Marginalizing Morons, One at a Time

Here’s the scene – Rattlesnake Bar and Grill, Boston, Massachusetts, last Saturday night.

It was a rare occasion these days, me out boozing with a friend in town from NYC. I have been his wingman for years in his endless search for what Jerry Seinfeld calls "women with qualities important to the superficial male".

So we are sitting at the semi-crowded bar, my buddy was chatting up some fair lady next to him and I ended up talking to some geriatric guy at the bar. He was kind of funny, somewhat drunk, and extremely out-of-place that Saturday night.

My buddy looks askance at me and jabs, "Why are you trying to pick up some old guy?"

Haha.

Turns out, the guy was a big shot at a multi-billion dollar company – actually a publicly traded one based in Boston. Let’s just say his three-lettered title started with a "C" and ended with an "O".

Like most people, the guy was soon charmed by both my conversation and my palpable eminence. He proudly gives me his business card. Now he is getting sloppy, drooling over the barmaid and pathetically trying to hit on girls less than half his age. But I was still BS'ing with him on an array of different subjects and alternately provoking his antics. The big shot thought himself hilarious and was dropping corny jokes like an avuncular dentist. He explained (no less than eight times) how he got his current high level position,

They made me a Polish Mafia offer...

...one that I couldn’t UNDERSTAND.

I actually hadn’t heard that one before and found it quite funny (and I am near half Polish myself).

He had this unrelenting frustrated comedian act going on. When asked if he had kids, he opened his wallet to show me a picture of his "pride and joy".



Yes, that was the pic he showed me. He said to turn it over, there's a picture of his "ex" on the back.

On the back of the card was a big letter "X".

He also told me that he fancied himself a "wit". And his friends tell him he is "half right".

This guy kept going on and on, imbibing, slobbering at unreceptive nubile women, and wisecracking. At some point I told him I have a blog called Marginalizing Morons. He somewhat scoffed at my revelation, asking me what I wrote about. I told him that I was going to go home and write about him. How he was stone-cold drunk, making an ass of himself, hitting on both men and women, and bragging how he cheated on both his past wife and his current one. Of course I would list his name, the company he runs, etc.

Shaking off his drunken stupor, the fossil turned noticeably white. He probably remembered that he had given me his business card, that he had been acting like a donkey, that he was a visible public figure, and that there's probably nothing he could do to stop me from "outing" his boorish behavior on the World Wide Web.

Of course I told the fool I was kidding but it did nothing to disabuse his fears. Still white as a snowflake, he told me all it would take is one phone call to "end" me. Ironically, here he was trying to play his sincerity off as a joke. Quite frankly, I have never ever received a more laughable death threat; bear in mind, that since I spent years hanging out in South Philly, I have heard them aplenty (and only three times did someone actually pull "metal" on me!)

So my buddy and I were in stitches laughing at the old coot; he dawdled for a few more minutes before sneaking out the bar. Maybe he soiled himself? More likely he went home and prayed that I truly was kidding. Nonetheless, it will be interesting to check my cookies tracker and see if "someone" from his company googles "marginalizing morons".

CaptiousNut fancies himself a benevolent public educator; all I was doing was teaching the old man a lesson on how seven-figure salaried executives should comport themselves in the age of the internet, YouTube, etc.

Overall, he wasn't really a bad guy, just as techno-clueless as everyone else in his age bracket. He should consider himself lucky that I didn't whip my video camera out of my pocket - the next guy may do so.

It's hard to believe he near runs a multi-billion dollar public company. Without giving away its name, let's just say the company is already heavily shorted by Wall Street.

Market Extremes

From BigPicture,

Its been a very long time -- 930 days -- since the Dow Industrials suffered a 2% one day decline; Not only has the S&P 500 gone almost four years without a 2% down day, it has been seven months since it has corrected 2% at all! This is the second-longest such period in 53 years.

A data point like this is fodder for both the sheep and the upstream-swimming salmon - see my prior post.

The difference is, the sheep are really fat and flush while that skinny salmon is broke, if not extinct.

Both stock and bond option premiums are also hovering near record lows.

I'd give my right arm to know the precise amplitude of this pendulum...

Too Lazy to Read?

Well I was too lazy to write today - but I toiled nonetheless.

Instead I did for pics what I have done in the past for hyperlinks. In the course of my blog research, I am forever stockpiling links and pictures that might complement upcoming posts. Today, I set my image files to music and uploaded them to YouTube. Many of the pics you'll recognize from my posts while some never made into the blog. Here they are in chronological order. Make sure your speakers are turned up. Enjoy.

Part 1

Part 2

Part 3

Part 4

Part 5

Part 6

Global Warming Empiricism

It's been so warm recently (except when it's ice cold) that many notables have even gone "commando".

I won't provide a link but for a hint, think "Spears".

They Did Not Win the Florida Sandcastle Competition

....BUT they are the favorites in the upcoming contest in Malibu.

Suitcase Nuke Prediction

I want to go on record as predicting a "suitcase nuke" explosion in Manhattan.

When?

No time frame will be given. Heck, if "climate change" doomsayers can be vague, so can I.

Think about it. If you were a terrorist with a three-digit IQ, dreaming of humbling the Great Satan (i.e. America), what else would be more devastating?

First of all, it would kill the most infidels.

Second, a dirty bomb would devastate the American, if not the world, economy.

The stock market would crash, 401k's would become 201k's, many jobs and companies would cease to exist. The fallout would be disastrous. Real estate would crater. Household and national wealth would plummet to impossibly foreseen levels. Tax revenue would dry up, the deficit would balloon, etc.

Think I am crazy?

Well, this gal thinks the nukes are already in America.

Flying planes into the Twin Towers was quite a surprise, was it not?

Well, it wasn't to the Arabs in Brooklyn. They knew instantly that it was a terrorist attack, who committed it, and why. They were jumping for joy on the Brooklyn Heights Promenade, taking pictures of each other with the "beautiful" burning buildings as the backdrop.

At this point, a mushroom cloud rising from an American city will only surprise the willfully ignorant. Why the heck would they pick Sacramento?



Where exactly are all of those Soviet nukes????

Hillary Proposes to Confiscate Oil Profits

Yeah, that's a great idea - go ahead and wipe out $440 billion dollars (Exxon) of investors' money. Of course they have to impoverish the shareholders of Chevron, Shell, and all of the other oil service companies all over the globe too. Apparently no pension funds, widows, or orphans own the stock of oil companies. The total market cap of oil names is over $1 trillion. Do you think they are all owned by old white men in Texas?

If so, turn your speakers on and click here.

Here's exactly what would happen in the face of profit confiscation - even if euphemized as "windfall taxation". Not only would investors lose multiples of the money they lost on Enron, oil and gasoline would skyrocket in price. Food, heat, air conditioning and every other consumer expense would inflate. Home prices would deflate; jobs would be lost. What an orgy of prosperity to look forward to!!!

