Wednesday, December 31, 2008

Black-eyed Peas for New Year's

... they're supposed to bring you good luck if you eat them*. I'm not sure if I can have a luckier year than 2008, but I'm going for the black-eyed peas anyway. I found a good recipe for Hoppin' John on this site and will be making it tomorrow.

From The Glory of Southern Cooking, by James Villas (Wiley, 2007).

¼ pound slab bacon, cut into ¼-inch cubes

1 small onion, finely chopped

1 stalk celery, finely chopped

1 clove garlic, minced

2 pounds black-eyed peas, fresh or frozen

Salt and freshly ground pepper to taste

Red pepper flakes to taste

Hot, cooked rice

3 large ripe tomatoes, chopped

1. Fry the bacon in a large saucepan over medium heat until crisp. Pour off all but 1 tablespoon of the fat. Add the onion, celery and garlic and cook, stirring, for 2 minutes.

2. Add the peas, salt and pepper, red pepper flakes and 3 cups water. Bring to a boil, reduce heat to low, cover and simmer until the peas are tender but not mushy, about 1 hour. (It may take less time for frozen peas, so taste them after 30 minutes.)

3. Drain the peas, then serve over hot rice topped with chopped tomato.
Possible photocookingblogging to follow.

* - there's no report of what they're supposed to do if you throw them out the window of your car as you drive on the freeway. If you do that, let me know what happens.

The Snack Situation at Work

... has become so desperate that I am now eating Nutter Butter Bites.

Please pray for me.


This fellow followed our fog-watching ship yesterday as we cruised out of San Diego Bay to look for whales fog.

Click on the image for a larger version.

The Very Deep Thoughts of Jenny Holzer

... can be found on Twitter. Really. At 140 characters a pop, she'll give you one gem after another. She's the perfect guru for our age, so move over, St. Augustine! Jenny's a real intellectual.

Here are a few of her winners. All of them are in CAPS because I think she doesn't know how to work the shift lock key.



OK, I give up. All that time wasted reading Aquinas, Augustine and the rest and I could have been following Jenny. Thanks, Jenny!

Err, does anyone know who this Jenny Holzer airhead is?

Update: She's a conceptual artist. That means she does shallow, imbecilic pieces of art that look profound to anyone with an IQ under 90 or anyone from the NYC art scene. Here's her set of truisms. Man, I hope she's getting a grant from the NEA. It would serve us all right.

Tuesday, December 30, 2008

Fun Facts About Fog

Today, the kids and I and one of their friends went whale watching. We didn't see any whales. Instead, we cruised out of San Diego Bay right into a huge fog bank. The fog looked like this.


As a special bonus, there was a fog expert on board who gave us a long lecture about fog*. Here, with a stylistic acknowledgement to Harvey and Frank J, are the highlights of her talk.

  • Fog is made up mostly of water vapor.

  • It also contains trace amounts of chromium, potassium and pancakes.

  • In the South they're called griddlecakes.

  • Fog migrates from the ocean to the shore every day.

  • Do not make any sudden movements around fog. If startled, it can deliver a painful sting.

  • Fog is not deterred by crosses, garlic or silver bullets.

  • Instead, you can ward off fog with some sliced mushrooms and onions sauteed in chicken broth.

  • Fog's only vulnerable spots are its eyes. If you have to engage in hand-to-hand combat with fog, go for its eyes.

  • The Spanish word for fog is La Jolla.

  • Fog has a symbiotic relationship with whales. It hides them and they sing to it.

  • Fog is more afraid of you than you are of it.
There. I hope that helps you the next time you have to deal with fog. We all thoroughly enjoyed our fog watching cruise. It was foggerific!

* - She may have been a whale expert from Scripps Institute of Oceanography, but I wasn't really paying much attention. I was revelling in the glory of fog instead.

A Downbeat Assessment for Gold

... can be found at Alan Brochstein's excellent blog. Here's one particular portion that caught my eye.
On the supply side, I expect to hear about central bank liquidations eventually. According to the World Gold Council, the U.S. has about 8000 metric tons of gold. This may sound like a lot, but at $750 oz, this is "only" $211 billion. According to that same source, the U.S. is anomalous in that it holds over 70% of its reserves in gold compared to foreign currency. The total amount held by central banks and the IMF is approximately 29,000 metric tons, or about 20% of all gold.
Unlike oil, which is used as it's produced, gold just sits there. If national governments decide to pay for their shopping sprees by selling gold, that's going to be bad for everyone who invested in gold expecting it to appreciate.

Fun With Photoshop

I took a photo of a rusted out drain pipe sillouhetted against the sky while at the tidepools yesterday so I could bring it into Photoshop and play with it. I've never tried this kind of thing before, but I think I like the results. Here's the original:

Here's the end result after liquifying it and chaging the rendering.

Click on the images for larger versions.

Point Loma Tidepools

My daughter and I went down to t5he Point Loma tidepools yesterday to play with our cameras. This was my favorite of all the pictures I took, not because of the subject matter, but because of the way the colors came out. Click on it for a larger version.

Monday, December 29, 2008

For Kelly, the Little Black Dog

... it's a Cheezburger of the Day just for Kelly.

funny pictures of cats with captions
more animals

Predictions from Minyanville

Here's an interesting post I just found from a link over at Mish's blog. Some tidbits, first with the basis for the predictions and then one of the predictions themselves:
From 30,000 feet, everything the Treasury and the Federal Reserve have done over the last several months has been far less sophisticated than they perhaps want to be given credit for:
  1. The government is absorbing as much private domestic debt as it can get its hands on.

  2. To sustain its ability to absorb the debt, the government is effectively destroying large swaths of it by debasing the currency with which it will presumably repay it.

  3. If points 1 and 2 were not enough for our foreign creditors to swallow, the US government has the hubris to expect that they will continue to finance our sacrosanct standard of living with fresh credit at laughably low rates.
It's the ultimate game of chicken, where we bet that foreigners won't have the courage to step back and let the US economy collapse. To complicate matters, how the parties will navigate this game will be driven not only by economics and finance, but by diplomacy and foreign affairs.

Some gut-feel 2009 calls in no particular order:
  • If the Fed continues to manipulate 10- and 30-year Treasury rates down at these levels, the US will experience a failed auction of its debt, which will effectively shift control of our long-term rates over to our creditors.
It's worth reading the whole thing.

Cash is king at all levels right now, from the personal all the way up to the national. I still like Australia.

Why I Like Australia

... and not just as a vacation destination, but in terms of coming out of the financial crisis in pretty good shape, too. Here's my college freshman-level take on who the winners might be coming out of the financial crisis.

First off, I'd suggest that there are three countries that are in reasonably good shape to weather this financial storm. They are Germany, Australia and China. Let's take them one at a time, but first, let's lay out some ground rules for judging them.

The financial crisis was caused by too much debt, debt that couldn't be repaid. The recession is going to reduce income for each nation's government. Some countries will end up defaulting on their loans (a few already have) and some will devalue their currencies by printing money to cover their debts (England is in the process of doing this now). In order to escape the trauma caused by default or devaluation, a nation has to have cash reserves, low debt or both. Here's how these three stack up.

Germany has been running a current account surplus equal to about 7% of their GDP. If the US was doing that, we'd have a trade surplus of $910B! Germany has been storing up the cash. Germany has a large national debt, about 65% of GDP. By comparison, the US has a debt about 61% of our GDP. So Germany has a tidy pile of cash, but a bit of a debt problem. The German government has so far resisted calls for monstrous stimulus spending. They may be the only prudent ones in all of Europe. That's all to the good.

