Believe me, I was as shocked as you probably are to discover this. And I'd like to thank John McCain and Sarah Palin for finally pointing this out to me. I always thought he was a conservative-minded, supply-side, free-market idealist but apparently I was mistaken.
I stumbled upon this startling realization by listening to the recent attacks McCain and Palin have levied against Obama's tax plan. His plan calls for raising taxes on the highest bracket (currently at 35%) back to the levels they were at under Clinton (39.6%). McCain and Palin have been quick to decry this as "socialism" and "spreading the wealth around." Obviously it goes without saying that during the Clinton years we were all living under a socialist regime. Fair enough. However, while researching here I was shocked *shocked* to discover that under Reagan (from 82-86) not only did the highest tax bracket have a far higher tax rate (50%), but there were actually 3 brackets that all had higher tax rates than Obama's proposal (44%, 49%, and 50%). And while we're at it we can't let perhaps the biggest socialist of all time, Richard Nixon, off the hook either. Under his tax plans, there were a whopping 14 brackets with higher rates (ranging from 42% to 70%) than under Obama's plan.
OK, so obviously the tongue is planted firmly in cheek here, but I think it illustrates the ridiculousness of this "socialism" accusation. Ever since we have had an income tax (1913) we have had a progressive tax system. By definition, a progressive tax system is a redistribution of wealth mechanism. If you believe that redistribution of wealth is a socialist idea, then it's all socialist and we have in fact been a socialist country for the last 95 years. Personally, I think that's a pretty narrow view to take on it. At it's core, socialism is about collective ownership at the expense of individual property rights and government setting the market price for goods and services. Tax policy has absolutely no effect on the former and only a minor, indirect effect on the latter.
In any case, I have absolutely no beef with someone who supports a flat tax levying the claim of "socialism" at our tax code. What I have a real problem with is the hypocrisy of someone who still supports a progressive tax code (as McCain does) calling another progressive tax code "socialist". If he wants to say "my plan is socialist, but his is more socialist" I could accept that too.
As you might be able to tell, with it being 5 days before the election my hackles are a bit up. It really saddens me that this campaign featured two of the most honest and respectable candidates in our recent history and we still had a campaign that was this nasty. While the Democrats are certainly not blameless, it is mainly the Republicans' fault (but don't take my word for it). Fortunately, while it's never over till it's over, it looks to be shaping up to not be particularly close. Every day more and more Republican insiders are coming out with negative feelings on Palin and her actions, and Republican Congressional candidates are starting to throw McCain under the bus by running ads playing up the angle that you don't want Democrats to control both houses of Congress as well as the Presidency. My sincerest hope is that the Republicans get the thorough ass kicking they deserve on Tuesday so that they are forced to reinvent themselves, throw out the right-wing extremists, and get back to their Reagan-esque roots. When that happens, I will be proud to once again pick up the Republican banner and wave it. Until that day though, I hope they never win another election.
Friday, October 31, 2008
Tuesday, October 21, 2008
Is This Thing On?
Update (10/22): Winner! In an unannounced and unexpected move, Kevin Smith WAS at the screening last night, and stuck around for over an hour after the movie to do a Q&A with the audience. We really lucked out because we were a little late in getting to the theatre and ended up getting seats near the front. While that wasn't ideal for the movie, it meant that we were about 10 feet from Kevin the entire time he was there. If you've seen any of his "An Evening With Kevin Smith" dvds it was exactly like that. I'm not sure if he'd take it as a compliment or an insult, but I think I laugh harder just hearing him talk for an hour than I do watching any of his movies (and I really like his movies). In any case, the movie was solidly good but not great. Definitely a must for anyone who enjoys either Kevin Smith or Seth Rogen movies.
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10/21
So, apparently I’m talking to myself now (or, more accurately, talking to Becky and Dan). My 4 posts in a 7-day span (which I think is a record for me) resulted in a whopping 6 comments (and 2 of those were mine). Yeesh, was my call for civility really that insulting?
So, last weekend my friend Joe and I went to the burgeoning metropolis that is La Porte, IN to campaign for Obama. I had been hoping that all we’d have to do was hang some literature on peoples doorknobs but we were out there knocking on people’s doors and talking to them. While I’m glad I did it, it just really isn’t my thing. I have a real problem with offering up unsolicited opinions to people (and FYI, I believe that by visiting this site you are implicitly asking for my opinion). I don’t like to be bothered by random campaign people and I assume no one else does either, so it just made the whole experience uncomfortable. What can I say, I’m just not a salesman. I’m also not exactly sure if we did any good. We met some strong Obama supporters that were happy to see us, and also some strong McCain supporters who were . . .less happy to see us, but I don’t really think we changed anybody’s mind. I guess in the end you have to believe in the power of numbers; if 10,000 people all knock on 50 doors somehow minds do get changed even if it can’t be directly traced to any one canvasser. Or maybe that’s just what I’m telling myself so I don’t feel like I wasted 4 gallons of gas and an entire Saturday.
In case the market hasn’t made you nauseous lately maybe this will do the trick . Some 21-year old ate a 15lb. burger in less than 5 hours. And the 15lbs was just the beef itself (pre-cooked). The bun and trimmings brought the total weight to 20.2 lbs. His prize for this feat? $400, 3 t-shirts, and a certificate. No matter how he invests that $400, I’m doubting it will come close to covering the costs of the inevitable angioplasty 20 years down the road. Don’t get me wrong, eating 20lbs of food in 5 hours is impressive, but so is maintaining consciousness while relentlessly beating yourself in the head with a hammer for a half hour. Doesn’t make either idea any less stupid. Of course, this is coming from someone who once drank 14 beers in 85 minutes and (on a separate occasion) decided to walk onto a semi-frozen lake in mid-March, so I think I know a thing or two about stupid ideas.
Going to see the new Kevin Smith movie tonight (Zack and Miri Make a Porno) as part of the Chicago International Film Festival. Sometimes as part of these they have special guests introduce the film and I had been hoping that maybe Kevin Smith would be here but it looks like no such luck. Still, it’s always fun to see a movie in a crowded theatre 10 days before its release.
I’m also really looking forward to seeing Saw V this weekend. I have no idea why, but I am.
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10/21
So, apparently I’m talking to myself now (or, more accurately, talking to Becky and Dan). My 4 posts in a 7-day span (which I think is a record for me) resulted in a whopping 6 comments (and 2 of those were mine). Yeesh, was my call for civility really that insulting?
So, last weekend my friend Joe and I went to the burgeoning metropolis that is La Porte, IN to campaign for Obama. I had been hoping that all we’d have to do was hang some literature on peoples doorknobs but we were out there knocking on people’s doors and talking to them. While I’m glad I did it, it just really isn’t my thing. I have a real problem with offering up unsolicited opinions to people (and FYI, I believe that by visiting this site you are implicitly asking for my opinion). I don’t like to be bothered by random campaign people and I assume no one else does either, so it just made the whole experience uncomfortable. What can I say, I’m just not a salesman. I’m also not exactly sure if we did any good. We met some strong Obama supporters that were happy to see us, and also some strong McCain supporters who were . . .less happy to see us, but I don’t really think we changed anybody’s mind. I guess in the end you have to believe in the power of numbers; if 10,000 people all knock on 50 doors somehow minds do get changed even if it can’t be directly traced to any one canvasser. Or maybe that’s just what I’m telling myself so I don’t feel like I wasted 4 gallons of gas and an entire Saturday.
In case the market hasn’t made you nauseous lately maybe this will do the trick . Some 21-year old ate a 15lb. burger in less than 5 hours. And the 15lbs was just the beef itself (pre-cooked). The bun and trimmings brought the total weight to 20.2 lbs. His prize for this feat? $400, 3 t-shirts, and a certificate. No matter how he invests that $400, I’m doubting it will come close to covering the costs of the inevitable angioplasty 20 years down the road. Don’t get me wrong, eating 20lbs of food in 5 hours is impressive, but so is maintaining consciousness while relentlessly beating yourself in the head with a hammer for a half hour. Doesn’t make either idea any less stupid. Of course, this is coming from someone who once drank 14 beers in 85 minutes and (on a separate occasion) decided to walk onto a semi-frozen lake in mid-March, so I think I know a thing or two about stupid ideas.
Going to see the new Kevin Smith movie tonight (Zack and Miri Make a Porno) as part of the Chicago International Film Festival. Sometimes as part of these they have special guests introduce the film and I had been hoping that maybe Kevin Smith would be here but it looks like no such luck. Still, it’s always fun to see a movie in a crowded theatre 10 days before its release.
I’m also really looking forward to seeing Saw V this weekend. I have no idea why, but I am.
Friday, October 17, 2008
W.
So I snuck away during lunch today to see W. Overall, I'd say it was pretty good. I have to admit, though, that I'm not really sure who the movie is intended for. It actually pulls too many punches to please the throngs of Bush-haters (which, judging by the latest approval ratings, is round about everybody nowadays). You won't find any scenes of him snorting coke, getting DUIs, smearing John McCain in 2000, or any mention of My Pet Goat. Sure, there are plenty of scenes of him drinking in his early life, but it's not exactly controversial to say that Bush drank a lot during his youth. So, it's pretty safe to say that anyone going into the movie expecting to see a non-stop pummeling of Bush the younger is going to be disappointed. On the other hand, it's unlikely that Republicans will like it either. After all, it's certainly not a coincidence that this is being released 18 days prior to the election and while I said that it doesn't pummel him it certainly doesn't paint him in a glowing light either. Largely, the movie reinforced the opinion I've had of him for the last 3-4 years. It paints the picture of a man who's been struggling his entire life to step out of the shadow of his father and his family's legacy. In a number of ways, he is a very tragic figure. Contrary to what a lot of the far left vilifies him to be he is not some evil, greedy, Machiavellian figure. He is a guy who genuinely believed (and still does) that what he is doing is right for the country and for the world and whose biggest mistake was surrounding himself with people that did not provide him with the crucial information he needed at the correct time. I am not trying to be a Bush apologist. The man made a lot of very, very bad decisions and we will be paying the price for them for a long time. Those bad decisions were a product of misinformation, stubbornness, and too much reliance on "gut feelings" instead of reevaluation of each situation as the facts changed. But I don't believe they were mainly the product of greed or malice. In the end, I still despise George W. Bush the President, but I really do feel empathy for George W. Bush the human being.
One of the people that comes off pretty well in the film is George H.W. Bush. Most of the film centers on him as an exasperated father dealing with a child who shows no real desire or ambition for anything for his first 40 years. He is proud of his son's accomplishments but can't connect with him, and he seems almost bewildered when the life and legacy that seemed destined to go to Jeb almost falls in George's lap instead. What little we see of Bush the elder as a politician centers on his side-stepping a number of the perils that W fell into headlong. Ironically, while W's numerous mistakes may have tainted the Bush name, it actually seems to have enhanced the legacy of H.W. Maybe it's just because enough time has passed that we can now look on his presidency with a less biased lens. Maybe not. But if that is indeed the case, then who knows? Maybe 15 years from now W will be right and history will vindicate him. I sincerely doubt it, but I have to leave open the possibility. I never thought my opinion of H.W. would have risen with time, and I never thought my opinion of Clinton would have risen with time either, but both happened.
Powell comes off very well too. Actually, I think he comes across a little too well. I am definitely a fan of Powell, and in all the books I've read concerning the Iraq war he was in fact one of the only people in the administration pushing for a conservative and diplomatic approach. But he is presented here as something of a crusader (in one scene in particular) whereas the story I've come to believe is one where he spoke out a few times early on but then gradually grew silent as he realized that his opinion was not valued and not often requested. I believe his decision to resign in 2004 is pretty concrete proof that he chose to remove himself rather than stay and try to fight, well, pretty much everyone. Mind you, I'm not criticizing him for that decisio, but I just don't think that's the perception that comes across in the film.
I have read a lot of praise about Thandie Newton's portrayal of Condoleeza Rice, and I just don't really see it. It is by no means a bad performance but apart from her looking spot on like her, there is very little meat to the role and she's largely a background character. Biggest props go to Richard Dreyfuss as Cheney (who, in the words of Ebert, "is not so much a double as an embodiment" of him) and of course Josh Brolin as W. It's hard to imagine one or both not garnering an Oscar nomination.
So in the end you have a well-made, well-acted film that is far more even handed than I would have thought Oliver Stone capable of. I'm still not exactly sure who it was made for, and I'm also not sure if the film will age well after the public has forgotten about the specifics of the Bush years. I guess, as W. himself would say, "we'll let history decide that".
One of the people that comes off pretty well in the film is George H.W. Bush. Most of the film centers on him as an exasperated father dealing with a child who shows no real desire or ambition for anything for his first 40 years. He is proud of his son's accomplishments but can't connect with him, and he seems almost bewildered when the life and legacy that seemed destined to go to Jeb almost falls in George's lap instead. What little we see of Bush the elder as a politician centers on his side-stepping a number of the perils that W fell into headlong. Ironically, while W's numerous mistakes may have tainted the Bush name, it actually seems to have enhanced the legacy of H.W. Maybe it's just because enough time has passed that we can now look on his presidency with a less biased lens. Maybe not. But if that is indeed the case, then who knows? Maybe 15 years from now W will be right and history will vindicate him. I sincerely doubt it, but I have to leave open the possibility. I never thought my opinion of H.W. would have risen with time, and I never thought my opinion of Clinton would have risen with time either, but both happened.
Powell comes off very well too. Actually, I think he comes across a little too well. I am definitely a fan of Powell, and in all the books I've read concerning the Iraq war he was in fact one of the only people in the administration pushing for a conservative and diplomatic approach. But he is presented here as something of a crusader (in one scene in particular) whereas the story I've come to believe is one where he spoke out a few times early on but then gradually grew silent as he realized that his opinion was not valued and not often requested. I believe his decision to resign in 2004 is pretty concrete proof that he chose to remove himself rather than stay and try to fight, well, pretty much everyone. Mind you, I'm not criticizing him for that decisio, but I just don't think that's the perception that comes across in the film.
I have read a lot of praise about Thandie Newton's portrayal of Condoleeza Rice, and I just don't really see it. It is by no means a bad performance but apart from her looking spot on like her, there is very little meat to the role and she's largely a background character. Biggest props go to Richard Dreyfuss as Cheney (who, in the words of Ebert, "is not so much a double as an embodiment" of him) and of course Josh Brolin as W. It's hard to imagine one or both not garnering an Oscar nomination.
So in the end you have a well-made, well-acted film that is far more even handed than I would have thought Oliver Stone capable of. I'm still not exactly sure who it was made for, and I'm also not sure if the film will age well after the public has forgotten about the specifics of the Bush years. I guess, as W. himself would say, "we'll let history decide that".
Friday, October 10, 2008
A Eulogy For the Cubs Season
Well, I have by meaning to do this since the season ended but found that it is only now that I can even stomach it without either feeling nauseous or depressed (or both). I guess the good news is that the Cubs did fulfill my pre-season prediction of back-to-back division championships and actually exceeded my win prediction (I predicted 91 and they ended up with 97). And of course I will always remember seeing the no-hitter up in Miller Park.
But that’s where the good news ends, as I had the extreme displeasure of watching my beloved team act like a bunch of clowns for 27 innings and get bounced. No gut-wrenching losses, no false hope, just 3 games of bad baseball from a team that looked cooked from the moment James Loney hit the grand slam in the 5th inning of game 1.
Minutes after the Cubs were officially eliminated, I came to the realization that this season officially marks my transformation from young, optimistic Cubs fan to old, jaded one. My entire life as a Cubs fan has been spent waiting for the one season where they’d be so good that they’d just steamroll everyone. Even when they have made the playoffs in the past, they were always the underdog and even though you hoped against hope that they’d pull it out, you certainly weren’t shocked when they didn’t. For the better part of 6 months this year, they finally were that team that seemed unstoppable. And guess what? It didn’t matter. I’ve been forced to realize that the worst part about this is that now I don’t even know how I go about getting excited about them next year (or any other season). Even if they started out 40-0, I’ll be left going “So what? That still doesn’t mean they’ll perform when it counts in the playoffs.” Now, of course the logical part of my brain tells me that 8 good teams made it through the 6-month grind, and already half of them have gone home. Even the Angels, with the best record in baseball, lasted only a game longer than the Cubs. And, of course, ultimately there will only be 1 out of 32 teams whose fans will be happy with the end of the season. Yes, my rational mind gets all of that. But then again, if I was truly rational, I wouldn’t be a Cubs fan to begin with.
