AugustFilet

Bleg: arrghh!

2008-12-05T08:16:00.000-08:00

You know? I thought my stock portfolio was recession proof. I'll describe my holdings, but no names: I'm still not sure if I'll discuss specific stocks next year or not, but I sure as shoot won't recommend stocks that I own. (For a number of reasons.)

A major bank. (One that has received multiple bailouts, BTW.)
A high-yield equity firm.
A discount airline.
A brokerage house.
A discount retailer.

In a recession, folks will still need to borrow money. And seek out high-yield investments. And fly cheaply. A sell stocks. And buy stuff at good prices. Where am I going wrong?

got whiskey?

2008-12-05T08:04:00.000-08:00

Let me translate the November jobs number for you:

The real number? Of 533,000 lost jobs? In a single month? It out-does any Beyond Worst Case Scenario numbers that would have gotten your Favorite Loony Economic Forecast Analyst laughed out of the room a day ago.
Few employees in my company -- and only one employee in my department -- were alive when we lost more jobs in a single month. Reported monthly job losses have only looked this bad 3-4 times. Ever.
Leading indicators are bad. Lagging indicators are bad. Concurrent indicators are bad. This is not a case of the news media exaggerating the downturn to sell advertising space. In retrospect, the news media have acted with restraint.
"So what do we do?" I've heard one idea that both (a) doesn't involve a dollar sign, an integer, and twelve zeroes, and (b) might actually work, and (c) actually addresses more than one problem. A one-page law, effective immediately: you buy a home, you're a U.S. citizen. You own a home, you're a U.S. citizen. You're shopping for a home, here's your visa. Come up with your own clever acronym. I'm off to get hammered.

For that matter, postmodern postmodernism

2008-12-03T11:17:00.000-08:00

Joe [the Plumber] reads economics:
The Theory of Money and Credit (Ludwig von Mises): "It brought monetary theory into the mainstream of economic analysis. It is important reading for these troubled times."
My theory is that someone in Ron Paul's camp told him to say that. Here is the full list of his favorite books.

Thus Spoke Tyler Cowen. Read the rest here.

Postmodern terrorism

2008-12-03T11:06:00.000-08:00

The Mumbai terrorists may have pumped themselves full of drugs to keep going during their murderous three-day rampage.

Indian police sources say tests on the bodies of dead Islamic fanatics revealed traces of stimulant drugs.

One said: “We found injections containing traces of cocaine and LSD left behind by the terrorists and later found drugs in their blood.

“There was also evidence of steroids, which isn’t uncommon in terrorists. These men were all toned, suggesting they had been doing some heavy training for the attacks.

Read the rest here.

Instamusicpunditry

2008-12-02T12:31:00.000-08:00

"Daddy? Can we hear something else?"
--My four-year-old son, Sunday night, while we listened to The Flying Cup Club by Beirut. You might recall that I awarded -- and would still award today -- the LP with Best of 2008.

When does one say "ethical dilemma," and when does one say "moral dilemma?"

2008-12-02T09:42:00.000-08:00

Let me take a crack at it before I simply hyperlink to dictionary.com.

***SPECULATION ALERT***

Ethics is the study of moral dilemmas, or, more precisely, the system through which moral dilemmas are discovered and resolved. Meaning the general term "ethics" is analogous to a judicial system, while the specific term "moral dilemma" is analogous to an individual court case. Meaning an "ethical dilemma" is sort of a meta-dilemma, or a dilemma regarding dilemmas. To continue the judicial system analogy, an ethical dilemma is analogous to a dilemma inherent in the court system itself.

An example might illustrate better. "Should I eat turkey on Thanksgiving Day or not?" is a moral dilemma. "Is eating turkey on Thanksgiving actually a moral dilemma or not?" is an ethical dilemma. Who knows. I'm probably way off. Let's take a look.

***SPECULATION ENDS***

Who knows if I was right or not? "Ethical" defined: "Pertaining to or dealing with morals or the principles of morality; pertaining to right and wrong in conduct."

"Moral" defined: "Of, pertaining to, or concerned with the principles or rules of right conduct or the distinction between right and wrong; ethical: moral attitudes."

Clear as mud?

Another heartbreaking piece from Christopher Hitchens

2008-12-01T09:51:00.000-08:00

Do not refer to "Bombay" as "Mumbai." To do so colludes with...

...the Hindu chauvinists who had tried to exert their own monopoly in the city and who had forcibly renamed it—after a Hindu goddess—Mumbai. We all now collude with this, in the same way that most newspapers and TV stations do the Burmese junta's work for it by using the fake name Myanmar. (Bombay's hospital and stock exchange, both targets of terrorists, are still called by their right name by most people, just as Bollywood retains its "B.")

This may seem like a detail, but it isn't, because what's at stake is the whole concept of a cosmopolitan city open to its own citizens and to the world—a city on the model of Sarajevo or London or Beirut or Manhattan. There is, of course, a reason they attract the ire and loathing of the religious fanatics. To the pure and godly, the very existence of such places is a profanity. In a smaller way, the same is true of the Islamabad Marriott hotel, where I also used to stay. It was a meeting point and crossroads for foreigners. It had a bar where the Pakistani prohibition rules did not apply. Its dining rooms and public spaces featured stylish Asian women who showed their faces. And so it had to be immolated, like any other Sodom or Gomorrah.

Read the rest here.

Origins of the meltdown?

2008-11-29T05:50:00.000-08:00

During the fury and carnage of World War I, little thought was given to two shots fired from a small pistol on a leafy suburban street in Sarajevo that killed Archduke Ferdinand and his wife. Gavrilo Princip acquired fame as the man who started World War I only after the upheaval was over and historians had the leisure to trace causes from effects.

Years from now, when the tumult of World Depression II (what is known today as the Great Depression will, like the erstwhile Great War, acquire the number I) seems to lie in the past, an accurate account of its beginning will place the assassin's pistol in the hand of Charles Schumer, Democrat Senator from New York and Chairman of the Senate Banking Subcommittee. He fired the shots on June 26, 2008 in the form of a public letter he sent to the Federal Home Loan Bank Board of San Francisco and other regulators. His target was Indymac Bancorp of Pasadena, Cal. and, as must have been his intention, he killed it. After the largest bank run since the Thirties resulted from his stunt, federal regulators took the bank over and shut it down.

Keep reading here.

Building a case against high fructose corn syrup

2008-11-29T05:48:00.000-08:00

Step one, as is always the case, is to bring out the rats...

If you suspect rabies, just go get the shots

2008-11-29T05:36:00.000-08:00

We've all heard that the treatment for rabies is a series of two, maybe three dozen shots, all in the abdomen, all terribly painful. Apparently now it is only five shots, and apparently it isn't that painful. From Ann Althouse:

Jogger runs mile with rabid fox locked on her arm.

After the fox bit her on the foot, she decided to catch it and bring it in for testing. This led to additional biting. That was a bad move. She had some hope of avoiding rabies shots, if she successfully brought the animal in for testing and it was not rabid, but do you know that if you are bitten badly enough, the rabies shots might not save your life? I learned this from expert doctors who interviewed me at the UW Hospital after I was bitten by a bat. I wanted to know if the shots ever failed, and they cited some cases in which a person received large, tearing bites from a wolf. Don't tangle with a wild animal. Just get the shots. They are not that bad.

Track of the day

2008-11-28T16:03:00.000-08:00

"Stocks are now cheap, but not exceptionally so"

2008-11-28T07:58:00.000-08:00

Follow the logic of that statement here.

Airport malaria

2008-11-28T06:15:00.000-08:00

It's not just for the black helicopter crowd anymore.

(Yes, yes, I know. My "environment" tag is still misspelled.)

Some common sense on credit default swaps

2008-11-28T06:12:00.000-08:00

Megan McArdle gets email:

Without going into details (my employer would not be happy), let me say that I work at a firm deeply involved in the CDS wing of the credit crisis. And while I partly agree that CDS are a sign rather than a source of the current market ills, I think you would also agree that that's perhaps downplaying their role. They've had an immense exacerbating effect, by prompting a lot of government action (like the AIG acquisition), and, most importantly, by hypercharging confusion, chiefly because CDS are so poorly understood. As someone with a front-row seat to this crisis, let me say that there are people who trade CDS and do not understand crucial details of contract terms and bond seniority, and I've often seen trading by major banks that takes place in ignorance of recent, public and relevant corporate news. Which is precisely what you'd expect from shops that use CDS for speculative and not hedging purposes.

Read the rest here.

No comment.

2008-11-28T06:10:00.000-08:00

Ladies and gentlemen, our war on drugs...

"Murder may have surpassed diabetes as the chief cause of mortality in this border city."

2008-11-28T05:56:00.000-08:00

I've been to Juarez. It's literally the only city in the world where I've only left the hotel to eat or work. I wasn't frightened, per se. The place just didn't feel right. As it turns out, I should trust my instincts:

Currently, Mexico's most violent city is Juarez, where nearly 1,300 people — including 60 police officers — have been killed so far this year.

[...]

Five reporters have been murdered [in Mexico] so far this year — casualties in a war between rival drug cartels for influence and territory.

The world is a complicated place, next in a series

2008-11-28T05:41:00.000-08:00

It was either September 11 or 12; my parents made off to a local blood bank to donate blood. They came back and told an odd story: a group of overly vocal Muslims showed up at the blood bank with television cameras, threatening to shoot footage of any Arab or Muslim being turned away from donating blood.

