After blogging for almost a year, and having written nearly two hundred short essays, I have come to the conclusion that I am spending too much time to provide too little value to too few readers.
One of the important lessons that I have learned is one that professional writers (I am not one) know: the process is hard and time consuming. There is good reason why thoughtful commentators write only a few columns each week. Researching and understanding topics, as well as choosing the proper words so that the thoughts come out right on paper, takes a lot of time.
There are other things that I should be doing. Some have the potential to make the world a slightly better place: working on behalf of sailors with disabilities, consulting to small businesses, helping to manage the financial affairs of the condominium association where I live are among them.
Although hard work, writing here has been fun. On the other hand, it has been something of a self indulgent waste of time that can be better spent elsewhere. I will, therefore, bid my readers adieu and fade into the background. Those who want my advice and opinions know where to find me.
Sunday, January 11, 2009
Friday, January 9, 2009
Economic stimulus package
Americans, like a pack of over-excited Golden Retrievers, are drooling over the prospects of getting their hands on some of the cash to be thrown around in President-elect Obama's economic stimulus package.
We should, however, consider this, written by Alexander Tyler in 1787 - the year that the Thirteen Colonies adopted the new Federal Constitution:
"A Democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largesse out of the public treasury."
Nearly fifty years later, Alexis de Toqueville came to a similar conclusion:
"The American Republic will endure, until politicians realize they can bribe the people with their own money."
The history of every democracy involves the seizure, by the government, of an ever increasing share of income. Worse, every year the proportion of transfer payments - compared to the purchase 0f public goods - increases.
Politicians, notwithstanding the fact that there is no such thing as a free lunch, have come to see the public treasury as a never ending source of wealth that can be distributed to all and sundry (well, to favored groups anyway) without incurring any cost. The politically incorrect term is that they are [more or less legally] buying votes. At the same time, voters have come to expect that they will be handed wealth from the public treasury without considering the fact that the wealth was theirs in the first place.
Except, someone will have to pay the bill - even if it is the next three generations.
We got into this economic mess because citizens and government, deluding themselves into believing that there is such a things as a free lunch, indulged in a frenzy of consumption financed by borrowing. Can it really be the case that more of the same will get us out again? Or would we be better served by accepting the realities and buckling down to work our way out of the hole that we have dug for ourselves? Arguably, deferring the inevitable will only make the pain greater.
Americans are not whiners and do not expect to have things handed to them. At least that was the way it used to be. If that has changed, then the predictions of Professor Tyler and M. de Toqueville are all too likely to come true sooner than we would like.
We should, however, consider this, written by Alexander Tyler in 1787 - the year that the Thirteen Colonies adopted the new Federal Constitution:
"A Democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largesse out of the public treasury."
Nearly fifty years later, Alexis de Toqueville came to a similar conclusion:
"The American Republic will endure, until politicians realize they can bribe the people with their own money."
The history of every democracy involves the seizure, by the government, of an ever increasing share of income. Worse, every year the proportion of transfer payments - compared to the purchase 0f public goods - increases.
Politicians, notwithstanding the fact that there is no such thing as a free lunch, have come to see the public treasury as a never ending source of wealth that can be distributed to all and sundry (well, to favored groups anyway) without incurring any cost. The politically incorrect term is that they are [more or less legally] buying votes. At the same time, voters have come to expect that they will be handed wealth from the public treasury without considering the fact that the wealth was theirs in the first place.
Except, someone will have to pay the bill - even if it is the next three generations.
We got into this economic mess because citizens and government, deluding themselves into believing that there is such a things as a free lunch, indulged in a frenzy of consumption financed by borrowing. Can it really be the case that more of the same will get us out again? Or would we be better served by accepting the realities and buckling down to work our way out of the hole that we have dug for ourselves? Arguably, deferring the inevitable will only make the pain greater.
Americans are not whiners and do not expect to have things handed to them. At least that was the way it used to be. If that has changed, then the predictions of Professor Tyler and M. de Toqueville are all too likely to come true sooner than we would like.
Thursday, January 8, 2009
U.S. Postal Service
There was a time when I used around 150 - 200 first class stamps a year. Now, with online bill paying, and Internet submission of invoices to my clients, I write three or four checks each month and a book of stamps lasts all year, maybe longer.
The price of postage, however, increases almost every year and, inevitably, the result is a collection of unused - but now inadequate - stamps sitting in a desk drawer. That means a trip to the post office to buy a sheet of one or two cent stamps. Needless to say the number bought rarely matches the number of semi-obsolete stamps sitting in the desk drawer.
It is rare for a government organization to do the right and sensible thing but the United States Postal Service has got it right. USPS has issued a 'Forever' stamp that is good for first class mail from the time of purchase until the end of time.
This is a simple, although not necessarily obvious, idea that has benefits for everyone. Customers can avoid an unneeded trip to the post office, the Postal Service no longer needs to print so many low denomination stamps, and the incidence of mail returned for insufficient postage is reduced.
Everyone wins which, when dealing with government, is unusual. Let us hope that more civil servants will have the courage to abandon procedure and conventional wisdom in favor of service to citizens.
The price of postage, however, increases almost every year and, inevitably, the result is a collection of unused - but now inadequate - stamps sitting in a desk drawer. That means a trip to the post office to buy a sheet of one or two cent stamps. Needless to say the number bought rarely matches the number of semi-obsolete stamps sitting in the desk drawer.
It is rare for a government organization to do the right and sensible thing but the United States Postal Service has got it right. USPS has issued a 'Forever' stamp that is good for first class mail from the time of purchase until the end of time.
This is a simple, although not necessarily obvious, idea that has benefits for everyone. Customers can avoid an unneeded trip to the post office, the Postal Service no longer needs to print so many low denomination stamps, and the incidence of mail returned for insufficient postage is reduced.
Everyone wins which, when dealing with government, is unusual. Let us hope that more civil servants will have the courage to abandon procedure and conventional wisdom in favor of service to citizens.
