Wednesday, September 26, 2007


If you haven't been watching this new show on FX, make sure you watch the replay of this season whenever it runs. It's been fantastic.

Thursday, September 20, 2007

What Is A Freegan?

Do you know what they are? Here, read the self-description:

What is a Freegan?

Freegans are people who employ alternative strategies for living based on limited participation in the conventional economy and minimal consumption of resources. Freegans embrace community, generosity, social concern, freedom, cooperation, and sharing in opposition to a society based on materialism, moral apathy, competition, conformity, and greed.
After years of trying to boycott products from unethical corporations responsible for human rights violations, environmental destruction, and animal abuse, many of us found that no matter what we bought we ended up supporting something deplorable. We came to realize that the problem isn't just a few bad corporations but the entire system itself.

Freeganism is a total boycott of an economic system where the profit motive has eclipsed ethical considerations and where massively complex systems of productions ensure that all the products we buy will have detrimental impacts most of which we may never even consider. Thus, instead of avoiding the purchase of products from one bad company only to support another, we avoid buying anything to the greatest degree we are able.

The word freegan is compounded from "free" and "vegan". Vegans are people who avoid products from animal sources or products tested on animals in an effort to avoid harming animals. Freegans take this a step further by recognizing that in a complex, industrial, mass-production economy driven by profit, abuses of humans, animals, and the earth abound at all levels of production (from acquisition to raw materials to production to transportation) and in just about every product we buy. Sweatshop labor, rainforest destruction, global warming, displacement of indigenous communities, air and water pollution, eradication of wildlife on farmland as "pests", the violent overthrow of popularly elected governments to maintain puppet dictators compliant to big business interests, open-pit strip mining, oil drilling in environmentally sensitive areas, union busting, child slavery, and payoffs to repressive regimes are just some of the many impacts of the seemingly innocuous consumer products we consume every day.

As the years go on I am mellowing out. I think Freegans are probably only 99% wrong.

Click here to read the rest of the description. I found it quite funny,

Tuesday, September 18, 2007

Marginalizing Technical Analysis

Read this and tell me whether the Option Queen is saying to buy or sell the Nasdaq:

The NASDAQ 100 made a lower high and a lower low in the Friday session which, was a positive session….but not positive enough. There is a gap on the chart from 2006.00 to1995.00. The stochastic indicator is curling over to the downside and will issue a sell-signal within a session or two. Our own indicator is will issue a sell-signal in the next session. The Thomas DeMark Expert indicator is issuing a continued buy-signal at overbought levels. The RSI is simply going sideways. The 5-period exponential moving average is at 2012.33. The top of the Bollinger band is at 2052.48 and the lower edge is seen at 1886.11. The market looks as though it is curling over to the downside with definite signs of exhaustion. The downtrend line for this coming week basis the weekly chart is at 2019.99. The uptrend line is at 1966.22. The indicators on the weekly chart all continue to be positive for the NASDAQ 100 with more room to the upside. The monthly chart is slightly more confusing. The stochastic indicator continues to issue a buy-signal at overbought levels, our own indicator is issuing a fresh sell-signal, the Thomas DeMark Expert indicator is issuing a slight sell-signal at overbought levels and the RSI is simply overbought.

I couldn't decipher it either - and I read it three times. They have indicators and indicators on the indicators. These clowns simply do not know what they are talking about. The fact is, if you draw a bazillion lines on a chart, of course the price graph will bounce off some of them. They never really say anything of value. My favorite is when they say, "if it goes up, we expect higher prices" and the like. No poop, Sherlock!

Technical analysis, or "charting", is a single tool - it ain't the whole tool box.

Believe it or not, the Option Queen is one of the most readable chartists out there.

In my new realm of commodities trading I have to sift through bushels of this crap.

Monday, September 17, 2007

More Commodities Meat

WhiteMan asked another timely question about the details of my commodity purchases which merits an extended response.

Click any of the charts to enlarge.