Unfortunately for Germany, they're exposed to monstrously huge defaults by their European brethren. Greece, Italy and Spain all look poised to default on their loans. Since all of them use the Euro, that can't be good for the currency. It definitely won't be good for German banks. My gut feeling is that the German government is staying out of the stimulus race, knowing they've got huge bank bailout bills just around the corner.

Germany is in good shape, but China is in much better shape.

China has trillions of dollars in cash and securities, built up over years of exporting more than they import. When Barack Obama talks about a massive stimulus plan and poses for his FDR-like portrait, guess whose money he'll be using? That is, until the Chinese decide that investing in China is better than investing in the US. After that, Obama might want to put on a hobo costume for his presidential portrait.

China can go completely crazy with stimulus spending and not go into debt for a long, long time. I think they'll do just that. China is still a dictatorship and the one thing dictators value above all else is stability. China will pay any price to avoid calling out the army to shoot demonstrators.

One thing I don't like about China is that I don't trust their accounting. Everything I read about it tells me it's a very murky business indeed. Who knows what's being spent where and what the true costs and prices are. Another problem with China is that in spite of the images you see in the news, China is still a very poor country.

That leads us to Australia, the last bastion of Western Civilization. While George W. Bush left Obama a mammoth deficit, Prime Minister Howard left his successor, Kevin Rudd a tidy $10B surplus. If that had been the US, it would have been a surplus of about $168B. Instead, Obama inherits a deficit of over $400B.

The Aussies are entering the stimulus race, too, but they're approach is much smaller than Obama's wild spending plans and they start with a national debt of only 17% of their GDP - one fourth of our own. Even if they jump into the shark tank with Obama, they've got a long way to go before they get into serious debt trouble.

Unlike China, Australia's financial system is modern and relatively clear. You can invest in Australia without wondering just what is going on with your money.

Finally, one of Australia's biggest trading partners is China. Australia exports a lot of raw materials to the Chinese, raw materials that are necessary to build the infrastructure the Chinese will almost assuredly start building to prevent unrest.

If I was going to pick a clear winner coming out of the crisis, it would have to be Australia.

Sunday, December 28, 2008

My Daily Financial Reads

In the process of learning about the financial system and educating myself about what happened during the financial crisis, I've gone through lots and lots of news sites and blogs. I've finally settled on some favorites, ones that I think give me reliable information and news and I thought I'd share them with you.


Bloomberg. Bloomberg has a great splash page with a bulleted list of the most recent financial headlines. It's site is clean and easy to navigate, unlike the new Wall Street Journal. While the WSJ still has some good news and reporting, the site is so encrusted with advertisements that it can be slow to load and annoying to read. No, I don't want to see a video advertisement for Apple load and start playing every time I visit your site, thank you very much. Bloomberg gives you the stories in a concise an useful way.

Broad Economic Analysis

Mish's Global Economic Analysis. This one is my favorite. If you go back in time and read Mish's columns from 2007, you can see that he called the crisis long ago. He's an economist from the Austrian school, meaning he believes in free enterprise and market forces. He is strongly against both the bailouts recommended by the Keynesians and the money printing recommended by the monetarists. He gives a great summary of the day's news and analyzes it well. The comment threads on Mish's site are inhabited by some very smart people. It's worth reading them as well.

Greg Mankiw. Greg is a monetarist and a Harvard economics professor. He has friends across academia and posts links to their pieces and provides cogent analysis of his own. Greg turned off his comments a while back because of an infestation of trolls.

Marginal Revolution. MR is run by a pair of economists who are from the Austrian school. They comment on the day's news and articles from economists who don't agree with them. Their site is a good way to get a pulse of the overall discussion. They're opinionated, but not strident.

Investment Advice

This set is not yet time-tested. It's my current group of daily reads. I learned the hard way earlier this year to follow my own thoughts and take the advice of others with a grain of salt. Right now, I'm really interested in the future of oil and metals and these sites give me a nice roundup of opinions and analysis.

I do not read any sites that deal with technical analysis of stocks where they apply wave theory to charts and graphs. I think that's utter nonsense. I'm trying to look at the world with as long a time frame as possible and am not interested in daily gyrations. I want to invest in companies that I would be happy to manage.

Jim Jubak. This is one of my financial guru's favorites. Jim provides both written and video segment analyses of the markets. He deals with the financial fundamentals of stocks and does so in a very accessible way. Watch this 5-minute segment on oil prices and you'll get the idea.

Seeking Alpha. Caveat emptor on this one. It's a hodgepodge of analysts and stock pickers. I only use it to get a read on what others are thinking. I haven't yet found anyone on this site I follow regularly.

Money Week. This is another caveat emptor site. These guys seem to be goldbugs which doesn't give me much faith in them. I haven't read them long enough to get a good sense of their track record. I like them because they hate debt and deficit spending.

There. That's my list. If you've got suggestions, I'd love to read them.

Update(s): Commenter John suggests the Financial Times. Thanks, John!

Saturday, December 27, 2008

It's a Very Disposal Christmas

We gave the four-legged In-Sinkerator a toy for Christmas.

With predictable results.

It was a canine stimulus package. $6.99 shredded in under 90 seconds.

A Must-Read

This article by Peter Schiff in the Wall Street Journal says what I've been thinking and blogging about for a while, but much more cleverly and succinctly. Here's a tidbit.
It would be irresponsible in the extreme for an individual to forestall a personal recession by taking out newer, bigger loans when the old loans can't be repaid. However, this is precisely what we are planning on a national level.

I believe these ideas hold sway largely because they promise happy, pain-free solutions. They are the economic equivalent of miracle weight-loss programs that require no dieting or exercise. The theories permit economists to claim mystic wisdom, governments to pretend that they have the power to dispel hardship with the whir of a printing press, and voters to believe that they can have recovery without sacrifice.
Read the whole thing.

H/T: Carpe Diem.

Quote of the Day

... from The Australian, an on-line newspaper I've been reading a lot lately.
Watching the world's biggest economy this year has been like living with a teenage girl: So much drama.
I love it.

Christmas Cat

Our Maximum Leader got a fishing rod with three catnip-flavored fish on it from my daughter. I didn't think she'd go for it, but here she is, hooked!

Catnip, fish and a string! What a great combination!

Friday, December 26, 2008

Some Sharks Work at Aquariums

Dig this.
As the jostling continues over a stimulus package containing upwards of $850 billion in federal spending, it’s hard to find a trade group without a strong opinion about where the money should go.

The latest pitch comes from the Association of Zoos and Aquariums, touting the “shovel-ready” infrastructure projects at the nation’s zoos and aquariums that should be eligible for stimulus funding, they argue. The organization has even adopted President-elect Barack Obama’s rhetoric twinning short-term jobs with long-term environmental concerns.
Well, where else* would you expect to see sharks?

* - the ocean. The environmentalist lobby is in overdrive grabbing for "green investment" dollars.

The Sharks are Circling

... they can smell $1T worth of blood in the water.

Here a shark.
The country's largest retail trade association asked President-elect Barack Obama Tuesday to add a series of sales tax-exempt shopping days to a coming economic stimulus package in an effort to revive consumer confidence and spur spending.

