This fulfills my obligation to say something about baseball.

The Sox and Cubs are both in the playoffs. If they win and keep winning, we could have the first Sox-Cubs match since 1906.
If this happens, don't be surprised by 7-headed dragons in the streets, boils all over your body, and armored, lion-toothed locust swarms at your doorstep...the End Times are at hand!

That being the case, I casually predict TPI and I will begin preaching prophecy while wearing sackcloth. How's that for an obscure biblical reference?

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Sarah Palin 0, Katie Couric 1

I have to agree with Megan, Sarah Palin is a total, complete idiot. Not that most politicians aren't, but she has the unique bugbear of being a green, untrained idiot, unlike the hardened, highly-trained idiot Joe Biden.

Katie Couric flambays Governor Palin:

Palin (in campaign speech) to crowd: I do look forward to Thursday night and debating Sen. Joe Biden. We are going to talk about those new ideas, new energy for America. I'm looking forward to meet him too. I've never met him before. But, I've been hearing about his Senate speeches since I was in, like, 2nd grade.

Couric (after speech) to Palin: You made a funny comment, you've said you have been listening to Joe Biden's speeches since you were in second grade, something like that.

Palin: It's been since like 72, yah...

Couric: You have a 72-year-old running mate - is that kind of a risky thing to say, insinuating that Joe Biden's been around a while?

Palin: Oh no, it's nothing negative at all. He's got a lot of experience and just stating the fact there, that we've been hearing his speeches for all these years. So he's got a tremendous amount of experience and, you know, I'm the new energy, the new face, the new ideas and he's got the experience based on many many years in the Senate.

There's just no getting around it folks, this woman is in no way qualified to be the Vice President of the United States, who (other than the oft repeated job of replacing a dead president) is the President of the Senate, responsible for tie-breaking votes. We certainly wouldn't want Joe Biden, with "many, many years in the Senate" as the President of the Senate, would we?

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This is your math on cars.

So I just can't seem to get over this $25 billion loan the taxpayers government is handing out to GM and Chrysler. So I did a little math to make myself feel better more irritated.

Several auto analysts claim that after late 2009, some automakers could start making a profit "once the economy recovers." (Let's ignore the fact that the definition of a bad company is one that is only profitable during economic booms)

So how long will it take to pay off?
If we optimistically assume the manufacturer's profit margin for a car is 3%, and there are 11 million new cars bought each year from GM or Chrysler dealers, and that each car costs $35,000 (the estimated cost of the Chevy Volt) then the math looks like this:

11 million cars
3 percent of 35,000 = $1050
$1050 X 11 million cars = roughly 1 billion dollars.

So in a perfect world they could pay the loan off in 25 years! Where can I get that loan?!

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Bailout subtexts.

I kept waiting and waiting to hear details about the bailout. Who got what? What regulation was there? Which companies will get help, and which won't.
Partly this was curiosity, I didn't like that the bailout was a giant number with no specifics.
Partly, however, this was greed, because when WaMu is trading at $0.90/share, if they were going to get, say, $55 Billion, you better believe I'd be writing checks to Schwab for every share I could afford.
My understanding is that they didn't release those detailed figures because 1. that'd amount to insider trading 2. they actually have no idea what to do with the money.

I've said it before, and every time someone here at work argues that we are in a crisis the likes of which the world has never seen, I mention it again. This is not new economics.

However, what is new is the level of government corruption and arrogance the likes of which the world has never seen. Perhaps Bush is naive and clueless to this, but Bernanke, Paulson, and Cox, the Triumvirate of Terror that essentially caused (or caused by inaction) this whole mess are trying desperately, desperately to remain in power. Rather than resign, like I suggested, they have written themselves into the future as aggressively as possible.

Any government legislation is shown online, so when the bill went up for vote, we all got a crack at it. Here's an interesting tidbit: the oversight committee for the $700 billion, rather than be a bipartisan committee of economic gurus, or even better, a private consultant with no party affiliation...it is: the chairmen of the Fed, the Secretary of the Treasury, the SEC, and the chairman of HUD.
The same bunglers who caused this mess now think they should oversee it!
"But you didn't mention HUD, at least they'll be clean." Not so, my friends, as I've shown. The Bush speech at a HUD meeting in 2002 is where this whole mess started.

So fiscal conservatives on both sides of the aisle told Paulson he's out of control with his own self-righteousness and voted this moronic article down.

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BAILOUT FAILS!!!!!!!!!!!!!

I'm sure the reason so many Representatives voted against the bailout was because of the insightful writings of yours truly.

My goodness, this is gonna take a while to wrap my head around. Back when TAE was so loudly against this thing (here, here, here, here), it was mostly because deep down I knew it would pass and therefore felt at liberty to rail against it, like any free American.

Now it's failed, and I'm suddenly very worried about my job, keeping a roof over my family's head, and whether or not the Air Force Reserves are hiring, because government work may be the only kind available.

Let's hope the indomitable force of American Democracy stumbles, but does not fall.



Interesting note: I wrote originally that the bailout was financial self-protection by congresspersons with vested interests in these companies that (as I write this) are collapsing like failed stars. Now it turns out the bailout may have been partially rejected because Congresspersons are more concerned about job security than about their own fortunes. Powermongering trumps greed every time.

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History repeats itself in frustrating fashion.

Thursday I wrote about the pathetic state of American car manufacturers, especially in comparison to the bold, innovate strategies being instituted by foreign auto makers. I also wrote about Detroit auto makers wanting a $25 billion bailout from taxpayer pockets.

T. Boone Pickens in 1986: "The automobile industry is a perfect example of an industry paralyzed by bureaucratic inertia. The Japanese and Germans concentrated on building a better automobile while the U.S. automakers added a little trim and rested on their laurels. Then, when the rest of the auto world caught up, Detriot ran to Washington for bailouts and protection."

So happy to see history repeating itself.

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Go Big 12 or Go Home!

As of the writing of this, at 9:26 PM on Saturday September 27th, the current USA Today poll for college football looks like this:

1. USC
2. Oklahoma
3. Georgia
4. Florida
5. Missouri
6. LSU
7. Texas
8. Wisconsin
9. Texas Tech

As I write this, USC, FLorida and Wisconsin have lost. Georgia is down by two scores with minutes left. LSU is leading but not by much. And none of them play each other the next week...if this happened it could last a while.

Could it be that with a little luck, tomorrow morning I'll wake up and the new rankings for the next week would be
1. Oklahoma
2. Missouri
3. Texas
4. Texas Tech

I can't even imagine a world where 4 Big 12 teams sit atop the polls. It'd be a sure sign of...something.

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Double Car Post

Two thoughts on cars today.

1. 36 billion wasted without a word. While we all piddle, twiddle, and resolve (but not one damn thing do we solve) this 700 billion dollar megacheck in the financial sector, a tiny, inconsequential mosquito of money, 36 billion dollars, has quietly slipped through our fingers unnoticed. At any other time, when the markets were strong and eyes were not on the mortgage crisis, there would be hue and cry up and down the Capitol Mall as lobbyists from Detriot quietly greased palms last week and convinced the House to add a 25 billion dollar bailout to their current tax break legislation. A similar measure is expected to pass next week in the Senate.
The automakers begging for scraps, namely Ford, GM, and Chrysler, are claiming they are desperate for the money because they have no capital with which to retool their factories for hybrid car production. GM plans to use it's allotment to build an engine building factory for its new Chevy Volt, "due" in 2010.
There are several obscenely offensive problems with this concept. First and foremost, is the complaint that without this money, these companies cannot afford to change from their gas-guzzling, 4-wheel drive, 8-cylinder SUV's to compact, lightweight 4-cylinder cars.

Because suddenly they feel like they should...when since 1999 it's been much easier to just lobby Washington to not tighten emissions restrictions. Instead of spending the last 10 years developing new technologies (or God forbid) buying it from the Japanese (who were desperate to export the technology in the late 90's), they now suddenly feel that their only method of survival is to convert from their SUV production (which has stranded millions of SUV's on dealership lots) to compact car production.

The second problem with this is that they believe they need this funding in order to meet the Washington requirement that mpg standards increase by 15% in the next 7 years, and 30% by 2020. This is the part where I mention that Honda, Toyota, and Hyundai all have committed themselves to meeting the 30% increase in mpg...with existing cars...before the 15% deadline comes...with no increase in vehicle cost...and no cost to the taxpayer. But in order for GM and Ford to do it, they need $25 billion out of taxpayer pockets. Did I mention GM is currently lobbying the government to release these restrictions?
There are only 535 people in the entire world dumb enough to think that Korean engineers are capable of meeting a technical standard that American engineers cannot. Unfortunately for the American people, those 535 people are the members of the United States Congress.

Third: GM and Ford cars and trucks are made almost entirely with parts that are created in overseas factories and brought to the USA and assembled here. Toyota builds most of their American cars using American parts made in American factories. The cars are assembled in an American plant by American workers. The reason they do this is because foreign owned companies are tariffed to the hilt to ship anything on the car into the States, while U.S. owned car companies can pluck foreign parts up here and there and bring them in to the states with no penalty, given they assemble the cars here.

