"History is a wonderful thing, if only it was true"
-Tolstoy

Monday, December 21, 2009

Sunday, December 20, 2009

Ouch!

Discovered Ed Youngblood's MotoHistory
Great stuff

One piece - Cook Neilson interview
Motohistory.Net - Featured Story - Cook Neilson Remembers - Page 2:

This one on a particular dangerous bike.
I was pitched off of one and manged to collect some nasty scars
Both palms gone, right forearm, right nipple ground down (I was dumb, wearing a work shirt, sleeves rolled up, no gloves)
Front fender shook loose, and grabbed the front tire... I went down ... hard.

"And what we were doing WAS dangerous. It seemed that we were always a staffer or two short; it seemed that we had a charge account at the Westlake Village Hospital. We lost Dave Hawkins for a good long while; same with Dale Boller; same with me. I remember one time, after we'd published a particularly scathing road test of an H2 Kawasaki 750, I decided that I'd show the Kawasaki people exactly what I was talking about with regard to handling instability. There was this one corner on Mulholland Highway that was perfect for testing: fast and bumpy (it was on a section of that highway that became known as Racer Road). The Kawasaki guys showed up; I showed up. So I was whistling this 750 through this one very high-speed turn when it started to wobble. When that happened, the suspension started to oscillate, then the muffler on the left side started banging off the ground, then it high-sided me through a barbed wire fence and I ended up in the hospital ('Charge it!') for a little while. I certainly hadn't intended to be that dramatic, but the point was, as far as I was concerned, Kawasaki was selling a bike to the public that was fundamentally unsound, and we wanted them to either fix it, or get rid of it."

Monday, December 14, 2009

Worth Sharing

Inspiration
click here

Interesting move

Expanding interest in Natural Gas

With XTO Deal, Exxon Expands Natural Gas Holdings - NYTimes.com

Note that
1) Boone Pickens has been pushing Natural Gas as "bridge" to non-carbon fuels, and esp. for over the road trucks (issues of storage preclude use for family car/SUV

2) Exxon is partner in the world's largest LNG plant which is finishing up in Qatar, which will be the largest man made structure in the world.

3) there are some arguments that NatGas is nearly inexaustable

Sunday, December 13, 2009

Timing

Passing through MSP airport tonight, we spotted an accenture poster with Tiger Woods, not this one, it was him lining up a putt, yellow background with text about thinking vs doing ... we got a chuckle.
Then caught the evening news ... accenture dropped Tiger and pulled all ads.


Saturday, December 12, 2009

Informed Development

Since "Smart Grow" may carry connotation that opponents are "not smart" what about the term "Informed Development" ... trying to be more inclusive and collaborative

Thursday, December 10, 2009

Maybe it's just Magic

Not going to hold my breath.
Some basic physics : more electrons = more protons and neutrons = more mass.

Skepticism Persists as Nissan’s Ghosn Leads Charge Into EV Age: "According to Ghosn, the Leaf's 100-mile (160-km) range covers 90% of the daily driving needs in Japan and most other major markets. The problem is that other 10%.

“Buyers would basically be paying the price of a Lexus for a second car,” one Nissan official admits.

While the basic story line is right, Ghosn has omitted a few details that could make the road ahead a little bumpier – namely, that the Leaf’s 100-mile range is achieved without engaging the car’s air-conditioner and heater, which knocks off 30%. Also, the life of the battery for automotive use is estimated at only four to five years."

Wednesday, December 02, 2009

Paleolithic Europe

Interesting piece on early settlements, pre-written language in the southeast of Europe

NYTimes
A Lost European Culture, Pulled From Obscurity

Before the glory that was Greece and Rome, even before the first cities of Mesopotamia or temples along the Nile, there lived in the Lower Danube Valley and the Balkan foothills people who were ahead of their time in art, technology and long-distance trade.

For 1,500 years, starting earlier than 5000 B.C., they farmed and built sizable towns, a few with as many as 2,000 dwellings. They mastered large-scale copper smelting, the new technology of the age. Their graves held an impressive array of exquisite headdresses and necklaces and, in one cemetery, the earliest major assemblage of gold artifacts to be found anywhere in the world.

The striking designs of their pottery speak of the refinement of the culture’s visual language. Until recent discoveries, the most intriguing artifacts were the ubiquitous terracotta “goddess” figurines, originally interpreted as evidence of the spiritual and political power of women in society.

Continue here

Could it be related to "Noah's Flood"

Experts Face Off on 'Noah's Flood' - The New York Times

Two marine geologists from Columbia University in 1996 advanced the idea that a flood of water from the Mediterranean, rushing through the Bosporus with the force of 20 Niagaras, entered the Black Sea 7,600 years ago. In months, at most two years, the Black Sea rose, inundated surrounding plains and attained its present dimensions.

As a consequence, the geologists suggested, people in the region had to flee, and this could explain the rapid spread of early agriculture into eastern and northern Europe. It was even possible, they said, that the cataclysm became a part of folk memory, inspiring the Babylonian flood myth in the epic of Gilgamesh and, in time, the biblical story of Noah.

Monday, November 30, 2009

Problems with Gold

Good summary
And gold is rather sterile : no yield, cost to own (store, insure)

Buttonwood: Paper promises, golden hordes | The Economist:

"A gold standard clearly protects the interest of creditors since it ties the value of money to a scarce resource. A government cannot create new gold. But the law of volatility applies. If you fix one part of the economic system, trouble has to show up elsewhere. When countries on the gold standard suffered a shock they had to let the real economy, rather than their currencies, take the strain.

The Depression showed the problem with this approach. In theory businesses and workers should quickly adjust to a deflationary shock, by slashing their prices and wages. In practice they were slow to adjust and the results were bankruptcies and mass unemployment. Democratically elected governments proved reluctant to stand by and let this happen. By going off the gold standard and allowing their currencies to fluctuate, they protected the interests of the bulk of their populations at the expense of creditors.

Dropping gold did work. A recent paper* by Barry Eichengreen of the University of California, Berkeley, and Douglas Irwin of Dartmouth College found that countries that abandoned gold not only had shorter recessions but were also less inclined to raise tariffs than those countries that retained the link."

Sunday, November 29, 2009

Education

Fareed Zakaria's GPS
The thesis is spot on - don't teach specific skills, but how to to acquire skills

CNN.com - Transcripts:

"ZAKARIA: And we are back with Eric Schmidt, the CEO of Google.

You know, I wonder about how we educate kids. I watch, you know, my kids go to school. And one of the things they have to do with great -- what takes a lot of time is to learn to spell properly.

Is it worth teaching people how to spell properly in a world in which every -- there's spell checks everywhere?

SCHMIDT: You can imagine education changing a lot. After all, when I was growing up, they forced me to memorize everything. But now, why do I need to remember that? I just need to learn how to search for it."

Saturday, November 28, 2009

Transparency

Hacked E-Mail Data Prompts Calls for Changes in Climate Research - NYTimes.com:

"Some prominent climate scientists are calling for changes in the way research on global warming is conducted after a British university said thousands of private e-mail messages and documents had been stolen from its climate center.

The scientists say that the e-mail messages, which have circulated on the Internet and which disclose the inner workings of a small network of climatologists who chart the planet’s temperature, have damaged the public’s trust in the evidence that humans are dangerously warming the planet, just as many countries are poised to start reining in greenhouse gas emissions.

“This whole concept of, ‘We’re the experts, trust us,’ has clearly gone by the wayside with these e-mails,” said Judith Curry, a climate scientist at Georgia Institute of Technology."

Politics posts

Several links dealing with state of the Obama Administration

Is the electorate getting disillusioned?

Note that source is Rupert Murdock's Wall St. Journal, so take with requisite dose of salt

Strains in Party Threaten Democrats' Plans - WSJ.com (note : Democrats often seem strained to acted together - see Will Rogers "I'm not a member of any organized political party, I'm a Democrat!")

More damning:

Fred Barnes: Why Obama Isn't Changing Washington - WSJ.com:

"First, Mr. Obama misread the meaning of the 2008 election. It wasn't a mandate for a liberal revolution. His victory was a personal one, not an ideological triumph of liberalism. Yet Mr. Obama, his aides and Democratic leaders in Congress have treated it as a mandate to radically change policy directions in this country. They are pushing forward one liberal initiative after another. As a result, Mr. Obama's approval rating has dropped along with the popularity of his agenda."

"Second, Mr. Obama misread his own ability to sway the public. He is a glib, cool, likeable speaker whose sentences have subjects and verbs. During the campaign, he gave dazzling speeches about hope and change that excited voters."

