Karthik's Random Ramblings

The Strange Rules of the FCC

2009-09-27T09:46:00.004-04:00

CAUTION: this post contains words that might be considered offensive. In reality, you probably hear them every day. However, if you are offended, you might just have a career in the FCC!

I was engaging in my Sunday morning ritual of a cup of coffee (and some delicious pound cake, thanks to a friend) and enjoying the extra time to read up on the news when I came across this story - SNL newbie Jenny Slate evidently dropped the F-bomb. Horror of horrors!! What will happen to society now? Oh and will she be punished? Will the almighty FCC slap a fine on the station?

Now, you can argue that the children don't need to be exposed to the F-word. I'll agree with you on that, though I've heard a kid as young as 9 years old use it. But if you are old enough to be watching Saturday Night Live, I don't think the FCC needs to be protecting you!

Seriously, what kind of stupid farts are on this board? Consider this - you can call someone a "bastard" but not say "shit" on TV! Shit! I mean, I don't use the fucking f-word a lot, but I never realized "shit" had the power to corrupt!

Come on, we're grown adults here! You could argue what's appropriate for sporting events and music awards in prime time, but after 10 pm, I say bring on the fucking nudes! And let them cuss while they are going at it!

Why Comparing US and European Health Care is Misleading

2009-09-11T07:54:00.002-04:00

Simple reason ... Americans are way too fat! Check out the national obesity statistics here. Americans are 3 times as fat as most European countries.

Government has a role. Removing corn subsidies that ensure high-fructose corn syrup in all our foods would be a good start. (Oh, and it would also reduce starvation in third world countries which struggle to compete on an un-flat agricultural market) Town planners incentivizing more walkable communities will help. More awesome farmers' markets, like the one in my city, will help.

I personally don't even mind a tax on unhealthy foods, although I don't think its implementable.

The Intellectual Dishonesty of the Public Option

2009-09-10T22:27:00.004-04:00

President Obama once again pitched for the public option last night and the mainstream media once again cheered. On the face of it, it is easy to be carried away. You can keep your insurance, or you can take the government plan. Sounds innocuous, right?

Wrong! The reality is that a public option is a lose-lose, unless you want a nationalized healthcare system.

For starters, even if the government plan is not subsidized by the taxpayer, it has several key advantages. One is that its cost of capital is much lower than any of its competitors, its debt being backed by the full faith of the US Government. The other is that since it does not have to make a profit, competition will kill returns in the private sector, driving us towards national healthcare.

Will we be able to keep the health plan we like? Absolutely not! Lets focus simply on the issue of those currently being covered by an employer-based health plan. If you are an employer, you can either buy health insurance from a private insurer, or you can pay a tax (if I remember the parts of HR3200 I read, it's in the vicinity of 8% of gross income)

If the government plan is cheaper, most employers will simply abandon providing health coverage and instead pay the tax. But we are not in the clear even if the government plan is more expensive. After all, this means that the clientèle for the government plan will dispropriately be the unemployed, individuals with pre-existing conditions, and other high-risk groups. That would make a government plan unsustainable (after all, the point of insurance is to spread risk, not aggregate the risky) Any bets that politicians would stay true to their word and allow a government plan to fail?

The mainstream media has bought this along traditional lines, and failed to do much analysis. It is easily to be carried away by the brilliance of Obama's oratorical skills, and by the extreme craziness from some on the right. But let's not get carried away - if the public option passes, we're coasting to a socialized medical system!

Are Medicare Administrative Costs Cheaper?

2009-08-16T12:59:00.004-04:00

One of the persistent arguments for a government health care plan has been the lower administrative costs associated with Medicare compared with government plans. This has been a contentious issue, with others arguing this is simply not true. Well, is it?

The American Medical Association reports that Medicare administrative costs account to 5.2 percent of public programs versus 14.1 percent of private programs. Aha, we'd all save money if we went to a public program!!

Not so fast, sport! The AMA points out to the unfair comparisons in those estimates. An excerpt:

Perhaps the most obvious shortcoming of many estimates is that they ignore unreported spending on administration of government programs. Such uncounted administrative costs are especially evident in the Medicare program and include:
• Tax collection to fund Medicare—this is analogous to premium collection by private insurers, but whereas premium collection expenses of private insurers are rightly counted as administrative costs, tax collection expenses incurred by employers and the Internal Revenue Service do not appear in the official Medicare or NHE accounting systems, and so are usually overlooked
• Medicare program marketing, outreach and education
• Medicare program customer service
• Medicare program auditing by the Office of the Inspector General
• Medicare program contract negotiation
• Building costs of the Centers for Medicare & Medicaid Services (CMS) dedicated to the Medicare program
• Staff salaries for CMS personnel with Medicare program responsibilities
• Congressional resources exhausted each year on setting Medicare payment rates for services

There are other methodological issues - follow the link above for more.

Quote of the Day: Those Dirty Dirty Chevy Volts

2009-08-15T23:10:00.003-04:00

I found this fascinating ... and actually rather logical when you think about it. If you haven't been hearing the buzz, the Chevy Volt is a new plug-in hybrid, that is its a car that runs on a battery that you can plug into an electrical outlet to recharge.

[Driving the Chevy Volt] won't be "petroleum-free" in much of the country -- because so many utilities use heavy fuel oil to generate that electricity. At current electricity-production levels, these plants emit as much as hundreds of thousands of cars on the road each day. If a few thousand well-meaning dupes plug a few thousand new Chevy Volts into electrical outlets (especially in urban centers), you could actually add millions of pounds of dangerous, dirty, unregulated pollution and carbon into the air we breathe -- possibly more pollution than would be offset by putting the Volts on the road.That's if the electricity grid can handle the added load. In fact, all across the nation, the grid is fragile, antiquated and maxed out.

Another reminder to watch out for green fakes ...

Hat Tip: American Public Media's Marketplace

Securitizing Health Care

2009-06-15T19:22:00.003-04:00

As the health care debate rages, we are offered a series of poor choices due to our political system's inability for consensus. On one side is the growing chorus for a government plan. Seriously, have these proponents not been to a DMV? All the government plan will achieve is to exert Wal-Mart style cost pressures that will run private capital out of business. And what makes supporters think the government can manage such a program efficiently? The track record of Medicare is hardly inspiring - the program is likely to be insolvent in the near future!

On the other hand, it is hard to argue with the fact that we have a seriously broken system. One in six Americans is uninsured, in a system where the costs of being uninsured are more dramatic because of inflated prices. Many more are excluded from the system because of pre-existing conditions. And the system does not encourage healthy lifestyle choices or preventative medicine, because of the lack of long-term commitments from the patients in question.

Democrats are living in la-la land, ignoring the cost side of the balance and seeking to run capital out of the industry. Republicans, even worse, seem to think that sticking their fingers in their ears and yelling 'socialism' means that we don't have a problem that needs fixing. What's missing is smart ideas that, like all the good ones, straddle the middle.

So here's an idea to consider - and it's not even that original. For all the criticism of our housing boom, Fannie Mae and Freddie Mac have dramatically changed home ownership in this country by providing coordination. The US government managed to achieve much greater home ownership rates without running the program by supporting these agencies whose role was to buy mortgages, repackage them and sell them to private industry. Before the distortions in recent years, this meant low risk to the government, aggressive competition in private markets and, well, a free-market system that largely worked.

In concept, I can't see why this isn't a valid idea for insurance. You have a pool of, let's say 100 people, 50 of whom might be relatively young workers, 10 of them are over 80, maybe 2 of them have cancer, 15 have diabetes, ... you get the idea. By pooling them, and doing so on a large scale and only government can, you offer the insurance companies the ability to greatly increase market share, but only if they are willing to pick up the unhealthy insurees as well as the healthy ones.

There would have to be some controls to ensure pools stay largely the same (i.e. if you're in Pool A, you are highly likely to stay in Pool A) - this gives insurance companies the incentive to improve your healthcare metrics as a risk mitigation tool.

Just thinking aloud ...

The Tests Aren't That Stressful

2009-05-10T18:19:00.002-04:00

So the banks' stress tests were finally released, and it was received with much enthusiasm. $75B in new capital. Roger that! Now the stock market can boom, we can talk of all the green shoots we see ... life is beautiful! It's a fiction we all want to believe. I know I do. I have one of my best friends without a job, and tepid economic environment causes me some discomfort personally. Plus, the booming stock market can make me feel like investing guru ... the next Warren Buffet.

Maybe it's the pessimist in me, but I say hold on to your horses! My initial suspicions arising from the relatively small size of the capital requirements ($75B is peanuts in today's bailout world) are unfortunately being confirmed by a couple of disturbing pieces of evidence.

First are the assumptions of the stress test themselves. The "adverse" scenario assumes 8.8 percent unemployment for this year, and 10.3 percent next year. Umm, newsflash - unemployment is already 8.9%, and it seems like 10.3% next year should be the baseline, not an adverse scenario.

Then there is news that the Fed modified the deficit computations under pressure from banks. Bad move! If there's one thing Japan should teach us, it's that a loss of confidence can be incredibly detrimental to the recovery of the financial system. At this point, it feels a lot like the regulators are becoming salesman for the banks, while shoveling public money with no end in sight.

So be nervous ... while we'd all like the dark clouds to pass, things might not be as rosy as they seem.

Add One More Scandal to the "Cleanest Admin Ever"

2009-03-01T20:30:00.002-05:00

This time it's Obama's "urban czar". If the facts in this story are true, this is far more disturbing than any of the previous controversies. This does not appear to be questionable judgment or any such thing, but out-and-out pay-to-play Blago style.

Big Brother is Trying ...

2009-03-01T08:22:00.003-05:00

This was one of the most disturbing stories I could have read in a really long time. There is a proposal at the federal level to start an enhanced drivers' license, with a built-in radio chip that can be used supposedly to reduce forgery. Even when you get past the national drivers' license program (which I know privacy advocates have screamed hoarse about but I've never really looked into), this is an amazing leap into our privacy.

Yes, officials argue it will only be used for authentication and not tracking. But really? How hard is it once a radio chip is embedded to track the license. It might start slow, oh let's say pedophiles or potential terrorists, but it is only a matter of time before that line moves.

