Monday, March 30, 2009

Speaking Truth To Power

There's been a welcome development on the freedom front lately. I've been a bit preoccupied with my new Flip video camera that I bought on Saturday ( more on that later). Last Thursday, Gordon Brown, the British Prime Minister gave a speech at the European Union's Parliament. Daniel Hannon, a former journalist who is now representing south England in the EU, and OMG, he's a blogger too, responded.

This morning, Vox Day, who makes his living as a video game designer, posted an interview with Mr. Hannan. By way of a preview, an excerpt from the interview:

Day: Who are your intellectual influences with regards to economics? Do you go all the way back to Smith?

Hannan: Absolutely, I'm a very traditional Brit like this. I've got two busts in my office. One is Adam Smith, the other is Thomas Jefferson.

I'm not sure Jefferson would qualify as a traditional Brit, but I've got to like this guy. He sounds like my kind of journalist.

Thursday, March 26, 2009

No Heroes In Tone Deaf Corporations

There's an excellent post over on Pajama's Media about the AIG bailout and its relation to the Titanic. It should be of interest to anyone interested in marketing, the current dissatisfaction among the citizenry, and historical research. It's written by Bill Whittle and compares the AIG Officers actions with those of the White Star Line after the Titanic sank. It is also a good example of what a great post looks like.

If you're feeling uneasy about all this bailout stuff, but are not sure why, you'll know after reading this.

Monday, March 23, 2009

Poker For Profit

The reviews are in and Treasury Secretary Geithner's newest plan to rescue the economy has been met with near universal disdain. The political left would rather see the banks nationalized, and object to the public/private aspect of the plan. The political right can't be in favor since, well, it's not their plan. It's essentially the same plan we had, but now that the other side is in charge, and have changed its name from TARP to TALF, we're against it. For a more non-ideological pedestrian view, we need to turn to the capitalists.

Tyler Durden writing for Seeking Alpha lays out the case in 8 logical steps. Better yet, in the comments section he gives insight into the mind of a true capitalist. The "non-recourse nature" he speaks of means that once the public/private entity buys an asset from a bank, the private investor has control of the asset.

Posted by Tyler Durden at 2:14 AM
The greatest bait and switch of this generation in all its visual splendor. As a result of the TALF's non-recourse nature, a hedge fund X can buy Bank X's MBS Portfolio which is marked on the bank's books at 80 cents on the dollar (but has a market price of 20 cents) for the marked price with a 3% equity check and TALF filling the balance. A day later, Bank X repurchases the portfolio from hedge fund X at the 20 cent market price, pays a $5 million fee for the "trouble" and waits for the portfolio to appreciate to 50 cents on the dollar by 2014. Hedge fund X takes a 75% loss on its nominal equity stake but more than makes up in transaction fees. The TALF portion takes a 75% loss with no recourse and no margin to fall back on.

As a result Bank X takes no writedown now, and in 5 years may book an equity profit of as much as $25 million (net of transaction fees paid to the Hedge Fund X), while Hedge Fund X books a profit of $3.2 million for one day's work...

Lastly the U.S. taxpayer loses $54.3 million on a $77.6 million TALF Investment, or 70% (net of 5 years of interest income).

Note: the maximum TALF size is $1 trillion. Will U.S. taxpayers suffer $700 billion in losses from the TALF? Ask your congressman.

And if you want to know why government intervention never works as advertised, or how the rich get richer, ask someone who stays up 'til 2 in the morning figuring out how to make $3 million a day.

Saturday, March 21, 2009

Is The End Nigh, Yet?

March 18, 2009, I’m marking it on my calendar. Was that the day our president admitted to a high bowling score of 129? No. It was the day the Federal Reserve announced they would begin buying Treasury Bills. In effect, we are now loaning money to ourselves. There is only one reason why anyone would do this. Nobody else will loan us the money. Like an overzealous mall rat, we are paying off one credit card with another credit card. It is the last act of the soon to be bankrupt.

