Penalty Kick

Marginalizing Sharing

Whenever I take my older child, a near two-year old, out to the park or library, I invariably have to deal with idiotic local parents. One thing I absolutely can’t stand is them screaming at their kids to “share”. Some child will be playing with a ball or Matchbox car, my son will run up, articulate some curiosity in the toy and then the same scene erupts, every single day.

"Adam, share your car!"

"Alyssa, no one will want to play with you if you don’t share!"

"Buckley (actual name I heard the other day), you have one, give him the other!"

Many of these Moronic parents make such a ruckus over this nonsense simply because I, and other parents, am there. Remember, these days parents are all about themselves and they most certainly don’t want their peers thinking they are derelict - especially in groupthink-plagued Boston.

Yes, it’s not the worst thing in the world to say "share". But do it once and don’t make such a big deal about it.

But quite frankly I am AGAINST SHARING. Sometimes I quip at these stupid blathering parents, "That’s okay, we don’t believe in sharing". They smile and erroneously assume I jest.

How are you helping your kid by inculcating the lesson that they are entitled to what others possess?

If there is something my son wants, then he should figure out how to acquire it for himself. He can mow the lawn for instance to earn some money. I have already got my son doing housework and he won’t be two for a month.

Now say my son ran up and procured a toy from little Jacob at the park. He would be wrong to do this and would be admonished, BUT he’d be teaching Jake an important life lesson, namely that people are always going to try to take his things. The same applies to my son. Others will try to dispossess him throughout his life. Shouldn't he be prepared for this and know how to protect himself?

Another example.

At the supermarket I shop at in West Roxbury, every weekend there are kids PANHANDLING out front – asking for donations to support their baseball, basketball, or other youth sports team. What kind of crap is this? Have a bake sale or a raffle, get a local business to sponsor your team, or perhaps have your parents pay for the activity.

Let me emphasize that these are not underprivileged kids. They are middle-class white kids, standing there in uniform with usually a father or two nearby. Next time I may holler at the dad,

"What the heck kind of a parent teaches their kid to beg?!?!?!?!"

Yeah people in Boston are SOOOOO smart, teaching their kids a sense of entitlement and dependency.

What could possibly be worse than depriving young children of their full human potential?

SHARING is for Commi’s.

Google and YouTube

How could I possibly leave this story unmentioned on my blog?

Around September 28th, 2006,

Mark Cuban: Only a ‘Moron’ Would Buy YouTube

Cuban said "anyone who buys that (YouTube) is a moron" because of potential lawsuits from copyright violations.

Fast forward to October 9th, 2006,

Google To Acquire YouTube for $1.65 Billion in Stock.

MOUNTAIN VIEW, Calif., October 9, 2006 - Google Inc. (NASDAQ: GOOG) announced today that it has agreed to acquire YouTube, the consumer media company for people to watch and share original videos through a Web experience, for $1.65 billion in a stock-for-stock transaction. Following the acquisition, YouTube will operate independently to preserve its successful brand and passionate community.

Remember, Google is the only stock I own. I am 8% Google and 92% cash. That covers everything, including retirement accounts.

So is Google a Moron as Cuban exclaimed?

Right now, nobody knows. Only time will tell. The blogosphere is abuzz with discussion of this deal, much of it very detailed. A good place to start is actually Mark Cuban’s blog, blogmaverick.com.

Be sure to read the comment thread if you’re interested in the business angles of the GooTube combination. Lumpen posters bring up some very interesting points such as:

How can YouTube sell ads in block when the advertisers won’t know what's going to be on the clips. What image conscious corporations want their to be placed above the popular soft porn clip-o-the-day? (Then again, Desperate Housewives has no shortage of sponsors)

Will Google fight with or try to share revenue with Big Media content holders claiming copyright infringement?

Will YouTube start sharing ad revenue with the amateur video posters?

Couldn’t YouTube just make uploaders personally liable for any copyright infringement? In that sense, make YouTube just a hosting site?



Also Forbes published a very edifying article on YouTube just before the deal was announced.

Here’s my take.

First of all, as a Google shareholder, I am getting sick and tired of these share dilutions. Pay cash for YouTube or borrow the money to buy it. Every chance these guys get they float more stock. The YouTube deal is at least the third, if not the fourth dilution in the past couple of years. Furthermore, I don’t have the hard numbers to back this up, but I hear that Google recklessly doles out stock and stock options to its employees. I don't look forward to them having to buy back stock at $1,000 per share to stem option dilution. Prior world conquering tech giants like Microsoft climbed a lot more than Google’s 400% before their management started acting so arrogant.

Google’s market cap is today $145 billion, so the $1.65 billion YouTube dilution is statistically insignificant. I just don’t like the arrogance too easily inferred by many of the Google headlines these days. Google's conceit has grown from noticeable to palpable and now to edible!

The core of Google’s biz is and will remain paid search. That story is still in tact and so far nothing has swayed my contention that,

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.

Google was around $420 per share when the deal was rumored and then shortly thereafter announced. Today it’s $477. Now does that mean the market believes GooTube will be a powerful combination?

IT ABSOLUTELY DOES NOT.

The stock may have been itching to go up anyway. The overall market has been strong. Also Google’s earnings continue to surprise on the upside. So ignore the knee-jerk media reactions and prognostications.

Remember AOL/Time Warner hit near $110 when that merger was first announced (before falling to almost $10).

Has Skype paid off for eBay? Remember they shelled out $2.6 billion.



I once called Mark Cuban intellectually incontinent. But it may be more accurate to say he is an intellectual playboy. He shoots from the hip, never bogging down his thoughts with formalities like topic sentences followed by supporting evidence. One has to glean his points and profundity - but they're there. He has the Perma-Credibility inherent in owning a very successful sports team and sitting on billions in cash. Like Hugh Hefner, many a young man dreams of being Mark Cuban. Heck I wouldn't mind doing an asset swap with him myself.

Cuban certainly has firsthand knowledge of worthless billion dollar acquisitions. Click here if somehow you don't know his story - then, crawl out from under that rock.

Dr. Greg Mankiw, The Harvard Economist, Marginalizing Himself

Last week, Dr. Greg Mankiw wrote an intellectually abominable piece in the Wall Street Journal titled Raise the Gas Tax.

He wants the gas tax raised by $1 per gallon. (It’s already around 40 cents).

His reasons were roughly:

1) The Environment
2) Road Congestion
3) Regulatory Relief
4) The Budget
5) Tax Incidence
6) Economic Growth
7) National Security

Here is my presently unanswered comment on his blog,

CaptiousNut said... Putting aside whether or not Mankiw's list of benefits is realistic or desirable, am I wrong, or wouldn't capping fuel efficiency at say 16 mpg achieve every single one of his objectives?

Of course it would deprive pols of tax money to squander, lavish on special interests, and redistribute.

The professor thinks the only way to alter behavior is by taxing gasoline. As my comment illustrates - it clearly isn’t. But let’s probe his ridiculous article some more.

His first reason, "The environment" centers upon global warming. I don’t want to indulge this argument now since it’s been debunked aplenty on my blog. Human induced global warming is light years from established fact, it’s all at once a pathology, a religious superstition, and a trendy climate theory.

Since 1895, the media has alternated between global cooling and warming scares during four separate and sometimes overlapping time periods. From 1895 until the 1930’s the media peddled a coming ice age.

From the late 1920’s until the 1960’s they warned of global warming. From the 1950’s until the 1970’s they warned us again of a coming ice age. This makes modern global warming the fourth estate’s fourth attempt to promote opposing climate change fears during the last 100 years.

Check out 2), directly from Mankiw’s article.

Road congestion. Every time I am stuck in traffic, I wish my fellow motorists would drive less, perhaps by living closer to where they work or by taking public transport. A higher gas tax would give all of us the incentive to do just that, reducing congestion on streets and highways.

Did you get that? Traffic is a personal burden to Mankiw. Perhaps we should all clear the road so he doesn’t get bogged down. Everyone else is inconsiderate and needs to live closer to work or take the bus. What unabashed snobbery. When you are mired in traffic, do you just think "Boy, gridlock sucks" or do you start hating on nearby drivers? If you fall into the later category, congratulations, you have solid elitist potential!