That’s as far as I can explain it in words. So I’d like to further express how I feel in pictures:
This first one's my favorite. It's pretty much the exact expression on my face while watching the Cubs commit 3 errors in the 2nd inning of game 2 en route to falling behind 5-0.
But that’s where the good news ends, as I had the extreme displeasure of watching my beloved team act like a bunch of clowns for 27 innings and get bounced. No gut-wrenching losses, no false hope, just 3 games of bad baseball from a team that looked cooked from the moment James Loney hit the grand slam in the 5th inning of game 1.
Minutes after the Cubs were officially eliminated, I came to the realization that this season officially marks my transformation from young, optimistic Cubs fan to old, jaded one. My entire life as a Cubs fan has been spent waiting for the one season where they’d be so good that they’d just steamroll everyone. Even when they have made the playoffs in the past, they were always the underdog and even though you hoped against hope that they’d pull it out, you certainly weren’t shocked when they didn’t. For the better part of 6 months this year, they finally were that team that seemed unstoppable. And guess what? It didn’t matter. I’ve been forced to realize that the worst part about this is that now I don’t even know how I go about getting excited about them next year (or any other season). Even if they started out 40-0, I’ll be left going “So what? That still doesn’t mean they’ll perform when it counts in the playoffs.” Now, of course the logical part of my brain tells me that 8 good teams made it through the 6-month grind, and already half of them have gone home. Even the Angels, with the best record in baseball, lasted only a game longer than the Cubs. And, of course, ultimately there will only be 1 out of 32 teams whose fans will be happy with the end of the season. Yes, my rational mind gets all of that. But then again, if I was truly rational, I wouldn’t be a Cubs fan to begin with.
That’s as far as I can explain it in words. So I’d like to further express how I feel in pictures:
This first one's my favorite. It's pretty much the exact expression on my face while watching the Cubs commit 3 errors in the 2nd inning of game 2 en route to falling behind 5-0.
More Ambivalence
If you currently do not have any money in the stock market, now is the time to get in. Contrary to what you may be expecting, there is no joke forthcoming. I am completely serious.
As I mentioned before, I am currently reading an investment book called A Random Walk Down Wall Street. There could not be a more relevant time to be reading it, as you can see the principles that he lays out operating in action in the market on a daily basis.
Contrary to what sterile economic theory has taught for decades, one thing that has been consistently borne out by empirical data over the years is that investors do not behave in a completely rational manner. Alan Greenspan called the internet boom of the late 90s a product of “irrational exuberance” but that principle also works in reverse as well. When the market goes up, investors have a tendency to believe that happy days are here to stay, and when it goes down there is a tendency to believe that it will never go up again. Both are obviously wrong, and both trains of thought will hurt you if you fall prey to them.
Let me ask a question. Taking crowds out of the equation, would you rather do your Christmas shopping on Black Friday when everything’s on sale or a week before Christmas on ebay where you may end up paying two to three times the retail price to get your kid the last whatever-the-hell that season’s must have trinket is? Most people would opt for the former, because all things being equal people prefer to pay less for something when they can. Seems to make sense, right? Well, shockingly enough the market tends to work in almost the exact opposite manner. Then again, considering the amount of business done on ebay at exorbitant prices in the days leading up to Christmas, perhaps it’s not so surprising after all.
Take a look at the following graph (apologies that it's slightly askew; I had to copy and scan it from the book), and please take a few minutes to fully absorb what it is saying, because it tells a fascinating story.
As I mentioned before, I am currently reading an investment book called A Random Walk Down Wall Street. There could not be a more relevant time to be reading it, as you can see the principles that he lays out operating in action in the market on a daily basis.
Contrary to what sterile economic theory has taught for decades, one thing that has been consistently borne out by empirical data over the years is that investors do not behave in a completely rational manner. Alan Greenspan called the internet boom of the late 90s a product of “irrational exuberance” but that principle also works in reverse as well. When the market goes up, investors have a tendency to believe that happy days are here to stay, and when it goes down there is a tendency to believe that it will never go up again. Both are obviously wrong, and both trains of thought will hurt you if you fall prey to them.
Let me ask a question. Taking crowds out of the equation, would you rather do your Christmas shopping on Black Friday when everything’s on sale or a week before Christmas on ebay where you may end up paying two to three times the retail price to get your kid the last whatever-the-hell that season’s must have trinket is? Most people would opt for the former, because all things being equal people prefer to pay less for something when they can. Seems to make sense, right? Well, shockingly enough the market tends to work in almost the exact opposite manner. Then again, considering the amount of business done on ebay at exorbitant prices in the days leading up to Christmas, perhaps it’s not so surprising after all.
Take a look at the following graph (apologies that it's slightly askew; I had to copy and scan it from the book), and please take a few minutes to fully absorb what it is saying, because it tells a fascinating story.
It is a measure of cash flow into and out of equity funds (i.e. mutual funds) in relation to the S&P 500 (which, even better than the Dow, is a good proxy of the market as a whole). What it shows is that when the S&P is riding high, investors are lining up to get onboard. They can’t wait to throw their money into the market. Then when it takes a dive, investors make a mad dash for the exits like rats on a sinking ship. The thing is, the ship is not sinking. Markets are cyclical and thus peaks and troughs are as unavoidable as they are unpredicatable. I am certainly not advocating that you try and jump ship when the market is high and get in when it’s low. I am saying that the best course of action is to not try to time the market at all. You have a far greater chance of hurting yourself rather than helping, as evidenced by this:
“Professor H. Negat Seybun of the University of Michigan found that 95 percent of the significant market gains over the thirty-year period from the mid-1960s to the mid-1990s came on 90 of the roughly 7,500 trading days.”
Now, I’m sure that there are at least somewhat similar numbers for market downturns, but keep in mind that over the last century the market has consistently trended up (from a Dow of virtually nothing in the 1930s to over 8000 today). The question then becomes, do you really want to play the market and risk missing out on the ~1.5% of the days where most of the gains occur?
So, to be clear on what I’m advocating, if you’re already invested in the market: do nothing! Resist the urge to jump ship along with the other rats. If you currently have nothing in the market this is one of the best opportunities to get involved, and I would strongly advise doing so by buying a broad-based index fund (like the S&P 500) rather than try to pick out your own portfolio.
Some caveats, though (and aren’t there always?). First, I am advising holding on to your investments absent the specific knowledge that any one particular company in your portfolio is a dog (AIG, for example, although I’m actually not ready to throw in the towel on them yet). Second, if you are contemplating retirement soon you may very well want to consider moving into a more stable investment. The market will recover, but your financial needs may not allow you to wait long enough to reap all the benefits when it does. Lastly, when I say that “now is the time to get in” I am not talking about maxing out your credit card on cash advances. I am talking about if you happen to have money (in savings, CDs, etc.) that you don’t plan to touch in the near future and can live without. Neither I or anyone else can tell you exactly when the market is going to turn around, and there’s certainly no guarantee that it won’t drop another 1000 points or more. But what I am confident about is that over the long term it will recover. If I had to put numbers to it, I’d say assuming you invested today in the S&P 500 (currently trading at 899) I am 60% confident that you will see a significant positive return (i.e. greater than that which you’d find in a “safe” investment like an FDIC-insured savings account) in a year, 75% certain you will see one in 2, and 99% (because nothing is absolute) that you will see one in 5.
Now, if you’d like to press me to recommend a specific company, I would have to go with GE (currently trading at $21.50/share). There are a lot of reasons I like them, but probably the biggest is the fact that Warren Buffett just invested $3 billion in them and by and large the man only invests in solid companies. They also are a bargain right now because GE credit is struggling (along with every other lender) but I believe that will eventually recover, and there is still a large amount of demand for their turbines and jet engines. But, again, I am talking about long-term investing here. One of Warren Buffett’s most famous statements is that “the correct holding period of a stock is forever.”
Of course, I would be remiss if I didn’t also point out another piece of advice I gleaned from A Random Walk Down Wall Street:
Stay Cool to Hot Tips
Tips come at you from all fronts – friends, relatives, the telephone, even the internet. Don’t go there. Steer clear of any hot tips. They are overwhelmingly likely to be the poorest investments of your life. And remember: Never buy anything from someone who is out of breath.
So I guess what I’m saying is that if you listen to what I’m saying, you definitely shouldn’t be listening to what I’m saying.
How’s that for ambivalence?
“Professor H. Negat Seybun of the University of Michigan found that 95 percent of the significant market gains over the thirty-year period from the mid-1960s to the mid-1990s came on 90 of the roughly 7,500 trading days.”
Now, I’m sure that there are at least somewhat similar numbers for market downturns, but keep in mind that over the last century the market has consistently trended up (from a Dow of virtually nothing in the 1930s to over 8000 today). The question then becomes, do you really want to play the market and risk missing out on the ~1.5% of the days where most of the gains occur?
So, to be clear on what I’m advocating, if you’re already invested in the market: do nothing! Resist the urge to jump ship along with the other rats. If you currently have nothing in the market this is one of the best opportunities to get involved, and I would strongly advise doing so by buying a broad-based index fund (like the S&P 500) rather than try to pick out your own portfolio.
Some caveats, though (and aren’t there always?). First, I am advising holding on to your investments absent the specific knowledge that any one particular company in your portfolio is a dog (AIG, for example, although I’m actually not ready to throw in the towel on them yet). Second, if you are contemplating retirement soon you may very well want to consider moving into a more stable investment. The market will recover, but your financial needs may not allow you to wait long enough to reap all the benefits when it does. Lastly, when I say that “now is the time to get in” I am not talking about maxing out your credit card on cash advances. I am talking about if you happen to have money (in savings, CDs, etc.) that you don’t plan to touch in the near future and can live without. Neither I or anyone else can tell you exactly when the market is going to turn around, and there’s certainly no guarantee that it won’t drop another 1000 points or more. But what I am confident about is that over the long term it will recover. If I had to put numbers to it, I’d say assuming you invested today in the S&P 500 (currently trading at 899) I am 60% confident that you will see a significant positive return (i.e. greater than that which you’d find in a “safe” investment like an FDIC-insured savings account) in a year, 75% certain you will see one in 2, and 99% (because nothing is absolute) that you will see one in 5.
Now, if you’d like to press me to recommend a specific company, I would have to go with GE (currently trading at $21.50/share). There are a lot of reasons I like them, but probably the biggest is the fact that Warren Buffett just invested $3 billion in them and by and large the man only invests in solid companies. They also are a bargain right now because GE credit is struggling (along with every other lender) but I believe that will eventually recover, and there is still a large amount of demand for their turbines and jet engines. But, again, I am talking about long-term investing here. One of Warren Buffett’s most famous statements is that “the correct holding period of a stock is forever.”
Of course, I would be remiss if I didn’t also point out another piece of advice I gleaned from A Random Walk Down Wall Street:
Stay Cool to Hot Tips
Tips come at you from all fronts – friends, relatives, the telephone, even the internet. Don’t go there. Steer clear of any hot tips. They are overwhelmingly likely to be the poorest investments of your life. And remember: Never buy anything from someone who is out of breath.
So I guess what I’m saying is that if you listen to what I’m saying, you definitely shouldn’t be listening to what I’m saying.
How’s that for ambivalence?
Tuesday, October 07, 2008
Hot, Flat, and Crowded
So as promised, here are some of my thoughts on Thomas Friedman's new book Hot, Flat, and Crowded which, contrary to what the title may insinuate, is not a biography on Paris Hilton. It is a detailed guide on why we need a green revolution in this country, how it can completely renew and revitalize us, and how it can once again restore our image to the rest of the world while simultaneously cementing us as an economic power throughout the next century.
Some of what is below I heard almost verbatim recited by one or both Presidential candidates on Tuesday night, and that makes me happy (if I make the colossal assumption that it was more than just lip service on their part). Most of what follows are paraphrasings of some of the main ideas in the book, with a few of my own musings thrown in. I put quotes where applicable, but for a lot of the rest I just didn't want to write "Friedman says" 100 times. Just wanted to make it clear that I'm not trying to plagiarize. In addition, I'd like to add that what I'm going to talk about is only a very, very small part of all that Friedman discusses. Some of it is controversial and some of it is just common sense; all of it is fascinating. As much as I enjoyed The World is Flat, this is better and it's not even particularly close.
Obviously, when one hears the words "green revolution" it instantly brings to mind the idea that, "oh, this is a book about global warming." Well, that's certainly a big part of it. Here Friedman presents in 27-pages probably the best synopsis on the science as far as what we know and don't know yet. He also puts forth this analogy about skeptics, which I got a big kick out of:
"Climate change deniers are like the person who goes to the doctor for a diagnosis, and when the doctor tells him 'If you don't stop smoking, there is a 90% chance you will die of lung cancer' the patient replies, 'Oh, doctor, you mean you are not 100% sure? Then I will keep smoking.'"
He also makes a very compelling case that climate change is not going to be as bad as some of the estimates out there. It's actually far more likely that it will be a lot worse.
But I don't want to harp on climate change (again) because for one my feelings on the subject have been well documented here and two that's actually not even the biggest reason Friedman convincingly gives for the US leading the charge in the green revolution.
Obviously if you are a staunch believer in man-made, carbon emmision-based climate change it's elementary to see why we would need to switch to renewables. But let's take climate change completely off the table. There's still overwhelming evidence that a switch to green technology is in our best interest. First, let's look at it from a national security standpoint. Right now we give a lot of money every day to oil barons and regimes operating in countries whose people don't like us very much. What's more, in a lot of cases the money received by these regimes is used to deny their citizens a lot of the freedoms of the Western world. If the motto of the Revolutionary War was "no taxation without representation" then the motto for a lot of these countries is "no taxation, so no representation either." Because these countries are so heavily dependent on oil revenue, they have very little motivation to invest in other industries. As a result, the people are often at the mercy of the government to support them and don't have the leverage to demand change. Taking these countries off of this type of "welfare" system would force them to change and attempt to build infrastructure and industry that competes as part of the global market. Then, and only then, will true democracy flourish in the Middle East. Some would say that the answer to that is drilling in the U.S. They are wrong. I'm not going to do the vast amounts of research to come up with completely hard numbers (because people would just argue with them anyway), but I went here for some rough estimates. Using the upper estimates of the potential oil, I come up with a grand total of 180 billion barrels of potential domestic oil (727 million barrels in the strategic reserve, 115.1 billion barrels in the OCS, 48.5 billion barrels onshore, and 16 billion in ANWR). Our consumption is over 20 million barrels per day. Some quick math reveals that even in the best case scenario we could be self sufficient for less than 2 and a half years using just our own oil. Even if our estimates are wildly off the mark and the real figure is 4 times that, we're still talking less than a decade. So, obviously if the goal is to be self-sufficient with our energy needs, renewables are a must. The stone age didn't end because we ran out of stones. It ended because we found a better way.
In addition, the energy needs of the world are escalating almost exponentially everyday thanks to the emerging markets (China and India are the headliners, but they are hardly the only ones). You also hear a lot (though probably still not enough) about the need to stifle the immense poverty in Africa but if you stop and think about what it would actually mean from an energy perspective to bring that entire continent up to first-world living standards the problem is truly daunting. So much so that a lot of people (including me for a time) have the attitude that "China and India are so big and growing so fast, it doesn't matter what efforts we undertake to curb our consumption and switch to renewables; all of our gains will easily be outweighed by their excess." I particularly like Friedman's response to this, which he gave in a speech to the Chinese at their "Green Car Congress" in 2007:
"Every year I come to China and young Chinese tell me, 'Mr. Friedman, you Americans got to grow dirty for 150 years - you got to have your Industrial Revolution based on coal and oil - now it is our turn.' Well, on behalf of all Americans, I am here today to tell you that you're right. It's your turn. Please, take your time, grow as dirty as you like for as long as you like. Take your time! Because I think my country needs only 5 years to invent all the clean power and energy efficiency tools that you, China, will need to avoid choking on pollution, and then we are going to come over and sell them all to you. We will get at least a five-year jump on you in the next great global industry: clean power and energy efficiency. We will totally dominate you in those industries. "
I realy like that because it turns everything around and turns a stick into a carrot. Instead of us acting like some world police force at a time when most of the rest of the world has had quite enough of us in that role, it transforms us yet again into a world leader on the cutting edge that challenges other countries by saying "This is the future, and we are moving towards it full speed ahead. If you want to join us now: great! We welcome the competition. But if you want to carry on like you have been and risk falling behind again right at the moment when you were just starting to catch up, that's fine with us too." The problem, of course, is that at the moment we are not going "full speed ahead."