This is far more significant than the wiretap program that got everyone's attention. I have no problems with the wiretap program as a short-term measure - if you are on the cell phone of a known terrorist or talking to a suspected terrorist abroad, well, maybe it's ok to listen in on your conversations. Again, a stop-gap - after all, if I happen to be some killer's insurance agent, my privacy rights can't be trampled on for too long!

But this is far more insidious. The government can, and if not stopped, will probably ease into various forms of tracking. Power exerts because it can. If this sounds like a grand conspiracy theory, it's not. What we need to appreciate, and I have to remind myself this all the time, is that what makes democracy work in the US is not that white people are instinctively more democratic (which a scary number of elites have suggested in one way, shape or form in relation to Iraq), not the climate, but those brilliant words of the Founding Fathers and those after, those amendments to the constitution that says, guess what, you have the right to privacy, you have the right to own a gun to defend yourself, you have the right to pray to the God of your choice, or not to pray, you have the right to become so insanely rich that you don't know what to do with it ... this is what defines America. She has no great history stretching eons, no unique language that can be used to whip up linguistic fervor, nothing ... but those words ... those words that have given you the right to do whatever you goddamn want as long as you aren't breaking any laws, insult whoever you goddamn want, participate in any fringe looney group as long as you don't break any laws. You start chipping away at that, and you start chipping away at America.

The Fairness Doctrine

2009-02-22T23:06:00.005-05:00

One of the items on the Congressional agenda is the Fairness Doctrine, where the Government would require broadcasters to provide equal time for both sides. While it sounds good at first listen, the Fairness Doctrine is, to borrow from the Jurassic Park movies, the dumbest idea in the history of dumb ideas!! First, the government mandating coverage flies in the face of the First Amendment. Second, who gets to decide if something is a liberal/conservative view point or a balanced view point? Some bureaucrat gets to decide if Wolf Blitzer is being a liberal or just a neutral commentator? Come on!!

It appears to me that if there is any place for the Fairness Doctrine, it should be NPR and PBS, which are directly funded by taxpayers. And yet, any unbiased listener recognizes that these organizations are loaded with liberals. Virtually every show at these networks, with the exception of the Newshour with Jim Lehrer, takes a decidedly biased view on the issues. Maybe we can start with dictating that such organizations need to be more balanced or lose taxpayer funding?

Full Disclosure: I listen to NPR and PBS extensively, and have contributed to NPR in the past. I have however decided against further support for NPR until their editorial content changes to present more view points.

The Peg is Here to Stay

2009-02-22T17:10:00.003-05:00

Hillary Clinton urges China to keep buying US debt. I'm no economist, but does this signal a strong dollar policy with respect to the yuan? After all, the reason China buys US debt is to finance the US trade deficit with China. That deficit is an artifact of weak US exports relative to US imports. For China to continue to buy US debt, the trade deficit must be sustained, China must maintain the peg to the dollar, for if the yuan appreciates relative to the dollar, there are smaller deficits to finance!

Video of the Day: Santelli Goes Ballistic

2009-02-22T17:02:00.000-05:00

Quote of the Day: Eric Cantor on the Stimulus Bill

2009-02-13T07:18:00.001-05:00

House Republican Whip Eric Cantor (R-VA) on the haste in voting on the $800 billion or so stimulus plan less than 24 hours after being released. (If you're counting, it was released at 9 pm, contains 1,1419 pages, and is being tabled at 9 am, but what's a few hours between friends!)

Those in favor of speed over commonsense may just be afraid of letting the People know what they are ramming through.

What a Bank, What a Bank ...

2009-02-09T21:51:00.003-05:00

At a time when it takes a little inner saint to not cuss at banks, I stumbled on a bank that actually makes the world a better place. Now, now, in this day and time, that almost seems impossible, unless you're talking of some international microfinance bank like the Grameen Bank, which isn't the type of bank you or I would necessarily do business with (although we might chose to give our charitable $ that way).

But skepticism step aside - here's the Shore Bank of Chicago. It's a bank formed with an express motive of achieving social and environmental goals while making a profit. Now, normally when I see something like that, I think it's a tired cliche every business now uses nowadays, but turns out the Newshour with Jim Lehrer did a piece on them. Watch the piece and become a convert!

Oh, one more thing - they currently offer one of the highest yields on online savings in the country! Make money and help disadvantaged communities ... God, I feel like Superman!!

The Daschle Fiasco Finally Ends

2009-02-03T21:46:00.004-05:00

Today was not a good day for the Obama White House. Two candidates for senior cabinet positions resigning. But while much of the coverage has claimed the two resigned for "tax reasons", like this one, that's not quite true in Daschle's case. No one thought Daschle's tax problems were a dealbreaker - what was was that his appointment flew in the face of Obama's pledge to not hire any lobbyists.

As Time magazine reports:

According to the White House, the important thing is that Tom Daschle is not technically a lobbyist. "If you're not registered to lobby, you can't be a lobbyist," explains White House spokesman Robert Gibbs. And Daschle, the former Senate Democratic leader who is up for the top health post in the Obama Cabinet, never filled out the paperwork to register.

Of course that's baloney, since Daschle effectively acted as a lobbyist. From the Time article:

Daschle, for instance, was a high-paid "policy adviser" at Alston & Bird, a lobbying firm with dozens of brand-name pharmaceutical and health-services clients. "Senator Daschle focuses his services on advising the firm's clients on issues related to all aspects of public policy," boasts the firm's website. One of Alston's clients, EduCap, a nonprofit student-loan company that spent six figures lobbying to change federal loan laws, took Daschle on two cushy overseas trips, one to the Bahamas for a board meeting and another to the Middle East to meet with foreign leaders.

What's particularly disturbing about this, if you were swept by the Obama hype of change, is that Obama supported Daschle despite these facts, and trying to spin the unofficial lobbyist status. Turns out he's just another politician - who would have thought?

Adding insult to injury is that the WH now argues that this will be the cleanest administration to date. That's a bit like arguing that a thief who didn't mug his victim because a cop showed up isn't a thief after all!

Enjoy Stimulus Now, Pay Your $14,000 Share Later

2009-02-02T21:23:00.003-05:00

Kevin Hastett wrote a incredible must-read piece on Bloomberg titled 'Enjoy Stimulus Now, Pay Your $14,000 Share Later'. Really, you must read it to understand the fiscal implications on your household budget are.

An excerpt:

Under President George W. Bush -- a big spender in his own right -- the federal budget deficit reached a record $455 billion in fiscal 2008, more than double a year earlier. Government bailouts of banks and other industries that started under Bush, and may accelerate under President Barack Obama, will help push the deficit toward that $1.7 trillion mark.

And just what does that mean for your personal finances?

If your family income in 2006 was between $75,000 and $100,000, the extra taxes that you will have to pay at some point in the future add up to about $14,000. If your income was between $100,000 and $200,000, your future tax hike will be about $28,000. If your income was between $200,000 and $500,000, then your future tax bill just went up by $90,299.

The longer the deficits last, the larger those numbers get. And all for what?

The Flawed Small Car Argument

2009-01-28T23:05:00.002-05:00

More ranting about CAFE standards. I was thinking about a concept in transportation planning called latent demand. It goes something like this. A city determines travel times are too much in their community. So they build new freeways, wider roads, that in the short term reduce travel times. But people then start to buy property in areas previously considered too far from the city center, and kaboom, their travel times are back up where they were, or often higher!

That's the flaw in the implicit assumption that forcing smaller cars on the public is the solution to our transportation energy needs. You don't have to look too far from your circle of friends to realize the person with a new fuel-sipping Honda is more likely to take a long road trip than one who takes a gas-guzzling old pickup.

I'm a tree-hugger, and I want to see true environmental change, but this is not the way. In the end, for true progress, we have to get past the cliched simplistic solutions, and a solution not based in government but societal change of less consumption.

The Wrong (and Right) Way to Fuel Efficiency

2009-01-26T22:27:00.003-05:00

I've been thinking about fuel efficiency standards this evening. The intent is to force auto makers to make more fuel friendly cards. Every automaker essentially has to meet quotas for fuel efficient cars. Especially as the economy worsens, new CAFE standards will kill the auto makers. With fuel prices so low, there is little incentive for the average consumer to chose to buy fuel sippers. Suddenly, the already delicately positioned auto makers may be left with huge inventories of small vehicles that they will have to sell at small, if any, profit.

Environmental advocates will protest that there is a need to reduce fuel consumption and greenhouse gas emissions. But really, even if we accept those goals, CAFE standards are the wrong way to go. They are the spineless politicians' way to avoid what is the truly effective solution - raise the cost of fuel! If fuel is more expensive, there is consumer demand for smaller cars (think a few months ago), and automakers will respond. This way, the government is not forcing them to make low-demand vehicles, but achieves the same result with a lot less economic pain.

Isn't it strange that politicians were complaining about high fuel prices and global warming at the same time?

Unlimited Calling, Text and Web for 50 Bucks!

2009-01-26T21:09:00.003-05:00

Clark Howard reports on Boost Mobile's new offering - unlimited cell phone calling and web access for 50 bucks! Dang!! The downside is phone selection and accessibility (it's on the Nextel network) but 50 bucks includes not only unlimited calling and texting but also web access? Whoa!!

PS: International long distance isn't as cheap as calling cards, but it's certainly a lot cheaper than other cell phone companies. The rate to India is $0.30/minute, which in a bind is not shabby. Also, outgoing international texts are not free.

PPS: There is NO contract!!!

The History of the Castrati

2009-01-25T11:16:00.002-05:00

I watched a play on the castrati last night. While the play itself was a bit out-in-left-field for me, it was interesting in that I had never heard about the castrati (yes, history was always a weak spot). These were boys who were castrated for the purpose of becoming great soprano players. I thought this might have been a myth, but this article from the Urological Sciences Research Foundation website suggests there were valid medical reasons why this was the case.