There are plenty of homes in Cambridge, yet Mankiw lives in Wellesley, a nearby town not very well connected to Harvard via mass transit. He’s actually my neighbor but we don’t hang out much.

In point 3), Mankiw inveighs against federal CAFE standards.

From Wikipedia,

The Corporate Average Fuel Economy (CAFE) regulations in the United States, first enacted by Congress in 1975, exist to regulate and improve the average fuel economy of cars and light trucks (trucks, vans and sport utility vehicles) sold in the US in the wake of the 1973 Arab Oil Embargo.

But in his article, Mankiw fails to make the childishly obvious point that fuel efficiency does the very opposite of what his $1 per gallon gas tax aspires to. More specifically, fuel efficiency makes driving cheaper, and encourages more drivers living far away to descend on Greg’s path and retard his commute. While ignoring the obvious issue with CAFE, Mankiw instead chose to blame it for the dreaded SUV, bogeyman of Morons everywhere. Then his last sentence under this point was a doozie.

A higher gas tax would accomplish everything CAFE standards do, but without the adverse side effects.

What? It endeavors the OPPOSITE of what CAFE standards are supposed to do. His tax would raise the cost of driving, whilst CAFE seeks to lower it. How then can the tax possibly "accomplish everything CAFE standards do"?

Can this really be a Harvard economist?

He’s caught in the quandary of today’s self-righteous environmentalist. For them, the little car is the mandatory badge of Earth-love, but they also want to inveigh broadly against driving. Unfortunately, little cars enable people to drive cheaply, live far from work, and perhaps even frustrate a tardy professor’s commute.

True environmentalists should advocate for FUEL INEFFICIENCY.

It’s one thing for the typical pot-smoking, trust funded, government working, tree hugger to juggle such hypocrisy and illogic, but quite another for an economist at our most esteemed college. The hippie can wallow quietly in their ignorant mysticism, but a professor at Harvard, at some point has to formally articulate his beliefs.

(Yeah, me too. I also wish the hippies actually were quiet.)

Reason 4) The Budget. After accurately identifying our budgetary albatrosses (Social Security and Medicare), Mankiw posits says that his gas tax would "make a dent". First of all, why not fix the problems directly? I hesitate to even dignify further this non-argument. By this logic, because the government is profligate and makes promises it can’t keep, then any new tax is kosher?

Reason 5),

Tax incidence. A basic principle of tax analysis -- taught in most freshman economics courses -- is that the burden of a tax is shared by consumer and producer. In this case, as a higher gas tax discouraged oil consumption, the price of oil would fall in world markets. As a result, the price of gas to consumers would rise by less than the increase in the tax. Some of the tax would in effect be paid by Saudi Arabia and Venezuela.

Don’t worry consumers, it really is only an 85 cent tax. Saudi Arabia and Venezuela will pay 15 cents of it. Don’t you feel better now?

Now that’s it. That is his entire discussion of tax incidence. Apparently higher gas taxes won’t raise the cost of food, shipping, furniture, a plumber’s visit, or anything else. Just 85 cents for you and 15 cents for Hugo and Prince Muhammad. What a joke.

Mankiw’s blog is nauseatingly riddled with discussions of progressive taxes and the Commi-speak “income inequality”. A google of his fledgling blog already turns up 21 posts on the latter.

Yet when it comes to taxes that might free up his personal roadways, he forgets all about lower income folk. A $1 per gallon tax on gasoline obviously hurts the poor disproportionately since fuel costs represent a larger percentage of their incomes. Apparently his compassion has an on/off switch.

Next up, point 6),

Economic growth. Public finance experts have long preached that consumption taxes are better than income taxes for long-run economic growth, because income taxes discourage saving and investment. Gas is a component of consumption. An increased reliance on gas taxes over income taxes would make the tax code more favorable to growth. It would also encourage firms to devote more R&D spending to the search for gasoline substitutes.

Apparently, since we all should simply be resigned to higher taxes, Mankiw thinks that just because a consumption tax is better than an income tax he has posited an argument for taxing the bejesus out of gasoline. This is typical False Comparison disputation. I am quite certain that Economic growth would be better behooved by leaving the gas tax alone or dare I say, reducing it. Greg compared one evil to a greater one. What scholarship!

Conundrum, hmmm? Boost interest rates, I must.

National security. Alan Greenspan called for higher gas taxes recently. "It's a national security issue," he said. It is hard to judge how much high oil consumption drives U.S. involvement in Middle Eastern politics. But Mr. Greenspan may well be right that the gas tax is an economic policy with positive spillovers to foreign affairs.

A Greenspan quote? Is that supposed to bring gravitas? Here's what this is. Greg wanted to trot out his own personal conspiracy theory of oil consumption subsidizing "Middle Eastern politics" - whatever the heck that nebulous animal is. BUT, he lacked the stones to say it himself and opted to mask his tripe in a quote from Yoda.

Anyway, combine Greenspan’s "It’s hard to judge" with Mankiw’s "...may well be right..." and all you’ve got is empty weasel-speak.

Mankiw concludes his vapid prose with an inanity quite on par with the preceding ones.

Even after a $1 hike, the U.S. gas tax would still be less than half the level in, say, Great Britain, which last I checked is still a democracy.

What is that a fourth or fifth grade argument? I have been out of school so long and standards seem to have deteriorated, so I just can't tell these days.

Americans hate taxes not because they think infrastructure and security are costless, but rather because they know pols simply waste it on pork, redistribution, elitist utopian dreams, and the corrupt solidification of their own incumbency.

Make no mistake, the Big Government socialists control the debate. Tax debate in this country is wholly centered upon class warfare and how high taxes should be. Ideally, WSJ editorials from alleged capitalists would take aim at how to more efficiently run government with the plentiful monies it already confiscates.

Just consider these already voiced plans for new gasoline tax revenue.

The New York Times wants to redistribute the money to poor people

Hillary Clinton wants to use the money to fund alternative energy development.

And now Greg Mankiw wants to use the money to pay down the deficit.

Okay let's get back to my unanswered comment

CaptiousNut said... Putting aside whether or not Mankiw's list of benefits is realistic or desirable, am I wrong, or wouldn't capping fuel efficiency at say 16 mpg achieve every single one of his objectives? Of course it would deprive pols of tax money to squander, lavish on special interests, and redistribute.

Even though Greg has deigned to respond twice in the comment section of his post (which may be a record for him), he predictably hasn't responded to mine - nor has anyone else.

It was a bit of a rash overstatement on my part to say that capping fuel efficiency would achieve "every single one of his objectives". The thrust of my criticism was towards, I guess really the only legitimate objective - dampening congestion (ignoring its supercilious presentation). Since every commenter has ignored his cockamamie suggestions that a higher gasoline tax would pacify the Mid-East, pay down the budget, grow the economy, etc., I was not alone in centering my initial criticism on the congestion angle.

Gasoline is by its very essence, a tax on driving (and the economy).

Automotive fuel efficiency is therefore a TAX LOOPHOLE.

So what really causes global warming? Is it the little car or the 6mpg recycling truck?

Just about every thing on this planet has negative externalities but if you listened to denizens of the ivory tower, they'd have you believe that only SUVs had them.

Incredibly, positive externalities only get mentioned when these guys are talking about themselves.

Boston Without Alcohol

From my Boston and Alcohol post last year,

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.

First off, I don't make a habit out of reading the Boston Globe but the cover story caught my eye this morning.

Liquor licensing spawns a clash of political wills

Prices on liquor licenses in Boston have more than doubled a year after the city ran up against a state limit on the number of licenses it can issue.

With a growing pool of would-be restaurateurs and club owners trying to outbid one another for the few licenses coming available as establishments go out of business, the amounts being fetched have soared into the hundreds of thousands of dollars.

Those prices are well out of reach for many small operators, and some industry observers fear that restaurateurs will give up or bypass Boston to open new establishments in the suburbs.

