Over-Nuanced Morons

"I don't want to diminish the threat of terrorism at all, it is extremely serious, but on a long-term global basis, global warming is the most serious problem we are facing."

Thank God Al Gore wasn’t our president when 9/11 happened we’d be offering Middle Easterners hybrid vehicles instead of democracy.

Chris Matthews is also one of these over-nuanced moral relativists. Ever watch him? He is one paranoid indefatigable LOSER. His nuanced view of terrorists:

"The person on the other side is not evil -- they just have a different perspective."



Rich Karlgaard is a great writer for Forbes. Check out his blog where you will find fresh ideas and insights not widely promulgated.

He had a great post on “zero-summers” – people that have never considered that our economic pie is a growing one or that innovative capitalism ALWAYS finds a way to more society forward.

Look at this great comment someone made on Rich’s post.

Save fuel now because it will run out in 200 years? Crazy. 200 years ago we were using wood. 200 years from now we will be using helium 3 mined from a gas giant for use in fusion reactors. Conserve oil so we won't run out? That is as crazy as saving whales, in 1850, so we will still have whale oil available in 2050.

I absolutely loved this comment. Too many people run around worrying about stuff like saving energy that history has shown is itself a waste of “energy”. My mother is one of these types who conserves water and runs around turning off lights in empty rooms. Only part of it is cheapness and force of habit, the bulk of it stems from a misbegotten belief in scarcity. (I did a google image search on "save the whales" and got this pubescent gem.)



Of course she has never read anything like that whale oil comment in her New York Times-owned local paper.

Speaking of that Perma-Commi newspaper, the Times said today that:

By most measures, the economy appears to be doing just fine. No, scratch that, it appears to be booming.

But as always with the United States economy, it is not quite that simple.

“Not quite that simple”??????

Stock market at 4.5 year high, housing market booming, and bond market just off a 46 year high. What else is there?

The Times says it is all a mirage and goes on to explain it to the under-nuanced. Who really wants to read perpetual negative spin on a prosperous economy? Then again nobody buys the Times for its sports section either.

Let me christen another Moron Tactic – the Simple/Complex Spin.

Over-nuanced Morons consistently use this trick whereby they transmute the complicated into the simple and vice versa.

The economy is not really that complicated especially with all three asset classes percolating – don’t get pulled in by this RUSE of “it is not quite that simple.”

Now take something that ACTUALLY is complicated, like the war in Iraq. The sultans of nuance at the Times boil it all down to “Bush Lied. Oil for Halliburton.”

Financial Update

Look at this Moron. Only in New York.....

In that hackneyed Wall Street lingo…..I am currently heavily OVERWEIGHT CASH (90%). In other words, I don’t like stocks or bonds at today’s levels. I recently sold all of my long term equity investments. The stock market is at 4.5 year highs, bonds are just off 46 year highs, and real estate is still very much in nosebleed territory.

And of course I am actually short real estate because I rent.

Let me explain that. For every dollar that my theoretical first home depreciates, that is one less dollar that I will have to shell out to buy it. Renting therefore is financially equivalent to shorting the housing market. The exact same risks apply because if I am wrong and home prices continue to rise, I will have to ante up that much more later on for my first home.

Money market rates are nearing 4% in some select banks and quite frankly I am extremely happy with that yield. I have heard a lot of older people whine about low interest rates the last few years almost as if they are ENTITLED to higher returns. More likely they just weren’t accustomed to ever getting the 1% or so the money market fell to. Also the older folk may have been whining but were generally wise enough to not chase better returns from investments with which they weren't comfortable – that is something I can’t say about some of my younger, condo-flipping buddies.

REMEMBER, 4% is pretty much the annual return one needs to justify borrowing at today’s rates of 6% and buying a home. The up-in-the-air mortgage interest deduction explains that 2% reduction.

So TODAY one can get 4% risk-free in the money market or you can take your money and make a decade or two commitment to a house, neighborhood, and city or town. You'll be fretting leaking roofs, rising property taxes, foundering local government schools, and will probably end up moving and paying an exorbitant real estate fee before too long.

I think cash will be king for a couple of years at least, mostly because nobody has any. “Homeownership” may be touted at 69% - an all time high, but so is home indebtedness. Americans collectively own less than 50% of their home down from a historical average of 75%. To be sure, it is generally wise to borrow when rates are low as they have been, hitting 46 year lows this year, but much of that borrowing has been done with very risky adjustable mortgages. Even worse, adjustable rate usage has risen even at higher home prices.

Back to the financial markets.



Gold rising is bad. In case you've missed it, gold effectively hit $500 an ounce today - a level not seen since 1987. (Click chart to enlarge.)

Bubblehead macroeconomists insist that rising gold is forecasting inflation. This recent gold move has been befuddling these dopes because the dollar has been rising with gold this year.

Normally gold benefits from a weaker dollar because most global commodities, oil, grains, metals, etc. are priced in dollars. So a weaker dollar means that it will buy a smaller basket of commodities than before.....ergo we have inflation.

So what is exactly going on here with gold seemingly moving the wrong way?

The answer is that nobody knows. But I will throw out my worst-case scenario explanation. I believe that the global financial markets are worried about the long term prospects of the US economy and are therefore diversifying accordingly.

What is there to worry about?

ENTITLEMENT CRISES. That is about it. Medicare and Social Security spending are a bigger and more certain threat to out prosperity than just about anything else short of a nuke in Manhattan.

American capitalism has been the world's most indefatigible benevolent force and will surely be tested by this impending clash of actuarial realities and political impotence.

Also fueling the stock market's recent percolation is a widespread belief that the Fed will stop tightening short term rates in January. This may be an accuate forecast BUT, despite Big Media and econo-illiterates' obsession with Alan Greenspan, SHORT-TERM RATES SIMPLY DO NOT MATTER. Japan had 1% short term rates for years and it did nothing to re-stimulate its economy. The rates that matter are LONG TERM RATES.

Also, lowered short rates couldn't stimulate our economy in the early 1990s either. Banks were ravaged by real estate lending and whatnot in prior years, decided to shore up their balance sheets, and therefore simply did not pass on the lower rates to borrowers.

Today's bulls tout falling energy prices as a very positive catalyst BUT they need to be reminded that the market did not sell off one lick on Hurricane Katrina and $3 gasoline. The market correctly shrugged off that media created frenzy while it was going on.

Today's bears can point to a flat yield curve.

One thing worth noting is the so-called January Effect that seems to come earlier every year. Last year the market spiked in December and sold off hard in January. I get the feeling that this November rally may be this year's early January Effect. Basically everyone used to expect the market to rally in January, and it did for many years, so they started buying in December. Now everyone expects a December rally and have bought in this month. Anyway this is just my unscientific take - we'll see what happens.

I am not short the market, but have been playing the short side intraday a lot recently. (One stock I am short is Apple - not because I think it is going to zero, but just as a trade.)



Anyway, how does that Google look now at $429 per share?

It was $228 when I first blogged about it in May. Remember I got in at $177.

I am still comfortable with my $3,000 price target for August of 2010, but will watch it closely. Recently they announced a $900 million set-aside for socially responsible investments in things such as “alternative energy”. My regular blog readers know how much I hate crap like this.

Everyone knows that Black Friday is the day after Thanksgiving, but I just learned about Cyber Monday. Apparently it is the next Monday when everyone spends their workday Christmas shopping online.



Cramer was touting the stock of Websense yesterday as somewhat of a play on this “cyberslacking” phenomena. Websense is a software company that helps businesses monitor, i.e. limit, delinquent websurfing from their employees. They have a great corporate-speak name for what they do - something like “technology resources optimization”.

I occasionally watch Mad Money because it is entertaining and informative – not to mention his stock picks tend to be quite the movers as soon as the words leave his lips. Watch the after-hours ticker at the bottom of the CNBC screen.

There is even a story going around about some Mad Money caller who was on hold and overheard Cramer touting some stock, bought it before everyone else (the show is slightly pre-recorded), and made a bundle.

Anyway, Cramer is a pretty bright guy and has made some great picks this year. He has mostly been bullish on Google, Apple, and oil companies to name a few. To be sure he has some bombs as well that others are probably better at naming. Just google “cramer sucks” or something.



Cramer’s fortunes will ebb and flow with this mild bull market. He is not recommending any shorts (at least that I know of) and will be pilloried should the market enter a prolonged bear period. One has to remember that he is a SALESMAN, pure and simple. Guys like him are a dime a dozen on Wall Street. They can give you a compelling bull case for whatever stock they feel like. Some of these guys, like Cramer, are so persuasive that you feel like running out instantly and buying whatever they tell you. A great stock recommendation can sound almost like an earth-shattering discovery – to which only you are privy. So you run out and buy it and as you are holding it you start doing some more research. Most times you will find out that that bull argument has been around for years. The stock could languish in the dumps and you may have to wait for another set of docile buyers to push the stock in order for you to get your money back.

