May Showers and Mo' Massachusetts Morons

Check out my new car.



Okay, it is only new to me - some Moron might call it a certified pre-owned vehicle. This monstrosity is a 1997 Chevy Suburban, perhaps the only car smaller than the Hummer and the now defunct Ford Excursion.

It gets 12 miles per gallon and currently costs $120 to fill up the out-sized gas tank.

Devil's Advocate: Do you think gasoline prices are going to plummet or something?

Not necessarily. But bear in mind I procured the car from my munificent mother-in-law. So however much I get gouged on gasoline will be offset by my purchase price of zero. Remember that gasoline is but just one cost of car ownership. It makes no sense to pay up $10,000 for a so-called fuel efficient car that will only save you $6,000 in gas. This is the subject of a recent column titled The Real Cost of Driving where the author concludes that given all of the costs, his guzzling 1992 Cadillac costs 70 cents per mile, while the green hybrid Toyota Prius will run you $1.42 a mile.

Anyway, as for my new/old Suburban, my wife will drive it 3.5 miles total per day, one round trip to the commuter rail station and for only four days a week, since she telecommutes on Fridays. Now I will be sure to take some flack for driving such a massive Earth-heater, given the preponderance of enviro-fanatics up here in Boston. I have pointed out the ironies, hypocrisies, and inanities of their cause more than sufficently. But while I was typing this up, I realized that I have probably consumed less fossil fuel than anyone I know. (Okay, my uncle, a 30 year resident of Brooklyn Heights likely consumes less than me BUT he heats the Earth with his logorrheic monologues.)

I lived car-less for nine years in Philly, walking to work and riding public transit. In New York, I took the subway a whopping one stop from Brooklyn Heights to Wall Street. And in Charlotte and Boston I have been working from home. The same goes for my wife. She also walked in Philly, subway-ed in NYC, walked four blocks to work in Charlotte, and now takes the commuter rail in Boston.

So the next time one of my mindless acquaintances make a crack about my "SUVs", I am going to make them compare 10 year energy consumption records. By the way, my wife and I now refer to our 14 mpg Ford Explorer as our "little fuel efficent car".



The stock market got whacked last week and I’ll explain why.

It’s because long term interest rates are rising. The econo-illiterates in the media all concur that it’s because the Fed raised short-term rates – but that isn’t really true.

First of all, the Fed only controls short-term rates. They have absolutely no control over longer term rates, the only ones that matter. The 10-year and 30-year Treasury bonds are what matter for businesses and mortgages and those yields are determined by global trading markets.

Devil’s Advocate: But everybody assumes the Fed controls all interest rates… If they can’t control longer term rates, then why did the 10 year and 30 year bonds tick up after the short term hike this week?

I think they were going to go up anyway. But this is what you see time and time again, people trying to explain security price fluctuations based on a current news cycle. My first boss (who made millions trading) told me 10 years ago that,

“...their job is to explain stock price movements...if they can’t explain it, then they won’t have a job...”

Why then the market sell-off?

First of all, when interest rates rise, bond markets attract capital away from equity markets. Every tiny .1 percentage increase in bond yields (of all durations) entices more money into T-Bills, money markets, corporate bonds, and what not. As I have noted before, I am loaded up on cash because I forecasted this rise in rates. Also note that every upward tick in yields sucks money out of real estate as well.

The market I believe is frustrated with the Fed. If the Fed wanted to slow the economy down, it should have been selling 30-year bonds in massive quantities. Selling bonds would suck cash out of the economy and would raise longer term yields and achieve their macro objective of cooling the economy. Instead, the Fed thinks that by manipulating nominal short term rates, that it can effect its goal. Not only does the Fed have this misguided notion, so does 99% of the country (if they have an opinion at all).

Let’s backtrack. The bull market of the late 1990s provided our government with budget surpluses and coincident arrogance. Emboldened by the extra money, Big Government decided they didn’t need to issue 30-year bonds any more, ceasing issuance in October 2001. This may be one of the dumbest moves ever committed by our econo-illiterate politicians. There were two major consequences.

1) With the supply of 30-year bonds cut off, the price of said bonds skyrocketed. When bond prices rise, remember their yields crater. The past five years have seen 30-year yields fall from around 6% to a ridiculous low of 4.25% in May of 2005.

Consider that there were investors locking in money for 3 decades only one year ago at 4.25%, a yield that Joe Blow gets in his money market account today. (Last May/June was also the top of the real estate frenzy – no surprise there.)

As a rule, low long term rates sow the seeds of inflation. It’s a fact that just nobody knows or cares to think about – especially not your Federal Government.

So, the Fed, by ceasing to issue 30 year bonds, actually incubated the inflation that it now seeks to eradicate.

2) Furthermore, by ceasing issuance of the 30 year bond, our incompetent Big Government was unable to take advantage of 46-year-low rates. We have minimally 100 years worth of debt obligations, but could only float bonds at these cheap rates for 10 years into the future. It took 4.5 years until the Gov’t saw its folly - 30-year bonds just resumed issuance. And there’s really no surprise that today its yield is a full point (6.25%) above last year’s low. So after almost 5 years of not borrowing against our long term obligations, the deficit is necessarily worse off than it would be otherwise AND it’s costing more to finance.

Devil’s Advocate – But didn’t the suspension of the 30 year bond cause the plummet in interest rates?

It played a role for sure. Yields may not have fallen as far as 4.25%, but they were in a major downtrend already. Anyway, so long our government is promising cradle-to-grave entitlements and doling out hundreds of millions each time a typhoon hits a banana republic, it has no business spending money that not only it doesn’t have, but doesn’t feel compelled to borrow.

It's precisely malfeasance like this that gives rise to goldbugs and other conspiracy theorists. Many goldbugs think the government secretly is trying to cause inflation and dollar depreciation in order to devalue the national debt. Many others are convinced that the dollar will soon be worthless and that the government has sold all of the gold in Fort Knox and other Reserve Banks.

With today's $700 an ounce gold price and equity weakness, the markets are definitely saying something.

I believe they're simply saying we have some commodity inflation and the Federal Reserve is powerless to do anything about it. All we can hope for is that the government doesn't exacerbate the problem it helped create.



This is a fashionable sign in my neighborhood these days. Some politician (John Tobin) is disseminating them in hopes of effecting safer driving.

First of all, I am all for safer driving. The riskiest thing Americans will ever do is travel by car. Over seven hundred people a week die in car accidents - that adds up to over 40,000 last year alone. It's just tougher to blame these deaths on George Bush, so the media sticks to exaggerating the relatively inconsequential deaths in Iraq.

Most people are safe drivers; there are however a minority out there that endangers lives just about every time they get behind the wheel. Anyone who thinks that signs are going to persuade self-centered bastards to drive more carefully is hopelessly naive. What they need on the roads is stricter traffic law enforcement - not front lawn suggestions.

Though again, this is Boston. This is how they do things up here. There might not be a greater concentration of self-righteous moralizers anywhere else. Essentially, there are two ways to influence human behavior, via economic incentives and via law enforcement but Boston brainiacs generally eschew both approaches.

When Boston Morons aren't telling you how fast to drive, or what type of car to drive, they will be telling you how much you should pay your nanny. Look what some idiot posted on Craigslist last week.


Paying your nanny $300 a week ?
________________________________________
Reply to: comm-158016653@craigslist.org
Date: 2006-05-06, 12:45AM EDT


is less than $10 an hour. Would you work for that? What kind of person will work for such low pay? Someone you'll regret hiring. Aren't your kids important? Being a nanny is not hanging out by the pool. I teach, take children to activities, break up sibling arguements[sic], stay late, come in early, etc. So splurge and hire the best for yourkids![sic]

Can you be a bigger loser than this dingbat?

She is going to single-handedly raise the wages of nannies everywhere - or so she thinks.

Now look at another self-evident Moron posted on Craiglist.

BE PREPARED TO RESPOND IF YOU ARE GOING TO POST
________________________________________
Reply to: sale-158847915@craigslist.org
Date: 2006-05-08, 8:25PM EDT



THOSE WHO POST ITEMS FOR SALE SHOULD BE GRACIOUS ENOUGH TO RESPOND TO THOSE OF US WHO MIGHT SHOW INTEREST IN BUYING YOUR ITEM(S). I KNOW IT CAN BE OVERWHELMING AT TIMES THE AMOUNT OF RESPONSES YOU GET, BUT OUT OF COMMON COURTESY IT IS ONLY FAIR TO RESPOND. EVEN IF IT'S JUST TO SAY YOUR ITEM(S) ARE NO LONGER AVAILABLE. US BUYERS ARE THE ONES WHO PAY YOU, THINK OF HOW YOU MIGHT FEEL!!