Ever since Hillary’s visit, the Chinese have been making public noises about their nervousness over our debt. They’re financing quite a lot of it and they have good reason to be nervous. With the currency being inflated, they won’t be getting the returns they were expecting when they bought in. Having taken our best customer to the cleaners, can we really expect them to come back for more?

There are stories circulating that the US dollar is going to lose its reserve status. It’s a subject you’ll be hearing more about once the upcoming G20 meetings get under way. Reserve status is a huge advantage to us. Not only do other countries buy dollars for emergency use, but also having our own currency as reserve, allows for all sorts of game playing with the debt. And boy have we been playing games with our debt lately.

Other countries resented us for it before, but now they are being pushed over the edge. Any group of countries can create a currency amongst themselves, and it looks like some are going to give it a try. Russia seems to be the ringleader. There is certainly talk behind closed European doors going on.

Here's what the metals have been doing through all this. The blue line shows the day before; stable and trending slightly down. The red line shows a spike up at the time of the announcement. The yellow line is the day after.

The same with silver:

I'm not quite ready to start walking around downtown with an "The End Is Nigh" sign, but a little metal under the floorboards might be a good idea, if you don't have some already.

Friday, March 20, 2009

Protest Government Spending

I'm not sure how readable this flyer is going to be, but there is going to be a protest against the money laundering going on in our government these days. It will be on April 15th, 10:30 to 1:30 in front of the capitol building in Carson City. All are welcome to join. You can find more info here.

Thursday, March 19, 2009

Ignoring the Customer

It's hard to believe now, but I used to enjoy reading Kathleen Parker's opinion pieces in National Review. I stopped when she turned on Sarah Palin for not being sufficiently sophisticated for the Washington champagne circuit. I stopped reading a lot of people then. Now I've come to find out that she has a thing against bloggers.
There’s something frankly creepy about the explosion we now call the blogosphere — the big-bang “electroniverse” where recently wired squatters set up new camps each day...Each time I wander into blogdom, I’m reminded of the savage children stranded on an island in William Golding’s Lord of the Flies. Without adult supervision, they organize themselves into rival tribes, learn to hunt and kill, and eventually become murderous barbarians in the absence of a civilizing structure.

Let me guess. The "civilizing structure" would be Kathleen. Apparently she is unaware that running naked through the forest is not only serious business, it's loads of fun. She should try it sometime. It might loosen her up a little. She continues:
Drive-by pundits, to spin off of Rush Limbaugh’s “drive-by media,” are non-journalists who have been demonizing the media for the past 20 years or so and who blame the current news crisis on bias.

There is surely room for media criticism, and a few bad actors in recent years have badly frayed public trust. And, yes, some newspapers are more liberal than their readership and do a lousy job of concealing it.

Where do I start with this? There was a time, not so long ago, when one who worked for a newspaper was called a reporter. A journalist is something different. Journalism, so I'm told, allows for perceptions and feelings. And guess what Kathleen; your feelings are of no more consequence than those of any blogger picked at random. As for "a few bad actors"; how about a whole troupe? The players in Washington may seem Shakespearean to you, but from this distance it looks like yet another high school performance of "Harvey". And who needs to pay for liberal opinion? It's in the ether. I would pay to escape it, but not to read it. She continues:
But the greater truth is that newspaper reporters, editors, and institutions are responsible for the boots-on-the-ground grub work that produces the news stories and performs the government watchdog role so crucial to a democratic republic.

Yes, about that crucial "watchdog role", where were you when the current mess was developing? How about the mess before this one? As I recall, wasn't that you in the comfy chair licking your ass? It's time you put that "boots-on-the-ground grub work" ethic to practical use and sniff out a new business model.

If the Gazette Journal folded tomorrow, Anjeanette Damon would still have a job. Why? Because she is in demand from people like me. And when it comes to Ms. Damon, there are a lot of people like me. We would search her out, find her new venue, and continue as before. As for the Washington troupe, just look for the room with the comfy chairs.

God, I love blogging.

