Marginalizing Cheapskates

I was once drinking and bullsh*tting down at my old golf course in Philadelphia with the guys and I suggested that we create "All" foursomes.

We could have an All-Talking foursome which would be JoJo, Frankie, and two other talk-the-balls-off-a-pool-table blabbermouths.

We could form an All-Cheating foursome of Bruno, Fat Johnny, and two other guys widely known to have flexible relationships with the rules of golf.

We quickly formed an All-Slow Play foursome of the four most brutally slow players.

And so on and so on.

Then I suggested we conjure up the All-Cheap Foursome. To which, after a moment's contemplation, one of the guys quipped, "Never mind a foursome - we have enough for an All-Cheap league!"

Indeed it was true.

Every family and every social group has its cheap members. You know, the ones who buy the worst Christmas presents. The ones who nurse their beer when it looks like it might be their turn to buy a round. They've got the short arms and often the deep pockets. They've never had to ring your doorbell with their elbows!

So how does one manage them? Do you just buy them drinks and bear the disproportionate expense? Do you call them out and try to guilt them into pulling their own weight? No doubt innumerable relationships have been ruptured by one party's resolute cheapness.

What if, in a given friendship, one person makes substantially more money than the others? Are they morally obligated to ante up a little more of the restaurant tabs and whatnot?

Which particular groups are the cheapest?

Well, I liken this bigotry query to the one I posed in an earlier post about who were the worst drivers. For nearly every group/ethnicity/creed, you can find someone who thinks they are the cheapest (or worst drivers).

Of course in terms of ethnicities, Jews might bear the most stereotypy for penny-pinching but from my own experience, I can tell of extremely cheap genes apparent in certain Asians, Irish, Italians, Hispanics and blacks that I know. There are cheap old people and miserly young'uns. Women can be just as cheap as men - or is it vice versa? Rich people can be just as cheap as poor people. There simply is no winner in the cheap contest.

Let's throw out some examples.

Patrick Ewing, retired NBA baller was known to be notoriously cheap. He would regularly go out to restaurants in Manhattan and when the bill came would assert that he had forgotten his wallet. He was making $18 million per year his last few years in the league!

Michael Milken, the disgraced junk bond king of 1980s used to take NJ Transit to work rather than pay up for Amtrak. He also wore cheap suits and a bad toupee despite making several hundred million dollars.

My sister was recently invited over to her cheap friend's house for fajitas. He asked her to bring tomatoes. Turns out, he asked everyone attending to bring one of the ingredients. Someone had to bring the tortillas. Someone else had to tote the chicken, etc. It's a wonder they didn't all bump into each other in the supermarket beforehand!

There is a big shot trader on the Philly Stock Exchange nicknamed "Cheese". Cheese won't so much as buy himself lunch despite the millions jingling in his pockets. I used to watch him everyday not order lunch when everyone else was doing so. Then, around 1:00 pm or so he would procure the second half of some clerk's sandwich or the extra slices of pizza from a broker. The guy drives clunkers and once, took a trip to New Orleans with some other traders. Get this, the guy decided to room at the YMCA for something like $13 a night! Oh, and you should have seen him scramble to get his ticket in for a juicy one lot trade. He really needed that quarter ($25)!

There is one guy, a friend of a friend, on the periphery of my wife's high school social net. He's another one of these guys that has been out at a restaurant and insisted he "forgot" his wallet. The more egregious story with this guy happened one drunken night out in the Hamptons. Remember what alcohol does, it removes inhibitions. A bunch of people including this particular miser crashed at my wife's family's house in Southampton. The next day, while vacuuming we discovered a few kaiser rolls under a bed. It turns out, the cheapskate came back late at night and assessed that there wasn't much food left so he stashed away the remaining rolls under his bed LIKE A STARVING PRISONER. We would never of unlocked this mystery if we didn't find out that in the wee hours he was assuring one of the guys not to worry about eating because "We've got some bread". This was an odd episode to say the least. All other experience has shown this guy to be as tight as they come. How did he get way? Who knows. But supposedly his dad is demented similarly despite being a high level executive for News Corporation.

I worked for a guy, another multi-millionaire, who I listened to spend 20 minutes on the phone arguing with a customer (on his side business) over who would have to pay a $9 FedEx bill. This was a dozen years ago and the customer was across the country. The cost of the phone call had to be near half the disputed amount all by itself. I couldn't believe this boss of mine fussed so much over a pittance while he had a trading firm that flung around hundreds of thousands of dollars on a daily basis. It was surreal. Declare your bigotry and guess his ethnicity!



