Your Life is on the Internet!

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

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

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

Say No to Canadian Drugs!

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

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

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

Yay to Flaxseed!

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

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

Another One Bites the Dust!

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

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

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

Correction to Earlier Story on Stock & Bond Returns

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



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

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



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

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

The Case for Capital Preservation

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

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

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

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


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

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

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

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

Stay Outa Faith Issues!

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

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

Save Your Identity

Some tips I just heard on the Clark Howard show:

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

Stupidity Award

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

Quote of the Day

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

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

Yuck! Say No to Fries!

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

Blood Pressure? Sip this Java!!

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

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

Losing Weight

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

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

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

Where's the Swagger?

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

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

Immigration Policy and Cheap Labor

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

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

Damn Liberals and Iraq

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

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

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

The Source of Wage Losses

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

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

Greenspan's Legacy

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

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

Washington Stalling

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

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

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

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

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

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

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

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

Rosa Parks

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

Sangkeertanam

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

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

Bush in Rummy mode

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

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

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

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

Quotes of the Day: WARNING Politically Incorrect

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

Pasta la Vista

New Rule

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

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

Pay Ball!

New Rule

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

Quote of the Day: Eddie George

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

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

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

How Much for Retirement?

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

Hero Hoagland

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

LIVE STRONG!

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

Live Strong, but also Live with Love and Compassion

Socialism In Action

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

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

Prices Can Go Down

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

Quote of the Day

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

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

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

We Want to Underpay!

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

Brace Yourself for Rough Times!

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

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

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

Seventh Heaven

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

Quote of the Day

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

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

Earthquake Victims

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

Church and State

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

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

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

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

OpenOffice Sucks!

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

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

Tree Climber

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

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

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

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

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

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

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

You're fired!

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

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

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

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

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

Oh Shut Up and Read the Whole Statement!

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

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

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

One more liberal show ...

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

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

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

Get in Shape!

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

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

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

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

Stay Away from the Java?

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

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

Rita Evacuation from Texas

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

Everbank MarketSafe

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

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

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

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

Cramer v Coin Flip

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

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

Chavez and His Oil Games

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

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

Goodbye Simon

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

Born Into Brothels

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

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

I-Bonds

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

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

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

Baghdad Burning

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

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

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

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

Healthcare Costs Out of Control!

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

Bush an Armstrong

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

Brown a Phony?

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

Ouch!

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

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


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


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

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

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

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

Are Hybrids Really Cool?

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

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

Median Price Falls

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

Katrina's Fury

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

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

Spoil the Child and Spare the Rod?

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

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

La Presidente 2008

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

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

So here would be the fascinating races of 2008:

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

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

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

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

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

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

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

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

Lance a Dopie?

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

Fallen Soldiers and Their Moms

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

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

Tenure Clock

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

The Common Man Beats Detroit, Tokyo and Berlin

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

Out of Gaza

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

The Grieving President

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

Goodbye Peter!

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

Ok, so I'm obsessed with Bubble Talk

Here's the latest, this from a Fannie Mae document that can be found here. While there's tons of interesting data, I picked these two charts to highlight, because they represent data I had been looking for.


Notice the rising inventory of new homes - BAD BAD!














Rental vacanies have been rising, suggesting a surplus of homes. While this could be because of the mania of individuals trying to buy new homes, and we might see this number drop as the bubble cools off, the levels are worrying given the level of debt. In my city (Charlottesville, VA), apartment complexes are cutting rents by as much as 30-40% due to oversupply of homes.

Paul Graham site

For those of you who didn't read the comments to the previous post, my friend Sriram had a link to an interesting article at www.paulgraham.com. I also found this article a good read, so I would encourage y'all to surf through the list of articles at that site.

Detroit is Finished!

The US auto manufacturers desperately need a brand overhaul, and a serious analysis of why they are in the mess they are. As a Honda lover, I'll tell you why - quality, or rather lack thereof. But rather than address that as well as the obvious image problem they suffer from, Detroit has chosen to throw employee discounts at every Tom, Dick and Harry. This simply won't work. You will see plenty of enthusiasic headlines like this one - Big Three automakers post double-digit gains: Popular employee-pricing discounts deliver blowout results, but in the end what matters is profits.

