30 December 2009

The saddest thing I read today

Of course, plenty of taxpayers themselves are eager to live to see the new year. One wealthy, terminally ill real-estate entrepreneur has told his doctors he is determined to live until the law changes.

"Whenever he wakes up," says his lawyer, "He says: 'What day is it? Is it Jan. 1 yet?'"
That's from an article today in The Wall Street Journal. The estate tax for the super-wealthy is going to be non-existent in 2010, and it's really framing peoples decisions about health.
What's most depressing about the man in the quote above is that it seems his only remaining desire/purpose to live is to beat the tax. How awful.

27 December 2009

Eagles vs Broncos

The Eagles squeaked out a win today against the Broncos. Just a few things to touch on.

What the heck is happening in the 2nd half? The offense falls apart and the defense gets lackadaisical. We almost gave the game away as a result. They're acting like the Runnin' Rebels, and it's frustrating me.

Positive notes: McNabb's 27 yard rush to get a crucial 1st down! That was awesome. Hope he didn't hurt his left hamstring...he did grab it a bit at the end of the run. Oh, and let's not forget that insane catch by Jeremy Maclin! So glad they reviewed that and made sure to get the call right, because that would have been a shame if it was left ruled as incomplete, not to mention that the game probably would have went into overtime had the ruling not been corrected.

Overall I think we look pretty solid. Definitely need to get and keep the rhythm after the half though. Leaving them that close could mean a short lived run in the Playoffs.

25 December 2009

Rebels lose their second

Don't fret, the Runnin' Rebels are now 12-2 after a tough loss to USC in the Diamondhead Classic final on Christmas night, but it's going to be okay. There are a couple of things I want to address though.

First: why are we shooting so many 3-pointers if we aren't draining them? 5 for 22 tonight, that's under 25% folks. Really? QUIT SHOOTING 3's! That's a guaranteed turnover when we don't get the offensive board. Giving the ball away when the offense isn't doing squat is not going to help you win the game.

Second: 17 for 50 on FG's. That is 34%. Not an impressive offensive performance from the team tonight. Rather dismal I'd say. The ball just wasn't going down tonight. 17 for 19 on free throws though, so looking good when we get to the charity line.

In praise of the Rebels, I will say OUTSTANDING DEFENSE! Did you see that full-court pressure? Wow. I have come to expect no less from the Rebels, they play tough, hard D all game long. I'm surprised we only lost by 11 considering how poorly we were shooting. But when you look for a reason as to why it was not a complete blow-out, the defensive play is what you find. Keep it up Rebels!

So, we chalk up a loss. Shrug it off, get home, get rested, and get ready to blast BYU in Provo on January 6th.

GO REBELS!

Well, hello!

So it's been a while since I've posted. A long while. More than one person has mentioned to me how I'm not posting anymore. So, as I sit on the couch watching movies on this lovely Christmas day, I think of these remarks and think it's time to make a post.

Christmas has been great so far, a bit hungover today, but when you start drinking egg nog at noon hangovers are no longer an issue. Got some cool stuff for Christmas. A very nice Eagles sweatshirt, and a bitchin' Eagles backpack. I now have a backpack with working zippers, so no more stuff falling out. Got some cool Nautica sweaters, some sweet new running/exercise shoes, and some new books that look pretty enticing. I usually only watch Glenn Beck to find someone to disagree with, or to laugh, but I got his new book "Common Sense" (inspired by Thomas Paine no less) and am actually looking forward to reading it. I also received a book by Paulo Coelho by the name of "The Alchemist" which looks very good. And last but not least, a book about drinking. It's called "McCarthy's Bar" by Pete McCarthy. Looking forward to that one. I read a book by J.R. Moehringer called "The Tender Bar" (good book, read it) and I imagine this is similar.

So now I sit drinking egg nog and watching Christmas-themed movies. I just finished reading some posts on Marginal Revolution and am now inspired to blog again.

