Peritheotic

CPI-U prints negative

2010-07-16T10:25:00.000-07:00

I haven't posted in a while, because, frankly, who wants to keep hearing that the sky is falling?! But... CPI-U, the Fed's official urban price-inflation indicator, just printed out at minus 10 basis points (-0.10%).

The Fed's inflation metrics are geared to understate inflation (there has been a move to replace the current system with a simple median price change, but it hasn't gotten much traction) -- I don't know if this could lead to overstating deflation or not. Given the fact that the changes are multipliers rather than subtractions, my assumption is their measurements will understate deflation too, but I can't say that with any certainty at all.

A scary pair of charts

2010-05-15T15:13:00.000-07:00

I won't insult the intelligence of the three people who read my posts by belaboring the obvious, but suffice to say that the I'm every bit as worried as before, and even more so (not just over these charts, but over the continuing lack of contrary indicators anywhere -- I WANT to be cheered up and shown that I shouldn't be terrified of our economic position, and it just ain't happening).

Employment Hopeful?

2010-05-09T12:20:00.001-07:00

Unfortunately, there's not really any such thing as momentum in markets (which is why momentum-traders need their stops), but this is hopeful:

Cheerfulness

2010-05-03T23:17:00.000-07:00

I've decided that this is Happy Week. Normally I fight my inclination to rave about economic things that are out of my control anyway, and despite the fact that there's a lot of macro to worry about, the fact is that the barrel's already headed over the falls, so we might was well whistle on the way down.

So instead of the normal gloom, I present the following: Rejected newborn red panda adopted by cat. So there.

Federal Californication

2010-04-05T12:16:00.000-07:00

Yes, I know I'm a fanatic with the economy that should probably lighten up, but where the "recovery" is concerned, folks should beware of the fact that most of the "recovery" happening in the Obama administration is California-esque stealing from the future, and not a true recovery.

Oh Frak!

2010-03-16T21:04:00.000-07:00

It's OFFICIAL, even by the government's standards: Ben Bernanke's pushing on a string.

An interesting idea from the Fed

2010-02-17T18:49:00.000-08:00

The Fed, as we know, has a real sticky wicket to get through: it knows that it's gotta find some way to, as the pundits are saying, "drain the swamp" and not let all the positively, massively, completely insane amount of money they've printed out into the wild for good, or else we'll be reprising the German hyperinflation. But, similarly, we've got such a vast debt-deflation hangover that they can't just jack up interest rates, as that would kill off any nascent recovery. They've been kicking around the idea of doing reverse repos for a while (where you sell T-Bills from them and they have to buy them back in the near future); that plus paying interest on reserves would allow them to incent lenders to keep their money on the sidelines, but it's rather limited.

The new idea is to allow not only their primary dealers network, but also money-market funds, to trade treasuries with them. The beauty of this scheme is two-fold. First-off, the primary dealers are fairly limited in what they can absorb at any one time, whereas there's a ton of domestic money-market demand sloshing around. Secondly, and here's the genius of it, the money-market funds would likely not be allowed to trade those T-bills with anyone else (which would infringe the primary dealers) -- thus they get a mechanism by which to handle their duration risk by floating treasuries that by definition cannot escape out into the wild.

... and, when you consider the embedded profits of getting treasuries via a primary dealer that a money-market fund would be able to avoid paying, this would provide a minor boost to the rates they could provide, too.

... and thinking about it, the only way for the money-market fund to profit from the T-bills is either price speculation against only the Fed (an illiquid market -- not so nice) or by banking the coupon payments. This might eventually end up not as actual treasuries (with their unpleasant maturity dates), but as a floating-rate perpetual bonds whose yields are set via the normal auction process (I'm *really* speculating here).

I'm impressed.

How could this happen... Why Greece... A hypothesis.

2010-02-11T13:14:00.000-08:00

So everyone's all concerned about things blowing up, and it always acts as a great shock to people who trust the official statistics that normally say everything's fine (because it's not in the interests of anyone in power to report otherwise). This leads in large part to conspiracy-theory thinking, the "someone's evil" reflex of caveman-thinkers (who, in that much simpler time, were correct nine times out of ten); but we're supposedly more enlightened folks who can address the symptoms of systems that're out of whack: hence my simple hypothesis -- whether we're talking about banks, corporations or countries, those entities with the largest ratio of hidden to declared liabilities die first. In the corporate world, the financially "innovative" behemoth, Enron, who first figured out how to hide their indebtedness behind SIVs (which earned their CFO "CFO of the Year") was the first to go. Similarly, tiny Greece, with 1/4 of its population working for the government and, as a result, very little economy to speak of, has plunged first in the looming sovereign debt crisis saga. If my hypothesis is correct, then before looking at Italy (one of the so-called "PIIGS"), expect France to hit the rails first.

The fix for this, of course, since most of the net liabilities in all these nations are in social spending like pensions, health-care, &c., is to either reduce these liabilities or else to declare them and curtail current spending appropriately. These two forms of political suicide, "betrayal of trust" and "austerity measures" are such a Scylla and Charybdis for politicians that I suspect we'll get to see if my hypothesis is correct.

Government statistics at their finest

2010-02-05T09:49:00.000-08:00

So the jobs print came out: we lost an additional 60,000 jobs in January, which meant that unemployment dropped from 10% to 9.7%.

Anyone who thinks the state should be in charge of people's lives should contemplate that stat (released to great fanfare, no less). Instead of mailing tea-bags, if we could just get the bureaucrats to use real data instead of the output of models, we'd be a lot better off (and drink more tea).

Keynes versus Hayek

2010-01-26T12:32:00.000-08:00

Pretty obvious which I favor... :D

The Supremes do something good

2010-01-22T11:04:00.000-08:00

I'm very happy about the decision this past week by SCOTUS to open the floodgates of corporations and, to a lesser extent, unions to run as many campaign adverts as they please. The reason I'm a fan is because, in the name of cleaning up elections, what's been done is that the two political factions have centralized control of campaign financing to an extent never before heard of -- if you're a state-level representative, up until this decision by SCOTUS, you'd better be kowtow'ing to the party line in DC or else your rivals in the primary would take all the available financing money. This has led to the recent increase in our already venemously partisan governance. By giving politicians someone else to go out to, hat in hand, besides just the party committees, we'll get better governance.

There's a counter-argument that party committees are limited in the amount they can donate: that's true, but they work around that fact by having party committees from all over the country write the checks, multiplying the limit by the number of local committees available, thus being the only source of "big pocket" funds.

This decision will help moderate candidates, in spite of the histrionics on the radio, and I'm very happy with it.

Great Infografic

2010-01-12T13:13:00.000-08:00

From Visual Economics. The upper-right corner's the real kicker.

Unemployments Compared

2010-01-11T20:55:00.000-08:00

Courtesy of the boffins over at Calculated Risk.

Nuff Said: Interesting Chart

2010-01-06T22:16:00.000-08:00

In the interests of cheerfulness, I'll leave the term "interesting" unqualified. :o)

2010, Year of Sunshine

2009-12-26T23:16:00.000-08:00

Hi y'all!

Captain Cheerful(TM) here: I've been taking advantage of time off to put a weather eye to economic data (predigested: I'm not a propeller-headed econ-boffin; I read other people's opinions having identified their biases and/or financial interests -- but so far I've been unpleasantly unsurprised, FWIW), and 2010 isn't looking so spiffy.

First, and foremost, here's the first thing everyone needs to know:

THE U.S. IS NOT OUT OF THE "PREVIOUS" RECESSION.

Fine print: the way that the financial stats are calculated, debt-based spending by the federal government counts as economic activity -- when you remove the amount that the Obama administration has run been running up the credit cards to stave off fiscal armageddon (and thankfully so: it has been giving the responsible among us time time to de-leverage our housholds before the shit REALLY hits the fan). The private economy is still collapsing like Eddie Izzard's proverbial "flan in a cupboard".

The second thing that everyone needs to understand is that, in spite of the fact that the economy is being propped up on Uncle Sam's credit-card, everyone else in the whole world either is panicking to issue more debt or is ceasing their overseas investing to focus on their own situation. For examples, check up on Greece or China, respectively. In order for the economy to continue collapsing like a flan in a cupboard (instead of collapsing faster), we need people to buy a ton of t-bonds. There are only a few ways this'll happen:

1) A collapse in the stock market. (This's probably overdue anyway -- folks have been cheering the return to overblown stock prices for a while now and, while I'm not enough of a fool to bet against the stock market directly (the famous saying is "the market can stay irrational longer than you can stay solvent"), my money's where my mouth is here -- what little we have for retirement's all in the sadly dreadful fixed-income market.) This would cause "main street" investors to panic again and flock to Treasuries as a "safe haven" investment. The open question here is whether or not, in such a scenario, that there will be enough extracted from the market "on the way down" to fund 2010's scheduled credit-card binge -- a lot would depend on how fast the market cratered. Let's not hope for this scenario.

2) A return of interest rates worth investing in. Tired of trying to fund your retirement on 1% returns? So are all the retirement fund managers out there who've been forced to borrow money to invest (capitalized by their client's investments) so they can eek a decent return out of the market. They'd love to be able to deleverage their funds without being put out of business when the fund next door shows five times their earnings while keeping its larger risk profile buried. This would get a lot of folks who're tired of waiting for the P/E bomb in equities to go off (P/E ratios have been insane for over a decade now and will get visibly worse with worsening economic conditions) while sitting in cash right now to plunk down for Treasuries and maybe keep armageddon from happening for another year, but the problem is that with so many households on the brink of ruin already, for Bernanke to decide to pull up on the interest-rate lever would be disastrous -- every household with significant floating-interest-rate debt would decrease their spending by the difference needed to pay the extra interest, assuming they don't default to such a huge extent that even the schmucks on Wall Street can't sweep the carnage under the rug. This would be like setting off a fusion bomb in the center of the economy. Lets not hope for this one, either.

3) For Treasury yields to increase. Unlike increasing the "official" interest rate (the "coupon" rate) of treasury bonds, the market could force the effective interest rates of treasuries to explod upwards simply by paying less for each bond at auction. This would be something that Bernanke & Geitner cannot control, but would have similar economic impacts on #2, above. This would also smash the prices of the T-bonds in people's existing portfolios -- and since the existing bonds scheduled interest payments are so miniscule, this would demolish a lot of pension funding. Another for the not-hoped-for bucket.

4) For complete cessation of all non-entitlement social spending and all spending on both Iraq and Afghanistan, effective immediately. This might cut out the need for the bond issuances in the first place (mostly -- Bush's medicare sellout to the grey-panthers will still bite us), but the political and, more importantly, diplomatic bloodletting that we'd suffer would be egregious in the extreme -- the government would lose all credibility both here and abroad. (The folks in Taiwan, for example, would buy a lot of Depends.) This one's not going to happen, nor, frankly should it. But even if it did, I'm not convinced that it'd keep the rate of collapse where it is.

5) Something happens that I'm not smart enough to think of, that either saves our bacon or at least kicks the can down the road so we can have an even greater mess a year from now. This would be great. Anyone feeling both smart and influential?

Personally, I'm rooting for #5.

