Moron Overload

I can’t take it anymore, everywhere I go I run into complete, total whack-job Morons.

A friend of mine just bought a new cell phone for $200 and bought the “insurance” for $6 a month. That is $72 per year for you math illiterates and would only be worth it if she had a 36% chance of losing the phone this year. Actually, over a two year period, the insurance is only worth it if the probability of a lost phone was 72%. Why not just flush your money down a toilet?

I just played golf this damp morning outside of Boston. There were 3 people on the empty course. I was riding a cart and 2 single walkers (players playing solo) were ahead of me. Neither of them would let me play through. I mean how bleepin’ retarded and ignorant can you get? I eventually hit my driver right over their pin-heads and drove right past them. Yeah, it is 47 degrees and raining and I was going to wait behind them for every shot with 16 empty holes ahead of me? I think not. Big deal, I just Marginalized them. But I should have pummeled the one dork who asked me if I was “in a hurry”.

That “in a hurry” remark reminded me of an incident I had a supermarket (Key Food) in Brooklyn. After finishing up my shopping, I was going to check out and just after I got in line, some old guy with a “few” items tried to cut in front of me. So I blocked him off and turned my back to him for a few seconds. I guess he mistakenly thought that I would step back. So I held my ground and then he decided to ASK if he could go ahead of me. I shook my head and derisively told the creep “NO”. I said maybe if you didn’t try to cut me, I would have let you go, but now I have to teach you a lesson. The creep started cussing me out (and another fossil reflexively started chirping at me as well). The meddler said that I had no respect for my elders all the while the original agitator was muttering four-lettered invective at me. I was dying laughing and the old bat cried out in desperation that he was “in a hurry”. To which I responded that I had no plans or urgencies at all. I said my evening was “wide-open”. Wow, was this guy pissed.

I have Marginalized CNBC in past blogs. They are the typical big, stodgy socialist media outlet. They are trying to show their progressivism by running blogs (Squawk Blog and The Morning Blog). All day they promote their blog web addresses, but there is basically nothing on their blogs. The CNBC hosts actually tout "new pics" of themselves on the blog, as if looking at their mugs all day isn’t enough. Do they really think anyone is interested this?

Also, you need a MSN Passport ID to post messages on their blogs. Since no one has one, there is nobody posting comments. I got a MSN ID just so I could criticize them. I figured that I needed an outlet after listening to their crap for 10 years, all day long. But they won’t publish my comments anymore. You can google “CaptiousNut” (click here) to see some of my hardly incendiary comments that some pissant at CNBC has decided to censor. So to sum it up, there is little blog content, a barrier to posting comments, and censorship of criticism. Somebody tell CNBC that “THAT IS NOT A BLOG”.

Thank God for the internet because I keep losing media outlets. I had to cancel Businessweek, I haven’t bought a newspaper in over 4 years, I haven’t watched the local news in years, and now I am muting CNBC practically all day long.



I heard some boob on the radio say today that the recent rain in New Hampshire has cost the state billions in tourism revenue. The first two weeks of October are peak viewing for foliage in the White Mountains. But come on, “billions”? He tried to justify his remark with an anecdote about a family of Londoners that usually comes to see the leaves this time of year. First of all, one “billion” is 1,000 million dollars. It is a lot of stinkin’ money. That would mean that the state would have to have had 1 million tourists, who usually spend $1,000 each in New Hampshire, all cancel their trips. Furthermore, “billions” implies at least twice that amount. I would almost bet my life that foliage viewing is not a multi-billion dollar season. Yo idiot supreme, when it rains, people may just sit in their hotel rooms or go shopping – they don’t cancel trips. Never mind that the boob has no concept of what a “billion dollars” is.

But herein lies the problem. I can’t watch, listen, or read to 90% of media. The content is either factually vacant or outright propaganda.

Last week in Toledo, a handful of Neo-Nazis marched in demonstration of “black crime”. They were attacked, ironically by crowds of African-Americans and disbanded. Hours later, as CNN calls them, “counter-demonstraters” rioted, burned buildings down, looted stores, attacked police, and even attacked paramedics who went in to assist the injured.

So white supremacists marched and ran, hours later “counter-demonstrators” riot and loot and this is the headline ABC News runs.



This is a complete and deliberate mischaracterization of what happened. The videos have been all over the internet. IT WASN”T THE WHITE SUPREMICISTS WHO RIOTED!!!

Those Neo-Nazis must be delirious. Probably not since Al Queda’s 9/11 attack has a plan so wildly surpassed its objectives.


From now on, I may refer to Big Media as the “Apocalypse Now” crowd. What is with all of this Avian Flu hysteria? Does anyone remember the fuss over the “impending” Sars Epidemic? Before that we had anthrax, Y2K hysteria, etc. Today it is Hurricanes, Global Warming, Energy Prices, and the formerly mentioned, panic du jour, Avian Flu.

Does Big Media really think their customers want to be bombarded with doom and gloom 24 hours a day? Seemingly nothing uplifting ever happens.

CNBC is breathlessly worried about “consumer confidence” and how much money people will spend this Christmas. But CNBC lacks any self-consciousness. They have been worrying about consumer spending for the better part of a decade. Every year they think people are going to stop buying stuff, implying that our economy is“over-leveraged”. There is also an undercurrent of paternalistic elitism here - that being the aspersion that the commoners are dumb and recklessly mismanage their budgets.

Capitalists believe in the business cycle while doom and gloom socialists always see misery.

I have said it before, economic illiteracy really scares me. Some Morons in Congress are trying to attack “windfall” profits on oil companies. I have already addressed such folly ad nauseum. They just don’t get it. If you take away (tax) money from oil companies, they have less to invest in production and development. THAT WILL LEAD TO HIGHER OIL PRICES!!!!!!!!



Rapidly escalating oil prices have “drained billions of dollars” from the nation’s economy “in a massive transfer of wealth from average Americans who can’t afford it, to big oil companies who already were experiencing all-time record profits,” Dorgan said.

Hey Dummy, oil companies are owned by "average Americans". This is analogous to when class action lawyers convince stock shareholders to sue their own companies.

North Dakota Senator Byron Dorgan (D) is championing the bill. I know, the “(D)” was superfluous. He has a cute little hitch in his bill that tries to address this “taxes stunt development” conundrum. The bill would allow oil companies to keep their “windfall” profits so long as they reinvest them back into exploration and production. Presumably we will need to create some new regulatory bureaucracy to enforce this and we all know how adept the government is at managing bureaucracies. I have already mentioned how taxing oil "profits" further would hurt pension funds, insurance companies, and investors. Someone needs to tabulate how many shares of Exxon, Chevron, BPAmoco, and other oil companies are owned by North Dakota’s pension funds. The inherent problem with this “exploration and development” exception is that it too is superfluous. Remember, oil companies are not run by old men in Texas, they are run by shareholders and boards of directors who would never let a company just sit on cash. Shareholders always demand the company put the capital to work or “rebate” it via dividends.

See Senator NumbNuts, there already is a "rebate" mechanism. I have put "rebate" in quotes because this bill would take (tax) non-reinvested "windfall" profits and "rebate" them to consumers.

Also, "rebating" consumers prevents the high gasoline price from changing consumptive behavior. So is Senator Dorgan against energy conservation? Here Dorgan's socialism puts him in a bind. He wants to attack evil oil companies, but this "rebate" may end up subsidizing SUVs and Hummers.


I have fired at Bill O'Reilly a few times now for his untrammeled econo-illiteracy but let me just say that he is quite comfortable sticking to his bricolage theories of price gouging, oil cartels, alternative energy science fiction, and evil oil companies. He had Neil Cavuto come on his show to discuss said topics, and Cavuto hammered away at Bill's sophistry. Bill smiled throughout yet was as wrong as he ever was.

On Monday, Bill opened his show with this nonsense:

Talking Points Memo - Gas prices going down?

"For weeks we've been telling you that the five major oil companies have been price gouging - taking advantage of hurricanes and the greed of OPEC to slam the American consumer. Some Americans have sided with the oil companies, citing the free market, supply and demand. Well, what say you now? Worldwide demand for oil is the same today as it was eight weeks ago, but oil prices are declining. So what gives? Oil companies are frightened that the American consumer will begin demanding fuel efficient vehicles and alternative fuels for their homes and cars, so they're pulling back Our pals over at the New York Times are unhappy about falling gas prices, saying 'a bolstered gas tax would raise huge amounts of revenue ? to be used to provide offsetting tax breaks to low income households.' You gotta love the Times. Under the guise of helping the environment, they hammer home their theme of income redistribution. Oil companies have been scared into lowering oil prices. And the far left wants to exploit the situation to redistribute income. That's the cold hard truth in the No Spin Zone."