Above is a daily graph of "October Sugar". My average purchase price was $9.80 (read as 980 on the chart). I bought it back in mid-August and since then it obviously took an immediate dip down to $9.10 and currently hovers at $9.42 as I type this. I have since rolled this position to a March contract.

Above find December Cotton's daily chart. I got in at $61.67, it dropped to $57.00 right in my face before recovering to $63.76 as I type this.

Above is the wild ride of December Coffee. My average purchase price in mid-August was $1.2485. In the "credit crunch" induced broad market sell-off it dropped quickly to around $1.15. But as I type this it is the pleasant surprise du jour. It's up a whopping .0450 ticks today to $1.2540. Don't let the decimals distract you; that's a 3.7% up move today. That would be mathematically akin to a 495 point move in the Dow from today's level of 13,400.

As you readily see, commodities can really move.

Lastly, above find December Cocoa. My average price is 1,891. The chart illustrates that I weathered an immediate dip to 1,750. As I type this, the contract has recovered to 1,873.

Summing it up. I am down about 4% in sugar, slightly down in cocoa, and up in both cotton and coffee. So presently I am up a very small amount of money - albeit I was looking at red numbers in all four for a month until about a week ago.

I have been thinking long and hard about how best to play this commodity market - given that we are already half a dozen years into the bull market AND that trading commodities is not exactly my forte. Here's where I stand presently

  • I have decided that the four commodities I bought, cocoa, cotton, sugar, and coffee, will be "investments" that I won't try to trade around - meaning, I won't sell when they pop and look to buy them back cheaper. They will be rolled forward indefinitely. I will continue to barely even look at them - as I do with my shares of Google.
  • I will not short any commodities. As tempting as it is to look at soaring Wheat and Soybeans and give them a whack, I will refrain from making the same mistakes I made with tech stocks during the Nasdaq Bubble. I will be long and flat - but never short. There's always money to be made on the short side, but I will let somebody else have it.
  • So primarily, I will look to rotate into whatever commodities are beaten up - much as I did when I bought at ton of oil at $51 this past winter. Sugar I believe is ripe for the taking now after its cruel 50% drop from its December '05 peak around $20. Hence I bought a little more of that than the others.

So again, with commodities, the initial dollar investments are big and the volatility is somewhat scary.

link link

I have to laugh when I see these recent headlines about big hedgefunds losing 5%-15% in a month. 15% is often a daily fluctuation of my trading account!

(Remember, I only trade 5-7% of my money.)

Keep the questions coming. First and foremost I am going to try to make myself money. But I will share ALL of my thoughts and insights. With some money, a little luck, and my formidable powers of articulation...

ANYONE should be able to make money from commodities.

If you don't know the movie, go and rent it!

Friday, September 14, 2007

A Monumental Lesson

Did you know that the Empire State Building was built in a mere 11 months in 1930-31? It was of course, raised during the Depression. Most of the work was done by European immigrants.

The only thing I really wanted to say about it today was the fact that it wasn't fully occupied until the 1950s. For quite a while it was jeered as the "Empty State Building".

So whenever I hear these delusional clowns talk about how real estate will bounce soon - in the next year or so - I am reminded of the resounding initial failure that was the Empire State Building.

Who could wait twenty years to recoup their investment in lumber, bricks, and mortar?

Many will have a hard time just getting through the next year or so...

Thursday, September 13, 2007

Bushels of Knowledge

Since I dove head-first into commodities about a month ago, I have learned tons - or should I say bushels?

Nothing sharpens your focus better than putting your money at stake.

For a while now I have been trying to teach myself about corn, soybeans, and orange juice and it took buying a basket to really light the fire in me.

Learning a new subject or taking up a new hobby can be very energizing. Now I have google email alerts pouring articles into my inbox on commodities. Most of it is crap but in the sifting I unearthed some great informational resources. In a matter of weeks I have become extremely fluent in at least the argot of commodity trading. The next step will of course be the ability to make money from my edification.

Do you know what "BPA" means?

It means "bushels per acre" - and I believe it is also referred to as grain yield. It's a pretty important metric for farmers and commodity investors. In fact, it might be THE most important datum in agriculture.