According to MSN's Moneycentral, Ford and GM's net profit margin's are 1.5% and -0.6%. Put simply, on average, on that $25,000 car you buy, Ford was making all of 374 bucks after expenses, while GM was actually losing money! Clearly with margins that small, increased volume from employee discounts aren't going to help. No wonder analysts have been revising earnings estimates for the next quarter down - Starmine estimates analysts have reduced Ford's earnings by 57% in the last month, and GM's by an astounding 341%! YOW!!!

Granted, what Ford and GM may be trying to do is get rid of inventory, and this is a reasonable goal. But there appears little plan to what the impact will be on brand value, or indeed how to improve brand value! Detroit needs to think quick, or perish like many a business before.

More Indications on the Real Estate Bubble

This story in USNews further supports the general indication that there is a real estate bubble about to pop. The data is pretty conclusive. I've been amazed in talking to people about how much blind optimism there is in the market!

Add those numbers to the chart shown here, which I got from this article at the InvestmentU.com, and you will see a correction in progress.



For full disclosure, I do own shares of real estate companies - Toll Brothers and MDC Holdings, despite my confidence in an impending crash. I am still trying to determine what an appropriate metric might be to determine when to sell them, but for now they are profitable and successful companies that seem undervalued.

Why A Real Estate Crash Is Imminent!

I am currently reading about the bursting of the tech bubble, and the one think that strikes me, something I have thought about for the last few months, is how similar the present real estate market is to the tech bubble. I didn't believe a crash was imminent a few months ago, when many naysayers were forecasting it. But as crash failed to materialize, many bears became bulls, arguing now that things had changed, that traditional ideas about bubbles were no longer valid. This is the same as what happened in the tech bubble - the early bears missed tremendous profit opportunities, thought to themselves, jeez we must be wrong, and bought into the myth of structural change.

The tough part is predicting when the bubble will pop, and how will we guard ourselves? I don't own any real estate, but when housing markets crash, it will ripple through not only our stock market, but those around the world.

Nonstickware and Cancer

There is now a huge debate on whether compounds in nonstick cookware may be carcinogens (for more, see this story in the NYTimes (free registration required). Some tips to reduce the risks cited by the story:

- "Use Teflon pans at lower temperatures, and never put them on the stove to heat without food or liquid inside." This is interesting, because it suggests I may be doing two things wrong. I often pre-heat the pan before pouring oil (BAD!) and also usually run the range on high to cut cooking time (BAD! BAD!)

- Another solution is to cook the old-fashioned way. If cast iron pans are seasoned and heated properly, very little oil is needed for browning. OK, this didnt make sense to me. Why does it matter that less oil is needed, especially if the toxic compounds are from the Teflon rather than the oil? Or is it that the oil is needed to burn the Teflon (contradicts the previous bullet)

- Greasy food that is heated in a microwave oven in a cardboard container is a potential source of PFOA; take the food out of the container and heat it in glass or ceramic. So reheating your pizza in that cardboard box is OUT!

Hopefully they will figure all this out soon, but it does highlight how little we know about the chemicals we interact with. I'd be interesting in seeing if anyone has been able to determine if we have a higher true incidence of cancer than in the past (I use "true" to distinguish from increased incidence due to increased screening and reporting)

Inefficient Cars

While I am not a big proponent for regulation, I do believe the economy has hidden costs that need to be accounted for by laws and protections. This story in the NYTimes (free registration required) about the EPA holding back a report that suggests that cars today are on average less fuel efficient than in the '80s is tragic and shocking. For all the lip-service we give to environmental issues, the only way the marketplace will adopt clean technologies is if we account for the hidden costs of pollution. That we are failing to do is evident by the fact that for all the succeses of hybrids like the Prius, our roads are being swamped by more and more SUVs and gas guzzlers.

On the topic of hybrids, have you heard of the new Accord Hybrid. This baby has 255 horses on a V6 engine, and is faster than the other Accords on the road. The mileage is a lot lower than the Prius, but Honda seems to be trying to attract customers not traditionally motivated by environmental conditions into accepting cleaner technologies. A link in this posting gives a fascinating look into the thinking of Honda management on issues such as clean technology and fuel efficiency.