I also just finished an intense "argument" with my Dad about the following: free market economies-politics-racism-standards of living-cultural analogies. He didn't listen to one thing I had to say, and is still thoroughly engrossed in his own beliefs. I will try not to argue with him in the future, as it is a futile exercise. Trying to change old men's opinions is as impossible as moving a mountain. Don't even try.

For now, adieu. Talk to you shortly.

07 July 2009

My s%it is bananas, b-a-n-a-n-a-s

I brought a banana with me to work today for a mid-morning snack. As I sat eating it just a bit ago, I wondered why the damn things are so inexpensive. A quick Google search led me to a slew of information on bananas. This article from the New York Times gives a breakdown. Bananas are cheap because:

1. The corporations that grow and distribute built a solid infrastructure;
2. The workers are treated like crap;
3. And they only grow one variety, the Cavendish, which allows growers to reap the benefits of economies of scale.

A Freakonomics blog post pointed me to this page, which has a bunch of interesting banana info. Did you know India is the largest world producer of bananas? I was shocked. I thought bananas only grew in tropical climates. And did you know that there is enough energy in two bananas to sustain you through strenuous 90-minute workout? I'll definitely be eating more bananas before my Ultimate matches from now on.

26 April 2009

Considering deleting Twitter, Facebook, and MySpace

Because this post has reified my thoughts about why I'm using these services.

07 April 2009

$4 Trillion - Seriously? This is getting funny...in a sick sort of way

The International Monetary Fund is now said to be projecting $4 trillion in losses on bad assets. Via Calculated Risk.

PPIP, Geithner, and the Great Bail-Out

Why are people so surprised about the PPIP (for those not in the know, this stands for public-private investment program) that Geithner is proposing?

Here is a good article. But it's a little off. Jeff Sachs postulates it will turn into a profit scam that the banks can "game".

Of course it's a scam. We knew that the day the plan was announced. Anytime you get to sell something worth nothing for near face-value it's a scam. The investors get to borrow 85% of the purchase price from the FDIC, Treasury kicks in half of the remaining 15% needed and the investor puts in the rest, a whopping 7.5%.

But it's not a profit scam....it's a loss-reduction scam, er uh, "program".

We will use Jeff Sachs' example from the article cited above. Citi forms a little PPIP, bids the face value, $1 million, on an asset that Citi owns, and only has to put in $75,000. The PPIP defaults on the federally guaranteed FDIC loan and Citi is sitting pretty with $925,000 profit.

The problem is, it really isn't profit. If Citi had originally paid any more than $925,000 for the security that gets sold to the PPIP then they are net zero. They just recouped any potential loss of the security really turns out to be worthless. Profits would only materialize if the PPIP is buying the security for more than what Citi originally paid for it (which is possible and likely to happen if these auctions aren't held in check...but why would they be held in check? the point of this plan is that the federal government doesn't know how to value the assets, so they're going to let the "experts" figure out the value and then bid that value with taxpayer dollars. Adverse selection anyone?).

The whole PPIP program is really just an indirect bail-out. The government is buying assets for more than what they're worth. Period. End of story. The Geithner plan is merely creating the illusion of price discovery through market transactions. People aren't cool with the government just writing a check to the banks. To circumvent public scorn and discipline they have to make it look like an "investment program". But really, we're just giving the banks money for assets with unknown and likely inflated values.

Don't get irate. If the plan goes through and this actually happens then we will have achieved what we wanted to: saving the banks. Nobody wanted to let them fail. Well, that's fine and dandy, but if you don't want them to fail then this is the only option--reimbursing them the lost value of bad assets. There's now way around it. So don't think Geithner is pulling the wool over our eyes. He's doing what he's been charged to do, and just making it seem less like what it actually is.

UPDATE - APRIL 7, 2009 - 7:00PM:
Via Calculated Risk.

The FDIC thinks there will be no losses on the loans it insures to investors participating in the PPIP. Seriously. This is no joke.

So my question is, if the FDIC is so confident that there will be zero losses on loans made to purchase assets of questionable value, then why do the loans need to be guaranteed? There's obviously no risk in purchasing these assets if the investors who choose to buy them are able to make the loan payments. So if they're so safe, how come nobody wants them?