Only in a thoroughly economically illiterate nation can a would-be President trumpet such inanity.

As this news made the rounds today, oil shot up $1.70, a huge move. Just a coincidence? Maybe, maybe not.

Make no mistake - Big Government advocates want oil to skyrocket in price. They intentionally strangle the businessman, the consumer, and the student with their regulation, taxation, and de-humanization and then use the resultant popular angst to argue for more power. Their failures are always excuses for more money and larger mandates. Imagine if you told your boss that your work was sub-par because he didn't give you enough time AND was underpaying you. How would that go over?

"Energy independence"????

Everything in their larger agenda is hellbent on suffocating human independence. As I articulated in a prior post,

They believe everyone should DEPEND on the government for healthcare, housing, birth control, welfare, free lunches, disaster relief, education, retirement, etc. Yet when it comes to energy, all of a sudden they start singing paeans to SELF-SUFFICIENCY. Of course their idea of "energy independence" is based on "alternative" mythology, not on domestic oil production.

The utopists endeavor to control it all.

Please, don't be fooled.

Finally, Cable Competition - Thank You Verizon

I got this letter in the mail the other day offering me Verizon's new fiber-charged cable service - FiOS TV. Remember, Verizon is primarily a phone company - the marriage of old Baby Bells, GTE and Bell Atlantic.

Now I won't switch to Verizon cable for a few reasons. One, I have RCN and it's the fastest internet connection I have ever had - and that is including T3s I've been plugged into in office buildings. I essentially can't work (trade) from home without a blazing fast internet connection. I receive streaming quotes from three brokerage applications and can't have my data pipeline clogging. Verizon will probably be just as fast but I don't want to take the risk of switching. However, I may get it anyway as a backup internet connection when I buy a new PC later this year. It was just pure luck that my house has a fast internet connection. I had no way of knowing before I signed the lease and if the speed was as bad as Road Runner in Brooklyn, I'd have to rent an office and incur those higher expenses.

I also won't switch cable systems now because who wants to be part of an inaugural rollout? I'll wait until other guinea pigs take the risk and give me the nod.

So why then am I thrilled about Verizon's entry into the cable business?

Because it provides competition for local incumbents Comcast and RCN. Even if they don't lower their prices, they'll at least have to stop raising them. Competition will also force them to pay SOME attention to customer service. I defy anyone to show me where competition has ever not had a positive effect for the consumer. Satellite television helped a little but was held back by its inability to bundle fast internet service. Also, in places like Massachusetts, snow clouds are the bane of satellite TV. One just can't get a dish up here and expect 100% reception in the winter.

If you click on the picture above to enlarge it, you'll see this advertised feature of FiOS:

A massive OnDemand library of over 2,700 movies and shows

That can't bode well for foundering Blockbuster or even NetFlix. Blockbuster is of course struggling; I don't know exactly why because I don't follow it too closely. But one thing I always hated about Blockbuster was that it doesn't have any older, hard-to-find movies from the 70s or 80s. Verizon's OnDemand library conceivably could beat Blockbuster on selection and convenience. And it will at least compete with NetFlix on convenience.

If I were a sh*tty cable company like say Cablevision, I'd be very worried...

There's definitely more that can be said on this topic in regards to net neutrality - a subject that I haven't adequately researched to hold an opinion on.

Contrarian Trading versus Momentum Trading

A commenter asked a question that merits an extended response.



Consider these two antipodal styles of trading:

1) Momentum
2) Contrarian

Momentum trading is buying strong securities and shorting weak ones. Contrarian trading is doing precisely the opposite.

If IBM drops today from $97 to say $70 for whatever reason, momentum traders will be playing the short side, looking to whack upticks (and downticks). Whereas contrarian traders would be looking to scoop shares of IBM at its bottom.

Of course nothing prevents a trader from playing both sides, long and short, many times over in the course of a day or any timeframe for that matter. But for purposes of simplification, set that thinking aside. Psychologically, it's very hard to be looking at IBM all day, thinking it's in big trouble and shorting it and then later turn around and play the long side. Security prices are volatile, head faking constantly, and generally very schizophrenic. False signals include wild upticks or downticks, breaking headlines, overall market movements, or even the guy next to you's asinine commentary. Most people would go crazy changing their minds 50 or 100 times in a day. I have seen guys try this style; predictably they go crazy, and quit not long into their career. Their workdays become filled with profanity, paranoia, and outright superstition. When day traders are called "idiots", this is whom they are talking about.

By nature I have always been a contrarian and thus a contrarian trader. I wish I could switch hit and learn how to buy high and sell low but that talent seems somewhat at odds with my brain. God knows that momentum devoured contrarian naysayers in the tech bubble of the late 1990s. Likewise the recent run in real estate had no pauses either. One guy I knew was trying to buy a house three years ago. Though frustrated with the rising prices he did eventually buy something. He now philosophizes that in order to make money in this world, you just have to break down and do what all of the Morons are doing. He is obviously broken and now firmly in the camp of momentum - or at least until he gets whipsawed.

Is today the age of momentum? Not witnessing other periods I am unqualified to answer. Though today's large markets run on the steroid of electronic trading and move with the grace of tidal waves, I submit there's still a niche for contrarians thinking outside the herd.

So how to make money this way?

First of all, a contrarian has to accurately assess his risk. If my short goes ten points against me what will I do? Double up? Cover it? Go on a bender and ride it out? He should know this beforehand and size the initial trade accordingly. One can't shoot spend their wad on the first trade. They may be dead right about the future direction of the stock but dead wrong on timing.

A contrarian's time horizon HAS TO BE LONGER. Momentum is definitely supreme on a short-term basis. In today's market you won't find many successful contrarian day traders. When stocks open down 10 points, day traders generally look to sell them. Only arrogant Morons like me think about getting long.

When I do try to bottom pick, I only buy a fraction of my desired position and I try to be as patient as possible. As a rookie contrarian, I used to buy or sell way too early. Now my entry points are much better. Better entry points mean less doubling up, less benders, more sanity, and more money. Of course being too patient entails missing some bounces and retraces - it's a delicate balance. I vowed to load up on Dell this summer under $20 but when the time came I wimped out - or was too patient. The stock was trading with a 17 handle at its low in July; it hit $27.88 in November. Oh well...

I have three trading accounts. One, solely for intraday stock trades (almost dormant these days); another for futures trading that I use the most (daytrading and position holding - due to its leverage); and my overall bank/brokerage account that holds my scant long term holdings like Google and trades that I want to hold for indefinite horizons. Just for kicks, here is a snapshot of my current long term holdings.

Long - GOOG, CDE, NEM, GSS, PAL, SWC, and I have a bunch of CDE LEAPS (calls).