Sometimes farmers will reap 200 bushels of corn per acre, and sometimes they will only get 50 due to bad weather or pestilence. So their total deliverable corn can obviously vary by orders of magnitude. How would you like to run business knowing that your revenue could vary anywhere from say $100 million to $400 million? This is the life of a farmer.

Of course they have crop insurance (at a cost), pesticides, and irrigation systems. Still, the unknown variable of weather dominates.

They can have a great year of sunshine and rain and yet, an early frost can doom the crop. Gasoline can spike and they hemorrhage money with the machinery and logistics. So many things can go wrong and imperil the profitability of harvests.

Commodities provide a beautiful study of economics and risk taking. Why is wheat surging to new multi-year highs at the moment?

Well, look at how corn spiked in 2006.

Last year, farmers saw the spike in corn and rotated more acreage to planting it instead of other crops. So the supply of wheat went down this year - aggravating its price spike.

Now, with corn and wheat in the stratosphere, soybeans will be rotated away from and could spike next.

See what I mean about the economics lesson? This is the substitution effect in black and white. There are only so many acres of farmland and the acreage will always gravitate towards maximum profit.

Why did corn spike last year?

Of course, from ethanol gasoline mandates by your politicians. So despite their unremitting annoyance, you can make good money from global warming worrywarts. Last year I had the look to get long corn but deleted the email. Darn!

In fact, it can be argued that global warming alarmists have inflated the entire agricultural sector - as corn dragged up wheat which will drag up soybeans and cotton, etc.

By the way, sugar will eventually get a big, politically-driven push from ethanol mandates as well. And soybeans are used to make "biodiesel", another loopy, economically inefficient green fuel.

Meanwhile, the skyrocketing cost of corn tortillas is ravaging the poor of Mexico and no doubt sending more hombres north of the Rio Grande. But that's neither here nor there - for this post.

I found one great site that has comments directly from farmers. Reading them is very interesting as it almost puts you right in the fields. Here are some excerpts:

9/12 - Northeast Nebraska: Temperatures in the low 40s and some mid 30s this morning. Most beans still green. Corn has started to dent but is still has high moisture. Predictions for even lower
temperatures next week could bring fears of frost or freeze. Some dryland crops suffered during the late summer heat. Early September rains may help dryland beans but the rains were spotty.

9/12 - Western Minnesota: Corn and beans look to be average for this area. Early frost and excessive rain in June have caused more damage than the dryness so far. Very dry now, but still have chance for near normal yields with some good rains soon.

9/12 - Benton County, Indiana: Corn harvest underway, but just barely. Yields seem to be over achieving, considering minimal rain during growing season. A good friend of mine completed his first field where a 102 day hybrid, planted 4/10 went 203 bpa at about 16% moisture. These are good black soils so we'll see.

9/12 - Southwest Illinois, St. Clair County: Corn harvest is in full swing. I’d estimate 1/3 of the crop is off. The early planted corn has been pretty good. 110-140 in the lighter soils in the south to yields in the 160-190 range on the better soils in the north. Moistures are very dry with elevators reporting nothing coming in over 16% and most 12-14%. May planted corn is the 20% range and will come off soon. I suspect it will be 20-30 bushels less than the April plantings, if we are lucky. Corn quality is decent with test weights fair at 55-58lbs for the most part. This isn’t the crop we had our sights set on June first, but given the record August heat and lack of rain we have to be somewhat pleased that we will wind up with an average to slightly above average crop. The heavy rains this past week will help some beans, but it was 2-3 weeks too late. I think most 1st crop beans will be 30-40 bushel and double crops will run 10-20. Both about 15 bushel off the average. Lots of wheat seed bought and supplies are tight.

9/12 - Northeast Iowa: Yields are great here in northeast Iowa. Hopefully our new bin is up in time. Storage will be the problem here. Some yield checks were 230+ on corn & into the 60's on soybeans.