Recall that tensions were high. My folks had already written the group off as some sort of terror organization. It turns out that the film crew represented the Holy Land Foundation, a local Muslim charity. I wrote off my parents' write-off as old school bigotry. Unenlightened claptrap. Just more damned tribalism.

The truth is, unfortunately, always more complex than you think:

A Muslim charity and five of its former leaders have been convicted in Dallas of giving more than $12 million to support the Palestinian militant group Hamas. The Holy Land Foundation for Relief and Development was found guilty of all 108 charges.

Trimming the fat

2008-11-28T05:35:00.000-08:00

If the charge of the Federal Reserve is price stability -- and its corollary, shorter and fewer financial panics -- and if the Federal Reserve has failed us in that regard, do we really need the Federal Reserve? After all, the country survived until 1913 without a central bank.

Richard Rahn, senior fellow at the Cato Institute and chairman of the Institute for Global Economic Growth, argues that no, we do not need a central bank.

Some brief, obvious, lame excuses for...

2008-11-28T05:17:00.000-08:00

I've been busy.
No one wants to read about anything other than the meltdown, and the meltdown is too depressing. (For our meltdown coverage, click here.)
Notwithstanding a few marquee releases this week, indie music has fallen off the cliff since early summer. I had a great time serving as your impromptu music critic, but dancing days are gone again.
My other personal interests are few and painfully normal: parenting, training, books, film, and the ever-so-occasional strip club. Who wants to read about any of those?
I'll try and do better.

I won't.

2008-11-25T12:32:00.001-08:00

DeVotchKa "We're Leavin" from Marshall J. Baumgartner on Vimeo.

A stitch 'n time, redux

2008-11-21T09:57:00.000-08:00

As a follow-up to this post, in the months that have passed I've found that simply keeping my breathing in time with my left foot has made all the difference. I don't switch right-left-right anymore. I just keep everything on the left side.

I'm sure there's a perfectly legitimate scientific reason for all this. Is the liver on the right side? The pancreas? The spleen? The large intestine? The fate of the auto bailout?

Harsh words from Althouse, Ann

2008-11-21T09:52:00.000-08:00

"HuffPo is aghast that turkey-killing doesn't faze Sarah Palin. Deal with it, you candy-asses."

Do you eat with that mouth?

I am, of course, kidding. As the never-boring Ms. Althouse reminds us, "if you eat meat, something like that is going on in the background for you too."

A compelling aspect of the auto bailout

2008-11-20T07:37:00.000-08:00

(Or: Take the AR! out of NASCAR!)

I only caught snippets, and only of the first day of hearings, so I'm a bit fuzzy on the details, but one of the auto makers' CEOs mentioned an interesting idea. Call it (this is my term, not his, but I believe that I'm close) a National Automotive Science Commission. Part of the $25 billion disbursement would be set aside for public-sector fuel efficiency research. And by "public sector," I mean to say that any U.S. auto maker would be able to draw from their findings.

Not that this changes my mind, but it's an interesting idea.

UPDATE: Never mind.

A "Refuge from Everything" post

2008-11-19T08:55:00.000-08:00

...he sailed off through night and day,
and in and out of weeks,
and almost a year
to where the wild things are.
--Maurice Sendak, Where the Wild Things Are

Beautiful.

Boring. Harmless. Mercifully short.

2008-11-18T11:16:00.000-08:00

Season (Six? Seven? Eight?) winner of American Idol (Wayne Cook? David Hicks? Daughtry Isaacs?) has released his self-titled debut, David Cook. (Aha! So close!) It falls somewhere between a yawn and a stretch.

Mein Gott but the boy can sing, though.

Meltdownomics

2008-11-17T08:32:00.000-08:00

Probably every brokerage house and money manager in the land is sending out mass mailers to their accountholders, attempting to stave off further panic by offering a few words of reassurance. The following one made its way to my inbox. I present it with only one comment, and without analysis or motive. My comment? It's pretty long:

It has been a difficult seven weeks for equity investors. Markets sold off rapidly worldwide. Virtually no equity asset class was spared as many investors lost control of their emotions (panic), some lost control of their assets (margin calls and/or redemption requests), and some lost control of both.

One of the most disconcerting aspects of the current correction is the speed at which it occurred. From September 26 through October 27, the S&P 500 declined -29.91%. At that point, the S&P 500 had fallen -41.17% year-to-date. By comparison, the market declined almost -90% during the Great Depression. The doomsday comparisons heard on the news are not accurate.

Central banks and governments around the world have responded forcefully to the credit crunch. Although many actions were debated, approved, and/or implemented just a few short weeks ago, they are having positive effects.

Markets are being flooded with liquidity to be sure the banking system remains adequately capitalized. Short-term interest rates have declined dramatically. The commercial paper market (where large companies frequently go to finance short-term borrowing) has seen the volume of issuance increase +1,000%. The corporate bond market also is improving as companies with good financials have been able to resume longer-term borrowing by issuing bonds. The credit freeze is thawing – it just takes some time.

Developed countries are now turning their attention to fiscal policies to stimulate the global economy. The UK, Japan, China, and Germany have announced stimulus packages. The US and other countries undoubtedly will follow. The G-20 countries met in Washington this past weekend to discuss their response to the credit crisis. In addition to stimulus packages, they likely discussed greater standardization and transparency in the global financial system. Allegedly, the UK floated the idea of a global tax cut to reinvigorate the world economy. The idea of using lower taxes to spur growth and recovery may be gaining traction. On Friday, Congressman Charles Rangel announced he would propose a reduction of US corporate tax rates by lowering the highest marginal rate from 35% down to 28%.

Last week, Secretary Paulson announced that he was abandoning the idea of using bailout funds to purchase toxic debt and remove it from the balance sheets of financial institutions. Although some are decrying this as “bait and switch” I am confident that the money is better used in the consumer-oriented, securitized debt markets that support lending via auto loans, student loans, and credit cards. The government has been successful in using taxpayer money to prime the pump in other parts of the credit markets and it should be able to do the same in these important areas. Banks have used bailout money to reduce their leverage and strengthen their balance sheets. This has successfully avoided a run on the banks but I think Paulson is now targeting a different area to encourage more lending and attract more private capital. Admittedly, it appears as though Treasury is making this up as they go along, and that rattles markets temporarily, but I believe it should result in improved policies and programs. There is no need to further capitalize banks that are now healthy. They can keep the mortgage-related assets on the books and let them pay out over time, or find a market for the purchase and sale of these troublesome assets. This might also encourage the institutions to find new leadership for their boards and/or executive teams.

On Friday, the Federal Reserve, the Commodity Futures Trading Commission, and the SEC announced their goal to have at least one public exchange in operation to trade credit default swaps (“CDS”) by the end of this year. This is important as the CDS market currently lacks transparency and liquidity. Removing this uncertainty and providing transparent price discovery to value these assets would help restore confidence in the capital markets. The creation of this new marketplace may be delayed beyond the December 31 target date but hopefully will begin operation soon.

Despite cries that the US Dollar would never recover, the dollar has rallied substantially over the last few weeks. It has re-emerged as the currency of choice as investors seek safety. Likewise, fixed income investments issued by the US Treasury have not been shunned or sold off in any way. Instead, record demand has been seen. Some investors are accepting annual yields as low as ¼ of 1% to hold short-term Treasury obligations. The doomsday predictions for American currency and debt have been wrong.

Energy prices have plummeted. Crude oil prices have fallen more than 60% since July. Gasoline prices have fallen dramatically. This is a big boost for consumers as a $2 reduction in gasoline prices frees up more than $40 billion per year that can be spent elsewhere in the US economy. Families and businesses will reap huge savings (possibly in excess of $200 billion) from the decrease in overall energy costs. Inflation fears that were so prevalent just six months ago have dissipated entirely as commodities prices have declined across the board.

Although it has been largely overshadowed by politics and/or fear of the unknown, there has been other positive economic news. There are companies that have reported healthy earnings and some have exceeded expectations. In this very negative environment you probably did not hear much, if anything, about the good earnings posted by companies like Johnson & Johnson, Fluor, and Wal-Mart.

Fine, healthy companies are trading below book value and some are even trading below the value of their cash and cash equivalents. Price/earnings ratios (P/E ratios) have fallen to multi-year lows around the globe. With valuations so low, it is not surprising that investors like Warren Buffett have been buying. As long as you have time to wait for the next round of returns, it is a low-risk environment to be an equity investor.

Both the pace of housing foreclosures and the inventory of unsold homes have declined as lower prices bring more buyers into the marketplace. Areas of the country that saw home values double in five years and then fall by about one-third when the housing bubble burst have seen housing sales accelerate significantly.

Approximately 68% of Americans currently own homes. That percentage rose to a high of almost 70% at the height of the housing bubble. Historically, approximately 65% of Americans have owned homes. That equates to a difference of about 4 million homes that will have to be absorbed into a system of approximately 80 million homes. Very doable, it just takes some time.

The unemployment rate has risen to 6.5% and likely will continue to rise until several months after the recession ends. Over the last 30 years, the average annual unemployment rate has been approximately 6.1% (the high point was about 10.8%). During The Great Depression, the unemployment rate rose to 25%. That is not at all likely to happen during this recession.

GDP fell -0.3% (annualized) during the third quarter and is expected to contract by -1% to -2%. During the Great Depression, GDP fell by -50%. Again, the doomsday scenarios are not appropriate.