Idiot, I don't think one Craigslist seller's behavior will be altered your post. Hey, but why let that reality impede on your own whining self-righteousness.

And the sterotype holds that all of the moralizers are Southern rubes...

Excuse my pedantry, but I learned the word "inure" back in high school. According to Dictionary.com it means:

To habituate to something undesirable, especially by prolonged subjection; accustom: “Though the food became no more palatable, he soon became sufficiently inured to it” (John Barth).

I'll never forget that word because of how I learned it. It was used to describe Kapos, the prisoners in concentration camps who supervised, often brutally, their fellow captives. I believe I saw the word in Viktor Frankl's book.

More than a few times I have asked, rhetorically or explicitly, why the heck people live in Massachusetts. My answer has always been "inertia". They live here because they were born here. And I guess they stay here because they have been inured to the misery.

Two weeks ago I aptly described the climate up here.

Though I grew up in Massachusetts, I never realized how dour the climate was until I came back. A warm day in February will undoubtedly be spoiled by rain. If the sun is shining, count on a stiff northerly breeze. And quite frankly, the sun isn’t often out much at all. It’s almost like living in a lake effect region of upstate New York. Even in this “global warming” induced mild winter, it still snowed on October 28th. Inertia has got to be the only reason people continue to live here.

Those of you lucky, or smart, enough not to live in New England probably saw the flooding rains that hit here last weekend. It's been brutal. On Saturday I hit weather.com to see the 10-day forecast. Unbelievably it was predicting rain FOR THE NEXT 10 DAYS.

And guess what....it had already been raining for the preceding 5 days. It's mid-May, and I have only played golf up here once this year. I even had to put the heat on for a few minutes this past Sunday. My toddler son is going stir crazy because I haven't been able to take him to the playground for over a week, and counting.

Lifelong residents, like my parents, have become inured to this weather.

They have also become inured to the feckless government, moralizing fanatics, and static economy. Forbes recently ranked Boston the 200th (out of 200) cheapest city to do business in - in other words, the worst.

Since my April 26th post, the number of homes for sale in Newton, according to Realtor.com has risen from 704 to 724. I just realized that those numbers may not do justice to the currently reality because of the rapidly growing number of FISBOs (For Sale By Owner). Just at the end of my block are four FISBO signs.

I am also happy to report that two of my friends recently sold their homes sans broker - saving them tens of thousands of smackeroos.

People have always had this option, so why all of a sudden are thousands of people opting to sell their own homes?

My answer is pure contagion. Once somebody hears of another doing it, they themselves submit to the power of suggestion. Then the idea spreads virally.

The same applies to this Southern migration. Florida and Arizona have always been cheaper and warmer. So why only now are hordes migrating away from the dank and dreary Northeast?

Devil's Advocate: Isn't it pure demographics - aging Baby Boomers seeking warmer climes and lower state taxes?

Sure that is part of it, but don't try to discount my contagion theory. In Charlotte, all of the newcomers are actually young people from the Northeast. The non-Boomers, including more than a few of my friends, are moving to Florida and Arizona as well. It's one thing to be merely aware of a faraway nicer, warmer, and cheaper place to hang your hat, but quite another to know friends or family members who've already taken the plunge. Plus, in the internet age, it takes 2 seconds to click on a link and see how much house you can buy down there or perhaps to see the weather forecast in Florida.

Almost everyone I met in Charlotte was a displaced Northerner. There they are called "Yankees" by the increasingly marginalized natives. Everyone's story was the same. They followed a friend, brother, or a job down there. They had people following them - often times their own parents. (So much for that in-law buffer zone!)

I really don't know how statistically significant those 700+ homes for sale in my town really are. But my hunch tells me that real estate in Boston will languish for years to come. As jobs and young people keep moving, the tax base will continue to erode, which will lead to more and more taxation, further aggravating the exodus. Massachusetts really is in an economic death spiral.

Furthermore, in my opinion, there is nothing that can prevent this. I am bearish on the stock market, but there are potential catalysts that could turn me bullish (lower taxes, entitlement reform, etc.) If you saw a stock with no hope for profits, you wouldn't sink a penny into it. I feel the same way about real estate in Massachusetts (and California).

By the way, first time home buyers today are going to be hurt the most. Thirty year fixed mortgage rates have gone up over a point to around 6.5% and yet real estate prices haven't dropped enough to reflect that. For example, last year it would cost you $2,839 per month for a 30 year fixed mortgage (5.5%) on $500,000, yet today it would cost you $3,160 for the same loan at today's rates (6.5%).

A $300 increase in cost should roughly translate to a $50,000 decrease in price. Do you think 500k homes are 10% off of their price peak? I certainly don't.

This is what I mean about today's first time buyers getting hurt. When interest rates are factored in, real estate is actually higher priced now than ever.

Here is the stock market analogy. It is generally safer to buy a high flying stock trading at 100 times its earning estimates when it is growing rapidly, than it is to buy the same stock when it drops to 50 times its estimates but is losing earnings momentum.

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



Oh yeah, about that death spiral...

41% of Massachusetts residents have recently thought about moving out of state.

Weaning Morons Off Television, Books, and Oil Agitprop

This woman is the only person I know that is "addicted to oil".



Have you ever watched her cook on PBS? She must go through gallons of olive oil like normal people go through gallons of milk. She adds olive oil at least three times during food prep - and in many cases, spoons more directly onto the finished product on your plate.



For what it's worth, I know someone who employs (via subcontractors) tons of illegals in Arizona. They told me that nary a soul missed work during that "big" illegal strike on Monday May 1st.



For you uni-linguists, that means "open the door or I will break the window".

Who is the marketing genius that planned these protests on International Workers' Day - a veritable Communist holiday?

I think it is safe to say that these protests are backfiring.



In my last post, I updated my original Deranged Dog People post. Yesterday, I forgot to include the above self-explanatory picture. (Click on the pic to enlarge.)



There are many people out there that inveigh against watching television. Their complaints run the gamut from "TV causes obesity" to "TV fries your brain". I believe, that like anything else, too little or too much can be bad. Excuse the analogy, but not watching American Idol today would be like eschewing the original Shakespearan plays. When historians look back on 2006, they are going to be very much interested what the masses were doing during the time period in question. If you want to be a cultural Luddite and live an anachronistic lifestyle, fine. But there's considerable ignorance implicit with such.

Anyway, media today is amidst a complete paradigm shift mostly because of the internet. Sure talk radio and cable television were big deals, but they were mere stepping stones to the disruption that the internet is causing. The disruption is two-fold.

1) Content production costs have collapsed to almost zero: cheaper cameras, free research via the web, collaborative reporting, free web hosting, etc.

2) Faster and wider content transmission coupled with mobile telecommunicative devices has made the world indeed a very small and knowledgeable place. News stories now effectively disseminate at the speed of light and to all corners of the globe.

Anyone could now do what Bill O'Reilly does by plugging in a webcam and bloviating about the day's headlines - with little to no cost. In fact many now already are. Check out Michelle Malkin's new daily v-log, or video blog. People will very soon be syncing up their iPods or PDAs to their PC each morning, and uploading everything from SportsCenter and Seinfeld to popular v-loggers like Michelle and whomever else emerges from the free marketplace of punditry.

Devil's Advocate: Is that your plan C-Nut? To become a renowned celebrity pundit?

It would be nice, but so would winning the Masters - neither are very realistic. You can see that there are no ads on my blog (nor any plans for them) and I don't troll the blogosphere posting hyperlinks to my posts, like many other wannabe's do. My blogging is purely a hobby, and has so far been extremely rewarding.

I honestly feel that I have learned more in the one year I have been blogging than I learned in the previous 30 years of my life. All of this mental growth is due to one thing - media interactivity. It's one thing to read some pinhead's view of the economy, yet quite another to actually think about it, perhaps do some research, and articulate a coherent retort.

As for you stuffy elitists who avoid the lumpen television and only read books...

You are information-challenged as well. A book, by definition, is a monologue and not nearly as robust a medium as a blog. We live in the age of the DIALOGUE now. A discourse without an open, appended comment section will have a very hard time gaining (or in the case of antique newspapers, sustaining) an audience. Media consumers simply want an outlet to respond. Furthermore, only piss poor journalism need fear scrutiny and rebuttal.