The National Retail Federation called for three periods of sales tax-free shopping that would last 10 days each in March, July and October 2009. The trade group estimates that it would save consumers about $20 billion, or $175 per family.
There a shark.
The Renewable Fuels Association, the industry lobby, is seeking $1 billion in short-term credit from the government to help plants stay in business and up to $50 billion in loan guarantees to finance expansion. The lobby would also like Congress to ease the 10% limit on how much ethanol can be added to gasoline for conventional cars and trucks -- never mind the potential damage to engines from such an unproven mix.
Everywhere a shark, shark!

When Politics Dominates the Investment Landscape

... it's time to hide.

My financial guru turned me on to this piece in the Wall Street Journal. It's worth reading in its entirety, but here's a good tidbit.

The federal government's alternating takeovers and bailouts of companies are inherently destabilizing and create massive uncertainty in investors and businesses. The Fed's shocking steps to print money and acquire every kind of private asset and, soon perhaps, washing machines and Chevy Tahoes, may in retrospect be seen as just the right medicine. At the moment, no rational investor or business manager looks upon such doings with confidence in our economic future ...

Our point here is that the bad policy vicious circle probably has a long way to run. While it's still possible to entertain wild hopes about an Obama administration, such hopes are partly self-liquidating on closer inspection -- they exist in the first place only because Mr. Obama has given us so little to go on, except campaign boilerplate.

Bottom line: Politics is in charge -- in a way that makes a lost decade of subpar prosperity more likely than not.
When lobbyists and legislators are the engine of the economy, how can you make rational investment decisions? Obama might be the worst of all possible choices to be president in such an environment as he has no team of known quantities with him. Instead, he has a patchwork cabinet and circle of advisors with no single, coherent theme and no joint track record upon which to base decisions. Couple that with his own inexperience and you've got the makings of a chaotic feeding frenzy in Washington.

With $1T worth of blood in the water, it's anybody's guess as to how this might all shake out. Young Mr. Obama is about to go swimming with the sharks.

$1T is a lot of chum. Do you suppose there will be an orderly discussion of how it will be, err, invested?

I'm not Sure I get Much Crossover Traffic

My most popular post of all time by far, is this deliberate spam post about Hannah Montana. When it gets running hot on Google's image search as it did earlier this week, I get hundreds of hits per day on it. On Tuesday it was the #2 result on the image search and the hits came flooding in.

That's all well and good, but other than the glow of goosing my statistics (I crossed the 200K barrier this week) I doubt it does much for return traffic. I can't imagine that the kinds of visitors that leave comments like this:
i like u so much i read your book called rockywaves it is so cool i really want to go to some of yo concerts to see u in real life and so i can get yo autograph.... ttyl ttyl is talk to u later... bye bffl
have much interest in reading how Ben Bernanke's policy of quantitative easing works.

It's a humbling phenomenon to witness. All of the thought pieces I've put together, all of the analyses and commentary I've written is dwarfed by a single throwaway bit I did to see if I could get hits by repeating the phrase "Hannah Montana" over and and over again with an image of Hannah. It's kind of hard to lie to yourself that you have some intellectual impact in the world when you get 800 hits on Hannah Montana and 40 on economics, politics or theology.

Thursday, December 25, 2008

Our Top 10 Christmas Songs - Number One

Merry Christmas, everyone. Have a blessed and happy day. Here's our very favorite Christmas song of all time.

Wednesday, December 24, 2008

A San Diego Christmas

I was walking along the Mission Beach / Pacific Beach boardwalk yesterday when I spied this family out getting their toes wet in the surf. It was a very San Diego kind of Christmas scene. Click on the image and see if you can imagine the man working his feet back and forth, burying them in the salty sand just for fun.

Our Top 10 Christmas Songs - Number Two

It's our second favorite Christmas song of all time, Dean Martin playing the wolf in a classic rendition of a great song. It's a perfect role for him and he plays it just right.

Man, what was good, wasn't it? Any bets on what could be #1?

Cheezburger of the Day

funny pictures of cats with captions
more animals

Tuesday, December 23, 2008

Our Top 10 Christmas Songs - Number Three

Bing at #5, Dean at #4, let's come back with some more Bing Crosby.

"Wait a minute," I can hear you say. "That was #3? What on Earth could be better than that?"

You'll just have to wait and see.

How the Bush Administration is Combatting the Fiscal Crisis

... can be seen in this video.

H/T: Greg Mankiw.

This makes more sense to me than the spasm of government spending promised by Obama, but in both cases, they're trying to help the country avoid paying for profligacy and greed. I don't think that's going to work.

Roads, Bridges and Schools for What?

First, open this link and check out the way cool flash map the Department Of Transportation made for you. It shows the growth of the Interstate Highway System from 1950 to the present. Find an underserved spot in the US that needs new highways. Next, our incoming Secretary of Education used to run the Chicago School District. His budget went up by 41% over a 5 year period for a total of $1.7B more per year. Per year. With $1.7B, how many schools could he build each year on his own?

Finally, consider that the $1T stimulus bill will cost each one of us $3,000. A family of four will have to pay $12,000 to stimulate things by building roads, bridges and schools.

What is your family buying for $12,000? Where are you going to get that money?

Update: Mish has a darkly funny pair of posts on what he calls Fiscal Insanity Virus (FIV). He claims to have discovered two strains, the Keynes (K) strain and the Monetarist (M) strain. He rebuts them thusly.
  • The average 8th grader understands that one cannot continually spend more money than he has.

  • The average homeowner who has been foreclosed on understands that buying more house than he could afford vs. wages earned was a very bad idea.

  • The average economics professor afflicted with the K-Virus thinks that it is possible to spend one's way out of a fiscal crisis.

  • The average economics professor afflicted with the M-Virus thinks that it is possible to inflate one's way out of a fiscal crisis by destroying the currency.

  • The average congressional representative believes in the free lunch theory of spending many multiples of what is collected in taxes.
Why is it that the average 8th grader has a better grasp of economics and fiscal sanity than the average economist and the average member of Congress?

Monday, December 22, 2008

Cheezburger of the Day

funny pictures of cats with captions
more animals

Our Top 10 Christmas Songs - Number Four

Let's see here, if we put Bing at #5, how about Dean at #4?

La Jolla Fishing Boat

I had some business in La Jolla the other day and by chance I had my Nikon Artillery Piece with me and managed to get a nice shot of this little fishing boat. Click for a larger image.

Notice he has some additional crew members. There's a pelican who is examining the gear on deck and a seagull scouting the local waters for fish.

Who Should be the US' new Lapdog?

In scouring the Internets Tubes for information about just what the Greek Socialist party stood for aside from improved rock and gasoline bomb throwing, I came across this bit of news:
The (Holland Socialist) party calls for a society where the values of “human dignity, equality and solidarity” are most prominent, and has been scathing in its attacks on what it describes as “the culture of greed”, brought about by “a capitalism based on inflated bonuses and easy money”. Like Die Linke, the SP campaigns on a staunchly anti-war platform — demanding an end to Holland’s role as “the US’s lapdog”.
First off, I didn't know Holland was our lapdog nor even that we had one. As I thought more about it, I realized that we, as Supreme World Power and Viciously Militaristic Hegemon, desperately need one. What's the point* of ordering our shock troops to invade some poor innocent country and steal their oil if we don't have a lapdog to pet and feed small bits of meat while we gloat like the Bond villain Blofeld?

With that in mind and given that the mighty socialists may soon rip poor, little, fluffy Holland from our laps, I ask you: Who should be our new lapdog?

Is this Luxembourg, Belize, El Salvador or someone else?

* - I realize that one completely worthwhile point is to send people like Sean Penn into paroxysms of rage, but work with me here.

