I had this vision of Obama bringing in a whole bunch of new faces, but apparently my few days of optimism got the better of my normal cynical, but apparently more accurate, judgement.
Update: An echo of my thoughts here.
Tin Foil Moment
As you guys know, I am rather fond of making wacky and worrisome predictions, so I am going to put on my tin foil hat for a moment to make a prediction for next year.
I am sure you all recall Biden's speech where he mentions a challenging moment that Obama will face early in his term. Fully cognizant that this is an otherwise low probability event, and as such, I am probably making a fool of myself, I am putting it on the record now that I think it will be a major currency crisis involving a collapse in the dollar and/or a collapse in the price of Treasuries. It will be signficant enough to put the survival of the dollar as a reserve currency in doubt and will create severe dislocations throughout the economy, including likely shortages of some goods.
I'll further posit that the government will use the crisis to scare Americans into an otherwise unwise set of policies, like the Patriot Act following 9/11. But considering that pretty much every crisis of the last decade has been greeted with idiotic policies, if an event occurs, foolish legislation seems certain to follow.
I am sure you all recall Biden's speech where he mentions a challenging moment that Obama will face early in his term. Fully cognizant that this is an otherwise low probability event, and as such, I am probably making a fool of myself, I am putting it on the record now that I think it will be a major currency crisis involving a collapse in the dollar and/or a collapse in the price of Treasuries. It will be signficant enough to put the survival of the dollar as a reserve currency in doubt and will create severe dislocations throughout the economy, including likely shortages of some goods.
I'll further posit that the government will use the crisis to scare Americans into an otherwise unwise set of policies, like the Patriot Act following 9/11. But considering that pretty much every crisis of the last decade has been greeted with idiotic policies, if an event occurs, foolish legislation seems certain to follow.
Sunday, November 23, 2008
Second-Order Economic Effects
One thing I find so disconcerting in most economic discussions taking place right now is the lack of consideration for the second-order effects of policies. Almost every government policy that effects economic policy has some unintended consequence that creates new economic distortions which then create new problems which are then inevitably treated with a new distortive policy, and so if goes.
To that end, it was nice to see an article that discusses one of those distortions.
The truth is that most economic behavior can be distilled to three principles. One, people generally act in their perceived self-interest. Two, people respond to incentives. Three, people are smart enough to apply some level of game theory to the first two principles. That third principle is the source of second-order effects, and it is remarkable how little the third principle is given consideration when policy makers form policy.
Unfortunately, Keynesian thinking has become so ingrained in the government and the media tha the first reaction to any problem is to assume reflexively that a new government policy is needed to combat that problem. Often this policy comes in the form of some new regulation, but while it might feel emotionally satisfying to think that there is an office full of wizened gurus somewhere able to create perfect policy, it is impossible. Not just improbable, but impossible, as any distortive policy will have distortive second-order effects. Of course, even if it was possible, there's not much evidence the government is run by wizened gurus.
To that end, it was nice to see an article that discusses one of those distortions.
The truth is that most economic behavior can be distilled to three principles. One, people generally act in their perceived self-interest. Two, people respond to incentives. Three, people are smart enough to apply some level of game theory to the first two principles. That third principle is the source of second-order effects, and it is remarkable how little the third principle is given consideration when policy makers form policy.
Unfortunately, Keynesian thinking has become so ingrained in the government and the media tha the first reaction to any problem is to assume reflexively that a new government policy is needed to combat that problem. Often this policy comes in the form of some new regulation, but while it might feel emotionally satisfying to think that there is an office full of wizened gurus somewhere able to create perfect policy, it is impossible. Not just improbable, but impossible, as any distortive policy will have distortive second-order effects. Of course, even if it was possible, there's not much evidence the government is run by wizened gurus.
Thursday, November 20, 2008
Cautious Optimism
I was shocked that Waxman's power play worked, and I feel about it somewhat the same way I feel about Obama winning (minus the history, eloquence, and warm fuzzies associated with Obama). On paper, this should be a good thing; there is no question we needed change, and the last thing we need is someone cozy with Detroit running the House Energy Commission. Still, is Waxman a bit too far left? He is pals with Pelosi, which doesn't give me comfort. Those who know YGG know that I am partial to Green, so if we are going to veer left, I prefer it in this arena. However, I think there is a tremendous opportunity to productively couple the green agenda with good old American capitalism, and I'm not sure Mr. Waxman and Ms. Pelosi are the best fit for that.
Bioethics
An article from the NY Times talks about the potential to regenerate the wooly mammoth with DNA from museum pieces and some pretty hopped-up sequencing machines and techniques. It also makes brief mention of the possibility of bringing back Neanderthal.
First, I'd like a KP reality check here. Some of us are in a better position to answer the question as to whether this is even remotely possible. Please do.
Second, I am not sure how I feel about the Neanderthal idea. On the one hand, it'd be pretty cool just to be able to do it. The issue then becomes ethical/moral. Would Neanderthals be considered people? What rights would they have? I know this sounds terrible but.. could we...ahem... make use of them? If they are considered people, I guess that knocks out some of the potential...er...uses, but if they are not people, just think about it. Maybe a little scary.
Anyway, let's not get ahead of ourselves. Can it be done? If so, should it? Discuss.
First, I'd like a KP reality check here. Some of us are in a better position to answer the question as to whether this is even remotely possible. Please do.
Second, I am not sure how I feel about the Neanderthal idea. On the one hand, it'd be pretty cool just to be able to do it. The issue then becomes ethical/moral. Would Neanderthals be considered people? What rights would they have? I know this sounds terrible but.. could we...ahem... make use of them? If they are considered people, I guess that knocks out some of the potential...er...uses, but if they are not people, just think about it. Maybe a little scary.