Beacon Hill has regulated the number of liquor licenses Boston can hand out since 1906, when a Yankee-controlled Legislature, distrusting Boston's Irish elected officials and fueled by Puritan beliefs about alcohol, limited licenses in Boston and required an amendment of state law to change it. Elsewhere in the state, the number of licenses is tied to population growth, triggering automatic increases.

Alright I was slightly off, I said Pilgrim-esque instead of Puritan. What a wonderfully progressive city that has 100 year old liquor laws. Now I think liquor is a dubious target of regulation in the first place, but c'mon update the law already.

The article also has a funny part about a feud between the mayor and a Naysaying councilman.

Since January, when Menino first floated a proposal for 60 new beer and wine licenses but no all-alcohol licenses at the Legislature, the city has rewritten its proposal several times. Each time, officials say, Morrissey has rebuffed them. Things turned particularly ugly after a meeting at the State House in April, several city officials who attended said, when Morrissey was late and spoke condescendingly to the mayor.

Menino says only that he hopes to work with Morrissey to reach a compromise.

Morrissey says he's always late to meetings and doesn't remember being condescending. He concedes that he harbors some anger toward the mayor, who instituted new fees last year for suburban boat owners who want to use city docks. Morrissey is a boat owner and counts many boat owners among his constituents, but he said that has nothing to do with his stance on liquor licenses.



Haha. You taxed my boat so all of Boston must suffer with fewer restaurant choices and pricier alcohol.

Now I want to highlight a stock Moron debating tactic. In arguing for the century-old, unprogressive, economic retarding status quo, the pissed-off boat owner trots out,

"Don't you think Legal Sea Foods would be a little [angry]?" Morrissey said. "They played by the rules and what did it get them? $240,000 in start-up costs."

Now, do you think that a fossilized hack Councilman from Quincy, Massachusetts really is pro-business? He clearly is not. This is just a deflection. He is anti-new businesses trying to get liquor licenses. He is anti-Legal Seafoods as well. Legal Seafoods would rather have paid say $100,000 for that license whose cost pols like Morrissey drove up in the first place.

Legal Seafoods, like most other businesses would like to expand and pay much less for their next license.

Presumably, all Bostonians would like more, cheap restaurants.

What's amazing is that piss-poor arguments like "It's unfair to Legal Seafoods" don't get duly shredded.

A few weeks ago I played golf with a group of very successful professionals. These were level-headed, intelligent folk. The subject of taxi costs came up. These guys simply could not believe that a cab from my house to Logan Airport, a mere 10 mile trip, costs $50. I calmly explained why and gave my prescription of "floating more medallions and lowering the legal rates and tolls" and there were no absolutely no respondents save one. He said to me,

"If they float more medallions, it wouldn't be fair to those that currently own them..."

No sh*t Sherlock. Apparently he thought it fair that consumers spend $50 on short cab trips.

I have alluded to this concept before. Specifically how economically illiterate Morons can usually only see intended or surface-level consequences but they fail to realize wider, long-term effects.



Every issue, idea, or proposal theoretically speaking, has two columns. Costs and Benefits. Positives and Negatives. Pro and Cons...... However you want to dichotomize them.

Most Morons can only see the column of their choosing.

For example. Somebody I know is a real global warming worrywart. Out of the blue I said to him,

"What are the arguments against human-induced climate change".

Let's just say that I didn't get much of an answer. So I prodded further,

"Don't you think you should at least be aware of what the counter-arguments are?"

Boston is a tough town to live in.

It's even tougher to take sober and hungry.

Back From Naples

Alright, I am fresh back from my annual golf trip to Naples, Florida. Listen to how bad real estate is down there.

One of my golf buddies is a member at the Island Country Club on Marco Island. Last year, due to the frothy real estate market no doubt, his club had 22 people on the wait list to get in. Because of which, they raised the membership fee from $70,000 to $90,000. But one year later the situation reversed with now 12 people on the waitlist to GET OUT of the club. (When someone leaves, they get a percentage of their fee back, but not until someone else joins to take their spot.)

My friend actually lives on the Hammock Bay development. The golf course there is down to a mere 70 members – which really sucks when those not infrequent assessments get handed down. Incidentally, my buddy has been trying to sell his condo for 8 months; it’s not moving despite being “the cheapest one in the development” (675k for 2000 square feet).

Is this just a mere downtick in the Florida real estate market? After all, they say that 1,000 people move to the Sunshine state each day. I doubt it simply because they are still building everywhere you look. On the Classic Course at Lely it seemed like they were just getting started on a couple hundred more new homes. There’s also a massive new mall going in near the airport that’s really just under way. And just about every development that I saw was still advertising a “Phase 4” extension. Existing homes in most parts of Florida will be competing with new construction for a very long time. Good luck to anyone that buys now.



What ever happened to all of those ominous hurricane predictions for 2006 anyway?

William Gray, noted storm forecaster said earlier this year,

At the beginning of the 2006 season, the Colorado State team predicted there would be 17 tropical storms and said nine would turn into hurricanes with sustained winds of 74 miles per hour (119 km per hour) or more.

It said five would be "major" hurricanes, which are Category 3 or higher on the five-step Saffir-Simpson scale with sustained winds of at least 111 mph (179 kph) and capable of causing some structural damage to buildings. Only two of this year's hurricanes have reached Category 3 status and none of the five hit the United States.

But yesterday, he had the stones to predict: Atlantic Hurricane Season Over.

The season is "over? Thanks for the value-added, Willy. What next, is he going to predict yesterday's high temperature?

Speaking of alarmist weather predictions, Al Gore recently said that cigarette smoking is a "significant" contributor to global warming. No, I am not kidding. Next up, he's going to indict human flatulence as an assault on Mother Nature's constant temperature. My old man will, without question, be number one on that chopping block!

That article concludes with this noteworthy claim.

NewsMax requested from UNTV an audio copy of Gore's address.

At first, NewsMax was told a copy would be provided by the U.N. audio library.

Later, NewsMax was told that copies of the Gore speech would not be available.

"We destroyed all copies of the speech, except for one master which cannot be released," explained one audio librarian.

Dujarric added: "The Gore speech was copyrighted and therefore we cannot release any copies of it."

The formerly "open" address, has now been reclassifed in the UN files as "a closed meeting."

First of all, the UN is not a sovereign entity. It is funded mostly by American tax dollars. How the heck can it be immune from public accountability? These people are fascists.

Gore was an 8 year vice president. If he misspoke, he should clarify what he meant. At least that's the theoretical tack of civilized adults. Having your compadres withold the record is indeed fascist.

Often times, nutjobs and elitist scumbags slip up and tell us what they really think - and a full-press cover-up ensues. Here's another example that I recently gleaned from John Gatto's Underground History of Education.

Along the way to this milestone, important way stations were reached beyond the scope of this book to list. The strand I’ve shown is only one of many in the tapestry. The psychological goals of this project and the quality of mind in back of them are caught fairly in the keynote address to the 1973 Childhood International Education Seminar in Boulder, Colorado, delivered by Harvard psychiatrist Chester M. Pierce. This quote appears to have been edited out of printed transcripts of the talk, but was reported by newspapers in actual attendance:

Every child in America entering school at the age of five is mentally ill because he comes to school with certain allegiances to our founding fathers, toward our elected officials, toward his parents, toward a belief in a supernatural being, and toward the sovereignty of this nation as a separate entity. It’s up to you as teachers to make all these sick children well—by creating the international child of the future.

Anyone else want to throw up? Remember this was a keynote at a major education conference. Instead of taking a route of disavowal or clarification, they opted to expunge the record.



When my wife’s firm confoundingly moved operations to Boston, all of the high level executives moved to the tony town of Wellesley. We laughed at them for such egregious herd-like behavior but later on realized why they did so. Apparently Wellesley is the only town around here that is not chockfull of socialists. So how good is this oasis? Listen to this recent conversation between my wife and a new Wellesley resident.

Executive – That’s it...We are leaving here soon.

C-Nut’s Wife – Why? I thought you liked where you lived?

Executive – Once my son is done school, I am quitting and moving. Supposedly we live in the most conservative, capitalistic town....I just found out that my son’s high school is sponsoring a “Transgendered Awareness Day”!!!