Now on to tipping.

The best tippers are, well, people who work for tips themselves: other bartenders and waiters. I used to sell food and beer at a golf course and this one guy, JoJo the bartender, was an absolutely insane tipper. It was two bucks for every little thing from coffee right down to if you told him the score of the Eagles game. I am not kidding. This guy would tip at toll booths and at McDonald's.

The worst tippers are blacks, Europeans, and younger people in general. All sorts of explanations abound but who really cares. This is an empirical blog, wholly insensitive to apologetic idealists. (By the way, I don't buy the 'the tip is included in Europe' so-they-don't-know-any-better excuse.) Blacks simply do not tip. Go google it - a ton of stuff comes up. When blacks come into a restaurant, waiters vie for other tables - including black waitstaff.

Also, I was a bit shocked when I was in South Beach a couple of years ago to see a $.41 tip included on my breakfast from Johnny Rockets. Miami has apparently taken it upon itself to automatically include tips on a everything - thank the Euros who've taken over the city. (Or is it the rappers' fault?)

I was always a good tipper. I guess it made me feel like a "big shot" and of course I worked for tips myself so I was sensitive to the practice. In fact I had to really work at NOT TIPPING piss poor service. I have found the profoundly rude Boston restaurants and bars to be really helpful in teaching me to tone down my gratuities.

At the conclusion of a wedding I attended in Vineland, New Jersey, I did what I always do. I sauntered over to the bar and left a tip - usually $20. The bartenders, all six of them, thanked me profusely. So I asked how they did for tips that night and they said they got "nothing at all". I couldn't believe it, there were 350 guests from all over the globe ordering pina coladas and glasses of white zinfandel (Hah! Old people drink that stuff). I wouldn't be surprised if any of those bar servers called out "sick" for the next wedding at that synagogue.

I know a girl who's worked at a wedding/catering hall for years. She also claims that blacks tip the worst. She said they can be nice as pie; they'll hug you and kiss you; but they won't leave a nickel. She also told me that cops and firefighters are the best tippers in her experience.

Bad tipping doesn't necessarily imply cheapness but they are kissing cousins.

There are so many ways cheapness can manifest itself. For sure you have older relatives that would go into cardiac arrest if you rolled the car windows down when they had the air conditioning on. As I have mentioned before, older folk are extremely cheap with food, technology, and energy. They should however get a bit of a pass because they grew up in a poorer generation and are mostly on fixed incomes. Well-traveled, wealthy, younger penny-pinchers who should know better get no pass at all.

I would surmise that most people are irrationally cheap about something. Me, I hate when cab drivers rip me off for $3-$5. I can't tell you how many times I have gotten into fights with cab drivers and jumped out without paying. I also hate to pay for haircuts. My head is essentially shaved and I can't pay someone $25 to spend the 4 minutes it takes to cut my luscious hair. So what if I have to walk the back alleys for a week or two after my self-administered cut? I also loathe spending money on housekeeping, yard work, snow shoveling, and childcare. I would rather do it myself than pay what I feel are ridiculous market wages.

There are many places that attract cheapos. Parks, bookstores and libraries immediately come to mind. I know a guy who used to manage a Waldenbooks. He told me that people would come in every day, take a newspaper, sit down with it, and do the crossword. Then they would put the paper back in the stack for sale. Now I would never pay a nickel for a newspaper myself, as they are vile worthless slabs of propaganda, but I'd never deface a 50 cent paper in a store without buying it.

I remember sitting in an economics class in college and getting blown away by a remark made by the esteemed Wharton professor (Robert Inman). The class was talking about tipping and the prof derided, "I just think of tipping as 'income redistribution'." It may not sound that bad by itself, but it was in a wider context of why would anyone tip a waitress in a diner while traveling. In other words, if one is eating in a restaurant that they'll likely never return to, it is irrational to leave any tip at all. I couldn't believe it. I was 19 and I fully understood the entire concept of tipping but this nerd teacher (Harvard PhD) and assorted other student nerds hadn't a clue about it.

I would have forgotten about this little incident if I hadn't more recently read a post of that Total Loser Greg Mankiw's a short while back. Here's what he said about tipping:



No, really, it's up to you

Economists do not have a good theory of tipping. Normally, we assume that consumers pay as little as they have to when buying the products they want. Yet, when buying meals, haircuts, and taxi services, most consumers voluntarily pay more than they are legally required. Why does this happen? Why is it more true for some services than for others? Why do tipping customs vary from country to country? I have no idea.