The genital mutilation caused a unique physical appearance too. An excerpt from the USRF article:

The manner in which the castrati appeared to their audiences can be judged from our clinical experience of eunuchoidism due to spontaneous primary hypogonadism. A tallness of stature, which was unusual in the 18th century, was commented upon by contemporary writers and was due to failure of the epiphyses to close at puberty, thereby allowing the unopposed action of growth hormone and other growth factors. There was a smooth pale skin, with, later in life, fine wrinkles around the eyes, no beard, plentiful scalp hair, a tendency to obesity, rounding of the hips, and narrowness of the shoulders; the pitch of the speaking voice was similar to that of a female.

I did find some disparities between what I read online and what was talked about in the play, so I guess take I have to everything with a grain of salt, unless I decide to make a trip to the library.

Dow Weighting

2009-01-25T11:00:00.003-05:00

I've never been a fan of the Dow Jones index, but now there are distortions that make it seem downright silly! From John Maudlin's latest commentary citing Jim Bianco:

...if C, BAC, GM, AA, JPM, AXP and GE all open at zero, the DJIA loses 528.63 points. If IBM opens at zero, it loses 652.95 points [IBM has risen since then -- JM]. So, the DJIA says that IBM has more influence on the index than all the financials, autos, GE, and Alcoa combined.
The DJIA is not normal as the index committee is not doing their job during this crisis, possibly because to the political fallout of kicking out a Citi or GM. As a result, this index is now severely distorted as it has a tiny weighting in financials and autos.

I.O.U.S.A.

2009-01-25T10:52:00.004-05:00

I've been wanting to watch the documentary film, I.O.U.S.A for a while now, and thankfully the movie makers have produced a 30-minute version you can watch for free on their website. This is a must-watch movie on how much of a debt crisis the US faces, with some nifty graphics and historical perspective. Watch it ... trust me, you'd be glad you did!

Get Ready for A Second Wave!

2009-01-17T10:03:00.002-05:00

Just when things seemed to be looking up, looks like they're getting worse. Suddenly, job losses ... big ones. The unemployment had been creeping up, and that was no surprise in a recession, but suddenly it seems things have gotten a lot worse. Bloomberg reports 21,000 job losses in a day, by companies such as Hertz.

Circuit City's liquidation was big news, because it means another 30,000 decent-paying jobs, but also this - would people keep buying electronic items if they were nervous the companies that sold the products would not be in business?

Intel saw a 27% drop in revenues. That's from a company that's in a duopoly competition with a weak competitor!

And there's more bad news I could whip up from the news. And I think we'll get a lot more coming this year. But there's some perspective we need to maintain here ...

Take that 21,000 jobs in a day. It scared the bejeezus out of me! It's a big number. It's a lot of families that have to suffer. But it's about 0.01% of the American labor force. Unemployment might have cracked 7%, but it's still a lot below historical highs.

And take all this talk of the Great Depression. I don't know of anyone calling for GDP to drop 5% this year, or in any year. If my memory of history is correct, the Big Kahuna shaved 30% from GDP. Ouch!

So take a deep breath! Things will get worse. A lot worse. But we'll all survive.

Geithner Must Go!

2009-01-14T22:20:00.003-05:00

So there's been some red faces over the recent revelation that Treasury Secretary nominee Tim Geithner did not pay his taxes from his IMF job from 2001 through 2004. After an IRS audit flagged his 2003 and 2004 returns, he paid the taxes for those years, but did not pay his overdue taxes for 2001-2002 until the Obama transition team pointed it out shortly before he was nominated.

President-elect Obama seems to be willing to call it an "innocent mistake", as do many in the press, but hold on! This isn't Rep. Charlie Rangel, who underpaid on his taxes. That was embarrassing because Rangel heads the committee that oversees the IRS. Geithner was working all those years and paid ZERO in taxes. That wasn't oversight, it was an attempt to defraud!! The alternate explanation is that he is pretty darned inept, which should rule him out as a custodian of our billions. Either way, this incident should disqualify him from becoming Treasury Secretary.

How Cheap is the Market? (corrected)

2008-11-25T23:16:00.005-05:00

I have run a few models suggesting decent long-term returns, and might chose to share those results at some point, but in the meanwhile, I thought some perspectives on valuation and expected long-term returns in the stock market.

Much of the gyrations on Wall Street deal with predicting what's happening now or next year, whereas the true driver of long-term returns is valuation and long-term earnings growth. The problem is Wall Street values the market on a multiple of recent earnings, which are highly volatile. Take a look at the chart below:

The blue thin line and thick trendline are the trailing 12 month (TTM) earnings for companies that make up the S&P 500 index. The problem with the traditional way of valuing the market using a multiplier of TTM earnings (or worse, some future year's earnings) is that it indicates that the market is worth 46% less now that it was a few ~~years~~ months ago. Indeed, that's consistent with the sell-off we see in the market, but for a long-term investor, is a whole bunch of bull!!

The pink line and red trendline represent a 10-year moving average of the TTM earnings. Essentially you are smoothing historical earnings to make long-term decisions while smoothing cyclical variability. Voila, it's fairly smooth. For a long-term investor, the market value hasn't changed in the last few ~~years~~ months - only the price.

So what does it all mean? The next chart is the S&P 500 price history, and the trend of 12, 16 and 25 times the 10-year earnings average. Think of this as a low, median and high value. I have been working on charts since 1910, but I need to verify a few things, so I'll only present the last almost 15 years.

Notice that the big crash in 2000-01 did not make the market cheap. It just took the market from ridiculously overvalued to expensive. And that explains why we have had mediocre returns since that time. In contrast, valuations today appear to present a much rosier picture in the long-term.

That "in the long-term" is the key piece! Short-term, prices could ... heck, almost certainly will fall more. As I write this, the markets are in a 3-day rally, but I expect any rally will fizzle. How low could markets go? I don't know that there is a clear answer in the data.

I would normally be tempted to answer down to the level of 14x 10-year earnings. That would suggest about 630 - quite a haircut more! But given the low level of interest rates and poor outlook for sovereign debt, I'd imagine that level seems low. I intuitively think 16x earnings is a bit high for a market bottom, and my guess is that the market will probably end up bouncing between 750-800 before a gradual rebound.

But we don't know. And at present levels, we can reasonably expect a decent return. How much? Earnings have historically grown about 6% a year. The dividend yield is about 3.2%. If we assume no multiplier change, that's still over 9% a year - a lot better than treasuries or CDs!

Shocking Compilation of the Day: Foreclosure Sales

2008-10-26T10:48:00.004-04:00

A compilation of some shocking numbers I've come across in the last few days:

Over a third of all home sales currently are foreclosed properties! Translation: Any increase in home sales ("we have a bottom") is because of the glut of cheap homes.

23% of all homeowners with a mortgage owe more on their mortgage than their house is worth. Translation: Holy Shit!!

A foreclosure near your home depresses the value of your home from somewhere between $5,000 to over $20,000, depending on who did the study! Translation: This foreclosure thing does affect you, at least in the short-term.

Story of the Day: Fart Research!!

2008-10-26T10:40:00.001-04:00

So evidentally the foul odor in farts has an important physiological role in controlling blood pressure. Oh dear! Please don't take this as an invitation to share. If you must regulate your BP, please find the restroom nearest you!!

There are No Tax Benefits to Owning a House for Most People!!

2008-10-18T16:41:00.004-04:00

I was having tea with this elderly British couple from Canada today, and in between a spirited political discussion, the topic of home ownership came up. I was fascinated to learn that home ownership in Canada was a very different beast! Buyers are typically required to put 25% down (compared with actually getting cash here in the US), and most families pay their loans off in 10-15 years. This couple in fact paid their Canadian house in 6 years!! That's a stunning difference from the US.

The big difference is that there is no tax deduction for mortgage interest in Canada. That of course, is much touted for being a reason to buy a house. Save on the taxes. But that is a totally bogus reason for many homeowners.

Let's run the numbers. Using this calculator, I estimate my tax savings on a mortgage of $200,000 is just a bit over $5,000. Wow! Except that the standard deduction for 2008 is $5,450 for singles, $10,900 for couples filing jointly. Which means, you'd still elect to use the standard deduction, unless you have substantial other deductions.

And mind you, those tax savings were only for the first year - they diminish every year as more of your mortgage goes towards principal. Oh, and don't forget property taxes which can take a bit out of your wallet.

There might be many reasons to buy a house, but saving on taxes isn't one of them ...

Quote of the Day: Joe the Plumber

2008-10-16T07:58:00.001-04:00

Joe "the Plumber" Wurzelbacher, the man in the spotlight during the third presidential debate had this to say to ABC News:

You know, me or -- you know, Bill Gates, I don't care who you are. If you worked for it, if it was your idea, and you implemented it, it's not right for someone to decide you made too much."

Here is the whole story.

Hold On!

2008-10-13T21:40:00.002-04:00

Right when I started to get optimistic on stock market prospects, we have a fast and furious rally. The Dow ended up 11%, the S&P 11.5%, the DAX over 11%. And at the time of this writing, the Nikkei is up over 12%, and much of Asia is up over 5%. Oh well! The market might be getting ahead of itself. After all, much of the pain is yet to hit Main Street, and it's likely that when this fact sinks in, markets will fall again. It's likely we will see some weakness during which to enter the market.

Breathe Breathe ...

2008-10-12T12:17:00.002-04:00

With the market turmoil, you may have no doubt lost a few months (years?) of your life fretting about your returns. I consider myself a value investor, who is supposed to live for times like this when assets can be purchased at a bargain, but for all that, I've had some heartburn as I've lost as much as 60% on some aggressive mutual funds, and close to 40% on an actively managed (by me) portfolio. But it is a good time to step back and take a look at the bigger picture.

I ran some computer models yesterday, and the risk/return profile has improved considerably due to the recent decline. I hesitate to provide too much information here, because much of it requires qualifiers. I have considered writing a newsletter of sorts, and even wondered if there might be a market for me to sell it at some nominal cost, not as a get-rich scheme, but to incentivize me to develop these ideas further. (Would you buy such a newsletter that focuses on the true investors, and doesn't spit out the same cliches that every mutual fund company does?)

But without getting into specifics, the expected returns from stock investing have moved from "not too much better than savings" a year ago, to offering decent (although not get rich quick) returns. We have no idea what stocks will do from here on - they could fall 5%, 10%, 50%. But that's the wrong question to ask for most investors.