These multi-culturalists are really out of control. It just gets to be too much to fight with them and good wholesome people simply move – far away at that. Something like 2 million kids are homeschooled now.



Let me go back to my Naples trip for a second.

It’s always nice to get out of Boston and be amongst real people. For one thing, though a very happily married man, it’s great to see the infinitely more attractive women from the rest of the country at the airports and whatnot. Remember from a prior post I railed against the barely androgynous women of Beantown with their short hair, jeans, baseball caps, and the dearth of makeup and jewelry. (Believe me, there’s NO compensation in the personality department either!)

One of my buddies told me about CNBC that he’d “never seen so many negative young people as constituted by the cast of CNBC” and that, “the market would rally 2,000 points if CNBC were pulled off the air”. I laughed, having long sung this refrain. I am not quite sure about the “2,000 points” but I told him to do what I did and turn the channel off for his own personal chi.

Another guy down there complained to me about CNN. He said, “Man, they are obsessed with Hurricane Katrina...” From incidental glimpses at said channel, I handily saw his gripe – though I haven’t regularly watched CNN in at least 15 years.

What struck me is that neither of these complainers understands why CNBC and CNN utilize these dour tacks. (Hint: they are socialist organs who seek to create, foment, and sustain discontent and for good measure their agitprop indicts socialism’s enemies, you know, those capitalist pigs.)

One of my golf buddies used to work for the now defunct US Airways. He was a baggage handler, making 85k to throw suitcases on a ramp. Asked how much his coworkers stole from luggage he explained,

“Years ago, they took everything. My guys thought there were entitled to whatever they wanted. For instance, when the Celtics once flew with us, I turned around and saw one guy wearing Larry Bird’s game shirt, another was wearing McHale’s. They worked all day in them and then took them home”.

Any wonder why US Airways went under?

A funny from profootballtalk.com,

BIG BEN NEEDS MORE COW BELLSteelers quarterback Ben Roethlisberger is recovered from his appendectomy of 15 days ago, but Michelle Tafoya of ESPN reports that Roethlisberger now has a fever (she actually said he has a "temperature" -- but we all do, honey).

Imagine if a sportscaster called someone "honey" on television or radio? Political correctness is certainly a self-inflicted burden on Big Media.



Have you heard the hullabaloo over this season’s Survivor? They divided the strandees into 4 ethnic groups: White, Asian, Latino, and Black. Many race baiting activists got mad and demanded boycotts of the show because it is divisive.

Unfortunately, that can't salvage a trick that is offensive on its face. Survivor has embraced the very essence of discrimination: treating people not as individuals but as members of an ethnically defined group. And the fact that Survivor finally, for the first time, has enough members of those groups to make discrimination viable is hardly a defense.

I think there was a black group, a Latino group, and an Asian group in Manhattan that collaborated to make the loudest (or initial) stink about Survivor’s format. Curiously enough, groups whose entire mission is to segregate themselves apparently see offense in the practice when undertaken by others. Imagine the outcry if someone started a “white-only” political group!!!

The producer of Survivor fired back, claiming that this format would mitigate charges of discrimination because Asians would vote off Asians, Latinos would vote off Latinos, etc. Rather than the possibility of everyone ganging up on one specific person who may be a minority.

Heck when I was at UPenn, I witnessed racial self-segregation at its zenith. Racially themed housing pervaded almost all campus social life. The Chinese didn’t interact with the Japanese (the Koreans hated everybody). Practicing Jews self-segregated at the Hillel House and its functions. Indians separated themselves into castes (seriously) and fought at parties along those lines. One Christian Indian friend felt he had to tuck his cross adorned chain under his shirt at Indian parties. The lily-white Latinos from Puerto Rico and the rest of the Caribeean distanced themselves from "Los Negros" – Latinos with any black blood. And the blacks holed themselves up in the W.E.B. DeBois House – which was derisively referred to as "Da Boyz" house by everyone else.

Who isn’t sick of this divisive multicultural crap by now?

Boohbah is a stupid kid show that my son watches on Sprout. Two characters on it are “Brother” and “Sister”. One is Hispanic and the other is Asian. What is that? I have been on the planet for 32 years and conscious for most of the time, but I have never come across a family that had Hispanic and Asian kids. I am sure some exist, but Boohbah is deliberately pushing the idea to children that siblings don’t have to look alike. Kids can't read, write, entertain themselves, tell time on non-digital clocks, or tie shoes without velcro, but at least they have some exposure to an anomalous mixed race family. Well done PBS!!!

Anytime you hear someone say that “diversity is what made us great”, tell them to shut the bleep up. Economic freedom and the rule of law is what made this country what it is today.

Diverse people from all over the globe came here because of our economics liberties – not the other way around or any other such distortion thereof.

Deval Patrick, Massachusetts Democrat nominee for Governor is dead-set against the public voting on gay marriage. His sophistical reason,

“...never let majorities determine the rights of minorities...”

So what Deval, should minorities then have more say than majorities? Seems to be quite a salient into the heart of democracy, no?

Note: Deval (nice name by the way, very Old Testament) needs a majority to elect him Governor before he can start expropriating its rights.

I recently anted up for some high end video editing software. Right away I have been having all sorts of problems with it. I was in a chat help session on Friday and look what the idiot said to me (in an electronic chat session - not over the phone):

ESL Tech Support: are you in front of your own computer right now?

CaptiousNut: how else would i be talking to you?

I burst out laughing at this uber-Moron. It harkened back to a few other incidents fresh in my memory.

I used to work at a golf course in Philadelphia. We advertised and sold "9 inch pizzas" - as the signs explicitly read. Three separate times, I had customers ask me,

Moron - "How big is a 9 inch pizza?"

Once I said it is "about 10 inches", once I said, "8 inches", and once I said it was "approximately 9 inches".

Back when I worked on the Philadelphia Stock Exchange, after some office relocating, I realized that I couldn't retrieve my voicemail. So I asked our tech/admin guy, a bumbling geriatric named Artie, if he could get me my new voicemail code. A week later, without a response I tracked Artie down,

CaptiousNut - Artie, did you ever get around to looking up my new voicemail key.

Artie - I sure did. I got the code, called you, and left it on your voicemail.

Now I don't want to sound like one of these clueless idiots that actually complains about the service at McDonalds, but consider my last example.

One of my brokerage firms actually has a stutterer working phone desk support. For anyone unaware, entering stock orders is an extremely time sensitive business. You simply can't have someone choking on every single syllable.

What next? Have the blind direct traffic? The deaf conduct orchestras symphonies? Have the dumb teach at Harvard? There are only a few jobs stutterers absolutely CAN'T DO, and one of them happens to be handling stock orders over the phone.



The end of my wife's maternity leave (and more precisely, our second child) forced us to break down and hire a babysitter. I kid you not when I say that babysitters here in Chestnut Hill want $15 an hour (some much more). Doing some quick math, that annualizes to $30,000 per year. Now consider that sitters get paid cash, so the tax avoidance pushes $15 an hour to more like a $37,500 per year job. That's what my wife pays her new hires AFTER they (or someone else) have paid 150k on college. There's no way I am paying that for someone to change diapers and play with my son. Now, if they are going to teach him advanced number theory and Latin...then that's another story. As it would be if they cooked and cleaned....

But most of them do not. One friend has a nanny and the nanny actually demands that she hire a separate cleaning lady because the exalted nanny doesn't want to work in an unkempt house. My not-so-bright friend acquiesces.

We ended up hiring an undergrad from Boston College. She's an education major and has tons of experience with little incorrigible brats. My son will certainly test the integrity of her resume. We pay her $10 an hour, nonetheless she still drives a car much nicer than either of ours.



