Saturday, December 16, 2006

Marginalizing Bad Drivers

I can't stand these people that try to use Iraqi War deaths to buttress a most likely deeper criticism of the war.

My stock response is always, "Yeah, well over 100 Americans died in car accidents yesterday..."

Recently I had this altercation and the guy responded, "You may be an intelligent guy but that is a stupid thing to say." Then he "cut and ran" from the discussion.

Since that conversation ended, I will continue it here.

Devil's Advocate - I think what he is saying is that people die everyday for stuff like lung cancer and that doesn't mean we should ignore military deaths...

That's a bad example because lung cancer comes (mostly) from a self-destructive bad habit. I am just trying to put the deaths in perspective since Big Media does such a poor job of it.

Members of the military are paid volunteers doing heroic work AND they're fully aware of the risks of their choice. Their deaths are certainly tragic.

But for me, there is far more tragedy in someone dying simply on their drive home from work. If the numbers were closer it'd be a different story. But 3,000 military deaths in 3.75 years can't be compared to 160,000 auto accident deaths over that same period. There are substantially more widows and orphans created on American roads than in Iraqi deserts.

For most Americans, Iraq is an abstraction. If you don't know a soldier, turn on the news, or open a newspaper that war may as well not even exist. Bill O'Reilly said last night that the 15 minute segments of his show on Iraq are the least watched of his whole program. Many Americans like me just don't care. Thankfully I have the fast forward button of my DVR.

Devil's Advocate - So if you aren't there, then it's an abstraction? So was the Holocaust just an abstraction that people could justifiably ignore if they didn't know any Jews?

If there was a different Holocaust, forty times as big going on in America, then you could rightfully chock up Hitler's Holocaust as a trivial development in a far off land. My point is that auto accidents are such a more immediate danger to Americans than 7th century "insurgents" in Iraq. There are plenty of viable arguments against the war, but the number of military deaths doesn't even crack the top 100.

Almost every time I get in my car, I am toting my most prized possessions in life - my wife and two small children.

Of the five different cities I have lived in, Boston drivers are absolutely the most dangerous.

First of all, you have octogenarians in Oldsmobiles and Buicks driving everywhere. You know, modern society estranged them from their kids so they aren't living with them. Their kids won't confiscate their car keys because who'll then chauffeur the dinosaurs around? And as I mentioned in a previous post, they don't want to be cut out of the will - no matter how many kids their doting parents run over.

Watch the video and keep your eyes on the man crossing the street. The cause of the accident was cell phone yapping. It's horrid to think that that pedestrian got flattened because some self-centered bastard JUST HAD TO TALK TO SOMEONE...

People in Boston are all invariably yapping on their cell phones (not illegal yet), watching a dvd, text messaging, or driving with their dog on their lap like my neighbor.

Yeah officer, the only reason I ran over that little kid was because my little Fifi jumped up to lick my face. She is so sweet my little Fifi.

Remember this is a state that bans tag at recess because it's dangerous but it won't outlaw driver cell phone yapping.

Devil's Advocate - You are being over-dramatic about kids getting run over?

Am I? How would anyone know? Go try to find stats about the complicity of cell phones and car accidents. This stuff is confoundingly not reported. At the scene of any accident, drivers should be interrogated as to cell phone usage. It's easy enough to verify the call times from cell phone bills.

My peeves, as usual, are cemented by logic. I hate tailgaters and I hate right-lane highway speeders - they tend to be the dangerous weavers. I loathe drivers that imperil my safety; in fact I take it quite personally.

Off the highway, if you tailgate me, I will quickly glance at the mirror and profile your sanity. If you don't look like some gun-carrying lunatic, I will immediately hit the breaks and drive as low as 15 mph to teach you a lesson. Good luck trying to go around my massive Earth-scorching Chevy Suburban. Even if I am in a hurry, I feel duty-bound to self-sacrifice and teach the tailgater a lesson about appropriate driving distance and perhaps better personal time management.

I also can't stand these drivers on the highway that think coming within six inches of your fender is a normal way to ask you to shift right and let them pass. High beams from a distance are rude enough. Bear in mind that if I am driving 10 mph over the limit already, I feel no compulsion to switch lanes. No one is entitled to drive 80 mph. The highway is a dangerous place to have pissing contests but sometimes you have to push back provided safety permits.

When I was a child the government agents in "schools" erroneously taught us that a yellow light meant take to caution and slow down. Nowadays it means, hit the gas and fly through that intersection. See, I have been saying over and over again that teachers lie to the students!

This was in fact the cause of a car accident that destroyed my back almost 8 years ago. The traffic light turned yellow, and some geriatric in Philly misjudged how far from the light he was, hit the gas, and came barreling into the cab I was riding in. We had a green light and had just eased into the intersection at 21st and Lombard. Because he was accelerating, the fossil hit us so hard that both cars were wrapped around a telephone pole. They needed the jaws of life to get the Moron out of his car.

I could have been hurt far worse than I was so I hate to complain about my plight. But if you really loathe someone, wish a bad back upon them. A bad back pains physically AND psychologically. Every frustration or setback tortures your body as well as your mind. Always an intense hothead, now I have to exert constant effort on chi management. Perhaps one day I will write a positive post and expound some more on my techniques.

Boston is a self-described "tough town". But the cold climate, rudeness, and economic malaise do not chisel out "tough" citizens as people here like to think of themselves. It churns out egocentric *ssholes. Nowhere is it more apparent than on the roadways.

Let me walk you through the morass of Boston's driving/traffic problems.

First of all, the mass transit here sucks. The government does not encourage people to take the trains or buses. They won't build high rise apartments near train stations. You wouldn't believe the trouble West Roxbury gives to anyone who tries to build an apartment or two near its train station. They want traffic studies, environmental studies, etc. They have old people in town who still drive down Centre Street to mail a letter or buy groceries 3 times a week and don't want any more "traffic". As a result, no young people live downtown and therefore you can forget about a vibrant market for bars, restaurants, or other commercial development. The lack of high rise apartments precludes a critical mass of residents, which would otherwise energize the local economy and put a dent in commuting traffic. Centre Street in West Roxbury is one of the most pathetic dilapidated main streets I have ever seen - 5 miles from Boston no less (only 22 minutes on the train). No normal young people would ever consider living there as it stands.

But that's not the only side effect. Since there is no way to live near a train station, everyone has to scatter about, own a car, and drive everywhere. See how these things spiral out of control? Arguments to discourage "traffic" invariably make it worse.

Last year, gasoline crossed the $3 dollar level and likely tempted many drivers to think about taking mass transit to work. A good thing right? Well the Massachusetts government apparently wanted to forestall that - they raised fares across the board. Subway fares are going up the most - 36% next month. They claim the fare hikes are required by law. The MBTA is hiding behind a "legal requirement" to balance their budget.

Bet your bottom dollar that the budget is in the red because of unions. Remember, environmentalism ALWAYS plays second fiddle to socialism - a lesson Greg Mankiw would be wise to digest.

Alongside the octogenarian driver is the more dangerous teenage/college punk driver. There are scores of them and not just because of the socialist/environmental zoning restrictions that force everyone into car-dependent lifestyles. Remember, Massachusetts is a full-blown Communist bastion. Under the shibboleth of equality, the Commonwealth will not let auto insurance companies price discriminate on very important factors. Generically speaking, they can't discriminate based on age or geography no matter what actuarial risk profiles demonstrate. Consequently, young drivers pay the same premiums as safer, older drivers; and rural drivers have to ante up just as much as more accident prone city drivers.

Devil's Advocate - This isn't fair?

Not only is it not fair, it's very dangerous. Why should older, safer drivers in rural Western Mass have to subsidize lane-weaving college kids in Boston? It befuddles the mind why at least half of the state's representatives haven't risen up in arms to protest this price distortion. Their deafening silence implies at least a fear of Boston-based pols and at most a stark ignorance of economic reality. The study I read concluded that car insurance is, on average, $150 higher than it would be if insurers were free to "discriminate" just on age and geography. Allowed to charge the accident prone their fair premiums, fewer urbanites and fewer youths will be on the roads.

Why does Mass have this policy on geographical discrimination? Who knows? I believe it's because they don't want minority Dorchesterites to be paying more than the bluebloods in Chestnut Hill. Or maybe it germinated from the power of Boston pols who just wrested cheaper car insurance for their constituents. When I lived in Philly, a friend of mine was given his father's BMW. He called for an insurance quote, for a new BMW , parked on the street in Philly, driven by a 23 year old. They told him insurance would be 7k per year. Needless to say, that BMW never made it down to the City of Brotherly Love. He took the subway and cabs instead.

Whatever the original motivations or ongoing justifications, free market meddling in the name of "equality" remains socialism with all of its attendant negative externalities. Here it goes beyond just higher prices and lower efficiency because people not so infrequently die in car accidents.