In the early 1960s, President Kennedy made a bold declaration that we would put a man on the moon by the end of the decade. It was obvious that this was at least in part driven by the Cold War. Even though the moon clearly offered no strategic military position, the humbling and helpless feeling the American people felt by having to look up at the sky and see Sputnik circling the Earth was enough to spur us into collective action. It spurred us to invest heavily in science, technology, and education in an effort to win the space race. Succesfully landing on the moon may have been the public face of the success that type of investment bred, but it certainly wasn't limited to just that.
Similar to the space race, we now need a green race. We need leadership that sets a lofty goal that the U.S. can rally behind. Collectively, I believe that we are still the most industrious people on the planet when it comes to working towards, fighting for, and sacrificing in the name of a cause we believe in. I believe that this is that cause.
And there will be sacrifices that need to be made; at least at first. Change is never comfortable, and there will be at least as many bad ideas that get implemented as there will be good ones. Great novels and great programs don't get written in one draft. But by investing in the next great global industry, we will not only be putting ourselves in position to dominate the global economy for the 21st century, we have the opportunity to once again bring manufacturing jobs back home. Maybe GM and Ford will never again enjoy the market share they once did, but instead of cars their assembly line workers can certainly put together solar panels or parts for wind turbines. The idea of bringing outsourced industries back onshore is folly; building infrastructure towards the next industry is vision.
This is a pivotal point in the history of mankind, and I shudder to think of what will happen if we fail to take advantage of this opportunity. To that point, Friedman quotes Jeffrey Immelt (CEO of GE): "I have always believed that every generation looks back at the generation before it and has one big question about something they did or did not do. For our generation, the big question to the generation before us was 'How could good people be so prejudiced against blacks and women?' I am convinced that when our kids are fifty, and they look back at us, they are going to ask: 'What were you thinking?' You were the richest country in the world. You had the technology to really make a difference on things like global warming. Why were you so slow to do the right things?'"
So, is it already too late? I don't think so. I can't; because really at that point all there is to do is despair. I prefer to think along the lines of Amory Lovins (Chief Scientist at the Rocky Mountain Institute):
"We have exactly enough time - starting now."
Some of what is below I heard almost verbatim recited by one or both Presidential candidates on Tuesday night, and that makes me happy (if I make the colossal assumption that it was more than just lip service on their part). Most of what follows are paraphrasings of some of the main ideas in the book, with a few of my own musings thrown in. I put quotes where applicable, but for a lot of the rest I just didn't want to write "Friedman says" 100 times. Just wanted to make it clear that I'm not trying to plagiarize. In addition, I'd like to add that what I'm going to talk about is only a very, very small part of all that Friedman discusses. Some of it is controversial and some of it is just common sense; all of it is fascinating. As much as I enjoyed The World is Flat, this is better and it's not even particularly close.
Obviously, when one hears the words "green revolution" it instantly brings to mind the idea that, "oh, this is a book about global warming." Well, that's certainly a big part of it. Here Friedman presents in 27-pages probably the best synopsis on the science as far as what we know and don't know yet. He also puts forth this analogy about skeptics, which I got a big kick out of:
"Climate change deniers are like the person who goes to the doctor for a diagnosis, and when the doctor tells him 'If you don't stop smoking, there is a 90% chance you will die of lung cancer' the patient replies, 'Oh, doctor, you mean you are not 100% sure? Then I will keep smoking.'"
He also makes a very compelling case that climate change is not going to be as bad as some of the estimates out there. It's actually far more likely that it will be a lot worse.
But I don't want to harp on climate change (again) because for one my feelings on the subject have been well documented here and two that's actually not even the biggest reason Friedman convincingly gives for the US leading the charge in the green revolution.
Obviously if you are a staunch believer in man-made, carbon emmision-based climate change it's elementary to see why we would need to switch to renewables. But let's take climate change completely off the table. There's still overwhelming evidence that a switch to green technology is in our best interest. First, let's look at it from a national security standpoint. Right now we give a lot of money every day to oil barons and regimes operating in countries whose people don't like us very much. What's more, in a lot of cases the money received by these regimes is used to deny their citizens a lot of the freedoms of the Western world. If the motto of the Revolutionary War was "no taxation without representation" then the motto for a lot of these countries is "no taxation, so no representation either." Because these countries are so heavily dependent on oil revenue, they have very little motivation to invest in other industries. As a result, the people are often at the mercy of the government to support them and don't have the leverage to demand change. Taking these countries off of this type of "welfare" system would force them to change and attempt to build infrastructure and industry that competes as part of the global market. Then, and only then, will true democracy flourish in the Middle East. Some would say that the answer to that is drilling in the U.S. They are wrong. I'm not going to do the vast amounts of research to come up with completely hard numbers (because people would just argue with them anyway), but I went here for some rough estimates. Using the upper estimates of the potential oil, I come up with a grand total of 180 billion barrels of potential domestic oil (727 million barrels in the strategic reserve, 115.1 billion barrels in the OCS, 48.5 billion barrels onshore, and 16 billion in ANWR). Our consumption is over 20 million barrels per day. Some quick math reveals that even in the best case scenario we could be self sufficient for less than 2 and a half years using just our own oil. Even if our estimates are wildly off the mark and the real figure is 4 times that, we're still talking less than a decade. So, obviously if the goal is to be self-sufficient with our energy needs, renewables are a must. The stone age didn't end because we ran out of stones. It ended because we found a better way.
In addition, the energy needs of the world are escalating almost exponentially everyday thanks to the emerging markets (China and India are the headliners, but they are hardly the only ones). You also hear a lot (though probably still not enough) about the need to stifle the immense poverty in Africa but if you stop and think about what it would actually mean from an energy perspective to bring that entire continent up to first-world living standards the problem is truly daunting. So much so that a lot of people (including me for a time) have the attitude that "China and India are so big and growing so fast, it doesn't matter what efforts we undertake to curb our consumption and switch to renewables; all of our gains will easily be outweighed by their excess." I particularly like Friedman's response to this, which he gave in a speech to the Chinese at their "Green Car Congress" in 2007:
"Every year I come to China and young Chinese tell me, 'Mr. Friedman, you Americans got to grow dirty for 150 years - you got to have your Industrial Revolution based on coal and oil - now it is our turn.' Well, on behalf of all Americans, I am here today to tell you that you're right. It's your turn. Please, take your time, grow as dirty as you like for as long as you like. Take your time! Because I think my country needs only 5 years to invent all the clean power and energy efficiency tools that you, China, will need to avoid choking on pollution, and then we are going to come over and sell them all to you. We will get at least a five-year jump on you in the next great global industry: clean power and energy efficiency. We will totally dominate you in those industries. "
I realy like that because it turns everything around and turns a stick into a carrot. Instead of us acting like some world police force at a time when most of the rest of the world has had quite enough of us in that role, it transforms us yet again into a world leader on the cutting edge that challenges other countries by saying "This is the future, and we are moving towards it full speed ahead. If you want to join us now: great! We welcome the competition. But if you want to carry on like you have been and risk falling behind again right at the moment when you were just starting to catch up, that's fine with us too." The problem, of course, is that at the moment we are not going "full speed ahead."
In the early 1960s, President Kennedy made a bold declaration that we would put a man on the moon by the end of the decade. It was obvious that this was at least in part driven by the Cold War. Even though the moon clearly offered no strategic military position, the humbling and helpless feeling the American people felt by having to look up at the sky and see Sputnik circling the Earth was enough to spur us into collective action. It spurred us to invest heavily in science, technology, and education in an effort to win the space race. Succesfully landing on the moon may have been the public face of the success that type of investment bred, but it certainly wasn't limited to just that.
Similar to the space race, we now need a green race. We need leadership that sets a lofty goal that the U.S. can rally behind. Collectively, I believe that we are still the most industrious people on the planet when it comes to working towards, fighting for, and sacrificing in the name of a cause we believe in. I believe that this is that cause.
And there will be sacrifices that need to be made; at least at first. Change is never comfortable, and there will be at least as many bad ideas that get implemented as there will be good ones. Great novels and great programs don't get written in one draft. But by investing in the next great global industry, we will not only be putting ourselves in position to dominate the global economy for the 21st century, we have the opportunity to once again bring manufacturing jobs back home. Maybe GM and Ford will never again enjoy the market share they once did, but instead of cars their assembly line workers can certainly put together solar panels or parts for wind turbines. The idea of bringing outsourced industries back onshore is folly; building infrastructure towards the next industry is vision.
This is a pivotal point in the history of mankind, and I shudder to think of what will happen if we fail to take advantage of this opportunity. To that point, Friedman quotes Jeffrey Immelt (CEO of GE): "I have always believed that every generation looks back at the generation before it and has one big question about something they did or did not do. For our generation, the big question to the generation before us was 'How could good people be so prejudiced against blacks and women?' I am convinced that when our kids are fifty, and they look back at us, they are going to ask: 'What were you thinking?' You were the richest country in the world. You had the technology to really make a difference on things like global warming. Why were you so slow to do the right things?'"
So, is it already too late? I don't think so. I can't; because really at that point all there is to do is despair. I prefer to think along the lines of Amory Lovins (Chief Scientist at the Rocky Mountain Institute):
"We have exactly enough time - starting now."
Wednesday, October 01, 2008
Energy Crisis Solved: We Will Be Powered by Spite
So if anyone saw The Daily Show last night I have very little to add. Apparently the reason given by several prominent Republicans (notably House Republican leader John Boehner) for the bailout failing to pass the House was Nancy Pelosi's highly partisan speech given before the vote was taken. What the hell kind of kindergarten crap is this? No, I don't like Nancy Pelosi and yes, I agree that the speech was highly partisan and not really necessary at the time, but I fail to see how that is relevant to voting for or against anything. I don't care if she was up at the podium dressed as a nazi, burning a bible in one hand and an American flag in the other, if you think the bill is in the best interests of the country you vote for it and if you don't you vote against it. Period. End of discussion. I still don't know exactly how I feel about the bailout and there were a lot of Reps who cast votes against it and voiced very legitimate concerns about it. That's fine. I'm not arguing that they should have voted for it. I'm saying that if you were all set to vote for it and then you changed your mind because Nancy Pelosi was a big meany you are a spiteful moron and you deserve to be voted out of office immediately.
Of course, as usual the truth of the matter (as I see it anyway) is somewhat more complicated. The bill wasn't going to pass anyway. Nancy Pelosi didn't have the votes and she knew it. She figured there was no chance she was going to sway any more Republicans at the last minute so instead she tried to appeal to Democrats to fall in line by stoking up anti-Republican and anti-Bush sentiment. It didn't work, so then it left a convenient opening for Republicans to blame it all on her. So I actually don't think that Republicans changed their mind based on her speech. I have more respect for their intelligence than that. What I have no respect for and hate with a fiery passion is the earnest desire to take every opportunity to take a partisan shot instead of providing an actual reason why you voted the way you did.
I still haven't had a chance to read through all the details of the bailout but one of the things that has been bothering me is the question of "how did we get to this point this quickly?" How did we go from "yeah, times are tough but we'll pull through it" to "OH MY GOD we need $700 billion immediately or everything's going to collapse!"? That would be like me sitting down at a blackjack table and Christy coming by every hour to check up on me. The first 5 times she asks how I'm doing I say "well, I'm down a little but I'm doing ok" and then she comes back the 6th time and I say "I need $798,000 or they're going to break my legs." Does this mean that everybody's balance sheets have just been lying this whole time, or was everyone (including the auditors) really just this clueless till 2 weeks ago about how bad things were?
On a somewhat related note, I just started reading A Random Walk Down Wall Street which is a fairly famous investing guide that argues in favor of investing in large index funds instead of speculating in individual stocks or managed mutual funds. It was first published in 1973 and has been updated and revised 9 times since (most recently in 2007) and it's amazing how relevant it still is. It's also amazing how in over 80 years Wall Street still has never managed to learn from its mistakes and continually gets caught up in manias and overvaluation where everytime they are convinced that there is no bubble and growth will continue indefinitely. I found this passage, found on page 1, particularly relevant: "many of the pros lost their shirts in the 90s using derivative strategies they failed to understand." That was only 8-15 years ago; there's probably a lot of the same people still at these big investment firms. How did they not see this coming?
With every year I find the Who's Won't Get Fooled Again to be more and more wise. . .
Of course, as usual the truth of the matter (as I see it anyway) is somewhat more complicated. The bill wasn't going to pass anyway. Nancy Pelosi didn't have the votes and she knew it. She figured there was no chance she was going to sway any more Republicans at the last minute so instead she tried to appeal to Democrats to fall in line by stoking up anti-Republican and anti-Bush sentiment. It didn't work, so then it left a convenient opening for Republicans to blame it all on her. So I actually don't think that Republicans changed their mind based on her speech. I have more respect for their intelligence than that. What I have no respect for and hate with a fiery passion is the earnest desire to take every opportunity to take a partisan shot instead of providing an actual reason why you voted the way you did.
I still haven't had a chance to read through all the details of the bailout but one of the things that has been bothering me is the question of "how did we get to this point this quickly?" How did we go from "yeah, times are tough but we'll pull through it" to "OH MY GOD we need $700 billion immediately or everything's going to collapse!"? That would be like me sitting down at a blackjack table and Christy coming by every hour to check up on me. The first 5 times she asks how I'm doing I say "well, I'm down a little but I'm doing ok" and then she comes back the 6th time and I say "I need $798,000 or they're going to break my legs." Does this mean that everybody's balance sheets have just been lying this whole time, or was everyone (including the auditors) really just this clueless till 2 weeks ago about how bad things were?
On a somewhat related note, I just started reading A Random Walk Down Wall Street which is a fairly famous investing guide that argues in favor of investing in large index funds instead of speculating in individual stocks or managed mutual funds. It was first published in 1973 and has been updated and revised 9 times since (most recently in 2007) and it's amazing how relevant it still is. It's also amazing how in over 80 years Wall Street still has never managed to learn from its mistakes and continually gets caught up in manias and overvaluation where everytime they are convinced that there is no bubble and growth will continue indefinitely. I found this passage, found on page 1, particularly relevant: "many of the pros lost their shirts in the 90s using derivative strategies they failed to understand." That was only 8-15 years ago; there's probably a lot of the same people still at these big investment firms. How did they not see this coming?
With every year I find the Who's Won't Get Fooled Again to be more and more wise. . .
Wednesday, September 24, 2008
I Didn't Mean For It To Be THAT Interesting
When I titled my last blog "an interesting week" I was referring to my personal experiences, but you could certainly say it was an apt, if understated, description of what happened on Wall Street last week.
I said a few months ago that I thought we'd bottom out around late September/early October. This is not quite what I meant. I did at least put in the caveat that "another financial or international crisis between now and then and all bets are off." I'm pretty sure this qualifies.
I have been meaning to blog about my thoughts on it since late last week, but I keep finding that I don't quite know enough to put together a coherent overall opinion together. And it's one of those where everytime I find out a new piece of information it just leads me to 2 new questions.
One issue I can speak to a little bit is the specific bailout of AIG. A lot of people have wondered why the government seems to be picking and choosing who it is going to let fail. Why was Lehman brothers allowed to go bust but not AIG? Well, to put things simply, you flat out cannot allow an insurance company to just "fail". I got some up close and personal experience in this while working for Kemper Insurance until they went bankrupt in 2002. When people invest money in a particular company or investment bank, it is with the understanding that the reason you are going to expect higher returns than you can get from a CD or T-Bill is that there is some element of risk involved. So, in a sense, by getting into the market you've signed up for that (even if you didn't know that you did when you got in). Insurance is exactly the opposite. You are not ever expecting to profit from an insurance deal. Instead, you are paying someone so that you can project your future more accurately and not have to contemplate all the "what ifs" of potential catastrophes that could befall you. If you just let an insurance company fail you remove that safety net and now you have thousands of companies (many of whom paid tens of millions in premiums) left completely uncovered. So not only would they need to immediately dump additional untold amounts of cash into new insurance during a time when they can least afford to, but in the interim they are left completely exposed and subject to unlimited liability. It's not hard to see how this could lead to a domino effect of potentially hundreds of companies (from the biggest to the smallest) becoming insolvent in short order. That is why when an insurance company goes bankrupt what you usually see is the state or federal regulators come in and "wind up" the business (meaning they don't write any new policies but honor all the existing ones by paying claims using whatever is left in the coffers, then selling assets, and then finally having the taxpayers foot the bill). Now, that didn't exactly happen with AIG, largely because it is unprecedented for an insurance company this large to go under. So what happened instead was a loan at a high interest rate, which is backed by ~80% ownership of the company. In theory, this means that AIG is not finished, IF they can pay back the loan. Former AIG CEO Hank Greenberg doesn't think it's going to happen though. He believes that the only feasible way AIG is going to be able to make their loan payments is to begin selling off their assets. If this continues, eventually you reach a point where you have sold off too many of the vital parts of the company and you will no longer be able to continue profitably even if you manage to pay off the loan. So he believes the government is in effect basically making AIG wind themselves down instead of having the government do it. Personally, I think that since the only real alternative is that the regulators would already be in shutting it down he should feel lucky they got the deal they did. If AIG can prove to potential investors that its troubles are now behind them, they should be able to attract new loans that will allow them to trade the high government loans for more favorable terms and that should allow them to continue. What is perhaps most extraordinary about the AIG situation is that even though its financial products division accounted for only a fraction of its overall revenues, it was able to write enough of these complicated derivatives to destroy the firm. That is some extremely poor risk management. Nevertheless, the remainder of the company has been well-run and profitable and thus I still give them a 50-50 shot of pulling out of this.