It is also the first time in a while that one of my models suggests a 100% stock stake in my 401k. What? I was not 100% stocks before, even though I have over 30 years to retire? Ah, that's where the conventional advice doled out fails small investors. But that's a story for another day (or a newsletter?)

Now is a time to be a net buyer. I personally will be looking to deploy my (unfortunately very limited) funds in the next 2-3 months. In my own 401k, I have eliminated my future bond allocations and readjusted my allocation to be more aggressive.

Zogby Poll Mechanics

2008-10-08T07:16:00.003-04:00

If you are a politics buff like me, or get your news from the Drudge Report, you probably closely follow the Zogby tracking poll, along with other such polls (the Gallup is the one featured most often). But today I saw a sentence in your release that made me say Whoa!!

The telephone tracking poll shows neither candidate with a clear advantage in the national horserace

What are the magic words? Telephone tracking poll. News flash! Telephone tracking polls don't work! One, you only select voters with phones, bias the samples for people who stay at home during the day or answer the phone ... it's very poor science! And polling is a science!

In this season of statistics, I'd like to recommend one of the best books you can read. The 1954 classic, How to Lie with Statistics is a fantastic guide for the layperson on ways companies and politicians distort statistics to make their case. And no, you don't have to be math-savvy to understand the book! In fact, the telephone poll analysis was something I read in that book years ago.

Liquidity ok, but What About Capital?

2008-10-06T21:01:00.003-04:00

The folks at First Pacific Advisors (FPA Funds) have a brilliant new commentary (actually a week and a half old) that's a must read. They point out, much as John Hussman and others have, that the bailout does nothing to address the capital needs of banks. Unless the government overpays for distressed assets, the bailout plan will have them traded, but in some cases, may even cause banks to fail to meet capital requirements after the asset sale, causing more bank failures.

An interesting factoid: corporate America has more than $600 billion cash on its books. Allowing companies like Wal-Mart into the banking business would allow that cash to come to the rescue of our financial system.

Read the whole article!

PS: One of my favorite mutual funds, one that I own personally is the FPA Crescent Fund (ticker: FPACX). If you have some money to put away, even as little as $100 a month, I encourage you to consider this fine conservative fund which has only lost money one year since 1995!!

BW Asia Stories Galore

2008-10-06T20:40:00.002-04:00

Wow, I've never found so many stories on BusinessWeek's Asia Insider to be quite so interesting! At a time when the US and Europe are experiencing a serious cash crunch, it seems Asia is swimming in cash. That means we could see Asian companies invest more in the US, and that includes major investments by the Indians, including, fascinatingly, in old-world industries like steel (whoever said the US steel industry was dead?)

And now the big topic of discussion is if China can save the world. The Chinese economy is slowing, property prices are falling, stocks are down 60% and more bad news. But GDP is still expected to grow at over 7%, so that holds hope of a robust Chinese economy preventing a global slowdown?

An Obvious Conflict of Interest

2008-10-01T21:59:00.002-04:00

I like Gwen Ifill. I think she's a sharp, smart journo, and I have felt that if CBS truly wanted to get a solid woman anchor, they should have picked her rather than Katie Couric. Having said that, I was shocked to learn of her latest conflict of interest when it comes to moderating the VP debates - she's writing a book on Obama to be released on inaugration day. That means an Obama victory could make a difference of a half million dollars or more!!

I don't think Ifill will be biased, but the appearance of conflict has potentially polluted what should be an interesting debate.

Goodbye Bailout!

2008-09-30T07:01:00.003-04:00

Ok, so the bailout isn't truely dead. In fact, it's a given some version will pass. And maybe something needs to be done. It's just this version was phenomenally vague in its specifics, and looked like it could dramatically alter the nature of American capitalism. Oh yeah, and raise the national debt while we are at it.

My objection isn't simply an economic one, although that is a valid point. The brilliant John Hussman wrote a wonderful piece titled You Can't Rescue the Financial System if You Can't Read a Balance Sheet, explaining why this does little to improve bank balance sheets and the likelihood they will fail.

My objection isn't even centrally the price tag, although $700 billion is enough to make you gasp for air. That works out to $5,072 per taxpayer in the US to buy distressed assets and flip them.

What I really dislike is that Uncle Sam would actually own the debt and potentially the stock of American companies. YUCK! For how long? What would the process be to unload these investments? As someone in most developing countries will attest, once the feds take a stake, privatization is not simple. That means we could see a landscape where we have companies with substantial governmental ownership in the US of A!

When the government maintains ownership, even if it is a modest minority stake, how does that influence government policy? As anyone with concerns about US beef will attest, the dual role of the US Dept of Agriculture in regulating and marketing beef often raises questions about the regulatory environment. On the other hand, government ownership could result in politicians trying to twist arms of the corporate leaders for political gains.

And how does the process of government divesture work? If the government sells, would it be perceived as a vote of no-confidence? What might be the rumblings of that? The government is no ordinary trader.

The stock markets have to fall. Earnings have been inflated by artificial methods and will have to normalize. But to save the taxpayer some, the Feds would do better to put a temporary hold on the 'mark-to-market' accounting rule, so they can look into other methods of valuation. 'Mark-to-model' was always bad, especially if there was no regulatory control of the model, but this mark-to-market nonsense is just as bad. Just because someone claims your house is worth $100,000 doesn't mean it is! There is a cash flow stream that has a value - maybe the accounting boards just need to firm up the assumptions used in their DCF model.

Meanwhile I won't hold my breath that another phenomenally bad bill doesn't emerge. All I hope is that the House Republicans managed to prevent the socialization of America! (Senate Repubs, way to show spine!)

Villain of the Day: The SEC?

2008-09-20T09:09:00.002-04:00

A lot has been made of John McCain's statement that SEC chairman Cox should be fired. I thought it was a silly demand - after all, a lot of what happened is not Cox's fault. Until I saw this, from the Maudlin newsletter:

It is going to cost the taxpayers a lot of money. While I think the losses on AIG will be rather minor in the grand scheme of things, if you add up Fannie and Freddie and a new RTC, coupled with the stimulus package, you can easily get to $500 billion, and that is probably a low number. For such a price, we had better get a new regulatory scheme which requires reduced leverage. Want to get really mad? Up until 2003, all investment banks were allowed only 12 to 1 leverage. Then in 2004, the SEC basically gave five banks (and only five banks) the ability to lever up 30 or even 40 to 1. Bet you can guess the five banks. Bear, Lehman, Merrill, Morgan and Goldman. Three down.

Hmmm.

Chart of the Day: Commercial Paper

2008-09-20T09:06:00.001-04:00

From John Maudlin, here's why the panic - the commercial paper market is what runs the economy!

Quote of the Day: Mark to Market

2008-09-20T09:02:00.001-04:00

If you don't follow these things, a lot of the present financial crisis comes from a change in accounting rules! Seriously! The FASB changed from a "mark-to-model" approach, where companies could value financial instruments such as mortgage-backed securities using a computer model based on default rates, to "mark-to-market", which is the price you'd get in the open market, based on the last sale of that asset. John Maudlin writes:

The current mark to market rule, while nice in theory, works in normal times. But it has the unintended consequence of making things worse in crisis times. Why should an institution have to write down a security which over time is going to pay back the lion's share or more of its value just because a severely stressed institution was forced to sell that security at a very low price in a time of crisis?

Yes, there needs to be transparency and we as investors need to know what is on the books of the companies that we invest in. But it is somewhat like my bank asking me to mark to market my home and pricing my loan daily based on that new price. If my neighbor loses his job and sells his home at auction, does that mean my home is now worth less two years from now. Maybe an even better analogy, if I am renting that home to a very good tenant, does my neighbor's price impair my income?

Quote of the Day: Stanford at the Olympics

2008-09-16T06:35:00.001-04:00

From a newsletter by Ajit Dayal, Quantum Funds:

An interesting statistic: students (former and existing) of Stanford University in USA won 25 Olympic medals in China, of which 8 were gold, 13 were silver, and 4 were bronze. If Stanford were an independent country, it would have ranked as the 9th in terms of gold medals won and 11th in terms of total Olympic medals won.

Quote of the Day: Leveraged Lehman

2008-09-15T19:14:00.003-04:00

John Hussman of the Hussman Funds writes:

Last week, Lehman reported $600 billion in assets, on less than $20 billion of common shareholder equity. ... Put another way, a markdown in the value of Lehman's assets by just over 3% would wipe out that reported shareholder equity. One would need to have a great deal of faith in that asset valuation to be willing to buy the company out at any price, since an outright buyer would have to agree to pay off Lehman's bondholders (in excess of $100 billion).

Wow, think homeowner with a $300,000 house, but his equity in the house is only $10,000, and with the house, and credit card and other debts of $50,000. Hmm, so turns out our most esteemed financial firms are no different from the lay homeowner?

Chart of the Day: Real Estate Predictions

2008-09-13T10:11:00.004-04:00

Predictions by John Burns of John Burns Real Estate Consulting, reported by the always brilliant John Maudlin.

ANWR Oil Reserves

2008-09-05T19:14:00.002-04:00

Some numbers to mull on ...

Mean estimate of ANWR Area 1002 Technically Recoverable Oil
7.7 billion barrels**

US proven oil reserves
21.8 billion barrels

**This estimate is only for the federally controlled area, and was done when oil was at $20/bl. Given that oil is more than 5 times that number, ANWR could have substantially larger oil reserves.

RNC: Day Two Impressions

2008-09-03T06:37:00.003-04:00

I only watched the RNC from about 9 or so. And I must say, it was quite a view. The one thing the GOP does better than the Dems is stay on schedule. Especially this year in a truncated convention where time was critical.

The video tribute to Michael Mansoor literally had me in tears. At a time of so much selfishness and cynicism, here was a young man who leaped on a grenade to protect his fellow soldiers. That, and the tribute to the veterans of different wars, set the evening in a really good way for me.

The Dems lost steam too often with breaks. Not the Republicans. Immediately after the tribute was what I thought was a pretty good speech by First Lady Laura Bush. There's something pretty awesome about her - she has so much grace and class! And she went to point out the stats the media have not bothered to point out - especially the highest ever minority performance on achievement tests, and what I think should be the legacy of the Bush administration - increasing the number of Africans receiving antiretrovirals from 50,000 to about 2 million.