More than 40% of domestic market capitalization currently is sitting in cash. As is always the case, those holding cash soon will realize that it is simply too expensive to remain in cash (interest paid on cash balances is less than inflation and less than the long-term returns on equities). This money inevitably will flow into the capital markets and drive up equity prices as these investors chase returns.

The activity that took place in the markets on Thursday was very encouraging. Seeing the lows re-tested, with a large bounce up afterward, on heavy volume, tends to indicate that a bottom may have been reached or will be reached soon. Given current valuations, the depth and behavior of the current decline, and the improvements that are taking place in the credit markets, it appears that the worst may be over.

As markets proceed through this correction, please keep in mind that lower equity prices do correlate to more volatility in the capital markets but more volatility in the capital markets does not correlate with lower expected returns on equity prices in the future.

As is the case with all significant corrections, this one is disconcerting, depressing, and scary. Thankfully, it is only temporary.

Petrofied!

2008-11-17T07:17:00.001-08:00

Apparently stock markets in Russia have been halted 30 times since September 2008.

In case you haven't read a word of news in the last 14 months, analysts credit the global downturn, destruction of oil demand, and general mass investor panic with the slide in Russian equities. A disproportionate percentage of which, incidentally (or not), are owned by foreigners.

The great equalizer

2008-11-14T11:45:00.000-08:00

The election -- then the financial crisis -- kept me from blogging much about political philosophy, which was supposed to be one of the original subjects. The nature of rights, the nature of government, the morality of laws (for that matter the study of morality): these are what I originally wanted to write about. Not whether or not John Edwards was a dog.

So here is a question: if the battle is won, if free K-12 education is a common good, why is university education also not a common good? Is it not inconsistent that K-12 should be universal and college should not?

Depending on the responses, both on and offline, I may examine this one further.

Trading fees on the rise

2008-11-14T08:03:00.001-08:00

By the way? My answer to the poll directly to the right? To whether or not we are witnessing the end of buy-and-hold investing? Is "not just yes, but hell yes."

Poll numbers notwithstanding, apparently a few of you agree with me.

Schwab handled 14 percent more trades in the third quarter than a year earlier, while second-ranked Fidelity Investments processed 19 percent. Activity at Ameritrade rose 6 percent, and transactions fell 1 percent at E*Trade. A year after the slump in technology stocks began in 2000, trading slowed 29 percent at Schwab, 11 percent at TD Ameritrade and 35 percent at E*Trade.

Mutual fund purchases are a low volume, low margin, but high stakes revenue source for brokerage firms. Mutual fund purchases also represent the quintessential buy-and-hold strategy. Individual stock purchases are a higher volume, higher margin, but lower stakes revenue source. Maybe it's time to buy shares in Ameritrade.

The rise, fall, and rise of equity seasickness

2008-11-13T13:45:00.000-08:00

Stocks erased three days' worth of losses (and about a week's worth of losses in my portfolio), in unbearably volatile trading today. The Dow Jones Industrial Average bounced erratically within a 911 point range. Investors would be forgiven for taking precisely that number and dialing it into their telephones.

The Dow closed up over 550 points, or 6.67%. Similar indices closed up similar amounts. Exxon Mobil alone added 10% to its (now) $383 billion in market capitalization. Sweden's 2005 GNP didn't exceed that latter value in all of 2005.

Far from receiving this as good news, the present reporter bemoans the return of the Wild Swing. Wild Swings are bad for baseball. They're bad for golf. They're bad for prizefighting. We'll see if it's any different for the stock market.

Believe it or not, I never really fell for this one

2008-11-13T08:58:00.001-08:00

The whole "Sarah Palin didn't know that Africa was a continent" thing? A hoax.

Next time, remember that stories like this always come with audio backup. Imagine the soundbite: a vice-presidential candidate fumbling a World Geography 101 question.

The certainty with which this thing went viral really should be a national embarrassment. It won't be, but it should.

Why is there more traffic in the evening?

2008-11-13T06:26:00.000-08:00

Logic says that the same number of people going to the office in the morning would leave the office some 8 hours later. So what gives? Some possibilities:

Part time employees start their shifts later than we do, but finish at the same time.
"Attention K-Mart shoppers: K-Mart is not open yet." Housewives, househusbands, students, and those of us out of work simply do not leave the house until later in the day.
Employees are more apt to leave early than to come in late.
There are roughly the same number of cars, but something about evening driving is more apt to cause traffic than morning driving.

# 3 is not likely, and # 1 is not likely to have that much of an impact. # 2 is limited in one respect: housewives, househusbands, students et. al. are able to avoid high-traffic times of day. # 4 gets my vote, with a dash of # 5, which is "who the hell knows?"

Two new polls.

2008-11-12T09:24:00.001-08:00

Make your voice heard, young grasshopper...

Top society/culture stories of the year

2008-11-12T08:48:00.000-08:00

Submit now for a year-end top 10 list.

The skunk that went up the hill and fell down the stairs

2008-11-12T08:42:00.000-08:00

Sometimes, and it probably isn't often, but the only way to salvage your day is by watching a skunk go ass over teakettle down a flight of stairs.

See?

Six more weeks at this rate and the Dow 30 stocks will have no market capitalization whatsoever.

2008-11-11T14:29:00.000-08:00

As headlines go, this one is logically hollow, unnecessarily snarky, and economically illiterate, I know. But still. It felt good to type. All this bloodletting is really starting to get to your intrepid reporter.

A continuum from autism to schizophrenia, with all other brain disorders in between!?

2008-11-11T11:49:00.000-08:00

Whoa.

Dr. Crespi and Dr. Badcock propose that an evolutionary tug of war between genes from the father’s sperm and the mother’s egg can, in effect, tip brain development in one of two ways. A strong bias toward the father pushes a developing brain along the autistic spectrum, toward a fascination with objects, patterns, mechanical systems, at the expense of social development. A bias toward the mother moves the growing brain along what the researchers call the psychotic spectrum, toward hypersensitivity to mood, their own and others’. This, according to the theory, increases a child’s risk of developing schizophrenia later on, as well as mood problems like bipolar disorder and depression.

In short: autism and schizophrenia represent opposite ends of a spectrum that includes most, if not all, psychiatric and developmental brain disorders. The theory has no use for psychiatry’s many separate categories for disorders, and it would give genetic findings an entirely new dimension.

Source. If you follow one AugustFilet link this year...

Atlas, and everyone else, shrugged

2008-11-11T07:56:00.000-08:00

I was going to post this yesterday. I didn't finish the dispatch before a meeting, and today the point seems moot:

Some opponents of the auto industry bailout voice their opposition in this way, or in something close to it: "Detroit has spent years offering one bizarre and inexplicable product after another, be it cars we do not want, cars we cannot maintain, cars we cannot afford, or cars we could not afford without tax breaks. In short, Detroit has offered diseconomy. To bail the auto industry out now would simply prolong the diseconomy. It is best to let the manufacturers fail and allow new car suppliers to rise in their place."

But this is exactly what opponents to the Wall Street bailout wrote weeks ago. The only problem is that the "bizarre and inexplicable products" in question were complex financial instruments that had no tires to kick and no engine to fire up. Threats of job losses and ripple effects were no more or less real with the Wall Street meltdown. We only believed the worst because we were [sic]

That is where I stopped typing yesterday. I would have resumed, but today I learn that the Wall Street bailout is not even working as legislated. As directed by law, the Treasury Department was to buy up bad paper at cents on the dollar. This way the banks straddled with bad debt would improve their balance sheets, and be able to start lending again. Uncle Sam, which has a longer time horizon than Uncle Owen, could hang onto the bad paper until it became good paper. The banks would win, the borrowers would win, and the taxpayer would win.

But apparently what the Treasury is doing is simply making "capital injections."

Thumbama debates Thumbcain

2008-11-10T14:31:00.000-08:00

I've yet to vet this.

Two trillion.

2008-11-10T11:14:00.000-08:00

Reason Magazine does the math and comes up with: $2,063,800,000,000.

Although she discounts the Inverted Interest Rate Orgy intepretation, Megan McArdle does have a point nevertheless. If your system suffers a two trillion dollar hiccup every now and again, something is going on with your system.

Department of Fleeting First Impressions: Statingrad Edition

2008-11-10T11:00:00.001-08:00

Every time I read a headline about the Jupiter study (executive summary: take cholesterol-lower drugs no matter who you are), I think that "Statin" actually says "Stalin." Imagine my confusion:

Why is the transition going so amicably?

2008-11-10T08:00:00.001-08:00

Why is the transfer of power from the Bush administration to the Obama administration going so smoothly? Some, and I do not exclude myself, will figure that news outlets are exaggerating the point. But for purposes of an interesting discussion, say they aren't. Say the transition is going just as the media says it is. Why?

As always, we pick the low fruit first and climb gradually to higher rungs:

Silly rhetoric aside, practically speaking there is not a dime's worth of difference between the two, so why wouldn't there be a smooth transition?
President Bush has had it up to here. "You want this mess? You got it. You want fries with that? How about a foot rub?"
President-elect Obama is the consummate schmoozer, and as the saying goes, you schmooze, you don't lose.
Transitions always go like this...
(A corollary to # 3) ... and since the media is so deeply in the tank for the president-elect, someone finally noticed.
President Bush is, as about twelve people are still saying, an upstanding guy and a loyal American, one who is still in love with the process. And since the process includes a peaceful transition of power, let's give them an exceedingly peaceful one.
President Bush is rubbing his hands together, cackling, and saying in his best Emperor Palpatine voice, "It's all going as according to plaaaaaaaaaan!"