That above quote was from Bill O'Reilly.com. But I watched the show (actually recorded in on my DVR as I do every night) and Bill actually said a lot more than what they posted on his website. He also said:

"Millions of Americans are angry with big oil and are buying less fuel and SUV sales are a disaster..."

"The official explanation is speculators will not pay as much for oil now as they did a few weeks ago… that’s bull." (official explanation?)

"If speculators are driving the global energy industry, we’re in huge trouble..."

"Oil companies set the price of fuel based on what they think they can get away with..."

"By the way, the price drop again shows the power of the people….Individual consumers, acting together, can bring any industry to its knees..."

Here Bill sounds like a real nutjob. He claims that "worldwide demand for oil is the same" and then in the omitted quote, "Millions are Americans are angry with big oil and are buying less fuel and SUV sales are a disaster..."

So what is it Bill? Is demand the same or have consumers cut back? Logic should retard your effort to have it both ways.

There is no weaseling out of this pickle. Bill has said in the past that since Americans consume 25% of all oil, then Americans control worldwide demand. So Bill claims on one hand that worldwide demand is the same, but Americans, who control it, have cut back.

Is there any mystery why those quotes were omitted from his website?

It is funny because my Bill O'Reilly posts get hit a lot but I can tell that the people that find my blog via "bill oreilly" and search engines, aren't very interested in what I say.

How do I know this? I can tell by the amount of time they spend on the blog and also by exactly what they searched for - typically it is something like "bill oreilly jackass". Unfortunately for these people, my critiques of Bill are mostly on a substantive level (and mostly anti-socialist).

If you read between the lines of Bill's last omitted quote, self-obsessed arrogance rears its Gorgonian head. He definitely thinks gasoline prices dipping since Hurricane Katrina had nothing to do with marketplace forces....it had to be due in part to his personal crusade against big oil companies.

If Bill O'Reilly is shaping public opinion on economic issues then truly we are all in "big trouble".

Boston and Alcohol

The other night I went to a Boston Celtics preseason basketball game at the TD Banknorth Garden, formerly known as the FleetCenter which of course replaced the original Boston Garden. I was forewarned that if I wanted to drink beer there I had better bring my passport. This, I think I have to type in bold because it is that outrageous:

You cannot buy a beer at the Garden unless you have a Massachusetts driver’s license.

A woman who had to be almost forty was denied beer right in front of me on Wednesday because she had and out-of-state driver’s license.

I can’t reiterate this enough, but the people in Boston are bleepin’ retarded.

I am not even going to analyze this inane policy. They are like so “WICKED RETARDED” with alcohol up here – I will give a few more examples.

Last summer, en route to a barbeque, I needed to buy a case of beer. I went to the liquor store, hauled the case to the register and was denied the sale. Again, they wouldn’t accept an out-of-state driver’s license. I actually got my 90 year old grandfather to come in the store and buy me the case. At the time I was 30 years old.

Oh, even if you are 21 and have the Massachusetts license, don’t bring your buddies in the store with you. They will card everyone that is with you.

Another example. After a round of golf, I went with a few family members to a local establishment for a few drinks. Well, we never got to a "few". After the second round of draft beer, the bartender told us that we "had had enough". We were sitting there at a table, barely talking at 4pm on a weekday afternoon. I was shocked almost to the point of speechlessness. (We went down the street to another place.)



In another instance, during my sister’s wedding weekend, I went to the "packy" and put $200 worth of liquor and wine on the counter and was refused the sale.

At the Warren Tavern in Charlestown, I was with a group of people and kept going up to the bar to order drinks. I was getting them five at a time, 2 Guinness, 2 gin and tonics, and a Kettle One on the rocks. After my third trip, the wench barmaid said to me, "YOU are drinking an awful lot..." Some regular the bar said to her, "He is not drinking all of those drinks…he is buying for the table..."

The MORONIC barmaid actually thought I had had fifteen drinks. Yeah, there is nothing like alternating between vodka, beer, and gin all in about an hour.

Even when her idiocy was pointed out politely by a regular, she still snapped at me, "Well you still have had a lot." To which I responded that I was staying across the street. Never mind that 3 drinks is very far from most people's notions of "a lot". She was rude and reluctant to serve me the rest of the time.

When the bill came, I looked at it, remembered her rudeness, and left a 14% tip. Five minutes later a bouncer came over and threw the check back at me. He said:

"The bartender wants to know if you are serious about this tip..."

Now I had had a few drinks so I double-checked my math and went up to the bar.

CaptiousNut:"First of all, you have been rude all night. And secondly, 14% is not a bad tip..."

Wench:"You need to tip 25%......I don’t work for less than that……I have two kids at home..."

CaptiousNut: "You want me to fix the tip?"

Wench:"Yeah"

She brought the pen over and I reduced the tip to zero.

Almost everywhere in Massachusetts, it feels like the bartender is doing you a favor by serving you. The thing is, Bostonians don’t realize how convoluted this is because none of them have ever been anywhere else. I have lived in several cites and traveled a bit so the alcoholic idiocy here is most apparent – as it is to anyone else with some perspective.

But again, this is such an insular and parochial society, the dopes that live here just take it all for granted. It is all they have ever known.

Now these anecdotes don’t represent my complete list. I could go on considerably longer about the Pilgrim-esque alcohol policies up here such as how anal they are with booze at wedding receptions, the paucity of liquor licenses stunting new restaurant development, etc. Remember, Bostonians don’t believe in personal responsibility. It is always someone else’s fault, the bartender’s, the liquor store’s,... Beer, like oil, guns, and SUVs, is a favorite scapegoat.

Remember that Red Sox fan that had an altercation this year with Gary Sheffield of the Yankees? The Boston Globe immediately ran a front page article on how they have increased the number of beer stands at Fenway Park, implying that the beer and Fenway should be held culpable for one idiotic fan’s actions.

From that registration-restricted article:

The new owners of the Boston Red Sox have greatly expanded alcohol sales at Fenway Park, adding at least 16 new stands where beer is sold since taking over in 2001, according to the city licensing board. The team has also increased by a third the size of beer cups, from 12 ounces to 16 ounces.




I think Yankee Stadium should deny beer to everyone that has a Massachusetts license. Maybe that would send a message to the dopes that set policy up here.

Mortgage Interest Deduction

The average person knows little about the facts of homeownership. President Bush, via a bipartisan Tax Reform Panel, recently had the “audacity” to suggest some changes to the mortgage interest tax deduction.

1) lowering the ceiling on the total amount of mortgage deductibility from $1 million to around $350,000,

2) capping the marginal tax rate of said deductions at 25%.

The anti-Bush crowd yelped in unison upon this announcement. “Now Bush is going to eliminate the mortgage deduction……”, “Bush is going to lower your houses value…”, and Becky Quick this morning on CNBC, “Many people bought their homes expecting this deduction…”

First of all, this is a direct assault on the rich. Anyone who thinks otherwise suffers from bottomless ignorance. It follows that anyone who criticizes these modifications cannot claim to be on the side of the "little guy" in the class warfare of “rich versus poor”.



If you have a 350k mortgage, I am sorry, but you are not middle class. You may be overleveraged but that is a topic for another blog. Before you Manhattanites go apoplectic, screaming about how a 500k mortgage is a small one in your neighborhood, let me correct you. If you live in an 800k two bedroom apartment, you are not middle class….you are poor for New York City. If limiting the interest deduction costs you a couple of hundred dollars per month and you can't afford it, then maybe you should cut back on your $12 martinis and $5 Starbucks lattes. Move to Staten Island perhaps.

Of course, that is one of the central questions a rational person would research before hyperventilating. Who would be affected by these changes and exactly by how much?

In a previous blog, Real Estate Hot Potato…Buy versus Rent & Invest, I have already done most of the math on “how much?”.

Specifically, I studied the costs of home ownership for a 500k mortgage on a 600k home.

We hypothetically borrowed 500k on a 5.75% fixed rate, 30 year mortgage. Below is the calculated monthly mortgage deduction for all thirty 30 years. As I showed in this prior exercise, the mortgage interest tax benefit is, among other things, a function of the borrower’s tax bracket. As I have previously stated:

It is actually one of the few tax laws that favor high income earners.

Total Interest Paid and Monthly Tax Benefits at varying marginal tax rates.