Sunday, December 21, 2008

Our Top 10 Christmas Songs - Number Five

No we're in the upper half of the list and getting serious. The competition is fierce. If this is #5, what could be in the spots above it?

Why Analyst Ratings Aren't Worth a Hoot

Check out this price chart of Freeport-McMoRan Copper & Gold (FCX):

It's lost about 80% of its value since its high of 120 earlier this year. Right now on the WSJ page, 2 analysts out of 17 rate it a strong buy and 6 are rating it as a buy. Another 8 rate it as a hold. They rated it even higher than that 3 months ago when it was falling like a stone. With advice like that, you might as well pick your stocks with a dart board.

Our Top 10 Christmas Songs - Number Six

It's time for some Beach Boys! You can't live in San Diego and not put at least one Beach Boys song on your Christmas song list. Here's one you might not expect ...

Why I Like Oil Companies More Than Mining Ones

... it's all about cash flow and cash reserves. This is a thought piece designed to codify my thinking and is not intended as any kind of investment advice.

Commodity prices have fallen like rocks lately. Oil is below $40 a barrel and copper is way down as well. Mining stocks are cheap right now as are the oil companies. I prefer the oil companies.

Everywhere you look, people are still driving cars. However, it's hard to find construction jobs going on and auto makers are closing plants, even if temporarily. That means that there is still a market for oil, but almost none for metals like copper. Exxon (XOM) has a reduced cash flow, but I would bet that Freeport-McMoRan Copper & Gold (FCX) has seen theirs fall much more.

What happens when you start to run out of cash? First, you cut expenses. You close down projects that were predicated on higher prices for your products and you might lay people off. When you lay people off, you start to lose your corporate knowledge base. Depending on whether or not your (former) employees find another line of work, you may not be able to get them back. When business picks up, you may have to train a lot of new staff.

I'm not saying this is happening at FCX, but as I watch what's going on and think about how I would run the company and the decisions I would have to make, I'd much rather be in XOM's shoes where there's a constant demand for their product than FCX's where there might not be much of one at all.

Saturday, December 20, 2008

It's not 1930 (and it's not 1950, Either)

Obama's massive stimulus bill is being described as an investment like it's going to pay some kind of dividends. It's not. Consider these two facts. The public works programs of the 1930s built things that did not previously exist. Dams and buildings and so forth. Eisenhower's Interstate Highway system was similarly new in the 1950s. Both paid dividends because they provided new capabilities to the nation. Repairing roads and bridges does not. It's important, but it's not new.

On most of the econ blogs, there are analogies to the past and charts and models and graphs, but none of them take into account how different the infrastructure of the country is compared to 1930 or 1950. We're pretty well built out right now, so those analogies fail.

Related post: Over at Marginal Revolution, they question the entire premise that lavish government spending has ever worked.

Do me a Favor

... and go check this out.

Our Top 10 Christmas Songs - Number Seven

Number 7 is Jingle Bell Rock performed by ... well, you'll see.

No More Blogging Until You Clean Up Your Room, Young Man!

... at least that's what my mom might say if she saw my house right now. I had to go out and buy a replacement PC for my old one which died just as I managed to backup all of my data. The boxes and manuals and CDs are strewn about. I've also got Christmas presents all over the place. The remnants of my daughter's science fair experiment are underfoot as well.

It's so bad that our Maximum Leader can barely find a place to sprawl out on the carpet.

I think you need to clean this place up a bit.

Friday, December 19, 2008

Our Top 10 Christmas Songs - Number Eight

What list of Christmas songs would be complete without Brenda Lee?

Moron, Your new Secretary of Education

Whoops! I made a typo in the title. That's supposed to me "More on Your new Secretary of Education." Too bad this is being carved in granite and I can't go back and make any changes to it. Do you suppose anyone will notice?

Well, in any case, here's a little more on Arne Duncan and his tenure managing the Chicago Public schools. He's being hailed from all corners as a reformer. I'll second that notion. In FY03, his total appropriated budget was $4.093B. In his last year there, it was $5.786B. His budget increased by 41% during his time there. Reading test scores went from 249 to 250, an increase of 0.4%.

Each point of increase in reading scores cost $1.693B in annual funding and took 6 years to produce. Given the fact the Chicago is now 13 points behind the national average, which is a score of 263 in reading, it will take $22B per year over 78 years for Chicago to catch up using the reforms enacted by Arne.

Now that's change you can believe in!

For the sake of comparison, $22B is just a little less than the output of the entire nation of Latvia. So if Arne the Reformer is allowed to harness the power of Latvia until the year 2086, he will have Chicago performing on par with the rest of the country. What a reformer!
Obama's press conference with Arne the Reformer with most of the uhhs and ahhs and umms removed.

Update: After thinking about this for a while, what Arne the Reformer really needs is more money to build schools. I mean, what kind of schools can you build with a paltry $1.693B? Especially when he's getting so much out of that money now!

Our Top 10 Christmas Songs - Number Nine

Number 9 comes from the movie Love Actually. This is so totally over the top for a grade school Christmas show*, but it's still a fun song. Enjoy!

* - primarily because they use the word "Christmas".

On the Other Hand, he did Spend his Entire Budget

Obama's pick for Education Secretary has a great track record. A great one of spending, that is.
( – In 2007, only 17 percent of eighth graders tested at or above grade level in reading in Chicago Public Schools – the school system administered by Arne Duncan since 2001.

President-elect Barack Obama on Tuesday tapped Duncan to become secretary of education in the upcoming administration.

Duncan, hailed by Obama as a reformer, said he would like to take the lessons he learned in Chicago with him when he moves to Washington.
Oh goody! His lessons learned led to this:
According to the U.S. Department of Education’s National Assessment of Educational Progress (NAEP) report for 2007, Chicago public schools have consistently performed below the national average during Duncan’s tenure
But here's the important part for Mr. Trillion Dollar Stimulus Package:
Nationally, Chicago is the third largest school district with over 408,000 students. Its budget for 2007-2008 was $4.6 billion, according to information released by Chicago Public Schools. $862 million of that was supplied by the federal government.

Under Duncan, Chicago Public Schools spent $10,555 per pupil
At least there was some payoff for this money, right?
During Duncan’s tenure, the Chicago district did not significantly increase its scores in reading, rising only one point on average from 2002 to 2007 – from 249 of a possible 500 in 2002, to 250 in 2007.
Err, maybe not.

He's a perfect fit, don't you think? He turns money into confetti and produces nothing. Hope and change! (Just keep repeating that over and over again. It helps. Trust me.)

Thursday, December 18, 2008

Our Top 10 Christmas Songs - Number Ten

At the encouragement of Dean, one of our Monks of Miscellaneous Musing, we've decided to post our Top 10 Christmas Songs. Here's the first one, the Monkees from their 1967 Christmas Special singing a Spanish Christmas song, Riu Chiu. I think they do a very nice job of it, too.

On Stimulus Packages, Investments and Maintenance

Just a quick thought. Obama is talking about a monstrous stimulus package, on the order of $850B. Much of it, they say, will go to roads and bridges. Looking at my copy of Google Earth, I can't think of any place in the US that I want to go that I can't reach by car right now. That means the roads and bridges money is not an investment, it's a maintenance bill. There's no return on investment for maintenance, just an avoidance of future costs.

For the life of me, I can't figure out how the stimulus bill, as I've been reading about it, is going to generate a single dime of new, private profits. And without new, private profits, the thing is a loser.