"Third, Mr. Obama misread Republicans. They felt weak and vulnerable after losing two straight congressional elections and watching John McCain's presidential bid fall flat. They were afraid to criticize the newly elected president. If he had offered them minimal concessions, many of them would have jumped aboard his policies. If that had happened, the president could have boasted of achieving bipartisan compromise on the stimulus and other policies. He let the chance slip away."

On the lead domestic program, health care:

David S. Broder - David Broder: Fears of health-reform cost are justifiable:

"By David S. Broder
Sunday, November 22, 2009

It's simply not true that America is ambivalent about everything when it comes to the Obama health plan.

The day after the Congressional Budget Office (CBO) gave its qualified blessing to the version of health reform produced by Senate Majority Leader Harry Reid, a Quinnipiac University poll of a national cross section of voters reported its latest results.

This poll may not be as famous as some others, but I know the care and professionalism of the people who run it, and one question was particularly interesting to me.

It read: 'President Obama has pledged that health insurance reform will not add to our federal budget deficit over the next decade. Do you think that President Obama will be able to keep his promise or do you think that any health care plan that Congress passes and President Obama signs will add to the federal budget deficit?'

The answer: Less than one-fifth of the voters -- 19 percent of the sample -- think he will keep his word. Nine of 10 Republicans and eight of 10 independents said that whatever passes will add to the torrent of red ink. By a margin of four to three, even Democrats agreed this is likely."

The executive branch is not all that strong, and congress was allowed to take over the agenda. Furthermore, I wonder if "campaign style" really works oversees, or do you have to put the foreign service to work laying the groundwork.

Peggy Noonan: He Can't Take Another Bow - WSJ.com:

"An icon of a White House that is coming to seem amateurish."

"From journalist Elizabeth Drew, a veteran and often sympathetic chronicler of Democratic figures, a fiery denunciation of—and warning for—the White House. In a piece in Politico on the firing of White House counsel Greg Craig, Ms. Drew reports that while the president was in Asia last week, "a critical mass of influential people who once held big hopes for his presidency began to wonder whether they had misjudged the man." They once held "an unromantically high opinion of Obama," and were key to his rise, but now they are concluding that the president isn't "the person of integrity and even classiness they had thought.

She scored "the Chicago crowd," which she characterized as "a distressingly insular and small-minded West Wing team." The White House, Ms. Drew says, needs adult supervision—"an older, wiser head, someone with a bit more detachment."

and

"Just as stinging as Elizabeth Drew on domestic matters was Leslie Gelb on Mr. Obama and foreign policy in the Daily Beast. Mr. Gelb, president emeritus of the Council on Foreign Relations and fully plugged into the Democratic foreign-policy establishment, wrote this week that the president's Asia trip suggested "a disturbing amateurishness in managing America's power." The president's Afghanistan review has been "inexcusably clumsy," Mideast negotiations have been "fumbling." So unsuccessful was the trip that Mr. Gelb suggested Mr. Obama take responsibility for it "as President Kennedy did after the Bay of Pigs
."

He added that rather than bowing to emperors—Mr. Obama "seems to do this stuff spontaneously and inexplicably"—he should begin to bow to "the voices of experience" in Washington.

When longtime political observers start calling for wise men, a president is in trouble."

Then the more "liberal" NYTimes chimes in:
Editorial - Diplomacy 101 - NYTimes.com:
"Mr. Obama’s own credibility is so diminished (his approval rating in Israel is 4 percent) that serious negotiations may be farther off than ever.

Peacemaking takes strategic skill. But we see no sign that President Obama and Mr. Mitchell were thinking more than one move down the board. The president went public with his demand for a full freeze on settlements before securing Israel’s commitment. And he and his aides apparently had no plan for what they would do if Prime Minister Benjamin Netanyahu said no.

Most important, they allowed the controversy to obscure the real goal: nudging Israel and the Palestinians into peace talks. (We don’t know exactly what happened but we are told that Mr. Obama relied more on the judgment of his political advisers — specifically his chief of staff, Rahm Emanuel — than of his Mideast specialists.)"

Monday, November 23, 2009

Racing

Took some time off and posted recollections from "racing daze"

1977 I'd put together a race team, went to Ohio and with combination of planning and a bit of luck started on our way to a National Championship, and Endurance racing at that.
With endurance racing, if it breaks, you fix it, if rider crashes, you fix it.
You keep racing.
Most pavement racing runs from 30 to 60 min, we'd run 3-6-12 hours, even a pair of the ultimates - 24hrs, once around the clock.

Transcriptions and notes: Racing Recollections - Google Docs

1978 we moved into the new AMA Superbike class, modest results, then worked with other riders and teams for a few years, but now had a family and would not spend as much time on the road.

Besides, it's damn hard to top a National Championship.

Later, I was a guest at a SAE (Society of Automotive Engineers) dinner, where the keynote speaker was the head of Porsche and he spoke of the importance of racing in teaching values to young engineers.

With winning the only object, you could :
build the best car, but if you couldn't make it to the starting line - NFG
build the fastest car, but if you couldn't make it to the finish line - NFG
Simply - no excuses, no gray, it's black and white - win or loose

You apply yourself, try to anticipate as many contingencies as possible and plan for alternative actions, if something breaks, can you fix it ... quickly?

Wednesday, November 18, 2009

Hype

He all but admits that he's all about BS and Hype
I just wonder if he really does drink his own kool-aid

Trump on Trump: Testimony Offers Glimpse of How He Values His Empire - WSJ.com:

"'My net worth fluctuates, and it goes up and down with markets and with attitudes and with feelings, even my own feeling,' he told lawyers in the December 2007 deposition."

and

"Mr. Trump was asked whether he has ever exaggerated in statements about his properties. "I think everybody does," he said in the deposition. "Who wouldn't?"

A follow-up question: Does that mean he inflates the value of his properties in general, nonfinancial public statements? "Not beyond reason," he said in the testimony.

The deposition reveals he told his bankers and New Jersey casino authorities in 2004 and 2005 that he was worth approximately $3.6 billion. In 2005, Deutsche Bank evaluated his net worth as part of underwriting a $640 million construction loan it made to Mr. Trump's Chicago condo and hotel project. The bank said his worth was $788 million, according to information presented by the author's lawyers present during Mr. Trump's deposition."

Thursday, November 12, 2009

More on the Housing Bubble

From an insider

Edward Pinto: Acorn and the Housing Bubble - WSJ.com

Lays out Congressional influence on Fannie and Freddie to lend at all costs (and what costs we've had)

"Fannie and Freddie acquired $1.2 trillion of loans from banks and other lenders from 1993 to 2007. This amounted to 62% of all such conventional home purchase loans with a down payment of 5% or less that were originated nationwide over the same period.

Fannie and Freddie also acquired $2.2 trillion in subprime loans and private securities backed by subprime loans from 1997 to 2007. Acorn and the other advocacy groups succeeded at getting Congress to mandate "innovative and flexible" lending practices such as higher debt ratios and creative definitions of income. And the serious delinquency rate on Fannie and Freddie's $1.5 trillion in high-risk loans was 10.3% as of Sept. 30, 2009."


Mr. Pinto was the chief credit officer at Fannie Mae from 1987 to 1989. He is currently a consultant to the mortgage-finance industry.

Monday, November 09, 2009

Who Killed the Electric Car?

Maybe, just maybe they just don't work

"The electric car is like a 4,000 pound Chevette with a single cylinder engine and a one gallon gas tank... that takes all night to fill."

Fiat pulls the plug on Chrysler's electric car program -- DailyFinance

"The Fiat decision to scuttle its American subsidiary's electric cars could signal the industry shakeout is already underway. One major problem is the inability of battery makers to bring down prices or increase performance quickly enough to allow the electric roadster to compete on equal footing with the gas slurping status quo. To be fair, Marchionne does plan on making some electric and hybrid cars. But he expects those types of vehicles to total less than three percent of Fiat's total production runs by 2014, a paltry 60,000 or so vehicles. In a nutshell, 440,000 electric cars just died and the toll will likely continue to rise."

Sunday, November 08, 2009

Reflections on the Tues Vote

Both parties should be careful, the public may well be pissed at all politicians.

Peggy Noonan: The Rose Garden Path

"The White House has gotten bad at listening, and now it’s paying the price."


The voters are more concerned about jobs than the health care debate.

"The path the president and the Democrats of Congress chose has been called the big-bang strategy. In January 2009 they had the big mo and could claim a mandate. The strategy was to give their first year to 2008 domestic policy pledges: health-care reform, climate change, empowering unions, etc.But reality came in and stole the mandate, stopped the mo.