--------------------------------------25%-----------30%-------------35%
Year 1........$28,582.24........$595.46.....$714.56........$833.65
Year 2........$28,202.49........$587.55.....$705.06........$822.57
Year 3........$27,800.32........$579.17.....$695.01........$810.84
Year 4........$27,374.40........$570.30.....$684.36........$798.42
Year 5........$26,923.34........$560.90.....$673.08........$785.26
Year 6........$26,445.65........$550.95.....$661.14........$771.33
Year 7........$25,939.75........$540.41.....$648.49........$756.58
Year 8........$25,403.99........$529.25.....$635.10........$740.95
Year 9........$24,836.59........$517.23.....$620.91........$724.40
Year 10.......$24,235.70........$504.91.....$605.89........$706.87
Year 11.......$23,599.32........$491.65.....$589.98........$688.31
Year 12.......$22,925.38........$477.61.....$573.13........$668.66
Year 13.......$22,211.65........$462.74.....$555.29........$647.84
Year 14.......$21,455.78........$447.00.....$536.39........$625.79
Year 15.......$20,655.28........$430.32.....$516.38........$602.45
Year 16.......$19,807.52........$412.66.....$495.19........$577.72
Year 17.......$18,909.71........$393.95.....$472.74........$551.53
Year 18.......$17,958.90........$374.14.....$448.97........$523.80
Year 19.......$16,951.95........$353.17.....$423.80........$494.43
Year 20.......$15,885.54........$330.95.....$397.14........$463.33
Year 21.......$14,756.18........$307.42.....$368.90........$430.39
Year 22.......$13,560.14........$282.50.....$339.00........$395.50
Year 23.......$12,293.49........$256.11.....$307.34........$358.56
Year 24.......$10,952.05........$228.17.....$273.80........$319.43
Year 25.......$9,531.41.........$198.57.....$238.29........$278.00
Year 26.......$8,026.90.........$167.23.....$200.67........$234.12
Year 27.......$6,433.57.........$134.03.....$160.84........$187.65
Year 28.......$4,746.16.........$98.88......$118.65........$138.43
Year 29.......$2,959.13.........$61.65......$73.98.........$86.31
Year 30.......$1,066.60.........$22.22......$26.67.........$31.11

If section 2) of Bush’s Tax reform were passed, it would immediately cost this buyer, if they were in the top tax bracket, about $238 a month. (from the difference in the 35% column and the 25% column in Year 1).

A short glance reveals that the difference decreases over time, as would be expected since the loan decreases as well. In Year 10 the added cost to a top bracket earner would be $202 and by Year 20 it would be down to $123.

But this only shows the effects of half of the proposed changes i.e. capping the marginal tax reduction at 25%. Now to see the effects of limiting taxable interest deductions on a maximum of $350,000 borrowed, I simply multiply the chart above by 0.70 (because 350k is 70% of 500k).

Total Interest Paid.........Monthly Tax Benefit
Year 1........$28,582.24........$416.82
Year 2........$28,202.49........$411.29
Year 3........$27,800.32........$405.42
Year 4........$27,374.40........$399.21
Year 5........$26,923.34........$392.63
Year 6........$26,445.65........$385.67
Year 7........$25,939.75........$378.29
Year 8........$25,403.99........$370.47
Year 9........$24,836.59........$362.20
Year 10........$24,235.70........$353.44
Year 11........$23,599.32........$344.16
Year 12........$22,925.38........$334.33
Year 13........$22,211.65........$323.92
Year 14........$21,455.78........$312.90
Year 15........$20,655.28........$301.22
Year 16........$19,807.52........$288.86
Year 17........$18,909.71........$275.77
Year 18........$17,958.90........$261.90
Year 19........$16,951.95........$247.22
Year 20........$15,885.54........$231.66
Year 21........$14,756.18........$215.19
Year 22........$13,560.14........$197.75
Year 23........$12,293.49........$179.28
Year 24........$10,952.05........$159.72
Year 25........$9,531.41.........$139.00
Year 26........$8,026.90.........$117.06
Year 27........$6,433.57.........$93.86
Year 28........$4,746.16.........$69.21
Year 29........$2,959.13.........$43.15
Year 30........$1,066.60.........$15.55

Now remember, that Year 1 number $416.82 represents the value of the first year’s monthly tax benefit. In other words, under this scenario, renting a $3,000 per month apartment would be roughly equivalent to a mortgage payment of $3,416 per month because of the tax deductible mortgage interest. (of course, it doesn’t take into consideration the other costs of home ownership that I discussed in the previous blog).

In effect, this last table would be THE MAXIMUM DEDUCTION table if both reforms were adopted.

As it stands now, a top income bracket earner with a $1,000,000 mortgage today would start out with around a $1,600 per month tax benefit. (Just double the far right column of the first table.) Under the proposed changes they would see it slashed by about $1,200 to that $416.82 amount.

Today the cost of real estate is roughly $600 per month for each $100,000 worth of home. So if say all 1.1 million dollar homes were owned and bought by top income bracket earners……then Bush’s proposal would theoretically lower these home values by 200k (as imputed from the loss of $1,200 per month in tax deductions).

Likewise, if both tax code modifications were made, the 600k house that I live in would theoretically drop by around $67,000 (as imputed by the loss of about $400 per month in tax benefits and assuming only top income bracket earners lived in this house). But if only the marginal tax rate benefit were capped at 25%, the loss would be closer to $30,000.

In all fairness, those numbers are too high. Not everyone in the market for 600k homes is a top bracket earner so the losses in property value would be somewhat less than my projections. Instead say we have losses of $60,000 and $25,000.

Now these are only rough estimates since that is all that is possible with such multivariate scenarios. Nonetheless, I will conclude with:

If deductible mortgage interest is limited to the first $350,000 borrowed and the marginal tax benefit rate is cut to 25%.....

….then a $1 million dollar home will instantly lose 15-20% of its value and a $600,000 home will lose around 10% of its value.

Obviously, the mortgage tax benefits and projected losses of benefits fade over time and I am basing my new property values from the Year 1 tax consequences. Also these numbers are subject to change if interest rates move. As I type this, the 30 year fixed rate is at 6.00%.



So Becky Quick thinks that they shouldn’t roll back mortgage interest benefits because “people” have bought expecting to get them. By her convoluted logic, government couldn’t reform anything because “people” might not have expected it.

She is dead wrong. Government should strive for logical and fair tax policies. It should do what is right, without regard for anything else. This of course begs the forgotten question of why should mortgage interest be deductible in the first place?

The theory was that when people owned their homes, they took better care of the neighborhood, were encouraged to save, etc. and that this was optimal for society. Hence the government pushed tax benefits to spur homeownership - which hit a record high of 69% in 2004.

But like all subsidies, this one was eventually priced into the market and it now borders on eroding its own original objective of helping make homes affordable. Prices are so high, albeit not just from deductible mortgage interest, that low end home buyers are overleveraging themselves with adjustable and interest-only mortgages. At this point, the mortgage interest deduction is not encouraging home ownership, but rather home-indebtedness.

So the Tax Reform Panel proposed changes to reestablish the original goals of the mortgage interest deduction, by targeting the incentives on the lower end of the housing market.

The only way pundits and Bush-haters in the media can bash these reforms, and still claim to be defenders of the “poor”, is by mischaracterizing the reform proposals.

Of course, mischaracterization and obfuscation are the modi operandi of Big Media. They succeeded in thwarting Social Security reform by this tactic and I would quite frankly be surprised if these proposed tax reforms were passed.

But say these reforms were passed and all million dollar homes were suddenly worth 850k. None of these homeowners will have “lost money” because the reforms will have affected all such homes evenly. It kills me when people buy a house for 400k and it appreciates to 600k and they think that they have made $200,000. It is not like they can sell their house, buy a similar 400k one and pocket the money. In most cases this is not possible because all similar homes will be trading for 600k. An across the board price change like these reforms would cause, will not cost homeowners any "profit". They will still be insulated from the nominal price level of the market. They will always be either selling “high” and buying “high” or selling “low” and buying “low”.

Million dollar homes dropping to 850k would only be an issue for someone planning on selling their home and then roaming the streets. Everyone else would parlay that equity into a similarly discounted home. So it is all a wash.

But the reality is, that most people don't understand anything about the value of their house. They paid X for it, and now it is "worth" 3 times X, ergo they are savvy investors no matter how many boats have risen with the current tide. Don't even think of telling them otherwise.

Bush has gotten little credit for a strong housing market, but that doesn't mean he won't bear a heap of blame for its decline - and that will happen whether these tax reforms are passed or not.

There is a lot more in the Tax Reform Panel's proposal, including many offsets to this "attack on the rich" such as the elimination of the Alternative Minimum Tax, a reduction in the tax on long term capital gains (from 15% to about half that), and a slight lowering of all marginal tax brackets.