Tuesday, January 6, 2009
St. Augustine redux?
Yesterday, President-elect Obama visited Capitol Hill to pitch ideas for his proposed economic stimulus bill which will involve tax credits and much, much, spending.
Since, when it comes to spending, Congress's behavior resembles nothing so much as that of an out of control heroin addict, most of this is likely to become a never ending burden on the taxpayer. Many programs are created but few are ever ended.
While Senator Kent Conrad (D-ND), Chairman of the Senate Budget Committee, did say that a commitment to reducing future deficits is critical, urgency is hard to find. Perhaps all Senators and Representatives should be forced to carry signs displaying a slightly modified version of St. Augustine's most notorious prayer:
" God, [at least when it comes to government spending,] give me chastity and continence, but not yet."
Enough said.
Since, when it comes to spending, Congress's behavior resembles nothing so much as that of an out of control heroin addict, most of this is likely to become a never ending burden on the taxpayer. Many programs are created but few are ever ended.
While Senator Kent Conrad (D-ND), Chairman of the Senate Budget Committee, did say that a commitment to reducing future deficits is critical, urgency is hard to find. Perhaps all Senators and Representatives should be forced to carry signs displaying a slightly modified version of St. Augustine's most notorious prayer:
" God, [at least when it comes to government spending,] give me chastity and continence, but not yet."
Enough said.
Monday, January 5, 2009
Budget Deficits
The Federal Government will run a very substantial fiscal deficit this year. Absent a complete market meltdown, the deficit can be financed even though the price may be high. That deals with the short term but, in the long term, spending will have to be cut unless taxes rise to unproductive and unsustainable levels.
States, cities, counties and other municipalities are also facing ugly mismatches between spending and revenue. Most of them are prohibited from deficit spending although there are some exceptions - mainly for capital projects and draws from so-called rainy day funds. Since there is a practical limit to the amount that taxes can be raised, spending must be cut.
Almost without exception, however, political cowardice reigns when spending cuts are on the agenda. Instead of making hard decisions about effectiveness and value, Governors and Mayors decree across the board spending cuts. Good programs are cut by as much as those that are useless and irrelevant.
We elect politicians to manage the affairs of government and to spend our money both effectively and in moderation. We also elect them to make hard choices: we must demand that they do so. Nor should we accept Ponzi schemes that involve out of control spending with the bill passed to the next generation.
Brave politicians will receive their due from thoughtful citizens. Even if their political careers end, they will know that they did the right thing. Better yet they will set an example set for national politicians to follow.
States, cities, counties and other municipalities are also facing ugly mismatches between spending and revenue. Most of them are prohibited from deficit spending although there are some exceptions - mainly for capital projects and draws from so-called rainy day funds. Since there is a practical limit to the amount that taxes can be raised, spending must be cut.
Almost without exception, however, political cowardice reigns when spending cuts are on the agenda. Instead of making hard decisions about effectiveness and value, Governors and Mayors decree across the board spending cuts. Good programs are cut by as much as those that are useless and irrelevant.
We elect politicians to manage the affairs of government and to spend our money both effectively and in moderation. We also elect them to make hard choices: we must demand that they do so. Nor should we accept Ponzi schemes that involve out of control spending with the bill passed to the next generation.
Brave politicians will receive their due from thoughtful citizens. Even if their political careers end, they will know that they did the right thing. Better yet they will set an example set for national politicians to follow.
Sunday, January 4, 2009
Theft
Theodore Roosevelt clearly understood human nature and the impact that education, wealth and power can have when he said:
A man who has never gone to school may steal from a freight car; but if he has a university education, he may steal the whole railroad.
Bernie Madoff is only the latest in the financial world to have stolen - or at least tried to steal - the whole railroad. There will be more and, since the regulators will be a step behind, we should always keep in mind the old cliche: if it seems to be too good to be true, it probably is.
A man who has never gone to school may steal from a freight car; but if he has a university education, he may steal the whole railroad.
Bernie Madoff is only the latest in the financial world to have stolen - or at least tried to steal - the whole railroad. There will be more and, since the regulators will be a step behind, we should always keep in mind the old cliche: if it seems to be too good to be true, it probably is.
Saturday, January 3, 2009
Unenforceable Laws
As we contemplate the opening of the 111th Congress next week, let us hope that some of its members will remember, or at least have their staffs draw their attention to, these wise words uttered by Albert Einstein:
"Nothing is more destructive of respect for the government and the law of the land than passing laws which cannot be enforced."
Since opinion polls, and the desire for re-election at almost any cost, now drive political behavior, the consequence is an almost obsessive need for politicians to be seen to be doing something. The result, all too often, is a panderfest of unenforceable law.
"Nothing is more destructive of respect for the government and the law of the land than passing laws which cannot be enforced."
Since opinion polls, and the desire for re-election at almost any cost, now drive political behavior, the consequence is an almost obsessive need for politicians to be seen to be doing something. The result, all too often, is a panderfest of unenforceable law.
Friday, January 2, 2009
War in Afghanistan
As the American involvement in Iraq begins to wind down, many more troops will be heading to Afghanistan.
Unfortunately, few policy makers seem to be considering that, even though the Afghans start each war badly, they have a two hundred year record of four wins and no losses. The losers during this time period are:
Unfortunately, few policy makers seem to be considering that, even though the Afghans start each war badly, they have a two hundred year record of four wins and no losses. The losers during this time period are:
- Britain: 1st Afghan War 1838 - 1842
- Britain: 2nd Afghan War 1878 - 1921
- Britain: 3rd Afghan War 1919 - 1921
- Soviet Union: Afghan War 1979 - 1989
Now the Great Game is on again: America 2001 - present.
In 656 AD, a few years after the death of the Prophet Mohammad, Arab armies invaded Afghanistan in the name of Islam. It took over two hundred years until Afghanistan was fully conquered, in approximately 870 AD, and the population converted to Sunni Islam. From that time on there have been many invaders - Genghis Khan, the Moghuls and the Persians to name a few - but none have managed to disturb the Islamic and tribal nature of the country for long.