There really is so much going on with commodities. Remember, this ethanol mandate that has arguably driven the explosion in grains redounds fundamentally from the Morons we've elected, BUT derivatively, the focus on alternative energy stems from simply higher oil prices. Crude futures touched $80 a barrel yesterday, an all-time high.

It doesn't matter exactly why oil is rising; to make money all an investor/trader has to do is understand how high oil will manifest itself in other securities.

Expensive oil may be one catalyst behind the run in grains but it's likely that they were going up anyway. United States wheat supplies were at a 33 year low this year. As Jim Rogers has bleated, commodities go through long cycles of under-investment and over-investment. Nobody was planting wheat fields over the past decades - they have been putting condos and golf courses instead.

Granted, through the bounty of genetic engineering, crop yields have been rising for a very long time. Farmers get way more crop yield than they ever did before. Look at this nice ascending chart.

In fact, I saw a remark from a farmer lamenting about the weather along these lines, "Thank Monsanto for the weather-resistant seed.... Ten years ago, we wouldn't have even had a crop to harvest".

Therein lies the ultimate bear argument against commodities - technology.

Technological improvements in seeds, machinery, finance, drill bits, etc. have been THE most important factor in commodity prices over the long haul. But this doesn't mean there aren't tradable rallies and mini bull markets within this larger downtrend. At their nadir in the late 1990s, commodities across the board were effectively at Depression level prices.

Back to oil for one last comment.

Crude oil is used to make and do just about everything on the planet. What's astounding is how rarely this insight is to be found. Rising oil has raised the cost of almost everything under the sun from the cost of driving to the cost of electricity to the cost of glass. Miners have had their profits ravaged by higher energy costs. I priced out a new sunroom for a house we almost bought. The salesman told me that to defer the project was to flirt with higher prices as the large glass panels are produced by burning fossil fuels. Farmers are dealing with suddenly expensive fertilizer since it, too, is petroleum generated. So these higher commodity prices aren't yet translating into producer profits (outside of oil and maybe copper) yet. Mild profits cap supply increases and will keep this commodity bull running plently more.

Jim Rogers recently said,

"I think there will be fortunes made in agriculture in the next decade." (link)

He looks prescient already. I wouldn't bet against Rogers - after all, he made so much money that he retired back in 1980 at age 38.

I told y'all that you could bum a ride on my auto-didactic commodities tour so there will be plenty more posts on the stuff you casually stuff into your mouth and car without contemplation. In this post I endeavored to give a glimpse into the fascinating links persistetn in commodities markets. Any eager student of economics will appreciate this subject.

And, I didn't even get to the cattle market yet. Remember, livestock needs to be fattened on these skyrocketing grains.

So burgers will soon cost a little more thanks to your neighbor who frets about global warming.

Wednesday, September 12, 2007

Lyrics Now Matter

Most people can listen to songs for years upon years without ever knowing the actual lyrics they are mumbling. I am almost one of those people. And I was always amazed whenever I saw someone clearly singing all the words to a pop song. How the heck could they decipher the screaming?

There simply was no easy way to ascertain what those drugged-up, eating-disordered singers were saying - until the internet. Now you can google songs, partial lyrics, and even find the full audio on youtube for almost every extant song.

I heard the recent hit of that pop diva Pink on the radio I don't know how many times before I figured out what she was saying. The chorus is "...It's you and your hand tonight"!

Alright, maybe more context is needed. Here are the full lyrics:

U + Ur Hand lyrics

Uh uh uh uh uh uh uh oh
Uh uh uh uh uh uh uh oh
Check it out
Going out
On the late night
Looking tight
Feeling nice
It's a cock fight
I can tell
I just know
That it's going down
At the door we don't wait cause we know them
At the bar six shots just beginning
That's when dick head put his hands on me
But you see

I'm not here for your entertainment
You don't really want to mess with me tonight
Just stop and take a second
I was fine before you walked into my life
Cause you know it's over
Before it began
Keep your drink just give me the money
It's just you and your hand tonight