Like any dissembling salesman, Cramer often talks out of both sides of his mouth. Sure he has been bullish on Google mostly, but also said to lighten up at $250. And I also remember a show where he said to lighten up on the oil stocks as well.

Cramer has a, let's just say a "mixed" reputation. When he ran a hedge fund and was short a stock, he would routinely get his analysts in on that particular company's conference calls. He ordered them to grill, insinuate, and basically accuse management of shoddy performance and whatnot. All the other analysts would hear this badgering and would undoubtedly get nervous or at least less comfortable with that company. In other words, it was a manipulative way to drum up negative sentiment on a stock in which he was short.

So how was Black Friday?

USA Today said it was “Dazzling”.

Bloomberg said it was “Good”.

The Associated Press said it was “Modest”

And shocker of all shockers…..the New York Times said it was “Horrible” or at least they deeply implied that in Mall Stores See Trouble in Sales Data. The Times spun Black Friday as all about “discounting” and poor people running up their credit cards.

So when we have high energy prices from a strong global economy…that is bad.

And when we have low priced televisions and clothing, the standard fruits of capitalism......that too is a bad sign.

Black Friday just brings another day's version of the same old agitprop.

Perma-Commi Naysayers.

Shame on Forbes

Shame on Forbes.

The November 14th, 2005 issue had an article titled, We’re Not That Dumb written by Michael J. Handel of the Economic Policy Institute. (Again, try bugmenot if you can't get that article.)

I am going to dissect this incoherent tripe.

First, the subtitle,

Our economic ills are supposedly due to a gap between workers' skills and job demands. That gap is a myth.

Now exactly what are “our economic ills”? Handel doesn’t say. About halfway through, I can only infer “rising wage inequality” with ZERO supporting evidence. But it’s not a good start when the reader has to guess the subject at hand.

Handel then says:

Fed Chairman Alan Greenspan has repeatedly said that U.S. workers need to beef up their skills and training if they want to compete globally in this era of technological innovation. President Bush proposes education policies based on the assumption that the quality of schools is sliding inexorably downward.

Okay, I don’t want to include too much of this article on my blog. It was painful enough to read it myself and the link is above for those so inclined. But I wanted to illustrate a common Moron debating tactic.

First, Handel makes a broad-brushed statement of our nebulous “economic ills” and then tries to link that to an equally vague notion, in this case a “skills gap”. Now this masturbater, I mean MASTER DEBATER sets off to debunk the “myth”.

Of course fueling these “ills” and the “myth” are two major enemies to socialism, Alan Greenspan and President Bush. A little background – the Economic Policy Institute is a Commi-propaganda think tank which I recognized right away but which could easily be missed by an undiscerning reader.

I fully understand the limits of space in penning an article such as this, but this is ridiculous. The first paragraph almost epitomizes the word propaganda. Handel is trying to suck the reader into a syllogism that he created out of thin air. Whatever our unnamed “economic ills” are, you can be sure that President Bush and Alan Greenspan are complicit. Nine out of ten people on the street will tell you that government schools are “sliding downward”. Only a elitist ideologue can dismiss that reality and I will get to the ideological bias later.

It is quite a leap from one Greenspan quote about workers needing to “beef up their skills” to a “wage gap” and then to our unnamed “economic ills”. But such is common practice amongst the Morons who start with ideological conclusions and then scamper to create the supporting evidence. And for good measure, this faux evidence usually impugns as many enemies of the Moron as possible, e.g Bush and Greenspan. Hey why not - it is all made up anyway?

It is almost impossible to debate a guy like this because he made no connection from our unnamed “economic ills” to his whacky construct of a “skills gap”. But like most of the Morons, I can even Marginalize this guy by assuming his misbegotten premise.

For the sake of argument, I will accept that we have some economic problems caused by deficiencies in workers’ skills. Handel proceeds to attacks this "myth":

In the early 1960s nearly 50% of all Americans had dropped out of high school, including nearly one-third of young adults. Today both figures are under 15%. Four-year college completion rates for young workers doubled from 15% to 30% over the same period. In fact, Americans are more educated now than ever before.

So why the concern with education? Scores on college entrance exams like the SAT and ACT did decline between the mid-1960s and the early 1980s. For much of that time the U.S. economy was also in recession and faced a withering challenge from the apparently better-educated Japanese. This began what is now a tradition of blaming education for economic problems.

(This last sentence is a doozy. I must have forgotten about our BLAME EDUCATION DAY. It is actually not a bad idea.)

So more kids graduate from high school and more go to college than 40 years ago. Big deal. How the heck does this imply that kids are entering the workforce today with no gap between their skills and what an employer needs? The great majority of people that I know will freely admit that they hardly use their college education at all on the job.

Furthermore, hasn’t high school education been dumbed down to the point of being a joke? For crying out loud, today students can take 12 years of ESL courses (English as a Second Language) and still earn their diploma. I would STRENOUSLY ARGUE THAT NOT BEING FLUENT IN ENGLISH IS QUITE A SKILLS GAP!!!!!!!!!!!!!!!!!!!!!!!

Aha – now I get it. What Handel really wants to say is that our educational system is good – which is quite off-topic from the still unnamed ”economic ills” and not to mention, quite a stretch of the imagination.

High schools are so deficient today that kids (their parents and taxpayers) have to spend 100k on college just to become literate now. Yet Handel somehow sees this increased college enrollment as a validation of our public educational system? Please Mr. Handel, come back to Earth. Actually I think Handel’s idiocy is irreparable. Clearly he has that dominant 2+2=5 gene so apparent in blind ideologues.

Handel then predictably steps in the excremental SAT propaganda.

Let's set the record straight. Since the early 1980s scores have remained level or climbed, depending on the test. Math SAT scores are higher now than they were in the early 1970s.

Sorry Moron, this isn’t evidence of a solid educational system either. As he himself already stated, there has been a significant increase in college matriculation and therefore a much greater percentage of students are taking the SAT. Before, only the smartest kids took the SAT, now plenty of the dummies are also taking it.

SO SHOULDN’T AVERAGE SAT SCORES BE LOWER TODAY THAN IN THE PAST?!?!?!?!?!?!?!?

Of course they should be lower. I am going to fill everybody in on a dirty little secret.

THE SAT IS A SCAM.

They have been gradually inflating the scores for the last fifteen years at a minimum. Today a score of 1300 is just not comparable to 1300 when I took the exam in 1990-91. According to this link, the average SAT score in 1990 was 1026 and in 2004 it was 1049. Now that may not look significant but look at this steadily rising trend in average math scores.

1990 - 521
1992 - 521
1994 - 523
1996 - 527
1998 - 531
2000 - 533
2002 - 534
2004 - 537

You know, all of these public companies get in a heap of sh*t for accounting gimmicks that smooth out their reported earnings or revenue. Yes, I am accusing the College Board of deliberately inflating students' scores.

I couldn't find any historical data on the percentiles but I would bet my right arm that if 1300 was a 94th percentile score (meaning better then 94% of the other applicants' scores) in 1990, I bet it is down nearer the 87th percentile in 2005. You see, they are making the test easier, but the smarter kids benefit more from easier questions than the other students. They have all sorts of skews in there as well to try and blunt this effect, but they can only do it so much. For instance, a student may get only one question wrong on the math part, lose 30 points, and be scored at 770. But the student who gets 10 questions wrong won't lose points proportionally. In other words, he will be penalized by less than 10 * 30 points and score above 500.

IT IS NOT A STANDARDIZED TEST at all because scores are clearly not comparable from year to year. I guess all that matters is your percentile score.

Why inflate the scores? Well, they simply do it to make nice with everybody. Colleges love to tout each incoming class' higher average SAT than the prior year's. Educrats and Big Government advocates like Mr. Handel hunger for contrived statistics to hide the deficiencies of public schools. In short, society just prefers feel-good pabulum over the cold hard facts.

(Coach Thompson and star "graduate" Patrick Ewing who freely admits his illiteracy.)

By no means am I the only SAT critic. Coach John Thompson famously walked off the basketball court sixteen years ago to protest the SAT as "culturally biased". I remember his one example. He said:

"How is a minority from the inner city going to know what a 'yacht' is?"

I don't know John....maybe if they read it in a book. I never saw a yacht in central Massachusetts when I was growing up either. Libraries seem to be free in every locale that I have visited.