Catching Up with Dilbert

As noted earlier, the new time zone is still wreaking havoc on my schedule. Looking through some old Dilbert blog posts, I found this:
One could argue that previous economic bubbles were driven by sex, directly or indirectly. Guys bought cars to attract girls. The VCR business thrived because of porn. So did the Internet. If you want to predict the next economic boom, figure out who is inventing technology that 19-year old boys will crave in order to increase their chances for sex. Any ideas?

Here's mine:

Japanese Robot Babes! When one of these shows up at the high school prom, we'll know 2 things. 1) The next boom cycle is here and, 2) the end of the human species is not far behind. They never nag, don't get jealous when you flirt with other robot babes, and they take instructions. The perfect 10.

Sunday, March 15, 2009

Finance Magic

In an article about the Obama Administration's problems in staffing the Treasury Department, Stephan Green, the Vodkapundit points out an interesting phenomenon:
According to a recent Reuters story, Blackstone Group CEO Stephen Schwarzman estimates that “Between 40 and 45 percent of the world’s wealth has been destroyed in little less than a year and a half.” Think about that. There was no 9/11 in New York, no nuclear bomb going off in London or Beijing, no fleets of bombers destroying factories — there has not been any physical destruction of capital whatsoever. Yet in the last 18 months, nearly half the wealth in the world has vanished into thin air.

Well, as every mother has said, at least once in her life, "Things don't just disappear, it has to be somewhere". So, where did nearly half the world’s wealth go? The answer depends on your view of reality. If the wealth was real, then it ended up in somebody’s pocket. If wealth is only a promise for future work, then it is not real. It can appear and disappear as easily as any other promise.

We are all familiar with optical illusions. Magicians make their living with them. Is there such a thing as a financial illusion?

You've worked and saved, and you're ready to buy a house. The work you have done is real. The money that was exchanged for your work is real; it is equal to the work you have done. So you plunk down 20%, and the bank covers the other 80%. Except, the bank doesn't have the 80%, they only have 2% on deposit with the Federal Reserve. The remaining 78% of the value of your house doesn't exist, not yet. But in the eyes of the banker, he has a note; a tradable commodity. He uses that commodity as a down payment on a bigger promise, and that commodity on an even bigger promise still.

All it takes to end the illusion is one broken promise; one call for a show of real wealth within a group of people who have none. When the illusion is over, what have we lost? You still have your house, your work, and you're keeping your promise. The banker still has houses and no real wealth. He's right back where he started.

I've heard we have lost our trust. Well, no kidding. Who would trust a magician?

Friday, March 13, 2009

A Few Useful Links

Is it my imagination, or did the switch to Daylight Savings Time wipe out a few bloggers (including me) this week. The early morning hours are prime blogging time for me, so I haven’t accomplished much this week. But, I did promise a few examples of the presentations at the Interactive Summit.

Thanks to a comment from Ryan Jerz in my last post, there is an excellent Twitter feed that has links to many of the presenters. Here are a few highlights.

Mike Henderson’s summary of his talk on podcasts is here. Even if you’re not thinking about podcasting, you can see it’s pretty thorough.

Mike McDowell’s Media 101 is in slide show format. I don’t know if it will make sense to someone who wasn’t there, but it’s a lot better than the notes I took. Trust me on that one. I’ve started using google reader as a result. It’s working out really well. It saves a lot of time and is much less aggravating than going back and forth from the blogroll. What I’d really like to do now involves an aggregator. It would be something like Nevada Blogs, only it would be the blogs I choose. So far, everything I’ve seen to do this involves HML, so I’m still looking.

Marcel Levy’s summary is in PDF format. Marcel doubles as a stand-up comic. Who would have guessed that building charts could be so much fun? There are some hard to find web addresses in here. I know they’re hard to find because I’ve looked for them, so this will be very helpful.

There’s plenty more on the search twitter link. I have months worth of projects just from these three. I'm off to visit mom this weekend, so I still won't get much done, but maybe I'll adjust to the new time zone.