That's right, OPEC's market share was actually larger in 1999 when oil cratered to $11 per barrel. So if you are going to be a Big Oil, price gouging conspiracist, then you ought to work that into your whacky theories.

I just can't resist exposing Bill O'Reilly's economic illiteracy.

Back in August, Bill said that high gasoline would plunge the country into recession.

He couldn't have been more wrong

He also said during the Hurricane Katrina aftermath, that he had proof that Big Oil was manipulating the price. Not only did he never divulge it, last week he admitted that he hasn't been able to find any proof. Yet, he hasn't changed his mind. Like all good conspiracy theories, the lack of evidence is confoundingly more proof of a vast cover-up.

The other day he bashed Big Oil for not investing in ethanol technologies which is ridiculous on its face.

Should the Fox Network be forced to invest in video games or other recreations that would take viewers away from the television? How about forcing Fox in to invest in medical devices or education - certainly the country needs that more than American Idol?

Bill has said that Exxon-Mobil's $400 million pay package for its retiring CEO was an "insult to its customers".

But on a pro rata basis, Bill himself will make more than that (over 13 years). He isn't the CEO of Fox, nor has FOX made nearly as much money for investors.



In fact, at $36 million per season, American Idol's Simon Cowell will also make more money than Lee Raymond. Simon is very far from the CEO slot as well.

Last I checked, neither of the two were meeting the transportation needs of our vibrant economy or generating shareholder returns on the order of Exxon-Mobil.

Bill has said many times that Exxon should sell their product cheaper (among other reasons, because we are "in a time of war"). He's asserted that,

"They only need to earn half as much."

But a good rule of thumb with public companies is,

half the earnings = half the stock price.

If Exxon's earnings halve, shareholders will lose $193 billion.

If all of the dreaded five BIG OIL companies cede to this populist demand and halve their earnings, the total loss for shareholders would be = $559 billion.

(At its peak, no doubt a ridiculous point of reference, Enron was worth only $70 billion. So this loss would be of eight times the magnitude. Yet many of the same people defending the little guys who allegedly lost money on Enron stock, are itching tax Big Oil down to these depths.)

So pension funds, university endowments, mutual funds, and small investors, aka Big Oil investors, would bear the brunt of this cataclysmic loss.

The publicly traded oil service companies also depend entirely on Big Oil to lease rigs, and to buy their equipment along with other services. They account for another $300 billion worth of public equity. With Big Oil, earning half as much, they will necessarily be able to reinvest only half as much money. So investors would lose another $150 billion or so there as well.

Devil's Advocate: But wouldn't consumers paying less at the pump stimulate the economy in other ways? Wouldn't this offset those losses in the stock market?

First of all, don't assume that cheaper oil at the wholesale level would translate into cheaper prices at the pump. Gasoline prices are also a function of taxes (average of 46 cents a gallon - and never going down) and the cost of refining which Big Oil has very little control over.

Second of all, if for whatever reason, either by law or volition, the oil companies profit margins were halved, I can guarantee you that the price of oil would sky rocket. This is financial markets 101. When the whole world sees the amount of money spent on exploration plummeting, the price of oil will rise to reflect that future decreasing supply.

Also, if oil companies lose half of their profits, they will also pay only half as much in taxes.

The nation's energy companies are already providing a "windfall" of taxes. According to Department of Energy data, from 1977 to 2004, federal and state governments extracted $397 billion by taxing the profits of the largest oil companies and an additional $1.1 trillion in taxes at the pump.

In today's dollars, that's $2.2 trillion - enough to buy a Toyota Prius for every household in the nation.

In fact, oil companies have paid in taxes more than three times what they earned in profits during those 28 years.

As the oil industry brings in record profits, it also pays record taxes that average 39 percent worldwide, even after accounting for special deductions and credits. That compares with a 33 percent average tax rate for other industries.

In 2005, Chevron, ConocoPhillips and Exxon Mobil paid more than $158 billion in total worldwide taxes. This gargantuan tax bill nearly equals the entire economic output of Iran and surpasses the total gross domestic product of 150 of the 184 countries ranked by the World Bank.

Okay, that Prius blurb is a bit absurd. Some (who knows exaclty how much?) of that money had to be spent on road maintenance over the last 27 years. So there is no way that we all could have been given Prius' from taxing largesse.

Also, make no mistake about it, cars like the Prius are the enemy of tax collectors. Generally speaking, fuel efficiency is a tax loophole. Gasoline taxes accrue on a per gallon basis and are ostensibly meant to pay for road maintenance. Yet the people who drive the most, likely buy fuel efficient cars, and therefore pay the least in gas taxes.

Similarly, as the price of gasoline rises, drivers cut back on gasoline consumption and state tax receipts get ravaged. The states will respond by likely cutting local aid to towns. So don't be surprised this year when your local municipality tries to raise taxes on you. They'll expertly frame it as needed to "save high school sports" or a similar ruse, as they have been doing the last two decades in Massachusetts.

But the overall point remains, if Big Oil's profits are cut, not only will the price of oil rise and shareholders lose billions, the government will also lose billions in tax revenue.

There's no doubt that Bill O'Reilly is economically illiterate but, I have a sneaking suspicion that he knows he's dead wrong. He simply doesn't care. He goes to great lengths to show he's "fair and balanced", and Big Oil bashing is just part of that larger endeavor. After all, he can't be a right wing shrill if he stands up to Big Oil - or so he thinks. It's just like when he highlights nutty religious people, no matter how obscure and impotent they are. He's just pandering to demographics. With likely 80% of the country economically illiterate, he sees Big Oil bashing as a pretty safe gambit.

Big Oil bashing amounts to not much more than Big Complaining. Like most complainers, Bill and his brethren's arguments seriously lack context.

If the price of oil is being manipulated, then what about sugar, gold, silver, Treasury Bonds, and real estate?

All are at or near multi-decade highs. Look at the explosion in copper:



Should we start hauling Big Copper CEOs before Congress now?



That chart above shows the recent explosion in zinc.

Because of which, it now costs more than one cent to make a penny. The latest projection is 1.4 cents to make a penny.

Surely our government wouldn't spend 1.4 cents to make a penny? If only I had such confidence. Soon, a nickel will be more valuable melted down, than in your bank account as well.

Given the relevant context, it's kind of tough to argue that ONLY oil prices are being manipulated up.

Generalized commodity inflation explains oil prices - so lose the conspiracy theories.

Boston - One Giant Dank Cemetery

Today is May 2nd, yet in Boston the forecast is for a high of 46 degrees and up to an inch of rain.

Though I grew up in Massachusetts, I never realized how dour the climate was until I came back. A warm day in February will undoubtedly be spoiled by rain. If the sun is shining, count on a stiff northerly breeze. And quite frankly, the sun isn’t often out much at all. It’s almost like living in a lake effect region of upstate New York. Even in this “global warming” induced mild winter, it still snowed on October 28th. Inertia has got to be the only reason people continue to live here.



Devil’s Advocate: Well then C-Nut, why do you live in Boston?

I live here because of a temporary quirk in my wife’s job. Obviously, as an independent securities trader I can work from anywhere. Hopefully we will be moving soon.

So I find curious all of this militant environmentalism in New England. I could understand it in beautiful California, the Pacific Northwest, Colorado, and the like, but here there’s little to appreciate.

Devil’s Advocate: What about the fall foliage?

That is a mere two weeks long. It is very cold if you go up to the White Mountains AND I can guarantee you that it will rain half of the time. If you think that will get you through the next 7 months then I have a bridge in Brooklyn you might be interested in.

People up here (that don’t know any better) make self-justifying excuses all of the time. They invariably tout skiing in defense of the winter. Well, I don’t think you can ski in April or May. What do you do then?

Make no mistake. The climate explains so much of the bitter ideology up here. I tell people it took me 30 years to lose my New England bitterness, and in the past 9 months it has come roaring back with a vengeance.

Also I had people up here proudly tell me that, “they don’t wear their religion on their sleeve.” But I have to take issue with that. As I and Michael Crichton have posited before, fanatical environmentalism is a religion, and the believers are as evangelic as any Latter Day Saint or bible-thumping rube. Environmentalists have scolded me for not recycling, not feeding my son organic milk, and for buying a Christmas tree at Home Depot instead of supporting the local farm.

I stand by my religion claim. Some guy even admitted as much on his bumper sticker that I saw the other day. It read,

“earth is thy religion”.