Which is your favorite? And which one is the most likely explanation? Or propose one of your own.

Fred's Addiction

2008-11-08T05:25:00.000-08:00

A silly little game.

Do you feel a draft?

2008-11-07T14:00:00.000-08:00

During the campaign season, friends of mine who advocated an Obama presidency were surprised to learn that I caught a whiff of the military draft in his rhetoric. Read the following -- from the president-elect's own transition site change.gov (!) -- and tell me if you're still surprised:

The Obama Administration will call on Americans to serve in order to meet the nation’s challenges. President-Elect Obama will expand national service programs like AmeriCorps and Peace Corps and will create a new Classroom Corps to help teachers in underserved schools, as well as a new Health Corps, Clean Energy Corps, and Veterans Corps. Obama will call on citizens of all ages to serve America, by developing a plan to require 50 hours of community service in middle school and high school and 100 hours of community service in college every year. Obama will encourage retiring Americans to serve by improving programs available for individuals over age 55, while at the same time promoting youth programs such as Youth Build and Head Start.

Bonus post!

2008-11-07T09:55:00.000-08:00

'Tis the season for the public dialogue over executive compensation packages. But just a friendly reminder: CEO bonuses are still mostly a private matter. We tend to hear about the larger compensation packages because those coincide with the larger companies, which are publicly traded more often than not. But just as "open to the public" does not mean public sector, "publicly traded" does not mean public sector, either. My year-end bonus is a private matter between the owners of this company and me. Just as executive bonuses are a private matter between the owners of their respective companies (the stockholders) and the executives.

There are some examples of when CEO bonuses are clearly a public matter. This list is certainly not exhaustive:

The executives of any firm with an outstanding bailout loan
The executives of any firm that has sold bad paper to the treasury, as part of a bailout package
The executives of any firm that has sold preferred stock to the treasury, as part of a bailout package

In short: you bought it, you own it. Even if you're Uncle Sam.

Department of Unintended Consequences, "More Like This SVP" Edit

2008-11-07T09:48:00.000-08:00

I don't know if this is big or not, but it seems big. From the Wall Street Journal health blog:

A 42-year-old man who had both leukemia and AIDS received a bone marrow transplant — a common, late-stage treatment for that type of cancer. His doctor selected a bone marrow donor who had a rare genetic mutation that renders people virtually immune to HIV. The transplant appeared to cure the patient of AIDS.

We’re as wary as the next guy of inferring too much from a single case study. Maybe it was a fluke; maybe there were unknown factors at work. But this one is pretty intriguing.

Read the rest here.

2, 1, (blank)

2008-11-07T07:28:00.000-08:00

Being the fixed quantity of birds (the first number) we would be able to kill with a fixed quantity of stones (the second number), in the event of an auto industry bailout.

First, I am morally and theoretically opposed to an auto industry bailout. I do not concede the moral and theoretical ground. But let's be realistic: the federally-guaranteed loan is coming, and it's going to be expensive.

So how can we, as I mentioned, double our avian disposal efficiency rate? Tell Detroit that with the bailout comes a requirement: we want fuel economy increased by x amount (the third number) during the life of the loan. Just fill in the blank. Thirty percent? Fifty? One hundred? I'll leave the policy details to the policy wonks.

Jeff Flake on the repair of the GOP

2008-11-06T14:53:00.001-08:00

The proliferation of earmarks is largely a product of the Gingrich-DeLay years, and it's no surprise that some of the most ardent practitioners were earmarked by the voters for retirement yesterday. Few Americans will take seriously Republican speeches on limited government if we Republicans can't wean ourselves from this insidious practice. But if we can go clean, it will offer a stark contrast to the Democrats, who, after two years in training, already have their own earmark favor factory running at full tilt.

Second, we need to recommit to our belief in economic freedom. Adam Smith's "The Wealth of Nations" may be on the discount rack this year, but the free market is still the most efficient means to allocate capital and human resources in an economy, and Americans know it. Now that we've inserted government deeply into the private sector by bailing out banks and businesses, the temptation will be for government to overstay its welcome and force the distribution of resources to serve political ends. Substituting political for economic incentives is not the recipe for economic recovery.

U.S. Rep. Flake is a Republican congressman from Arizona. Read the rest here. HT, VC.

Take a breath.

2008-11-06T13:18:00.000-08:00

There's a rumor going around that President-elect Obama is considering nationalizing your 401(k) accounts, liquidating any stock or mutual fund holdings, and managing the funds for you by investing in government and municipal bonds, or in a second national Ponzoi scheme, Argentina-style.

Moral outrage aside, and considering the wisdom of enacting this strategy in a bear market also aside, just the long-term damage to the equities markets is reason enough to pass. But it just isn't true. The truth is:

House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans. In place of 401(k) plans, she would have workers transfer their dough into government-created "guaranteed retirement accounts" for every worker. The government would deposit $600 (inflation indexed) every year into the GRAs. Each worker would also have to save 5 percent of pay into the accounts, to which the government would pay a ... 3 percent return.

Like I said, the gloves are off.

2008-11-06T10:47:00.001-08:00

But frankly, I can't get riled up about President-elect Obama's staff choices (yet?). That said, for round one of our Cruel Neutrality Ends Now campaign:

Barack Obama has asked Rep. Rahm Emanuel (D-Ill.), a tough-minded tactician with West Wing experience, to serve as his White House chief of staff, Democratic sources tell Politico.
[...]
Mr. Emanuel is one of the most rabid partisan politicians in the history of this country.
[...]
Oh, and lest we forget, Mr. Emanuel was on the board of Freddie Mac when it was bringing about our current financial crisis.

Read the whole thing here.

Poached like an egg, I've been

2008-11-06T08:16:00.000-08:00

Mr. Tuesday Pants has tagged me.

4 Random things I love about Amber:
1. Doing the laundry makes her laugh hysterically.
2. She's obsessed with sheets, but takes it pretty well when I rip them to shreds in my sleep.
3. When big, fuzzy spiders float up to me in the pool, she's on it.
4. She's as tough as almost everyone else I know combined.

4 Jobs I've had:
1. Bank teller
2. Stock broker
3. Busboy
4. Data entry

4 Movies I have seen more than once:
1. Star Wars Episode IV: A New Hope (probably two dozen times)
2. A Clockwork Orange (ditto)
3. Eternal Sunshine of the Spotless Mind (three times, but likely the greatest piece of filmmaking ever)
4. Amores Perros (once with los subtitulos, once without)

4 TV shows I watch:
1. Lost
2. Heroes
3. Amazing Race
4. House (Amber and I call it "Hizzy")

4 Places I've Been:
1. Antananarivo, Madagascar
2. Delphi, Greece
3. Tangier, Morocco
4. Cancun, Mexico

4 places I've lived:
1. Erie, PA
2. Birmingham, AL
3. Denver, CO
4. Toluca, Mexico

4 Favorite Foods:
1. Burger, fries and a Carta Blanca
2. Spaghetti and meatballs, with a garden salad and tomato vinaigrette dressing
3. Anchovy and jalapeno pizza
4. Sushi

4 Places I'd Like to Visit:
1. The Galapagos Islands
2. Cambodia
3. India and Nepal
4. Russia

4 People I tag:
1. Anberlin (who will have to leave her list in the comments section)
2. Jimi James
3. Ms. Tuesday Pants
4. President-elect Barack Obama

Another first

2008-11-05T15:13:00.000-08:00

I just realized that, for the first time, we have elected a president who admitted to inhaling marijuana smoke. Take that as you will.

In other news

2008-11-05T14:40:00.000-08:00

Last night voters in Florida and Arizona approved gay marriage bans. California's titular Proposition 8 also seems cleared for takeoff.

Funny that this may be the one issue on which the present correspondent is a bona fide liberal, and so even while the country has stumbled leftward in the last 24 hours, I am still at odds with the electorate. AugustFilet views gay marriage through a three-word lens: equality under law.

There is only one possible response to this plank in our platform, and that is a scriptural response (those who invoke the gay marriage sniff test on strictly secular grounds are either joking or should be). But no one is suggesting that churches be forced to annoint same-sex marriage, or that religious texts be abridged or banned. In the eyes of the law, marriage is a purely contractual matter that affords thousands of benefits: federal, state, local, private-sector, and intangible benefits. Gay marriage bans write discrimination into law. And that ship is said to have sailed decades ago.

The conservatives I know are devastated.

2008-11-05T11:42:00.000-08:00

At least the ones I've spoken to are. You can feel the kick to their guts in your own gut. They aren't bemoaning the loss of power. Screw power, they say. They just really, really didn't want so liberal a senator to be elected.

For them this isn't about unions anymore. Or taxes. Or S-CHIP. Or whether or not Obama wears the flag lapel pin. Foremost in their thoughts:

An overreaction to the credit crisis that parallels 1932. A second Great Depression. Twenty-five percent unemployment. Fat cats getting skinny, skinny cats eating ramen noodles three meals a day.
A foreign policy rookie leading the military during uncertain times.
A wholesale disembowling of what is left of our health care industry.
Eight years of judicial appointments; liberal judges legislating from the bench.

Having abandoned the last political movement that would have me, I can tell you with some clarity that no one is ever all wrong all the time. Let's hope that they are wrong about this. Let's hope the next administration constitutes four years of unions, taxes, and flag lapel pins, conspicuous in their absence.

A fairly decent German semi-retraction

2008-11-05T09:36:00.000-08:00

Anyone remember this essay? I do. Obama...