Cheezburger of the Day

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Europe is Upset With Germany; the Detroit Lions With Tennessee

Europe is fighting with Germany*.
Put bluntly, Germany is pursuing a beggar-thy-neighbour policy. It is not fulfilling its responsibilities as the world’s top exporter and pivotal power of Europe’s monetary union. It is leaching off global demand, even as it patronizes Anglo-Saxons, Latins, and Slavs. No doubt binge debtors in the Anglosphere are much to blame for this crisis. But Germany rode the boom too. It made those Porsches and BMWs driven by the new rich. Its banks are among the most leveraged in the world ...

Within the EMU, Germany has gained a competitive edge against France, Italy, and Spain for year after year by screwing down wages. In pre-euro days the North-South rift did not matter. The D-Mark revalued. Balance was restored. In monetary union it is toxic.
So what you're saying is that by all of you adopting the Euro, you lost the ability to compete with the Germans by turning your currencies into waste paper ...
Germany now has a current account surplus of 7pc of GDP. It is hollowing the industrial core of Latin Europe.
... and now they're kicking butt. Darn those Germans, working hard and saving their money! It's so unfair! Kind of like the Lions playing the Titans on Thanksgiving.

Somehow, despite government-mandated benefits, huge social programs, short work weeks and an anti-capitalism attitude, the rest of Europe was not able to compete with the Germans.

* - Historically, unless they bring in the Americans, that typically doesn't end well for the rest of Europe.

... and in Other News, China Threatened to Poke Themselves in the Eye With a Stick

There's something unintentionally hilarious about this bit of news.
Dec. 18 (Bloomberg) -- The yen fell from near a 13-year high against the dollar and tumbled versus the euro after Japan’s government signaled it may intervene in the foreign- exchange market for the first time in four years.

Finance Minister Shoichi Nakagawa said he has “the means” to limit the yen’s advance ...
As everyone is racing to print untold billions of dollars worth of their currency, Japan is warning us that it's putting on its track shoes and warming up to enter the race to Zimbabweization of their currency. No one wants to be the only one with a strong monetary system so everyone (save the Germans* and the Aussies) are taking steps to destroy their own.

That's not going to end well.

* - Unfortunately for the Germans, they dumped the Deutschemark and moved to the Euro about 10 years ago. This effectively ties them to Italy, Greece and Spain, all of whom will soon be defaulting on massive loans. Losing control of your currency is not good.

Wednesday, December 17, 2008

Cheezburger of the Day

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Not Enough YouTube Christmas Content

... to do KT's Top 10 Favorite Christmas Songs. I was thinking of doing daily posts of my favorite Christmas songs using YouTube videos to provide them, but the ones I found just weren't that good. The music was fine, but the videos were poor. For example, my favorite Dean Martin Christmas songs were there, but the videos were just a single still of one of his promotional shots.

Oh well.

Update: We're doing them after all! Check out the list on our left hand sidebar and see what we've picked.

Nancy Pelosi: Stimulus Bill to buy Heroin and Booze

... and that's not far from the truth. Recently, Nancy Pelosi suggested that some of the enormous stimulus package they plan to enact after Barack Obama is sworn in will go to help states that are in financial distress. States like California where the deficit is supposed to be about $28B.

First off, how does a state manage to get $28B in the hole? How on Earth can a state spend that much money? $28B would buy you a complete aircraft carrier battlegroup. It's madness. In any case, some of that money does indeed go to drugs for addicts as a part of California's drug treatment programs. And a drug treatment program is exactly what Nancy Pelosi is offering states like California.

California has been mismanaged by the Democrats for years with recent help from the Governator though they hardly needed it. They spend and spend and spend and here we are with a preposterous deficit. That deficit, like a hangover or the DTs, might prod even the Democrats into some kind of spending restraint. Nancy Pelosi stepping in and handing them more heroin and booze in the form of billions of dollars of "stimulus" isn't going to help.

Meanwhile, states that have been thrifty and prudent will get ... nothing.

Tuesday, December 16, 2008

However, Justice Department Officials Have not Been Able to Stop Laughing at his Name

This just in:
PartyGaming Plc’s founder and former director, Anurag Dikshit, pleaded guilty to illegal Internet gambling and agreed to cooperate with the U.S. Justice Department in an investigation of the Web-based gaming company.
It's times like these that I'm glad I don't work for the Justice Department.

Cheezburger of the Day

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Barack Obama vs. Angela Merkel

... by proxy with Paul Krugman facing off against Peer Steinbruck. Paul is an economist who is eager to see massive government spending on a global scale. He comes from a country that has enormous and ever-growing debts. Peer is the German finance minister and comes from a country with large debts, but a balanced budget. Let's see what they have to say.

Peer Steinbruck:
(He is alarmed that right now w)e have a bidding war where everyone in politics believes they have to top up every spending program that's been put to discussion. I say we should be honest to our citizens. Policies can take some of the sharpness out of it, but no matter how much any government does, the recession we are in now is unavoidable ...

The speed at which proposals are put together under pressure that don't even pass an economic test is breathtaking and depressing ... It's the yearning for the Great Rescue Plan. It doesn't exist.
Paul Krugman:

The ... European Union ... is arguably in as much trouble as we are. ... As in the United States, monetary policy — cutting interest rates in an effort to perk up the economy — is rapidly reaching its limit. That leaves, as the only way to avert the worst slump since the Great Depression, the aggressive use of fiscal policy... Right now everyone sees the need for a large, pan-European fiscal stimulus.

Everyone, that is, except the Germans. Mrs. Merkel has become Frau Nein:... she wants no part of it, telling a party meeting that “we’re not going to participate in this senseless race for billions.”
Paul goes on to urge everyone to run as fast as they can in the senseless race for billions. Peer's response is contained in the article linked above.
Q: What entails the greater risk to the economy: not acting now before the pain gets worse or the negative consequences of overspending now?

A: I don't think anyone knows. Making political decisions means taking responsibility in an environment of uncertainty. When in doubt, I'd say the risk is greater of burning money without significant effects and in the end having a budget weighed down with even more debt.
Here we see the Krugman / Obama plan put into action. Logs are processed into paper which are printed into dollar bills and then immediately shredded and dumped in a huge bin. Everyone enjoys the benefits of this natural stimulus action.

Great Googly Moogly, I Don't Even Want to Know What This Means

I was wandering over by Yahoo! to check on a stock quote when I saw this headline on their front page: Top 10 reasons why women cheat. Here's a tidbit from #9, Miss Self-Centered Dingbat is Bored*

When the man she loves is spending too much time and attention on himself or his other interests, it is a complete turn-off for women because we want to be the center of his world, and when we aren't, we know that someone else will place us on a peddle stool.
A peddle stool?!? What in the name of the Goats of Ragnarok is a peddle stool? Is it some kind of unicycle? Is it, heaven forbid, some kind of device for dealing with constipation? Whatever it is, I certainly don't want my significant other anywhere near one, much less on top of the thing.

A peddle stool. How hideous.

Those of you who would like extra credit, feel free to diagram that quoted sentence. If you'd like to follow the link, I'm sure you can find all manner of other grammatical horrors. In a different sentence from that piece, there was reference to another man "fillin gin" for you. That sounds like a nice thing to do, if you ask me.

* - that might not have been the actual title of that section.

For Terrie

A few nights ago, my fiancee and I watched Love Actually. She'd never seen it and it's one of my favorite Christmas movies of all time. It closes with the Beach Boys singing God Only Knows. Noodling around the Internets Tubes this morning I came across this lovely music video on YouTube. I normally don't like videos that simply pan and zoom on stills, but this one captures the Beach Boys during their happiest phase and I had to share it.