Such a capital gains reduction would be very bullish for the economy, but it would not be as bullish as a drastic reduction in the top tax brackets.

Although the Tax Reform Panel is bipartisan, President Bush will bear the brunt of the criticism. But anyone with a clue has to conclude that these reform proposals are spot on the money and will spur more real economic growth instead of just housing inflation for higher end homes.

NBA Salaries, a Medley of Socialism and Racism

A few years ago, the NBA instituted a rookie salary cap. It was more than a cap, it not only limited how much rookies could be paid, it actually enumerated the amounts, basing them strictly on draft position. This also begs the question of why rookies would hire agents to “negotiate” their first contract and have to pay them a percentage of their first deal.

Why did the NBA institute this? They did it to discourage young players from turning professional. The league thought it would be better served by having more mature rookies. Some people think they did this to depress one end of the pay scale and therefore save the owners some money. After all, their franchises are theoretically worth more if they pay out less of their revenues. On this point I completely disagree. Savings in one area are usually squandered on others: veterans’ salaries, new arenas, a team charter jet, etc. Also, what followed this failed initiative further buffets my claim.

Of course the rookie salary cap failed. It actually opened the floodgate for high school players entering the draft. Prep school stars correctly figured, along with help from their “agents”, that the sooner they got the ridiculously low rookie contract over with, the sooner they could reap the lucre of free agency. In other words, if they entered the NBA at age 18, they could sign a limitless contract by age 22. But if they went to four years of college, they wouldn’t have this opportunity until they were 26.

In 2001, an unprecedented five of the first eight players drafted were high schoolers. This trend continued right through 2005.



So NBA Commissioner David Stern actually achieved the opposite of his goal. But this wasn’t anomalous - this has happened every time a socialist has arrogantly tried to regulate prices (wages) to generate an intended result.

It took Stern five years to realize that the best, and perhaps only, way to keep young players out of the league is to simply ban them. He did that this summer by instituting an "Age Limit" or more accurately an age minimum of 20 years old to play in the NBA.

I have addressed what Stern has tried to do and its failed consequences. But now I want to talk about the virtue, if any, of his goal.

Why limit young players in the NBA? Tennis and golf have no problem with teenage phenoms nor do baseball and hockey. The answer is that the NBA is fighting an image problem. Older white men have been tuning out pro basketball for a decade. Whatever the reason, lower scoring, fewer white players, or negative perceptions of the players, the league is trying to regain these fans. David Stern and his "posse" really believe that if guys come into the league as 20 year olds, it will improve the marketability of NBA players.

So here we have a league that started out by limiting what players could earn and then graduated to banning young players from earning money entirely. The league is 90% black and this has purportedly been done to cater to old white fans. I hate the term racism because it is all too often abused, but this is a clear case of it. One thing I think is worse than overusing the racist label is when real racist elites get away with crap like this.

Hey CaptiousNut, maybe you are going too far. Maybe Stern is just trying to improve the level of play…because young players lack fundamentals and maturity...?

Well then why did the NBA just institute a jacket and tie dress code for players?



My wife told me that they should just say "no jeans" or something. As I told her, if the league tried to explicitly itemize the attire they don’t want players wearing, it would be:

No baggy jeans, no more than 8 gold chains, pants pulled to within 6 inches of the waist, and no throwback jerseys.

…and this would go against the league’s policy of only subtle racism allowed.

Now let me reiterate, I hate the term "racist". The word is so abused as to have lost meaning completely. For instance, I could argue that the public school system is racist. The schools are bad and most black kids go to public schools….therefore public education is a racist institution. After all, if cops pull over more blacks they are deemed racist, so the same oversimplified logic should apply. Yet every politician who pushes for vouchers and school choice is deemed a racist as well. So it is racism to condemn blacks to public schools but it is also racist to move them out.

I don’t really think the NBA is racist. My intention was to illustrate that they are getting away with stuff that would otherwise be labeled such if it were done by the police, George Bush, Mormons, etc.

I think the NBA is stupid to try and woo the old white demographic. My regular blog readers may already know this, but two groups that I Marginalize a lot are old people and young kids. Far too many older people haven’t had an original thought in decades and most young’uns, they just haven’t had any at all. Does the NBA really think they can change the minds of recliner-bound, fixed income, old guys like my father – who spends half of his waking hours dozing off under a vapid newspaper?

The NBA will be fine if the quality of its games improves, i.e. more scoring. The real reason the league hit a rough patch with the fans was another botched socialist attempt at regulating the game.

About twenty five years ago, they instituted the illegal defense rule which basically eliminated zone defenses. The league didn’t want teams double teaming its headline stars. In other words, they wanted to cultivate the superstars in hopes it would drive ticket sales.

But in the real world, actions have reactions. In this case, the elimination of zone defenses forced teams to guard every single player, whether they merited it or not. This misguided rule protected guys who couldn’t shoot because an opposing team couldn’t penalize these non-scorers by leaving them open. Anyway, scoring declined steadily until last year when they eliminated the illegal defense rule. So the points are on the way back, but time will tell whether on not the fans return.

Bill O’Reilly - Economic Illiteracy and Populism

(a pic of Bill O'Reilly's 10 mpg limousine)

With energy prices so "high" these days, I will no doubt be doing plenty of Marginalizing on this subject.

Bill O’Reilly, econo-illiterate that he is, has proposed that oil companies lower their prices by giving back half of their profits to consumers. That is fine Bill, but you won’t accomplish anything this way and in fact will exacerbate the problem.

If Exxon, Chevron, et al accede to your shameless populist suggestion, then they will have half as much money to reinvest towards more exploration and production. Do you really think cutting such would LOWER energy prices?

Others have suggested "windfall profit" taxes on oil companies. This won’t work for the same reasons. You will be taking away money from oil exploration budgets and you will encourage companies to move business (including oil sales) to lower tax locales. The truly "populist" stance would be a TAX REDUCTION on oil companies to free up more capital and help increase supply. But instead we have to hear about "price gouging" and big business bashing from almost every media outlet.

Back to Bill. If Exxon’s profits were halved, either by taxes or Mr. O’Reilly’s suggestion, its stock price would halve as well.

If you don’t think that is a big deal, then contemplate this. Exxon is a $380 billion market cap company. If its stock declines 50%, then investors, mutual funds, and pension funds will collectively lose $190 billion. Then you would have to halve shareholders’ equity in Chevron, BP Amoco,... Yeah Bill, let’s take a few hundred billion bucks from investors.

Contrary to Big Media agitprop, oil companies aren’t owned by old men in Texas.

O’Reilly won’t shut up about OPEC, "alternative energy", or "SUVs". His poll question last week displayed yet another layer of ignorance. He asked:

"Should we tax vehicles (SUVs) that get less than 15 miles per gallon?"

I sent my pithy email response that of course was ignored.

SUV’s are already taxed more since they are less fuel efficient. Remember, gas taxes accrue on a per gallon basis to the tune of over 30 cents per gallon.

Next week maybe Bill will poll his audience:

"Is the Pope is Catholic?"

Too many idiots think that if everyone simply drives a smaller car, then fuel prices will decrease. But these dolts need to look at Europe. All of their "small" cars haven’t given them cheap gasoline!!!!!!!!!!

The conservationist movement is based largely on economic ignorance and some obtuse sense of moral superiority.

The people who recycle and drive hybrid cars think that they care more about the Earth than SUV drivers and their wasteful brethren. In other words, their environmental agenda is actually peripheral to or more accurately derivative of their egocentricity. It partially explains why there are so many contradictions and logical gaps within environmental propaganda. After all, there are laws of nature and economics but there are no such rules for self-appraisal.

Therein lies the misguided notion that individual people can affect global energy prices. Bill O’Reilly speciously argues that since we (America) represent 25% of oil demand, the largest for any country, that we could stop buying gas on Sunday and both teach the oil companies a lesson and lower the price of oil.

Bill, the rest of the world consumes 75% of oil so "we" don’t determine the price. Enough of this arrogant and misguided self-absorption.

I have covered this before but will reiterate. Red flags should rise whenever you hear a pundit, academic, or politician try to parse the demand component of something’s price, especially something as multivariate as energy prices.

Demand parsing is usually impossible because of imperfect information and the inability to compute price elasticities and whatnot.

Bill really has that wicked combo going on - economic illiteracy and intellectual arrogance.

Given all of the above, I hate to call Bill O’Reilly a capitalist, but at least as a commentator he has successfully maximized his audience. He toes a line, fashionably taking shots at “both sides” and has cemented himself as a modern day populist.