The rock band Radiohead is putting this phenomenon to the test: You can buy the download of their latest album for whatever price you choose. You can pay as little a penny or, they hope, much more. The whole price you pay is, in essence, a tip (but paid before the service is rendered).

Since we economists don't understand tipping, we can't really say whether this new scheme will work. But if it does, during my next ec 10 class, I will put a hat next to the lectern.

Oftentimes, a frank admission of ignorance demonstrates genuine wisdom - but not here. Mankiw, like the other Harvard-educated professor whose lectures I had to bear, doesn't understand why consumers ever tip. In his convoluted mind, the lumpen consumers are simply "not rational" (nor are voters). This is just his gutless, elegant way of asserting his intellectual supremacy. It's the professorial way of calling everyone else stupid.

I really wish he had left the comments in place. If he had, you'd be able to read several comments from incipient little socialists (students) echoing, less tactfully, the sentiments of these scumbag professors.

I failed somewhat in this post to stay on topic. My screed on the generic cheapskate devolved into a screed on bad tippers. I guess tipping is where cheapness most manifests itself. But in no way are customers the only penny pinchers in town.

I knew the now-deceased bar owner of Chaucers in Philadelphia pretty well and he was one cheap bastard. He regulated the amount of soap his bartenders used to wash glasses. He demanded a head on draught beer to shave his keg costs that 2%. He even put weird tape contraptions on the waitstaff's pens because he was convinced that they often rolled off the bar and into the trashcan. Meanwhile this filthy rich tightwad was always telling me about his million dollar semiconductor bets.

I also got a bagel recently from Bruegger's. It was early and for some reason the manager ended up serving me. He was very slow and quite stingy with the cream cheese. I very politely asked him for "extra"; without breaking any speed limits, he niggardly dabbed a bit more. I asked again for some more and he looked up at me above his nerdy accounting glasses and declaimed that he already put "extra" on it. I said, "I will pay you whatever you want for the bagel but if you don't put more cheese on it I won't take it!".

Man, you'd think I asked him for a pound of flesh...

Cheapness must of course be a gene but like everything else, I suspect it can also be an environmentally wrought disposition.

What Inflation?

So I played golf last week at Widow's Walk and got paired up with some random dude. He worked for a food company that made sundry products, primarily supermarket branded items. The guy told me that they were getting "killed" by commodity price increases.

Guy - We used to buy cheese (for frozen pizzas) at $1.10 per pound. Now it's over $2 per pound. Also, soy beans, SOY BEANS are killing us since we use tons of soy bean oil in our salad dressings. Who knows when this is going to end?....

Haha. I told him (tactfully) that in my opinion it was going to get much worse over the next five years. Luckily for his company, competing products all have the same rising input costs to contend with.

Nerd economists have always held that the demand for food is "inelastic" with respect to price.

We shall see.

Another Marketing Misnomer

How can you possibly call a retirement home Sunrise Assisted Living?

Shouldn't it be more aptly named SUNSET Assisted Living?

Or, how about these more accurate names:

Final Inning Care

Last Lap Living

Grande Finale Nursing Home

The DNR House

???

I love how when these Baby Boomers outsource their filial responsibilities to a nursing home their justification is invariably, "Well, it's better for them to be around their peers..."

Peers?

It's better for your parents to spend their golden years with other doting parents who also have self-centered, irresponsible kids?

Stock Market Inflation

Is there inflation?

Again, that's like asking, "What is the temperature of the United States?".

Well, it very much depends on where you are looking.

The same trader who gave me that insight over a decade ago also posited that a "high stock market" was profoundly inflationary as it meant that it was currently "more expensive" to save for his retirement. I completely agree.

My wife works for a large financial company. A large portion of her pay is in restricted stock - so we already own a bunch of it. Now understand this, I DO NOT ROOT FOR THE STOCK TO GO UP. She gets her allotment in I believe January; it's a fixed dollar figure so the lower the stock price the more shares she gets. The last thing in the world I want to see is her company's stock jump 20% right before the disbursement.

Why do I bring this up? Well, if you hadn't noticed, the stock market recovered all of August's losses and then some. The NASDAQ is at a 7.5 year high while the Dow and S&P500 (notwithstanding the NYT) recently hit all time highs. If the stock market is going to be say on average 10% lower next year, then everyone who is dumping money this year into their 401k's, SEP's, Keoghs, annuities, mutual funds, etc., will be effectively losing 10% of their investment right off the top. That's an immediate asset erosion which can be construed as inflation.