The reality is that over the past 10 months the great recession settled in, broadened its presence, and became part of the national landscape. It became the big bad thing for normal people."



and Frank Rich from the other side:

Op-Ed Columnist - The Night They Drove the Tea Partiers Down - NYTimes.com: "Unemployment ranked ahead of the deficit and health care as the No. 1 pocketbook issue in the survey, with 81 percent saying the Obama administration must take more action.

The tea party Republicans vanquished on Tuesday have no jobs plan. They just want to eliminate all Washington spending — a prescription that didn’t go down too well in New York’s 23rd, where the federal government has the largest payroll. The G.O.P. establishment’s one-size-fits-all panacea is tax cuts — thin gruel for those with little or no taxable income. The administration’s answer is the stimulus, whose iffy results so far, it argues, can’t be judged this early on.

Fair enough. But a year from now the public will register its verdict in any event. Meanwhile, both parties have their own delusions, not the least of which is the Republicans’ conviction that Tuesday was a referendum on what Obama has done so far. If anything, it was a judgment on just how much he has not."

and

American elections: The shine coming off | The Economist:

"Two broad points have emerged from this election night. The first is that the Democrats are now considered to own the economy—trying to blame George Bush for the country's economic ills, as Mr Obama tried to do in New Jersey, will not wash with swing voters. In Virginia, moderates and independents warmed to Mr McDonnell's themes of reduced taxes. The economy will doubtlessly improve before next year's mid-term elections, but Mr Obama's ambitions for government spending trouble many centrists.

The other point is that Sarah Palin’s broadside against the Republican candidate in upstate New York has established her beyond doubt as the leading player in Republican politics, much to the chagrin of party grandees. There is nothing new about conservative insurrection in the party. The contest in New York is somewhat reminiscent of Pat Buchanan's rebellion against the party establishment in the New Hampshire primary in 1992, except that conservatives have ditched their pitchforks for iPhones. But the danger for the Republicans remains the same now as then; the pursuit of an ideologically pure conservatism will turn away moderates and independents. The Republicans lost the 1992 presidential election, and they lost the 23rd congressional district in upstate New York on Tuesday."

It's Complicated

Good analysis of strategic patience
We may be in Iraq and Afghanistan for a very long time

U.S. Amb. Ryan Crocker on Iraq and Afghanistan Newsweek.com

Saturday, November 07, 2009

Population(s)

An "older" world needs some policy changes
In short, the idea of retirement needs to be "retired"
As long as people are productive, they should contribute to society

Demographics: Greying globe | The Economist:
The Age of Aging: How Demographics are Changing the Global Economy and Our World,
by George Magnus

"This book falls firmly into the last category. It provides a clear, sober and well-written analysis of the problem, both in developed and developing countries, and runs through the options for heading off the worst effects. The biggest part of the solution lies in expanding the shrinking band of workers, mainly by getting people to retire later and persuading even more women to take up paid employment. At the same time more productivity will have to be squeezed out of the labour force that remains. And people will have to be persuaded to save a lot more for their old age."

A report on aging populations :
A survey of ageing populations: : A slow-burning fuse | The Economist:

But there is a bright side, population growth slows
Fertility and living standards: Go forth and multiply a lot less | The Economist:

"Lower fertility is changing the world for the better"

Maybe I AM a Conservative

If the following defines a conservative ...

Looking for a True Conservative - Forbes.com:

A true conservative today should stress construction, encouragement, moderation and understanding instead of destruction, prohibition, extremism and slogans. A conservative thinks in terms of countless minor corrections and improvements based on experience and experiment rather than in terms of a universal, uniform solution based on theory and enforced by inflexible law.

"A conservative, in the best sense, sees the world and its inhabitants as an interdependent organism, comprising innumerable local communities and territories, each adapting to particular conditions. A conservative is someone who goes with the grain of humanity and the nature of the physical world, rather than trying to regiment and fashion a utopia through force of law. And, needless to say, an acceptable conservative is not one who thinks all the answers are obvious but is a modest person who admits that problems are not easily solved, that perfection is unattainable in this world and that it is often necessary to admit mistakes, change one's mind and start again."

Links on Financial Fiascos

A series of links from the last week or so

Charleis Gasparino's work on the crash
Book Review: "The Sellout" - WSJ.com

This goes way back:

"So what made 2008 so much worse? For one thing, the market was in the throes of a housing mania so intense that a leading lender, New Century Financial, touted its ability to generate a mortgage offer in as little as 12 seconds. For another, the government had made a series of horrendous policy decisions that, as Mr. Gasparino shows, encouraged financial firms to go long on housing in ways that would have once been unimaginable.

In 1995, Henry Cisneros, the secretary of housing and urban development, directed Fannie Mae and Freddie Mac—two "government-sponsored enterprises" in housing finance—to buy and guarantee mortgages of low- and moderate-income borrowers amounting to 42% of their annual business volume. His successor, Andrew Cuomo, moved the number up to 50% and directed Fannie and Freddie to buy the mortgages of borrowers with "very low income." The effect was a flood of government-subsidized lending."

Can't afford a mortgage - That's OK, you have a "right" to a home

Note that I applaud the goal of home ownership, as owners tend to be more responsible citizens, but there have to be sensible guidelines.

More from Charlie:
RealClearMarkets - An Interview with Charlie Gasparino:
"But what you will also find in my book, which I guarantee is absent from most of the others, is the root cause of the risk taking, which I believe begins and ends with the policy makers. The various heads of HUD, like Henry Cisneros, Andrew Cuomo and those in the Bush Administration who believed owning a home was a right, rather than something that should be earned, led to the disaster at Fannie Mae and Freddie Mac, which spread its guarantees to subprime loans, a place it traditionally stayed away from.

You also can't excuse Alan Greenspan for handing out free money to Wall Street every time the big firms screwed up over the past thirty years. It gave them incentive to double down on their risky bets until of course they double-downed so much the system blew up
."

More on GSE's:
Barney Frank, Predatory Lender - WSJ.com

"Since the early 1990s, the government has been attempting to expand home ownership in full disregard of the prudent lending principles that had previously governed the U.S. mortgage market. Now the motives of the GSEs fall into place. Fannie and Freddie were subject to "affordable housing" regulations, issued by the Department of Housing and Urban Development (HUD), which required them to buy mortgages made to home buyers who were at or below the median income. This quota began at 30% of all purchases in the early 1990s, and was gradually ratcheted up until it called for 55% of all mortgage purchases to be "affordable" in 2007, including 25% that had to be made to low-income home buyers.

It was not easy to find candidates for traditional mortgages—loans to people with good credit records or the resources for a substantial downpayment—among home buyers who qualified under HUD's guidelines. To meet their affordable housing requirements, therefore, Fannie and Freddie reduced their lending standards and reached into the FHA's turf. The FHA, although it lost market share, continued to guarantee what it could, adding to the demand that the unregulated mortgage brokers filled. If they were engaged in predatory lending, it was ultimately driven by the government's own requirements. The mortgages that resulted are now problem loans for the GSEs, the FHA and the big banks that were required to make them in order to burnish their CRA credentials."


Then Charlie wrote an OpEd piece:
Charles Gasparino: Three Decades of Subsidized Risk - WSJ.com:

"The greed merchants needed a co-conspirator, Mr. Forstmann argues, and that co-conspirator is and was the United States government.

'They're always there waiting to hand out free money,' he said. 'They just throw money at the problem every time Wall Street gets in trouble. It starts out when they have a cold and it builds until the risk-taking leads to cancer.'

Mr. Forstmann's point shouldn't be taken lightly. Not by the press, nor by policy makers in Washington. But so far it has been, and the easy money is flowing like never before. Interest rates are close to zero; in effect the Federal Reserve is subsidizing the risk-taking and bond trading that has allowed Goldman Sachs to produce billions in profits and that infamous $16 billion bonus pool (analysts say it could grow to as high as $20 billion). The Treasury has lent banks money, guaranteed Wall Street's debt and declared every firm to be a commercial bank, from Citigroup with close to $1 trillion in U.S. deposits, to Morgan Stanley with close to zero. They are all 'too big to fail' and so free to trade as they please—on the taxpayer dime."

From across the pond - similar need for re-regulation in the Anglo world of finance
Banks are too big, and the model needs to change

Of note - the policy to allow mega-banks was to allow American and British banks to compete with the perceived mega-banks of Europe and Japan.
In both systems, banks are a much large portion of the finance system, as opposed to the equity and debt markets in New York and London.