Anyway, let's not get ahead of ourselves. Can it be done? If so, should it? Discuss.
Wednesday, November 19, 2008
Tuesday, November 18, 2008
The Big 3 Auto Makers and Innovation
Mish has a typically good and fiery rant, but I found the most interesting part of it to be the video below...
Watch the video here
It's only three minutes. Not only is it a pretty cool video, but it proves that companies like Ford can be incredibly innovative. Just not on American soil.
A bankruptcy of these companies would be a blessing. Although it would wipe out shareholders and create enormous pain for the U.S. government through the PBGC, the restructured company would have the chance to innovate again. Maybe even in America. Any bailout will just prolong the pain - it is basically a transfer of money from taxpayers to UAW workers and pensioners. One could argue that the government should be helping out these parties, but if you insisted on the POV, it would frankly be better to just write workers a check, rather than flush the money through the existing wealth-destroying engines that are the Big 3.
Watch the video here
It's only three minutes. Not only is it a pretty cool video, but it proves that companies like Ford can be incredibly innovative. Just not on American soil.
A bankruptcy of these companies would be a blessing. Although it would wipe out shareholders and create enormous pain for the U.S. government through the PBGC, the restructured company would have the chance to innovate again. Maybe even in America. Any bailout will just prolong the pain - it is basically a transfer of money from taxpayers to UAW workers and pensioners. One could argue that the government should be helping out these parties, but if you insisted on the POV, it would frankly be better to just write workers a check, rather than flush the money through the existing wealth-destroying engines that are the Big 3.
Monday, November 17, 2008
Et tu, Cubes?
Perhaps I've let my Mavs fandom bias me, but I've always felt Mark Cuban was a decent, honorable "Joe Six Pack" kind of guy who happened to be a billionaire. His blog was regularly, refreshingly honest. How many fans wouldn't love to know their owner's thoughts and views? And how many can say they have exchanged multiple e-mails with their team's owner. So with that background, I'm a bit disappointed, but I'm not necessarily shocked or upset, by the latest.
If the allegations are true, he must have known that what he was doing was illegal. Still, I'm not overly upset. Its an interesting scenario in which the company may have shared the info in order to entrap him from selling his stocks, likely knowing Cuban wouldn't be down with the PIPE but also likely knowing he couldn't sell his massive share of their company once they told him. I'm also not shocked because no one has ever accused Cuban of stoicism and calmness, so I could see a scenario where he got so pissed about the "entrapment," or alternatively, the stupidity of the plan to approach him, that he said, "Screw it. Sell." Well, them's the breaks, and now he has to pay the PIPEr. The question is whether he should face criminal charges like Martha or just pay the heavy civil penalty. I've always hated the NBA's stupid, self interested rules protecting incompetent refs which make every game essentially a crapshoot, and I've loved Cuban's attempts to tear these down....a losing battle except from a PR stance. But the SEC is a different story, and this appears to be a losing battle from a PR stance too. The SEC's rules are there for a reason, so if the allegations are true, I'm disappointed in my man. I think he should come clean and pay the heavy penalty, but it doesn't seem prison time is warranted without a cover up ala Martha.
The ones who will truly be hurt are Cubbies fans who now may lose out on a dynamic, fan based, winning is everything owner. MLB prefers its white collar criminals to be stodgier, and this will be the excuse for Selig to neg Cuban's offer.
If the allegations are true, he must have known that what he was doing was illegal. Still, I'm not overly upset. Its an interesting scenario in which the company may have shared the info in order to entrap him from selling his stocks, likely knowing Cuban wouldn't be down with the PIPE but also likely knowing he couldn't sell his massive share of their company once they told him. I'm also not shocked because no one has ever accused Cuban of stoicism and calmness, so I could see a scenario where he got so pissed about the "entrapment," or alternatively, the stupidity of the plan to approach him, that he said, "Screw it. Sell." Well, them's the breaks, and now he has to pay the PIPEr. The question is whether he should face criminal charges like Martha or just pay the heavy civil penalty. I've always hated the NBA's stupid, self interested rules protecting incompetent refs which make every game essentially a crapshoot, and I've loved Cuban's attempts to tear these down....a losing battle except from a PR stance. But the SEC is a different story, and this appears to be a losing battle from a PR stance too. The SEC's rules are there for a reason, so if the allegations are true, I'm disappointed in my man. I think he should come clean and pay the heavy penalty, but it doesn't seem prison time is warranted without a cover up ala Martha.
The ones who will truly be hurt are Cubbies fans who now may lose out on a dynamic, fan based, winning is everything owner. MLB prefers its white collar criminals to be stodgier, and this will be the excuse for Selig to neg Cuban's offer.
Saturday, November 15, 2008
Fire: The Next Sharp Stick?
A play in one act, courtesy of McSweeney's:
FIRE:
A Conversation
FIRE:
THE NEXT
SHARP STICK?
A Conversation
Among Cavemen.
BY JOHN HODGMAN
- - - -
John Hodgman, who has been a McSweeney's friend and contributor since our first issue, is on tour now for his new book, More Information Than You Require. Today, in celebration of the book, we're running the second thing he wrote for us, "Fire: The Next Sharp Stick?," which appeared in McSweeney's Issue 2. John will be at the Echoplex in Los Angeles tonight, along with troubadours John Roderick (of the Long Winters) and Jonathan Coulton (of Massachusetts).