Now back to my "cut and run" critic who thinks I am a fool to talk about highway deaths. He doesn't have any kids to worry about or to make him drive a little bit safer. I suggest he think about OTHER PEOPLE'S KIDS or even his own health. Over one hundred people per day die in car accidents; maybe the number isn't significantly reducible but I highly doubt it. The fact remains, nobody is studying the issue; we are all just supposed to become inured to it - I guess.

My theory is that there is a sub-population of dangerous drivers out there, not very hard to identify. They will be the ones that at some point end up injuring or killing somebody. Surely, everyone knows a few acquaintances that drive like lunatics. People either yap on the phone, speed, tailgate, and weave all of the time OR hardly ever at all. I think they need unmarked police cars out there mounted with cameras to get these specific jackasses off of the roads. Also we need better mass transit, fairer "discriminatory" insurance pricing, and a deregulated cab industry - please don't get me re-started on the cabs.

Bad driving is taken too lightly by almost everyone. Just accept it because it's far worse in other countries? I don't think so. Around 400,000 people have been killed on the roads in just the last 10 years. It is a present day mini-Holocaust.

And that 400,000 number isn't counting all of the broken backs, limbs, and vegetative comas wrought by car accidents - a number likely much larger.

I could be wrong, but I think it's possible to get driving deaths down to say 90 per day rather than current 115 and climbing.

Recently a college classmate of mine and his wife were killed in an auto accident, orphaning their infant daughter. Some guy of dubious immigration status drove across a wide grassy median on the highway and caused the tragic pileup. There was no sign of drugs or alcohol. The guy either fell asleep, was talking on his cell phone, or guilty of some other distraction. The news of this accident was broadcast widely all over New York (of course without the messy illegal immigrant angle). What real life example of most families' worst nightmare wouldn't be?

My wife knows three kids from her high school that were killed ON BICYCLES by automobiles.

A former co-worker of mine came home to the most horrible phone call one day. His wife and fourteen year old son were killed in an accident on the way home from lacrosse practice.

I knew a ten year old child who chased a ball into the street, only to be run over by a passing car.

Think for a moment. How many auto deaths have hit close to your home? That number will only go up.

Some Morons vote for socialists, but others may get distracted by Oprah or SportsCenter and run you over on the street, regardless of whom they voted for.

Be wary of them all.


Hello jalopnik readers!!!

Sorry to disappoint but your webmaster misled you. Nowhere in my post did I insist that deaths from cell phone yapping drivers are worse than the Holocaust. Either he reads too fast or thinks too slowly.

I hope he's got a better grasp of cars than he has of basic reading comprehension!!!

Salmon and Mashed Potatoes

Listen to Boston Celtic Tony Allen eloquently explain his career best game last night.

To think that all this time I was incorrectly pronouncing it as "sam-uhn"....

Friday, December 08, 2006

Social Skills for Blockheads

The video is a little messed up. If I happen upon the commercial again I will re-upload it. All you need to know is that it's a television ad for Magtastik where Dr. Paul Poumeliotis unleashes this doozy,

Playing with blocks or similar building activities really enhances your child's interactive skills and later on, social skills...

What the bleep?

Playing with blocks will enhance your kid's social skills?

Will it guarantee a date for the prom as well? If not, can I sue the quack doctor?

Apparently all of those weirdos in my class mustn't of had enough block time as toddlers.

Invoking "social skills" is one of the best ways to market to dumb parents these days.

...Daycare will improve kids' social skills.

...Deval's Patrick's all-day kindergarten will improve children's social skills.

...Playing with Magtastik blocks will improve social skills.

Personally, lower taxes would improve my coefficient of socialization. Somehow I need to work that "social skills" shibboleth into my own propaganda.

Thursday, December 07, 2006

The End-of-the-World Trade

Intro to Conspiracy Theory

Anyone who's traded the gold sector as much as I have is fluent in doom-and-gloom, End-of-the-World financial prognostications.

Skepticism towards government abounds in every populace and has in every period. Are the pols lying to us? Surreptiously lining their pockets? Abusing their power to suppress dissent? Are they manipulating the garb of reality through parades, rhetoric, or scapegoats?

Of course they are - ask any random person on the street. Open almost any history book.

Now ratcheting that cynicism up a notch it follows that government must be recklessly manipulating the financials to further its own devious interests.

What are those interests? And how are they doing this? Well the details of a conspiracy theory are inherently unimportant. Conspiracy theories fend off factual probing with a Hydra-headed resilience.

Oil companies manipulate prices up; later they fall. It couldn't be market forces moving the prices, the greedy oil execs decided to soak the little people. Then they got scared of Bill O'Reilly's populist handwringing and used their omnipotence to lower gas prices back down. Every price move or industry development has a knee-jerk cynical explanation. Supposedly we went to war in Iraq just to get oil. Since we have gotten that oil and increased world supply, prices, against all economic logic, have risen. And that brings the nutjobs back to their oil industry greed/manipulation lemma.

I am not kidding. The who, what, when, and how of a conspiracy theory are fluid to the point of irrelevance. The vaguer the accusation, the wider the net to cast.

In 1755 a horrific earthquake ravaged Lisbon, Portugal killing between 60,000 and 100,000 people. The absence of seismologists opened the door for any and all opportunistic speculators. The Church took occasion to blame it on immorality. Jean Jacque Rousseau blamed it on depravity of urban living. (If people didn't live all jammed together on 5 story buildings there'd have been much fewer casualties). Ignorance has always given license to conspiratorial conjecture.

Make no mistake, there will be a financial earthquake in your lifetime. We'll all have personal scapegoats lined up to blame: oil companies, Alan Greenspan, George Bush, Bin Laden, Wall Street, politicians, hedge funds, "greed", the national debt, China, outsourcing, illegal immigrants, the "rich", etc. Amid the crossfire of blame, genuine culpability will be quite beside the point.

So why all this talk of doomsday and conspiracy theories?

The reason I write this post is that my trading positions at the moment look like I am predicting the end of the world.

Long gold and silver.
Long oil.
Short the Nasdaq.
Short the 30 year bond.

Of course, trades are inherently short-term; conceivably I could cover and reverse them all before lunch. But if oil exploded and the dollar collapsed, I'd make a small fortune. Frighteningly, these scenarios are two key ingredients in any viable End-of-the-World prediction.

Now do realize I am not simply trading off a doomsday conspiracy theory; my positions are dictated by empirical price action and economic theory. Any legitimate economic textbook will tell you that cheap money (low interest rates) sows the seeds of inflation, which then erodes the currency. The only question is of timing.

Look at it this way, if the dollar lost value, our way of life would be turned upside down, and perhaps a shudder would be felt globally. Those dim ramifications demand we consider everything that could possibly cause the dollar to devalue.

Inflation of course is suspect numero uno. It can arise from the government simply printing too much currency; it could come from a sudden spike in prices (leaving aside for a moment the relationship between the two). Lastly, dollar weakness could arise from a fear of fiscal solvency, i.e. the national debt.

Oil is arguably the oxygen of the global economy. Jack its price up and Goldilocks won't long be able to breath. Almost every single necessity of life will cost more - at least theoretically. Ergo, rising oil must play a starring role in The End of the World.

The other co-star, previously alluded to, is your Federal Government. So how much money is it really printing? That's a question not exactly dominating your local news now is it? Here we are getting into more esoteric financial stuff that I admittedly don't fully understand such as the velocity of money, M1, M2, etc. What I do know is that the government owes lots of money and unfortunately for its creditors, the Feds are the ones who print it.

Should we just trust the slimeballs on this one?

I just did a google search for "growth of money supply" and found this nugget on the Federal Reserve's website.

In 2000, when the Humphrey-Hawkins legislation requiring the Fed to set target ranges for money supply growth expired, the Fed announced that it was no longer setting such targets, because money supply growth does not provide a useful benchmark for the conduct of monetary policy.

Our government is so compassionate...It doesn't want to confuse us, the fretful public. As is plain to see, tinfoil-hatted conspiracy theorists don't exactly have nothing to point to.

I am sure some people monitor the Fed's printing of greenbacks, but I think it's safe to say that it gets about 1,000,000th of the public scrutiny given to say the quality of cous cous at Guantanamo Bay.

So after the "trust us on money supply" policy piques your cynicism, next take a look at the Federal Reserve's interest rate machinations. At the slightest sign of weakness they drop rates to artificially revive the economy and buffet political incumbents. They arrogantly feel that such fine tuning steadies the ship. I disagree.

In the long run, the economy is going where it's going no matter what the Fed does. Long term interest rates (set by markets) and technological innovation trump the short term borrowing cost of money. The Fed's manipulations create large distortions which preclude the vastly more efficient free market from allocating capital. All the Fed really did in the last few years by lowering rates was encourage debt-laden consumers to borrow and spend more money. Sure Fed defenders can find GDP growth numbers or other convenient metrics that allegedly justify their "ship steadying" mission. But I say, look at havoc of the Nasdaq dropping 70% from its high. Did they really need to lower interest rates in the wake of Long Term Capital or the Asian financial crisis? Or later on after 9/11?