2. A credit collapse = much, much cheaper, smaller, more fuel efficient cars.
Dave Ramsey, author of the popular book Total Money Makeover suggested yesterday that America should force itself into a credit collapse. Let the mortgage companies, investment banks, and associated brokerages collapse, he says, and credit will become extremely difficult to obtain. Home loans, car loans, student loans, and credit cards will suddenly become a luxury only those with a credit rating near perfect will be able to obtain.
Of course, this is ridiculous, our country is addicted to credit, and my generation is the Debt Generation, we couldn't operate for very long without our debit and credit cards.
But it is an interesting idea. Ramsey takes the extreme view of debt, to the point where he says if you don't have the income to pay cash for a college education then you save up until you can. By forcing us to stop using credit (because it is no longer available to the masses), we would free ourselves from this downward debt spiral we seem to be stuck in.
Nevertheless, less than ten thousand people in this country can probably afford to pay cash for a home.

An interesting side-effect of Ramsey's plan would be that we could no longer afford 60-month loans on $35,000 cars. Tata motors, an Indian company who parents Land Rover and Jaguar, plans to start selling a $2,500 dollar, 62 mpg, 2-cylinder, 4-door car called the Nano, which travels around 200 miles on 4 gallons of 87 octane gas.
If I was unable to get the financing I did for my Honda CR-V, in fact if I were unable to get financed for anything, then my only alternative would probably be to save for a couple months then buy a Nano, which is the only car cheap enough to be bought with cash.

What a strange world it'd be, if all of a sudden we all stopped driving excessively-powerful, excessively-large, excessively-inefficient mega cars and we all piled into these tiny little gas sippers and zipped around town at a max speed of 64 mph. If we all switched over to them tonight, we would be completely free of Persian Gulf oil...tonight.

Wait. Hold the phone. If there are about 350 million Americans...and 43% of them have valid driver's licenses...and the government is giving Wall Street 700 Billion dollars...that's 700 billion divided by 150 million...that's dollars a person. That's roughly $4,500 dollars a person.

Why doesn't the government, instead of bailing out Wall Street (again and again and again) instead buy every driver a Nano and single-handedly end our dependence on foreign oil?!

Not to mention the $25 billion the taxpayers would save when they collectively said "I already have a Nano, I don't need a Chevy, thanks, but no thanks."

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Somebody set up us the bomb.

When I read this morning that Mr. McCain wanted to postpone the debate so he and Mr. Obama could go to Washington and help deal with the 'crisis' I was at first flabbergasted.
Here are two men that have less than 5 times since March been in Washington at the same time, and suddenly it is important for them to suddenly remember they are Senators and go do their jobs? Ridiculous! The crisis has been going on since August but only now they need to be doing their jobs? Ridiculous. The bailout plan has been on the table almost a week and they don't need to go to Washington to deal with it until Thursday? Ridiculous!

It offends me when politicians constantly inanely babble talk about what they'll do when they get elected to a higher position than the one they are in. If their current political position is any evidence, then they'll spend most of their term at that higher position trying to get reelected! Senator Obama, for all his graces and vices, has been running for an elected position nonstop for the last 14 years. Senator McCain: 26 years.

I've said it before and I'll say it again: there should be a law that says if a federal employee runs for an elected position above his or her current position, then he or she must immediately resign their current position before they (or their affiliated party) are allowed to use any campaign financing for their election campaign for that higher position. If we raised the stakes a little we wouldn't have had several Senators, a Governor, a neoconservative uber-Christian and 2 Representatives run for President this time around. Furthermore, federal employees would have nothing to do but get reelected and actually do their job.

So when Mr. McCain says "drop everything, let's go to Washington" I was a little cynical.

However, politically it was a bold move to put him on the offensive. If Mr. Obama had agreed, well, Mr. McCain has the upper position, and can claim he was running the show. If Mr. Obama disagreed, then Mr. McCain can say Mr. Obama isn't a patriot and isn't doing his job as a Senator (tut tut).
So when Mr. Obama said he thought the campaign should continue, the debate should not be postponed I thought "fortune favors the bold, well done Mr. McCain."
But I thought too soon! (and TPI posted too soon) Mr. Obama's last sentence in his press release, that "we both have big fast planes, we can get to Mississippi Friday night no problem" was sheer genius. He was agreeing with Mr. McCain that they should go to Washington Friday (if needed) but he was upping the ante, throwing it back into Mr. McCain's face!

Instantly the pundits pounced, and Shanin and Parks, a conservative radio program out of Kansas City lamented for all Republicans: "Had Obama agreed with McCain, he would have made a great decision, but based on what Obama responded, McCain has made a terrible, terrible mistake." Then these (normally McCain pandering) analysts started to speculate about whether Mr. McCain's age was a factor. Perhaps he should send Governor Palin to the debate in his stead!

Fortune favors the clever, well done, Mr. Obama.

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Someday maybe I'll be a one-name name too.

This being the 40th TAE post, and 40 being a holy number (re: Noah), I figured I should write about something other than the economy today.

I got it! I'll make fun of celebrities! That's fun!

This past Sunday the Emmy awards were broadcast to record low ratings. Hollywood gives itself a collective pat on the back and America collectively responds with "who cares!"
I've long said that Hollywood (let's expand "Hollywood" to mean the entire entertainment industry) has more self-congratulatory banquets than any other trade or profession. Let me elucidate:

Let's pretend (work with me here) that Jessica Simpson was actually a good actress and good singer.
She makes a movie, and for the movie she gets an Oscar nomination at the Academy Awards. She also uses her singing prowess to record several songs on the official movie soundtrack. The soundtrack wins a Grammy, the single (songs are called singles in Hollywood because they acknowledge that for the most part...that ain't music) also wins a Grammy. Then, the movie wins a "popcorn bucket" at the MTV Movie Awards, then the album wins an Astronaut (or whatever it is) at the MTV video music awards. The music video for the single, which features clips of the movie interlaced with Jessica singing the song, also wins an astronaut trophy for "Best Video".
However the country music industry doesn't want to feel left out so they pick up a different single of Jessica's from the movie and drive it to the top of the charts. Jessica then wins big at the CMT awards, the ACM awards, and the CMA awards.
The movie is sufficiently popular to create a spin-off TV series, which is nominated for (but doesn't win) an Emmy award. The movie also spawns a live-theatre production of the music, adapted into a cute musical featuring a B-list actress in order to draw in revenue (see Katie Holmes). That musical gets nominated for a Tony award. Finally the movie and soundtrack disappear, to be replaced by the next media complex blitz.

The one movie (w/soundtrack) has garnished (yes I mean garnished)
An Oscar, 2 grammys, an MTV movie award, 2 MTV music awards, a CMT award, an ACM award, a CMA award, a Tony, an Emmy and though I didn't mention it, probably a SAG award.

Now the remarkable thing here is that I am probably underestimating the number of awards that would be given out, not to mention nominations that don't come to full fruition.

It constantly astounds me that the entire entertainment media complex is self-perpetuating and that they expect us to want to watch it happen. They create movies, play, musicals, etc., and expect us to watch them, then they vote for each other to win awards, and expect us to watch that, they write songs, and expect us to buy them, then vote for each other to win awards, and expect us to watch that. They want us to watch, watch, watch, but as soon as they are caught snorting cocaine, or making out with their ex-boyfriend, they throw up a red flag and say "you need to stop watching our every move!"
The whole system isn't unlike a fish tank, where the fish live in their own little microcosm, and we have but to stare in and watch and add a little food here and there to keep the fish happy.

Of course, the system would break down instantly if it weren't for 24-hour cable news channels. The ability to cover celebrity news round the clock has really opened up a new chapter in celebristalking. The news depends on celebrities to come give interviews and drive up ratings. The news depends on celebrities to be celebutarded so they can film it and drive up ratings. The professional athletes celebrities need the media to constantly cover them, so their negotiating power goes up and they can get higher contracts. Hollywood execs need the news so they can run ads and get people to come see the movie in sufficient numbers to pay the exorbitant amounts A-list actors think they're worth.
So when America collectively said "normally we'd love to help you stroke one another's egos, but tonight there's a great football game on" Sunday night during the Emmy's, of course it was all over the news this week. The entertainment-media complex won't stand for it! They need America to follow their every move, and as Academy Awards, Emmy Awards, and Grammy Awards ratings continue to slip, they grow more and more desperate.

Two years ago, in order to get viewers for their music awards show, MTV had to do something to get viewers to tune in. What ho! Britney Spears manages to land at rock-bottom, and rock-bottom happened to be stumbling around on stage in her undies looking half-drunk and mostly asleep. "Thank goodness," the MTV execs declared, "for that walking trainwreck!" This year, MTV faced the same problem: apathetic audiences, a mediocre record sales year, and lackluster commerical time sales for their awards show. Solution: Bring Back Britney! She has a new look, new album, new lease on life, new lack-of-child-custody. It was a win-win for MTV. Either Britney tanks - great television, or Britney triumphs - great television.
MTV heaped awards on Britney. Her video (as I've mentioned before) was absolutely mediocre compared to some other brilliant, brilliant works of art. Her song was forgettable, and well, she's come a long way since I was 19, and it has been invariably in the wrong direction. Every time Britney "gets her body back" she moves a little further and further away from human.

Anyway, the Emmy's didnt have a Britney this year. They don't have a Katy Perry singing anti-gay messages like MTV does. They don't have an Amy Winehouse doing drugs on 5th Avenue then beating the unholy hell out of her boyfriend and getting arrested. They just have their forgettable tv shows, and in a year when the writers' strike wiped out several months of potentially decent television, there was even less reason to cheer.