...has scant hope of reaching the White House. He's too young, too inexperienced, too vague, and for many Americans, too black. His magic words about the era of change, of hope, of an America he will unite -- all that will evaporate like morning mist.

The fact is that Obama is an unknown quantity. He sat in the US Senate for half a term without attracting any attention whatsoever. One intense speech at the Democratic convention in Boston in 2004, that was it.
--Gabor Steingart, January 4, 2008

Today Steingart writes:

Obama is America's offer of reconciliation after all those years of premeditated political provocation, of military action not backed by international law, of America's claim to be entitled to military pre-emptive strikes. The Bush doctrine was scrapped last night. The unilateralist stance of the Western superpower is likely to be over for now.

As the new day dawns in Germany, America is once again dreaming the American dream.

Predictions that never quite panned out

2008-11-04T18:28:00.000-08:00

CBS News has just called Ohio for Obama, which is another way of saying that CBS News has just called the election for Obama. This way we can safely say the following common predictions were wrong.

I'd like to point out that I have heard many of these personally, and all were stated with the same degree of infallibility with which George Bush drove the left nuts for the last eight years:

"George Bush will invoke the war on terror to suspend the 2008 elections."
"George Bush will push to repeal the 22nd amendment and run for a third term."
"The GOP will steal the 2008 election (again) with Diebold voting machines."
"A black man will never take the presidency from the militarist-corporatist regime."
"George Bush will reinstate the draft."

The left has responded to what they believe to be the worst president in history with some of the worst -- yet most authoritatively stated -- analysis in history. Hopefully the right will respond to the Obama administration with more restraint.

The only way to summarize the last several weeks, Filet-style

2008-11-04T13:46:00.001-08:00

In the end I could not bring myself to vote for either Senator Barack Obama or Senator John McCain. Bob Barr is a walking black eye. Ralph Nader? Please. That said, the Dow Jones Industrial Average closed up over 300 points today. Meaning if the investment class really was building Obama's imminent victory into stock prices, they certainly got over it on V-Day. Tomorrow, we'll see.

More on the same: energy stocks rose today, but solar stocks rose higher. Pharmaceutical stocks were mixed.

Tomorrow we will have a new president. For most of the American political spectrum, he will be an improvement over our current president, no matter the outcome. And this blog, for one, intends to watch him like a hawk.

Filet closed for a long weekend

2008-10-29T12:31:00.000-07:00

Out until next Tuesday. (Which coincides with something else, I just can't remember what...)

Unholier.

2008-10-29T12:25:00.000-07:00

A few weeks ago I pleaded with boxing fans, the sanctioning bodies, and in general anyone who would listen to put Evander Holyfield in front of tomato cans for the rest of his career. Or, at the very least, not in front of 7-foot, 300-pound Russian heavyweight champions.

But I guess it could be worse.

[Peter] Buckley has lost more fights than any other boxer in the world. Throughout his 256 defeats, he has remained magnificently undeterred. While the British Boxing Board of Control (BBBC) remained desperately concerned that he would do himself a serious lasting injury, Buckley persisted, losing bout after bout.

In the past five years he has put together a particularly impressive losing streak, failing to win in 88 successive bouts. He has lost to 42 future world, European, British and Commonwealth champions, including Naseem Hamed, and has fought more bouts than any other boxer in the world. But this one, No 300, will be his last.

Retooling the Filet

2008-10-29T08:00:00.000-07:00

New music releases have completely dried up. The election, unofficially, is behind us. The new administration does not get fired up for another three months. The economic meltdown is exhausting to cover. So ... what do you want to talk about? Vote up and to the right:

Our humble correspondent and his day-to-day vicissitudes.
Triathlon training (always a party killer).
Hit-and-run links to lively conversations elsewhere.
Just stay the course!
Other? (Leave comment.)

Can writing styles be fingerprinted?

2008-10-29T07:45:00.000-07:00

A pop quiz for frequent readers of this web log: on the basis of writing style alone, which of the following passages are mine?

--It is clear to me that although many politicians play lip service to banning torture, they want to leave enough loopholes in its definition in case "we" decide to use it under certain circumstances. It was therefore refreshing to find conservative wordsmith and retired commentator William Safire, a supporter of the Iraq War, say unequivocally that waterboarding in fact is torture.

--The waterboarding debate horrifies me. Not that the act itself is horrifying -- which it is -- but I mean the debate is horrifying as well. People I respect, admire, even people I love think waterboarding is a perfectly acceptable means of interrogation. These are well-meaning, gentle people. They cry during My Left Foot, and go to church.

--So, now that Hitchens has undergone the procedure himself on a dare, what does he conclude? ...That waterboarding is torture; that it has a lasting and terrorizing effect on its victim; that it provides no reliable information; that it crosses a moral Rubicon that is far better never to approach; and that all it really does in the end is make it more likely that your own people will be tortured in response.

Here you have three passages nearly identical in length and purpose, all expressing revulsion with the practice of waterboarding. Which one did I write? For those not familiar with my writing style, but interested in participating, scroll and read for a bit. It shouldn't take too long.

When you're ready, to confirm whether you answered correctly or not, read the first paragraph of this AugustFilet post. For reference, I happened upon the other two passages here and here.

As to the point of this exercise? Jack Cashill, who for months has been inquiring into the true author of Barack Obama's ostensible work Dreams From My Father, now believes the work to have been ghost written by Bill Ayers. One of the exhibits of his case is stylometry, the science of writing style. Obama supporters who follow these links will groan: World Net Daily is not exactly objective on the subject of the Obama campaign. But if you were able to pick the correct passage above, you just might think there is something to the science of writing style.

When did he write it?

2008-10-29T07:13:00.000-07:00

Inflation, as the late Milton Friedman explained, is always a monetary phenomenon. The federal government consistently wants to spend more than it can tax and borrow, so Congress turns to the Fed for help in covering the difference. The result is more dollars, both real and electronic-- which means the value of every existing dollar goes down.

Federal Reserve Chairman Ben Bernanke faces two basic ongoing choices: raise interest rates to prop up the dollar, but risk pushing the economy into a recession; or lower interest rates to stimulate the economy, but risk further declines in the dollar. This unfortunate dilemma is inherent with a fiat currency, however.

Of course Mr. Bernanke inherited this tightrope act from his predecessor Alan Greenspan. The Federal Reserve did two things to artificially expand the economy during the Greenspan era. First, it relentlessly lowered interest rates whenever growth slowed. Interest rates should be set by the free market, with the availability of savings determining the cost of borrowing money. In a healthy market economy, more savings equals lower interest rates. When savings rates are low, capital dries up and the cost of borrowing increases.

However, when the Fed sets interest rates artificially low, the cost of borrowing becomes cheap. Individuals incur greater amounts of debt, while businesses overextend themselves and grow without real gains in productivity. The bubble bursts quickly once the credit dries up and the bills cannot be paid.
--US Rep. Ron Paul (R-TX)

Two weeks ago? Early this year? August 2007? Or December 4, 2006? We report, you decide.

A few months later he wrote (and stop us if you've already heard this one):

Government officials consistently claim that inflation is in check at barely 2%, but middle class Americans know that their purchasing power--especially when it comes to housing, energy, medical care, and school tuition-- is shrinking much faster than 2% each year.

Bleg o' lantern

2008-10-27T17:42:00.000-07:00

Anyone know why carving pumpkins would make my hands itch? Like, immediately? And severely? This is the second year in a row that the itch has been unbearable, and probably the fortieth year in a row that I've itched at least a little bit. I'm especially keen on learning any home remedies that keep the itching at bay.

Yes, yes, I could always wear latex gloves.

Anyway, help! Only 364 days until I start carving again!

Public service announcement: cruel neutrality ends next Wednesday

2008-10-27T12:22:00.000-07:00

I fully expect Senator Obama to win. Congratulations, champagne all around, blah.

Come the day after it is on. Obama aficionados might either vacate the premises now or read the safety instructions located in the seat pocket in front of you. The captain is expecting turbulence.

What looks to be a great new blog

2008-10-27T12:06:00.001-07:00

Derivative Dribble. Czech it out.

Quote of the day: "That Is So Obvious And Trivial That It Can’t Be Right."

Where is that pit bull when I need him?

2008-10-27T11:56:00.000-07:00

Somehow I can't get my hackles up over this:

From the source article:

When the Treasury Department's bailout czar provided an update this week on the government's $700 billion plan to rescue troubled financial institutions, he vowed that it would be an "open and transparent program with appropriate oversight."

The next day, the Treasury Department put out an announcement about a major bailout-related contract with Bank of New York Mellon Corp. that fell short in the transparency department.

The copy of the agreement that was made public had blacked-out paragraphs in the section covering Bank of New York Mellon's compensation.

For those new to the place, or endowed with terribly short memories, you can find an explanation of the pit bull reference here.

Sign o' the times

2008-10-27T09:35:00.000-07:00

Last night we attended Ghouls on the Lawn, at Tucker Hill. Tucker Hill is a high-end, high-vacancy residential development. Entry was free with registration (sample registration question: "Are you in the market for a new home?"). Many of the finished homes are still for sale, complete with volunteers passing out candy in lieu of homeowners. Several of those finished homes were also open for a walk-through.

It's sad to see such beautiful homes sitting vacant. There is little doubt that the developer is struggling to stay afloat. That said, as a promotional idea, Ghouls on the Lawn was brilliant. My wife and I are wondering what Tucker Hill will do for Thanksgiving. Free turkey dinner?

I may remove this post later, but...