Again, I don’t know how locals can be so fond of the Earth, given the harsh weather. In fact, I tell people (known to be enviro-fanatics) that “I HATE THE EARTH - IT'S MY LEAST FAVORITE PLANET”. I also have been known to let out, “I HATE THE BLEEPIN’ ENVIRONMENT”. The knuckleheads just don’t know how to respond. CaptiousNut is so oft outrageous that many people can never tell whether he’s serious or not.

Since the Boston Tourist Commission isn’t going to hire me anytime soon...

Near my house is a massive cemetery that I have to drive by to go just about anywhere. I couldn't help from thinking the other day that a cemetery is the perfect metaphor for Boston. This city is all about dead and semi-dead people.

As a teenager, I attended an enrichment program at the Rose-Hulman Institue of Technology (Indiana). There were 30 child geniuses (and me) from all over the country. One guy from California told me that “...the Northeast is a dying, if not dead part of the country.” I was taken aback if not slightly offended. But what did I know, I was all of 17 years old and had never left New England, save for DisneyWorld. Years later I would realize that pissant prodigy was right.

(Googling has revealed that the pissant went to Harvard undergrad and is now an MIT professor, firmly ensconced in the Peoples Republic of Cambridge, perhaps the epicenter of the “dead Northeast”.)

What do I mean by “dead”?

First of all, there are people on life support driving cars all over the place. Radio talkshow host Howie Carr was going off the other day on the dangers of elderly drivers. I couldn’t concur more strongly. At least once a week my life is threatened by a blue-haired old lady in a Lincoln. A few months ago, I watched my 92 year old grandfather pull into his garage, put the car in reverse instead of park, get out, get knocked over by the car door, and fall under the car. He would have been run over had the car door not gotten stuck on the side of the garage.

Two years ago, my 85 year old grandmother, after years of innumerable accidents (some where she just drove away), finally totaled her car while driving down, thankfully, an empty street. She was banged up badly, broken ribs, etc. Most importantly (and luckily), she didn’t kill or injure anyone else.

For sure it’s a hard thing, giving up one’s driving. Nobody is eager to concede their freedom and become dependent on others for errands, church, and whatnot. Someone is likely going to have to pry the car keys from my hands one day. I just hope that future generations are better at convincing their parents to let go. God knows, these selfish Baby Boomers don’t even want to care for their parents, never mind drive them all over the place or, EGADS, have them move in.

I thought this was all about the inherent complications with giving up one’s lifestyle, but Howie Carr insists that the children don’t confront their senescent parents because they don’t want to be cut out of the will. How pathetic, and in many cases how true. Make sure you get your $75,000 inheritance no matter how many small children your mother runs over. I really do collectively loathe the Boomers. I think they should be renamed "The Worst Generation".

I was surprised to find Massachusetts listed as only the 12th oldest state. 13.5% of its population was over the age of 65 during the 2000 Census. But other New England states pick up the slack – Connecticut ranked 10th and Rhode Island ranked 6th. Also, the numbers are probably somewhat understated because of the high number of college students in Massachusetts that likely skew the average lower.

I may get in trouble for this, but it needs to be said.

Another thing I hate about Boston is how homely the women dress. Women up here hardly ever wear skirts, heels, or even blouses. Everywhere I go, ladies, young and old, are wearing jeans, sneakers, Red Sox hats, sweatshirts, and tee shirts. Underneath those hats is usually unkempt hair.

No DA, it is not a lesbian thing. ALL WOMEN UNDERDRESS UP HERE.

I chock it all up to the groupthink contagion. It's easy to walk around dressed like a slob college student, if only because everyone else does.

I could easily include some pictures of homely locals - Lord knows I have my camera with me all of the time. But I have had trouble getting people to pose for me. When I tell people the pics are for my website, strangers invariably ask its name. I tell them it's "marginalizing morons" and for some reason their cooperative enthusiasm immediately vanishes.

I just don't understand why.

Remember my post on Deranged Dog People?

I have to add a couple more examples to that epic post.

My neighbor drives all over town with her dog on her lap. I have noticed countless other drivers doing the same. Not only does Massachusetts have to ban cell phone usage (at least go "hands-free"), it seems they have to address another driving hazard up here: homely dressed old women with poodles on their laps.

Speaking of laps. A deranged friend of mine made the mistake of admitting to me that she holds her dog on her lap WHILE SHE GOES TO THE BATHROOM.

I never understood while people tell me anything, given my extremely big mouth. Now that I have three websites, read globally, it makes even less sense. I had to place a note on my door warning guests that "...anything they say or do can and will likely be used against them in the blogosphere."

Here is my favorite personal Big Mouth story. I played in a golf tournament in Philly about ten years ago. One of the guys I played with took more than a little license with the rules. When I found out the guy turned in a score of 75, I let others know what actually happened on the course.

Now the word gets out and the body-building drug dealer comes looking for me. He runs in the clubhouse and pulls me aside to "talk to me".

Jerk: Did you tell SOMEONE that I cheated?

C-Nut: No Bruno, I TOLD EVERYONE YOU CHEATED.

I'll never forget how far his jaw dropped when I laid that one on him. It's a wonder I am still alive.

Oh yeah, and I recently found out that my flake sister feeds her two dogs - ORGANIC DOG FOOD.

But the biggest omission from the Deranged Dog Post was the subject of vicious dogs. Why anyone would want to own a pit bull (besides a drug dealer) is beyond me. The people attracted to these monsters are usually trash (white and black) or upper crust fruits who think no dog is inherently dangerous - "it's all how they are raised".

I was waiting in the always long line at Let There Be Bagels in Port Washington, NY. Some loud-mouthed woman behind me starts talking to someone else about pit bulls, how they are the sweetest dogs in existence and they just "have a bad rap". I turned around and screamed at the woman, in front of many people,

"MY NIECE LOST HER FACE TO A PIT BULL."

Okay. That didn't actually happen But I should have said that.



There is seemingly a pit bull attack every day in this country. Check out that 10 year old's arm.



And the 8 year old girl's face.

Pit bulls' jaw strength is something obscene like 2000 pounds per square inch.

To give that some perspective, a cheetah only bites at 600 psi.

Needless to say, when a pit bull decides to bite you, he'll let go when he feels like it - no sooner. How much flesh it leaves on your bones is up to his discretion as well.

A friend of mine in Philly has a pit bull. He told me that when he walks it, other pit bull owners (there are plenty in South Philly) come up to him and ask if he, "wants to let the dogs hit". At the time I didn't know what that meant. It is when they keep the dogs on leashes, but let out some slack so they dogs can have a controlled fight. I am no animal rights nutjob, but this is sick.

Devil's Advocate: But that confirms what the woman above was saying about how the dogs are raised, doesn't it?

Go take two golden retrievers and see if they "hit". Pit Bulls are naturally vicious. At the risk of being too presumptuous, I assert that many of these pit bull apologists who attribute the dog's innate pugnacity to "the way it's raised" are the same people who blame guns, rather than people, for gun related deaths. Like I said, that is admittedly a bit of generalization, but it accurately describes at least two vicious dog owners that I know.

It's an oft uttered refrain that pets (and children) really do reflect the owner. I take issue entirely with the Moronic owners, because many have elevated the dogs up to the same status as people.

Last week I took my 1.5 year old son to a park at 7am. As soon as I arrived, I saw that there were three dogs running around - two black labradors and a golden retriever. Obviously they really are just about the friendliest dogs known to man. So I went out to the middle of the field and let my son run around. One dog owner, was letting her dog run freely on the other side of the field. Anyway, the dog (probably 1-2 years old) comes galloping across the field and bowls over my son. Now I was about 15 feet away and not particularly worried. But the dog's owner really got me pissed.

She comes sauntering over, having never once even called the dog to stop and says to me,

"Is he alright?"

Meanwhile my kid is still on the ground, wailing away, mud all over him, and still wrapped up in the dog's 15 foot leash.

"IS HE ALRIGHT? TAKE A LOOK AT HIM YOU IDIOT!!!"

Deranged Dummy: It was an accident. (even though the dog was unleashed and she made no attempt to catch it.)

I then said to her, in my soft serial killer tone,

"If your dog had bitten my son, I'd take my golf club to its head..."

Deranged Dummy: But...

"AND I WOULD PROBABLY TAKE THE CLUB TO YOUR HEAD AS WELL."

She turned white.

"AS YOU WOULD DO IF IT WERE YOUR KID".

She sighed and nodded in tacit agreement.

Devil's Advocate: Whoa, C-Nut. That sounds like you crossed a line with that threat.

First of all, that wasn't a threat because I used the word "if". Furthermore, I was teaching this naive woman an important lesson - that's just the type of service I provide on a gratuitous basis.