Besides, there was a great football game on. Featuring the Dallas Cowboys. Featuring Dallas Cowboys quarterback Tony Romo. Who is dating Jessica Simpson...

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The Lost Decade

Could it be, I asked myself last night while driving home from The Abstracted Mother's house, that we're just repeating history?

My colleague at work off whom I incorrigibly bounce all my thoughts before publishing them mentioned the other day that China is extremely good at learning from the mistakes of others.
The Chinese see our manufacturing sector suffering when the dollar loses value, so they fix their currency at such a low rate that no other country can compete. They see unionization driving down profits so the aggressively control union activities.

But the United States may not be learning from our foreign neighbors. Last night on the radio a caller-in claimed that the reason decisions were hard to make was because the economic situation America finds itself in is unique; no roadmap exists for this type of situation.

Not so!

In the late 1980's, Japan's housing market bubbled like crazy. Property values in some parts of Japan tripled, and the government (surprise!) encouraged the growth in property values (some as much as $139,000 per square foot) by pushing less stringent requirements to qualify for a low down payment mortgage. Sound familiar?
Why was the Japanese government encouraging the housing bubble? Fear of decreasing value of their currency, and fears of decreasing exports compared to imports from China. Sound familiar?
The housing bubble inevitably burst, and the mortgage crisis threatened to sink several large banks, trillions in property value were lost. The mortgage crisis was exacerbated when the government adopted a protective policy for banks, and invested billions trying to bail them out, creating what the Japanese called 'zombie businesses'. Sound familiar?

Japan's recovery from the mortgage crunch was slowed by low interest rates (0% at one point), deflation, and the continued act of giving mortgages to people who were considered high-risk. Prices didn't bottom out until 2003, and they now call the 90's "Japan's Lost Decade."

Please, America, learn!

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Read the whole article, buddy.

McCain quoting Greenspan incorrectly.

Greenspan says it is the worst economic crisis since WWII.

McCain changes it into the worst crisis since WWII. Apparently to McCain the Korean War, the Vietnam War, the Cold War, the Cuban Missile Crisis, the Bay of Pigs debacle, the first Gulf War, the Iran-Contra scandal, Nixon's impeachment, Clinton's impeachment, The Oil Embargo, the Economic Slowdown of the 80's, the Air Traffic Controller's Strike of 1981, Black Monday, The first Gulf War, the second Gulf War, September 11th, and of course the Enron scandal all pale in comparison to this massive crisis in American history.

Everyone needs to calm down. That kind of rhetoric (especially after calling the economy 'fundamentally strong' a week ago) is not helpful at all.

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And now for some good news.

Everyone gets an extra two months to live.

Thank goodness. I was really sweating death-by-black-hole.

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Who's fault is it anyway?

A couple people (probably the sum total readers of this blog) have asked me why I said that the lower income brackets are getting off while the upper class (the actual taxpayers) are picking up the bailout tab.
TPI made the astute argument that people who foreclose on their mortgages do not get any of the $700 billion bailout that Congress is debating. This is basically true. Although the people who are losing their homes will not receive direct compensation from the government in the bailout, they can in effect benefit. By restoring the liquidity of these mortgage giants, and with the enactment of recent legislation, mortgage companies can convert hi-risk mortgages into safer ones.

But the point I was trying to make was that if a doctor prescribes painkillers for me, and I get addicted to them because I take too many: I'm as much at fault as the doctor. To extend the analogy further, the doctor was perhaps at fault for not warning me sufficiently about the dangers of addiction, but he or she couldn't have known (because I was a first time painkiller user) that I would get addicted. Plus, the doctor knew I was in pain, and hospital beauracrats encouraged the doctor to prescribe painkillers to me.
Now the doctor is mired in a malpractice suit, and the only way he or she can continue to help patients is if his malpractice insurance bails him out.

The point I'm trying to convey here is that I have an excel sheet on my computer that tells me what my monthly payment will be for my (future) house, given a certain escrow, a fixed interest rate, and a certain down payment. This kind of simple calculation should be made by anyone buying a home, and people who see that data and yet make the decision to buy a house that exceeds their ability to make a payment are being very, very foolish. Further, although the banks that financed the mortgage were in fact being enablers to this foolish practice, they in themselves have no responsibility to stop people from buying houses beyond their ability to pay; all the banks see is a certain income level, a credit rating, and they make their decision based on that. Many people who defaulted on their mortgages failed to report other debts during their loan application process. Why should the bank care if they were carrying $15k in credit card debt? Maybe because the bank would have taken $15k off their mortgage amount.

Now I hate to advocate the bailout (since I'm highly against bailouts and government regulation in a free market) but accusing the banks of being evil entities who gave out bad mortgages knowing they would inevitably fail is an unfounded accusation. No financial entity gave away money to people who they believed couldn't pay it back. No financial entity intentionally lowered its liquidity so that when it's bad investments massively failed, it needed the government to bail itself out. The large companies that fell apart when the housing bubble burst were (in some cases) as victimized as the people who bought over-sized mortgages. I have (several times) shown the pressure Washington was putting on mortgage companies to finance people with less than perfect credit.

When will people grow up and stop expecting government to be their babysitter?

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Congress protects Congress.

I forgot to mention in my last post an interesting statistic: "Altogether, 56 senators and representatives had large stakes in AIG, Lehman, Fannie Mae, Freddie Mac, Bear Stearns Cos. or IndyMac Bancorp Inc."

OF COURSE THEY'RE GETTING BAILED OUT! OF COURSE CONGRESS WILL PASS MORE BAILOUTS!

9 lawmakers owned $1.8 million each in Merrill-Lynch.
John Kerry's wife owned 2+ million shares of AIG...
54 Congressmen had stock (ranging from $1.9-5 million) in Bank of America!
Rep. Jane Harman, the wealthiest Congressperson on Capitol Hill, lost $102,000 when Lehman went bankrupt.

THEY'RE NOT ACTING IN THE PEOPLE'S SELF INTEREST, THEY'RE ACTING IN THEIR OWN SELF INTEREST!!

Then again, what else is new.

Fact Check.

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Bailouts and CEO pay rates.

Three thoughts in case you don't want to read the whole post:

First, a little math on the bailout. And man does it suck for rich people.

Second, CEO pay, as high as it is, is not necessarily too high.

Third, I wish I had the nerve to write like this guy.

You are wrong, TPI, and I was wrong. Perhaps this isn't a socialist government like I thought. A better definition would be an oligarchy. Defeat of the $700 billion bailout would be the single greatest act of righteous indignation in my lifetime. But it will inevitably pass, and my children will wonder why their parents were so fiscally irresponsible. Well, my generation is the "Debt Generation" anyway.
But the sheer size of the bailout is what really offends me. I first heard 2 Trillion, at which point I just laughed. Then I heard Bush say something about $500 billion. The newest numbers are around $700 billion.
Let's just examine that number for a minute. Given the 350 million Americans, it's easy to come up with the quick figure that each American will be out $2,000 dollars. But that's an oversimplification. For fiscal year 2004, there were 131 million tax returns filed. Of those, approximately 42.5 million were awarded enough credits and deductions to equal no tax liability for that year. That means roughly one-third of Americans that filed tax returns don't have to pay a dime, because of low income and deductions. Also, an estimated 15 million households earned some income but did not file a tax return because they knew their tax liability was zero. Estimates of the household size, when added with these numbers generates the conclusion that approximated 40% of Americans are outside the eligibility for the Federal income tax system.

Therefore, only 210 million Americans would be picking up the $700 billion bill. The amount each taxpayer pays suddenly surges to $3300.
But this number is also misleading. Statistics show that the middle third of America, those that make enough to pay a small amount of income tax but don't make enough to contribute very much income tax don't significantly contribute at all to the national chest. The Congressional Budget Office estimates that those who make $43,500 a year or more pay 99.1% of all federal income tax. That's approximately 40% of the U.S. population. Further, those that make 83,700 (the top 10%) or more pay 70.1% of the nation's income tax. This is why when liberal democrats promise tax breaks to the middle and lower class I just shake my head at the idiots who vote for them on that premise, and I get angry at the idiots who vote against the conservative incumbents who gave tax cuts to the upper class. THE UPPER CLASS IS PAYING ALL THE TAXES!
Anyway, TAE makes enough that a quick calculation reveals that I'll be paying about $5,000, assuming each tax-paying American has to eat an equal share of this $700 billion weekend bender that Paulson thinks we should go on.
The irony here is that (as I showed in an earlier post) the mortgage crisis was in large part caused by banks financing people who were not making enough to afford a house payment, to minorities, and to people with small down payments and low credit ratings. Classically, these groups of people are the ones not paying income taxes.

So the bottom line is that the upper class is gaining an even greater tax burden to bail out those that have no tax burden whatsoever.