Short - QQQQ, PCCC



So you just double down until you cover your losses during corrections?

Usually I do. Again, I always start small and leave myself this option. But I need to have a reason to double or triple up or at least have had nothing in my original analysis change. For instance, I shorted the 30-Year Treasury Bond after this year's election - I deemed more socialists in Congress as definitely bad for owners of American debt. Even though it went against me right away and violently, I confidently sold some more into this loss. After all, once December was over, all sorts of stupid, market-braking ideas would be swirling in the Legislature: minimum wage hike, illegal alien amnesty, shackles for Big Oil, etc. Now if I was short the bond before the election and the socialists were routed by newcomers hellbent on entitlement reform and tax cuts, then I probably wouldn't have doubled up on my bond short; I may have even covered it.

So though I do double up most of the time, I constantly monitor my original criteria and thinking. Much of it is dictated by feel and experience. Sometimes I let a Nasdaq short go 5 points against me, and sometimes I let it go thirty points before whacking it again. Of course once in a while I just cover it, take the loss, and move on. It would be very difficult and tedious to sit down and formally tabulate all of my rules for entering and exiting trades; though if endeavored it would probably add some clarity to my own thinking. I am saving this for the day when I hire some young strappers to trade for me.

Now, if the market moves big on say "smoke in NYC", "Bin Laden captured", or some other unconfirmed rumor, I'll swing the big aggressive bat right away and take a massive position. In these rare opportunities, he who hesitates is lost. All traders can count numerous once-in-a-lifetime trades that in the heat of a volatile moment, they were too scared to make or did too small in size. I am not talking about simpleton hindsight; I am talking about risk-free, edge-full trades that could if not enable retirement, could at least permit a year or two of vacation. Even many years later I can vividly remember my worst squandered opportunities.

Isn't this dangerous? The amazing thing to me is that you have not had a substantial loss trading against a strong market. How do you do it?

Doubling up on losers or "dollar cost averaging" is incredibly dangerous. One just never really knows how far a stock will move. Five and fifty dollar stocks alike go to zero - quite often actually. The same goes for shorting. I know guys who were short Dell, Amazon, and Iomega in size for hundreds of points during the late 90s. The markets will continually surprise even experienced traders, year in and year out - write that in stone and put it next your buy button. Inexperienced traders should really just start off with short term momentum trading because they don't as yet have the savvy to avoid major disasters.

My futures account has been very volatile these days. As I stated, I have been short the Nasdaq for much of this recent run. From November 6th through November 22nd, the Nasdaq was up 13 out of 14 trading days. Those were a painful two weeks. There were simply no dips to buy back any of my short. Ideally, I like to short things, have them come in, cover, and then reestablish them on big bounces. Most people have no clue how volatile the markets really are. They see a 10% return on their mutuals at the end of the year and are as happy as pigs in poop. Last year the Nasdaq 100 started the year by dropping 14% and then bounced 25% from its August low. And this is just the broader index, individual stocks and of course options had investment returns all over the map. The reality is, there is so much more money to be made from trading; as of now, only rich investors (hedge funds) are benefiting from it.

So answering Tax Shelter's question, I did get really hurt this fall in the Nasdaq, but was able to flip the futures enough times to offset what I lost on my stubborn position. Luckily, I have made all of that money back plus some dough on my End-of-the-World Trade. I was no doubt fortunate to escape unscathed, but believe me, I've been Lady Luck's b*tch aplenty.

What's inherently stupid about contrarian trading and doubling up is that a losing position is technically telling you "you're wrong". It's always foolish to argue with market forces but particularly so with the humbling financial markets. Think about it, what makes more sense, doubling up on your losing ideas or your winning ones?

Over the years I have gotten much better at understanding and occasionally utilizing momentum-based strategies. Though mentally a contrarian, my trading pedagogy also did its part to bias my skill set. Remember I started as a options trader, market-making on the floor of the Philadelphia Stock Exchange. I was originally schooled to buy options when they were cheap and sell them when they were expensive - all calculation based on the quantifiable metric of historical price volatility. My brain was programmed to see value in price and nothing in trend.

It took a couple of years, but once I started making money trading options in my pit, my ego decided to take on the larger market. I decided to parlay my winnings into foolish contrarian bets like shorting Coca-Cola, Home Depot, the Dow Jones Industrials, and IBM. Tragically for me, this was in the middle of the bull market. In that first foray, I committed a the cardinal sin of shorting stuff simply because it was "too high"; and I recklessly doubled up on all of them. In fact, I quadrupled up on IBM. The total damage wreaked by my contrarian ego that year -$220,000.

How's that for a one-year, educational tuition?



There are many traders that will absolutely never buy a stock unless it's in an uptrend. If I had a nickel for every time I heard a trader say "picking a bottom is like trying to catch a falling knife" I'd be retired on a Hawaiian beach by now. As for doubling up on losing positions, a veteran trader (himself Jewish) once told me that "dollar cost averaging has killed more Jews than Auschwitz".

Trading is in many ways analogous to the golf swing. There's no set right way to trade any more than there's one golf swing apt for everyone. Every style has its strengths and weaknesses and each participant is limited by their own inherent abilities and resources.

Consider this wire item last week from Briefing.com,

Google: Jefferies reiterates Buy ahead of Q4 earnings (499.07)

Jefferies reiterates their Buy rating and $520 target on GOOG ahead of what they believe should be stronger than consensus 4Q06 earnings, driven by both volume (incremental market share gains) and pricing (monetization improvements).

Do you spot the inanity? Google is currently $499.07 and Jeffries, a brokerage concern, is reiterating their recommendation to buy the stock EVEN THOUGH it's price target is a mere 4% higher (these are generally intermediate to long term investment ideas - not short term trading suggestions) . Who in their sane mind would buy a stock, race horse, or gas station with an advertised 4% return? That is what one gets in a money market these days. What unmitigated rubbish!

Again, for making real money, trading is where it's at.

Let's wrap it up.

One note about momentum trading. To be successful with this strategy, one has to sit there all day and stare at stocks (called "reading the tape") to get a feel for where they're headed. Remember I watch two small kids at home I can only trade part-time. Just too many diapers and bottles to study every tick of AAPL or BIDU. So my family priorities somewhat preclude me from really indulging in too much momentum trading. I could of course put my kids in daycare or hire a South American nanny - but I am not an a**hole like all of these other parents. If you don't want to see your kids grow up and instill your values in them, why procreate in the first place? Oops, sorry for that off-topic editorial.

Anyway it's just a whole lot easier to be a contrarian trader when part-timing it.

Summarizing, momentum traders work harder and earn more consistent money. While contrarians work less have bigger profit swings.

It's almost perfectly analogous to the contrast between the option buying and option selling strategies. Option buyers lose a small amount of money each day but connect on occasional home runs. Option sellers make small amounts of money each day (even on weekends) but give it back in big nasty chunks. What a great topic for my next trading post!