Like I said above, my problem is with the owners, who too blithely think their dogs harmless - even to 23 pound infants.

Fifteen minutes later I was accosted by the entire population of dog walkers in the park who apparently didn't like the way I dealt with that dingbat. They actually had the gall to say it was my fault that my son got run over. I couldn't make this stuff up. I wielded some logic and facts, they perhaps realized the weakness of their stance and eventually conceded, "I guess you have a right to be in the park too."

I duly thanked them for their magnanimity.

Anyway the dogs all stayed on the leashes the rest of the time I was there. Apparently the Deranged Dog People are there every morning. It was a nice park that I hadn't been to before. So I went back the next morning and walked around with a golf club. Okay, I haven't done that yet. I was strenously advised against that by both my wife AND my anger management counselor. But driving by the other day I saw that without some scary guy known to make golf club threats, all of those same people had their dogs running freely throughout the park.




Okay, fresh off of that escapade, I went to Larz Anderson Park in Brookline this weekend.

First of all, I have never seen weirder people in my life than those at the park that day. This is a ripe subject for an entire other blog. On the way out, I was strolling my son up a very steep hill to get back to the parking lot. Some unleashed, nasty looking dog started chasing me up the hill. Ever vigilant, I was on top of the situation. I hollered back to the remiss owner, "Is that a pit bull?". No he assured me, it was a boxer. So it is now running right up to my son in the stroller and I ask the guy to get his dog away from my son. The dunderhead reassures me that his dog loves kids. Now I am getting mad. So I shoo the dog away with my foot and ask the guy again to "GET HIS DOG AWAY!!!"

Now the owner gets mad at me. He calls me paranoid and came very close to finding himself at the bottom of the hill, minus a few teeth.

These idiots need to get it through their head that DOGS ARE NOT PEOPLE and in the hierarchy of living creatures they are FAR BELOW YOUNG CHILDREN.

Okay, I started this post with the horrible weather forecast for Tuesday. Well, here's this morning's forecast for Wednesday, verbatim as I just heard on the radio.

"Dank, dreary, rain all day with temperatures still in the 40s".

Medical Morons

Percent of people with HIV in Africa 1999-2001



Check out this recent headline – Circumcision, Fidelity More Effective HIV Prevention Methods than Condoms, Abstinence, Researchers say.

I touched on this in a prior post,

Researchers have found that male circumcision reduces the risk of contracting HIV by 70%. Why does this make the Roundup? Because the world is spending billions of dollars to find an HIV vaccine whose targeted risk reduction level is only 30%. When are people going to realize that scientists are mostly a government subsidized welfare demographic?

Now that headline is somewhat whacky. I am not sure how anything could trump abstinence but nevertheless, it echoes what I previously said about circumcision.

The researchers said,

...they have tried to “put aside intuitions, emotions, ideologies and look at the evidence in as coldhearted a way as we can.”

Do you believe this? This is like a judge saying that he tried to consider the law before making a ruling. Scientists should learn objectivity when they are around nineteen years old. It’s almost like they want extra credit here. They also seem to be apologizing for ignoring ideology. Sorry, this AIDS stuff is serious business unlike “global warming” where it’s de rigueur to have ideology marching as the lead explanatory variable.

At any rate, the scientific community should put an asterisk next to this uniquely objective report.

So while millions of Africans are dying of AIDS, governments, NGOs, and philanthropists like Bill Gates are wasting mucho dinero on vaccine development despite the fact that a simple snip snip would do.

There’s actually a whole movement devoted to fighting circumcision with books out titled, Circumcision – The Hidden Trauma, websites like Mothers Against Circumcision, and countless experts like Dr. Dean and Dr. Spock carrying the torch.

But what about the "trauma" of HIV infection?



In a prior post on Health Savings Accounts, I posited that,

“Something like 40% of drugs don’t work.”

(Clearly I was referring to legal, prescription drugs.)

Forbes has a decent article in the May 8th issue titled Pushing Pills – How Big Pharma Got Addicted to Marketing.

In that article they lead off with Lamisil, a pill that attacks that fungus which makes one's toenails yellow.

10 million Americans have taken Lamisil, which costs $850 for a three-month treatment.

Lamisil sales jumped 19% to $1.2 billion worldwide in 2004 and held steady last year.

Now here is the kicker,

...the drug fully cures the problem in only 38% of patients.

That entire article is worthwhile reading but the over-marketing aspect of pharmaceuticals is a subject that has been hijacked by the econo-illiterate socialists. As I have promulgated in my HSA post, one of the main problems with healthcare is the Third Party Payer system. The average Joe is going to think twice about treating his yellow toenails if he has to shell out the $850 for a pill that is only 62% effective.

The socialists would rather blame evil Big Pharma than the misbegotten government dominated healthcare system. In fact, their answer for government induced problems is unflappably, always more government. (I am not sure, but I think that Ted Kennedy championed the Health Maintenance Organization Act of 1973 that obviously spawned the modern HMO.)

There’s another illustration in that article of the brainless Third Party Payer system,

"People would come in asking for--demanding [a COX-2 inhibitor]--and sometimes threaten to find a new doctor if I didn't prescribe it," says physician John Abramson, a clinical instructor at Harvard Medical School who has consulted for plaintiff lawyers. "Vioxx wasn't a bad drug for everyone, it was a bad drug for certain patients," says Chris D. Robbins of Arxcel, which consults to pharmacy benefit managers. "Unfortunately, people saw the ads and started demanding the drugs from their doctors."

Unbelievable. Here a doctor basically admits to letting the patient pick his treatment under the threat of losing him (i.e. money) to another, more liberal script writer. Then he has the stones to go work for plaintiff lawyers.

What’s next? Kids demanding less homework from their teachers? Why not let the inmates run the asylum while we are at it?

It’s much easier to just write the script, after all, neither the doctor nor the patient is directly footing the bill. And heck, everyone else is doing it. And when something unforeseen happens, be it a drug recall like Vioxx or healthcare costs skyrocket...

...they can just blame evil Big Business.



What's cheaper? Nail polish or Lamisil?

Just Speculating

In Bill O’Reilly’s vast, changeable oil price conspiracy, he often inveighs against speculators.

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

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

Bill and his econo-illiterate brethren wholeheartedly believe that speculators are nefarious bogeymen, huddled in a backroom somewhere in Texas, sticking pins in dolls of American consumers.

So what exactly is a speculator? It certainly sounds shady, now doesn’t it?

I just did a blog search on it and just about every post that came up was about real estate speculators with probably about 10% mentioning oil markets. Of course the term predates contemporary mania. The Pilgrims were speculators, as were the pioneers who settled the West. There were money changers in the Old Testatment, etc. Speculating is an inherent human trait. I heard someone once say,

"Telling man not to gamble is like telling the wind not to blow."

Yes, indeed.

Wikipedia defines it thusly:

Speculation involves the buying, holding, and selling of stocks, bonds, commodities, currencies, collectibles, real estate, derivatives, and any valuable financial instrument to profit from fluctuations in its price as opposed to buying it for use or income via methods such as dividends or interest.

The economic role of speculation:

The service provided by speculators to a market is primarily that by risking their own capital in the hope of profit, they add liquidity to the market and make it easier for others to offset risk, including those who may be classified as hedgers and arbitrageurs.

For example, if a certain market - say in pork bellies - had no speculators, only producers (pig farmers) and consumers (butchers etc) would participate in that market. With fewer players in the market, there would be a larger spread between the current bid and ask price of pork bellies. Any new entrant in the market who wants to either buy or sell pork bellies will be forced to accept an illiquid market and market prices that have a large bid-ask spread, or might even find it difficult to find a co-party to buy or sell to. A speculator (e.g. a pork dealer) may exploit the difference in the spread and, in competition with other speculators, reduce the spread thus creating a more efficient market.



Okay, that is the theoretical definition. Let me give some more examples.

First of all,technically CaptiousNut is a speculator. I have been trading the financial markets for over 10 years, mostly using my own money. When I wasn’t completely on my own, I had either one or two partners – but never any investor funds.

In the old days, when a large buyer showed up in IBM, perhaps a mutual fund manager with 50,000 to buy, he would tell the NYSE specialist who'd promptly move the stock up .50, 75, or even 1.00, and sell him the stock. But nowadays, because of evil speculators, an order like that probably wouldn’t move IBM more than .25. There are thousands of speculating entities (such as hedge funds along with individual traders) ready to smack down almost all large price jumps.