Note also they raised them in 1999 partly to entice people to not make a Y2K run on their banks. The criteria for their manipulations are unbounded.

Devil's Advocate - But wasn't Greenspan trying to deflate the Nasdaq bubble in 1999? Wasn't he doing the right thing?

You mean deflate a bubble that he arguably helped create (by lowering rates in 1998 under the guise of Asian woes)?

That would be like machine-gunning a guy and then wanting credit for calling an ambulance.

Okay, for the sake of argument, say they were correct to raise rates in 1999. Since the Nasdaq doubled anyway, from 2,500 to its 5,000 zenith, clearly they were too late to the rescue. This brings us to our present day analogue.

Right now, the Federal Reserve is literally praying that their recent rake hikes not only slow the economy, they are praying that a cooler economy will then a bite out of inflation. This may be the largest parlay bet in history.

Remember, a tightening Fed couldn't ground the dot-coms in 1999.

What if the economy slows but commodities march onward and upward?

Lowering rates will just aggravate the inflation. So what then, raise rates in the face of a breaking economy? That will never happen.

The Fed simply does not have a tool to crack open the stagflation nut - which is what we could be looking at if the Fed's parlay busts.

Congress could theoretically crack that nut BUT it has a record of making things worse.

Here's what it could do to stem inflation, strengthen the dollar, and invigorate the economy:

1) Lower taxes.
2) Start phasing out Medicare. Push HSAs.
3) Privatize Social Security.
4) Shrink the size of government. Deregulate more industry. Decentralize government schooling.
5) Attack hidden taxes on business like the tort lobby, ethanol mandates, etc.

Here's what they will most likely do:

1) Raise taxes on income, capital, and perhaps oil companies.
2) Expand Medicare (or leave it alone while demographics expand it).
3) Will do nothing positive with Social Security. They will means test "wealthy" people off of it. They will increase the cap beyond the first 90k of salaries. They will make 11 million illegal immigrants retroactively eligible for benefits - even though the "trust fund" is already underfunded and also ravaged by unfavorable demographics.
4) They will expand the size of government. Regulate more industry, e.g. hedge funds are up next. The socialists will keep pushing for nationalized healthcare.
5) They will add more hidden taxes on economic activity.

If you don't think econo-illiteracy pervades America from Joe Blow on the street, all the way through the highest political offices, then you haven't read enough of my blog. Any financial earthquake will be met with the crossfire of blame mentioned above but the ignorant finger-pointing will pale compared to the damage wrought by the political "solutions". Be sure to thank your local Congressman.

I am covering a lot of stuff here but this is no disjointed diatribe.

If the dollar is fundamentally in trouble, the only place to hide is in precious metals. Sure you could convert your dollars to euros, yen, or other currencies but then you're opening another can of worms - especially with the euro. The European Union is more concerned with global warming and world government than they are with economic vitality. The Japanese have their own problems as well, e.g. an inflexible banking system.

Devil's Advocate - So how does the dollar weaken if you don't see other currencies strengthening?

Finally DA, you ask a good question. I don't necessarily see the buck weakening versus other currencies - at least not to the extent of other goldbugs. My argument for dollar weakness focuses more on a loss of purchasing power from inflated commodity prices (and debt).

Gold is THE SAFE HAVEN from dollars, euros, and yen. While currencies have come and gone, the yellow metal has held value for 4,000 years.

Sure you could demonstrate how horrible of an investment gold has been over many time periods BUT I can always fire back my 4,000 year argument. How'd the dollar do during the Civil War? How'd the German mark fare with Hitler? Didn't Oscar Schindler use diamonds as a currency while fleeing for safety?

The conspiracy theories will never, ever go away. In fact, I think they will gain steam for the foreseeable future.

Some of these goldbugs are indefatigably nuts. They believe the government has sold all of the gold at Fort Knox. They believe you have to own gold coins instead of gold futures because banks will never be able to deliver your metal in the wake of a financial catastrophe. Others live in cabins with stockpiled food, firearms, and bomb shelters. As nutty as I am, I am not quite there yet.

There's so much more I could say on this topic but I am going to end it here for now.

Tax Shelter asked in advance for a "What if I am wrong?" consideration. I am sure he'll fine tune the question in the comment section but I'll give it a go now.

If I am wrong about these trades, I will lose some of my hard earned money. My positions are not very large but are quite levered in the sense it looks like one big End-of-the-World bet. Should oil drop, not only will I lose on that position, but it's likely that gold and silver dip as well. And of course stocks and bonds may rally some more.

I want to emphasize again that these are "trades" not investments. Aside from the 30 year Treasury, I have been both short and long gold, silver, and the Nasdaq more times than I could count just this year.

I am "wrong" every single day. Today I bought Apple too early. Yesterday I lost 7 points on Gold. I got run over shorting the Nasdaq in November. The game I play is not about being "right" all of the time or even 51% of the time. It's about cleaning up on your winners and having small losers. I don't like the term "diversification" - I much prefer "a basket approach". It really has taken me 10 years to learn how to trade smaller. As a fearless youth I swung a big bat on single positions and had to numb the losses with inebriation. Maybe that's why there are no trading firms in Boston, because bars won't sell you more than three drinks before cutting you off?

I am fully aware that my blog spouts a formidable negative vibe. I have the End-of-the-World trade on and of course I am short the housing market because I rent. When I say I don't believe in long term equity investing remember I am speaking for myself only and about the stock universe as I see it today. I have a hunch that Tax Shelter wants to know the long term bull arguments for stocks and perhaps real estate but I'll wait for him to clarify.

If the economy keeps roaring, interest rates stay low, and real estate starts ascending again, I will get hurt financially - no question about it.

But if I am right and play the right side of coming trends, not only will I earn some good money, but I will vault up the wealth ladder.

It's one thing to get rich when seemingly everybody else is, like in internet stocks or in real estate, but quite another to make bank while others are bleeding. Something like 69% of Americans own a house and at least 50% own stocks directly. I am not really that bearish on the stock market because its valuation is not that high. I am however very strongly bearish on housing and on the long bond because of their stratospheric prices.

Okay that's it. I am ending this post because the concept of me making money on this trade is just too depressing.

Maybe I'll renominate it as the schadenfruede trade...

Tuesday, December 05, 2006

Article on Education

The Dream Palace of Educational Theorists
by John Derbyshire (Dec. 2006)

Education is a subject I find hard to contemplate without losing my temper. In the present-day U.S.A., education is basically a series of rent-seeking rackets.

There is the public school racket, in which homeowners and taxpayers fork out stupendous sums of money to feed a socialistic extravaganza in which, when its employees can spare time from administration, "professional development" sabbaticals, and fund-raising for the Democratic Party, boys are pressed to act like girls, and dosed with calming drugs if they refuse so to act; girls are encouraged to act like boys by taking up advanced science, math, and strenuous sports, which few of them have any liking or aptitude for; and boys and girls alike are indoctrinated in the dubious dogmas of "diversity" and political correctness.

Any article that starts out like that can't be bad.

Click here and read the rest.

Moronic Athletes

I am working on a few posts but my time is otherwise strapped and the babysitter is MIA. All I have today are these timeless Moronic quotes from the sports world.

Chicago Cubs outfielder Andre Dawson on being a role model: "I wan'all dem kids to do what I do, to look up to me. I wan' all the kids to copulate me."

New Orleans Saint RB George Rogers when asked about the upcoming season: "I want to rush for 1,000 or 1,500 yards, whichever comes first."

And, upon hearing Joe Jacobi of the 'Skins say: "I'd run over my own
mother to win the Super Bowl," Matt Millen of the Raiders said: "To win, I'd run over Joe's Mom, too."

Torrin Polk, University of Houston receiver, on his coach, John Jenkins: "He treats us like men. He lets us wear earrings."

Football commentator and former player Joe Theismann, 1996: "Nobody in football should be called a genius. A genius is a guy like Norman Einstein."

Senior basketball player at the University of Pittsburgh : "I'm going to graduate on time, no matter how long it takes."

Bill Peterson, a Florida State football coach: "You guys line up alphabetically by height." And, "You guys pair up in groups of three, then line up in a circle."

Boxing promoter Dan Duva on Mike Tyson hooking up again with promoter Don King: "Why would anyone expect him to come out smarter? He went to prison for three years, not Princeton."

Stu Grimson, Chicago Blackhawks left wing, explaining why he keeps a color photo of himself above his locker: "That's so when I forget how to spell my name, I can still find my clothes."

Lou Duva, veteran boxing trainer, on the Spartan training regimen of heavyweight Andrew Golota: "He's a guy who gets up at six o'clock in the morning regardless of what time it is."

Chuck Nevitt, North Carolina State basketball player, explaining to Coach Jim Valvano why he appeared nervous at practice: "My sister's expecting a baby, and I don't know if I'm going to be an uncle or an aunt."