Second point: CEO pay is not really unfairly high. Let's pretend a large company like Fannie Mae is a professional football team, and the board of directors is the VP of Hiring Personel. Now, it would be a gamble to recruit an awesome quarterback out of college, because often quarterbacks are a bust. But he had amazing numbers in college and the crowd will follow him to the NFL games in which he plays.
So the team makes him an offer for 80 million over 7 years, with 5 million guaranteed per year and the rest tied up on performance based bonuses. He laughs and says another football team has offered him 105 million over 6 years with 5.5 million guaranteed per year, and a signing bonus of 11 million. So the first company counter-offers with $110 million over 6 years with a 12 million dollar signing bonus and a "gift" of $500k for each playoff game the team is in, plus another $250k for each playoff game they win. The football player accepts.
When the Associated Press finds out how much the quarterback will be making, the paste it all over espn.com and everyone reads about it and speculates whether he'll be a bust. Pre-season ticket sales for the team go through the roof, the stadium is packed and you hope the player does well. If he does, great, the seats stay packed, the player gets great stats, and your team profits by getting endorsements, televised games, etc. etc. If the player does poorly, well, you've already make a boatload of money off him, and at the end of the season you can probably trade him to another team and bank a good draft pick.
This is how CEO hiring goes in large business. CEO's are recruited by different companies competitively, and part of the reason their pay is so high is because they bring with them the allure of a new, highly touted CEO that will draw new shareholders and new business to the company. The performance of the CEO, while important, is not so important as the ability to advertise the company's fresh face to gain more revenue. Further, the exorbitant, hundreds of millions the CEO makes is chump-change to a corporation with billions in revenue.
The problem is that some CEO's get paid huge amounts and then don't take their company to the Superbowl.

What people need to understand is that there are 31 teams in the NFL each year that don't win the superbowl. But they pay their top performers huge sums to keep the seats filled, to keep the game exciting, and most importantly, to keep the team profits high.
CEOs that turn out to be total busts are just like the Ryan Leafs and Heath Shulers and Eric Crouchs of the NFL, players that came with high expectations, high pay, and ended up a bust.
But for every Ryan Leaf, there is a Peyton Manning, just like for every Herb Allison there is a Muhtar Kent.
Saying that CEO pay needs to be regulated or reduced sounds a lot like whining. If you don't like how much a CEO is making, then don't invest in a company. The fact is, when a CEO makes $125 million in a year and the company's stock price plummets, people cry foul play. But when a CEO makes $125 million in a year and the stock price goes up 16% and shareholders see a 5% return on their dividend, people call the CEO a genius. How could the company have known which CEO would be a boon or a bust? How could they have predicted the market atmosphere in which the CEO would have to work? Most likely, all a company can do is aggressively recruit the finest CEO that their money can buy and hope for the best.

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Palin begins her short descent into reality

The Rebellion Has Begun.

The article barely mentions it, but Chuck Hagel skipped the RNC to do his job.

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KDOT, Deb Miller, and McCain

Quick thought on the economy: Could this be true? Could McCain's poorly worded statements that the economy is fundamentally sound have killed his campaign this week? Now his campaign sounds like the dying rattle of a wounded animal as it tries vainly to crawl off to its den to die. Of course, the Dems pounced.

I find it sad that this might kill McCain's campaign, when it is one of the few true statements he has made. The fundamentals of our economy are strong. The housing market got way out of whack, and now a market self-correction is occurring. The only thing that is wrong with this is that the government is over-stepping its bounds and taking over companies as if to pull a domino out of a line of falling dominoes.

Given that TAE called for the immediate resignation of Hank Paulson on Monday, I thought it would be fitting if I made this resignation week and called for another.

TAE calls for the resignation of Deb Miller, Kansas Secretary of Transportation. Of course, I do this mostly out of personal spite. Today I drove on a poor excuse for a road, and as the oncoming traffic was throwing gravel onto my car (this road was paved yesterday?) I couldn't help but feel a little chagrined.

Anyway, in the great state of Kansas, where roads are touted as some of the best in the nation (because there's no traffic, perhaps?) and intersections are up for awards, I find it ironic that the KDOT ran out of funding. Apparently making huge, ridiculous, inefficient (but pretty) intersections that feature wildflowers, giant sideways towers to hold traffic lights, and 11 lanes of traffic is expensive. That honestly doesn't matter, especially if you are a civil engineer.

Mechanical engineers such as TAE, have nothing but derision for civil engineers, which are considered near the bottom of the engineering totem pole, second only to industrial engineers in their general lack of advanced engineering methods. As a general rule, the smaller the object the engineer is working on, the more respect the engineer has. Electrical engineers designing computer processors? Geniuses. Civil engineers surveying where to put a pond on a farm? Not geniuses.

Anyway, Deb Miller, KDOT Sec. who ran the state out of road-building money, is not an engineer. In fact, Deb got her degree in sociology (a natural fit in the engineering world) and subsequently went to HNTB (an architecture/engineering firm) where "she provided strategic planning and public communication assistance to state Departments of Transportation and municipalities" so she wasn't an engineer or an architect, she was a P.R. hack whose job most likely was to explain to state DOT's that HNTB needed to increase their budget on bridge projects in order to qualify for awards.
And of course, after her four years at HNTB she moved to the public sector and in no time at all (literally zero time) she was Director of the Division of Planning and Development, a position she held for 10 years. Governer Sebelius promoted her to the SecTrans position in 2003.
Anyway, no where can I find any information that leads me to believe that Ms. Miller (as she's called on the website) has had any formal engineering or financial training that would give her valuable knowledge in how to build roads cheaply, or how to spend the fiscal budget over 12 months on projects that make sense.

My real beef here is that a driver gets off the highway at US 69 Hwy, 87th St, and I-35 and you find yourself in a complex, gigantic intersection where nothing looks right. At one point in the intersection, a tunnel has been made that leads off the highway into a field. Future expansion I guess? Other features of the intersection include sculptures of bison, brown-eyed susans (sunflowers on a budget) that block your vision of on-coming traffic, stones with tall-grass "imprinted" into it, and pedestrian walkways with fences composed of prairie grass wrought iron cutouts and small towers with color changing lights. All in all the intersection has the workings of a theme park attraction, with a myriad of distractions to see that drivers will only enjoy if they are stuck in the intersection at a red light. Which is actually pretty commonplace. Apparently, no where in the America's Transportation Award criteria must traffic actually move through the intersection.

But Deb Miller isn't the only buffoon at KDOT. The state of Kansas seems to take pleasure in building mega-intersections with cloverleafs hacked through limestone rock as though dynamite and bull-dozers lay waiting to be used, as if we prefer to swing at 0.7 G's around corners like a kid on a swing rather than making a simple left turn and accelerating straight down a hill and merging onto the highway.

Cloverleaf intersections, I contend, are specifically made so that a civil engineer can take aerial photos of it and put them in his resume to convince future city councilpersons that they aren't an offensive waste of money. I can imagine the selling pitch: "Look at this, here's an intersection we did in Gardner, Kansas. Not only can you get on northbound I-35 by taking the cloverleaf, you can also take the normal on-ramp! That's right, we built two on-ramps to the same direction of traffic at a quiet intersection with less than 5,000 cars daily! Now we at Johnny Civil Engineering Firm can do the same for your intersection here in Olathe."

KDOT sceptic: So what do you propose for the Lone Elm and I-35 intersection?

Civil Engineer: We specialize in shutting down lanes of major interstate highways for months or years in order to knock out perfectly good bridges and replace them into art bridges. We propose taking out the existing bridge in 2007, diverting traffic on I-35 from 2007-2009, putting in cloverleaf interchanges with no traffic lights in 2009, putting in a new three layer bridge in 2010, adding traffic lights in 2011, repaving the bridge in 2012..."

KDOT sceptic: Well what if our mega-bridge starts to flatten out and lose it's bow like the one at 151st and I-35? We've spent almost 12 million dollars trying to fix it, and it continues to worsen.

Civil Engineer: That was a different firm, my firm would never have done that.

Minor word of defense for Deb Miller: part of the reason Kansas is out of money is because the bridge collapsed in Minneapolis on Aug. 1, 2007. Since then, the entire pad of KDOT's funding has been spent inspecting, repairing, and shoring up as many existing bridges as possible. That said, the obscene new bridges over I-35 at 127th and 87th streets, as well as the new bridge over US-69 at 131st st. are poignant examples of wasteful, non-utilitatarian spending.

They are bridges for cripes sake, they don't need to be pretty!

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Al Davis, owner of the Zombies Raiders

Al Davis is looking more and more like the Crypt Keeper from the 90's TV show "Tales from the Crypt."

Then again, so does Jerry Jones. Is the NFL being run by a plague of undead zombies?

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Sisterly Cynicism

The Abstracted Sister this morning: I heard on the radio this morning some idiot saying "And if the company remains viable and even grows, the American people could turn a profit." Thanks! That's exactly why I pay taxes: so [the government] can use them for stock buyouts.


TAE: So if the American people see a profit on our 75% stake in AIG, does that mean we'll all see a decrease in our taxes? Or will the government write us a check for the return on the dividend? When do we get permission to diversify our portfolio? I want to roll over some of my AIG shares into low-risk bonds, and roll some shares over into an emerging markets fund that invests in uranium mining in Kazakhstan.
But I don't have any control over the AIG shares that I "bought" and the government is deciding for me where my tax dollars are invested as it uses the money to buy majority shares in gigantic private companies.

There's a term for that: market socialism. It's how China's economy is run.

The Abstracted Sister: But seriously, I pay taxes so I don't get arrested.

TAE: True. True. Nothing like the fear of incarceration to motivate us to go along with a government's actions we find largely unethical and not in our best interest.

I'm sorry, I'm just nostalgic for the good old days of free market capitalism.

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I am government bailout and you can too!

Yesterday's entry about the idiocy of government bailouts was written with a high hand, because I thought the socialist terror was over. Unfortunately I was wrong.

Apparently Paulson and his pirate friends have a vested stake in bank insurance, and therefore needed to protect that market, as well.