Etiquette and Life

I've been quite busy at work, and so never got to post this rant till now, so it's a little outdated. A few days back, the Today show had these silly girls of the lacrosse team from Northwestern University, who wore flip-flops to see the President of the United States! Their defense was basically that they meant no disrespect, while the mom of one of the girls was glad she was comfortable.

I'm sorry, but to me this is garbage ... and symptomatic of a serious problem we have - the Death of Etiquette. I'm sure the annoying person in the restaurant talking on their cell phone doesn't mean any disrespect, nor does the person who doesn't bother to hold the elevator for you. They are just being insensitive, something we didn't used to defend.

What about the bus? On a university bus, I apparently offended a likely feminist, who thought me offering her a seat was chauvinistic, while I have myself shaken my head a little at women who do accept that seat but refuse to consider it worthy of something as trivial as a "thanks". We are all so freaking caught up in our crappy existence we seem to forget that society is a collection of humans, and the decency that exists in society is a product of, well the decency of people in the past!

Ladies, did you really think it was appropriate to see the president in flip-flops? I mean, come on, you aren't worth shit, nor am I, compared to the man who gets to decide if he wants to nuke half the world. You may or may not like him, but for godsakes, he is the President and you are meeting him in the White House. If that doesn't qualify for your best dress, then maybe you are too self-obsessed to be a role model of any kind. It is much for important for me, for one, to have a daughter that knows respect than one that's talented!

The President's and a Woman's Right to Choose

Tim Russert had a clip of Bill Clinton as President saying he would only appoint judges who were pro-choice. That raises the question of why President Bush have the right to appoint judges that were pro-life. Bush won the election in part on the platform of voting conservative judges, and I think it's improper for Democrats to try to shoot the Roberts nomination on anything other than ethical or tempermental issues.

That's not to say that Roberts is anti-choice (his wife runs a feminist organization), or that I am resolved on the issue of abortion. In my early years, I was overwhelmingly pro-choice, and still fundamentally find the argument of women having freedom over their bodies appealing. But after seeing a 3-month ultrasound of a friend, I find it disingenous to deny that abortion is not an allowed killing! Where does a balance lie ... when does life begin ... these are questions I have not been able to answer. I would love to hear intelligent opinion on this issue (please use the comment section to do so).

Idiot Pol

OK, come on, how many of you are sick of idiotic politicians? The latest in a string of fools on the Hill is Rep. Tom Tancredo (R-CO). On a right-wing talk show, our elected representative suggested that if another terrorist attack were to happen, the US should retaliate by taking out Mecca, the holy site for Muslims. Yeah dickhead, nice way to state to the world that the war on terror isn't a war on Islam.

Listen, I'm sick and tired as all else about the failure of moderate Muslims to speak out more forcefully against the extremists, but silly statements like this marginalize those moderates and push the mainstream into the hands of fanatics.

Adversity

I saw the movie 'Marvin's Room' on CBS today. It was quite a good movie, especially since I had found myself recently contemplating adversity. Why do people have to have such struggles in life - from health issues to financial to emotional? This movie, staring Diane Keaton, Meryl Streep and Leo de Caprio among others, was perfect viewing at this time. I had heard 'adversity builds character', but I also realized it so deeply shapes the lives we lead. It forces us out of our complacency, out of our self-obsessed lives of indulgence, to look outside and within.

I recently spoke to an aunt I haven't spoken to in at least 15 years because of concerns with her health. I had thought of calling her before, but it was always, well frankly uncomfortable to do so after all these years. And yet, when hard times are on us, we leave our cushy lives and do things we think we are not ready for. And we always feel empowered when we leave our comfort zones, the freedom from entrapment!

The movie also made me contemplate growing old, growing dependent, death ... all these events we try to block out of our lives. So I'm forcing myself to contemplate these, even though I hope to have a half century or so left in me. Because I feel when we can accept death, we can accept life as it is.

