WOW Costco!

I just watched a story on ABC's 20/20 website about Costco. You can read the story here, or better yet, click on the video link and scroll down the list to the Costco story. There are some things almost renegade about this chain - the average worker makes $17/hour, almost 40% higher than competitor Sam's Club, the CEO is paid a petite $350,000 a year, probably putting him at the lowest rungs of CEO pays. Costco was, get this, the world's largest wine retailer this year! WOW!

It appears that their average customer is much more affluent, a median income of $74,000 a year, if I remember right. That's much higher, I suspect, than Sam's Club, where I am a member. A brief look at the Costco website seems to confirm that suspicion. So in the end, after all the praises of Costco, maybe I still need a Sam's Club to allow me to buy $3 bags of pasta and $9 boca burger cartons.

French Women Do Get Fat

I was sitting at my local Barnes and Noble, reading the latest issue of the Economist today, when I was surprised to find that, contrary to popular perceptions (and the title of a book that was featured on many of the morning shows here in the US) that France has an obesity problem. Yes, it is admittedly less severe than that in the US, where about one in three people are obese, and two in three overweight. But with over 40% of French people estimated to be overweight, this is a serious problem for them too. A Google search revealed an old story in the Washington Times that reported that 1 in 10 children of age 10 are obese! YUCK!

And with obesity comes other issues like diabetes. In my native India, some 27 million people already suffer from diabetes, a number that is expected to grow to 57 million by 2025, according to this article in the British newspaper, the Gaurdian.

The source of all this global obesity pandemic? Well, it seems there is something the US still does export.

Want to Make A Point? Change Your Reference

I tell you, I'm tired of journalists using flawed logic to make a point. The latest comes from this piece by David Leonhardt arguing that buying a house is less of a strain today than in the 80s and hence somehow a correction in housing prices isn't imminent. In fact, here's how the story ends ...

"When you get affordability stretched so much, all the creative financing in the world can't stop some correction of house prices," Mr. Rosen, the University of California economist, said. "It happened in Hong Kong, Japan and England."
It looks as if it may not happen, though, in most of the United States.

Why would he compare with the 80s? If you thought it was something to do with how 20 years makes a good timeframe for comparison, you'd be wrong. You see, the way to sell your idea is to pick an arbitrary reference for your argument. For example, if you want to show you lost weight, start your count right after a huge Thanksgiving meal, and end it when you are sick and have lost several pounds. Is it a correct measure? No, but it tells the story you want it to.

So why the 80s again? Well, the federal funds rate in the 80s ranged from 6.5 to over 19%. Of course, the costs of home ownership were high... buying a house in the early 80s was like buying it with a credit card today! Costs have come down now because of interest rates, but that doesn't reflect anything about the value of the asset!

To be fair, Leonhardt does have some reasonable points about just how much incomes have gone up in some communities. But then he somehow tries to imply something about a national market, indicating that housing isn't overpriced except in a few places.

I certainly am not anti-home buying. In fact, I've been advising a good friend of mine to buy a house, because he and his wife will be living in the same city for at least 6-7 years. Time is a friend, because you can wade out troughs along the way. But I certainly don't agree that housing isn't set for a correction. And I'd give an earful if I ever met the Gilberts featured in the story:

The most money that Tim W. Gilbert has ever had in his possession was $15,000, he said, in the form of a check for a job he had done as a carpenter. But he and his wife, Marjorie, were still able to buy a 1936 Cape Cod-style house this year for $176,000 in Poland, about 45 minutes north of Portland. They took out two mortgages rather than making a down payment and they use Mr. Gilbert's $5,000 or so in pretax monthly income to cover $1,600 in mortgage, tax and insurance payments. Ms. Gilbert, a writer, home schools their daughters, ages 4 and 6. "I paid rent for 18 or 19 years," Mr. Gilbert, 38, said. "We waited years and years. We wanted to make this happen."

The most you have EVER saved is less than 10% of the value of the house! Gosh, if that's all the discipline you have, where are you going to come up with the money when those faucets start to leak, the water line bursts, and that heat pump quits?

Sorry, I know I'm opinionated ... that's why I have a blog! But if you can't save enough to put at least 10% down, you have no business owning a home!!

Immigration is Good for the U S of A

Gosh, I'm sick and tired of the attacks on immigration - the latest a move by "conservative" representatives to revoke birthrights for children of illegal immigrants. I put the quotes because I hate labels, and being a conservative myself, don't think its conservatism as I see it to oppose immigration, for reasons I will discuss below.

First a disclaimer. I'm a LEGAL immigrant, and proud of the contributions immigrants, legal and otherwise, have made to this country, be it starting IT firms, running gas stations, serving in academe, or working diligently on grape and strawberry farms. But this is not a post on legal immigration - that seems, for the moment, a less contentious issue, except among leftist unions.

OK, over to the illegal immigration issue. Here's why it's not prudent to oppose illegal immigration - they come because we need them! Pure and simple, supply and demand. We have a serious labor shortage in this country, especially for backbreaking jobs like working in labor-intensive farming operations. (For a touching story of one child and his family's travails as a illegal farmhand, read the firsthand account called 'The Circuit' by Francisco Jiminez). Let's see, at present the US unemployment rate is somewhere south of 5%. By traditional standards, that should have triggered inflation - know why that hasn't happened. Two words - cheap labor ... be it in the form of (mostly illegal) immigration, or outsourcing.

Demographics played a big role in America's surge over Britian and the European powers, but now the same demographic factors threaten US economic supremacy. Short of figuring a way to create working-age humans in the lab, the only way we can get enough productivity at low inflation rates to support the Baby Boomers is immigration.

So whether you are a poor blue-collar worker trying to buy affordable groceries, or a middle-class professional trying to make some money in the stock market, a retiree trying to preserve the true value of your nest egg or a company trying to keep your costs down, stand up and be thankful that there are poor Mexicans willing to risk their lives for the peanuts we throw them to scrub our floors, clean our toilets, make our sandwiches, pick our fruit or process your meat!

Oh, and by the way, I couldn't help but notice the comment from Rep. Tom Tancredo (R-CO), suggesting that rather than seek an outright vote which would likely lose (or at least get vetoed by President Bush), supporters seek to hide the provision in a likely-to-pass bill. This is an old cheap trick by senators and congressman, one that really has to stop! Not that I would have expected that much from Tancredo, who is already in my Hall of Shame, for his stupid comments on taking out Mecca.

Frontline on Diet Wars

I just watched a wonderful edition of PBS' kick-ass show 'Frontline' titled 'Diet Wars' (to watch online, click on the link; the show is split in five chapters). At first, it may appear the same cliched discussion of the different diets, but as the show goes on, there are several less-noticed issues that come up, including reflections on our priorities as a society, and also many interesting (and alarming) facts.

For example, did you know, a teenager today has a 50% risk that he/she will develop Type 2 diabetes in his/her lifetime!! WOW, and I thought I should be nervous because of the sprinking of incidents in our family history!

Even if you are not concerned about your weight or health (either because you don't care or have it under control), this is a show worth watching for its contemplations on contempary society and public policy.

McClellan & Family

The other night, I was watching a NBC Nightly News story critical of the complexities of the new Medicare plan, which is so ridiculously confusing. Part of the story involved a soundbite-sized interview with the Medicare chief Dr Mark McClellan. Last name ring a bell? It should - his brother Scott is the President's press secretary. My first instincts were favoritism at play, although reading the comments of both Republican and Democratic senators about the nomination (last year) suggests he was an excellent choice. Incidentally, their mom is the Texas comptroller, and considered to be a potential gubernatorial candidate!

Can You Hear Me Now?

I have been trying to understand the wiretap issue a little better this week. While I haven't had much time to watch the news, some of the best perspectives came from PBS' Newshour with Jim Lehrer (simply the best news show to understand issues) and Nightline on ABC anchored by Martin Bashir. The guests on these two shows included an ex-acting director general of the CIA, a legal expert at Georgetown and many other smart professionals who didn't have a political point to make.

Essentially, I think the overall coverage of this story has tended to mix up two seperate but related questions. One, was the wiretapping authorized by President Bush legal? Two, was it necessary?

First the legal angle. It certainly appears from all I have heard that the President's order might have been illegal ... actually, more likely it was a federal crime. The FISA act is supposed to explicitly talk about terrorism not being a factor in changing the rules, and requires the administration to get a warrant, at least retroactively. Certainly, the majority of legal opinion seems to weigh in on the side of Bush having broken the law.

Which leads us to ask, was the subversion of the FISA court necessary? Critics of the administration have argued that the FISA act allows, in the event of an emergency, up to 72 hours (15 days during a war) for the administration to go back and ask for a warrant for a search (after all, that's what a wiretap essentially is) that was already conducted. So why seek to step around the process?

The problem, as several ex-intel officials pointed out, is on two grounds. One, the requirement of probable cause. Intelligence since 9/11 has been a bit of a fishing expedition. They get the cell phone of a suspected terrorist, find 200 phone numbers. Some of these might be people with terror links, but the list might include the guy's barber, for all you know. Do they have probable cause to get a warrant? Tough sell! Should they be following up on every lead as aggressively as possible? Absolutely!