I don't want to get into the very real possibility that the market could be higher still next year and retirement savers would be wise to buy at today's lofty prices. I just want to make this somewhat counterintuitive point that while high stock prices might be good for yesterday's investments, they aren't at all beneficial to present-day investments.

Say that no matter what, the Dow is going to be 75,000 in 40 years. Wouldn't you have wanted most of your "buys" to have been made at very low levels?

Greg Mankiw - Total Loser

Guess what the Harvard professor did, he disabled comments from his blog posts!

The guy couldn't take criticism so he did what all small-membered tyrants do, he banned it.

If you remember, first he tried to stifle negative feedback under the ruse of regulating civility.

Apparently that didn't suffice.

I haven't been following or commenting on his blog for quite a while, so alas, I can't take much credit for his capitulation. Read one of his explanations:

I just don't have the time to police comments and enforce good behavior, especially since some posts were generating more than 100 comments. And I don't want to host a party in which a small vitriolic minority consistently tries to ruin the event for everyone else. So I decided to turn the comments feature off.

There you have it, intellectual minorities are not welcome by the effete majority at Harvard. Diversity must remain only skin-deep.

(The guy didn't just "disable comments". He deleted all of them from old posts too!)

FLASHBACK Here is my favorite Mankiw post. It's a good thing I preserved the exchange with screen shots.

The New York Times Hits A Ten Year Low

As I type this, shares of the New York Times Co. are trading at $18.45 apiece.

I will bet you'll have difficulty finding ANY other stock in the Standard & Poor's 500 Index that is at such a multi-year nadir.

So, will S&P boot the company out of the index and spare the millions of passive index investors from blindly subsidizing this train wreck of a media company?

I wouldn't hold my breath.

On the bright side, this mutual fund welfare, courtesy of S&P, has probably helped the demise of the Grey Lady. Another company in these straits would have had its ratings slashed, its stock price pummeled, AND had to quickly re-invent itself as a rational, profit-maximizing entity. Ironically, just about everyone who DOESN'T read The Times understands that welfare kills.

The NYT's financials indicate that it has a mere $57 million in cash against a debt load of almost $1 billion. Bankruptcy still has an outside chance. Wall Street currently has shorted around 11% of the stock's float - that's no small percentage.

If one looks in the right places...he'll find plenty of justice in this world.

Babysit or Manage a Subway?

So I was talking to a young lady who owns a Subway sandwich shop in the Boston area. She told me that she pays her managers $10 per hour and the minions $7.50 per hour.

Bear in mind that I pay my babysitters, cheapskate that I am for my locale, $12-$14 per hour - in cash (i.e. no tax withholding, Morons).

What would you rather do? Bean-count at a restaurant or play with my angelic kids for substantially higher pay?

Note that $7.50 per hour is the State of Massachusetts' minimum wage. No doubt if the Subway owner could pay the minions a little less, she'd be able to raise the manager's pay to the neighborhood of a babysitter's (unregulated) pay.

Furthermore, the owner told me that she has had problems with all the managers skimming (that means stealing money, Morons).

Gee, I wonder why they skim?

Real Estate - Fixer Upper Arbitrage

How many times have you heard someone exclaim, "You know if I buy that house, put fifty grand into it, I can sell it for a hundred grand more..."?

I have heard it more times than I could count - which is no small number!

The fact is, after you pay all the transaction fees: closing costs, title insurance, real estate commissions, etc., the theoretical profit of such a flip gets whittled down to nothing.

For example, if the house costs 600k and your "updating" yields a sale price of 700k, the 5%-6% real estate commission alone will erode $35,000-$42,000 of your massive 50k profit.

Sure, arbitrage as I have outlined is more doable with lower priced homes as the transaction costs are smaller in dollar magnitude but I submit that these opportunities, generally speaking, do not exist.

They don't exist because they have been arbitraged away by contractors. In this housing bull market run, all these obvious buy, fix-up, and flip-for-a-profit properties have been scooped up by professional contractors - men who know a little be more than everyone else about updating costs. Also, bear in mind that they can do the work cheaper than you as well.

So, the next time you contemplate buying a speculative fixer upper that's been languishing on the market for months, remember that all sorts of professional contractors have scouted and rejected its prospects already.

Oh yeah, and don't forget that housing prices, broadly speaking, are going to drop at least another 20% from today's levels.