His crusades on Jessica’s Law (stiff penalties for child molesters) and “high” gas prices are designed to appeal to as many people as possible. For those of you that are unaware, his show is easily the most watched show on cable.

The problem with populism is that it binds one to present day sentiments. If O’Reilly gave me his show for tonight I might say:

"First of all, gasoline is still not that high. Second, oil companies are not ripping anyone off. Third, all you greenies can buy hybrids and curse SUVs….but none of this will lower the price of oil. And lastly, all of you old people out there are responsible for today’s energy prices. That’s right y’all elected economically illiterate Congressmen for decades and never demanded that they address the energy needs of the country. You old people in the northeast will especially deserve your $10,000 heating bills this winter."

…..but if I did, my career as a populist would be short.

Populism often puts Bill in a tight spot and when it does, he consistently opts for likeability over accuracy. I guess it is better than the New York Times which eschews both.

Make no mistake, O’Reilly is a force these days and the other networks and shows are subtly trying to ape his rapid-fire and confrontational show. For example, CNBC has tried to get Congressmen to go on air and “defend your pork”. Of course not many pols have taken the bait because CNBC is quite ignorable. But one Ohio Congressman came on and defended a $3 million per year subsidy for a Packard car museum in his district. His argument was simply that many rich people will patronize the museum and help the local economy and that his constituents pay “gas taxes” so why shouldn’t they get some back. I was yelling at the television:

“those gas taxes are for the roads…….and if there are plenty of rich people interested in Packards….then surely they could privately fund the mere $3 million subsidy...”

But all five CNBC anchors were speechless and impotent to mount even the obvious counterarguments. They tried to be confrontational but clearly lack the required skill set.



Hey O’Reilly, remember Al Smith's prescient warning to Robert Moses:

that populism is but a “slender reed to lean on....”

(Moses was the populist exemplar while he crusaded for parks in New York, but has suffered quite the ignominy ever since. The tome on Moses is a must read.)

Tax Cuts for the Rich, Global Warming on Mars, Etc

The Gini coefficient measures wealth inequality in a given society. In this country, it has been rising steadily for 30 years – implying a widening gap between the richest and poorest. Propagandists love to pounce on this stat to show how “unfair” capitalism is, yet countries with narrower gaps (lower Gini coefficients) suffer higher unemployment, lower growth, and lower standards of living. Socialists just can’t comprehend the fact that the existence of very rich people is a good thing for the rest of society.

About the recent “tax cuts for the rich” - the Gini coefficient for America rose the most during the Clinton years. To reiterate, that means the wealth gap widened the most. (if that link requires registration, try "forbesdontbug" for both username and password or go to BugMeNot for another.)



I have mentioned the global warming whackos many times on this site but I have a new angle of attack.

It turns out, there has been “global warming” on Mars the past three years. It must be from all of the Martian SUVs. No?

“Global warming” is one of the many nutjob theories that I can debunk even by assuming many of the nutjob premises.

For instance, these “scientists” concur that the earth has warmed to the tune of one degree over the last several decades. For the sake of argument, I won’t contest that. But even conceding that, how can anyone tell if that is statistically significant?

This reminds me of some old guy who I knew that bought stock in USWest, a Midwestern phone company. He kept touting the “millions of customers” that USWest had. I forget the exact number but I asked him what that meant? How significant was “millions”? How many “millions” of customers did its competitors have? What about it balance sheet and profitablility? Etc.

None of this mattered - he was dazzled by “millions” and quite self-satisfied with his trivial nugget of research.

The same holds true for the “one degree” alarmists. No one knows if this one degree is statistically significant and they certainly don’t know what caused it. The earth is 4.5 billion years old and they have a 50 year sample set. Every time the nutjobs cite “melting polar ice caps”, I can cite last year’s record cold winter in the Northeast, “global warming” on Mars, etc.

Remember, much of environmentalism is a ruse to give government more power (...or money. In NYC, the recycling police roams around on trash day looking for an aluminum can in your trash bag and gladly slaps you, or your landlord, with a $100 ticket. It is quite the revenue raiser.)



In case you haven’t heard, there are new license plate scanners employed by local police in many parts of the country. Set up on major roads or highways this new technology can automatically read and research the license plates of passing cars.

An automatic license-plate reader that can scan 500 license plates an hour looking for stolen vehicles underwent its first field tests by the Los Angeles County Sheriff's Department last week.

Using character-recognition technology developed for the Italian Post Office to read postal addresses, four robot eyes in the course of one night queried more than 12,000 license plates, recovered seven stolen cars and resulted in three arrests.

Of course civil libertarians are leery and want the cops to erase all of this collected info and whatnot.

Another thing, the proponents of this technology naively think that it will be immune to cries of racism and profiling that human eyes are prone to. If they think Jesse Jackson and his ilk won’t still cry racism…...they are more than a little bit stupid. The race hustlers think that hurricanes can be racist!!!!

Another word on profiling. I consider myself an excellent profiler. For instance, when I have rented cars, sometimes I could clearly discern what type of person had that particular car before me just by noting the angle of the driver’s seat and/or the radio station the dial was set to.

Also, when I first moved to Boston two months ago I walked by a guy on my block who looked Arabic. He had darker skin and was very unfriendly (although that is prevalent up here). All I had was a hunch about his ethnicity. But another day I walked by and saw this:



…and my hunch was basically confirmed.

What is that pic? It is of a satellite dish pointing the “wrong” way. DirectTV dishes point southwest and the DISH Network’s point southeast. Most people have DirectTV but if you want to watch Al-Jazeera you need DISH Network. I learned this living amongst the 100,000 Arabs in Brooklyn.

Florida Real Estate Froth

(empty, i.e. "new", condos near Marco Island)

After returning from Naples, Florida this weekend I am convinced more than ever that there will be a painful real estate collapse.

First of all, they are building everywhere: new developments, additions to old developments, strip malls, etc. These new buildings spring up in no time flat and they won’t stop even when prices abate.

I met a guy who has made a few million bucks flipping homes, condos, and lots down there all in the last 5 years or so. One lot he bought for 200k and is now selling for almost $2 million only 4 years later. He told me that everyone down in Naples was “in real estate”. I asked if that meant they had made a few bucks speculating or were really in the real estate business. “Speculating” he answered with a wry smile.

Sorry, I just had a flashback of my buddy that quit his investment banking career to "daytrade" in the last bubble.

It will be interesting to see how this real estate market plays out. When prices soften, what will people do? Will they opt to sell their homes in the north or their condos in Florida? I have got to think that this winter’s impending energy cost spike will convince some fence straddlers to permanently move to the south.

(For those unaware, natural gas and heating oil could be double last year’s prices. Also electricity is looking up 27% from last year as well because it is generated by natural gas.)

I think everyone knows somebody who bought a condo in Florida a few years ago for 200k and now it is “worth” 500k. But here is something to remember. That condo may have only cost 160k to build. Five years later, the construction cost of a similar condo is still no more than 200k. Those builders built the original condo for a mere 40k profit and will continue building more until those prices get all the way back to 240k. In the northeast there is very little new construction – in fact my house that was built in 1970 is considered “new”. But when I was house shopping in Charlotte I noticed that homes only 5 years old traded at a significant discount (10%) to the brand new construction. Similarly, condos in Florida will always have to compete with new construction being built nearby.

One last point about Naples – Interstate-75, the main highway down there is a complete mess. I was told that during the “season” (i.e. October-April), that I-75 is a parking lot. In other words it moves at a snail’s pace. Given the traffic we dealt with in the “off-season”, it is pretty easy to see what they were talking about.

CNBC's Economic Illiteracy

I am only 31 years old and admittedly have so much to learn. But all day I listen and watch CNBC reporters 10-20 years older utter such ignorant tripe that I have to constantly hit the mute button.

Just last week, anchor Ted David said,

"...it took thousands dying in New Orleans to..."

Hey Ted, the number is well under 1000, "thousands" would imply at least 2,000.

CNBC was promoting a segment later in the day,

"With the rising cost of healthcare, who should pay? The worker or the employer?"

One would think that CNBC, a putative business channel, would be able to see beyond trite socialist argumentation. Even if the employer paid it all, it would still be borne by the employee in terms of lower raises and fewer employees. It is a stupid question that I would expect more from econo-illiterates than CNBC.

The real question is how can we lower healthcare costs (for everyone)?

Yesterday, CNBC had a guy on who claimed there was no housing bubble because house prices are based on the affordability of monthly payments and not on sticker prices. You would think they might ask him about adjustable mortgages, interest-only loans, and over-leveraged borrowers but there was no such probing.