Even when there is probable cause, these former intel officers point out, it's inefficient to have to get a warrant to tap a phone after the fact. That's because FISA was written in the day of landline phones, when suspects would use the same phone repeatedly. In today's quick-turnover cellphone age, terrorists quickly keep swapping numbers weekly, if not more often, and the effort involved in getting a warrant is worthless.

Clearly, it would have been better for the administration to have confronted this problem head on, including as a provision of the Patriot Act. In the days after 9/11, President Bush have incredible leverage to have pushed such legislation through. Rather, he made an unfortunate choice of trying to do things behind the curtain, which has come back to hurt him.

In a later post, I'll explore the possible fallout of this scandal on the Bush Presidency, and the 2006 and 2008 elections. Until then, I'll be following this story very closely, hoping to pick up some other perspective on the issues involved.

Populism at Work in India

Score one more for populism in India. The Parliament is in the process of passing a bill which will require most private educational institutions, even those without federal or state support, to reserve a certain number of seats for people who have historically been socially backward. It's affirmative actiion with actual quotas. What's wrong with that? Well, for starters, the track record of such a policy in state colleges has been abysmal. Rather than actually benefitting the classes it is intended to, it eliminated seats from play because of insufficient applications from members of a certain community, and also eliminates any level of academic standards for those that make it through. These students are then completely unprepared for any kind of performance-based system, and usually fall through the cracks (if they don't, there's some chance they will get similar reserved spots in hospitals or public works departments, which would explain the killer state-run hospitals and crumbling infrastructure in India).

But this is also a depressing reminder of populism thriving in India. For all the great economicspeak about India, elections are won by pandering to your base, and when your uneducated base doesn't realize how much your pols are screwing you to keep you down, they think these half-brained schemes are in their interest. So we'll continue to have doomed-to-fail schemes like a National Employment Guarantee, a Right to Primary Education bill and other progressive-sounding bills and initiatives, even when they are just a front for a bulging bureaucracy siphoning taxpayer money, never mind the skyrocketing deficits and lack of actual progress.

Maybe We All Want to Be Treated Like Garbage!

The Transit Workers Union (TWU) strike has brought NYC face-to-face with chaos. Estimates are that NYC is losing of the order of $400 million a day because of this strike! Now, that's what I call a YUCK! But maybe the workers have a point ... after all, they say they are sick and tired of being "treated like garbage" by the MTA? I mean, here's a classic case of workers rising up for fair wages, right?

WRONG! David Andelman writes in Forbes magazine about the incredible pay and benefits that the TWU workers get. Check this out ... the average bus or subway driver is paid $63,000 a year, a rep in a token booth $51,000, they pay virtually nothing into a generous pension plan, ... oh, and they retire at 55! But they are being treated like garbage because the MTA now wants them to put in 4% of their pension contributions. Wow!!

Now, I'm not a traditional conservative who necessarily thinks unions are evil. They serve an important role as an advocate. My mother headed a teachers' union for a while, fighting against a successful school that penny-pinched and tried to screw teachers while some in administration roles allegedly were siphoning money. But I do appreciate how they fought their battles. For starters, their only "strike" was on a Saturday, so that not only were no classes affected, but students did not have to see their teachers protesting against their very own school. I showed up at one of their rallies to support them on a trip home, and was indeed inspired by the dedication of the staff.

Pity the farly better-paid TWU workers don't have the same ethic!!

Watch Out for 'em Credit Cards!

Frontline had a wonderful special titled 'The Secret History of The Credit Card' (click on the link to watch the program online, learn more about the issues involved, or take a quiz to test your awareness about credit card issues). It is revealing that most people don't know that your credit card company can change your interest rates at any time with 15 days notice, and charge you any interest rate they want (there's a reason so many of them are in Delaware or South Dakota!)

While there certainly is a need for more regulation (yes, the conservative in me still likes consumer protections), this will be a long time coming. The quicker path for an individual is an embrace of Puritan values - work hard, save and spend less than you make each month. Use your credit card for convenience, but never more than you can pay off that month.

This leads to a larger issue of debt in our lives. We have exposed ourselves to such mountains of debt that we are unprepared for bumps along the way. I was guilty of this when I bought my car. Two and a half years ago, I returned to graduate school, and realized I had to pay over 25% of my gross monthly salary for a car payment! YUCK! Luckily, I had the prudence to buckle down, and with the help of a large income tax refund (also a YUCK because it's an interest-free loan to Uncle Sam) and some extreme miserliness, I paid the loan off.

But before you buy that large-screen TV or a new house, spend some time contemplating changed circumstances. What if you were to get laid off? Face a disability or health crisis? How well protected are you?

Sick of NPR!

God, can someone tell the guys and gals at NPR to at least pretend to be unbiased? I used to love the radio show, and still listen to them because they are the only half-educated radio show on the air, but gosh, they may as well be funded by the Democrats. Most guests are liberals, sorry "progressives" or some other euphemism, and about the only time you will find a Republican is when he critisizes Bush. I lost it right now when they had a discussion on the wiretap scandal. Well, a discussion makes a lot more sense when all the people of the panel aren't diehard liberals who think anyone who supports Bush is nuts!

Look, I haven't yet commented on the wiretap scandal because I'm waiting for more details to unravel. I'm inclined to give rather large leeway to the administration fighting terror, although recent reports suggesting vegan and other political movements may have been spied on, which is concerning. But several lawyers in the White House, Justice Department and other departments seemed to think there was a valid arguement for the president's actions, so how come the media can't?

Taking Back Christmas

The conservative talk radio hosts have it all wrong! The problem with Christmas is not its being packaged as the "holidays", the problem is the bastardisation of the name Christmas. How did Christmas become so completely corrupted by materialism? I spent a good part of 5 hours driving today, and was shocked at parents nervous about getting their hands on a Xbox 360 or iPod Nano, or people generally obsessing about avoiding tensions associated with gifting.

Now, I confess I've never been much of a gift-giver. I don't give gifts for birthdays, weddings, anniversaries, achievements ... you'd better be pleased with a card, if that. But even if you aren't as acrimonious to purported material manifestations of affection, how did we convert a holy day like Christmas to such a cheap and vulgar display of money?

Is this what Jesus' message was? I'm sure he's having a word with the Big Guy, saying damn, maybe I didn't want to go on the cross for this! Jesus' life was one of simplicity and service, something we'd all do well to remember. Too many Christians are just too happy giving lip service to the fact that Jesus went on the cross for their sins, and using it to ignore their own actions.

I say we need a revolution - not one that ponders wether "Happy Holidays" is offensive or not, but one that emphasizes the true meaning of Christmas!

Pricking the Bubble

With all the talk of wiretapping, there was little attention paid to a couple of important news items about real estate that should have gotten people's attention. One was the Housing Market Index, a measure of US homebuilder sentiment, which fell to its lowest level since April 2003! Yikes!!

The other was a news piece that indicated that the value of unsold homes amounted to $500 billion, up 33% since last year!

In fact, I was listening to a local station while driving through Louden County, one of the high-priced areas of northern Virginia, and heard a caller complain of their inability to sell their house in the last 5 months, despite cutting costs twice already. The host (or one of his guests?) chimed in that the median home price in Louden County had falled in the last few months had dropped from $506,000 to $480,000.

These are just early signs of trouble. It is sad that people fail to recognize irrational exuberance, especially so soon after a decade of similar exuberance about stocks. If and when there is a collapse, it gives none of us much joy, because families are going to be crushed, our monetary system affected, the economy may take a knock ... so obviously I hope that all the gloomies and I are wrong, those optimists are right, and things go on. But history tells us that the track record of "soft landings" is rather suspect, and a correction is imminent.

Shame on PETA

While I've never been a fan of the group People for the Ethical Treatment of Animals (PETA) because of their mostly publicity-seeking star-studded antics, I have usually had a somewhat positive opinion of them because of the cause they espouse, one that's very close to my heart. All that changed when I saw a story on CNN on how PETA has been actively killing animals! (For a short time, you can find the story on the CNN Video page) This is nothing short of an outrage, and a symbol of how many large nonprofits are forgetting the real cause and have become slaves to money, power and fame. Shame on Peta! These pets could have had a loving supportive family, but were instead coldbloodedly murdered!

Ah, the Smell of Fresh Democracy

The Iraqi voters once again showed the cynics just how much they valued their newfound democracy. 70% ... wow, when was the last time the US or any western democracy had a turnout like that? They don't want democracy, they liked to be ruled by thugs, was the refrain of liberal wimps, but indeed the Iraqis showed once again that they'd dogde bullets and bombs to let their voices be heard. Sure, there are still challenges ahead. The history of political development in all countries has been a slow and tortous one, but this is exactly why we have a responsibility to support them, rather than cutting and running, like retards like Howard Dean would prefer us to do.

President Bush argued very persuasively for patience in his interview with Jim Lehrer.

Wars are fought on objective, not timetable ... Victory means the troops are coming out, but troops are coming out does not mean victory.

Incidentally, you can hear that interview here, even though unfortunately it is only in streaming audio, rather than video.