Wait, what? Am I accusing Henry Paulson, Secretary of the Treasury, of being an evil, conniving, greedy, self-interested, monetary autocrat? Why, yes I am.

Secretary Paulson should resign immediately. The obvious reason for this (well obvious to anyone with a slight background in morality is that his conflict of interest is so glaring, so pointed, that anyone with any sense of business ethics and code of conduct would resign immediately) is that he was the former CEO of Goldman-Sachs. Goldman-Sachs, one of only two investment banks still operating after yesterday (the other being Morgan Stanley).

One might think that when Paulson left Goldman-Sachs for his civil position that he also forfeited his interest in the company. Paulson was so vested in that company that on a whim he can donate $100 million to a family foundation, then sold off a further $500 million in stock later that year. He claimed this was to adhere to conflict of interest rules, in fact. However, a little digging reveals that a U.S. government ethics rule exempts all returns from the sale of this stock from tax, which saved Paulson an estimated $200 million dollars. The stock was then put in a diversified "blind trust" which, interestingly, is made up of mutual funds.

But this conflict of interest is apparently not important enough to make the major news outlets for one of two reasons:
1. I'm the only one who sees it.
2. It's a long-standing tradition that Goldman-Sachs CEO's get government roles that indirectly benefit their company and therefore it isn't anything new.

The second is potentially the truer of the two. The following CEO's of G-S went on to work in civil service:
Corzine - New Jersey Senator then Governor
Friedman - Chairman of National Economic Council
Rubin - Secretary of the Treasury (Clinton Administration)
and best of all
Whitehead - Chairman of the Federal Reserve, Deputy Secretary of State, Director of NYSE, and the World Trade Center Memorial Foundation (not to be confused with the National September 11 Memorial & Museum Foundation chaired by NYC Mayor Michael Bloomberg)

Reagan, Bush, Clinton, and Bush again have all had economic advice whispered in their ears by Goldman-Sachs' former board members.
The CEO planting goes further: Bank of Canada's chairman is Mark Carney.

Anyway, this yet-another-bailout once again comes from both sides of the aisle. After meeting with President Bush, Paulson then met with Democrats Chris Dodd and Harry Reid, and Republican John Boehner. The general consensus is that this bailout is a way to"assist AIG in continuing to meet its obligations, mitigate broader disruptions and at the same time protect taxpayers."
Thanks for protecting me, Mr. Paulson. Did I mention that some of the diversified investment funds bought through the $500 million ethical conflict of interest sale Mr. Paulson made in 2006 went to AIG stock options? So Paulson is loaning AIG $85 billion of government (taxpayer) money to save a company he owns stock in. What was I saying earlier about conflict of interest?

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Laissez-faire Reaganomics

The best way to remove a band-aid is with one sharp tug.

I hate arguing these blanket problems, I start to sound like those babbling buffoons on talk radio stations, who argue themselves in circles and blame everyone but themselves for society's problems. Perhaps I should stick to what I know best; sarcastic analyses of individual issues. God knows I'm no Milton Friedman. However...

One of TAE's best friends, a lawyer from Dallas, TX, made the important point this morning that socialism (my sworn enemy) is typically a problem we talk about in association with liberals. Usually society paints a picture where the conservatives are greedy, self-interested old white men who discuss money and power in dark rooms while smoking cigars, while the liberals are young people, out on the street, shouting in a protest for the rights of the people.
Lately, as I've shown, the conservatives are the ones that are trying to enable the rights of the minorities, and the liberals are the ones that are pushing for protection of the free market.

The problem, as I see it (having no classical political education, just my own self-righteous indignation) is that left-wing and right-wing are misnomers for similars point on a wheel. If free market capitalism is on one point in a wheel, then classical liberals and conservatives are both near that point. Diametrically opposite of free market capitalism is a police state. That term immediately sends up red flags with many people, and they doubt we are there, or ever could be there, but when companies get so large (via government help) that they cannot sustain themselves and then collapse, only to be taken over by the government (via forced taxpayer help) then the reader needs to think really hard about how far-off a police state really is.
Anyway, neo-liberals and neo-conservatives lie closer to this point, in fact, lately they seem so close as to resemble the same point on the wheel (see here for awesome visual, but please ignore the text, anyone that refers to "the Leviathan" should be ignored).
When left-wingers argue for more government regulation to protect the American people, they point at the "right-wing" as if those who are against the legislation they propose are far, far away from their ideas of government regulation as a good thing.
Then the right-wingers argue for more government regulation to "protect the economy" and point to the left-wingers as fools who don't understand how a free market works.

Now maybe I am over-simplifying the definitions here, but the Fannie/Freddie bailout was endorsed on both sides of the aisle, for very different reasons. Any Congressperson who was truly committed to protection of a free market economy would have quickly acknowledged that bankruptcy of the two mortgage lenders was the only way for the housing market to correct. All the legislators have done by bailing the companies out is delayed/slowed the inevitable crunch until someone else is working on Capitol Hill.

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Palin + Hillary = Hillarity

Why is it comedy when we speak the obvious?

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The Abstracted Professor

Lately, TAE has talked with Mrs. TAE about my desire to possibly teach some classes. This may stem partially from an over-blown sense of self-importance; I am brilliant, I must share that brilliance.

But I also think it doesn't hurt that TAE's mother was a teacher for almost 30 years, and impressed deeply upon me the value educators have in modern American society. For if I could do one thing for students, it would be to convince them to be open-minded, and to question everything.

I don't know what I would teach. My college education was fairly versatile. I spent two and a half years in intensive biochemistry, then switched gears completely and spent the next two and a half years in engineering. Then I spent two years in grad school doing a mixture of both. I could probably teach math, physics, engineering, biology, chemistry...pretty much any boring class you can think of.

It'd be nice to give something back from the volume of information in my brain (much of which is going completely unused in my current occupation as an MEP design engineer).

But my motives aren't completely selfless. Teaching a college class (which you can do as an adjunct prof without your doctorate) would be a good way for me to decide if further post-graduate education is in my cards. I still casually toy with retaking the MCAT and becoming a doctor of medicine, but I also still toy with the idea of becoming the philosophical kind of doctor.

At this point, me going back school is an innocuous discussion, the family budget allows only one family member in college at a time, and Mrs. TAE has to finish her schooling before I can make any bold career moves. So for the time being, a part-time, adjunct professorship at the local community college might be just what the doctor ordered. The challenge is figuring out how to get a spot on the adjunct faculty rotation at the community college, their web-based job listing site is outdated at best, and cryptic at worst.



At any rate, it'd be fun to teach a night class. My evening class professors were always the nutty ones, and it'd be them after whom I'd model myself.

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Bad Hurricane Forecasts Become the Norm!

Seems like this year is shaping up to be a wildly average year for hurricanes!

From Gregg Easterbrook:
Before the 2006 hurricane season, both the government's National Hurricane Center and the media-favorite hurricane prediction center at Colorado State University forecast an exceptionally severe Atlantic hurricane season: Instead, the 2006 season was smack on the average of the past half-century. Before the 2007 hurricane season, the National Hurricane Center and Colorado State again predicted a harsh Atlantic season. In April 2007, Colorado State called for a "very active hurricane season," with nine hurricanes, five of them intense. (The average of the past half-century is six Atlantic Ocean hurricanes, two of them intense.) In May 2007, the National Hurricane Center forecast a "75 percent chance that the Atlantic Hurricane Season will be above normal," with up to 10 hurricanes, as many as five of them intense.

The National Hurricane Center and Colorado State weren't alone. AccuWeather's weightlifting Hurricane Center Chief Forecaster Joe Bastardi, who is "recognized for his astonishing ability to grasp the potential impact of severe weather patterns," warned that the U.S. Gulf Coast "is at much higher risk of destructive tropical weather" in 2007 than occurred in 2006. Tropical Storm Risk, a weather forecasting consultancy in London, predicted the 2007 season would see nine hurricanes, as many as four of them intense. The forecast came from Mark Saunders of University College London, whose bio calls him a Professor of Climate Prediction. (Go here and click Saunders' bio under the "staff" link for hilarious puffery in the English vein, including that he received an award "at the Royal Albert Hall" and a claim Saunders "has published nearly 300 scientific research papers." What this means is Saunders' name has appeared in author lists on papers with dozens of authors. (No human being has ever done 300 papers' worth of original research.)

So what happened? The first half of the 2007 season was quiet, with no hurricanes. In early August, the National Hurricane Center announced it was standing by "expectations for an above-normal season. As we enter the peak months, August through October, of the Atlantic hurricane season, NOAA scientists are predicting an 85 percent chance of an above-normal season, with the likelihood of … seven to nine hurricanes, of which three to five could become major hurricanes." About the same time, William Gray of Colorado State -- the media's favorite hurricane forecaster, perhaps because he always predicts disaster -- declared, "Though the 2007 hurricane season has gotten off to a slow start, my colleague Phil Klotzbach and I still anticipate another active season with above average numbers of major hurricanes." A slow start. Come on you hurricanes, let's get cracking, form and destroy something! Instead, the bottom line on the 2007 Atlantic hurricane season was six hurricanes, two of them intense -- smack on the average of the past half-century.

This did not discourage Colorado State: "Based on our analysis of fall parameters, the 2008 Atlantic hurricane season is expected to be more active than the average 1950-2000 season," the school's forecasters said in December 2007. The initial Colorado State forecast for 2008: seven Atlantic hurricanes, three of them intense. Hurricane predictions bonus: In November 2006, after his 2006 Colorado State forecasts proved wrong, Gray declared, "We are improving our skill in seasonal prediction with an improved level of understanding." He predicted his predictions would get better -- and was wrong about that, too.