The song captures my life and what finding Terrie has meant to me. I'm reasonably successful in my career and have two lovely children who never cease to delight me. My parents are a joy and a treasure. With all of that, Terrie is the future, bright and warm, offering all manner of new things to explore and enjoy together.

In quiet moments alone in the car (when I'm not talking back to a radio that can't hear me) I sometimes consider what life would be like never having met her.

Hence, the song.

Monday, December 15, 2008

Fred Thompson on the Bailouts

And this, dear readers, is why I drive around with a Fred Thompson bumper sticker on my car.

Christmas Trees are Like Incendiary Bombs

Dig this.

Great Caesar's Ghost! It's like having a 500 pound napalm bomb in your living room!

Sunset Gap

A few days ago I got some shots of an outstanding sunset over the Pacific. This is the sunset through a gap in the clouds. The "horizon" in this shot is actually a bank of clouds.

Revving up for the Feeding Frenzy

In a previous post, I showed an aquarium of piranha feeding as an analogy to the way the upcoming stimulus spending spree would be received by Washington lobbyists and contractors. Now dig this.
(T)he Treasury's TARP program has even managed to create a potentially illegal tax loophole that grants banks a tax-break windfall of as much as $140 billion. Lawmakers are furious - but possibly powerless, afraid that a full-scale assault on the tax change could cause already-done deals to unravel, which would cause investor confidence to do the same.

One could even argue that since this first bailout (the $700 billion TARP initiative) has fueled takeovers - and not lending - the government had no choice but to roll out the more-recent $800 billion stimulus plan, aimed at helping consumers and small businesses. It's a move that may spur lending and spending, but still adds more debt to the already-sagging federal government balance sheet.
Well that had to come as a surprise -- commercial entities outwitting the Federal government and using the money to make a profit. I'm sure once The One takes office and we have a president with no actual experience in running anything at all and no commercial experience plus a congress made up of similar types, we'll get the results we're looking for from loading a trillion dollars into a confetti cannon and blasting it all over the place.

Here, a wise, old Obama administration official oversees the expenditure of stimulus funds.

Sunday, December 14, 2008

Making Money the Socialist, Secular Humanist Way!

It's fast, fun and easy! Here's how you do it.

  1. Abandon religion

  2. Pursue self-gratification

  3. Stop having children

  4. Vote yourself money

  5. When it runs out, nationalize your industries to get at the money stored there

  6. When that runs out, borrow money from everyone else

  7. When that runs out and you've got fewer young people to support lots of old people, protest and riot

  8. Burn down shops and smash and loot!

  9. Repeat steps 7 and 8 and enjoy victory the EuroSocialist Way!

Yay! Check out how it's working in Greece.
The riots in Greece have made investors in Greek debt particularly uneasy. Street violence flared last weekend after police shot a teenager who was among a group of demonstrators. Concurrent strikes by trade unions and teachers this week reflected a growing discontent with the government's economic management ...

A belated bid to push through economic overhauls in recent months -- including harsh changes to pension, labor and tax rules -- spawned the weekend riots, which worsened after the police shot and killed a protester. Jobless rates for those under 25 are 20% or higher in Greece, Italy and Spain.

About 28% of young Greek university graduates are jobless, by far the highest in the euro area.
Burning auto dealerships is just one of many terrific benefits!

Deflation Explained

... at least to me. Hopefully to you, too.

I've been trying to wrap my brain around the concept that we are in the middle of deflation while the government is printing money like crazy. I think I finally figured it out this morning.

Deflation and inflation are not about the overall amount of money in the economy, they are about the amount of money circulating in the economy. That is, what is the ratio of goods being sold to dollars being spent?

Say you've got $1000 of cash laying around you could spend on Christmas gifts and that you had the same amount last year. Last year you spent all of it. This year, concerned about the future, you hold back $200 of it and only spend $800 of it. That's deflationary. The stores still have the same number of gifts for sale, but now there are only $800 being spent on them. In order to get you to buy their products, they have to lower prices. The amount of money in the system hasn't changed, but the amount of money circulating has. Because of that, prices have fallen. Deflation.

In a recent post, Mish explained this in technical terms, showing this chart.

The banks are hoarding the money the Fed is printing.

Deflation is a bad thing for people with debts. Their debts become larger as dollars become worth more. People like, oh, I don't know, the ones with $10,600,000,000,000 in debt. The same ones who tell us that the deficit can be ignored in the short run and are planning on borrowing another $1,000,000,000,000 and throwing it into a wood chipper. They don't like deflation at all. That's why they're screaming at the banks to lend money and consumers to spend it.

Deflation is a good thing for people with cash. All you have to do is sit on it and it becomes worth more. The more people decide that they can make money by not spending it, the less they will spend. The less they spend, the more prices fall. This also explains why businesses are laying people off. Why pay employees to make things that no one will buy when instead they can just sit on their cash and watch it grow?

When enough people are making the buy vs. hoard decision in favor of hoarding, you get deflation.

Did that help?

When Business Becomes Byzantine

... everyone loses.

One of the greatest things about the Web 2.0 revolution is that we all now have access to experienced, educated people who can shed light on whatever is currently in the news. Over at the Secular Apostate blog (why aren't you making that a daily read?), the Apostate has an outstanding post which ties together artificial intelligence, telecommunications and labor contracts.

No, seriously, it does! Go check it out.

In the meantime, I've been considering learning more about the Ottoman Empire and the meaning of the word "Byzantine" ....

Cheezburger of the Day

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Saturday, December 13, 2008

Let's Give These Guys Ownership of our Steel Plants, Too!

Why not? They've shown how clever and dedicated to the public good they are.
10 Republican Senators voted with the Democrats last night, which means the Democrats could have reached 60 votes if the entire Democratic caucus voted for the bill.

But eight Democrats bailed on the bailout (Reid, it should be noted, voted against it for procedural reasons, in order to bring it up for a vote again).

Four Democrats voted 'nay': Baucus, Tester, Lincoln, and Reid.

Four Democrats did not vote: Biden, Kennedy, Kerry, and Wyden.
The auto bailout bill didn't fail, it was killed by the Democrats themselves.

A Financial Dictatorship?

The last few months have seen an amazing restructuring of the American economy moving power from the private sector to the government. We're likely to see even more. Thanks to the Bush Administration, the rules no longer exist and the government can simply buy anything it wants and pay for it by printing money. The auto bailout, as negotiated before it fell apart, had the government buying stakes in the Big 3. Banks and insurance companies have already been bought. The Fed has been buying corporate debt.

There are no rules, there is only a growing series of financial spasms as we attempt to avoid responsiblity for our actions, avoid paying for what we buy and refuse to deny ourselves any pleasure we can dream up. Like a worm recoiling from the touch of your finger, we're operating instinctively, attempting to avoid any kind of short-term pain.

That's all about to change as the nationalization of our economy moves into overdrive. Charles Krauthammer has an excellent piece describing this.
Obama was quite serious when he said he was going to change the world. And now he has a national crisis, a personal mandate, a pliant Congress, a desperate public -- and, at his disposal, the greatest pot of money in galactic history. (I include here the extrasolar planets.)

It begins with a near $1 trillion stimulus package. This is where Obama will show himself ideologically. It is his one great opportunity to plant the seeds for everything he cares about: a new green economy, universal health care, a labor resurgence, government as benevolent private-sector "partner." It is the community organizer's ultimate dream ...