Uh uh uh uh uh uh uh oh
Uh uh uh uh uh uh uh oh

I'm drunk
I don't give a ***k
Wanna dance
By myself
Guess you're outta luck
Don't touch
Back up
I'm not the one
Buh bye
Listen up it's just not happening
You can say what you want to your boyfriends
Just let me have my fun tonight

I'm not here for your entertainment
You don't really want to mess with me tonight
Just stop and take a second
I was fine before you walked into my life
Cause you know it's over
Before it began
Keep your drink just give me the money
It's just you and your hand tonight

Uh uh uh uh uh uh uh oh
Break break
Break it down

In the corner with your boys you bet 'em five bucks
You'd get the girl that just walked in but she thinks you suck
We didn't get all dressed up just for you to see
So quit spilling your drinks on me yeah

You know who you are
High fivin, talking sh*t, but you're going home alone arentcha?

Cause I'm not here for your entertainment
You don't really want to mess with me tonight
Just stop and take a second
Just stop and take a second
I was fine before you walked into my life
Cause you know it's over
Know it's over
Before it began
Keep your drink just give me the money
It's just you and your hand tonight
It's just you and your hand

I'm not here for your entertainment
No no no
You don't really want to mess with me tonight
Just stop and take a second
Just take a second
I was fine before you walked into my life
Cause you know it's over
Before it began
Keep your drink just give me the money
It's just you and your hand tonight

Yeah oh

So why am I posting on this small beer?

Well, I play these songs on youtube for my kids to dance to behind me while I try to work. I just happened to glance up at the window and see a very funny comment under the video on youtube.

I couldn't believe it. At first I thought it was sarcasm. Pink IS a whore! Look at what she wears doesn't wear during performances.

What a darned shame that some 13 year old girl commenting on youtube really thinks telling a guy to give you $3 bucks instead of a drink and to go home and auto-gratify is what separates ladies from "whores". What type of positive female role model prances around in tramp attire, peppering her songs with "dick head" and "cock fight"?

This youtube comment would graduate from funny to hilarious if it wasn't so tragic.

How can I possibly shield my little girl from at least the fashion standards of these role models - no less everything else?

Now I have bought many random girls drinks at the bars. I thought I had received the full gamut of responses right down to this one girl who looked at me and fell out of her bar stool laughing upon my proposal. (This was at Dicken's Inn in Philly. She was probably 40 and I was 19. I had to look not a day older than 15 at the time.)

But never has a girl turned down my offer, suggested I simply pay her, and then go home and touch myself. Unfortunately for the stags out there, this response has now been normalized through song.

I see that Pink is from Doylestown, PA. I remember, more than a few times, me buying random girls from Doylestown drinks. They used to come down to Philly all the time to escape the boredom of suburbia. Could I have bought her one back in the day?

Suburban girls are always the easiest to approach in almost every city bar. I sincerely doubt Pink was turning down drinks so rudely back when she was just known as Alecia Beth Moore.

Pink maybe able to turn out some fun songs (ignoring the lyrics), but she is a piece of garbage.

Maybe the message is dress like a whore and talk like a whore BUT get really pissed if anyone MIGHT think you are one?

I don't know.

Regardless, tarting yourself up for money is the very essence of being a whore.

If you saw a girl dressed like Pink out on the town are you supposed to think, "Hey, that's the type of girl I would like to take to the opera or maybe have a deep geo-political discussion with..."


Saturday, September 08, 2007

Hiccup or Fart?

(Click any chart to enlarge)

We've experienced extreme market volatility over the last 6-8 weeks. The markets have recovered some, but here are my rough calculations of peak-trough decline.

The NASDAQ fell from 2,712 to 2,386 (-12%)

The Dow Jones Industrials fell from 14,000 to 12,455 (-11%)

The S&P 500 fell from 1,552 to 1,370 (-11.7%)

So there you have it, pretty much an 11-12% broad market decline. Most of the sheep blame the weakness on "subprime mortgage credit issues". Of course as the markets were ascending over the last seven years, not a soul ever said it was due to "subprime mortgage" prosperity. One will be perpetually amazed at the reasons opinion-heads attach to unquantifiable security price fluctuations.