President Bush was decent - he had a few good lines, but I don't know if it was the fact that he was speaking by satellite, or what, but he's been better at public speaking. But it was short, and kept the momentum going into the video tribute of Reagan.

The Reagan piece was ok. Seriously, how do you ever make a vid on Reagan and not include the famous "Tear Down these Walls" speech? But there were moments when it was touching.

Fred Thompson was the best speaker of the evening. Talk about knocking it out of the park. Best line was talking about hope ... the hope that McCain had as a POW, that is the true hope. His re-telling of the McCain story was incredibly moving, and for someone like me who has already heard it, I still found myself tearing up.

Joe Lieberman was decent, but entertaining if only because I was surprised how aggressive he was. I won't expect to see calls for his censure within his causus, but it truly motivated the folks at the convention center, and the base in general to see the former VP pick of the Dems come over.

Overall, I thought it was a pretty good night. I think the GOP candidates have less of a need to be specific since they are running on an experience platform. And their experiences have been of surviving torture, reforming government ... not how their candidate met his wife, and asked her out!!

I'm real excited about the Palin speech tonight. The more I see her old interviews, the more I like her. She's been viciously attacked by the jerks like the DailyKos and the far left, but that's a post for another time.

Require Women to be Paid As Much As Men?

2008-08-31T21:34:00.002-04:00

John McCain opposed a law legislating equal pay for women as their male counterparts. Ditto Sarah Palin. What is with American conservatism? Is this an instance of GOP bigotry liberals love to complain about.

Women get paid less than men for a variety of reasons, and discrimination is an important, although not only, factor. Studies have routinely showed that women who demand raises, for example, are perceived in a less favorable light than male counterparts. And no unbiased observer can deny the existence of old-boy networks.

The challenge with legislating equal pay for equal work comes down to what constitutes equal work. The whole idea comes from a manufacturing age, when equal work simply could be construed to be equal number of hours, and job functions. However, the age we live in does not lend itself to such analysis.

As an environmental consultant, I make a lot more than some of my peers. And a lot less than some others. Is it because I'm brown? A foreigner? Good looking? Ugly? Or just plain because I'm smarter/dumber or more/less hard-working than my peers? How is a law going to distinguish discrimination from true performance-based pay?

The Palin Alternative

2008-08-31T13:18:00.004-04:00

For someone as opinionated as me, I've had a hard time figuring out where I come out on presidential contender John McCain's choice of Alaska Governor Sarah Palin for the second spot. It's one of those improbable hail mary's that you can never judge when the ball's in the air. Nevertheless, if only for my friend S., I will try ...

My first instincts were that this was a weak choice. Yes, Palin's a woman, and in a change election, an outsider helps. I believe it was Newt Gingrich who pointed out that McCain picking an old white guy might be suicide at a time people wanted to be exploring the possibilities of racial and gender transformations. But her resume is thin, with just 20 months as governor, and a mayor of a small town before that.

The case against Palin has been fairly well laid out in the MSM. It takes out the experience argument, even more important because that was McCain's selling point, and a 72-year old man with questionable health. It's unlikely substantial number of Hillary Democrats will defect, given Palin's opposition to reproductive rights, and especially after a fairly rousing call for unity by Hill and Bill at the convention.

Just don't be too quick to write Palin off. First, I think the "woman" angle has been oversold, and another important aspect largely ignored. She's blue-collar as they come. While McCain's alternatives are right white men, Palin comes from a much more modest background than even Obama. Todd and Sarah Palin had to elope because they couldn't afford a marriage. Todd was a commercial fisherman, and works on an oil rig. Member of United Steelworkers. (Who'd have thought the GOP would have a leader with union roots!) She worked on the PTA, slogged those nasty city council meetings.

She's a proven reformer. She took on corruption in the oil and gas business. Knocked out powerful Republicans who misused the public trust. In a party tainted by scandal, that's a powerful image for a leader. And she's passionate about wasteful spending. She killed the infamous "Bridge to Nowhere" and auctioned the governor's plane on eBay!

She's invigorated conservatives. In the day her nomination was announced, the McCain campaign received six times it's previous daily fundraising record! And it allows McCain to be truely maverick without having to look over his shoulder.

The talk of her lack of experience is valid. But she does have more executive experience than McCain, Obama and Biden combined. The reality is senators do not have to make particularly tough individual decisions, and sail under the radar by largely agreeing with the party line. Palin, by taking on the Republican establishment, could be the real change candidate.

Of course, like everything else, the challenge is selling this line. This is why Mitt Romney is not the VP candidate. In an economy that will stink for a while, Romney knows more about the complex world of global finance than the three contestant senators. But selling a rich white Mormon with a genuine insincerity might have been more than the McCain ad gurus could manage.

So Palin could be an interesting choice. She certainly could fail spectacularly, but I think McCain made the right choice. The reality is that with more Dems than Republicans, a conventional candidate would have sounded the deathknell for McCain. The challenge now is marketing Palin as an evangelical to the social right, but at the same time, as a reform-minded bureaucrat to the rest of us.

DNC: Day Two Speeches

2008-08-26T23:11:00.003-04:00

I need to go to bed, so this will be short ...

Good speech by Hillary - just what the base was looking for. Paint the distinction between the parties' philosophy, attack Bush-McCain, talk about the favorite Democratic talking points. Oh, and while you're at it, get maximal publicity for yourself - anyone notice how she walked around the podium after she finished for maximal exposure. Best line: "Did you do it just for me, or for that woman who has cancer, ..."

I thought the best speech of the night was Mark Warner. He reminds me why I would have supported the Democrats if he ran for President. He's a centrist, and rather than focus on the liberal bashing of American corporations, he focuses on building creating the right environment for new businesses. Best line: None I can think of now, but his story about Lebanon, VA was fantastic!

Kathleen Sebelius of Kansas was bland! Thank heavens for the Dems she wasn't pick as the Veep candidate. She had a few good punch lines, but her delivery was flat, and she didn't seem particularly passionate (I must confess I heard her on the radio, which in some ways in a great way to judge speakers). Best line: "McCain is for some renewable enery - renewing Bush's failed energy policies"

Bob Casey, Jr did well as did the Montana Governor. A former secretary of energy, Frederico Pena was good in presenting Denver as a model of green energy for the country. But there's still too much time between the good speeches, and it's been a challenge to try to keep watching ... like the Oscars without the awards or the celebrities!!

Pelosi Alert!

2008-08-26T18:44:00.003-04:00

The WSJ quotes Madame Speaker on natural gas:

I believe in natural gas as a clean, cheap alternative to fossil fuels... [Natural gas] is cheap, abundant and clean compared to fossil fuels.

Can someone tell Ms. Pelosi that nat gas is a fossil fuel?

DNC: Green Hotel Plan Flops!

2008-08-26T07:51:00.002-04:00

The New York Sun reports:

The Democrats have embarked on a highly visible effort to make their convention the "greenest" ever, focusing on everything from expanded recycling to more creative programs like encouraging Denver restaurants to offer "lean 'n' green" meals made with healthful, organic, and locally sourced ingredients. But not all of their environmentally friendly initiatives have gone as planned. Take the hotel card keys, for example. Instead of the traditional plastic cards, the Sheraton in downtown handed guests Visa-sponsored swipe cards "made from sustainably-harvested wood." The plan lasted all of a few hours. By Saturday night, enough guests had reported problems getting into their rooms with the wooden cards that the front desk clerks had abandoned them and switched back to the plastic cards. A clerk said they were now handing out one of each and suggested that the wooden one could kept as a souvenir.

DNC: Carville's Take

2008-08-25T22:12:00.003-04:00

On CNN, James Carville looks just as frustrated as me ...

If this party has a message, I sure haven't heard it.

Yawn! Yawn! I'm no Democrat, but I am always engaged by good political discourse ... but this is a real snoozefest!!

DNC: Teddy Kennedy

2008-08-25T21:38:00.005-04:00

It was quite something to see a 76-year old veteran pol recovering from cancer come up and give a speech with as much vigor as he did. Although it's more hope, hope ... at this rate, I'm not going to be able to survive the next few days of TV watching!

Meanwhile, Drudge reports that NYT will cite sources that the Kennedy tribute was to take the focus off the Clintons. Interesting!

DNC: Yawn So Far

2008-08-25T21:20:00.003-04:00

So far I haven't been impressed with the convention. From what I've seen, there's been a ridiculous amount of dead time, and not that much in between to get you fired up. Jesse Jackson, Jr seems to be wanting to ape Obama, coming out with one of those speeches where you want to grab him and say, what the heck do you want to do on any of the issues!! David Gergen correctly pointed about that the first 2 hours have been breathtakingly short on specifics!

I'm a little shocked by the nonsensical hero worship, including Caroline Kennedy talking about Ted Kennedy being inspired by Obama! Ted Kennedy is a liberal icon who has achieved so much in life, and the notion that he would be inspired by an amateur like Barack is ... well, ludicrous!

Back to Blogging!

2008-08-25T21:18:00.002-04:00

After a long hiatus, and for the first time since my move, I'm back to blogging. Been meaning to do this for a while, and what better time than during the Democratic National Convention!! I'll be blogging live through what I watch of the conventions, although I don't know that I'll spend all my evenings watching the bland infomercials both parties put on.

Worry about the Credit Crisis ... Worry a Lot!

2008-02-27T11:14:00.004-05:00

More troubling signs that the credit crisis is far from over. I first heard this on Bloomberg (ah, I wish I had cable like my cousin) - the Port Authority of New Jersey had its interest rates jump from 4% to 20%. Gov. Spitzer was testifying before Congress about this issue. The problem is the concerns over monoline insurers.

First, some background. The monoline insurer business works like this. The Widget Co doesn't have the financial strength to get a decent interest rate on its debt, so it approaches a monoline, say AMBAC, and essentially buys insurance wherein the insurer, with its solid credit rating, serves as collateral in the event Widget Co defaults on its debt. The Widget Co then essentially gets the same credit rating as the insurer.