With the country clamoring for action and with all psychological barriers to government intervention obliterated (by the conservative party, no less), the stage is set for a young, ambitious, supremely confident president -- who sees himself as a world-historical figure before even having been sworn in -- to begin a restructuring of the American economy and the forging of a new relationship between government and people.
And if you disagree with him, because of the dissolution of the barriers to government ownership of private firms and the elimination of worry over the debt, he can simply print the money he needs to buy you.

Mussolini is on the way.

Let's Head for Fiji!

We'll take my boat*. It's got everything we need - a hammock, a surfboard, plenty of room for a few passengers and it's ship-shape and ready to get under way. Click on it for a better image and let me know what part of the crew you want to be.

* - this is not actually my boat and we're not heading for Fiji.

The Auto Bailout Negotiations Explained

This is a windy post and I apologize in advance for its length. I just needed to write it for the sake of my own understanding.

As I've read about the negotiations going on in DC over the automaker bailout, I've felt there was much more than met the eye underway. The telltale sign to me was that the UAW and management were going hand in hand to congress to beg for cash. It was clear that they had planned this in advance and wanted to preserve the status quo. When the UAW refused to blink on reducing their wages in line with Toyota's, I knew something was up. In terms of my own understanding, I think I've unraveled it enough to explain it, but perhaps not enough to be right.

Here we go. We will use GM to refer to all American automakers for simplicity's sake, but just know that in the following explanation, GM is a shorthand for all of them.

First off, everyone knew that GM's profits came exclusively from big cars, big trucks and big SUVs. Second, eveyone knew that SUV sales are gas-price elastic. That is, as gas prices go up, sales of SUVs go down. Third, once China and India began to industrialize and demand more oil, it became pretty clear that gas prices were going to rise as the production rate of oil is relatively fixed.

Therefore, the downturn in SUV sales was no surprise. The timing of it was always murky, but it was clearly inevitable. That means that both management and the UAW knew they were living on borrowed time.

What has bothered me all along is this. Why was there no contingency planning done? Why did they not prepare for an event they all knew was on the way? The UAW in particular had to know that the goose with the golden eggs was living on borrowed time. I single out the UAW because upper management at GM is far less sensitive to bankruptcy than the workforce as they are more likely to have substantial cash reserves to survive GM's destruction.

My hypothesis is that there were contigency plans made and they consisted of the money in your wallet.

There are three possible explanations for their actions. The first is that GM's labor-management relations are so hostile that they're less like labor contract opponents and more like the Israelis and Palestinians. They didn't care what happened so long as they got their own way. If this is the case, then GM and the UAW should be put out of business as fast as possible so the wreckage can be bought up and restarted by someone new.

The second possiblity is that both GM and the UAW knew this was coming and planned for it, but they made a mistake in predicting the timing. They thought they had longer than they did. The UAW made significant concessions in recent negotiations and because of that, GM will soon have labor costs in line with Toyota.

Click on the image for a readable version.

If this is the case, then the bailout makes partial sense as a true bridge loan to bridge the gap between now and the time when the new contracts take effect. However, it begs the question, "If you saw this coming months ago (and everyone did), why didn't you accelerate the contract timing and get yourself out of this mess?"

The answer to which brings us to option 3. They knew they could squeeze the money out of Congress. They had a blueprint for extortion based on Chrysler's bailout years ago and knew they could play chicken with us. There was no reason to do the hard work they needed to do in emergency contract renegotiations because they knew that in the end, the taxpayers would cough up the money and their little dance could go on as it had. They were able to wreck the company through greed and intrasigence, knowing full well that we would pick up the pieces, put them back together and hand it back over to GM and the UAW to keep playing the same game.

GM and the UAW are not the first management-labor team to have gone through this. Lots of companies have missed the timing of events and faced bankruptcy. The rest have all renegotiated their contracts to save their companies and their jobs. GM and the UAW knew they didn't have to.

How did they know this? They had already been working over Congress and the administration in advance. They knew who they could count on and they knew that even if the Senate Republicans stood their ground, there were elements in the White House that would allow the TARP funds to be given to GM. They also knew that all they needed was enough money to make it into January, whereupon Barack Obama's administration would give them whatever they asked for.

That's why the UAW didn't bother to negotiate their wages in the bailout debates in the Senate. They knew they held all the cards ahead of time.

This explanation is also in line with the past behavior of GM and the UAW. It was a lazy, slovenly, irresponsible solution to their problems, much like their lousy cars and preposterous labor contracts. Whereas a company like Solar Turbines here in San Diego would have solved their problems in house, GM and the UAW never even bothered to try. As the deadline for bankruptcy was clearly approaching, they sauntered down to Washington and played the game they knew they would win in advance.

This is a consistent pattern of behavior for decades from GM and the UAW and once again reveals their greedy, slothful, unimaginative culture. Bailing them out will yield us nothing as the problems go to the core of both.

B-daddy over at The Liberator Today argues that we should not blame the UAW. I stole the chart shown above from him. Mark Perry over at Carpe Diem argues that wages are just part of the problem and that the UAW work rules play at least as big of a role as wages.

Friday, December 12, 2008

A Bailout for the Detroit Lions

... makes about as much sense as a bailout for the auto industry. Here are highlights (lowlights?) from a Lions game earlier this season.

After watching the Lions go 0-13 playing like this, my conclusion is that we should keep the management and keep the workers and just hand them wads of cash to keep them going for a while. That makes sense, right?

What if he Catches a Whale?

I saw this guy inner tube fishing in San Diego Bay yesterday.

Won't this make the wilder "one that got away" stories less believable?

San Diego Late Afternoon Panorama

This is a shot taken from Point Loma overlooking San Diego Bay towards the downtown skyline just as the sun is setting. I took it with our small point-and-shoot camera and not my Nikon artillery piece, so the image is a bit fuzzy. Still, it's worth a click to see the big version.

Dave Ramsey, the UAW and the Auto Bailout

I have to admit, I don't get it. I simply don't think in the same terms as the UAW negotiators who killed the auto bailout bill yesterday.
Republicans, breaking sharply with President George W. Bush as his term draws to a close, refused to back federal aid for Detroit's beleaguered Big Three without a guarantee that the United Auto Workers would agree by the end of next year to wage cuts to bring their pay into line with U.S. plants of Japanese carmakers. The UAW refused to do so before its current contract with the automakers expires in 2011.
We've been told that the choice here was bailout or total liquidation of the American auto industry. That made the choice for the UAW either reduced wages or no jobs at all. How is an income of $0 a year better than wages equal to the Toyota workers' wages?

Let's see what Dave Ramsey has to say about this in a recent call to his talk show.

Question: Seth lost his job earlier this week, and he has some debt. He is in his 20s, married and has a 10-month-old daughter. He wants to know how to keep his head above water. Dave gives him short term and long term goals to shoot for.

Dave Ramsey's advice: I'd go crazy about finding an income, because this is all about finding an income. If this involves delivering pizzas at night and working at the mall at weekends to replace your income, then do that while you hunt for a full-time job.
Emphasis in the original.

If Seth was a UAW worker and he called up Dave to ask if he should take a cut in pay or throw away his job, what do you suppose Dave would say? How about this: "Seth, I think you should toss away the job you have and end up scrambling for pizza-delivery jobs in a financially wrecked part of the country!"

I doubt it.

GM is not selling cars because the cars cost more than they're worth to the customers. Cost comes from labor + capital + raw materials. The last two are fixed costs, so the only variable cost is labor. It's pretty simple stuff. I don't understand the UAW denial and intransigence.