Anyway, scary as hurricanes seem, especially after Katrina, as a kid growing up in Tornado Alley TAE leared that hurricanes historically are pound for pound the least deadly of all natural weather phenomena. Earthquakes, tsunamis, tornados, and blizzards all occur with generally less than 12 hours warning, and therefore are virtually impossible to escape through planned evacuation. But hurricanes are almost always predictable to within 90 miles 48 hours in advance, giving residents of coastal regions plenty of opportunity to move inland. A good example is the 2004 Indian Ocean Tsunami, which killed an estimated 230,000 people. Hurricane Katrina, which caused a relatively similar amount of flooding and surface damage, claimed about 2,500 people (includes missing persons). In terms of lives lost, Hurricane Katrina, the fifth deadliest hurricane of all time, was only 1/100th as deadly as the 2004 Tsunami.

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Large Hadron Collider

I warned you people.

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9/11 blogging by requirement

Future conversation with The Abstracted Daughter:

TAE: "six years before you were born a horrible catastrophe occurred that forever changed America."
TAD: "9/11? Boring! We learned about in history class. Dad, did you know that the number of Americans killed in 9/11 was 3,000 but the number of Americans killed in the Vietnam war was 20 times that? Almost 60,000 people! And the number of Americans killed in World War II was 150 times the number killed in 9/11; 450,000 Americans!
TAE: Yes, I know.
TAD: So why is 9/11 such a big deal?
TAE: Um.

James Fallows on 9/11:
On November 2, 2001, a driver on the Washington Beltway cut me off in traffic and gave someone else the finger. I remember the date because I thought, The 9/11 era is over.
In fact, the 9/11 era was both transitory and permanent. The political moment in which the United States could have done anything to address basic problems—notably, reliance on imported oil, which then cost about $25 per barrel—was gone within six months. Other consequences of 9/11 will stay with us. It is hard to imagine when airline travel will be “normal” again, or when no American troops will serve in Iraq.
For several years after the attacks, saying that a policy or idea reflected “pre-9/11 thinking” could end the discussion. But by 2005, some people, mainly academics, began arguing carefully that too much alarm over possible terrorism could be self-defeating. They said that 9/11 was a moment of unprecedented shock for America but did not overturn every previous principle of how the United States should deal with other nations or preserve its own liberties.
Early last year, a British Cabinet member announced that his government would stop using the term war on terror, because it united and perversely dignified disparate terrorist groups. The U.S. electorate made essentially the same decision this year, in rejecting Rudy Giuliani’s bid for the presidency. His approaches to economic, legal, and foreign-policy questions all began: “On 9/11 … ” Seven years afterward, that is no longer enough.

I remember exactly where I was the morning the Twin Towers were hit. Most of us do. But I also remember exactly where I was when I kissed a girl the first time, I remember exactly where I was when I graduated high school, I remember exactly where I was when I got my acceptance letter to college, and another acceptance letter to graduate school. I remember exactly where I was when I asked Mrs. Abstracted Engineer to be my wife, and I remember exactly where I was when The Abstracted Daughter was born. I remember exactly where I was when I first truly believed in God and I remember exactly the bench I was sitting on at Tall Oaks Church Camp on a Thursday night when I finally accepted Christ into my life.

The point is, events, good or bad, mark our lives like signposts. But they are the past; we live, and we learn, and we move on. If we let the bad events supercede the good and let them define our actions and overshadow our lives, if we allow them to fester inside us and dictate who we are, then we lose something of what makes us humans: the ability to rise from the ashes and rebuild ourselves from within, better than before.

Did 9/11 make us stronger? Sometimes I would argue yes, sometimes I would argue no. Personally, no setback in my life has truly made me stronger until I learned from it, and learned to smile again.

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You heard it here first.

Click me (headphones required).

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Fannie-Freddy and Bush is a socialist

3o years ago, if you wanted a $45,000 house, you showed up at the bank with $9,000 or they showed you the door. A 20% down payment was pretty standard for first-time home buyers and refinancing was fairly rare.
Also rare was "using your homes equity" to fund a bass boat and a 2-week trip to the Bahamas, but that is neither here nor there.

The main reason Fannie and Freddy went broke was because they lent huge sums of money to people who should not been given it. And who told Fannie and Freddie to lend that money so frivolously? Why, George Bush of course.

The following are excerpts from a Bush speech in 2002 that coincide with the start of the shady lending and wild mortgage practices that are now causing so much chaos.

Bush: "Let me first talk about how to make sure America is secure from a group of killers, people who hate -- you know what they hate? They hate the idea that somebody can go buy a home."

Bush is making the obvious point that terrorists hate realtors more than any other group of people, becuase realtors aid in the infidel practice of home buying.

Bush: "I believe when somebody owns their own home, they're realizing the American Dream. They can say it's my home, it's nobody else's home."

Bush accidentally mistakes the American Dream for the Third Amendment to the Constitution.

Bush: "Five-and-a-half million [more] families by 2010 will own a home. That is our goal. It is a realistic goal. But it's going to mean we're going to have to work hard to achieve the goal, all of us. And by all of us, I mean not only the federal government, but the private sector, as well."

What he is saying here is that not only will the private sector do whatever they have to do to get 5.5 million families mortgages, but the Federal Government will also help by buying out any mortgage companies that go belly-up when all that lent money dries up.

Bush: "Well, probably the single barrier to first-time homeownership is high down payments. People take a look at the down payment, they say that's too high, I'm not buying."

He's so right! High down payments are a lender's way of guaranteeing that the monthly payment will be low enough that lendee won't default on the loan. By keeping the down payment high, the bank also protects itself in case of a foreclosure by having a large initial burst of capital from the lendee that it can use to cushion any losses taken while trying to resell the home. So the high down payments are in effect, protection for the banks against people who couldn't afford the monthly payments. They also protect the person trying to get a loan, as the bank is in effect protecting the applicant from their own demise.

By and large, the decrease of the 20% down payment down to 10%, then 5%, then 0% down on 80/20 loans was the single factor that caused the current housing mess. If you do the math, putting 20% down on a 30-year mortgage effective cuts your monthly payment in half compared to a 0% down loan.

Bush: "There are neighborhoods in America where you just can't find a house that's affordable to purchase, and we need to deal with that problem."

He's exactly right. That is why a person searching for a home drives past those neighborhoods and goes to the neighborhoods with smaller houses and buys one of those. The wrong thing to do is to find a bank that'll loan you an 7/2 adjustable rate mortgage (ARM) so that you can get into a huge house, then hopefully flip it in 5 years before your ARM matures.

Unfortunately, that is what many people did, and the housing market collapse coincided with the maturation of their ARMs. Double Whammy!

And now, for Bush's real kicker: "And so, therefore, I've called -- yesterday, I called upon the private sector to help us and help the home buyers. We need more capital in the private markets for first-time, low-income buyers. And I'm proud to report that Fannie Mae has heard the call and, as I understand, it's about $440 billion over a period of time. They've used their influence to create that much capital available for the type of home buyer we're talking about here. It's in their charter; it now needs to be implemented. Freddie Mac is interested in helping. I appreciate both of those agencies providing the underpinnings of good capital."

Wait, what two companies did he say? Fannie Mae and Freddy Mac? Seems like I heard about them in the news lately...yes, it seems I remember hearing that they didn't have anything to do with good capital, but instead with $200 Billion in BAD capital. Capital that I, a taxpayer, am now picking up the tab for.

Of course, the "period of time" Bush was talking about was June 2002 - May 2008, when the two companies cried uncle and rolled over.

Now this is all post-haste, and really, do we need another blogger hating Bush and pointing out that he was best friends with those usurous scoundrels since he got elected, but I want to point out that its still going on elsewhere.

The current housing "aid" bill supposedly helps first time homebuyers by giving them a tax refund equal to 1/10th the total value of their home. So if Mrs. Abstracted Engineer and I bought a $150,000 home, we'd get a $15k credit on our taxes for 2008. Sweet! Free money!

Not so! The legislation stipulates that the refundee then has a grace period of 5 years upon which time, the refund must be paid back in full over the next 7 years.

So let me get this straight, the government is going to help me get a loan I can't afford by giving me free money, then right when I am in the midst of mortgage payments the government will start asking for the money back?

Only in America.

Full speech text here.

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Just by typing the name Britney Spears I'm adding to the problem

Britney wins back custody of kids.

Britney invests large amounts of money in her sons' college funds.

Britney makes triumphant return to VMA's.

Britney drops music biz, will try honest work for a while.

Notice only one of the above is an actual, active link?

But the real problem is that Britney's video for "Piece of Me" won Video of the Year. This video featured Britney mooning "paparazzi" then running around and dancing with blonde women. Didn't Lohan do that in 2006? Isn't the paparazzi theme (and paparazzi in general) getting a bit old?
This video was better than Linkin Park's "Shadow of the Day" with its LA riot undertones? Or Feist's "1 2 3 4" where the entire video was shot in 1 continuous take and the song was all over the television and radio courtesy the iPod nano commercials?
Or, in an ideal, perfect world, Amy Winehouse would win with her song, "Rehab," and then during her acceptance speech (in a brash move of hilarious irony) she'd dedicate the song to Spears.