Speaking of my offspring. We just baptized my daughter and were granted this semi-appalling story. Though I wore a suit and tie everyday for four years in high school, since then I have been clad like a slob. There was really no dress code on the Philadelphia Stock Exchange (jeans and sneakers) and working for myself later on hasn't behooved my wardrobe. It's really tough to get me to dress up - even for my daughter's baptism. It was a warm day and we were serving 30 people food and drink prior to the sacrament. I just didn't feel like getting in a suit and working up a sweat, so I went casual to the church - khaki's, a nice golf shirt, and a blue blazer. As underdressed as I was, consider that a mother (was a group baptism) there actually wore flip flops AND a new godfather there donned jeans and A NEW ENGLAND PATRIOTS JERSEY.

This is a typical Boston church; people actually blow you off during the peace offerings. I am not kidding. They act like they don't see you. This is church for crying out loud.

My church also has two collections, EVERY SINGLE WEEK. Talk about Taxachusetts!!!

This week the second collection was for "rising energy costs". I felt like putting my hand up and asking, "But haven't oil and gas just cratered in price?"



About a month ago, I mentioned off-handedly that gasoline prices would soon dip within earshot of one of my mother's friends. Now I don't even remember this specifically, but a few weeks later my mother said to me,

C-Nut's Mother - Betsy was extremely impressed that you knew gas prices would drop.

Did I know gas prices would drop a dollar per gallon? No way. Oil had dropped about $5-$7 off its high and anyone with a three digit IQ could auger a mild price drop at the pump. So why would anyone be shocked and awed by such elementary prescience?

Because they are not only economically-illiterate, but also thoroughly uninformed. I sincerely doubt my mother's friend follows the global price of oil - or even knows that it is a global commodity whose price is set by market factors NOT INCLUDING a devious cabal of Texas Bush cronies.

It is a resoundingly sad indictment of the public that gasoline prices dominate political sentiment.

If only we could somehow illuminate, say the price of public education, the cost of Medicare, or a countdown to Social Security's insolvency on big signs of busy intersections...

As of yet, no one seems to have flinched at this sign.



Obviously more than one is needed.

Prank

Messing with the older generation is almost always funny.

Click here for a funny phone prank I uploaded to youtube.

UPDATE - Try clicking here.

Hello Marc Rich Handlers

So I took my occasional glance at the web traffic referrals on my blog and saw one curious looking hit.

Somebody in Zurich, Switzerland found my recent post by a blog search of "marc rich". They were further described by my tracker as "farner pr und consulting ag".

I googled "farner" and found out that Farner is a huge PR consulting firm. Anyone want to bet that Marc Rich doesn't have them on retainer to manage his image?

Though Marc has been pardoned by President Clinton, he is still apparently afraid to come back - most assuredly for fear of new criminal charges. Here is the Wikipedia primer on Rich which I wouldn't normally even provide, but this shameless pardon was barely even mentioned by our impartial media organs.

For a second I thought that it was maybe Marc Rich himself that found my blog but I doubt that now. Lots of people google themselves; I have countless times. Greg Mankiw actually gets up each morning and does a google blog search of himself, another little tidbit that I learned from my tracking software.

Anyway I am off to Naples, Fl for a few days to play some golf and count "for sale" signs.

Bill O'Reilly Marginalizes an Invertebrate Congressman

The following clips were posted by yours truly on youtube.



And now for part 2 of Congressmouse Meehan embarrassing himself, his district, and his state.



If a hemorrhoid could talk, I bet it would sound like Meehan.

To watch the clips directly on youtube,

Part 1

Part 2

Marginalizing the Jimmy Fund?

Well not really. I want to Marginalize the idiots in New England that donate to the Fund.

A couple of weeks ago, while the Yankees were in town to give the Red Sox a five game butt-spanking, Red Sox broadcasts were littered with promotions for the Jimmy Fund. It was borderline nauseating.

You might think I am a jerk for complaining about a children's cancer charity but think again. I certainly do support medical research but I do so by supporting unfettered capitalism.

Up in Boston, everyone votes with the class action tort lobby. They also support pols who do all they can to make health insurance unaffordable. People up here just don't get it. Money wasted on acupuncture, aromatherapy, in vitro fertilization for lesbians, and on malpractice and class action lawsuits is money that would otherwise find its way into cancer research.



So these idiots kick back $20 to the Jimmy Fund and feel like they've made a positive difference.

Then in two months they will go vote for an unctuous lawyer for governor (Deval Patrick).




When Johnny Damon (one of the original idiots) returned to Boston this spring he was deemed a traitor for signing with the Yankees.

Note the idiotic spelling from fans in the "most educated" state in the country.

Speaking of education, I am almost finished reading John Taylor Gatto's book and will soon summarize it in a blog post. BUT I CANNOT RECOMMEND ENOUGH READING IT IN ITS ENTIRETY. His book has had a more profound impact on my mind than any other I have ever read. I wouldn't say that it has altered my life, but rather that it's given coherence and historical context to much of what I thought I already knew.

One of his copiously documented hypotheses is that government education was actually designed to make people dumb and unable to think for themselves. Of course that sounds farfetched but his claim is well-documented.

Here is but a sliver of Gatto's wisdom,

Back at the beginning of the twentieth century, the monstrously influential Edward Thorndike of Columbia Teachers College said that school would establish conditions for "selective breeding before the masses take things into their own hands." The religious purpose of modern schooling was embarrassingly evident back when Ross and Thorndike were on center stage, but they were surrounded by many like-minded friends. Another major architect of standardized testing, H.H. Goddard, said in his book Human Efficiency (1920) that government schooling was about "the perfect organization of the hive." He said standardized testing was a way to make lower classes recognize their own inferiority. Like wearing a dunce cap, it would discourage them from breeding and having ambition. Goddard was head of the Psychology Department at Princeton, so imagine the effect he had on the minds of the doctoral candidates he coached, and there were hundreds. We didn’t leave the religious purpose of modern schooling back in the early years of the century. In April of 1996, Al Shanker of the AFT said in his regular New York Times split-page advertisement that every teacher was really a priest.

Ninety-nine [students] out of a hundred are automata, careful to walk in prescribed paths, careful to follow the prescribed custom. This is not an accident but the result of substantial education, which, scientifically defined, is the subsumption of the individual. – The Philosphy of Education (1906)

Here in a brief progression is one window on the problem of modern schooling. It set out to build a new social order at the beginning of the twentieth century (and by 1970 had succeeded beyond all expectations), but in the process it crippled the democratic experiment of America, disenfranchising ordinary people, dividing families, creating wholesale dependencies, grotesquely extending childhoods. It emptied people of full humanity in order to convert them into human resources.

After digesting much of Gatto's book, some things started to click in my brain. Gatto's theorizes that compulsory government education transforms men into sheep. For instance, the fact of Massachusetts being the "most educated" (in terms of college grads) state must then explain the chauvinistic groupthink up here. (Believe me, it's insufferably worse than your local groupthink.)

Bostonians simply can't think for themselves. In this convoluted region, intelligence has been conflated with meaningless college degrees, bogus professional certifications, and worst of all reading the local newspaper.

This state didn't get dumb overnight or just last week. It has an ignomious history whose crowning achievement perhaps was being the first state to mandate compulsory government education (1850). I guess it's simply not enough for Boston's present-day events to piss me off - I have to get chafed by its history as well.

The Trash is Your Friend

No. That is not an antique photograph. Those are 2 cans of spices that I recently found in a nameless family member's kitchen.

So how old are they?



That's right, the curry powder expired 27 years ago. Since things like spices have long shelf lives (!), I'll bet that it was purchased at least 30 years ago.

Those spices are indicative of what most people will find in their older friends'/family's homes. And every artifact I find rouses the memory of my clutter post.



Contrast 49 cent spice cans from the 1970s with what I just did. Pictured above is a 5.5 year old, 17 inch flatscreen Dell Trinitron monitor. I haven't used it in 2 years and it works fine. I saw it trading on ebay for around $40-$50. I tried to sell mine on Craigslist for only $20. I got nary a response. So I trolled Craigslist and saw people trying to sell similar monitors for $15. I had thought that I was giving it away for a mere $20.

Since I am a multi-thousandaire and value the space in my house more than $15, I posted a new ad the other day.

17 inch Dell Trinitron Monitor - FREE

I tried selling this for $20 a few months ago and got no responses. It is FREE now, you just have to pick it up - otherwise it's going in the trash this week.