What about the cost of heat? Everyone in the northeast is aware that at today’s energy prices, it may cost twice as much to heat their homes this winter. My guess is that 2000 square feet cost about $4,000 a year to heat (I have to check this). Doesn’t this raise the monthly cost of home ownership?

These questions were only raised in my living room.

This same boob said that home prices in the cities (unlike the rest of the country), San Francisco, Los Angeles, New York, and Boston will not come down because there is no new supply in these cities. It is funny because many others have said the opposite – that home prices in the non-coastal regions are more stable because they are insulated from the urban home price bubble.

Everyone has a favorite self-serving canard that their home won’t decline in value.

Amidst the no-profit internet tech bubble, Coca-Cola hit $85 a share in 1998. I remember hearing how Coke was a real company, with real earnings unlike those bubbly tech names – no way it could go down. Here we are 7 years hence and Coke stock is still worth half of its 1998 value.

Likewise Home Depot is 45% off from its 1999 high. Not even this massive housing bubble could get Home Depot close to it former highs, no matter how “insulated” it was from the dot-com bubble.

Some dummy said to me the other day (he just bought a house here in Massachusetts) that home values are safe here because there are so many colleges and thus there will always be people that want to live here. Hey dummy, not if they leave because they can’t find work or can’t afford to live here. Also, there has always been many colleges here – so that is already been priced into the market. You didn’t unearth that fact.



Back to CNBC. Every time they interview an oil trader the first question they ask is always about OPEC. And every single time, the trader tells them that OPEC is irrelevant and that they pay no attention to what OPEC says. These traders think about, watch, and trade oil all day for years. Furthermore, most of them risk their own substantial money on their “opinions”. Yet almost daily, CNBC talks about OPEC - so much for CNBC being a learning organization. They would rather speak the lexicon of econo-illiterate “economists”, politicians, and sheepish fund managers.

CNBC will put any boob on TV if they meet their criteria. They have to have some high falutin credentials and or maybe the requisite smile and ability to utter cliched sound bites.

They used to interview some guy from Tahoe Trading, an options trading firm on the American Stock Exchange, to get his take on the day's market action. I knew a guy that worked with him and every time CNBC put the dolt on TV, I would get an instant message from his co-worker telling me how much money the guy was currently down. His trading deficit of around 300k didn't prevent CNBC from giving him international air time. At least he looked and sounded smart.

Another pet peeve of mine is the term “profit taking”.

Whenever a security or commodity falls in price the clueless news anchors attribute it to “profit taking”. But there is no such thing as “loss taking”. Presumably all people do is make “profits”. Did Enron really go to zero because of “profit taking”?

This comes from the media’s incessant desire to inform and explain. The problem is that most security price movements are beyond the ken of pundits. Trying to explain the unexplainable isn't just shoddy journalism, it is intellectual arrogance.

I don’t care if CNBC is owned by the great General Electric – the TV producers leave a lot to be desired.

Another thing about Katrina, I haven’t heard one person correct the spurious claim that Katrina will cost more than 9/11. What everyone is forgetting (or more likely ignoring) are the hundreds of billions (maybe a trillion) lost in the stock market after 9/11. Maybe it was just innocuous "profit taking"?

Katrina didn’t move the stock market one bit, nor should it have.

What Social Security Crisis?

I have finally cancelled my anti-Businessweek subscription. There is no reason to further subsidize agitprop. I have fisked their articles in prior posts and basically am just fed up with how they bastardize economic and political dialogue.

A guy recently told me that,

” …Social Security is funded until 2041, according to the AARP…..So it doesn’t need to be reformed.”

Without informing him as to the complete lack of integrity, conflicts of interest, and political agenda of the AARP, I responded,

“…2041…. That is great. That is about the year I start collecting Social Security. Do you mean to tell me that you don’t give a sh*t if I, and everyone else my age and younger, pay 6.2% of our incomes to Social Security recipients for the next 35 years and may get nothing when we retire?”

(By the way, self-employed people like myself pay 12.4% of our incomes in Social Security taxes.)

There was no response but I doubt I changed his mind. The guy has no kids and he is probably comfortable as a selfish person.

But most people have children, nieces, nephews, and grandchildren. So logic would imply that they do care about the legacy they leave for young America.

I just reread my fisking of anti-Businessweek’s Social Security article and it made my skin boil yet again.

It’s not just Businessweek, it is the entire Mainstream Media. The Social Security issue may be the paragon of political bullsh*t. The problem is as crystal clear as the solution, yet the MSM has successfully muddled the public dialogue. Almost every article on the subject is false and deliberately misleading.

I just googled “social security poll bush” and got a news story today from a San Diego paper with this disgusting excerpt.

The administration's original blueprint would have involved steep reductions in planned future benefits for workers under age 55.

Those “steep reductions” are more than offset by the higher returns from a partial privatizion. There are no mentions of the other partial privatization benefits such as the protection of having a personal account or the ablility to keep/bequeath your benefits after you die. Furthermore, that excerpt is another example of the playbook media trick of FALSE COMPARISON. They want to compare what the under 55 demographic would receive with a number that is not relevant, be it today’s level of payouts or whatnot. Social Security will be bankrupt in 35 years, much of the under 55 demographic is on track to get nothing at all. This FALSE COMPARISON ignores that fact.

I can’t find it now, but I read a while back that polls which show support for partial privatization drop drastically when it is framed as “Bush’s plan”. I generally put no stock in polls because the results can vary greatly depending on the wording, preceding questions, and sample group. Nonetheless, this drop off in support for partial privatization shows that unfortunately partisanship is still trumping good ideas, not just from politicians, but from the public as well. (It is not like there are any other plans to reform Social Security, the reform opponents maintain there is no crisis.)

Click here to see a great example of PUSH POLLING and the Social Security issue.

You can call these Social Security reform opponents, partisan, socialist, moronic, or whatnot. But regardless of the label, make no mistake that anyone who is against reforming Social Security is giving young Americans a giant middle finger.

From President Clinton's 1998 State of the Union speech,

"I have a simple four-word answer: Save Social Security first."

Boston Globe Condescension

Why do New Englanders read the Globe. Read below to see the elites at the Globe condescend on 60,000 Patriots fans after their opening night game against the Raiders.

And we got remotes of rapper Kanye West and pop rockers Maroon 5 from a generic-looking, red-white-and-blue stage in Los Angeles.

Maroon 5 came off vapidly (doing just one song, ''Harder to Breathe"), while West did one tune, ''Heard 'Em Say." Yet it was DISCONCERTING to hear his name booed loudly by Patriots fans who evidently didn't appreciate his nationally televised comment the other night on a Hurricane Katrina benefit that President Bush ''doesn't care about black people." The boos were thunderous and lasted for much of his number.

Why couldn’t the Globe just report what happened? Why did they have to editorialize the booing with “DISCONCERTING”?

The answer is because they just can’t help themselves. They are unabashed elitists.

And before anyone claims that that the “disconcerting” jibe was but the work of one journalist (Steve Morse), I want to remind them that this article passed the scrutiny of the editors. “Disconcerting” was a deliberate potshot at the fans, 65% of whom probably voted against President Bush (if they reflect the general population in Massachusetts).

Just imagine what the Globe thinks of the other 35%.

(Also, ABC didn't broadcast any of the booing - don't think that was accidental.)


(click to enlarge this funny looting warning.)

One quick note about Hurricane Katrina, "racism", and President Bush.

You hear this flawed reasoning all of the time, "many African-Americans are poor, so anything that hurts poor people is an act of racism...."

So it was no surprise that the televised images of Katrina in New Orleans brought out all of the race hustlers such as newbie Kanye West and his claim that "Bush doesn't care about black people."

Well Bill O'Reilly slammed that claim in his Talking Points Memo last night.

The issue was described this way by Newsweek reporter Evan Thomas, a liberal guy but not alone, who writes, "Liberals will say [the authorities] were indifferent to the plight of poor African-Americans. It is true that Katrina laid bare society's massive neglect of its least fortunate."

Massive neglect? Let's take a look at that bit of overstatement. Halfway through President Clinton's tenure in office in 1996, the poverty rate was 13.7 percent. Halfway through President Bush's tenure, the rate is 12.7 percent, a full point lower.

In 1996, the Clinton budget allotted $191 billion for poverty entitlements. That was 12.2 percent of the budget and a whopping amount of money. That's why Bill Clinton (search) was called the first black president by some.

However, the Bush 2006 budget allots a record shattering $368 billion for poverty entitlements, 14.6 percent of the entire budget, a huge increase over Clinton's spending on poverty entitlements.