Monolines used to only insure municipal agency debt, but in the last few years took on more mortgage related debt (ah, there's the good ol' real estate market again). With the meltdown in subprime markets, the financial strength of the monolines come into question. What good is insurance if you think the insurance company may go belly up?

As the graphic presented here from the NY Times shows, the CDS (credit default swaps) market is HUGE, bigger than even the stock market.

John Maudlin discusses this scary scenario:

But what if the above-mentioned monolines are downgraded to junk, as was [ACA Capital] when it could not raise capital? As the downgrades on various mortgage assets and the CDOs continue to increase, the ability of the monolines to deal with the problems is going to come under increasing question. The losses at major banks could be much worse than $122 billion if they are downgraded to the same junk level that ACA was.

I have read somewhere else that in addition to the $250 billion written down in 2007 for subprime, banks and financial firms may write down another $250 billion in CDS. Wow! But that's not the start of it. What if you have your port authority paying 20% on its debt? That's not a recipe for keeping things cheap...

NYT Becomes the New SwiftBoaters

2008-02-21T20:14:00.004-05:00

While I disagree with a lot of the New York Times puts out, I have always thought they were a quality paper. Unfortunately, their credibility has taken a big hit with the latest hit job on presumptive Republican nominee, John McCain. Devoid of the normal journalistic standards you'd expect of a top newspaper, it largely cites anonymous sources and is incredibly skimpy on details for an investigative piece.

As the New Republic documents, editor Bill Keller appears to have shared the concerns over the piece. But in the end, he seems to have rolled over and given it the green light. What makes the piece even more suspicious is that others, including Fox's Carl Cameron found nothing in the story when he investigated it last fall. Given Fox's expected bias against McCain, one might imagine the decision not to pursue the story was indicative of the lack of weight.

McCain's lawyer, Bob Bennett points out that he provided the NYT a list of times when McCain voted in opposition to the interests of Iseman's clients, but the paper left that fact out of its piece. What a surprise!

Scary Chart of the Day: Phoenix Real Estate

2008-02-20T18:17:00.002-05:00

Courtesy of a very nifty graphing tool at National City, here's an example of the craziness of the speculative real estate boom that occurred in so many places. As someone who loved his time in Phoenix partly because of reasonable real estate prices, all I can do is shake my head ...

Housing Meltdown?

2008-02-19T11:45:00.003-05:00

Businessweek recently carried a very negative story on the housing meltdown. A meltdown? If that seems extreme, the authors don't think so. Even for a housing bear like me, some of the predictions and information in the story were surprising and deeply troubling.

Brace yourself: Home prices could sink an additional 25% over the next two or three years, returning values to their 2000 levels in inflation-adjusted terms... Shocking though it might seem, a decline of 25% from here would merely reverse the market's spectacular appreciation during the boom. It would put the national price level right back on its long-term growth trend line, a surprisingly modest 0.4% a year after inflation. There's a recent model for this kind of return to normalcy after the bursting of a financial bubble. The stock market decline that began in 2000 erased most of the gains of the boom of the second half of the 1990s, leaving investors with ordinary-sized returns.

Even more troubling was this excerpt:

For another bearish view, there's what economists refer to as the Mankiw paper. In 1989, long before working in the White House as chief economic adviser or writing his best-selling textbook, Principles of Economics, Harvard University economist N. Gregory Mankiw co-wrote a paper that was startlingly negative on housing. He and David N. Weil predicted that home prices would decline by 47% after inflation over the next 20 years, based on a shrinking pool of potential first-time buyers and an expectation that baby boomers as a group would spend less on housing as they grew older. It could be that Mankiw and Weil were not so much wrong as premature.

Ouch! Not looking good for real estate outlook! True, in recent years, the easy availability of credit would support greater leveraging of household budgets (in contrast, in the 20s and 30s, most houses put something like 50% down!), but if the credit crisis is more than short-term, then we just may see this Mankiw prediction come good after all!

Earmarks Galore!

2008-02-15T23:07:00.003-05:00

Courtesy of Taxpayers for Common Sense, we now know just how much pork each member of Congress took home.

Presidential Candidates
Hillary Clinton $342,403,455
Barack Obama $ 91,421,220
John McCain $ 0

Prominent Congressman (no party bias - just the ones I'm familiar with)
John Murtha $176,397,200
Steny Hoyer $139,128,759
Nancy Pelosi $ 94,332,500
Paul Sarbanes $ 71,045,900

Prominent Senators
Dick Durbin $335,181,200
Chuck Grassley $323,628,520
Trent Lott $311,013,500
Chuck Schumer $309,691,055
Harry Reid $305,289,470
Diane Feinstein $295,872,430
Russ Feingold $ 0
Claire McCaskill $ 0

So much for all the talk about eliminating pork in Washington!

Quote of the Day: The Mac on the O

2008-02-15T23:02:00.001-05:00

Republican presidential candidate John McCain on his likely Democratic counterpart Barack Obama:

To encourage a country with only rhetoric rather than sound and proven ideas that trust in the strength and courage of free people is not a promise of hope. It is a platitude.

Green Tip of the Day: Kill Vampire Electricity

2008-02-11T18:10:00.000-05:00

Bankrate.com reports:

Many appliances use electricity even when they're turned off. It's called a phantom load, or vampire electricity, and as much as 75 percent of the electricity used by home electronics and small appliances is used while they're turned off. The Ohio Consumers Council estimates that it costs consumers $40 to $100 a year.

So Much for Obama Girl

2008-02-08T10:07:00.000-05:00

So I just watched on CNN that Obama Girl, the woman who made it big with her YouTube hit professing her crush on Barack, did not vote. Why? She claimed she was too sick to drive across the bridge to vote in Jersey. Not sick enough though to attend an election watching party that night.

How typical! Obama has to worry about the young people flocking to his campaign - how many are the serious political activists who dot campuses, and how many are just ditsy sorostitutes embracing the next big fad?

Why Huck Won't Be Veep

2008-02-08T09:31:00.001-05:00

I've always thought the notion of Mike Huckabee running with McCain as a vice-president was a little foolish. Sure, Huck brings evangelicals and the South, but it takes more than cold electoral calculus to make a good ticket. For one, few candidates like assistants who can take attention from them, and Huck sure can. But also, Huckabee brings very little in terms of qualifications or experience, and one could argue that McCain needs a policy wonk. More confirmation from this story on Politico:

In 2005, he sat down with Stephen Moore of the Wall Street Journal, and said: "I'm going to be honest; I know a lot less about economics than I do about military and foreign policy issues. I still need to be educated." On the campaign trail, he's also suggested he'd look for a vice presidential running mate with strong economic credentials to balance weaknesses of his own.

If not for the baggage from his run, Mitt Romney would be the ideal man to do that. Of course, Mitt would blow the center McCain strives for, and also is more charismatic than the Mac, so you can rule him out.

What Mac needs ... hold your horror ... is a Dick Cheney type veep. Policy wonk, no political ambitions. Ok, maybe not someone quite so polarizing ...

Bye Bye Mitt!

2008-02-08T09:22:00.000-05:00

Mitt Romney has left the building. Goodbye! It's sad to see a candidate that could have been something stumble. I didn't support him ... in many ways, I thought he was like that other man from his state that ran for President - John Kerry. Both were brilliant enough to be president, but both had serious credibility issues. People trusted Bush and McCain, even if they didn't really have the best resume.

In the end, Mitt made a calculated gamble. Here was a man who had created phenomenally successful businesses, resurrected a broken Olympics, and introduced universal health care as governor. What better qualifications could you expect in a presidential candidate? But he chose to steer from the data-driven non-ideologue that is his strength to what he perceived to be what the Republican party was looking for. But this isn't 2000 and people aren't looking for another George Bush.

To be fair, maybe his campaign was doomed anyway. In this time of economic angst, I don't know if any candidate could run with a claim of running businesses. Populism is in the air, as you can tell from Huckabee's strong showing in a party that worships the free market. But by running a more sincere campaign, Romney could have managed to get on as a veep, something that simply can't happen now!

Vid of the Day: Jon Stewart on HRC's Hallmark Special

2008-02-06T23:40:00.001-05:00

Watch to the end - it's pretty funny how it ends!

Real Estate Stinks!

2008-01-26T19:24:00.000-05:00

I woke up way too early on a Sunday morning, and since all the buzz in India and back stateside has been on the real estate market, I was curious what the historical returns on residential real estate have been. While no data exists in India, I found a study for the US, from which I reproduce this graphic on nominal and real (i.e. inflation-adjusted) returns. Nothing to write home about.

Source

To be fair, this study does not appear to factor in rent savings, which could be substantial. My own experience with online calculators is that there is a huge disparity based on assumptions, so do your homework. Nevertheless, it is useful to consider that home price inflation has only barely beat inflation in much of the US, a far cry from the 10-20% annual returns we have seen recently.

Click! Streets of Chennai, India

2008-01-23T14:45:00.000-05:00

With my new camera, I'm hoping to take a lot more random pictures, and since I'm on vacation in my hometown of Chennai, India, here are some of the clicks I took today.

What easement? This is Chennai - all that separates traffic from construction is an asbestos sheet. The construction BTW is for the Kathipara junction, which will be Madras' first junction with multiple roads crossing over in different directions!

Since no one seems to follow the lanes, it looks like in some cases, the transportation dept just did away with the wasted paint. Incidentally, this is remarkly unchaotic for Chennai - I need to take a picture of a real Chennai street!

Seatbelt anyone?

That's a view of the Olympia Tech Park, which I'm told is the largest building in the world to get the LEED gold certification. I need to go and visit this. I read online that only 12% of the property is built up, with 88% designated for extensive landscaping in process. That would be stunning in an area where land prices are at about Rs 4-5 million a ground (~ $2 million/acre!!) and have gone up 50% in the last year!

Click! Views from my car on VA-24

2008-01-19T00:26:00.001-05:00

As I drove back to Virginia from a trip I had taken, I found myself in a simply incredible fog and snow storm. Here are some pictures from the car. I took this pictures as I drove - don't try this in your car!