- - - -
Setting: The offices of Ten Men Who Help Each Other But Are Not Brothers, a firm located near the River That's Not as Wide as the Really Wide River.
(ONE WHO HELPS THE HAIRY ONE is seated, going over some notes. Enter MAKER OF FIRE.)
ONE: (Standing.) Hey, it's good to see you. Thanks for coming by.
MAKER: Thank you, One Who Helps the Hairy One. I'm sorry I'm late. Somehow I ended up by the Really Wide River.
ONE: Really? When we met by the Sticky Tree, I thought I said near the River That's Not as Wide as the Really Wide River.
MAKER: That is what you said. I must have gotten turned around at the Sharp Shells.
ONE: Oh, yeah. That happens a lot.
MAKER: I must have just spaced.
ONE: No harm done. Do you want a Stick That Tastes Good to Gnaw On?
MAKER: No, thanks. I just had one. I'm a bear if I don't have one before Hot Part of the Day.
ONE: (Doesn't understand, a little afraid.) Excuse me?
MAKER: (Laughs.) Sorry. Sorry. I'm not actually a bear. I just mean that I'm like a bear if I don't have a Stick That Tastes Good.
ONE: You pretend to be a bear?
MAKER: No. I feel like a bear feels when he wakes up. You know, grumpy, impatient.
ONE: Do you become a bear when you say it?
MAKER: No. I just say it.
ONE: (Still doesn't understand.) Oh. OK. I see. Well, in a way, that's exactly why I asked you to come down here. As you know, Ten Men Who Help Each Other But Are Not Brothers is a very old and established firm.
MAKER: I do know.
ONE: I mean, for me, it's a real honor to be associated with the Hairy One and to be his helper. The Hairy One's a visionary, you know. But he's—how do I say it? He's older than the Old One, and, as a result, I think that Ten Men needs to think about its future and think about how it can stay competitive in changing times.
MAKER: Naturally, I agree.
ONE: When we met by the Sticky Tree, I immediately thought, Here's a guy who's ahead of the curve. Here's a guy who maybe can help Ten Men make the transition into That Day That Isn't This Day but Also Isn't the Day Before or the Day Before That.
MAKER: At the Shallow Pond With a Terrible Odor, we call it "tomorrow."
ONE: Really? "Tomorrow"? Very clever. But the point is, we were talking about fire, and it seemed to me after we spoke that this could be just the thing to carry Ten Men into "tomorrow."
MAKER: Well, there's no question that fire has a lot to offer any firm, Ten Men included, and I'm happy to show you why. But I think you need to think seriously about what your fire needs are. The truth is, this technology is so revolutionary that I think the real question won't be whether fire is right for Ten Men but whether Ten Men is ready for fire.
ONE: (Nodding seriously.) True. True. Well, what I have planned is pretty informal, just a meeting of the minds, so to speak. I've asked the Hairy One to sit in on this meeting, since he'll have to approve anything that might happen Not Now but Another Time. You may have to take it a little slow with him—he's a bit of a Neanderthal when it comes to this sort of thing, if you know what I mean.
MAKER: HA HA HA HA HA HA!
ONE: HA HA HA HA HA HA!
(Enter the HAIRY ONE, carrying a sharp stick. ONE immediately stops laughing and falls to the floor completely prostrate, arms and legs spread, face down. MAKER smirks and does not move.)
ONE: (Speaking into the floor.) Oh, hey, Hairy One, how are you? Thanks for coming by.
HAIRY ONE: (Grunts to MAKER.) Where are the Sticks That Taste Good?
MAKER: I think they're over there.
(HAIRY ONE crosses to side table to get a stick and begins gnawing it.)
ONE: (Starting to raise himself.) I just gathered them, Hairy One, so they're fresh. (Pauses. Looks to MAKER.) You know me: I'm a bear if I don't have one before the Time You Tell Us When We Can Eat.
HAIRY ONE: (Stick drops from mouth in fear.) BEAR! BEAR! (Raises sharp stick and crosses to begin hitting ONE with it.)
ONE: No! Not bear! Not bear!
MAKER: It's just a saying.
ONE: It's just a saying!
(HAIRY ONE stops his attack and stares at both of them suspiciously.)
ONE: (Rising, then sitting down.) I'm not a bear.
MAKER: It's just something that he said.
HAIRY ONE: (Completely indifferent.) Whatever. (Retrieves stick and sits down at head of table.)
ONE: Hairy One, Maker of Fire. Maker of Fire, the Hairy One.
MAKER: My pleasure, Hairy One. I've followed your work with Ten Men for a long time. It's a remarkable firm.
HAIRY ONE: So you're the one with the fire?
MAKER: Yes.
HAIRY ONE: Is it here?
MAKER: Well, no.
HAIRY ONE: Where is it?
MAKER: Well, in a sense, Hairy One, fire is everywhere. Rather than being an object, say, like your sharp stick, it's really a process, so it can't really be said to exist anywhere. In a sense, fire exists in its own imaginary, virtual space, where we can only talk about what is not fire and what might become fire.
HAIRY ONE: Whoa whoa whoa! English, please!
ONE: I think that what the Maker of Fire is trying to say is that—and let me know if I have it right—while I may have one fire, and you may have another fire in another place, and the One Who Helps the Hairy One may be planning to make a fire, the truth is that it's all fire. It's all the same thing. It's all fire.
MAKER: That's true, in a rudimentary sense, but for our purposes it'll do fine.
ONE: What's great about fire, Hairy One, is that it combines many things in one. Light, heat, pain—all in one. It's all those things. It's multi-thing.
HAIRY ONE: I thought you said it was all the same thing.