Now multiply that by the almost 20,000 public companies and add in stock price decimalization (remember they used to trade in increments of 1/8 and 1/4 points), the proliferation of electronic exchanges, the implosion of commissions down to less than half a penny per share, and the sea of money now invested in hedge funds. What do you get?

All of this dreaded speculation dampens volatility immensely -benefitting everyone who invests in mutual funds or index funds. In fact, the low commissions, which everyone now enjoys, are a direct result of not only technology, but of the very existence of many speculators who trade in great volume. It's kind of like how the dreaded rich people pushed LCD prices down to an affordable level for the little guy.

Before one recklessly bashes us speculators (mind you I am one of negligible size), he really should consider a world without us.

Instead of oil bumping up $5 a barrel on Katrina or Iranian Nuclear bluster, I can assure you that without an army of risk taking speculators, the price would jump $20 or more. The volatility would be gut wrenching and economically disruptive. Nobody would know how to price their goods. Supermarket prices would be all over the place, as would gasoline, airfares, electricity, and just about every price in America would be higher to reflect the complete uncertainty of energy prices. Such turbulence would hamper businesses' ability to expand and innovate. We'd have a less dynamic economy and a much lower standard of living.

I know that I sound uncomfortably like one of these Big Government apologists whose seemingly only defense is “Trust me, it would be worse off without government...” But supporting evidence abounds.

Quite frankly, the money saved by investors is in the multi-billion dollar range. Every stock transaction costs less in terms of commissions and market impact. How much more would housing cost today if there weren’t an army of evil real estate speculators building homes on every empty lot and converting old mills and whatnot into condo’s?

Devil’s Advocate: But haven’t those speculators actually wildly bid up property, making it prohibitively expensive for others?

You sound like Bill O’Reilly. In some cases, and in some convoluted way, yes they have. But that is like buying AOL at $100 a share, then after it plummets to $10, blaming everyone that bid it up to the $100 price where you bought. Nobody forced you to buy it. The same goes for housing. No one is forced to buy a certain sized home or one within an expensive neighborhood. People can rent (quite cheaply I must add) or live in close quarters. People used to raise nine kids in three bedroom homes and everyone survived - not too long ago either.



Plus, speculation is a pendulum and swings both ways. This fall, natural gas ran up to $16 before the mild winter crashed it down to $7. I can guarantee you that so-called speculators got killed on this move. Loading up on natural gas was almost a no-brainer with oil roaring and the weakness exposed in the supply chain during Hurricane Katrina. And let’s not forget how freezing cold last year’s winter was either, despite “global warming”. Considering all these factors together, natural gas longs were licking their chops this autumn.

I can also guarantee you that natural gas is cheaper today than it would otherwise be without the bleeding speculators in the futures market. I can’t totally prove this (no one could), but I have seen this play out countless times over my ten year trading career. When something gets extremely overbought and craters like natural gas did, it takes a very long time for the price to recover. In the meantime, natural gas is now oversold, and will stay somewhat cheap for a while. Even today as oil flirts with $75 a barrel, natural gas hasn't budged. (Remember it's a substitute for oil, and as such they should move more or less in lockstep.)



Another example. All of those clothes at Banana Republic, marked down to 50% off...where do you think they came from?

They are the byproduct of too much speculation. Don’t think for a second that Gap Stores (Banana’s parent) wanted to have excess inventory that they'd essentially give away. They overbought (or over-produced) and savvy consumers reap the benefits.

So instead of your wife buying one sweater for $100 when it first hits the shelves....

...She can smartly wait until it goes on sale, and buy two $50 ones instead.



All you have to remember about speculators is that they are merely a subset of Risk Takers, the engines of our economy and of progress.

Bill O'Reilly works for one of the biggest risk takers around in Rupert Murdoch. The guy was almost bankrupt more than a few times, risking his entire net worth on precarious media investments.

Bill might never gotten his shot at the big time if someone with capital hadn't speculated on his potential.

Philadelphia Food Vacation

I recently drove my family 300 miles down to Philly simply so I could eat my favorite food in the world (okay maybe in the USA - Italy is tough to beat.)

First, above find one pizzazz from Celebre's.

It's not exactly a pizza. It has american cheese and sliced tomatoes (along with hot peppers). You wouldn't think this is any good, but it tastes unbelievable.

This pizzazz is surprisingly good also because PHILADELPHIA PIZZA FLAT OUT SUCKS.

New York pizza is of course the gold standard (my favorite is made by the illegal immigrants at My Little Pizzeria on Court Street in Brooklyn Heights). The pizza in New England is not that bad. But I lump Philly pizza in with its inedible cousins in the southern and western states.

Another thing that will shock quite a few of you is the fact that Italian food in general sucks in Philadelphia. Even in South Philly - despite the preponderance of Italian Americans.



My next stop on the food tour was the most deservedly famous Pat's for a cheesesteak. It may have been around 2 am and I may or may not have been overserved that night.

Now some of you probably call it a "steak and cheese" or a "Philly cheesesteak", but down there it is simply a "cheesesteak" or even a "steak".

Everyone in Philly has their favorite cheesesteaks. Some like Dallesandro's (which I loathe), some like Abner's in West Philly (thumbs up from me, especially since the guy with the gold chains there used to sell me beer when I was underaged and thirsty), and the suburbanites from the Main Line all go to Jim's on South Street - mostly because they 1) they are sheepish and 2) they likely are afraid to drive into South Philly.

Quite frankly I think Jim's sucks.



Of course you have Geno's, right across from Pat's. Some militants swear it's better, but the length of the lines always favors Pat's - by a mile.

What astounds me is how few people realize why cheesesteaks in Philly taste so much better than everywhere else. Some simple deduction says that the onions, cheese, and meat are the same as found in the rest of the country. Surely they don't have some special cooking appliances that are only extant in Philadelphia.

It is the bread you fools.

Philadelphia bread is very soft. As such, the hoagie rolls expertly absorb all of the juices: be it oil, grease, mayo, ketchup, whiz, etc. That is quite simply what makes a hoagie or cheesesteak taste better.

You can't replicate Philly bread elsewhere. Just like you can't grow tomatoes in your garden to rival those of southern Italy. The local air and water uniquely determine how the Philly bread dough rises. Go a mere 100 miles north to New York City and the bread rises completely different. In fact, New York bread is disgustingly tough, though ideally suited for bagels and pizza.

Actually, Lido's Subs in Santa Maria, California gets Amoroso's rolls overnighted from Philly. I don't know why more places don't do it. And I especially don't understand why Pat's doesn't open a place in Manhattan. I was recently speaking to a guy who is friends with Pat's owner and he told me that the guy is very hands-on, and doesn't want to open another place if he can't be there to micro-manage.

That sounds like hogwash to me. Eventually someone is going to start selling cheesesteaks in NYC and shipping rolls up the turnpike. They will be slammed 24 hours a day and everyone is going to be shaking their heads that they didn't do it. If there ever was a risk free business plan, this is it.



Pictured above is one Primo Italian hoagie ("italian, works, hots")

Again, it is all about the bread. At Primo's they use Sarcone's bread - which is actually kind of tough and chewy, but like nothing you have ever tasted. Anyway, you haven't had a hoagie until you've had a Primo.

One place on my list that I didn't make it to was Franco & Louigi's. They used to have an unbelievable cheesesteak stromboli, but alas, I found out the place was no more. Another place on my list that I skipped was Nick's Roast Beef in South Philly. I was told the ownership changed hands and the place wasn't what it used to be. I tried to make it to Cherry Street Tavern for their lunchtime roast beef but just couldn't pull it off. Cherry Street is allegedly where Larry Bird hangs his hat each night that he is in town.



Not sure if he and Dr. J clinked beer mugs that fateful night of November 9th, 1984 (looks like it may have been in Boston too).

Sidebar - Who did the NBA consider the instigator in that fight?

Answer - Bird. Larry was destroying the aging Doctor (he had scored 42 points while Erving made just 6) and started taunting him.

Sorry for the nostalgia. Nowadays, the guy with 6 points initiates the taunting or the touchdown dance.

There are a couple of more places I want to recommend in Philly. Monk's Cafe is definitely worth going to. Most of their food is worth eating, especially the burgers on LeBus bread. Monk's is also known for its inventory of a zillion or so beers. I waited 45 minutes for a table last week but had to walk out as the hostess had too many piercings and not enough civility.

Lastly, DiBruno's is a high end Italian Deli, the likes of which I haven't seen matched anywhere even in New York. The place is spectacular. My favorites are their homemade foccacia and aged cheese spreads, especially the Abruzze.