Frank Layden, Utah Jazz president, on a former player: "I told him, 'Son, what is it with you? Is it ignorance or apathy?' He said, "Coach, I don't know and I don't care."

Shelby Metcalf, basketball coach at Texas A&M, recounting what he told a player who received four F's and one D: "Son, looks to me like you're spending too much time on one subject."

Amarillo High School and Oiler coach Bum Phillips when asked by Bob Costas why he takes his wife on all the road trips, Phillips responded:
"Because she is too ugly to kiss good-bye."

Monday, December 04, 2006

Barney Frank-ly Is A Dissembling Socialist

On November 29th, Congressmen Barney Frank (S - Massachusetts) appeared on the O'Reilly Factor. Frank is no political lightweight; he'll chair the House Financial Services Committee when the Democrats take control of Congress in January.

Definitely watch the video first. I've transcribed the important exchange below - though it's a thoroughly inadequate substitute for the viewing experience.

BillO - Do you believe in income redistribution?

BF - To some extent the whole country does...George Bush supports a tax structure in which people at the upper end get taxes much more than people at the lower end. It's called progressive taxation. But that's not what I've been talking about mostly now. The problem we have now is not that the government isn't doing enough to redistribute to the lower end but that the government is doing too much to redistribute it to the higher end.

BillO - Do you believe in it or not?

BF - Stop being a silly would-be district attorney...Bill if you want to do that go to law school. The fact is I told you I do like George Bush does.

BillO - You're not like George Bush. That's ridiculous.

BF - Bill, will you please stop interrupting?

BillO - When you say something dopey, I am going to point it out.

BF - I came on the show to have a coherent conversation...

BillO - And I asked you a question and...

BF - And as I try to answer it you keep interrupting. It's your style when you don't like the answer...

BillO - It's YOUR STYLE to make an invalid comparison between you and George Bush....That's bull.

BF - I said that I agree with George Bush that people at the upper end of the income scale should be taxed more than people at the lower end.

BillO - That's not income redistribution.
BillO - What's the top tax rate? What should it be?

BF - I think when Bill Clinton had it at 39%, we had a very good economy. But that of course is only part of the problem because you are trying to ignore the issue that public policies today are in fact (effect?) going in the reverse direction and what we've seen is more and more of the wealth that we've created in this society is staying in the hands of very few people and I would like to see public policies that distribute the wealth more fairly. I'm not talking about taking from the rich and giving to the working classes or poor. I am talking about a fairer share of the increased wealth because as Alan Greenspan said a couple of years ago, it's all going recently to a handful of people. I am talking about just sharing the increase instead of redistributing.

BillO - 39%, you think is a fair top rate.

BF - Yeah, I said that.

CaptiousNut - Actually BF, no you didn't say that. You blurted out some vague connection to the internet bubble and a 39% tax rate.

Boy would I have loved to have been there asking my socialist Congressman questions. Bill did a decent job (compared to his peers in the news business) but it's nothing like to what I would have laid on the slimy stammerer. Of course, Bill can't "drill" Barney too hard or he'll never come back on the show. I predict it will be a while before Barney appears again given his embarrassing performance.

Now is Frank a liar or a complete Moron?

What I mean is, does he truly believe in confiscating money from the working rich and handing it to the non-working, morally-challenged poor and just doesn't want to admit to it?

Or he is so thoroughly stupid that he really thinks he answered the darn question?

Hey Barney do you believe in X?

Well, to some extent the whole country does....


He mocks Bill as a "would-be district attorney" but there isn't a judge in the land that would permit such outright evasion. Your honor, will you please direct the witness to answer the question?

Now how many lies can Barney cram into his non-answer?

The whole country supports progressive taxation?

First of all, I don't support it. Libertarians are likely all against it. Steve Forbes has been advocating a flat-tax for many years and ran for President on that platform in 1996. Not to mention most especially that HIGH INCOME EARNERS DON'T SUPPORT the disproportionate confiscation of their wages.

George Bush supports progressive taxation?

Why? Because he didn't veto every Congressional bill not including a flat-tax? Therefore he believes in progressive taxation?

The same exact day Frank uttered these falsehoods (again while evading a direct question), wire reports were buzzing about George Bush touting Estonia's economic growth and FLAT TAX.

Of all the days in the last six years to misrepresent lie about President Bush's tax philosophy, could Frank have picked a more untimely one?

Too bad Bill didn't have a Captious voice in his hear on this point...

I just had a flashback to Al Gore hyperventilating about global warming in NYC on one of its coldest days on record.

How can Frank say with a straight face that Bush agrees with him on progressive taxation?

Bush lowered the top tax bracket from 39 percent to 35 percent.


Bush also cut taxes on the low end.

Flattening out the tax code at its highest point seems a most peculiar expression of support for progressive taxation.

Then again, answering a question about your personal beliefs with "the whole country believes in..." also confounds most holders of 3-digit IQs.

President Bush also wants to abolish the estate tax which is arguably its most progressive confiscation. Frank and his comrades are not exactly on board with that one.

Let's pause the litany of lies for a second.

Frank's response (re: income redistribution) may span the gamut of pejorative adjectives, but that's not to say there's no logic to his tack. Let me try to illustrate this obliquely.

Often times when Senator John Kerry is interrogated about some policy or gaffe of his, he starts his response some variation of, "We have to do better..." or "I have to do better..."

When any Congressmen admits his and his cohorts' incompetence, the listener will reflexively fall into initial agreement. After that, it's much easier for a John Kerry to evade a question, peddle BS, and unleash more sophisticated propaganda. A few sentences into Kerry's response-turned-monologue, and the audience of Soundbite Nation won't even remember the initial question; at least that's what he's striving for. Worst of all, John Kerry won't seem like such a detestable figure.

I want to give another example before I tie to all together.

Remember a dissembling Greg Mankiw hid behind Alan Greenspan in his call for higher gasoline taxes,

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.

My comment was:

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.

Barney Frank's use of "the whole country" and "George Bush" is a very LOGICAL DEFLECTION - not fundamentally different than the examples given of John Kerry or Greg Mankiw. In this case, Frank wields President Bush as the Useful Stereotype to burnish his own image.

Bill O'Reilly essentially called Frank a socialist, and graciously gave him a chance to disavow it. Frank then tried to sell himself as mainstream, cut from the same mold as the most powerful and visible capitalist of all - George Bush. All the while Frank indulged in FALSE COMPARISON and demonstrated an infinitely flexible relationship with the truth.

...I would like to see public policies that distribute the wealth more fairly. I'm not talking about taking from the rich and giving to the working classes or poor.

Wow, a fairer distribution of wealth that doesn't involve taking it from those who have it????????

...I am talking about just sharing the increase instead of redistributing.

How can sharing possibly not be considered redistribution?????????

The problem we have now is not that the government isn't doing enough to redistribute to the lower end but that the government is doing too much to redistribute it to the higher end.

The only thing he can be talking about here is the "tax cuts for the rich". When his ostensible co-ideologue George Bush dropped the top income tax rate from 39% to 35% - that is called "redistribution". Huh?

Letting people keep 4% more of the money they earned is a government "redistribution"?

If a guy walks by me and I don't mug him for his wallet, did I then "redistribute" his cash to him?

The problem we have now is not that the government isn't doing enough to redistribute to the lower end...


Can you say straw man?

You can't even say that Frank "bobs and weaves" - at least in the context of tax redistribution. The bell rang, he ran out of the ring, stole the announcer's microphone, and started fulminating from the rafters.

Distortion, deflection, mythological metaphor, vituperation, and outright propaganda all by a man "who came on the show to have a coherent conversation".

Note that Greg Mankiw is proud of his Congressman Barney Frank.

Frank was recently re-elected in the gerrymandered 4th District of Massachusetts. He ran unopposed.

If you can't or didn't watch the YouTube clip at the top, make sure you find the time to do so; it's highly illuminating.

Thursday, November 30, 2006

Marginalizing the Jurassic

Alan Greenspan said the other day that the worst of the housing market was over.

Really Alan?

Let's see, does he have a track record on big market calls?

Remember his famous Irrational Exuberance speech in December 1996?

Well the stock market roared for over 4 more years, with the NASDAQ tripling in value. Thanks again for that untimely warning Alan.

It's a pathetic thing to watch old timers who just don't know when to hang it up. Is Rickey Henderson still playing in the farm leagues?

Another example would be Red Auerbach, patriarch of the Boston Celtics. I'd be lying if I didn't tell you that I am glad he is dead. It's not that I disliked him, but more so that I couldn't stand the baseless reverence he invoked. He was old, and washed up 20 years ago for crying out loud.

In 1989, he drafted a stiff from BYU, Michael Smith, hailed him as a Larry Bird on offense and promised he would be "taught defense".