Did You Know: "Magic Bullet" theory of JFK assassination

2008-01-16T11:40:00.000-05:00

I'm watching PBS as I work, watching a show called Oswald's Ghost, and I was surprised to learn that the person who first proposed the theory that was later derided as the "magic bullet" theory was the Ranking Member of the US Senate, Sen. Arlen Specter (R-PA). If you don't know what the "magic bullet" theory, you have to watch Oliver Stone's brilliant movie, JFK, starring Kevin Costner and Tommy Lee Jones.

Zinger of the Day: Pandering to the Latinos

2008-01-14T23:26:00.000-05:00

Ruben Navarrette Jr. rants about politicians attempting to pander to Latinos and use silly generalizations assuming the Hispanic community is one mass. Here's a dig at Hillary:

Hillary Clinton got off to a rocky start. While chatting with Hispanic voters in a Mexican restaurant in Las Vegas, Nevada, last week, she stretched for an analogy to explain how all Americans are connected and their problems interconnected despite the fact that "we treat them as though one is guacamole and one is chips."

Aiy caramba! Quick rule of thumb: The nation's 46 million Hispanics are a proud people who have accomplished a great deal, have fought and died for this country in every military conflict dating back to the Civil War, and who embody the American Dream. If you're a politician who is trying to relate to them -- but your own knowledge of the group doesn't extend beyond whatever is on the No. 3 combination plate -- you want to be careful not to be so tone deaf that you wind up insulting them.

US Downgrade?

2008-01-11T09:56:00.000-05:00

In the midst of much populism on one end and paranoia on the other end of the presidential campaign, few people paid attention to a cataclysmic headline: Moody's argues that rising debt obligations could lead to the United States having its credit rating cut from AAA. Now, while some of this is saber-rattling, the fact that a rating agency would even dare to talk about it is pretty phenomenal, and reflects the huge entitlement obligations (Social Security, Medicare, etc) that is promised by the US Federal govt. I have previously reported on some amazing slides from the Comptroller General showing just how large this obligation is. Debt is $411,000 per household, with entitlement spending expected to outpace GDP growth several times over. This clearly isn't sustainable! And yet, few presidential candidates are talking about it in more than generalities. Contrast the $46 trillion debt burden with spending by most agencies, and you realize the big threat isn't spending too much money on the Environmental Protection Agency, it's running with a social contract that isn't viable any more!

Talking on a Cell Phone as Bad as Drunk Driving?

2008-01-10T00:38:00.001-05:00

Stunning research at the University of Utah driving under the influence of a cell phone is just as bad as doing so under the influence of alcohol. Participants drove simulator cars while sober, drunk and distracted and their performance in each test case was considered, and it was found that they were actually more likely to crash the car when distracted by a cell phone call than when drunk with a blood alcohol level of 0.08 (the legal limit for a DUI).

Interestingly also, they found no difference in driving behavior when using a handheld cell phone or a handsfree device! Cell phone users were over 5 times more likely to get in accidents than undistracted drivers. And they found cell phone users may also cause traffic backups due to their slow speed and poor lane changing patterns.

Wow, time to think of hanging up that phone! I don't talk a lot on the road, except when I take long trips on the interstate, but that's partly because I've been living in a university town. As I look to move and work, that might change, and suddenly the productivity drain seems a shame.

Picture of the Day: China Pollution

2008-01-10T00:28:00.000-05:00

From the Switchboard, a blog by the National Resource Defense Council, comes this picture of pollution in Beijing. Eric Young wonders if the marathon during the Olympics will have to be moved out in the country.

Say No to Plastic Bags

2008-01-09T17:05:00.000-05:00

I never thought I'd be applauding China for being the vanguard of environmental progress, but here goes: the China has banned free plastic bags at grocery stores. The even bigger surprise? Merchants and customers alike are all for it! Way to go!!

The Indian Expert on the Hoods

2008-01-09T13:09:00.000-05:00

Columbia university sociologist Sudhir Venkatesh's work formed a chapter in the book, Freakanomics. Now he's got his own book, Gang Leader for a Day. While I haven't read the book, this interview reminds me how interesting his work is. Think: if drug dealers are so successful, how is it that most live with their mother?

As I read the interview, it is sad to see how much we miss with a merely criminal view of gangs, ignoring the social causes.

An excerpt:

There is significant exposure to lead and asbestos and extremely poor nutrition. One of the most jaw-dropping experiences I continue to have is to walk into a grocery store in the inner city. There's a lack of fresh food, decent food.

And another:

It's depressing to see the cycle of failure and the reproduction of poverty. The typical story goes like this: Job is going well, then their kid gets sick. They start missing work, then they get fired. It just makes you want to scream. We're talking about the folks who are trying to help themselves, and they can't do it. That's another kind of sadness.

Brooks on Obama and McCain

2008-01-09T13:02:00.000-05:00

David Brooks contrasts the two candidates appealing to independents - John McCain and Barack Obama. I particularly liked this quote:

In policy terms, [Obama] is an orthodox liberal. He never tells audiences anything that might make them uncomfortable. In the Senate, he didn’t join the Gang of 14, which created a bipartisan consensus on judges, because it would have meant deviating from liberal orthodoxy and coming to the center. How do you build a trans-partisan coalition when every single policy you propose is reliably on the left?

This is one of the things I love about McCain:

McCain’s campaign events are unpredictable. At Obama events, the candidate gives a moving speech while the crowd rises deliriously as one. McCain holds town meetings. People challenge him, sometimes angrily. And if they oppose him, McCain will come back to them two or three times so that there can be an honest exchange of views. Some politicians try to persuade their audience that they agree with them. McCain welcomes disagreement and talks about it.

Cricket Vid: Oh What a Mash!

2008-01-09T02:10:00.000-05:00

I never thought I'd be blogging about cricket the night after the New Hampshire primaries, but some horrendous screw-ups in a recent Test match have got me quite riled up. Thanks to Web 2.0, even an Indian living in the US can now pull up a neat documented collection of the incompetence of the umpiring!

Book of the Day: The Third Wave

2007-12-31T12:23:00.001-05:00

Alvin Toffler's classic, 'The Third Wave' presents a fascinating study of the forces that shape society today and will reshape the future. If you're wondering what the waves are, the first was agriculture, the second was industrialization and the third is the knowledge revolution. Even though it was written back in 1980, it offers a convincing argument for the shape of things to come. While Toffler's predictions aren't always spot on, the general principles are seen to be in play. Best of all, once you read this, you can read his later work, especially his latest book called 'Revolutionary Wealth'.

Footnote: The challenge if you plan to buy this book is finding a classic edition. The mass paperbacks available in B&N features much too small a print for my liking!

Gimme a Break: It's Illegal to backup your CD on your comp!

2007-12-31T12:11:00.000-05:00

This the latest from the Recording Industry Association of America (RIAA). It's illegal to copy a music CD you purchased onto your computer or iPod, even if it's for personal use. I say, gimme a freaking break! I'm all for copyright protections, but the benchmark has always been that you weren't allowed to distribute the music. The theory was that if you spend a good bit of money buying a CD, you were within your rights to make a backup to protect your investment from scratches, but now the RIAA argues in court that that is illegal.

Here's to betting the RIAA will become irrelevant in 10 years!

Geek Tip: Extreme Makeover Desktop Edition

2007-12-31T11:31:00.000-05:00

If you are using Windows XP and are ready for a new look, envious of your Mac-owning yuppy friends who have neat graphics and superior rendering, here are two tips for you.

One, don't be. The Mac is cool for those who want something that looks cool. But all those animations (when you start a program, you actually have the icon bounce!) and other gizmos exact a cost on performance.

Two, having said that, you can get a Vista-like feel to your desktop using the Vista Transformation Pack. Below are four plates showing the boot sequence, the login interface, and two screenshots. I personally don't care for the sidebar, and will do a post some other time reviewing different sidebar options available, but for now, here's to a cleaner UI (that's user interface, for you non-geeks)

Pic of the Day: Goodbye Benazir

2007-12-27T12:46:00.000-05:00

While she may not have been all she's been cut out to be now in obituaries, Benazir Bhutto represented an important part of post-Zia Pakistan. With her death, there is definitely a power void in the PPP, which is a little scary as they might have been the party to win.

This is the last picture ever taken of a living Benazir. Goodbye Benazir, we'll miss you!

Why Rudy Won't Be President

2007-12-24T20:58:00.000-05:00

While he's no longer considered the front-runner, Rudy Guiliani has been topping national polls for the Republican ticket for a while. However, an analysis of the primaries show just how long a shot his winning the ticket is. Let's us walk through this...

(I'm using the numbers from RCP)

Jan 3, Iowa: Guiliani comes in fifth.
Jan 8, NH: Guiliani comes way behind Romney and McCain.
Jan 15, MI: Rudy comes in fourth, behind McCain.
Jan 19, SC: Rudy comes in fifth. That's four down in a row.
Jan 19, NV: Rudy has the first chance of winning. But then again, with 3 down, and he's currently tied with Romney, he might lose the chance to win.
Jan 29, FL: So Rudy leads in opinion polls here right now. But with that kind of drubbing, it's hard to see how he can maintain that lead.

So Rudy could well enter Super Tuesday with no wins, and at most 2. Admittedly, the field's diverse, and others could be in the same situation. But Huckabee, Romney and McCain have a lot more 2nd and 3rd place finishes than Rudy.

Kiva Update

2007-12-24T19:30:00.001-05:00

Wow, looks like a Web 2.0 day. I had written previously about microloans using Kiva. Well, I'm happy to report I just had one of my lenders completely repay the loan. Sergei Borodzhayev of Ukraine just repaid $1,200 he had borrowed for buying construction supplies 6 months ago. I'm not free to roll my $75 loan into a new loan to a new entrepreneur. Both Shahin Novruzov of Azerbaijan and Mahbuba Ahmedova of Tajikistan have been paying in a timely fashion.

To learn more, visit Kiva.

Nifty Website of the Day: Mint

2007-12-24T19:15:00.000-05:00

Have trouble keeping track of exactly where you're spending money? Enter Mint. Mint directly obtains information from you bank accounts and credit cards and categorizes your spending patterns. It can recognize a charge under 'Taco Bell' to be in the 'Fast Food' category, but you can also develop rules to classify expenses to one category or the other. It also makes recommendations for changes you can make to save more money, such as (in my case) switching to Verizon from AT&T. There is still a lot of functionality to be built in, but for a free clean website, it's gets 2 thumbs up!