I got no responses and watched it get thrown in the garbage truck this morning.

Somehow I don't think my (or your) older friends and relatives could have stomached doing such a thing.

Your House Is Not An Investment

An accomplished real estate investor once told me that,

"A house is like a gold mine on the moon... impossible to harvest."

If a house is an investment, then for many of today's home buyers, it should at least be qualified as a highly leveraged one. I know that over long periods of time homes have appreciated enough to justify a mortgage, and that may offer solace to some, but I can't get over the notion that if you need an 80%-100% mortgage, then common sense seems to be hollering that you can't afford the house you are buying. Would you invest in the stock market with 10-to-1 leverage?

Seriously think about that for a second. If you have to borrow 90% of the cost, consider that maybe the house is out of your budget. What if you don't get paid for 3 months? What about six months? Can you still cover your expenses? Isn't assuming that your income won't fluctuate or stall for 30 years a reckless egotistical gamble?

I know many people that were earning a few hundred grand 15-30 years ago and now work for 40k and 50k. As a self-employed securities trader, my income has always been all over the place so I am used to it. But I fear for some people that I know who have made decent income every year and have recklessly parlayed that presumption into expensive lifestyles. Imagine your career takes a dive, you have to sell your house at a loss, and move into a smaller place perhaps in a less desirable neighborhood. To most people, this would be unthinkable - not to mention psychologically devastating.

Last year I linked to some alarming articles about the high usage of adjustable rate mortgages - particularly in California. Well today, still roughly 25% of mortgages are opting for the adjustable (or interest only) route. Unless these people have a wad of cash in their bank accounts (or their mortgage is small relative to their income), I certify them as insane. I'd say this 25% is a big reason why home prices haven't crashed yet as well. As I mentioned in a recent post,

The worst case scenario is playing out for real estate. Instead of a quick 20-25% correction, the market is just stagnating, staying overbought, and sucking more buyers in at these nosebleed prices. It's most certainly going to make the eventual correction more severe.

Incidentally, my hometown of Newton, Mass heads the Ziprealty Price Reduction Index. They obviously don't have a presence everywhere, but nevertheless, as of this week, 54.3% of Newton homes have reduced their sale price.

Remember I have been tracking realtor.com for home listings in Newton.

April 26, 2006 704
May 18, 2006 724
June 21, 2006 776
August 15, 2006 685

Why are the listings down after that springtime uptick? Are homes selling? Or are people taking their houses off the market?

Who knows? But regardless, I think it is safe to say that prices are dropping in Boston as well as everywhere else. I am still in Southampton, NY and let's just say that if I had a nickel for every "for sale" sign I drove by, I would likely be able to buy a house on Dune Road in East Hampton.

In the past I have done the math on Rent versus Buy and Invest for my apartment but I would like to extend that a bit. As I said above, there are tons of homes for sale in the Hamptons (because there still is plenty of farmland for development) and always plenty to rent for the summer months. Some quick and dirty math has revealed to me that it's almost always better to rent a house for the summer than to own one - and that is at every price point. I'll spare the details of the analysis but after factoring in lawn care, insurance, pool maintenance, realtor rental fees, the risk of not being fully rented, and the short rental season, I have come to the conclusion that a Hamptons house really is a luxury. Summer renting is far and away the wiser choice (and much less hassle). The same likely applies to your local vacation destination.

Seemingly everything is cheaper to rent. Consider jet-skis. Paying $50 to rent one for 30 minutes may seem like a rip, but do the math on how many times you have to rent one to outspend a jet ski purchase (and remember as well upkeep, storage, and the fact that you'll feel obligated to use it a lot, just to justify the original purchase). Renting, rather than owning, a car is also a mathematical no-brainer for Manhattanites who could spend $4,000-$5,000 a year just on parking.

Almost every house I look at screams "maintenance costs" right back at me. I am so happy renting, not having to worry about leaky pipes, new heating systems, lawn sprinklers, landscaping, getting the roof done, paying an exterminator, paying a 5% real estate commission to move, or worrying where interest rates go. (Also not to go unmentioned is my outright apathy towards local politics. I simply don't have to get involved, I can easily move when my son comes home from kindergarten and starts talking about civil unions.)

Given my druthers, I think I'd rent forever.



Remember, borrowing at 6% to buy a house implies that after the income tax deduction, your home has to appreciate around 4% per annum, JUST TO BREAK EVEN on your "investment". Now that rates are more like 6.5%, you need appreciation a half point higher, ANNUALLY, FOR THE LIFE OF THE MORTGAGE, JUST TO BREAK EVEN. If mortgage rates climb to 8%....never mind.

Another savvy entrepreneur once told me,

"Real estate is the ultimate investment...because it has a yield and is protected for inflation."

Theoretically he seems to be right. But practically, today's yield on real estate, i.e. rental income, is paltry (less than 4%). As for inflation protection, owning real estate is a hedge ONLY against real estate inflation. Owning a house won't help you pay escalating healthcare inflation, college tuition inflation, local tax inflation, and its value will actually decrease with energy cost inflation. Mark my words, the next cold winter's heating bills will decimate real estate in New England.

Speaking of real estate and Massachusetts Morons, look at this rich headline.

REP. WALLACE (D-Southie) SEEKS TO HALT BUILDING BOOM

Now who would want to halt a "boom", especially in your own town?

This bespeaks of the gross economic illiteracy in Boston. The fact that an elected representative can publicly clamor against the development that has likely made more money for South Bostonians than anything in decades tells you all you need to know about how economically illiterate not only he is, but also his supporting constituents.

Whenever dunderheads talk about the housing market, they bandy about terms like supply, demand, and investment. Allow me to interject a more germane one - valuation.

Mostly valuation is used to talk about stock prices in terms of multiples of earnings. Google is trading around 37 times this year's expected earnings. Its PE ratio is 37.

For financial assets, valuation is the most important price determinant. The example I like to give is this,

Imagine a stock of yours climbed up to $100 per share. Clearly demand was outstripping supply for your stock and the market was pushing its valuation higher. It could stay highly valued for a long time, perhaps even go much higher. But one day, your stock may open at $50. For some reason, slowing earnings, a competitor's innovation, deleterious legislation, a market crash, natural disaster, accounting irregularities, etc. all of a sudden the market decided to value your precious stock at a much lower number.

This may seem like a circuitous, if not over-nuanced, way to simply say that the stock got ripped but bear with me.

Owning shares of a stock gives you nothing more than a sheet of paper. House ownership is nothing but a plot of land and some wood and cement. Unlike gold, these are soft assets whose values really are derivative in nature. The only part of a house that approximates a hard asset is the potential rental income which offers a floor for prices.

As I have said in prior posts, rental yields are less than money market rates. Real estate prices would have to fall near 35% for new real estate investors to be able to cover their cost of capital with rental income and that is with rates at the still benign 6-6.5%. If mortgage rates hit 8%, you'd need a 50% decline in real estate prices for the rental business to become cash flow positive.

Okay enough of my impending doom screed.

The last five years have been a boon for contractors as anyone who has tried to get some house work done cheaply and quickly can readily attest to. In fact I read somewhere that two-thirds of job growth in the last 3 years was in the construction biz (so much for Bush not creating low end jobs). It's been a perfect storm for contractors with the real estate boom, low interest rates, spread of home equity loans, and overall speculative investment. But one of the most favorable variables for them is the new mass of novice homeowners.



Just as real estate agents have been able to slide their "non-negotiable" 6% fees into the back pockets of inexperienced first time sellers, contractors also are in the fortunate position of servicing an entire generation of rookie homeowners who haven't the slightest idea how to manage a contractor.

One simply can't pay a contractor in full upfront. Too many people do this. Pay half upfront and don't pay the other half until well after the work is done and stood the test. Also, definitely have any "handy" friends check out the work.

Though I have many, I'll give just one anecdotal example. Three people I know just put new fences up - and all three got jammed. One just didn't shop around and got bamboozled on the price. The other two had the same little trick pulled on them. A price was agreed upon, the contractor said they would cement the fence posts in, but in both cases the contractor "couldn't" cement them in when the job was actually done. In neither case did the contractor lower the price for a fence that will be uneven in no time. He is under no obligation to "lower" it for you, you must ask him to.