When Coach Rick Pitino left the Celtics, walking away from $30 million bucks, Red begged him to stay and ride out the storm. Then a couple of years later, Red started bashing everything Pitino did. As soon as Pitino was gone, Red intervened and insisted on drafting Joe Forte over Tony Parker. Forte is out of the league while Parker has a couple of championship rings and a Desperate Housewife.

Ninety percent of these old guys age like bananas instead of fine wine. Harry Truman became a nutjob in his dotage. Jimmy Carter is another trenchant example though it's debatable how sane he was to begin with. Just wait ten years and see how bonkers Al Gore and Bill Clinton become.

Everyone gets a little whacky when they age. Think about your own parents. But certain species really go off the deep end like the 60s hippies who became journalists and college professors. Their psychological demise is palpable over just the last few years. Ten years ago the New York Times defended a white student who called a bunch of black girls "water buffalo". Oh yeah, and they were also in favor of a $0 minimum wage. Can you stretch your imagination enough to see that in today's paper?

I certainly can't.

I have an undeveloped theory that people who cling to dehumanizing ideologies are most apt to go cuckoo long before the Grim Reaper visits. Imagine you are Al Gore and every SUV (not in your entourage) that drives by makes your nerves frayed? How long can your sanity survive?

Are your parents sullen hippy socialists? Maybe you should send them to Sunset Hall, a rest home for Commi's.

Of course sub-species exist. Pathetic football jocks Al Bundy and Biff Loman could not let go of their high school glory days. I am sure everyone has a couple of real life analogues in their own social circles. They are the ones that push their kids the most at sports, yell the loudest at games, and become fanatical youth coaches themselves. Don't get me wrong, I love sports, particularly basketball. But it's really sad every year to see a fresh-faced 24 year old as the new 5th assistant for Mike Krzyzewski, a guy whom you recognize as a recent Duke player himself. These young guys have the whole world in front of them but choose to keep playing a game which has already consumed twenty years of their precious life.

What makes these fossils disproportionately nuts is the descent from their pedestals. They were once on top of the world and haven't since recalibrated their egos. Dan Rather used to be "the man", now he's "the loser" embarrassing himself with every movement of his lips. Another problem for the dinosaurs is the present-day ubiquity of cameras. Think Michael Richards (though like Jimmy Carter, he likely started a few cards short of a full deck.)

I could easily list here at least 50 people from the sports world: Brett Favre, Joe Paterno, thrice retiring Michael Jordan, Joe Montana on the Kansas City Chiefs, Arnold Palmer, etc.

How many thousands of high school coaches belong in this category? Once hired, these guys think it's for life.

Speaking of life tenure, do you know how many Supreme Court justices have held on while absolute invalids? Mark Levin itemized the long list in his book. These guys should serve twenty year terms and that's it.

I was talking to an older guy (65?) about Alaskan Senator Ted Stevens, I casually mentioned his age of 83. My older acquaintance interrupted me and exclaimed that he didn't think octogenarians should be in charge of ANYTHING.

Amen to that.

It's one thing to offer a wealth of experience (Stevens worked for Eisenhower) but if your memory is shot, it's really beside the point.

I fully expect my kids to email me this post, many times, starting in my pre-dotage.

Monday, November 27, 2006

Copyrighted Morons

Last year Bank of America bought MBNA. At some corporate meeting of the two companies, two middle-aged balding dorks got up and performed U2's One, with rejiggered lyrics. Watch the video.

Now, if you aren't familiar with that song, you might not find this interesting in the least. Sorry. Thousands of people have viewed this clip online thus far. But today I read,

A video of two Bank of America employees singing a version of U2’s “One” to commemorate their company’s acquisition of MBNA recently made the rounds of the blogs, prompting amusement and some ridicule from online viewers.

But the intended comic effect of their performance and the retooled lyrics (“One spirit, we get to share it/Leading us all to higher standards”) seemed lost on lawyers on the lookout for copyright violations.

On Tuesday, a lawyer for the Universal Music Publishing Group, a catalog owner and administrator, posted the text of a cease-and-desist letter in the comments section of, a Web site carrying the video. It contended that Bank of America had violated Universal’s copyright of the U2 song.

Universal said on Stereogum that it had sent the letter by fax and registered mail to Bank of America last Monday. On Friday, a bank spokeswoman, Betsy Weinberger, said the legal department had not yet received it.

The letter was signed by Raul R. Gonzalez, a lawyer for Universal Music. Reached at his office, Mr. Gonzalez said, “No comment” and hung up.

Online commentators accustomed to viral marketing said they suspected that the video was the latest corporate attempt to co-opt Internet video for promotional purposes. But Ms. Weinberger said it was “absolutely not” leaked by Bank of America as a marketing ploy.

These copyright lawyers are complete idiots. That type of parody is nothing that can't be found on every radio station in the country. I think on this issue, Universal got a little overzealous. Nonetheless, these intellectual property types simply don't get it.

Take for instance this video below which I posted on YouTube and linked to before.

I had some loser from Z100, an executive producer or something, email me threatening to sick his lawyers on me for posting "copyrighted material". Below is my response,

Let me get this straight. You want me to take down free, viral, international advertising for your show?

But I gain nothing from this clip, so I'd lose nothing by its removal.

I got the clip in an email originally. It's all over the net and will be FOREVER. You'll never be able to take it down everywhere. Sure you guys can put it up on YouTube and Revver and strike some sort or revenue sharing agreement but it will amount to pennies.

You guys should put your next phonetap up immediately and preempt the favor I did for you

Do you really want it down?

This was the response I got back,

What we don’t need is you trying to teach us about viral videos, promotion and the Internet. If we thought you were doing us a favor, we wouldn’t have written you the email. If we wanted it posted, we would have done so with proper detailed descriptions. There are legal issues here involving the people on our calls. It is no different that a recording artist not wanting their videos or their songs posted all over the web. Posting a Phone Tap does not promote our show as you think. We are in the business of having people listen to our show to hear our Phone Taps. Listening on You Tube does not help that and is for us to decide. Please enjoy the mp3 on your computer but respect our wishes and please take it down.

Thank you,

Note the guy didn't appreciate my patronizing attempt at Luddite edification.

Never one to concede the last word to anyone, I quickly wrote a response that I decided not to send.

"Legal issues"?

Once they air the original show, they have legal liability. It never goes away and the mere 6,000 views of my YouTube clip don't in any way increase their liability. So Z100, please shut up.

I have noticed that this "legal liability" excuse is a chronic Moron tactic. Often times, when a Moron does or says something stupid, they lurch for this lame ruse. For example, banning tag and dodgeball at government schools had to be done for "legal reasons". Give me a break.

Consider for a second the irony of a radio program getting mad at someone else for using their clips. All day long they steal audio clips and soundbites from other media sources. Everything they do is theoretically protected by the parody law.

But God forbid someone reproduces a clip from their show....

As I said in my email, Z100 will never be able to take that clip down from everywhere. I have already found a few more clips of it on YouTube. All were posted after mine so those posters may have just stolen my clip and rebranded it. There is an easy way to capture files straight from YouTube.

In the mother of all copyright ironies, YouTube is actually trying to silence a few websites that instruct on how exactly to do this.

If one googles any permutation of "youtube", "copyright infringement", "intellectual property", and "sued" you'll be absoluteley astounded at how many news stories and blog posts come up. Everyone is getting sued or at least being threatened with it: Google Video, MySpace, YouTube, etc.

In ten years young Captious bloggers will look back at present day and wonder how so many idiotic content producers thought that in the age of the internet, they could control their broadcasted and publicized products.

In an oblique way, this issue reminds me of the multiple listing wars of option exchanges.

Up until the late 1990s, stock options for public companies would only trade on one of the erstwhile four exchanges. The Amex floor had Intel. The Philly exchange had Dell. The P-Coast had Microsoft and Chicago had its proprietary listings. Slowly the monopoly broke. New issues like WorldCom and Netscape would debut on all four exchanges. Eventually all the exchanges declared war on each other and equity options for almost every stock could be found on all of the exchanges.

It was a grand time to be an options broker. They'd come in the pit and bid or offer mid-market, threatening to send the order "away". Specialists and traders were making tight, deep markets, "1000 up" in Moronically vain attempts to protect their business. All they did was piss away lots of money. Without edge, not only is there no reason to trade, it's quite hazardous to your wallet.

It was impossible to protect subsequent orders from ever seeking a better fill on another exchange. The gig was up.

Like the option pit traders of yore, today's copyright warriors are fighting a battle that's long since been over.

Defending "intellectual property" rights is as feckless as launching up fireworks in your backyard and trying to prevent your neighbors from enjoying them.

All you need to know about the intellectual bankruptcy of intellectual property is that Greg Mankiw supports it.

If someone wants to cut and paste my entire blog into a book and sell it, so be it and more power to them. I have been fully aware of that reality since the get-go.

But if I find knock-off C-Nut Bobbleheads for sale in Chinatown, color me a hypocrite, but I may have to call my lawyer.