Sen. Incredible!

I learned about the late Sen. Proxmire (D-WI), who passed away this week, from watching Newshour yesterday. I know nothing of this man's politics, but this fact blew me away - he ran for the Senate in 1976 spending $177.77, and then again in 1982, $145.10, all out of pocket. No campaign contributions, certainly no TV or newspaper ads. Wow, that's unthinkable these days, and I dare say was probably so even in those times! You can watch the piece here. God bless his soul, and God bless US and every democrocy with more Proxmires!

College Football and Academic Achievement

This story by Mark Starr highlights what I have long held against college football - the fact that it is a farce! I love the NFL, the superior quality of performances and all that goes with it. I know the athletes play for the money, and noone ever claimed otherwise. College football, on the other hand, is a lie - the supposed theme is that players are amateurs, playing for glory while still studying and getting a college degree. 'Bullshit!' is the pronouncement of a new study, which shows how dismal graduation rates and achievement of academic standards among football players are. Turns out this players aren't quite deserving students after all! That's what really bothers me about college football - the hypocrisy of it all.

Oh, and I've seen another study that some economics professors at Cornell did which shows that having a football program does NOT enhance alumni giving, as is conventional wisdom!

Firefox Themes

I just discovered the new version of Firefox allows you to install themes (similar to Windows Media Player). You can find a sampling of themes here. In evaluating the different web browsers, it appears to me that Firefox has gotten way ahead of the competition.

Also, what's up with people not criticizing Apple's policies with respect to their browser? Apple's new Safari RSS handles RSS feeds and tabbed browsing, but is available only if you switch to their latest operating system. Hah, and all those people who embraced Apple as the anti-Microsoft should be feeling very good with the Mac's embrace of Microsoft-style coercion!

Check Your Charity

'Tis the season to give, but be sure your dollars are spent wisely. ABC had a special on how programs targeting the poor are getting less and less money, while nonprofits servicing the opera or a museum are awash in cash. Now is a good time to reevaluate your priorities, and think of those unfortunate brethren suffering the winter.

On that note, do take the time to investigate the charity you plan to give to. Some of the web sites to do this are Charity Navigator, and Give.org to name a couple. I was surprised by some information I found on the former site:

• Habitat For Humanity gets a one-star rating, spending only about 75% of its money on program expenses (i.e. actual charity work)! It spends 22 cents on fundraising for every dollar it gets!
  
• The American Red Cross does get 4 stars, but still spends 18 cents on the dollar on fundraising, and has a CEO making a salary in excess of $450,000!
  
• By and large, the smaller charities do a better job, in my opinion. For example, among charities that do work in India (where I'm from), one of the standout groups, Asha for Education, spends just a cent on a dollar on fundraising, spends almost 98% of its budget on program expenses, and does not pay its CEO!
  

That's not to condemn any of the larger charities, just to say do your homework. And remember, as my friend's dad used to tell him,

Make all you can,
Save all you can,
Give all you can.

Store Credit Cards Can Screw Up Your Credit Score

David Bach, author of the Automatic Millionaire wrote this essay on four reasons to say no to store credit cards. While most of them are the usual suspects when talking about avoiding credit cards in general, one point was rather significant, even for a disciplined spender who would definitely pay off all his/her balance every month.

One of the factors determining your credit score is how much of your available credit you have used, but this is not just in sum total. Let's say you have cards with banks A, B and C with a credit limit of $1,000 each. Your balance on card A is $800, card B and C are $200 each. Your total balance of $1,200 represents 40% of your available credit, so that won't trigger a red flag. However, you have used more than 50% with a single lender (80% from A in this instance) and so you will lose points in the evaluation of your credit score.

What that means is that a small purchase from your neighborhood Target with a store card could easily do some pretty nasty damage. All for a few free bucks ... that, my friend, is what called cutting an leg to save a toenail!

McD Gift Card

I saw these ads for the new McDonalds Gift Cards. Ah, what better way to say I HATE YOU that to gift them the gift that keeps clogging ... your arteries, that is. I'm not much of a gift person (so far, I've only once got my brother and folks gifts for their birthdays!), but allow me to offer some alternatives to a Mickey D card:

1. One-month membership to a gym, or sessions at a yoga studio.
2. A mountain bike, or gift card to a fitness store
3. A book (yes, enriching your mind is a form of fitness) - no gift card here: take the trouble to find something worthwhile - my vote is for 'Tuesdays with Morrie'.
4. Savings bond, especially if it's for a kid
5. Make your own based on what the person needs.

Anything that contributes to mind, body and soul is a winner. On the other hand, if you are on the person's will, you may want to present the Golden Arches Card after all!

Your Life is on the Internet!

I have periodically wondered about how our lives are on the Internet, and what the implications of this fact are. For example, this blog tells the world my views, and yet this may not be desirable when I'm seeking employment (for example, a potential employer may be uncomfortable with my conservative views on abortion and politics).

Well, this cuts even deeper. After reading something in a blog I follow, I was curious and looked up some friends' profiles on popular "networking" sites such as Friendster and Hi5. In the course of doing this, I discovered that someone I consider a close friend had recently lied to me about something personal. Sure enough, while snooping, I discovered more about her personal life than I had necessarily wanted to know. While I could write a philosophical post querying why people lie (and I intend to write a broader musing at some point), it also highlighted for me not only how the Net is, in so many ways, impacting our lives, but also how trusting we are currently with putting personal information we would not want even our family members to know out there for strangers to read!

So where does this revolution go? As we acknowledge the proliferation of blogs, personal web pages, networking sites and the like, I can't help thinking there will be a backlash, when people realize how this information can be abused. Bloggers have already discovered the pitfalls of openly sharing their views with the world, often getting fired from their jobs, and I for one would not be averse to deleting (or making anonymous) this blog before I seek real work after grad school.

Say No to Canadian Drugs!

I found this essay by Huber to be a wonderfully persuasive argument against the imposition of drug price controls or allowing large-scale importation of Canadian drugs into the US. I have long felt that insisting a drug company charge the same in the US as it does in Mexico or any other country is foolish to say the least. Now I'm glad someone penned it a lot more articulately than I ever could have!

USA Today's 'Ask Matt' Column Features My Question

A question from yours truly was featured in the 'Ask Matt' column of USA Today. The question was truncated and missed one key question I had asked, which had to do with impact on the broader (non-construction) market. Since the time I posted the question (August 1!!) there have been a few stories in media outlets suggesting that a housing bubble could affect retail, as people don't "feel as wealthy".

Yay to Flaxseed!

I was just reading about 15 tricks to turn ordinary foods into nutritional superpowers and I got really interested in flaxseed oil. Reading more, this seems to be an incredible supplement, especially for a vegetarian like me. Get this - just one teaspoon of flaxseed oil contains about 2.5 gm omega-3 fatty acids, besides being rich in omega-6 fatty acids. Consumption of modest amounts of flaxseed oil has been shown to reduce incidence of heart disease, cancers, acne, fatigue and several other conditions. For more information on flaxseed and other tips, check out these sites:

WholeHealthMD's Flaxseed page
Dr Mirkin argues that omega-3's from plants are better than those from fish!
Practical Usage Tips

Another One Bites the Dust!

Wow, yet another senior Republican in ethics trouble. This time it's an eight-time Congressman from California - Rep. Cunningham has admitted to some pretty serious fraud charges. I forecast the GOP will lose the House and Senate unless they do some serious house-cleaning. How the hell can so many senior leaders be involved in scandals, and the party turn around and ask for votes?

The troubled ones so far (pols and others) - Delay, Frist, Rove, Libby, Cunningham, Abrahamoff, Scanlon - phew, that's quite a list! And I suspect we'll see a lot more uncovered.

I hope this is a clarion call for the clean politicians in the GOP to take over - people like my man, John McCain. Yes, he's a loose cannon, but the American people appreciate straight talk, and hopefully clean records!

Correction to Earlier Story on Stock & Bond Returns

Every now and then, I get it wrong (ok, maybe more often than I'd care). In my earlier analysis of stock and bond returns at present bond yields, I noted that the historical forward 5-year returns of both asset classes at present real bond yields were horrendous. This was true. I then noted that adjusting for inflation did not explain the performance of stocks. This was somewhat incorrect. What I had done was to adjust the stock price index (S&P 500) for inflation, but not the bond yields. Using an abscissa of nominal rather than real bond yields explains a lot.



First note that at high nominal yields, there is a direct correlation between those yields and ensuing performance. This would suggest the early phases of stock bull markets, where either inflation has investors fleeing bonds, or hype has them running to stocks (a la 1990s). But when we get to lower nominal bond yields, there appears little correlation between these yields and ensuing stock performance.

So what about my conclusions in the previous post on the need for capital preservation? Let's look at the data since 1981, when the era of hyperinflation ended.



As we can see, this graph suggests that at present real bond yields, there is a lot of bullishness about bonds, meaning stocks may actually outperform bonds (delusion of crowds phenomenon). This woud be especially true if we believe concerns about inflation are overplayed.

Certainly there are many assumptions in this analysis, and this screw-up emphasizes why you should not take any one person's ideas too seriously!