Interestingly enough, with options I have been evenly split between the buying and selling of premium - while most option traders I knew lean hard one way or the other.

Now if only I could add some more momentum trades to my current trading and balance out my contrary nature...

YouTube Copyright Policing

They finally took down my hilarious clip of that Z100 phone prank. In a couple of short months it was viewed over eleven thousand times and the comment thread was pushing one hundred posts.

I couldn't really understand the legalese on that email they sent me but I think it essentially says they'll repost the clip if I provide my name and address. In other words, I need to identify myself and take responsibility for a potential lawsuit.

If I had any balls, a lot of money, or a copyright lawyer in my family I'd send my name in and mix it up.

From now on, when I post stuff I will just leave all identifiable tags and keywords out of the description. There's simply no way for the media thugs to find their copyrighted content in that multi-million clip labyrinth.

I remember when Napster tightened it up a bit. They pulled everything with "madonna" in the title. Only days later one could find the trollop's songs by searching for "medonna" or "modonna".

I am somewhat irrationally peeved that they took down my clip. But my anger pales compared to my son's - they just yanked almost all of the good Wiggles clips.

USA Chant?

Some high school kids got in trouble or at least reprimanded for chanting "U - S - A" at a sports event. My first hunch was that their school was playing against a predominantly Mexican school or should I say against children of "undocumented workers"? But the article says it means something else. Googling didn't reveal anything. Can someone fill me in? I am so out of touch these days.

Of course, negative chants are banned,

WIAA policy states that only cheers supporting one's own team are permitted — no put-downs, no innuendos. Every BHS game has a contest manager, often an administrator, to reel in a rowdy crowd and put a damper on inappropriate cheers, signs or attire.

When my high school was getting beaten badly by an inner city school, we use to chant "S-A-Ts, S-A-Ts,..." at their fans. And of course they retorted with "F-A-Gs, F-A-Gs,..." since we were, obviously, an all-male school.

I sincerely doubt anyone was traumatized notwithstanding those ten dumb, gay kids that committed suicide right after basketball games one season.

Goldman's Money or Yours?

Why doesn't anybody talk about interest rates?

I played golf a couple of weeks ago with a general contractor who asked me if interest rates were going to go back down. I said, "What?"

Higher interest rates have "killed" his business over the last 6-9 months or so he insisted.

The only interest rates that have gone up this year are those of very short term duration. Either the guy doesn't know his business or his customers are re-doing their kitchens based on short term loans; either way I told him his business prospects sucked for the foreseeable future. I said to him, "You probably made good money for the last ten years, didn't you?"

"Yes", he confirmed. "Well, it's over. Be grateful for the good times and move on, or at least recalibrate your expectations", I lectured him. (His business is suffering because the housing bubble is deflating.)

Every fool can tell you the exact price of gasoline at local gas stations or how many points the Patriots scored yesterday, but hardly a soul around could draw a basic graph of oil prices or interest rates. I have news for you people, you should know this stuff!

I rehash this interest rate subject because today I want to talk about Goldman Sachs. Why are they making so much money these days and drawing the ire of class warfare mongers?

It's very easy for me to learn the prevailing agitprop without consuming any of it - I just go to an extended family gathering.

At Christmas, two separate (but equally misguided) relatives complained to me about the average pay at Goldman Sachs being six hundred thousand bucks in 2006.

Aha! That must be a prominent socialist talking point these days, or so realized CaptiousNut.

Is that a lot of money? Of course. The average pay actually ended up at $521,000. Basic math dictates for every secretary making 50k, there has to be someone making around $1 million. Or for every two secretaries, there must be someone making $1.5 million, etc.

Now I could care less about how much Goldman employees earn. First, I don't own any of their stock. Second, I don't believe in zero-sum economics whereby every dollar Joe Blow earns is a dollar out of my own pocket. Third, I am not a deadly sinner.



Envy was listed as a deadly sin long before Marcus Goldman founded his firm in 1869; it's in the Old Testament, Proverbs 6:16-19.

Of course none of the kvetchers think themselves envious. In fact, they contort the entire issue into a crime of greed on the part of Wall Street, corporations, hedgefunds, and sundry other bogeymen. One of my relatives in fact referred to Goldman Sachs as "the moneychangers".

It just so happens that greed is also a deadly sin. So their moral transgression ought to be excused by another's?

As Greg Mankiw would say, how elegant!

I submit that my newspaper-addicted relatives are in fact quagmired in envy. Look at it this way, if they had a son or daughter that worked at Goldman, would they be appalled at the child's take home pay? No, their kid would have earned it. In this case, would they be rooting for Goldman and Wall Street to have a bad year and slash bonuses? Of course not. Would they be ashamed that their child worked at one of the most profitable and powerful banks in the world? No, they'd be quite proud of it.

Sorry, that's not hypocrisy; that's pure envy.

As for the greed, what do people expect Goldman to do with all of their earnings?

Goldman's earnings set an alltime high for investment banks in 2005--then grew 76% last year to set a new record. In 2006 revenue rose 50% to $38 billion (net of interest cost). Its dealmakers handled an industry-high $1.1 trillion in mergers and acquisitions; its wealth managers raked in $94 billion in new- customer money. Its stock climbed 55% to hover near $200.



As you can see, the stock has gone from $150 to over $200 per share just since the summer. Overall, the stock is up 100% in the last two years so shareholders aren't exactly complaining.

Don't think that if Goldman paid smaller bonuses and banked the money or paid it out as a dividend that the stock would necessarily have performed even better. That would be indulging in unquantifiable conjecture and defy certain business realities.

If I were ever going to start the ideal investment bank or trading firm I would try to situate it far from Manhattan. Though it's the financial capital of the world and much of my firm's business would reside in and derive from the Big Apple, the City presents a major problem for employing labor. There are so many jobs and opportunities there that when the labor market gets tight, every employee becomes an unrestricted free agent.

It's not just the econo-illiterate but also most people that haven't lived in the New York Metro area that don't understand this phenomenon. New Yorkers change jobs like others change their underwear, or thereabouts. In a good job market, firms lose employees left and right. Furthermore they have to throw all sorts of money at the employees that do stay just to keep them happy.

If Goldman issues smaller bonuses or paid out their profit swell through dividends, they run the risk of hemorrhaging valuable traders and bankers who are already itching to jump into more lucrative ventures like hedge funds or other investment banks. Losing talent en masse would hamper future profitability AND preclude any theoretical stock price gains. At the end of the day, Goldman knows better than newspaper columnists and your big-mouthed relatives how best to spend their money.

You can read that cover story on Goldman in Forbes but it won't tell you what I am going to tell you. Forbes runs through a rather boring litany of successes for Goldman: Kinder Morgan buyout, NYSE equity trading, hedgefund services, etc.