Seen as the end-all gateway to higher education, the SAT invites criticism from a multitude of angles beyond Thompson's ridiculous argument. Coach Thompson just didn't want his freshmen declared athletically ineligible because they couldn't score 700 or whatever the proposed minimum was.

Minorities don't score well ergo the SAT is racist.

Women lag men ergo the SAT is sexist.

The SAT is a poor predicter[sic] of college grades....Historically the test did a particularly poor job of predicting how females, students of color, and older test-takers will perform in college.

(All that from a website devoted to bashing the SAT and advocating colleges to stop requiring it.)

My wife wanted to add "football player" to that list of demographics that perform poorer on the SAT than they do once in college. Now here is the burden of humoring and debunking Moron arguments - once you start, you keep encountering more and more sophistry that needs to be taken out.

Why do many kids do poorly on standardized tests and then seemingly do better in college?

BECAUSE THEY MIGRATE TOWARDS THE EASY SUBJECTS!!!!!!!!

While at UPenn, I witnessed firsthand kids who struggle in Economics, Calculus, Engineering, and Pre-Med courses and then take mad dashes into the departments of Psychology, Sociology, Spanish, English, and the joke fields of Afro-American and Women's studies.

So they blow on standardized tests but excel in "all A's and B's", "there are no wrong answers" fluff majors. This "poor predicter[sic]" argument is another standard Moron tactic - Selective Metric Fishing.

The whole point of standardized testing is to objectively and fairly measure all students. These joke fields abominate that end. Did I mention that Michael Handel is a sociologist? I know, what a shocker.

Okay, so the Moron has made neither a coherent nor trenchant case for our educational system yet feels sufficiently content to move on.

What about rising wage inequality? Many labor economists think the spread of computer use to the broader workforce explains most of the change, especially between college- and high-school-educated workers.

Then he rambles on about how computers aren't that important or difficult to use. But wait a second, what about "rising wage inequality"? Handel doesn't bother to source this AND apparently expects readers to sheepishly nod in agreement of both its existence and depravity. CaptiousNut has already debunked its wickedness in a previous blog.

The Gini coefficient measures wealth inequality in a given society. In this country, it has been rising steadily for 30 years – implying a widening gap between the richest and poorest. Propagandists love to pounce on this stat to show how “unfair” capitalism is, yet countries with narrower gaps (lower Gini coefficients) suffer higher unemployment, lower growth, and lower standards of living. SOCIALISTS JUST CAN'T COMPREHEND THE FACT THAT THE EXISTENCE OF VERY RICH PEOPLE IS A GOOD THING FOR THE REST OF SOCIETY.

Moron Handel glosses over that crippling salient, as would any other devout socialist.

I apologize for the redundancy, but again Handel tries to elevate a dubious notion of "rising wage inequality" by linking it to some half-baked theory of computers and worker productivity and then dispelling that "myth".

(Please only skim read this insipid diarrhetic babble.)

In fact, most people use computers in ways that are relatively easily learned and do not require expert knowledge or much greater cognitive skills than before computers arrived on the job. Much of the early evidence that computers raise the average users' pay or the skill level needed for typical jobs has proven shaky on closer examination. Most of the growth in the college-versus-high-school wage gap occurred between 1980 and 1990--suggesting that technology was not the main driver or that its biggest effects on skill demand are behind us.

Of course, technology may change the job mix. But again, the most rapid shift to skilled white-collar work is in the past. It happened more quickly in the 1970s and 1980s, when the percentage of all jobs in the managerial and professional category increased by between four and five percentage points, than in the 1990s, when it grew three percentage points.

Skill requirements will continue to rise, probably at about the same steady, measured pace as in the last four decades, not at the breakneck speed of popular imagination.

("breakneck speed of popular imagination" - WTF kind of vague generalization of the populace is this?)

As the Moron drones on it becomes painfully clear that this is in fact an article about "nothing" - at least on a substantive level. Seinfeld and Costanza could maybe appreciate it, but I certainly didn't from a normally very edifying publication.

After all, if the skills gap has been growing all this time, how to explain the latter half of the 1990s, when unemployment rates plummeted, productivity growth soared to levels not seen since the late 1960s and real wages rose broadly for the first time since the early 1970s?

I just introduced the concept of Selective Metric Fishing, now I want you to meet its cousin, Causation Fishing.

The late 1990s were no doubt a period of tremendous economic prosperity and every Moron has a self-aggrandizing spin on how or why it happened. Some dreamily think the stock market rallied because Bill Clinton was in office, others think it was because we slightly raised the minimum wage, and now this Moron is using it to try and debunk his self-authored "skills gap myth".

Does anyone think I over use the Commi- and socialist labels? Well consider how Handel ends his article about "nothing".

But the problem with the skill-shortage story is that it perpetuates myths about both workers and jobs. The reason the wages of most Americans stagnated in the last 25 years is not the lack of skills or education. Rather, the economic crises of the 1970s and early 1980s resulted in a drive to lower labor costs that became institutionalized as a basic premise of management. The real problem lies not with workers but with an economy that doesn't produce enough well-paying jobs.

Unnamed "Economic Ills".

Unassailable Government Education.

Unassailable Workers' Skills.

Wage Inequality.

Evil Management with an "institutionalized" drive to lower Labor costs.

The Economy is the "real problem".

A Commi is still a Commi.

Congressional Morons, Etc.

I guess the quintessential moron is one who repeatedly acts against his own self-interest. Banging your head on a wall comes to mind.

The joke that is government education, especially the collegiate level, is always ripe ground for harvesting morons.



It boils my skin when I hear how schools have banned the military or ROTC from their campuses. The most publicized culprit is of course Yale. Now these schools get millions in federal subsidies directly and indirectly through federally backed student loans. I was thinking the other day how outrageous this was and how the federal government should just revoke all of their funding – especially the student loan backing. The powers-at-be of Yale just don’t appreciate the military (the whole gay issue is a ruse), in fact they hate it. Yale is likely run by pathetic 60s hippies who came of age with an antipathy towards the military. I happily discovered that others already shared my sentiment. The Solomon Amendment was attempting to do just what I prescribed – withhold federal monies from these petulant schools.


CNBC anchor Steve Liesman recently asked U.S. Treasury Secretary John Snow about the deficit.

Snow: We cut taxes and it improved the deficit – contradicting what the naysayers forecasted. And now the deficit is a smaller portion of GDP than before.

(Liesman hated this answer and fired back.)

Liesman: Well what about the dollar value of the deficit?

It is tough to do justice to this in print but I will try. This little exchange illustrates why I am starting to really loathe CNBC. They have such a Commi-adversarial bias that permeates almost every second of their programming.

Liesman wanted to hit the Treasury Secretary over the head with the deficit and when Snow returned serve with the undeniable benefits of the tax cuts, Stevie got visibly perturbed. How dare Snow flaunt facts hostile to socialist propaganda!!!!!

Liesman, mental midget and terrible anchor that he is, completely glossed over what Snow said. Stuck on the deficit, he followed up with that stupid follow-up about the "dollar value" of the deficit. Which begs a worthy issue that I will get to in a moment.

While writing a draft of this blog I characterized Steve Liesman as a perma-Commi naysayer. My characterization was purely based on the empiricism of listening to him every day. I hadn't yet read his illustrious profile.

It turns out that he worked for the Moscow Times, went to Columbia School of Journalism, and has an undergraduate degree in English.

Emeril couldn't concoct a better recipe for a "perma-Commi naysayer".

So CNBC's Senior Economics Reporter lacks even an undergraduate degree in economics. WOWSERS!!!!

They pick on Liesman sometimes during programming because he is a bit of a weenie and may in fact deserve it. But to me, his economic illiteracy is the much bigger vice. If I ever debated him on TV, he might not be able to get off the mat when I was through. Way to go CNBC....great hire.

Now back to the deficit. This whole idea that we need to raise taxes to pay for the deficit couldn't be more flawed. Not only have tax cuts raised more revenue all four times enacted, econo-illiterates consistently MIS-FRAME the debate.

The fact that Congress is addicted to spending should have nothing to do with where the government sets tax levels. "Two wrongs don't make a right" is preached to 5 year olds....so why doesn't it apply to the grown-ups that run society?

Another analog. Consider the parent whose child is addicted to video games. Unable to wean him away from his Sony Playstation, the parent relents and decides to buy the geek a lot more games - to make him happy. Or when people argue that we should legalize narcotics because we can't enforce the drug laws.

Tax cuts make sense because they stimulate the economy. I just don't understand the socialists sometimes. They should be for tax cut stimulation because it will bring in more revenue that they can REDISTRIBUTE. Of course socialists don't care about the financial realities....all they care about is what tax propaganda will help them foment CLASS WARFARE.