Afghanistan is occupied - sort of - by NATO and American armies who are attempting something that has never been achieved in the history of the country. That is the creation of a strong central government which will be able to control the country and, most important to the West but not perhaps to Afghans, deny sanctuary to Islamic terrorists.
There is little likelihood of any victory in Afghanistan in the near or medium term since the West's objectives (the rule of law and the dissolution of terrorist bases and sanctuaries in the bad lands of the Afghan - Pakistani border) are no closer now than in 2001 when America invaded and overthrew the then Taliban dominated government. The idea that Afghanistan can be governed by a strong central government has simply not been accepted by the tribes who value autonomy over country and those who know that the forces of Islam are again at war against the Crusaders.
Be prepared for the loss of many more of our lives and much treasure, for little gain, in one of the world's great hell holes.
Thursday, January 1, 2009
Cheap and nasty
In the 1950s and 1960s 'Made in Japan' was a synonym for cheap, nasty and low quality goods. Now it is the standard of quality and value. Today, cheap and nasty is identified by 'Made in China'. That would be more or less bearable except for the fact that all too many of these poor quality products are also dangerous.
The response of most Americans, encouraged by the media, is to blame our government for not inspecting everything and protecting us from harm. The reality is that we need to stop whining and begin looking out for ourselves. Relying on government, which is generally expensive, inefficient, and incompetent, simply doesn't work very well. Self reliance is an American characteristic of which we need to see more.
This quote, from Maya Angelou's latest book - Letter to My Daughter - provides valuable advice:
"Never whine. Whining lets a brute know that a victim is in the neighborhood."
So, whining and complaining are out: action is in. I simply intend to do my absolute best to avoid anything that says 'Made in China'. I will change my mind when Chinese manufacturers achieve the quality and reliability standards of their counterparts in Japan and Korea.
The response of most Americans, encouraged by the media, is to blame our government for not inspecting everything and protecting us from harm. The reality is that we need to stop whining and begin looking out for ourselves. Relying on government, which is generally expensive, inefficient, and incompetent, simply doesn't work very well. Self reliance is an American characteristic of which we need to see more.
This quote, from Maya Angelou's latest book - Letter to My Daughter - provides valuable advice:
"Never whine. Whining lets a brute know that a victim is in the neighborhood."
So, whining and complaining are out: action is in. I simply intend to do my absolute best to avoid anything that says 'Made in China'. I will change my mind when Chinese manufacturers achieve the quality and reliability standards of their counterparts in Japan and Korea.
Wednesday, December 31, 2008
End of a bad year
H.M. Queen Elizabeth II summed up 1992 with the words: "Annus horribilis." Those two words are sufficent to describe 2008.
Since Americans are optimists by nature, let us look forward to better times in 2009.
Since Americans are optimists by nature, let us look forward to better times in 2009.
Tuesday, December 30, 2008
Israel and Hamas
The end of the [more or less] ceasefire between Israel and Hamas in the Gaza Strip brings to mind something said, in 2004, by Bertie Ahern the former Taoiseach (Prime Minister) of the Republic of Eire:
"As long as we have a position - I won't move until you move - and won't do this until you do that - you'll never get anywhere."
He was referring to the situation in Northern Ireland but there doesn't seem to be a better, or more succinct, way of summing up the progress, or lack thereof, of the Middle East peace process since the 1979 Israeli-Egyptian peace treaty.
"As long as we have a position - I won't move until you move - and won't do this until you do that - you'll never get anywhere."
He was referring to the situation in Northern Ireland but there doesn't seem to be a better, or more succinct, way of summing up the progress, or lack thereof, of the Middle East peace process since the 1979 Israeli-Egyptian peace treaty.
Monday, December 29, 2008
A new ice age (2)
Earth's orbit is far enough away from the sun that, without help, the planet would be too cold for liquid water and there would be no life as we know it.
Without carbon dioxide and other greenhouse gases in our atmosphere, we would have difficulty surviving. Mars has almost no atmosphere and therefore little ability to retain heat. As a result it is far colder than its distance from the sun would suggest. The temperature on Venus - at some 900 degrees Fahrenheit - is far hotter than its distance from the Sun would suggest: a runaway greenhouse effect is the cause.
Earth's atmosphere, historically, has acted as a thermostat and, for billions of years, has generally kept the planet at a temperature which permits carbon and water based life to exist.
The Vostok Project, completed in 1999, involved drilling into the Antarctic ice. Scientists recovered cores (going back 400,000 years through four complete glacial cycles) and were able to match atmospheric CO2 levels to temperature. The CO2 levels in the record were as low as 180 parts per million in the cold periods (i.e during ice ages) and reached 280 in the warm periods but never higher. Current CO2 levels are now in excess of 380 ppm so we can expect a very warm period in the near future.
By emitting so many greenhouse gases, we are conducting a massive experiment on our planet. Although there are many who doubt that the increasing levels of greenhouse gases put our way of life at risk, the burden of proof must be theirs. The risks of continuing along our present path are existential.
On the other hand, should we totally abruptly abandon the use of fossil fuels, it would not take all that many years, at least in terms of geological time, for atmospheric CO2 levels to drop precipitously. Global cooling and a new ice age would soon be the climate problem at hand.
Caution is necessary but inaction may be fatal.
Without carbon dioxide and other greenhouse gases in our atmosphere, we would have difficulty surviving. Mars has almost no atmosphere and therefore little ability to retain heat. As a result it is far colder than its distance from the sun would suggest. The temperature on Venus - at some 900 degrees Fahrenheit - is far hotter than its distance from the Sun would suggest: a runaway greenhouse effect is the cause.
Earth's atmosphere, historically, has acted as a thermostat and, for billions of years, has generally kept the planet at a temperature which permits carbon and water based life to exist.
