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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
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.
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