I'd love to hear from my small pool of readers on their thoughts on such matters. Please use the comment form if you feel you have anything to say or share.

Blogs Come Back to Bite You ...

This story highlights the risks of being too expressive in blogs. My own policy is to avoid personal information as much as possible (even if most of my blog audience are acquaintences). I also reserve the right to always change my views at a later time. I used to be a communist in my teens, and stayed a liberal through much of the time, but in recent times have found myself getting more conservative (with age?) on a host of issues ranging from economic to social. But rather than dithering, I view this as a healthy acceptance of new information and a lack of rigidity that is so lacking in so much of our populace. I also recognize that sometimes rheoteric doesn't match reality, so while in principle, one approach may work (say, for example, governments involved in ensuring jobs for the poor), I may one day realize reality is very different (governments are more likely to feed themselves and ensure that the flawed systems that empower bureaucrats remain firmly entrenched!)

Rural Innovators

I was quite inspired by this story of budding innovators in rural India. It's a reminder that through dedication and commitment, we can make a difference, despite the lack of monetary and other resources. Hopefully, some entreupreneur can team with such talent to bring this ideas to the marketplace, rather than them having to rely on some stupid government official's benevelonce.

Horror in London

Tragic events in London! Just when we thought terror was on its way out, it rears its ugly head again. The sad part is that in the early hours since the blast, I was hoping it would be some local group (the French angry at London being chosen, G8 protestors, etc) since the alternative is that the evil Al Qaeda is still strong. Clearly this is a war for the long haul...

Immortality

I read this beautiful quote on Steve Pavlina's Blog:

"Millions long for immortality who do not know what to do with themselves on a rainy Sunday afternoon." – Susan Erz

Ten Commandments

OK, so the Supreme Court has confused us on what it's stand is on the Ten Commandments. It's OK as long as it's purpose is not to promote religion (and who exactly makes that call?) Well, I looked up the Ten Commandments, and here is what I came up with:
The ten statements
1. "I am the Lord your God who brought you out of the land of Egypt..."
2. "You shall have no other gods besides Me...Do not make a sculpted image or any likeness of what is in the heavens above..."
3. "You shalt not swear falsely by the name of the Lord..."
4. "Remember the Sabbath day and keep it holy"
5. "Honor your father and your mother..."
6. "You shall not murder"
7. "You shall not commit adultery"
8. "You shall not steal"
9. "You shall not bear false witness against your neighbor"
10. "You shall not covet your neighbor's house..." (in Exodus, the text reads "... neighbour's house, ... neighbour's wife, nor his manservant..." etc. while in Deuteronomy, "thy neighbour's wife, ... thy neighbour's house, his field" etc.)

OK, let's go through these. (1) is a direct violation of Church and State, since people not of Judeo-Christian faiths do not believe it. Ditto with (2), which conflicts with my Hindu faith. Also, I'm curious what I am supposed to imply about the quality of justice I can expect from the court if I have happened to commit adultry. These stipulations are great for individuals, but I believe out of place in a secular court. What purpose do they serve, other than for Evangelicals to feel they have fought for their faith? (Incidentally, one of the drivers in the 10C movement is supposed to be (6), which they then want to use to ban abortion!)

Eminent Domain

OK, so I've been slacking off posting my views on many political topics, in part because I've been quite busy. But an e-mail from a friend pricked my blog consciousnes, so here are my two cents on recent Supreme Court decisions (this and the next post)

As you may know, the Supreme Court ruled that local goverments can seize personal property for private development. They could always get your property for building a new highway, but now they can force you to sell your property for the new mall or stadium. This is an outrage, and is un-American! Being an immigrant from a country where bureaucrats have far-reaching powers, I know all too well of the opportnuties for abuse. Why does the court insist on sabotaging our rights?

On a related note, do read about musician Ry Cooder, of 'Beuna Vista Social Club' fame, talking about his new project, Chavez Ravine, which highlights this precise abuse of power.