ONE: It is!
HAIRY ONE: But now you say it's multi-thing?
(ONE is confused, looks to MAKER OF FIRE.)
MAKER: It is and it isn't. It depends on how you define "thing."
HAIRY ONE: And where does the bear come in?
MAKER: It doesn't.
ONE: That was just something I said.
HAIRY ONE: I get that, OK? I just wanted to know if a bear was involved in fire or not.
MAKER: It isn't.
HAIRY ONE: Good.
MAKER: See, the thing about fire is that it's totally interactive. Fire isn't a bear, but if you put fire on a bear, then the bear becomes fire. It's completely responsive to your needs at a given time, reacting specifically to your fuel input and usage paradigm ...
HAIRY ONE: OK, stop right there. Here's the thing. I've heard a lot about this fire already. Everyone is saying how shiny it is and how flickery it is. But you have to agree that that's very specialized. I know you folks at the Shallow Pond With a Terrible Odor are making a whole big deal about this, but we here by the River That's Not as Wide as the Really Wide River, well, we're simple folk. We want to know: what can it do for us? And the thing is, until people really figure out how fire can be used, I just can't see it becoming a staple of everyday life.
ONE: If I can just jump in here for a moment, Hairy One, think of it like the sharp stick. You know, many, many, many nights ago, everyone was using a blunt stick for clubbing and for poking at things we had no name for. We didn't even call it "blunt stick" back then. We just called it "stick."
MAKER: Exactly.
ONE: And then someone came along and said, Hey, let's take this rock and push it on the stick and remove parts of the stick at one end until it's different than it was before. Everyone called this someone Crazy One, until Crazy One took the sharp stick and put it in the Loud One's eye.
HAIRY ONE: Someone didn't do that. I did.
ONE: That's what I'm saying. Once we had the sharp stick, the Loud One became One Eye, and the Crazy One became the Big Hairy One.
HAIRY ONE: I'm the Big Hairy One.
ONE: That's what I'm saying. You don't want to be the One Who Didn't Like Fire. Fire is the sharp stick of ... of ... tomorrow.
HAIRY ONE: What's "tomorrow"?
MAKER: Well, that's not entirely a correct analogy, since fire can't really be compared to anything that isn't fire, but ...
HAIRY ONE: (To ONE.) OK, but I think you're both overlooking an important thing: fire is very, very scary. Even when sharp stick got big, there were a lot of people still using blunt stick because they knew what blunt stick could do. People still love their blunt sticks, and it is many, many days and nights later. So I can't see how this fire thing is going to work until people have a reason not to be scared.
MAKER: Well, before we go on, we all have to accept that not everything is going to appeal to Johnny Blunt Stick.
HAIRY ONE: OK, but let me tell you that it's Johnny Blunt Sticks that made Ten Men one of the top firms by the River That's Not as Wide as the Really Wide River. Johnny Blunt Sticks like me.
MAKER: Look, I didn't mean to offend anyone. Listen, I have to use the dung heap. Why don't I step out for a moment and you two can decide how you want this meeting to go. OK?
HAIRY ONE: No offense, no offense. We'll be here.
(MAKER exits.)
ONE: I'm sure he didn't mean to suggest that ...
HAIRY ONE: I don't care about that. I know how they are by the Shallow Pond. You know I've met him before?
ONE: You have?
HAIRY ONE: Sure. Many, many, many, many nights ago on a business trip. I was over by the Shallow Pond, and all the Shallow Ponders were laughing at him. You know what they used to call him? I mean, before all this "Maker of Fire" bullshit?
ONE: What?
HAIRY ONE: They used to call him the One Who Knocks Two Rocks Together Over Dry, Dead Plants.
ONE: Oh, man, really?
HAIRY ONE: He's a complete lunatic. Not just not like us—not like anybody.
ONE: But what about fire?
HAIRY ONE: Oh, he may have fire, but "Maker of Fire"? He's an idiot. Where did you meet him?
ONE: Over by the Sticky Tree. He wanted to know if Ten Men would want to give him some food and then he would give us some fire.
HAIRY ONE: He what?!
ONE: He called it "barter."
HAIRY ONE: Well, I call it bullshit. He's obviously deranged. I thought he was here to invite us to go to the Shallow Pond and kill everyone and take fire.
ONE: No, he wants to "trade."
HAIRY ONE: Now I just feel sorry for him.
(Re-enter MAKER OF FIRE.)
MAKER: Well, have you thought it over?
HAIRY ONE: Maker of Fire, you do us great honor by traveling so far to visit us two men of the Ten Men Who Help Each Other But Are Not Brothers. But until I get a sense of how fire could ever be useful I'm afraid we're just going to have to muddle along without it.
MAKER: I understand. Not all are fire-ready.
HAIRY ONE: And I'm sorry about the Johnny Blunt Stick business. Please, come over here and join hands.
(MAKER goes to join hands. The HAIRY ONE stabs him with the stick, and then beats him until he is dead.)
ONE: What are you doing?
HAIRY ONE: There, he's out of his misery, poor fellow. Now go through his skins and his magic bag.
ONE: What? Why?
HAIRY ONE: We're looking for fire, my helper! We're looking for fire!
ONE: Oh, you truly are the Wise and Big Hairy One!
FINIS
Friday, November 14, 2008
The Color of Rage
I know no one in the old KP is a fan of right-wing racism, but I think Michelle Cottle puts some of their bile in context. I'm willing to bet that some of these folks are former Democrats.
Not Fair
You know what's not fair?
Alec Baldwin used one of my favorite phrases on 30 Rock last night: "objectively awesome."