The Agenda for a Finance Revamp - WSJ.com:

"The repair of the global financial-regulatory system is too important to future prosperity to be left to technocrats and bankers. But the substance is so arcane and complicated that few politicians or informed citizens can grasp the issues, let alone choose solutions."

But there not all is well between London and the US
Andrew Sorkin's Too Big to Fail

Wall Street's crisis: Book of revelations | The Economist:

"...as Lehman Brothers tottered, there was briefly hope that Barclays Bank would ride in with an 11th-hour bid. But the British government, fearful of contracting the American cancer, took fright and blocked it, helping to seal the investment bank’s fate. As American officials absorbed the news, an exhausted and exasperated Hank Paulson, the then treasury secretary, muttered that the British had “grin-fucked us.”

Andrew Ross Sorkin’s fly-on-the-wall account of the great panic of 2008 is littered with such colourful anecdotes. It is meticulously researched, drawing on interviews with more than 200 of those who participated directly in the events it covers, including their handwritten notes and tape-recordings of critical meetings. The result is a compelling reconstruction of the drama surrounding the government seizure of Fannie Mae and Freddie Mac, Lehman’s collapse, the rescue of American International Group (AIG), the subsequent market pandemonium and the shoring-up of big banks’ capital with public funds."

I happen to agree with past Fed Chair, Paul Volker:
Volcker: Bernanke Didn't Go Far Enough | Newsweek Politics | Newsweek.com:

"But Bernanke didn't go nearly as far as Volcker says we should. Volcker wants to keep major commercial banks that enjoy federal-deposit guarantees away from big-time speculative trading. 'They shouldn't be doing risky capital-market stuff,' Volcker told NEWSWEEK before the Fed announcement. But, he adds, the president 'obviously decided not to accept'"

Which leads to the following - on bank's capital structure(s):

"The peculiarity of the banks is not some arcane matter. Regulators are furiously trying to find ways to prevent taxpayers picking up the tab for banking crises. The latest bill passing through Congress aims to hit the industry for the cost of bail-outs, for example. Their main weapon, however, is forcing banks to have bigger equity buffers. Bankers complain that equity is too expensive and will have a knock-on effect on the price of credit, damaging the economy. But this contradicts a cornerstone of corporate finance, set out by Franco Modigliani and Merton Miller in 1958, that a firm’s value is unaffected by its capital structure (at least in a perfectly efficient, tax-free world)."

Much more here:
Economics focus: Buffer warren | The Economist

Wednesday, November 04, 2009

Good Read !

John Steele Gordon: Obama and the Liberal Paradigm - WSJ.com:

"Valerie Jarrett, senior adviser to President Barack Obama, recently explained the White House war on Fox News as an example of 'speaking truth to power.' Much of the American political world collapsed in laughter, pointing out that her boss was president of the United States, the most powerful man on earth. His every word is news around the world. Fox News is a cable channel rarely watched by more than a few million people at a time. How could she have so blithely said something completely out-of-sync with reality?

Simple: She's a liberal."

Tuesday, November 03, 2009

Who woulda thunk?

no comment

U.S. Unlikely to Recoup Auto Bailouts, G.A.O. Says - DealBook Blog - NYTimes.com:

"A government report released Monday concludes that taxpayers will probably never recoup all — or even close to all — of the $67 billion that the Treasury Department lent to General Motors and Chrysler in the last year to prevent their collapse, Nick Bunkley of The New York Times reports from Detroit.

The report, by the Government Accountability Office, estimates that G.M. and Chrysler would need to be worth a combined $121.7 billion, or roughly 30 percent more than their values about a decade ago, for the Treasury to break even on its investments. The report said it already was assuming that $6.4 billion of the money lent to the carmakers before their bankruptcies would not be repaid.

“Treasury is unlikely to recover the entirety of its investment in Chrysler or G.M., given that the companies’ values would have to grow substantially above what they have been in the past,” the report said."

Monday, November 02, 2009

Dealing with Information

Interview with Esther, who seems to be in the eye of the info-hurricane.

When did you first recognize the power of information?
My brother and I were always trying to one-up each other, and the most devastating thing I could say was that I already knew something he told me.

You were in on the ground floor of the information explosion. Will information continue to grow so rapidly in importance?
That's like asking if energy will continue to grow in importance. It's so true that it's not a very useful statement.



Life in Information, According to Esther Dyson - Leadership and Innovation - EMC:

"How do you manage information?
I have my PC and my cellphone, which now gets e-mail. I don't have a phone at home. I threw out my landline 20 years ago, not because I was replacing it with a cellphone but because I didn't want to be called at home. The message here is: Don't let these things run you. You can always unplug your phone.

But we hate to feel we're missing something. And now there's so much more to miss.

People are trying to make you feel you're missing something. That's called marketing."

Saturday, October 31, 2009

Tragity of the Commons

Rent a bike - which cost $3,500 Each !!!

French Ideal of Bicycle-Sharing Meets Reality - NYTimes.com:

"With 80 percent of the initial 20,600 bicycles stolen or damaged, the program’s organizers have had to hire several hundred people just to fix them. And along with the dent in the city-subsidized budget has been a blow to the Parisian psyche."

Doling out favors

Cash for Clunkers for Michigan
Cash for Golf Carts for Florida?

Weekend Opinionator: Was the Car Rebate Plan a Clunker? - The Opinionator Blog - NYTimes.com

Friday, October 30, 2009

Whiskey Tango Foxtrot

Now we go from Cash for Clunkers to ... ???

Note : not just Obama, this started under Bush

Golf Cart Buyers Could Get Big Tax Credits - County By County News Story - WFTV Orlando:

"One of the most surprising things about the golf cart tax credit is that it gives people almost as much money as the tax credit for first time home-buyers, which is $8,000."

Thursday, October 29, 2009

Shameless plug

Full disclosure - I have an interest in RCT

East Lansing - Denton ATD Taps East Lansing-Based Red Cedar Technology's Virtual Design Tools

Ohio-based engineering company Denton ATD is using East Lansing-based Red Cedar Technology software to optimize its virtual crash test dummies design.

Red Cedar Technology is a engineering optimization software and consulting company that accelerates design processes for companies facing engineering challenges.

The Red Cedar Technology designed the HEEDS Professional software that's being used by ATD Design allows engineers to automate their design process. Typically, designers use CAD tools to develop computer models. They then analyze the model, and if the model isn’t correct, they have to manually fix the design until it’s correct.

“The software (HEEDS Professional) replaces the manual iterative process for finding the better design with a mathematically-based process that’s much faster and much more robust and much more intelligent than any engineer could be,” says Red Cedar Technology President Ron Averill.

Red Cedar Technology has 12 employees and, though 2009 has been a bit slow in terms of growth, the company has added one employee.

“We anticipate more rapid growth next year and I think things are starting to pick up,” Averill says.

Source: Ron Averill, Red Cedar Technology

This is success?

Our tax dollars at work?
What's next ... golf carts (yup)

Edmunds:Cash For Clunkers Cost Taxpayers $24K Per Vehicle Sold - WSJ.com:

"The government's 'Cash for Clunkers' program may have only added 125,000 vehicle sales, according to Edmunds.com, which said the rest of the units sold would have happened regardless of the program.

In total, the car-shopping Web site said about 690,000 vehicles were sold during the program. Edmunds.com said that based on the actual sales gained from the program, the Cash for Clunkers program cost taxpayers $24,000 per vehicle sold.

'Our research indicates that without the Cash for Clunkers program, many customers would not have traded in an old vehicle when making a new purchase,' said Edmunds.com senior analyst David Tompkins. 'That may give some credence to the environmental claims, but unfortunately the economic claims have been rendered quite weak.'"

Tuesday, October 27, 2009

True Prosperity

Mark Sanford on Ayn Rand | Newsweek Books | Newsweek.com

I would add that true prosperity relies, as well as those mentioned, on the nations shopkeepers, and workers who add their knowledge and talents to the goods and ideas they produce.

"... at a fundamental level many people recognize Rand's essential truth—government doesn't know best. Those in power in Washington—or indeed in Columbia, S.C.—often lead themselves to believe that our prosperity depends on their wisdom. It doesn't. The prosperity and opportunity we enjoy comes ultimately from the creative energies of the country's businessmen, entrepreneurs, investors, marketers, and inventors. The longer it takes this country to reawaken to this reality, the worse we—and in turn, our children's standard of living—will be.