Sunday, March 8, 2009

Notes on the Summit

I attended the Nevada Interactive Media Summit held at the Reynolds School of Journalism on Saturday. Is it possible to suffer information overload, and still not have heard enough? The conference was designed in three groups of workshops per hour, over five hours, so I didn’t get to hear everything I wanted. Still, by day’s end, I had to go home and give my poor little brain a rest.

There were a few themes that nearly everyone was talking about. One of these was strategy. Most of the presenters were marketing people, as were a majority of the audience, but what is the goal of blogging? Every so often I come across a blogger asking: ”Why do I do this?” It’s a bit like asking a weekend artist why he paints landscapes. There are a thousand reasons, and no reason in particular. The more I do this though, the more obvious it becomes that there are abundant opportunities for the taking. The field is wide open, and setting some long-term goals would probably be a good idea.

Another constant throughout the day was the importance of mobility; that means gadgetry. Most of the talk was about programs and applications, but sitting here at my desktop is already considered somewhat quaint and old-fashioned. I put a lot of effort into keeping my life simple. This blog naturally reflects that. I’m not a gadget guy. Still, the place could use a little variety. I now have a much better idea of how to accomplish that without getting tied up in USB cables. I can liven it up a little while maintaining a minimalist approach.

One thing everyone could agree on was the need to filter out all the chatter and concentrate on only the things that apply to them. No doubt, there is somebody filtering out this blog post right now. There are some time saving techniques on how to do that, and there will likely be better ones coming along in the near future.

As hokey as it sounds, the best thing about these types of conferences are the people. The knowledge, ideas, and experiences, the friendliness, the focus, it’s a great way to spend a day. It’s always good to be reminded that behind every post, tweet, and camera shot is a human being trying to communicate. The fears of virtual isolation are much overdone, as the virtual has merged with the physical. Many of the presenters said they would post summaries on-line, so I’ll have an update with links up soon. Also, as I complete some new projects, I’ll be posting about how it went. For those that missed it, you’ll see it was worth the price of admission.

Monday, March 2, 2009

End the Fed

Thanks to Vox Day for pointing this out. It's too good not to pass along.

The Federal Reserve’s low interest rate policy is a big mistake; it is not a panacea.

Artificially low interest rates are achieved by inflating the money supply. Low interest rates penalize the thrifty and those who save are cheated. It promotes consumption and borrowing over savings and investing. Manipulating interest rates is an immoral act. It’s economically destructive.

The policy of artificially low interest rates caused our problems and therefore cannot be the solution. The market rate of interest is crucial information for the smooth operation of the economy. A central bank setting interest rates is price fixing and is a form of central economic planning. Price fixing is a tool of socialists and destroys production. Central bankers, politicians, and bureaucrats can’t know what the proper rate should be. They lack the knowledge and are deceived by their own aggrandizement.

Manipulating the money supply and interest rates rejects all the principles of the free market. Ironically free markets and sound money generates low rates, but unlike the artificially low rates orchestrated by the Fed, the information conveyed is beneficial to investors and savers. The Congress, by conceding this authority, conveys extraordinary economic power to the elite few. This is a power that has been abused throughout history. Only the Federal Reserve can inflate the currency, creating new money and credit out of thin air, in secrecy, without oversight or supervision. Inflation facilitates deficits, needless wars and excessive welfare spending.

Debasing a currency is counterfeiting. It steals value from every dollar earned or saved. It robs the people and makes them poorer. It is the enemy of the working man. Inflation is the most vicious and regressive of all forms of taxation. It transfers wealth from the middle-class to the privileged rich. The economic chaos that results from a policy of central bank inflation inevitably leads to political instability and violence. It’s an ancient tool of all authoritarians. Inflating is never a benefit to freedom loving people. It destroys prosperity and feeds the fires of war. It is responsible for recessions and depressions. It’s deceptive, addictive and causes delusions of grandeur with regards to wealth and knowledge. Wealth cannot be achieved by creating money by fiat. It instead destroys wealth and it rewards the special interests.

Depending on monetary fraud for national prosperity or a reversal of our downward spiral is riskier than depending on the lottery.