Now people will think I'm quoting him when it's really the opposite. I own that phrase!
Alec Baldwin used one of my favorite phrases on 30 Rock last night: "objectively awesome."
Now people will think I'm quoting him when it's really the opposite. I own that phrase!
Thursday, November 13, 2008
Developing the Sensible Party's founding principles
HBS's Michael Porter had an excellent piece in BusinessWeek a couple of weeks ago discussing the need for strategic planning to guide our government's economic decision making. Yes. A thousand times yes.
Instead of taking a position on a laundry list of issues, the Sensible Party needs to take a holistic, strategic view as a starting point. What should our economic strategy be? And besides economic issues, what else is important to us?
Instead of taking a position on a laundry list of issues, the Sensible Party needs to take a holistic, strategic view as a starting point. What should our economic strategy be? And besides economic issues, what else is important to us?
New York Times website: July 4, 2009
It's pretty amazing what these guys pulled together. Looks exactly like the real thing.
Wednesday, November 12, 2008
As if unions weren't bad enough already
To follow Al's last post about Detroit:
I think it's fair to say that unions have greatly contributed to the Big 3's current situation - excessive wages, pensions, etc.
They've had the same detrimental effect on public education (this is coming from the kid of two teachers no less). The lack of accountability for performance and the difficulty in firing incompetent/criminal teachers is appalling.
So now Obama wants to let unions get more power? He supports the Employee Free Choice Act (complete misnomer) - which makes it easier for unions to organize and increases penalties on employers. Sounds like a great way to jump-start the economy...
Unions had their place 80 years ago. It's time to let them die so they can't continue to hurt business and education.
I think it's fair to say that unions have greatly contributed to the Big 3's current situation - excessive wages, pensions, etc.
They've had the same detrimental effect on public education (this is coming from the kid of two teachers no less). The lack of accountability for performance and the difficulty in firing incompetent/criminal teachers is appalling.
So now Obama wants to let unions get more power? He supports the Employee Free Choice Act (complete misnomer) - which makes it easier for unions to organize and increases penalties on employers. Sounds like a great way to jump-start the economy...
Unions had their place 80 years ago. It's time to let them die so they can't continue to hurt business and education.
Loot, Baby, Loot
Aztec didn't understand my outrage at the bailout. I responded to his comment with my own comment, but here is another article that really captures the dynamic that has emerged. A choice paragraph concerning lobbying for the a piece of the bailout pie...
As bad as the original bailout plan was, this torrid scramble for money is even worse. AIG lives. Lehman dies. Is there any law, regulation, or other documented reasoning that led to this decision? No. It was the largely the whim of Bernanke, Paulson and friends. Is there any quantitative basis for the relative amounts of money that have been handed out under the TARP? No. Is any of this actually constitutional? No, probably not.
So now we have a herd of corporate pigs kicking, biting, and scratching to get at the government trough. What are the odds that the money will be doled in a way that is efficient and sensible? Zero. There will be winners and losers, and fundamental merit will have little bearing in discerning between.
Anyone interested in the long-term functioning of the U.S. as a Constitutional democracy should be concerned.
"Unfortunately, I don't have a lot of good news for them individually,"
said Jeb Mason, who as the Treasury's liaison to the business community is the
first port-of-call for lobbyists. "The government shouldn't be in the business
of picking winners and losers among industries." Mason, 32, a lanky
Texan in black cowboy boots who once worked in the White House for Karl Rove,
shook his head over the dozens of phone calls and e-mail messages he gets every
week. "I was telling a friend, 'this must have been how the Politburo felt,' "
he said.
As bad as the original bailout plan was, this torrid scramble for money is even worse. AIG lives. Lehman dies. Is there any law, regulation, or other documented reasoning that led to this decision? No. It was the largely the whim of Bernanke, Paulson and friends. Is there any quantitative basis for the relative amounts of money that have been handed out under the TARP? No. Is any of this actually constitutional? No, probably not.
So now we have a herd of corporate pigs kicking, biting, and scratching to get at the government trough. What are the odds that the money will be doled in a way that is efficient and sensible? Zero. There will be winners and losers, and fundamental merit will have little bearing in discerning between.
Anyone interested in the long-term functioning of the U.S. as a Constitutional democracy should be concerned.
What do we do with Detroit?
Obama is pushing Bush to bail out the Big 3 auto makers. Three millions lost jobs if we don't. If Bush doesn't do it, it looks like Obama/Pelosi/Reid will do it themselves. I ran across this article which quotes no less an authority than Wharton's Jeremy Siegel as saying:
What about hitting the reset button on the U.S. car industry? Wouldn't you rather spend a fraction of the money and give, say, Elon Musk's Tesla Motors some more growth capital to develop their electric battery and drivetrain and scale their production lines? Maybe force Chrysler to license Tesla's technology and produce a certain number of electric cars? After all, Silicon Valley voted for and funded Obama too.
"Any bailout of the auto industry is really a bailout for the health benefits ofSo Obama's coziness with unions comes home to roost almost immediately. And we're going to reward horrible management and institutionalized mediocrity. Are the Big 3 really "systemic" and "too big to fail?" Obama talks about using the money to "retool" them to build more fuel-efficient cars--is that really feasible, especially with the crushing union obligations? If we give them money, I hope management is summarily fired.
the UAW [United Auto Workers]. That's all it is."
What about hitting the reset button on the U.S. car industry? Wouldn't you rather spend a fraction of the money and give, say, Elon Musk's Tesla Motors some more growth capital to develop their electric battery and drivetrain and scale their production lines? Maybe force Chrysler to license Tesla's technology and produce a certain number of electric cars? After all, Silicon Valley voted for and funded Obama too.