The Case for Capital Preservation

Let me start by emphasizing that I am not an economist. No sir, my knowledge of economics is rather rudimentary. As an engineer, I try to predict (and hopefully understand) complex systems by a study of data. And in that spirit, I looked at returns that can be expected based on economic data from January 1963 to September 2005. (I talk about some assumptions and limitations further below)

My interest was to see what the historical record had to say about our historically low real bond yields, hovering just under 2% (real yields are yields minus inflation). If you look at the forward 5-year change in bond prices as a function of real bond yields, you notice at that present levels, bonds have been a good way to lose money.

This is hardly surprising - low yields indicate high demand, and any value investor will tell you that when there is too much exuberance in the market, that asset will likely fall in price when investors realize the unsustainability in price.

So stocks are the way to go, right? After all, the fundamental principle of diversification is that stocks and bonds are inversely correlated. Well, not quite. If you look at the historical record, at present real bond yields, stocks have suffered quite badly in the ensuing years.


My first thought were that historical low real bond yields must have been associated with inflationary periods which killed businesses with high raw material costs. Unfortunately, this does not completely solve the puzzle, as plotting the data in terms of unadjusted (rather than real) prices shows similar trends.

Why this happens is a mystery to me, one I'd like to understand. If there's someone with an economics background or just a better understanding of these phenomena, please cue me in.

If this reasoning is correct, that makes the case for inflation-protected securities or CDs yielding above inflation. At last count, I-bonds were yielding (real) something like 1.6% (I think), while most CDs were closer to 0.75%. While an 4-8% real return over a 5-year period hardly seems appealing, the record suggests this may be better than rather significant losses in equities or fixed income assets.

OK, now for the less interesting (to many) details of assumptions and the weakness of my arguments.
(1) I assume that this limited (42 years) data set is sufficient.
(2) I assume that multiple factors are priced into real bond yields. While I did consider inflation above, the economy is a complex and nonlinear system, and it is questionable if real bond yields reflect the nonlinearities appropriately.
(3) I do not consider international investing. Correlations between international economies and the US are something to look at - I would argue that much of the Asia-Pacific economies are tied to the US, and a slowdown in the US economy would wreak havoc on these economies.

Stay Outa Faith Issues!

I think criticism of a Catholic school firing a pregnant unmarried teacher is really misguided. People send their kids to faith-based schools to help them inculcate the values of their faith, and teachers are supposed to be role models. To have a teacher obviously violate it and still be in the school confuses kids. As a Hindu Brahmin (a sect that abhors the consumption of animals), I would be outraged to find out a teacher in a school of my faith did not adhere to those same principles!

Secular schools just have to have different criteria than faith-based schools ... actually make that true for all types of institutions!!

Save Your Identity

Some tips I just heard on the Clark Howard show:

* Never let your checkbook leave your house! If your check book is stolen, good luck saving your identity!
* If you have all the credit you need, opt out of pre-approved credit offers, by calling 1-800-5OPT-OUT
* Check your credit reports for suspicious activity. Added bonus: You can make sure your credit report is ok (Some 8 in 10 credit reports have errors!)

Stupidity Award

OK, the latest person deserving on some kind of Nobel prize for Stupidity is this lady, who tried to open the door on a plane so that she could smoke. Shit, if you are scared of flying, that's one thing, but to actually try to open the jet door! And to think she got off with just a "good behavior bond"!!

Quote of the Day

Rep. Mike Pence (R-IN), who wants Bush to show how the US is actually winning the war in Iraq:

This is football season. People want to know if we're winning or losing . . . what's the score ... just over 2,000 Americans dead, compared with 50,000 to 60,000 enemy combatants.

Yuck! Say No to Fries!

The next time you feel inclined to shake your head at someone smoking or having a drink, disappointed at their choices in life, look at your own. I'm amazed at how many people who sneer at poor choices by others will not think twice before loading up on their favorite fried foods, be it french fries, or an ethnic delight like vadas (for my Indian audience!). Well, enjoy them if you must, but here's what it will do to you.

Blood Pressure? Sip this Java!!

Ok, just when I was trying to brainwash myself into accepting coffee is bad for you comes new research that coffee reduces blood pressure, at least in women. OK, so the difference isn't significant to justify drinking it, but it sure makes it seem a lot less evil, and hence a lot tougher to quit. (Whereas say, fried foods obviously clog your arteries and are easy to skip if you care enough about living a half-decent life!)

No, no, I still plan on gradually reducing my dependence and eventually quitting the need to have coffee, although I still hope to enjoy the nectar of the Gods ever so often.

Losing Weight

Men's Health Magazine had this piece on the new science of weight loss. Really quite interesting, and in some cases, counterintuitive. Here are some interesting facts:

* You could be increasing your body fat percentage by not eating! When your body needs energy, it burns muscle before fat, so if you don't get enough carbs, you burn muscle instead of fat!
* I have loved to bug my friends about this one - weight training is a MUCH BETTER method to lose weight than running or any other form of exercise. The difference is that weight training increases your resting metabolic rate (how many calories you burn while not exercising) and thus causes greater calorie burn.

There's a lot more, so I would read the story (even if you aren't a man!)

Where's the Swagger?

Watching Bush the other day, I couldn't help thinking of how beleagured the President is. I mean, I had read of all his problems in the media, but it was nowhere more obvious than watching a press conference. Gone was the swagger and the charm, and instead was left a man who seemed excessively defensive. Bush needs to get back to what made him popular - besides conservatism, he got elected because he was a Washington outsider, not a seasoned politician with an eye fixated on the popularity scale. To redeem himself, Bush needs to come out strong on ethics issues, and fix his personal credibility, which has been tumbling. Don't play coy and refuse to comment - you are just adding yourself to the long list of politicians we hate. That's not how you became president, and certainly what people want.

As I complained in an earlier post, I was quite excited after the elections by a president who seemed ready to fix social security, healthcare, education, immigration. Instead we have gone nowhere. This second term is the most collosal waste of time we have experienced. Maybe he's waiting for elections to be done Nov 8? One can only hope so. Whether you are Republican or Democrat, you have to be frustrated at the lack of progress on so many issues.

Immigration Policy and Cheap Labor

It annoys me that a purpotedly business-friendly administration cannot fix our flawed immigration policy. Bush needs to look up from the problems with ethics and judges, and reevaluate his plans to fix a policy that encourages poor Mexicans to spend exhorbitant sums of money to get to the US, and then get scammed of their earnings, like these stories about Katrina cleanup workers not being paid. Capitalism is based on an understanding of supply and demand, and it's not rocket science to realize we have a real shortfall of cheap labor in this country.

Reading a biography on Greenspan, I found it interesting that economists (including those at the Fed) subscribed to a concept called NAIRU wherein unemployment rates below a threshold level trigger accelerating inflation expectations (for more on NAIRU, read this). I don't know if anyone has looked at how outsourcing and cheap labor may help reduce the NAIRU, but it certainly seems intuitively that the threshold should drop lower when there isn't supply constraints.

Damn Liberals and Iraq

Remember the pre-war days when liberals crooned that war was the wrong option, and that the US should follow the lead of Russia and France in pursuing diplomacy. Well, now that the Oil For Food program investigation is over, it turns out that, surprise surprise, companies in those countries, as well as many more, were getting fat violating UN sanctions and enriching Saddam's pockets.

On The McLaughlin Group on PBS yesterday, Eleanor Clift crooned about how the Bush administration lied about WMDs and implied we shouldn't have got rid of Saddam. This was a thug who tortured his people, invaded another country and then subverted a sanctions program, but don't count on leftist idiots to value all that. It was left to Mort Zuckerman to point out that every major intelligence agency in the world thought Iraq had WMDs, and indeed so did the Clinton administration.

Listen, it's tough stuff out there in Iraq, and there are innumerable risks, but in the end, I think it's the right signal that Bush gave that America will stand on the side of freedom. This is a sea change for a country that has often failed its role by supporting autocratic governments, and it is refreshing to see that the world's only superpower realize its responsibilites beyond its self-interest.

The Source of Wage Losses

If you are wondering why there hasn't been a post in a while, it's because I spent the week in Cincinnati at a conference. Anyway, it's always good to be back home, although I come stressed out about just how much I need to do to get the elusive PhD.

On the theme of education, I liked this essay on the source of declining wages for low-skilled workers. Hint: it's not from outsourcing!

Greenspan's Legacy

As 'the Maestro' Alan Greenspan's tenure winds into its last leg and the excitement shifts to Bernanke, a introspection of Greenspan's achievements is in order. Very few news agencies have done so in a detailed and unbiased way. Most refer to Greenspan in mythical terms, the man who saved the US economy multiple times, the man who could do no wrong. So I thought a counterview was appropriate, and for that Forbes magazine is the place to be. To be fair to Alan, Forbes represents a group of supply-sides whose definition of a good Fed is no Fed.

James Grant's column is fairly critical of Greenspan's performance and record. Grant is a dollar-bear and gold-bull, in part because he thinks rising debts and poor fiscal policies do not bode well for any of the world's currencies (he does like Korean and South African currencies, but has in the past suggested dividend stocks in Korea instead - but this is not an investing post!)