2008-10-27T08:44:00.000-07:00

...in the meantime, the way I understand it, one of the ways that last week was cited as being such a dark moment for capitalism goes something like this: "Alan Greenspan effectively reversed his position on the regulation of credit default swaps. Gotcha!"

A credit default swap, for lack of a better description, is an insurance policy written to hedge an investor against bond default. (Say, for example, a municipal bond default.) But in that example, a municipality defaulting on a bond is the symptom of a recession, not the cause. When unregulated credit default swaps themselves default, the general economy is already upside down. And while that isn't exactly ideal and certainly doesn't help matters, these conspicuously absent regulations would also certainly benefit the rich directly, and the rest of us only indirectly.

Talk of "regulation" in and of itself is incomplete. It's like going to the meat market and ordering a pound. A pound of what?

22mph.

2008-10-27T05:06:00.000-07:00

Being the speed at which I was cycling as I heard the unmistakable sound of dog paws on concrete. Then the bark. I turned around and saw a pit bull easily gaining on me. I submit this as a follow-up to this Mr. Tuesday Pants dispatch. If you own a pit bull, keep it inside.

Pit bull owners will circle the wagons and declare these deranged beasts the sweetest things since Ben & Jerry's Chunky Monkey. But as far as I know, ice cream does not gore horses to death. Some will read this and dismiss it as sensationalism, and no doubt, the mainstream media craves a stereotype. But is there any way to sensationalize this, this, this, this, or this? Out of common decency I have left off the most disgusting and heartbreaking stories, but there are many. Perform a Google search for pit bull kills * for a taste.

This happened just after a fairly grueling leg of my bike ride. I was looking forward to some nice downhill work, but had to step up my speed to about 29mph to outrun the dog. At one point it must have been running at 25mph, although they have little endurance. At the moment it gave up the chase, it was still gaining. Other cyclists with less conditioning -- or someone with equal conditioning, only further into the ride -- would not have had a chance.

UPDATE: Mr. Tuesday Pants tells me offline to buy a can of mace, and keep it in a clip fitted for a road bike. Done.

"Salty Gatorade"

2008-10-27T05:01:00.000-07:00

To follow-up this post, I tried my customized Infinit Nutrition recovery drink for the first time yesterday. After tasting it, I asked my wife to. She did, and I asked her for a two-word description. She tendered "salty Gatorade."

I did not tell her in advance that my two-word description was "salty Gatorade." There is simply no other way to put it. Infinit Nutrition tastes exactly like salty Gatorade. Meaning the benefit to workout recovery is probably identical to that of salty Gatorade.

Just for the record.

2008-10-24T14:26:00.000-07:00

I am neither this Fred, nor this Fred.

If I ever comment on Megan McArdle's blog (don't count on it), I'll post under "AugustFilet Fred" or somesuch.

Life, Ren & Stimpy, inching ever closer.

2008-10-24T12:18:00.000-07:00

Haven't we been over this already? Don't whiz on the electric fence.

Poll wrap-up

2008-10-23T07:56:00.000-07:00

Iron Man beat Hancock and the Dark Knight 3-2-2 for "your favorite superhero film this summer." The Incredible Hulk and Hellboy II were no-shows. Hancock gets my vote.

As to an explanation why I performed so badly during my last triathlon, "Sarah Palin's 'maritime border with Russia' comments" outpaced "nanotechnology!," "Obama not wearing the flag lapel pin," and "women weaken legs (meow!)" 2-1-1-1.

In both cases an anonymous respondent saved the poll from yet another friggen' tie. It happened within minutes of each other, so logic says that it was the work of one. You have my thanks.

"A lost decade in stocks"

2008-10-23T06:56:00.000-07:00

This phrase and others like it keep popping up in media analysis. The logic goes something like this: the Dow Jones Industrial Average closed at, for example, 7,732 on October 8, 1998. Over ten years later, on October 23, the index traded as low as 7,882. A two percent return over ten years is an abysmal record.

Sure. Had you invested in the Dow Jones Industrial Average (or more exactly: had you purchased shares in an index mutual fund designed to approximate the performance of the Dow) on 10/8/98, and had you cashed out on 10/23/08, your investment portfolio would have lost a decade.

Of course had you cashed out after nine years, your nine-year return would have been 83 percent. The equivalent ten-year rate is 92%. Not half bad.

And had you sold General Motors stock short at 39.45 and covered the short at 4 (both prices have occurred in the last 12 months), your one-year return would have been 886 percent. The equivalent ten-year rate is 8,860 percent.

All three examples are hypothetical and ridiculous, none more ridiculous than the other. Do your homework, buy and sell decisively, and -- at the least -- go through your portfolio monthly, when your statement comes in.

Hamiltonian conservatives beware!

2008-10-21T10:44:00.000-07:00

Once at a Christmas party I declared myself a Jeffersonian conservative. It was a profoundly stupid thing to say, the kind of thing that causes a guy to quit drinking the next day. I knew little of Jefferson's private life, and even less of his public life. I knew him to be an intellectual heir to Adam Smith, and a strong advocate for the First Amendment. I knew him to be the author, or one of the authors of the Declaration of Independence, which established the protection of human rights as the only legitimate task of government. Instead I might have called myself a natural rights conservative, a First Amendment conservative, a Declaration of Independence conservative, or the more familiar form to all of those: a (gasp!) libertarian. But I was drunk and knew only enough to embarrass myself and was trying to be funny.

My interlocutor scolded me for betraying the revolution, and told me that the only true conservative was the Hamiltonian conservative. At once I realized that I didn't know what Hamiltonian or Jeffersonian conservatives really were, and since I had already used one of the adjectives to describe myself, I also realized at once that the debate was over. L on forehead. Shuffle off. Kick a rock.

I go back to moment a lot these days, when I hear that Hamilton's fiscal policy is the intellectual foundation for the $700 billion bailout. Of a few investment banks. Which reside in a tiny settlement of 30,000 in only the fourth-largest commercial district in the country. Plus other fringe benefits.

I'm being sardonic, and painfully so, without style. There is absolutely no intellectual foundation for the bailout, or for Hamiltonian conservativism. To wit:

As soon as the federal government announced its trillion-dollar bailout (for starters) of Wall Street plutocrats, defenders of the bailout pulled out what they apparently believed was their secret weapon: the myth of Alexander Hamilton as the alleged inventor of American capitalism. Hamilton, they said, would approve of the bailout. Case closed. How could anyone dispute "the architect of the American economy?"

[...]

The Fed proudly labels Hamilton as its founding father, boasting that he even spoke just like a contemporary Fed chairman. The First Bank of the United States, which was opposed by Jefferson and Madison, created 72 percent inflation in its first five years of operation, as Murray Rothbard wrote in A History of Money and Banking in the United States. It was not rechartered in 1811, but was resurrected by Congress in 1817, after which it created America's first boom-and-bust cycle, which led to the Panic of 1819, the title of another of Rothbard's great works on American economic history.

Read the whole thing here.

Tyler Cowen does not agree with me.

2008-10-21T08:41:00.001-07:00

It's my take that, in short, Ron Paul was right. Artificially low interest rates, driven by the Federal Reserve (a non-governmental agency, by the way) and not endorsed but positively demanded by the media, the Congress, the President, the businesses and the polls (in short: by the people) caused the first domino to fall. Indeed, interest rates by no small measure are upside-down still, meaning that holding onto cash incurs an expense. So we convert our cash to stocks, steel, speculative oil contracts, land, houses, what have you. Bubbles formed. Bubbles burst. The rest? History.

Tyler Cowen's take, which carries great weight, methinks, is:

I view the boom as having been fueled by new global wealth, most of all in Asia, and the liquification of that wealth through credit and the desire for additional risk.

I still like Ron Paul's explanation better, probably because it quenches my American, all-too American thirst to blame a single person, a single organization, a single event, what have you. "The rise of Asia" is far too plural a factor. "Alan Greenspan" is satisfactorily reduced.

Be contrarian.

2008-10-20T14:14:00.000-07:00

My stock portfolio is up 18 percent in under two weeks of trading. The portfolio of stocks I should have bought, but didn't is up nearly twice that. Indeed, the stocks I should have bought are up nearly five percent today alone.

Do not listen to the diversification hawks when you know a stock is undersold. Do not listen to technical hawks when you know a stock is undersold. Do not listen to the bears when you know a stock is undersold. The fundamentals are everything.

(For those slacker friends of mine needing translation: a "diversification hawk" is someone who insists you cannot own J.P. Morgan and Citibank at the same time. The "technical" movements in stock are those stock price chart-only concerns: upticks, downticks, volume, institutional holdings, etc. A "bear" is someone who tells you that the sky is falling, and that not only should you convert stock portfolios to gold, you should convert your gold to disaster shelters, bottled water, canned food and propane. "Fundamentals" are those data points pertaining to the brick-and-mortar performance of the company.)

Tax and French wine? Tax and surrender? I've got it! I've got it! Tax and gay marriage!

2008-10-20T11:59:00.001-07:00

The GOP needs a new nickname for the Democrats. "Tax and spend" is simply not going to cut it anymore. Not with $1.5 trillion already on the table and with Ben Bernake calling for another stimulus package.

I heard this morning that Obama's health care plan, if enacted in full, would cost the country $1.6 trillion over 10 years. Five weeks ago I would have shuddered if I had heard that. Two months ago I would have fallen into a swoon; vapors and all that. I guess timing is everything.