Oh, and the FDIC has some stipulations on the loans it insures. It says it will carefully vet each loan and require borrower's to pay loan fees and post collateral. No risk loans, but they are to be collateralized and vetted carefully? Something smells fishy.

Aside from that, who the hell is going to post collateral that actually has value for a loan to make a gamble on some obscure and mysterious asset of unknown value? Some investors might be pretty risk tolerant, but this ain't the craps table on the strip--these are businessmen looking for a handout. They're not going to post good collateral. The point of PPIP is to encourage investors to buy these "toxic assets" (I hate that term) by minimizing the risk of loss, ie giving you 92.5% of the money, no strings attached, to purchase them, with no recourse and no collateral needed. The strings are going to discourage anybody from borrowing to buy the damn things, leaving us in the same situation that we are in now.

Our Greatest Legacy

"We are all culpable for this mess. Almost all of us have been acting irresponsibly and self-indulgently, in varying degrees, for a long time."


I like his analogy comparing drugs to debt. Many of us were indeed getting high on consumption. Now the withdrawal comes, and withdrawal, for those of you who have never experienced it, is very tough. One of the things that sucks the most about this mess is the huge negative externalities. For those who didn't choose to play, this calamity will extol its wrath on them just as equally as those who borrowed irresponsibly and percipitated the whole debacle. Is your employment situation as stable as it was a few years ago? In addition to the short term consequences that will be born by all, we will all also deal with much longer term consequences like the GARGANTUAN national debt. For teens and twenty-somethings our lives will never be what they once could have been. Most of us will remain in the lower or middle class, but instead of paying a 15% to 20% tax on our moderate incomes, we will likely be paying taxes somewhere in the 30% to 40% range in order to payoff this massive debt incurred to bail-out banks, financial institutions, auto companies, and home-owners. The array of opportunities once available to us are no longer possibilities. Our future budget constraints just shifted left, big time. We now have the honor of paying for the previous generations' excesses. A legacy of rapacious appetite for ever more.

02 April 2009

It's social science!

“Look, economics is not rocket science.  Think of the US Government as like McDonalds, a bank and a toxic asset are just like a franchisee and a Big Mac.  Once you see it that way, its simple.”

An interesting sentence from Steven Levitt.  It can be seen in context here.

01 April 2009

Rockefeller-Snowe Measure Proposes Government Regulation of Private Cyber Security

The idea is that private networks, which control the country's infrastructre systems for things like water and electricity, are vulnerable to malicious attacks from foreigners, and therefore are a national security concern.  The measure suggests a central government agency to establish security standards and regulations for both private and military networks in order to safeguard against possible cyber-attacks.  The full story is here.

I understand the need for securing these types of networks, but one of the may costs of allowing the government to control private network security is the privacy issue, which is brought up in the last paragraph of the article.

Blair acknowledged there will be privacy concerns about centralizing cybersecurity, and he said the program should be designed in a way that gives Americans confidence that it is "not being used to gather private information."

I don't like it.  It's another encroachment on private property and privacy for the "national security."  Besides, don't the entity's that own and operate these networks have incentive to protect their investment?  Why would the government be any better at developing cyber-security than the private sector?

Union Owned Companies - Corporate Suicide?

From the Washington Post this morning:

Under the government's proposed reorganization for General Motors, the union health plan and the company's bondholders would give up much or most of those claims in exchange for an equity stake in the reformed GM.

This is interesting.  What would be the implications of a union having a massive ownership stake in the very company that its members are employed by?  Hoepfully they'd gain control of the board, modify operations in a way that we might think a union would, and end up killing the zombie on their own.  The government doesn't seem to want to kill it; they're content with pouring billions of dollars into it.

29 March 2009

Mile High Club

If you'd like to get it on while flying in an airplane, you can do so by visiting these fine folks. I find it cheapening. Plus, getting down on a commercial airliner with other people on the flight is where the real excitement and glory would seem to come from. I'm surprised to see that there are enough people wanting to "accomplish" such a goal that a business exists to supply the demand. Thanks MR.