When the economy took a nosedive a year ago—a series of events that arguably began when the government-sponsored corporations Fannie Mae and Freddie Mac went broke—many Americans, myself included, watched in disbelief as members of Congress placed blame on everyone and everything but government."

Monday, October 26, 2009

How to talk to your banker

I would add
1) Banking should be boring
2) a banker who is not lending is not in business
3) bankers want return of capital even more than return on capital

The Secret Language of Bankers - You’re the Boss Blog - NYTimes.com

Sunday, October 25, 2009

Steve Wynn on the Economy, Jobs & Hotels - CNBC.com

Lucid insight as to work works and what doesn't

Steve Wynn on the Economy, Jobs & Hotels - CNBC.com

Politics

Devout and practicing non-partisan, with lots of issues with both major political parties.

But as long as we have the Democrats in power, we might as well pick on them for today.
I expect that the Democrats will place blame for problems on the Bush Administration or the rest of President Obama's term.

But sooner or later, the voters may decide that it's the Democrats economy and war(s)
Peggy Noonan: It's His Rubble Now - WSJ.com:

"At some point, you own your presidency. At some point it's your rubble. At some point the American people tell you it's yours. The polls now, with the presidential approval numbers going down and the disapproval numbers going up: That's the American people telling him."

and as for tactics ... Chicago Politics

They pull a knife, you pull a gun. He sends one of yours to the hospital, you send one of his to the morgue. That's the Chicago way.

–Jim Malone,

"The Untouchables"



Kim Strassel: The Chicago Way - WSJ.com:

"A White House set on kneecapping its opponents isn't, of course, entirely new. (See: Nixon) What is a little novel is the public and bare-knuckle way in which the Obama team is waging these campaigns against the other side."

While I don't take the time to follow Fox, it looks like the administration does:

Behind the War Between White House and Fox - NYTimes.com:

"Speaking privately at the White House on Monday with a group of mostly liberal columnists and commentators, including Rachel Maddow and Keith Olbermann of MSNBC and Maureen Dowd, Frank Rich and Bob Herbert of The New York Times, Mr. Obama himself gave vent to sentiments about the network, according to people briefed on the conversation.

Then, in an interview with NBC News on Wednesday, the president went public. “What our advisers have simply said is that we are going to take media as it comes,” he said. “And if media is operating, basically, as a talk radio format, then that’s one thing. And if it’s operating as a news outlet, then that’s another.”"

Starting to get "interesting"

Moore Moore Moore

Apologies to Donna Summers (how do you like it ...)

Is Capitalism Evil? Michael Moore Thinks So | Newsweek Business | Newsweek.com:

"What have you done with all the money you've made? Do you invest it?
I don't invest in anything. I don't own any stock. I don't participate in the system. Why would I want to put my hard-earned money into a casino? Now, when you invest, people are taking secondary bets on other secondary bets and concocting weird schemes. No normal person can benefit."

Saw him on CNBC doing his promo tour for Capitalism: A Love Story .
Asked about his own wealth, he claimed that all his funds were in a "Saving's Account"
Really ?
Let's assume, for the sake of argument, that he gets some interest on his deposits.
There are limits on insurance : FDIC: Deposit Insurance Simplification Fact Sheet
Maybe he spreads his deposits over a variety of banks?
Yield ? up to a whopping 2% ?

But what about his foundation?
From Michael Moore: A Love Story? Not So Much - WSJ.com we have :
"Public documents, reviewed by The Wall Street Journal, show the foundation, the Center for Alternative Media & Culture, which listed Mr. Moore as president, held shares in Halliburton in 2000 and in Tenet in 2002, along with many other stocks."

OK, now we are getting into "fine print"... the foundation invests, Mike doesn't

A Russian ex pat's view : Advisor Perspectives :
"Moore neglects to admit that capitalism has brought people out of poverty and socialism sank them there. He blames rising health-care costs on HMOs, though HMOs are just a pass-through vehicle between payers and service providers. He derides capitalism as a system that favors businesses because it “allows them to get away with paying so little.”

Thursday, October 22, 2009

There goes the neighborhood

Traverse City makes Geographic's list of best destinations |

"Traverse City and the region's lakeshore have made the list of the world's cleanest and most authentic tourist destinations, according to National Geographic."

Friday, October 16, 2009

If Only we could

As Wall St. traders seem to have short memories, say less than 10yrs, or since the last debacle, maybe we should apply some genetic engineering.

No more "it's different this time"... because if usually isn't.

Now if we could implant bad memories ...

Science Friday Archives: Creating Memories:

"Researchers have used pulses of light to store the memory of a bad event that never actually happened into the brains of fruit flies. Writing this week in the journal Cell, the researchers describe their success in directly manipulating the activity of individual neurons responsible for associating a certain odor with a bad experience. By introducing chemicals into those neurons when the odor was present, the researchers found that they could produce flies that 'remembered' experiencing an electric shock connected to the odor, although no actual shock was present."

Wednesday, October 14, 2009

No-Mi

On Toyota closing Nummi, politics and unions as well as prospects for protectionism when Government Motors is told both to be profitable and go green, all the while maintaining the largest workforce possible.

Holman Jenkins: The Meaning of Nummi - WSJ.com:

"There you have the still-unfolding disaster of the developed world's auto market writ small. Protectionism is never about 'saving jobs,' but about saving specific jobs of politically useful groups. Ms. Merkel's steps may well cause a blow-up in the EU, given her insistence that Opel's German plants be protected at the expense of plants in Belgium and Spain. Likewise, California is not up for grabs politically, unlike other states where the UAW is powerful. So the union, having already received countless favors from the Obama administration, chooses to spend its ammunition elsewhere, partly because it never liked the Nummi idea of 'lean manufacturing' in the first place."

Monday, October 12, 2009

Grand Vision

In response to Leelanau Enterprise "County Board rejects Grand Vision"

Open letter :

To the Editor
I am writing with some observations and thoughts related to the story headlined “Vision not so ‘Grand”” First off, I was in attendance at the meeting, as a board member of the Grand Traverse Regional Community Foundation, but stepped out after the presentation was made, and did not observe directly the later activities.

I’m writing merely in response to the story as presented in the Enterprise. Were a majority of the board “not impressed” or were they just lacking more information?

Commissioner Watkoski : “… I found it focusing less on transportation issues and more on issues like land use and housing.” I attended as many visioning sessions as practicable, and found, if anything, there was too much focus on transportation. Granted, the project was working with highway funds, but the charge was to come up with a long term plan, and where people are and where they want to go is your base data for transportation. Let’s not build bridges to nowhere.

Commissioner Schmuckle : “Your group is anti-growth…” I’ve never found this to be the case, and as a matter of fact, a slogan of the Grand Vision project is “Growth Happens”

Commissioner’s Tonneberger and Schaub seemed to have the right idea in seeking to table the issue until more information was available

I’ll withhold responses to the public comments, as they seem to have come from a group with pre-conceived notions.

I would further like to note that the Grand Vision has strong support from such groups as the Traverse Bay Chamber of Commerce, and Rotary Charities.

I am a strong proponent of regional cooperation and planning. In the days of horse and buggy, travel was a short distance issue. Today, citizens of Leelanau work in neighboring communities and counties. We are all in this together, and need to think “together.”

Full disclosure: I currently chair the Leelanau EDC, sit on boards of Grand Traverse Community Foundation, Traverse Bay EDC, and the Michigan Land Use Institute.

Not Peak Oil, not peak gas

Not peak hydrocarbons.

I can recall, decades ago (I'm that old) when I wasn't interested in Nat Gas because we were going to be running out.

Guess not"...calculated that the recoverable shale gas outside of North America could turn out to be equivalent to 211 years’ worth of natural gas consumption in the United States at the present level of demand, and maybe as much as 690 years. The low figure would represent a 50 percent increase in the world’s known gas reserves, and the high figure, a 160 percent increase."

Gas Extraction Method Could Greatly Increase Global Supplies - NYTimes.com:

"Italian and Norwegian oil engineers and geologists have arrived in Texas, Oklahoma and Pennsylvania to learn how to extract gas from layers of a black rock called shale. Companies are leasing huge tracts of land across Europe for exploration. And oil executives are gathering rocks and scrutinizing Asian and North African geological maps in search of other fields.

The global drilling rush is still in its early stages. But energy analysts are already predicting that shale could reduce Europe’s dependence on Russian natural gas. They said they believed that gas reserves in many countries could increase over the next two decades, comparable with the 40 percent increase in the United States in recent years."