Here is the crux of the econo-illiteracy problem. Most people don't understand the realities of an economic transaction, i.e. that self-interest also has its grip on the person they are paying. Just don't forget that everyone from a cab driver to your financial adviser to the mortician who's going to bury you, is actively trying to separate you from your money.

The lumpen masses think that because their homes have recently appreciated that they are "investments". It reminds me of a common stock market trap. Many times a trader will buy a stock that's dropping - but just to trade a bounce. But what happens all too often is that the beat up stock drops further and the trader decides to hold the position for a while, ergo a "trade" has turned into an "investment". But it is no investment, just a losing trade contorted by ego. It's really depressing to think how much money I have squandered on this familiar story.

So again, since you have to live somewhere, your house is necessarily not an investment - it is a sunk cost and perhaps a liability.

Devil's Advocate - Yeah, but who wants to piss away money on rent?

There's no difference between pissing away money on rent and pissing it away on mortgage interest? At today's prices I'm opting for the one year commitment over the thirty year one.

Right before the Nasdaq peaked in 2000, I was taking a cab at 6am to the train station in Philly. The driver, making small talk, upon hearing that I worked in the market asked me what I thought about Qualcomm (a darling of the tech bubble). If that wasn't a sign of the market top, then I don't know what was. It certainly smelled like the shoeshine boys giving stock tips before the 1929 Crash.

Back in the tech bubble, I couldn't so much as get out of a doctor's office. All the docs wanted to run their stock tips by me. Thirty minutes would run by and I'd interject, "Hey doc, what about my back?"

One guy I knew, an experienced professional trader, asked me if he should buy JDSU because he was getting a tip from a neighbor. I asked him, "What does JDSU do?". He said he didn't know (they are in fiber optics). Now here was a professional thinking about investing in a stock based only a tip and he hadn't even taken 10 seconds to research what the company did. Hindsight crystallizes everything, but the signs of an impending bubble burst were all around.

Six years later, real estate is playing out the same tragic script. Ask people about the relative costs of renting versus buying - they don't know. Ask them how much their mortgage deduction really saves them - they don't know. Ask them when the last real estate bull market ended - they don't know (1988 and it took until 1998 to make a new high). Ask them how much money they should be saving for future repairs like a new roof - they don't know and definitely aren't doing it. I am not exaggerating at all when I say that NOBODY is armed with this basic information. Forget about asking them about the solvency of their town or state - that's way too advanced of a question. States like New Jersey and California are bankrupt now - how do you think they are going to perform in a recession? People and businesses move quickly these days. Is your state or town headed for a tax death spiral (rising taxes, shrinking tax base)? Remember New York City was essentially bankrupt in the 1970s. There will be bumps again, and that is when I will buy.

Just like the last bubble this one is going to end with lots of pain. Soon there will be an army of unemployed mortgage brokers and real estate agents trolling for jobs. They will be the day-traders of five years ago.

And a lot of real estate investments will look awfully like previous ones made in the Munder NetNet Fund.

Government Schools Suck - By Design

Any self-conscious fool, at least intuitively, knows that public schools are a joke but thankfully we have John Taylor Gatto to explain why.

I found his profound essay, Against School - How public education cripples our kids and why and it really provoked my brain.

Normally I would pull some highlights from his paper but that might deprive the lazy of reading the entire article. Seriously, if you have or are planning one day to have children, you'd be intellectually and parentally irresponsible to not heed Gatto.

In fact, I enjoyed his article so much that I clicked on his site. I found out that not only has Gatto artfully expounded on his theses in a book, but that I could read his entire book on his website for free.

Who would put a book on the net for free?

Well, the guy cares more about America and children than money. That should give you a hint about his probity. I started reading his book (currently on chapter 4) and let me tell you that it is even better than his essay. I am going to buy his book anyway because it is that important. When I am done reading it I will consolidate my thoughts and post a more thorough blog on what I have learned.



Click here to read the book.

Hamptons Hodgepodge

Most adroit shoppers know that yard sales are often gold mines of cheap goods. Whether it’s antiques, a baby stroller, golf clubs, or an Oriental rug, many a good deal (for the buyer) has been struck on a driveway near you. It almost goes without saying that the shopping cognoscenti all race to the yard sales before everyone else. “You just have to go early”, they say.

So I had to laugh at sign I saw this week in Southampton, New York. It was advertising a flea market that opened at 9am. General admission was $2 but early bird admission, from 7am to 9am, was $20. Hey why not? Price discrimination is a tool at everyone’s disposal. This amounts to nothing more than the flea market operator grabbing a slice of the best deals.

On the subject of the Hamptons, summer playground of the wealthiest people in the world (and multi-thousandaires like me), since so many of my acquaintances are dying to make a visit and check out this part of Long Island, I will give a primer.

First of all, the “Hamptons” is a large geographical area. It encompasses Hampton Bays, West Hampton, Southampton, Bridgehampton, and East Hampton. (I’d include Amagansett and Montauk too). As a big area, there’s an entire range of people out there, from 22 year old Manhattan summer house renters, to the townies that have lived there for generations, to the $50 million estates in East Hampton. There are also tons of people from all over the country that rent a house for a month (anywhere from $6,000 to $200,000 for a summer month). Many times it's for the mother and the children. Maybe Dad takes a full week and drives out or flies up on weekends.

There’s one road that traverses them all. Route 27 moves at a snails pace on busy days and is a veritable parade of contractors, landscapers, and illegal immigrants coming out each morning and then going home each night. There’s so much work to do and so much money to pay for it, all of the smart plumbers, contractors, etc. are out there cleaning up – literally and financially.

Despite the expansive area, the Hamptons is not a vacation destination for everyone. Some of the activities can be very expensive. Restaurants in particular price food at Manhattan levels – but many of them lack NYC quality. There used to be a Thai restaurant called Chinda’s between Southampton and Sag Harbor that I have had the unfortunate experience of dining at. Pad Thai was $18 and it was the worst I’d ever had in my life. I also remember at $15 omelot at a diner that I never revisited. We ordered takeout recently, two pizzas and a side of spinach - $50. Last night I saw $27 fajitas on the menu at the Driver's Seat. Ritzy beach towns everywhere have their share of rip-off restaurants. If you can’t cook or operate a grill, be prepared to spend some dough eating out.

As for bars, about tens year ago I was appalled when I saw the price of beer at The Drift Inn (Hampton Bays) and the Surf Club (Westhampton) …… I was acquainted with paying $5 for a beer in Manhattan, but at these bars, $5 didn’t get you a Heineken or a Guinness draft, it got you a CAN of Miller Lite. As for the swankier places like Jet East in Southampton, don’t be shocked when people that come 30 minutes later get in before you. The bouncer subjectively picks who gets in next. If you go, dress up, bring the best looking girls you know, and don’t forget your wallet. I am not sure what the exact prices are, but it works like this. You don't order by the drink, instead you order a bottle of Absolute or Kettle One for like $300 (it could be more) and they give you the mixers, tonic, juice, etc. on the side.

Speaking of bars, if anyone needs some spare cash, I would highly recommend becoming a gypsy cab driver in the Hamptons. When the bars let out at 4am, there are plenty of drunk kids in need of transport home. You buy a van or Cadillac, pick up some drunk girls and charge them $150 for a 20 minute cab ride home. Believe me, they can and will pay whatever you ask of them. Drunk guys pay as well.

As to the politics out on the so-called East End....click here for a hint.



Now it's not like California, but look at some of the whackiness I found in the local paper.

An ad for Organic Cleaning, another for Organic Poison Ivy Removal, and an ad for Personal iPod Consultation - which is clearly for those old Luddites with the groupthink gene. Hey fossils, if you can't figure out an iPod, then you probably shouldn't have one.

All mockery aside, I am all for the proprietors of these businesses. I have nothing but the utmost respect for capitalists that separate rich fools from their money.