19 March 2009

Impending Doom


“You have the black hole of commercial real estate and that hasn’t happened yet,” said Mr Black in a wide-ranging interview on FT.com.


That's from a Financial Times article. It goes on to mention that the extra costs associated with this segment of the downturn could be as much as $2 trillion.

Remember what I said?

17 March 2009

Boiling Blood & Conspiracy Theory

Unbelievable!

An internal memo from AIG was leaked (you can find it
here) and in it they argue that they have to pay these retention bonuses because if they don't it's a cross-default on their part and they'll have to pony up billions more in payments to CDS counterparties. Are you effing serious! I've never even heard of a cross-default.

I think these assholes engineered it this way. How can we not pay these crooks to stay on and untangle the mess they've created to screw everybody over now? If these jerks are not paid they'll walk, and then you and I will be pumping in however many more billions to cover the cross-default payments! It's a lose-lose situation for the American taxpayer. You clever bastards!

08 March 2009

Rant

Read this transcript of a call on the Rush Limbaugh show. The hypocrisy in this is ridiculous. They're whining about the government being too involved in people's lives and telling people that they cannot succeed without government assistance. It's not really even a coherent conversation. What does her question about effective policy have to do with her buying a home? I guess she's talking about the government bailing out homeowner's and the policy solutions to the large number of foreclosures occurring.

But to my point. I bet those student loans she's repaying are government guaranteed, and I bet you that she probably couldn't have afforded college without government guaranteed student loans offering low interest rates. So where the hell does she get the gall to say that the government is rewarding underachievers and inefficiency? If she is such an achiever, as Rush tells her she is, she wouldn't need government guaranteed student loans to get through college. She could have toiled on her own and made her own success. But she chose to take the government handout, MY handout. You and I subsidized her education, and now she's going to criticize the assistance of others.

And on a side-note, buying a house right now is just stupid. Because when she get's laid off in the next year and can't afford her mortgage payment anymore it won't seem like such a smart decision to "refuse to participate" in this recession. And then she'll take the next government handout, a bail-out of her mortgage to prevent foreclosure and unemployment benefits.

Talk is cheap. Ideology is hogwash. What matters is incentives. I'm so sick of the "left" and the "right" and the "liberals" and "conservatives". They all talk a lot, but when it comes down to it their philosophies are hollow. Just an image. When it all comes down to the bottom line, people take what they can get. Costs and benefits are what matter. The rest is bull.

Blogs of no importance to Obama Administration

An excerpt from a NY Times article about President Obama:

Mr. Obama rode to the White House partly on his savvy use of new technology, and he has a staff-written blog on his presidential Web site. Even so, he said he did not find blogs to be reliable, citing the economy as one example.

“Part of the reason we don’t spend a lot of time looking at blogs,” he said, “is because if you haven’t looked at it very carefully, then you may be under the impression that somehow there’s a clean answer one way or another — well, you just nationalize all the banks, or you just leave them alone and they’ll be fine.”

I think this is a bad policy. There are many bloggers offering analysis and opinion grounded on extensive knowledge of both economics and finance. I'm not saying that we should subscribe to any one econblogger's ideas, but in this situation more information is definitely better, and there is some high quality information available via the econblogs.

28 February 2009

Counter-cyclical Asset via Marginal Revolution

I find it funny that Ayn Rand (the champion of unbridled capitalism) is selling ridiculously well during an economic downturn purported by many to be caused by unrestrained and under-regulated greedy capitalist bankers.

Marginal Revolution's "counter-cyclical asset" posts are generally quite good. I would suggest following them.

20 February 2009

Things to Come


The red bars are predicted vacancy rates for office space in the United States. The blue are the actual rates. Things could get hairy.

Thanks CalculatedRisk.

Frustration

Many people are upset over this possible housing rescue plan that President Obama is proposing. I've been thinking about it, and I'm rather upset myself. I'm of the opinion that we should just let this thing correct itself. Very philosophical, very principle driven...the consequences would be dire, but saving everybody's ass because of bad decisions and random events is just not something we should do.