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Football Anger

Normally I leave the football analysis alone. Sports are overanalyzed anyway, and the last thing we need is another cubicle-jockey talking like he knows stuff.
Plus, my favorite column, Tuesday Morning Quarterback, usually does an effective job of saying what I was thinking about various games.

However I feel morally obligated to rail on Herm "I honor my contract when I want to" Edwards and his inane play calling with 40 seconds left in the 4th quarter. For those readers who were watching other games, underdog Kansas City trailed the New England Patriots by a touchdown late in the 4th Quarter. I had already written "Game Over" in my head and started looking at fantasy stats when all of a sudden KC was on the Patriots 5 yard line thanks to a 65 yard pass. 1st and Goal from the 5 yard line.
"Great!" I thought to myself. "We have Larry (lower your head and bull through) Johnson and Jamaal (downhill, brakeless freight train) Charles behind Damon (the ancient one) Huard, surely the Chiefs will just run a couple running plays and be in. For God sakes, Larry could jump the five yards."
Then I watched my stat-tracker as the Chiefs ran the following: incomplete pass, incomplete pass, run up the middle for no gain, incomplete pass, game over.

What just happened? Anyone with a basic knowledge of Chiefs football knows that Larry Johnson averages 4.5 yards per carry over his prolific career. So all the Chiefs needed was one average run by Larry and they're within a foot of the endzone. And they had four downs to try.

Great play-calling, Herm.

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Boeing Machinist Strike

Unions and strikes are difficult issues for me to resolve because The Abstracted Engineer's father is in a union, however for the most part I am against them.

A little background: Boeing's machinist union, which represents over 27,000 workers in Seattle, Wa, Portland, OR and Wichita, KS is striking because they want a better deal for themselves. Boeing has attempted to negotiate a settlement with the union reps, but the union has overwhelmingly voted to reject any offer and set up picket lines.

The strike could cost Boeing as much as $100 million dollars a day, assuming the strike lasts more than a few days. Boeing offered the machinists a $5,000 dollar bonus, 11% raise plus 3% adjustment for cost of living increase, and benefits increases, so that each employee's total package would be upwards of 34,000 dollars annually. The average machinist at Boeing makes $27/hr, or $56,160 annually. Apparently the union workers want all that, plus more vacation and 401k benefits. So basically the union workers are saying "we want you to pay us more, but we also want to not have to work as many days to earn it, and we want to be able to retire sooner."

Now I'm going to try to remove my bias here because it's hard to feel sympathetic to people who are complaining that they aren't getting paid enough when I get paid a similar amount to them and I have 7 years of college more than they do.

The problem with this strike is that it's stupid. I'm not a heartless money-grubber, and I'm not anti-American, but if I were on the Board at Boeing I would give the machinists the finger and move my factories overseas. In 12 months Boeing could be building their planes in Asia where labor is 1/4th the cost it is here. They would reduce their expenses, increase their profits, and please their shareholders.

"But," you might ask me, "are you advocating abandoning American workers?"

Well I'm not, really. But I do advocate fair wages based on labor quality and difficulty of training, and I find it hard to believe what the machinists are doing is worth what they are making...and even harder to believe it is worth what Boeing offered as a settlement. But greed is a dangerous and awful thing, and with Boeing's back orders totaling over $430 billion, the machinists believe they have a right to some (more) of that money. More than 27 bucks an hour, anyway.

Capitalism works (and works well) because a fair price can be paid for a service or commodity. Labor, it can be argued, becomes a commodity when it's price is negotiated and regulated by a group such as a union. Capitalism also works because you are not forced to pay an unfair price for a commodity. If something is too expensive, people don't buy it. Then the price will inevitably come down.

Milton Friedman argues that increased wages (via union negotiation) actually increases unemployment by decreasing the amount of workers an economy can support.
Simply put: If bananas are 12 cents a piece, and I have a dollar, I can afford 8 bananas. If the bananas go up to 13 cents a piece, I can now only afford 7 bananas, and one banana rots.
On outsourcing: If a banana is worth 12 cents that is one thing. But if I can find a banana seller somewhere else that will sell me 8 bananas at 7 cents a piece, not only am I getting all the bananas I want, but I have 44 cents left over to return to my shareholders. This is how labor unions increase unemployment, and how I believe they are pushing the industrial sector of this country increasingly overseas.

It's not un-American to move your company overseas. CEOs often have no choice, as their longevity at a company is intimately linked to their ability to return a profit to the shareholders. I am sure any God-loving American would prefer to see businesses invest in, and stay in America, but when you are a business administrator, not a political one, your job is to run a successful business.

So if I were a higher-up at Boeing, here's what I would do (I decide this without any intimate knowledge of the legal ramifications):
I'd tell the machinists they're all fired. I would then try to hire new machinists here in the states. If the machinists sued me, I'd counter-sue, claiming that they forfeited their jobs when they stopped coming to work.
If the government stepped in and tried to force me to negotiate with the machinists, I'd sue the government, and claim that government intervention into private enterprise is not warranted when there is no threat to the national GDP, no threat to national security, and no significant decrease in taxable wages. Then I'd have my lobbyists (who believe me, at Boeing the lobbyists know their stuff) tell the members of Congress that if they didn't back off, I'm taking my entire business to Asia. Probably Russia, actually, since Boeing has already promised to spend $27 billion there building up their titanium industry.

A small, kind word for unions before I go. America's economy 100 years ago was such that unions were an awesome idea, when price fixing was not well regulated, workers had no rights, or job security, or retirement plans.

But today isn't 1908, its 2008, and the average blue-collar worker is living better than ever. Modern economics has shown that a labor-union wage increase generally increases inflation and comes at the price of lost jobs...for non-union workers. Boy that's fair.

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Cellulosic Ethanol

In order to produce cellulosic ethanol all you need is a plant. The structural material a plant creates to support itself is cellulose, which is essentially a complex sugar. Using enzymes to break down the plant's cell walls into sugars then fermenting the sugars is the extremely basic explanation for how cellulosic ethanol is made.

The primary reason starch-based (corn and sugar cane) ethanol is easier is that the corn seeds are already fairly simple sugars and the methods to turn them into fermentable sugar is much simpler and cheaper.
But corn-based ethanol can only utilize the seed of the corn plant. Cellulosic ethanol can utilize the entire plant.

Interestingly, some of the most ideal plants for cellulosic ethanol are grasses, which have a high ratio of cellulose to mass. And they're cheap.

Here's my list of reasons that this is awesome:

1. CO2 emissions from the fermentation process are much less for cellulosic ethanol than for corn-based ethanol.

2. Tillage of soil to plant corn crops release large amounts of CO2 trapped in the soil, and switchgrasses are perennial, which means once planted tillage never need happen again.

3. Native species can be used. Why plant some genetically engineered freak corn when you could get ethanol from all-natural native plants that restore the native habitat.

4. Grass farming is much cheaper and easier than corn farming, and grasses (especially native) are far more resistant to local weather conditions. Also, many insects that wreak havoc on corn crops have no effect on grass.

5. Corn farming causes soil erosion. Grass farming actually decreases soil erosion.

6. With an abundance of native grassland areas, the government could reduce or end the CRP management policy, saving the tax-payers billions. (34,500,000 acres at 170 bucks an acre = 5,8 billion dollars a year.)

7. Mathematically, we could actually end our use of petroleum based fuel. Switchgrass production, at peak, could eventually produce enough oil to fuel the current U.S. fuel consumption. In 2007 fuel use actually dropped. Even better!

8. Corn-farming is creating a condition where there is a total lack of genetic diversity amongst all plants. If a bacteria or virus started wiping out corn, it could take out all corn because little or none of it would be virus-resistant. Switchgrasses could be planted in a mixed bag (read: hundres) of various native grass species, and when one grass suffered from illness, the other species could easily fill the void.

So I'm excited to see the Dems jumping on the cellulosic bandwagon. Although I don't agree with ethanol mandates and ethanol subsidies, this rests entirely on the fact that corn-based ethanol benefits literally no one except corporate corn farmers.
Cellulosic ethanol could free us from foreign oil, decrease CO2 emissions, increase U.S. wealth, increase native populations, and decrease fertilizer and genetic engineered crop use.

But the main reason I love this is that normally technology and cars and fuel clash violently with the natural world. Here's a solution to the fuel crisis that involves cutting-edge technology - that actually encourages returning farmland to native plant growth. Imagine a shining ethanol plant, sitting in a field, surrounded by thousands of acres of tall-grass prairie. Now that is what I call harmony.

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A rare, kind word of praise for the Republicans

I have spoken out and written about the Second Biggest Folly in American Energy History, and how it appeared from the start to be nothing more than a smoky mirror congressional P.R. stunt to say "You hate high gas prices? We'll we're doing something about it, re-elect us please."

I am of course talking about the massive, massive ethanol subsidies this nation has created in the last 10 years. I continue to state as I always have that corn is a crappy ethanol source compared to sugar cane and the entire U.S. ethanol industry would completely collapse without the government subsidies.

I have noted before that ethanol makes up an inconsequential amount of our fuel resources and that total conversion of America's farmland to ethanol production would only cover the fuel needed by this nation for 25 days.

I have also mentioned that ethanol destroys engines when used in greater than 10% concentration. E85 vehicles are able to handle it, but all small-engined vehicles, lawn-mowers, atv's, motorcycles, etc. find ethanol toxic to their internal components.