Saturday, November 25, 2006

Real Estate Realities

Homes for sale in Newton, MA. From,

April 26, 2006           704

May 18, 2006             724

June 21, 2006             776

August 15, 2006         685

September 12, 2006   673

November 21, 2006    607

Wow. Listings are cratering in my hood.

Note that decreased supply is not helping prices one bit. Also failing to help are plummeting mortgage rates, a full 70 basis points lower than in June.

Gee, I wonder how the housing market will handle an uptick in interest rates?

Or a potential jump in energy bills?

If house prices keep dropping, perhaps your local municipality will quickly move to lower your property assessment and/or taxes?

Devil's Advocate - Lower taxes? Surely you jest. But what would be the bull argument for the housing sector today?

Massive wage growth. A soaring stock market. And to a lesser extent, declining property taxes and lower energy costs - two possibilities that I think can safely be rejected.

Despite the unrelenting agitprop, wages have been rising for a while. I still feel like they were higher back in 1999 - but maybe that's just my Wall Street bias rearing its head. Now if you believe in a direct correlation between income levels and real estate prices, just for kicks, go research the value of your house back in 1999, a time of perhaps frothier wages.

In 1999 the median home price in America was $125,000.


The United States median price was at approximately $213,000 as of year-end 2005. This is 48.5% higher than the previous housing boom peak of an inflation-adjusted $143,400 in 1989.

So let's see, the nominal median house price is up 70% from the 1999 median. College tuitions cost much more, healthcare costs a lot more, food, energy, cable bills, postage, etc. Just about everything outside of televisions, cell phones, and computers costs more today than in 1999. We'd need much higher personal incomes in order to justify today's sky-high housing market.

Of course interest rates are much lower now than ever before, so housing inflation is not as high as it looks. The question is, how much of the froth is justified by the lower rates?

Here's a chart of historical mortgage rates. Look at 1999.

Mortgage rates started 1999 at 7% and finished the year at 8%. So lets use 7.5% as a baseline.

The full cost of the median house in 1999, i.e. a 125k mortgage fixed at 7.5% over 30 years,

$874 per month.

But at the end of 2005, the full cost of the median house, i.e. a 213k mortgage fixed at 6.25% over 30 years,

$1,311 per month.

Here's the mortgage calculator I used.

So, even after factoring in lower interest rates, it's abundantly clear that on a payment basis, the median home is still 50% more expensive than it was in 1999.

Devil's Advocate - Why did you use the full value of the house? Doesn't the median homeowner have some equity in the home? Shouldn't the mortgage be less than the total house value?

Absolutely not. If you own a $300,000 home, no matter how much you have mortgaged, that is still the amount of capital tied up that you could otherwise be earning interest on. For example, if you have 150k in equity and 150k in mortgage debt, that equity money is asleep, and could be earning interest at market rates. Today it would annually earn at least $6,000 in a money market. The lost interest income is an opportunity cost of homeownership. This is a real estate subtlety thoroughly underappreciated by the investing public.

Take me for example. Since I kept moving (four cities in the last 6 years) I never bought a house. So I am sitting on a lot of cash and will probably have to break down and buy a house soon. Right now I am getting 4% in money markets. Should rates rise to say 7%, 8%, or higher, clearly home prices will get smacked and one would think that I'd be licking my chops for this scenario to buy a discounted home and get settled.

But, if I could earn 8%, 9%, or higher on my cash, I'll be very reluctant to dump my income-earning mound of cash into a house. Heck, bond yields topped 15% twenty-five years ago - not exactly a return to be belittled.

Okay, back to historical house prices. Consider the chart below.

You absolutely have to click here and view the chart enlarged.

Note it's not often that I cite material found in the forever apocalyptic New York Times. This is a real hockey stick graph (not like the global warming propaganda).

I have long believed that the internet bubble never really popped, it just morphed into a real estate bubble. I just read that in Shiller's book Irrational Exublerance, Second Edition he posited the same hypothesis.

Since July, I have been having a local real estate broker email me home listings from a handful of towns off the Mass Pike. The prices today are cheaper than a few months ago, and also down a notch from 2005 but my gut keeps telling me that homes are still just way too pricey - and my blog research (like this) confirms that in spades.

$800,000 for 3000 square feet in Shrewsbury, Massachusetts?

Are you kidding me?

How far do I see the housing market falling?

I don't know....but at least 25% from today's prices.

Forget for a moment all of the conventional terms used to analyze the housing market: demand, supply, immigration, wages, mortgage rates, inflation, interest rates, etc.

I declare the most important variable for the housing market is price momentum.

The housing market rally has been fueled primarily by its own price appreciation.

It's demise will also be story of price momentum. A descending housing market will push mortgage rates higher - which will itself aggravate prices further. Fossils in New England will get less selling their drafty old home up north and have less to spend in Florida's Del Boca Vista. As South Florida cools, so too will Orlando, the Panhandle, Georgia, and the Carolinas. There will be no escape.

Then it will really get ugly. Perhaps the bond market crashes. Congress raises taxes on income or capital gains. Oil hits $100 per barrel...

That picture is worth much more than a thousand words.

Properly digested it could save you thousands of dollars.

Wednesday, November 22, 2006

Class Action Scumbags

Part of this post is reprinted from a prior one.

In California, a group of stock brokers sued their employer (Merrill Lynch) for overtime pay and won a settlement. Amazing considering that they get paid on commission and presumably have already been compensated for their "extra" work. But I guess in the land of fruits, nuts, and is not at all surprising.

The lawyers will collect $9 million of the $37 million settlement while brokers will get around $10,000 each. Furthermore, other brokerage firms are going to settle with their brokers without a fight as well. This is simply corporate extortion wrought by legal technicality, socialist judges, and vile class action attorneys.

Most people have an idea that class action lawyers are an economic bane but it's mostly just a vague notion. Remember, Big Media has never ever done a negative story on class action lawyers. The negative externalities of class action tort simply don't exist, at least in their view. When tag gets banned, the pinheads mutter about lawsuits, but they never indict the legal climate or the villainous lawyers. In fact they coddle them.

Not only did all of the major brokerage houses have to settle with California over this case, it cascaded into other states as well. So far the cost for job-creating brokerage firms has been:

Cost of Litigation + Cost of Settlement

Now add in,

+ the Cost of Changing their Compensation Plans

+ Cost of Lobbying for Legal Reform

The firms tried to get the laws changed, but pols everywhere remained uninterested or should I say, disinterested. Not many econo-illiterate, jelly-spined politicians want to stump for a law that,

1) would anger the tort lobby - remember most pols ARE LAWYERS.
2) would appear to put them on the side of evil Wall Street firms.
3) breaks their general habit of doing nothing.

Now you won't read this officially anywhere but the brokerage firms have considered everything and made the rational corporate decision to fire all brokers that earn under 100k.

Okay, they aren't exactly firing them but these antiquated Fair Labor laws proved too hard to circumvent. Hence the firms instead had to create complicated compensation plans that would encourage all the sub-100k earners to quit.

So who cares? Right?

First of all, I mentioned this small beer story to highlight a clear negative externality of class action lawyers - parasites who kept a third of the multi-million dollar settlements while they eliminated five-figure jobs. This brand of BS is simply not reported on by the socialist organs of Big Media.

Another casualty, besides the up-and-coming brokers, is customer service. They'll be fewer brokers to answer calls, walk customers through setting up 529 accounts, and help guide the clueless through the investment universe. Firms will be forced to push clients toward internet-based resources, annoying telephone menus, and overall a more depersonalized customer experience. This move won't affect wealthy clients one bit - their plentiful assets will still receive professional, white-glove care. As usual, the victims of these rich class action lawyers will be working class brokers and their relatively lower income clients.

I drafted this post a while back. Today I did find a Dow Jones newswire mention of this lesson in class action externalities. It includes these two rich quotes,

"This would be a step in the direction of fairness, but lowering the brokers' payout rate in exchange for complying with the law may not be the best way to proceed," said Justin M. Swartz, a labor lawyer with the New York-based law firm Outten & Golden.

"Other firms will be wise to follow Smith Barney's lead, because following the labor laws should be a priority at all companies. I would hope, however, that the other firms decide to do so without taking money out of brokers' pockets," he added.

Does this lawyer need to be punched or what?

It's jaw-dropping to hear a labor lawyer paint the brokerage firms as the bad guys.

Firms HIRE workers and service the public.

Lawyers are the ones who eliminated their jobs, lowered their pay, and lowered the level of customer service for everyone so they could line their own pockets.

Lawyers are half the problem; on the other half are politicians, in bed with the tort lobby and afraid of how fixing an antiquated law might make them look politically.

The Fair Labor Standards Act of 1938 was written to protect blue collar workers who punched a clock and sold door-to-door - hardly the profile of today's six-figure earning stock brokers.

On second thought, since the pols are all lawyers, we can safely say that lawyers constitute the entire problem. And it certainly doesn't help that judges are all lawyers as well.