Do these guys know what they're doing?
While they eventually received wide-ranging powers to do things like recapitalize banks, the initial strategy was to buy up troubled, "toxic" assets from financial institutions to clean up their balance sheets. That's why they named it the "Troubled Asset Relief Plan." In their testimony in front of the Senate Banking Committee, they muttered something about the government being able to help the market with "price discovery" to make these assets liquid again. Here's what I wrote in a private email thread on September 24:
There is a ton of private money that would like to buy loans on the sidelines--my company has about $2B itself. The overall estimate is in the hundreds of billions--lots of people saw this coming and raised vulture funds. The problem is matching buyers and sellers. Buyers need to buy at fire-sale prices to get returns. Sellers can't go too low and fuck up their capital ratios. It's not clear to me at all how the government buying assets at the "Hold-to-Maturity" price (whatever that is) is going to be anything less than a wholesale bailout with zero upside for anyone but the banks who made stupid investments or loans in the first place.Today Paulson announced that, well...yeah...actually, that part of the plan won't really work.
The problem I have is not with Bernanke and Paulson switching course, and I'm glad they are able to admit when they might have been wrong and something isn't working (unlike, say, Donald Rumsfeld, et al). The problem is that they don't seem to have a very good grasp for what the root causes of the problems are and/or how to devise appropriate solutions. I don't have special powers of prescience. My comments above were just a regurgitation of what everybody in the mortgage industry has been experiencing for over a year. Plus it's common sense. How did Bernanke and Paulson not realize this? They have access to any and all experts and market participants. Paulson ran Goldman Sachs for crying out loud. How is he so clueless on this point? Or was he blindly beholden to conservative ideology until he and Bush finally said, "Screw it, nationalize the whole lot of 'em?"
Come on, Barack. Bring in a pragmatist who knows what he or she is doing.
Lewis on Wall St.
Michael Lewis, of Liar's Poker fame, is back with his take on the Wall St. meltdown.
Otherwise known as looting the treasury
Just doing my normal evening reading, and I came across this fine post from Yves at Naked Capitalism. It goes into a lot of detail that might bore some of you guys, but there are two important points to take from the post.
One, as I feared, the TARP and similar government programs are becoming vehicles for connected parties to get bailed out by taxpayers on an epic scale.
Two, the MSM, caught up in the drama of home foreclosures and the stock market implosion and assuming as always that government intervention is the answer to any problem, is completely missing the story here.
The bailout is not going to fix anything fundamental. It is simply going to allow the government to select a handful of winners at the expense of countless losers, including any company considered expendable and, as always, taxpayers.
One, as I feared, the TARP and similar government programs are becoming vehicles for connected parties to get bailed out by taxpayers on an epic scale.
Two, the MSM, caught up in the drama of home foreclosures and the stock market implosion and assuming as always that government intervention is the answer to any problem, is completely missing the story here.
The bailout is not going to fix anything fundamental. It is simply going to allow the government to select a handful of winners at the expense of countless losers, including any company considered expendable and, as always, taxpayers.
Tuesday, November 11, 2008
GammaBoy Baby Break
Sorry for the absence of coffee breaks lately, but I have been on a rather intensive baby break. Mother and baby are both healthy and doing well, so I'd like to introduce KP to Daniel Christian GammaBoy Jr.
GammaBoy Jr. is eating well and seems completely content with his entry to our world. At least that was case until his father explained the likely ramifications of the latest Fannie/Freddie proposal. Daniel's reaction mirrored his father's. Like father, like son.
GammaBoy is, of course, thrilled, as evidenced by this photo of GammaBoy and his new son (with GammaBoy in requisite anonymous blogger/superhero disguise)
GammaBoy Jr. is eating well and seems completely content with his entry to our world. At least that was case until his father explained the likely ramifications of the latest Fannie/Freddie proposal. Daniel's reaction mirrored his father's. Like father, like son.
By Popular Demand
Wonkette readers have taken over the Rebuild the Party website which solicits ideas on how to rebuild the GOP and allows readers to vote on the best ones. You can see the site by clinking below.
http://ideas.rebuildtheparty.com/
You can see what the number one idea is (sorry Paultards). And in response to KP requests to post some left winger comments, I offer the following:
http://ideas.rebuildtheparty.com/
You can see what the number one idea is (sorry Paultards). And in response to KP requests to post some left winger comments, I offer the following:
- My dad once told me a story about his days spent in a bamboo hut in a makeshift prison toward the end of the War. It was the 4th of July and his spirits were very low. He wanted to be back behind the wheel of his old '61 Chevy, a beer in his hand, mom's delicate face in his lap. He began to weep. Then a guard approached, knelt, and drew in the dirt outside my father's cell a crude set of TruckNutz
- Put some Truck Nutz on the elephant.
- AN INVESTIGATOR FROM CONGRESS EMAILED MY AOL A 200 PAGE REPORT ON HOW TRUCKNUTZ ARE THE ONLY WAY TO SAVE AMERICA FROM THE SOCALIST HALF-BREAD MUSLINS THAT WILL GIVE OUR COUNTRY TO HIS PEOPLE IN THE COUNTRY OF AFRICA AFTER HE SOBERS UP FROM HIS HOUSE PARTY WITH KID N' PLAY AND TLC ON THE 21ST!!!!1111!!!!
- This is totally unscientific, but a guy I know insists that none of the GOP legislators who lost his seat in 2008 had a pair of trucknutz hanging from his SUV. Those who kept their seats did. Nuff said.