Thank you, finally, GOP, for agreeing with me. As noted on page 30 of the GOP 2008 Platform:

The U.S. Government should end mandates for ethanol and let the free market work.

YES!

Unsurprisingly, the Republican Senatorial incumbents and candidates from the northern plains states are highly against this reversal of policy. Could that be because their states have reaped a fortune over the last 7 years from corn prices skyrocketing? Or is it because they genuinely think that ethanol is a way to break our energy dependence on foreign oil? I'll let the reader decide.

Here's what the DNC platform had to say about ethanol:

We'll invest in advanced biofuels like cellulosic ethanol which will provide American-grown fuel and help free us from the tyranny of oil.

Even the democrats now basically agree with me. They are acknowledging that starch-based ethanol (corn, sugarcane, etc) will not work, but cellulosic ethanol made from switchgrass is much more efficient a producer of ethanol (once mass-production is utilized).

Why do I love this plan? Well, imagine the entire Great Plains blanketed by the original tallgrass prairie that originally was there. Imagine thousands and thousands of acres of cropland converted to highly-profitable grasslands. I can't even express how great a plan this is...oh heck the easiest way is with a whole seperate post.

Here's the Biggest Folly in American Energy History since I left that unanswered above.

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Philosophy in a Mountain Dew

I had no idea before but today I noticed that my 20 oz. Mountain Dew bottle is a source of infinite wisdom.
Besides supplying the brain-altering surge of caffeine and sugar that puts me in a near-hallucinatory frenetic state (and subsequently renders me catatonic 2 hours later), it also boasts unique and wonderful information on the outside of the bottle: nutritional information, a "best by" date, a mysterious recycling code number, and the obvious brand label.

However, as I twisted off the cap, I was dimly aware that I might just be the "1 IN 8 SCORES: Buy (1) 20 oz., get (1) 20 oz free!" Woohoo! Unfortunately when I twisted off the cap I found I was not the winner, all I saw was "Please, try again."

As disappointing as this is, its a far cry better than Coke contests, where the outside of a Coke bottle claims by twisting off the lid you could win any number of great prizes. Twisting off the top of a Coke bottle reveals something like this:

75xv9
11z7b

As though by drinking Coke products you suddenly become fluent in a strange WWII army code and you can find out if you won. The truth is its all a not-so-cleverly disguised attempt to force you to log on to their website, www.mycokerewards.com, and enter personal information so they can sell your soul information to advertisers and make a secondary revenue. So by "entering to win" usually all you are winning is a full mailbox.

But I digress. The point is, I got to thinking about that Mt. Dew lid and it's taunting "Please Try Again" and I came to the conclusion that by and large that's some of the finest advice I have ever been given. Although I don't normally go looking for advice on the underside of Pepsi products, well, there it was.

We as humans are inherently failures. We learn to walk by standing up, taking a cautious step, and falling. Then we try again. And again. And eventually we are sprinting. We take classes and (with a few exceptions) make mistakes and learn from those mistakes. Maybe I misdefine us when I call us failures, because failure implies the endgame is one of non-success. What I mean to say is that we are a creature that by and large practices doing a thing unsuccessfully many times before it is eventually accomplished with success.

This differs from most other animals, for example housecats. Ever watched a cat sit there, twitching its tail as it ponders something, then in a blur it bounces upward and performs a highly acrobatic jump which involves three or four different bounces before casually landing on a perch? How many times did the cat practice that move? Probably none, and it probably got it right.
Or think about a squirrel jumping from tree to tree...it doesn't miss that branch very often.
So we as a species are uniquely prone to fail. Not total failure, just individual failings that stack up until they are crowned by a single success.

So this Mt. Dew lid, though its message was completely innocuous, reminds me what we all should remember: when you mess up, please, try again.

And never forget: 1 in 8 scores.

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Black Holes (Funding and Literal)

Next week the Large Hadron Collider starts smashing particle protons, an event that some believe will cause the Big Bang Lite, and in an instant we'll have solved all the world's problems by ending the world.
The Large Hadron collider cost an estimated 6.4 Billion Euros (up to this point) and it's primary goal is to prove (or disprove) the existence of the Higgs Boson particle. For those of us who don't know what the Higgs Boson particle is, its basically particle physics answer to the great question "Why does a tiny proton have mass?"
Unfortunately for Particle Physicists, discovery of the Higgs Boson particle will in no obvious way benefit mankind in the foreseeable future. However, it will answer one of the fundamental questions about physics, and tie up the Standard Model of Physics.
Which leads to the problem. How will physicists convince their governments to fund ridiculous particle accelerators in the future if the LHC successfully answers the last great question? Several physicists who are involved in the LHC were interviewed last year in Science magazine. They suggested they hope the LHC doesn't find the Higgs Boson, becuase if it does they will essentially be out of a job. They are concerned that without the potential for a major discovery, they'll have no footing to fund their super-super collider, and the super-super-super collider after that.

Let me assuage their fears. The Fermilab accelerator has not had a major discovery since its finding of the "Top Quark" in 1995. However, they had no problem securing $320 million dollars for funding in fiscal year 2008. Then they complained that they weren't getting enough, so Congress earmarked another 29 million as an add-on to the current Iraq spending budget for the year. There are approximately 1900 employees at Fermilab. 350 million dollars divided amongst 1900 employees comes out to around 184,200 dollars per employee, many of which are graduate students and post-docs. I wasn't making 184,000 dollars as a grad student, then complaining to Congress for more, while producing no major research breakthroughs for 13 years...

Anyway, the LHC comes online next week and some believe the particle collisions might produce micro-blackholes that could destroy the earth and solar system. And although the physicists who believe this acknowledge it is a low-probability, the major study that found the LHC was safe was funded and produced by CERN, the company in charge of the LHC. That's like a used car dealer saying "oh hell yeah, this car has a great engine. You can trust me, I'm not biased."

The LHC is sponsoring a live webcast of the first particle collisions. There may be a small contingent of physicists going "I told you so" as the webcast shows swirling, bright energetic lights appear, then mysterious high-tech gizmos being sucked into a vortex, then the camera going dead.

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Detroit (Tokyo) Muscle

As I am working on rebuilding my little Honda Tin-Can (from my fender-bender) I am wondering how far I should go in the maintain and rebuild process.

I spent my lunch break reading about the legendary 71 Plymouth Belvedere GTX, the car owned by my father back in the early 70's. I didn't know much about this car, other than dad would always go into that weird, radio-announcer bass and go "4-26 hemi...the most powerful engine blah blah blah" and I'd tune the rest out.

But as I wandered today through my rambling thoughts and wikipedia articles I came across a weird regulation in the Nascar rules that state that 427 cubic inches is the "maximum allowed displacement" for a regulation racing engine. Apparently the 426 hemi took first, second and third at the Daytona 500 soon after they were introduced, and other companies (Ford, Chevy) successfully got it banned for a year before its "stock" parts were widely distributed to the public and it was allowed again. To this day the regulation stands, the 427 cu. in. engine is as large as it gets. And suddenly I remembered my dad's ridiculous rants about his old car.
Could it be, I asked myself, that my dad actually knew what he was talking about and had the ultimate, most bad-ass car ever?

Further research revealed the truth, the 426 Hemi produced way more than the 425 HP that Plymouth claimed, but in order to keep insurance rates low (and sales high) that is what they advertised. Further, only 720 GTX's were sold with the 426 Hemi, and to this day it remains an extremely valuable collector car. And of the 720 GTX's made with the 426 Hemi, only a few were 71's, as the production level was way down that year.
It's quite possible my dad had one of the rarest, most valuable Plymouth cars in company's history. Today a 71 GTX with a 426 Hemi is so rare (30 known to exist) they each have their own name and sell for $250-500k.
And my dear old dad sold the GTX and bought a Vega.
When I mentioned that story to a co-worker, he about flipped out. Apparently he spent his 20's (in the 80's) rebuilding late 60's, early 70's Detroit muscle cars. When he found out my dad had a 71 GTX with te 426 Hemi he was blown away. But it was the downgrade to a Vega that really caused him to gasp.

I never really understood how valuable the 71 GTX my dad had was until today.

And so it makes me wonder about my own car: that little, dinged up, tin can, Honda Del Sol that looks like the runt of the Honda litter. Similar to the GTX, the Del Sol was a novelty car built by a major automaker during its heyday. There were slightly less than 75,000 made between 1993 and 1997. Today approximately 1/4 of those remain on the road. In the next 20 years they'll fade into history. Could it be that I should cling to my little Del Sol, or god willing, fix it up?
It has crossed my mind that someday people may go "remember the days when cars didn't look like jellybeans?" And there will be that spiffy little Del Sol under a canvas in my barn, and I'll drag it out and fix it up and when I drive it down the road people will openly gape in admiration for a day when you actually had a fuel-injected single overhead cam engine that didn't talk to you and discuss its feelings.
And maybe, just maybe, some other person my age will feel sufficiently nostalgic and offer me 45,000 dollars for that little car, and it'll be theirs, so they can drive it around and remember how great it was when Tokyo Muscle ruled the streets.

I guess the problem is when I pull up to a dealer to get a new car the dealer will offer me a few hundred bucks for the Del Sol (my dad got 300 bucks for his GTX)...but its worth more than that to me, and 30 years from now it may be worth a lot more, to me and to someone else.

Especially if I swap in a B16 engine, turbocharger, add sway bars, put in a stage 3 clutch...

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