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.

Tuesday, November 14, 2006

Boston Morons and Question One

Here's the transcript for you people with multimedia or firewall issues:

I am chief Bob Bradley of the Somerville Police Department.

Some people would have you believe that Question One is only about the convenience of being able to buy a bottle of wine at a supermarket.

BUT what it’s really about is doubling the amount of liquor licenses that we’ll have in this state.

Here in the city of Somerville we’ll go from 26 to 46 licenses.

It’s not just about supermarkets. It’s about convenience stores. It’s about gas station mini-marts being able to sell alcohol. That’s what we’re talking about here.


This was an ad that was "credited" with helping defeat Question One on the Massachusetts Referendum which would have allowed grocery stores to sell wine pending local approval. See my prior post.

The stupid decrepit cop says "DON'T BE FOOLED BY QUESTION ONE", but please do be fooled by my ad.

He conflates "Wine" with "Alcohol/Liquor" and doesn't even mention "Local Approval".

Also, I thought that when you doubled 26, you got 52?

What's worse?

1) That people are so dumb as to be swayed by a deceptive ad?
2) That they can't think about the issue for themselves?
3) That the Morons think they are saving "mom and pop" liquor stores?
4) That the media did not look at other states (or countries) for test cases?

I could keep going.

I just found out that some more of my older relatives voted against the measure.

It's so ridiculous that my wife has banned me from further discussing it. So I need the blog to vent.

The dumb reasons keep coming.

"We have too many college kids here.....We are different than other states."

Excuse me, but college kids don't drink wine.

They will however continue to move out of your state when they graduate.

Thursday, November 09, 2006

Another Dose of Big Media Hypocrisy

Remember Heath Shuler, the star quarterback at Tennessee?

Well he was just elected to Congress from that nutty enclave of Asheville, North Carolina.

I saw him speak on Larry Kudlow's CNBC show last night and was underwhelmed to say the least. Think of the dumbest football player you knew in high school or college. Well that is what he sounded like. I thought about putting it up on YouTube but it was too long and torturesome. Not only is he incredibly dumb (for a quarterback) but he speaks   r-e-a-l     s-l-o-w-l-y.

But what do you expect from Asheville?

Massachusetts just elected Deval Patrick who'll be its first Democratic governor in 16 years. The Boston Globe reported this spring that Patrick is personally leveraged to the hilt. He owes $5.9 million in mortgage debt which they generously calculated at a $27,000 per month payment.

I say generous because I just punched it up, at 5.75% over 30 year, Mortgage-Calc gives a payment of $34,430 per month.

In order for Patrick to owe that much money and pay a mere 27k per month, someone would have to have given him a 30 year mortgage at 3.65%.

Recently I heard, more credibly that his payments are closer to $38,000 per month. We'll never know Patrick's real financial status because he refused to release his records to the public. Massachusetts confiscated $18 billion in state tax revenue last year. Now they have a governor to oversee it who is not only personally leveraged but won't reveal any potential business conflicts of interest.

Now I have no idea how much money Patrick has but consider that he will only be earning $140,000 per year for his gubernatorial services.

Figure that 38k per month minimally implies at total expense of $50,000 per month to pay taxes, insurance, upkeep etc.

$50,000 times 12 months = $600,000 in yearly expenses.

He and his wife would need a million bones per year in gross income just to cover that. Again, I have no idea how much money the guy has, but he'd need at least $10 million in bonds to throw off even 500k in interest income per year.

This unctuous fellow has all sorts of business dealings and relationships but no one seems to care in Massachusetts. It's amazing the pass some people get and others don't. (Above is his Milton home and below is his leveraged Berkshires project)

Ironically, Deval Patrick's election victory may shatter his own personal real estate investments in Massachusetts.

Speaking of the Boston Globe and the selective application of principle....

The Globe's parent, The New York Time Co. has a very unique ownership structure that Marginalizes its public shareholders. From Dinocrat,

While the broad market has gone up 10%, the New York Times’ shareholders have lost almost 30% of their money. Put another way, New York Times shareholders have lost over 40% of the money they would now have simply by being in a diversified portfolio. Disastrous.

How can a public company get away with this?

Normally, in a public company, you would expect the independent directors to take action to stem the losses and to enhance shareholder value. The New York Times is not a normal public company, however.

The New York Times gets away with its appalling stewardship of its franchise, because it is not in business principally for its readers or its shareholders. There are around 144,000,000 shares of the New York Times that trade freely, but these do not have any power. Control of the New York Times resides in a mere 738,810 shares of non-trading class B stock which reside in a family trust and have the power to elect 70% of the Board of Directors. Pause a moment to take this in: one half of one percent (0.5%) of the stock of the New York Times gets to elect 70% of the directors.