As for where the other $600 billion plus are going, I really don't have any specific thoughts yet. So instead I'll just post a couple of general thoughts and questions that have occurred to me:
I said a few months ago that I thought we'd bottom out around late September/early October. This is not quite what I meant. I did at least put in the caveat that "another financial or international crisis between now and then and all bets are off." I'm pretty sure this qualifies.
I have been meaning to blog about my thoughts on it since late last week, but I keep finding that I don't quite know enough to put together a coherent overall opinion together. And it's one of those where everytime I find out a new piece of information it just leads me to 2 new questions.
One issue I can speak to a little bit is the specific bailout of AIG. A lot of people have wondered why the government seems to be picking and choosing who it is going to let fail. Why was Lehman brothers allowed to go bust but not AIG? Well, to put things simply, you flat out cannot allow an insurance company to just "fail". I got some up close and personal experience in this while working for Kemper Insurance until they went bankrupt in 2002. When people invest money in a particular company or investment bank, it is with the understanding that the reason you are going to expect higher returns than you can get from a CD or T-Bill is that there is some element of risk involved. So, in a sense, by getting into the market you've signed up for that (even if you didn't know that you did when you got in). Insurance is exactly the opposite. You are not ever expecting to profit from an insurance deal. Instead, you are paying someone so that you can project your future more accurately and not have to contemplate all the "what ifs" of potential catastrophes that could befall you. If you just let an insurance company fail you remove that safety net and now you have thousands of companies (many of whom paid tens of millions in premiums) left completely uncovered. So not only would they need to immediately dump additional untold amounts of cash into new insurance during a time when they can least afford to, but in the interim they are left completely exposed and subject to unlimited liability. It's not hard to see how this could lead to a domino effect of potentially hundreds of companies (from the biggest to the smallest) becoming insolvent in short order. That is why when an insurance company goes bankrupt what you usually see is the state or federal regulators come in and "wind up" the business (meaning they don't write any new policies but honor all the existing ones by paying claims using whatever is left in the coffers, then selling assets, and then finally having the taxpayers foot the bill). Now, that didn't exactly happen with AIG, largely because it is unprecedented for an insurance company this large to go under. So what happened instead was a loan at a high interest rate, which is backed by ~80% ownership of the company. In theory, this means that AIG is not finished, IF they can pay back the loan. Former AIG CEO Hank Greenberg doesn't think it's going to happen though. He believes that the only feasible way AIG is going to be able to make their loan payments is to begin selling off their assets. If this continues, eventually you reach a point where you have sold off too many of the vital parts of the company and you will no longer be able to continue profitably even if you manage to pay off the loan. So he believes the government is in effect basically making AIG wind themselves down instead of having the government do it. Personally, I think that since the only real alternative is that the regulators would already be in shutting it down he should feel lucky they got the deal they did. If AIG can prove to potential investors that its troubles are now behind them, they should be able to attract new loans that will allow them to trade the high government loans for more favorable terms and that should allow them to continue. What is perhaps most extraordinary about the AIG situation is that even though its financial products division accounted for only a fraction of its overall revenues, it was able to write enough of these complicated derivatives to destroy the firm. That is some extremely poor risk management. Nevertheless, the remainder of the company has been well-run and profitable and thus I still give them a 50-50 shot of pulling out of this.
As for where the other $600 billion plus are going, I really don't have any specific thoughts yet. So instead I'll just post a couple of general thoughts and questions that have occurred to me:
- I think that by and large, Treasure Secretary Paulson has done a good job in explaining why this type of drastic action is required while still not panicking people. However, he's a bit naive in his request for the Congree to pass this as quickly as possible and to have absolutely no committee oversight to answer to. In an election year where just about nobody trusts the current administration anymore, going to the "trust me" well one more time seems a tad . . . optimistic. I understand that time is of the essence, but we have 3 branches of government for a reason. If we didn't want checks and balances, we'd just have a monarchy. Writing a $700 billion check seems exactly the right time to kick the tires and take a test drive instead of simply buying straight off of craigslist.
- When you start talking in terms of the hundreds of billions of dollars, what are the rules for rounding? If you decide that a particular company needs "~$50 million", do you just round up to $100 million?
- It's funny how 6 months ago everyone was watching the presidential race and no one was paying attention to Bush, and now no one is paying attention to the candidates. People are basically saying "I'm not nearly as concerned with what you would do if you were in there as I am with what the guy that's currently in there is doing." That's appropriate, I think.
- McCain can't have it both ways. You can't paint yourself as someone who is "anti government regulation" and then say that the reason this crisis happened is because we need better regulation. And I don't care how you paint it, saying "the fundamentals of our economy are strong" was a political gaffe no matter how you try to change the meaning of the word "fundamentals".
- Anyone who is in favor of this bailout must give up this whole "the Democrats are socialists" line forever. If you don't like a particular social program, say "I don't want the government involved in that" and not "the government should not be involved in that because it shouldn't be involved in anything because that's for socialists." If, however, you are against the bailout then by all means you can continue the "socialist" slander, but I'm going to call you an "anarchist" from now on..
Leaving for Vegas in a few hours, so wish me luck. I don't expect to win; I am just hoping to navigate around the isolated pockets of massive cash hemhorraging that I usually run into on at least 2-3 occasions per trip. With luck, I will also finish Hot, Flat, and Crowded, which is the phenomenal new book by Thomas Friedman (author of The World is Flat) on the plane ride over. I will have an extensive write-up on that (hopefully) next week sometime, but I'd highly advise anyone looking for a good non-fiction book to pick it up immediately.
And yes, it will involve me being preachy on climate change again. You have been warned.
Wednesday, September 17, 2008
An Interesting Week
For starters, I had a more personal interest in Hurricane Ike than most of the people up here considering I've got parents, an uncle, a brother, nephews and nieces in Houston. While it will still be quite a while before any true "normalcy" returns to the area fortunately everyone is safe with little to no damage to their homes. And also fortunately, there were two silver linings that came out of all this. There was a huge worry that the storm would devastate the pizza biz. Overall, the place has been doing decent but "decent" in the sense of a new business in its first year; meaning that they have been making enough to clear expenses and haven't had to dump any more money into it but they have yet to really turn a profit. The worry was that a potential couple weeks of being shut down could really turn the screws on them. They even stayed open late on Friday night before the storm hit to make some extra cash since everyone else closed early. Well, they finally got a stroke of luck. For some unexplainable reason they got power back on at the restaurant on Saturday night (even though everyone's house and most of the 3 million people in the Houston area still don't have it). So once again they are pretty much the business open and people have been flocking. As a consequence, they have pretty much sold out all of their food every day since then. This is good news for them not only because it means they will be able to make it through the storm relatively unscathed, but now there are a whole lot of people that have tried them that probably never would have and hopefully that will lead to more repeat business. That was one silver lining . . .
The second one has to do with the Cubs! When the hurricane hit, it forced the postponement of the Cubs-Astros series that was scheduled for that weekend in Houston. Imagine my surprise when I got on the net Saturday night to find out that they would be playing one of the make-up games on Sunday night in Milwaukee. Even though we already had people coming over for the Bears game on Sunday, I couldn't resist going. After all, the Cubs game that was supposed to be my last of the year was the one in Cincy that they blew in the 9th, and who wants to go out like that? Well, I'm certainly going out on a much, much better note as I got to witness Carlos Zambrano throw a no-hitter (the 257th ever thrown and the first in 36 years for the Cubs). The word for the entire night was surreal. Surreal to be in someone else's ballpark with nothing but Cubs fans. Surreal to hear the crowd cheering when it was announced that the normal "home" team (the Brewers) had lost. Surreal to see Cubs fans who, starting with about the 6th inning, just wanted to see the Cubs batting half of each inning get over as quickly as possible. And surreal to see such a dominating pitching performance that featured a grand total of 2 hard hit balls the entire game. I said a few years ago after witnessing Illinois come back from 13 points down to Arizona in the last 2 minutes to win that you watch sports your entire life in the hope that you get maybe 10 "moments" that are truly special and take your breath away. Where it seems perfectly natural to see people around you crying and strangers hugging each other and "perfect" is the only way to describe it. That was one such moment, and this was another. Not to be greedy, but I'm hoping to get another one around the end of October this year.
On another note, last Tuesday I finally finished War and Peace and a part of me wants to now list that accomplishment on my resume. My reaction? Well, it's one of those where I could easily spend about 3 hours talking to someone about it but I am almost at a loss to try to give a 2-minute version. Nevertheless, here are some of of the most frequent questions I've been asked about it:
Q: How long was it?
A: 1358 glorious pages
Q: How long did it take you to finish?
A: A little over 2 months
Q: Why would anyone read a book that long? What the hell is wrong with you?
A: I don't know. I like to think of it as reading 13 100-page books, then it doesn't seem so bad. Or you can view it like watching a season of Lost or Heroes (or whatever tv show you like). It would be pretty intimidating if someone said "here watch this, it's 16 hours long" but when it's spread out over 9 months it doesn't seem that long at all.
Q: So, uh, what's it about?
A: Well, it's about war and peace [rimshot]. Plot wise, it's about the Napoleonic wars in Europe from 1805 - 1813 as viewed (mainly) from the perspective of the Russian aristocracy. I haven't fact-checked him, but I believe most of the historical references to battles and such to be historically accurate. I believe this mainly due to the footnotes in the back which corroborate his accounts and just the fact that it was published in 1869 and Tolstoy was a former general in the Russian army. That would be like today someone publishing a historical fiction about WWII. You certainly could take liberties with the characters but it's doubtful you'd get critical acclaim if you completely changed the facts of the war. But, again, I haven't confirmed this (nor do I plan to).
Q: So what else is it about?
A: On the philosophical side of things, it's an exploration of what it means to have free will. Tolstoy says that the closer we are (time wise) to an event which has happened, the more we attribute it to the decisions and actions of a specific person or people. But the farther away we get, the more we are able to get the "big picture" and the more it looks like those actions were inevitable and can't be specifically attributed. For instance, look at the American Revolution. I'm sure at the time the cause of the war was attributed to the "shot heard round the world" at Lexington and Concord. But through the prism of history, we are now able to see that event as a culmination of tensions which had been rising for years and which surely would have boiled over somewhere else if they didn't happen there. I don't think anyone would argue that if that showdown hadn't occurred, there never would have been a war.
So, he takes this as his base and argues that we can never determine the true "cause" of anything, because every cause itself has another proximate cause and another and another until we are irretrievably far away from the event we are attempting to explain. This leads him to conclude, basically, that things "happen because they happen" (which is actually quite similar to the Buddhist expression "everything is as it should be.") This passage explains it pretty succinctly:
"It may seem to be a matter of indifference whether we understand the meaning of historical events this way or that; yet there is the same difference between a man who says that the people of the West moved on the East because Napoleon wished it, and a man who says that this happened because it had to happen, as there is between those who declared that the earth was stationary and that the planets moved round it, and those who admitted that they did not know what upheld the earth, but knew there were laws directing its movement and that of other planets. There is, and can be, no cause of an historical event except the one cause of all causes. But there are laws directing events, and some of these laws are known to us while we are conscious of others we cannot comprehend. The discovery of these laws is only possible when we have quite abandoned the attempt to find the cause in the will of some one man, just as the discovery of the laws of the motion of the planets was possible only when men abandoned the conception of the fixity of the earth."
So, basically it is his position that absolutely everything is subject to and governed by physical laws; nothing is random. This is a concept that became more popular about 75 years later with Einstein's famous statement "God does not play dice with the universe." And since everything is subject to law and nothing is random, there is no room for free will. I may think that I am making a conscious decision to write these words, and you may think that you are making a conscious decision to read them, but in reality the "decision" is a product of all the neurons in your brain acting in a rigid, predictable way to determine what action you will take. You are not in control; you're just along for the ride. That's his theory anyway. Kind of a bummer huh? As a final note, I'd like to add that I actually do largely agree with him. Neverthless, I will continue to blame Bush for the Iraq War.
Q: So, was it worth reading?
A: Absolutely! For a book that's 140 years old, it is surprisingly easy to read (no doubt a good translation helps immensely). It has some beautifully fleshed out, 3 dimensional characters that you come to care about. It will also force you to think and puts old historical (and even more recent) events in a new context, even if you don't completely agree with his philosophical take. Ultimately though, probably the best thing I can say about it was that when I got to the end I wanted it to keep going. Of course, the bottom line is that you're either someone who is horrified at the thought of a 1000+ page book (in which case you will never, ever pick this thing up) or you are intrigued. If you are in the latter category, then I absolutely would recommend picking this up and can guarantee that you won't be sorry.
Q: So is it the best novel ever written?
A: I really don't know how to answer that question, mainly because my reading of "classic" literature is extremely limited. I can say this, though. I've never read any novel that I would definitively say is better, although I'd probably put Atlas Shrugged right up there with it.
That's all I'm gonna say for now, but rest assured that I do like talking about it so if you want to know anything more about it feel free to ask some questions in the comment section or the next time we get together for a beer!
The second one has to do with the Cubs! When the hurricane hit, it forced the postponement of the Cubs-Astros series that was scheduled for that weekend in Houston. Imagine my surprise when I got on the net Saturday night to find out that they would be playing one of the make-up games on Sunday night in Milwaukee. Even though we already had people coming over for the Bears game on Sunday, I couldn't resist going. After all, the Cubs game that was supposed to be my last of the year was the one in Cincy that they blew in the 9th, and who wants to go out like that? Well, I'm certainly going out on a much, much better note as I got to witness Carlos Zambrano throw a no-hitter (the 257th ever thrown and the first in 36 years for the Cubs). The word for the entire night was surreal. Surreal to be in someone else's ballpark with nothing but Cubs fans. Surreal to hear the crowd cheering when it was announced that the normal "home" team (the Brewers) had lost. Surreal to see Cubs fans who, starting with about the 6th inning, just wanted to see the Cubs batting half of each inning get over as quickly as possible. And surreal to see such a dominating pitching performance that featured a grand total of 2 hard hit balls the entire game. I said a few years ago after witnessing Illinois come back from 13 points down to Arizona in the last 2 minutes to win that you watch sports your entire life in the hope that you get maybe 10 "moments" that are truly special and take your breath away. Where it seems perfectly natural to see people around you crying and strangers hugging each other and "perfect" is the only way to describe it. That was one such moment, and this was another. Not to be greedy, but I'm hoping to get another one around the end of October this year.
On another note, last Tuesday I finally finished War and Peace and a part of me wants to now list that accomplishment on my resume. My reaction? Well, it's one of those where I could easily spend about 3 hours talking to someone about it but I am almost at a loss to try to give a 2-minute version. Nevertheless, here are some of of the most frequent questions I've been asked about it:
Q: How long was it?
A: 1358 glorious pages
Q: How long did it take you to finish?
A: A little over 2 months
Q: Why would anyone read a book that long? What the hell is wrong with you?
A: I don't know. I like to think of it as reading 13 100-page books, then it doesn't seem so bad. Or you can view it like watching a season of Lost or Heroes (or whatever tv show you like). It would be pretty intimidating if someone said "here watch this, it's 16 hours long" but when it's spread out over 9 months it doesn't seem that long at all.
Q: So, uh, what's it about?