Will Durant on Religion

I looted this passage from the beginning of The Reformation which is Book VI of Durant's The Story of Civilization.

RELIGION is the last subject that the intellect begins to understand. In our youth we may have resented, with proud superiority, its cherished incredibilities; in our less confident years we marvel at its prosperous survival in a secular and scientific age, its patient resurrections after whatever deadly blows by Epicurus, or Lucretius, or Lucian, or Machiavelli, or Hume, or Voltaire. What are the secrets of this resilience?

The wisest sage would need the perspective of a hundred lives to answer adequately. He might begin by recognizing that even in the heyday of science there are innumerable phenomena for which no explanation seems forthcoming in terms of natural cause, quantitative measurement, and necessary effect. The mystery of mind still eludes the formulas of psychology, and in physics the same astonishing order of nature that makes science possible may reasonably sustain the religious faith in a cosmic intelligence. Our knowledge is a receding mirage in an expanding desert of ignorance. Now life is rarely agnostic; it assumes either a natural or supernatural source for any unexplained phenomenon, and acts on the one assumption or the other; only a small minority of minds can persistently suspend judgment in the face of contradictory evidence. The great majority of mankind feel compelled to ascribe mysterious entities or events to supernatural beings raised above “natural law”. Religion has been the worship of supernatural beings – their propitiation, solicitation, or adoration. Most men are harassed and buffeted by life, and crave supernatural assistance when natural forces fail them; they gratefully accept faiths that give dignity and hope to their existence, and order and meaning to the world; they could hardly condone so patiently the careless brutalities of nature, the bloodshed and chicaneries of history, or their own tribulations and bereavements if they could not trust that these are parts of an inscrutable but divine design. A cosmos without known cause or fate is an intellectual prison; we long to believe that the great drama has a just author and a noble end.

Moreover, we covet survival, and find it hard to conceive that nature should so laboriously produce man, mind, and devotion only to snuff them in the maturity of their development. Science gives man ever greater powers but ever less significance; it improves his tools and neglects his purposes; it is silent on ultimate origins, values, and aims; it gives life and history no meaning or worth that is not cancelled by death or omnivorous time. So men prefer the assurance of dogma to the diffidence of reason; weary of perplexed thought and uncertain judgment they welcome the guidance of an authoritative church, the catharsis of the confessional, the stability of a long-established creed. Ashamed of failure, bereaved of those they loved, darkened with sin, and fearful of death, they feel themselves redeemed by divine aid, cleansed of guilt and terror, solaced and inspired with hope, and raised to a godlike and immortal destiny.

Meanwhile religion brings subtle and pervasive gifts to society and the state. Traditional rituals soothe the spirit and bind the generations. The parish church becomes a collective home, weaving individuals into a community. The cathedral rises as the product and pride of the unified municipality. Life is embellished with sacred art, and religious music pours its mollifying harmony into the soul and the group. To a moral code uncongenial to our nature and yet indispensable to civilization, religion offers supernatural sanctions and supports: an all-seeing deity, the threat of eternal punishment, the promise of eternal bliss, and commandments of no precariously human authority but of diving origin and imperative force. Our instincts were formed during a thousand years of insecurity and the chase; they fit us to be violent hunters and voracious polygamists rather than peaceable citizens; their once necessary vigor exceeds present social need; they must be checked a hundred times a day, consciously or not, to make society and civilization possible. Families and states, from ages before history, have enlisted the aid of religion to moderate the barbarous impulses of men. Parents found religion helpful in taming the willful child to modesty and self-restraint; educators valued it as a precious means of disciplining and refining youth; governments long since sought its co-operation in forging social order out of the disrupting egoism and natural anarchism of men. If religion had not existed, the great legislators – Hammurabi, Moses, Lycurgus, Numa Pompilius – would have invented it. They did not have to, for it arises spontaneously and repeatedly from the needs and hopes of men.

Idleness Update

I have to apologize to my millions of faithful blog readers. I have been too busy to post these days. Here's what I have been doing:

First off, I am trying to recover the boatload of cash I lost shorting this stock market bounce. For sure Wall Street is giggling at how it manhandled the Fed into lower rates. Politicians, because that's what Bernanke et al really are, are complete invertebrates.

Secondly, I just went down to a wedding on Long Island. In fact, the wedding was at the same yacht club that my wife and I got married at nearly four years ago to the day. It was quite fun to take in the beauty of the location as we weren't distracted this time by all the pageantry of our sacrament.