Inflation has been used to pay for all wars and empires. And they all end badly. Inflationism and corporatism engenders protectionism and trade wars. It prompts scapegoating: blaming foreigners, illegal immigrants, ethnic minorities, and too often freedom itself for the predictable events and suffering that result. Besides, the whole process is unconstitutional. There is no legal authority to operate such a monetary system. So let’s stop it. Let’s restore a policy of prosperity, peace, and liberty.

The time has come. Let’s End the Fed.

Congressman Ron Paul's speech to Congress 2/25/09

Housing and Recessions

I ran across a article at Calculated Risk that has 20 good charts; so many that I had trouble picking just one. This chart shows the relationship between housing construction and recessions, and brings up 2 important points.

The first point is that housing spikes and recessions are not necessarily related. There are several smaller spikes in home construction outside the recession areas.

The second point is when recessions contain housing spikes, one sure fire way to end a recession is to stop building so many unsellable houses.

I recently started following Guy Johnson on Twitter. He blogs at Reno Realty. The last post there discusses a house in the "bungalow district" on the "wrong side" of Wells Avenue. It's selling for $89,000. Out of curiosity, I drove over. It's definitely a fixer-upper. It has aluminum siding on the street side and, well, something else on the other 3/4's. Several large tree stumps decorate what used to be a backyard lawn. Still, I came away with a vague feeling of optimism. It was a real house, on a real foundation, and I could afford it if I wanted it. That's assuming I could find a banker foolish enough to loan me tens of thousands of dollars.

With our government insisting on creating jobs and stemming unemployment, it means we will still be building more unsellable houses and prices will continue to fall. And, thanks to our government, there are plenty of foolish bankers still in business. Who knows, in another 6 months, I might be able to afford a decent house in a decent neighborhood.

So keep the bailouts coming Mr. President; keep that monopoly money flowing and the bubble expanding. I'm almost there. Too bad for everyone else though.

Sunday, March 1, 2009

Problems at CPAC

Republicans are the pro-business party. Why then are we so lousy at public relations?A case in point from Patrick Poole at Pajamas Media:
...those of us inhabiting the official bloggers row, sponsored this year by Pajamas Media, are clearly considered the red-headed stepchildren by CPAC’s organizers. The best evidence for this was that bloggers row was situated at the back corner of the exhibit hall (which doubles as the first floor of the hotel’s parking garage). The organizers could not have positioned us any farther from the events here at CPAC without setting us up outside the building. In contrast to political left, where bloggers and new media have propelled Democrats to stunning victory and are courted by their politicians at the annual Daily Kos convention, the conservative establishment still has no idea what to do with new media.

OK, here's a pop quiz for all you Republican "leaders". If you take your date out to dinner, and the waiter gives you a table that is closest to the kitchen, with banging pots and pans competing with angry shouts from the cooks, do you tip him 0%, 5%, or 10%? If, on the other hand, the waiter seats you and your date next to the window, where she can overlook the gardens as the evening sky turns from pale blue pink to Rosy red, do you tip him 25%, 50%, or leave an endowment to his kids?

Needless to say, Mr. Poole was not overly gracious in his comments on the rest of the conference. He went on to point out that most of the speakers were the same retreads that caused our collapse. Looking at the straw poll, I can't say I have a lot of hope for 2012 yet.

Mitt Romney...20% (Are Mormons ready for a Mormon President?)

Bobby Jindle..14% (Makes Bob Dole speeches seem thrilling by comparison.)

Ron Paul......13% (Will he ever get 15% anywhere?)

Sarah Palin...13% (The thrill is gone, maybe.)

Newt Gingrich.10% (Who?...What?...Really?)

Mike Huckabee.07% (Not many Baptists at CPAC this year.)

Mark Sanford..04% (Did we ever decide the Confederate flag issue?)

Rudy Giuliani.03% (Aw Rudy, we'll always have New York.)

Charlie Crist.01% (Apparently candidates were allowed to vote for themselves.)

The good news is we have 4 years to work on it.