A: Well, it's about war and peace [rimshot]
Q: So what else is it about?
A: On the philosophical side of things, it's an exploration of what it means to have free will. Tolstoy says that the closer we are (time wise) to an event which has happened, the more we attribute it to the decisions and actions of a specific person or people. But the farther away we get, the more we are able to get the "big picture" and the more it looks like those actions were inevitable and can't be specifically attributed. For instance, look at the American Revolution. I'm sure at the time the cause of the war was attributed to the "shot heard round the world" at Lexington and Concord. But through the prism of history, we are now able to see that event as a culmination of tensions which had been rising for years and which surely would have boiled over somewhere else if they didn't happen there. I don't think anyone would argue that if that showdown hadn't occurred, there never would have been a war.
So, he takes this as his base and argues that we can never determine the true "cause" of anything, because every cause itself has another proximate cause and another and another until we are irretrievably far away from the event we are attempting to explain. This leads him to conclude, basically, that things "happen because they happen" (which is actually quite similar to the Buddhist expression "everything is as it should be.") This passage explains it pretty succinctly:
"It may seem to be a matter of indifference whether we understand the meaning of historical events this way or that; yet there is the same difference between a man who says that the people of the West moved on the East because Napoleon wished it, and a man who says that this happened because it had to happen, as there is between those who declared that the earth was stationary and that the planets moved round it, and those who admitted that they did not know what upheld the earth, but knew there were laws directing its movement and that of other planets. There is, and can be, no cause of an historical event except the one cause of all causes. But there are laws directing events, and some of these laws are known to us while we are conscious of others we cannot comprehend. The discovery of these laws is only possible when we have quite abandoned the attempt to find the cause in the will of some one man, just as the discovery of the laws of the motion of the planets was possible only when men abandoned the conception of the fixity of the earth."
So, basically it is his position that absolutely everything is subject to and governed by physical laws; nothing is random. This is a concept that became more popular about 75 years later with Einstein's famous statement "God does not play dice with the universe." And since everything is subject to law and nothing is random, there is no room for free will. I may think that I am making a conscious decision to write these words, and you may think that you are making a conscious decision to read them, but in reality the "decision" is a product of all the neurons in your brain acting in a rigid, predictable way to determine what action you will take. You are not in control; you're just along for the ride. That's his theory anyway. Kind of a bummer huh? As a final note, I'd like to add that I actually do largely agree with him. Neverthless, I will continue to blame Bush for the Iraq War.
Q: So, was it worth reading?
A: Absolutely! For a book that's 140 years old, it is surprisingly easy to read (no doubt a good translation helps immensely). It has some beautifully fleshed out, 3 dimensional characters that you come to care about. It will also force you to think and puts old historical (and even more recent) events in a new context, even if you don't completely agree with his philosophical take. Ultimately though, probably the best thing I can say about it was that when I got to the end I wanted it to keep going. Of course, the bottom line is that you're either someone who is horrified at the thought of a 1000+ page book (in which case you will never, ever pick this thing up) or you are intrigued. If you are in the latter category, then I absolutely would recommend picking this up and can guarantee that you won't be sorry.
Q: So is it the best novel ever written?
A: I really don't know how to answer that question, mainly because my reading of "classic" literature is extremely limited. I can say this, though. I've never read any novel that I would definitively say is better, although I'd probably put Atlas Shrugged right up there with it.
That's all I'm gonna say for now, but rest assured that I do like talking about it so if you want to know anything more about it feel free to ask some questions in the comment section or the next time we get together for a beer!
Wednesday, September 10, 2008
I Palin(drome) I
So, finally getting around to writing my thoughts about McCain’s VP selection. Obviously, given a week plus to reflect my thoughts are not quite what they were, but that’s probably for the better.
My first reaction when I fired up Firefox and saw the headline was a kind of quizzical, head-tilting, confusion. My immediate thought was that it seemed like a desperate and transparent ploy to pull in disgruntled Hillary supporters. Apart from that though, I knew absolutely nothing about her so I was kind of at a loss. Fortunately, I’m people who knows people, and I was able to call out to Tim, the John’s Unnecessary Blog Offical Alaskan Correspondent (bet you didn’t know I had one of those?) for some local perspective. Here are some excerpts:
“Sarah seems cut out for being a mayor, but above that, she seems out of her league to me. Her campaigh for governor in 2006 was poorly managed, flew by the seat of its pants, and she frequently double-booked certain times of the day with appointments. I invited her to a telephone debate with other candidates for a rural Alaska audience, and her people cancelled the morning of the event.
People like her in Alaska because she is so different from the series of old white men who have governed this state since its birth 50 years ago. She was inaugurated in a stadium in Fairbanks, instead of the state capital in Juneau. Just to be different, and allow more of the common folk to attend. Her emphasis on ethics in government has been very well received, and 4 state lawmakers have been sent to prison since she took office, with more on the way. She gets the credit for that. She is scorned by the Alaska Republican Party for being a maverick and totally unwilling to suck up to the good ol’ boys club involving lawmakers, business leaders and the oil industry. That's how she got to be on the McCain radar screen a year or so ago.
She loves constitutions. Her answer to almost any political questions involves constitutionality. At times she does not seem to have an opinion of her own, just an ability to invoke the Alaska constitution.
But she's still embroiled in this scandal surrounding her firing of the Commission of Public Safety, evidently because he refused to fire a state trooper that is a bad man and was, by the way, once married to Sarah's sister Molly. I assume that situation has reached the rest of American now that Palin is in the national spotlight. A state legislature committee is trying to find evidence that could indict her, but Palin has lawyers saying that the investigators have no right to do so. Now some Big Republican lawyers will likely help her get out of this mess.
After she fired the guy who wouldn't fire her sister's ex husband (stick with me here), she hired a guy who sexually harassed an employee several years ago and was disciplined by his police department. Palin nor her people knew about that before they offered him the Commissioner job. That guy resigned two weeks after taking the job. Oops.
Biden should make her look silly in the VP debate. Or rather, SOUND silly. She will manage to look good, even when she is getting crushed in a debate.”
Thanks Tim, for the local perspective! I am quite confident that some of my readers will appreciate your point of view more than others.
My immediate sense was that this selection was a game-changer, though whether it was a 99-yard TD pass or an interception returned for a TD I wasn’t sure. And really I’m still not, though I think it has probably a slightly better chance of blowing up in McCain’s face then it does of working out.
From an election standpoint it’s completely irrelevant what someone who was already in the McCain camp on August 28th thinks about her (they’re generally ecstatic FWIW), just as it was completely irrelevant what an already-declared Obama supporter thought about Biden after that pick was made. The whole end game of the next 60 or so days is how each of these picks fares in picking up the undecided voters. And on that level I think she’s in for a very bumpy ride.
So, I will ask the question that everyone has been asking for the last 10 days, who the hell is this person and what does she stand for? Since her website automatically reroutes to John McCain’s and all that currently has is a transcript of her convention speech, I had to pull quotes from here. I know they will be out of context, but she’s not giving me a whole lot to go on at this point.
“I told Congress thanks, but no thanks, on that ‘Bridge to Nowhere.’ If our state wanted a bridge, I said, we'd build it ourselves.” – Convention speech
“I am pro-life and I believe that marriage should only be between and man and a woman.” – from her now re-routed http://www.palinforgovernor.com/ website
On a hypothetical if Roe v. Wade was overturned: “Under this hypothetical scenario, it would not be up to the governor to unilaterally ban anything. It would be up to the people of Alaska to discuss and decide how we would like our society to reflect our values.” – Anchorage Daily News 2006 gubernatorial profile
“I got rid of a few things in the governor's office that I didn't believe our citizens should have to pay for. That luxury jet [for personal use by the governor] was over the top. I put it on eBay. I also drive myself to work. And I thought we could muddle through without the governor's personal chef--although I've got to admit that sometimes my kids sure miss her. I came to office promising to control spending--by request if possible and by veto if necessary.” – Convention speech
“I am a conservative Republican, a firm believer in free market capitalism. A free market system allows all parties to compete, which ensures the best and most competitive project emerges, and ensures a fair, democratic process.” – Palin/Parnell campaign mailer, 2006
On whether or not she supported the Alaska Supreme Court's ruling that spousal benefits for state employees should be given to same-sex couples? “No, I believe spousal benefits are reserved for married citizens as defined in our constitution.” - Anchorage Daily News 2006 gubernatorial profile
“As Mayor and CEO of the booming city of Wasilla, my team invited investment and encouraged business growth by eliminating small business inventory taxes, eliminated personal property taxes, reduced real property tax mill levies every year I was in office, reduced fees, and built the infrastructure our businesses needed to grow and prosper.” -Palin/Parnell campaign mailer, 2006
On teaching creationism vs. evolution in school: “Teach both. You know, don't be afraid of information.... Healthy debate is so important and it's so valuable in our schools. I am a proponent of teaching both. And you know, I say this too as a daughter of a science teacher." Boston Globe, Aug 30 2008
On global warming: “A changing environment will affect Alaska more than any other state, because of our location. I'm not one though who would attribute it to being man-made.” - Q&A with newsmax.com Aug 29, 2008
Well, I’m not going to go point by point on these, as I think it’s probably pretty apparent to all readers of this space where I stand on most of these. However . . .
I absolutely do have to take her to task on the “Bridge to Nowhere” comments. It’s just a flat out lie. Now, we can go round and round (and probably will) about the when and the why she was for it and then against it. But the kicker that’s undisputed is: she kept the money. There is a great Simpsons episode where Ron Howard feels sorry for Homer and gives him some money. Homer shouts back “I don’t need your charity!” And then he folds the money and puts it in his pocket. That’s what Palin is doing here.
Anyway, setting that aside if we summarize her she can aptly be characterized as conservative, pro-life, pro-2nd amendment, for the teaching of creationism alongside evolution, against wasteful spending, for low taxes and free markets, against gay marriage, and isn’t convinced that climate change is man-made.
Now, again, setting aside whether or not you agree with those views personally or not, I just don’t see how a candidate with those positions helps you win over independents, as at least half of those are at odds with most independents think (abortion, climate change, and evolution in particular). The only way I can see it really working is if this now allows McCain to move a lot more towards the center since he believes that his base is now energized and loyal because of her. If that’s indeed what he’s doing, then that’s a gamble, but of course he likes gambling and prides himself in earning the “maverick” claim.
I’m not going to say a whole let else about all the “noise” being thrown around by both camps over the Palin storm. It’s certainly true that a lot of staunch left-wingers have spread some nasty unfounded rumors and there’s too much focus on her personal life, but at the same time the Republicans are trying to lump all queries about her, both legitimate and illegitimate, as “attacks”. Questioning whether or not her 5th child is really hers or not is out of bounds and irrelevant to an election. Campbell Brown grilling Tucker Bounds on Palin’s foreign policy experience is completely legitimate and should not have prompted McCain to cancel a CNN appearance. I will say this, however (and this is more of a commentary on American culture than anything else); if it was Barrack Obama instead that had a pregnant 17-year old daughter, this election would be over.
So, to somewhat wrap this up, while overall I don’t think it will turn out to be a great pick for McCain I do agree that Democrats underestimate her at their peril. Just as it was stupid for John Kerry to spout that “John McCain is a weak candidate” for the last 6 months, the instantaneous ridiculing of Palin by some on the left is completely counter-productive. Criticizing her by saying that her experience as mayor of a tiny town is worthless does not play well in small towns elsewhere in the U.S. (but then again criticizing community organizers doesn’t exactly play well in big cities). And Democrats should not get drawn into the debate about Obama’s overall experience versus hers. Even if they win that debate, the Republican response is “you’re right, she doesn’t have all that much experience. That’s why she’s at the bottom of our ticket and not the top.”
Oh, and because I just happened to read about it 10 minutes ago I want to add that the feigned outrage at Obama’s use of the term “lipstick on a pig” is just stupid.
My first reaction when I fired up Firefox and saw the headline was a kind of quizzical, head-tilting, confusion. My immediate thought was that it seemed like a desperate and transparent ploy to pull in disgruntled Hillary supporters. Apart from that though, I knew absolutely nothing about her so I was kind of at a loss. Fortunately, I’m people who knows people, and I was able to call out to Tim, the John’s Unnecessary Blog Offical Alaskan Correspondent (bet you didn’t know I had one of those?) for some local perspective. Here are some excerpts:
“Sarah seems cut out for being a mayor, but above that, she seems out of her league to me. Her campaigh for governor in 2006 was poorly managed, flew by the seat of its pants, and she frequently double-booked certain times of the day with appointments. I invited her to a telephone debate with other candidates for a rural Alaska audience, and her people cancelled the morning of the event.
People like her in Alaska because she is so different from the series of old white men who have governed this state since its birth 50 years ago. She was inaugurated in a stadium in Fairbanks, instead of the state capital in Juneau. Just to be different, and allow more of the common folk to attend. Her emphasis on ethics in government has been very well received, and 4 state lawmakers have been sent to prison since she took office, with more on the way. She gets the credit for that. She is scorned by the Alaska Republican Party for being a maverick and totally unwilling to suck up to the good ol’ boys club involving lawmakers, business leaders and the oil industry. That's how she got to be on the McCain radar screen a year or so ago.
She loves constitutions. Her answer to almost any political questions involves constitutionality. At times she does not seem to have an opinion of her own, just an ability to invoke the Alaska constitution.
But she's still embroiled in this scandal surrounding her firing of the Commission of Public Safety, evidently because he refused to fire a state trooper that is a bad man and was, by the way, once married to Sarah's sister Molly. I assume that situation has reached the rest of American now that Palin is in the national spotlight. A state legislature committee is trying to find evidence that could indict her, but Palin has lawyers saying that the investigators have no right to do so. Now some Big Republican lawyers will likely help her get out of this mess.
After she fired the guy who wouldn't fire her sister's ex husband (stick with me here), she hired a guy who sexually harassed an employee several years ago and was disciplined by his police department. Palin nor her people knew about that before they offered him the Commissioner job. That guy resigned two weeks after taking the job. Oops.
Biden should make her look silly in the VP debate. Or rather, SOUND silly. She will manage to look good, even when she is getting crushed in a debate.”
Thanks Tim, for the local perspective! I am quite confident that some of my readers will appreciate your point of view more than others.
My immediate sense was that this selection was a game-changer, though whether it was a 99-yard TD pass or an interception returned for a TD I wasn’t sure. And really I’m still not, though I think it has probably a slightly better chance of blowing up in McCain’s face then it does of working out.
From an election standpoint it’s completely irrelevant what someone who was already in the McCain camp on August 28th thinks about her (they’re generally ecstatic FWIW), just as it was completely irrelevant what an already-declared Obama supporter thought about Biden after that pick was made. The whole end game of the next 60 or so days is how each of these picks fares in picking up the undecided voters. And on that level I think she’s in for a very bumpy ride.
So, I will ask the question that everyone has been asking for the last 10 days, who the hell is this person and what does she stand for? Since her website automatically reroutes to John McCain’s and all that currently has is a transcript of her convention speech, I had to pull quotes from here. I know they will be out of context, but she’s not giving me a whole lot to go on at this point.
“I told Congress thanks, but no thanks, on that ‘Bridge to Nowhere.’ If our state wanted a bridge, I said, we'd build it ourselves.” – Convention speech
“I am pro-life and I believe that marriage should only be between and man and a woman.” – from her now re-routed http://www.palinforgovernor.com/ website
On a hypothetical if Roe v. Wade was overturned: “Under this hypothetical scenario, it would not be up to the governor to unilaterally ban anything. It would be up to the people of Alaska to discuss and decide how we would like our society to reflect our values.” – Anchorage Daily News 2006 gubernatorial profile
“I got rid of a few things in the governor's office that I didn't believe our citizens should have to pay for. That luxury jet [for personal use by the governor] was over the top. I put it on eBay. I also drive myself to work. And I thought we could muddle through without the governor's personal chef--although I've got to admit that sometimes my kids sure miss her. I came to office promising to control spending--by request if possible and by veto if necessary.” – Convention speech
“I am a conservative Republican, a firm believer in free market capitalism. A free market system allows all parties to compete, which ensures the best and most competitive project emerges, and ensures a fair, democratic process.” – Palin/Parnell campaign mailer, 2006
On whether or not she supported the Alaska Supreme Court's ruling that spousal benefits for state employees should be given to same-sex couples? “No, I believe spousal benefits are reserved for married citizens as defined in our constitution.” - Anchorage Daily News 2006 gubernatorial profile
“As Mayor and CEO of the booming city of Wasilla, my team invited investment and encouraged business growth by eliminating small business inventory taxes, eliminated personal property taxes, reduced real property tax mill levies every year I was in office, reduced fees, and built the infrastructure our businesses needed to grow and prosper.” -Palin/Parnell campaign mailer, 2006
On teaching creationism vs. evolution in school: “Teach both. You know, don't be afraid of information.... Healthy debate is so important and it's so valuable in our schools. I am a proponent of teaching both. And you know, I say this too as a daughter of a science teacher." Boston Globe, Aug 30 2008
On global warming: “A changing environment will affect Alaska more than any other state, because of our location. I'm not one though who would attribute it to being man-made.” - Q&A with newsmax.com Aug 29, 2008
Well, I’m not going to go point by point on these, as I think it’s probably pretty apparent to all readers of this space where I stand on most of these. However . . .