Back to the mis-framed deficit debate. I learned the mis-framing tactic back in the fourth grade when a jesting classmate asked me:

"Do your parents know that you are gay?"

Obviously both "yes" and "no" answers elicited giggling.

Republicans have been smart to push for the recent tax cuts. Ideally, they want taxpayers to get so accustomed to the rebates that it becomes political suicide for a pol to be against the cuts. This tactic reminds me somewhat of what Robert Moses said about his huge public works projects, "...all I want to do is drive the first stake..."







These bridges, tunnels, and highways he built were mammoth in size and ungodly in cost. Who could possibly forecast the eventual cost of the Tri-Borough Bridge or the Verrazzano Bridge? Moses, typical government agent that he was, couldn't care less about the real costs. All he wanted to do was drive that first stake in the ground and he knew that no New York City politicians would let the projects lanquish or go unfunded on their watch. They always found the money even as the costs exploded far beyond the worst projections.

So this whole push for tax cuts has been driven by that logic. Congress is really just a bunch of collusive local lobbyists. The federal government scoops up tax dollars and these wanton criminals divvy it up to suit their own perceived political agendas. Congressmen think it is their duty to bring home as much federal money as possible. Think about that for a second. The present-day Congressional metric for success is how much federal tax revenue they can have wasted in their own states.

Boil it down and Congressmen are nothing more than dirty sports agents for their districts. Don't expect leadership or healthy debate on national issues from these weasels. Goverment spending should be held hostage to pro-growth and low taxation levels - not the other way around.

Republican Senate Majority Leader Bill Frist has recently jumped on the "let's tax big oil" pig-pile. He knows darn well that oil companies aren't "gouging" and that taxes will just aggravate energy prices. But this "leader" is worried that he and other Republicans are too identified with oil companies.

This is leadership? Instead of seizing this moment to educate the public on the costs of fanatical environmentalism, the economics of energy companies, and the GOUGING of gasoline taxes (almost 4 times what big oil earns).....Frist is worried about how Big Media and really dumb people percieve him. Inherent in his reasoning are two vile presumptions:

1) His constituents don't want leadership, but rather a waffling, "finger in the wind" invertebrate.

2) That his constituents are dumb and wouldn't be receptive to a common sense lecture on the realities of energy economics.

Perhaps I am wrong. Maybe Frist is pulling a Bill Clinton. Remember President Clinton would pay lip service to big issues like Social Security reform but never take a step beyond the rhetoric. If this were the case I have even less respect for Senator Frist. I mean what is to respect about a jelly-spined pol who thinks common folk are dumb AND docile?

Settle down you Clinton apologists, I am not making this up. In the not too distant past it was very hard to find and transmit information. Before the internet, politicians, pundits, celebrities, and whoever could spew inanities with almost complete impunity. Well, technology changed all that and prompted this nugget:

"We have become hostage to Lexis/Nexis...the problem is an excess of literalism."

Uttered by none other than George Stephanopoulos (while special policy adviser to President Clinton.) Of course the internet and modern telecommunications make Lexis/Nexis look like a stone aged slingshot.

Cornelius, North Carolina recently elected a very young state representative and I remember reading his fresh-eyed indictment of the state legislature. He said something like,

"It is unbelievable.....all they do is vote for each other's pet road projects...."

The failed Coburn Amendment confirms this problem at the national level. Several analyses of its demise have alluded to the “unwritten rule” in Congress of not criticizing others' pet pork projects. It was truly astounding that only 15 Senators voted against shifting the “bridge-to-nowhere” funds to Hurricane Katrina relief. I fully blame the media who couldn’t care less about the level of federal spending. Most people haven’t a clue that there even was a Coburn Amendment – no less are aware of the disgusting vote count. Yet when a perma-Commi naysayer like Steve Liesman wants to impugn the Bush Administration, all of a sudden they are concerned about government waste.

In the past, I have argued that economics is the most important force in our lives. It determines where we live, how we live, how we vacation, how safe we are, what we can offer our children, etc. Economic inefficiency remains anathema to most people because they would never manage their lives like that. Theoretically, Big Government should be doomed but in actuality, Big Media's whitewashing has aided and abetted the plunderage. For decades they have ignored government waste and equated tax cuts with poor minority children starving and the elderly living on dog food. Just yesterday, while inveighing broadly against energy companies, perma-Commi Steve Liesman said people are freezing to death over heating costs. Liesman must be counting fictional people - I guess.

Hey Stevie, why don't you wait for the actual winter before you unleash your agitprop?



I just received a political flyer in the mail from a clown named Gibran Rivera who was apparently running for Boston City Council. Forget economic illiteracy, this guy may be illiterate in general. Read this passage from his website:

We are running this campaign as an organizing campaign and see that as the only way to truly engage with people in a meaningful way. A campaign based in organizing can help to build our society rather than just get someone elected and then outsource your political responsibility to that elected official. Running an organizing campaign means that when Gibrán is elected, he will be accountable to people in a real way.

So in three profound sentences we have 4 campaign’s, 3 organizing’s, and both a “meaningful way” and a “real way”. And what the heck exactly is an “organizing campaign”? It may have been third grade where I was taught not to define a word with that same word.

His flyer is also an affront to the standards of English grammar. In it he kept using the word community over and over again. I went back, counted them, and came up with exactly 14 usages of community in a very terse pamphlet. Not only that, I counted 17 more communidad’s as well!!!

With far too many Gibran Rivera’s in our political farm leagues, it is no wonder that we end up the abomination that is our Congress. Gibran can’t so much as pen a coherent paragraph and so I doubt he’ll ever be able to comprehend the negative consequences of taxing “windfall” profits.

Boston - The Case Study in "Money Isn't Everything"

What do these three high profilers have in common?







They all left big money on the table so they could leave Boston.

Rick Pitino walked away from $20 million in guaranteed money. (The biggest dollar walkaway in sports by a country mile.)

Nomar Garciaparra turned down a $60 million contract. (And subsequently had to accept an $8 million one.)

And yesterday, boy wonder Theo Epstein turned down $4.5 million to continue his dream job of running the Red Sox.

With Theo, sure enough the New York Times was involved. Remember the Times owns the Boston Globe and also part of the Red Sox. Theo was pissed about a Globe article they ran on him during "closed door" contract negotiations. From BostonSportsMedia.com and the Lowell Sun,

He then goes to say how Epstein was leaning towards accepting the contract offered him by the Red Sox, but that something changed his mind:

But then, shortly after waking up around 7 a.m., an article in The Boston Globe was brought to Epstein's attention. The piece struck a chord for Theo, not only because of the content (much of which defended Lucchino while diminishing Epstein's stature within the organization), but also because of how familiar the verbiage sounded. Many of it was all too familiar to words uttered by Lucchino to his general manager earlier in the week.



The only redeeming quality of Boston is the school system - that is why people of all income levels are fleeing.

Moron Overload

I can’t take it anymore, everywhere I go I run into complete, total whack-job Morons.

A friend of mine just bought a new cell phone for $200 and bought the “insurance” for $6 a month. That is $72 per year for you math illiterates and would only be worth it if she had a 36% chance of losing the phone this year. Actually, over a two year period, the insurance is only worth it if the probability of a lost phone was 72%. Why not just flush your money down a toilet?

I just played golf this damp morning outside of Boston. There were 3 people on the empty course. I was riding a cart and 2 single walkers (players playing solo) were ahead of me. Neither of them would let me play through. I mean how bleepin’ retarded and ignorant can you get? I eventually hit my driver right over their pin-heads and drove right past them. Yeah, it is 47 degrees and raining and I was going to wait behind them for every shot with 16 empty holes ahead of me? I think not. Big deal, I just Marginalized them. But I should have pummeled the one dork who asked me if I was “in a hurry”.

That “in a hurry” remark reminded me of an incident I had a supermarket (Key Food) in Brooklyn. After finishing up my shopping, I was going to check out and just after I got in line, some old guy with a “few” items tried to cut in front of me. So I blocked him off and turned my back to him for a few seconds. I guess he mistakenly thought that I would step back. So I held my ground and then he decided to ASK if he could go ahead of me. I shook my head and derisively told the creep “NO”. I said maybe if you didn’t try to cut me, I would have let you go, but now I have to teach you a lesson. The creep started cussing me out (and another fossil reflexively started chirping at me as well). The meddler said that I had no respect for my elders all the while the original agitator was muttering four-lettered invective at me. I was dying laughing and the old bat cried out in desperation that he was “in a hurry”. To which I responded that I had no plans or urgencies at all. I said my evening was “wide-open”. Wow, was this guy pissed.