What would rappers and guys like Evan Thomas say about President Bush if he had actually cut poverty entitlements?

So instead of a dialogue on the effectiveness of entitlement spending, the "alternative" media has to spend its energy debunking fallacious claims, another example of the Ills of a Media Duopoly.

It is also worth noting that the poverty rate is dropping, despite the constant raising of the bar by the poverty industry.

The chasm between reality and what Big Media reports is astounding.

Attention Morons, Gas IS NOT an Entitlement

Before I moved to Boston, my blog topics were usually inspired by what I read or heard from a media source, but here in Boston, all I have to do is talk to people.

If I were to invent the perfect scenario to highlight economic illiteracy I guess it would be the higher gasoline prices caused by Hurricane Katrina. Really, I don’t think anyone could concoct a better catalyst. Idiot after idiot, moron after moron, have all raised their voices to hypothesize, blame, and display their immense collective ignorance.

A guy just asked me, “So who is ripping us off??????”

Apparently, “cheap” gasoline became an entitlement. I must have missed that in the Boston Globe.

Furthermore, why does he assume that someone is ripping him off?

He assumes it because that is the foundation of the anti-business culture of Massachusetts. You will never find an article in the Boston Globe extolling anything about a business – in fact it is laced with the complete opposite. Corporations are “laying people off….”, “Bank of America is evil…”, “they are doing if for PROFITS…”, etc. And since the newspaper represents about 95% of New Englanders’ information base, you have a recipe for economic illiteracy.

Unfortunately, it is not as simple as “a socialist local media causes all of this anti-business sentiment”. New England is geriatric central – most of the people here are retired and/or on a ventilator. I am serious. When we were looking for a place to live up here, we walked by octogenarians in wheelchairs and with breathing tubes in the some of the building lobbies (in Brookline).

What do most old people do every day? Usually the same thing they did yesterday. It would be an understatement to call them creatures of habit. Their daily rituals border on the robotic. Breakfast at 4am, lunch at 10am, and dinner at 3pm. Daily lottery tickets, bingo, church on Sundays, maybe a weekly golf or bowling league,….

A huge part of this routine would no doubt involve the daily newspaper. For many people (mostly older), this is their major, if not only source of information. I hear too many people regurgitating the propaganda of their daily paper as if it were the unadulterated truth. Sure some people claim that they skip the editorials and think for themselves. The problem with that is that it does nothing to counter the journalistic sins of omission. There is and has been so much going on that simply does not get reported by the Mainstream Media. I don't care how many papers someone reads, or which ones for that matter - if they are not supplementing that info with alternative media (primarily on the internet), they will remain ignorant.

Sidebar: Why do the people that otherwise embrace alternative energy, alternative food (vegan, organic, microbrews, etc.), alternative music, and alternative lifestyles, do they consistently indict and shun alternative media?

Back to economic illiteracy. The economy of yesteryear, say 1930-1990, was a completely different animal than today's. Most older people had fewer than 3 jobs, if that, in their entire careers - with many having only had one job in their entire life. These jobs provided security until and after (defined benefit pensions) retirement. But today is much different. Industries come and go, jobs move and change, and marketable skill sets are constantly evolving. Young people today may have had 3-4 different jobs by age thirty. For the most part, young people today view a job as an opportunity to get rich whereas their parents viewed their jobs as stable entitlements. Older folk still bear the scars of the robber baron era and the labor/management wars of decades ago. My parents' generation would take their workplace complaints to their union rep or maybe just suck it up for years. Today, kids quit and find new jobs, go back to school, or maybe start their own business.

The older folk just don't understand economics - they think that "jobs" just appear out of thin air. Remember my prior post on how William Galvin was meddling in the Procter-Gamble/Gillette merger? Well the Gillette CEO is fed up and warned the Boston establishment to STFU. Notice the self-righteous newspaper headline,


Whiny Kilts puts Boston on notice: Gillette head slams Hub, warns critics.

"Procter & Gamble is looking at Massachusetts right now," he warned. "They're trying to decide if Massachusetts is a place where they want to expand and invest."

Kilts, who will become P&G vice chairman, added: "every day, we're making resource trade-offs: `Where are we going to invest?' "

He revealed that Chicago was actively seeking to grab Procter & Gamble investment from Boston.

Aside from the default sin of being a CEO, Kilts made the major Boston faux pas of criticizing the local media.

Back to my point that New Englanders don't understand economics. The complainers here just don't grasp the fact that a hostile business culture SCARES away many more jobs than it protects. When I was a teenager in 1992, I couldn't so much as get a job that paid more than minimum wage (at McDonald's or whatnot). But when I moved to Philadelphia, I immmediately got several jobs, all paying much above the minimum. In Jack Welch's first book, he declared that General Electric wouldn't expand business in Massachusetts because of the greedy self-righteous unions. I hope Gillette pulls all of their jobs out of Boston - they deserve it.

The problem is, say that Gillette followed through and phased out Massachusetts jobs, the media, politicians, and econo-illiterate populace would just claim, "see, we told you they were bad...", "they don't want to pay fair wages...", "lying unethical corporation....", etc.

The key thing to remember about Bostonians is that they can spin any situation so that the other guy is lying, irresponsible, unethical, and just bad. Bostonians are never at fault and they are certainly never wrong.

Boston sports reporters aren't vultures, they are "passionate".

The reason business costs in Boston are the highest in the nation is "because our highly skilled (i.e. "smarter") workers demand more pay than elsewhere".

How is that for arrogant spin?

So no matter what Gillete does, they will be the bad guy. This is why Bank of America should never have tried to placate the media/politicians up here (by moving brokerage operations from Manhattan and Charlotte).

Yet the old New Englanders continue to buy these business-bashing newspapers and vote for politicians that echo the same. Meanwhile, costs (both business and household) are pushed up, jobs become scarcer, and young people continue to flee the region.

Massachusetts was the only state in the nation to lose population last year. Between 2001 and 2003, the number of 20-24 year olds fell by 11.5 percent, compared to a national increase of 5.6 percent.

It astounds me that people in Boston, “the most educated city", don’t realize that Anti-Business really means Pro-Higher Consumer Prices and Pro-Less Jobs. The evidence is all around them, but Bostonians apparently think they are exempt from the laws of economics.

Yet ask the majority of Bostonians and they will tell you that Ted Kennedy, John Kerry, William Galvin, and their ilk all protect the "little guy". Even though this "little guy" canard flies in the face of the higher consumer prices and anti-growth policies that constitute their political records.

More on this alleged "little guy". I recently heard this canard promulgated by a doctor, and two other people that have vacation homes. In other words, they are not "little guys" themselves or at least are only in their own minds. In this vein, I think "little guy" could pass as a codeword for an econo-illiterate. The aforementioned people are "little" only in the sense that they don't understand the economy, prices, wages, and more generally what is going on. They think that high gas prices just descend on them from some bogeyman, be it OPEC, oil companies, global warming, other people's SUVs, or the Iraq War. I suggest they put down those newspapers and fire up their rusty brains.

Yeah....like that will happen.

So with oil, who is ripping off the "little guy"?



(the real car of the "little guy")

In a word, the DEMOCRATS, the putative defender of little people. They are in bed with the evironmentalists who oppose any and every measure that would lower gas prices.

As expensive as oil is getting, there is no buffer for domestic gasoline supply. This is completely the result of environmental activism that opposes building gasoline refineries. I think the last domestic oil refinery was built over 25 years ago.

There is no way to have a growing economy if you don't have a growing energy supply. The DEMOCRATS have been voting against economic growth for decades, but you will never see such facts pointed out by the Mainstream Media.

Look at this from a recent (post-Katrina) editorial by the Boston Globe.

The challenge that defenders of the Arctic National Wildlife Refuge have faced to protect it from oil drilling will likely become even more difficult when drilling advocates point to the damage the petroleum industry has suffered around New Orleans, pushing gasoline prices to $3 a gallon.

The refuge is a critical habitat for polar bears, caribou, snow geese, and wolves. The oil and natural gas industry want to interlace it with hundred of miles of roads and pipelines. The roads and air strips required by the industry would result in immense amounts of gravel being stripped from the refuge's streambeds. These are the migratory destination for millions of birds, many of them from as far as South America.

All of this degradation would be in the service of oil production that, at its peak, would never amount to more than 2 percent of US demand.

That editorial says it all. Even while drivers suffer from $3.50 a gallon gasoline, the elites at the Globe shameless reassert their opposition to drilling for more oil - to protect birds and caribou.

Only bottomless ignorance can explain why the "little guys" in Massachusetts continue to subsidize the Boston Globe.