Now -- when discussing a policy proposal -- instead of reflexively gasping at first glance of the price tag, we will debate the merits. And I suppose that's a good thing. It's an expensive lesson we've learned, but certainly a valuable one.

Do as I say, not as I do.

2008-10-20T08:36:00.000-07:00

The title of the post is not ironic. I mean do as I, Fred, the host blogger says. Not as I, Fred, the host blogger do.

When it's time to pull the trigger on your stock purchase, do not chase the price up. When it's time to pull the trigger on the stock sale, do not chase the price down. In the last few days I've lost hundreds of dollars, maybe over one thousand dollars doing just that.

Experts will click their tongues and remind me that market orders are bad policy. You might hit an upward spike and pay, say, $24 per share on a $20 stock. That's all fine and good: to prevent that simply enter a limit order at market, even above market, and you're protected. If the current ask is $20.25, enter that as your limit order, or $20.30, just to be sure. For the record I don't believe in all or nothing orders (limit orders which set both the quantity and the price as fixed), but I do believe in setting a minimum purchase. If you've entered your order for 2,000 shares at $20.25, no one wants to buy only 100 shares at that price. Offer to buy a minimum of, say, 1,000 shares.

Again, as always, don't take investment advice from an anonymous blogger, especially one who doesn't take his own advice. If you invest in stocks you stand to lose some or all of your investment. Past performance is no indicator of future results. The square of the hypotenuse of a right-angled triangle is equal to the sum of the square of the other two sides, yadda yadda yadda.

How to interpret the stock market's performance today

2008-10-16T14:02:00.000-07:00

Option # 1: "Woo hoo! Up 400 points!"

That's one way. Here's another way: today's low point for the DJIA, just after 11AM EST, was 8,197. Today's high point, just at the closing bell, was 8,979. This is the fifth consecutive trading session with swings as large as 700 points. Four of those days have seen swings over 800 points; one day saw a swing higher than 1,000 points. At 8,197, another 1,000 point swing equals a 12% movement.

I'm getting seasick just writing this.

Will investors stock up on Dramamine and stay in the game? Or will they all sit the next ride out, all at the same time? Stay tuned.

Name five things you do to stay sane.

2008-10-16T11:02:00.000-07:00

(Inspired by this post here. I have yet to read the comments or follow the links, lest I color my own answers.) The first two are easy, albeit gently contradictory:

Spend as much time with my wife and kids as possible, and make the kids laugh as much as I can. A toddler's laughter is the second-most exclusive commodity in the world. An infant's laughter is the first. The only way this causes any discord at all is when the kids laugh at something that is decidely not funny.
Exercise. I'm burning on average 3,300 calories a week, which equates to 5 1/2 hours a week, and that's not including warm up, cool down, evening walks, wrestling with the youngsters, jumping on the trampoline, blah. If by March 16, 2009 I'm not burning closer to 10,000 calories a day, I'll know in advance that I won't be ready for this horrible little race.
Apply water to the face; apply air conditioning. What can I say? I overheat.
Routine. And when I'm not overheating, I'm getting annoyed by deviations in The Program. Come now. Don't tell me you don't have A Program.
Avoid talkers. I can't stand being filibustered. Indeed, I probably filibuster as much as I do to keep others from doing it to me. No, it isn't fair, but hey? Homo sapiens?

You?

And while we're at it, more like this SVP

2008-10-16T09:50:00.000-07:00

CARACAS (Reuters) - Socialist Venezuelan President Hugo Chavez mocked George W. Bush as a "comrade" on Wednesday, saying the U.S. president was a hard-line leftist for his government's intervention of major private banks in the U.S. financial crisis.

Chavez, who calls capitalism an evil and ex-Cuban leader Fidel Castro his mentor, ridiculed Bush for his plan for the federal government to take equity in American banks despite the U.S. right-wing's criticism of Venezuelan nationalizations.

"Bush is to the left of me now," Chavez told an audience of international intellectuals debating the benefits of socialism. "Comrade Bush announced he will buy shares in private banks."

Yes, yes, it's not just Bush, it's Congress, the mainstream media, big business, small business, and while we're at it every American man, woman, and child etc etc etc. But still, this is a howler.

The track of the day is...

2008-10-16T09:48:00.001-07:00

..."Curse Your Little Heart," by DeVotchKa, from their EP by the same name.

I just can't find an embeddable copy. I guess you're on your own.

And more like this, too, SVP

2008-10-15T11:08:00.001-07:00

Last week we credited the Mises Economics Blog with:

According to Obama "the biggest problem in this whole process was deregulation of the financial system". [...] Can Mr. Obama name even one act of deregulation signed into law in the past eight years? The fact of the matter is that financial markets are among the more regulated areas of commerce in the USA. While Obama seems oblivious to this fact, it might be reasonable to assume that he does not believe his own words.

Similarly, Peter Wallison writes in the Wall Street Journal:

Sen. Obama should consider his own complicity in the failure of Congress to adopt legislation that might have prevented the subprime meltdown.

In the summer of 2005, a bill emerged from the Senate Banking Committee that considerably tightened regulations on Fannie and Freddie, including controls over their capital and their ability to hold portfolios of mortgages or mortgage-backed securities. All the Republicans voted for the bill in committee; all the Democrats voted against it. To get the bill to a vote in the Senate, a few Democratic votes were necessary to limit debate. This was a time for the leadership Sen. Obama says he can offer, but neither he nor any other Democrat stepped forward.

Instead, by his own account, Mr. Obama wrote a letter to the Treasury Secretary, allegedly putting himself on record that subprime loans were dangerous and had to be dealt with. This is revealing; if true, it indicates Sen. Obama knew there was a problem with subprime lending -- but was unwilling to confront his own party by pressing for legislation to control it.

The whole thing is worth reading, so take a minute to do so here. Is it time yet to vote "None of the Above?"

My own Bill Ayers?

2008-10-15T08:47:00.000-07:00

I'll call him William. We first met about a year ago. I would often see him walking as I turned onto our street. It turns out he was renting a room from his old friend, a neighbor of mine, so William and I were neighbors for a brief time.

He was affable and covered in tattoos. He was gentle with our toddler-aged kids, and tolerated their whims very well. He seemed to have a terrible memory; I think he told me that he was sixty. I would often stop in the middle of my run to talk with him. His political ideas were scattershot and unnuanced. On some issues he would hold a smashmouth libertarian view, in which government was evil, unwieldy and inefficient. On others he seemed progressive, in both modern uses of the term. For example he distrusted Obama after the rumors spread that the senator was Muslim. He seemed to have a reflexive progressive disregard for religion, especially a Hitchensesque contempt for Islam. Yet at the same time he was still horrified by the Supreme Court's Kelo decision, years later. He was likeable, and I liked him.

Our conversations turned explicitly philosophical and political. McCain and Obama were rising in delegate counts and I disliked both of them in policy terms. William agreed. When his friend and landlord put the house up for sale, it was clear that William would have to move. Within the safety of this limited time, he told me that he had been a member of the Weather Underground. Bill Ayers was already a figure of the 2008 presidential election, so I was up-to-date on what the Weather Underground had done. I tried to turn the conversation in every other direction but that. Our brief friendship was becoming an enjoyable film, and I didn't like the new plot twist. He didn't offer me contrition for associating with the revolutionary group, and I didn't ask him to. The whole thing was terribly inconvenient, because I already liked him. Would you have done any differently?

I don't think my memory is fooling me into a false literary ending: I believe that the last I saw of William was him reaching through a fence to pet a neighbor's horse.

It's a far from perfect example, but it's the only one I've got. I didn't want to exaggerate the point to make a point. But as long as he was telling me the truth -- and I have no reason not to believe -- is he guilty by association? And if so, am I?

"Any analysis that can be undone by omitting or changing a single data point isn't very robust."

2008-10-14T12:09:00.000-07:00

We've all heard of data that prove GDP and stock markets perform better under Democratic presidents than they do under Republican presidents. There are several problems with this analysis:

Eighty years of data -- or approximately 20 four-year terms -- is a pretty small sampling, with too few plot points. If you had remodeled your home twice in the last thirty years, would you think to create a chart, and then draw a line between the two data points?
Like it or not, the president is not the final arbiter on stock market capitalization. The stock trade is. Why credit these knuckleheads with more than they deserve?
As a corollary to number 2 above, the report disregards the legislative branch of the government. After all, the president merely signs the law. Congress writes and deliberates. If anyone has true economic clout, it is the senator, not the executive.
The data disregard the very real prospect of liberal Republicans and conservative Democrats.
As a corollary to number 4 above, what constitutes "quintessentially Republican" and "quintessentially Democrat" have changed so much over the past several decades that a true analysis conducted through a present-day lens is totally meaningless.
The data disregard other factors: war, embargo, public opinion, weather, and spillover from previous administrations.

This article attempts to remedy at least some of those failings. My take? Again, notwithstanding external factors such as war and embargo, markets and productivity seem to intuitively prefer "social capitalism" (whatever that is) to "capitalism" (whatever that is). Advantage, Democrats. But not by much.

UPDATE: Greg Mankiw adds an unexpected -- and rather technical -- problem:

Suppose what New York Times finds is econometrically correct. They might have just found another risk factor for abnormal returns. Democrats sitting in the White House do bring about more risks in stock holdings. Therefore, investors demand higher return to compensate for extra risks they are bearing.

In short -- and say it with me -- "correlation is not causality."

"Vacation from K Street and Wall Street" Week

2008-10-14T09:35:00.000-07:00

Part Twelve: a live-action introduction to "The Simpsons."

My favorite bit? The music class.