The Vostok Project, completed in 1999, involved drilling into the Antarctic ice. Scientists recovered cores (going back 400,000 years through four complete glacial cycles) and were able to match atmospheric CO2 levels to temperature. The CO2 levels in the record were as low as 180 parts per million in the cold periods (i.e during ice ages) and reached 280 in the warm periods but never higher. Current CO2 levels are now in excess of 380 ppm so we can expect a very warm period in the near future.
By emitting so many greenhouse gases, we are conducting a massive experiment on our planet. Although there are many who doubt that the increasing levels of greenhouse gases put our way of life at risk, the burden of proof must be theirs. The risks of continuing along our present path are existential.
On the other hand, should we totally abruptly abandon the use of fossil fuels, it would not take all that many years, at least in terms of geological time, for atmospheric CO2 levels to drop precipitously. Global cooling and a new ice age would soon be the climate problem at hand.
Caution is necessary but inaction may be fatal.
Sunday, December 28, 2008
A new ice age (1)
The environmental panic of the 1970s was the coming Ice Age. It was based on apparent evidence of just two decades of worldwide cooling together with a 1971 article in Science that suggested that an increase in atmospheric aerosols – such as sulfur dioxide and particulate matter emitted by diesel engines and coal fired power plants – would provide enough cooling to trigger a new ice age.
The two decades of global cooling was overestimated, and the trend was soon reversed, while the science was just plain wrong. At that time, no one understood the extent that other atmospheric constituents, such as methane, contribute as much to planetary warming as does carbon dioxide. Meanwhile the industrialized West has successfully cleaned up much of the sulphur and particulate emissions so their cooling effect is largely lost.
The Earth appears to be in a cycle of ice ages followed by warm periods. It is also true that, all other things being equal, we could expect another ice age sometime in the near – at least by geological standards – future. It is true, as well, that Earth's orbit lies outside the "habitable zone" around the sun where, absent other influences, liquid water can exist.
But all other things are not equal and human impact on our planet has certainly postponed the onset of the next ice age - perhaps for ever.
First, the invention of agriculture led to more and better food. The result was an increase in population followed by deforestation to provide additional arable land. As a result, more CO2 was released. Then, the domestication and spread of cattle, sheep, and goats for labor, milk, and meat increased the amount of methane released into the atmosphere. Finally, in the three hundred years since the beginning of the Industrial Revolution, the ever increasing consumption of fossil fuels – coal, oil, natural gas – has increased the load of heat retaining gases in the atmosphere to levels not found in the last 650,000 years.
Studies of Antarctic ice cores show a remarkable correlation between temperature and atmospheric CO2 levels so, unless we do something - but not too much, it looks like we are in for a hot one!
More tomorrow.
The two decades of global cooling was overestimated, and the trend was soon reversed, while the science was just plain wrong. At that time, no one understood the extent that other atmospheric constituents, such as methane, contribute as much to planetary warming as does carbon dioxide. Meanwhile the industrialized West has successfully cleaned up much of the sulphur and particulate emissions so their cooling effect is largely lost.
The Earth appears to be in a cycle of ice ages followed by warm periods. It is also true that, all other things being equal, we could expect another ice age sometime in the near – at least by geological standards – future. It is true, as well, that Earth's orbit lies outside the "habitable zone" around the sun where, absent other influences, liquid water can exist.
But all other things are not equal and human impact on our planet has certainly postponed the onset of the next ice age - perhaps for ever.
First, the invention of agriculture led to more and better food. The result was an increase in population followed by deforestation to provide additional arable land. As a result, more CO2 was released. Then, the domestication and spread of cattle, sheep, and goats for labor, milk, and meat increased the amount of methane released into the atmosphere. Finally, in the three hundred years since the beginning of the Industrial Revolution, the ever increasing consumption of fossil fuels – coal, oil, natural gas – has increased the load of heat retaining gases in the atmosphere to levels not found in the last 650,000 years.
Studies of Antarctic ice cores show a remarkable correlation between temperature and atmospheric CO2 levels so, unless we do something - but not too much, it looks like we are in for a hot one!
More tomorrow.
Saturday, December 27, 2008
Banks and losses
Last year John G. Stumpf, CEO of Wells Fargo and Company which is one of the few relatively healthy large banks in the country, was quoted as saying:
"It is interesting that the industry has invented new ways to lose money when the old ways seemed to work just fine."
Perhaps, in 2009, banks will return to their proper line of work: making payments, collecting deposits, and lending money to those who are reasonably likely to repay it. I am not holding my breath.
The credit crunch will last until commercial bankers stop being terrified. Once that happens, they will start lending again. But when they do, we must hope that they remember how it works: assets provide something of a safety net - but no more - against default, actual repayment can only be made out of cash flow.
And it isn't going to be different next time!
"It is interesting that the industry has invented new ways to lose money when the old ways seemed to work just fine."
Perhaps, in 2009, banks will return to their proper line of work: making payments, collecting deposits, and lending money to those who are reasonably likely to repay it. I am not holding my breath.
The credit crunch will last until commercial bankers stop being terrified. Once that happens, they will start lending again. But when they do, we must hope that they remember how it works: assets provide something of a safety net - but no more - against default, actual repayment can only be made out of cash flow.
And it isn't going to be different next time!
Thursday, December 25, 2008
Wednesday, December 24, 2008
Customer service
It should not come as a surprise when one experiences good customer service but it does. Unfortunately, regardless of the economic situation, few companies seem to understand that the best way to keep a customer is to provide exceptional treatment.
Six weeks ago, the battery in my laptop died and the best that the manufacturer's website (name withheld to protect the guilty) offered was 'usually ships in four weeks'. So I went to www.batteries.com who shipped me a replacement battery almost immediately. Unfortunately, it did not work but, after a short telephone call, Batteries.com sent a return mailing label by e-mail and a new battery duly arrived in about a week.