Washington Stalling

I was truly excited at the start of Bush's new term as president. Here was a man who had a mandate, who talked about spending the "political capital" he had earned. Talked about reforming the fractured systems we endure, from a failing social security system to a obsolete education system.

Goals are great. But right now, Bush's second term's starting to look a lot like Clinton's. While the president's ethics have not been personally questioned, his aides and teammates are being battered. As I write this, Libby's joined the roster of injured players - soon after DeLay went down for questionable fund-raising. Karl Rove and Bill Frist look shakey. Harriet Miers withdraws her nomination. Bush's own approval ratings are sinking!

Is there hope for a new push forward? Don't count on it. Miers' fall is one of the worst things that could happen to our government, whether you are Republican or Democrat. Her qualifications may be questionable, but right now, Bush is in a quagmire. If he chooses a not-conservative-enough candidate, he can kiss his political future goodbye - his base will eat him alive. But a candidate who wins approval from them will face filibusters from the Democrats. In short, don't count on a new face on the bench anytime soon.

Why did Bush follow the brilliant nomination of John Roberts with such a disasterous choice? Did he not realize how charged an atmosphere he was stepping into?

Either way, let's look at momentum going forward on other issues. Will things improve in Iraq. Probably not. As countries which have dealt with insurgencies would tell you, you can't fix a place overnight, not even with the wonderous gift of democracy. It's a long and slow process, and I dare say that if the US is truly concerned about Iraqi stability, they should be prepared to hang out there for 10 years or more.

The legal woes for the Republicans are not likely to go away anytime soon. One of the problems with a party in power for too long is the arrogance that comes with it. The Democrats have been guilty of the same problem before.

And then add in candidates trying to distinguish themselves for elections in 2006 and the the Big One in 2008, and you have the death of unity in the ruling party. Add in an opposition that is confused and lost, struggling to come to new economic realities under the grips of powerful interest groups (yes, a union is a freaking interest group!) and you have chaos in Washington!

If anyone can find a way things might improve, and we see real change, positive change, do comment on it. Could even be far-fetched. After all, as I have been convincing some friends, the secret to happiness is delusion.

Rosa Parks

I have been so busy I haven't had the time to mourn the passing of Rosa Parks. Here was an ordinary lady who made an extraordinary contribution to the history of this country by a simple act of resistance. She truly is a testament to the potential of one individual to change society, and is a breath of fresh air in the stench of cynicism that exists around us.

Sangkeertanam

This is for my Tamil audience interested in some incredible devotional songs. Sangkeertanam is a wonderful collection of songs produced (I think) by Bro. Jega from Malaysia and Rekha Ravindran (who I think is also from Malaysia), and is available online at the Sangkeertanam page at Tamilsongs.net. It features such accomplished singers as Unnikrishnan and SPB. The pick of the album, for me and my "karmic brother" Shiva, is Vazhavaipai Thayee, and especially the version by O.S.Arun, which practically gives me goose bumps every time I hear it. It's very much like a ghazal (or maybe is one?).

Incidentally, I'm not quite sure how if accomplished this, but when I checked it out from home, it had the words in Tamil, but at school, the song names were in English! Evidentally a script that checks for availability of a font or the like. But if you find gibberish, don't worry, the links still work.

Bush in Rummy mode

Here's an excerpt of what Bush at his press conference with Palestinian leader Mahmud Abbas in the Rose Garden, in response to reporters' queries on Harriet Miers.

...the questionnaire that she filled out is an important
questionnaire, and obviously they will address the questions that the senators have in the questionnaire -- or as a result of the answers to the questions in the questionnaire.

Sounds a bit like a certain Defense secretary? I don't know if he intended it, but towards the end, he certainly was grinning! Of course, he's got a long way to go before he can reproduce Rumsfeld's gems ... here's one of his classics, at a Pentagon briefing on February 12, 2002 (read it aloud, and only once to get the right effect!)

Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns - - the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.

Quotes of the Day: WARNING Politically Incorrect

Bill Maher's Rules in his latest book 'New Rules':

Pasta la Vista

New Rule

If you're in Iraq and you even sort of think you might be kind of near a checkpoint . . . stop. Otherwise, don't be surprised if we shoot your car. Haven't you seen a single American movie, television show, or news story from the last 60 years? That's what we do: We shoot cars. Does the name Elvis ring a bell? Richard Pryor? Lee Harvey Oswald? I know it's hard for foreigners to understand, but in America we shoot first and ask questions rarely.

This one's less PI but still a good one.

Pay Ball!

New Rule

Stop saying that athletes do it for the love of the game. They do it for the love of their 32-room mansion with the live shark tank in the living room. Bass fishermen do it for the love of the game, which is why so few of them have agents. If pro sports paid minimum wage, Shaquille O'Neal would be a bouncer at Scores, and Anna Kournikova would be a mail-order bride from Minsk.

Quote of the Day: Eddie George

Veteran running back, Eddie George, who is only the second NFL running back to run over 10,000 yards without missing a start:

As a running back, you’re basically using your body as a battering ram. And I end up pinned in some really awkward positions. I thought if my muscles were more flexible and had experienced some of those stresses beforehand in yoga, I’d be less likely to get hurt.

That's for all you people who think yoga's for sissies! Incidentally, EG is on the cover of the book 'Real Men Do Yoga', and I can attest (although it's feeble compared to EG) that yoga has helped my weight training and stress management.

How Much for Retirement?

Choose to Save has this interactive calculator for determining how much you would need to save for retirement. It's only a ballpark estimate, and is sensitive to model inputs, but does exactly what it suggests - give you a ballpark estimate. If you are saving less than this for retirement, time to cut out of those fancy dinners and start ploughing more in. If you are single, I would say you need to exceed those estimates - remember, if and when you do have kids, you will have to put aside substantial amounts of money for their college education (currently, a decent 4-year program would set you back as much as $100,000 and it is likely that tuition inflation would be greater than overall monetary inflation)

Hero Hoagland

My latest hero is Principal Hoagland, who put his foot down and cancelled the prom rather than allow it to become a vulgar display of affluence, and an excuse for a sex party. That a Catholic school, where presumably parents send their kids to escape the weak standards, academic and otherwise, of public schools, had degenerated to this was sad. But thankfully at least one educator seems to think we are headed in the wrong direction. Cheers to you! Now I would introduce into the curriculum a service component, where rather than the school going to Disneyland or some stupid trip, they go down to Mexico and solve the problems of their brethren. And if any parents don't seem keen about it, well, then let them take their kids to a school that does not have a mandate to impart values! All schools, but especially faith-based schools, whatever faith they represent, have a central covenant - mould the character of the pupils.

LIVE STRONG!

USNews had this story you have to read about being the husband of a breast cancer patient. Stop! Don't run away just because your wife is fine, or maybe you aren't married or whatever. This is a story worthy of reading, because it teaches us some important things about being in a relationship (whatever the relationship) with someone suffering from a terrible disease.

Live Strong, but also Live with Love and Compassion

Socialism In Action

This story speaks to the inefficiencies in socialist economies - an analysis of the Delhi Jal Board, the water utility of India's capital city Delhi. Even my non-Indian readers will want to read this, especially the comparison between the performance of the utility companies in "booming" India and the forgotten Ivory Coast. This is the reality that you need to keep in mind the next time you think the government should take over an industry (think Democratic calls to have the Feds run refineries to compete with those 'evil capitalists' profiting from Hurricane Katrina). The reality is efficiency is the product of a need to survive. Think if you were guaranteed an 'A' in a course without having to study, how much time would you invest in the course?

Some notes before you read the link: 1 crore = 10 million, Rs 50 is just over a dollar, although I find a conversion of 8X works better in adjusting for purchasing parity (so someone making Rs 800,000 a year truly makes about $16,000, but lives like someone who would make $100,000)

Prices Can Go Down

In recent times the popular press has been obsessed with the real estate bubble, which is why I have stopped writing that much about the issue. But this story (and accompanying table) reinforce what I have said in the past - real estate prices can go down!

Quote of the Day

President John F. Kennedy welcoming 49 Nobel Prize winners to the White House in 1962:

I think this is the most extraordinary collection of talent, of human knowledge, that has ever been gathered at the White House, with the possible exception of when Thomas Jefferson dined alone.

Disclaimer: I go to the University of Virginia, founded by good ol' TJ, so anything associated with him has almost mystical status!

We Want to Underpay!

I was watching an interview on PBS' Newshour with China's Vice Chairman Cheng Siwei yesterday, and in some ways I found it quite interesting. I could write several blog postings about the interview, but you'd be better off reading (or watching in streaming video or hearing on streaming audio) the whole interview at the Newshour page. The one thing that did strike me during the course of the interview (indirectly) was that essentially the US wants to underpay its debt to the Chinese! How? Well, we have built this huge surplus with China, all along paying for it with IOUs (Chinese buying Treasury bonds). Well, all the talk of revaluation has focused on our desire to reduce the trade deficit, which is probably true. However, one point that's missed out is that if China revalues the yuan, the debt in $ is now worth less yuan. You can then see why the Chinese have a good reason not to be thrilled about having to lose even the measly return they have been getting on Treasuries.