There. I've done it. I've rid my home page of any explicit reference to politics or the economy. I started to wane there at the end, but you've all held up brilliantly: no hate mail. No gnashing of teeth. No downward spike in readership.

AugustFilet is scheduled to resume its partisan hackery in T-minus 6... 5... 4...

"Vacation from K Street and Wall Street" Week

2008-10-14T08:58:00.000-07:00

Part Eleven: DVDs I take no joy in disliking.

Sleeping Beauty. Sleeping Audience is more like it. A jilted sorceress doesn't get invited to the baby shower and freaks out. Prince Phillip carries the distinction of being both boring as a young boy and boring as a grown man. Sorceress puts thorny bushes in his path to ward off the titular kiss. He chops at the thorny bushes with a sword. Then, natch, sorceress announces that she is, indeed, a hellspawn. Neither principal character speaks throughout the entire latter third of the film, although sometimes they have astonished looks on their faces.

Heroes, Season Two. Loved season one. The WGA strike weighs heavily on this 12-episode advertisement for season three, yet at the same time lets 11 episodes pass before explaining the end of season one. Best addition by far is Maya, who is smoking hot, clearly single, and has a terrifying power. Worst addition is Claire's west coast boyfriend West, who can (wait for it) fly (been there). Something about a virus. Peter Petrelli is way too powerful, so between picket line protests the writers neuter him with amnesia. Doesn't work.

Bee Movie.

"Vacation from K Street and Wall Street" Week

2008-10-14T08:51:00.000-07:00

Part Ten: I try not to endorse products, but I can certainly endorse the idea of a product. To that end I submit the Infinit Nutrition website, which allows you to customize a sports drink with the following parameters: flavor, carbohydrates, calories, electrolytes, proteins, amino acids, and caffeine. It's available in Orange, Lemon Lime and Fruit Punch flavors.

It's not cheap. I haven't tried the product yet. But the idea is very, very cool.

"Vacation from K Street and Wall Street" Week

2008-10-13T10:32:00.000-07:00

Part Ten? Eleventeen?

I may have already posted about this, but I don't think so:

An indigenous language in southern Mexico is in danger of disappearing because its last two speakers have stopped talking to one another.

The two elderly men in the village of Ayapan, Tabasco, have drifted apart, said Fernando Nava, head of the Mexican Institute for Indigenous Languages.

He used the example to draw attention to the threat to indigenous languages across Mexico.

More than 20 of these are under threat of extinction.

Read the rest here.

"Vacation from K Street and Wall Street" Week

2008-10-13T10:25:00.000-07:00

I'm losing count. Part Eight?

Coffee may cut the risk of dementia by blocking the damage cholesterol can inflict on the body, research suggests.

The drink has already been linked to a lower risk of Alzheimer's Disease, and a study by a US team for the Journal of Neuroinflammation may explain why.

A vital barrier between the brain and the main blood supply of rabbits fed a fat-rich diet was protected in those given a caffeine supplement.

Read the rest here.

"Vacation from K Street and Wall Street" Week

2008-10-13T10:17:00.000-07:00

Part Seven: the point.

Yes. The point of all of this is to temporarily rid my front page of any reference to politics, the economy, the stock market, the bailout, the upcoming elections, George Bush, Paul Krugman, special interest groups, libertarians, Lou Dobbs or any manner of derangement syndrome whatsoever.

And yes, now I have to start over.

"Vacation from K Street and Wall Street" Week

2008-10-13T10:10:00.001-07:00

Part Six: Cloud Collapse Disorder? First the bees, now the bats?

Bonus read! For those who doubt that -- like "a colony of ants" -- one says "a cloud of bats," click here for my source. Some of the more lively collective nouns are:

An ambush of tigers
A conspiracy of ravens
A deceit of lapwings
An intrigue of kittens
A mutation of thrushes
A stench of skunks

Contest Alert! Win a prize if you come up with the best collective noun for:

Bloggers
Collective nouns
Mexican seafood restaurants
Presidential candidates

"Vacation from K Street and Wall Street" Week

2008-10-13T06:57:00.000-07:00

Part Five: apparently the reasons you should eat bugs are starting to accumulate. Here's an obvious one that I didn't see coming:

Bug-eating also reduces the need for pesticides. The more bugs you eat, the less you have to spray. That's what happened in Thailand, where locusts have been brought under control through culinary culling.

I tasted crickets once in Mexico. I ordered them on accident, end of discussion. The meal was only that: a bowl full of crickets. No chimichanga, no beans and rice. Crickets at least taste exactly like you would expect them to. I ate one and then sent the rest back.

"Vacation from K Street and Wall Street" Week

2008-10-13T06:53:00.000-07:00

Part Four: the top 10 science fiction planets.

"Vacation from K Street and Wall Street" Week

2008-10-13T06:48:00.000-07:00

Part Three: a terrific visual representation of which body parts are most often referenced in various musical genres. As the project name "Fleshmap" implies, it is NSFW.

"Vacation from K Street and Wall Street" Week

2008-10-13T06:43:00.000-07:00

Part Two: a nice description of the Large Hadron Collider, and how it works.

"Vacation from K Street and Wall Street" Week

2008-10-13T06:33:00.001-07:00

Part One: a new way to test the many-worlds interpretation of quantum physics.

"The markets are going in the tank because the stock traders know your man is going to win."

2008-10-12T09:16:00.000-07:00

I take "your man" (and since the comment was directed at me, it is more appropriately reported as "my man") to mean Barack Obama. Even as a joke -- and I now believe the remark to not have been a joke -- it is personally insulting, terrifically uninformed, and, alas, probably the conservative talking point come Monday morning.

There are conservatives whom I deeply respect, and engage in debate only when cornered. I am not writing this open letter to you.

To the rest of you:

"My man" is no longer running for president. Fittingly, I will likely not vote. But if you push with your continued logical and economic illiteracy, I will vote for Obama to spite you.
Your deliberate self-delusion -- clearly an effort to be able to throw your logical and ideological bombs without blushing -- is dangerous. A well-informed populace, and all that. IMNSHO your vote should not count the same as mine.
The markets are crashing worldwide because banks are not lending to one another. I am not going to explore the causes of the credit freeze yet again; suffice to say that Senator Obama's non-votes and "present" votes are quite likely not one of them.
Obama's middle name is not in and of itself sufficient reason to vote for McCain. To claim otherwise is not sophisticated enough to call racism.
Obama's surname is not in and of itself sufficient reason to vote for McCain. To claim otherwise is not sophisticated enough to call racism.
Obama's faith is not in and of itself sufficient reason to vote for McCain.
That said, Obama is nevertheless not a Muslim. How do I know for sure? Because he said so, and I have no reason not to believe him.
Obama does not put his hand over his heart during the national anthem, and then gives a ridiculous answer as to why: get over it.
Obama does not wear a flag lapel pin, and then gives a ridiculous answer as to why: get over it.

AugustFilet

Bleg: arrghh!

got whiskey?

For that matter, postmodern postmodernism

Postmodern terrorism

Instamusicpunditry

When does one say "ethical dilemma," and when does one say "moral dilemma?"

Another heartbreaking piece from Christopher Hitchens

Origins of the meltdown?

Building a case against high fructose corn syrup

If you suspect rabies, just go get the shots

Track of the day

"Stocks are now cheap, but not exceptionally so"

Airport malaria

Some common sense on credit default swaps

No comment.

"Murder may have surpassed diabetes as the chief cause of mortality in this border city."

The world is a complicated place, next in a series

Trimming the fat

Some brief, obvious, lame excuses for...

I won't.

A stitch 'n time, redux

Harsh words from Althouse, Ann

A compelling aspect of the auto bailout

A "Refuge from Everything" post

Boring. Harmless. Mercifully short.

Meltdownomics

Petrofied!

The great equalizer

Trading fees on the rise

The rise, fall, and rise of equity seasickness

Believe it or not, I never really fell for this one

Why is there more traffic in the evening?

Two new polls.

Top society/culture stories of the year

Top science stories of the year

The skunk that went up the hill and fell down the stairs

Six more weeks at this rate and the Dow 30 stocks will have no market capitalization whatsoever.

A continuum from autism to schizophrenia, with all other brain disorders in between!?

Atlas, and everyone else, shrugged

Thumbama debates Thumbcain

Two trillion.

Department of Fleeting First Impressions: Statingrad Edition

Why is the transition going so amicably?

Fred's Addiction

Do you feel a draft?

Bonus post!

Department of Unintended Consequences, "More Like This SVP" Edit

2, 1, (blank)

Jeff Flake on the repair of the GOP

Take a breath.

Like I said, the gloves are off.

Poached like an egg, I've been

Another first

In other news

The conservatives I know are devastated.

A fairly decent German semi-retraction

Predictions that never quite panned out

The only way to summarize the last several weeks, Filet-style

Filet closed for a long weekend

Unholier.

Retooling the Filet

Can writing styles be fingerprinted?

When did he write it?

Bleg o' lantern

Public service announcement: cruel neutrality ends next Wednesday

What looks to be a great new blog

Where is that pit bull when I need him?

Sign o' the times

I may remove this post later, but...

22mph.

"Salty Gatorade"

Just for the record.

Life, Ren & Stimpy, inching ever closer.

Poll wrap-up

"A lost decade in stocks"

Hamiltonian conservatives beware!

Tyler Cowen does not agree with me.

Be contrarian.

Tax and French wine? Tax and surrender? I've got it! I've got it! Tax and gay marriage!