- I, Ronald Reagan, have risen from the dead to haunt all those who vote against Truck Nutz
- I can see TruckNutz from my house!
- Truck nutz is a symbal of how we're gunna take are country back from the half breed muslins
- I am bitter and I am clinging to my TRUCK NUTZ! And I am hanging them from my bible. To protect against de witches. Oh, yeah, where de witches at?
- Looking for that perfect wedding gift? Bristol and me are registered at www.trucknutz.com.
Say Thanks Today
In honor of Veterans Day I offer the quote below:
Jack Nicholson (Col. Jessup): Son, we live in a world that has walls, and those walls have to be guarded by men with guns. Whose gonna do it? You? You, Lt. Weinburg? I have more responsibility here than you could possibly fathom. You weep for Santiago, and you curse the marines. You have that luxury. You have the luxury of not knowing what I know. That Santiago's death, while tragic, probably saved lives. And that my existence, while grotesque and incomprehensible to you, saves lives. I know deep down in places you dont talk about at parties, you don't want me on that wall, you need me on that wall. We use words like honor, code, loyalty. We use these words as the backbone of a life spent defending something. You use them as a punchline. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very freedom I provide, then question the manner in which I provide it. I prefer you said thank you, and went on your way, Otherwise, I suggest you pick up a weapon, and stand to post. Either way, I don't give a damn what you think you are entitled to!
Jack Nicholson (Col. Jessup): Son, we live in a world that has walls, and those walls have to be guarded by men with guns. Whose gonna do it? You? You, Lt. Weinburg? I have more responsibility here than you could possibly fathom. You weep for Santiago, and you curse the marines. You have that luxury. You have the luxury of not knowing what I know. That Santiago's death, while tragic, probably saved lives. And that my existence, while grotesque and incomprehensible to you, saves lives. I know deep down in places you dont talk about at parties, you don't want me on that wall, you need me on that wall. We use words like honor, code, loyalty. We use these words as the backbone of a life spent defending something. You use them as a punchline. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very freedom I provide, then question the manner in which I provide it. I prefer you said thank you, and went on your way, Otherwise, I suggest you pick up a weapon, and stand to post. Either way, I don't give a damn what you think you are entitled to!
Monday, November 10, 2008
Recent Reading
Here's what the Aztec Tomb has been reading/listening to the past couple of months:
September 2008
The Universe in a Nutshell, Stephen Hawking (Audio)
Icelander, Dustin Long
World War Z, Max Brooks (Audio)
Notes on Blood Meridian, John Sepich
October 2008
Carry on Jeeves, P.G. Woodehouse (Audio)
Jazz, Geoffrey C. Ward & Ken Burns (Audio)
Obviously, the election took a toll on real reading last month. Woodehouse is fun for listening to on the run: it's light, entertaining, and meant to be delivered in an English accent. Icelander was a bit of a disappointment and not worth your time, even if you are Believer-subscribing McSweeney's lover such as myself.
September 2008
The Universe in a Nutshell, Stephen Hawking (Audio)
Icelander, Dustin Long
World War Z, Max Brooks (Audio)
Notes on Blood Meridian, John Sepich
October 2008
Carry on Jeeves, P.G. Woodehouse (Audio)
Jazz, Geoffrey C. Ward & Ken Burns (Audio)
Obviously, the election took a toll on real reading last month. Woodehouse is fun for listening to on the run: it's light, entertaining, and meant to be delivered in an English accent. Icelander was a bit of a disappointment and not worth your time, even if you are Believer-subscribing McSweeney's lover such as myself.
How much more do we have to pay?
For those who like Obama's rhetoric on taxes and hitting those who make above 250K (from Fortune Magazine, HENRY=High Earning, not rich yet):
Those that make 250K+ already get slammed, frankly as do those who make 100K+. How much more do I have to bleed for government programs?
100% Defense of "Indentured Community Service"
First time I actually get the time to write on the blog.
While I'm somewhat shocked to find I agree with Aztec, I do support Obama's idea of community service. I'm not sure that the economics work out, but in principle I think every American should do some form of service - in fact, I'd take it farther than Obama and make it mandatory, and even link it to getting access to certain benefits, a la "Starship Troopers" (not the horrible movie, the book). Admittedly extending voting priviliges to only those who have served is probably too far, but I think the concept remains sound. To me, it's not about the economic return on such a program, it's about creating a sense of service and duty within most Americans who right now take for granted the benefits we enjoy. It could be military service, Peace Corps, working for the Post Office - whatever.
And yes, I'm well aware of the irony in my conservative self being a proponent of a big government program, especially considering that I think most large government programs are inefficient as hell.
While I'm somewhat shocked to find I agree with Aztec, I do support Obama's idea of community service. I'm not sure that the economics work out, but in principle I think every American should do some form of service - in fact, I'd take it farther than Obama and make it mandatory, and even link it to getting access to certain benefits, a la "Starship Troopers" (not the horrible movie, the book). Admittedly extending voting priviliges to only those who have served is probably too far, but I think the concept remains sound. To me, it's not about the economic return on such a program, it's about creating a sense of service and duty within most Americans who right now take for granted the benefits we enjoy. It could be military service, Peace Corps, working for the Post Office - whatever.
And yes, I'm well aware of the irony in my conservative self being a proponent of a big government program, especially considering that I think most large government programs are inefficient as hell.
What Did I Tell You?
I was right about Obama's community service program. You can see the clarification on the website here.
Or Rich People Are Extremely Smart
As my dad said in paraphrasing someone else, "... once 51% of the population figures out that they can vote themselves free money, then you can say goodbye to democracy." Maybe.