They don't even list the ingredients on the cheese spread containers, which may in fact be illegal. I called up once and asked what exactly was in the Abruzze - feigning an allergic reaction to the cheese. They laughed, told me nice try but they's seen that ruse many a time.

Writing this blog has been torture on my taste buds - it's just making me want to go back.

And I haven't even gotten to Tony Luke's cutlets, Cavanaugh's wings, or Chickie's and Pete's crab fries.

As far as soft pretzel's are concerned....



I haven't had one in years.

A guy on the trading floor of the Philadelphia Stock Exchange told me this discomfiting story. Apparently his brother-in-law used to make deliveries to Federal Pretzel in South Philly. More than once the delivery guy showed up early in the morning, walked into the back room, and saw some guy with his pants around his ankles HUMPING THE DOUGH.

Bon Appetit.

Common Sense and Interest Rates Collide

The 10-Year Treasury Bond just hit a 4 year high.



The 30-Year, though one percentage point off its low, still can rise a bunch.



I post those interest rate charts as a warning. An investor really has to ask himself if he wants to buy anything (such as real estate) levered to interest rates, when they are still so close to a 46 year low.

When stuff is at multi-decade extremes, you just have to be a contrarian.

Look at the CRB (Commodities) index below. Again, click on any charts to enlarge.



In 1999, not only were commodities at 17 year lows, they were actually much lower if inflation is factored in. In fact, many commodities, so adjusted, rivalled Depression level prices. Obviously, the CRB has almost doubled from its 1999 nadir.

Making money, or investing, has never been about much more than common sense and patience.

Back to un-real estate.

There are plenty of homes for sale in my tony hometown of Newton, Massachusetts. Realtor.com has 704 listings today (533 priced over $500k and 189 over $1 million). I will re-check this periodically.

Like everywhere else, in Boston they are building new homes wherever they can - like a single home on the lot down the street from me, the new multi-home development near Hammond Pond Parkway, a huge new condo building near the Atrium Mall, countless luxury condo conversions on the Boston waterfront, etc.

Now let's apply that common sense weapon. If they are building new construction everywhere (though not to the extent of Florida, North Carolina, Arizona, etc.), and the state is losing population, how can local real estate possibly appreciate?

Some real estate perma-bulls have argued that immigration is the wild card that's been driving home prices. I never believed that for a minute - I think it has all been interest rates and investment momentum. But supposing that was true, wouldn't Boston's meteoric housing market coupled with a declining state population serve to debunk that theory? Putting all of that aside, I think is it safe to say there will be some immigration (illegal) abatement going forward. Don't you agree?

Summing it all up, we have:

1) Rising interest rates.

2) Increased supply.

3) Decreasing demand.

and I will throw in,

4) Higher energy costs, both electric and heat.



I really do pity today's first time homebuyers in Boston.

There are arguments that interest rates will never rise to past heights ever again. The logic is based on technological and financial innovation.

Of course the same stuff was said about commodities in the 1990s.

Fool me once.....

Capitalism Versus Moronic Politicians

Politicians never cease to amaze me. They are wrong on seemingly every issue.

Everyone knows that college tuitions are out of control, but good luck finding a politician that has the slightest clue why. In fact, Congress is going to start hauling university presidents before them and demand to know why tuition hikes are “outpacing inflation”.

But this is like giving a dog a bone and then indicting him for eating it.

We, the public, should haul Congress before us and hold them accountable for the stratospheric college costs.

College is expensive simply because of federal grant money and most importantly, government subsidized student loans. If you subsidize something, the price will eventually go up.

EVERY SINGLE TIME.

The geeks at Harvard are whining about having to answer to the hand that feeds them.

The College’s tuition and fees will increase by 4.75 percent next year. But Harvard also recently expanded its financial aid program so that families making under $60,000 a year won’t face any required contribution.

Notice how they try to justify the excessive inflation by hiding behind Harvard's version of the poor (families making under $60,000 a year - not likely a significant population). In other words, we are only ramping up the bill on the dreaded rich just like the Commi progressive income tax.

Ignorant and spineless politicians lack the guts to ever propose “cutting student loans”. They lack the guts to cut just about anything but education is probably second to “cutting Social Security” benefits - at least in terms of the fear factor.



Consider for a moment the rank hypocrisy and misdirection of Congress hauling oil executives before a committee and grilling them about the cost of gasoline?

Congress won’t let them drill in ANWAR, in the Gulf Coast (although Mexico can), or off the coast of California. They have the gall to restrict drilling and yet complain about the cost of oil and our reliance on imported oil.

The oil companies should haul members of Congress before them and GRILL THEM!!!

Sadly, this resonates with the economically illiterate part of the citizenry.



Massachusetts this week gleefully announced “universal health coverage” or at least a mandate for it.

If all goes as planned, poor people will be offered free or heavily subsidized coverage; those who can afford insurance but refuse to get it will face increasing tax penalties until they obtain coverage; and those already insured will see a modest drop in their premiums.

The measure does not call for new taxes but would require businesses that do not offer insurance to pay a $295 annual fee per employee.

The cost was put at $316 million in the first year, and more than a $1 billion by the third year, with much of that money coming from federal reimbursements and existing state spending, officials said.

The state's poorest — single adults making $9,500 or less a year — will have access to health coverage with no premiums or deductibles.

Those living at up to 300 percent of the federal poverty level, or about $48,000 for a family of three, will be able to get health coverage on a sliding scale, also with no deductibles.

Those living at up to 300 percent of the federal poverty level, or about $48,000 for a family of three, will be able to get health coverage on a sliding scale, also with no deductibles.

The plan hinges in part on two key sections: the $295-per-employee business assessment and a so-called "individual mandate," requiring every citizen who can afford it to obtain health insurance or face increasing tax penalties.

One goal of the bill is to protect $385 million pledged by the federal government over each of the next two years if the state can show it is on a path to reducing its number of uninsured.

The U.S. Department of Health and Human Services has threatened to withhold the money if the state does not have a plan up and running by July 1.

The House approved the bill on a 154-2 vote. The Senate endorsed it 37-0.



When they say that poor people will be "offered free or heavily subsidized coverage" I am not sure what they are talking about. The sacred poor already get free healthcare and there is a growing line of bankrupt hospitals to prove this.

Again, alway be wary about those championing the poor.

This is really just an excuse to attack businesses that don't offer health insurance because by some natural law, politicians (and other econo-illiterates) simply have to blame someone else for high healthcare costs.

Read this line again.

The measure does not call for new taxes but would require businesses that do not offer insurance to pay a $295 annual fee per employee.

That is pure Commi-Speak.

A $295 fee per employee IS A TAX.

This is what politicians do. They scapegoat every issue. Healthcare is expensive so who can we blame? How about Wal-Mart and businesses that don't offer health insurance?

This is pure misdirection. The pols are responsible for high healthcare costs.

Consider the richness of this inanity. You have something (healthcare) that is prohibitively expensive and the demented politicians prescribe that everyone has to run out and buy it.

...requiring every citizen who can afford it to obtain health insurance or face increasing tax penalties.

How the heck is that supposed to lower the cost of healthcare? All it is going to do is throw more dumb money into our inefficient healthcare system. The only thing that will drive costs lower would be the complete opposite - more people opting out of health insurance. Hospitals, doctors, HMOs, and other healthcare providers would be forced to streamline, innovate, and essentially lower their prices.

It would be like the government complaining about the cost of apples and then mandating that everyone eat three a day.

The only way this convoluted logic can hold is by the ridiculous theory that rich uninsured working people are somehow driving up everyone else's health costs.

My regular blog readers know how I despise demand component warfare but if any one group is burdening another, it is the uninsured poor who raise everyone's costs (and taxes). But I don't blame them for anything. I blame the politicians who have over-regulated, over-subsidized, basically neutered the free market's ability to lower healthcare costs for everyone. Essentially, the only growth they have fostered is that of the uninsured demographic. And now these same culprits want to wipe away the reality of that statistic by fiat.

The pols spent decades propagating the notion of health coverage as an entitlement all the while their economic illiteracy kept making it tougher to deliver. Until they (or the public) realize their own supreme complicity, people should expect continued rising costs and more misguided finger pointing.

Oh, and let's not forget high gasoline prices, runaway college tuitions, etc.



With Big Media running this vast conspiracy to keep the public poor and stupid, capitalism (or what's left of it) is the only check on these politicians. Actually in Massachusetts it more precisely described as transportation as people keep fleeing this state that ranks 46th in tax/fee friendliness.