Brace Yourself for Rough Times!

Man, this is not the happiest time to be an investor. The specter of inflation and recession loom large. Two respected writers have argued for one or the other. Bill Gross of PIMCO, aka Bond King (more like Bond God!) argues that rising interest rates will cause the bursting of the housing bubble, triggering a US recession. If this is the case, stocks will be pummeled as corporate profits plunge.

David Dreman of Forbes, on the other hand, argues that inflation will be a killer, and that locking in interest rates would be murderous for your investments.

Hmm, funny how no one seems to talk of stagflation. If prices of crude, copper and other commodities continue to surge, fueled by growing demand, isn't it foreseeable that the Fed has its hands tied? Or if the US Treasury is forced to print money to pay its debts, then you have a situation where you have too much money and slow economic growth. I'm no economist, so if there's someone who understands this stuff better than I, clue us all in.

Seventh Heaven

I really liked this story on Stephen Collins of Seventh Heaven fame, in part because I used to really like the show. I haven't watched it since moving to Charlottesville two years ago (where we don't have a WB station), but my recollection is the show, intended originally for a teen audience, represented the type of TV I'd like to see. It's not too surprising (but sad!) to read how WB and the entertainment shows never gave 7H its due, more keen to promote shows with generous amounts of sexuality and violence.

Quote of the Day

Sen. John McCain (R-AZ) when asked to comment if he would accept a slot for the Vice-Presidency in 2008:

I spent all those years in a North Vietnamese prison camp, kept in the dark, fed scraps, why the hell would I want to do that all over again?

Earthquake Victims

Our prayers and thoughts are with the victims of the terrible quake in Kashmir and the tragic loss of life. I hope the inept bureaucracies of India and Pakistan can get their acts together to prevent a further exxageration of their misfortune.

Church and State

I was listening on the radio about how the Bush administration wants to reimburse faith groups for expenses incurred during Hurricane Katrina. While this may be good in the short term, I think the Faith-Based Initiative at the federal government with spell the deathknell of faith-based initiatives. No, I'm not just concerned about the influence of church on state. I am much more concerned about the influence of state on church.

Look at it. Right now, the top states for personal giving are the Red states (incidentally, why on earth are conservative states called Red, which is elsewhere synonymous with Communism?) Why? Because people in these states believe in a moral and religious obligation to help humanity. In the blue states, people think their obligation is to pay taxes so that the government can take care of the needy. (OK, these are simplifications, but you get the idea!) Knowing a church gets federal support means less individuals will contribute, churches will swell with "entitlement money" and soon churches will be indistinguishable from the inefficient bureacracies we are bestowed with!

Also, while the present government may not seek to have strings attached, what prevents a future government from dictating moral and social terms to future dependent faith groups? If a church believes, for example, that homosexuality is a sin, is it for government to dictate that they must hire gay priests? I think not. Heck, I say if a faith group believes white people are superior, I as a man of color would disagree with them, I would sue a company which tried to impose such views, but believe the religious groups are within their rights to pick only white people in their clergy, as long as they do not get federal money.

That's why I think Salvation Army is on a slippery slope. It cannot long-term depend on state money and yet chose to hire only those who conform with their article of faith. But rather than demand the Salvation Army hire non-Christians like me, I would suggest they get out of the government money handling business, and ask Him to assist in His mission.

OpenOffice Sucks!

Much is being made of Google's tieup with Sun which, as I understand it, will improve penetration of OpenOffice. Now, I'm no techie, but I have used OpenOffice, and there's no way it's going to be a serious challenge to Office in the near-term. Despite the hype about Office portability, OpenOffice fails to open highly formatted content appropriately, and lacks many of the features that Office has.

I understand a lot of people are anti-Microsoft (I use a Mac at work because my advisor is one of them!) But the reality is Microsoft makes a good product, and has the scale to automatically give it an edge on competitors. Yes, Google has those same attributes too, plus the "cool" buzz, but it's going to take a lot more to unseat Microsoft.

Tree Climber

I thought about this story yesterday, and while I have posted it a while back, I decided I wanted to post it again, and not just a link to the old post. So here goes my rant again ...

While I am often bothered by the nature of disparity, I was particularly moved by something that happened this week. I went to bed reading the story of a panaiyeri nadar, a tree-climber in my home state of Tamil Nadu, a story typical for many in his profession. His job is to extract date palm jaggery from the trees, for which purpose he has to climb the tree, extract the juice with a knife, and on to the next tree. He has no safety harness or other protective gear, and a fall guarantees death, or worse serious injury that could spiral his family into serious debt. He often has to climb upto 150 trees, each at least 15 to 20 feet in height. That's about the same as climbing 250 floors up a staircase, except he has no staircase or even ladder - just his bare palms and legs. He starts working at 3 am in the morning, and gets done about 6 in the evening. The fruits of his labor? About Rs. 5-8 (under US 20 cents!) a day ... oh and muscle pains, asthma and a host of other ailments!!

I woke up the next morning, and turned on my TV to discover it was National Splurge Day - and we were being shown how we could splurge (if we had the money!) ranging from caviar to $200,000 diamond earrings to a Merc wheels that set you back close to 400 grand! Sure, spend, revel in luxury ...

This bothers me a whole deal, and I'm no commie or leftie! I don't believe the Government should necessarily be a constant presence in our lives. But I do believe that we are humans, and humanity is what distinguishes us from the beasts of the jungle. How can people not be bothered by the extreme poverty that besets so many in the world? And I don't mean just the rich. How far would the $2000 you spent on a home theater system gone in those parts? How many palaiyeri nadars would have had access to a more supportive system?

Yes, governments are supposed to do that, but it's obvious that for many in the Third World, governments have failed them. But ask yourself, if a loved one were in need of medical attention, and the state-sponsored medical system (Medicare in the US) refused to provide any assistance, would you turn a blind eye to their plight?

Religions love to talk about the great attributes of their leaders. And yet, how is it that so many who tout the virtues of Christ, Mohammed, Rama, Buddha fail to attempt to replicate their compassion?

How about envisioning a year, nay a day as a panaiyeri nadar?

You're fired!

I was reading this story on CNN about how great online banks are, when I came across this excerpt.

And if you're looking to have your hand held, online accounts are not for you. ING Direct, for instance, closes an average of 3 percent to 4 percent of accounts a month, when customers require too much personal service.

"We fire our customers is a colorful way of putting it," said ING Direct's Kuhlmann. "While the banking business says the customer is always right, we're online guys and you can only do business with us in a certain way."

He added that it just isn't cost effective to maintain high maintenance customers that need more personalized attention.

Whoa, never heard of that before. I'm not surprised or outraged - I mean, you can't kill the goose that lays the golden egg, but that's still radical, and the number is much higher than I would have imagined!

Oh Shut Up and Read the Whole Statement!

OK, so here's one more instance of people getting excited after apparently reading a soundbite. People are blasting William Bennett for suggesting that we should abort black babies to reduce crime. That, my friends, is the exact opposite of what he said!

OK, here's what I understand happened. A caller asked about some book that suggests that the reason crime is down is because abortion is up. Bennet, a pro-lifer, pointed out that the ends do not justify the means. As an example, he asked rhetorically if it would be ok to abort black babies to reduce crime? He then went on to say that it was morally reprehensible in this case, just as it is always morally reprehensible to abort a baby for economic reasons. His point was you cannot justify a moral wrong with economic reasons.

Now, you may be for or against abortion, you may like Bennett or not - I for one know little about him. You may even argue with his implication that black people are responsible for most crime. I do not question anyone arguing on this issues. What I do get pissed off about is people trying to suggest Bennett called for the abortion of black babies!!

One more liberal show ...

I sat with a group of friends to watch the premier of 'Commander-in-Chief' on ABC. If you haven't heard about it, it's a show where a woman VP becomes President when the incumbent dies. We watched it because a friend acted as a Nigerian woman, and it was indeed very exhilarting to see someone you know on network TV.

Having said that, I'm tired of one more liberal show bashing conservatives, which is what my early radar suggests this is going to be about. I mean, the woman's an independent, and the Speaker and others are power-hungry insensitive Republicans. So what I suspect we'll see is Geena Davis kicking some ass as she improves welfare, reduces pollution, bashing money-hungry companies, and allows gay marriage and abortion (though it'll probably be called "choice"). What they won't tell you is what she's really doing is throwing money into that sinkhole called Big Government, implementing meaningless policies independent of whether it truly helps the environment, kills job-creating industries, and allows for the murder of unborn babies. (Yes, it's debatable when, but certainly at some point, a fetus is a life, and that's a lot before it comes out of the mother's womb, so let's not cloak it as "choice"!)

Incidentally, just how retared the producers of this show are is from how they botched facts a young kid could have found Googling. As my Nigerian friend Femi pointed out, Nigeria does not have a Prime Minister, the lady about to be stoned by a Sharia court should wear a purdah if she's Muslim, and why would she be jailed in Christian Lagos if Islamic courts (which are in the North) sentenced her to be stoned for extramarital sex?

Get in Shape!