Update: I understand now. The UAW will get its bailout anyway.
The Bush administration dropped its opposition to using the $700 billion bank bailout fund to provide financing for U.S. automakers, after the Senate yesterday failed to approve emergency loans.
Honestly, what's the point of voting, anyway? If it isn't the courts finding mysterious rights in the Constitution and telling all of us to shove it if we don't like them, it's the Treasury blowing money in defiance of the legislature.

I considered trying to make a buck on this and buying 100 shares of GM with a sell order 20% higher from where it is right now, figuring on a bounce, but I decided not to do so. That kind of gambling just doesn't work for me.

Thursday, December 11, 2008

Global Warming Hits New Orleans

... with snow.
NEW ORLEANS -- People across south Louisiana called their friends, grabbed their cameras and headed outside this morning to document a rare and wonderful sight: snow ...

Much of southeast Louisiana was under a winter weather advisory until noon. Accumulating snow was reported in towns and cities all across south Louisiana, including Baton Rouge, Lafayette and Lake Charles.

The storm caused several schools to close.
The Earth is boiling. We're doomed. Film at 11. Film now.

Update: This just in! Our Theocratician on near the scene, Justin has more. Go check it out!

What's Your Morning Drive Time Radio Station?

For me, it's Scott and BR on XX Sports Radio 1090. They're fun and funny and they don't lard up their broadcast with commercials and bump music. I've tried ESPN's Colin Cowherd (sp?) show, but I think he gives you no more than 12 minutes of actual entertainment per 60 minutes of broadcast time.

I have to admit that other than some jazz, I don't listen to music very much any more. Political talk shows are really turning me off these days, too.

How about you? What's your morning drive time show?

The Teachers Union Takes on Handicapped Kids in Court

Our good friend B-daddy over at The Liberator Today alerted us to this situation in Arizona.
Parents of special needs children are arguing for the right to use vouchers to use at the private or public school of their choice, but opponents argue public funding shouldn't go toward private education.

The vouchers for special needs and foster children were approved two years ago, and they have been challenged twice. The lower courts have ruled that the use of vouchers at private schools is unconstitutional.
Apparently, someone is arguing that using tax dollars to educate retarded kids is unconstitutional. Who would be so utterly venal and heartlessly selfish as to do that?
The Arizona Education Association said funds should go toward ensuring public schools are serving every child's needs.
The Teachers Union. I should have known.

The Liberator Today post has a wonderful video on the subject. It's worth a visit.

Wednesday, December 10, 2008

The Place Burned Down and Sank Into the Swamp, but we Were Still Able to Refinance It

Dig this.
Fannie Mae and Freddie Mac, the mortgage-finance companies seized by the U.S. government, are considering waiving a requirement for new appraisals on refinanced loans, their regulator said.

“If they refinance someone, rather than doing a loan mod, do they need a new appraisal if they already have the credit?” Federal Housing Finance Agency Director James Lockhart told reporters after a speech in Washington today. “That’s an issue that’s being discussed. They’re looking at it.”

Thanks to Fannie Mae, I was able to refi this home and get $40,000 out to buy a new ski boat!

Blagojevich is a Distraction

... sort of a new entree into our Bread and Circuses atmosphere.

The MSM and the right wing blogs are all a-twitter over Blago's baldfaced corruption. Freight trains full of electrons are being spent discussing how horrible this is, speculating how far the web of scandal will go and if The One will be tainted by this.


While all of this is going on, the Fed is considering issuing its own debt. Now that's newsworthy. Why are they doing this? To continue their finger-in-the-dike effort to contain the financial meltdown. Why do they need to do that? We spent far more than we earned. Why did we do that?

For the same reason Blago tried to sell the senate seat, the same reason gays want to marry, the same reason GM and the UAW want a bailout and the same reason our prisons are full of young men from broken homes.

Because we want it and we want it now and we don't want to earn it.

Where's all of the new money Going?

Mish's Global Economic Trends has a great post showing just where all of the new funny money is going. Here's the gist of it.
Base money is soaring but all of it is sitting in bank reserves. In other words, banks are not lending. Clearly we have a huge monetary distortion, but banks seem to understand that lending money in this environment would do nothing but increase losses.
The charts show wild increases in the money supply, but decreases in the amount of money actually in circulation. Banks are hoarding it. To me, this looks like a great recipe for wild inflation down the road, but I'm no expert.

Obama Skepticism and Paul Volker

So far, almost everyone and their dog has praised the economic team that Obama has assembled, even while noting their widely varying views. I'm highly skeptical. The cornerstone of Obama's economic plan is to spend, spend, spend and not worry about the debt. Part of his team, even if just on an advisory basis, is Paul Volker. Here's a bit about him.
Volcker is back, tapped by Barack Obama as a special economic advisor. And if the president-elect follows his advice on the current economic crisis, there could be pain again and no doubt many protests -- but also the possibility of long-term benefits.
Small chance of that as Paul Volker's advice runs completely contrary to the majority of Obama's team.
His concerns go to the very core of how America lives and how Wall Street operates. A child of the Great Depression and a man of legendary personal thrift, Volcker thinks Americans have been living above their means for too long.

"It is the United States as a whole that became addicted to spending and consuming beyond its capacity to produce," Volcker lectured the Economic Club of New York in April. "It all seemed so comfortable."

Bringing consumption back in line with income would not only crimp individuals and families, but also require major readjustments in the global economy, which has relied on the U.S. as consumer of last resort.
Paul Volker is a dramatic example of the wildly diverging advisors Barack Obama has assembled.
He (Volker) also will have to work with some outsized egos and giant intellects on Obama's economic team: Lawrence H. Summers, chairman-designate of the National Economic Council; Timothy F. Geithner, nominated to be Treasury secretary; and Christina Romer, chosen to lead the Council of Economic Advisors.

The group is generally not of one mind. Major differences exist in how they view regulation, monetary control and fiscal policy. Summers, for example, was among the Clinton administration officials who helped relax federal regulation on Wall Street, recalled David R. Henderson, a conservative economist at the Hoover Institution. Romer has questioned how well fiscal policy works at all, a central tenant of Democratic economic thinking.
To me, this is a clear indication of intellectual chaos within Obama's thinking. I've run teams of researchers, major projects and 100+ person organizations. At no time did my staffs and I have significantly different world views. It made no sense at all to do so. As a leader, you need a staff who will execute your plans and enact your vision. If they disagree with it, you'll be forever chasing them down and changing the decisions they make when they're away from you.

Can you imagine the staff meetings? How is anything going to get done with everyone coming at the problems from completely different viewpoints? It's hard enough to come up with plans of action in the time you've got to meet, much less do it in an environment where people have deep disagreements.

So why would you assemble such a team? First off, there is no way Barack Obama has an economic vision at all. You would not bring together this kind of team if you had a clear direction for the government. Second, the team consists of high-profile people who are guaranteed to earn Obama kudos from everyone. Financial scrooges like me love the Volker selection and profligate spenders love some of the others.

My conclusion is that Barack Obama's primary goal is adulation. Beyond that, he has very little intellectual discipline and no vision of his own. The team has been assembled to garner him praise from all quarters and to insulate him from criticism as every viewpoint will have been heard. I think that's an achievable short-run goal, but in the long run, after we've blown through a couple of trillion dollars and have nothing to show for it save a massive financial hangover, his lack of vision and purpose will become obvious.

Barack Obama at the center of his council of economic advisors.