So far so good. Regrettably the replacement battery was also defective. When I called, the customer service department asked, without having to be prompted, whether I wanted a second replacement or a refund. I opted for the refund and the return label, once more, arrived by e-mail in less than 15 minutes. No arguments, no fuss, no need for me to ask or have to fight for decent service.
While the company did not get my business for the laptop battery (I am now waiting patiently for the manufacturer to send one), I am still a customer for future battery orders and will recommend then to anyone who asks. It cost the company in the short term but, in the long term, they have kept a customer.
Would that more companies could learn this simple trick. The recession will end one day and customers will be back. Reputation and service will be critical in determining the number of currently dormant customers that return.
Six weeks ago, the battery in my laptop died and the best that the manufacturer's website (name withheld to protect the guilty) offered was 'usually ships in four weeks'. So I went to www.batteries.com who shipped me a replacement battery almost immediately. Unfortunately, it did not work but, after a short telephone call, Batteries.com sent a return mailing label by e-mail and a new battery duly arrived in about a week.
So far so good. Regrettably the replacement battery was also defective. When I called, the customer service department asked, without having to be prompted, whether I wanted a second replacement or a refund. I opted for the refund and the return label, once more, arrived by e-mail in less than 15 minutes. No arguments, no fuss, no need for me to ask or have to fight for decent service.
While the company did not get my business for the laptop battery (I am now waiting patiently for the manufacturer to send one), I am still a customer for future battery orders and will recommend then to anyone who asks. It cost the company in the short term but, in the long term, they have kept a customer.
Would that more companies could learn this simple trick. The recession will end one day and customers will be back. Reputation and service will be critical in determining the number of currently dormant customers that return.
Tuesday, December 23, 2008
Living for ever
There seems to be a cultural imperative that demands that we live forever. Unfortunately, any attempt to do so risks making ourselves bored and boring - if not miserable - while we try.
In reality, I am of the persuasion that being rolled into the funeral home, totally worn out - but happy after an exciting ride - is the way to go. If I can manage to run out of money the day before I die, then I have succeeded at another level.
This joke, circulating around the Internet challenges the pretensions of the 'live forever at any cost' crowd:
I recently chose a new primary care physician. After two visits and exhaustive lab tests, he said I was doing 'fairly well' for my age. A little concerned about that comment, I couldn't resist asking him: "do you think I'll live to be 80?"
He asked, 'Do you smoke tobacco or drink alcoholic beverages?'' "No," I replied: "and I don't do drugs, either."
Then he asked: "Do you eat rib-eye steaks and barbecued ribs?" I said: "No, my other doctor said that all red meat is unhealthy!''
"Do you spend a lot of time in the sun, like playing golf, boating, fishing or relaxing on the beach?'' "No, I don't." I said.
He asked, 'Do you gamble, drive fast cars, or have a lot of sex?'' "No," I said. "I don't do any of those things."
Then he l looked at me and asked: "Then why do you care about living to 80?"
Enjoy your holidays because life is for today!
In reality, I am of the persuasion that being rolled into the funeral home, totally worn out - but happy after an exciting ride - is the way to go. If I can manage to run out of money the day before I die, then I have succeeded at another level.
This joke, circulating around the Internet challenges the pretensions of the 'live forever at any cost' crowd:
I recently chose a new primary care physician. After two visits and exhaustive lab tests, he said I was doing 'fairly well' for my age. A little concerned about that comment, I couldn't resist asking him: "do you think I'll live to be 80?"
He asked, 'Do you smoke tobacco or drink alcoholic beverages?'' "No," I replied: "and I don't do drugs, either."
Then he asked: "Do you eat rib-eye steaks and barbecued ribs?" I said: "No, my other doctor said that all red meat is unhealthy!''
"Do you spend a lot of time in the sun, like playing golf, boating, fishing or relaxing on the beach?'' "No, I don't." I said.
He asked, 'Do you gamble, drive fast cars, or have a lot of sex?'' "No," I said. "I don't do any of those things."
Then he l looked at me and asked: "Then why do you care about living to 80?"
Enjoy your holidays because life is for today!
Monday, December 22, 2008
Statistics
As year end approaches, we will be bombarded by stories which attempt to sum up the year that is about to pass. There will also be many stories that purport to predict what will happen next year.
Most of these stories will be packed with statistics - many incomplete, others simply misleading and some that are almost impossible to interpret. Since few of the authors, and even fewer of the readers, have ever studied Statistics, we are well advised to be cautious in our interpretation and use of the information provided.
Aaron Levenstein summed up the situation particularly well with this thought: "statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital."
Most of these stories will be packed with statistics - many incomplete, others simply misleading and some that are almost impossible to interpret. Since few of the authors, and even fewer of the readers, have ever studied Statistics, we are well advised to be cautious in our interpretation and use of the information provided.
Aaron Levenstein summed up the situation particularly well with this thought: "statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital."
Sunday, December 21, 2008
Fixing things
The world is full of people who are severely mechanically challenged. For these people, fixing things can best be categorized by the statement: "this is a problem that can be solved by the application of cash."
Then there are those who claim that anything can be fixed by hitting it with a hammer. While sometimes (often?) true, knowing where to hit, and how hard, takes great skill and training.
For the rest of us, with limited mechanical ability, there are only two tools: duct tape http://tinyurl.com/5g6ayp and WD40 www.wd40.com If it moves, and it’s not supposed to, use the duct tape. If it doesn’t move, and it should, use the WD40.
Then there are those who claim that anything can be fixed by hitting it with a hammer. While sometimes (often?) true, knowing where to hit, and how hard, takes great skill and training.
For the rest of us, with limited mechanical ability, there are only two tools: duct tape http://tinyurl.com/5g6ayp and WD40 www.wd40.com If it moves, and it’s not supposed to, use the duct tape. If it doesn’t move, and it should, use the WD40.
Saturday, December 20, 2008
Bailing out the economy
Here is an analysis - only partly tongue in cheek - of the government's economic bailout program http://tinyurl.com/4vuhwd offered by former Senator Fred Thompson. In this short video, he suggests that we got into the present mess as a result of too much spending and borrowing and that the government's solution is to do much more of the same.