Saturday, October 10, 2009

ouch

So much better than I could lay it out
like a marshmallow on a stick

Op-Ed Columnist - Gandhi Wuz Robbed - NYTimes.com:

"When he heard the Nobel Peace Prize shocker on Friday, Bill Clinton went into one of his purple rages. He picked up the phone and dialed the one person on earth who would be as steamed as he was."

Peggy Noonan rips the Nobel

A Wicked and Ignorant Award - WSJ.com:

"It is absurd and it is embarrassing. It would even be infuriating if it were not such a declaration of emptiness.

The Norwegian Nobel Committee has embarrassed itself and cheapened a great award that had real meaning."

Then on to the meat of her argument - America has sought freedom and justice, not empire.

For instance: The Peace Prize judges won't see it this way, but America has gone to Europe twice in the past century to fight for peace. This is an old concept, and has to do with killing killers so they can't kill anymore. It cost America a lot to do this, and we kept no territory, as they say, beyond the graves where our soldiers lie. America then taxed itself and gave its wealth not only to its allies but to its former adversaries, to help them rebuild. We didn't actually have to do this. We did it to make the world better. We did it to foster peace. (They should give us a prize.)

America hasn't just helped the world, it literally lit the world with its inventions, which are the product of its freedoms. The lights under which the Peace Prize judges read, and rejected, the worthy nominations? Why, those lights were invented by an American. The emails the committee members sent to each other, sharing their banal insights on leadership? They came through the Internet. Who invented the Internet? It was a Norwegian bureaucrat with a long face and hair on his nose and little plastic geometric eyeglasses? Oh wait, it was Americans. The members of the Norwegian Nobel Committee are healthy because they have been inoculated against diseases such as polio. Who invented the polio vaccine, an enfeebled old leftist academic in Oslo? Nah, it was a man named Jonas Salk. He was an American.


Oh yeah, her comments on Ronald Regan were on point :

It was always absurd that Ronald Reagan, whose political project led to the end of the gulag and the fall of the Berlin Wall, and who gambled his personal standing in the world for a system that would protect the common man from annihilation in a nuclear missile attack, could not win it.

Smarts

UBS has been renamed "Use to Be Smart" and now we have "We Pretended to be Smart" :

John Thain Admits He Didn't Understand Merrill's Risks: Tech Ticker, Yahoo! Finance:

"The bankers and traders dealing in CDOs didn't understand what they were doing, John Thain said in a recent speech.

“To model correctly one tranche of one CDO took about three hours on one of the fastest computers in the United States. There is no chance that pretty much anybody understood what they were doing with these securities. Creating things that you don’t understand is really not a good idea no matter who owns it,” the former Merrill Lynch chief executive said in a speech this month, according to Financial News."

Good thinking on thinking

By Michael Milken

Published: October 4 2009 20:31 | Last updated: October 4 2009 20:31

FT.com / Comment / Opinion - Prosperity rests on human and social capital:

"Amid all the changes since I first went to Wall Street 40 years ago, basic investing principles have not changed at all. Attractive opportunities still await those who do careful research; capital structure still matters; and the best investor is a social scientist who analyses markets from both macro and micro views.

The macro view sees the 21st century defined by global competition for the world’s most valuable asset, human capital. Nations build this by strengthening education, healthcare, access to scientific knowledge, opportunities for women and incentives that attract skilled immigrants.

A continuous focus on education is driving the rise of the middle class in Asia. That is one reason Asia’s growing economy is expected to reach at least half the world total by 2030, up from less than 30 per cent today."

Friday, October 09, 2009

Style over Substance

John Stuart delivers the "news", the Noble committee delivers prospective peace.

In Surprise, Obama Wins Nobel for Diplomacy - NYTimes.com:

"But while Mr. Obama has generated considerable good will overseas — his foreign counterparts are eager to meet with him, and polls show he is hugely popular around the world — many of his policy efforts have yet to bear fruit, or are only just beginning to. North Korea has defied him with missile tests; Iran, however, recently agreed to restart nuclear talks, which Mr. Obama has called “a constructive beginning.”

In that sense, Mr. Obama is unlike past recipients of the Nobel Peace Prize such as former President Jimmy Carter, who won in 2002 for what presenters cited as decades of “untiring efforts” to seek peaceful end to international conflicts. (Mr. Carter failed to win in 1978, as some had expected, after he brokered a historic peace deal between Israel and Egypt.)"

Thursday, October 08, 2009

Prospects

Positive on the Dollar, interesting changes in China
"beginning of major shift to consumer orientation, and the crisis was good for China - shaking them out of export orientation"

Jim O'Neill global head of research at Goldman Sachs
Video - CNBC.com

Wednesday, October 07, 2009

Fish

Salmon and Trout at "The Tubes" on the Crystal
We've had some good rains, guess it brought them in from the "Big Lake"

Most I can recall ever seeing at once.

Hazard to navigation ...



video

Tuesday, October 06, 2009

Where's your Union

I doubted the "cash for clunkers" as not much more than a quick fix gimmic for "Government Motors"
Clear some inventory, maybe juice production some, help the UAW

For used car dealers (as if the breed deserves much sympathy) get left out - they are non-union.

Used-Car Dealers Feel 'Clunkers' Pinch - WSJ.com:

"Michael Darrow, an independent used-car dealer, is still feeling pain from 'Cash for Clunkers.'

During the summer, he was shut out of the popular initiative, which allowed only new-car franchises to participate. Now, the inventory he normally buys at auction is sharply limited, a direct result of Clunkers sending close to 700,000 gas guzzlers to the junkyard. That's driven wholesale prices to new highs at a time when cost-conscious consumers, who sometimes rely on dated information from guide books, aren't paying more."

Monday, October 05, 2009

Your tax dollars at work

Bit of "social interest" investing on the part of Uncle Sam
Unlikely that there will be any breakthroughs here.

Betting on "nubie" companies with virtually no experience in volume manufacturing or distribution

A Long Bet on Electric Cars - BusinessWeek:

"Not every government investment is a sure bet. The question is how much risk taxpayers should shoulder. The feds have put $465 million into Tesla, but it has raised only $300 million and change in private capital. And the U.S. has invested five times as much in Fisker as private investors. Rogers says Fisker must raise more money to tap the credit line, but debt will still account for 70% of the company's funding. So the risk, and burden if these companies fail, will mostly rest with U.S. taxpayers."

Sunday, October 04, 2009

Catching up

No particular order, but wanted to post some links on items I've come across
Starting with

---
Secret Lives of the Presidents - Timothy Egan Blog - NYTimes.com

Reminder that one should not take politicians at face value
Such as :

"We see more of them than we do most family members. We know what kind of dog they like and what beer they drink. Strangers bring up the most intimate details of their lives for rabid dissection, and intimates bring up the strangest details.

Yet for all the perceived closeness Americans have to their presidents, we don’t really know them, as a slew of recent revelations make clear. They are layered thick with the armor of artifice.

George W. Bush, who got Ned Flanders Nation to see him as a righteous Christian guided by Biblical principle, had a soft spot for gay marriage, and didn’t believe his own speeches on the subject. This from ex-speech writer Matt Latimer."

or

"Bill Clinton comes across in Branch’s just-published book, “The Clinton Tapes,” as the closest thing to the guy we recognize. He is needy, petulant, brilliant, with those oversized appetites. It’s no surprise that he is dead-on in his assessment of why Al Gore lost the 2000 campaign: failing to run on the Clinton prosperity, or even use the Big Dog. But what if Clinton had come out and said at the time that Gore was blowing it, as he told Branch. Most likely, Gore would have been forced to use him, and needing only a handful of votes in a few states, it would have tipped the 2000 election. But then again, as Clinton is quoted as saying of Gore: “I thought he was in Neverland.”
---

The very wealthy are concerned - in part about what may happen with confiscatory taxes or other government actions towards assets. That and commercial real estate.

Wealth Matters - Too Rich to Worry? Not in This Downturn - NYTimes.com:

"According to a study the Family Office Exchange plans to release this month, the super-rich are most worried about what they do not know. Some 45 percent of the 108 ultrahigh-net-worth families surveyed in August ranked the economy and financial markets as their No. 1 concern. They were most concerned about government intervention in the financial markets and a commercial real estate bust."

Tuesday, September 29, 2009

In Debted

Good points, like that debt hasn't been cleaned up, just that it's been shifted

Debt: The New Four-Letter Word - CNBC.com

Shared via AddThis

Couple of pieces on the dismal science

Been a bit behind in getting some things posted that I've bookmarked over the last month.
Some reflect my long held opinion that "rocket science" works on The Street ... until it doesn't.
Failure to recognize that markets are based on crowd behavior and changing psychology. People are not always rational, both in the economy and in markets.