I absolutely do have to take her to task on the “Bridge to Nowhere” comments. It’s just a flat out lie. Now, we can go round and round (and probably will) about the when and the why she was for it and then against it. But the kicker that’s undisputed is: she kept the money. There is a great Simpsons episode where Ron Howard feels sorry for Homer and gives him some money. Homer shouts back “I don’t need your charity!” And then he folds the money and puts it in his pocket. That’s what Palin is doing here.
Anyway, setting that aside if we summarize her she can aptly be characterized as conservative, pro-life, pro-2nd amendment, for the teaching of creationism alongside evolution, against wasteful spending, for low taxes and free markets, against gay marriage, and isn’t convinced that climate change is man-made.
Now, again, setting aside whether or not you agree with those views personally or not, I just don’t see how a candidate with those positions helps you win over independents, as at least half of those are at odds with most independents think (abortion, climate change, and evolution in particular). The only way I can see it really working is if this now allows McCain to move a lot more towards the center since he believes that his base is now energized and loyal because of her. If that’s indeed what he’s doing, then that’s a gamble, but of course he likes gambling and prides himself in earning the “maverick” claim.
I’m not going to say a whole let else about all the “noise” being thrown around by both camps over the Palin storm. It’s certainly true that a lot of staunch left-wingers have spread some nasty unfounded rumors and there’s too much focus on her personal life, but at the same time the Republicans are trying to lump all queries about her, both legitimate and illegitimate, as “attacks”. Questioning whether or not her 5th child is really hers or not is out of bounds and irrelevant to an election. Campbell Brown grilling Tucker Bounds on Palin’s foreign policy experience is completely legitimate and should not have prompted McCain to cancel a CNN appearance. I will say this, however (and this is more of a commentary on American culture than anything else); if it was Barrack Obama instead that had a pregnant 17-year old daughter, this election would be over.
So, to somewhat wrap this up, while overall I don’t think it will turn out to be a great pick for McCain I do agree that Democrats underestimate her at their peril. Just as it was stupid for John Kerry to spout that “John McCain is a weak candidate” for the last 6 months, the instantaneous ridiculing of Palin by some on the left is completely counter-productive. Criticizing her by saying that her experience as mayor of a tiny town is worthless does not play well in small towns elsewhere in the U.S. (but then again criticizing community organizers doesn’t exactly play well in big cities). And Democrats should not get drawn into the debate about Obama’s overall experience versus hers. Even if they win that debate, the Republican response is “you’re right, she doesn’t have all that much experience. That’s why she’s at the bottom of our ticket and not the top.”
Oh, and because I just happened to read about it 10 minutes ago I want to add that the feigned outrage at Obama’s use of the term “lipstick on a pig” is just stupid.
Tuesday, September 09, 2008
4 States in 48 Hours
So before I get into the serious posts on tap for this week, I thought I’d start with something easy.
The theme for this past weekend was “Pack of Lies.” While that may sound negative, it’s really more comical than anything else.
My brother and I got into Champaign at about 6:00 on Friday night, and decided to head out to dinner with some friends of his from U of I as well as my friends Eric and Bickham. We decided to go to Boston’s which, just for clarification, has nothing to do with the city or the band. The entire dinner can only be described with a single word: debacle. It began with the drink orders. After asking the waitress what beverages they served, two people ordered Boulevard: Sunset Wheat. The waitress returned with beers that were most definitely not Boulevard: Sunset Wheat. When this was brought to her attention, she got this extremely confused look on her face (this would be a recurring theme) and went back to check. She returned to confirm that yes, we were in fact correct that it was not Sunset Wheat because they did not have and have never had Sunset Wheat. At this point we probably should have inquired how she had managed to believe she had filled an order with something they did not currently and had never had, but we’re fairly easy going and we like beer so we just said it was fine. Then our food came and, well, pretty much everything was wrong: the turkey-bacon wrap arrived without bacon, the Mexican-tortilla salad arrived without tortillas, and apparently the waitress decided that I could stand to skip a meal or two as my food did not arrive at all. After finally straightening this out, we attempted to order a 2nd round of drinks. We had all ordered large beers, but instead we were brought small beers. The waitress explained that they were out of large glasses. She offered this explanation in willfull ignorance of the fact that we all had empty large glasses in front of us from our first round. If from that amount of information you can figure out a solution, you are officially one step ahead of the Boston’s wait staff. But again, we are easy going so we didn’t worry about it too much. So we just asked for the check. Now, this being a college town and all, and us being with several college students, we had asked for separate checks. I realize that can be somewhat complicated, so I will grant that a little confusion is understandable. However, out of the 8 checks presented to us exactly 1 was correct. That’s not even a good batting average. The most common mistake was that even though there had been no large beer glasses we were still being asked to pay large beer prices. We pointed this out to the waitress, who of course apologized and ran off to correct the problems. 20 minutes later she returned and now 3 of the remaining 7 were correct (so at least she was getting better). She then proceeded to disappear again to once more attempt to correct the problem. Sensing that this might be a while, I excused myself to go to the bathroom, go home, have kids, raise a family, and retire to Florida. When I returned, they finally seemed to have gotten everyones' bills correct; except for the fact that they never brought me one. Well, you can call it a moral failing on my part, but I simply didn’t have the strength to sit their for another lifetime while they figured out the complicated trigonometry of what to charge me for bow-tie pasta and two beers. So we left. This trip to Boston’s collectively represented the first pack of lies.
The rest of the evening went fairly smoothly. We went to a party in Urbana where the older of us were ridiculed for having been to Woodstock and voting for Dukakis while we talked about how in our day the Quad was only a line and we had to ferment our own beer in buckets. We were a bit disappointed that all the parties started breaking up at around 1:45. Apparently, these crazy kids today just don't know how to party late anymore.
The next morning we awoke to do some tailgating before the Illinois-Eastern Illinois game. We picked up some beer on our way to the parking lot. I noted a new type of Old Style that I had never seen before: “Old Style Lite Gold”. Intrigued, we decided to purchase it and give it a try. It only took about half a beer for us to realize that this beer tasted more watery than usual, even for a Lite beer. We then realized, upon closer inspection of the case, that the flowery writing did not in fact say “Lite”, it said “LA”, which stood for “low alcohol.” This was the second pack of lies (actually, “case of lies” is probably more accurate). We cursed our misfortune, drank a few anyway, and headed into the game.
After witnessing the first half of what eventually turned out to be an Illinois rout (47-14), we headed off to Cincinnati. Arriving about 40 minutes before gametime, we checked into our hotel. We were informed that if we were willing to accept a smoking room, they were offering free breakfast. Since neither of us are all that sensitive to smoke, and I actually had a couple of cigars with me anyway, we decided to go for it. However, when we got to our room we discovered that we now had also been downgraded from 2 double beds to 1. This was the third pack of lies and was not going to work. After a call to the front desk we had our room switched, shotgunned a few beers, and headed off to the Cubs game at Cincinnati’s Great American Ballpark. I would highly recommend anyone who enjoys baseball to visit this stadium and, if you do, to sit in the upper deck (preferably as close to behind home plate as you can get). We were directly behind home plate and from that vantage point you look out across the Ohio river and directly at the hills that are the start of the Appalachians. At sunset, on a beautiful summer/early autumn night like it was Saturday it is the perfect atmosphere to watch baseball in (well, as close to perfect as you can get outside of Wrigley). Unless of course, you get vertigo easily, as the upper deck is quite high. It is very strange to always be looking down on the ball no matter how high it is hit. It was also great that Cubs fans outnumbered Reds fans by about 2-1. I’ve been to a number of Cubs road games where Cubs fans have tried to get the “let’s go Cubbies” chant going, only to have it booed down (and rightfully so). But here there was just simply not enough Reds fans to do anything about it. We completely took the park over, and it was awesome, especially since we got to witness Soriano hit 3 HRs and the Cubs cruise to a relatively easy 14-9 victory. As we exited, some impromptu “Go Cubs Go” singing broke out, and we headed back to the hotel to have a few more drinks and get some sleep.
Sunday morning we awoke at 10:30 and headed down to claim our free breakfast at 10:45. Upon arriving at the restaurant we were informed that once again we had been given a pack of lies, because even though no one had informed us of this they stopped seating for breakfast at 10:30. After a bit of bitching and whining, they compromised and offered to give us free breakfast via room service, which we accepted. After breakfast and a quick shower, it was off to Kentucky and the Creationism museum.
We had both forgotten our cameras so we bought a disposable one and thus I don’t have any pictures that I can post yet, but I will. Let’s just say that it was pretty much what I expected it to be. Probably the most surprising thing was that it was less derogatory towards evolution than I thought it would be. A lot of the exhibits had side by side columns saying that this was what evolution theory said, and this was what creationism said. Of course, basically most of the way the creationists “prove” things is by saying “ok, well I think the thing that we can all agree on is that the Bible is 100% correct, so if we just follow that down . . .” And it’s like: whoa, whoa, whoa. It doesn’t matter if steps 2-100 are completely objective, step 1 is definitely not scientific. It may actually turn out to be correct, but it’s not a proof of anything because it’s not scientific. One of the most difficult things to do was to have to keep reminding myself that most other people there with us were taking this stuff completely seriously. I kept having to catch myself from pointing and laughing and instead just uttering a subdued “hey, look at this Joe.” I will pretty much let the pictures speak for themselves (since I can’t do them justice with my descriptions) but my personal favorite was the explanation for why there is no mention of dinosaurs in the Bible: the word “dinosaur” was not invented until 1841. Apparently, the concept that language comes from (“evolves” if you will) our need to explain our world, thoughts, and actions and not the other way around is yet another concept lost on the creationists. I will say, however, that one interesting take I wasn’t expecting is that they thought the idea and myths of dragons came from men fighting dinosaurs (of course, they don’t connect the dots and then explain why the word “dragon” doesn’t appear in the Bible either). So all in all, it was a good time, I’m glad I went, and I would recommend it to anyone passing through the Cincy area (particularly if you can get in free like we did). But I’m still categorizing it as the final “pack of lies”.
Not gonna say too much about the Sunday Cubs/Reds game. Our seats were worse and the Cubs blew the lead in the 9th to send a whole lot of Cubs fans back to their cars and to the expressways in a foul mood. We pulled back into Evanston at about 8:45 in time to see the 2nd half of the Bears surprising season-opening victory, so at least I got to go to bed happy (or at least happier).
So to recap: Boston’s – bad. Illini rout – good. Old Style LA Gold – bad. Great American Ballpark – good. Creationism Museum – fun but wrong. Cubs blowing a 9th inning lead – very bad. Bears beating Indianapolis on the road – very good.
The theme for this past weekend was “Pack of Lies.” While that may sound negative, it’s really more comical than anything else.
My brother and I got into Champaign at about 6:00 on Friday night, and decided to head out to dinner with some friends of his from U of I as well as my friends Eric and Bickham. We decided to go to Boston’s which, just for clarification, has nothing to do with the city or the band. The entire dinner can only be described with a single word: debacle. It began with the drink orders. After asking the waitress what beverages they served, two people ordered Boulevard: Sunset Wheat. The waitress returned with beers that were most definitely not Boulevard: Sunset Wheat. When this was brought to her attention, she got this extremely confused look on her face (this would be a recurring theme) and went back to check. She returned to confirm that yes, we were in fact correct that it was not Sunset Wheat because they did not have and have never had Sunset Wheat. At this point we probably should have inquired how she had managed to believe she had filled an order with something they did not currently and had never had, but we’re fairly easy going and we like beer so we just said it was fine. Then our food came and, well, pretty much everything was wrong: the turkey-bacon wrap arrived without bacon, the Mexican-tortilla salad arrived without tortillas, and apparently the waitress decided that I could stand to skip a meal or two as my food did not arrive at all. After finally straightening this out, we attempted to order a 2nd round of drinks. We had all ordered large beers, but instead we were brought small beers. The waitress explained that they were out of large glasses. She offered this explanation in willfull ignorance of the fact that we all had empty large glasses in front of us from our first round. If from that amount of information you can figure out a solution, you are officially one step ahead of the Boston’s wait staff. But again, we are easy going so we didn’t worry about it too much. So we just asked for the check. Now, this being a college town and all, and us being with several college students, we had asked for separate checks. I realize that can be somewhat complicated, so I will grant that a little confusion is understandable. However, out of the 8 checks presented to us exactly 1 was correct. That’s not even a good batting average. The most common mistake was that even though there had been no large beer glasses we were still being asked to pay large beer prices. We pointed this out to the waitress, who of course apologized and ran off to correct the problems. 20 minutes later she returned and now 3 of the remaining 7 were correct (so at least she was getting better). She then proceeded to disappear again to once more attempt to correct the problem. Sensing that this might be a while, I excused myself to go to the bathroom, go home, have kids, raise a family, and retire to Florida. When I returned, they finally seemed to have gotten everyones' bills correct; except for the fact that they never brought me one. Well, you can call it a moral failing on my part, but I simply didn’t have the strength to sit their for another lifetime while they figured out the complicated trigonometry of what to charge me for bow-tie pasta and two beers. So we left. This trip to Boston’s collectively represented the first pack of lies.
The rest of the evening went fairly smoothly. We went to a party in Urbana where the older of us were ridiculed for having been to Woodstock and voting for Dukakis while we talked about how in our day the Quad was only a line and we had to ferment our own beer in buckets. We were a bit disappointed that all the parties started breaking up at around 1:45. Apparently, these crazy kids today just don't know how to party late anymore.
The next morning we awoke to do some tailgating before the Illinois-Eastern Illinois game. We picked up some beer on our way to the parking lot. I noted a new type of Old Style that I had never seen before: “Old Style Lite Gold”. Intrigued, we decided to purchase it and give it a try. It only took about half a beer for us to realize that this beer tasted more watery than usual, even for a Lite beer. We then realized, upon closer inspection of the case, that the flowery writing did not in fact say “Lite”, it said “LA”, which stood for “low alcohol.” This was the second pack of lies (actually, “case of lies” is probably more accurate). We cursed our misfortune, drank a few anyway, and headed into the game.
After witnessing the first half of what eventually turned out to be an Illinois rout (47-14), we headed off to Cincinnati. Arriving about 40 minutes before gametime, we checked into our hotel. We were informed that if we were willing to accept a smoking room, they were offering free breakfast. Since neither of us are all that sensitive to smoke, and I actually had a couple of cigars with me anyway, we decided to go for it. However, when we got to our room we discovered that we now had also been downgraded from 2 double beds to 1. This was the third pack of lies and was not going to work. After a call to the front desk we had our room switched, shotgunned a few beers, and headed off to the Cubs game at Cincinnati’s Great American Ballpark. I would highly recommend anyone who enjoys baseball to visit this stadium and, if you do, to sit in the upper deck (preferably as close to behind home plate as you can get). We were directly behind home plate and from that vantage point you look out across the Ohio river and directly at the hills that are the start of the Appalachians. At sunset, on a beautiful summer/early autumn night like it was Saturday it is the perfect atmosphere to watch baseball in (well, as close to perfect as you can get outside of Wrigley). Unless of course, you get vertigo easily, as the upper deck is quite high. It is very strange to always be looking down on the ball no matter how high it is hit. It was also great that Cubs fans outnumbered Reds fans by about 2-1. I’ve been to a number of Cubs road games where Cubs fans have tried to get the “let’s go Cubbies” chant going, only to have it booed down (and rightfully so). But here there was just simply not enough Reds fans to do anything about it. We completely took the park over, and it was awesome, especially since we got to witness Soriano hit 3 HRs and the Cubs cruise to a relatively easy 14-9 victory. As we exited, some impromptu “Go Cubs Go” singing broke out, and we headed back to the hotel to have a few more drinks and get some sleep.