Greenspan on US-China Trade

On a friend's recommendation, I watched Greenspan's testimony before the Senate Finance Committee on US-China trade relations. Folks, if you want to watch the Maestro in action, this is as good as any. The link to the C-Span video, at the time of this message, is here. (The date of the video is June 24, 2005). While silly politicians focus on misleading the public, Greenspan argues why tarrifs on Chinese imports will not help US jobs industry. It was quite revealing to listen to his wonderful exposition on the nature of the relationship, as well as his wit. I would recommend "fast-forwarding" the meaningless speil of the politicians and go straight to the Greenspan testimony and then Q&A.

Wake up to Reality!

This story really had me chuckling, because of the suggestion from one esteemed professor that universities should de-link from the market, and strive to avoid a pay difference between an engineering professor and an English professor. Wake up and smell reality... any idea that suggests ignoring the marketplace violates basic economic principles, and is destined to FAIL HORRIBLY!

Two Great Blogs and One Super Site

OK, here are 2 blogs I love:

Postsecret is a fantastic idea - it's a project where people send in anonymous postcards sharing secrets they haven't told anyone else. Some seem so freaky, you almost wonder if they are real!

Chromasia is a wonderful photo blog. The pictures are breathtaking, and if you read the comments, you will get more details about the exposure, film, etc.

But my favorite site is ...
PhD Comics is a fantastic (make that FANTASTIC!) comic strip by a talented bunch at Stanford, and is a hilarious (and sometimes dangerously accurate) account of graduate school! OK, if you were thinking of coming to grad school, please do not visit this site!!

Truman Show

I watched 'The Truman Show' the other day. Very nice movie starring Jim Carrey. I enjoyed the deep underlying message and was wondering if others caught it too. If you watched the movie, please comment on the movie and the hidden message.

Viva la Honda!!

Being something of a Honda man myself, I found this article about Honda' s philosophy and obsession with gas mileage fascinating. It almost seems unbelievable that any company could be so committed to certain core values, even if they do not obviously result in greater profits!!

Welfare Europe

I received this as part of a daily investment newsletter I get. While I don't agree with all his views, especially on gold, it did make for an interesting read! I especially liked the one paragraph on Third World aid, which I have added emphasis to below.


Dear Friend,

It must pain my Berlin-born colleague to be on the sidelines during a big week for dynamic markets. From Brussels to Beijing, free markets are routing central planners and French socialists. But who will win the war over Europe's economic future, the planners or the Anglo-Saxon market dynamists?

It's great to be in London as the British and the French square off for another round in their centuries-long hate affair. The political match of the day is in Europe. But it wouldn't surprise me to see similar tensions in China by the end of the year. More on that later.

Here in Europe, French President Jacques Chirac is trying to distract the French people from his political failures by doing what any good Frenchman would do - blaming the British.

The whole argument revolves around the complex, arcane, and essentially socialist nature of the EU. France gets big farm subsidies from the EU. Chirac wants Britain to pay French farmers so that all of Europe might continue to enjoy inflated food prices. As an American who does not pay taxes to the EU and enjoys French food, my stomach tells me to side with France.

But as an advocate of free markets, less regulation and lower taxes, my head tells me to side with Britain. The French never expected to be having a debate over the future of Europe. The constitution was supposed to silently impose a massive bureaucratic super-state across the Continent, to be meekly ratified in those countries where citizens were actually trusted with a voice and a vote.

Now that the document is dead, Britain, which takes over the rotating presidency of Europe on July 1, can ask a much more fundamental question about "ever closer union" in Europe. Will Europe be a political union with a common foreign policy, common defense and a common, reflexively anti-American position? Or will it be a federal Europe that ensures national sovereignty in politics and foreign affairs but embraces freer trade and open markets?

The debate is going to be a doozy, mostly because leftist governments all over the continent have a lot to lose. The EU and the euro have not delivered the promised goods of integration, namely jobs and incomes. How could they, when labor laws and restrictions on competition in services remain in place?

Europe isn't growing economically because its political elites refuse to give up the dream of a socialist super-state. Whether their citizens agree with them is another matter. But the clash between the French and British over the European budget is surely just the opening skirmish in a summer-long battle over Europe's future course.