I have Marginalized CNBC in past blogs. They are the typical big, stodgy socialist media outlet. They are trying to show their progressivism by running blogs (Squawk Blog and The Morning Blog). All day they promote their blog web addresses, but there is basically nothing on their blogs. The CNBC hosts actually tout "new pics" of themselves on the blog, as if looking at their mugs all day isn’t enough. Do they really think anyone is interested this?

Also, you need a MSN Passport ID to post messages on their blogs. Since no one has one, there is nobody posting comments. I got a MSN ID just so I could criticize them. I figured that I needed an outlet after listening to their crap for 10 years, all day long. But they won’t publish my comments anymore. You can google “CaptiousNut” (click here) to see some of my hardly incendiary comments that some pissant at CNBC has decided to censor. So to sum it up, there is little blog content, a barrier to posting comments, and censorship of criticism. Somebody tell CNBC that “THAT IS NOT A BLOG”.

Thank God for the internet because I keep losing media outlets. I had to cancel Businessweek, I haven’t bought a newspaper in over 4 years, I haven’t watched the local news in years, and now I am muting CNBC practically all day long.



I heard some boob on the radio say today that the recent rain in New Hampshire has cost the state billions in tourism revenue. The first two weeks of October are peak viewing for foliage in the White Mountains. But come on, “billions”? He tried to justify his remark with an anecdote about a family of Londoners that usually comes to see the leaves this time of year. First of all, one “billion” is 1,000 million dollars. It is a lot of stinkin’ money. That would mean that the state would have to have had 1 million tourists, who usually spend $1,000 each in New Hampshire, all cancel their trips. Furthermore, “billions” implies at least twice that amount. I would almost bet my life that foliage viewing is not a multi-billion dollar season. Yo idiot supreme, when it rains, people may just sit in their hotel rooms or go shopping – they don’t cancel trips. Never mind that the boob has no concept of what a “billion dollars” is.

But herein lies the problem. I can’t watch, listen, or read to 90% of media. The content is either factually vacant or outright propaganda.

Last week in Toledo, a handful of Neo-Nazis marched in demonstration of “black crime”. They were attacked, ironically by crowds of African-Americans and disbanded. Hours later, as CNN calls them, “counter-demonstraters” rioted, burned buildings down, looted stores, attacked police, and even attacked paramedics who went in to assist the injured.

So white supremacists marched and ran, hours later “counter-demonstrators” riot and loot and this is the headline ABC News runs.



This is a complete and deliberate mischaracterization of what happened. The videos have been all over the internet. IT WASN”T THE WHITE SUPREMICISTS WHO RIOTED!!!

Those Neo-Nazis must be delirious. Probably not since Al Queda’s 9/11 attack has a plan so wildly surpassed its objectives.


From now on, I may refer to Big Media as the “Apocalypse Now” crowd. What is with all of this Avian Flu hysteria? Does anyone remember the fuss over the “impending” Sars Epidemic? Before that we had anthrax, Y2K hysteria, etc. Today it is Hurricanes, Global Warming, Energy Prices, and the formerly mentioned, panic du jour, Avian Flu.

Does Big Media really think their customers want to be bombarded with doom and gloom 24 hours a day? Seemingly nothing uplifting ever happens.

CNBC is breathlessly worried about “consumer confidence” and how much money people will spend this Christmas. But CNBC lacks any self-consciousness. They have been worrying about consumer spending for the better part of a decade. Every year they think people are going to stop buying stuff, implying that our economy is“over-leveraged”. There is also an undercurrent of paternalistic elitism here - that being the aspersion that the commoners are dumb and recklessly mismanage their budgets.

Capitalists believe in the business cycle while doom and gloom socialists always see misery.

I have said it before, economic illiteracy really scares me. Some Morons in Congress are trying to attack “windfall” profits on oil companies. I have already addressed such folly ad nauseum. They just don’t get it. If you take away (tax) money from oil companies, they have less to invest in production and development. THAT WILL LEAD TO HIGHER OIL PRICES!!!!!!!!



Rapidly escalating oil prices have “drained billions of dollars” from the nation’s economy “in a massive transfer of wealth from average Americans who can’t afford it, to big oil companies who already were experiencing all-time record profits,” Dorgan said.

Hey Dummy, oil companies are owned by "average Americans". This is analogous to when class action lawyers convince stock shareholders to sue their own companies.

North Dakota Senator Byron Dorgan (D) is championing the bill. I know, the “(D)” was superfluous. He has a cute little hitch in his bill that tries to address this “taxes stunt development” conundrum. The bill would allow oil companies to keep their “windfall” profits so long as they reinvest them back into exploration and production. Presumably we will need to create some new regulatory bureaucracy to enforce this and we all know how adept the government is at managing bureaucracies. I have already mentioned how taxing oil "profits" further would hurt pension funds, insurance companies, and investors. Someone needs to tabulate how many shares of Exxon, Chevron, BPAmoco, and other oil companies are owned by North Dakota’s pension funds. The inherent problem with this “exploration and development” exception is that it too is superfluous. Remember, oil companies are not run by old men in Texas, they are run by shareholders and boards of directors who would never let a company just sit on cash. Shareholders always demand the company put the capital to work or “rebate” it via dividends.

See Senator NumbNuts, there already is a "rebate" mechanism. I have put "rebate" in quotes because this bill would take (tax) non-reinvested "windfall" profits and "rebate" them to consumers.

Also, "rebating" consumers prevents the high gasoline price from changing consumptive behavior. So is Senator Dorgan against energy conservation? Here Dorgan's socialism puts him in a bind. He wants to attack evil oil companies, but this "rebate" may end up subsidizing SUVs and Hummers.


I have fired at Bill O'Reilly a few times now for his untrammeled econo-illiteracy but let me just say that he is quite comfortable sticking to his bricolage theories of price gouging, oil cartels, alternative energy science fiction, and evil oil companies. He had Neil Cavuto come on his show to discuss said topics, and Cavuto hammered away at Bill's sophistry. Bill smiled throughout yet was as wrong as he ever was.

On Monday, Bill opened his show with this nonsense:

Talking Points Memo - Gas prices going down?

"For weeks we've been telling you that the five major oil companies have been price gouging - taking advantage of hurricanes and the greed of OPEC to slam the American consumer. Some Americans have sided with the oil companies, citing the free market, supply and demand. Well, what say you now? Worldwide demand for oil is the same today as it was eight weeks ago, but oil prices are declining. So what gives? Oil companies are frightened that the American consumer will begin demanding fuel efficient vehicles and alternative fuels for their homes and cars, so they're pulling back Our pals over at the New York Times are unhappy about falling gas prices, saying 'a bolstered gas tax would raise huge amounts of revenue ? to be used to provide offsetting tax breaks to low income households.' You gotta love the Times. Under the guise of helping the environment, they hammer home their theme of income redistribution. Oil companies have been scared into lowering oil prices. And the far left wants to exploit the situation to redistribute income. That's the cold hard truth in the No Spin Zone."

That above quote was from Bill O'Reilly.com. But I watched the show (actually recorded in on my DVR as I do every night) and Bill actually said a lot more than what they posted on his website. He also said:

"Millions of Americans are angry with big oil and are buying less fuel and SUV sales are a disaster..."

"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..."

"Oil companies set the price of fuel based on what they think they can get away with..."

"By the way, the price drop again shows the power of the people….Individual consumers, acting together, can bring any industry to its knees..."

Here Bill sounds like a real nutjob. He claims that "worldwide demand for oil is the same" and then in the omitted quote, "Millions are Americans are angry with big oil and are buying less fuel and SUV sales are a disaster..."

So what is it Bill? Is demand the same or have consumers cut back? Logic should retard your effort to have it both ways.

There is no weaseling out of this pickle. Bill has said in the past that since Americans consume 25% of all oil, then Americans control worldwide demand. So Bill claims on one hand that worldwide demand is the same, but Americans, who control it, have cut back.

Is there any mystery why those quotes were omitted from his website?

It is funny because my Bill O'Reilly posts get hit a lot but I can tell that the people that find my blog via "bill oreilly" and search engines, aren't very interested in what I say.

How do I know this? I can tell by the amount of time they spend on the blog and also by exactly what they searched for - typically it is something like "bill oreilly jackass". Unfortunately for these people, my critiques of Bill are mostly on a substantive level (and mostly anti-socialist).

If you read between the lines of Bill's last omitted quote, self-obsessed arrogance rears its Gorgonian head. He definitely thinks gasoline prices dipping since Hurricane Katrina had nothing to do with marketplace forces....it had to be due in part to his personal crusade against big oil companies.