Sunday morning we awoke at 10:30 and headed down to claim our free breakfast at 10:45. Upon arriving at the restaurant we were informed that once again we had been given a pack of lies, because even though no one had informed us of this they stopped seating for breakfast at 10:30. After a bit of bitching and whining, they compromised and offered to give us free breakfast via room service, which we accepted. After breakfast and a quick shower, it was off to Kentucky and the Creationism museum.
We had both forgotten our cameras so we bought a disposable one and thus I don’t have any pictures that I can post yet, but I will. Let’s just say that it was pretty much what I expected it to be. Probably the most surprising thing was that it was less derogatory towards evolution than I thought it would be. A lot of the exhibits had side by side columns saying that this was what evolution theory said, and this was what creationism said. Of course, basically most of the way the creationists “prove” things is by saying “ok, well I think the thing that we can all agree on is that the Bible is 100% correct, so if we just follow that down . . .” And it’s like: whoa, whoa, whoa. It doesn’t matter if steps 2-100 are completely objective, step 1 is definitely not scientific. It may actually turn out to be correct, but it’s not a proof of anything because it’s not scientific. One of the most difficult things to do was to have to keep reminding myself that most other people there with us were taking this stuff completely seriously. I kept having to catch myself from pointing and laughing and instead just uttering a subdued “hey, look at this Joe.” I will pretty much let the pictures speak for themselves (since I can’t do them justice with my descriptions) but my personal favorite was the explanation for why there is no mention of dinosaurs in the Bible: the word “dinosaur” was not invented until 1841. Apparently, the concept that language comes from (“evolves” if you will) our need to explain our world, thoughts, and actions and not the other way around is yet another concept lost on the creationists. I will say, however, that one interesting take I wasn’t expecting is that they thought the idea and myths of dragons came from men fighting dinosaurs (of course, they don’t connect the dots and then explain why the word “dragon” doesn’t appear in the Bible either). So all in all, it was a good time, I’m glad I went, and I would recommend it to anyone passing through the Cincy area (particularly if you can get in free like we did). But I’m still categorizing it as the final “pack of lies”.
Not gonna say too much about the Sunday Cubs/Reds game. Our seats were worse and the Cubs blew the lead in the 9th to send a whole lot of Cubs fans back to their cars and to the expressways in a foul mood. We pulled back into Evanston at about 8:45 in time to see the 2nd half of the Bears surprising season-opening victory, so at least I got to go to bed happy (or at least happier).
So to recap: Boston’s – bad. Illini rout – good. Old Style LA Gold – bad. Great American Ballpark – good. Creationism Museum – fun but wrong. Cubs blowing a 9th inning lead – very bad. Bears beating Indianapolis on the road – very good.
Thursday, September 04, 2008
Coming Soon . . .
OK, this post is the equivalent of the 30-second teaser they run for a movie that's still a year away from release. I have been intending to write several new blogs this week but for once I am actually quite busy at work and haven't had time to devote the attention I want to it. But I was sick to death of seeing my sophomoric text message spelling as a header and also didn't feel the need to pad the comment counter in the last post any further. In any case, coming soon to this space within the next week:
- My long-promised (but now largely irrelevant and completely usurped) take on the Palin selection.
- My thoughts on John McCain's speech tonight
- Thoughts on completing the marathon that is War and Peace (150 pages to go as of right now; might even finish tonight if I feel motivated)
- A recap of my road trip weekend which begins tomorrow and will include stops in Champaign to relive my college days Friday night and see the Illinois/Eastern Illinois game Saturday, two Cubs games in Cincinnati, a stop at the $23 million Creationism museum, and a mad dash back to Chicago to make the opening kickoff of the Bears game on Sunday night.
We now join our regularly scheduled political back-biting already in progress . . .
Wednesday, August 20, 2008
OMG I Pikd My VP LOL!
Since Obama announced last week that he would be broadcasting his VP choice first to his supporters via text message, that is how I have been imagining it coming across. And since anonymous "inside" sources have said that he is planning his first public appearance with his VP choice on Saturday in Springfield, it looks like we're down to the last 48-72 hours before we'll all know. So I thought I'd try to play a little Nostradamus and predict it. It is "widely believed" (whatever that means) that the choice is down to 4 candidates: Delaware Sen. Joe Biden, Kansas Gov. Kathleen Sebelius, Indiana Sen. Evan Bayh, and Virginia Gov. Tim Kaine. Biden has going for him the fact that he is a friend to both the Clintons, a lot of foreign policy experience (as well as experience in general), and is a good debater who will be able to go toe to toe with anyone McCain chooses. However, as one of the eldest serving Democratic Senators he would somewhat undercut Obama's message of change and by potentially drafting him into the White House you lose a powerful force in the Senate, where he may be more valuable. He's also from Delaware, which is going to go blue anyway so he lacks the power to "deliver a state". I don't take Sebelius seriously, not because she's not a viable choice (she is) but because in this current election if he's going to pick a woman it pretty much HAS to be Hillary. Anything other than that is likely to be seen as a slap in the face by her supporters. Evan Bayh seems to be a perenially popular VP finalist (Gore and Kerry also had them on their lists) and Indiana is seen as a swing state, so that goes in his favor. But recently there are concerns that Bayh's wife, who does work for 7 corporate boards and earned over $800k from them last year, could also undercut his message about breaking from corporate ties and being in the pockets of lobbyists. That leaves Gov. Tim Kaine. Virginia has been seen as a Republican stronghold in recent Presidential elections but with a now Democratic governor and the election of Democratic Senator Jim Webb in 2006 that could be poised to change. So, in that respect he certainly passes the "can he deliver a state?" criteria. But outside of Virginia he's not very well known and Obama already has a difficult enough time getting the rest of the nation's undecided voters comfortable with him let alone trying to introduce them to his VP as well. Speculation has really heated up over Kaine considering that he is set to campaign with him today and spend the night as his guest in Virginia tonight. But is it a visit to tell Kaine personally that he's his choice, or is it a consolation prize?
So what do I think (like you asked or care)? I think that as of 10 days ago Obama was leaning towards Kaine. However, I think the Russia-Georgia incident has underscored his need to get somebody with foreign policy experience to undercut the Republican's ability to say that the world is too dangerous to leave the country's security and diplomacy in the hands of someone so inexperienced. I also can't see why he would be publicly campaigning with Kaine the day or two before the announcement. To me it seems like since he knows he's not going to pick him he wants to still use the last day of speculation to draw more attention to them together then they otherwise would have received if the decision had already been made. So, in the end, I think it's going to be Biden and I can't say that I'm unhappy with that pick.
Of course, there's always the possibility that someone comes completely out of the blue and surprises everyone. And I was surprised that 3 names in particular were not among the finalists: Ohio Gov. Ted Strickland, Pennsylvania Gov. Ed Rendell, and New Mexico Gov. Bill Richardson. From what I've read, Richardson was never really considered and Strickland and Rendell said they didn't want it. Of course, there's the old political axiom that "the VP is the job that nobody wants but nobody turns down."
Guess I'll just have to keep a close eye on my cell phone for the next couple days . . .
So what do I think (like you asked or care)? I think that as of 10 days ago Obama was leaning towards Kaine. However, I think the Russia-Georgia incident has underscored his need to get somebody with foreign policy experience to undercut the Republican's ability to say that the world is too dangerous to leave the country's security and diplomacy in the hands of someone so inexperienced. I also can't see why he would be publicly campaigning with Kaine the day or two before the announcement. To me it seems like since he knows he's not going to pick him he wants to still use the last day of speculation to draw more attention to them together then they otherwise would have received if the decision had already been made. So, in the end, I think it's going to be Biden and I can't say that I'm unhappy with that pick.
Of course, there's always the possibility that someone comes completely out of the blue and surprises everyone. And I was surprised that 3 names in particular were not among the finalists: Ohio Gov. Ted Strickland, Pennsylvania Gov. Ed Rendell, and New Mexico Gov. Bill Richardson. From what I've read, Richardson was never really considered and Strickland and Rendell said they didn't want it. Of course, there's the old political axiom that "the VP is the job that nobody wants but nobody turns down."
Guess I'll just have to keep a close eye on my cell phone for the next couple days . . .
Friday, August 08, 2008
I Got . . .Something
OK, still don't have much. Although I've been following politics very closely over the last couple weeks (I fell a little behind on my issues of The Economist but have caught up by reading 3 issues in the last 3 days). However, on the discussion side I've honestly been a little politic'd out. I think it's because I know that with the DNC convention coming at the end of the month and then the RNC one right after it's going to really move the campaigning into high gear and that's likely all we'll hear about for the two months after that till election day. Still, I do have a couple thoughts . . .
First, yesterday in the first Guantanamo war crimes trial the driver for Osama Bin Laden was given what most consider to be a pretty light sentence: 5 and a half years. Since he's already served 5 of those years, that means he is eligible to be released in 6 months. I actually have no interest in discussing whether or not his sentence was fair (because I know what that will quickly devolve into). However, this is the line from the story that really got to me: "U.S. authorities insist they could hold him indefinitely without charge as an 'enemy combatant'." So, that means that someone can be convicted of a crime, sentenced, serve their sentence, and then still not be released? If that's the case, then the trial is nothing but a farce and brings us one step closer to the type of governing you see in places like Zimbabwe, where the incumbent loses an election but still gets to stay in power. Now, the story does go on to say that "defense lawyers and human rights groups say the military will face pressure to release him at the end of his sentence", but the fact that it's even an option that he won't be is apalling. Again, as we should be asking with almost everything we do now, how do you think this appears to the rest of the world?
Next, while catching up on the afore-mentioned Economists I was reading one of their special reports on emerging technologies in energy. In particular, while reading an article on the re-emergence of nuclear reactors I was struck by the latest perversion of language being thrust upon us. As is common knowledge, all nuclear reactors have within them safety mechanisms that are automatically triggered without human intervention if certain conditions exist. These used to be referred to as "fail-safes". However, apparently we can't have any derivation of the word "failure" anywhere near a discussion about nuclear power; so now they're called "passive safety" mechanisms. This got me onto a line of thinking about all sorts of semantic changes we have to endure so that expressions that describe exactly what something is are replaced or softened because they are unpallatable for some reason. Speaking of failure, a few years ago a British Teacher's Union debated removing "failure" from all situations in school and replacing it instead with deferred success. Thankfully, that was voted down, but now we are treated to debates that aren't much less ridiculous. After Al-Maliki has started to come around on the idea of setting some goals for U.S. withdrawal from Iraq, we now get to hear that the Bush administration, while still against "timetables" for withdrawal, are ok with having time horizons. The fact that we will really have to listen to our prospective future Presidents seriously debate the difference between the two makes me want to weep. My favorite quote about this was from The Daily Show the other night ("Isn't a horizon something that you keeping moving toward but never reach?"). George Carlin was someone who was greatly annoyed by euphemisms, and has a lot of classic bits about just this type of language softening. One of the best is on what we've done to the term describing when someone in combat has their nervous system stressed to beyond the breaking point. It used to be called shell shock in WWI; then it became battle fatigue in WWII; then Operational Exhaustion in Korea; and then finally we arrived at Post-Traumatic Stress Disorder in Vietnam. As he was so great at doing, he takes a somewhat goofy premise and lets us know why we should care about it: "I bet you if we'd still been calling it shell shock, some of those Vietnam veterans might have gotten the attention they needed at the time."
First, yesterday in the first Guantanamo war crimes trial the driver for Osama Bin Laden was given what most consider to be a pretty light sentence: 5 and a half years. Since he's already served 5 of those years, that means he is eligible to be released in 6 months. I actually have no interest in discussing whether or not his sentence was fair (because I know what that will quickly devolve into). However, this is the line from the story that really got to me: "U.S. authorities insist they could hold him indefinitely without charge as an 'enemy combatant'." So, that means that someone can be convicted of a crime, sentenced, serve their sentence, and then still not be released? If that's the case, then the trial is nothing but a farce and brings us one step closer to the type of governing you see in places like Zimbabwe, where the incumbent loses an election but still gets to stay in power. Now, the story does go on to say that "defense lawyers and human rights groups say the military will face pressure to release him at the end of his sentence", but the fact that it's even an option that he won't be is apalling. Again, as we should be asking with almost everything we do now, how do you think this appears to the rest of the world?
Next, while catching up on the afore-mentioned Economists I was reading one of their special reports on emerging technologies in energy. In particular, while reading an article on the re-emergence of nuclear reactors I was struck by the latest perversion of language being thrust upon us. As is common knowledge, all nuclear reactors have within them safety mechanisms that are automatically triggered without human intervention if certain conditions exist. These used to be referred to as "fail-safes". However, apparently we can't have any derivation of the word "failure" anywhere near a discussion about nuclear power; so now they're called "passive safety" mechanisms. This got me onto a line of thinking about all sorts of semantic changes we have to endure so that expressions that describe exactly what something is are replaced or softened because they are unpallatable for some reason. Speaking of failure, a few years ago a British Teacher's Union debated removing "failure" from all situations in school and replacing it instead with deferred success. Thankfully, that was voted down, but now we are treated to debates that aren't much less ridiculous. After Al-Maliki has started to come around on the idea of setting some goals for U.S. withdrawal from Iraq, we now get to hear that the Bush administration, while still against "timetables" for withdrawal, are ok with having time horizons. The fact that we will really have to listen to our prospective future Presidents seriously debate the difference between the two makes me want to weep. My favorite quote about this was from The Daily Show the other night ("Isn't a horizon something that you keeping moving toward but never reach?"). George Carlin was someone who was greatly annoyed by euphemisms, and has a lot of classic bits about just this type of language softening. One of the best is on what we've done to the term describing when someone in combat has their nervous system stressed to beyond the breaking point. It used to be called shell shock in WWI; then it became battle fatigue in WWII; then Operational Exhaustion in Korea; and then finally we arrived at Post-Traumatic Stress Disorder in Vietnam. As he was so great at doing, he takes a somewhat goofy premise and lets us know why we should care about it: "I bet you if we'd still been calling it shell shock, some of those Vietnam veterans might have gotten the attention they needed at the time."
Friday, August 01, 2008
I Got Nothin' . . .
So, yeah this is more a blogging for the sake of blogging and so that I don't have to remind myself that it's been 10 days since I posted anything and over two weeks since I really posted anything. Well, not too much to report. The trip to Texas was good; the pizza place is starting to take off and get consistently busy. Got out to play golf twice, which is enjoyable even though I'm not very good. Saw a couple movies while we were there (The Dark Knight and Wall-E); both of which were excellent. Now this week I'm just trying to get back into the swing of things work-wise and starting to count down the days till my next vacation (a trip to Vegas in September for my friend Shoma's wedding).
This weekend we are going to yet another Cubs game; our 2nd and final trip of the year to the bleachers. Pending today's outcome, hopefully we will be seeing the Cubs go for 7 in a row with Zambrano on the mound. I am a bit leary because they are playing the Pirates. I have personally attended three Cubs/Pirates games where the Cubs blew the game in the 9th and lost. Of course, I also have seen the Cubs pummel the Pirates in Wrigley and I was there in 2003 the day they swept a double-header from them to clinch the division. Other than that, should be a pretty relaxing weekend, especially since I have Monday off.
On another note, next weekend is the half marathon and . . .well, I'm thinking I'm not running it. The two main motivations I had when I signed up were 1) getting Christy motivated to do it; and 2) giving myself a goal to train for rather than just running for the sake of running. Well, motivation #1 went out the window in early June, and motivation #2 went out the window 3 weeks ago when I stopped running. So now, considering I already ran the half last year, I can't really think of a good reason to try and squeeze a month's worth of training into a week just so I can have the pleasure of waking up at 4:00 in the morning next Sunday to run 13.1 miles on what will likely be a sweltering day. So, all in all, looks like that was $100 well spent for the both of us . . .
One brief foray into politics; I was happy to read this in this week's Economist: "A few year's ago, no politician would have been seen with a book called 'The Post-American World'. Mr. Obama has been conspicuously reading Fareed Zakaria's recent volume."
This weekend we are going to yet another Cubs game; our 2nd and final trip of the year to the bleachers. Pending today's outcome, hopefully we will be seeing the Cubs go for 7 in a row with Zambrano on the mound. I am a bit leary because they are playing the Pirates. I have personally attended three Cubs/Pirates games where the Cubs blew the game in the 9th and lost. Of course, I also have seen the Cubs pummel the Pirates in Wrigley and I was there in 2003 the day they swept a double-header from them to clinch the division. Other than that, should be a pretty relaxing weekend, especially since I have Monday off.