P.S. If anyone thinks I'm just being a worry-wort here, put on your thinking cap and ponder what it means that, of all companies, Arrow Trucking(! WTBFF !) is going bankrupt. Anyone from a "flyover state", aka "where all the shit we take for granted comes from" will be racing for a malt whiskey right about now. Everyone else'll start to get it in about a week... .
P.P.S. "WTBFF" means "what the bloody flying fuck", an expletive that even potty-mouthed me generally holds in reserve for serious occasions.

A Horror Movie Only Blair Could Have Written

2009-11-17T23:54:00.000-08:00

... and here I thought he was in Korea. He must be moonlighting.

The King's Singers Deconstructing Bach

2009-11-10T12:40:00.000-08:00

(you'll want to turn the sound up, since it's keyed a little low)

A much needed breather

2009-10-14T09:54:00.001-07:00

Everyone's busy arguing over whether we're going to have a "V" shaped recovery or a "W" shaped recovery (or an "L" shaped recovery). I've no greater clue than anyone else, but regardless of how it falls out, the similarity of our situation to that of Japan in the previous decade augurs for a double-dip at least, before anything long-run-positive occurs. If the boffins are right and we're going to have a rallying economy for the next year or so before the double-dip danger really rears its head, then this presents a much needed breather for households to repair their balance sheets and maybe accrue some savings. A second dip would likely be more violent than the first, as the "true disbelievers" would have all been shaken out by then, so savings cushions will be critical -- I don't know what the macro trend is looking like, but we're doing exactly what the average Japanese consumer did in the '90s: welding our wallets shut. Sure, it was bad for their retail sector and will be awful for ours (with commercial real estate to fall right on it's heels), but with baseline unemployment running 16%, deflation rampant and with equal risks of stag-disinflation and stagflation to follow, who cares?

But I'll take the breather.

It's Officially Here

2009-10-05T10:25:00.001-07:00

That's YoY price changes; deflation is now here even when measured by price (the symptom thereof, not the real thing). It was already here, of course, but now we can expect to see people asking the government to find a way to keep prices from coming down (insanity...)

And in other fun, here's the first negative disposable personal income in 60 years:

(hat tip: the above from Mike Shedlock)

What kind of insanity might we expect people to ask from the government now that the chips are officially down? Price supports? Consumer dept-relief? Michael Moore in the White House (now that he's made all that money going after, to paraphrase Bill Hicks, "that anticapitalism dollar -- that's a great market!")? Whatever it's gonna be, hang onto yer hat and save your pennies, because money's getting more expensive, and that'll make debt even more so.

For more cheerfulness, head to EconomPic's latest labor force graphs.

The Fed, Again

2009-09-30T19:10:00.000-07:00

The FDIC's reserve balance just went negative -- they're going to charge member banks three month's dues in advance in order to compensate. This's the moral equivalent of the FDIC borrowing from its member banks in order to sustain them.

In other news, nearly half of all treasury bonds purchased at recent auctions (which's how the sales are conducted) were bought not by regular investors or by foreign central banks, but by our own Fed, which, conveniently enough, is purchasing lower-grade paper from other central banks to help fund their continued purchase of treasuries.

Needless to say, I'm a big supporter of the bill to audit the bastards.

Vérinage

2009-09-15T12:00:00.000-07:00

Apparently the French have been demolishing buildings 9/11-style (sans aircraft) for quite a long time and consider it a standard demo technique, called "vérinage". The general idea is that the weight of the top portion of the building, even though it can be supported by the building, contains such a massive amount of potential energy that once it's fallen a story or two it can easily sheer through any and all support beneath it.

To my uneducated eye this looks exactly like the World Trade Center's collapse, especially in the three aspects of

Massive ejection of dust & debris
Near free-fall appearance ("near" because if you can eyeball the difference between a 9.8 m/s*s fall and an 9.0 m/s*s fall, you're a better man than I)
Sheer vertical collapse similar to standard U.S. explosives-based demolition.

While I cannot declare with absolute certainty that the twin towers falling was the work of physics and not a nefarious plot by an evil vice-president and his secret legion of freedom-hating evil-doers, it's good enough for me. :D

"A compilation of demolitions conducted using the French demolition technique of vérinage. This is achieved with hydraulics that push structural members out of alignment, allowing the top portion of a building to then demolish the structure below via gravity alone, without the use of explosives. Note that the collapses are rapid and produce copious dust."

Energy Storage is EASY

2009-08-13T20:49:00.000-07:00

I was astounded by another article I saw this morning talking about the problem of storing energy that photovoltaics, wind-power, etc. all face. The article went on to talk about truly massive (city-sized) electrical batteries, ultracapacitors (which'll be great for cars) and other devices. For small-scale use, the problem remains, but for broad-scale power production where energy is only produced during the day, but the amounts of energy being produced are massive, why hasn't anyone thought of digging a big basement and almost filling it with a massive concrete block? When you need to store power, you lift the block up to ground level, and when you want to draw power, you lower it. If you want your power I/O to be very sharp-edged, you use a simple pulley (or massive rotating beam serving as a pulley); multiple pulleys can be rigged for any level of I/O you want. Now, granted, conversion back and forth from mechanical to electrical energy will have losses, but given the non-linear response to compressing a gas (not to mention keeping a pressurized cavern airtight), friction losses from flywheels, etc., it can't be that bad.

But what really gets me is that no-one's mentioned it before even though potential energy is part of high-school physics -- could it be that hard? Really?

Why California is Doomed

2009-07-24T11:44:00.000-07:00

I motion that logic, rhetoric and economics be taught in Junior High School, and that any students receiving less than a C on a standardized test thereof be immediately fed to rabid stoats.

Obama Looking Weak

2009-07-21T00:09:00.000-07:00

So the full-court press is on to label the Republican opposition to the Rush-to-Health-Care as political obstructionism is on. This is a bad move and an advertisement to anyone watching that the democrats are playing a weak hand. Just like the Bush administration couldn't get any of the democrats to participate in their attempt to reform Social~~ist Ponzi Administration~~ Security Administration, the Republicans are wisely (per their constituents) dragging their feet on the federal health-care takeover (which may or may not constitute "reform", depending on one's ~~faction of choice~~perspective). The Democrats promised up and down to reform the way health-care is provided in this country, and, since they own both the Legislature and the Executive, have no excuse not to pass such a reform. But the thing is, they know it'll suck: until money and stethoscopes grow on trees, such reform will include all manner of rationing, and is liable to have the kinds of customer service made famous by Marge Simpson's twin sisters. If the "reforms" pass by a party-line vote, then the Democrats get all the credit or blame for however it shakes out, and those in power know this'll mean a lot of blame. Such a party-line establishment of nationalized health-care would constitute electoral red-meat for the Republicans, and everyone on the hill knows it.

And Obama & his aides just admitted they don't know what to do about that -- on national TV.

The left-wing will fall in line behind the repudiation of the Republicans for being "political" (OMG, Legislators being political?! How shocking!), and this will work to stave off their constituency temporarily, but in the end they'll either have to gut their program sufficiently that the Repubs can take that home to their 2010 campaigns as a legislative victory, or they'll have to take the larger risk and completely own their health-care program forever-and-ever-amen.

While ex-President Bush could claim that he couldn't line up enough votes to defeat a filibuster (which is the normal way a faction advertises that it hasn't the balls to sign its own checks), President Obama owns his Congress, so if he tarries too long he'll risk being branded a coward, to boot.

If I were a Republican congressman, I might even risk smiling.

California Politicians Slimier than Ever

2009-07-20T23:52:00.000-07:00

So the folks here in dreamland have cooked up a way to fix the $26B budget defecit:

* $16B in cuts, except that six $B of that is really just borrowing from the school budget and must be paid back eventually, to the tune of $11B
* $2B in revenues legally belonging to municipalities diverted to state coffers, also to be repaid with some unspecified level of interest -- This isn't the first; if I were a mayor I wouldn't be holding my breath.
* $4B by accellerating withholdings by 10%, temporarily increased taxes that get paid back later come tax-time. Except: by the time you're getting your refund you've already gotten zapped with the latest withholdings. This's the slimiest it's-not-a-tax tax I've ever heard of.
* $1.5B of robbing Peter to pay Paul (at the state level: the municipal level's already been robbed)
* Moving a payday out from this calendar year into next year so that the state workers lose the float on the money and so the payment doesn't have to be calculated in this year's payouts.
* Other unspecified gimmicks.

So while claiming, to great fanfare, that they've finally fixed the problem, California's politicos have done what they've always done: kicked the can down the road so their mess will be Somebody Else's Problem. You know the old joke that you can tell a politician is lying if his lips are moving? Our current ~~panderers~~politicians are doing their part to make even the folks in Beijing and Brussels look honest.

Simple Q&A

2009-07-15T14:04:00.000-07:00

Q: What's the difference between Venezuela and Zimbabwe?
A: Ten years.

Nuff Said: The Economist on TX vs CA Economies

2009-07-14T13:29:00.001-07:00

The editor at the Economist adds in some faint praise for CA just to sound civil, but from an economic perspective, TX's fiscal conservatism wins hands-down.

The Newest Deal

2009-06-19T13:20:00.000-07:00

Obama just announced that they'll allow the government agencies responsible for financing the housing bubble to try to prop that bubble up by allowing refis of up to 125% of the house's "value" (original price?). I can't imagine who'd buy such an instrument from them, but just a word to the wise, don't do it if it tempts you.

Refis are 2nd mortgages and are recourse loans; unlike 1st mortgages, if you default on a refi, they can take the house, then come after you for the rest.

Economics for the Citizen

2009-06-16T20:55:00.000-07:00

Just a link post; I'd call Walter Williams my favorite economist, but I don't really have any favorites except for not-Krugman. But anyway, Walter Williams freakin' rocks, and he has small class notes for an intro econ course he teaches called Economics for the Citizen. It's both really good and also nice & short too. I highly recommend it.

Getting Ready for the Mortgage Defaults to Get Serious

2009-06-03T12:11:00.000-07:00

No doom & gloom for a while, I must be losing my touch.... Here's something just to keep the stomach acids going:

There's a lot of buzz going around based on a super-big chart-filled presentation by some scare-mongers called "T2 Partners", who're attempting to use reality to scare customers into buying their services. Sadly, the reality they paint, is, well, real. Here're a few of said charts:

Here's the situation with regards to subprime mortgage rate resets:

Here's where we stand with regards to the Alt-A resets...

or scheduled resets in general:

The 64-thousand-dollar question of course is what this will do to bank valuations. No-one knows for sure how many of these mortgages will end up defaulting, but I'm suspecting that they're already factored into bank shares' trading prices.

With $1.7T of mortgages resetting over the next five years, during the worst economy seen in decades, the big question will be how will this affect the rest of the economy. Especially retail sales. No-one knows, but I'm wagering that those "V-shaped" recession wonks are wrong, and that the "U-shaped" wonks are also wrong. Given the way mean reversion versus a growth trend-line tends to work, I'm betting on an "L-shaped" recession that stays flat, just like the Japanese have seen (since we're repeating their mistakes).

This of course while we're debasing the currency so much that the Treasury Secretary got laughed off the stage in China.

We now return you to your regular sunshine filled day.

Progress in California

2009-05-20T18:06:00.000-07:00

They just had an election yesterday on whether a convoluted scheme to change nothing and instead kick the proverbial can even farther into the future; it failed, hard.