If Bill O'Reilly is shaping public opinion on economic issues then truly we are all in "big trouble".

Boston and Alcohol

The other night I went to a Boston Celtics preseason basketball game at the TD Banknorth Garden, formerly known as the FleetCenter which of course replaced the original Boston Garden. I was forewarned that if I wanted to drink beer there I had better bring my passport. This, I think I have to type in bold because it is that outrageous:

You cannot buy a beer at the Garden unless you have a Massachusetts driver’s license.

A woman who had to be almost forty was denied beer right in front of me on Wednesday because she had and out-of-state driver’s license.

I can’t reiterate this enough, but the people in Boston are bleepin’ retarded.

I am not even going to analyze this inane policy. They are like so “WICKED RETARDED” with alcohol up here – I will give a few more examples.

Last summer, en route to a barbeque, I needed to buy a case of beer. I went to the liquor store, hauled the case to the register and was denied the sale. Again, they wouldn’t accept an out-of-state driver’s license. I actually got my 90 year old grandfather to come in the store and buy me the case. At the time I was 30 years old.

Oh, even if you are 21 and have the Massachusetts license, don’t bring your buddies in the store with you. They will card everyone that is with you.

Another example. After a round of golf, I went with a few family members to a local establishment for a few drinks. Well, we never got to a "few". After the second round of draft beer, the bartender told us that we "had had enough". We were sitting there at a table, barely talking at 4pm on a weekday afternoon. I was shocked almost to the point of speechlessness. (We went down the street to another place.)



In another instance, during my sister’s wedding weekend, I went to the "packy" and put $200 worth of liquor and wine on the counter and was refused the sale.

At the Warren Tavern in Charlestown, I was with a group of people and kept going up to the bar to order drinks. I was getting them five at a time, 2 Guinness, 2 gin and tonics, and a Kettle One on the rocks. After my third trip, the wench barmaid said to me, "YOU are drinking an awful lot..." Some regular the bar said to her, "He is not drinking all of those drinks…he is buying for the table..."

The MORONIC barmaid actually thought I had had fifteen drinks. Yeah, there is nothing like alternating between vodka, beer, and gin all in about an hour.

Even when her idiocy was pointed out politely by a regular, she still snapped at me, "Well you still have had a lot." To which I responded that I was staying across the street. Never mind that 3 drinks is very far from most people's notions of "a lot". She was rude and reluctant to serve me the rest of the time.

When the bill came, I looked at it, remembered her rudeness, and left a 14% tip. Five minutes later a bouncer came over and threw the check back at me. He said:

"The bartender wants to know if you are serious about this tip..."

Now I had had a few drinks so I double-checked my math and went up to the bar.

CaptiousNut:"First of all, you have been rude all night. And secondly, 14% is not a bad tip..."

Wench:"You need to tip 25%......I don’t work for less than that……I have two kids at home..."

CaptiousNut: "You want me to fix the tip?"

Wench:"Yeah"

She brought the pen over and I reduced the tip to zero.

Almost everywhere in Massachusetts, it feels like the bartender is doing you a favor by serving you. The thing is, Bostonians don’t realize how convoluted this is because none of them have ever been anywhere else. I have lived in several cites and traveled a bit so the alcoholic idiocy here is most apparent – as it is to anyone else with some perspective.

But again, this is such an insular and parochial society, the dopes that live here just take it all for granted. It is all they have ever known.

Now these anecdotes don’t represent my complete list. I could go on considerably longer about the Pilgrim-esque alcohol policies up here such as how anal they are with booze at wedding receptions, the paucity of liquor licenses stunting new restaurant development, etc. Remember, Bostonians don’t believe in personal responsibility. It is always someone else’s fault, the bartender’s, the liquor store’s,... Beer, like oil, guns, and SUVs, is a favorite scapegoat.

Remember that Red Sox fan that had an altercation this year with Gary Sheffield of the Yankees? The Boston Globe immediately ran a front page article on how they have increased the number of beer stands at Fenway Park, implying that the beer and Fenway should be held culpable for one idiotic fan’s actions.

From that registration-restricted article:

The new owners of the Boston Red Sox have greatly expanded alcohol sales at Fenway Park, adding at least 16 new stands where beer is sold since taking over in 2001, according to the city licensing board. The team has also increased by a third the size of beer cups, from 12 ounces to 16 ounces.




I think Yankee Stadium should deny beer to everyone that has a Massachusetts license. Maybe that would send a message to the dopes that set policy up here.

Mortgage Interest Deduction

The average person knows little about the facts of homeownership. President Bush, via a bipartisan Tax Reform Panel, recently had the “audacity” to suggest some changes to the mortgage interest tax deduction.

1) lowering the ceiling on the total amount of mortgage deductibility from $1 million to around $350,000,

2) capping the marginal tax rate of said deductions at 25%.

The anti-Bush crowd yelped in unison upon this announcement. “Now Bush is going to eliminate the mortgage deduction……”, “Bush is going to lower your houses value…”, and Becky Quick this morning on CNBC, “Many people bought their homes expecting this deduction…”

First of all, this is a direct assault on the rich. Anyone who thinks otherwise suffers from bottomless ignorance. It follows that anyone who criticizes these modifications cannot claim to be on the side of the "little guy" in the class warfare of “rich versus poor”.



If you have a 350k mortgage, I am sorry, but you are not middle class. You may be overleveraged but that is a topic for another blog. Before you Manhattanites go apoplectic, screaming about how a 500k mortgage is a small one in your neighborhood, let me correct you. If you live in an 800k two bedroom apartment, you are not middle class….you are poor for New York City. If limiting the interest deduction costs you a couple of hundred dollars per month and you can't afford it, then maybe you should cut back on your $12 martinis and $5 Starbucks lattes. Move to Staten Island perhaps.

Of course, that is one of the central questions a rational person would research before hyperventilating. Who would be affected by these changes and exactly by how much?

In a previous blog, Real Estate Hot Potato…Buy versus Rent & Invest, I have already done most of the math on “how much?”.

Specifically, I studied the costs of home ownership for a 500k mortgage on a 600k home.

We hypothetically borrowed 500k on a 5.75% fixed rate, 30 year mortgage. Below is the calculated monthly mortgage deduction for all thirty 30 years. As I showed in this prior exercise, the mortgage interest tax benefit is, among other things, a function of the borrower’s tax bracket. As I have previously stated:

It is actually one of the few tax laws that favor high income earners.

Total Interest Paid and Monthly Tax Benefits at varying marginal tax rates.

--------------------------------------25%-----------30%-------------35%
Year 1........$28,582.24........$595.46.....$714.56........$833.65
Year 2........$28,202.49........$587.55.....$705.06........$822.57
Year 3........$27,800.32........$579.17.....$695.01........$810.84
Year 4........$27,374.40........$570.30.....$684.36........$798.42
Year 5........$26,923.34........$560.90.....$673.08........$785.26
Year 6........$26,445.65........$550.95.....$661.14........$771.33
Year 7........$25,939.75........$540.41.....$648.49........$756.58
Year 8........$25,403.99........$529.25.....$635.10........$740.95
Year 9........$24,836.59........$517.23.....$620.91........$724.40
Year 10.......$24,235.70........$504.91.....$605.89........$706.87
Year 11.......$23,599.32........$491.65.....$589.98........$688.31
Year 12.......$22,925.38........$477.61.....$573.13........$668.66
Year 13.......$22,211.65........$462.74.....$555.29........$647.84
Year 14.......$21,455.78........$447.00.....$536.39........$625.79
Year 15.......$20,655.28........$430.32.....$516.38........$602.45
Year 16.......$19,807.52........$412.66.....$495.19........$577.72
Year 17.......$18,909.71........$393.95.....$472.74........$551.53
Year 18.......$17,958.90........$374.14.....$448.97........$523.80
Year 19.......$16,951.95........$353.17.....$423.80........$494.43
Year 20.......$15,885.54........$330.95.....$397.14........$463.33
Year 21.......$14,756.18........$307.42.....$368.90........$430.39
Year 22.......$13,560.14........$282.50.....$339.00........$395.50
Year 23.......$12,293.49........$256.11.....$307.34........$358.56
Year 24.......$10,952.05........$228.17.....$273.80........$319.43
Year 25.......$9,531.41.........$198.57.....$238.29........$278.00
Year 26.......$8,026.90.........$167.23.....$200.67........$234.12
Year 27.......$6,433.57.........$134.03.....$160.84........$187.65
Year 28.......$4,746.16.........$98.88......$118.65........$138.43
Year 29.......$2,959.13.........$61.65......$73.98.........$86.31
Year 30.......$1,066.60.........$22.22......$26.67.........$31.11

If section 2) of Bush’s Tax reform were passed, it would immediately cost this buyer, if they were in the top tax bracket, about $238 a month. (from the difference in the 35% column and the 25% column in Year 1).