I submit that Goldman is knocking the cover off the ball simply because of low long term interest rates. Allow to me explain.

As an investment bank, they traffic in businesses and assets, right? Well following simple present value discounting, low interest rates make all income bearing assets worth more. When interest rates drop from 8% to 6%, your house is worth more, taxi medallions are worth more, stock exchange seats appreciate, as do gas stations, consulting firms, and every other business or asset.

Why would a gas station worth more?

Well, say it pumps out 100k in yearly income and the market presently values it at around $1 million. That's a 10% yield. But if one can borrow the money at 5%, as is likely in today's market, investors will buy the station, pay 50k a year in interest and pocket the other 50k profit almost risk- and work-free. This doesn't really happen too often; more likely the station will cost closer to $2 million - approximating a 5% yield. The gas station, and just about every other business under the sun, will always have its price dictated by the cost of money, i.e. interest rates. Cheap currency always leads to high prices.

Consider those slimy real estate agents. Today they sell a house for 500k and divy up a healthy 25k (5%) commission. Five years ago they were selling that same house for 300k and only reaping a 15k commision. Clearly, the higher the asset prices, the more lucrative the real estate brokerage biz.

The same goes for Goldman but on a more massive scale because the assets they transact in (like shopping malls and oil pipelines) have more zeroes in the price tag. Remember, at the most cynical level, finance is but the largest skimming operation there is. There's simply more cream to be had when the cup runneth over.

I am short the bond and cash laden so I'll do fine should interest rates rise from here - as will Goldman Sachs since they are diversified into commodities (however average pay may fall to 400k).

I hope one day people envy my earnings as they do Goldman's.

Bet on Peyton?

As much of a Patriots fan as I am, I happen to think will this be the year for Peyton Manning. (New England clashes with Indy on Sunday for the AFC Championship).

Here's some Captious humor from Boston Sports Media Watch,

Tony Dungy talking about Peyton Manning being compared to Tom Brady:

"I don't know that he'll be judged against Tom Brady," Colts coach Tony Dungy said. "But every quarterback will be judged against Joe Montana and Terry Bradshaw and Bart Starr and guys who have won Super Bowls.

So did Brady win Super Bowls like Montana, Bradshaw and Starr, or not?







Yes he has, three of them so far, along with two Super Bowl MVP trophies as well.

Do I bet on football?

Not really.

Someone I know once denounced football betting as,

The absurd wagering on armor-clad minorities jostling over an oblong ball...

That is certainly one take on it.

Philosophically, I believe telling man not to gamble is like telling the wind not to blow. Though I have been itching to get involved with Tradesports, sports gambling is not really for me - at least in any meaningful size.

Since I am a professional trader, I get more than my share of personal net worth fluctuations during market hours.

The Bachelor Culture and Consumerism, Rotten Fruits of Progress

My antennae are always raised by the slightest bit of economic illiteracy. When I started reading John Gatto's book I reflexively deemed him an econo-illiterate. The guy was a teacher, a steward of the Government Economy. Of course he wouldn't understand capitalism, free markets and the like. I have yet to meet one teacher who does.

In his book he continually avers that government schools are part of some underhanded alliance with "corporations". That sentiment took me aback for two reasons. One, he sounds like the typical socialist business basher, you know who hates Walmart, McDonalds, Coca-Cola, "oil companies", etc. and thinks every company in America is like the outlier Enron. And secondly, I couldn't for the life of me believe that "corporations" covet the illiterate, cheating, self-entitled graduates churned out by Big Education.

Upon further reading, it turns out we were both right. The guy is economically illiterate and somewhat self-aware of that. But Gatto is absolutely correct that historically corporations had a huge hand in shaping compulsory government education.

Remember, American forced schooling started in 1850 in Massachusetts, but it really started to gain steam in the early 1900s.

In 1908, when the play opened in Washington, the United States was in the middle of absorbing the largest influx of immigrants in its history – Irish and Germans, followed by Italians and East Europeans, Catholics and Jews – some 18 million new citizens between 1890 and 1920. (link)



Well, the industrial capitalists (Robber Barrons) who ran the country had as their greatest fears, strikes and labor unrest. Andrew Carnegie, Henry Ford, and their cohorts saw compulsory schooling as the vehicle to tame this horde of alien rabble. Schools would teach kids obedience to authority. Immigrant students would be Americanized, molded into productive citizens, forced to cite the Pledge of Allegiance, and LEARN ENGLISH.

Note schools take the complete opposite approach today, preaching ethnic pride, hatred of America, and multiculturalism to border-jumping progeny. Also, the brats don't seem to think much of authority or obedience anymore either.

So a century or so ago, the titans of industry co-opted the schools for their own purposes. They are still shaping policy today through various Ford foundations and Carnegie foundations but clearly, a lot has changed since then. Government schools have since been recast as a tool for political patronage and for chiseling the minds of future voters. "Corporations" are certainly not in charge of curricula anymore as control was wrested from them by agents of an ascendant Big Government.

Academics, socialists, and other Morons always decry what they think is the downside of the corporate structure. These cavils are dressed up as "externalities" and used to broad-brush the corporate animal. Pollution remains the most propagated symbol of an externality because that's the business basher's most effective stereotype. To them, all companies pollute in one way or another, get away with it, and therefore we need a vast regulatory arm not just to save the Earth but more broadly to clean up the excesses of capitalism. But the reality is, lawyers and private property rights are sufficient enough to stem real externalities like pollution and even the imaginary ones like "discrimination".

So what are the "negative externalities" of the corporate structure?



Consider Michael Dell for instance. He is a staunch capitalist and a Republican. So why are there full-page ads for his company every single day in the New York Times?

Well, since Dell Computer is a public corporation, it has to make purely rational business decisions. Michael Dell could hate Sulzberger and Co's guts but if advertising alongside the agitprop offers a profitable return on investment, then the ads will be bought. Otherwise he'd be disserving his shareholders. Despite a hatred of all things Dell, The Times has to accept his advertising because it's in dire financial straits (not because it is rational, a profit maximizer, or gives a hoot about shareholders).

So one potential, but nonetheless real downside of corporations (especially public ones), is their inability to be morally judgmental.

I have long wondered why nobody has organized a powerful product boycotting group to take aim at the advertisers of certain offensive media. But it recently dawned on me that advertisers are all big corporate conglomerates like Dell, wholly incapable of making value judgments.

Now my insight extends further than boycotting the sponsors of a particularly treasonous episode of 20/20 or an issue of Time magazine. Advertising corporations are averse to making value judgements of almost any kind, so lewdness runs wild on television and throughout the culture. After all, the racier a show, the more viewers it gets, the better the return on ad investment. Have you seen the way pre-teen girls are clad on the Disney Channel? They look and act like complete prostitutes.