The paper also had this inane listing on the Kid Kalendar.

LEARNING ABOUT MARINE CONSERVATION - 8/13 - 9-10:30am. Patricia Paladines will use English and Spanish to talk about life that inhabits the oceans, encouraging multi-cultural discussion of ocean conservation. The group will then make a papier machee sea turtle and prepare to send as a greeting to the children of the sister church in Havana, Cuba. There will also be jelly fish cupcakes, sea turtle veggie munchies, and green algae tea for refreshments. At the First Presbyterian Church of East Moriches, 389 Montauk Hwy. 631-878-4175.

A "multi-cultural discussion of ocean conservation"???????

And how do you get a turtle into a "veggie munchie"?

Devil's Advocate - It's probably shaped like a turtle, but still made of vegetables...

Well in that case, the kids will still be eating something that looks like an animal. Seem to be slipperly slope, no?

Someone asked me the other day if I was a vegetarian. My response,

C-Nut - No. But many of the animals that I eat are...

Here's another good one.

If God didn't want man to eat animals....then why did he make them out of meat?

Back to Dan's Papers, the Hamptons' local paper.

A few years ago, I was skimming the classified section and came upon an ad something like this,

Two young professional women from Manhattan willing to house sit in the Hamptons on weekends....

So I picked up my cell phone and called the number provided.

ProfessionalWoman - Hello.

CaptiousNut - Hi, I am calling about your ad in Dan's Papers.

ProfessionalWoman - Yes.

CaptiousNut - I have a rather large house in East Hampton but I am going to be away this summer. I don't want to rent it out but would like someone to watch over the property. Is this the type of service you'd be willing to provide?

ProfessionalWoman - Yes. (probably getting excited)

CaptiousNut - My house is on Dune Road. Do you know where that is?

ProfessionalWoman - Yes. (probably jumping up and down)

CaptiousNut - So let me get this straight. You'd be willing to come out and house sit my beach house each weekend. How much would I have to pay you?

ProfessionalWoman - Well. Uh,....

CaptiousNut - WHAT ARE YOU CRAZY!!!! YOU THINK SOMEONE IS JUST GOING TO LET YOU "HOUSE SIT" IN THE HAMPTONS FOR FREE. PEOPLE SPEND TENS OF THOUSANDS OF DOLLARS TO STAY OUT THERE. NO IDIOT IS GOING TO LET YOU "HOUSE SIT". (hangs up)

It was so funny. The other passengers in the car at the time of my call, my future wife and future mother-in-law, were in such hysterics that we almost had to pull off the Long Island Expressway.

Here's what "Dune Road" looks like,



It's a sandbar on the ocean - with no starter homes. That house pictured above is known as "The Castle". I've heard that it has shark tanks and 27 bathrooms.

What I absolutely love about the Hamptons is the sheer beauty. There are so many farms, mansions, deer, and water all around. The Shinnecock and Peconic Bays are almost as stunning as the ocean. I have to say that, by far, the southern shore of Long Island has the most gorgeous beaches I have seen. For one thing, the beaches don't end in either direction. You could walk forever. All you will see is a few people and bold mansions every few hundred yards (perhaps some topless women to boot!). I generally go to a beach in Bridgehampton that only has about 20 parking spots. You either have to get dropped off or get in line and wait for someone to leave - which could be a while if you go on a weekend. The Southampton beach does have a parking lot, but even that isn't very big, it fills early up as well, and it costs $30 to park. As far as I am concerned, that is a very cheap price for spending hours in such a spectacular setting. There are no boardwalks, no funnel cakes, and no blaring salsa music - Robert Moses would be at home.



What the heck is a "Justice Center"???

Anyway, after enduring 20+ inches of rain in April/May up in Boston, the weather here has been a pure godsend.

In 4.5 weeks, it hasn't rained once.

The Future of Video Media Has Arrived

Do you know what YouTube is?

Most people do now and I can tell by the increasing numbers of hyperlinks to it that are showing up in my inbox.

Essentially it's a free video hosting website. Users upload video clips, YouTube hosts them their servers, and organizes them - allowing tags, comments, ranking metrics, and searching functionality.

Here, an example transcends all literal description. Below is the first clip I saw from YouTube. It's just a photo montage some Georgia girl made for her boyfriend set to Keith Urban's "Making Memories Of Us" - nothing fancy. Click on the video.



As I type this, that video has been viewed over 200,000 times which blew me (and I am sure its author "Holley") away. These videos are getting very easy to make. She used Pinnacle Studio. One just throws some pics together, adds music, and uses the video transitions from the software. Everyone is doing this now. I just made a similar video for my wife using Microsoft Movie Maker (which came with my version of Windows XP) - but instead I used Kenny Rogers' "Through The Years". Sorry, it's on my son's site - not YouTube.

Everything imaginable is on YouTube except porn and gross vulgarity. Kids dancing to music, funny clips from The Comedy Channel, news clips, funny commercials,......

Obviously, there are few ads on the site thus far and YouTube must spend a ton of money on servers and web hosting to be able to handle all of the videos people keep uploading. Whoever owns it must be trying to build up the critical mass even more before selling or partnering out (think CraigsList).

Where is all of this content coming from?

Like the example above, it's all user generated. If a clip is particularly funny, entertaining, shocking, or clever, the virtual word spreads virally and there's no limit to how many people will eventually view it.

This is not just kids dancing to music. I did a google video search on "golf" and found clips of golf tips - and these clips were really actually cleverly disguised ads for golf schools i.e. info-mercials.

Who would sit at home and voluntarily watch commercials? Well that is a dumb question in 2006. Consider that MTV is all commercials. The videos are just ads for the albums.

Back in probably the 1960s, when Coca-Cola first put its logo on a red t-shirt, critics blathered,

"Now who is dumb enough to buy a Coke shirt and pay them to advertise their product?"

Well, if it's a sharp looking and reasonably priced shirt, people will buy it no matter what. And they did.

A lot of the video content on the internet is ripped from television. This is done by,

1) Getting a DVR (Tivo).
2) Getting a FireWire card and cable for your computer.
3) Plugging it into the back of your DVR.
4) Grabbing some free ripping software off the net.

I tried this recently but it didn't work. I think I bought too cheap of a firewire card. Hopefully I will figure it out soon. Too many times I see something on tv and think, "Now, that is blog material". Plus it would be better to put my fisking of Bill O'Reilly side-by-side with video clips of him.

But the impact of pervasive file sharing and cheaply generated user content will be as revolutionary as the advent of the radio. The current TV pipe is just too narrow to satisfy the appetite of media consumers who are also tired of commercials and $60 cable bills. I can't find the link but I read recently that teens are spending twice as much time on the internet as they do watching television now. Sure a lot of it is instant messaging but they are also big consumers of YouTube and the like.

I have been following YouTube for a bit now but one clip I saw really got me thinking. It was a clip on a Boston Celtics blog (I am a huge C's fan) of highlights from a recent summer league game. Now summer league games are barely on television but someone was able to tape the game and put the highlights together. Then they posted it on YouTube. Who needs SportsCenter? What's fascinating about this is that diehard Celtic fans all over the globe were able to see obscure content that technology (and economics) would never before have permitted.

Consider that hour-long evolution lecture video that I linked to in my last post. Very soon, the net will be littered with educational clips. Perhaps some dynamic Calculus teacher will record and publish a year's worth of their lectures? Home schooled kids will be able to sit at home and learn limits, differentiation, and integration from their homes AND at zero cost. Forget "perhaps", that WILL happen, many times over, and on every conceivable subject.

The internet stock bubble may be long over, but the net's impact on every facet of society is just getting going.

Okay, I have been emailed this clip three times already. It's a parody of rap videos - only with white "WASPS" to drive home the point. Having never seen a rap video, my mother-in-law only got half of the joke - thinking it just a mockery of the blue-blooded. At first I didn't think it was that funny, but subsequent views got me laughing harder.

What do I know? It's been viewed a mere 400,000 times in its first week on YouTube.



Here's one of the links I couldn't find earlier.

Study: Only One in Four Teens Can Name Broadcast Networks