However, taxes are but one cost, and I won't even have to get on a high horse about the heartstring value to be attributed to helping those less fortunate, etc. Nope, quantifiable costs such as avoiding an unnecessary war loom large. Just because Bush's fiscal policy was to put off paying such debts doesn't mean they won't become due with interest. $3 trillion is a hefty chunk of change; forget about the economic cost due to lost leverage internationally and other factors. (My cousin, a very productive and successful worker, was called up and sent to Iraq twice and will essentially now lose his job, not to mention he understandably may not have been the most productive worker in between stints. His wife raising three kids on her own may have lost a bit of production too.) I said I wouldn't play heartstrings, but then you must include the cost of human life lost from these bad decisions when voting.
This is not a shot at McCain. I like him and was on board until he picked Palin, but the actual cost of a potential Palin presidency would have far exceeded any tax raise I foresee. Bush lowered taxes and sent out checks, but I still feel like today I would have been richer and more comfortable with someone else in the White House.
However, taxes are but one cost, and I won't even have to get on a high horse about the heartstring value to be attributed to helping those less fortunate, etc. Nope, quantifiable costs such as avoiding an unnecessary war loom large. Just because Bush's fiscal policy was to put off paying such debts doesn't mean they won't become due with interest. $3 trillion is a hefty chunk of change; forget about the economic cost due to lost leverage internationally and other factors. (My cousin, a very productive and successful worker, was called up and sent to Iraq twice and will essentially now lose his job, not to mention he understandably may not have been the most productive worker in between stints. His wife raising three kids on her own may have lost a bit of production too.) I said I wouldn't play heartstrings, but then you must include the cost of human life lost from these bad decisions when voting.
This is not a shot at McCain. I like him and was on board until he picked Palin, but the actual cost of a potential Palin presidency would have far exceeded any tax raise I foresee. Bush lowered taxes and sent out checks, but I still feel like today I would have been richer and more comfortable with someone else in the White House.
"Rich" People are Dumb
Work, family, and life have been intruding on blogging, but you guys seem to be doing fine without me. Also nice to see KP tackling issues well within KNet areas of expertise - YGG/Climate and Lt. Weinberg/Medical Research.
Last weekend was homecoming at the old alma mater. Surprisingly, there were a few McCain supporters who, after a few beers or a dozen, decided to vent some of their frustration that had built up since election day.
Smartly, they zeroed in on the absurdity of my voting against my economic self interest. It appears that I was not alone - not by a long shot.
Of course, they were making reference to my well-worn "What's the Matter with Kansas" diatribe that I had cribbed from Thomas Frank's Harpers article (I never got around to reading the NYT bestselling book). Frank's thesis is that Red State voters, who otherwise have a strong populist streak in them, continue to vote Republican as part of a cultural backlash against cultural liberalism they see running rampant withing the Democratic party. Despite the fact that these voters would likely receive personal economic benefit from the economic policies of Democratic Party leadership, they continue to vote against their self interest due to social/cultural issues.
So here I am, a post graduate degree holding, poli/econ major who has spent the last four years or so furrowing my brow and clicking my tongue over the poor choices of rural voters, now faced with the reality that I have made the exact same economic "mistake."
Perhaps I am (as one conservative friend suggested) so besotted with the thought of victory that I would pay any price or any tax levied. But those who voted themselves tax increases could, honestly, anticipate that their decision could pay long term economic dividends. Just one example: my firm already does a good amount of transactional and regulatory work for major energy companies' renewable resources projects. We could reasonably anticipate that such work would increase under an Obama administration. Also, with the increases in the earned income tax credit and tax credits for employee health insurance, we may be able to increase our domestic helper's real income and provide her with family health insurance. Granted, we might be able to do this if we kept those tax dollars, but that wouldn't affect the lot of millions of other domestic workers. Once again, I consider it an investment in the future of America.
Last weekend was homecoming at the old alma mater. Surprisingly, there were a few McCain supporters who, after a few beers or a dozen, decided to vent some of their frustration that had built up since election day.
Smartly, they zeroed in on the absurdity of my voting against my economic self interest. It appears that I was not alone - not by a long shot.
Of course, they were making reference to my well-worn "What's the Matter with Kansas" diatribe that I had cribbed from Thomas Frank's Harpers article (I never got around to reading the NYT bestselling book). Frank's thesis is that Red State voters, who otherwise have a strong populist streak in them, continue to vote Republican as part of a cultural backlash against cultural liberalism they see running rampant withing the Democratic party. Despite the fact that these voters would likely receive personal economic benefit from the economic policies of Democratic Party leadership, they continue to vote against their self interest due to social/cultural issues.
So here I am, a post graduate degree holding, poli/econ major who has spent the last four years or so furrowing my brow and clicking my tongue over the poor choices of rural voters, now faced with the reality that I have made the exact same economic "mistake."
Perhaps I am (as one conservative friend suggested) so besotted with the thought of victory that I would pay any price or any tax levied. But those who voted themselves tax increases could, honestly, anticipate that their decision could pay long term economic dividends. Just one example: my firm already does a good amount of transactional and regulatory work for major energy companies' renewable resources projects. We could reasonably anticipate that such work would increase under an Obama administration. Also, with the increases in the earned income tax credit and tax credits for employee health insurance, we may be able to increase our domestic helper's real income and provide her with family health insurance. Granted, we might be able to do this if we kept those tax dollars, but that wouldn't affect the lot of millions of other domestic workers. Once again, I consider it an investment in the future of America.
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