And today they're announcing an 18% pay cut for elected officials.

It's not much, but it's a start. It'll be a long, long time before California will live within its budget, but it's a start.

Obama versus the Constitution

2009-05-13T15:41:00.000-07:00

Eric Holder was interviewed today and explained that they're looking for a new SCOTUS appointee who "understands that the constitution is a living document that [must handle situations the founders never anticipated]". The "living document" buzz-phrase is code for "we only want to honor the constitution where it's convenient, but elsewhere will interpret it as we choose."

The more that this kind of crap is tolerated the less our rule of law is worth.

Concord Juice

2009-05-09T22:26:00.000-07:00

Maddie bought me some pure Concord grape juice; not the crappy filler-eque juice used by leftover european grapes, but honest-to-Gort east-coast grapes that just taste purple.

I forsee wine-making experiments....

MOUSs

2009-04-13T20:30:00.000-07:00

Tonight I got home after an unpleasant commute, had a pleasant supper, then went out and dealt with the rat that had wandered into our garage and met the fate of all small peanut-butter-attracted creatures. Mr. Rat had lived a full life, and had grown to quite a respectable size, but in spite of his lingering moisture, when I came across him he'd lost quite a bit of his former stature; he was just at that sweet spot of putrefacation that smells thick, smokey and almost sweet, and I would have swept him immediately into a sack, but he was defended by MOUSs.

I'd never experienced Maggots of Unusual Size before; the ones I've seen before topped out at about a centimeter, but these guys were the breadth of a quarter, WITH FEET. I haven't seen anything sucking away at a corpse like that since a month ago when the UAW rep from Chrysler was interviewed, it was that disgusting....

According to Maddie, I've now earned my Hubby Points(tm) for the remainder of the year.

Obama's Socialized Mortgage Program

2009-04-10T10:45:00.000-07:00

The Fed is now buying Fannie & Freddie mortgages like it's going out of style so that the yields on the notes goes down (remember the inverse price/yield relationships of bonds) and the marketplace gets good mortgage refinance rates, currently in the 4.x range. If your mortgage is held by Fannie or Freddie and you want to refi, go ahead; we're borrowing it from the Chinese....

Details at Making Home Affordable.

Great Commercial Shows the Scale of the Thing

2009-04-08T19:21:00.000-07:00

I mean, really, what more needs be said?

The Geitner Plan

2009-03-30T13:14:00.000-07:00

And the Left thought that Bush was vile. This scenario this guy lays out is so likely as to be unstoppable. And it would explain why the supposedly brilliant Geithner is acting so tongue-tied: he can't really talk about the fact that his plan is a complete bail-out not just of wall-street's corporations, but of its investors too. The only up-side is that many of those investors are pension funds. Mixed-feelings ahoy....

Oh, and when he says "The Fed", don't forget that he's not talking about the Treasury -- he's referring to the FDIC! These fuckers (Obama & co.) are going to save Wall Street's investors by wiping out the fund that's supposed to secure the bank accounts of every Mom & Pop in the USA (I say "supposed to" because reserves are effectively less than 1% of liabilities).

PS. If you want to see the plan fixed, edit the word "non-recourse loan" from it and make the money from the FDIC get repaid. Then you'll see all those eager participants run to the hills immediately, because that leverage simply will not be repaid. As it is, the "responsible" plan is just like taking out a loan from the bank to buy stocks with, with the only collateral the bank gets being the stock itself -- who wouldn't jump for that deal?

Fun, not fun and whew

2009-03-21T20:13:00.000-07:00

In the "and now for something completely different" vein, I just wanted to remark on how much great fun it is to whallop a brick outdoor grilling installation with a 16 lb sledge. It'd be doubly fun if I had any muscles so I didn't have to use so much body english, but still, whalloping fun. What's not so fun is dropping a cubic foot of masonry on your foot. Luckily, I was wearing my special mail-order shoes with the steel toes and met-guards, so instead of the furiously throbbing but otherwise normal looking foot I've got now, I might've had something outta The Tom & Jerry Show.

ouch, but yay ouch. (c:

PS. In other news, Maddie made macaroons and the cats are all over them. I know Photon eats stuff like garlic hummus that he's not supposed to like but both cats eating coconut? Weird.

If only California shopping was like this...

2009-03-05T12:31:00.000-08:00

Rising Up and Rising Down

2009-02-23T12:37:00.000-08:00

I just found out ( by finding it in a store -- say what you like about San Francisco(and I'll probably agree with you, sadly), but it has some great bookstores ) that William Vollmann's 3,500 page magnum opus on violence, Rising Up and Rising Down, has been published in an (affordable) abridgment. This guy was a war correspondent in Syria, Yugoslavia and chunks of Africa, and after witnessing quite a lot of it, decided to sit down for 23 years to write an entire treatise on the subject, including a moral calculus thereof.

Needless to say, I bought a copy. This's very exciting.

Amen!

2009-02-14T12:29:00.000-08:00

FDIC in trouble?

2009-02-03T12:31:00.000-08:00

Excerpted from Reuters:

WASHINGTON (Reuters) - The Federal Deposit Insurance Corp is seeking to more than triple its credit line with the U.S. Treasury Department to $100 billion, a move to give it more financial power to handle U.S. bank failures, the agency said on Monday. The FDIC and Congress are working to boost the agency's current $30 billion borrowing power in legislation being crafted by U.S. Rep. Barney Frank, chairman of the House Financial Services Committee. The move comes as the FDIC's deposit insurance fund has shrunk due to a significant uptick in bank failures over the past year. The insurance fund's value dropped 24 percent in the 2008 third quarter to $34.6 billion. "We would maintain that it's prudent planning to have contingency plans in place," said FDIC spokesman Andrew Gray. The House bill being prepared by Frank would also make permanent Congress's October decision to temporarily increase deposit insurance to $250,000 per customer account. The increase was hurriedly adopted as a temporary way to increase confidence in the struggling U.S. banking system. Frank said the FDIC's desire to increase its borrowing power is a safeguard to ensure the agency can quickly pay out insured deposits when a bank fails and the FDIC is named as a receiver. "They have no immediate need for it, but they just want to make sure they're not constrained in the decision by a lack of the insurance fund," Frank told reporters after meeting Treasury Secretary Timothy Geithner on Monday. "They don't want to say, 'We have to keep this bank open longer than it should because we don't have enough money.'"

Is anyone still falling for the "we don't think we'll actually need anything like this, but we'd like you to authorize it really quickly just in case" ploy anymore? The FDIC, IIRC, has been funded to the tune of 1/3 of 1% -- if they actually have to backstop money-center banks' deposits, the debt picture for the country will be even worse than it is already. That is, of course, still assuming that the money could be raised; so far that's held true, but if things keep worsening we may have to revisit the assumption of unlimited federal funding.

Yuck.

In the meanwhile, I suppose the FDIC is probably better than the alternatives, what with multiple states using accelerated 'abandonment' judgments to confiscate safe-deposit boxes for sale at auction and all.

Money As Debt

2009-02-01T22:23:00.001-08:00

Someone uploaded this oldie-but-goodie onto Google as flash-video; it's very worth watching if you want to understand the nature of money.

Criminals for Gun Control

2009-01-31T13:55:00.000-08:00

Courtesy of Mr. Darwin Slaughter, our real estate agent from Texas, an issue for our times....

Nuff Said on Bank "Hoarding"

2009-01-23T09:25:00.000-08:00

These are lifted from Mish, and explain why banks aren't lending to the folks clamoring so loudly for more credit...

The problem isn't a credit crisis, it's a solvency crisis. Banks would be insane to continue their profligate lending to people who're already as indebted as the average US'ian. And for those who want the state to step in and rescue people from the results of our collective fiscal insanity (and who clearly haven't read Hayek), don't forget that the tax revenues that people what increased to bail people out have to come from the same people who're feeling the debt squeeze to begin with.

Expect more calls for folks "hoarding" money in their savings accounts to invest like good little ~~rubes~~citizens. In the meanwhile, the only way out of this mess will be massive reductions in consumption that will be necessary to accumulate the savings needed to pay back all that debt, with the side-effect of demolishing a large chunk of the consumer-oriented industries and their suppliers.

At least most of you don't live in the land of Wimpy (California, that is, who's voters think "I'll gladly pay you Tuesday for a hamburger today" is sound fiscal policy. Ugh.), and won't have to watch your state hand out dubious IOUs instead of wages & tax returns.

Alice

2009-01-19T12:13:00.000-08:00

Well, a kitten got us this weekend; her name is Alice, and she had a policy of "when in doubt, purr." Expect more soon on Foggy Foot Annex.

And, I seem to have a Tom Lehrer song stuck in my head....

Obama's First Triumphs

2009-01-13T12:02:00.000-08:00

Today I had the ~~sorrow~~privilege of listening to the beginning of Hillary Clinton's confirmation hearings in the senate while commuting to work. The introductory fellatio was off the Richter scale even for those occasions when the partisanship of the house and legislature match, and the bipartisan olive-branches that really mean "we expect the other guys to lay aside their concerns and priorities so they can advance our agenda instead" were strewn about in that simulation of camaraderie so well known in Minnesota and the deep South.

What I wasn't expecting was in Clinton’s prepared remarks. Sure, she has a tin ear and she delivers speeches exactly the way her husband doesn’t, emphasizing the parts of the sentence that are intended as lubricant while gliding along the portions that should be emphasized, but, while her public speaking continues to startle and surprise the unwary ear, after suffering through her primary campaign’s stump speeches this is hardly astonishing. What was astonishing was the immense amount of slight-of-mind in the speech – she alluded to nearly known opportunity and vexation that the world faces today, but every time she veered dangerously close to making a prescription she slipped sideways into the sort of generalities and pabulum that any fourteen-year-old girl in front of her civics class might have advocated when required to give a political speech. And it really was an assigned but otherwise meaningless speech, as CSPAN long ago converted public hearings into the toilet politicians use to communicate with their masses. The masses this time around are from the Left, who have a “don’t bother me with the details – I trust your good intentions” mind-set, so this was all spot on for the audience at hand. Meanwhile I’m was trying not to run off the road because of how violently my gorge kept rising….

But then it hit me: what a stroke of genius on Obama’s part. After the Clinton machine insisted on torturing all thinking listeners for over a year, Obama has managed to give us at least four years peace, in which Clinton can take her crash-course in rhetoric overseas. To paraphrase General Patton, “our job is not to have Clinton melt our minds melted like cheap Velveeta, our job is to let Clinton melt the other poor dumb bastards minds like cheap Velveeta!”. For four years at least, the only speeches we’ll hear from Clinton will be in quick sound-bytes on CNN. If nothing else, this is truly a triumph of the Obama regime.

But then I thought: “Wait a minute! To confidently speak at length in tones of grand significance while actually saying nothing – isn’t this truly the heart and soul of diplomacy?” In addition to saving our poor scalded minds from her speeches, Obama may have achieved an even grander triumph even before being sworn into office: he may have figured out something Hillary Clinton’s good for!

Un-Cute Un-Relief

2009-01-09T14:54:00.000-08:00

Just in case anyone's feeling cheerful, here's an interview with one of the guys that predicted all this financial mess YEARS ago. I don't think it's necessarily as bad as he makes it out to be, but can't disagree any more strongly than that.