They flat out tell everyone that birds are more important than people and speciously argue that Alaska would only reduce gas prices by 2%. The problem is, they are against drilling in Alaska, off the coasts of Florida and California. They are for strict environmental regulations on gas stations and refineries that have led to a dearth of refinery capacity and has closed over 30,000 "mom and pop" gas stations over the last decade or so. All of this adds up to much much more than the purported 2%.

They end the editorial with this whopper:

New England Republican conservationists such as Representatives Charles Bass and Jeb Bradley of New Hampshire, Nancy Johnson and Christopher Shays of Connecticut, and Senators Olympia Snowe and Susan Collins of Maine should join with like-minded Democrats in rejecting this assault on a corner of America that should not have to suffer for what happened in the Gulf of Mexico.

So instead of calling out those ACTUALLY responsible for the higher gas prices, like I have done, they are singling out "Republican conservationists". And that last misplaced metaphor implies that the disaster in the Gulf of Mexico was caused in part by the oil industry's operations down there. Seriously, read it again. They are saying if we drill in Alaska, then we are fomenting a catastrophe there.

Look at all the caribou in this pic.



When the Alaskan pipe line was proposed years ago, the environmentalists claimed that it would wipe out the habitat of caribou. Well, it turns out the heat from the pipeline attracts caribou and shelters them - so much so that after the pipeline was built, they have been procreating like rabbits!!!

If you are a unionized truck driver spending twenty to thirty thousand dollars more on gas this year, do you really want your union dues thrown to politicians that will choose birds and caribou over cheaper gasoline?

Hey but instead of that little shot of self-examination, you can just blame oil companies - it will absolve you of blame. After all, there is no way that could you have been wrong about so much for so long.

So many Morons here in Boston, and so little time to Marginalize them.

GOOGLE – PRICE TARGET $3,000

In a prior post, I made my bull argument for Google and now I would like to add to it.

I think that in August of 2010, shares of Google will be trading at $3,000 each. That is a ten fold increase from today’s price of just under $300.

Yes, that would make it almost the first trillion dollar company. (Microsoft is worth $285 billion. I believe Exxon-Mobile is the largest at $385 billion. Google is currently $83 billion – soon to be $87 billion after it completes a secondary offering.)

Everyone wants to find the next Microsoft or Dell, and let’s be honest, the next Microsoft will be many times bigger. This is just the way it has always worked.

My prior bull case is still valid and worth reviewing, but I want to elaborate some more on my argument.

A Google bear (i.e. disbeliever) said to me:

“I have never bought anything from a google ad or keyword search…….”

Fair enough, nor have I. But I also have never bought a car, beer, or mutual fund simply because I saw an advertisement on television either. At least with Google, companies can see the return on investment down to a penny.

For example, some guy pays Google $7 per click-through to have his company listed first in any search for “MOVERS NYC”. If he is shelling out money to Google and not getting any new business, he will simply stop. It is almost an ideal business for both Google and its customers.

I figure about one in twenty people I know googles regularly. The people that do google constitute a young and growing demographic, those that don’t are obviously the dying geriatric Luddites. In five years, I don’t think it is an outrageous prediction to think that three out of 20 people I know will be googling regularly. That conservative forecast would triple the number of googlers and I believe it would also increase the price-point of all keywords. Let me reiterate, three in twenty googling would be extremely conservative – almost to the point to certainty.

On an earnings per share basis, Google is cheaper than both Amazon and Ebay, AND it is growing much much faster. Its revenues were actually up 100% this year.

I predict it will be added to the S&P 500 index before January.

Google announced on August 18th that they would float 14 million more shares to the public. The stock immediately dumped, down to a low of 273.35 because of this massive dilution. Yet the demand for this offering has been overwhelming – it looks like it will place around $294 per share, much higher than the price at the time of the announcement. Today, still before the placement, it actually traded up to $299.28 obviously even higher than the rumored placement price. I can’t remember the last time a stock placed this much higher on a secondary. There is a latent, yet massive institutional demand for shares of Google.



I have only heard a couple of wildly bullish predictions for Google and this makes me more confident. Notably Cramer, he of the Mad Money fame, has been bullish for a while. (But he also said to sell around $250 when it first got there. That was 70 points too soon.) Cramer is still bullish, but calling for a $500 price target – way below mine.

The biggest risk is, not surprisingly, arrogance. I want Google to stay away from aquistions with the same dicipline that Michael Dell showed during the dot-com craze.

When I heard this morning that EBAY was buying SKYPE (an internet telephony company that Googled was rumored to be interested in), I was ecstatic. Had Google paid a few Billion for a barely profitable company I would have been mightily displeased.

These Wall Street analysts try to measure the size of the ad market that they think Google can tap. So they look at total TV ad dollars and also the billions spent on the Yellow Pages. They draw some straight lines and try to forecast the possibilities of Google's business, i.e. how much share they can grab from "old school" advertising. But I think they are all underestimating the dynamicism of Google. Kids are already using google to fact check their professors in class, fans use blackberries to check stats while at the games, and who needs GPS in a car when you have the more robust web surfing cell phone?

This is only the tip of the iceberg for Google.



UPDATE - See my follow-up post from April 18th, 2008.

The Katrina Homerun

I can’t even watch the hurricane coverage on television. It couldn’t be more nauseating, with all of the spinning, politicizing, and blaming.

I find myself muting the news coverage because all I care about is the raw video footage.

Stupid issues like looting or finding, which inept government agency is “more at fault”, "will all of my favorite restaurants be gone" (from sports columnist Bob Ryan), gasoline “price gouging”, race baiting from rappers and the predictable Jesse Jackson/Louis Farrakhan types, and ridiculous comparisons to 9/11. I even just saw a post that criticized President Bush for not ordering the lowering of flags.

First of all, there is no comparison to 9/11. The WTC encompassed maybe 25 blocks total. There was no flood, loss of power or telecommunications. The geographical distances “refugees” had to travel were walk-able. Manhattan is surrounded by bridges, tunnels, and ports that facilitated assistance. Hospitals and resources abounded to help the injured and displaced. So when I hear idiots propound that,

"...if only we had the leadership of Rudy Guiliani……everything would have been fine.",

I want to pull my hair out.



The hurricane was a NATURAL DISASTER, not a Karl Rove plot or an act of racism. Furthermore, anyone who was surprised to see gross ineptitude in the government agencies is a complete moron themselves.

David Brooks in the New York Times suggests, predicts, and hopes that Katrina will enervate an incipient "progressive" movement. Here are some dreamy excerpts:

On Sept. 11, Rudy Giuliani took control. The government response was quick and decisive.

The rich and poor suffered alike.

It's already clear this will be known as the grueling decade, the Hobbesian decade.

Each institutional failure and sign of helplessness is another blow to national morale. The sour mood builds on itself, the outraged and defensive reaction to one event serving as the emotional groundwork for the next.

And the key fact to understanding why this is such a huge cultural moment is this: Last week's national humiliation comes at the end of a string of confidence-shaking institutional failures that have cumulatively changed the nation's psyche.

Americans in 2005 are not quite in that bad a shape, since the fundamental realities of everyday life are good. The economy and the moral culture are strong. But there is a loss of confidence in institutions. In case after case there has been a failure of administration, of sheer competence. Hence, polls show a widespread feeling the country is headed in the wrong direction.

Katrina means that the political culture, already sour and bloody-minded in many quarters, will shift.

Reaganite conservatism was the response to the pessimism and feebleness of the 1970's. Maybe this time there will be a progressive resurgence. Maybe we are entering an age of hardheaded law and order. (Rudy Giuliani, an unlikely G.O.P. nominee a few months ago, could now win in a walk.) Maybe there will be call for McCainist patriotism and nonpartisan independence. All we can be sure of is that the political culture is about to undergo some big change.

We're not really at a tipping point as much as a bursting point. People are mad as hell, unwilling to take it anymore.

In the spirit of my prior post, The Hillary Homerun, I will now refer to Brooks' thesis as The Katrina Homerun.

Brooks, and his ilk, sit around and dream of natural disasters, recessions, military failures, and terrorist attacks. He hopes that one cataclysmic event can convince all of the "idiots" that he has been right all along. I am not sure if this counts as a scarce example of optimism from the Mainstream Media.

But Brooks may be right in a broken clock sort of way.

Katrina may ignite public opinion, but it may push sentiment further in the direction it has been going - that would be, more intolerance for civic incompetence and more disdain for Big Media that shelters it.

Mr. Brooks, be careful what you wish for.




Although I disagree with this poster's suggestion for President Bush to engage his critics, this is a good synopsis of the MSM's coverage: A New Low For The MSM?