I just googled "massachusetts losing population" and found some nuggets.

The powers-at-be go into full blown spin mode when confronted with the fact that the state has lost population for two years in a row.

From that same link:

...a spokesman for Mayor Thomas M. Menino yesterday dismissed the latest census data.

"The numbers are merely estimates,” said spokesman Seth Gitell. “They fly in the face of what Mayor Menino sees every day when he’s out in the neighborhoods.”


And typical of the Boston Globe and other Big Government - High Tax apologists.

Massachusetts will never be a low-cost state.

There's plenty more spin. Bostonian elitists actually decry that these population numbers are simply "estimates" that undercount their college students and immigrants. I am sure they mean illegals, like no other state has them. Give me a break. It is certainly one thing to argue against more complicated statistics, but here they are arguing with counting.

"I disagree with your statistics" is a transparent and deflective debating tactic favored by Morons everywhere.

I have some more sobering news for the pols. You may be able to impose your Commi healthcare mandate on today's residents and businesses...

... but you can't force them to stay in your state.

In fact, hordes of productive businesses and people have already left.

Undocumented Econo-Illiteracy

No one knows the economic effect of illegals, whether they depress wages or not. Look at it backwards, a doctor makes 120k, what could you change to make them earn more or less? It is much harder than you think to figure out.

Devil's Advocate: If you made medical school tougher to get in, there would be fewer doctors, and their salaries would go up.....

Not necessarily. Look today how much rising malpractice premiums have eroded doctor's incomes. Today malpractice is a decisive factor in doctor incomes, tomorrow it could be something different (like Medicare solvency).

In the same vein... has subsidizing college loans made tuition more affordable?

At forty thousand plus per year I don't think so.

The examples are endless.

Say we got rid of the illegals today, wages will still be a function of like 25 variables: interest rates, stock markets, global politics, terrorism, oil prices, weather, education, healthcare, food, demographics, drugs, taxes, real estate market, etc.

One simply cannot say, either way, what the economic effect of illegal/guest/temporary/migrant workers has been.

Yet you see this casuist argument everywhere,

"Illegals are suppressing Americans' wages at the lowest skill level..."

To which I respond,

"How does the ability to pay a nanny only $400 a week, so both parents can further their careers, depress wages?"

Devil's Advocate: But they are likely high skill level people...

So you don't think that high wage incomes should be counted in those real wage averages?

Also, when high level earners go out to restaurants, remodel their kitchen, and whatnot, who do you think benefits from that spending?

Devil's Advocate: So you are trotting out the "trickle down" theory?

If you want to have that battle now....sure.

First of all, by citing the term "trickle down", you are manifesting yourself as a propaganda inhaler. As Thomas Sowell says,

"...there has never been any school of economists who believed in a trickle down theory. No such theory can be found in even the most voluminous and learned books on the history of economics. It is a straw man."

"Trickle down" is the socialist caricature of free market capitalism. Middle and lower class people absolutely benefit from the same free market low-tax environment that behooves wealthier people.

Don't believe my propaganda? Well then go out and try to find work where there are no rich people. Go up to Vermont or some rural town anywhere. Who makes more money, a bartender in Manhattan or one in Western Massachusetts? You won't even be able to earn money cutting lawns far outside of the big cities (away from the dreaded hoarding rich). There are no restaurants except maybe Applebee's and McDonalds. No Starbux. No Wholefoods. No hedge funds to work for.

Growing up in Worcester, Mass (a veritable economic wasteland), I couldn't so much as get a job above minimum wage when I was a teenager. I moved to Philadelphia and instantly got several lucrative jobs.

If you don't believe in "trickle down", then you're intellectually blind or parochially ignorant. You don't have to believe anything - just accept the empirical reality all around you.

Furthermore, if you still think you don't need rich people, why don't you move to where the homes are really cheap?

Read that whole Thomas Sowell column for his concise, yet trenchant explication of "trickle down" economics.



Devil's Advocate: So it seems like you come down on the side of "illegals aliens are a net positive"...

As usual, your inference is woefully off the mark. I just threw the "trickle down" stuff out to debunk that canard about illegals depressing wages. Had someone initiated the dialogue with,

"Illegals definitely stimulate the economy..."

I would have fired back,

"Have you considered the costs inflicted on hospital emergency rooms in the Southwest or the fact that over 20% of prison populations are illegals? Have you measured these societal costs? Do you not think that everyone else will end up paying for this in terms of higher medical bills and higher taxes?"

The only economic truth about illegal workers is that nobody knows their overall impact.

Another example. RightWingNews has a widely disseminated post titled,

Answering 13 Frequently Asked Questions About Illegal Immigration.

I take issue with number,

8) But, aren't these illegal aliens doing jobs Americans won't do?

"...Moreover, it needs to be pointed out that there's no such thing as a job, "Americans won't do." There are only jobs Americans won't do at a certain price. Consider your job. Would you still do it if the pay were 50% less? For most people, the answer to that question is, "no."

Well, since illegal immigrants generally come from poor countries with mediocre economies, they're willing to work for much lower wages than the going market rate because they're still making substantially more than what they can make at home. So, if there's a large influx of illegal aliens into an America industry, it depresses wages so much that Americans simply won't do those jobs any more for the going pay rate.

This harms poor Americans the most, because they're the group that generally ends up competing with illegal aliens for jobs on the low end of the pay scale."

While on most of the 13 questions they posed I generally agree with their perspective, this one here I take major issue with because it's redolent of Big Media Commi logic.

First, this statement,

"...large influx of illegal aliens into an America industry, it depresses wages so much that Americans simply won't do those jobs any more for the going pay rate."

This is total crap. Wages are set by both the demand and supply for labor. For many jobs, the demand for the work is very sensitive to the price (wage). For example, I may pay $40 every week to get my lawn cut but I will not pay if the price rises to $60. At that cost I will instead cut my own lawn. This whole argument that the illegal willing to cut grass for $40 is lowering the wage of the $60 worker falls flat on its face because that $60 job will never exist. So in this sense, many illegals ARE DOING JOBS THAT AMERICANS WON'T DO.



So ignore this pervasive canard, "There are only jobs Americans won't do at a certain price." because you can't separate the job from the wage that the market is willing to bear.

Always be wary of the Morons that don't consider both supply and demand components.

Speaking of demand and econo-illiterates, 8) also sounds like Big Media agitprop with its,

"This harms poor Americans the most, because they're the group that generally ends up competing with illegal aliens for jobs on the low end of the pay scale."

This is Demand Parsing. As I have said many times before,

Be wary of anyone who tries to parse the demand component of something. The demand parsers are, 9 times of 10, econo-illiterates trying to promulgate political propaganda.

In this case, they are saying, "Wake up you poor Americans, illegals are hurting you the most."

I hate this as much as when skinny people blame fat people for healthcare costs or when SUV drivers get blamed for char-broiling the earth and subsidizing terrorism.

Now there is some subtlety here that warrants further explanation. It's crystal clear that this notion of illegals disproportionately hurting the poor is a thinly veiled hypocrisy accusation. Rightwingnews is saying to all of the poverty advocates and self-styled vanguards of the "little guy" that they have to condemn illegal immigrants or don the hypocrisy badge.

Make no mistake, the "poor" are a rhetorical football. This may sound awful, but always be wary of anyone claiming to be on their side. First of all, I disagree with term "poor". The difference between poor people and rich people is not simply money. One could substitute "high school dropouts and teenage parents" for "poor" and be referencing almost the identical demographic.

I don't believe we even have poor people in America. The people with less money have more often than not, either spit on all of the opportunities implicit in a free public education and free market economy or simply made one bad decision after another. (I especially loathe the propaganda term "working poor".)

To say that "poor people" are simply competing with illegal immigrants for "the jobs Americans don't want do" is absolutely ridiculous.

Poor people are competing against lifetimes of bad decisions and immorality. They are competing against educated and diligent Americans and even against technological innovation. So sorry RightWingNews, poor people are competing against a lot more than simply illegal immigrants.

Certainly illegal immigrants put both downward and upward pressure on wages.

Certainly illegal immigrants are in some ways stimulating the economy and depressing it in others.

IT REMAINS ABSOULUTELY IMPOSSIBLE TO MEASURE THESE NET EFFECTS BECAUSE THEY ARE SIMPLY TOO MULTIVARIATE.

Please, keep your illegal immigration debates free of distorted economic theory. God knows, there are plenty of factually based arguments you can wield.