I was short the entire way down, covered right at the bottom, and went long. One problem was, I was just making back money that I lost on the rally in July. Another problem for me was that I lost patience and dumped my long WAY too early. Then I re-established my short far too soon - as this violent retrace in the NASDAQ hammered me good.

Enough about me and my trading travails.

The important question of the day is, was this just a hiccup in the financial markets or was it a fart?

Hiccups can, and often do terminate very quickly.

Whereas a fart is mostly a premonition to a dump...

(Please pardon my imagery but literary excellence demands precise and provocative metaphors!)

Homeschooling Fundamentals

Here's a good little article from the Wall Street Journal last week. Since I can't link to it, I will take the bold step of copying and pasting it in its entirety. Come sue me!

Don't Suffer the Little Children
September 7, 2007; Page W11

Another school year has sprung itself upon us, which is always an occasion for my wife, a former Detroit public-school teacher, and me to remind ourselves why we home-school. Part of the reason, in addition to my wife's expertise in this area, can be found in Thomas Sowell's "A Conflict of Visions," published 20 years ago. Mr. Sowell contrasted the "unconstrained vision" of utopians, who want to radically improve humankind, with the "constrained vision" of realists, who begin with the proposition that man is inherently self- interested, and not moldable into whatever form the high-minded types have in store for us once they get their itchy fingers on the levers of power. Mr. Sowell's book has been influential among conservatives for its compelling explanation of the divide between people who want to reshape us -- often via large intrusions on liberty -- and those who believe that the purpose of government is to protect institutions (like markets and families) that channel our inherent selfishness into productive behavior. It is also a handy guide for parenting.

While some mothers and fathers stubbornly cling to the utopian beliefs of their childless years, the vision of humans as inherently sinful and selfish resonates with many of us who are parents. Nobody who's stood between a toddler and the last cookie should still harbor a belief in the inherent virtue of mankind. An afternoon at the playground is apt to make one toss out the idealist Rousseau ("man is a compassionate and sensible being") in favor of the more realistic Hobbes ("all mankind [is in] a perpetual and restless desire for power"). As a father of four sons, I've signed on to Mr. Sowell's summation of a parent's duty: "Each new generation born is in effect an invasion of civilization by little barbarians, who must be civilized before it is too late."

The constrained vision indicates that world harmony and universal satisfaction are mirages. People are innately selfish, and they'll always desire more goodies. This means that tradeoffs between competing wants are inevitable. My wife and I therefore forbid our children to use the word "fair." Parents still in the thrall of the unconstrained worldview are prone to manipulation by their kids, who like little human-rights lawyers insist on fairness as an imperative. And don't get me started on the damage that an exaggerated sense of fairness and entitlement has done to public schools. In our house things are much simpler: That last piece of cake had to be divided somehow, and in this imperfect world your brother got the extra frosting. Deal with it.

While the unconstrained worldview teaches that traditions and customs are to be distrusted as holdovers from benighted generations, those of us with the constrained view believe it's good to make our children address their elders properly, refrain from belching at the table and wear clothes that actually cover them. Mr. Sowell noted that some benefits from evolved societal rules can't be articulated, because they've developed through trial and error over centuries. This reveals the sublime wisdom in that time-honored parental rejoinder: "Because I said so."

It's not surprising, then, to see Mr. Sowell approvingly cite Edmund Burke's observation that traditions provide "wisdom without reflection." This is lived out in our house by the dictum that parents are to be obeyed first, and politely questioned later. That seems oppressive to parents with the unconstrained worldview, who want to nurture Junior's sense of autonomy and broad-minded reasoning. It's awfully useful, however, when Junior is about to ride his bike into the path of an oncoming car. Obedience may be a dirty word in progressive schools and enlightened parenting circles, but it saves lives.