A short glance reveals that the difference decreases over time, as would be expected since the loan decreases as well. In Year 10 the added cost to a top bracket earner would be $202 and by Year 20 it would be down to $123.

But this only shows the effects of half of the proposed changes i.e. capping the marginal tax reduction at 25%. Now to see the effects of limiting taxable interest deductions on a maximum of $350,000 borrowed, I simply multiply the chart above by 0.70 (because 350k is 70% of 500k).

Total Interest Paid.........Monthly Tax Benefit
Year 1........$28,582.24........$416.82
Year 2........$28,202.49........$411.29
Year 3........$27,800.32........$405.42
Year 4........$27,374.40........$399.21
Year 5........$26,923.34........$392.63
Year 6........$26,445.65........$385.67
Year 7........$25,939.75........$378.29
Year 8........$25,403.99........$370.47
Year 9........$24,836.59........$362.20
Year 10........$24,235.70........$353.44
Year 11........$23,599.32........$344.16
Year 12........$22,925.38........$334.33
Year 13........$22,211.65........$323.92
Year 14........$21,455.78........$312.90
Year 15........$20,655.28........$301.22
Year 16........$19,807.52........$288.86
Year 17........$18,909.71........$275.77
Year 18........$17,958.90........$261.90
Year 19........$16,951.95........$247.22
Year 20........$15,885.54........$231.66
Year 21........$14,756.18........$215.19
Year 22........$13,560.14........$197.75
Year 23........$12,293.49........$179.28
Year 24........$10,952.05........$159.72
Year 25........$9,531.41.........$139.00
Year 26........$8,026.90.........$117.06
Year 27........$6,433.57.........$93.86
Year 28........$4,746.16.........$69.21
Year 29........$2,959.13.........$43.15
Year 30........$1,066.60.........$15.55

Now remember, that Year 1 number $416.82 represents the value of the first year’s monthly tax benefit. In other words, under this scenario, renting a $3,000 per month apartment would be roughly equivalent to a mortgage payment of $3,416 per month because of the tax deductible mortgage interest. (of course, it doesn’t take into consideration the other costs of home ownership that I discussed in the previous blog).

In effect, this last table would be THE MAXIMUM DEDUCTION table if both reforms were adopted.

As it stands now, a top income bracket earner with a $1,000,000 mortgage today would start out with around a $1,600 per month tax benefit. (Just double the far right column of the first table.) Under the proposed changes they would see it slashed by about $1,200 to that $416.82 amount.

Today the cost of real estate is roughly $600 per month for each $100,000 worth of home. So if say all 1.1 million dollar homes were owned and bought by top income bracket earners……then Bush’s proposal would theoretically lower these home values by 200k (as imputed from the loss of $1,200 per month in tax deductions).

Likewise, if both tax code modifications were made, the 600k house that I live in would theoretically drop by around $67,000 (as imputed by the loss of about $400 per month in tax benefits and assuming only top income bracket earners lived in this house). But if only the marginal tax rate benefit were capped at 25%, the loss would be closer to $30,000.

In all fairness, those numbers are too high. Not everyone in the market for 600k homes is a top bracket earner so the losses in property value would be somewhat less than my projections. Instead say we have losses of $60,000 and $25,000.

Now these are only rough estimates since that is all that is possible with such multivariate scenarios. Nonetheless, I will conclude with:

If deductible mortgage interest is limited to the first $350,000 borrowed and the marginal tax benefit rate is cut to 25%.....

….then a $1 million dollar home will instantly lose 15-20% of its value and a $600,000 home will lose around 10% of its value.

Obviously, the mortgage tax benefits and projected losses of benefits fade over time and I am basing my new property values from the Year 1 tax consequences. Also these numbers are subject to change if interest rates move. As I type this, the 30 year fixed rate is at 6.00%.



So Becky Quick thinks that they shouldn’t roll back mortgage interest benefits because “people” have bought expecting to get them. By her convoluted logic, government couldn’t reform anything because “people” might not have expected it.

She is dead wrong. Government should strive for logical and fair tax policies. It should do what is right, without regard for anything else. This of course begs the forgotten question of why should mortgage interest be deductible in the first place?

The theory was that when people owned their homes, they took better care of the neighborhood, were encouraged to save, etc. and that this was optimal for society. Hence the government pushed tax benefits to spur homeownership - which hit a record high of 69% in 2004.

But like all subsidies, this one was eventually priced into the market and it now borders on eroding its own original objective of helping make homes affordable. Prices are so high, albeit not just from deductible mortgage interest, that low end home buyers are overleveraging themselves with adjustable and interest-only mortgages. At this point, the mortgage interest deduction is not encouraging home ownership, but rather home-indebtedness.

So the Tax Reform Panel proposed changes to reestablish the original goals of the mortgage interest deduction, by targeting the incentives on the lower end of the housing market.

The only way pundits and Bush-haters in the media can bash these reforms, and still claim to be defenders of the “poor”, is by mischaracterizing the reform proposals.

Of course, mischaracterization and obfuscation are the modi operandi of Big Media. They succeeded in thwarting Social Security reform by this tactic and I would quite frankly be surprised if these proposed tax reforms were passed.

But say these reforms were passed and all million dollar homes were suddenly worth 850k. None of these homeowners will have “lost money” because the reforms will have affected all such homes evenly. It kills me when people buy a house for 400k and it appreciates to 600k and they think that they have made $200,000. It is not like they can sell their house, buy a similar 400k one and pocket the money. In most cases this is not possible because all similar homes will be trading for 600k. An across the board price change like these reforms would cause, will not cost homeowners any "profit". They will still be insulated from the nominal price level of the market. They will always be either selling “high” and buying “high” or selling “low” and buying “low”.

Million dollar homes dropping to 850k would only be an issue for someone planning on selling their home and then roaming the streets. Everyone else would parlay that equity into a similarly discounted home. So it is all a wash.

But the reality is, that most people don't understand anything about the value of their house. They paid X for it, and now it is "worth" 3 times X, ergo they are savvy investors no matter how many boats have risen with the current tide. Don't even think of telling them otherwise.

Bush has gotten little credit for a strong housing market, but that doesn't mean he won't bear a heap of blame for its decline - and that will happen whether these tax reforms are passed or not.

There is a lot more in the Tax Reform Panel's proposal, including many offsets to this "attack on the rich" such as the elimination of the Alternative Minimum Tax, a reduction in the tax on long term capital gains (from 15% to about half that), and a slight lowering of all marginal tax brackets.

Such a capital gains reduction would be very bullish for the economy, but it would not be as bullish as a drastic reduction in the top tax brackets.

Although the Tax Reform Panel is bipartisan, President Bush will bear the brunt of the criticism. But anyone with a clue has to conclude that these reform proposals are spot on the money and will spur more real economic growth instead of just housing inflation for higher end homes.

NBA Salaries, a Medley of Socialism and Racism

A few years ago, the NBA instituted a rookie salary cap. It was more than a cap, it not only limited how much rookies could be paid, it actually enumerated the amounts, basing them strictly on draft position. This also begs the question of why rookies would hire agents to “negotiate” their first contract and have to pay them a percentage of their first deal.

Why did the NBA institute this? They did it to discourage young players from turning professional. The league thought it would be better served by having more mature rookies. Some people think they did this to depress one end of the pay scale and therefore save the owners some money. After all, their franchises are theoretically worth more if they pay out less of their revenues. On this point I completely disagree. Savings in one area are usually squandered on others: veterans’ salaries, new arenas, a team charter jet, etc. Also, what followed this failed initiative further buffets my claim.

Of course the rookie salary cap failed. It actually opened the floodgate for high school players entering the draft. Prep school stars correctly figured, along with help from their “agents”, that the sooner they got the ridiculously low rookie contract over with, the sooner they could reap the lucre of free agency. In other words, if they entered the NBA at age 18, they could sign a limitless contract by age 22. But if they went to four years of college, they wouldn’t have this opportunity until they were 26.

In 2001, an unprecedented five of the first eight players drafted were high schoolers. This trend continued right through 2005.



So NBA Commissioner David Stern actually achieved the opposite of his goal. But this wasn’t anomalous - this has happened every time a socialist has arrogantly tried to regulate prices (wages) to generate an intended result.