If political incorrectness is the act of challenging conventional wisdom, then Senator Thompson is one of the masters of that valuable art.
If political incorrectness is the act of challenging conventional wisdom, then Senator Thompson is one of the masters of that valuable art.
Friday, December 19, 2008
Strategy and achievement
The late Professor John W. Tukey, when he was Chair of the Department of Statistics at Princeton University, summed up the strategic issues facing most organizations this way:
"People, researchers, companies and various other institutions usually make one of three kinds of error:
1. Cannot define the problem they need to solve in order to move forward.
2. Define the right problem but solve it too late.
3. Define and solve the wrong problem."
While this describes President Bush's administration all too well, it is not clear whether the Administration or Congress is more at fault. Unfortunately, even if President-elect Obama's administration turns out to be competent, it will be able to achieve little - at least in the long term - unless Congress can manage to prove Professor Tukey wrong.
"People, researchers, companies and various other institutions usually make one of three kinds of error:
1. Cannot define the problem they need to solve in order to move forward.
2. Define the right problem but solve it too late.
3. Define and solve the wrong problem."
While this describes President Bush's administration all too well, it is not clear whether the Administration or Congress is more at fault. Unfortunately, even if President-elect Obama's administration turns out to be competent, it will be able to achieve little - at least in the long term - unless Congress can manage to prove Professor Tukey wrong.
Thursday, December 18, 2008
Too good to be true - again
It is possible to have some – but only a little – sympathy for the victims of the Ponzi scheme operated by Bernard Madoff. His pitch was that he offered really good, although not spectacular, returns regardless of market conditions. There was at least some level of plausibility since hedge funds – big losers this year – used to make the same claims.
On the other hand, there is much evidence to show that consistently beating the market for any extended period of time is rare. Those who doubt this last statement should ask Bill Miller, an honest and skillful mutual fund manager, from Legg Mason www.leggmason.com who, amazingly, beat the market for some fifteen years but whose formerly stellar reputation is now much diminished..
The real lesson, endlessly repeated and endlessly ignored, is that when something looks too good to be true, it probably is. Even if it is true, for a while, there is often a painful ending.
The delicious irony in this case is that Mr. Madoff’s name is pronounced “Made Off” as in ‘he made off with their money’.
On the other hand, there is much evidence to show that consistently beating the market for any extended period of time is rare. Those who doubt this last statement should ask Bill Miller, an honest and skillful mutual fund manager, from Legg Mason www.leggmason.com who, amazingly, beat the market for some fifteen years but whose formerly stellar reputation is now much diminished..
The real lesson, endlessly repeated and endlessly ignored, is that when something looks too good to be true, it probably is. Even if it is true, for a while, there is often a painful ending.
The delicious irony in this case is that Mr. Madoff’s name is pronounced “Made Off” as in ‘he made off with their money’.
Wednesday, December 17, 2008
Nothing wrong in Illinois?
Illinois Governor Rod Blagojevich claims that he has done nothing wrong and, therefore, has no reason to resign. What he really means is that he has been arrested, charged and released on [fairly modest] bail, but has not yet been convicted of any crime. Given the presumption of innocence in American criminal law, that is true but falls far short of being the whole truth: the evidence of wrongdoing, so far, appears overwhelming.
There are many things that are, or were, perfectly legal but, nonetheless, wrong. Slavery, racial segregation, denial of women's right to vote are major examples from the past. A modern legal, but wrong, curiosity is the denial of voting representation in the United States Senate and House of Representatives to some four hundred and fifty thousand citizens who reside in the District of Columbia. It is not hard, either, to think of things that were illegal but right: the Boston Tea Party, America's unilateral Declaration of Independence and, not least, Rosa Parks's famous refusal to give up her seat on a bus.
Those who remember President Clinton's most memorable phrase, "it depends what the definition of 'is' is", will continue to be appalled to learn of yet another gross pollution of our language by those who possess law degrees.
It is no surprise, at least to this writer, that [soon to be former?] Governor Blagojevich is an attorney. He is, also, a member in good standing of the ignominious company of Senators Ted Stevens and Larry Craig who both, notwithstanding their convictions - one by a jury and the other as a result of a guilty plea, still maintain that they did nothing wrong. They, too, declined to do the right thing by resigning from the United States Senate.
There are many things that are, or were, perfectly legal but, nonetheless, wrong. Slavery, racial segregation, denial of women's right to vote are major examples from the past. A modern legal, but wrong, curiosity is the denial of voting representation in the United States Senate and House of Representatives to some four hundred and fifty thousand citizens who reside in the District of Columbia. It is not hard, either, to think of things that were illegal but right: the Boston Tea Party, America's unilateral Declaration of Independence and, not least, Rosa Parks's famous refusal to give up her seat on a bus.
Those who remember President Clinton's most memorable phrase, "it depends what the definition of 'is' is", will continue to be appalled to learn of yet another gross pollution of our language by those who possess law degrees.
It is no surprise, at least to this writer, that [soon to be former?] Governor Blagojevich is an attorney. He is, also, a member in good standing of the ignominious company of Senators Ted Stevens and Larry Craig who both, notwithstanding their convictions - one by a jury and the other as a result of a guilty plea, still maintain that they did nothing wrong. They, too, declined to do the right thing by resigning from the United States Senate.
Tuesday, December 16, 2008
Banks aren't lending
Politicians are agonizing over the fact that banks are not using taxpayer funds (bailout money) to increase lending. If they don't understand what is going on, then they are showing greater than usual stupidity. If they do know what is going on and are posturing - again - it only shows that hypocrisy is a critical part of the foundation of a political career.
Here is what is really happening. Banks indulged themselves with years of promiscuous lending to people, and businesses, whose cash flow, and therefore ability to repay, was doubtful. They could manage this magic because they could package the loans into strange and complex securities that were sold to investors whose greed greatly exceed prudence. Having done so, they could declare profits.