I hope that the investment/economic crisis of the last year or so has been a lesson learned.

How Did Economists Get It So Wrong? - NYTimes.com:

"It’s hard to believe now, but not long ago economists were congratulating themselves over the success of their field. Those successes — or so they believed — were both theoretical and practical, leading to a golden era for the profession."

Unboxed - Creating Quant Models That Are Closer to Reality - NYTimes.com:

"The risk models proved myopic, they say, because they were too simple-minded. They focused mainly on figures like the expected returns and the default risk of financial instruments. What they didn’t sufficiently take into account was human behavior, specifically the potential for widespread panic. When lots of investors got too scared to buy or sell, markets seized up and the models failed."

Wednesday, September 16, 2009

Mama said there'd be days like this

My mantra now goes from "Banking Should Be Boring" to "Banking Relationships Should Be Boring"

Too much time today on reviewing options and making plans for potential changes.


UPDATE 2-Irwin Financial shares plunge on liquidity concerns | Markets | Markets News | Reuters:

"Sept 16 (Reuters) - Irwin Financial Corp (IFC.N) said it had 'no realistic prospect' of boosting its capital to levels demanded by a U.S. regulatory cease and desist order.

The news nearly wiped out nearly half of Irwin's market value in early trade, but the shares later recovered to 53 cents, down 40 percent from Tuesday's close, in high volume.

The company along with its banking unit Irwin Union Bank & Trust Co received a cease and desist order from regulators, and the bank is currently classified as 'undercapitalized' under regulatory capital standards.

The cease and desist order, from the Federal Reserve and the Indiana Department of Financial Institutions, requires the bank holding company to achieve a certain capital level and reduce reliance on certain types of deposits by Sept. 30."

Tuesday, September 08, 2009

Guilty Pleasure

Coming back from meeting, M-22, and blasting past a Prius, in the Honda S2000

Knowing that I was still pulling high 30MPG, but top down and enjoying the drive, with great sticky tires, responsive high revving engine and stiring the 6-speed gearbox.

Wednesday, September 02, 2009

Slip Sliding Away

The real risk of blowing it:
Can the Administration recover the leadership on the issues or will it cave to Congress and the further left leaning leadership.

You run to the left (or right for Republicans) to get nominated, but you have to govern from the middle ... or lose the next election.

A short victory lap ... OK, but then you have to lead, and govern.

Op-Ed Columnist - The Obama Slide - NYTimes.com:

"The administration hasn’t been able to pull it off. From the stimulus to health care, it has joined itself at the hip to the liberal leadership in Congress. The White House has failed to veto measures, like the pork-laden omnibus spending bill, that would have demonstrated independence and fiscal restraint. By force of circumstances and by design, the president has promoted one policy after another that increases spending and centralizes power in Washington.

The result is the Obama slide, the most important feature of the current moment. The number of Americans who trust President Obama to make the right decisions has fallen by roughly 17 percentage points. Obama’s job approval is down to about 50 percent. All presidents fall from their honeymoon highs, but in the history of polling, no newly elected American president has fallen this far this fast.

Anxiety is now pervasive. Trust in government rose when Obama took office. It has fallen back to historic lows. Fifty-nine percent of Americans now think the country is headed in the wrong direction."

Beats crossword puzzles

Let's see, up to 4 a day ... wonder if that is every day or some lumpynesss?

Vital Signs - Moderate Drinking Over 60 May Lower Dementia Risk - NYTimes.com

"The studies variously defined light to moderate drinking as 1 to 28 drinks per week.

Compared with abstainers, male drinkers reduced their risk for dementia by 45 percent, and women by 27 percent."

Tuesday, September 01, 2009

Some excellent analysis of the issues

NOTE: printed in full without permission, but I encourage any and all to follow the link to The Economist, for more information.

Reforming American health care: Heading for the emergency room | The Economist:
Heading for the emergency room

Jun 25th 2009 | Washington, DC
From The Economist print edition

America’s health care is the costliest in the world, yet quality is patchy and millions are uninsured. Incentives for both patients and suppliers need urgent treatment.

No one will be astonished to hear that health care costs more in Indiana than in India. However, a few might be surprised to learn that Americans spend more than twice as much per person on health care as Swedes do. And many may be shocked to be told that in Miami people pay twice as much as in Minnesota, even for far worse care.

The American health-care system, which gobbles up about 16% of the country’s economic output, is by far the most expensive in the world (see chart 1). The Congressional Budget Office (CBO) estimates that on current trends spending on Medicare and Medicaid, the government schemes for the old and the poor, will rise from 4% of GDP in 2007 to 12% in 2050. The prospect of long-term fiscal disaster is the main reason why efforts to reform health care are gaining momentum in Washington, DC. As Peter Orszag, the director of Barack Obama’s Office of Management and Budget, puts it, “that ‘long term’ keeps getting closer and closer.”

The system has its defenders. They point out that countries should expect to spend more on health care as people age. Americans are wealthy enough to choose extra health care over other things. Their free-spending approach calls forth the invention and speedy adoption of valuable new drugs, devices and procedures, whereas Europe’s stodgy and stingy (not to mention socialist) health-care systems deny coverage and ration care, to the detriment of their people’s health.

A poll carried out for The Economist by YouGov highlights Americans’ beliefs about the state of their system. Although 68% of them rate the care they receive as “excellent” or “good”, 52% are dissatisfied with the quality in the country as a whole. Only 25% think the system works pretty well and requires only minor changes; 40% think fundamental change is needed and 29% think it should be completely rebuilt. Some results are shown in chart 2. A fuller version is available at www.economist.com/yougovpoll.

The doubters have a better case than the defenders. Granted, medical inventions are readily embraced by American doctors and patients. In specific instances—technology to save babies born prematurely and statin drugs to reduce cholesterol, to take two—the benefits of spending greatly outweigh the costs. But if the system in general were providing value for money, America’s vast expenditure would at least be reflected in a healthier population than in more frugal countries.

Alas, it is not. Comparisons with other rich countries and within the United States show that America’s health-care system is not only growing at an unsustainable pace, but also provides questionable value for money and dubious medical care. Three troubling symptoms stand out: uneven quality of care, inadequate coverage and soaring costs.

Start with quality. Evidence is mounting that spending more does not necessarily buy better health. On the contrary, it appears that many Americans are getting mixed or even downright dreadful health care. In a recent study economists at the OECD found that America does indeed do well on some measures, such as breast-cancer survival rates and cervical-cancer screening, compared with other rich countries. However, it does worse in other areas. American infant mortality was 6.7 per 1,000 births in 2007, against an OECD average (excluding Mexico and Turkey) of 4.0. The death rate after haemorrhagic strokes was 25.5% in American hospitals but only 19.8% in OECD countries as a group.

Jonathan Skinner, an economist at Dartmouth College, cautions that factors other than health-care systems—attitudes to teenage pregnancy, say, or smoking—may influence the numbers. Even so, he thinks the system is wasteful. In a paper in the Journal of Economic Perspectives last year he and Alan Garber, of Stanford University, argued that America’s health system was “uniquely inefficient”, producing too little per unit of input and consuming far too much of the country’s resources.

Mr Skinner is involved with another worrying line of research. The Dartmouth Atlas project has scrutinised variations in health outcomes and spending involving Medicare. It has found wide differences in costs across the country—less than $5,000 per person in Salem, Oregon, in 2006; a bit more than $8,000 in San Francisco, in line with the national average; more than $16,000, and rising fast, in Miami—but no connection between higher spending and better outcomes. In fact, the evidence points in the other direction: outcomes tend to be better where costs are lower. Mr Orszag points to the Dartmouth work to argue that up to 30% of America’s health-care spending is sheer waste.

The second symptom is coverage. Uniquely among rich countries, America’s system of health insurance is not universal. Around 49m people have no health insurance. On current trends, within a decade 60m will be without cover. Studies have shown that not all these people are indigent: a quarter or more can afford insurance, but choose not to buy it.

They know they are unlikely to be left to die in the streets. With the truly poor, the free-riders turn up at emergency rooms. This is hugely inefficient, because pricey late interventions and operations could very often have been avoided with a much smaller investment in preventive care. Insured people and taxpayers are forced to cross-subsidise such “uncompensated” and wasteful treatments to the tune of tens of billions of dollars per year.

Other rich countries cover almost all their citizens in one of two ways. Some, such as Britain, Canada and Sweden, have “single payer” systems, in which taxes support a public service. Others, notably the Netherlands and Switzerland, oblige individuals to buy insurance. France has a mixed public-private system.