Hey pot, doesn't that kettle look black to you?

The New York Times is not only most influential newspaper in the country, they are the most hypocritical. All the socialist rag does is rail against CEO pay, executive stock option grants, full financial disclosure and whatnot. I simply don't see how Standard and Poor's could index this company with such an unaccountable ownership structure.

After a 50% decline since 2000 that erased $3.5 billion of their money, some investors are finally taking action. From (paid site),

AP reports a Morgan Stanley investment fund is stepping up its confrontation with The New York Times with the submission Wednesday of a shareholder proposal that would urge the co's board to take several steps to "reform" its corporate governance practices. The proposal, if it is approved at the co's next shareholder meeting, would recommend that the board put to a vote the co's dual-class share structure, which currently allows the members of the Ochs-Sulzberger family to control the co through a special class of stock. It would also recommend that the roles of chairman and publisher of the Times' flagship newspaper be separated. Both jobs are currently held by Arthur Sulzberger Jr. The shareholder proposal was submitted Wednesday by Morgan Stanley Investment Mgmt, which owns about 7% of the Times' shares. The proposal also includes a recommendation to adopt a policy of making the chairman an independent director and making a majority of the members of the board's compensation committee independent directors.

Make no mistake, these investors just want a bounce so they can get out.

Currently around 11% of NYT stock is held short by Wall Street traders, which is a moderately high number.

Tuesday, November 07, 2006

Morons Spamming Me

My wife is a Boston College grad. One of her fellow alumnae has been organizing a group to go to the November 18th football game versus Maryland here in Chestnut Hill.

There are only about 16 people going. Now as we approach game weekend, one of these kids sends out a "reply all" email to everyone. She wrote,

hi guys,

anyone interested in buying two tickets off me? if not, i might have a couple people who have never been to a game who would love to have them. i'm going to be in ghana for two weeks, missing our reunion at the game AND missing a visit home by my sister.

I showed it to my wife and we both shook our heads in concert.

C-Nut's Wife - Who the heck goes to Ghana? I guess the only place worse than that to go to would be Darfur...

Now realize that there is only a sample size here of 16 people, eight of whom I already knew. Look at the "reply all" email that surfaced the next day from a different respondent.


Is it the weekend before Thanksgiving? If so, I don't think I can go. I am trying to get to Sudan...

What are the odds? I told my wife we needed to play the lottery pronto.

Don't you hate those "reply all" emails? I mean who needs to be a party to trust-funded girls trying to one-up each other's charity?

The Long Lost Art of Invective

Ethan Albright wrote a hilarious letter to John Madden where he takes issue with his ratings on Madden's NFL Football 20007 video game.

Warning - Adult language.

Click here to read the letter.

Jonathan Swift is smiling in his grave (he brought invective to its ne plus ultra).

Friday, November 03, 2006

November Rain

A few bits of wit and wisdom before I head into NYC for a drinking binge baptism.

When you get married, be sure to have the photographer put the shaky inlaws on the periphery of your family photos. Believe me, with todays 50% divorce rate, you're almost guaranteed to be in need of a cropping or two down the road.

It has come to my attention that my fruity sister pays $6 per pound for organic tomatoes. Yes, she is also the one who buys organic dog food for her mutts. I wonder if she uses this crap - Veggie Wash. There is seemingly no end to the list of products that sell purely by Marketing to Morons.

But there is hope. Note that organic icon Whole Foods' stock got creamed today. The stock is down 21% today as I type this.

If you have Weatherbug on your computer, disable it at once, and go ahead and delete it as well. You'll get an ominous warning like, "If you disable WeatherBug you'll be missing potentially life-saving weather alerts...."

Maybe, but I'll take my chances.

You'll end that semi-permanent internet connection that not only slows your computer down, it also leaves you vulnerable to viruses. Just about any permanent internet connection is risky. A lot of old people don't know how to turn off instant messengers which also run quietly in the background. My mother's computer was destroyed by a virus from such negligence. Just about round the clock I would notice my mother logged on to Yahoo Instant Messenger even when I knew she was not home. I tried several times to show her how to terminate the little smiley face but she obviously couldn't handle the responsibility and consequently lost her hard drive.

More than once I have railed against the older generation for their nitpicking grandparental idiosyncrasies. They reflexively think a baby is ALWAYS COLD and HUNGRY. (Right now I am at my mother-in-law's house. She has been feeding my son all freakin' morning. The only thing that ended it was my son choking from over-consumption.)