Folks, I heard from a friend of mine that she was suffering from a rather undesirable ailment. While researching it today, I was struck to see a risk factor that seems to be omnipresent - obesity. It really is time to get our act together, and if you're not convinced, imagine yourself with one of the many ailments you are exposing yourself to.

Just for the record, I'm not suggesting weight caused my friend's condition. Myriad factors influence the diseases we are exposed to, including genetics, diet, exposure to environmental stressors etc. But weight and diet are the two you can control.

Why do I list weight and diet are independent? Because even if you are skinny, your diet can kill you. Don't be complacent that those saturated fats wont harm you because you aren't fat - those arterial walls are clogging up as you chew those fried potatoes.

So get in shape, cut back on fats and salt, start some yoga (pick a studio or class where they emphasize the breathing and mental aspects) and plan to live a long healthy life.

Stay Away from the Java?

The problem with running computer models is that when they are running, you tend to surf the Net. And increase your probability of reading something like this - Mens' Health magazine reports that researchers at the University of Athens measured coffee consumption and aortic stiffness in 228 people and found that caffeine junkies displayed twice as many signs of abnormal arterial pressure as their less-caffeinated counterparts.

Well, guess I need to start thinking of cutting down... don't get too excited! This may be the time for one of those ambitious Five-Year Plans!!

Rita Evacuation from Texas

On my way in, I was hearing on the radio an interview with someone on NPR who said she was tired of the traffic from Houston to Austin, and so was planning to turn around and head back!! This is crazy indeed! You would have thought Katrina taught people to get the hell away from a hurricane. It is also worth asking why it is that people have to evacuate with cars. Can the goverment (state or federal) not provide train or bus services to evacuate large masses of people quickly. Only buses should be allowed to use the carpool lane - that would be incentive enough for people to leave their cars behind and get the heck out!

Everbank MarketSafe

Everbank has a fantastic new product called a Marketsafe CD. Essentially you can choose either an S&P-based or gold buillon-based CD for 3 or 5 years, and you are guaranteed the greater of the S&P/gold appreciation or 100% of your principal. So for example, if you get the S&P-based account, and the S&P 500 gains 50% over the next 5 years, you make 50% in 5 years. But if the S&P 500 loses 10%, you still get back your initial investment (although it's now lost money because of inflation).

I don't care so much for the S&P-based account as I do for the gold-based account. For one, it should act as an inflation-hedge (we got a lot of it coming) and I actually like gold in this time when we are evidencing generally weak currencies - the dollar's heading south, the euro is a currency based on a failing political ideology and the Asian countries are desparately trying to force their currencies cheap.

Everbank also offers currency-based CDs, including offerings such as a Commodity CD, which is a CD based on currencies of four commodity-producing countries.

I wouldn't put a large part of your portfolio in any of these CDs, but I think such products offer the individual investor a great way to hedge against economic events.

Cramer v Coin Flip

If you know anything about investing, you've heard of Jim Cramer. He's the loony who hosts Mad Money on CNBC, and is revered as a virtual investing guru by many small investors. And yet, I was shocked to find out by reading Jason Zweig's commentary in Benjamin Graham's 'The Intelligent Investor' that Cramer's record is several notches below stellar, heck several notches below decent even. Well, now a fellow blogger pointed me to this analysis of Cramer's record that shows he's about as accurate as a coin flip! That is, if you made your decisions to buy and sell by tossing a coin, you'd do about the same as you would have under him! (OK, there are some slight caveats, but you get the point).

Folks, Wall Street and the world is full of hype. If you don't train yourself to ask critical questions about the "experts", well, train yourself to get burned!

Chavez and His Oil Games

When will we realize that our oil consumption is supporting thugs like Hugo Chavez? Fortune had this story about how he is indimidating business leaders into rewriting contracts, and also wants to jack up the price of oil. It's time to reduce our dependence on oil by conservation, pursuing alternate sources and new technology development. If we create the right incentives, the private sector will respond with new technology.

Oh, and talking of alternate sources, isn't it time to look more seriously at nuclear power. Despite the safety issues, this remains in the short-term the most likely candidate for large scale power development, and is relatively safer. I hope to see even cleaner options emerge, but we need to recognize we aren't there yet (which after all these years, you wonder why)

Goodbye Simon

Our time with Simon Wiesenthal has come to an end. The Nazi war criminal chaser passed away yesterday. For those of you who wish to know more about this man, please read this story on CNN. I only wish to add that if any of you happen to be in LA, the Simon Wiesenthal Center and Museum of Tolerance is an incredible experience. I certainly didn't have an appreciation for the horrors of the holocaust till I visited this museum, and in my opinion, it's an absolute must-see. I noticed on the Simon Wiesenthal Center website that they have also opened a Tolerance museum in NY, so you may want to include it on your next trip to Yankeeland.

Born Into Brothels

This weekend, I saw the wonderful documentary, Born Into Brothels, a moving story of children born in the world's oldest brothel, Sonagachi in Kolkotta, India. I often found myself tearing up, and was swept off my feet by the kids featured. It's essentially a tale of Zana Briski, a NY-based photographer who teaches the kids of the brothel photography and tries to use their art to get them out of the brothels and into a decent school. It was truly a wake-up call for me for the needs of so many children, for school, for a decent life, for love ... the children we forget while focussing on meaningless crap from movies to sports. This movie moved me, but I only hope I can keep it in mind rather than allowing myself to drift into the same old habits.

You can learn more about the movie and the kids at the Kids with Cameras website

I-Bonds

I recently learned about a great offering from the US Department of Treasury called I-bonds. They offer a certain percentage over the inflation rate (currently yields a total of 4.8%), i.e. they are inflation-indexed (indexed to the CPI to be more precise). You can redeem it after anywhere from 1 to 30 years. If you do redeem it before 5-years, you lose 3 months worth of interest, which is still a lot less punitive than most 5-year CDs.

Interest earnings are exempt from state and local taxes. If you are saving for college, you definitely should consider I-Bonds, since an I-Bond used for education purposes is some cases federal tax-free!

Learn more about this at the I-Bond page at the Treasury Department.

Baghdad Burning

Thought I'd post the link to one of the blogs I regularly read - the Baghdad Burning blog. While I don't agree with her views, it's still nice to get an Iraqi's perspective.

But here's my war pitch - the reality is that as much as people say they don't want America to interfere, they really want to criticize the US. Look at Rwanda or Sudan - people cried that the US had blood on their hands to not doing enough to prevent the massacre of innocent lives! The reality is when you are your big brother, you sometimes have to protect your lil bro from bullies, even if he doesn't want it.

Have there been American excesses? Sure there have. The reality is that no army in the world can complete a mililary mission without collateral damage... no, let me not use that euphemism - death ... innocent lives! It's easy for us to sit back on our smooth asses and judge how military forces are doing, but we don't walk the corner thinking our balls are going to blown off, a bullet's gonna end it and the like.

When I was an undergrad working in a research lab, I had the opportunity to interact with an Indian captain who had been commandeering troops against an insurgency in Kashmir before he came back for grad school. His accounts were incredible, and his honesty in acknowledging that it's hard to always be rational after so many near-death exercises refreshing. It's part of why I would hate to second guess troops or even law enforcement officers sitting back on our cushy couchs sipping warm Starbucks coffee!

Healthcare Costs Out of Control!

No surprise, but a reminder today that health care costs are out of control, from this Kaiser study. Healthcare costs are also a large part of why American manufacturers, especially automakers, are struggling. A fix is needed fast! To the extent that liability may be causing defensive medicine, we need to address this issue. But we really need to study all structural issues that may be causing this problem. Or else, our pursuit of a perfect medical system would have caused a collapse of the system we have!

Bush an Armstrong

My latest fascination is biking. No, I don't do it, but it is one of those things I'd love to do. I live in a wonderful place to enjoy the outdoors exercises. Anyway, I was trying to remember the name of President Bush's bike (just for fun - no way I can EVER afford it!) and while Googling, came across this tidbit of information - President Bush rides 18-milers burning 1200 calories, getting his heart rate up to 4x his resting heart rate - in the same range as Tour-de-France veteran Lance Armstrong!! Jeez!!That just blows my mind away!

Brown a Phony?

There are few worse things than second-guessing a public official during a crisis, and yet I was sufficiently concerned about this story Time did questioning Michael Brown's creds. For those of you who have been oblivious to what's been happening, MB is the FEMA chief who some claim botched up the emergency relief ops after Katrina. In all fairness, I think the devastation after Katrina would have been too much for any FEMA chief to handle, but the questions about his credibility don't help.

Ouch!

OK, I confess as an engineer, I'm obsessed with numbers. I just have to crunch them. I'm a numeroholic!! So as my MRI machine warms up, I crunched some numbers in Excel using publically available (and reliable) information, and produced the following graphs.

The first one is what you are likely to see any time someone convinces you that the road to wealth is by buying their newsletter, investing in the stock market or whatever. In this case, it's to show how rich you'd have been if you had invested in real estate.


Wow, how can you argue with that, right? Well, turns out that little thing we rarely think about these days, inflation makes a big difference. Here are the same numbers in 2004 dollars.