Unfortunately, these banks then took the next steps to disaster. They loaned money to these investors and, even worse, bought many of the toxic securities based on worthless loans. The result was, and continues to be, vast losses.
Now investors are missing, as they contemplate their losses, and bank loans can no longer be unloaded. Since banks have to keep these loans, they are the ones who will suffer if the borrowers default. Not surprisingly, they are taking much more care about their lending decisions.
If politicians are surprised by the actions - or rather non-actions - of banks, they should contemplate this question. Would you lend your own money to someone who is unlikely to repay you?
Here is what is really happening. Banks indulged themselves with years of promiscuous lending to people, and businesses, whose cash flow, and therefore ability to repay, was doubtful. They could manage this magic because they could package the loans into strange and complex securities that were sold to investors whose greed greatly exceed prudence. Having done so, they could declare profits.
Unfortunately, these banks then took the next steps to disaster. They loaned money to these investors and, even worse, bought many of the toxic securities based on worthless loans. The result was, and continues to be, vast losses.
Now investors are missing, as they contemplate their losses, and bank loans can no longer be unloaded. Since banks have to keep these loans, they are the ones who will suffer if the borrowers default. Not surprisingly, they are taking much more care about their lending decisions.
If politicians are surprised by the actions - or rather non-actions - of banks, they should contemplate this question. Would you lend your own money to someone who is unlikely to repay you?
Monday, December 15, 2008
Ice storms in New England
On Friday a severe ice storm struck northern New England and at least 1.5 million households lost power. Some will not have electricity back until the end of this week.
Since ice storms are not exactly rare in that part of the world, it might have been a good idea to have buried the power lines. That [sensible] course of action, however, increases capital costs which are borne by the utilities and their customers. Perhaps the economics work better when a public company does it the cheap way - at least in the short term - with overhead wires and then gets Federal Disaster Aid when the inevitable happens.
This sounds like the Wall Street bailout again: just another case of privatizing profits and socializing losses.
Since ice storms are not exactly rare in that part of the world, it might have been a good idea to have buried the power lines. That [sensible] course of action, however, increases capital costs which are borne by the utilities and their customers. Perhaps the economics work better when a public company does it the cheap way - at least in the short term - with overhead wires and then gets Federal Disaster Aid when the inevitable happens.
This sounds like the Wall Street bailout again: just another case of privatizing profits and socializing losses.
Sunday, December 14, 2008
Infrastructure and economic stimulus
Part of the reason that we are so rich is our investment in infrastructure: roads, bridges, railways, dams, water and sewer plants, pipelines, airports and the electrical grid to name a few. For the past thirty or more years, however, we have been addicted to consumption. As a result, not only have we not completed - let alone started - much in the way of new infrastructure projects, we have grossly neglected the proper maintenance of our existing infrastructure.
President-elect Obama plans to stimulate the economy by spending vast sums to improve and restore our infrastructure. At first sight, this looks good and there is little opposition to maintenance projects. The problem is that so-called shovel ready, deferred maintenance, projects account for, perhaps, $120 - $150 billion in spending. Since Senator Obama is suggesting that $600 - $750 billion (perhaps more) of economic stimulus is needed, it is not clear what projects will actually be funded.
The first issue is that major infrastructure projects take a lot of time to plan, for bids to be requested, and for contracts to be awarded. The second, and probably greatest problem is NIMBY - or Not In My Back Yard. People just don't want electrical transmission lines, power stations, new roads and rail, not to mention sewage treatment plants or trash incinerators anywhere near where they live.
Worse, there is an influential subset of extremists, highly skilled at using the legal system to impose major delays on infrastructure projects, who want us to return to a rural ideal that never actually existed. Their philosophy can be summed up with the word BANANA - or Build Absolutely Nothing Anywhere Near Anything. Between NIMBY and BANANA, it will be a great surprise if anything much gets done in a timely manner.
All of which brings to mind the old, and cynical, definition of an environmentalist as someone who already has his cottage by the lake and who is resolutely opposed to any future building.
President-elect Obama plans to stimulate the economy by spending vast sums to improve and restore our infrastructure. At first sight, this looks good and there is little opposition to maintenance projects. The problem is that so-called shovel ready, deferred maintenance, projects account for, perhaps, $120 - $150 billion in spending. Since Senator Obama is suggesting that $600 - $750 billion (perhaps more) of economic stimulus is needed, it is not clear what projects will actually be funded.
The first issue is that major infrastructure projects take a lot of time to plan, for bids to be requested, and for contracts to be awarded. The second, and probably greatest problem is NIMBY - or Not In My Back Yard. People just don't want electrical transmission lines, power stations, new roads and rail, not to mention sewage treatment plants or trash incinerators anywhere near where they live.
Worse, there is an influential subset of extremists, highly skilled at using the legal system to impose major delays on infrastructure projects, who want us to return to a rural ideal that never actually existed. Their philosophy can be summed up with the word BANANA - or Build Absolutely Nothing Anywhere Near Anything. Between NIMBY and BANANA, it will be a great surprise if anything much gets done in a timely manner.
All of which brings to mind the old, and cynical, definition of an environmentalist as someone who already has his cottage by the lake and who is resolutely opposed to any future building.
Saturday, December 13, 2008
Malicious thoughts of the day
Tom Donlan, Editorial Page Editor for Barrons Magazine http://www.barrons.com/ is responsible for today's malicious thoughts.
Mr. Donlan is a student of capitalism and the author of a couple of very worthwhile books http://tinyurl.com/donlan . He strongly opposes a bailout of the automobile industry but, being a realist, he recognizes that three large and grossly mismanaged companies will soon be the recipients of cash that, if not just created out of nothing, is extracted, under duress, from the long suffering taxpayer.