Cute Relief

2009-01-08T12:54:00.000-08:00

Just in case you're bummed out by any number of the things going on right now, here's some mindless cute-relief:

Palestine: Game (long) Over

2008-12-31T20:27:00.000-08:00

WARNING: unedited rambling rant-ish post ahead....

There was a very sad afternoon for my twin and I when we were kids when we spent a while at one of the more significant crossroads of the Trail of Tears thinking about what our forbears had done to the Native American population. Gaza brings up similar feelings for me -- there're just as many Arabs selling out other Arabs as there were Native Americans doing the same back then, and, just like then, the only rational conclusion for the native population involved is "game over, dude".

Peace talks so far speak of a "two state solution" and not only do not countenance any return of palestinian properties taken (these seizures are mostly known, right down to the street addresses), but also of no right to participate in any meaningful way in the Israeli population -- as the local Jews say "or else we'd be a minority in our own country". This's slightly different than our history here, when, even though our idea of America was a country of, by and for white people, there was plenty of land for everyone. Like the situation with Israel, though, the native population had already occupied the best land, so clearly that had to change. Palestinian Arabs are now squished into cantons, ghettos or reservations (depending on whose rhetoric you favor) that make the idea of a single continuous, autonomous and sovereign state as laughable as the pretext of Native American reservations' sovereignty that the government maintains today (Native Americans on "their" land can barely spit without BIA's approval).

The Native Palestinians are a conquered and defeated people existing solely where the Israelis chose to crowd them, with water rights solely when they don't contravene the interests of the steadily increasing numbers of incoming Zionists. The Fatah and Hamas organizations are flag-wavers on a sinking ship and the other regional Arab states who continue to throw the Palestinians under the proverbial bus so as to distract their own populations from their local tyrannies are well aware of this fact and are perfectly happy to see Palestinians slaughtered 10-to-1 (8.5 years of rocket attacks have killed 28 Jewish Israelis (the Israelis that Israelis care about), making the death toll from the current operation about 10-1 -- thus easily satisfying Blair's Law of Insurrection). Thus there's no hope of other Arab states coming to the Philistines' rescue to overthrow Israel (nor would Western "consciences" countenance an undoing of their solution to Hitler's "solution").

Israelis will never allow the Palestinians to co-habitate with them for fear of losing racial hegemony (the clear game-plan to satisfy "Never Again" being to maintain a country just for them plus just enough defanged second-class Arabs as are needed to clean their commodes), nor can any viable nation be pieced together from disconnected regions whose occupants enjoy no right of travel between them. The big question is: when are the Palestinians going to realize that the game is up, that resistance at this point is utterly futile, and that their only hope is to seek extradition to other countries where they can be taken advantage of in a new Arab version of the Grapes of Wrath?

Nuff Said: FedEx

2008-12-19T10:21:00.000-08:00

Damn. I'm impressed. Never heard of that in my life. Wow.

I'm impressed. Damn. Way to do it right....

Damn.

Lucky Bastards, All

2008-12-18T09:43:00.001-08:00

Never say never, and never imagine that the "correct" course of behavior is always the one that will be rewarded.

For example: the upcoming resets in ARMs that everyone's been worried about, given the banking sector? No problem -- there's such a misery of doom & gloom and the flight-to-safety has been so strong, that for the moment, most folks with adjustable mortgages are about to get a discount, while those of us who 'did the right thing' and locked in "low" interest rates while Bernanke was inflating the money supply will continue to pay out through the schnozola.

So, independent of anything that the cretins in Washington D.C. would bring you, the natural business cycle's current supply of deflation is bringing mortgage relief to all the nation's household-roulette players, and of course, to my twin, the lucky bastard....

---

I almost wonder if this was the real reason for Bernanke's cranking the rate so low and turning the printing presses up to 11. Of course, anyone with savings will pay for it in the end, but since the net aggregate savings rate in the U.S. has been negative for many years, this'll likely mean that we're screwing over the Chinese and the Germans.

Bastards... Humbug, I say unto Thee! (c:

Spin the Black Circle

2008-12-10T12:38:00.000-08:00

I'm not generally a fan of flash games, as, in general, I'm vastly too time-constrained to be able to play games -- I know that makes me sound like a stick in the mud, but ten hour days at work plus 3-4 hours commuting plus 8 hours sleep leaves precious little time for everything else, and this means that weekends are busy from the week's stuff piling up to be dispatched.

That said, I have to recommend a game I stumbled across while waiting for some code to build: Spin the Black Circle. It's addictive the way that video games used to be. Apparently, they still make them like they used to....

And now for something completely different

2008-12-03T11:29:00.000-08:00

UPDATE: Ok, cute impaired people, if that doesn't make your right-brains work, then how about these flying foxes that were separated from their mother after a big storm in Aussie-land?

FICO shoe to drop

2008-12-01T13:20:00.000-08:00

As this link is stating, the big banks, facing the long-anticipated credit-card bust looming over them, are likely to severely cut available credit lines. Rightly so, given that in a financial panic those most likely to use credit are the least likely to be able to repay. But this will actually have a double-whammy on credit, since part of everyone's FICO score is the percentage of personal credit already used. Once credit lines are slashed, every holder of one of those lines of credit will get a commensurately lower FICO score, and, thus will not be able to borrow as cheaply as before.

Whether banks give a broad-based haircut to credit-lines, or base them on current credit utilization will remain to be seen.

The Force is Strong in this One

2008-11-26T11:33:00.000-08:00

I haven't listened to it with the volume up yet (Maddie's typing beside me, and I don't want to distract her), but clearly this little Penguin's got something going on.

It's raining

2008-11-26T11:15:00.000-08:00

No, not financial doom & gloom, just rain.

We get very little in the way of weather out here (lots of climate, but little actual weather). It isn't snow, but I'm thrilled nonetheless. (c:

Thirty More Years

2008-11-14T10:07:00.000-08:00

Since most folks are mostly invested in equities, I thought I'd provide an example of what's happening in the bond world. This's a very subjective data-point (my 401k), but it shows the perspective that the big financiers have on things pretty well.

This's also a good testament to the fact that one should adjust risk tolerance over time -- this is a diversified bond portfolio, but it's still much higher risk than someone near retirement should have had. Looking at a 401k like this just prior to retirement can really swing your perspective towards socialism, fast.

Luckily, many of us have 30 more years for things to work out. :)

ADVANCED MICRO DEVICES INC 7.75000% 11/01/2012 ↓-32.87%
AMKOR TECHNOLOGY INC SR NT 9.25000% 06/01/2016 ↓-34.36%
AVENTINE RENEWABLE ENERGY HLDG 10.00000% 04/01/2017 ↓-73.97%
BOSTON SCIENTIFIC CORP 5.45000% 06/15/2014 ↓-11.98%
BOWATER INC DEB 9.50000% 10/15/2012 ↓-71.62%
CENVEO CORP SR SB NT 7.87500% 12/01/2013 ↓-27.05%
CHESAPEAKE ENERGY CORP 6.87500% 11/15/2020 ↑4.25%
CHIQUITA BRANDS INTL INC 7.50000% 11/01/2014 ↓-21.38%
CLEAR CHANNEL COMMUNICATIONS DEB 7.250% 10/15/2027 ↓-75.49%
CLEAR CHANNEL COMM NOTES 5.500% 09/15/2014 ↓-67.57%
COLUMBIA HCA HEALTHCARE MTN BE 8.70000% 02/10/2010 ↓-8.92%
COLUMBIA HCA HEALTHCARE MTN BE 7.75000% 07/15/2036 ↓-41.17%
DEAN FOODS CO SR NT 6.90000% 10/15/2017 ↓-15.75%
DENNYS HLDGS INC SR NT 10.00000% 10/01/2012 ↓-22.00%
DILLARD DEPT STORES INC 6.62500% 01/15/2018 NT ↓-48.89%
DOLE FOOD INC SR NT 8.87500% 03/15/2011 ↓-31.11%
FORD MTR CO DEL DEB 8.87500% 01/15/2022 ↓-67.18%
FREEPORT-MCMORAN COPPER & GOLD 8.37500% 04/01/2017 ↓-3.49%
HERTZ CORP SR SB NT 10.50000% 01/01/2016 ↓-43.47%
ITT CORP NEW DEB 7.37500% 11/15/2015 ↓-25.14%
LIBERTY MEDIA CORP DEBENTURES 8.500% 07/15/2029 ↑11.49%
LOWE'S COMPANIES INC BONDS 5.500% 10/15/2035 ↓-30.60%
MAGNACHIP SEMICONDUCTOR S A 6.87500% 12/15/2011 ↓-91.22%
MEDIACOM BROADBAND LLC & MEDIA 8.50000% 10/15/2015 ↓-7.06%
MICHAELS STORES INC SR SB 11.37500% 11/01/2016 ↓-72.00%
NEIMAN MARCUS GROUP INC 9.00000% 10/15/2015 ↓-46.03%
PEP BOYS MANNY MOE & JACK 7.50000% 12/15/2014 ↓-47.90%
QWEST COMMUNICATIONS INTL INC 7.50000% 02/15/2014 ↓-24.99%
R H DONNELLEY CORP SR NT-1A 6.87500% 01/15/2013 ↓-73.41%
REMINGTON ARMS INC NEW 10.50000% 02/01/2011 ↓-23.12%
RITE AID CORP SR NT 8.62500% 03/01/2015 ↓-64.77%
SMITHFIELD FOODS INC SR NT 7.00000% 08/01/2011 ↓-21.50%
SOLO CUP CO SR SB NT 8.50000% 02/15/2014 ↓-24.44%
SOUTHWEST AIRLS CO DEB 7.37500% 03/01/2027 ↓-23.30%
STONE CONTAINER CORP SR NT 8.37500% 07/01/2012 ↓-47.30%
TIME WARNER COMPANIES INC 6.87500% 06/15/2018 ↓-18.94%
TIMES MIRROR CO NEW DEB 7.25000% 03/01/2013 ↓-80.89%
TRIBUNE CO NEW NT 4.875% 08/15/2010 ↓-65.62%
U S CONCRETE INC SR SB 8.37500% 04/01/2014 ↓-25.40%
UNISYS CORP SR NT 8.00000% 10/15/2012 ↓-41.58%
UNISYS CORP SR NT 8.50000% 10/15/2015 ↓-42.17%
UNITED RENTALS NORTH AMER INC 7.00000% 02/15/2014 ↓-23.58%
WEYERHAEUSER CO DEB 6.95000% 10/01/2027 ↓-30.83%

Relax

2008-11-11T12:49:00.000-08:00

In these days of financial doom and gloom, with taxpayer bailouts being used to fund christmas bonuses on wall street, I thought it might be nice to bespeak the good news:

...

OK, that was short. In the absence of any really particularly good news, I instead offer two opportunities for relaxation and cheerfulness. Remember, it's the relaxed person who survives the car crash....

Getting Ready for the Plunge

2008-10-31T08:47:00.000-07:00

Forget everyone who's been talking about when the recovery'll start; we're just about to take the big dive....