Still good, but certainly doesn't look like the pathway to Mackena's gold! Well, then there is that little thing called risk. You only have to read the works of Benjamin Graham and William Bernstein to realize that the path to higher returns is often associated with higher risk (see, those newsletters promising to make you money never tell you how much you lost. The master investor Warren Buffer always said rule 1 of investing was - never lose money! Rule 2? Always pay attention to rule 1!!)

Looking at changes in new home prices over 5 years reveals something quite interesting - it bursts the myth that home prices can never go down. BTW, this is based on new home prices - you will have to include a discount for the house being 5-yrs old, and that discount actually increases when the market crashes.

Add in the fact that a house is highly leveraged and you could really lose your shirts. Planning on holding on to your home for a longer period does mitigate these risks somewhat. The figure below is the percentage change in value over 10 years.

My point is not to bash the act of buying a house. Heck, I sure hope I can do it someday. My mission is rather to educate, because I've encountered a shocking number of people who invest substantial sums of money without asking some rather basic questions about the risk or returns of their investment! I have heard people say that real estate is an investment, and yet not apply the same critical analysis to real estate markets as they would to the stock market.

Are Hybrids Really Cool?

I am a HUGE fan of the hybrid car concept, but I was a little disappointed to read this story. Turns out not all hybrids do very well in achieving gas mileage - heck, the Chevy Silverado and GMC Sierra get a measly 1-2 mpg over their gasoline version. Good ol' GMC needs to go - I can't say I'd shed any tears for the loss of an American icon - what good are icons of yore when they are such bad role models of today?

This story also left me curious about one thing - who on earth buys a hybrid that gets 21 mpg? I mean, if you love a mean road machine, I guess you live with your conscience, but how stupid do you have to pay a premium for a vehicle that gets 1-2 mpg. Consumers of hybrids don't mind paying a premium for a cleaner vehicle, but 1-2 mpg extra is what you'll get if you take a few things out of your trunk!

Median Price Falls

This story points to the fact that the first prick of the real estate bubble might have already occurred. I have reproduced a graph from one of the links in the story - one of median new home price. This is consistent with what I had been expecting - in fact, compare the chart here with the one on my posting on July 29. Sure looks like a correction is in progress. Folks, if you own a home, aggressively pay down your loan ahead of schedule. The gains of real estate are because of leverage, but leverage works both ways, so don't be caught owing a lot more than your house is worth! (This is especially true for people who work in jobs that may require them to relocate, or who are in the early years of their career where they would be better off being flexible about relocating)

Katrina's Fury

My thoughts and prayers are with those affected by Hurricane Katrina. It is truly amazing how even in the most developed country in the world, people's engineering prowess doesn't compare to nature's fury. Talking of which, does anyone else feel there are too many damn natural calamities off late. I mean, I'm starting to wonder where global warming fits into all of this!

Katrina also exposed what a screwed-up energy system we have. For all those who thought conservation was a dirty word, $5 gas and talk of rationing should help convince them what dire warnings of global warming couldn't. I was shocked to read that major airports might run out of jet fuel by next week!

Spoil the Child and Spare the Rod?

Looks like England is where a new educational revolution is taking shape. I thought the US was bad in laxity in education. Well, sorry, but the UK takes the cake for this one. After doing away with "failure" in favor of "deferred success", the latest twist is that one school in the UK is allowing students to cuss at the teachers! But only 5 times in a lecture mind you - we don't students to think there are no rules!!

Much has been made about outsourcing and immigrant workers, but till countries return to the education principles that made them successful, they will be victims of their own success. That is how great civilizations fail ... er, I mean defer future success for several generations.

La Presidente 2008

This article in CNN got me all excited about the presidential race of 2008. Yes, it's all of three years away, but gosh, look at the field. Of course, while I'd love John McCain to be the next president, he has NO hope of winning the Republican ticket. In my opinion, that honor will go to Jeb Bush or Condi Rice if either decide to run, else Bill Frist will probably be the favorite, with George Allen an outside shot. And no, Rudi Guilliani has no hope, because unlike Democrats, Republicans dont think of who the other side may approve of.

For the Democrats, the race starts and ends with one name - Hillary Clinton. And I think that may be the end of the race. I believe she carries a lot of baggage. Social conservatives hate the thought of Bill being a First Gentleman, fiscal conservatives hate the fact that she pioneered the universal health care plan (good intentions, but here choice was a large govt-managed plan) and too many people think she's too liberal to lead America. I don't think she's as liberal as she's potrayed to be, but perception's a hard thing to beat.

So here would be the fascinating races of 2008:

McCain v Clinton => Large swathes of conservatives would sit out. Tough race, but I'd hope McCain pulls this one off.

Rice v Clinton => Unthinkable! The sad reality is America is not yet ready for having two women run for president. As much as city folk like to think gender bias is dead, it isn't and it will be a long time before something like this happens.

Guillani v Clinton => Impossible! People need something different in the 2 candidates to choose from. While McCain is at least socially conservative, G is a Democrat in Republican robes.

Frist v Clinton => Replay Bush v Kerry, except the Republican ticket doesnt have the Bushian charm (yes, you read that right!) and the Democratic ticket doesnt put you to sleep. But Hillary may pull this off if Bill Clinton hits the stump hard.

Bush v Clinton => If Jeb takes tips from his elder brother rather than his dad, he'd win hands down. While Bush Sr was an incredible statesman (I was enthralled by an interview with Jim Lehrer) George would tell him that statesman dont win elections - "common men" do. And so, like Bush, play the ordinary-man card (even if you did better at Harvard than your "intelligent" opponent) and appeal to the base. Unfortunately for his supporters, I don't know if he could (from what I hear, he's much more like dad)

I can't comment on the Allen nomination because even though he's a senator from my state, I know little about him.

Sidebar: If McCain miraculously wins, it is possible Sen Lindey Graham (R-SC) gets an administration role. Awesome!

Disclaimer: None of these views reflect those of my family, and especially my brother, who practically worships Bill Clinton!

Lance a Dopie?

Allegations that Lance Armstrong may have used performance-enhancing drugs reached a new high after a French newspaper published what they said was an expose on the issue. While we do not know the facts of the case, one can only hope they are untrue. Lance has been a real inspiration to many people I know, and it would be shattering to find out that the story of strength was a lie.

Fallen Soldiers and Their Moms

Why is it that the media gives so much attention to Cindy Sheehan and ignores the fact that so very many military families actually support the war? I respect any mom in her grief of having lost a son, and I know these fallen soldiers chose a profession I'd be too much of a wimp to take to, but as several military moms point out, that's exactly what their children signed up for - to defend freedom. And yet the media, keen to tell a story (that the war is unpopular) continues its daily coverage of Sheehan and Co.

To be fair, I don't think it's just a liberal bias. I think it's the media's need to find news. Sheehan is news. People saying they support our policies aren't. You could do a piece emphasizing how life in Iraq is compared to barbaric Saddam times, but negative stories sell - positive ones don't (except when we are overcome with emotion like after 9/11) Oh, and they actually take some work. Sure, there are common men in Baghdad who hate the US, but I bet you there are just as many appreciative that they could actually vote for a government (and heck, did they vote or what!)

Tenure Clock

I was heartened to learn that Princeton is giving new parents an additional year for tenure review. At last someone is seriously trying to address this issue. It is indeed tragic that most female professors either have stay-at-home husbands or are single. (Why not the male professors? Could it be, like Harvard President Summers suggested, that they don't give a damn. To be fair, many of the male professors have stay-at-home or work-parttime wives). I think the future will see more realization that parents have a responsibility to family, and we will see in both academe and in industry a greater flexibility in this arena.

The Common Man Beats Detroit, Tokyo and Berlin

I was delighted to read this story about how people are rigging their cars to get 80 mpg, and in some cases as much as 250 mpg. The solution, adding additional batteries which are charged with a plug-in electrical outlet, is simple, and in this era of surging gas prices represents economic sense (besides being friendly to future generations who'd like to have a planet to live in!)

Out of Gaza

Israeli troops are now in the process of withdrawing from Gaza. This is indeed a gutsy (if somewhat risky) call by Sharon. It's now up to moderate Palestinians to take the next step towards peace. This could be a historic opportunity, but one only hopes the Abbas and co don't fritter it away, because if they do, we could see blood flowing in the Middle East for a long time to come.

The Grieving President

This article offers a touching potrait of a president who publicly remains strong, while privately grieving with the widows of US troops fallen in Iraq, and is a must read for all those who, influenced by a liberal media, potray Bush to be some sort of emotionless demon. I used to be one of them, but I have increasingly realized that this is basically a decent man!

Goodbye Peter!

I was truly disappointed to hear of the passing of Peter Jennings, ABC News anchor. Here was a guy who dropped out of high school, and yet achieved tremendous success and popularity for being more learned than his peers. I loved Peter's style of being casual on screen, making it seem like he was chatting with you, one on one, rather than the traditional scripted style that Brokaw and Rather followed. But in the last couple of days since his death, I have learnt a lot about his sense of humor, his love for children, and so many issues. Peter, you lived a good life ... goodbye and we will miss you!