After decades of failed attempts at reform, a consensus appears to be emerging in America around the principles needed for universal coverage. One likely change means a restructuring of America’s failed health-insurance markets. Firms are today allowed to pick the safest patients and reject the sickest. In future they will have to take all comers. Because this imposes unfair burdens on firms that attract lots of older or sicker people, reform is likely to include government-funded mechanisms for risk pooling or reinsurance. The Netherlands, in particular, uses such an approach.

American health insurers, having long opposed this idea, have performed a startling U-turn in recent weeks. America’s Health Insurance Plans, their chief lobbying group, now says it is willing to accept such heavy-handed reforms—if they are accompanied by a requirement that all Americans purchase coverage. This may seem a cynical ploy to expand their business, but some compulsion is needed to get around the selection problem. Any legislation is likely to include subsidies to help the poorest pay for cover.

If done properly, this will in time move America towards the Swiss and Dutch models of universal private insurance. These are not perfect, to be sure. Regina Herzlinger of Harvard Business School observes that the Dutch reforms have led to rapid consolidation of insurers and hospitals, fuelling resented price increases. She favours the decentralised Swiss model, which preserves individual choice and competition. Others note that Swiss health-care costs are high by European standards. But they are a third less, as a share of GDP, than America’s, and the country’s excellent health outcomes should be the envy of American reformers. Our poll suggests that an individual mandate would be unpopular, with only 21% in favour and 53% opposed. Respondents did favour having the option to buy from the government, by 56% to 23%.

Such reforms would expand coverage, but could exacerbate the third symptom, cost, as the experience of Massachusetts, a trailblazing state that has already implemented a plan for universal coverage, suggests. The state faces possible bankruptcy unless it finds a way to rein in costs.

Your money or your life

Indeed, tackling inflation in American health care remains the most important and difficult part of the treatment. According to our poll, cost is a tender nerve: 61% thought the high cost of care and insurance was a bigger problem than the number of uninsured, against 31% who believed the reverse. Only 21% would be willing to support a reform plan if they had to pay more in insurance or tax; 62% would not.

Some common diagnoses are wide of the mark. One is price gouging by drug companies. In fact, pills account for barely a tenth of health-care spending in America and similarly small shares elsewhere. But aren’t costs lower in Europe because of price controls? Europe does indeed spend less on new branded drugs, but also uses fewer generic drugs and pays much more for them. And Switzerland actually has higher drug prices than America (as does Canada). Greedy drugmakers are not the main cause of America’s runaway costs.

Nor are baby-boomers, though they are often blamed for health-care inflation because there are a lot of them and they are getting old. Ageing will clearly push up costs in time (see our special report in this issue), but it is not the main culprit yet. The CBO estimates that ageing accounts for only a quarter of the health-care inflation to come in the next few decades, and the share in other rich countries is similar.

Doctors’ generous pay is another popular culprit. But doctors in several European countries are well paid too. The OECD estimates that general practitioners in America earn 3.7 times the average wage. Their British counterparts earn 4.2 times their national average. American specialists earn 5.6 times the average wage, against 7.6 times for their Dutch colleagues. Yet health-care costs in Britain and the Netherlands remain lower than America’s. The real problem is not how much American doctors are paid, but how. The system of medical reimbursement warps incentives for doctors, insurers and patients that lead Americans to consume more and more medical services. There is strong evidence that Americans use pills, procedures, scans and other expensive forms of health care more often than do patients in other rich countries, and not always to good effect.

America’s insurance system encourages overuse in several ways. One is the tax break that favours health insurance provided by employers, which leads to excessively generous coverage and hence over-consumption. Another is the fact that American health insurers earn a lot of revenue from administering the health plans provided to employees by big corporations which, in effect, insure themselves. This leaves insurers with no incentive to curb costs, because more spending means fatter management fees.

The incentives facing doctors are even more perverse. Most doctors are not paid a fixed salary, still less rewarded for better health outcomes. Integrated American systems such as Kaiser Permanente and the Mayo Clinic are exceptions to this rule, and Britain’s National Health Service (NHS) is trying to adopt a similar approach. But most doctors and hospitals are paid more if they provide more services, regardless of the results. Predictably, this leads to far higher rates of doctors’ visits, specialist referrals, scans and so on.

For instance, the OECD countries have an average of 11 magnetic-resonance imaging machines per 1m people. America has 25.9. America uses them more often, too: 91.2 times per 1,000 people per year, compared with the OECD average of 39.1. Similar tales can be told about other pricey kit.

This incentive problem even extends to patients. If patients pay very little out of their own pockets they have little desire to curb consumption. Though this is a problem in many OECD countries, in America the proportion of out-of-pocket spending has declined sharply in the past few decades. And a new report by McKinsey, a firm of management consultants, identifies a more subtle problem. Having examined insurance and out-of-pocket spending for several health risks, it concludes that Americans are generally “over-insured and under-saved”. It is prudent for individuals to have comprehensive health insurance against catastrophic health risks such as heart attacks or cancer. But McKinsey finds that Americans with private health insurance often have generous coverage for non-essential and even medically unjustified care (see chart 3). This encourages over-consumption.

The power of sunshine

A second big factor pushing up health costs is the lack of competition among operators of American hospitals. Thanks to a wave of consolidation in recent years, argues Harvard’s Ms Herzlinger, “most parts of the United States are dominated by oligopolistic hospital systems.” George Halvorson, who heads Kaiser Permanente, insists that “there is an almost total lack of price competition among providers.”

Nimble upstarts and innovators are challenging the incumbents in some areas. Such efforts range from specialist heart hospitals, which get better outcomes at more reasonable prices than local general hospitals, to retail clinics at Wal-Mart stores. Remote medicine, in the form of technology for tele-care or medical tourism to Thailand and Costa Rica, also poses a threat. But medical lobbies are using political influence and outdated regulations to thwart competition where they can (for example, through rules preventing a doctor from treating a patient in another state).

To counter this, reforms could allow federal regulators to overrule state-level obstacles to entrants such as clinics staffed by inexpensive nurse-practitioners. More transparency would help too, by empowering patients to choose hospitals and doctors providing good value and better results. Electronic medical records would make shopping around easier.

Another useful way to promote transparency and value would be to evaluate the cost-effectiveness of new drugs, devices and treatments. This may be common sense, but it is rarely done in America. Britain’s National Institute for Health and Clinical Excellence (NICE) pioneered this approach, and other European countries have followed it. Andrew Dillon, the agency’s chief executive, accepts that “the NICE model is not transportable in precise form” but he still insists that “one can dissect and apply what is relevant to other countries.”

In America, the drugs and devices lobbies are violently opposed to a NICE-style agency that could issue mandatory rulings. They paint a scary picture of Americans being denied access to life-saving new drugs by faceless bureaucrats. In Britain NICE has come under fire for rulings that limited access to expensive drugs for Alzheimer’s and cancer on the NHS. America could get around this problem by requiring and perhaps even funding studies, but leaving insurers and individuals to decide whether to pay for treatments.

More competition and transparency would help, but the main goal of any reform plan must be to address the perverse incentives that encourage overconsumption and drive up costs. Medicare has been tinkering with “pay for performance”, a promising experiment. Mr Halvorson insists that by rejigging incentives other health providers can also create their own “virtual Kaisers”.

If American reformers doubt the power of incentives, they should visit Sweden. Like other relatively cheap OECD systems, Sweden’s single-payer model has been plagued by long waiting-lists—a sign, to American conservatives, of the rationing that goes with socialised medicine. Swedish health officials tried and failed to cut queues by increasing direct funding for hospitals and even issued an edict requiring hospitals to cut queues for elective operations to three months. Then, last year, the health ministry said it would create a fund into which it would pay SKr1 billion ($128m) a year for local authorities that managed to reduce waiting times to that threshold. Nine months ago virtually none of the counties passed, but this month the health minister revealed that nearly all had cut their queues to three months or less.

Anders Knape, the head of the organisation representing county governments, ascribes this to “a dramatic change in incentives”. In the past, he explains, hospital bosses believed waiting lists were a sign of being overloaded, so they tolerated them in the hope of winning more funding. With the new scheme, however, “no queues means more resources”.

If getting incentives right can mobilise even a state-run health system like Sweden’s, surely there is scope for such reforms to fix America’s mess too. If the United States couples its efforts to expand coverage with such a radical restructuring of the underlying drivers of cost inflation, there is every reason to think its health system can become the best in the world—and not merely the priciest.