Wonks everywhere have been panicking about the Baltic Dry Index, which represents the amount of good being shipped in containers over the seas. As this article mentions, global orders are down precipitously (Volvo's YoY truck orders are down 99.6% from 41,970 to 155!). With no-one buying goods, who needs employees? Retail's gonna get creamed; demand for short-term commercial loans will skyrocket to cover the fact that no-one's buying, and demand for retail loans will plummet. Visa(V) has already taken it in the proverbial shorts (pun intended), but all those banks who've been using the projected proceeds from usurious lending rates will find themselves in deem kim-chee.

Pension funds are also in big trouble:1,2,3,4,5,6, and CalPERS, for locals.

Like I said, hang onto your hats, 'cuz it's gonna be scary.

Exploding Money Supply

2008-10-27T13:13:00.001-07:00

Ben Bernanke is known, among other appellations, as "Helicopter Ben", because he believes that the Federal Reserve Bank caused the Great Depression by reacting to the financial crisis of the time by killing the nation's money supply. His response, when interviewed years ago, as to what he'd do in a similar situation was to drop money from helicopters if necessary to preserve money/credit liquidity. As you can see from the chart below, this's pretty much exactly what he's doing:

All the folks who claim it's the Great Depression all over again are wrong: last time the spike was in the opposite direction. Here's the broader picture:

As you can see from the picture, what we're currently doing is exacerbating the symptoms of the current problem, as opposed to what they did last time, which was to look at the symptoms and say "Whoa -- we've gotta put a break on this!"

Both, though are approaches to dealing with the primary symptom of the real problem: the overexpansion of money supply through loosening credit standards. There are a lot of dollars in circulation that only exist for real if you pretend their corresponding IOU's don't exist, just like the situation that occurred last century. In both cases, the result is a vastly increased number of dollars representing the same actual amount of national wealth. Thus each dollar represents much less wealth than it used to. But when credit increases like mad, people don't tend to keep their dollars -- they offload their dollars fast, converting them into assets instead. This is relatively OK if the assets themselves were paid for with cash, but when those assets were paid for with money that was itself purchased, that IOU sits out there demanding more cash to repay it. If the IOU is small, then it can be paid down and there's no big deal. If it's big, though, then when a hiccup hits the economy the demand for money suddenly outstrips the demand for assets, since the banks won't let us pay off our credit-cards by mailing them fancy sneakers. All the IOUs come home to roost and the money that people thought they had starts going "poof" -- suddenly cold hard cash looks much nicer than a shiny IPod and everyone starts taking money out of circulation if they can, or else they do the whole matter-antimatter thing and pay down their debts, destroying the illusion of wealth that wasn't really their in the first place (and in a real panic, selling the Lexus for $10k). This's the exact opposite of the "wheelbarrow of money" scenario of Weimar Germany and Zimbabwe, but just as bad.

Bernanke's attempting to snatch stagnation from the jaws of implosion by running the printing presses hard; maybe it'll work.

But in the long run, all those dollars will be coming out of our hides in the form of higher interest rates (to halt hyperinflation), vastly higher taxes (if we figure out how to borrow the money instead of print it), or some combination of the two. Regardless of how that plays out, we're dodging Scylla by stearing straight at Charibdis, so hang onto your hats, 'cuz the next decade's gonna get rough.

Nuff Said: Sinfest on Paulson's New Bailout Plan

2008-10-14T09:17:00.000-07:00

Paulson: <Vader>I am altering the deal. Pray I don't alter it any further.</Vader>
(UPDATE:
According to the Washington Post, the deal is not voluntary.

Federal regulators said they did expect some banks to volunteer, though none stepped forward yesterday. But they added that they would not rely on volunteers. Treasury will set standards for deciding which banks can be helped, and the regulatory agencies will triage the banks they oversee: The institutions faring best and worst will not receive investments. The institutions in the middle, whose fortunes could be improved by putting a little more money in the bank, will be pushed to accept the money from the government.

)

Clearly someone gets it.

Nuff Said: That Giant Sucking Sound

2008-10-02T13:07:00.001-07:00

If I weren't already incensed as to the "good judgement" McCain's showing by nominating Palin (is he tring to force me to vote for Obama?!), this would certainly do it. The whole "it's a crisis, let's elect a king" reflex is never good, but the "we have to act yesterday" drums keep beating....

For half that amount we could simply buy all the foreclosed houses outright and transfer them to HUD (not that I think the Feds have any business having a HUD, but it's better than making Paulson the most powerful man in the world).

Missed Me, by the Dresden Dolls

2008-09-26T21:13:00.000-07:00

Ok, it's song lyric time. This is the first and last time I will ever post song lyrics on this blog. These song lyrics are no pathetic paean to any bedraggled "my lexus key, it cuts me" emo-esque foppery -- no, this's appropriate kudos for a true work of art.

Behold, the most "Wow, that's fucked up" composition you'll ever hear, not only displacing Ein Stuhl in Der Holle, but even edging out Excitable Boy for its "yeah, uhh... huh?" value.

(click title for link to audio)

missed me

missed me missed me now you've gotta kiss me
if you kiss me mister i might tell my sister
if i tell her, mister, she might tell my mother and my
mother, mister, just might tell my father and my father,
mister, he won't be too happy and he'll have his lawyer
come up from the city and arrest you mister,
so i wouldnt miss me if you get me, mister, see?

missed me missed me now you've gotta kiss me
if you kiss me mister, you must think i'm pretty
if you think so mister, you must want to fuck me
if you fuck me mister, it must mean you love me
if you love me mister, you would never leave me
it's as simple as can be!

missed me missed me now you've gotta kiss me
if you miss me mister, why do you keep leaving
if you trick me mister, i will make you suffer
and they'll get you mister, put you in the slammer and forget
you mister, then you'll miss me won't you won't you miss me
won't you miss me

missed me missed me now you've gotta kiss me
if you kiss me mister, take responsibility
i'm fragile mister, just like any girl would be
and so misunderstood (so treat me delicately!)

missed me missed me now you've gone and done it
hope you're happy, in the county penitentiary
it serves you right for kissing little girls, but i'll visit, if you miss me
say you miss me!!
how's the food they feed you?
do you miss me?
will you kiss me through the window?
do you MISS ME? MISS ME?!
will they ever let you go?
i miss my mister so!

Congratulations to Chris

2008-09-24T12:33:00.000-07:00

My brother Chris is now officially wed (last Sunday) to a really neat woman. Yay!

Taleb

2008-09-15T21:59:00.000-07:00

I've been a fan of Taleb for a while now, doubly so now that everything I've ever heard him say has shown itself to be true. Whether or not you have a math or finance background, he's worth reading. And now he has an article in Edge; and even though Edge can be excruciatingly self-congratulatory in it's "we're the smart people" marketing, the article is very worth reading.

Download Chrome

2008-09-02T12:37:00.000-07:00

If you're on a Windows machine, skip Internet Explorer in favor of Google's new browser Chrome. It's positively boring, it works so well. And if you download research papers, you can pull a multi-hundred page PDF in a new tab without seeing any affect at all on the rest of what you're doing(!).

Of course, there's no FoxMarks for it yet, which is my "killer app", so my usage will necessarily be limited, but I highly recommend it.

Nuff Said on One-Upping Sarkozy

2008-08-29T22:27:00.001-07:00

My gun's spoken for, but, on the larger issue, does this seem to anyone else just like Harriet Miers/Geraldine Ferraro all over again, aka, let's get an inoffensive no-one with all the right moral criteria for the constituency to bring in leverage from the 'if it's a woman it must be the right thing' baby boomers? Or maybe she's just PUMA-bait?

The Frog

2008-08-22T23:43:00.000-07:00

Once upon a time there was a frog who thought he should not have to swim. "Swimming's hard, we don't need it" thought the frog, "and anyway, just because everyone else likes to breathe all the time, why does that mean I should?"

And so the frog stopped swimming. The frog's friends didn't understand why he would not swim, and came nearby to stop him from sinking. But no frog can support another who will not swim, and so the frog slipped to where his friends could barely even touch him with a flipper.

The other frogs asked themselves, "What can we do, when he will not swim?" But none of the other frogs had any answers, so they decided that they would hang out nearby in case an opportunity to help came by.

And the frog sank a little more, and was lonely. But swim it would not. "You shouldn't have to swim! Enough of this 'you must swim' regime! Not everything is right for everyone after all!" And the frog floated around, just a little deeper than before.

Just about the time the frog was going nuts wondering why his froggy friends wouldn't join him, he met two new friends, Fish and Eel. The frog really liked Fish and Eel, who both maintained that though they were under the water, that they swam just fine. "Breathing?" said Eel, "You mean ingest air on purpose! Why should anyone want to do that?" Fish agreed, shuddering her fins at the thought.

The frog became fast friends with Fish and Eel, and, though he wouldn't follow them through all their caves, had long debates over the nature of Pond. But all the while, the frog was slowly sinking deeper.

Eventually, the frog hit bottom, and rested there after all the turmoil. "Come, let's play in caves", invited Fish, but the frog knew that playing was really just another form of swimming and breathing, only for the below-air folk, and wasn't interested.

Eventually, the frog started running out of oxygen; his vision swam for him, and everything started getting darker. Looking up at the frog-shaped silhouettes, he thought his final thought:

"I wonder how they climb so very high?"

[Nuff Said] It's just unprecedented

2008-07-31T10:55:00.000-07:00

Dvořák and Beethoven

2008-07-12T14:36:00.000-07:00

I'm over at my mother-in-laws running numbers right now trying to figure out why we're still hemorrhaging our savings, and just realized that when you're hopped up on narcotics for your bad back, even if you're largely immune to opiates (Russ and I seem to shrug off opiates like it's science-fiction), that's not a good time to drink a beer. Tipsy squared!

But since I'm feeling a sudden need to worship at the alter of Procrastinus, I thought I'd mention that Maddie and I were comped some tickets to the San Francisco symphony, to which we got gussied up and went last night. It was the 8th of the Dvořák's famous dances, followed by the Emperor Concerto and, after intermission, From the New World (one of my very favorites).

The woman who played piano for the Beethoven was wonderful -- she came out in a totally black gothalicious gown and candy-red 4" FMPs, and gave what I must declare to be the geekiest performance I've ever seen from a pianist in my life. It was magnificent. She was totally into it in a nonchalant, "this is such cool stuff, and, oh hey, there's an audience there!" kind of way. Really sweet. And her pianissimo attacks were sublime -- it was like hearing a butterfly stomping its feet. Just maginicent.

The 9th was more of a mixed bag. The conductor, who's apparently the heir-apparentto Michael Tilson Thomas (or, to his coterie of would-be boyfriends, "MTT"), the guy came to the podium with the score, which I didn't take to be a good sign. He started the piece in exactly the kind of gentle, sweeping way that Toscanini didn't do it, and I was inclined to be disappointed, but as time went on, things got better. You could really tell the portions of the music that he was concerned about, because they tighted up and you could really get knocked over by the subtle conversations going on, but then it would be back to grand-sweeping mediocrity. The beginning and ending of the piece were so-so (granted, so-so for this piece still makes me happy), but in exactly the middle portion where folks tend to gloss through things he really did a bang-up job. Overall it was a very nice experience, even where he let things go on autopilot -- I'll never be able to afford the kind of sound system at home that can rival tenth-row orchestra seating, so all I've gotta say is if the lady who comped them to my mother-in-law has more of them, I'll be giving a hearty "yes please".