The average child watches 28 hours of TV a week, the average teenager 23 hours.

By mid teen years children have watched 15,000 hours of TV, more time than spent with teachers, parents and friends put together.

By the age of 18 they have seen 16,000 murders and 200,000 acts of violence.

By the age of 11 they will have watched 400,000 acts with sexual innuendo primarily between non married persons. (link)

Last night I was contemplating that last statement and tried in vain to think of ANY portrayal of married people having sex on television or in a movie. I couldn't really come up with an example. When you do the math and realize that even with the divorce rate what it is, there is still a lot of husband/wife sex going on. I just don't buy the idea that married sex isn't marketable and that explains its absence. I'll bet anyone that has "walked in" on their parents can stump for the pure beauty of the act.

Getting back to the topic at hand...

So when your child isn't at home alone inhaling this filth, they are "safe" at school with a couple hundred age-mates who are also brainwashed by insidious television programming.

Consider the following, also from that link,

The article features an experiment in which 3 year olds watched an actor on a TV screen cuddling a life size doll. The children then were led into the room where this was filmed with the same doll in it. They all cuddled the doll. Then the children went back to watching the TV and saw the actor go into the room with a large wooden hammer and strike the doll. When the normally well behaved children were led back into the room each attacked the doll furiously.

My son is two years old and through him I can vouch for children's unfettered disposition towards mimicry. This summer, my son started hitting golf balls though I never showed him how. He just saw me doing it from a distance. Every incremental word he learns or action he takes is a clear aping of someone else. Recently he started using the "F" word but not just randomly, in proper context like when he gets frustrated. For this, my wife and I point fingers at each other.

Lemma - Not only does sex sell, by mandate, corporations must buy it.

I still think a formidable boycott group will emerge one day, but it'll find it awfully hard to operate considering that there are only two kinds of computers (Dells and Apples) and every brand of soap or beef jerky is owned by Proctor and Gamble. Corporations may be in control of many aspects of American society, but they don't pull the puppet strings of government education anymore.

Another cynicism of Gatto's is that Big Education deliberately created a nation of consumers rather than producers.

First of all, even though he spent his adulthood teaching in Manhattan, Gatto is from farm country. He bears a resentment, common throughout much of rural America, against mechanization, the shift toward city life, and the destabilizing march of economic progress. He genuinely believes that corporations and Big Education surreptitiously convince the public to buy things they don't need.

Now I can forgive his small farm bias but the idea that it's possible to convince Americans to consume more than they need struck me as ridiculous. I mean how exactly could devious corporate executives pull this off?

After reading, rereading, and fully digesting Gatto I've concluded that he has a point.

The problem was, I was interpreting his message too narrowly. Sure the bucolic small family farm is sorely missed, but that's not Gatto's message. What's gone is rugged self-reliance and its lifeblood, self-production. Depend on one corporation for your job and others for your food, clothing, entertainment, heat, banking, etc. There's no more chopping firewood, well water, milking the cow, stuffing money under your mattress, or raising your own kids. If one produces nothing, they are forced into a life of consumption, are they not?

Let's shift over to the narcotic of schooling. Government education is a drug in the sense that American society has grown addicted to it. Increasing wealth may have paved the way but nefarious forces chimed in to make it a one way road; families lack the memory of homeschooling, remain unaware of its virtues, and for the most part can't rejigger their lives to accommodate it.

Compulsory mass education is seemingly free to most people. Before government schooling, sending one's children to be educated would lower the productivity of the family farm or the family store. It was an economic tradeoff, a tuition payment that shaped educational realities and institutions. One hundred years ago, nobody would send their kids to school against the interests of family wealth if they were going to come back unlettered, unruly, and un-marketable. Nowadays the kids come back ignorant and unskilled but the loss (economic and otherwise) is not so obvious to the parents. The cost is really borne by taxpayers, i.e. rich working people. Also, your kids don't look so dumb compared your neighbor's brood either - so breathe a sigh of relief.



If you are an accountant at a big corporation, bringing your two young sons into work isn't really going to help you get your job done or get you a raise. And you can't send them to work on their own either because of child labor laws (notwithstanding that sneaky little Greek kid). It's hard for your wife to stay out of the workforce and homeschool them because every other household in your local economy has a double-barreled income. That is priced into the housing market and you'd likely have to move to a less desirable neighborhood should she opt out of the workforce. Not to mention, that everyone else sends their kids to the government school AND you already pay property taxes, the bulk of which fund that school. So even if skeptical and averse to groupthink, you reluctantly hand the kids over to a government school, promising yourself to be a vigilant parent, and hoping for the best. The school can't possibly ruin your kids, after all you did okay yourself. Right?

But very few working parents can counteract the peer pressure, the brainwashing, and the television.

So how then does mass schooling fuel consumerism?

The answer is that it doesn't do so directly. Consumerism is the confluent result of the corporate efficiencies and technological progress that have completely redrawn the landscape of America. Not only are there are fewer family farms, there are fewer family restaurants, "mom and pop" gas stations (thank the environmentalists), family supermarkets, etc. Every aspect of American life today is bigger, more efficient, and more complicated than it was one hundred years ago. Very few people earning six figures can so much as change a flat tire. That may be a point of condescension for today's older folk; but I am sure their grandparents mocked them when they were young and unable to milk a cow. Getting back to point, progress and prosperity facilitated the idling of children. But take notice that while you and your wife went to work for large corporations, depraved forces have moved in to fill the void left by farm chores and child labor. If you believe they have anything resembling the best interests of your children then your own "education" fails you.

Devil's Advocate - I thought you couldn't stand the defenders of "mom and pop" businesses?

That's right. Ninety-nine percent of them are socialists. Here, I am just mentioning the undeniable fact of their demise. Banning Walmart is not going to right any of the wrongs addressed by this post. Socialism will certainly not bring back the family farm, help poor people, or reanimate the country with self-production and self-reliance - which is the subject of my post. Entrepreneurialism is not dead; in fact many recent developments (e.g. the internet) have given it a massive boost. BUT, it, like all business is constantly under siege by hyper-regulatory socialist econo-illiterate... let's just call them economic insurgents.

As I was saying, the world got a whole lot more complicated. One can't simply blame corporations for the death of small family businesses because that wouldn't tell the whole story. The Industrial Revolution, combustion engine, and the assembly line cheapened food, heat, and housing for the multitude. Its great wealth brought sanitation, better healthcare, and grew life expectancies. The cornucopia of capitalism did however fertilize the weed of Big Government. Many pundit-types refer to this as the flip side of economic growth - a ripe topic for another time.



Someone on the web captioned the above pic as "The Church of Consumerism". By that metric how pious are the women in your family? Some women I know have locked up sainthood!