It took Stern five years to realize that the best, and perhaps only, way to keep young players out of the league is to simply ban them. He did that this summer by instituting an "Age Limit" or more accurately an age minimum of 20 years old to play in the NBA.

I have addressed what Stern has tried to do and its failed consequences. But now I want to talk about the virtue, if any, of his goal.

Why limit young players in the NBA? Tennis and golf have no problem with teenage phenoms nor do baseball and hockey. The answer is that the NBA is fighting an image problem. Older white men have been tuning out pro basketball for a decade. Whatever the reason, lower scoring, fewer white players, or negative perceptions of the players, the league is trying to regain these fans. David Stern and his "posse" really believe that if guys come into the league as 20 year olds, it will improve the marketability of NBA players.

So here we have a league that started out by limiting what players could earn and then graduated to banning young players from earning money entirely. The league is 90% black and this has purportedly been done to cater to old white fans. I hate the term racism because it is all too often abused, but this is a clear case of it. One thing I think is worse than overusing the racist label is when real racist elites get away with crap like this.

Hey CaptiousNut, maybe you are going too far. Maybe Stern is just trying to improve the level of play…because young players lack fundamentals and maturity...?

Well then why did the NBA just institute a jacket and tie dress code for players?



My wife told me that they should just say "no jeans" or something. As I told her, if the league tried to explicitly itemize the attire they don’t want players wearing, it would be:

No baggy jeans, no more than 8 gold chains, pants pulled to within 6 inches of the waist, and no throwback jerseys.

…and this would go against the league’s policy of only subtle racism allowed.

Now let me reiterate, I hate the term "racist". The word is so abused as to have lost meaning completely. For instance, I could argue that the public school system is racist. The schools are bad and most black kids go to public schools….therefore public education is a racist institution. After all, if cops pull over more blacks they are deemed racist, so the same oversimplified logic should apply. Yet every politician who pushes for vouchers and school choice is deemed a racist as well. So it is racism to condemn blacks to public schools but it is also racist to move them out.

I don’t really think the NBA is racist. My intention was to illustrate that they are getting away with stuff that would otherwise be labeled such if it were done by the police, George Bush, Mormons, etc.

I think the NBA is stupid to try and woo the old white demographic. My regular blog readers may already know this, but two groups that I Marginalize a lot are old people and young kids. Far too many older people haven’t had an original thought in decades and most young’uns, they just haven’t had any at all. Does the NBA really think they can change the minds of recliner-bound, fixed income, old guys like my father – who spends half of his waking hours dozing off under a vapid newspaper?

The NBA will be fine if the quality of its games improves, i.e. more scoring. The real reason the league hit a rough patch with the fans was another botched socialist attempt at regulating the game.

About twenty five years ago, they instituted the illegal defense rule which basically eliminated zone defenses. The league didn’t want teams double teaming its headline stars. In other words, they wanted to cultivate the superstars in hopes it would drive ticket sales.

But in the real world, actions have reactions. In this case, the elimination of zone defenses forced teams to guard every single player, whether they merited it or not. This misguided rule protected guys who couldn’t shoot because an opposing team couldn’t penalize these non-scorers by leaving them open. Anyway, scoring declined steadily until last year when they eliminated the illegal defense rule. So the points are on the way back, but time will tell whether on not the fans return.

Bill O’Reilly - Economic Illiteracy and Populism

(a pic of Bill O'Reilly's 10 mpg limousine)

With energy prices so "high" these days, I will no doubt be doing plenty of Marginalizing on this subject.

Bill O’Reilly, econo-illiterate that he is, has proposed that oil companies lower their prices by giving back half of their profits to consumers. That is fine Bill, but you won’t accomplish anything this way and in fact will exacerbate the problem.

If Exxon, Chevron, et al accede to your shameless populist suggestion, then they will have half as much money to reinvest towards more exploration and production. Do you really think cutting such would LOWER energy prices?

Others have suggested "windfall profit" taxes on oil companies. This won’t work for the same reasons. You will be taking away money from oil exploration budgets and you will encourage companies to move business (including oil sales) to lower tax locales. The truly "populist" stance would be a TAX REDUCTION on oil companies to free up more capital and help increase supply. But instead we have to hear about "price gouging" and big business bashing from almost every media outlet.

Back to Bill. If Exxon’s profits were halved, either by taxes or Mr. O’Reilly’s suggestion, its stock price would halve as well.

If you don’t think that is a big deal, then contemplate this. Exxon is a $380 billion market cap company. If its stock declines 50%, then investors, mutual funds, and pension funds will collectively lose $190 billion. Then you would have to halve shareholders’ equity in Chevron, BP Amoco,... Yeah Bill, let’s take a few hundred billion bucks from investors.

Contrary to Big Media agitprop, oil companies aren’t owned by old men in Texas.

O’Reilly won’t shut up about OPEC, "alternative energy", or "SUVs". His poll question last week displayed yet another layer of ignorance. He asked:

"Should we tax vehicles (SUVs) that get less than 15 miles per gallon?"

I sent my pithy email response that of course was ignored.

SUV’s are already taxed more since they are less fuel efficient. Remember, gas taxes accrue on a per gallon basis to the tune of over 30 cents per gallon.

Next week maybe Bill will poll his audience:

"Is the Pope is Catholic?"

Too many idiots think that if everyone simply drives a smaller car, then fuel prices will decrease. But these dolts need to look at Europe. All of their "small" cars haven’t given them cheap gasoline!!!!!!!!!!

The conservationist movement is based largely on economic ignorance and some obtuse sense of moral superiority.

The people who recycle and drive hybrid cars think that they care more about the Earth than SUV drivers and their wasteful brethren. In other words, their environmental agenda is actually peripheral to or more accurately derivative of their egocentricity. It partially explains why there are so many contradictions and logical gaps within environmental propaganda. After all, there are laws of nature and economics but there are no such rules for self-appraisal.

Therein lies the misguided notion that individual people can affect global energy prices. Bill O’Reilly speciously argues that since we (America) represent 25% of oil demand, the largest for any country, that we could stop buying gas on Sunday and both teach the oil companies a lesson and lower the price of oil.

Bill, the rest of the world consumes 75% of oil so "we" don’t determine the price. Enough of this arrogant and misguided self-absorption.

I have covered this before but will reiterate. Red flags should rise whenever you hear a pundit, academic, or politician try to parse the demand component of something’s price, especially something as multivariate as energy prices.

Demand parsing is usually impossible because of imperfect information and the inability to compute price elasticities and whatnot.

Bill really has that wicked combo going on - economic illiteracy and intellectual arrogance.

Given all of the above, I hate to call Bill O’Reilly a capitalist, but at least as a commentator he has successfully maximized his audience. He toes a line, fashionably taking shots at “both sides” and has cemented himself as a modern day populist.

His crusades on Jessica’s Law (stiff penalties for child molesters) and “high” gas prices are designed to appeal to as many people as possible. For those of you that are unaware, his show is easily the most watched show on cable.

The problem with populism is that it binds one to present day sentiments. If O’Reilly gave me his show for tonight I might say:

"First of all, gasoline is still not that high. Second, oil companies are not ripping anyone off. Third, all you greenies can buy hybrids and curse SUVs….but none of this will lower the price of oil. And lastly, all of you old people out there are responsible for today’s energy prices. That’s right y’all elected economically illiterate Congressmen for decades and never demanded that they address the energy needs of the country. You old people in the northeast will especially deserve your $10,000 heating bills this winter."

…..but if I did, my career as a populist would be short.

Populism often puts Bill in a tight spot and when it does, he consistently opts for likeability over accuracy. I guess it is better than the New York Times which eschews both.

Make no mistake, O’Reilly is a force these days and the other networks and shows are subtly trying to ape his rapid-fire and confrontational show. For example, CNBC has tried to get Congressmen to go on air and “defend your pork”. Of course not many pols have taken the bait because CNBC is quite ignorable. But one Ohio Congressman came on and defended a $3 million per year subsidy for a Packard car museum in his district. His argument was simply that many rich people will patronize the museum and help the local economy and that his constituents pay “gas taxes” so why shouldn’t they get some back. I was yelling at the television:

“those gas taxes are for the roads…….and if there are plenty of rich people interested in Packards….then surely they could privately fund the mere $3 million subsidy...”

But all five CNBC anchors were speechless and impotent to mount even the obvious counterarguments. They tried to be confrontational but clearly lack the required skill set.



Hey O’Reilly, remember Al Smith's prescient warning to Robert Moses:

that populism is but a “slender reed to lean on....”

(Moses was the populist exemplar while he crusaded for parks in New York, but has suffered quite the ignominy ever since. The tome on Moses is a must read.)