The Problem with Minimum Wages

2008-07-10T11:59:00.000-07:00

Assuming that you don't live in an alternate reality where all wishes are fulfilled, everyone's dreams come true, and unified school districts are Disneyland for the Mind, or, assuming you're not a politician and on the hook to promise such things for fear of other ~~professional panderers~~ politicians selling their "it's so good it MUST be true!" slogans, the economic affects of price controls are well understood by anyone who got a B or higher grade in Econ-101.

Artificial price ceilings demolish businesses profits and (since business's aren't in the charity field) supply gets rarer and rarer until goods can only be purchased on the black market for thousands of times their real economic worth.

Artificial price floors reduce demand and force consumers to find alternative products that they can afford while suppliers clamor for consumers to buy goods consumers can't afford. This also drives suppliers out of business, forcing them to turn to other markets where their goods are desired.

When inflation rears its ugly head, price ceilings bite and price floors are largely moot. Since it takes time for any periodic inflation to permeate an economy, not everyone benefits immediately from the absence of price floors -- in fact, it seems that the poorest of the community generally don't get the benefit, because by the time their wages have normalized, so has the given run of inflation. But at least the floor hasn't bitten them.

When deflation¹ rears its ugly head, price ceilings are moot and price floors bite. The least well-off in a community feel the hit -- for this reason, almost all price floors and conspiracies to put a floor on pricing, are illegal. This is one of those areas where the political consequences are such that price-fixing laws are actually enforced, unlike other statutes for things like, oh, accepting gifts.

But the politicians that be always exempt one item from the "normal" consideration of economic consequences: wages. People always and everywhere say "inflation is bad!", unless it's wage inflation -- if the schmoe collecting carts at the local Wynn-Dixie gets an extra nickel every hour to produce the exact same economic benefit, then since that's a benefit for a Worker^TM, then since every adult worker is by definition a Registered Voter^TM, then, this is seen as economic progress regardless of the fact that this drives down the corporate profits that comprise most of our tax base. During periods of inflation wage-inflation is never taken to be a bad thing by anyone who matters, aka: voters.

Well, almost....

It does matter to voters who work for auto manufacturers, because customers have the option to buy cars from companies that don't have union-controlled wage-inflation. Just like the supplier of goods mentioned above, the supplier of labor to, say, General Motors finds that GM would rather buy more robots than pay an ever increasing cost for the same labor. The unions, who derive their money not from serving their people, but from ~~garnishing their wages~~ collecting dues (which in some states workers must pay regardless of whether they want such "representation"), claim that the answer is to force all suppliers to use union-controlled labor (aka "we want a piece of their wages too!"), thus "evening the playing field". Since we're not yet² a police-state, this "unfair" labor can still be purchased by Toyota, who's creaming GM and other ~~union-infested~~ pro-union producers.

But that's inflation. And right now, despite the increasing costs of materials³, the state of our money supply looks like it's finally left the super-inflation that it's been in⁴. Our real danger right now is coming from the collapse of our money supply (slowed down by the Bear-Stearns buyout); credit-lines, which are ubiquitous under inflationary regimes, are being curtailed left & right as more and more financial institutions are being shown to be "less than fully capitalized"⁵

The supply of money is shrinking, and, with it, people's desire to purchase goods at last-year's prices. This means producers of goods have to produce goods more cheaply than before if they're going to stay in business. There are three time-honored ways to do this:

Eat the losses -- this is ruled out by the dwindling supply of credit.
Use cheaper/fewer materials -- this is ruled out by increasing material costs (even fewer materials still cost more when tallied up).
Use cheaper labor -- they've been doing this for years already by going overseas.

In the domestic market, some producers like airlines have opted for #3 by reducing the pay of stewardesses and pilots (with unions being forced to participate by the bankruptcy courts) -- but these business use relatively small amounts of relatively high-cost labor, so they can cut wages. For those producers who use large amounts of unskilled or semi-skilled labor (the schmoe at the Winn-Dixie), their price of labor is set by the government, so their only alternative is to reduce the number of employees on their payrolls. Or, if they're lucky, they can try to get away with not hiring replacement workers when vacancies come up. Or, if their staff are mostly part-time, they can try to reduce the number of hours per employee.

In this scenario, rather than everyone staying employed but feeling the pain as the market worsens, people who want non-dead-end jobs (aka full-time ones), rather than being able to accept a job for less than last year's wage, are simply shut out of the labor market with nowhere to go. And they can thank their local ~~panderer~~ politician for that.

¹ The Fed acts like deflation is worse than inflation, and would say "it's uglier head", but this is because they see things from a control perspective, and, while they can inhibit demand via the price of money, they have no tools that can create demand in a deflation -- lowering the cost of money under such circumstances is like "pushing on a string". For an example, look at Japan's negative (inflation-effective) interest rates.

²... but it looks like medical treatment is heading that way fast, so that the same government that gives us quality control akin to the Post Office's one-week "overnight" delivery and the customer-service the Department of Motor Vehicles is renowned for can be in charge of every medical transaction in the country, under pain of prosecution.

³ With much of the rest of the world finally moving out of poverty this will only continue. I don't have India's numbers, but China has moved 300 million people out of poverty (the equivalent of the entire US population, and is doing its damnedest to bring the its other 1000 million out of poverty too. All these people are our price-competitors for every raw material from cement to oil, and their ability to pay is increasing.

⁴ Don't believe the Fed's numbers on inflation; just instead ask yourself: do you remember when a Ferrari cost $17,000? I don't, but Bill Cosby does!

⁵ If even Fanny-Mae has only $80B capitalizing $5.2T (that's less than 2% reserves folks!), what do you think the now-embarrassed Wachovia and others will look like once their off-balance-sheet items are brought into the sunshine?

FISA mess gets deeper

2008-07-08T09:21:00.000-07:00

According to an official memorandum from yesterday, the Administration has declared that it will veto any version of the FISA legislation that doesn't offer retroactive immunity to the telephone companies that broke the current surveillance laws (Qwest being the big exception who followed the rules). Now, I know that this plays straight into the would-be fascists at Move-On's hands, but if the updates to the FISA legislation really are as important to USian lives as Bush claims they are, why on Earth is he willing to see it derailed to protect phone companies? They're concerned that companies "might be less willing to assist the Government" by, essentially, violating Federal law.

This means either:

a) protecting the US is less important than papering over violations of federal law (ominous), or
b) the administration firmly believes that it cannot protect the US from within the confines of the law (even more ominous).

It reminds me of the famous Franklin quote about freedom & security....

Oil: another good article

2008-06-27T10:02:00.000-07:00

The picture above makes things pretty clear; click for the article.

Here's an explanation as to why Indonesia's no longer gonna be in OPEC, and why more dominoes will fall....

If there's any single human-alterable cause of oil prices right now, it's fuel subsidies in many countries that want to hide price-signals from their citizens. These subsidies are a political "third rail", even in tyrannies like China and Saudi Arabia.

Without the Hot Air

2008-06-24T16:24:00.000-07:00

Regardless of whether you think global warming is true, false, or beneficial, we do know that we have a looming issue of energy availability for the next few generations. To that extent, a fizzlecist in England has put together the draft of a book that explains the options that people have, based on a numerical approach that respects the fact that a Watt is a lot smaller than a MW.

Highly recommended cluefulness that I'd recommend recommending.

Here's the link: http://withouthotair.com/

George Carlin is Dead

2008-06-23T10:22:00.001-07:00

Sigh... Mr. Carlin made even Terry Gros's show worth listening to...

"Why is it you can get on radio and say you pricked your finger, but you can't say you fingered your *bleeped* ? They're the same words...."

It was bad enough Bill Hicks is gone; now with Carlin gone I wonder: is era of social comedians over?

Obama: best hope for Republicans?

2008-06-20T15:48:00.000-07:00

The Reagan coalition of libertarians, fiscal conservatives and social(Christian) conservatives has been dead since Bush took office; libertarians are seen as a lunatic fringe and the social conservatives tell the fiscal conservatives "where ya gonna go?".

But as I look at Obama's current tax policy recommendations, which would raise the maximum federal marginal rates (all taxes, not just the income tax) to just over 50%, I have to think that the Clinton Democrats are being killed off by Old Labor and other nemeses from the dark past. If Obama's elected, besides the stake it would drive through the pustulent heart of Al Sharpton, it would solidify the demise of centrist democrats, once again putting the kinds of Dems in the white house that Republicans know how to win against: with a Reagan-esque coalition....

Of course, it would come at the cost of social architects on the Supreme Court, and that's not good. The current court's bad enough already--even Scalia's making decisions on policy rather than constitutionality....

Purity Scales

2008-06-11T09:52:00.001-07:00

Just saw the XKCD cartoon above, and was thinking about both Russ and Mike's comments regarding teaching. Surely that cartoon is apt for the sciences, but I wonder about "purity scales" for other fields. Could one really argue that tactics are merely applied strategies, for example?

The View from Mars

2008-06-09T13:38:00.001-07:00

That's a highly telephoto viewing angle, so add lots of nothingness for the complete picture....

What's Going On With Oil

2008-05-29T11:42:00.000-07:00

I've been a follower of The Oil Drum for a while now, and love to check in for their articles, or, the ones I understand, at any rate, as they have an uncommonly high signal-to-noise ratio. Today they have the most succinct and cogent explanation of the oil situation that I've ever seen.

Well worth looking at.

You can't soak the rich

2008-05-21T09:34:00.001-07:00

There's a great editorial over at the Wall Street Journal (click image for link) about this guy named Kurt Hauser from San Francisco, who's demonstrated empirically that government receipts as a proportion of GDP are literally unaffected by income tax rates. One could only hope that the California electorate would start to pay attention and work on pro-business legislation instead of driving more of our companies over to Texas instead.

Sadly, it's not likely with the 'but it sounds good so it must be true' knee-jerk socialists that run the state. Can you believe these idiots want to add a VAT? It's no accident that the places in Europe that are kicking butt are the places growing their GDP (Ireland, Germany), not the ones that are confiscating as much as they possibly can (Spain, France, England). What I don't have a graph to show, though, is GDP-growth rate, which is affected by taxation -- ask Ireland how to benefit from a low flat tax.

But no, the local idiots are going to try to soak the rich to cover the costs of CA's incessant borrowing. Oh, and they're also going to get out of debt by borrowing more!

Doom and Gloom! Whee!

2008-05-12T09:33:00.001-07:00

I know everyone thinks that I'm the perennial financial doom-meister, and, although I think that recent history is actually backing me up, I'd still like to be thought of as kind of a sunny guy.

...but then it's so hard when you see graphs like this:

When you look at this from a bank solvency perspective, you just gotta wonder how they're going to pay all this back. Or are they? Now that the Fed is even taking credit card debt as collateral¹, maybe the plan is just to nationalize all the bad credit, which would be the bail-out of the millennium, and so far beyond the pale that the term "moral hazard" just doesn't work any more.

Students of American history might recognize a few of those "tiny" upward blips....

Yours,

Mr. Sunny Outlook Guy

¹ Just because Congress said you can't wipe out credit-card debt via Chapter 11 doesn't mean these'll actually be worth anything in a high-foreclosure environment that actually makes Chapter 7 look like a better long-term deal for the debtor.

Awwww!