So what exactly is consumerism? Wikipedia has a very tame definition but I think we all can agree that it generically refers to the purchasing of goods if not an obsession thereof. Clearly, the more money one has, the more they can purchase. The richer this country has gotten, the greater its appetite for iPods, designer jeans, hybrid cars, premium wine, organic food, etc. So where am I going with this banality?

You see, John Gatto is absolutely correct. Not only can people today not raise a chicken, kill it, pluck it and serve it up for dinner, most people today can't cook a store-bought bird. Who today hems their own pants or even owns a sewing machine for that matter? My grandfather did his own oil changes - not too long ago either. What madness, no?

What about self-entertainment? For centuries people played instruments, sung, socialized, and read books. Most of the social clubs in cities like New York and Philly are long since dead and gone and the survivors are desperate for new membership. Today when the cable is out nobody knows what to do. How pathetic is it to drive around at night and see a flickering television in almost every house? Today Americans sit on their collective asses, listening to music or inhaling the politically correct pornography on the idiot box. Everyone is consuming entertainment; no one is producing any.

Recently I have come to loathe television. For at least twenty years I used to mock my sophisticated uncle who doesn't own a television. I thought him grotesquely out of touch (of course he still is on many fronts). But now I have come full circle to his point of view, or at least its conclusion anyway. Parenthood put the first involuntary dent into my television viewing. When a newborn deigns to sleep, you find yourself relaxing by say, brushing your teeth, doing the dishes, or taking your own nap. The whole new parent experience shocks the bachelor and bachelorette lifestyles into a foreign if not alternate reality.

Even with the DVR, watching fluff shows like Pardon the Interruption just couldn't compete with an opportunity to go to the bathroom or feed myself. Predictably, I clung to my favorite programs and axed the Marginal ones. Each month it seems another of my pet shows bites the dust. Ever since the umbilical cord was cut, literally and figuratively, stark tradeoffs were manifested, and my television viewing began an irretrievable descent.

The second dent into my TV viewership began with Marginalizing Morons. When I first started this blog, I had little idea what I would write about, no less where blogging would transport me. (I did know that I wanted to avoid the sewer pit of "politics".)

Early on I put a tracker on my blog and it had a profound impact on me. I could see that people in far off places had read my posts: Pakistan, London, Iceland, Thailand, etc. And I could see exactly how they found my work. I was blown away by the prominence of my post on J-Crew's embroidered djellabah. At one time, if you googled "embroidered djellabah" my blog post came up first in the search results - right below J-Crew's listing. Now I was hooked, awed by the sheer power of the internet.

There probably has only been one other epiphanous moment like this in my life. In the fall of 1988, I went to my first freshman math meet. I didn't really train for the event nor have any idea what it was all about. Nonetheless, I turned in a perfect score - the only one of 300 kids in the county. Imagine the effect beating out perhaps the smartest kids around had on my incipient ego. Winning the event validated my arrogance or so I thought. I was hooked on the euphoria and really took to math. Once I began working at it, I graduated to national acclaim. Consequently, my mind, ego, and self-confidence ascended to dizzying heights. This is why Greg Mankiw is but a gnat to me; I have competed against and held my own with profound geniuses, guys who could memorize Π to 500 decimal places in an afternoon.

Writing a blog was the first productive endeavor of my life. Imagine that at 30 years of age, like most people I had never created or built a single thing. This novel experience has had a profound effect on my life. Today I could either vegetate in front of a ball game or I could compose my thoughts and publish them globally. The end of self-centered bachelorhood forced this dilemma on me. When I think about how much time I have spent idling with a remote control I can't help but get mad at the time I have lost. My blog will be there forever. It'll be a window into my soul for my children, grandchildren, great-grandchildren, etc. Wouldn't you have liked to know your great-great-great-great grandparents?

I have said this before, my blogging is also a tool for self-education. Dumping your thoughts onto an open forum like the blogosphere makes you measure your words, balance your thoughts, and wend your way towards clarity. So again, weigh the benefits of watching the Red Sox today versus the benefits of developing your mind and leaving a legacy for your descendants.

It is a categorical trait of most Morons that they can't put their "ideas" and "opinions" on paper. If you can't formally articulate your arguments, consider that maybe you haven't thought them through or researched them. Or perhaps your opinions are not even your own - they are just propaganda clichés. I would confidently say that at least 90% of people simply pawn off others' propaganda as their own creed. Look at this email I recently received from a family member.

I will debate you on this whole global warning thing... I usually agree with your blog but your last grandstanding nonsense about global warming is wrongheaded

Scientists say 2007 may be warmest yet - Yahoo! News

One, instead of posting his dissent on my blog he sent me an email expressing nebulous disagreement. Two, he threatened to debate me at a later time but I guess only verbally. Three, note the Yahoo news link he regurgitated and propagated as "argument". Four, he still hasn't engaged me in the threatened debate. I emailed him and dared him to post a comment - he didn't. Five, it's not like he doesn't have time to post a comment - he is a shiftless bachelor!!!

The point is, consuming content pushes most people to act like my mind-numbed relative. Most people don't have any coherent ideas of their own because they are too busy consuming the thoughts of others.

I apologize for the peripatetic course of this post. Sometimes coherence can be as much an anchor as it is a rudder. How's that for a sloppiness justification!

Remember I resolved to be more positive this year, so I'll try my hand at offering a dollop of advice.

Ask yourself whether you are a consumer or a producer. If the imbalance is as bad as mine was, figure out how you can change that. Instead of joining a club or a weekly card game, start your own. Become a leader, not a follower. Instead of watching television, seek out edifying web content. Everyone isn't made for blogging but you can still engage others via comment threads. If you are going to consume content, seek out the best, the classics. Right now I am immersed in the eleven volumes of Will and Ariel Durant's The Story of Civilization. Reading is not just another form of passive media consumption. It forces your mind to stay awake, crack the code of language, and form your own mental images. One simply can't eat, doze off, and scratch themself while reading a good book as they can while watching television. There are great books on every subject; find the ones suited to your palate.

For my last chi enhancing prescription, get yourself a set of Bose Noise Cancelling Headphones - especially if you have small children in your present or future. They are also good if you ride the subway or fly often. They won't make you completely deaf but they'll make a big difference. If you've ever felt like running into the cockpit and strangling an overly loquacious pilot, you need this headset.



There are plenty of devious elements out there trying to waste your time, your money, and your mind - so fight back a little.

(Since my ramblings took us away from the Bachelor Culture, I promise to cover it in a subsequent post.)

Life Backwards

Click the image to enlarge.

Greg Mankiw Swings and Misses

Above find Dr. Mankiw's inaugural response to CaptiousNut!!!

That is in fact a truncation of my comment above the vaunted professor's. First read his original blog post - Pigovian Questions. Here is my comment in its entirety,

CaptiousNut said...