Thirdly, I recently endured a very traumatic incident with my mother-in-law. It has simply frozen my mind and sapped my zest for life. I have no idea what to do with it. My life coach has recommended blogging about it for "cartharsis". BUT my wife told me that to do so would invite assassination.

Fourthly, my scant free time has be spent trying to finish Will Durant's Story of Civilization. I have 2.5 books left out of 11 and hope to be done with them by the end of the year.

And my last weak excuse is that I went on my short, annual golf trip down to Naples, Florida. With all the driving, flying, and putting I haven't spent much time at my computer.

Fear not my wandering flock, I shall return shortly!

Convoluted Honesty

This recently appeared on CraigsList:

What am I doing wrong?

Okay, I'm tired of beating around the bush. I'm a beautiful(spectacularly beautiful) 25 year old girl. I'm articulate and classy. I'm not from New York. I'm looking to get married to a guy who makes at least half a million a year. I know how that sounds, but keep in mind that a million a year is middle class in New York City, so I don't think I'm overreaching at all.

Are there any guys who make 500K or more on this board?

Any wives? Could you send me some tips? I dated a business man who makes average around 200 - 250. But that's where I seem to hit a roadblock. 250,000 won't get me to central park west. I know a woman in my yoga class who was married to an investment banker and lives in Tribeca, and she's not as pretty as I am, nor is she a great genius. So what is she doing right? How do I get to her level?

Here are my questions specifically:

- Where do you single rich men hang out? Give me specifics- bars, restaurants, gyms

-What are you looking for in a mate? Be honest guys, you won't hurt my feelings

-Is there an age range I should be targeting (I'm 25)?

- Why are some of the women living lavish lifestyles on the upper east side so plain? I've seen really 'plain jane' boring types who have nothing to offer married to incredibly wealthy guys. I've seen drop dead gorgeous girls in singles bars in the east village. What's the story there?

- Jobs I should look out for? Everyone knows - lawyer, investment banker, doctor. How much do those guys really make? And where do they hang out? Where do the hedge fund guys hang out?

- How you decide marriage vs. just a girlfriend? I am looking for MARRIAGE ONLY

Please hold your insults - I'm putting myself out there in an honest way. Most beautiful women are superficial; at least I'm being up front about it. I wouldn't be searching for these kind of guys if I wasn't able to match them - in looks, culture, sophistication, and keeping a nice home and hearth.

PostingID: 432279810



Here's one of the answers Madame Gold-Digger received:

Dear Pers-431649184:

I read your posting with great interest and have thought meaningfully about your dilemma. I offer the following analysis of your predicament.

Firstly, I'm not wasting your time, I qualify as a guy who fits your bill; that is I make more than $500K per year. That said here's how I see it.

Your offer, from the prospective of a guy like me, is plain and simple a crappy business deal. Here's why. Cutting through all the B.S., what you suggest is a simple trade: you bring your looks to the party and I bring my money. Fine, simple. But here's the rub, your looks will fade and my money will likely continue into perpetuity...in fact, it is very likely that my income increases but it is an absolute certainty that you won't be getting any more beautiful!

So, in economic terms you are a depreciating asset and I am an earning asset. Not only are you a depreciating asset, your depreciation accelerates! Let me explain, you're 25 now and will likely stay pretty hot for the next 5 years, but less so each year. Then the fade begins in earnest. By 35 stick a fork in you!

So in Wall Street terms, we would call you a trading position, not a buy and hold...hence the rub...marriage. It doesn't make good business sense to "buy you" (which is what you're asking) so I'd rather lease. In case you think I'm being cruel, I would say the following. If my money were to go away, so would you, so when your beauty fades I need an out. It's as simple as that. So a deal that makes sense is dating, not marriage.

Separately, I was taught early in my career about efficient markets. So, I wonder why a girl as "articulate, classy and spectacularly beautiful" as you has been unable to find your sugar daddy. I find it hard to believe that if you are as gorgeous as you say you are that the $500K hasn't found you, if not only for a tryout.

By the way, you could always find a way to make your own money and then we wouldn't need to have this difficult conversation.

With all that said, I must say you're going about it the right way. Classic "pump and dump."

I hope this is helpful, and if you want to enter into some sort of lease, let me know.

Shiftless College Kids

Damages

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.

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,

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.

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!

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...

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 agweb.com 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.

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
Tonight
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

Midnight
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
Aiight

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
No
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..."

????

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
By TONY WOODLIEF
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.

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.

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.