UPDATE Lifehacker has a more comprehensive review on Mint, including screenshots. Also, after having played around a little more, I think the best part of using Mint is tracking your budget.

McCain is Back, and He's Gooooood!!

2007-12-20T09:04:00.000-05:00

From the start of the presidential race, one candidate has had my hypothetical vote (as a foreigner, I don't get to vote) since the start. John McCain doesn't align with me perfectly, but he represents the kind of politician I would be - fiscally conservative but supporting regulation in some areas, socially conservative on some issues and liberal on issues. But above all, an ethical one.

That McCain seemed almost to be gone when he was an establishment candidate and a front runner. While I did realize the need to embrace the powerful interest groups such as the evangelists, it seemed like the McCain I loved was morphing. Well, no more! The kickass McCain is back, as Time magazine put it and he's super! So super that you even have the Weekly Standard, a prominent conservative outlet, writing quite glowingly about him.

Dissing corn subsidies in Iowa ... now that's a political slogan that will get him support nationally. It helps that he was right on Iraq ... a surge has helped and made Gen Petraeus the 'Man of the Year' (never mind what the folks at Time think!) in my book. But above all, it helps that he's genuine.

To be fair, he's trailing big-time. But I think at some point, people are looking for a candidate who's genuine. I dare say that's why W. won in 2000, and that's why Obama's doing so well in the Democratic circles.

Eau d'asparagus

2007-12-15T10:05:00.000-05:00

You know you're a dork when you're drunk at a bar, walk past a room of attractive women, enter a crowded men's room and wonder why asparagus makes your urine smell funny. Well, this time I was sober enough to remember the next day, so here's the answer from WebMD:

it's the result of a simple chemical reaction. Asparagus contains a sulfur compound called mercaptan... When your digestive tract breaks down this substance, by-products are released that cause the funny scent... But not everyone has this experience. Your genetic makeup may determine whether your urine has the odor -- or whether you can actually smell it. Only some people appear to have the gene for the enzyme that breaks down mercaptan into its more pungent parts ... The ability to smell the by-products may also be genetic. Another study published in the same journal found that 10% of a group of 300 Israeli Jews could not detect the odor. In other words, a person's urine could smell, but he or she might not know it.

Dissing Iowa

2007-12-11T23:59:00.000-05:00

I learned recently that Iowa has NEVER elected a woman as Governor or to the US Senate or Congress. Never! Ever! Great, we give first dips on our president to a bunch of mostly-white male-chauvinists!

Huckabee Watch

2007-12-11T20:13:00.000-05:00

So far, it was all about how Huckabee was "folksy", but now the dirt starts flowing.

In a response to a questionnaire when he was running for US Senate, Huckabee has this to say:

It is difficult to understandth e public policy towards AIDS -- it is the first time in the history of civilization in which the carriers of a genuine plague have not been isolatedf rom the generalp opuiation,a nd in which this deadlyd iseasefo r which there is no cure is being treated as a civii rights issue instead of the true health crisis it represents.

This four years after the surgeon general clarified that AIDS is not spread by casual contact.

But the saga goes on ...

Turns out Huckabee was one of the signatories of a Southern Baptist Convention ad that has this to say:

You are right because you called wives to graciously submit to their husband's sacrificial leadership.

(To be fair, the next line says that husband and wife are equal before God)

I'll keep my eye out for more zanies from Mike.

Chart of the Day: Median Home Price to Median Income

2007-12-11T09:46:00.001-05:00

Courtesy of GMO, the ratio of median home price to median income. Anyone who thinks this real estate slump is over (like the snake-oil charmers at the National Association of Realtors) are going to be sadly mistaken!

Website of the Day: Prosper.com

2007-12-09T17:16:00.000-05:00

The website of today is Prosper. Started by the founder of E-LOAN, the idea of the website is to leverage the power of the Internet to allowing individuals to lend and borrow to each other. If you want to be a lender, you can search for individuals based on credit quality and loan size, or any of many other metrics. You bid on an interest rate, and can place a bid for as low as $50. The idea is very similar to Kiva, about which I have previously written, except for the lack of philanthropic intentions and the profit.

Stunning Prediction of the Day: Lending in a Credit Crunch

2007-12-03T09:34:00.000-05:00

I read this in John Maudlin's latest piece

Jan Hatzius of Goldman Sachs forecasts a recession and that the growing credit crunch will reduce lending by about $2 trillion

I'll Pass on Smart Phones, Thank You!

2007-11-28T08:29:00.000-05:00

Jack Trout has a great piece in Forbes magazine about why convergence is a pipe dream. Convergence refers to the idea that we will eventually have a single device that handles all our needs. The iPhone has been labeled a giant leap for convergence. Trout argues that the idea of getting something without a tradeoff is impossible. An excerpt:

Palm was wildly successful with organizers; then they introduced the unreliable and unremarkable Treo, essentially an organizer that makes phone calls as well ... BlackBerrys are great at e-mail, but the phone is barely adequate. The Motorola Q crashes almost as often as the Treo. The Apple iPhone is terrific for music and media, but lousy for e-mail and phoning. For marketing reasons, everybody is trying to cram all these complicated features into ever-sleeker, ever-thinner boxes, while also adding longer battery life, and so on. Invariably, smart-phone designers have to make compromises that mean some functions don't work especially well.

Google Censorship

2007-11-27T23:18:00.000-05:00

This is troubling - evidently Google doesn't bend over just for China. YouTube has censored a video by a human rights activist in Egypt showing the torture by the local police. This was supposed to be the great promise of the Internet - the ability to share not only the meaningless garbage that fill the bandwidth, but to expose and educate. And yet YouTube decided that it wasn't up to that mission. Of course, as Michael Goldfarb at the Weekly Standard pointed out, YouTube had no trouble showing graphic videos of the Abu Gharib scandal. That was the right decision - after posting a warning and ensuring that viewers were over 18 years old, YouTube allowed you to see the videos. We don't need Big Brother censoring us, and we certainly don't need corporate America doing so! Shame on you, Google!

Photo of the Day: A Spinner in Action

2007-11-24T11:52:00.000-05:00

Many of you probably know nothing about cricket. Greatest sport ever. Truly. A type of bowler (similar to a pitcher in baseball) is a spin bowler, and we all tend to think of them as crafty with their fingers. I loved this pic because it emphasizes the concert of different muscles coming together - look at the tension in the legs, abs, all over.

History Flashback: Time mag cover from April 1984

2007-11-23T21:10:00.000-05:00

Picture of the Day: Iceberg!

2007-11-23T20:39:00.001-05:00

A Liberian-flagged cruise ship after hitting an iceberg in Antartica. Thankfully, no one was hurt!

Random Thoughts on Black Friday

2007-11-23T10:20:00.000-05:00

It was my first time in several years buying anything on Black Friday. There were quite a few deals - the one that got me to Walmart was this Kodak ZD710 digital camera with a 7.2MP resolution and 10X optical zoom. There were some other spectacular deals, and definitely some crowds, a topic supported by early news reports. But looking at people's shopping carts, and the vast stacks of unsold specials in my city's Walmart, I wonder if this is indeed an indication of a retail slowdown. It does appear to me that people in at least my town seem to be getting much more conscious of expenditures, possibly due to the housing slowdown and rising oil prices? I'll be curiously waiting for the final numbers ...

Speaking of shopping, be sure to check return policies! I haven't purchased too much more than books online, and as I was considering buying a camera (yes, I'm probably the LAST person to still be using a film point and shoot!) I decided to peek at the return policies. Amazon gives you a 30 day return period (although there's a grace period around the holidays), and any opened item loses 20% of its value. On Buy.com, it's 14 days and a 15% restocking fee. If you think you're not sure about the quality of the product you are buying, favor the traditional retailers - a purchase at Walmart can be returned to a store for no extra charge, even if you bought it online.

Speaking of cameras, shopping for one is a bit like going to the gym. In the gym, there's the ridiculous emphasis on the bench press even though it is not a decent metric of fitness. In the camera world, it appears it's all megapixels and megapixels (ok, there are times when two seemingly identical cameras are vastly different in prices, but not for any reason a novice like me can figure out) Here's a tip: think what you'll use it for. I talked to a few friends savvier about these gizmos than I (hey, I still use a film camera!), and it seemed evident to me that if your application is mostly for travel, a good optical zoom is far more important than MP. If you plan to make posters, or make prints from portions of your photo (i.e. you crop out part of the picture) then MP are much more important.

Dem Debate: Turn off the Commentators

2007-11-18T13:25:00.000-05:00

Anyone else tired of the crap political commentators put out after every debate? After the last edition, one I watched because I was finally done with my doctoral defense (yes, yours truly now has signatures approving his Dr.-dom!), I couldn't help but notice how disparate my views were from those of the "experts".

Hillary, they told us, put in a stellar performance. Really? I must have missed that. What I saw were soft questions (including the most ridiculous question about diamonds or pearls, one it turns out CNN encouraged an audience member to ask), and a failure to commit to specific policies. Sen. Clinton is best when she has to play the old pol's game of being everything to everyone.

Obama, we are told, stumbled. I'm not that impressed with him, but at least he did on occasion commit to where he stands on issues. Of course, that was few and far between, as the top tier candidates largely deflected every question to a beration of the Bush administration.

The sidelined candidates, on the other hand, did a stellar job. Richardson and Dodd were very good in talking about specifics, and Biden had flashes of brilliance when asked about foreign policy. But the media just writes a few brief lines about them - after all, a Pakistan policy isn't as exciting as how Hillary snapped at Edwards!

Cartoon of the Day: Pat Robertson Endorsement

2007-11-12T07:50:00.000-05:00

From Politico.com

Awesome Football Vid of Trinity's Lateral Win

2007-10-28T15:30:00.001-04:00

This is a must watch!

Trinity's lateral revolution

Picture of the Day: Lake Lanier

2007-10-19T23:34:00.000-04:00

The drought in Georgia is very worrying - estimates are that Atlanta has less than 60 days of water supply left. This picture (courtesy USA Today) is of Lake Lanier in Cummings, Ga. where the drought has exposed several docks.