A lawyer himself, Abraham Lincoln once said,

"...if in your own judgment you cannot be an honest lawyer, resolve to be honest without being a lawyer."

So far, brokerage firms have agreed to pay more than $250 million to settle claims.

Tuesday, November 21, 2006

Marginalizing Republicans

A couple of quotes from Jacques Ellul.

"The goal of modern propaganda is no longer to transform opinion but to arouse an active and mythical belief"

"(Propaganda) proceeds by psychological manipulations, character modifications, by creation of stereotypes useful when the time comes - The two great routes that this sub-propaganda takes are the conditioned reflex and the myth."

I love it.

Active myths and useful stereotypes...absolutely hits the nail on the head now doesn't it?

It's abundantly clear that the rhetorical war between Democrats and Republicans is decidedly asymmetrical.

For example, the Dem's push symbolic actions like raising the minimum wage. Free market Republicans are at least minimally indifferent to it and theoretically against it. But a unified and persistent Democratic front will not let the issue go.

Though in practice the minimum wage is a symbolic issue, it has far greater propaganda value. To Ted Kennedy and his class warfare comrades, the issue is a chance to not only paint the Republicans as the party of the rich, the party of business interests, the party of management, but also uncompassionate and perhaps mean. Clintonista Gene Sperling says the wage should be raised for reasons of "dignity".

Can you say "useful stereotypes"?

The negative externalities of raising the minimum wage are too esoteric for an econo-illiterate Soundbite Nation. I wanted to laugh the other day at a Moronic relative of mine bleating, "Who can raise a family when both parents are earning minimum wage?", but his docility was just too tragic to mock. Teenagers and part-time workers represent most of the minimum wage earning demographic. AND two-thirds of them last less than a year in this category. In other words, they soon get raises lifting them out of this category. Raising the wages of these ascendant workers by fiat, if it doesn't eliminate their job entirely, it at least deprives them of the opportunity to earn a raise by working hard.

Two parents both earning the minimum wage???

That's just another active myth.

Republicans often talk about winning in the arena or marketplace of ideas - a fine and lofty ideal. But they unnecessarily get annihilated in the arena of propaganda.

The economics of wage controls may be beyond the ken of the public, but there are plenty of other tacks to take.

For instance, I have never ever heard a Republican bring up illegal immigration in regards to the minimum wage issue?

This confounds me to no end. If I were in charge of the Republican Party I would insist that every socialist salvo on the minimum wage should be repelled with,



And I'd start floating graphs of the last decade, showing the 1997 increase in minimum wage right alongside a line depicting the explosion in illegal immigrants. Perhaps plaster them on billboards across the country.

The Democrats see the minimum wage issue as a flank in the propaganda battle, and instead of returning fire Republicans will predictably choose to "cut and run".

Illegal immigration is an issue that could disembowel the Democratic Party. Illegal workers are the natural enemies of three of its core constituencies: blacks, blue-collar whites, and unions. It would behoove the Republicans to step on this wedge every chance they get.

I am fully aware that one of the reasons Republicans don't forward my argument is their ambivalent stance toward illegal immigration. But that is a detail quite beside the point. The issue can perhaps more readily divide their special interest juggling opponents. My contention is that despite the emergence of the internet and the decline of the MSM, Republicans consistently fail to win in the public dialogue. The argument can certainly be made that the public is Moronic, can't think for themselves, and is a brainwashed byproduct of Government Education BUT that doesn't mean Republicans have no weapons at their disposal.

For decades the New York Times editorialized against the very notion of a minimum wage. They have recently flip-flopped on that without any explanation whatsoever. They recognized the tremendous propaganda power of a minimum wage increase and swapped their last iota of principle for naked practicality.

Republicans are convincing themselves that a federal minimum wage raise won't ground the economy and such a concession would euthanize this incessant talking point. They may well be right.

But this retreat is really another missed opportunity to go on the offensive. As it stands, Republicans continue to lose the asymmetrical war of propaganda. The GOP foot soldiers ironically seem like outdated Redcoats, lined up in an open field of fire.

Did you know that individual states can already set their own minimum wage levels?

California's minimum wage is $6.75, over 25% higher than the federal minimum. In thirteen months, it will be raised to $8.00 per hour.

How hard would it be for Republicans to argue that a higher federal law would be superflous, given the states can already set it wherever they want?

How hard would it be to correlate a high California minimum wage with illegal immigration?

Why am I sitting at home while someone else gets big bucks to advise the rudderless Republican Party?

Monday, November 20, 2006

Is Anyone Afraid?

The overall economy really is booming. Deny that, well then you are professing considerable ignorance. A consultant friend of mine informs me that a hotel room in Manhattan is not to be found these days for less than $500 a night. He told me it should be more like $350. That is both a sign of prosperity and one of burgeoning inflation.

Though energy prices are all over the place and home prices quietly imploding, the stock market marches on fearlessly. Note last week it shrugged off a major political victory by American socialists.

Not only are stocks roaring, but they are trading with the euphoria of 1999. This very short-term bullish and more long-term bearish headline just flashed on,

14:27 Sentiment indicators

Market volatility, as measured by options market prices, is close to unchanged after the VIX (CBOE Volatility Index) made an intraday move below the 10.00 level for only the second time since 1994.

The VIX is one of the only indicators I look at. If you recall, my career started as an option pit trader. It's a broad measure of option premium in the stock market. A low VIX implies low investor fear. The index always tends to get whacked around the 4th of July, Thanksgiving, and Christmas weeks when market participants generally vacation. Nonetheless, it's essentially in uncharted and perilous territory.

Yeah, corporate earnings have been great, wages are upticking, and hotel rooms and flights hard to book BUT the stock market's move feels to me like a massive trader short squeeze. I am short the NASDAQ and bleeding a bit. Hopefully I'll be able to hold on to the trade long enough to get some money back.

The stock market may think it's 1999, but there were much more promising companies to invest in back then. Today, the bull story is mostly one of cheap money (low interest rates) and the elixir of never-ending productivity gains. For sure, it's one scary freight train to step in front of.

But in 1999 we had paradigm shattering breakthroughs like the internet, the Cheap Revolution, nascent wireless technologies, etc.

All we have today (outside of Google) are iPods - toys that aren't about to usher in any new industrial ages.

Friday, November 17, 2006

Sheep to Slaughter

I punched up dunderhead Greg Mankiw's textbook on Amazon and was semi-shocked to see it cost near $130.

It brought back memories of my own college textbook purchasing at UPenn.

Of course all students used to buy their books from the University book store but I think it was my sophomore year, 1993, that Campus Text arrived to attack the monopoly.

Some upperclass student looked at the enormous mark-up on textbooks and saw a tremendous economic opportunity. He perused the course syllabi, ordered the books, and sold them out of a rental truck on 38th street, right next to the book store. An $80 dollar book in the University store could be found for $60 in his truck.

The guy's name was Doug Levy. Again, he was only a student, yet an obviously precocious businessman. Everybody bought books from him. He hired students, advertised, accepted credit card payments, etc. He had to easily make tens of thousands of dollars by just working a week before each semester. I didn't know the guy personally but saw him late one night at a frat party. I asked him how much money he made. Doug misread my sentiments and responded, "The question is, how much did you save?"

Well, I saved a lot less than he made, but that was beside the point. I was in full and complete awe of his success.

He expanded to other schools and made a fortune. Campus Text is still running, Doug sold the business six or seven years ago. Some googling revealed that Doug went on to bigger and better things. He founded internet consulting firm imc2 in 1995. Do I even have to say that was some tremendous timing on his part?

What's a more powerful educational lesson, watching a classmate artfully get rich right before my very eyes or learning about Laffer curves and Nash equilibria?

Let's back up for a second.

How in world would a twenty-year old kid think to take on an Ivy League university and sell books out of truck?

He clearly must of had a lot of early exposure to the business world.

To shed more light, I'll get auto-biographical.

Though every conventional educational metric in my life told me I was a genius, there was no way I could have ever come up with an idea like Doug's, not at age 20 anyway.

I grew up in Worcester, Massachusetts which was, unbeknownst to me at the time, an economic wasteland. The only economy there is the oxymoronic Government Economy. Let me just give you a run down of my family members' professions:

social worker

The only people in my immediate family that worked in the private sector were two retired grandparents.

My exposure to the business world and entrepreneurialism was absolutely zero. My experience was not very atypical for Massachusetts either; there simply is no private sector vitality. There are no jobs or careers far removed from the government teat. The reasons for this are aplenty and copiously referenced throughout my blog, but that is not the topic du jour.

I, and so many others, could never have the early life success of Doug Levy because I was deprived of the necessary exposure and tools. (Economics was a pariah of a subject in my schooling.)

Make no mistake this deprivation is by design. How often have you read in the paper or seen on television an entrepreneurial success story? Forbes is the only place you'll find them consistently.

Any impartial observer would insist there must be a Big Media ban on optimism.