On another note, next weekend is the half marathon and . . .well, I'm thinking I'm not running it. The two main motivations I had when I signed up were 1) getting Christy motivated to do it; and 2) giving myself a goal to train for rather than just running for the sake of running. Well, motivation #1 went out the window in early June, and motivation #2 went out the window 3 weeks ago when I stopped running. So now, considering I already ran the half last year, I can't really think of a good reason to try and squeeze a month's worth of training into a week just so I can have the pleasure of waking up at 4:00 in the morning next Sunday to run 13.1 miles on what will likely be a sweltering day. So, all in all, looks like that was $100 well spent for the both of us . . .
One brief foray into politics; I was happy to read this in this week's Economist: "A few year's ago, no politician would have been seen with a book called 'The Post-American World'. Mr. Obama has been conspicuously reading Fareed Zakaria's recent volume."
Tuesday, July 22, 2008
Franky Says Relax
Well, I guess you guys don't like economics talk that much. I swear, I think I could hear crickets chirping after that last post. Oh well, just further confirmation of what I've always thought (that I'm a huge nerd).
Won't be a whole lot in the way of significant content this week (I can hear the disappointment now) as Christy and I are currently relaxing with the Ps down in Houston. Considering that our last "vacation" over Christmas was spent packing and moving to our new place, it has been over a year since our last real break and it feels great to be able to sit back and not even have marathon training or the CPA hanging over my head. So far we've attended a Cubs game (they lost), hit up a casino in Lake Charles, LA (I lost $150 because blackjack is an evil, evil game), and got a little golfing in, which we're also doing tomorrow morning. Also will be working at Windy City Pizza for a few hours tomorrow night before going to see The Dark Knight. Judging by the amount of money it made this past weekend, apparently Christy and I will be the last 2 people in America to see it. Then we're taking the nieces and nephews to see Wall-E on Wednesday. In between all of that I have also finally started reading War and Peace. It's very strange to be over 200 pages into a book and feel like I'm still at the very beginning. The goal will be to get through it by the end of the summer, though I have a feeling that as soon as I get over halfway I'll power my way through to the end. Believe it or not, it's actually a pretty easy book to read. It just takes a little while each time to get used to Tolstoy's rhythm but once you do the pages just fly by. He also writes very short chapters so even though it's so monstrously long you always feel like you're making progress on it.
For any fellow movie nerds like me, just wanted to take a moment to do some advertising for Deep Discount DVD. This week they are running a buy 1 get 1 free on all Criterion Collection DVDs. For those movies which have yet to come out on Blu-Ray, Criterion is the top of the line version you can get in terms of both transfer quality and special features. I already have a lot of my favorites, but I just picked up Dazed and Confused and Ran (the last of my favorite Kurosawa films that I didn't have). Some of the ones I would particularly recommend are Brazil (of course), Hoop Dreams, Harakiri, The Bicycle Thief and 8 and a half (two classic Italian masterpieces), any of the other Kurosawa films (Seven Samurai, Ikiru, Rashomon, Kagemusha, Throne of Blood, and the Hidden Fortress), as well as any of the Ingmar Bergman films (The Seventh Seal and Wild Strawberries are two of my favorites but you really can't go wrong). At an average of about $32 per film, that means you can get these for ~$16 each when bought in pairs. That's a steal. Here ends the advertisement.
OK, think that's about it for now and will probably be the last update of the week. I'll be spending the rest of the week relaxing, recharging, and undoubtedly coming up with more topics to either interest (hopefully) or bore (more likely) all of you.
Won't be a whole lot in the way of significant content this week (I can hear the disappointment now) as Christy and I are currently relaxing with the Ps down in Houston. Considering that our last "vacation" over Christmas was spent packing and moving to our new place, it has been over a year since our last real break and it feels great to be able to sit back and not even have marathon training or the CPA hanging over my head. So far we've attended a Cubs game (they lost), hit up a casino in Lake Charles, LA (I lost $150 because blackjack is an evil, evil game), and got a little golfing in, which we're also doing tomorrow morning. Also will be working at Windy City Pizza for a few hours tomorrow night before going to see The Dark Knight. Judging by the amount of money it made this past weekend, apparently Christy and I will be the last 2 people in America to see it. Then we're taking the nieces and nephews to see Wall-E on Wednesday. In between all of that I have also finally started reading War and Peace. It's very strange to be over 200 pages into a book and feel like I'm still at the very beginning. The goal will be to get through it by the end of the summer, though I have a feeling that as soon as I get over halfway I'll power my way through to the end. Believe it or not, it's actually a pretty easy book to read. It just takes a little while each time to get used to Tolstoy's rhythm but once you do the pages just fly by. He also writes very short chapters so even though it's so monstrously long you always feel like you're making progress on it.
For any fellow movie nerds like me, just wanted to take a moment to do some advertising for Deep Discount DVD. This week they are running a buy 1 get 1 free on all Criterion Collection DVDs. For those movies which have yet to come out on Blu-Ray, Criterion is the top of the line version you can get in terms of both transfer quality and special features. I already have a lot of my favorites, but I just picked up Dazed and Confused and Ran (the last of my favorite Kurosawa films that I didn't have). Some of the ones I would particularly recommend are Brazil (of course), Hoop Dreams, Harakiri, The Bicycle Thief and 8 and a half (two classic Italian masterpieces), any of the other Kurosawa films (Seven Samurai, Ikiru, Rashomon, Kagemusha, Throne of Blood, and the Hidden Fortress), as well as any of the Ingmar Bergman films (The Seventh Seal and Wild Strawberries are two of my favorites but you really can't go wrong). At an average of about $32 per film, that means you can get these for ~$16 each when bought in pairs. That's a steal. Here ends the advertisement.
OK, think that's about it for now and will probably be the last update of the week. I'll be spending the rest of the week relaxing, recharging, and undoubtedly coming up with more topics to either interest (hopefully) or bore (more likely) all of you.
Tuesday, July 15, 2008
Sometimes the Truth Makes for Bad Politics
So, Phil Gramm (and, by association, John McCain) caught some slack last week for saying "You've heard of mental depression; this is a mental recession" and "We have sort of become a nation of whiners." Looking at this strictly from a political standpoint, these are incredibly stupid comments to make and constitutes a signifigant political gaffe for someone who, up until a few days ago at least, has been repeatedly referred to as "John McCain's top economic advisor." If there actually was a book titled "Campaigning 101", I'm pretty sure that somewhere near the top of the list of things not to do would be "Do not refer to the constituency as whiners, and do not tell them that their problems are imaginary." The response from both candidates was, of course, completely predictable. McCain leapt to the defensive, saying "Phil Gramm does not speak for me. I speak for me. I strongly disagree" while Obama came out with "When people are out there losing their homes and property values are declining, that's not a figment of your imagination." So, in the end we have a seeming non-starter where both candidates agree that Phil Gramm is wrong. Well, that's all well and good except for the tiny little problem that Phil Gramm's actually right.
Don't get me wrong. The economy is certainly not soaring right now. But neither is it as horrible as most people believe. On Friday, a poll was released which said that consumer confidence is currently hovering around a 28-year low. Really? Do people, as a whole, really think that our economy is in as bad a shape now as it was in 1980? In that year, consumer sentiment reached its low point in May at 51.7, but for the 1st half of the year it averaged 58.9. Right now we are at 56.6. Consumer's fears turned out to be pretty well-founded in 1980, as real GDP declined by a whopping 7.8% (the largest drop since 1958 and a drop that is over 2.5 times anything we've seen since). As it stands right now, we have had a pretty anemic 6 months (with real GDP increasing an average of .8%) compared with our 50-year average of 3.4%. The numbers for the 2Q2008 aren't out yet, but the number is expected to be small but positive or, at the worst, a slight negative. Certainly nothing on the order of even negative 2 or 3% (as what occurred during our last official recession in 90/91). On the unemployment side, statistics for June place it at 5.5%, which is higher than it's been for the last 4 years but about average for the last 50. In 1980, it was around 7.5%. On top of that, the upside to a weakening dollar has been a booming export business and a substantial increase to foreign tourists visting the U.S.
Again, I am not trying to say that people's struggles are not real. In fact, I know of 2 people that have been laid off in the last week. As I've indicated a number of times on this blog, I have not been a fan of this current administration's fiscal policies and I do not believe that it has served us well. However, I believe that it is still absolutely correct to say that the current sentiments about the economy are, at the very least, an overreaction. As case in point, just take a look at the different tone communicated between this article and this one. Even if you don't feel like reading the article (and I know you don't), just look at the difference in what the headlines imply. And the two articles share a common author! You might think that this is merely semantics, but it is much more than that. The economy sometimes really does function like The Matrix ("your mind makes it real"). If people believe that times are really tight and they need to save up every penny and stop consuming, all of their worst fears will come to fruition.
High gas prices, a horrible housing market, and the credit crisis are all very real and negative forces. I will use a hated term here, but in each of these situations the market is really and truly experiencing a correction. Gas prices are being driven up by increasing demand, both seasonally from the U.S., and internationally by permanent increased (and rising) use. It will not always be $4.00/gallon, but cheap gas (i.e. under $2.00) is gone for good. We will have to adjust (and if you look at plunging truck and SUV sales for the year, we are). As for the housing market, if you bought your home in 2004-2006, odds are that you're not very happy right now, and for good reason. But if you bought before then, unless you are in one of the couple areas hit unbelievably hard chances are good that your house is still worth more today than when you bought it, and it's a virtual certainty if you bought in 2000 or before. People are often victims of what I refer to as the "gambler's mentality", which means that whenever they get "up" money that amount instantly becomes the floor below which everything is considered a loss. As an example, imagine someone walking up to you and saying "I just lost $5000 at the blackjack table" and then you find out that what actually happened was that he started with $100, got up to $5000 and then proceeded to lose it all. The reality is that he actually lost $100, but it "feels" like he lost $5000. Similarly, people who bought their house in 2000 at $150,000 probably saw their value double in 5 years and now they've had it sink back to $175,000 (yes, I am making these numbers up). It "feels" like they've lost $125k, but in reality they've gained $25k. Of course, that leads right into the credit problem, because some of those in the last example took out $100k home equity loans, and now they really well and truly are in the hole. That's why it has also been a correction for credit to tighten up.
The key here is to understand that what's happening is not "the sky is falling." It takes a series of significant setbacks to derail the economy and when the stars align and they happen it can be devastating. The last time we experienced something similar was the simultaneous dot-com crash and Enron/Worldcom scandals, and a year plus of negative and then lackluster growth resulted. But the underlying institutions and "machinery" of the economy were sound then and we pulled through it and the same is true today. The key is that I believe that these current crises have largely played themselves out. By that I mean that at this point we have a good sense of how much damage has been done (something that could not be said immediately after the sub-prime failures and Bear Stearns debachle) and that the worst is behind us. It will still take a while, but housing prices will start to go back up again (though it's not likely to rise to the meteoric levels it was at for quite some time) and credit will be cheap again (though probably not as cheap as it was). If you want my prediction (and even if you don't) I think we're likely to pull out of this sooner than later. The end of summer will see demand-driven gas prices decline somewhat, which should help. And the excitement of the presidential race (and subsequent exit of a very unpopular president) should serve to raise the nation's spirits. And right on the heels of the election we will jump right into the holiday season which should prove to be a nice boon for businesses. GDP growth for the rest of the year is still likely to be relatively low (on the order of 1 - 1.5%) but it should boost consumer confidence, which should in turn boost growth in subsequent quarters.
So, yeah, if I had any money to invest I'd look to do it around late September/early October. Of course, another financial or international crisis between now and then and all bets are off.
Don't get me wrong. The economy is certainly not soaring right now. But neither is it as horrible as most people believe. On Friday, a poll was released which said that consumer confidence is currently hovering around a 28-year low. Really? Do people, as a whole, really think that our economy is in as bad a shape now as it was in 1980? In that year, consumer sentiment reached its low point in May at 51.7, but for the 1st half of the year it averaged 58.9. Right now we are at 56.6. Consumer's fears turned out to be pretty well-founded in 1980, as real GDP declined by a whopping 7.8% (the largest drop since 1958 and a drop that is over 2.5 times anything we've seen since). As it stands right now, we have had a pretty anemic 6 months (with real GDP increasing an average of .8%) compared with our 50-year average of 3.4%. The numbers for the 2Q2008 aren't out yet, but the number is expected to be small but positive or, at the worst, a slight negative. Certainly nothing on the order of even negative 2 or 3% (as what occurred during our last official recession in 90/91). On the unemployment side, statistics for June place it at 5.5%, which is higher than it's been for the last 4 years but about average for the last 50. In 1980, it was around 7.5%. On top of that, the upside to a weakening dollar has been a booming export business and a substantial increase to foreign tourists visting the U.S.
Again, I am not trying to say that people's struggles are not real. In fact, I know of 2 people that have been laid off in the last week. As I've indicated a number of times on this blog, I have not been a fan of this current administration's fiscal policies and I do not believe that it has served us well. However, I believe that it is still absolutely correct to say that the current sentiments about the economy are, at the very least, an overreaction. As case in point, just take a look at the different tone communicated between this article and this one. Even if you don't feel like reading the article (and I know you don't), just look at the difference in what the headlines imply. And the two articles share a common author! You might think that this is merely semantics, but it is much more than that. The economy sometimes really does function like The Matrix ("your mind makes it real"). If people believe that times are really tight and they need to save up every penny and stop consuming, all of their worst fears will come to fruition.
High gas prices, a horrible housing market, and the credit crisis are all very real and negative forces. I will use a hated term here, but in each of these situations the market is really and truly experiencing a correction. Gas prices are being driven up by increasing demand, both seasonally from the U.S., and internationally by permanent increased (and rising) use. It will not always be $4.00/gallon, but cheap gas (i.e. under $2.00) is gone for good. We will have to adjust (and if you look at plunging truck and SUV sales for the year, we are). As for the housing market, if you bought your home in 2004-2006, odds are that you're not very happy right now, and for good reason. But if you bought before then, unless you are in one of the couple areas hit unbelievably hard chances are good that your house is still worth more today than when you bought it, and it's a virtual certainty if you bought in 2000 or before. People are often victims of what I refer to as the "gambler's mentality", which means that whenever they get "up" money that amount instantly becomes the floor below which everything is considered a loss. As an example, imagine someone walking up to you and saying "I just lost $5000 at the blackjack table" and then you find out that what actually happened was that he started with $100, got up to $5000 and then proceeded to lose it all. The reality is that he actually lost $100, but it "feels" like he lost $5000. Similarly, people who bought their house in 2000 at $150,000 probably saw their value double in 5 years and now they've had it sink back to $175,000 (yes, I am making these numbers up). It "feels" like they've lost $125k, but in reality they've gained $25k. Of course, that leads right into the credit problem, because some of those in the last example took out $100k home equity loans, and now they really well and truly are in the hole. That's why it has also been a correction for credit to tighten up.
The key here is to understand that what's happening is not "the sky is falling." It takes a series of significant setbacks to derail the economy and when the stars align and they happen it can be devastating. The last time we experienced something similar was the simultaneous dot-com crash and Enron/Worldcom scandals, and a year plus of negative and then lackluster growth resulted. But the underlying institutions and "machinery" of the economy were sound then and we pulled through it and the same is true today. The key is that I believe that these current crises have largely played themselves out. By that I mean that at this point we have a good sense of how much damage has been done (something that could not be said immediately after the sub-prime failures and Bear Stearns debachle) and that the worst is behind us. It will still take a while, but housing prices will start to go back up again (though it's not likely to rise to the meteoric levels it was at for quite some time) and credit will be cheap again (though probably not as cheap as it was). If you want my prediction (and even if you don't) I think we're likely to pull out of this sooner than later. The end of summer will see demand-driven gas prices decline somewhat, which should help. And the excitement of the presidential race (and subsequent exit of a very unpopular president) should serve to raise the nation's spirits. And right on the heels of the election we will jump right into the holiday season which should prove to be a nice boon for businesses. GDP growth for the rest of the year is still likely to be relatively low (on the order of 1 - 1.5%) but it should boost consumer confidence, which should in turn boost growth in subsequent quarters.
So, yeah, if I had any money to invest I'd look to do it around late September/early October. Of course, another financial or international crisis between now and then and all bets are off.
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