Anyway, since the federal government is borrowing all this money, and me and my kids (if I have any) will pay through the nose for it, I'm wondering where my cut is. Since people under the age of, oh let's say 40, will be begin footing the bill about 15 or 20 years from now, I want a little something now to compensate for the future sacrifices I'll be making. Now I don't own a home, so all this bailout isn't doing a thing for me. But all those people who kept sucking the equity out of their homes to finance their spending are going to get a break on repaying their debt. And me? Oh, well I don't get anything. I borrowed money to finance a lifestyle that I couldn't afford too, I'm not saying I didn't. So why don't I get special consideration in the repayment of my debt, since so many others are? It's the least society could offer me for footing the bill for everybody else. Modify my debt. Send me a check right now for about $20,000 to lube me up before you screw me, okay USA?

15 February 2009

Whom to Blame for this Mess...

The biggest culprit in my mind.

Round 2

"There are many more bank failures to come over the next couple of years, mostly because of losses related to Construction & Development (C&D) and Commercial Real Estate (CRE) loans..."

Many people that I speak with about the current economic crisis reject the idea that this contraction will get considerably worse due to a likely wave of defaults in commercial loans. I have a feeling that the default frenzy in home mortgages was just a glimpse of what is to transpire in commercial real estate markets.

I spoke with a colleague the other day about a property in Las Vegas that was appraised for over $6 million about two years ago. We just received a current appraisal and the value came in at under $2 million. A $4 million loss in just two years! And we're probably not even half-way through this contraction in terms of lost growth. So as businesses continue to fail and the number of new ventures to replace them declines, the demand for commercial real estate will fall through the floor in a market that is already arguably vastly over supplied.

Let the good times roll.

11 February 2009

The Re-Birthday

I turned 24 at 9:49am today.

First, a quick run-down of the day. It was a good day. My boss and co-workers brought me a large box of donuts this morning at the office, along with a flipping sweet Napoleon Dynamite card and 100 bones. Very fine people indeed. We also lunched at the Claim Jumper in Town Square (for approximately 1.5 hours, which makes the workday feel much shorter even though it's only 30 min more than usual). Pepperoni pizza for dinner and a quite night at home. Not very eventful, but a great birthday all in all. Friday night will be party night; some friends and alcohol and a great time will be had.

My 23rd birthday passed without much notice (or perhaps I'm more perceptive this year), so I found myself more appreciative of the "Happy Birthday"s from friends and family. Thank you all again if you read this.

The start of this 24th year has me thinking about making some changes in how I live this life. The attitudes, habits, and conceptions that I've had for the past 5 years are in need of recalibration. So with this new year of life starting, I intend to make some resolutions and change the way I experience the world. This sort of thing is usually reserved for New Years, but why should resolutions be made only on January 1st?

The few things I intend to start with to begin changing my life:

1. Change my philosophy. I think it was Tyler Cowen who gave me this idea, either in his book Discover Your Inner Economist or on Marginal Revolution. The idea is to keep in mind the following question: "What can I do today to improve my life?" I was struck deeply by this when I first came across it. I'd never thought of my life like that before. The idea of controlling the quality of my own life experiences, given the exact same conditions, is still a profound one to me, and in my mind evidence of continuation of my enlightenment.

2. Become happier by making progress in self-development. I need to grow as a person. I'd never really comprehended that statement before, I guess I was too young. I'm now starting to catch glimpses of what this actually means. The past 3 to 4 years of my life have been like that movie Groundhog Day. I've stalled out. I'm numb. Depressed. Indifferent. In a way, it could be said that I've been insane for the past few years. It's been said that insanity is when you keep repeating the same actions while expecting different results. It's time to move forward, grow, and become a happier human being.

3. Take better care of my physical self. Stop smoking completely and for good, exercise more, eat healthier (even if just a bit at first) and take a vested interest in the condition of my vessel. Physical health greatly impacts emotional health. It also expands the list of possibile life experiences.

I'm seeking a higher quality life, and am preparing myself to take action to make this a reality. A Happy Re-Birthday to me!