I had my infant at the supermarket recently and a nosy fossil chided me,

"Your baby's toe is uncovered."

Mind you it wasn't a leg or a foot - just a single toe transformed the octogenarian into a buttinski.

People in Boston won't so much as say hello (or offer a sign of peace at Mass) BUT they'll scream at you with political bumper stickers and offer unwanted parental advice.

One of these days I may snap back. I respect my elders and I can most certainly see how they think kids today are Morons. But they are Nuts too. I am apparently the only one on planet Earth who is sane.

Do you know anyone that has adopted a little Asian girl or boy?

Well, chances are, they are RACISTS.

That's according to one of my acquaintances. He insists that there are plenty of black and Hispanic kids in America to adopt and that by going halfway around the globe to find an orphan, these adopters are clearly revealing their prejudices.

That's quite a harsh stance if you ask me. I have a lot of sympathy for people that can't have children. When we die, all we really leave on this planet are our kids.

Speaking of minorities. Clint Eastwood's new movie Flags of Our Fathers hit the screens recently. It's been criticized for a lack of black soldiers. Given that blacks make up a disproportionate share of moviegoers, I am surprised at this oversight. These days, I would have expected an exaggerated number of blacks in a such a movie. Of course they would also normally take license to highlight female and Native American heroes.

Anyway I read the book a couple of years ago so I have no need to see the movie. In case you don't know, Flags of Our Fathers is the story of Iwo Jima as told through the men caught in the famous flag-raising photo. The book's author is the son of one those brave men. As far as I am concerned, the book should be required reading for EVERY high school student in the country.

If you were a blogger and an esteemed Harvard professor, would you link to dog poop?

Well that's what wonderboy Greg Mankiw recently did. He wrote a blog post titled,

Pornography and Rape are Substitutes

In it he quotes some economist who claims that internet porn has diminished the incidence of rape. His smoking gun is a decreasing rape trend from 1998-2003. That's it. Just correlation and presumption. Porn is probably but one of a thousand factors (mostly unquantifiable) contributing to rape. This idiot used a mere 5 year period. I bet the success of the New York Yankees and rape would produce an identical correlogram over that same time period. Maybe it's Yankee pennants that actually slake male frustration?

Next thing you know, these pointy head intellectuals will be using a 50 year climate trend of a billion year-old Earth to extrapolate an SUV-induced apocalypse. Oh wait, they already do that.

Is it impertinent to ask why an economist is studying porn and rape? Or who pays this fool? (Taxpayers)

Why did Greg Mankiw link to such dog poop? Because it was from an economist? Or perhaps he is a latent porn advocate? Who knows and who cares. If (and when) I link to dog poop, I usually call it such. Mankiw refrains and thereby tacitly endorses this study.

Remember as far as Mankiw and his ilk are concerned, only SUVs have negative externalities.

And now porn accompanies higher education as the two things in which he sees positive externalities.

I want to Marginalize the position of Ryder Cup Captain. The sports media world makes such a big deal over this crap it's nauseating. ANYONE IN AMERICA could captain the US Ryder Cup Team. There is absolutely no strategy, planning, or thinking involved. Pairing up the 12 best golfers might in fact be the easiest job on planet Earth. It's just another example of a media-created myth.

There's a cooking school in my hometown of Newton. Of course it advertises classes for little rich kids touting that it provides a "...good non-competitive arena."


"non-competitive" = Commi-speak

A member of my beloved Boston Celtics was involved in a shooting last year. I know it's a big shock to hear about an athlete involved in foul play... but check out the Moronic name of the victim.

The Celtics guard has been charged with throwing the punch that triggered the melee, leading to a shot from a still-unidentified gunman that wounded Marktwain Johnson.

His name is Marktwain??????

I wonder if he has a brother named CharlesDickens or a sister named SylviaPlath.

Wednesday, November 01, 2006

Independent Idiot For Governor

So Christy Mihos is going to protect the three industries that have no chance of leaving: higher education, healthcare, and tourism.

Wouldn't the prudent thing be to protect the industries of private businesses that ACTUALLY COULD LEAVE?

Wouldn't a competent governor be promising to ATTRACT NEW BUSINESSES to move to Massachusetts?

I guess he has thrown the towel in on private enterprise. Lucky for him, this type of message resonates with the Moronic residents here in Massachusetts.

Traffic in India

Hey Mankiw, note that there are already plenty of fuel efficient vehicles on the road.

A $1 per gallon gasoline tax would not get rid of the mopeds, it would increase their popularity.