Mr. Sowell also notes that among those espousing the unconstrained view, intentions are pre-eminent; utopians are cooking up a better tomorrow, after all, and should be excused for breaking a few million eggs while making the human omelet. In our house, however, you are in big trouble if you push your brother into the pool, regardless of the sincerity behind your desire that he learn to swim without his floaties. Hiding an animal trap directly on the path Dad takes to get his morning paper is likewise unacceptable, no matter how badly you want to catch a critter. And while other parents cherish whatever art their little Monets create, we punish activities that incorporate Mom's jewelry and Superglue, no matter how glittery the final product.

Many parents in the unconstrained camp adhere to Rousseau's sentiment: "Man is born free, but everywhere is in chains." They not only fail to punish bad behavior but snarl at anyone who rebukes their precious darlings. In our house we have reversed Rousseau's theory: You are born in bondage and should be darn grateful for the free room and board. Besides, if you want to talk about restrictions on liberty you can take it up with your mother, who hasn't had an uninterrupted trip to the bathroom since 2001.

I sometimes speak to groups of high-school and college students, and I have taken to disabusing them of the feel-good notion that they can do anything they want so long as they are passionate about it. Intentions, as Mr. Sowell observes, mean very little in the constrained worldview -- and, besides, individuals are neither equal nor perfectible. This means that some of us will dig ditches for a living, especially if those certain someones, who know full well who I'm talking about, don't stop shooting spitballs at their brothers and get back to their math workbooks. Firmly in the constrained camp, I'm less concerned that my children self-actualize at an early age than that they learn a trade and get out of the house.

As it turns out, this tension between realists and utopians has existed for at least as long as people have been making a buck dispensing wisdom about how other folks should raise their kids. Ann Hulbert's "Raising America: Experts, Parents, and a Century of Advice about America" reveals successive generations of disciplinarians pitted against "gentler Rousseauian" proponents of the inherent goodness of a child's nature. Ms. Hulbert quotes the president of the National Congress of Mothers proclaiming in 1897 that science-based parenting innovations would so change civilization that "those of us who live to see the year 1925 will behold a new world and a new people." Fast forward past two world wars and the global ravages of utopian totalitarianism to 2006, when education expert Stephanie Marshall writes exuberantly that "the fundamental purpose of schooling is to liberate the goodness and genius of children."

Perhaps the fundamental purpose of schooling should be to liberate parents from the necessity of supporting our kids well past our retirement years. But regardless, this notion that humans are inherently angelic, and that it is society that corrupts them, is at the heart of much bad parenting, as well as inept schooling. Rather than help our children develop internal constraints that channel their energy and passion into productive enterprises, we end up teaching them that limits and discipline are for chumps. Ms. Hulbert notes that even Dr. Benjamin Spock, whose advice in his book "Baby and Child Care" was so often blamed for parental permissiveness, had seen enough of the consequences: "I can hardly bear to be around rude children," he wrote. "I have the impulse to spank them, and to give a lecture to their parents."

Mr. Woodlief's pamphlet "Raising Wild Boys Into Men: A Modern Dad's Survival Guide" is available from the New Pamphleteer.

Go here to buy the book.

Friday, September 07, 2007

Wall Street Bets All-In on Fed's Stupidity

This just came across the wire.

Goldman Sachs says expects 50 bps rate cut from Fed at Sept 18 meeting after weak jobs report

Of course, Treasuries have been rallying for weeks now. I don't know how this isn't already priced into a nose-bleeding 30-year Treasury that only yields 4.71% as I type this.

I am short this bond and bleeding - badly.

Who in their right mind would lend money to our government, for 30 years, at a rate of 4.71%? Even if we do go into a Japanese style, low-growth recession short term rates may stay low for what 2-5 years? What about the other 28-25 years? A 30-year instrument should not be valued by 2-5 year outlooks. Isn't that what American homebuyers are suddenly learning?

The fact that our government is about to drop short-term interest rates with gold, oil, and wheat setting all time highs is sheer lunacy. Historians will look back with bewilderment, just as we do when studying government "remedies" during the Great Depression.