You see, Big Media is a pure shill for Big Government. They simply do not want a country of financially or intellectually independent citizens even though that was America's founding profile. If scores of people start believing that they can run their own businesses, save for their own retirement, pay for their own healthcare, care for their own parents, educate their own children, etc. then Big Government will lose not only its clients and unwitting supporters, it will lose its mandate.

Thus stories with a patina of hope or a wisp of empowering individualism have been smothered for decades. Socialism needs a steady diet of bitterness, and the Perma-Negative New York Times, Associated Press, CNN, network news are about the only buffet in town.

In some places like Massachusetts, they've been so effective that there simply aren't any more success stories to suppress. Mission Accomplished!

The other trenchant evidence that Big Media shills for socialism is its complete refusal to ever report on government waste. They can't take the risk that taxpayers unite and revolt against Big Government. There is so much waste, a 24 hour news channel would have its hands full covering just this subject. But I digress.

Sure the media plays a major role in stunting the ambitions of Americans, but the larger culprit is Government Education.

Consider this Gatto snippet,

I once had a thirteen-year-old Greek boy named Stanley who only came to school one day a month and got away with it because I was his homeroom teacher and doctored the records. I did it because Stanley explained to me where he spent the time instead. It seems Stanley had five aunts and uncles, all in business for themselves before they were twenty-one. A florist, an unfinished furniture builder, a delicatessen owner, a small restauranteur, and a delivery service operator. Stanley was passed from store to store doing free labor in exchange for an opportunity to learn the business. "This way I decide which business I like well enough to set up for myself," he told me. "You tell me what books to read and I’ll read them, but I don’t have time to waste in school unless I want to end up like the rest of these people, working for somebody else." After I heard that I couldn’t in good conscience keep him locked up. Could you? If you say yes, tell me why.

I submit that little Stanley could be the luckiest kid in America.

Devil's Advocate - But he's being deprived of his childhood....

Yes, he'll enjoy less kickball and peer pressure but he's more likely to become Doug Levy than other kids his age. As Gatto has said, modern schooling "grotesquely extends childhoods" which thereby deprives people of their young adulthood.

That canard reminds me of another I keep hearing,

Homeschooling will stunt your child's social skills.

After most people say this, they reference the one kid in their hometown that was a social misfit and homeschooled. But that is a classic case of distorting correlation. Misfits are misfits; they aren't made that way by homeschooling. There's simply no causal relationship.

I have to laugh about this "social skills" argument when I think of Massachusetts. Remember my theory that the people here are the dumbest BECAUSE they are the most educated and degreed group around? Well also consider that these people are the rudest, most self-absorbed, ANTI-SOCIAL people you'll ever meet.

So 16 to 20 years of formalized government education apiece hasn't really made Bostonians so friendly now has it?

Gatto's book is mostly an indictment of government education but he does offer some prescriptive nuggets such as,

If you can keep your kid out of any part of the school sequence at all, keep him or her out of kindergarten, then first, second, and maybe third grade. Homeschool them at least that far through the zone where most of the damage is done. If you can manage that, they’ll be okay.

Now contrast that with Massachusetts governor-elect Deval Patrick's vow to extend government school kindergarten to a full day. As usual, government failures are consistent arguments for more government intervention. When is the public going catch on to this ruse?

Consider that kindergarten, the very class that Gatto claims does the most damage, is the one Patrick wants to expand. From Deval's own website,

I see every 3-and 4-year-old with access to quality early education, and every 5-year-old with access to full-day kindergarten. Experts agree that such early opportunities have a life-time impact on young learners in terms of greater academic readiness, higher test scores and improved social skills. All children deserve this opportunity.

Here we go, "experts" and "improved social skills"....

Patrick also disgustingly admits,

I believe the best teachers seek to educate the "whole child".

People just can't see through the rhetoric. What he means is, teaching reading, writing, and arithmetic shall not bound the aspirations of Big Education. Even the most casual glance reveals that schools are teaching birth control, multi-culturalism, obedience, irreverence for family and church, government dependency, anti-American history, evangelical environmentalism, and countless other extra-curricular subjects completely estranged from what used to be considered a classic education. This is what's really meant by the "whole child".

More from Deval Patrick,

Public education in America began in Massachusetts. In my administration, we will lead again.

Yeah, Deval your state foisted a hideous Hindu and Prussian invention on an unsuspecting public. Compulsory government education has proved a fascist, thoroughly dehumanizing monster. It's almost impossible to quantify the damage in its wake. Yet Deval can comfortably trumpet the success of government education because both he and his constituents are Moronic byproducts of it.

Why do you send your kids to school to be taught by strangers, agents of the government?

Well most likely because you yourself went to a government school. Just as most teenagers would not think to open a competing college book store, most parents have never thought about teaching reading and writing to their own children. The notion simply is not alive in anyone's consciousness today. I fancy myself pretty informed, yet didn't even know what homeschooling was until I was 30 years old.

Back in 1850, Massachusetts began mandating government education and the cycle of homeschooling was broken. The socialists have had inertia ever since.

Government schools may spawn hordes of illiterates, but nevertheless their graduates are natural apologists for the system that screwed them. Nobody really wants to think that they are thoroughly uneducated; after all, they have degrees that scream otherwise.

Nobody wants to think that as children they were lied to, manipulated, and deprived by calculating elitists.

This is quite frankly too much for many people to bear. After all, most people cherish their childhood memories. Why sully the nostalgia?

But the biggest impediment of all is that nobody today wants to think they are a bad parent today for outsourcing the care of their most prized possessions. Heck, everyone does it; it must be the right thing to do.

Devil's Advocate - But my sister is a teacher and she is great. Everyone loves her and she's very dedicated to her profession...

Ah, yes more small-brained Captiousness. She doesn't have to be conscious to be a part of the people's educational conspiracy against themselves. We'll get to the details of this in subsequent posts. BUT ask her or any other teacher to explain the history of schooling to you.

I'll bet 99% of them can't. How comfortably would you do you toil at your job each day if you didn't know exactly why it existed in the first place?

Ignorance is not bliss, it's blight.

More Gatto,

What few knew then or realize now is that they were also a Hindu invention, designed with the express purpose of retarding intellectual development.

Here is just a window into the Prussian (i.e. German) origins,

Traditional American school purpose—piety, good manners, basic intellectual tools, self-reliance, etc.—was scrapped to make way for something different. Our historical destination of personal independence gave way slowly to Prussian-purpose schooling, not because the American way lost in any competition of ideas, but because for the new commercial and manufacturing hierarchs, such a course made better economic sense.

Prussia itself was a curious place, not an ordinary country unless you consider ordinary a land which by 1776 required women to register each onset of their monthly menses with the police.

In 1839, thirteen years before the first successful school compulsion law was passed in the United States, a perpetual critic of Boston Whig (Mann’s own party) leadership charged that pro-posals to erect German-style teacher seminaries in this country were a thinly disguised attack on local and popular autonomy. The critic Brownson allowed that state regulation of teaching licenses was a necessary preliminary only if school were intended to serve as a psychological control mechanism for the state and as a screen for a controlled economy. If that was the game truly afoot, said Brownson, it should be reckoned an act of treason.

"Where the whole tendency of education is to create obedience," Brownson said, "all teachers must be pliant tools of government. Such a system of education is not inconsistent with the theory of Prussian society but the thing is wholly inadmissible here." He further argued that "according to our theory the people are wiser than the government. Here the people do not look to the government for light, for instruction, but the government looks to the people. The people give law to the government." He concluded that "to entrust government with the power of determining education which our children shall receive is entrusting our servant with the power of the master. The fundamental difference between the United States and Prussia has been overlooked by the board of education and its supporters."

Under Frederick William II, Frederick the Great’s nephew and successor, from the end of the eighteenth century on into the nineteenth, Prussian citizens were deprived of all rights and privileges. Every existence was comprehensively subordinated to the purposes of the State, and in exchange the State agreed to act as a good father, giving food, work, and wages suited to the people’s capacity, welfare for the poor and elderly, and universal schooling for children. The early nineteenth century saw Prussian state socialism arrive full-blown as the most dynamic force in world affairs, a powerful rival to industrial capitalism, with antagonisms sensed but not yet clearly identified. It was the moment of schooling, never to surrender its grip on the throat of society once achieved.

Big Government does not simply confiscate money from its subjects. It deprives us of individualism, of hope, of knowledge, time, and humanity. A scheming mind couldn't concoct a better instrument to disembowel family, faith, and spirit - the bedrocks of civilization.

I would like my children to be knowledgeable enough to start a business long before I was.

I want them to get their values from their family, not from other kids in the schoolyard (or MTV).

I want them mature enough to marry and have children while they are young.

I want them to see educating their own kids for what it is, a wondrous opportunity to cherish rather than a burden fit for outsourcing.

If I am lucky, my kids will be far more successful and educated than I was. Maybe they'll buy me a Cadillac and nursing home room with a view at Del Boca Vista.