2008-05-08T12:57:00.000-07:00

I know that for a red-blooded American male I have an overgrown sense of cute, but this one tops it even for me. It seems that a fox cub was orphaned in Nizhni Novgorod. In order to save its life, they decided to ask one of the local mother cats to foster it, which it did....

... and as an aside, will someone please hurry up and domesticate foxen so I can have my kittendog?

Red Belt

2008-05-01T14:19:00.000-07:00

I just heard on NPR a (too-short) interview of my favorite actor, Chiwetel Ejiofor, who's in some kind of drama by David Mamut called "Red Belt". I'm not a Mamut fan, but if you're a fan of Ejiofor, you may want to check it out.

In case you're not familiar with him, he was the Operator in Serenity, the doctor in Dirty Pretty Things and the drag queen in Kinky Boots. Fan-f*cking-tastic actor of the minimalist variety.

Not being a Mamut fan, this'll be a renter for me, but I'll definitely be seeing it.

Nuff Said: Non-Human Intelligence

2008-04-28T12:58:00.000-07:00

That's an oranghutan trying to fish with a spear!

An Engineer's Guide to Cats

2008-04-22T19:34:00.001-07:00

Copeland

2008-04-21T21:21:00.000-07:00

Aaron Copeland just came on the radio and Maddie responded by saying "... and suddenly I want steak".

Gimme Gershwin any day....

Nuff Said: Don't Reincarnate As A Mountain Goat

2008-04-17T09:25:00.000-07:00

Causing Poverty

2008-04-11T09:09:00.000-07:00

This political season has made for some great entertainment watching Othello duke it out with Lady Macbeth. As pretty much everyone who knows me is aware of, I'm rooting for Othello¹, but certainly not because I think that he has a clue economically. Very good he is at getting votes and, given his academic credentials, I assume that he's damn good at citing chapter and verse from legal texts. But this is a far cry from understanding how our nation actually works, or how economies work in general. Both of them have been guilty, at some point or other in this campaign of seeking to "identify and root out the causes of poverty in our nation". What a knuckle-brained idea.

At this point, I'd like to advance a small thesis, one that I would hope to be self-evident:

What we call "poverty" has been an aspect of the state of humanity since the dawn of history, remains the state of most of humanity, and has always been the state of most of the natural world. As such, "poverty" on its grand scale is not the result of causation, but is the result of lack of causation.²

I think the big sticking point is the definitions that people casually use for the opposite of poverty, "wealth". If you have as your operative definition of wealth "ill-gotten gains resulting from exploiting the masses of commodity-laborers"³, then you're nearly guaranteed to have a captive constituency of commodity-laborers who, depending on the individual, either cannot or will not elevate themselves from their commodity status. This certainly works for the philosophical socialists and their more numerous brethren, the socialists-of-convenience, among us, but does nothing for arriving at an understanding that can be used for anything. Show me one med-student or overworked lawyer who has actually "raised the jackboot of oppression over the supine body of the proletariat"⁴ -- not the way things work. I've seen more than one instance of someone being a jackass or worse to further him or her self personally, but this's different from claiming that the systemic actions of individuals going about their business "cause poverty". More often than not, the "causes" of poverty cited turn out to be a lack of voluntary charitable donations of time or money on the part of people busy supporting themselves and their own.

All this rhetoric, as well as a whole bunch of other societal ills, goes away in an instant when one actually regards the true meaning of the word wealth: "surplus". Regarding a lack of surplus to be caused, in general, would be as silly as regarding darkness to be caused by someone hoarding light. The great genius of several species⁵, including our own, is to work to create a surplus, then to dispose of that surplus at need. We've gotten so good over the centuries at creating and retaining surpluses that we've not only figured out how to exchange surpluses with other people, we've invented vast systems for disposing of excess surpluses. In fact, for a long period of time centers of power competed with each other for how artfully they could squander surpluses⁶.

The baseline determination of who's wealthy encoded in the sentiment "having more than you need" is wrong not only due to the implication that one becomes wealthy by taking more than one's share, but also because it ignores the fact that not all surpluses are equal. We've all seen examples of people with lifestyles that are way beyond our own means who complain incessantly of how they wish they were better off. These people have fallen into the common trap of exchanging too much of their liquid surplus for illiquid surpluses. Whether it's upgrading the kitchen to the very latest granite counter-tops, buying the Bentley one's always wanted, or simply moving into a higher-end neighborhood⁷. It's one thing to have an item, but it's quite another to be able to consume it, and for all the moral talk against "consumer consumption", the fact of the matter is that we all have a baseline consumption that we must meet, plus an extra level that we entitle our "lifestyle", to which we're sufficiently accustomed that we maintain it as if it were part of the baseline. While we retain property rights over non-consumable items, it's only those items that we can either consume, or which we can exchange for consumables, that really define our surpluses. Surely, if we get in financial trouble, we can sell our thousand-inch plasma-TV on Craigslist, but we can only do so at a significant discount from what we paid for it, and at a price that is difficult to determine ahead of time -- not the stuff monthly budgets are made of.

The "cause", so to speak, of poverty is, simply put, failure to create or retain consumable surplus. If we're avid gardeners and have access to land, we can grow and set aside stores of food for later use. We can also sell our labor for more than our lifestyle costs and pocket the difference. Then of course, one also has to dodge Uncle Sam, who'll come through and grab our surplus for the "public good"⁸; lately Congress & the Fed's theft of our surpluses via currency devaluation has become quite a matter for concern too⁹. But however it goes, what we have to do to stay out of poverty is to amass surpluses.

So all that having been said, what I'd really like to see from politicians who claim to care about the poor is a debate not on the causes of poverty, but on how we can identify and remove obstacles to an individual's ability to generate wealth¹⁰, and what can be done to ameliorate these obstacles without simply stealing, as the great sage Izzard said, "from people who are comfortable and giv[ing] to the moderately impoverished". Rolling up our sleeves and creating wealth was what made this country great, not the current situation where our governments are the largest block-employer¹¹. We don't have to be the world's biggest debtor-nation -- we can get the ship aright again. But we'll never do it while supposing that wealth is the natural norm and poverty the aberration.

¹ I'm rooting for Obama not because I think he'd made the best president of the three, but as a strategic play. Obama's "towards a more perfect union" rhetoric is working so well because independents and those Dems who don't happen to be shrill zealots are sick to death of the Gramsci-esque "I'm a Righteous Anger Studies major planning a divisive career in Identity Politics". Clinton, OTOH, is a confirmed Gramsci follower. If we can muddle through four years of incompetent socialism to remind the Republicans of what (fiscal) conservatism is all about and get them back on the wagon, while simultaneously removing one of the fangs from the Marxists on the left, I call it a good deal: may the best conservative win in 2012. Now that the macro-economic sins of the past two decades are coming back to haunt us, the disaster that we risk during the '08-'12 time-frame might even help to dissuade the public of the curious left-wing notion that if only a few of us can afford something, then somehow, collectively, we all can. Wishful thinking, perhaps, but the combination of a non-Gramsci-esque political approach plus a discrediting of idiot-socialism seems worth the risk.
² Clearly genocides, murders and crippling diseases all can be regarded as individual causes of instances of poverty. Anyone who argues otherwise is an idiot; but I'm talking about the larger picture here.
³ Under the sanctifying label of "workers", as if 60-hour weeks at a desk fail to constitute "work".
⁴ Not original to me: my socialist friend used the term humorously to describe her time purchasing labor from her employees.
⁵ Ants and squirrels, for example.
⁶ The palace at Versailles, Beethoven's symphonies and the only English gift to cuisine, ice-cream, might be good examples. Dubai is perhaps our finest disposer of surpluses at the moment, but I suspect the Chinese will catch up one day.
⁷ Michelle Obama has famously complained that things are so financially tight for them, in spite of enjoying a high-six-figure income and living in a mansion.
⁸ Which I generally define as enriching politicians at the public's expense, but that could be Lazarus Long's influence.
⁹ This is not a total loss -- since fiat currencies are inherently inflationary, the theft of ordinary people's savings by the legislature is somewhat offset by the fact that the super-rich cannot simply save their money or it will likewise erode. When you have seven figures in your savings account, these kinds of inflationary losses are huge, so this inflationary tendency forces the super-rich to purchase labor via the equity markets (public or private). It's hard to overstate how important these capital flows are to the rest of us, albeit indirectly: if you want to see what a country without (re)investment looks like, North Korea and Somalia are very good examples.
¹⁰ Vouchers to get inner-city students out of the drop-out factories euphemistically referred to as "schools" would be a good start....
¹¹ Our governments, taken as a sector, employ almost a million more people than the next largest sector, wholesale & retail trade: roughtly twenty-three-ish million people.

What's that gun?

2008-04-01T12:31:00.000-07:00

If you listen to the recording of this firefight, there's a BRRRRAP that sounds a lot like a vulcan-phalanx cannon, but those things aren't exactly man-portable. Anyone hazard a guess?

Nuff Said: I WANTS ONE

2008-03-20T16:05:00.000-07:00

The Chart to Watch

2008-03-20T10:15:00.000-07:00

As we're all aware of by now, the Fed's propping up the commercial banking sector by monetizing debt, which my brother assures me is how all great powers eventually wane -- I suspect that's true, too. It's why my normally uber-conservative bond-laden 401(k) has a little over a pound of proxy gold in it (StreetTracks Gold Trust, GLD) as an inflation hedge.

I don't know how often it's updated, but the wickedly friendly FRED charting facility that the St. Louis Fed puts out has the following chart available:

The Fed was already allowing the commercial banking sector to debase the currency by explosive creation of monetary equivalents (esp. via the USDJPY carry trade), but this chart shows the amount to which credit is being extended using essentially worthless collateral. Or maybe not worthless; who knows how many of the subprime mortgages will really blow up in the long run, but certainly not the AAA-rated cash-reserve-equivalent collateral that should be used. Right now the Fed has no choice if it's going to fulfill its second mandate of protecting employment. Right now we're so close to Scylla that aiming the prow at Charibdis (sp?) doesn't seem like that bad of an option, but once we're in the jaws of the latter foe, this chart'll help show just how much white-phosphorus we've added down in the boilder room.

Helicopter Ben To The Rescue

2008-03-18T12:54:00.001-07:00

There's something really weird on the radio tonight: sounds like Holst meets Gershwin....

Anyway, there's obviously a lot of news about the bail-out of Bear Stearns, and I'd like to chime into the chorus with a view that'll be anathema to some and gospel to others -- it wasn't a bail-out.

I repeat: it wasn't a bail-out.

This time last week Bear Stearns's stock price was $75/sh -- today it spiked up to $6. Shareholders and employees of B.S. (my, what an unfortunate set of initials!) have taken it in the shorts -- we're talking about livelihoods lost, retirements ruined, portfolios smashed. No-one with an interest in Bear Stearns's success was helped one iota by the Fed's actions. We'll see if their CEO keeps his shirt when the civil suits are finished with him, but anyway....