There is no pressing reason for the government to drop rates. It won't help homeowners for more than a fleeting moment. It won't help the economy in the long run. Politicians are just too stupid and too spineless to do the right thing - which is nothing. Let economic forces run the economy on their own. Remember, the federal government played a starring role in the housing bubble in the first place - by dropping rates so much in the early 2000s.

This bailout is going to finally bite them in the ass.

Some boats are meant to sink.

Wednesday, September 05, 2007

Homeownership Sucks!

I know a guy who, unfortunately is amidst a divorce and has left his 3,700 square foot, 100 year-old Victorian house and moved into a 3 bedroom rental apartment. He insists that aside from all the other issues implicit in a divorce, he is loving renting now. He has nothing to worry about fixing or renovating. He no longer comes home to annoyances like leaky faucets; he no longer frets about peeling paint or creaky steps. Now he just comes home from work and can finally relax.

My wife and I considered buying a decrepit Victorian house in Waltham and he, coming from the unimpeachable perch of experience, essentially said not to do it. Asked if he went back in time, would he still buy his old Victorian, this guy said he would only buy the house if he were "young and dumb."

This was one of the points I argued with my wife when we were jawboning buying a few places earlier this year. Every little repair job in a house is a burden on the MAN. He's the one that has to diagnose and research every little issue. He's the one who has to manage plumbers and contractors as they try to ravage his wallet. I told my wife that renting allows me to sleep at night - a luxury of almost unquantifiable value.

So I am here in my new place four weeks now. The rails on the staircase are falling off, the window sills outside need paint, the glass door on the shower is hanging by a thread, both the seal and the lock on the back door are in disrepair, the pump in the air conditioner has been broken and fixed twice recently, and there's probably some more stuff I can't remember at this instant. Again, this is only over the past four weeks!

Then this week my landlord got hit with two more little disasters. The blower on the septic tank went - cost $770. And, in the course of trying to convert the heating system from oil to gas he not only obviously needed to buy a new boiler - costing a few grand, it turns out the chimney that houses the exhaust also has all sorts of problems. It has a crumbling interior of asbestos, terra cotta, or some other junk; it had to be swept/vacuumed out and now needs a new steel liner. This will run around $1,800 - so they say. It might even make sense to completely rebuild the chimney, given the total cost.

So yes, I truly believe that Homeownership Sucks. It is completely overrated AND it makes no economic sense given that rental costs are roughly 70% of purchase costs nationwide. In Florida, they are down to 60%.

How many times have you recently heard Morons say they bought a condo because they didn't want to deal with yard work and upkeep?

Notwithstanding the premium of buying over renting a place, it makes perfect sense that an abode with outsourced upkeep should cost more than a place where dwellers are responsible for every little maintenance problem.

Devil's Advocate - No, those condos pool their upkeep costs, spread them over more people, so they'd be cheaper to maintain than individual units.

Now that's a great little theory, but have you ever seen low condo fees out in the real world? I haven't.

Added to that is the bickering amongst condo owners over management decisions. How often should the grass be watered? How much to spend on flowers for the common roadway? I know a new tony condo development in Port Washington, NY that is already awash in management strife. There was a big brouhaha about how long the parking lot lights would be left on at night. The cheap old folk wanted to save money on electricity. Remember, that's what fossils do whether they are rich or not - they run around turning lights off.

As I sit here typing this, my landlord is outside trying to remove a sliding glass door and re-glue the insulation. It's a little complicated to extricate such a door but he's hoping to avoid calling a carpenter.

I gave my wife last night the litany of things that have gone wrong in our first month. I chuckled that I love having a landlord because it's like having a handyman, on call, for free!

What could possibly be more ideal?

In this hectic age where consumers highly value their free time, don't y'all think that free maintenance and outsourced upkeep should demand a premium?

In other words, it should be cheaper to buy than to rent a given house that's replete with the on-call handyman.

Sometimes the market prices of our world really are upside down.

UPDATE - Door couldn't be fixed by owner. Carpenter has been called.