Mr. Donlan also accepts that, having thrown cash at the Detroit Three, the Administration and Congress will create a so-called Car Czar to supervise the waste of our hard earned money. Mr. Donlan - and here is where the malicious thoughts are found - offers some names to fill this post. He starts with former Vice President Al Gore on the grounds that Mr. Gore might come to understand, at first hand, that Detroit doesn't build fuel efficient cars because the average citizen is not yet interested in paying through the nose for undersized and underpowered mini-boxes.
As an aside, the [Hybrid] Toyota Prius is ugly. It is bought mostly by the trendy 'see how green I am' crowd. Evidence for the nature of the Prius's owners is found in the fact that the Honda Civic Hybrid is just about as fuel efficient, a little larger, no more expensive compared to its gasoline engined cousin than is the Prius, and is much better looking. Sales, however, are nothing special because the Civic fails to do a decent job of advertising the green credentials of its owner. In this case, being ugly appears to be one of the Prius's critical design features.
Having offered up Mr. Gore as the sacrificial lamb, Mr. Donlan then provides the names of some very competent executives (Jack Welch, Lee Iacocca and Ross Perot) before suggesting a person for whom 'paybacks are hell' is an appropriate description. Mr. Donlan's reasoning is that, since the United Auto Workers Union is at least fifty percent responsible for the automobile industry's current mess, it would be only fair that UAW President Ron Gettelfinger be given the fruitless task of trying to sort out the industry.
If new loans would help the Detroit Three get their acts together, why won't the private sector provide the money? Even though the U.S. economy is suffering from a serious credit drought, the answer to that question should be obvious.
How hard is it to understand that new loans to the Detroit Three fall into the category of 'throwing good money after bad'? Since it doesn't really matter who is appointed to supervise the delayed death of three once proud companies, we might as well allow ourselves some small entertainment as yet more of our cash goes up in flames.
Mr. Donlan is a student of capitalism and the author of a couple of very worthwhile books http://tinyurl.com/donlan . He strongly opposes a bailout of the automobile industry but, being a realist, he recognizes that three large and grossly mismanaged companies will soon be the recipients of cash that, if not just created out of nothing, is extracted, under duress, from the long suffering taxpayer.
Mr. Donlan also accepts that, having thrown cash at the Detroit Three, the Administration and Congress will create a so-called Car Czar to supervise the waste of our hard earned money. Mr. Donlan - and here is where the malicious thoughts are found - offers some names to fill this post. He starts with former Vice President Al Gore on the grounds that Mr. Gore might come to understand, at first hand, that Detroit doesn't build fuel efficient cars because the average citizen is not yet interested in paying through the nose for undersized and underpowered mini-boxes.
As an aside, the [Hybrid] Toyota Prius is ugly. It is bought mostly by the trendy 'see how green I am' crowd. Evidence for the nature of the Prius's owners is found in the fact that the Honda Civic Hybrid is just about as fuel efficient, a little larger, no more expensive compared to its gasoline engined cousin than is the Prius, and is much better looking. Sales, however, are nothing special because the Civic fails to do a decent job of advertising the green credentials of its owner. In this case, being ugly appears to be one of the Prius's critical design features.
Having offered up Mr. Gore as the sacrificial lamb, Mr. Donlan then provides the names of some very competent executives (Jack Welch, Lee Iacocca and Ross Perot) before suggesting a person for whom 'paybacks are hell' is an appropriate description. Mr. Donlan's reasoning is that, since the United Auto Workers Union is at least fifty percent responsible for the automobile industry's current mess, it would be only fair that UAW President Ron Gettelfinger be given the fruitless task of trying to sort out the industry.
If new loans would help the Detroit Three get their acts together, why won't the private sector provide the money? Even though the U.S. economy is suffering from a serious credit drought, the answer to that question should be obvious.
How hard is it to understand that new loans to the Detroit Three fall into the category of 'throwing good money after bad'? Since it doesn't really matter who is appointed to supervise the delayed death of three once proud companies, we might as well allow ourselves some small entertainment as yet more of our cash goes up in flames.
Friday, December 12, 2008
Political correctness
Political correctness is an ever present pollution of public discourse. Resistance to such an abomination, however, should never cease because, in a manner that George Orwell would have well understood, political correctness greatly increases the sloppiness, and dishonesty, of our discussions. The result is that decisions and actions are deeply flawed.
I have been unable to find a source for this definition of political correctness but it sums up the situation well:
'Political Correctness' is a doctrine fostered by a delusional minority, and the mainstream media, which holds forth the proposition that it is entirely possible to pick up a large lump of manure by the clean end.
Enough said.
I have been unable to find a source for this definition of political correctness but it sums up the situation well:
'Political Correctness' is a doctrine fostered by a delusional minority, and the mainstream media, which holds forth the proposition that it is entirely possible to pick up a large lump of manure by the clean end.
Enough said.
Thursday, December 11, 2008
Investing
Some companies, but not many, make a great deal of money during a gold rush: most make little or nothing. The same applies to whichever investment strategy is all the rage - whether it be real estate, dot coms, emerging markets, alternative energy or something else that has caught the eye of the mob.
The people who make solid - just not spectacular - profits in a gold rush are those who supply picks, shovels, beans, transport and, most particularly, saloons. When the next gold rush starts - and there will be one someday - keep in mind that investing in the supporting infrastructure is certainly safer, and may well be much more profitable, than trying to pick winners.
The people who make solid - just not spectacular - profits in a gold rush are those who supply picks, shovels, beans, transport and, most particularly, saloons. When the next gold rush starts - and there will be one someday - keep in mind that investing in the supporting infrastructure is certainly safer, and may well be much more profitable, than trying to pick winners.
Wednesday, December 10, 2008
Arrogance and its consequences
The best, and fastest, way to get into real trouble is to start believing your own press releases. A little modesty, a lot of humility, and an aversion to the spotlight, except when strictly necessary, will do much to prevent self-inflicted wounds.
A simple enough program, but given human nature, not all that easy to execute.
A simple enough program, but given human nature, not all that easy to execute.
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