Specifically, Chirac wants the British to give back all or part of its $3.1 billion "rebate" from the European Union. Britain is a net contributor to the EU's budget, the second largest, in fact. But Chirac has shifted the debate to whether or not Britain ought to get a rebate. Blair has linked this with a renegotiation of Europe's common agricultural policy (CAP), which so generously benefits the French.

The entire affair comes as EU leaders meet in Brussels on Thursday to pass a seven-year budget. The EU wants to spend over 871 billion euros over the next seven years. Yet 42% of the annual budget currently goes to agricultural subsidies. That's right: 42% of the EU's budget goes to 5% of Europe�s population, one fifth of whom happen to be French farmers.

If that seems inequitable, that's because it is. France is certainly one of the breadbaskets of Europe. But how do massive agricultural subsidies in Europe, for example, relieve poverty in the Third World? Instead of debt relief, couldn't Europe and the United States do a lot more for the developing world by not subsidizing domestic agriculture? This would allow developing countries to compete and profit from agriculture, and it would lower global food prices.

Of course that would be pragmatic and effective. Much of what passes for policy in Europe is posturing and moralizing, which requires less real effort. Yes, politics is politics, whether it's Washington or Paris. Expect to hear a lot more heated rhetoric this summer. EU Trade Commissioner Peter Mandelson is already calling the British "neo-Thatcherites", as if that were something to be ashamed of.

Will the whole European project unravel? Well, the individual national economies are certainly not going to disappear overnight. But the political bonds could. The real question is, what will happen to the euro?

Dollar bear that I am, I take two observations away from the euro�s recent plunge. First, the dollar is still the world�s reserve currency. It is far more likely that the euro will collapse in the next year than the dollar.

Second, currencies put forth by debt-loaded governments are bad investments, period. The euro's prospective doom is an object lesson for dollar bulls. Debt-backed paper currencies are not long for this earth.

Christoph might not agree with me on this one. But I don't think he'd grudge me saying that the best advice you can take from Europe�s trouble and the euro�s sad state is simple: buy gold.

Cordially,
Dan Denning

Maya, Step Aside!!

Well, I'm back, with my first posting in 112 days!! YOWSA! It's been a personally turbulent and yet very revealing time for me, and so, as much as I'm itching to discuss the horrendous economy of that obese welfare state, Germany, parental rights and many other political issues, this posting shall be about my own personal experiences in the last several months.

I was on a cruise when I noticed the captain executing a particularly sharp maneuver to avoid what seemed like an innocuos little piece of ice. My protestations on its size relative to the big ship we were on, were brushed aside by the captain, who informed me that what lay ahead was a huge iceberg, much larger than the visible nose above water. Unconvinced and sure my life was in the hands of an apparently drunk or incompetent captain, I flung myself overboard into the freezing waters.

Fiction? Well, not quite. In the face of adversity over the last few months, that is precisely how I behaved. Rather than trusting the Captain who charters the course for all our lives, I blinked in tough times and embraced depression, booze and cigarettes. Sled down a downward spiral. Promised never to go to a temple till He "fixed things". Allowed my mind to convince me that things sucked, people were bad, and life gloomy.

Until one day I realized such a life was not worth living. But no, I didn't contemplate suicide. Instead I fought, fought with my mind, refusing to accept its grim prognosis. Fought to hold on to the values I cherished.

In time, I came to learn of things I didn't know of, that made me exclaim, "Lord, you're a genuis!". That He may be. But what about me? I have experienced enough in life to always trust him, and yet I keep getting enticed by Maya, like a distracted saint dropping his rosary upon the call of a luscious woman. This is the only tragedy in our lives - from it springs all else. If only we could always focus on what's real ....

So I'm back from the abyss, vowing again to learn from my mistakes, promising to be stronger and more trusting. Promising to expect less from people, and leave it to Him to guide my life where it needs to be. Can I do it? Ah, that is the big question!

Footnote:The Hindu and Buddhist faiths believe that this material world is an illusion of our mind, refered to as Maya, that prevents us from realization that we are Perfect and Complete, indeed the verisame God that we worship. Our path to "eternal life" then is to quiet the mind and see our unity with the Supreme, to move past entrapment in this artificial world ... to wake up as the One, just as Keanu Reeves had to in the Matrix!