The phrase to keep in mind is "counterparty risk". I'll circle back to that in a second, but basically we should regard the derivative markets (literally: where an asset is created that derives its value from the value of some other asset according to fixed rules) as a ticking time-bomb, and Helicopter Ben's trying like mad to cut the right wires. There are all kinds of examples that one could give, like options, futures, options on futures, etc. all the way up to 6th-level arcana like convexity-swaps, but the point can be made via garden-variety short-selling. When you sell a stock short, you borrow the instrument in question and sell it, creating an IOU to the holder of the stock that you have to make good on, hopefully by buying the stock back at a lower price. Nowadays the exchanges make short-sales very easy (depending on which exchange and under what rules, they may not even have to borrow the stock any more, but let's pretend they still do). If we had to enter into these stock-lending arrangements on our own, very few short-sales would happen, because let's face it: good intentions don't count when you're talking about seriously real amounts of moolah. The reason that any short-sales actually happen is because someone takes the role of a "market maker", which they do not only by having a big building and lots of account numbers, but also by assuming the counterparty risk of the market's participants. So if you loan me 5,000 shares of Microsloth so I can sell them short, but it turns out that Vista SP2 is such a rampaging success that Richard Stallman does a public-service TV commercial for them, you don't have to worry that I've just lost my shirt and can't get you your shares back -- the market maker will make you whole and then will send guys with violin cases to collect from me.

Although Bear Stearns was a smaller player among "the big guys" on Wall Street, it held bazillions of financial instruments, all of which had "in case of bozo, see Bear Stearns to be made whole" metaphorically stencilled upon the back of them. We all know how much "bozo" there has been to go around in so far as exposure to the sub-prime lending debacle goes -- it's been sorely straining market-makers to the point that the Fed has had to reinvent its product-line to keep banks upright. But Bear Stearns was not only a market-maker for a lot of those instruments, but also took highly-leveraged positions in this toxic-waste market itself! In its greed it nuked itself ... and their shareholders have gotten creamed for it; wham-bam-thank-you-ma'am, they're outta there.

What Bernanke just engineered was not merely a face-saving gesture so that the Wall Street Journal didn't have "BEAR STEARNS BANKRUPT!" plastered across its front page; Bernanke in fact just saved the commercial banking system from a run on it that would have made Black Monday (which was when Russia said "you know all those pesky bond-things y'all are holding that you think we're going to pay back, uh, I wouldn't go using them as collateral for any assets you care about") look like a walk in the park by comparison. All of those we-owe-you's that Bear Stearns has floating around would have had their status's changed from "it's Bear Stearns, of course they're good" to "I wonder how much I'll have left once the bankruptcy judge's finished with 'em". You and I don't normally pay too much attention to the solvency of our local banks, because unless we've got an account with over $100,000 in it (Mother May I?), the FDIC will make us whole in case our bank goes bozo. But most of the modern banking system isn't part of the FDIC, so if Bear Stearns had been allowed to go toes-up, there would have been tens of thousands of people with big smoking craters where there wallets had just been, and the rest of the already-skiddish commercial-banking customers would have gone "holy fucking shit on a horseshoe, Jack, I'm cashing out my account like mucho-pronto". This would have not only have led to the complete destruction of what reserves the banking system has left, but would have killed the extension of credit to anyone, no matter how good their FICO score. Imagine most of the world trying to cash out their dollar-based derivatives -- most of them being highly leveraged affairs. Next to "bloodbath" in the OED would be the phrase "300 trillion notional dollars in assets cutting their prices in competition for 1.4 trillion dollars of hard currency". Total nightmare -- you'd be able to buy a Lexus for a thousand dollars, but you'd be too shit-scared to take anyone up on the deal. Normally a bank won't call (demand immediate repayment) a mortgage with a loan-to-value ration less than 80%, but under that kind of scenario, what do you think your house would be worth? With all of its creditors suddenly turned into jackals, how long would your employer keep the lights on? Bad. Bad bad bad.

Instead, J.P. Morgan has "bought" Bear Stearns for a price so ridiculously low that you might as well consider it an administration-fee, and the Federal Reserve has guaranteed all $30B of Bear Stearns's outstanding obligations.

Bailout? Nah, I call it salvation.

Deep Kim Chee

2008-03-17T17:06:00.000-07:00

Holy Fuck!

It's no wonder that Bernanke is rushing to nationalize so much of our debt. I just don't have words to describe how bad this is, but I rescind all criticism of "Helicopter Ben". Tank the currency, inflate our way outta dept, whatever it takes....

This, sports fans, is bad.

Quiet Lately

2008-03-12T14:06:00.000-07:00

Just in case anyone's wondering, I haven't fallen off of the planet; I've just been really busy after the last re-org -- we're drinking from the firehose over here trying to get up to speed on what everything is, how everything works, etc., with a baptism-by-fire "Welcome to the NFL" preliminary task to get us all started....

Will resume more postings when I understand SCA, SOA, SDOs, EJBs and several other TLAs.

David Mamut becomes a Libertarian

2008-03-12T11:46:00.000-07:00

That bastion of right-wing conservative authoritarianism The Village Voice has an excellent article about famed neo-Con playwright David Mamet's fall to Libertarianism. Mamut's betrayal of the political principles this country was founded upon will surely reverberate for months as the mainstream right-wing intelligencia of our nation's universities cope.

Yes, I'm being satirical, but the piece is real, and well articulated.

An Excerpt:

I found not only that I didn't trust the current government (that, to me, was no surprise), but that an impartial review revealed that the faults of this president—whom I, a good liberal, considered a monster—were little different from those of a president whom I revered.
Bush got us into Iraq, JFK into Vietnam. Bush stole the election in Florida; Kennedy stole his in Chicago. Bush outed a CIA agent; Kennedy left hundreds of them to die in the surf at the Bay of Pigs. Bush lied about his military service; Kennedy accepted a Pulitzer Prize for a book written by Ted Sorenson. Bush was in bed with the Saudis, Kennedy with the Mafia.

In entirely other news, somebody knows me....

Memory Lane, Clinton style

2008-02-26T21:48:00.000-08:00

For those who weren't in Washington DC during the Clinton years (especially the earlier ones), Maggie's Farm has a pretty good list of why I'm so opposed to her. I'm all for an eventual female president, but HRC should be allowed no closer to the Presidency than it takes for a Secret Service agent to taser her (preferably on YouTube)....

Hillary Clinton has been telling America that she is the most qualified candidate for president based on her 'record,' which she says includes her eight years in the White House as First Lady - or 'co-president' - and her seven years in the Senate. Here is a little reminder of what that record includes:

As First Lady, Hillary assumed authority over Health Care Reform, a process that cost the taxpayers over $13 million. She told both Bill Bradley and Patrick Moynihan, key votes needed to pass her legislation, that she would 'demonize' anyone who opposed it. But it was opposed; she couldn't even get it to a vote in a Congress controlled by her own party. (And in the next election, her party lost control of both the House and Senate.) -

Hillary assumed authority over selecting a female Attorney General. Her first two recommendations, Zoe Baird and Kimba Wood, were forced to withdraw their names from consideration. She then chose Janet Reno. Janet Reno has since been described by Bill himself as 'my worst mistake.'

Hillary recommended Lani Guanier for head of the Civil Rights Commission. When Guanier's radical views became known, her name had to be withdrawn.

Hillary recommended her former law partners, Web Hubbell, Vince Foster, and William Kennedy for positions in the Justice Department, White House staff, and the Treasury, respectively. Hubbell was later imprisoned, Foster committed suicide, and Kennedy was forced to resign. [The FBI were not allowed to investigate the site of Foster's death: the Clintons required the Federal Park Police to do it! They also barred the FBI from looking into Foster's office (via Nussbaum). To be fair, all this could have been Bill's work...]

Hillary also recommended a close friend of the Clintons, Craig Livingstone, for the position of director of White House Security. When Livingstone was investigated for the improper access of up to 900 FBI files of Clinton enemies (“Filegate”) and the widespread use of drugs by White House staff, both Hillary and her husband denied knowing him. FBI agent Dennis Sculimbrene confirmed in a Senate Judiciary Committee hearing in 1996 both the drug use and Hillary's involvement in hiring Livingstone. After that, the FBI closed its White House Liaison Office, after serving seven presidents for over thirty years.

In order to open “slots” in the White House for her friends the Thomasons (to whom millions of dollars in travel contracts could be awarded), Hillary had the entire staff of the White House Travel Office fired; they were reported to the FBI for 'gross mismanagement' and their reputations ruined. After a thirty-month investigation, only one, Billy Dale, was charged with a crime - mixing personal money with White House funds when he cashed checks. The jury acquitted him in less than two hours.

Another of Hillary's assumed duties was directing the 'bimbo eruption squad' and scandal defense:

---- She urged her husband not to settle the Paula Jones lawsuit. ---- She refused to release the Whitewater documents, which led to the appointment of Ken Starr as Special Prosecutor. After $80 million dollars of taxpayer money was spent, Starr's investigation led to Monica Lewinsky, which led to Bill lying about and later admitting his affairs. ---- Then they had to settle with Paula Jones after all.---- And Bill lost his law license for lying to the grand jury ---- And Bill was impeached by the House. ---- And Hillary almost got herself indicted for perjury and obstruction of justice (she avoided it mostly because she repeated, 'I do not recall,' 'I have no recollection,' and 'I don't know' 56 times under oath).

Hillary wrote 'It Takes a Village,' demonstrating her Socialist viewpoint. [I'm just fine with her putting her belief's in public; this may have been her one case of truth-in-advertising -- but not an advert any libertarian's going to like.]

Hillary decided to seek election to the Senate in a state she had never lived in. Her husband pardoned FALN terrorists in order to get Latino support and the New Square Hassidim to get Jewish support. Hillary also had Bill pardon her brother's clients, for a small fee, to get financial support. [I'd actually like to see some cites for this one, but it wouldn't surprise me.]

Then Hillary left the White House, but later had to return $200,000 in White House furniture, china, and artwork she had stolen. [The Clinton's claim that these were 'gifts' in spite of the (very) well known law stating that gifts received over <current statutory amount> become the property of the gov't. Even as a pond-scum level consultant for DOE, I had to certify awareness of these laws....]

Hillary's husband further protected her by asking the National Archives to withhold from the public until 2012 many records of their time in the White House, including much of Hillary's correspondence and her calendars. (There are ongoing lawsuits to force the release of those records.)

As the junior Senator from New York, Hillary has passed no major legislation. She has deferred to the senior Senator (Schumer) to tend to the needs of New Yorkers, even on the hot issue of medical problems of workers involved in the cleanup of Ground Zero after 9/11.

Hillary's one notable vote; supporting the plan to invade Iraq, has since been disavowed.

Since she claims "35" years of experience, technically one should also cite Cattle-Gate, the Castle-Grand affair (aka Webster Hubble), union-busting for WalMart (which I'm for, but doesn't look pretty on her record for unionistas), etc. But honestly, the "sniff test" was failed long ago. Compared to HRC, I'd even take Santorum for President (*shudder*).

'Nuff Said: The Clintons, TNG

2008-02-17T21:17:00.000-08:00

God Bless Surplus Russian Ammo

2008-02-09T21:27:00.000-08:00

Pure comedy gold, it is.

Railgun prototype

2008-02-01T13:26:00.000-08:00

It looks like the prototype for the Navy's rail-gun is operational. Once ship designs allow for the power-diversion necessary, this will put the concept naval bombardment back on the map, but without that "yeah, but they only carry x Tomahawks" problem! If it can be made fast-firing, at that speed it might feasibly even be useful for point defense!