"all taxes are bad...is too common"???

Anyone that thinks that is a simpleton?

Greg tries to paint himself as the realist which I find quite ironic. The reality is that taxes have always been an end-around for more and bigger government.

In theory, one tax raise could be offset with a decrease elsewhere. But I thought Greg was trying to be realistic - when has this ever happened?

I don't buy his "there will be taxes...so we should use the least bad ones" excuse. Nor do I buy his profession that he thinks government spending is too high. If he had just one-tenth as many "cut the government down to the bone" posts as he had Pigou Club posts it'd be more credible. As it stands, his blog can be summed up as just one big ad for gasoline taxes, for the abolition of Red State agricultural subsidies, and an unending humoring of the "inequality" debate. Can you say "class warfare"?

The empirical, real-world externalities of socialism are far worse than the hypothetical externalities of carbon emissions.

I make no distinction between socialists and those that harbor them - unwittingly or not.

As of yet, no one has ever answered my question from way back:

Why not limit cars to 16 mpg instead of a gasoline tax?



The background of this is of course Greg's Wall Street Journal editorial that proposed to add a $1 tax to every gallon of gasoline sold (on top of the current 50 cent burden). He's been on this long crusade to get politicians, economists, and other pinheads to join this "Pigou Club". This nonsense is little more than his transparent job audition for a future tax-raising Democratic Administration. Click here to read his editorial. And this link will give you more context if desired.

My response to Dr. Mankiw's mistake,



For you Morons, I suggested banning Yugos and Camrys NOT Hummers and 10 mile per gallon clunkers, as Mankiw and one of his toadies mistakenly inferred. A population driving Chevy Suburbans would drive a heck of a lot less, ergo there'd be less "congestion".

Note that I eschewed all acerbity in my response to Mankiw even though he was DEAD WRONG and called me "Mr. Nut". His larger portfolio of folly is my concern, not a single overly-Captious misread.

But his response did reveal a couple of things. First it demonstrated his latent, but predictable, hostility towards me. I took a screenshot of the comment thread immediately for fear that he'd erase his embarrassing jab.

It also showed that he's both tunnel-visioned and tone deaf regarding the gasoline tax. I have proposed my ingenious solution to congestion on his blog more than a few times, so he should have been aware of my idea. Given such an awareness, he wouldn't have misread my latest comment. Mankiw is no dummy. He certainly has the capacity to understand my suggestion BUT it's been neutered by his both his animosity towards me and the self-righteousness of his own crusade. He's kind of like Jeff Jarvis with his Dell Hell.

Unshaken and unapologetic, Mankiw and one of his fawning minions vainly try to attack my proposal. A few more comments were exchanged; the noble professor who called me "Mr. Nut" actually lectures me on civility; and I smack them both down in a rousing grand finale.



CaptiousNut said...
Without directing it at anyone in particular, there is an expression, “never argue with a fool because others may not know the difference”. In that vein, I refuse to be sucked too far into debating the Pigou Manifesto, a foolish bricolage complaint. To say that my proposal would not reduce pollution, a Pigovian aim, is fatuous at best. As more than a few people have pointed out, a Pigou gas tax wouldn’t even necessarily accomplish what it purports to do. Pacify the Mid-East? Balance the budget? Reduce congestion? Save the environment? Give me a break.

Pigou Club members demand to be judged by their “aims” rather than their results. Just like all of the other socialists!

By definition, no practical, narrow solution can compete with a fantastic panacea. The Pigou gas tax is a great example of why the term panacea is mostly uttered sarcastically. The criticism of my idea is quite analogous to critics of securing the southern border who claim it’s not a “comprehensive solution” for immigration when in fact it doesn't purport to be one.

If a higher gas tax is supposed to reduce pollution, then why are emissions growing 5.4% in Western Europe and 4.7% in the U.S.? (since Kyoto no less)

Europe proves incontrovertibly that consumers are immune to a gas tax so long as little cars are legal. So, unlike my proposal, a gas tax makes no salient into congestion. By the way, for those of you with “global warming” phantoms dancing in your heads, the rotten fruit of congestion is idling, no friend of Mother Nature either. Furthermore, the fewer gallons consumed in America due to a $1 gas tax will just be burned by Third World rickshaws without catalytic converters. Al Gore’s Earth will still be doomed with or without a gas tax. Shouldn’t the inevitable energy consumption take place here, where emission standards are better?

Like I said above, I don’t want to get sucked too far into this morass of conjecture. There is a tradeoff between congestion and fuel efficiency and it’s ill met by a gas tax. My proposal better attacks congestion and may increase emissions slightly in the short term. I could care less about that but there are many feasible offsets for those that care. Massachusetts could take many cars off the road and reduce overall emissions if it: deregulated taxis, lowered the cost of mass transit, allowed car insurance companies to charge urban drivers and younger drivers higher premiums, built high rises near train stations, and modernized its toll booth collections. There may be a ton of Priuses in the Bay State and no shortage of Earth-huggers, but they are all allied politically with the opponents of my emissions offsets. Go figure.

Other states and particularly congestion-ridden cities could take thousands of uninsured drivers of the roads. BUT that might be seen as discriminatory racial profiling in some circles. Needless to say, the opponents of this offset also vote with the global warming chorus.

Taking a ton of cars off the road entirely would reduce congestion emissions for the rest of us. In the longer term, driving Chevy Suburbans would force everyone to make major lifestyle changes. People would live closer to work, there’d be more carpooling, and overall drivers would eliminate so many frivolous car trips. I think once people get a whiff of telecommuting and the facility of online ordering, not only will they’ll never go back, they’ll strive to drive even less and emissions would decrease. I’d be quite surprised if Moffatt or anyone else possessed a chart of price elasticities that could predict the future interplay of so many dynamic variables. I am sure 200 years ago no one could envision horse transportation usage dropping 100% either. When they banned smoking in public places critics said no one would quit, they’d just smoke more at home. At first nobody quit, but over time people started dropping the nasty habit in droves.

Of course my idea won’t raise tax revenue but that’s kind of the whole point. I just can’t find the law stating new revenue must be found before old revenue is eliminated. But since I am not angling for a policy job maybe it’s all beyond my ken.

8:50 AM

Marginalizing Bloomberg Television

U.S.-Led Forces Kill 20 Alleged 'Terrorists' in Iraq

That's the headline at the bottom.

Wouldn't just leaving "Terrorists" in quotes have sufficed? Isn't "Alleged" a bit on the superfluous side?

They should say either alleged terrorists or just "terrorists". As it stands, they are alleging that the Bush Administration(?) called them terrorists. They either said it or they didn't. All day long headlines like this scroll on Bloomberg, demonstrating that it's not a journalistic entity but rather an advocacy group.

The best characterization I have heard yet is that members of the media are like fish in the water, completely unaware they are wet.